updated 9/26/2008 2:11:15 PM ET 2008-09-26T18:11:15

HARDBALL

September 25, 2008

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

Guests: Sen. Jim Bunning, Todd Harris, Steve McMahon, Todd Harris, Dee Dee Myers, Clarence Page, John Harris

QUESTION: Can you share with us a little bit of the tenor of the meeting with Senators McCain and Obama (INAUDIBLE)

SHELBY: They were-they were-Senator McCain and Obama were being senators and a member of the body. They were very courteous to each other and very respectful.

QUESTION: The agreement with-that Dodd announced this morning...

SHELBY: Well, that's-that agreement is obviously no agreement.

OK? Thank you.

SHUSTER: That's Senator Richard Shelby. He had expressed his opposition to this earlier if the day and I suppose is smart to be the first out to try to shape public impressions of this. But again, at least based on earlier today, he was earlier-he was the minority view on the Senate Banking Committee on the Republican side. You have top Republicans like Bob Bennett who had agreed with what Chris Dodd put forward. So you had, of course, Shelby saying that, no, he is opposed to this, and he wanted to make sure that his voice was heard at the stakeout.

But let's now turn it over to Chris Matthews and HARDBALL-Chris.

CHRIS MATTHEWS, HOST: Thanks, David. Now we continue with Senator Bunning now. We're going to have Senator Jim Bunning of Kentucky joining us. He's a member of the Senate Banking Committee joining us right now to give us his view of this. Senator Bunning, this isn't exactly a perfect game they're pitching there, is it.

SEN. JIM BUNNING ®, KENTUCKY: It-from the very beginning, Chris, it's been anything but.

MATTHEWS: What do you make of Senator Shelby's comments coming out of that meeting at the White House just now? We heard him say that they're nowhere near an agreement. He says he believes that the major economists of the country he's spoken to say it's a flawed agreement, it's not going to solve the problem. He thinks alternatives are in order. They should be addressed.

BUNNING: Well, I think that's generally what I've been saying from the very beginning. I think that Paulson and Bernanke have been very poor salesmen on their plan to stimulate our economy, which they said was doing really well until the end of July, and now they've come to us with "Armageddon," Chris.

You and I know both that those two people are not good talkers and not good salesmen. And so I think the Bush administration made a very large mistake in trying to send them up here with a flawed plan.

MATTHEWS: What did you make of the president's statement last night? Did he capture the problem in terms of foreclosures, in terms of too much credit out there? Did he nail it? Does he have an understanding of the diagnosis?

BUNNING: I think he understands the problem. I think he's got the wrong solutions. I think there are solutions-we passed a bill to bail out Fannie and Freddie, and we put unlimited sources of money from the Treasury in that plan. And then we put $300 billion in a separate little tranch to take and reduce all those mortgages, bad mortgages, that Fannie and Freddie had.

I think if we do that and do it effectively, we will reduce the pressure on the credit markets. Now we're trying to add $700 billion. I'm not privy to what is being said at the White House, but originally, the plan was $700 billion. I think that is a waste of money. No one on Main Street is going to get any good effects unless they can feel some relief from the credit crunch.

MATTHEWS: Well, if you could-could you outline an alternative at this moment, Senator?

BUNNING: I could outline plenty of alternatives. First of all, we have to unclog the arteries of the credit markets. You do that by getting some of the bad credit off the street. And we gave Freddie and Fannie the ability to do that, and the Treasury unlimited for 18 months resources to use the full faith and credit of the U.S. government to do that. Now they came back and said, Well, that's not enough. We need $700 billion more. Well, they have not made a case for that.

And my gut feeling is that George W. Bush realizes that we have a problem, but we're not at Armageddon. I mean, Ben Bernanke may be the smartest man in the world, know more about the Great Depression than anyone I've heard of, but what does he know about the markets as they are today? He knew nothing when he took over.

MATTHEWS: Last night, the president used very, I think, scary language. He talked about a possible panic. He talked about the need for a rescue. He talked about a serious financial crisis. I mean, if I were an older person, perhaps less attentive, I'd hear those words and I'd go, Oh, my God, I better go to my ATM, I better go to my bank in the morning and get my cash out of the bank.

He speaks in very scary terms. You say that's not appropriate.

BUNNING: Well, I think it's not appropriate because what happens if we run into a snag and we run longer in trying to get something done up here by mutual consent of both parties and it goes on longer? And the more you speak of panic, the more panic there will be if we don't get something done.

MATTHEWS: Is there-you know these gentlemen, like Barney Frank and the Democrats involved. They're the ranking-they're the chairmen of the committees because they have the majority now, of Banking and Financial Services. Do you think they're pushing a particular ideology here you don't like, or are they just making a practical approach to this? What do you think is the fight over right now between the-is there a fight between Democrats and Republicans, or is it a fight between the establishment and people who question the establishment?

BUNNING: Chris, there's a fight over who's going to take the responsibility, who's going to get credit for it. We're in a presidential election year. Come on! Every member of the House is up for reelection, 34 members of the Senate are up for reelection.

Now, if this plan passes and it temporarily solves the problem until after the election, then everybody will feel relieved. But what happens in January, when all of a sudden, these same things are not addressed in a problem way and Freddie and Fannie and all of this mortgage business is clogging up the credit system and we haven't got to the root problem and we have to go back in and say to the people that we're giving the authority to spend-I heard now coming out of the White House that it was $250 billion, rather than $700 billion-but $250 billion in this economy, $14 trillion economy, is not, as Alan Greenspan, who I disagree with most of the time said, is not chicken feed, but it is not enough money.

