Guest: Sen. Jon Tester, Sen. Richard Shelby, Steven Pearlstein, Steve McMahon, Todd Harris, Cynthia Tucker, Jonathan Martin
CHRIS MATTHEWS, HOST: Is John McCain helping the bail-out or sitting in the lifeboat?
Let‘s play HARDBALL.
Good evening. I‘m Chris Matthews. Welcome to HARDBALL. Leading off tonight: So many zeros, so few answers. Treasury Secretary Henry Paulson and Fed chairman Ben Bernanke got an earful from senators today as the two bail-out boys tried to convince Congress to approve the emergency bill for Wall Street. From the liberal side, Democrat Chris Dodd said the size and scope of the bail-out puts our Constitution at risk. From the conservatives, Republican Jim Bunning called the plan financial socialism and un-American. Then there was this from Democrat Jon Tester of Montana.
(BEGIN VIDEO CLIP)
SEN. JON TESTER (D-MT), BANKING COMMITTEE: I‘m a dirt farmer. You guys have been in the business, former chairman of Goldman Sachs. Why do we have one week to determine $700 billion that has to appropriated or this country‘s financial systems go down the pipes? Wasn‘t there some opportunity sometime down the line where we could have been informed of how serious the crisis was so we could take preventive steps before this got to this point?
(END VIDEO CLIP)
MATTHEWS: Senator Tester and Alabama Republican Richard Shelby will play HARDBALL with us tonight. Tester in just a moment.
So where do we go from here? The Dow fell over 161 points again today. Even if and when Congress passes the bail-out package, will that solve the problem? And by the way, who pays for all this, and where does the money come from? I keep asking the question, who writes a check for $700 billion and not know who‘s going to back it up? We‘ll try to break this down and help you and me understand this crisis. Jim Cramer, my friend and host of CNBC‘s “Mad Money,” is coming here, and another incredibly eloquent journalist in economics, Steven Pearlstein of “The Washington Post” business section—he‘s going to join us, as well.
And the HARDBALL strategists. It‘s not yet clear who‘s benefiting from this mess, but could one of the candidates be gaining? It looks like it‘s Obama right now. We‘ll look at some state by state numbers that show him slightly moving up during this mess.
Also, in the “Politics Fix,” is John McCain too much of a hothead to be president? Is Barack Obama too emotionally cool get elected? We‘ll look at their strengths and vulnerabilities heading into Friday‘s huge debate. First Joe Biden said he didn‘t approve an Obama ad ridiculing—an ad ridiculing McCain, and then he said, Well, let me rephrase that. We‘ll take a look at that in the HARDBALL “Sideshow.”
Here are tonight‘s poll numbers. Senator Obama leads by 4 points in the Deagio Hotline tracking poll. He was up by 5 yesterday, so that‘s about 4 to 5. He leads by 3 points in the Gallup tracking poll. He was up by 4 yesterday. So that‘s settling down. And he leads by 3 points in the overall numbers. So let‘s look at the number 3 as a good guide to where he stands.
But first tonight, we‘re joined by Senator Jon Tester of Montana, a member of the Banking Committee, which has all this on its shoulders. If you have to explain to one of your constituents out west right now, Senator, what‘s wrong with this bail-out, what would you say?
TESTER: I would say that small business and working families and family farm agriculture aren‘t enough of the focus. And I know that Paulson and Bernanke would probably disagree with me on that, but that‘s just how I feel coming out of the hearing.
MATTHEWS: Is that because they come from that background, from the big banks in New York, the big—and investment banks, that they think about their own kind and they don‘t think about the little guy?
TESTER: Well, that might be it. It might be the fact that I just don‘t think the questions got answered that were asked today. And that‘s a big part of it, too. And when I heard the answers, I got the impression from the answers that Wall Street was taken care of pretty well on this and not so much for the little guy, not so much for the small businessperson or the working family or the family farmer.
MATTHEWS: Is anybody on Wall Street going to pay for this, or are they all going to end up with their golden parachutes, with their high salaries, with their high incomes and somehow the taxpayer, or whoever it is down the road 20, 30 years from now, pay for the borrowing the government is going to engage in?
TESTER: Well, I don‘t think there‘s a doubt about this. It‘s our kids and our grandkids that are going to be ending up taking the brunt of this. You know, we don‘t pay for a lot of stuff that goes on down here, you know, because the supplemental budgets with the war in Iraq and now this $700 billion. You know, the debt limit‘s being raised to $11.3 trillion. We‘ve got a real problem.
And I think that—you know, and that‘s, you know, getting back to the Banking Committee and this whole issue, this is part of what concerns me about going into the future. And is this going to cause the markets to be even worse and our U.S. Treasury notes to be rated lower?
MATTHEWS: Let‘s take a look at Secretary Paulson today. Here‘s what he said, Senator.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: We need to build upon this spirit and enact this bill quickly and cleanly and avoid slowing it down with provisions that are unrelated or don‘t have broad support. This troubled asset purchase program on its own is the single most effective thing we can do to help home owners, the American people, and to stimulate our economy.
(END VIDEO CLIP)
MATTHEWS: You know, it amazes me when somebody comes from Wall Street and instructs us to behave cleanly. You know, I mean, cleanly! That‘s an interesting metaphor. After all this overselling of housing, this balloon mortgages, everything that was meant to get people in debt they couldn‘t handle, all this derivative wealth that you can‘t even explain where the production came from, what do these guys do to make themselves billionaires, you can‘t even figure it out, and then they come out and say, We want a clean bill.
What is that about, the word “clean”? Does that mean, Don‘t change anything here, it‘s a Republican bill, let it stand?
TESTER: Boy, Chris, I mean, I guess what I would tell you is that I only heard part of what you had to say because my doggone earpiece keeps coming out. But the truth is, is that, you know, we find out now about regulation being inadequate, in fact, there being no regulation in marketplace.
