updated 10/6/2008 3:12:27 PM ET 2008-10-06T19:12:27

Guest: Bob Shrum, Steve Israel, Rep. Brian Bilbray, Rick Hertzberg, Ron

Brownstein, Michelle Bernard, Chris Cillizza

CHRIS MATTHEWS, HOST:  Sarah is saved, and the bail-out deal‘s done.  But the market is down jobs are dying, the economy‘s in recession, McCain‘s in pain.  And where, oh, where, are we?

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Leading off tonight: Signed, sealed and delivered.  What a difference a Wall Street collapse makes.  In the same week the House rejected the $700 billion bail-out and the stock market plummeted nearly 800 points, the House passed a revised version of the bill.  Democrats supported it overwhelmingly.  Republicans voted against it narrowly.  And President Bush quickly signed it.

(BEGIN VIDEO CLIP)

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES:  By coming together on this legislation, we have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country.

(END VIDEO CLIP)

MATTHEWS:  If Wall Street was impressed, it didn‘t show it.  The Dow dropped another 157 points, most of that loss coming at the end of today.  Part of the reason for that may be because the Labor Department reported today that 159,000 jobs were lost in September, the worst loss in five years and, by the way, the ninth straight month of job losses.

Plus, about last night‘s debate.  Did Sarah Palin survive?  You‘re darn right she did.  Whether she changed any minds about whether she knows what she‘s talking about is another thing.  One thing we can tell you is boffo box office.  The early ratings suggest the debate drew Super Bowl-like numbers.  Who won?  Two real-time polls taken right after the debate last night declared Joe Biden the winner, but it‘s unlikely either side gained or lost much.  We‘ll ask Pat Buchanan and Democratic strategist Bob Shrum about who won and get a little argument going here.

One thing we can agree on is that the big event on the campaign calendar coming up is the presidential debate this Tuesday in Nashville.  We‘ll look at that in the “Politics Fix.”  And to borrow an expression that Governor Palin used last night, who got more shoutouts in the debate last night, John McCain or Barack Obama?  That‘s in the HARDBALL “Sideshow” tonight.

But first, U.S. congressman Steve Israel of New York supported the bail-out bill.  Congressman?

REP. STEVE ISRAEL (D), NEW YORK:  Hi, Chris.

MATTHEWS:  Thank you very much, Congressman.  Let me ask you this, why didn‘t Wall Street respond to $610 billion in economic spending by the government?

ISRAEL:  Well, anybody who believes that there‘s an instant recovery here is wrong.  Look, the economy is sick, Chris.  When you‘re sick, when somebody‘s sick, you take some medicine.  It takes some time to recover.  The economy is sick.  We gave it some medicine to nourish the credit markets, and it‘s going to take some time to recover.

The other point I want to make is, this really isn‘t about the Dow Jones.  It‘s not about Wall Street.  It‘s about Americans who are finding it harder to get college loans for their kids.  It‘s about American car dealers who are going out of business because people can‘t get auto loans.  This is about restoring faith in the credit market so that businesses can borrow responsibly and expand and hire people, rather than laying off the 160,000 that were laid off in September as a result of the credit crunch.

MATTHEWS:  So you voted for the bill and you‘re glad you did, right?

ISRAEL:  Look, no, I‘m not glad that we had to vote for this bill.  I resent the fact that it took the Bush administration eight years to dig us into this mess.  And all I‘m saying is it‘s not going to take one vote by the House of Representatives to dig us out.  What we did do is we stopped digging deeper.  And it‘s going to take some time to recover.  This was strong medicine.  Nobody enjoyed having to vote for this.  But inaction was a worse prescription than what we did tonight.

MATTHEWS:  OK, we have joining us right now U.S. congressman Brian Bilbray of California.  He voted against the bill.  He‘s a Republican.  President Bush said we needed this bill.  He‘s signed it.  Why did you disagree, Congressman?

REP. BRIAN BILBRAY ®, CALIFORNIA:  Well, I think that we need to do something, but we need to change procedures, not just throw money at it.  And frankly, Chris, you know, we had all weekend to work out something.  It wasn‘t a take it or leave it, the Senate throwing this out there and then adding all of the stuff, like the Senate always does, takes a crisis, makes it a Christmas tree, and it loses all its credibility with the American people.

