updated 8/13/2008 11:43:12 AM ET 2008-08-13T15:43:12

Guest: Milissa Rehberger, David Shuster, Eugene Robinson, Frank Gaffney, Joan Walsh, John Heilemann, Susan Rice, Chrystia Freeland, Mike Feldman, Todd Harris

DAVID SHUSTER, GUEST HOST:  Danger zone.  Obama and McCain hit troubled waters politically overseas and with the truth.

Let‘s play HARDBALL.

Good evening, everybody.  I‘m David Shuster, in for Chris Matthews. 

Welcome to HARDBALL.

Leading off tonight, trouble spots in the presidential campaign.  During the primaries, we all learned about Barack Obama‘s problem with older voters.  Well, it hasn‘t gone away.  And John McCain?  Four years ago, George W. Bush carried 97 of the 100 fastest-growing counties, the so-called exurban voters living beyond the suburbs, but it looks like this year may be different.  Danger signs for both candidates in a moment.

Also: Politicians often tell the truth, sometimes they stretch the truth, and sometimes they stretch it until it breaks.  We will take a closer look at some of the latest whoppers in the campaign ads and speeches.

Plus: John McCain hit the trail today and talked about the fighting between Russia and Georgia.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  And I know I speak for every American when I say to him, today we are all Georgians.

(END VIDEO CLIP)

SHUSTER:  What do the candidates‘ statements about the crisis tell us about who you would want answering that 3:00 AM phone call?  We‘ll talk to both campaigns.

And what‘s wrong with this picture?  That‘s Rielle Hunter during John Edwards‘s presidential announcement tour in December 2006.  I can hear you saying, So what?  Well, this was after Edwards said their affair had ended.  We‘ll try to make sense of that and more in tonight‘s “Politics Fix.”

And while we‘re on a roll, what‘s wrong with this picture from the Olympics opening ceremony?  Let‘s put it this way.  If deception were an Olympic event, she‘d be a gold medal contender.  We‘ll explain that in the HARDBALL “Sideshow.”

But we begin with political problems for the candidates.  “Washington Post” columnist Eugene Robinson is an MSNBC political analyst, and Chrystia Freeland is U.S. managing editor of “The Financial Times.”

I want to start both of you with the latest Gallup tracking poll.  It has Obama leading McCain 47 to 42.  That‘s the same as yesterday, basically the same as it‘s been for a week.  Pollster.com‘s national average has Obama leading by 2.5 points.  But look at the upward trajectory for McCain in the last month there.

Eugene Robinson, is the major development going to be when either Barack Obama or John McCain sort of breaks through their glass ceiling, for McCain 45 percent, for Obama 50 percent?

EUGENE ROBINSON, “WASHINGTON POST,” MSNBC POLITICAL ANALYST:  That will be a moment, when it finally happens, for one or the other.  But you know, we don‘t know when that‘s going to happen.  I mean, my guess is that, probably, we don‘t see a whole lot of movement until after both conventions, and then we know the shape of this race.  You know, I think there‘s—there are encouraging signs for both campaigns.  Certainly, you‘d rather be stuck at 47 than stuck at 42, you know, just generically, but I think the McCain campaign can take heart at the fact that he‘s doing better than average Republicans are doing in this Democratic year.

SHUSTER:  And Chrystia, wouldn‘t it be better for somebody, for the Republicans, for example—they‘ve got the edge, given that McCain‘s numbers have gone up a bit.  Even if it‘s just a little, McCain can point to some progress, as Gene just pointed out.

CHRYSTIA FREELAND, “FINANCIAL TIMES”:  Of course.  I mean, I think the Republicans should be really be absolutely astonished and delighted by how well McCain has done, given the headwinds he is facing.  You know, as Gene said, this should be a year for the Democrats.  We have an unpopular president, an economy which is weak, an unpopular war.  And as I think even people close to Senator McCain would admit, he‘s not the world‘s most charismatic, effective campaigner.  So the fact that he is doing so well still really speaks, I think, to some lingering doubts about Barack Obama.

And this has been a good week for McCain, I think, on the foreign policy front.  He came out very early and strong on the Georgia conflict.  And I think, also in Russia‘s actions this week, we have seen a vindication of McCain‘s long-standing suspicion of Russia.  He‘s been one of the American voices which has been quickest to perceive in Putin‘s Russia a neo-imperialist bent, and I think events this week have proven him to be right.

SHUSTER:  Well, we‘re going to be hearing from both campaigns later in the show about that.  But “The Washington Post” had some intriguing numbers that helps explain both Barack Obama and John McCain.  McCain‘s lead—this is what “The Washington Post” writes—“McCain‘s lead among those 65 and older is the main reason he remains close overall.  His margin is largest among older white voters without a college education, accounting for much of Obama‘s problem with the white working class.”

And here‘s today‘s “Los Angeles Times.”  “Four years ago, exurbs in Florida, Ohio, Nevada and Colorado were full of families open to the Republican messages of family values and low taxes, and Bush made a strong stand, winning 97 of the 100 fastest-growing counties.  McCain has tried to do the same in a far different climate, as exurbanites feel increasingly pinched by the rising costs of what not long ago seemed the ideal lifestyle.”

Chrystia, what do you make of the problems in Florida, or the problems, for example, in some of these exurbs for John McCain?