MATTHEWS: Well, you've been on the Hill for a number of years in both the House and the Senate. You know how things work. Give me a prognosis. Where do you think this is going to end this weekend? Will we be arguing until Sunday night before the markets open on Wall Street? Is that sort of the next coming deadline of this debate?

BUNNING: I think the coming deadline of this debate is whether you can get enough Ds and Rs to support the basic problems and the basic relief that Bernanke and Paulson and Bush and now Barney Frank and Chris Dodd and others have pushed forward in a panic situation to get relief temporarily to the markets, so that, as they said, Well, we did this, so it ought to relieve some pressure.

Whether it really does-we have over 200 economist-and I know you can get 200 economists in the room and get 200 different results out of those economists. But you know, Chris, I was in the market for 25 years as a broker. I've had 16 years of experience on the Banking Committee both in the House and the Senate. I'm not panicked. I want to do what's right and what is successful in relieving the clogged arteries of our credit situation.

MATTHEWS: So the way I'm hearing you is you think they may cut a politically shrewd deal, they may get the 218 on the House side, they may get the 50-plus, the vice president's vote, in the Senate, but then come a couple of months from now, they'll be back asking for more intervention.

BUNNING: I think that's pretty accurate.

MATTHEWS: And that's not good for the country.

BUNNING: I think it's bad for the country. I think it's bad for America. I think it's bad that we're taking probably the last full credit, you know, democracy that is free from socialism and free from communism and turning it into a socialistic democracy.

MATTHEWS: And if we allow this bill to pass, this bail-out bill, and allow the federal government to invest $700 billion of taxpayer money-of borrowed money, at least-into the credit system and they get an equity in these companies, then you see that as a new established form of democratic socialism, that's what will happen.

BUNNING: Well, it's taking us to France 20 years ago. That's exactly the way France started 20 years ago in injecting-and you know, Hugo Chavez does it without taxpayer money. I guess you-you know, he goes in and just takes over the companies without paying anything for them. I think that's bad for America, particularly the way I want my kids to grow up, and my grandkids.

MATTHEWS: OK. Senator Jim Bunning of Kentucky, member of the Senate Banking Committee, thank you so much for joining us right now.

BUNNING: Thank you.

MATTHEWS: Thanks for coming to us tonight.

Coming up, tomorrow night's debate-we hope. Our strategists will lay out the challenges facing John McCain and Barack Obama. I guess the first debate is whether there's going to be a debate tomorrow. But I'm heading to Ole Miss tonight, so I'm suspecting there will be a debate.

We're going to bring in the strategist right now. They are familiar faces here, Todd Harris and Stephen McMahon. Gentlemen, let's start with the politics of this from the president-I mean, because we're still trying to figure out what's going to come out of that West Wing meeting right now. It looks to me, based upon Richard Shelby coming out, of Alabama, and Jim Bunning of Kentucky, it's not a happy crowd in there yet. They haven't figured it out yet, although they're outriders right now.

They may have a deal.

Let me start with you, Todd. You believe that John McCain's decision to basically put off the debate, if necessary, was a patriotic, good-conscience decision. It wasn't the kind of razzle-dazzle we've seen on occasion.

TODD HARRIS, REPUBLICAN STRATEGIST: I think the decision came from a pure place. Having said that, I think he should declare victory and get to Oxford.

MATTHEWS: Enough's been done, you think.

HARRIS: Yes. I think he needs to be in the debate tomorrow night. But his decision to do all this I think comes from a pure place.

MATTHEWS: Steve? I have a theory, but I want to listen to both of you.

STEVE MCMAHON, DEMOCRATIC STRATEGIST: I hate to be cynical, but it's the same impetuous, long-ball-throwing John McCain that resulted in Sarah Palin. And frankly, that...

MATTHEWS: Well, where's the-where's the goal for him? What's his goal in-if you want to call it diddling this thing or slowing it down or playing games, what would his goal be? How does he look good blowing the whistle on this play, this debate?

MCMAHON: I think his goal is to look like he is the person that brought everybody together and achieved this compromise. I think it's a very risky strategy because, as you just saw from Shelby and from Senator Bunning, there are a lot of Republicans who don't want to go along. I do think, however, if he can get the Republicans in line and if Nancy Pelosi can deliver the Democrats, he'll claim victory. He does need to get to Oxford...

(CROSSTALK)

MATTHEWS: OK. Let me give you my practiced view of this. The Democrats have nothing to gain voting for this thing, but they'll vote for it just to get-to avoid a catastrophe which will hurt all Americans, including all elected officials, if they can get half the Republicans to show good faith. So if you get a half-if you can get 25, 30 senators, if you can get 100-some-plus House members, Republicans, to vote for it, they'll bring their requisite numbers in.

But the Republican members under John Boehner are not going to put up their votes until they know that McCain's aboard because there's no way a Republican running for reelection in a conservative district, which is where you have Republicans-if John McCain, their standard bearer for president, has said this bill stinks and he's voted against it, because how can they support a guy for president who says the bill they voted for stinks and they've given away $700 billion of taxpayers' money?

It's not that he comes in as a hero. It's that they smelled the fact he was going to vote against the bill, and that's why he had to come down to Washington...

(CROSSTALK)

MATTHEWS: ... because if John McCain votes against the bill, none of the Republicans can vote for it. You know the politics of this...

(CROSSTALK)

HARRIS: Yes. Well, we don't know what the bill's going to look like. They haven't come out of the White House yet. But if the bill has made progress toward those five points that McCain outlined the other day...

MATTHEWS: Right.

HARRIS: ... what, transparency, accountability, oversight...

MATTHEWS: Right.

HARRIS: ... if it's made progress toward that, I think he can declare victory...

MATTHEWS: But you all agree that the Republican caucus cannot vote for this, Republican members up for reelection-all of them are up in the House-can't vote for this if McCain's off base, right? Can they?