MATTHEWS:  Didn‘t they put that stuff in for House Republicans?  I thought that was the goal of it was to buy you guys.

BILBRAY:  They threw in all kinds of stuff.  But the trouble is—you know, it‘s the Senate.  You‘ve been around here, where they—every crisis is a way to...

MATTHEWS:  Oh, I—I remember...

(CROSSTALK)

MATTHEWS:  I noticed that they put in something on wooden arrows for kids to buy, I guess, bow and arrow sets...

BILBRAY:  Well, wait until you see...

MATTHEWS:  ... up in—from up in Alaska to keep Don Young in his seat.

BILBRAY:  Well, actually, Washington, I think, was the state.  But the senators all get their grab bag.  Wait until you see the Virgin Islands, the deal made with a foreign rum producer.

MATTHEWS:  The rum.  Who benefited from that?

BILBRAY:  That is going to be Captain Morgan‘s.  And I love a good glass—you know, Coke and...

MATTHEWS:  Well, which congressman...

BILBRAY:  ... rum and Coke is...

MATTHEWS:  ... demanded that change?

BILBRAY:  Well, it usually ends up being put in for the Virgin Islands and the rum manufacturer who wants to site there.  There‘s a—let me just tell you...

MATTHEWS:  Well, Congressman insisted on that (INAUDIBLE)

BILBRAY:  I don‘t know where it came from.  All I know is a deeper—

I wanted to support this bill.  I wanted to have a workout on this, rather than a bail-out.  And there were things that need to be changed.  I mean, there was procedurals (ph) changed that the administration was willing to do after the Monday loss, but the attitude of now that you‘ve got a financial crisis and then you throw all this Christmas tree stuff on, it loses credibility.

MATTHEWS:  Would you vote against this bill if your vote was critical to passing it?

BILBRAY:  Yes, I would.

MATTHEWS:  You would have brought it down.

BILBRAY:  Because I‘m—only because we‘ve got until Monday, Chris, and I think that even the congressman from New York would recognize we could have worked all the weekend and actually got something that hadn‘t been turned into a Christmas...

MATTHEWS:  Yes, but the Senate had already acted.

BILBRAY:  Well, the Senate (INAUDIBLE) could come back and straighten it out.  But the fact is...

MATTHEWS:  OK.

BILBRAY:  ... it‘s this issue of having to do it on a Friday, rather than working it Saturday and...

MATTHEWS:  All right.  Well, that‘s a detail I‘m not sure is important.  Congressman Israel, is that important, whether you work two more days to try to...

ISRAEL:  No.  Look...

MATTHEWS:  ... get a bill, then go back to conference and have to do it all over again in the Senate and unwrap that whole deal?

ISRAEL:  Chris, show me 435 members of Congress, and I‘ll show you 435 perfect solutions to the economic crisis.  Unfortunately, we didn‘t have the luxury of more time, another week, another month, another three months to get this the way every one of the 435 members of Congress would have wanted it, not when people can‘t get college loans, not when auto dealers in my area of New York, on Long Island, are reporting a 50 percent drop in sales, and people are getting thrown out of the showroom and being thrown out of the service bay areas.  They‘re unemployed.  They‘re going into foreclosure.

I wish we had the luxury of perfection.  We didn‘t have that luxury.  The other thing I want to say is—frankly, if Brian and others had voted for this on Monday, we may not—and it—you know, and it passed, we may not have had the problems that we had nearly a week later.

What the Senate did was wrong.  What the Senate did was frustrating.  I‘m not happy with what the Senate did.  But the Senate passed a bill, gave it back to the House, and said, Take it or leave it.

MATTHEWS:  Yes.  Let me ask you gentlemen about something bigger that‘s going to loom over the next couple weeks before the election, and also loom over the next year or two, a recession.  Look at the number today, 160,000 jobs lost today.  The unemployment rate didn‘t go up, but the number of jobless claims way higher than anybody thought.  This is the ninth straight month we‘ve had increased job losses.  Jack Welch, the former head of this network—or actually, this network (INAUDIBLE) this network said the fourth quarter this year is going to be a deep negative growth period.

What‘s Congress able to do in the short run?  Are we going to have to just live through this recession over the next year?

