updated 9/29/2008 4:32:43 PM ET 2008-09-29T20:32:43

Guest: Trent Lott, Chris Dodd, Douglas Brinkley, Howard Dean, Rahm Emanuel, Heather Wilson

CHRIS MATTHEWS, HOST:  So guess what?  McCain ain‘t going to miss Ole Miss.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews, coming to you tonight from Ole Miss, the campus of the University of Mississippi in Oxford, Mississippi, where just four hours from now, the first presidential debate of 2008 will begin.  Yes, it‘s on.  McCain‘s coming.  We‘re broadcasting live from outside the student union and right next to the grassy area known as the Grove.  This is a beautiful campus here at the Ole Miss campus.

Tonight, after nearly a half century of integration, the debate that almost didn‘t happen because one of the candidates, John McCain, said he first wanted to see action taken to avert a national financial crisis, Democratic senator Barack Obama takes to the stage and debates Republican senator John McCain.  So tonight, you will be watching history.

And MSNBC will be here all night covering it.  Our full debate coverage begins at 9:00 Eastern.  At 10:30, David Gregory will join me for complete post-debate coverage.  Then it‘s “COUNTDOWN” with Keith Olbermann at 11:00, a late-night edition of HARDBALL at midnight, and then the late late night version of “THE RACHEL MADDOW SHOW.”

There‘s so much political news today.  This would have been a big day even without this debate.  And we‘ll start with the latest on the bail-out in Washington with a top Democratic leader, U.S. Congressman Rahm Emanuel, Democrat of Illinois.

Congressman, thank you so much for joining us tonight.

REP. RAHM EMANUEL (D-IL), DEMOCRATIC CAUCUS CHAIR:  Hey, Chris.

MATTHEWS:  Where does this thing stand right now?  Are we going to get a deal by Sunday night, or when, or if?

EMANUEL:  Well, we‘re working towards that.  Obviously, I feel good about it, but we have a lot of tough negotiations ahead of us because we‘ve got just basically, as you well know, on Saturday three pages with, you know, an unbelievable request for $700 billion with no oversight authority.

And we put in there a set of principles that we think are very important.  One, protection for taxpayers and that their participation in any upside.  Two, there be a board to oversee this, like in any other company.  Three, that there be compensation reforms as it relates to CEOs.  And four, for home owners who are facing difficulties, they have an ability to basically get some type of a remiss on their mortgages so they can continue to pay them.  Those were fundamental changes from where this document was just on Saturday night, when we got the first three pages.

And so do I think we‘ll get there?  I do, actually, because I think

people know now—and it took the Republicans a little while to get there

to realize that when the country‘s at this level of brink that you don‘t sit there and just play politics and do that.

We were very close, as you know, yesterday, and once presidential politics got interjected in it, it derailed it.  But we got it back on track.

MATTHEWS:  Well, is it going to be hundreds of billions of dollars of money going to the bail-out, or is it going to be a big loan program, as some of the conservative Republicans want it to be now?  What‘s it going to be, a loan?

EMANUEL:  No, no.

MATTHEWS:  Or money spent by the federal government?

EMANUEL:  Well, first of all, I think, as you look at the document—maybe we ought to go into it—there‘s some ideas about taking on some of these toxic securities backed up by some of these mortgages.  The other option available to the secretary treasurer would be to put in what is basically a recapitalization of banks and other financial institutions.  And that‘s going to be a case by case basis.

The most important, whichever case it‘s chosen to do, and probably will be doing both, is to make sure the taxpayers‘ money is protected.  You know, Chris, the other day I talked to Warren Buffett, who‘s a friend.  And he said, Look, given the fact that the government is borrowing rate is X, it‘s almost impossible not to make money here, if you do it right.

And so it‘s not going to be one thing.  Some places you‘re going to recapitalize the financial institution, give them equity, ability to do what they need to do, which is lend money and bring liquidity to the market.  In other cases, Chris, they‘re going to actually run auctions and take some of these toxic materials out, and do it, hopefully—which is going to be the very most important part of this—at a price where you‘re not overpaying for what you shouldn‘t overpay and getting the right market price.  And how you structure that is key.

MATTHEWS:  Well, what happened—you know, it seemed to me, watching the news and watching our network yesterday, before the two presidential candidates showed up, it looked like you were close to a deal.  Watching Congressman Frank and watching Senator Chris Dodd, it looked like a deal was struck.

EMANUEL:  Right.

MATTHEWS:  And then everything came apart when the two presidential candidates showed up.  What went wrong?

EMANUEL:  Well, I mean, look, in my own view is we were—you know, the candidates—and I think it was a mistake by Senator McCain to basically make a theater out of this.  We were making progress, doing well.  They should go run around the country and speaking to crowds and announcing policy.  We were on track doing our job, which is we had a very difficult set of circumstances sent (ph) to us in short order to do something massive, never tried before in the country.  And then everything was progressing and we were achieving our principal goals, as we said, to protect taxpayers, as well as give basic confidence back to the market.  And what—lo and behold, politics got interjected.  The thing got derailed.

So my view is, go back to doing presidential politics.  We‘ll do what we‘re supposed to do, which is protect the taxpayers.

MATTHEWS:  Can this thing pass without the votes of McCain and Obama? 

Do they both have to support this for it to pass?

EMANUEL:  Well, I think that, you know, they‘ll make their own decision.  Both, as you know, laid out a set of principles.  If you look at the actual document, what‘s been agreed to, we laid this out, which is the things as we said, protecting taxpayers, making sure home owners got some relief, compensation reform by management, so they have some skin in the game, just like taxpayers, and fourth, that we had an oversight board to make sure that what we‘re doing the type of investments or type of financial (INAUDIBLE) were being done accordingly to protect the taxpayers and get the best bang for the buck.

So all those were already there.  I will say this.  As you know, Chris, I like politics.  I don‘t have a problem with politics.  I also am a legislator.  We were legislating, doing our job and we were making progress.  The moment politics got into it, progress got derailed.  Now that they‘re out, we‘re continuing to get this thing back on track and doing our job.