FREELAND:  Well, I think the exurbs actually speak to why, as we‘ve been saying, this should be a Democratic year.  You know, those are the areas where the economic growth we saw at the beginning of this decade were really powerful reasons to feel good.  But a lot of those feel-good reasons have vanished as the economy has gotten weaker.  So I don‘t think it‘s surprising at all that voters there would be thinking that the incumbent party is not a party they want to keep in office.

The big hurdle that Obama has to overcome with those voters, with the older voters you mentioned, is he has to have enough Americans get comfortable with the idea of Barack Obama, with someone who is so different in so many ways from a lot of Americans and from the kind of people they‘re used to having as their president.  I think that that is emerging as the central question for his campaign.

SHUSTER:  Hey, Gene, has Barack Obama missed a huge opportunity with older voters?  And the reason I say that is there‘s John McCain saying we need to fix Social Security.  Well, you can only do that by either cutting benefits or raising payroll taxes.  Neither of those tends to fit very well particularly with the older generation.

ROBINSON:  Well, exactly.  You know, this is out of the Democratic Party playbook 101, right?  Demagogue Social Security.  I mean, you could attack McCain on that.

The other thing I think the Obama campaign certainly has been trying to do but hasn‘t gotten as much traction on as it would like to have is linking John McCain with George Bush.  If the election is a referendum on the eight years of George W. Bush, then Barack Obama wins easily.  And I think he‘s made some headway on that, but he hasn‘t quite associated, I think, in the public mind McCain with Bush to the extent that the Obama campaign would like.

SHUSTER:  Chrystia, is it possible that we‘re simply seeing John McCain do exceptionally well among older voters because, well, John McCain is essentially one of them, that the older voters know John McCain‘s generation and are a bit suspicious of people who are in their mid to late 40s?

FREELAND:  Well, maybe we could put a more positive spin on how older voters think...

(LAUGHTER)

FREELAND:  ... that, you know, they might have fewer doubts than a younger person could have about the abilities of a fellow older person, Senator McCain, to be effective and to be president.  And I think also some of the social shifts in America, which make Barack Obama an incredibly appealing candidate and help to account for his strength among voters under 40, might play in the opposite way among older voters.

SHUSTER:  Eugene?

ROBINSON:  Well, let‘s face it, too, there are generational differences and attitudes towards race, I mean, and that‘s a fact.  And it could be playing into this.  It might not be playing into this, but certainly could be.

SHUSTER:  Do you think it is playing into this?

ROBINSON:  I think, to a certain extent.  I personally think it probably is.  But that‘s kind of an existential question.  I mean, there‘s nothing the Obama campaign really can do about that except to try to demonstrate to these voters that he is not alien, that he is—you know, that he is as American as apple pie and—but in the final analysis, if there are voters who wouldn‘t vote for him because he‘s black, he‘s not going to be not black.  So that‘s just a fact of his candidacy.

SHUSTER:  Chrystia, though, as far as a sort of generation gap, let‘s flip it.  John McCain has a difficult problem with younger voters.  What do you attribute that to, and is there anything John McCain can do to try to improve his standing among college-educated younger voters?

FREELAND:  Well, I think it‘s a couple of things.  I mean, I do think that it is legitimate—in a way that it actually isn‘t legitimate to raise these questions around race, I think it is legitimate to raise some questions around age and to talk about the issue of—you know, it‘s really, really hard to be president, and is there an age at which, actually, you don‘t have the energy, you don‘t have the stamina, you don‘t have the quickness to be president.  I think with his energetic campaigning, whenever we see John McCain‘s fabulous mother, he helps to answer some of those questions.

But they do get asked, and I think they probably get asked more by younger people.  I also think the younger voters are very positively attracted by Barack Obama partly because of the things that he stands for, partly, you know, this notion—Gene, I think, said that Obama needs to show he‘s as American as apple pie.  I think the Obama narrative of the father from Kenya, the mother from Kansas, and that being an attractive definition of Americanness, maybe appeals more to a younger voter than it does to someone over 65.

SHUSTER:  One of the usual campaign danger zones involves the issue of credibility, and we‘re going to be highlighting that in our next segment.  But Eugene, you start.  Is there any particular reason to believe that John McCain, or Barack Obama, for that matter, could be vulnerable on the issue of credibility, given the way things have played out so far?

ROBINSON:  Credibility in what sense?

SHUSTER:  Credibility in terms of people don‘t believe when John McCain says, Drill right now and that‘ll cause oil prices to drop down, or they make a claim about the other candidate that‘s demonstrably false.

ROBINSON:  Right.  I don‘t think that has become a major issue at this point.  I think there‘s a decent amount of trust in both candidates.  It can always arise, especially if something—one of the candidates says—proves spectacularly to be not the case.  And indeed, there have been distortions on both sides, and perhaps, you know, some campaign ads have just been wrong.  But I don‘t think that has stuck to either candidacy yet.

SHUSTER:  And Chrystia, real quickly, is there a sense that maybe at least  for John McCain, given some of his stumbles over Iraq and Iran, that at least maybe he‘s more susceptible to the idea that he may not necessarily always be credible not because he‘s misleading but because people seem him as old and perhaps at times a little bit out of touch?

FREELAND:  You know, I don‘t think those stumbles have really hurt him.  I think what he does have to watch is the negative edge to his campaigning.  I think one thing that people like about John McCain is the idea that he‘s a straight shooter, and reconciling that with the negative tone of some of his ads could prove difficult.