BILBRAY:  Chris, we since March have gone $1.69 trillion deeper into debt.  That kind of—remember, the bail-out—I mean, Steve, I didn‘t vote for the bail-out for Freddie and Fannie, either.  That was supposed be...

MATTHEWS:  Shouldn‘t that be enough stimulus to stop the economy from going into recession...

BILBRAY:  Not if you...

MATTHEWS:  ... to spend that kind of money?

BILBRAY:  The biggest problem is that you need to change procedures, too.  The one thing difference between Monday and today was the administration was willing to say the accounting for real estate should be different because it was wrong.  They could have done that before.  So when they say, You vote for it Monday, we already saw a change.  There needs to be a lot more procedural changes.  Washington always thinks the answer is throw more money and later do reforms, rather than...

MATTHEWS:  OK, let me—let me go to Congressman Israel about the on-the-ground situation in your district.  If you go and talk to people who can‘t sell a house or people who obviously have mortgage problems and are facing foreclosure, how does the $810 billion agreed to today reach them on the street corner?

ISRAEL:  Well, I wish it would have done more for them.  Again, I wish we had perfection.  I wish we could have helped them more.  Unfortunately, Republicans said they wouldn‘t vote for a bill that allowed more aggressive and vigorous workouts of homes close to foreclosure.  We do have a bill that allows some workouts under some circumstances.  We‘re going to have to come back in January and be more aggressive and more vigorous in helping those people who didn‘t get into bad loans because they were irresponsible, they got into predatory loans because the lender lied to them.

We have an obligation to help those people not only in their interest, but in my district, Chris, the average home owner has lost $14,000 in equity on their homes not because of anything they did but because of the increased number of foreclosures in their neighborhood.

MATTHEWS:  Yes.

ISRAEL:  When you have more foreclosures, property values decline.  We need to stem those foreclosures.

MATTHEWS:  Boy, we know that.  We know that.  Your last word, Congressman Bilbray.

BILBRAY:  Look, when you have a federal government since ‘77 demanding that certain people who do not normally qualify for loans have to get loans in a fix (ph), and you have static income and increasing prices—

Washington was very much responsible for mandating that certain loans go out, and then you had people taking advantage of it.

MATTHEWS:  Right.

BILBRAY:  We need to change that and we should have changed that...

(CROSSTALK)

MATTHEWS:  I assume we‘re going to have a lot more oversight over Fannie Mae and Freddie Mae, the works.  Thank you, Congressman Steve Israel.

ISRAEL:  Thanks, Chris.

MATTHEWS:  Thank you, Congressman Brian Bilbray of California.

Up next: Sarah Palin rebounds, I guess, but with the McCain campaign giving up on Michigan—they‘re apparently pulling up stakes there—how much pressure is there on McCain to try to win this game, even though the playing field is getting very small for him?  What‘s the importance of Tuesday‘s debate coming up in Nashville?  We‘ll review last night and preview next Tuesday.

You‘re watching HARDBALL.  Please come back in a minute as we talk about what‘s going to happen Tuesday night.  Back in a minute.

(BEGIN VIDEO CLIP)

SEN. JOSEPH BIDEN (D-DE), VICE PRESIDENTIAL NOMINEE:  The people in my neighborhood, they get it.  They get it.  And they know they‘ve been getting the short end of the stick.  So walk with me in my neighborhood.  Go back to my old neighborhood in Claymont, an old steel town, or go up to Scranton with me.  These people know the middle class has gotten the short end.  The wealthy have done very well.  Corporate America has been rewarded.  It‘s time we change it.  Barack Obama will change it.

GWEN IFILL, MODERATOR:  Governor?

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL NOMINEE:  Oh, say it ain‘t so, Joe.  There you go again, pointing backwards again.  You prefaced your whole comment with the Bush administration.  Doggone it, let‘s look ahead and tell Americans what we have to plan to do for them in the future.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE:  How about Sarah Palin last night, huh?  Viva la barracuda!

(APPLAUSE, CHEERS)

(END VIDEO CLIP)

MATTHEWS:  I knew that was coming.  Welcome back to HARDBALL.  Palin-Biden is in the books right now.  The debate is over.  Is it a game-changer or not or simply a push, as they say in sports, no big change in the standings?  And speaking of game changes, is John McCain pulling back in Michigan?  What‘s that all about?  Why is he pulling up stakes and giving up a state with 17 electoral votes that they were all along headed to try to win this time from the Democrats?