MATTHEWS:  Let me ask you some politics questions about tonight quickly.  “The New York Times” today, in a piece by Patrick Healy, suggested that your candidate for president, Barack Obama, your fellow Democrat from Illinois, doesn‘t have enough heat, enough visceral gut instinct about the country‘s pain right now economically to win this debate tonight and win this election.  What‘s your view?

EMANUEL:  I think Patrick‘s a great journalist.  He happens to be wrong.  Chris, look, Barack knows exactly—and I‘m glad you asked that—the anguish and challenge that are facing middle class families because not only are the budgets, or basically, the balance sheets of banks around the country hurting, the family budget is hurting in this country.  Median Household income in the last seven years has gone down over $1,000.  Costs for college, health care and energy have gone up close to $4,800.  That has been basically the consequences of the policies put out by the president.  So not only are the banks in financial distress, middle class families are in distress.

Barack and I share constituents, constituents in my district from, basically, Jefferson Park, working class bungalow people who live, work, do everything right, trying to raise their kids to know the difference from right from wrong.  He knows that they are working harder, earning less and paying more and that you have to have an economic program that ensures that middle class families are at the heart of it.

What has missed for the last seven years is that the top 1 percent in this country have done extremely well, while everybody else is working harder, making less money and paying more for the bills.  And unless you have a strong middle class, you will not have a strong economy.  And what you have seen in the last week in dire terms is, basically, that the fact is that the middle class has been weakened, in fact, now what you have is a overall weak economy.

And that is the difference between what we want—what Barack Obama wants to do versus John McCain.  And he knows it in his gut because he has the same constituents I have, and he knows they‘re trying to do right by their families and facing tremendous odds trying to do that.

MATTHEWS:  OK.  U.S. Congressman Rahm Emanuel of Illinois.  We‘ve been looking for Barack Obama, the senator from Illinois, to speak with that kind of gut instinct tonight.  That‘s great to have you on, Congressman Emanuel.

EMANUEL:  Thanks.

MATTHEWS:  Let‘s go right now to “Newsweek‘s” Howard Fineman.  You know, that is the issue.  Everybody seems to agree, the conventional wisdom is John McCain is too hot, maybe erratic this week—I‘m not going to come, I‘m going to come, I‘m going to fire this guy, I‘m going to fire that guy, I‘m going to fire the debates.  And on the other hand, you got—this guy is so cool, you wonder if he‘s really engaged.  Is that the—is that the sort of the instinct out there?

HOWARD FINEMAN, “NEWSWEEK,” MSNBC POLITICAL ANALYST:  I think that‘s the way to add it up.  I think it‘s sort of the jet pilot survivor gunslinger guy versus the body surfer.  Now, Barack Obama was not the world‘s greatest surfer, but he understands the idea of the wave.  And he thinks he‘s riding a wave.  He thinks he‘s riding a change of history, a demographic change in the country.  And he‘s not going to get too worked up about it because he‘s riding it.  That‘s how he views it.

John McCain is a guy who‘s been left for dead, literally, and has had to struggle day by day, and he makes it up as he goes along, minute by minute, day by day.  Those are the two types of characters we have, and they‘re going to be on the stage tonight.

MATTHEWS:  OK, hold on there, Howard.  I want to bring right now Congresswoman Heather Wilson of New Mexico.  She‘s been on so many times before.

Congresswoman, what do you make about John McCain‘s performance the last couple days?  He basically set the stage for yesterday‘s White House meeting, and according to the reports, he didn‘t say anything.  He hasn‘t said much sense.  He says he wants to see action before he debates, but action hasn‘t taken place and yet he‘s going to debate.  Interpret.

REP. HEATHER WILSON ®, NEW MEXICO:  He actually did say something at the end of the meeting at the White House after listening to all of the discussion take place.  And if you‘ll remember, it was John McCain who said, you know, the votes aren‘t here to pass the Paulson plan.  We need to get people together and get them talking.  Fortunately, that‘s finally happening.

MATTHEWS:  Well, do you believe that action has taken place?  Do we have a plan?  Do we have the framework of a plan?

WILSON:  There are negotiations that are now going on.  I think that there was an effort by Democrats and Paulson to try to push through a plan and get people to swallow something that didn‘t—that put a tremendous burden on the taxpayer and the home owner and didn‘t put enough on Wall Street, where the problem was created in the first place, and it had no elements of reform.

They were deaf to that.  Secretary Paulson had his fingers in his ears for the first four days of this week to repeated requests from Republican members, and from Democrat members as well, as to, What else have you looked at?  What is your analysis of why that won‘t work?  Have you considered these ideas?  And all we got from him initially was, No, we‘ve got the right answer and take it or leave it.  And they just didn‘t have the votes.  And it was John McCain who said, You know, you don‘t have the votes, and we need to get together and solve this problem and do it expeditiously.

MATTHEWS:  Why didn‘t your minority members, the ranking members of the two committees, say that before yesterday?  Mr. Bachus I haven‘t heard speak as clearly as you just did.  Why did it take so long for the Republicans to rebel?

WILSON:  Well, I saw it on Tuesday morning.  I think to their credit, everyone was worried about coming out and completely trashing the idea and trying to give feedback in private to fix the thing because you didn‘t want to have an impact on markets.  But it was clear as a bell to me that there were some problems with Paulson‘s approach and that he was not listening.

And then to read the paper this morning that, Oh, you know, the administration was blindsided by concerns on Capitol Hill—you know, they weren‘t listening.  And it was John McCain who, not even being in the city, was in touch with enough people saying, You know, they don‘t have the votes, the taxpayers are not protected here, there are alternatives that are less expensive for the taxpayer and put some of the burden on the people who really caused this problem in New York City.

MATTHEWS:  Well, I guess the question a lot of people have is John McCain‘s standard for participating in the debate down here at Ole Miss was he wants to see action taken on the potential collapse of our financial institutions, and yet I don‘t think action has been taken.  I don‘t understand his consistency here.  Do you?