HARRIS: I'd be surprised if they did. I don't know if...

(CROSSTALK)

MATTHEWS: Well, by the way, we just got word, I got the word through my ear, that John McCain has somehow left the White House not by the usual route. Everybody's got this place staked out, but he went out the back door, I guess.

MCMAHON: Here's the other thing. I mean, I agree with everything that was just said. However, John McCain cannot be against this thing because the only thing worse for John McCain than bailing out Wall Street is letting Wall Street and the world financial community collapse. And he would be blamed for it if it happened...

MATTHEWS: Why he and not Obama?

MCMAHON: Well, because he's the person who said yesterday this thing is going to down. He's the one who's laid the marker. If he wants to play high-stakes poker, that's what he's doing.

And by the way, you said something, Chris, that I think is not quite true. The Democrats have already gotten a lot out of it. I mean, Senator Bunning, I think, called it-called it France, but the White House presented a proposal that didn't have accountability, and now taxpayers are going to have the opportunity to profit in these assets, if they ever recover and there is profit...

MATTHEWS: And what did I say...

MCMAHON: ... and they're not going to have...

(CROSSTALK)

MATTHEWS: And remind me of my sins here. What were they again?

MCMAHON: Well, you basically said that the Democrats have no reason to vote for this thing, and they do because they've already gotten concessions out of the White House...

MATTHEWS: Oh, you mean...

(CROSSTALK)

MCMAHON: There's no golden parachutes...

(CROSSTALK)

MATTHEWS: ... the safest vote is the vote against...

(CROSSTALK)

MATTHEWS: ... because there's always going to be something wrong with it.

MCMAHON: Well, there's always going to be something wrong with it, but...

HARRIS: It will never be...

(CROSSTALK)

MCMAHON: And if they vote against it and the stock market drops another 1,500 points or 2,000 points, they will rue the day...

(CROSSTALK)

MATTHEWS: ... if you're a Democrat, you're in a working-class district, a middle class district, and explain you've given away $700 billion and you haven't given them anything and all the money's gone to Wall Street.

MCMAHON: But Chris, if you give taxpayers-you've made every taxpayer into Warren Buffett because these assets, even though they've been written down to zero, they don't have zero value. They still have significant value. What the bad...

(CROSSTALK)

MATTHEWS: ... members coming out now Here they come from the White House. Here they are.

UNIDENTIFIED MALE: The members have gone back to the Capitol to try and continue work on this issue. Senator Obama will be taking questions at the Mayflower Hotel in about 10 minutes. Thanks very much.

UNIDENTIFIED MALE: The House Democrats will have a caucus at 5:45, and we may come out after that and do an avail back at the Capitol. Thanks.

UNIDENTIFIED MALE: Sorry about that, everyone.

(CROSSTALK)

UNIDENTIFIED MALE: Still working on it.

MATTHEWS: Now, that's interesting. Barack Obama is going to take questions at the Mayflower. You know-you know, I always wonder about press gamesmanship, and check me on this. Big mistake for members of Congress to face the White House corps. The White House press corps is responsive in many ways to the White House. That's where they get their information. That's the tether they live on. They got to find out what's happening, they have their source at the White House.

Usually, if Obama says, I'm not going to deal with the White House press corps, I'm going to go back and deal with my campaign-my campaign press corps because they're going to need to deal with me...

MCMAHON: Here's the interesting...

MATTHEWS: It's such an interesting-but-he's going to the Mayflower Hotel, by the way. Anyone familiar with Washington, it's five minutes by car down Connecticut Avenue. So isn't it fascinating? They don't want to talk to these press people. They're out press shopping!

MCMAHON: So you have John McCain sneaks out the back door.

MATTHEWS: No!

MCMAHON: Sneaks out the back door...

MATTHEWS: Well, they both left by other doors. Let's not...

MCMAHON: And didn't say anything. And his campaign staff didn't say he's going to answer questions, or even take a position, because, you know, Senator McCain doesn't really want to take a position. He wants to wait and see what everybody else is doing, not withstanding the fact that he's the true maverick who's the true leader.

Senator Obama is going to go across the street and he's going to man up. He's going to act like a president. He's going to say what he's for. He's going to take a position. And I think he's going to...

MATTHEWS: Well, that's...

(CROSSTALK)

MATTHEWS: You know what I like about that prediction? Within this program, we'll have the answer.

MCMAHON: We will.

HARRIS: We don't know what John McCain is going to do and...

MCMAHON: We know what he's not going to do.

HARRIS: You don't know that!

(CROSSTALK)

MCMAHON: We know that he's not running his plans through Steve! But other than that...

MATTHEWS: OK. Is John McCain interested in having a debate tomorrow night or not? Does he want to have a debate, really?

HARRIS: Yes.

MATTHEWS: All things considered?

HARRIS: Yes. Absolutely.

MATTHEWS: You sure?

HARRIS: Absolutely. Look, this is a debate that's supposed to be, at least, on foreign policy and national security. This is a home-you know, home turf advantage for John McCain. He absolutely wants to have this debate.

MATTHEWS: Do you think he's in shape for this debate?

HARRIS: Yes.

MATTHEWS: You watched him this week? You think he looks like a happy camper this week?

HARRIS: I don't think...

MATTHEWS: How come he looks so old, so tired and so angry one week, this week?

(CROSSTALK)

MCMAHON: I think you're calling him a grumpy old man.

MATTHEWS: I'm not.

HARRIS: I don't think any American...

(CROSSTALK)

MATTHEWS: ... because I think last week, week before, he looked great. This has been tough week for him.