SHUSTER:  All right.  Chrystia Freeland and Eugene Robinson, thank you both very much.  We appreciate you coming in.

And coming up: Liar, liar pants on fire.  We will put the candidates‘ claims to the test.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to HARDBALL.  As the ad wars heat up and the rhetoric in speeches ratchets up, are John McCain and Barack Obama now playing loose with the facts or the equivalent of what you might call verbal gymnastics?  Mike Feldman is a former adviser to Al Gore.  He joins us from Washington.  And Todd Harris is a former McCain spokesman from McCain‘s 2000 campaign.  He joins us in Dallas.

Let‘s start by taking a look at what McCain‘s latest ad says about his energy plan.  Watch.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Renewable energy to transform our economy, create jobs and energy independence.  That‘s John McCain.

(END VIDEO CLIP)

SHUSTER:  Hey, Todd, McCain‘s plan doesn‘t specify any new government spending on renewable energy, and in the past, McCain has opposed tax incentives.  So how can that ad possibly be accurate?

TODD HARRIS, FORMER MCCAIN SPOKESMAN, REPUBLICAN STRATEGIST:  Well, David, as you know, right now, there is this sort of “catch as catch can” framework of tax credits and tax incentives for the renewable fuel industry.  And what Senator McCain is saying in his energy plan is, number one, we need to be drilling offshore to increase our domestic supply of oil, but also, we need to streamline all of these tax credits to bring some sanity to them so people—private companies who want...

SHUSTER:  But Todd, in the past...

HARRIS:  ... to invest in these technologies...

SHUSTER:  ... he has opposed—he has opposed these tax credits unless they‘re paid for with—by rising taxes elsewhere.  So how would he balance it this time?

HARRIS:  Well, yes, he‘s opposed to taxing one sector of our economy in order to try to stimulate another sector of our economy.  Absolutely.  He still feels that way.  But David, you know, if the game changer, when oil—when gas became $4 a barrel, and all sorts of positions for good leaders, you know, are being looked at again because we need to start doing some things that maybe we didn‘t do in the past in order to decrease our reliability on foreign oil and bring down the cost of gasoline, that‘s exactly what the McCain energy plan is going to do.

SHUSTER:  Well, I agree that the issue is a game changer with the high price of energy, and that‘s why I think Barack Obama‘s ad about alternative energy resources is pretty significant.  Watch this.

(BEGIN VIDEO CLIP)

MCCAIN:  ... inflate our tires.  So he...

(END VIDEO CLIP)

SHUSTER:  OK, well, that was John McCain talking about what he had heard Barack Obama say.  But again, if we‘ve got it, here is Barack Obama‘s ad, in which Obama has repeatedly said that, in fact, he has a fast-track policy in terms of energy policy.  And I guess the question for you, Mike, is how can it be fast track, as Barack Obama has said in his ads and as he says in his speeches, when it‘s a 10-year plan?

MIKE FELDMAN, FORMER GORE ADVISER, DEMOCRATIC STRATEGIST:  Well, look, even John McCain has said it took 30 years to get us into this mess, and so the question is, What do we do now?  And if there was a faster way to get out of this mess, I suppose we‘d be there.  The question is, What direction are you taking?  Are you for drilling and tax breaks for the big oil companies or are you for renewable energy?  And as you said and stated earlier in response to that other ad, Senator McCain has opposed tax credits for renewables.  He‘s opposed tax credits for alternative energy.  He‘s opposed fuel efficiency standards.  What he‘s for is huge tax breaks for the oil companies and for drilling.  And that‘s not going to get us anywhere very quickly.

SHUSTER:  Todd, do you believe that Barack Obama has an energy plan?  Do you believe Barack Obama has a plan to take care of these challenges, whether you like them or not?

HARRIS:  Barack Obama‘s got a lot of words that sound really nice, but when push comes to shove, when you start talking about the things that actually will make a difference in terms of the cost of gasoline—I‘m talking about increasing our domestic supply of oil, drilling off of our coast, which is supported by more than 70 percent of all Americans—even Speaker Pelosi today...

SHUSTER:  But Todd, those are the politics...

HARRIS:  ... is coming around on this issue.  Barack Obama...

(CROSSTALK)

SHUSTER:  As far as the specific question, I would suggest—and I think most people would agree—that Barack Obama has a plan, even if you don‘t necessarily agree that it‘ll solve things.  You can go to his Web site and find his plan.  But here‘s how John McCain characterized Barack Obama‘s energy plan.  Watch.

(BEGIN VIDEO CLIP)

MCCAIN:  The only think I‘ve heard him say is that we should inflate our tires.  So he has no plan for addressing the energy challenges that we face.

(END VIDEO CLIP)

SHUSTER:  Hey, Todd, when John McCain says the only thing he‘s heard Barack Obama say is, Inflate our tires, do you believe John McCain?  That‘s the only thing he‘s heard?

HARRIS:  I do believe him.  You know, Barack Obama may be able to fuel his car with hope and optimism and celebrity, but the rest of us use good old-fashioned gasoline, and Obama‘s not proposing anything that‘s going to reduce the cost of gas.

SHUSTER:  Right, but when John McCain says, The only thing that I‘ve heard is dot, dot, dot, doesn‘t that raise questions about whether John McCain has selective amnesia?