Ron Brownstein‘s the political director for Atlantic Media and the author of “The Second Civil War” that‘s just out in paperback.  We‘re going to show you a copy.  There it is.  This guy is the best in the business.  You and—I think you and Balz, I think, are the two best now.  Rick Hertzberg‘s the senior editor of New Yorker,” a friend of mine.  Rick, thank you for joining us.

I want you both to look at something.  Maybe this is comic relief or tragic relief, but let‘s take a look, before we get to the polls on who won the debate last night, something that Governor Palin proposed last night.  It came out of nowhere.  It had something to do with enlarging the role of the—the constitutional role of the vice presidency within the Senate somehow.  Let‘s look at this and what she said.

(BEGIN VIDEO CLIP)

PALIN:  Oh, of course, we know what a vice president does, and that‘s not only preside over the Senate, and we‘ll take that position very seriously also.  I‘m thankful that the Constitution would allow a bit more authority given to the vice president also, if that vice president so chose to exert it in working with the Senate—and making sure that we are supportive of the president‘s policies and making sure, too, that our president understands what our strengths are.

(END VIDEO CLIP)

MATTHEWS:  I don‘t know, Rick, what constitutional powers that she‘s claiming here before taking the office, assuming she gets elected, but there‘s nothing in the Constitution about any powers for the vice president.  The vice president has no power, executive or legislative, except for breaking a tie.  What is she talking about here?

RICK HERTZBERG, “NEW YORKER”:  Yes.  And that power to break a tie is just the equivalent of the president‘s power to veto a bill.  It doesn‘t make the president part of the legislative branch that he can veto a bill.

I think what happened there is that she had absolutely no idea what the background to that question was.  And that was the one part of the debate where she wandered off down the Pacific Coast Highway, you know, into unknown territory, and what she came up with was gibberish.  She kind of reached for the notion that maybe the question was about expanding the vice president‘s power in the Senate, but of course, it was much more about the power grab that Cheney has staged over the last eight years.

MATTHEWS:  Yes, I wonder—Ron, what do you make of the—I found it fascinating because it was the one part of the speech that wasn‘t scripted.  It wasn‘t memorized.  It wasn‘t recited.  It was thinking out loud, which I find fascinating.

RON BROWNSTEIN, ATLANTIC MEDIA:  And I don‘t think we know exactly what she was referring to.  Obviously, there was this brief assertion by the Cheney team that the vice president was part of the legislative branch, and thus not subject...

MATTHEWS:  Yes.

BROWNSTEIN:  ... to laws that affected the executive branch, or exempt from them.  I don‘t know if that‘s what she was talking about.  I guess we have to await...

MATTHEWS:  Well, here‘s a...

BROWNSTEIN:  ... further clarification from the governor of...

MATTHEWS:  Well, Gwen Ifill...

BROWNSTEIN:  ... Alaska.

MATTHEWS:  ... pushed her on this point.  Let‘s see what she says in further exploration of this new role of the vice president in the Senate, some kind of new power.  We‘re talking, by the way, at a time of the most strongest—the strongest vice president in history, Dick Cheney, in terms of war powers, in terms of intelligence, torture, the whole works.  And now she wants more, apparently.  Here is Sarah Palin explaining her position on the new powers that she sees for the vice president.

(BEGIN VIDEO CLIP)

IFILL:  Do you believe, as Vice President Cheney does, that the executive branch does not hold complete sway over the office of the vice presidency—that is, it is also a member of the legislative branch?

PALIN:  Well, our Founding Fathers were very wise there in allowing through the Constitution much flexibility there in the office of the vice president.  And we will do what is best for the American people in tapping into that position and ushering in an agenda that is supportive and cooperative with the president‘s agenda in that position.  Yes, so I do agree with him that we have a lot of flexibility in there, and we‘ll do what we have to do to administer very appropriately the plans that are needed for this nation.

(END VIDEO CLIP)

MATTHEWS:  Once again, I hear the pattern of the way we used to answer questions about books we didn‘t read in book questions in school.  If you didn‘t read the book, you give a lot of words and try to fill up the bluebook.  But what‘s she saying there?