WILSON:  Well, he thought that both of them should come back and try to push this through.  They both came back.  Senator Obama wanted to go through with the debate and went to Mississippi.  You know, in that kind of circumstance, where Senator Obama says, No, we should keep talking, we should do a debate, I think Senator McCain said, Fine, I‘ll fly to Mississippi, I‘ll do the debate, and then I‘ll come back up here.

But when we finally have a vote on a bill to address the financial problem we‘re in, it will be important that both the current president and the two men who are running for president say, you know, This is OK.  We can implement this.  And I think that will help to get this through the Congress.

MATTHEWS:  Right.  Will you vote for this measure?

WILSON:  We don‘t have a measure yet.  As of yesterday...

MATTHEWS:  OK, let me ask you a more general question.  Would you—let me put it more subjunctively.  Would you vote for a measure that John McCain did not support?

WILSON:  I‘m not sure I—I have to see—you know, I‘m an independent lawmaker.  I have to see exactly what the proposal is.  I have to tell you, I have some real concerns about the lack of specificity in Paulson‘s proposal...

MATTHEWS:  Right.

WILSON:  ... basically giving the $700 billion checkbook with no reform, no oversight, and no alternatives that might reduce the impact on taxpayers and home owners.

MATTHEWS:  It‘s always great to have you on.  U.S. Congresswoman Heather Wilson of New Mexico, thank you very much for joining us tonight.

Coming up, debate night.  We‘re here.  We‘re at Ole Miss.  Will Obama be cool, too cool?  Will McCain be hot, too hot?  What to look for in tonight‘s big fight right here at Ole Miss.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL, live from the first presidential debate locale down here at Ole Miss, Oxford, Mississippi.  First time I‘ve ever been here.  Of course, it‘s always been in the news.

And with us right now is “Newsweek‘s” Howard Fineman, who sits with me, as he has often done over the last 300 years, and NBC News political director Chuck Todd.

Chuck, you‘re right outside the debate center.  It seems to me that John McCain‘s behavior the last week has been erratic—I mean objectively, not psychologically.  He said he would not come here unless action was taken to avert a federal financial collapse.  Action has most clearly not been taken.  Why is he here?

CHUCK TODD, NBC POLITICAL DIRECTOR:  Well, I think it‘s eye of the beholder.  Look, I‘ve talked to some folks who want to say, Hey, McCain blinked.  He made his threat.  He said if there wasn‘t a deal, he would get (ph) here, he wouldn‘t come.  Well, they didn‘t change the definition of what a deal would mean—framework for a deal.  I have some folks who are upset, who wish that he would have stood his ground on this and fight this.

But I think the language he uses tonight to explain exactly why he was doing what he did—there is good news for him.  He inserted himself into the story.  But at what cost?  And I think that that‘s the question here because if by inserting himself in the story, he also needs to figure out how to become part of the solution.  And now he‘s owning both side of this.  He‘s going to not get the solution part if three fourths of everybody else is on board on this and he‘s sort of not crazy about it.  But the up side for him is if this thing is still as unpopular today—in two weeks as it is today, of the two candidates, he can say he was more against it than Obama.

MATTHEWS:  You know what?  I love logic trees, gentlemen, a logic tree.  If this thing passes, we won‘t know if there would have been a collapse otherwise.  And therefore, he will have to defend something that‘s hard to defend because he has to say, We had to do something very unpopular, but he had to do it to avert something worse.  But what we see is the unpopular.  Barack Obama has the option of saying, No, I‘m not voting for this thing, doesn‘t he?

(CROSSTALK)

MATTHEWS:  Howard first.

FINEMAN:  Here‘s the thing.  He‘s a Navy guy, OK?  The Navy motto is, Don‘t just stand there, do something.  I just bumped into Nicole Wallace, who‘s the communications director of the campaign.  She‘s giving me the spin of what he‘s going to say tonight.  He‘s going to say, Sure, it was bad politically, but I don‘t care about the politics.

MATTHEWS:  Yes.

FINEMAN:  I was doing it...

(CROSSTALK)

MATTHEWS:  OK, a week from now...

(CROSSTALK)

MATTHEWS:  But do we agree he has to vote for whatever comes out?

FINEMAN:  He‘s going to have to vote for whatever comes out.

MATTHEWS:  OK, if he has to vote for it, he has to defend it.  Barack Obama, does he have to vote for it?

FINEMAN:  Yes.  They‘re both going to have to vote for it.

MATTHEWS:  Are you sure he has to vote for it, Barack?

FINEMAN:  Oh, yes.  They‘re both...

MATTHEWS:  OK, explain why Barack has to vote for it.

FINEMAN:  Yes.  They‘re both going to have to vote for it.

MATTHEWS:  Are you sure he has to vote for it, Barack? 

FINEMAN:  Oh, yes.  They‘re—they‘re both...

MATTHEWS:  OK.  Explain why Barack has to vote for it.

FINEMAN:  They‘re both going to—well, first of all, Barack is—is actually the one doing the work to try to help get the thing passed.  He has made—he has told his Democratic allies, don‘t put that stuff in there about bankruptcy judges. 

TODD:  Well...

(CROSSTALK)

FINEMAN:  Keep that—keep that out of there.  Keep that out of there. 

I think—I think that he‘s demonstrating, by what he‘s doing, that he wants to try to get it passed. 

MATTHEWS:  Chuck? 

TODD:  Well, it‘s eye of the beholder.  I mean...

MATTHEWS:  Does Barack have to vote for this thing? 

TODD:  ... there is an argument.

Well, yes, he has to vote for it.  And so does McCain, if House Republicans are a part of it.  I still think McCain has a chance to back out of this if, for some reason, he doesn‘t like what the compromise language is—is going to become. 

But this is what is so odd about McCain‘s decision...

MATTHEWS:  But it won‘t pass if he backs out of it. 