You know, six months ago, we saw bear Stearns come down. Why didn‘t they bring the Banking Committee from the Senate and the House together and say, You know what? We got a problem coming down the pipe. We‘ve got to do something with regulation. Instead, we‘re talking about investing $700 billion after the fact, with no assurance that the small folks, the small business, that the housing—the working families that have houses at risk are going to be taken care of, and then—and then pile the debt on our kids.
So there‘s going to be a lot of—a lot of work that has to be done over the next couple days, especially if we‘re going to turn this thing out by Friday.
MATTHEWS: Here‘s how I see this thing, Senator. Correct me if I‘m wrong. The United States government is proposing in this bail-out to go out and raise $700 billion on the open market by selling bonds or T-bills or whatever to raise $700 billion—Chinese, whoever wants to buy these T-bills at whatever rate we have to pay, then taking that $700 billion and buying $700 billion worth of worthless mortgages, people that have already run out of the house that‘s already worth less than what they mortgaged it for, worthless paper.
TESTER: Yes.
MATTHEWS: And the United States government is going to buy $700 billion of worthless paper. Why would anybody sign such a bill? Why would you hold the American taxpayer down the next 30, 40 years to buying nothing?
TESTER: Yes, well, because—because we‘re faced with the other option that potentially the market could do some real bad things to not only Wall Street but to small businesses and working people. So we‘re kind of caught between a rock and a hard place here, Chris, in that it‘s laying out $700 billion hoping a program is going to work, hoping it‘ll bring stability to the marketplace, hoping that people will be able to stay in their houses, or not putting it out and see how the market plays out, which may not be very pretty.
MATTHEWS: Is it going to be different tomorrow, the next day? Are we still going to have ARM, balloon mortgages? Are we still going to have people encouraged to buy homes they can‘t afford? Are we still going to have businesses that use as assets meaningless paper because they don‘t have any idea why somebody would pay off a mortgage?
TESTER: That‘s exactly why we have to have a commitment to regulation. Otherwise, this can happen again in two years and this money will just be frittered away. So I mean, that‘s exactly why we have to have a commitment to re-regulation in this marketplace, this financial marketplace that virtually has no regulation in it.
MATTHEWS: OK, here‘s the HARDBALL question of the night, Senator. Before you were there, so I‘m not nailing you with this, Congress got in trouble years ago for what‘s called the bank scandal years ago. It was average members of the House borrowing money from each other, no interest rate charged, no interest rate given. They borrowed money from each other. Didn‘t cost the taxpayers a cent. When that scandal broke, a lot of members of Congress were defeated.
But here‘s a case where oversight didn‘t occur, it seems to me, banking Committee members like yourself over the years watching the industry, the investment banking industry, the whole gang of people up there on Wall Street. Was anybody really watching the store from, your point of view, from the Senate Banking Committee? Were they really watching it, or are you guys now all blaming the regulators rather than blaming yourself for failure of oversight? What‘s fair here?
TESTER: I‘ll tell you what‘s fair, Chris. The fact is that the
administration‘s job is to report to us on the condition of the financials
of this country. They didn‘t do it. And the fact is, is that they weren‘t
if they knew what was going on, they didn‘t tell us about it, or they didn‘t know what was going on to tell us about it. But the fact is, is we can‘t make policy without good input, and we weren‘t getting good input. For the year and three quarters that I‘ve been here, we certainly haven‘t heard about this being a problem, and that question was asked.
MATTHEWS: Well, the guy out there on the tractor out there in the west, where you come from—and you get on that tractor yourself—must wonder who to trust.
TESTER: I agree. I mean, absolutely. And that‘s why the decisions that I‘m going to make in regards to this bill is going to be determined on, like I said earlier, small business, working families and family farmers and ranchers, rural America. And I think Wall Street, if this bill passes, is going to be fine. I‘m really concerned about those folks.
MATTHEWS: OK. Senator Jon Tester, thank you for joining us tonight. Senator Richard Shelby will be—he‘s a Republican, ranking member on that committee of banking, he‘ll be on with us later. He had a conflict.
Coming up, by the way, $700 billion, where‘s the money coming from? My favorite question. It wasn‘t there yesterday. The government is going to borrow it from whom? Who‘s going to pay it back? Well, we know that. But where is the money coming from? Those are the big questions we‘ll get answered next with two of the smartest economic journalists around, CNBC‘s Jim Cramer and “The Washington Post‘s” Steven Pearlstein.
You‘re watching HARDBALL.
(COMMERCIAL BREAK)
MATTHEWS: Welcome back to HARDBALL. Jim Cramer‘s the host of CNBC‘s “Mad Money.” Steve Pearlstein is with “The Washington Post.” He‘s a fabulous business journalist.
Let me start with Jim Cramer here. What are you worried about right now? You know more than I do. Most people watching don‘t know what you know, Jim. What are you worried about in terms of Congress‘s ability to go along with something but make it better than what Paulson is recommending here?
JIM CRAMER, HOST, CNBC “MAD MONEY”: I‘m worried about the failure of the largest savings and loan in the country and I‘m worried about bank lines and I‘m worried about the domino effect. I believe many big banks will fail. The FDIC will be overwhelmed if we don‘t get this plan.
MATTHEWS: And you believe we‘re going to get to a cash crisis, in other words.
CRAMER: Oh, absolutely. I mean, I—you know, I...
MATTHEWS: In other words, you won‘t be able to get any money of your
ATM.
CRAMER: I believe that we will have a Great Depression scenario. We just—we have—I came—not that I‘m going to give you the Paulson speech that‘s—you know, that is like...
MATTHEWS: Right.
CRAMER: ... the most frightening thing in the world, but I am desperately fearful that this package fails.