(LAUGHTER)

HARRIS:  I—you know, I—I think that Senator McCain is talking about how there—there really is no meat, no substance, in any meaningful way, to reduce the cost of gasoline in Senator Obama‘s plan.  And he talks about inflating tires. 

That‘s fine for him, but, you know, the rest of us need gasoline for our cars.  We need increased drilling.  And that‘s what Senator McCain is going to give us. 

SHUSTER:  Well, Todd, what‘s wrong with inflating tires?  I mean, it will save up to 4 percent.

(CROSSTALK)

SHUSTER:  That‘s—I mean, if you—if all Americans would do that, you would save more money than you could possibly get from the new drilling that John McCain or anybody else talks about. 

HARRIS:  David—David, there‘s nothing wrong with inflating your tires, but it‘s not an energy plan. 

SHUSTER:  All right, fair enough.  That‘s an argument.  But, again, there is an energy plan that Barack Obama has.  And I‘m just not sure it‘s it‘s credible to say he has no energy plan. 

In any case, Mike, we have been beating up on Todd and John McCain, but now it‘s time to put you on the grill. 

Here‘s what Barack Obama has said about taking on big oil.  Watch. 

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  We need a president who can stand up to big oil and big energy companies and say, enough is enough. 

(END VIDEO CLIP)

SHUSTER:  Now, Mike, maybe we do need somebody taking on big oil, but isn‘t it true that Barack Obama voted for the Bush-Cheney bill in 2005 that gave tax breaks to big oil? 

FELDMAN:  Well, it‘s true he voted for that bill.  As I recall, three-fourths of the Senate voted on that—voted for that it.  And bill, actually, in net, raised taxes on the oil and gas industry and also made record investments in renewables and alternative fuels. 

So—and, look, he had to work across the aisle to get something done.  And I think that‘s what Barack Obama is proposing to do when he‘s elected president of the United States. 

SHUSTER:  Todd? 

HARRIS:  Well, Senator McCain—Senator McCain did not vote for that bill, because, as “The Washington Post” said, it was a Christmas tree giveaways to the oil and gas industry.  Senator McCain thought it was a boon for them and a loser for average working families.  And he voted no.  And he‘s proud of that vote. 

SHUSTER:  Todd, I‘m going to catch you before this segment is over. 

So, here‘s John McCain in Florida talking about his support for civil rights.  Watch. 

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE:  I‘m proud of that record.  From fighting for the recognition of Dr. Martin Luther King‘s birthday in my state to sponsoring specific legislation that would prevent discrimination in any shape or form in America today. 

(END VIDEO CLIP)

SHUSTER:  Hey, Todd, as you know, John McCain actually opposed the Martin Luther King holiday.  He even voted against the commission working to promote the holiday.  What happened there?  Was that just a misleading statement by John McCain? 

HARRIS:  No, he was totally wrong to oppose the holiday.  And he has said that he was wrong.  He said that.  And he‘s apologized for it.  He has come forward and said he was wrong to oppose it.  He did support the state holiday in Arizona. 

SHUSTER:  Then, Todd, why did he just say, why did he just say in that clip, I‘m proud of that record from fighting for the recognition of Martin Luther King‘s birthday in my state?  That was wrong. 

HARRIS:  Because he did.  Because he did, David.

He—David, he opposed it on the national level.  When it came time for—to support this in Arizona, he had a change of heart, which he is proud of that change of heart.  And he fought to support it in the state of Arizona, which is exactly what he just said. 

SHUSTER:  Mike, your view? 

FELDMAN:  Well, look, he was against it before he was for it.  In fact, as late as 1987, he actually supported an effort in Arizona to repeal it. 

So, I suppose—and, again, I have a hard time keeping track of Senator McCain‘s positions even in the last few years, let alone going back 10 years.  I get a little dizzy sometimes when I try to do that.

But think Todd is right.  What he has basically said is, I was wrong.  And I take his—I take his word on that. 

SHUSTER:  All right. 

Finally, here‘s Barack Obama talking about his work helping wounded veterans.  Watch. 

(BEGIN VIDEO CLIP, OBAMA CAMPAIGN AD)

OBAMA:  That‘s why I passed laws moving people from welfare to work, cut taxes for working families, extended health care for wounded troops, who have been neglected.

(END VIDEO CLIP)

SHUSTER:  Actually, Barack Obama was not there for the final vote, even though he did support the overall bill.  But, again, it raises questions when a candidate says, “I did this,” and they actually did it with a lot of people. 

In any case, Mike Feldman and Todd Harris, you guys are the best, excellent advocates for your point of view.  We appreciate you coming on today and playing.

FELDMAN:  Thank you. 

HARRIS:  Thank you, David.

SHUSTER:  You‘re welcome.  You‘re welcome. 

Up next: more on the John Edwards-Rielle Hunter affair.  Was Edwards telling the truth the other night about when it ended? 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

SHUSTER:  And welcome back to HARDBALL. 

Time now for the HARDBALL “Sideshow.”

First up: an Olympic fake-out.  We now know the Chinese fireworks show during the opening ceremonies was digitally enhanced.  But it turns out there‘s yet another part of the opening ceremonies that was staged.  The 9-year-old Chinese girl seen there singing the national anthem was actually lip-synching to another girl‘s voice. 

Why?  “The U.K. Telegraph” reports, the actual 7-year-old singer had the ideal voice, but not the ideal teeth—China‘s taking perfectionism to new heights at the Olympic Games.