TODD:  ... that he didn‘t come with his own—well, that‘s true. 

But he didn‘t come with his own solution to the table.  He didn‘t seem to say, this is what I want in there, the way the House Republican at some point did...

MATTHEWS:  Right. 

TODD:  ... come with something that they wanted in there.

And I think this is why I think—look, I think McCain made a -- 75 percent of the decision that McCain made this week was a good decision.  He had to, politically.  This thing was drifting away from him.  He wasn‘t involved in the story.  And he had to show that he could show leadership on an issue that he hadn‘t shown leadership on before.  And that was the economy. 

(CROSSTALK)

TODD:  The odd 25 percent part was to make this little debate threat, because that politicized it. 

He can‘t say this was country first when he made the debate threat.  If he had said everything else, he could have pulled a country first on this.  Adding the debate politicized it. 

MATTHEWS:  Yes.

Howard? 

FINEMAN:  Well, I—listen, I think he had no choice but to do something, because the economy has wiped everything else.  It‘s sort of like the hurricane in the Gulf.  OK?

MATTHEWS:  Yes. 

FINEMAN:  It‘s wiped everything else off the map.  It‘s the only thing people care about, whether their ATM cards work, whether their savings are good. 

MATTHEWS:  Yes. 

FINEMAN:  And he‘s got to show that he cares about it.  And that was the way he chose to demonstrate it. 

McCain is not a logic tree thinker.  OK?  You‘re in to the logic trees.  McCain is one news cycle to the next news cycle.  And he wanted to demonstrate, somehow, that he cared as much about the economy and fixing the economy as Obama did. 

MATTHEWS:  OK.

(CROSSTALK)

MATTHEWS:  You first, Howard. 

(CROSSTALK)

MATTHEWS:  When this whole thing is over, hopefully in a week or two, when this is over in a week—Chuck, if you want to go first, go ahead—is this is all over, they have a deal a week from now, they pass it, the markets are sort of OK on it for a while, is the country going to be any more in love with the way people are running this country than they were a week ago? 

Or are they going to say, these bums have all ended up on top; they have fed themselves and their buddies on Wall Street that give them campaign contributions to their buddies out there, all the money in the world; we‘re screwed again?

Why would anyone want to run on the status quo and say, what—what a great way to run a country?  I‘m convinced that the person who is the odd man out on this will look good. 

You disagree.  You think they both have to sign on, Chuck? 

TODD:  Well, no.  I think you‘re—look, I think you‘re onto something on that front. 

And that is what I—a lot of conservative, Republican strategists that I talk to in Washington sat there and said today, why did McCain do this?  Why didn‘t he go all in and say, I‘m going to be against this thing; we have got to stand up to Wall Street, got to stand up to Washington? 

And he almost did it.  And then he pulled back a little bit.  And that, I think, is frustrating some, because I—Chris, I think you‘re right.  The grassroots in two weeks is never going to like this thing, because the markets...

(CROSSTALK)

TODD:  It‘s not as if it‘s all going to correct everything in a minute.

(CROSSTALK)

FINEMAN:  Yes. 

(CROSSTALK)  

FINEMAN:  But here‘s the problem substantively. 

The other side—that is, the non-Paulson side—doesn‘t really have a good proposal. 

MATTHEWS:  I know they don‘t.  I agree.

FINEMAN:  People that I have talked to about the House Republican proposal say, it‘s not really a good idea.  And most of Main Street businesspeople at the upper end think that the Paulson thing is the worst of a—is the best of a bad lot of proposals. 

The other side doesn‘t really have an answer.  The 200 economists who said they didn‘t like the Paulson idea didn‘t have an idea of their own. 

MATTHEWS:  Yes. 

FINEMAN:  They just objected to Paulson was doing.

MATTHEWS:  I think the one who signs on to this deal has signed on to the way things are being done in this country, and they will lose the election.

If I were Barack Obama, I would be wait until the minute.  I would be the last senator to vote, and I would vote no. 

Thank you, Chuck Todd.  Thank you, Howard Fineman. 

(CROSSTALK)

MATTHEWS:  Up next:  Tonight‘s debate may well set the course for the rest of this race, not unlike the great debate back in 1960 between John F.  Kennedy and Richard Nixon.  That was also held, by the way, on September 26. 

(CHEERING AND APPLAUSE) 

MATTHEWS:  And, later, DNC chairman Howard Dean and former Mississippi Senator Trent Lott preview the big debate, another great debate, here tonight at Ole Miss. 

You‘re watching it, HARDBALL, live from the University of Mississippi, the first presidential debate of 2008, only on MSNBC. 

(COMMERCIAL BREAK)

(CHEERING AND APPLAUSE) 

MATTHEWS:  Welcome back to HARDBALL. 

On this very day, September 26, in 1960, John F. Kennedy and Richard Nixon met in what is called the great debate, the first televised debate between presidential candidates. 

What lessons can we learn from them today? 

Joining us right now, one of the great historians of our time, Doug Brinkley.

Douglas, thank you for joining us. 

I want you to take a look at something that John Kennedy did to start that great debate back in 1960. 

(BEGIN VIDEO CLIP, SEPTEMBER 26, 1960)

JOHN F. KENNEDY (D), PRESIDENTIAL NOMINEE:  We discuss tonight domestic issues.  But I would not want that to be—any implication to be given that this does not involve directly our struggle with Mr. Khrushchev for survival. 

(END VIDEO CLIP)

MATTHEWS:  Doug, there he is, laying it out.  It was a memorized opening statement.  I‘m convinced it was the way to win the debate, come in with memorized material, make your case, let the other guy live with it. 

DOUGLAS BRINKLEY, PRESIDENTIAL HISTORIAN:  Well, that‘s right. 

And, you know, as you said, it was the first televised debate.  You had 70 million people watching it.  And Kennedy had to persuade people that he was presidential.  And he did it.  He grabbed ahold of foreign policy.  And even though that first debate, first of four, was supposed to be on domestic politics, it turned to foreign policy.