MATTHEWS: Give me a date. When‘s it got to get done?
CRAMER: It‘s got to done before—it‘s got to get done in the next 5, 10 days. There‘s a bank up there that I don‘t think can make it.
MATTHEWS: And we‘re watching the Dow, is all I can watch here from this show. I‘m watching the Dow go down a couple hundred again, couple hundred again. If that erosion continues at that rate, a couple hundred points a day, is that what the death rattle sounds like?
CRAMER: All that is is people saying, Listen, they‘re going to nickel and dime the plan. It‘s not going to make it. And people know what a horse race is going on between several institutions that are really fighting for their lives, that need this plan very badly, and the stuff on Capitol Hill. It‘s taking too long.
MATTHEWS: Steven, you were unbelievable on “Charlie Rose” last night.
I fell in love with your analysis because you have clarity working for you. How do you—just take this time here, a minute or couple minutes, and explain this thing to people who are just looking at it in awe, and all they have is a 401(k) or a pension or whatever they got, and they‘re watching. What the heck happened here?
STEVEN PEARLSTEIN, “WASHINGTON POST”: Well...
MATTHEWS: Is it too big a question?
PEARLSTEIN: It is too big a question. What‘s happening now is that the financial system is having to realize the losses that resulted from this huge credit bubble that burst, and the system is freezing up.
You can look at the stock market, but as Jim would tell you, it‘s even more important to look at the bond market and credit market, where all the money is flowing into short-term Treasuries. Banks won‘t lend to other banks. Banks won‘t lend to McDonald‘s so that franchisees can fix up. Banks won‘t—nobody will lend to the auto companies so people can buy cars. You‘ve got auto companies, you‘ve got banks, you‘ve got a lot of people that are going to get starved for credit.
And you know, you won‘t like what happens if this plan goes down and the financial system melts down. It‘s just the reality. And we hate to see—to have to do this. We hate to have to put our money at risk here.
By the way, you keep saying that it‘s $700 billion that we‘re going to lose. We‘re not going to lose $700 billion, OK? We‘re going to borrow $700 billion, and we‘re going to buy $700 billion worth of stuff. The stuff is not, Chris, worthless, OK?
(CROSSTALK)
MATTHEWS: What‘s its value?
PEARLSTEIN: It‘s not worthless.
(CROSSTALK)
PEARLSTEIN: If we knew the value, we wouldn‘t be here. We wouldn‘t have this problem. The fact is, we don‘t know what the value is.
MATTHEWS: Well, what I‘m going by, Steven, is I‘m going by the anecdotal story-telling I keep getting, that these mortgages foreclosed on, that people are never going to come through with any money, that they walked away from the house.
PEARLSTEIN: No, you know what? That‘s—in a few cases—you‘re talking about trillions of dollars worth of these packages. You know, 80 percent of the mortgages in these packages are fine, 10 percent of them can be fine with little adjustments, OK? So instead of people getting 100 cents on the dollar, they‘re going to get 80 or 60 or 70 cents. So please don‘t—it‘s not—they‘re not worth zero, OK? And we‘re going to buy them...
MATTHEWS: Well, why is the federal government the only market for them, then?
PEARLSTEIN: Because no one will touch them anymore. The markets are irrational, Chris. They‘re irrational...
(CROSSTALK)
MATTHEWS: But why aren‘t they discounted? If something goes down in value, you buy it at a cheaper price. Why aren‘t there people—why isn‘t the market clearing here? That‘s all I‘m asking.
PEARLSTEIN: Because—the market is not clearing because markets don‘t clear when they‘re irrational. If you think the price is going to go down further, no one bids. It‘s like trying to catch a falling knife.
MATTHEWS: OK.
PEARLSTEIN: And you need to bring a buyer in, and a buyer who‘s saying...
MATTHEWS: OK.
PEARLSTEIN: ... I‘m willing to buy, now who‘s willing to sell? And then you have an auction see who‘s willing to sell to me at the lowest price. And then you start to get some action.
MATTHEWS: So give me an anecdotal example of why a mortgage that isn‘t valued—nobody will buy it on the open market right now, is worth something down road if the government freezes this whole process and buys that paper right now. How does it become better?
PEARLSTEIN: You‘re talking as if it‘s a single mortgage. And a single mortgage, I would know what to do with it. If it‘s a package of a thousand mortgages, it‘s a lot more complicated.
MATTHEWS: OK.
PEARLSTEIN: And that‘s where the mortgages are, and that‘s why this is more complicated that a single mortgage. A single mortgage, I know what to do with. I can see the house.
MATTHEWS: Right.
PEARLSTEIN: I can see the guy who‘s got it and what his finance is, and I can make a decision. A thousand, I don‘t know what to do.
MATTHEWS: Yes.
PEARLSTEIN: That‘s the problem.
MATTHEWS: Let me go out to Jim. I‘ve been corrected here. It‘s not a $700 billion loss, it‘s an $700 billion outlay here by the federal government which will have an unrealized or an unmeasurable value at some point to the Treasury, right?
CRAMER: Right and...
MATTHEWS: Whoever is going to all that paper has to—will sell it or do something with it, will discount it somewhere, and we‘ll have something left.
CRAMER: Steve is so right here. It‘s so great to hear someone who is not on Wall Street complaining about this plan because, boy, he‘s got clarity to this.
We have many vintages of mortgages. We have mortgages from 2005 in certain zip codes in California, and they may be worth 30 cents on the dollar. We‘ve got some 2006 mortgages from Florida, maybe worth 50 cents. With the right manager, we make the right bids, what will happen is the private sector will come in and say, You know what? I know that I can lose these mortgages, this big batch from Wachovia, 50 cents on the dollar from the Fed. I am so confident that this plan is going to make us money and cause a housing bottom by the middle of next year that I want in.