Next:  John Edwards has some more explaining to do.  According to TheWashingtonPost.com, Edwards took mistress and campaign videographer Rielle Hunter along for the ride during his four-day presidential announcement tour.  Photos show Hunter crisscrossing the country while the campaign—with the campaign, while Edwards made his initial pitch to voters back in December of 2006. 

The thing is, Edwards claimed he ended the relationship and confessed the truth to his wife, Elizabeth, in 2006.  So, either the confession window was incredibly tight, or the Edwards admission last week now has even more questionable holes in it. 

And here‘s a blast from the past.  Cindy Sheehan, the anti-war activist who camped outside President Bush‘s Crawford ranch back in 2005, is now aiming for House Speaker Nancy Pelosi.  Cindy Sheehan just yesterday as an independent candidate to challenge the speaker‘s reelection to Congress, saying Pelosi has not done her part to stop funding for the war. 

Pelosi‘s office, by the way, says the speaker welcomes the challenge.  I bet she does.  When you have the kind of safe seat that Nancy Pelosi does, you would welcome Elvis into the race. 

Now for “Name That Veep.”  Today‘s “New York Times” profiles this red-state senator who hit the trail last week with Senator Obama and seems to be topping Obama‘s short list.  The problems?  This senator‘s 2002 vote authorizing the Iraq war could alienate the party‘s left wing.  And his speaking style is somewhat lacking, to put it mildly. 

So, who is it?  Indiana Senator Evan Bayh. 

Full disclosure:  I‘m from Indiana.  My parents are college professors in Bloomington.  And the cutbacks as governor that Bayh imposed on public universities drove my family and most of our friends crazy. 

Time now for tonight‘s “Big Number.”

Florida has been a pivotal swing state in recent elections.  And state polls indicate we are headed towards another tight finish in November.  The Obama campaign certainly aiming for a win.  According to today‘s “Wall Street Journal,” Obama has already aired almost 10,000 local TV ads in the Sunshine State. 

So, just how many has John McCain campaign run?  Zero.  The McCain campaign has run no ads in the state that is considered vital to a McCain Election Day victory.  It‘s causing heartburn in many Republican circles.  The big zero, zero McCain ads in Florida—tonight‘s “Big Number.” 

Up next:  The Russia-Georgia conflict is testing the candidates‘ foreign policy mettle.  Who‘s got what it takes to take that 3:00 a.m.  phone call? 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MILISSA REHBERGER, NBC CORRESPONDENT:  I‘m Milissa Rehberger.  Here‘s what‘s happening. 

Russian President Dmitry Medvedev has ordered a halt to military operations in the former Soviet Republic of Georgia after five days.  And both countries have agreed to cease-fire terms brokered by France.  Medvedev said Georgia had been punished enough for launching an attack on its pro-Russia breakaway province of South Ossetia. 

Russia took control of the province, moved into another Russian enclave in western Georgia, and conducted airstrikes throughout Georgia.  Hundreds and perhaps thousands of civilians were killed. 

A small plane carrying a cancer patient to Boston for medical treatment crashed in Easton, Massachusetts, killing all three people on board, the patient, his wife and the pilot.  The plane, from New York‘s Long Island, nosedived into a grocery store parking lot. 

And John Lennon‘s killer has denied parole for a fifth time.  Mark David Chapman has been in prison for 27 years, since pleading guilty to that murder.  He‘s eligible for parole again in two years—now back to HARDBALL. 

(BEGIN VIDEO CLIP)

CONDOLEEZZA RICE, U.S. SECRETARY OF STATE:  I want to make very clear that the United States stands for the territorial integrity of Georgia, for the sovereignty of Georgia, that we support its democratically-elected government and its people.  We are reviewing our options for humanitarian and reconstruction assistance to Georgia.  But the most important thing right now is that these—these military operations need to stop. 

(END VIDEO CLIP)

SHUSTER:  Welcome back to HARDBALL. 

That was Secretary of State Condoleezza Rice today calling for an end to the fighting in Georgia. 

What‘s the next president, either Obama or McCain, going to do about Obama?  How would each of them handle a crisis like this?

Susan Rice is a senior foreign policy adviser for the Obama campaign.  She joins us.  Susan, thanks for coming in. 

SUSAN RICE, OBAMA SENIOR FOREIGN POLICY ADVISER:  Good to be with you.

SHUSTER:  I want to get your reaction to something that John McCain today said—John McCain said.  Watch. 

(BEGIN VIDEO CLIP)

MCCAIN:  My friends, today, the killing goes on, and the aggression goes on. 

Yet, I know, from speaking this morning to the president of Georgia, Mikhail Saakashvili, who I have known for many years, that he knows that the thoughts and the prayers and support of the American people are with that brave little nation. 

I told him that I know I speak for every American when I say to him, today, we are all Georgians. 

(END VIDEO CLIP)

SHUSTER:  Susan,  does the Obama campaign agree?  Are we all Georgians?

S. RICE:  The Obama campaign certainly agrees that Georgia‘s sovereignty and territorial integrity have been violated.  That is a violation of international law.  It is a violation of moral and humanitarian principles.  And we have to stand up forcefully, as Senator Obama has, against that. 

So, yes, we all are with the Georgian people as they have suffered.  But the—the question is, David, where do we go from here?  Secretary Rice, in the clip you played, said that, you know, we have to get a cease-first, and then look at reconstruction and humanitarian aid.  That‘s absolutely right. 