HARRIS: I don't think any American should be happy this week. There's a lot going on to make people really, really unhappy. But yes, McCain wants to have this debate, and I think he's going to do very well on it.

MATTHEWS: Here's the suspicion I have...

(CROSSTALK)

MATTHEWS: He said with his briefers. He sat with his foreign (ph) partners (ph). He had a brutal half hour or so. He realized that every question was, You said the economy was fundamentally strong. Oh, God, that's a great one to start the debate with, but they will start it-Jim Lehrer will start it, if nobody else does. Your people say we're all-

Phil Gramm, your chief economic adviser, says we're all a bunch of whiners in this country. Imagine getting-having to answer that one. He's got Carly Fiorina saying he's not equipped to be head of an American company, let alone deal with this economic crisis. There's so many statements out there by his campaign lately, he's got to go through a minefield.

HARRIS: Obama's got an equally large minefield.

MCMAHON: Oh, come on!

(CROSSTALK)

MATTHEWS: Let's hear it.

HARRIS: He wants to raise taxes. He wants to increase capital gains taxes, which is a terrible idea right now, when you've got people pulling all of their money out of the markets. The last thing that we need to do is double our capital gains taxes so everyone will pull every ounce of liquidity out of the market before that goes into effect.

MATTHEWS: You mean the fiscal policy we have today is a good one, right?

HARRIS: Look, I've been saying our capital gains tax where it is is a good idea. It was...

(CROSSTALK)

MCMAHON: I hate to correct you, but Barack Obama, as you know, wants to cut taxes for every family that makes less than $250,000 a year. So it's a nice ploy for the Republicans to say that he wants to raise taxes...

HARRIS: He does.

MCMAHON: ... but it just isn't true. It's exactly the kind of thing that we've been getting from the Bush administration for eight years now.

(CROSSTALK)

MATTHEWS: Let me go back to a couple of a points here.

MCMAHON: ... as often as you like, even if it's not true.

MATTHEWS: If you're right, Steve, on behalf of the Democrats, who you advocate for here, the Democrats will be able to walk away from this table, if there is a deal, with some successful claims. One, they got a cap on executive pay.

MCMAHON: Right.

MATTHEWS: So nobody's-although John McCain had the idea nobody should get more than the president of the United States gets paid, so he had the idea of a cap, too, right?

MCMAHON: But...

MATTHEWS: Didn't he? Didn't he?

MCMAHON: ... it was Nancy Pelosi and the Democrats in the House...

MATTHEWS: But isn't John McCain partially responsible...

(CROSSTALK)

MCMAHON: Barack Obama called John McCain yesterday and said, Let's get our principles out there. Their principles happen to be fairly close, but they were generic and vague. Nancy Pelosi and the Democrats in the House insisted on this provision.

MATTHEWS: I think there are a number of positions here that McCain might benefit-executive pay cap is a very popular idea. Most people don't make one tenth of $400,000 a year.

Members of Congress, by the way, have left the White House, as we've been reporting, some of them by circuitous routes, only a couple-0 only one, Richard Shelby, by the front door, and he went back in again. Anyway, Senator Obama and Senator McCain are expected to do a series of interviews with TV networks right now.

But we're going to take a break because we hear that Senator Obama's going to be right down there in five minutes now. We'll be right back the minute he's on camera. He looks like he's going to be the first guy out to talk. Obama to speak in a few moments.

Steve McMahon and Todd Harris will stick with us.

This is HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Coming up in a minute: Deal or no deal? How long will it be until congressional leaders hammer out a deal on this financial bailout? We're talking $700 billion. We're talking about possible panic. A rescue plan, is it in the works?

We will find out. This is a developing story, as we say-more HARDBALL after this.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL.

We expect Senator Obama to take questions at the Mayflower Hotel at some point this hour. There's word it may be imminent. It's down the street, of course, from the White House-not of course, but it is down the street from the White House. Senator Obama and Senator McCain have left the White House. We know that, where they met with President-

President Bush for at least for an hour and also with the congressional leaders.

Those talks continue. If anyone makes a statement, we will bring it to you live.

We're back with the strategists, Democratic strategist and former Howard Dean adviser Steve McMahon, and Republican strategist and former McCain spokesman Todd Harris.

You know, this is one of those, like, Bronco chase afternoons. This is a Friday (sic) afternoon. Here we are in the early evening trying to keep track of something that is pretty important.

And the question, of course, is, will there be a deal in time for the debate tomorrow night? Will there be something initialed that is enough for John McCain to say, I got what I wanted; I came back to Washington; I led the charge; the cavalry arrived; the deal has been struck; I don't have to stay here for the-for the full signature process?

Is that his standard? Or will he say, I'm not leaving until we have a deal completely? Fifty-one -- 50 votes in the Senate and 218 in the house.

TODD HARRIS, REPUBLICAN STRATEGIST: I think he's going to want to declare victory and get to Oxford. And, you know, let's...

(CROSSTALK)

MATTHEWS: That's under the assumption he wants to debate, which is your assumption.

HARRIS: Yes, which I think that he does.

And let's-let's-I think it's important to-to refresh ourselves on the benchmarks that he laid out the other day for what he was looking for. He talked about additional oversight in this bill that he was demanding to make sure that one person was not in charge of all of this money. He talked about accountability. He talked about transparency, so we knew where-the taxpayers know where all of this money is going.

He talked about limits on executive pay. And he said that I'm going to make sure that no sneaks any earmarks into this bill. So...

(CROSSTALK)

MATTHEWS: Well, no one has talked about doing that, have they?

HARRIS: People have been whispering about it. No one has actually...

MATTHEWS: Pork-barrel spending?

HARRIS: Yes.

(CROSSTALK)

MATTHEWS: Who was talking? Come on.