BROWNSTEIN:  There was a lot of words and very little meaning.  I think—I don‘t think we know what she was saying.  She wasn‘t saying anything there.  I mean, there she was desperately trying to get through that question.  But what exactly she means, as I said, I don‘t think we know.  We‘re going to have to explore it further.  I mean, the idea that there is this vast hidden well of institutional power of the vice presidency that has not been plumbed in the eight years of the Bush/Cheney administration seems a little incredible.  But you know, I don‘t think we know exactly what she‘s referring to.

MATTHEWS:  Do you think she overheard a conversation with the vice president‘s people, Addington or Scheunemann, or one of these people that is a vice presidential type, and she‘s heard them talking about how they want more power, and she‘s into that or—Rick, this is serious business.  This is almost like “precious bodily fluids” here we‘re talking about...

(LAUGHTER)

MATTHEWS:  ... a conversation that has no history before it but may have a history ahead of us, if she gets the job.

HERTZBERG:  Well, she was—I think she was grabbing at two straws.  I mean, when you begin an answer by praising the wisdom of the Founding Fathers, that often means you have no idea where you‘re going.  And then she wanted to agree with Cheney without getting anywhere near specifics.  She must have had a vague idea that there was some danger in going too far, getting specific in agreeing with Cheney.  But Chris, I think you may be imagining that she had more thoughts in her head than she actually did.

MATTHEWS:  Well, my concern is that last night was a brilliant—and I think she‘s quite talented at thinking and learning quickly.  There‘s no doubt about it.  But I had the feeling I was listening to speech parts last night, rather than thinking.  Biden obviously not as exciting a personality, not as perky, not as—well, energetic, is a word, I guess, that‘s sort of neutral, but clearly was able to respond in a conversational way.

There was nothing conversational about her.  She was reciting speech parts cued up by Gwen Ifill‘s fairly predictable questions.  She—Gwen stuck to the main channel of questions that could have been predicted by briefers.  I thought she was just doing a briefing run-through last night.  And it was scary that people were impressed by it, but apparently, the viewers thought Biden still won.  What do you think?  Who won last night, Rick?

HERTZBERG:  Well, I think—I think Biden won in the end. 

It just—in a similar way to the way Obama won in the end.  The—the commentariat, all of us, I guess, were—were looking—were grading this thing on a curve.  You know, we were—we were—we were completely tied up with the whole expectations game.  And she did do better than expected. 

But most viewers, I think, watched this as if it was actually fresh and had nothing to do with what had gone before. 

BROWNSTEIN:  You know, I think Palin did herself a lot of good, in terms of the public image of her. 

I mean, it was sliding very much in the wrong direction. 

ABC/”Washington Post,” 60 percent said was not prepared to be president.  And I think, on balance, people probably felt more comfortable with her at the end of the day than they did at the beginning. 

But I thought Biden was much more effective than Palin at delivering the core message of his campaign.  In fact, I thought Biden was more effective than Obama was in the debate Friday night in making the central argument, the Democratic argument the country is off on the wrong track because of George Bush‘s policies, and John McCain represents an extension of those policies. 

He effectively returned to that over and over.  Now, the closest thing for Palin was moving to this very ideological argument that Obama represents big government and big taxes.  Clearly, I think that is a direction that McCain wants to go moving forward.  I mean, they have an ad that really emphasizes that. 

But, overall, I thought Biden was much more effective in laying out an agenda and especially laying out a case against the other side, whereas Palin mostly was effective in sort of resolving, I think, some—or at least softening some of the doubts about her own qualifications. 

MATTHEWS:  Thank you, Ron Brownstein.

Thank you, Rick Hertzberg.

Up next:  Perhaps neither Joe Biden, nor Sarah Palin scored a clear victory last night, but the debate itself scored big with viewers.  How big?  Stick around for the “Sideshow.”  What a viewing audience last night, Super Bowl size. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back. 

Time for the “Sideshow.”

Iraq was a big topic at last night‘s debate.  John McCain, Sarah Palin, and Joe Biden all have sons in the war. 

And here‘s the commander in chief, George W. Bush, two nights ago at a USO gala. 