But Senator Obama‘s view, which he has articulated since April, goes further than that.  He says, we cannot just go back to the status quo ante.  We need real peacekeepers inside of Georgia that aren‘t Russians.  And we need a negotiated political settlement, which has been lacking.  We have known about this crisis for months, and, yet, we have not been actively engaged in negotiations. 

And that‘s in part because we have been focused on Iraq.  And our foreign policy has now become monolithic. 

SHUSTER:  But what about our relationship...

S. RICE:  And we‘re not there to deal with other—other challenges like this one.

SHUSTER:  What about our relationship with Russia?  Should there be, in the eyes of John—Barack Obama, consequences for Russia‘s actions? 

S. RICE:  Absolutely. 

SHUSTER:  And what should they be? 

S. RICE:  And he spoke about that yesterday.

He said that we need to review all aspects of our bilateral and multilateral relationships with Russia, and in particular take a look, with our allies, at the question of whether Russia ought to be allowed, as it wants to, to join the WTO. 

But, yes, there has to be action and—and consequences for those actions.  But, David, the other thing that has to happen is, we need to be there for the people of Georgia.  Barack Obama has said, for many months, that the United States ought to be in the lead in pushing for Georgia to be a member of NATO.  We still need to take that step.  And that hasn‘t happened. 

SHUSTER:  But that would be highly provocative move for the Russians, if we put Georgia in—I mean...

S. RICE:  Well, in fact, it‘s something that—that the U.S.  government and Senator Obama have been arguing for, for months. 

But we didn‘t succeed with our European allies in getting their agreement to a membership action plan for Georgia to join NATO.  And that‘s, in part, a consequence of our frayed alliances and relationships that that have suffered because of Iraq and so many other poor decisions that John McCain had supported and that Bush has advocated. 

Yes, now we have reality.  And we need to be there for the Georgian people.  We can‘t be intimidated by the Russians and rescind our support for their joining NATO. 

(CROSSTALK)

SHUSTER:  ... intimidated, then, whether you—Barack Obama as president or as—would the campaign support imposing economic sanctions on Russia, as some Republicans are calling for?

S. RICE:  Well, I would like to—to see which sanctions a lot of the Republicans are calling for. 

The reality is that Russia is—has grown into a significant power again, while the United States has been distracted, focused on Iraq, and not paying much attention to—to Russia.  We have neglected a crucial country that has now gone in a very difficult and worrisome direction.  And we will all have to deal with the consequences of that. 

By reviewing all aspects of our bilateral relationship with Russia, as Senator Obama has advocated, we will be able to take account of—of what steps are appropriate. 

But here‘s the thing, David.  We cannot shoot from the hip.  We cannot act on the basis of ideology or preconceived notions.  When this crisis began, Barack Obama, the administration, indeed, and all of our NATO allies took a very measured and reasoned approach, because we were dealing with the facts as we knew them. 

John McCain shot from the hip, very aggressive, very belligerent statement.  And he may or may not have complicated the situation now. 

SHUSTER:  Well, I‘m not sure that John McCain supporters would agree with your characterization.

S. RICE:  I‘m sure they wouldn‘t.

SHUSTER:  But we‘re going to find out now.

(CROSSTALK)

SHUSTER:  Susan Rice, thank you for coming on.  We appreciate it. 

Frank Gaffney is a John McCain supporter and the president of the Center For Security Policy.

Frank, I want to read a statement by Senator Obama today—quote—

“Now is the time for action, not just words.  It is past time for the Russian government to immediately sign and implement a cease-fire.  Russia must halt its violation of Georgian airspace and withdraw its ground forces from Georgia, with international monitors to verify that these obligations are met.”

Any problem, Frank, there with that—that statement? 

FRANK GAFFNEY, FMR ASST SECRETARY OF DEFENSE:  Look, I think that‘s fine.  It sounds more like the kind of thing I believe we have been treated to, which is, on the one hand, condemning the Bush administration, condemning the president himself for a policy that‘s long on talk, on wishful thinking, rather than a policy that‘s rooted in the reality.  It‘s not the United States‘ inattention that‘s caused Vladimir Putin to rebuild Russia and to make it, once again, an aggressive power, a danger to its neighbors, and I think to a great many others beyond, as it is arming the Chinese, the Venezuelans, the Iranians, the Syrians and so on.  This is the kind of reality that I think Senator McCain has a better handle on it than Senator Obama, despite his protest.

Senator Obama‘s program, at the moment, sounds a lot more like another four years of George Bush‘s present policies. 

SHUSTER:  Frank, spell out John McCain‘s program.  What exactly—what sort of consequences—when John McCain talks about consequences, spell it out, what should the consequences be for Russia? 

GAFFNEY:  I like John McCain.  I‘ve liked him for a long time.  I‘m not on his campaign staff, nor do I speak for him.  I think he has rightly said, one of the costs, and there ought to be a number of costs to Russia for engaging in this behavior, is we stop treating them as though they are a part of the civilized community of nations—

SHUSTER:  Frank, how do you do that? 