HARRIS: No. It's-it's buzzing all over Capitol Hill, people talking about this.

MATTHEWS: Well...

HARRIS: So, that-those are the benchmarks that he laid down several days ago. And now let's see, you know, what the results were.

MATTHEWS: Yes.

Well, according to the Democratic deal here, the Banking Committee chair, Chris Dodd of Connecticut and Barney Frank of-who is chairman of House-of Financial Services in the House, his partner over there, the-they're going also include in their deal something to reduce the national debt if this thing makes any money.

I think that's the happy scenario, that this thing might actually make some money for the federal government, the-if they go out and buy all this relatively useless, in some cases, mortgages, or some with limited value, they will be able to yield a value out of it, and that that would go towards reducing the national debt. I think that's very optimistic.

STEVE MCMAHON, DEMOCRATIC STRATEGIST: Yes.

Well, there's-there are a couple of other things that Democrats insisted be included. One is that there's some relief for taxpayers-for taxpayers who are in these homes who are being foreclosed upon. And that, I think, is something that wouldn't have happened if the Bush administration had gotten their way.

And you mentioned the fact that the taxpayers now would have a stake in these things. And I-I mentioned, facetiously, a moment ago...

MATTHEWS: I never understood the equity. In other words, the federal government would have an equity portion-position in these mortgages they buy.

(CROSSTALK)

MATTHEWS: But that doesn't mean individuals are going to get the money. It just means the government as a whole.

(CROSSTALK)

MCMAHON: Right. It means the government is the guarantor of last resort on all this debt.

Most of this debt has been written down to zero. So, it's one the banks' books as of zero value. And, in fact, it's not of zero value. Much of it is-is actually of positive value, but the banks don't know how much it is. So, they want to get it off their books. They take it down to zero. They get it off the books. The government will take it over.

Well, if the-if the $700 billion worth of assets turns out to be worth $800 billion or $900 billion -- $800 billion or $900 billion, the government would then reap that benefit. And it would-and it would go to retire the deficit.

These are all things that Democrats have insisted on. What the Bush administration basically came with a few days ago, which, by the way, John McCain didn't read as recently as two days ago, the three-page memo that the Bush administration prepared, had none of these things in it. It didn't have transparency. It didn't have accountability. It didn't have the taxpayers having an opportunity to benefit if the assets were worth more.

These are things-and it didn't have any relief for the homeowners. So, these are all things the Democrats put in there. And I think, by voting yes on this, the Democrats will have plenty to claim credit for.

MATTHEWS: OK.

MCMAHON: And, frankly, if John McCain wants to claim some credit, great. Let's go have a debate.

MATTHEWS: Let's go back to politics for a second here-and not for a second, for a couple minutes-because I think it's fascinating.

The polls lately-they're always hard to read, but, the last two weeks, they have been moving towards Barack. This economic crisis has helped the Democrats. It's a terrible thing to say, but it helps somebody. It helps the party out of power usually.

If you look at the issues of the last couple weeks, there have been snafus on the other-on your side, the Republican side. I don't know what Carly Fiorina was thinking when she said that these guys running for president aren't capable of running an American company. Maybe she's right, in a technical sense.

I don't know what Phil Gramm, the former senator from Texas, was thinking when he says we're a bunch of whiners. And I don't know what Senator McCain was thinking when he said the economy is fundamentally strong. I know what he meant. I don't think he knows what he meant now. He was in a defensive posture.

I will submit my belief he doesn't want a debate tomorrow night. I don't think he wants a debate, because there's no winning card for him on the economy.

Now, you say the format tomorrow is foreign policy. Do you really think they are going to stick to foreign policy in this environment, with this much heat on the economy? Do you Jim Lehrer is going to blow the whistle and say, sorry, boys, you can't talk about the economy?

HARRIS: No. There's no way that-there's no way that that will happen.

I think what you will see, even when there are questions about foreign policy, I think you will see candidates pivoting, like they have never pivoted before.

MATTHEWS: Right.

HARRIS: So, you will have a situation where...

MCMAHON: Like basketball players...

(CROSSTALK)

(LAUGHTER)

HARRIS: No. I mean, you will say like, I think the thing we need to do is strengthen NATO is to cut taxes and make sure that confidence is restored in our housing markets.

(LAUGHTER)

MATTHEWS: If they don't, we will think they're dodoes for not doing it.

HARRIS: Absolutely.

(CROSSTALK)

HARRIS: Because the public...

(CROSSTALK)

MATTHEWS: Let me ask you, again, you really think John McCain wants to fight on the turf, on economic turf, this week?

HARRIS: Absolutely. Look, I think...

MATTHEWS: You are such a good soldier.

HARRIS: I think John McCain...

(CROSSTALK)

MCMAHON: ... combat pay?

(CROSSTALK)

MCMAHON: ... get combat pay?

MATTHEWS: Look, you start getting into motive around here, I will go after you, buddy.

(LAUGHTER)

MATTHEWS: You won't-you won't even agree to the fact that John McCain is the one that pushed for a cap on executive pay.

(CROSSTALK)

MATTHEWS: By the way, there's the new political party. I just saw I.

Lieberman and McCain, that's a new party.

MCMAHON: He wasn't the only one, Chris. And, hey, listen, if John McCain...

HARRIS: No. He was just the loudest...

(CROSSTALK)

HARRIS: He was just the loudest and the first.

MATTHEWS: Look at that party. Look at this new political party.

Look at that. Look these guys.

MCMAHON: Barack Obama...

MATTHEWS: A new buddy system.

MCMAHON: Barack Obama said that Democrats and Republicans need to solve this problem together. And, if John McCain brings a solution to the table to fix the deregulatory bill that his campaign chairman, Phil Gramm, shoved through the Congress that caused this problem, that's fine.