I hope I can get in on this plan. I hope the taxpayer can get in. I hope I can participate in a bad bank. You know, they‘re going to split banks that are good and bad banks. I hope that I will be able to tell people on “Mad Money,” You can be part of this plan, too, because once we get price discovery, these mortgages are going up in value, not down.
MATTHEWS: OK, let me go back to Steven, who I‘ve invited on to correct me, and you‘ve done so with vigor. Let me ask you this -- $700 billion outlay—what do you think is a reasonable estimate of what the value of that will be once the government institution has purchased the paper? What will we be left with, roughly?
PEARLSTEIN: Somewhere plus or minus $200 billion. We could make $200 billion, we could lose it. Look, is it possible we could lose it all? Yes, if we have the Great Depression again for 15 years...
MATTHEWS: Yes.
PEARLSTEIN: ... we could lost it all. But realistically, if we manage this thing well, plus or minus $200 billion either way.
MATTHEWS: Either way on the $700 billion?
PEARLSTEIN: Yes. You could make it.
CRAMER: Small price to pay, small price. And I agree with you.
MATTHEWS: So, it‘s possible...
(CROSSTALK)
MATTHEWS: Is it a 50/50 bet that we could break even?
CRAMER: I think so.
Not only that, but, if we can stem foreclosures, whole areas that we would never want to live in will suddenly become buys. I mean, you will go to the Inland Empire in California. If we can stem foreclosures and those properties...
MATTHEWS: Yes.
PEARLSTEIN: ... are down 40 percent, 50 percent like from when I was there last year, looking to buy, look, put me up. I will buy five homes.
MATTHEWS: Yes.
So, you‘re talking about people buying homes, that the housing market would come alive if this thing works. Is that what you‘re both saying?
CRAMER: Oh, my God.
(CROSSTALK)
MATTHEWS: The housing market comes alive. People start to sell. People start to buy. It works again. Everything works again. Is that what the goal is, Steve?
CRAMER: Not for the whole country.
PEARLSTEIN: Look...
MATTHEWS: Steve?
PEARLSTEIN: Look, the alternative is terrible, Chris. The alternative people...
MATTHEWS: Yes.
PEARLSTEIN: ... lots of people losing their jobs, lots of people losing their 401(k)s because everything comes down.
MATTHEWS: Yes.
PEARLSTEIN: I mean, we‘re not doing this for Wall Street. The bailout for Wall Street is really the worst kind of way to think about this.
MATTHEWS: OK.
PEARLSTEIN: They are the instruments by which we are saving ourselves. And we can‘t get fixated on the fact that it‘s unfair. OK? Life is unfair. This whole thing is unfair.
The question is not whether it‘s unfair, but whether it‘s going to be more unfair if all—so many other innocent people suffer, because we don‘t make this—this investment and take this risk. And it is a risk.
Look, don‘t—don‘t kid yourself. There is some risk involved here. Do we know it‘s going to work? Absolutely, we do not know it‘s going to work. But this is the best idea that a lot of smart people have been able to come up with.
MATTHEWS: OK. I thank you, and I believe you.
Thank you, Jim Cramer.
(CROSSTALK)
MATTHEWS: Because I think you‘re disinterested, smart people.
Thank you, Jim Cramer.
And I mean disinterested in the best sense of that word, in the George Will sense. You‘re not into this for anything but the truth.
Thank you, gentlemen, “Mad Money” Jim Cramer and, of course, Steven Pearlstein of “The Washington Post” business section.
Up next: What‘s going on with Bill Clinton? Why can‘t he stop saying nice things about John McCain—isn‘t McCain the Republican running against his party? -- while he‘s always saying impersonal things about Barack Obama? Let‘s watch him do it again. We will show you the latest next on the “Sideshow.”
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
MATTHEWS: Back to HARDBALL.
Time for the “Sideshow.”
Chris Rock is once again doing what he does best, seeing what we‘re doing and catching the often uncomfortable truth in it all.
Last night, on “David Letterman,” the comedian took a swing at fellow guest Bill Clinton.
Here it is, first Bill on the ‘08 race, then Chris with his own take on the president‘s lines.
(BEGIN VIDEO CLIP, “THE LATE SHOW WITH DAVID LETTERMAN”)
BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: We will get along toward the end of this race. The country will wind up liking both of them. And a lot of people will go into that polling place and say, you know, I really admire Senator McCain. He—he gave about all you could to give to this country without getting killed for it.
DAVID LETTERMAN, HOST, “THE LATE SHOW WITH DAVID LETTERMAN”: Yes.
CLINTON: But I have got to have a change, and I think I‘m going the other way.
That‘s what I think will happen. And that‘s what I believe...
(APPLAUSE)
CHRIS ROCK, COMEDIAN: Is it me, or he didn‘t want to say the name Barack Obama?
(LAUGHTER)
(APPLAUSE)
ROCK: He did not—he—he went through everything he could do.
(LAUGHTER)
ROCK: Well, like Hillary would want to do with the economy.
Hillary ain‘t running!
(LAUGHTER)
(APPLAUSE)
LETTERMAN: Well...
(APPLAUSE)
ROCK: Hillary‘s not running!
I love Hillary, but, you know, she lost.
LETTERMAN: Yes.
(LAUGHTER)
LETTERMAN: Now...
ROCK: She—she lost.
LETTERMAN: He—he mentioned...
ROCK: She got a lot of votes. She did.
(LAUGHTER)
ROCK: The Patriots got a lot of votes, too, but they lost to the Giants.
LETTERMAN: Yes. They lost. I understand, yes.
(LAUGHTER)
(END VIDEO CLIP)
MATTHEWS: Wow. Chris Rock is the smartest comic out there, because he pays more and sharper attention to what we see than anybody.
I love the fact, by the way, we have the same first name.