And he really ran against Nixon in Quemoy and Matsu issues, Cuba, et cetera, in the following three debates after that first one. 

MATTHEWS:  Who was the tougher cold warrior, Nixon or Kennedy? 

BRINKLEY:  Boy, Kennedy played the tougher cold warrior, Chris, as you know.  I mean, he came on and grabbed ahold of that missile gap issue, saying the United States was woefully behind the Soviet Union.  He went after Castro‘s Cuba, John F. Kennedy, and he said that Nixon was being soft. 

I think a difference between 1960 and now is that Nixon, you know, is

had a very popular president that he was vice president under, Eisenhower, could have won a third term, where McCain has President Bush, who, by no means...

MATTHEWS:  Right. 

BRINKLEY:  ... could win a third term right now. 

MATTHEWS:  OK.  People aren‘t very happy now. 

Let‘s watch Ronald Reagan and see if Barack Obama can do what Reagan did 28 years ago.  Here he is with his salvo. 

(BEGIN VIDEO CLIP, OCTOBER 1980)

RONALD REAGAN ®, PRESIDENTIAL NOMINEE:  Next Tuesday is Election Day.  Next Tuesday, all of you will go to the polls.  You will stand there in the polling place, and make a decision. 

I think, when you make that decision, it might be well if you would ask yourself, are you better off than you were four years ago? 

(END VIDEO CLIP)

MATTHEWS:  Can Barack Obama do the same, Douglas Brinkley? 

BRINKLEY:  Absolutely. 

He should almost use that line and, all night long, tattoo President Bush‘s failed domestic and foreign policies and try to blame McCain with it. 

Remember, when McCain tried to cancel this debate, or tried not to show up, he wasn‘t being that odd, historically, as people made it seem.  Nixon did not debate in 1968 and ‘72.  He learned a lesson from 1960.  And, of course, Nixon won those two elections.

MATTHEWS:  Right. 

BRINKLEY:  There‘s something intimidating going against a man that is so telegenic as Obama.  And, so, it‘s—but, on the other hand, if Obama screws up tonight, it‘s a great opening for McCain. 

MATTHEWS:  I love the way you talk.

Douglas Brinkley, of Rice University, thanks for joining us.

Up next: where this race stands heading into the first debate, the great debate, it may well be called.  We will look at the latest poll numbers. 

Plus, Mississippi‘s own Trent Lott, plus Democratic Party chair Howard Dean. 

(CHEERING AND APPLAUSE) 

MATTHEWS:  You‘re watching HARDBALL, live from the University of Mississippi, Ole Miss, as we get ready for the first presidential debate between John McCain and Barack Obama. 

(COMMERCIAL BREAK)

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

Stocks closing mostly higher, as Congress struggles to reach a deal on a Wall Street bailout.  Despite that uncertainty, the Dow Jones industrial average gained 121 points, the S&P 500 up four.  The Nasdaq lost just three. 

Oil dropped $1.13, closing at $106.89 a barrel. 

And “The Wall Street Journal” reports, troubled bank Wachovia has begun preliminary merger talks with a handful of possible suitors, including Citigroup and Wells Fargo. 

That‘s it from CNBC, first in business worldwide—now back to

HARDBALL. 

MATTHEWS:  Well, that‘s Margaret Brennan with some good news for the markets, for once. 

Welcome back to HARDBALL, live at the University of Mississippi for the first presidential debate.

Let‘s go now to MSNBC‘s chief Washington correspondent, Norah O‘Donnell, who is up in New York with more with our latest NBC poll numbers -- Norah.

NORAH O‘DONNELL, NBC CHIEF WASHINGTON CORRESPONDENT:  And good evening to you, Chris. 

And take a look at our new virtual reality set.  You know, tonight‘s debate takes place against the backdrop of a very unhappy electorate.  In fact, according to our NBC News/”Wall Street Journal” poll this week, the mood of the American public is about as worried as it can get. 

In fact, we asked voters, registered voters, if they think America is in decline.  And almost three in four, 74 percent, said, yes, while only 22 percent said no.  And that represents an increase from 69 percent in our June poll. 

And, when talking specifically about their finances, people are also very concerned.  Take a look at this.  Only one in three, 34 percent, are optimistic about their personal finances, while 58 percent say they are worried. 

So, in this pessimistic environment, it‘s not surprising that this $700 billion bailout plan, which is still being debated by taxpayers, is not very popular.  In fact, when we asked voters about the original proposal put forth by President Bush and Treasury Secretary Hank Paulson, only 31 percent approve of the plan, while 33 percent disapprove.  Thirty-six percent do not have an opinion. 

And, really, those last two numbers, Chris, I think, are really critical, because you combine them, and more than two-thirds don‘t approve of the plan.  And that‘s why tonight‘s debate is so critical for Barack Obama and John McCain.  They are going to have to make the case to nearly 100 million expected viewers tonight—Chris. 

BLITZER:  OK.  Thank you very much, Norah O‘Donnell, as always. 

We have Howard Dean now, chairman of the Democratic National Committee. 

It‘s great to have you here.

HOWARD DEAN, DEMOCRATIC NATIONAL COMMITTEE CHAIRMAN:  Chris, thanks for having me on.

(CHEERING AND APPLAUSE) 

MATTHEWS:  My anecdotal check around the country, basically in the Northeast today, tells me that the best argument for Barack Obama to make tonight is change.  I‘m not the team that is running the show right now. 

DEAN:  I think that‘s right. 

You saw John McCain kind of panic and rush back to Washington.  I think this is about with leadership.  And I think Barack has had a good week this week.  He looks presidential.  He looks like he‘s the kind of guy that can lead us out of this. 

MATTHEWS:  If the Democrats don‘t win their turn, which is ‘08, after eight years out of office, how can you explain they don‘t win?  How could your party not win this election? 

DEAN:  Look, elections are between two individuals.  And, at the end of the day, party doesn‘t have a lot to do with it.  This is between Barack Obama and John McCain. 