It's time for John McCain to start bringing some solutions. And it's time for him to get down to Oxford, don't you think, Todd?

MATTHEWS:

HARRIS: Was this the bill that was shepherded through the White House during the Clinton administration?

MATTHEWS: What I want-you know what I want? I want a debate tomorrow night. I want to be there before and after.

(CROSSTALK)

MCMAHON: Well, they should have it there. If they can't get to Oxford, how about right here on HARDBALL?

MATTHEWS: I think Ole Miss is a great place to have a debate. I went to Chapel Hill. I want to go see what it's like in Oxford, the home of William Faulkner. I have never been down there.

Steve, Steve...

MCMAHON: Steve.

MATTHEWS: ... Todd Harris, you're both finished.

(LAUGHTER)

MATTHEWS: Anyway, when we return, Pat Buchanan and Dee Dee Myers are going to join us.

We continue to await Senator Obama. If he is going to make a statement about that White House meeting, it could be down at the-down at the Mayflower Hotel at any minute now. We will bring it to you as it happens.

As I said, this is sort of a Bronco chase tonight. We're trying to figure out where the American money is headed.

You're watching HARDBALL, only on MSNBC.

(LAUGHTER)

(COMMERCIAL BREAK)

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

Stocks surged with a deal appearing to be near on a Wall Street bailout plan, although, after a White House meeting with President Bush, John McCain, Barack Obama and bipartisan congressional leaders, Alabama Republican Senator Richard Shelby said there is no agreement.

But, during the active session, and as that meeting began, the Dow Jones industrial average closed up 197 points, the S&P 500 higher by 23, and the Nasdaq higher by 31.

That's it from CNBC, first in business worldwide-now back to Chris and HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

Senator Obama and Senator McCain have both left the White House now. And members of Congress are headed back to the Hill, with no deal yet on the financial crisis and no bailout plan agreed to. Senator Obama is expected to take questions at the Mayflower Hotel, down the street from the White House, in a couple of moments. We are going to have to see if we have got somebody there to get it. Are we going to even get it technologically from him before his round-robin interviews with TV networks, which he is scheduled for tonight.

He will be on, I believe, "Nightly News" tonight. When that happens, we will bring it to you live, however, here on HARDBALL, ahead of everyone.

"Vanity Fair" contributing editor Dee Dee Myers served at the White House as press secretary. She knows all about these technical issues.

(LAUGHTER)

MATTHEWS: And, of course, MSNBC political analyst Patrick J.

Buchanan.

Pat, I have seen every trick pulled tonight. They have a meeting at the White House too look like they're all in this together. Apparently, they're not all in it together yet. You have the Obama campaign calling for a presser-a press relations opportunity down at the White House to get everybody away from the White House press corps and back to his campaign press corps, which maybe he gets a better deal from. Who knows.

All this gamesmanship, does it offend you, Pat?

PAT BUCHANAN, NBC POLITICAL ANALYST: No, it doesn't.

I think McCain did the right thing, coming back when you got a-what Warren Buffett called a financial Pearl Harbor going on. You don't want to holding town hall meetings in Joplin, Missouri. You want to be a national leader back in the United States.

But McCain is really in a box here, Chris. I think he did the right thing coming back. But, if he signs on to this deal, where people out in the country, by 100-1, are writing, calling, text-messaging, saying this is an outrage, he will offend the populist base of the Republican Party and Middle America and working-class Democrats, as he did on the amnesty bill for illegal aliens. This will be amnesty for Wall Street deadbeats.

On the other hand, if he takes a strong stand against this, he risks a possibility that he will be held accountable for a real plunge in the market. That is the box he is in right now. I don't think there's any final deal. If there is one, and he signs onto it, and goes to Oxford, I think he's in risk of really tossing away his last chance to win the presidency.

I wouldn't sign onto this deal. The way I have seen it, as of now, it looks like we are being stampeded into another, if you will, Tonkin Gulf Resolution.

MATTHEWS: Right. You know, this is the Pat Buchanan I love most. I know Pat likes the other one more.

(LAUGHTER)

MATTHEWS: He likes the other Pat Buchanan, the fire-breathing Pat Buchanan. But that analysis, then, was brilliant. I never thought of that. That's why I think it's brilliant.

He said, basically, if Buchanan-if John McCain signs onto a bill that gives $700 billion to Wall Street, he will never be able to say there could have been-there would have been a catastrophe otherwise. He will never be able to say-prove there would have been Armageddon. He will be stuck with the proof that he signed onto an establishment bill that makes all these fat guys in New York fatter, at the expense of $700 billion in added debt.

DEE DEE MYERS, FORMER CLINTON WHITE HOUSE PRESS SECRETARY: Right. I mean, and it...

MATTHEWS: And Pat sounds-I haven't thought of that. And, if he fights it, he brings down the temple.

MYERS: Right ,because-and it is, in some ways, up to him. If he -if he says yes, he will probably be able to bring along enough votes to pass.

And, if he says no, clearly, the Republicans will desert the bill.

MATTHEWS: And then the Democrats won't vote for it.

MYERS: Right, exactly. But he will be blamed with-with bringing it down. And, then, if the markets respond negatively, if the crisis cascades forward, John McCain will be blamed, as will the Bush administration. And the Republicans will be saddled with it.

MATTHEWS: So, what is his escape hatch, Pat? You have thought about the two negatives here, Hobson's choice he faces. If he votes for it, he's part of the bad deal. If he votes against it, he brings the house down, potentially.

Could he win if he bluffs and says, OK, I will vote against it; it will come down, and the market won't go down? Will he look good then?

BUCHANAN: Oh, listen...