Next, he‘s Joe Biden, and he does not approve this message.
Remember this Obama campaign ad mocking Senator McCain‘s computer illiteracy?
(BEGIN VIDEO CLIP, OBAMA CAMPAIGN AD)
NARRATOR: Things have changed in the last 26 years, but McCain hasn‘t. He admits he still doesn‘t know how to use a computer, can‘t send an e-mail, still doesn‘t understand the economy.
(END VIDEO CLIP)
MATTHEWS: Well, Senator Biden says, no one ran it by him.
Here‘s Senator—the senator reacting to that ad in an interview with CBS‘ Katie Couric.
(BEGIN VIDEO CLIP, “CBS EVENING NEWS”)
KATIE COURIC, CBS ANCHOR: You guys haven‘t been completely guilt-free making fun of John McCain‘s inability to use a computer.
SEN. JOSEPH BIDEN (D-DE), VICE PRESIDENTIAL NOMINEE: I thought that was terrible, by the way.
COURIC: Why did you do it, then?
BIDEN: I didn‘t know we did it. And if I had anything to do with it, we would have never done it. And I don‘t think Barack, you know—I mean, I just think that was...
COURIC: Did Barack Obama approve that ad? He said he did, right?
BIDEN: Yes. The answer is, I don‘t—I don‘t think anything was intentional about that. They were trying to make another point.
(END VIDEO CLIP)
MATTHEWS: Well, after that interview with Katie Couric, the Senate veered back on message, saying in a statement that he never had actually seen the ad, and that, due to the disgraceful tenor of McCain‘s ads, Republicans were in no position to criticize.
Time now for the “Big Number.”
I have said it before. I will say it again. Again, in times of crisis, Republicans have the edge, because people worried about moment-to-moment security head to the right. It‘s the way things work.
In times of economic recession, however, it‘s Democrats who come out on top, because, in bad, especially in worsening times, people go for political change. When unemployment is rising, they head to the Democrats.
By the way, you may think there‘s a lot of time for the election climate to change before November. Well, think again. How many states already are voting? Eleven, Pennsylvania, North Carolina, South Carolina, Kentucky, Virginia, Maine, Michigan, Mississippi, Georgia, Missouri, and South Dakota are all voting. Eleven states are already giving voters the chance to cast ballots—tonight‘s “Big Number,” 11 are already in this thing.
In three days, it‘s the first presidential debate between Barack Obama and John McCain. This Friday night, at Ole Miss, the University of Mississippi. I will be there with three editions of HARDBALL, two before the debate and one after the debate—right here on MSNBC.
Up next, our strategists, one Democrat, one Republican, weigh in on what each candidate has to do. Also, Senator Shelby, Richard Shelby, is coming here from Alabama.
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
MICHELLE CARUSO-CABRERA, CNBC CORRESPONDENT: I‘m Michelle Caruso-Cabrera with your CNBC “Market Wrap.”
Stocks tumbled for a second straight day, as the Bush administration‘s $700 billion Wall Street bailout plan got a skeptical reception at a Senate hearing. There‘s concern Congress could delay the rescue plan. As a result, the Dow fell 161 points, the S&P 500 down 18. The Nasdaq declined 25.
Oil prices also fell after yesterday‘s record increase. Crude dropped $2.76, closing at $106.61 a barrel.
That‘s it from CNBC. We are first in business worldwide—back to
HARDBALL.
(BEGIN VIDEO CLIP)
QUESTION: If the fate of the bill is in your hands, on your vote, could you and would you still vote against it?
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: Well, let me say that I hope that Democrats would recognize that this—this issue should not be in any way related to my vote. This issue should be and their vote should be determined in how we can resolve this crisis and get America going again. This is a huge crisis.
(END VIDEO CLIP)
MATTHEWS: Wow, welcome back to HARDBALL.
That was Senator John McCain not answering a very tough question, whether, if this thing depended on him, if his vote was crucial to passing this bailout bill, would he give it to the president? He waffled. Now that‘s a political position he‘s taken. He‘s entitled to it. He‘s not saying.
Senator Richard Shelby of Alabama is the ranking Republican.
As the ranking Republican, Senator Shelby, would you deny, any circumstances, your vote if it was crucial to passing this package?
SEN. RICHARD SHELBY ®, ALABAMA: Oh, I don‘t know that I would vote for this package.
I think Senator McCain was being very careful a few minutes ago that I saw some of the footage. We don‘t know what this bill is going to look like. Will it be the same three-page document that they proposed Thursday night, or Friday night, or Saturday night, or, after the Banking hearing, will it change?
There are a lot of questions that have been asked today in the Banking Committee by Republicans and Democrats about this bailout. Who‘s going to pay for it? It‘s the taxpayer. What will it do? Will it solve the problem? Were there other things considered?
I think we have got to consider a lot of things before we get to a vote.
MATTHEWS: What do you think it would be worth for you to bring the bill down, if you were the 50th vote they needed? What would get you to bring this bill down, if they needed your vote?
SHELBY: Well, I—I‘m not interested in whether somebody needs my vote. I‘m interested in doing what‘s best for the country, what‘s best for the taxpayer.
And I can tell you, Chris, as one who voted against—as a young congressman, I voted against the Chrysler bailout because the market—and they paid it back, sure, but would Chrysler be better off today if we hadn‘t done that? Maybe. Maybe they wouldn‘t be here.
But I will have to say this. We better look for market solutions.
The market is the best disciplinarian. We‘re looking like France now.
This might not be the real solution. It might be, but at a cost.
MATTHEWS: We just had a couple of economists on, economic reporters,
you know, Cramer and Pearlstein from “The Post,” and they said, if we don‘t
intervene, if the government doesn‘t intervene, the price of these
mortgages will keep dropping. The prices of the real estate that they‘re
based upon will keep dropping, and nobody will ever buy it, because it‘s an
it‘s an asset that‘s depreciating in value, that the market will never catch up with the issue. And you say it will.