GAFFNEY:  You take them out of the G-8.  They shouldn‘t have been in there in the first place.  I think we ought to stop the kinds of consultations we have been doing at NATO with them.  It seems to me that Americans should be encouraged not to invest in the various Russian state owned enterprises, which are increasingly being used as engines for this kind of behavior.  These are the sorts of steps that I think would have an affect on the Russians, and make it clear that the behavior they are engaged in today and that they have in mind for Crimea and Ukraine next, and quite possibly, for a lot of places, including eastern Europe.  It‘s not in the cards. 

SHUSTER:  It might have an effect.  But the effect also might be to cause us problems as far as North Korea and Iran.  The question is, where do you draw the line between punishing Russia appropriately, and putting our relationship with them on those crucial issues in jeopardy? 

GAFFNEY:  I‘m of the view that things are not going perfectly with either North Korea or Iran.  So the kind of help the Russians are giving us, if this is what we are trying to encourage by looking the other way on the rape of Georgia, then I say, forget about it.  North Korea—

SHUSTER:  Wait a second, Frank, if you‘re calling it a rape, that‘s a loaded word—

GAFFNEY:  I have to tell you, Iran is continuing to build nuclear weapons with Russian help.  This is not the kind of cooperative relationship that I think we should be promoting. 

SHUSTER:  If you‘re calling it a rape, that‘s a pretty loaded word.  That would suggest that just having international monitors or whatever, that‘s not enough, that the United States should take far more concrete action.  I guess I‘m wondering, Vice President Cheney spoke specifically about economic sanctions on Russia.  Do you think that‘s a wise idea? 

GAFFNEY:  I‘m describing some steps that could be taken far faster than economic sanctions on Russia.  I think if the American people were to dump the stocks that they are holding in their mutual funds in companies like Gasprom, it would send a very powerful signal to the Russians that this is not a game that‘s going to be allowed to go on as they intend to play it. 

Let me just say, I personally—I‘m not speaking for the McCain campaign, certainly not for the Bush administration—would be signaling strong support for the people of Georgia by enabling them to not only rebuild their country with our help, but rearm their country.  If that entails having American trainers, if that entails having American forces there to help them do it, I would do it.  I think that‘s the sort of signal we need to send to the Russians at this time. 

SHUSTER:  Frank Gaffney, who supports John McCain but is not with the McCain campaign, thank you very much.  Thanks, of course, to Susan Rice.  There, of course, you heard it.  Voters have to decide for themselves on these sorts of issues whether we should have a more robust, aggressive approach towards Russia or a diplomatic one. 

In either case, up next, it‘s our HARDBALL panel with the politics fix.  Did the John Edwards affair end when he said it did?  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SHUSTER:  Welcome back to HARDBALL and the politics fix.  Tonight‘s round table, Joan Walsh of Salon and John Heilemann of “New York Magazine,” whose article, “the Color Coded Campaign,” is in this week‘s edition.

I want to start you both with these photos that have emerged of John Edwards with Rielle Hunter.  These were pictures of John Edwards‘ campaign announcement taken at the very end of 2006.  Joan, it sets up the problem as far as John Edwards saying on Friday night that his affair with Hunter ended in 2006.  Do you believe John Edwards when he says that? 

JOAN WALSH, SALON.COM:  No, I really don‘t, David.  It makes me sad, but I don‘t see how we can.  I don‘t think I believed him Friday night, but I really don‘t believe him today, looking at that photo.  Why, at that point, given what he said, he would be so reckless as to travel with her.  It just boggles the mind.  The whole story is really mind boggling. 

SHUSTER:  John Heilemann, why would John Edwards, last Friday night, therefore, if we‘re all to be suspicious, give a rather sort of contained or limited admission? 

JOHN HEILEMANN, “NEW YORK MAGAZINE”:  Well, look, I think he‘s trying to manage the fallout from an obviously devastating story.  I think I‘d go further than Joan and say that I‘m not sure there‘s anybody in politics that I know, and maybe my friends are just a little too cynical—I‘m not sure there‘s anyone in politics that I know who doesn‘t believe that John Edwards is the father of this child, even though he‘s denied that had too. 

WALSH:  Right. 

HEILEMANN:  I think there‘s a consensus that he‘s lied throughout this affair, throughout the entire thing from the time the Enquirer broke these story.  He continues to lie about it now.  Whether that‘s to limit the pain that‘s being inflicted on his wife Elizabeth or whether that‘s to try to keep open some hope of a political career, I can‘t really tell.  But it is an astonishing thing, and every day the story gets worse for him, as I think it will continue to do for the weeks ahead, as people keep picking at this and finding inconsistencies in the story. 

SHUSTER:  Joan, regarding the paternity test, John Edwards, of course, on Friday night said he would be willing to undergo a paternity test.  Then we found out yesterday or the day before that, in fact, Rielle Hunter does not want a paternity test.  Do you know of any woman who has a kid who doesn‘t want to know for sure who the father was? 

WALSH:  Not in my experience, David, but maybe I just haven‘t been that experienced.  So I‘m not going to judge her on this, except to say, it‘s been pretty clear from the beginning that she‘s protecting him.  People have brought up whether there was media bias in the media not really covering this way back in 2007 when the Enquirer broke the story originally.  I think that‘s an unfair charge.  I know that we, with our tiny staff, did ask questions. 

But you had both the principles denying it.  She came out and issued a statement and said, no, this is not true.  So she‘s clearly protecting him.  I think the issue with his what seem to be continued lies is that it raises the stakes for news organizations to continue to press on this and to press on the question of money, as in why did his campaign finance chair, Fred Barren, agree to pay her to relocate, et cetera. 