MATTHEWS: Is that too risky?

BUCHANAN: Well, look, here's what-Chris, when you're in a crisis like this, you know the best thing to do is? Do what you genuinely believe is the right thing to do. That's the best advice you have got when you have got this kind of dilemma.

If I were him, I would not support this bill, and I would tell the guys-go back to the Hill-I would say, I can't support this as written. I don't know that there's that great of danger.

More importantly, what Bunning said is-appeals to me. Is this the only conceivable solution, to buy up all this garbage from every single bank in America, and unload it on the taxpayer? Or there is another-is there another way to do it? You have heard about injecting funds into these things and letting-and putting all the stuff on the market first, and seeing what it's worth. It is worth something.

MATTHEWS: But who would design that, Pat? John McCain doesn't have the faculties to do that. Who could do that?

BUCHANAN: He does-he does not...

(CROSSTALK)

MATTHEWS: Who would design that package?

BUCHANAN: Well, you would have to go up there and talk to the House guys, and tell them, look, if we're going to take this thing down, we want to come forward with an alternative, not just say no, but say, no, here's what the right thing to do is.

MATTHEWS: Yes.

BUCHANAN: I think you have got to do that.

MATTHEWS: But can he design that? Does John McCain have the staff, the expertise to design a bailout bill as an alternative to what's being offered by Paulson and agreed to with amendments by the Democrats?

BUCHANAN: Well, you heard Shelby say he's talked to economists.

I have had people writing me and saying, Pat, this is the worst possible way to do it. Here's the way to do it.

MATTHEWS: Yes.

BUCHANAN: Now, I don't know if they're exactly right.

But I don't know that this thing-certainly, Chris, you heard Paulson and Bernanke. Would you have bought that thing from them without the argument...

(CROSSTALK)

BUCHANAN: ... that the whole world is going to end if you don't take it?

MATTHEWS: No, I-I thought the president last night-and I don't ever-I never get personal with him, but I thought the president last night was shaky. I thought he learned what he was taught on this issue, but he was shaky.

This wasn't something he could grab hold of and totally grasp himself.

And he was selling us something he hadn't grasped himself...

BUCHANAN: Right.

MATTHEWS: ... or seemed to fully believe in.

But I do believe this. No Republican who is up for reelection in a conservative district can afford to vote for a bailout bill that his or her candidate for president has said stinks. It doesn't make any sense, because he does have the good house-keeping seal in his hand. If he doesn't put that seal on this bill, John McCain doesn't do it, he's saying, I wouldn't vote for this. You shouldn't. I don't see why anybody would.

We'll be right back with Pat Buchanan and Dee Dee Myers. We're getting a lot of great analysis from Pat and Dee Dee, as we await-Barack Obama is outside a hotel somewhere with a statement, we hope, as the negotiations continue on Capitol Hill, as the bailout deal stays up in the air. HARDBALL back in a minute.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. After meeting at the White House for more than an hour today, there's no deal on the big financial crisis bailout package yet. We've been reporting that Senator Obama would be taking questions at the Mayflower Hotel this evening. That will be happening, but after he does the network interviews, the broadcast network interviews, he had already scheduled. We might not get any report from him until a bit past 6:00.

We're back right now with Dee Dee Myers and Pat Buchanan. I'm going to give it back to the hot hand of the evening, Pat Buchanan. You believe that he's in a Hobbsian choice? In other words, John McCain, who called this game, basically, by saying he won't go into a debate unless he's got some sense there's a deal cooked here-do you think he will debate tomorrow? It sounds like you're-has he locked himself into saying he can't go down to Oxford, Mississippi tomorrow?

BUCHANAN: If there is no deal, it's hard for me to see how he goes down to Oxford, Mississippi. And why did he not want to go to Oxford, Mississippi? Chris, look, if he goes down there-for the last eight days or nine days, he's been slipping and sliding because of this financial crisis, this financial Pearl Harbor. Everybody is looking at the real issue, the economy. They're saying, we need change. We have a disaster on our hands.

He has not handled it well, and Barack Obama has been riding the wave. He hasn't been out front, but he's riding it. If you go to Oxford, Mississippi, and you're not talking about the surge and the success there and Barack Obama's blunders in foreign policy, you're talking about Republican philosophy destroying the economy, which is the pillar of our global security; that's Barack's turf. It's his first debate. It's his best chance. It could be gone.

I understand exactly why he's doing what he's doing. But he is now in a box.

MATTHEWS: In other words, you accept Occam's Razor, that the reason he's not debating is he doesn't want to debate this week? That's the bottom line.

BUCHANAN: The simplest explanation is often the correct explanation.

MATTHEWS: Occam's Razor is appropriate here. Dee Dee, do you accept that? Are you willing to leap to the conclusion that he's doing what he wants to do?

MYERS: Yes, I think a lot of people leaped to that conclusion yesterday. They recognized, as Pat said, he's in a bit of a box, but that if he wanted to debate, he could have constructed-I'm going to Washington, but I'm still going to debate because the American people deserve a conversation about these issues at this time of crisis. Instead, he constructed it in a way that gives him absolute power to either say, yes, there's a deal, or enough of a deal, the outlines of a deal, or no, it's not far enough along. We're going to find out exactly what he wants to do. And I think he doesn't really want to debate.

MATTHEWS: Next Wednesday maybe.

BUCHANAN: Chris?

MATTHEWS: Yes, Pat, last word.

BUCHANAN: This is a Palin moment. It really is. He threw the ball into the end zone, right corner; she caught it. He is now in another Palin moment. I think he better look-if he believes it's a bad deal, and is not in the interest of the country, he ought to look at torpedoing this deal and take responsibility for it, and say, we're crafting another deal, and it will be the McCain Republican bipartisan deal.