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  I think we all know, the moment things began to turn around in Iraq, it‘s when the USO decided to deploy Jessica Simpson. 

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS:  Well, I agree with the president—we all do—that the USO serves our troops and country with great honor.  And I share in the national appreciation of Jessica Simpson. 

But isn‘t this Bob Hope stuff from the president getting a little long in the tooth? 

In other words, we all know the youth vote will be key to the White House this year.  And celebrities usually try to play a role in getting people to vote for a candidate or simply vote.  This year, a hip group of them are trying a little reverse psychology. 

(BEGIN VIDEO CLIP, AD)

LEONARDO DICAPRIO, ACTOR:  Please just don‘t vote. 

TOBEY MAGUIRE, ACTOR:  Don‘t vote. 

BENICIO DEL TORO, ACTOR;  Don‘t vote. 

ELLEN DEGENERES, ACTOR:  No, seriously, don‘t. 

FOREST WHITAKER, ACTOR:  You don‘t care. 

COURTENEY COX, ACTRESS:  What‘s the point? 

EVA LONGORIA, ACTOR:  Don‘t. 

WILL SMITH, ACTOR:  Don‘t vote.

SARAH SILVERMAN, ACTRESS:  Don‘t vote, really. 

COX:  Because who cares about, you know, your children‘s education? 

LAURA LINNEY, ACTRESS:  Reading, literacy, really?

JONAH HILL, ACTOR:  You‘re right.  Don‘t vote. 

JAMIE FOXX, ACTOR:  Who cares about global warming and the fact that...

DICAPRIO:  ... our polar ice caps are melting? 

JENNIFER ANISTON, ACTRESS:  I hear polar bears can swim. 

ASHTON KUTCHER, ACTOR:  Don‘t vote.  Whatever you do, don‘t vote. 

(END VIDEO CLIP)

MATTHEWS:  What a hip group. 

By the way, people are paying attention.  Early numbers show nearly half of all the households in the top media markets watched last night‘s vice presidential debate.  That‘s about a 50 percent increase from last Friday‘s McCain-Obama debate.  We will give you the total audience number that works out to when we get it.

And that brings us to tonight‘s “Big Number.” 

Last night‘s vice presidential debate was between Palin and Biden, but it was really about Obama and McCain.  Each potential veep played offense and defense, invoking their running mates and their opponents. 

But the resulting score looked like a bad basketball game.  And that‘s “Big Number,” 104-60.  We heard John McCain‘s name 104 times last night and Barack Obama‘s name 60 times, almost 2-1 -- McCain, 104-60, tonight‘s two big numbers. 

Up next:  So, who helped their ticket more at last night‘s vice presidential debate?  Pat Buchanan and Bob Shrum join us next with their analysis and probably their argument on the Palin-Biden showdown. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

JULIA BOORSTIN, CNBC CORRESPONDENT:  I‘m Julia Boorstin with your CNBC “Market Wrap.”

Stocks tumbling, even though the House gave final congressional approval to the $700 billion financial bailout bill.  The Dow fell 157 points, after being up more than 300 points earlier in the day.  The S&P lost 15 points, and the Nasdaq dropped 29. 

Part of the problem, the economy lost a larger-than-expected 159,000 jobs in September.  That‘s the biggest monthly decline in more than five years and the ninth straight month of job losses.  But the unemployment rate held steady at 6.1 percent, as tens of thousands of people gave up looking for work. 

A battle has erupted for Wachovia.  Wells Fargo reached a deal to buy the troubled bank for $15 billion, four days after Wachovia agreed to be takeover by Citigroup for $2 billion.  Citigroup is considering legal options.

And oil prices slipped slightly.  Crude fell nine cents, closing at $93.88 a barrel.

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

HARDBALL. 

(BEGIN VIDEO CLIP)

PALIN:  I do respect your years in the U.S. Senate, but I think Americans are craving something new and different and that new energy and that new commitment that‘s going to come with reform. 

I think that‘s why we need to send the maverick from the Senate and put him in the White House, and I‘m happy to join him there. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL. 

Governor Sarah Palin there survived last night‘s debate, by most accounts, perhaps with more style than substance, perhaps.  But Palin did what she he had to do, which was not lose.  She calmed the nerves of the base and delivered for her ticket. 