SHELBY: Oh, I think the market always catches up.
Let‘s go back to 1987. The Dow Jones dropped down to about 1400, 1500 points. I think that was the top of it—I mean the bottom of it, 1400, 1500 points. In a few months, this country was on an upward spiral, and we stayed there a long time.
MATTHEWS: Well, let me ask you about the person at home now. Somebody is asking me, what about the good mortgage person, the person who‘s made their monthly payments, who bought a house they could afford, has been sweating and struggling and giving up almost everything to pay that mortgage?
Do they get hurt if everybody—if the people who have messed up for their own purposes, or because they couldn‘t handle it, are they going to pay the price of the people that screwed up, who couldn‘t handle it?
SHELBY: Well, that‘s the question I have been asking. What price and who pays it? The taxpayer. And that‘s mainly—I wouldn‘t say everybody, but it‘s a lot of the people who have—are making their payments every month, that are working every day and obeying the law and everything else. What do they get out of this? Hardly anything.
MATTHEWS: Do you believe, Senator, that the Banking Committee has done a good job of overseeing these regulatory agencies and these financial markets? Have you, on the committee, Republican and Democrat both, done a good job over the years of watching these people?
SHELBY: Well, I believe we have, but, on the other hand, we‘re not the regulators. We do the oversight of the regulators.
And I can tell you this. As we look back now, we have been reassured over time by the Federal Reserve and by the other banking regulators and the SEC that everything was well, and we found out it wasn‘t. I think the regulatory system has failed us.
MATTHEWS: OK. Thank you very much for coming back on the show, Richard Shelby of Alabama...
SHELBY: Thank you.
MATTHEWS: ... ranking Republican on the Banking Committee.
Now it‘s time for the strategists, the politicians.
Joining me, Democrat Steve McMahon, Republican Todd Harris.
I‘m going through all this letter—all the words up here, because I‘m trying to cut to the chase. Everybody knows who you guys are.
(LAUGHTER)
MATTHEWS: Let me ask you about—let‘s all watch the Obama acceptance speech. There is a little point which I think tells us what‘s coming this Friday night in this hot debate. It‘s going to get personal.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: If John McCain wants to have a debate about who has the temperament and the judgment to serve as the next commander in chief, that is a debate that I am ready to have.
(CHEERING AND APPLAUSE)
(END VIDEO CLIP)
MATTHEWS: Wow, temperament. That‘s ripping the scab off, because there‘s that whole issue about John McCain‘s temper. It‘s discussed. It‘s in the backroom. It‘s talked about.
In this column today, conservative columnist George F. Will wrote today—quote—“It is arguable that, because of his inexperience, Obama is not ready for the presidents—presidency. It is arguable that McCain, because of his boiling moralism and bottomless reservoir of certitudes, is not suited to be the—to the presidency. Unreadiness can be corrected, although perhaps at great cost, by experience. Can a dismaying temperament be fixed?”
This is the guy on his side.
(LAUGHTER)
(CROSSTALK)
MATTHEWS: I mean, I assume George Will is going to vote for McCain, but, boy, he is saying he doesn‘t have the temperament to be president, which is...
(CROSSTALK)
STEVE MCMAHON, DEMOCRATIC STRATEGIST: How long do you think—How long do you think until that is in an Obama ad, huh, huh?
TODD HARRIS, REPUBLICAN STRATEGIST: You know, I don‘t think I have ever...
MCMAHON: Thirty-six hours, 48 hours?
HARRIS: I don‘t think I have ever read a George Will column that was complimentary of John McCain. He has huge problems with Senator McCain that stem around the issue of campaign finance reform, which—which George Will has been blasting for years.
MATTHEWS: You discount this. It‘s like this with you. Slip it off the shoulder.
HARRIS: Nothing.
MATTHEWS: Steve McMahon, are you saying this is going to be an ad?
MCMAHON: I think it very well be.
MATTHEWS: -- to make the case the guy‘s got a temperament problem?
MCMAHON: I think you saw it last week. He was basically lecturing Senator Obama at a time when most Americans expected him to act presidential. On the other hand, Senator Obama was acting very presidential. I think it‘s interesting what‘s going on here, Chris, because John McCain entered this thing as the Democrat‘s and the independent‘s favorite Republican. He was the guy that everybody liked. He was the happy warrior. He‘s become sort of a petulant, angry grouch in the course of this campaign. Barack Obama—
MATTHEWS: Why don‘t you just say grumpy old man.
MCMAHON: I didn‘t say it.
MATTHEWS: You were in that territory. You were so close to saying that.
MCMAHON: Barack Obama, on the other hand, has grown into his suit.
HARRIS: Professorial.
(CROSS TALK)
MATTHEWS: You‘re starting to like George Will. Grown into his suit, that‘s pretty pompous.
HARRIS: Yes, professorial, elitist.
MATTHEWS: Let‘s test his temperament. If you‘re Barack Obama, would you go into that debate for an hour and a half Friday night with Jim Lehrer, and seize the opportunity to do the following—I don‘t think people running for president of the United States, commander in chief, in a time with war in Iraq and potential war with Iran should be singing old Beach Boy songs about bomb bomb Iran as if it‘s Barbara Anne, it‘s a joke. Just rip the scab off McCain, saying, you‘ve been out there laughing about war, chuckling about it. That‘s below a guy running for president. Is he willing to take him on and say that? Stick it to him. Will he rip the scab off?
MCMAHON: I think he may rip the scab, but he won‘t rip it off quite that frontally. I think what he‘ll try to do is get under Senator McCain‘s skin.
MATTHEWS: How?