MATTHEWS: And that deal will hold? That other deal he offers will be done in time to meet the challenge and you believe that deal will be better and will hold off the markets at least through the election, you believe?

BUCHANAN: I believe you can put together a Republican/Democrat deal that is not the Bush deal that's going down right now, yes.

MATTHEWS: Well.

MYERS: It's betting-you know, shoving all the chips onto black and letting the ball roll. John McCain has shown himself willing to do that, as Pat points out, several times in this campaign already. It may or may not be a-

MATTHEWS: As Humphrey Bogart said in "The African Queen," you buy your ticket and you take your chance. Thank you, Dee Dee Myers. Thank you, Pat Buchanan, that river boat gambler down there.

Up next, the latest from Capitol Hill where negotiations continue. Plus, much more on the politics of the bail outs, winners, losers. Plus, tomorrow night's debate, if it goes as planned. This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK

MATTHEWS: We're back and it's time for the politics fix with Jon Harris, editor in chief of the Politico, "Chicago Tribune" columnist Clarence Page and NBC's Mike Viqueira joins us from Capital Hill. Mike, we have to get the latest update from you. This is one moving story here.

MIKE VIQUEIRA, NBC NEWS CORRESPONDENT: It is unbelievable. It is not good news now for people looking for a quick, simple resolution. As if anything could be simple with all the political cross currents and everything that is at stake in this crisis, Chris. I talked to a top aides of John Boehner, the Republican leader, who himself has been whip sawed by cross currents within his own caucus and the House conservatives staunchly opposed to this proposal. He says there was no deal that emerged from the White House meeting.

Boehner indicated to the meeting, to all those present, that he had problems with the proposals that were put forth by that group that met earlier today behind closed doors, Both Republicans and Democrats on the Financial Services Committee and the Banking Committee. This agreement in principles a non-starter with the Republican leader of the House. Dems have to go it on their own, Nancy Pelosi does, if she wants to pass this out of the House of Representatives. That is not good news.

A setback this evening, Chris, I think it's fair to say. Nancy Pelosi and Democrats have said all through out the week that they are not going to jump off this cliff alone. They do need significant Republican support in the House. That would include the leadership. Something of a standoff at this point, Chris. We are in a very complicated game here, a political game. It's gone off the realm of finance now, and into the realm of politics.

MATTHEWS: The captain has to be the last one to leave the ship here.

The Republicans have to lead. Clarence.

CLARENCE PAGE, "CHICAGO TRIBUNE": That's true. I think really everyone is waiting to see what John McCain is going do. He's become the deal maker here. The Republicans don't want to do anything that he doesn't want to do, because he might turn around and campaign against them. The Democrats don't want to be standing out there by themselves. They want to have some significant Republican votes.

MATTHEWS: There are three options now. Pat pointed to three. Two of them; one is, if he doesn't pass and it goes down, it is his fault. If it does support and it pass, and it becomes a totally unpopular bill by the roots of this country, who don't like it. Or third, he passes it and it doesn't work.

PAGE: Well, that's down the road.

MATTHEWS: How about if he signs on and they don't get a majority of members behind it. He has proven he is not a leader. That is another option.

PAGE: There is a lot of negative feedback from the voters our there about this bill. I think that is why you are not seeing a lot of people rush.

MATTHEWS: John Harris, let's look at that third option. Suppose John McCain does turn around by midnight tonight and says he's for the deal that's been cooked up by the people on the Banking Committee and the majority of the conservatives in the House don't go with him, he looks like he's weak.

JOHN HARRIS, POLITICO.COM: Maybe so. Presumably Obama would also backing the same bill so they would be similarly positioned. I don't think McCain is going to put his name behind something he doesn't feel Obama will also say is necessary. As far as the risks, though, the risks of him inserting himself into this, seem to be less than the risks of what he was doing before, seeming to be on the margins with a bad message and almost daily dropping in the polls.

So this has probably been smart for him even with those bad scenarios you described all being real.

MATTHEWS: Yes, I wonder. I think the trend, whenever the economy is forefront, is for political change and for the Democrats to replace the Republicans, just because that's the way it's always been in our life time. You change political horses when the one horse falls.

Thank you, Mike Viqueira, tonight for everything. Thank you, John Harris and thank you Clarence. They are staying with us for the politics fix. You are watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We're back with John Harris and Clarence Page for more of the politics fix. Clarence, I watched you on the "COUNTDOWN" last night. Look at this amazing piece of tape here. Here is the governor of Alaska back a couple years ago going through a religious ceremony of some kind with this minister from Kenya, the black fellow in the back. He is talking about witchcraft and protecting her from witchcraft and these two guys them like this?

PAGE: He is calling for money, too. And calling on god-

MATTHEWS: Which religious tradition is this that has to do with witchcraft and all? What are we watching here?

PAGE: He is an African minister and known witch hunter, which is a controversy in itself. But this was sort of a blessing ceremony actually. She was running for governor at the time. As you notice, she won. Maybe this guy's got something.

MATTHEWS: What do you make of this, John Harris, politically? A lot of people haven't laid a glove on the governor of Alaska yet, but here's a strange-it's an awesome picture, I think.

HARRIS: You need someone with a different collar than I'm wearing to explain it. It is odd to me that this is a now new stop for op-o researchers to go to church websites. They did it with Obama and Reverend Wright and now they found this on her own church website. I think it's kind of strange.

MATTHEWS: As we say in journalism, more coming. John Harris, Clarence Page. Tomorrow night, I'll be at Oxford, Mississippi, at the University of Mississippi for the first presidential debate. Right now, it's time for the "COUNTDOWN" with Keith-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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