Senator Joe Biden‘s steady performance and his direct answers came in short contrast to Palin‘s performance.  So, was the debate a game-changer or not? 

Pat Buchanan, MSNBC political analyst, and Democratic Bob Shrum are both here to debate the debate. 

(LAUGHTER)

MATTHEWS:  Pat, you thought it was great.  The polling by the people, CBS and CNN at the time, found it for Joe Biden.  Your thoughts the day after? 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  Well, I mean, Drudge found it 70-30.  You had 500,000.  AOL found it...

MATTHEWS:  For whom? 

BUCHANAN:  For Palin. 

MATTHEWS:  AOL found it 500,000... 

(CROSSTALK)

MATTHEWS:  But those aren‘t polls.

(CROSSTALK)

BUCHANAN:  No, but they‘re just calls in.

MATTHEWS:  Those are just people e-mailing in to a conservative blog site.

(CROSSTALK)

BUCHANAN:  All right.  Frank Luntz...

MATTHEWS:  We can do those. 

BUCHANAN:  Frank Luntz‘s focus groups found it going for Palin.

Let me tell you this, Chris.  The way to judge these things is, take a look at the commentators and the loyalists and things that—conservatives and Republicans were doing cartwheels last night, all of them.

MATTHEWS:  Right.  Fair enough. 

BUCHANAN:  And a number of liberal commentators have these grim looks.

MATTHEWS:  I know. 

(CROSSTALK)

BUCHANAN: “Biden won this race.”

(LAUGHTER)

BUCHANAN:  Your people who are cheering, they won. 

Look, here‘s the thing.  Is it a game-changer for Palin?  It sure was. 

MATTHEWS:  Are you talking about Keith?

(LAUGHTER)

BUCHANAN:  No, a game-changer for Palin.

I‘m not talking about anybody at MSNBC. 

MATTHEWS:  OK.

BUCHANAN:  For Palin, it was a game-changer. 

MATTHEWS:  Right.   

BUCHANAN:  In the election—I think it may have stopped the bleeding.  A game-changer in the election?  No. 

What has hurt McCain has been these last three weeks of a major, serious event, almost to the order of the Cuban Missile Crisis, which stops the cars at Indianapolis. 

MATTHEWS:  And it‘s not over. 

BUCHANAN:  And the yellow flag goes up. 

MATTHEWS:  I agree.

BUCHANAN:  And McCain is down about five or six.

MATTHEWS:  OK, much bigger stories.

Let me ask you.  Bob, I watched it with trying to look at—I do impress—I was impressed that she beat the spread dramatically, but I also was impressed by my indecision as to how people would take it.  Would they take it as brilliant, perhaps almost excellent recitation of a well-coached performance?

(LAUGHTER)

MATTHEWS:  In other words, she had every speech part she needed.  She answered every of question brilliantly.  Everything was answered like wallpaper, but there was not much spontaneity or originality to anything there. 

Or would people say, she‘s smart?  I couldn‘t tell.  Most people apparently thought she was OK, but Biden was better.  What do you think? 

BOB SHRUM, DEMOCRATIC STRATEGIST:  I think Biden was better.  And I‘m not grim about it. 

And for Pat to be citing like the AOL poll or the Drudge poll, which is set up and, last week, by the way, showed a huge victory for McCain in that first debate, which no one credits at this point, shows us how much he wants to do cartwheels, because she didn‘t commit a pratfall on stage. 

(LAUGHTER)

SHRUM:  I think she did—I think she did save herself.  I think she has a future in the Republican Party.  Maybe she can run for the nomination in 2012. 

But the loser of that debate was John McCain, because, in terms of the economy, in terms of health care, in terms of the big issues that matter, she made absolutely no progress for the ticket.  He pulled out of Michigan yesterday.  The debate was held.  The electoral map is smaller. 

The economy is smaller.  And the odds on him winning are longer and longer. 

MATTHEWS:  OK. 

Let‘s stay on that same question Bob raised.  Did she get, for her candidate, McCain, separation from President Bush?  Did she achieve the strategic goal of this campaign, which is to separate itself from President Bush? 

BUCHANAN:  She didn‘t achieve it, but I don‘t think that is the key goal of this campaign, in this sense.