MCMAHON: Little digs that might not be quite as overt as what you‘ve just described, Chris. I don‘t think he‘s going to get very far by lecturing Senator McCain.
MATTHEWS: Will he mock him?
MCMAHON: I don‘t think he‘ll mock him. I think what he‘ll do is he‘ll take little shots at him and talk about his judgment and how he had the right judgment on the Iraq war and John McCain‘s been wrong again and again and again. Then he‘ll talk about I think this answer that we just saw on HARDBALL a minute ago, where John McCain is standing there saying the country is in crisis, won‘t say how he will vote on a bill that might take us out of this crisis.
MATTHEWS: That was a great reporter question. I‘ve been asking it for days. If your vote was critical to getting this bailout passage, would you say no? Anybody can float out there and say how they‘re going to vote. John McCain will not say, by the way, that he would save the bailout. He wouldn‘t answer the question.
HARRIS: I think it was a legitimate answer.
MATTHEWS: What was the answer, yes or no?
HARRIS: He said he hasn‘t made up his mind yet. No, because look, today Senator McCain came out with five key principles he wants to see in this legislation. He wants additional oversight, accountability—
MATTHEWS: Everybody wants everything. What if he doesn‘t get it?
HARRIS: Then I think his vote is on the table. If he does get it, I think he‘ll support it. Hold on. If what they‘re saying is, we‘re going to ram through this 700 billion dollar bailout with no oversight, no accountability, and no transparency, I don‘t think there‘s a single member of the Senate who ought to be supporting this. But there‘s no reason why we can‘t have this rescue and have the oversight and accountability and transparency that Senator McCain is calling for.
MATTHEWS: Can he stick him with this? Can Barack Obama say, John McCain, you‘ve been in the Senate for all these years. You‘ve been in the Congress 26 years. You had plenty of time to play Teddy Roosevelt and ride your horse up to Wall Street. You could be a trust buster. You haven‘t done it. You haven‘t done it. Why do you want to be president of the United States if you couldn‘t do it as a member of the Senate all those years?
HARRIS: Five years ago, Senator McCain stood on the floor of the United States Senates and said, we‘ve got to create some kind of oversight agency within the Department of Treasury that will have greater regulatory authority over Fannie Mae and Freddie Mac, because if we don‘t, we are facing a huge problem in our housing market and it‘s going to cost the American tax payers money. Congress did nothing.
Are people right to blame --
MATTHEWS: What about all the I-bankers? Is he going after the I-bankers in New York? The Goldman Sachs? The Lehman Brothers, the big shots over there? Has he ever taken them on?
HARRIS: I know he‘s taking on—
MATTHEWS: It seems to me that‘s the issue. Anyway, you‘ve got a good point.
MCMAHON: That one issue. The other issue is his top economic adviser, former senator Phil Gramm, the person who said America is a bunch of whiners when it comes to the economy, was the person who wrote the bill that deregulated Wall Street, that enabled all of these lines to get busted down, and that created this mess. It‘s very nice that he gave a speech.
MATTHEWS: Are you saying he sipped his wine before his time?
MCMAHON: I am. But it‘s very nice that he gave this speech about Fannie and Freddie. But the fact is that the underlying structural problems that we‘re seeing on Wall Street have something to do with Freddie and Fannie. But it has more to do with the fact that John McCain and his buddies in the Senate and the Republicans in the House haven‘t regulated Wall Street.
MATTHEWS: What about those underlying structural problems?
HARRIS: You‘re talking about this bill. It was shepherded through, yes, written by Gramm, but also by—
MATTHEWS: Politics, if you‘re advising a senator or Congressperson on Capital Hill right now, would you have them risk voting to bring down this bailout in the next week or would you say, you better vote for it in the end?
MCMAHON: Vote for it and fix it later.
HARRIS: No, no, no. Get the concessions now.
MATTHEWS: If you can‘t get them, would you still vote against it?
Would you bring down the bailout? Would you risk bringing it down?
MCMAHON: Because you‘re one senator, Todd. That‘s why you can‘t.
MATTHEWS: Are you willing to risk bringing it down?
HARRIS: I think the bill needs to have oversight.
MATTHEWS: You‘re not answering my question. Are you willing to bring the thing down and leave us without a bailout?
HARRIS: Yes.
MATTHEWS: Gave me the answer.
(CROSS TALK)
HARRIS: How are you going to fix a problem created by no oversight by passing a bill that has no oversight.
MATTHEWS: Well said. But you‘re risking Armageddon according to these people we just had on, Jim Kramer and Steve Pearlstein.
MCMAHON: But these guys in the Senate, they know much more about the economy than those fools who do it for a living. Don‘t they?
MATTHEWS: I think Carly Fiorina knows more about all this stuff. Anyway, Steve McMahon, Todd Harris, up next—By the way, she said these guys couldn‘t run a big company. I‘m beginning to think she was right. I‘m beginning to think she was right. The debate is coming in three days.
What will it look like? Will McCain be too hot? Will Obama be too cool? Isn‘t that great? It‘s so symmetric. Is one guy too hot and the other guy too cool? I think we‘ve got it. The politics fix coming up next. This is HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
MATTHEWS: Welcome back to HARDBALL. Tonight‘s round table, Jonathan Martin of Politico and Cynthia Tucker, who is dynamite at the “Atlanta Journal Constitution.” Thank you, Cynthia. What do you make as you get ready to cover this debate about the mono a mono aspect of it, the one on one, not the big issues of the credit crisis or the money crisis, but how these two guys perform sitting next to each other? Do you think the temperament issue will rise up by midnight?
CYNTHIA TUCKER, “ATLANTA JOURNAL CONSTITUTION”: We‘ll see. Though John McCain has a long running reputation for being a hot head, who pops up and melts down, in fact he performed very well in the Republican debates. He came across as strong. He often is quick with the quips. He was well prepared.