So, when I look at the lies, I think they must have something to do with that money trail.  I could be wrong, but that‘s where my journalist suspicion immediately goes. 

SHUSTER:  Go ahead.

HEILEMANN:  I was just going to say, I think the money is crucial here.  And once again, the notion that Fred Barren has been arranging these massive payments to her—

WALSH:  Massive?

HEILEMANN:  -- without any knowledge of John Edwards and his inner circle strikes, I think, a lot of people as not credible.  I think the major reason—just to speculate, the major reason why Hunter might not want to have a have paternity test is because there‘s some kind of an arrangement going on behind the scenes, whereby she agrees not to press him on this matter of the paternity test and she continues to get financial support through various channels that are connected to Edwards.  I think that‘s the suspicion that everybody in the press has right now.  I don‘t know whether it‘s true, but it‘s one of the few conclusions that one can draw logically from this circumstance.  I think that‘s where the story is going to go now, as to whether she continues to get money from Edwards and Edwards affiliated sources. 

WALSH:  Right.

SHUSTER:  I think the other conclusion we can draw out of this is that John Edwards, we knew, was going to handle this very badly when he issued that paper statement on Friday before the interview aired, in which he said he had been 99 percent honest, even though he had had an affair.  I‘m not sure that‘s the number most of us would be familiar with it.  In any case, Joan and John, we will be back with you with more of the round table.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SHUSTER:  We are back with more of the politics fix.  John Heilemann, I want to ask you about this issue with Russia and the significance with Georgia.  Is it a bit of a mixed message for John McCain when he tries to say this is so important, this is grave and then you look up and there‘s President Bush at the Olympic Games hanging out with the volleyball players? 

HEILEMANN:  Yes, I think it‘s a pretty significant mixed message.  I thought it was interesting earlier on the program, you have someone who is I think Frank Gaffney was accusing Barack Obama of having foreign policy that was closer to George Bush‘s than John McCain‘s.  I think, look, anything that puts distance between George Bush and John McCain is, I guess, good for John McCain.  But in this case, I think you‘re right, the images are quite jarring and somewhat undercut the message that the McCain campaign is trying to push forward on this issue. 

SHUSTER:  Joan, as far as this effort to try to separate from President Bush, we have been learning, of course, that President Bush and Dick Cheney are going to speak on the very first night of the Republican convention.  How big a problem is it for John McCain?  Does he just simply stay 3,000 miles away until Tuesday or Wednesday? 

WALSH:  Yes, I think he should say on the campaign trail.  I don‘t think there‘s anything they could have done to keep President Bush away.  That would be a huge insult not to invite a sitting president.  Dick Cheney seems like over kill.  I sort of wondered, did he threaten to torture somebody or something to get a speaking plot?  That‘s a little crazy.  I don‘t think he deserves it.  He‘s not a great orator.  But, you know, this is tough for McCain. 

I have to say though, I think George Bush is closer to right on the Russia-Georgia conflict than John McCain is.  He‘s saber rattling.

SHUSTER:  How so?

WALSH:  Because he‘s saber rattling and there aren‘t a lot of good options.  If there were, we would be hearing about them.  Europe is not inclined to really go all the way in threatening Russia.  It‘s very, very complicated.  And so McCain steps out there.  He wants to put distance between himself and the president, perhaps, certainly between himself and Barack Obama.  But he‘s making kind of empty threats, especially being tied up in a war in Iraq.  It‘s very difficult to do anything credible on the Georgia front. 

SHUSTER:  John Heilemann, does it hurt John McCain that there was, in fact, a cease fire negotiated by Sarkozy of France, of all people.  They didn‘t really make any threat to Russia, and yet there‘s John McCain talking about this is grave and Russia must have consequences.  Is John McCain out on a limb by himself on this one? 

HEILEMANN:  I think he is.  And I think also the notion that somehow what American foreign policy needs is to appear to be and to be more bellicose than it was during the Bush administration is going to strike a lot of independent voters and a lot of soft Republican voters, and certainly most Democratic voters, as kind of an insane proposition. 

WALSH:  Right.

HEILEMANN:  The idea that what‘s been lacking in American foreign policy is saber rattling, resoluteness and interventionism just seems to me to be the wrong message to the get to the voters that John McCain needs to get to.  Purely from a strategic point of view, it doesn‘t seem like this is going to get him what he wants. 

At the same time, you can see what‘s tempting to them about it, which is that they want to make Obama look, as they‘re trying to make him look, weak and too liberal and effete and inexperienced.  McCain is going to try to play the daddy.  He‘s going to try to play the tough guy in this election and try to scare people, as Republicans have in the past, about how we need to have someone who understands the needs of American security in foreign policy and that‘s why they want to posture him in a tough guy stance. 

SHUSTER:  John Heilemann from “New York Magazine,” in New York, and Joan Walsh from Salon, who joins us from San Francisco, thank you both for coming on.  We appreciate it.  Again, the big news is that there‘s apparently a cease fire between Russia and Georgia, negotiated by the French.  But you will see how the politics plays out with both the McCain campaign and Barack Obama.  John McCain, of course, saying that there should be consequences for Russia, Barack Obama saying diplomacy and engagement is the right way to go. 

Join us again tomorrow night at 7:00 Eastern for more HARDBALL. 

“COUNTDOWN” with Keith Olbermann starts right now.

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

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