John McCain is—it‘s really very much, I think, like the election of 1960.  John McCain is playing the role of Richard Nixon, and Barack Obama is playing the role of Jack Kennedy.  People had a lot of doubts about Jack Kennedy, but he won because he was the president of the future, and not the candidate of the past. 

MATTHEWS:  How does Dean—I mean, how—you‘re Dean—how does Barack Obama warm up—let‘s be blunt about it—the more conservative, more cautious white voter? 

DEAN:  Because, I mean, frankly, the pain of staying the way we are in America, which is what John McCain represents, is, I think, much greater than the fear of change that all Americans have. 

I mean, people always both fear change and want it at the same time.  We‘re in a place now where we really need change.  And it‘s really clear that Barack Obama can lead us to that change. 

MATTHEWS:  How do you deal with this tax thing?  These guys kneecap you with the tax issue.  Every time a Democrat says, time for a change—we got Trent Lott coming here in a minute—I‘m sure he‘s going to kneecap you, the way they always do—Republicans say, you think things are bad now?  You get the Democrats in, and the first thing they will do is raise taxes again. 

DEAN:  They always talk like that.  First of all...

MATTHEWS:  Well, is it true? 

DEAN:  No, of course it‘s not true. 

MATTHEWS:  Well, Clinton raised taxes, didn‘t he?

DEAN:  Barack has a—a tax cut plan that‘s going to help all the people that Bush and McCain have left out, first of all.

Secondly, they always talk about that kind of stuff, because they always want to scare people about change.  The truth is that Bill Clinton‘s economy was the best economy that we have seen in a hundred years.  George Bush and John McCain‘s economy has been awful. 

Republicans can‘t manage, they don‘t know how to manage money.  Three-quarters of the deficit in this country was put in by the last three Republican presidents.  And Bill Clinton was the only president who got rid of the deficit in the last 40 years. 

We need a Democratic president just to manage the country right and manage the economy.  The truth is, Chris, the economy is always better when you have a Democratic Party president. 

MATTHEWS:  Sarah Palin, the governor of Alaska, and the V.P. nominee of the Republican Party, said that she‘ll be good on foreign policy because if Vladimir Putin, the president of the Soviet Union, enters American airspace over the Arctic Circle, she‘ll be prepared with her experience as the governor of Alaska. 

I‘m dead serious, this is a dead serious statement by her to Katie Couric.  What do you make of it?  That‘s her preparation to defend our country, that she‘s used to defending that northern border.  What do you make of it? 

DEAN:  I think the American people saw that interview and they‘ll make up their own mind about it.  We‘re running against John McCain.

MATTHEWS:  What do you make of it, is it a serious response or a naive response? 

DEAN:  I don‘t think it‘s a serious response.  But I do think that we‘re running against John McCain, not Sarah Palin.  And John McCain is the one who is going to end as president of the United States if we don‘t win this election.  And that‘s very bad. 

MATTHEWS:  You guys are walking on eggs.  You are so afraid to hit the governor of Alaska. 

DEAN:  The governor of Alaska is not running for president.  The governor of Alaska may become an issue when John McCain‘s judgment becomes an issue.  And I think John McCain‘s judgment has become an issue this week when he lost his cool, rushed off to Washington, said he wasn‘t going to debate.  I think part of the John McCain that.

MATTHEWS:  Do you think he has been erratic? 

DEAN:  I think he is erratic.  I think he is irascible.  And I think he can be impulsive.  And I think that‘s—you know, those are not good traits.

MATTHEWS:  Is temperament an issue of tonight‘s debate? 

DEAN:  I don‘t—no, he has done a good job controlling his temper on the campaign trail.  But if you ask many people from the United States Senate, including Senator Thad Cochran from this state, they‘ll say that John McCain probably ought not be president. 

MATTHEWS:  Governor Dean, thank you very much, sir. 

DEAN:  Chris, thanks for having me on.

MATTHEWS:  Thank you very much for—we‘re going to—here right now, we‘re going to change seats.  You have to rise, sir.

DEAN:  Yes, I do.

MATTHEWS:  And Governor—Senator Trent Lott of Mississippi is about to take your place. 

(CHEERING AND APPLAUSE)

MATTHEWS:  You know, I haven‘t been down here in so long.  I was in Jackson about 28 years ago, and here I am.  This is the most beautiful place.  If you like summer in the United States, it‘s still here, it‘s still August up here. 

(CHEERING AND APPLAUSE)

MATTHEWS:  You know, Senator Lott, I see why you kept your tan all year round down here.  Jeez, this is like a Fourth of July picnic down here. 

TRENT LOTT®, FORMER MISSISSIPPI SENATOR:  Hey, great, man. 

MATTHEWS:  It is so great to have you down here, and the rock band just stopped playing.  We‘ve got a lot of McCain people here. 

(CHEERING AND APPLAUSE)

MATTHEWS:  And we have somebody from the Everst (ph) family for Obama here which is.

(CROSSTALK)

LOTT:  Yes, absolutely.  Yes.

MATTHEWS:  And we have Obama people here. 

(CHEERING AND APPLAUSE)

MATTHEWS:  So...

LOTT:  Well, let me ask you, Chris.  Have you learned how to do “Hotty Toddy” yet?  You can‘t be an Ole Miss guy if you can‘t do a Hotty Toddy.

(CHEERING AND APPLAUSE)

LOTT:  Great to be with you.

MATTHEWS:  I‘m just trying to slow down my Philly accent a little bit.  Let me ask you about this part of the country.  Mississippi will be for McCain, right?

LOTT:  Beg you pardon?

MATTHEWS:  Mississippi has already been counted, right? 

LOTT:  Well, no, it hasn‘t been counted, but I feel very good that Senator McCain will be, you know, the leader in Mississippi.  That hall right there used to be McCain Hall, named after John‘s grandfather. 

MATTHEWS:  Really?

LOTT:  And the McCain family is from here.  And lot of Mississippians don‘t know that, but I believe that in the end that McCain and Palin will be very strong in Mississippi. 