Obama, many people believe, is very cerebral, knows a lot about the issues. But in the debates, he has to be able to also look like a leader that gives strong, clear and concise answers. And he does not always do that in a debate setting.
MATTHEWS: Let me ask you about the hot and the cold temperatures because the metaphor I think works in both. McCain is considered too hot. I guess Marshall McLuhan would say too hot for the medium. Is Barack too cool? Is Barack Obama too professorial? Too detached from the human experience? Remember Dukakis? They asked him—Bernie Shaw asked him down in Texas, what happens if your wife gets raped and killed, and he gave a very politically correct answer. He didn‘t say I would kill the guy or something like that.
JONATHAN MARTIN, POLITICO: That‘s sort of the conventional wrap, McCain is too hot, Obama is too cold for his own good. But I think going into this debate Friday, both these candidates benefit from what President Bush would call the soft bigotry of low expectations. Neither of them are great debaters. I think the bar is fairly low here.
There‘s no question about it that Obama was never a great debater during that Democratic primary. And McCain, for his part, has to watch out because what is most memorable about him during the primary was he had a tentative to come off aggressive and go after some of his rivals. There were a couple times where he went after Romney in a really big way. He has to watch that.
MATTHEWS: Let me go back to what you said, Cynthia. It seems to me Hillary Clinton was a great debater. She was a great debater throughout, but really in the end. She came in and she would say to people specific things they wanted to hear. Sophisticates would say these are playing to the audience, playing to the voter. She said, for example, I‘ll give you a break on your taxes on your gasoline during the summer. I‘ll show you that I can do something at least to help you on gas prices.
That kind of particularity, that coming in, is that what Barack has to do, say something to the average person watching, the average stiff, working guy, working woman out there who is a little resistant, and say, look, here‘s what I‘m going to do for you. Should he be that particular, I‘m going to give you a better tax deal; I‘m going to give you this; don‘t worry about this other stuff?
TUCKER: Absolutely.
MATTHEWS: You want particularity? You want to give him that?
TUCKER: Especially—the first debate is on foreign policy. And what you were just talking about was economic issues. I think on foreign policy, he has to give some particular strong concise answers too. While both these guys—maybe there are low expectations for both going in. The fact of the matter is John McCain is expected to be far better, far stronger, to seem far stronger on foreign policy issues. So Obama is going to have to give answers that reflect strength. And not—in foreign policy, especially, he is given to these long thoughtful answers, because so many of these issues are not black and white. But this is not a night, Chris, quite frankly, for pleasing the intellectuals and the commentariat. This is an evening for pleasing the average voter.
MATTHEWS: I would say, if we just had a hotel blown up in Islamabad, what would you do to stop that? Those guards all got killed defending that hotel. They got blown to hell—heaven, I should say. They were doing their job. And I wanted—those are the tough questions the candidate has a hard time with. What would you do to stop those suicide bombings of American titled companies?
MARTIN: And the onus, Chris, I think in this first debate is clearly on Obama. The bar is certainly a little bit higher for him because he has to prove that he is presidential.
MATTHEWS: What does McCain have to prove?
MARTIN: McCain, because of his background, has the advantage here inherently on foreign policy issues.
MATTHEWS: I think the variations can be a lot more with Obama. We know McCain what he does. He delivers every time. Three yards and a cloud of dust. Obama can have a great night of oratory and a terrible night with debate. We‘ve seen both. We‘ll be right back with Jonathan and Cynthia for more of the politics fix.
(COMMERCIAL BREAK)
MATTHEWS: We‘re back with Jonathan Martin and Cynthia Tucker. Cynthia, when we look forward to Friday—I‘m certainly looking forward to it. These candidates get together with maybe 100 million people watching. What is the influence of this cash crisis on them, the Wall Street deal with Congress? Is it better for McCain if we‘re still in a crisis mode, or better for him if we‘ve got a deal by then?
TUCKER: Well, you know, Senator McCain has floundered ever since the economy has returned to the forefront, starting with that day about a week ago when he announced that the fundamentals of the economy were strong. He has had a different message every day. He came out toward the end of the week as the angry populist, which seemed an odd pose for him. So I, quite frankly, have to think that as long as the crisis is an economic one, McCain suffers and Obama does better.
MATTHEWS: And John McCain today, just out late this afternoon—we showed the tape—couldn‘t answer a reporter‘s question whether he would give the president the vote if he needed it.
MARTIN: Chris, I think McCain has to make this less of an economic issue and more of a leadership issue. His campaign recognizes that. He is going to have a tough time—
MATTHEWS: A security issue.
MARTIN: -- a tough time wanting a debate on a financial crisis that happened on the watch of a GOP president. If he broadens it out, Chris, makes it more about do you want a tested leader, a steady hand at the wheel in tough time, he has a fighting chance. If it is just the prolonged debate about the minutiae, it‘s tough for him.
MATTHEWS: He never mentioned the name Bush, which is the name of our president.
MARTIN: He‘s not going to.
MATTHEWS: During his acceptance speech, the very long, 45-minute—he referred to President Bush 41. Never referred to this president. Can he get away with, just deny any parenthood of this guy?
MARTIN: He can keep trying, certainly.
MATTHEWS: What is your thought?
TUCKER: Well, he isn‘t looking particularly presidential either. Even if he is trying to turn it into a general leadership issue, Senator McCain isn‘t doing well at that either. George Will had a column where he slashed him about that, popping off, not appearing presidential.
MATTHEWS: I agree. We‘re out of time. Cynthia, thank you so much. Cynthia Tucker of the “Atlanta Journal Constitution,” Jonathan Martin of the Politico. Join us again tomorrow at 5:00 and 7:00 eastern for more HARDBALL. Right now, it‘s time for RACE FOR THE WHITE HOUSE with David Gregory.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
END
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