MATTHEWS:  Well, I thought we‘d have an empty chair debate here tonight, Senator, because I thought John McCain really was going to stick to his guns and not show up.  Because he said, I‘m not coming until there‘s action taken on dealing with this financial collapse.  Well, action has not been taken but John McCain is going to be hear.  How do you explain that? 

LOTT:  Well, I think they‘re making progress and they‘re going to keep working on it. 

MATTHEWS:  But they‘re not go getting it done.  He said.

LOTT:  They‘re going to get it done.  They‘re going to get it done.  They may have to meet tomorrow.  They may have to meet Friday.  After all, if they came to an agreement—as you know, Chris, you were there, if you came to an agreement right now, it would take a day or two to put the pieces together.  But what‘s going on in Washington right now, Chris, is hat I wrote about in my book, “Herding Cats.” And they‘ll get an agreement.

MATTHEWS:  Well, I remember, let me cite you one of the great writers, William Faulkner, of course, is one of the great writers of history here. 

He‘s from down here.  Nah, he‘s not very well thought of.  William Faulkner

Ernest Hemingway once said to Ava Gardner, don‘t confuse action with motion.  What we‘re seeing on Capitol Hill right now with all of these meetings, are we seeing action or just motion?  Is something actually getting done, because I don‘t hear it getting done? 

LOTT:  You‘ve been through that, and I‘ve been through that.  And to get action, there has to be a lot of motion.  You have to include everybody.  And one of the things that got a large.

MATTHEWS:  Would you vote for a bailout being from Mississippi?  Or would you just say, let those guys bail themselves out? 

LOTT:  You know, I would want to make sure I understood all of the details.  And that‘s what happened yesterday.  They added some things that shouldn‘t have been in there.  I would probably like to make some changes. 

But here is the thing, Chris.  Yes, I would vote for it in the end.  In fact, if I had been majority leader, I would have forced a vote on a package last night at midnight.  Because this is serious business. 

And until people in Congress, in an election year, Chris, are told, look, you‘re going to have to cast this vote, make up your mind, are you going to take the chance of doing nothing and facing the consequences with our economy, or are you going to step up and do the right thing and explain to the people as best you can why you did that? 

MATTHEWS:  OK.  I want you to do something I get Pat Buchanan to do once in a while.  Take off your political hat, your ideological—I know you‘re a Republican conservative, think about this as your.

LOTT:  But you also know I‘m a guy that believes in getting something done, Chris. 

MATTHEWS:  OK.  Imagine you‘re in the corner of Barack Obama tonight.  You have got 15 minutes with him before the debate.  You‘re going to be his cornerman.  You‘ve got the towel over your shoulder.  You‘ve got the bucket in your hand.  The guy is going in the ring.  How do you get John McCain‘s goat?  How do you get him to just go crazy tonight? 

LOTT:  Well, actually, I‘ve been in the other corner.  I‘d say, John, keep cool, you‘re up against a very capable.

MATTHEWS:  I don‘t want to hear that, I want to hear how to get the guy‘s goat. 

(LAUGHTER)

LOTT:  No, you‘re not going to be able to. 

MATTHEWS:  You‘re not?

LOTT:  No.  Because first of all, John is a different man than he was in 2000.  John has changed.  I think he has matured.  I think he is much more in control.  Don‘t you think that somebody is telling McCain right now, look, he‘s going to attack you here or there. 

Look, Obama—I hope it won‘t be a gotcha attack deal.  Let‘s have a good discussion about foreign policy and how the economic circumstances affect not only us but the entire world.  What happens in the world affects us. 

I think they‘ll both do that.  I think—we all know Senator Obama has had a lot of experience in debates this year, four one-on-ones, Senator McCain I think maybe had one one-on-one.  So but I do think this is the opportunity for these two men to rise above what, you know, could be a gotcha typical sort of debate and have a serious, thoughtful debate about national security, defense, and foreign policy. 

MATTHEWS:  All right.  I think it may be more interesting than that. 

But thank you, Senator. 

LOTT:  All right.  Chris, good to see you. 

MATTHEWS:  Trent Lott, thank you for taking the high road.  Senator Trent Lott of Mississippi.

(CHEERING AND APPLAUSE)

MATTHEWS:  Up next, we‘ll talk to the great crowd here at Ole Miss about what they want to see at tonight‘s debate.  This is HARDBALL live at the University of Mississippi for the first presidential debate tonight on MSNBC.  

(CHEERING AND APPLAUSE)

(COMMERCIAL BREAK)

MATTHEWS:  Here we are at the campus of Ole Miss.  And we have got some kids here, young adults, rather.

(CHEERING AND APPLAUSE)

MATTHEWS:  . from around the country who are a group called Concerned Youth of America, CYA, I guess we could figure what that means, also. 

Tell me, why are guys here, and why are you wearing prison costumes? 

UNIDENTIFIED MALE:  We are a nonpartisan organization that deals with national debt. 

MATTHEWS:  What is your worry? 

UNIDENTIFIED MALE:  Our worry is that we‘re—our generation is going to be stuck with the bill, which is why we‘re wearing these prison costumes. 

MATTHEWS:  How much debt do we have in this country right now, national debt? 

UNIDENTIFIED MALE:  Right now it‘s about $9.6 trillion, but it‘s growing by the day.

MATTHEWS:  And what happens after the bailouts, about $11 trillion, right? 

UNIDENTIFIED FEMALE:  Right.  If we keep on spending like this, our generation—in like 20 to 30 years, the debt will be up to like $53 trillion. 

MATTHEWS:  So are you guys Democrats or Republicans or what? 

UNIDENTIFIED MALE:  We‘re completely nonpartisan, grassroots student organization.  And we‘re just concerned about when we‘re going to be politicians that we‘re not going to have a government to... 

MATTHEWS:  Yes.  I worry about it too.  What happens when this government owes $11 trillion?  You kids are going to pay for it or what? 

UNIDENTIFIED FEMALE:  That‘s what we‘re worried about. 

MATTHEWS:  How come the politicians don‘t talk about this? 

UNIDENTIFIED FEMALE:  Because it is an issue that people are not—it‘s not an attractive issue.  People want to—the politicians worry about getting voted for.  And you know, the people want taxes to be cut and they want entitlement programs, and that‘s how a politician gets elected, they‘re not going to be elected by saying we are going to have to make sacrifices, which is what we have to do. 

MATTHEWS:  They may be adding $2 trillion.  I hear that this thing may go to $11 trillion, that we owe to the world, some of it the world.  What does that mean?

UNIDENTIFIED MALE:  The real question is, who is going to pay it for all of these policies being advocating on Capitol Hill?  Right now nothing is going to happen in terms of your tax bracket.  Everything is going to be pushed down to our generation.  The bill just keeps getting pushed down.

MATTHEWS:  OK.  You know, I appreciate the fact that you guys are all seriously looking at the implications of a $700 billion bailout.  Somebody is looking at the price tag.  It‘s—there it is.  More HARDBALL coming up.  Here it is, www.cyaamerica.org, “acting today to preserve tomorrow.” Thank you.  Her name is Caroline (ph). 

(CHEERING AND APPLAUSE)

MATTHEWS:  Thank you, everybody.  We‘ll be right back with more

HARDBALL.  

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to the University of Mississippi, Ole Miss, site of the first presidential debate tonight between Barack Obama and John McCain.  It‘s coming on at 9:00 Eastern tonight here on MSNBC. 

Back in Washington, meanwhile, the U.S. Congress continues to work on a possible bailout deal and we‘re joined right now by one of the key people involved in that, the chairman on the Senate Banking Committee, Senator Chris Dodd of Connecticut. 

Senator Dodd, thank you for coming here. 

SEN. CHRIS DODD (D-CT), CHAIRMAN, BANKING COMMITTEE:  Thank you, Chris. 

MATTHEWS:  Do you have a breakthrough possibility?  Do you have a breakthrough possibility tonight to offer? 

DODD:  Well, I don‘t have one.  But there is always a possibility.  We‘ve been at it for seven days.  And I‘m not going to buy into a plan here that gives this secretary or any secretary $700 billion without making sure you have executive compensation.  You make sure you have accountability on this money.  Make sure you‘re going to see to it that taxpayers are going to get some of the benefit if these assets turn out to make a profit.  And want to make sure that we deal with foreclosures. 

Look, this was a problem that was avoidable, Chris.  It didn‘t have to happen.  And we‘re here because the cops were not on the street.  And this has really caused us a major financial blow-up.  So I‘m willing to work on a plan.  But I‘m not about to turn over this amount of money without some strong conditionality associated with it. 

MATTHEWS:  It seems to me that the little man out there, the little woman out there is thinking, even if you cut a deal, you know, here‘s the big shots.  Not you.  You‘re an elected official.  But the big shots from Wall Street, personified by Secretary Paulson, are covering themselves, they‘re making sure they‘re taken care.  And that somehow in the end, the money is going to move back to them even though they messed up. 

DODD:  Well, that‘s a fear.  That‘s why I‘m so adamant about the executive compensation.  I don‘t know if you heard about one of these executives at Washington Mutual who was there about three weeks and walked away with millions of dollars in a compensation or bonus package. 

The idea that the American taxpayer would subsidize these companies by getting these bad assets off their books and then somehow using that assistance from the federal government to reward themselves with some huge bonuses or compensation, I refuse to have anything to do with a plan that even would remotely allow that to happen. 

And then secondly, I say this to you, Chris.  And, again, I‘m angry about this.  I‘m furious that we‘re in this situation.  The danger is this, what happens if we don‘t act?  Don‘t do anything?  The very people you just talked about on Main Street, that small business, that family that wants to send their child to college, that retirement account, that 401(k), all of those things we‘re told by economists and people whose judgment I think we have to listen to, they say they‘re in jeopardy. 

So I have no interest in helping the lower part of Manhattan.  I have a lot of interest in avoiding a catastrophe for people who live way outside of New York.  And that‘s really what may be at stake here. 

MATTHEWS:  When you talk to your experts and your staff people talk to the experts, when is the real deadline, as people see it, right now? 

DODD:  A great question, Chris.  You know, we were told a week or so ago, it was a matter of days.  Now we‘ve had some rough news this week with Washington Mutual, then maybe some other banks that are going to collapse in the midst of all of this.  And we‘re told again by people we are on the brink of something that could be far more devastating and far more costly. 

But my guess is, Chris, we need to act on this fairly quickly.  Now again, I‘m prepared to stay here again as I did all last week, up until 5:00 in the morning, night after night, trying to work something out.  But I‘m more determined about getting this right.  And I refuse to be herded or stampeded into an answer here without giving this the kind of consideration it rightly deserves. 

MATTHEWS:  Is the end of the third quarter a significant fact?  The fact that we‘re coming up with October 1st?  Is that a significant fact in the banking world? 

DODD:  Well, it is.  The more important date I think is November 4th, that‘s Election Day.  That‘s about 39 days from today.  And asking 535 members of Congress to buy into a program that most Americans, 99 percent are furious about, and yet most Americans realize they probably can‘t leave here without doing something about it. 

That‘s the date I suspect most of my colleagues are worried about. 

Not October 1st, but November 4th

MATTHEWS:  OK.  Thank you very much.  Chris Dodd, the chairman of the Senate Banking Committee, who is at the heart of this effort to save our economy.  Thank you much, sir, for joining us tonight. 

DODD:  Thanks, Chris.

(CHEERING AND APPLAUSE)

MATTHEWS:  Join us again in one hour for more HARDBALL.  And then at 9:00 p.m. Eastern right here on MSNBC, the first presidential debate between John McCain and Barack Obama. 

Right now it‘s time for “RACE FOR THE WHITE HOUSE WITH DAVID GREGORY.”

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