Chris, they have been playing the Bush card, and McCain moved ahead by four points.  He was winning this.  The game-changer is this Lehman Brothers going down, AIG, McCain saying fundamentals are sound, fire Cox, all these things happening. 

This is a historic event.  And it‘s driven Bush down to 26 percent.  The Republicans are being driven down.  It is a major issue.  You can‘t overcome that with rhetoric.  She may have won the debate.  I think she did terrific, sensational.  Has she turned the race around?  No.  She may have stopped the bleeding. 

MATTHEWS:  Well, I‘m looking ahead to the news that we may be facing a very serious recession, Bob, not a crisis, just really bad news over a sustained period. 

SHRUM:  Right. 

MATTHEWS:  That tends to help the party out of power.  Crises can throw people to the right or the left, but, generally, isn‘t it true, Bob, that people tend to go to the party out of power when they don‘t like conditions? 

SHRUM:  I think that‘s true. 

And you also said something the other night, Chris, that I think is very right, that Obama gives this impression of calm deliberation, someone who can go in there, and under a lot of pressure, maybe make the right decisions.

And McCain, the last couple of weeks, has looked impulsive and erratic.  So, it‘s not only on the natural that you toward the party out of power.  It‘s when you look at the two candidates side and side and you say, which one would you want handling a crisis, your answer tends to be Barack Obama.  And we‘re seeing that in poll after poll.

MATTHEWS:  Oh, well, that‘s Charles Krauthammer, actually.

(CROSSTALK)

MATTHEWS:  The conservative columnist said that today.  He said that he is showing the temperament you need to be president, as well as the intellect. 

BUCHANAN:  I don‘t disagree with that, quite frankly. 

I do believe Barack has been showing that.  And he‘s playing politics. 

He‘s staying out of it, and riding this wave, which is what he ought to do.  And I think what McCain had to do, Chris, and didn‘t do—I mean, this is such a crisis.  It divides the Republicans, this horrible bill.  He should have come back, seized it, stopped the bailout thing, and reshaped his own package, I think, and gotten more concessions, and then won this thing. 

I think that‘s the only way he‘s going to...

MATTHEWS:  You mean beaten the establishment? 

BUCHANAN:  Yes, but put the establishment together with the populists out there of both parties, who hate this thing. 

MATTHEWS:  Yes. 

BUCHANAN:  And that‘s his only—instead, he just comes on and says -

gets one little item and then he‘s out on the road campaigning. 

MATTHEWS:  Yes. 

But he‘s up against the reality you keep hearing, that once Secretary Paulson said, we need this bill, it became self-defining.  We did need it.  That‘s what I hear from smart people.

BUCHANAN:  Yes.  Yes, we do need it, but I think they could have gotten an awful lot more.  Nobody really—serious people don‘t believe this is going to solve it.

MATTHEWS:  OK.  Let‘s talk about Tuesday night, you gentlemen.

And I don‘t get you together that often.

Bob, you first.  You‘re an expert at the rhetoric and helping candidates get ready for these kinds of events.  Can John McCain win on the economic field, or does he have to change it?  No matter what Tom Brokaw or the people bring in, or the online questions Tuesday night, does he have to change the topic to culture, and to who Obama or him, rather than what, the way things are or change? 

Can he change it to culture, or does he have to fight on the economic front, and win there? 

SHRUM:  Well, Pat and I will probably disagree here. 

I don‘t—he can try and change it to culture.  It‘s not going to work.  The economy is the issue.  You know, every once in a while, the voters get to decide what matters in an election.  And what matters is what‘s happening in their lives, not just what they‘re seeing on television, not just the stock market, but the fact that, for example, small businesses can‘t borrow, people are having a terrible time selling their homes. 

MATTHEWS:  Yes. 

SHRUM:  Those are the questions that are going to come in. 

And I think Mike Murphy, who works for MSNBC and NBC, instead of working for John McCain, much to John McCain‘s loss, has been right all along...

MATTHEWS:  You‘re right.

SHRUM:  ... which is that McCain needed a positive message from the start, where he went out there, and gave people the sense that he was really going to change the Bush policies and he was really going to offer them some hope.  He‘s never done that.  Random attacks...

MATTHEWS:  Well, he made a—but, you know, he made his big mistake, Bob, when he said the economy is fundamentally strong.  He sunk his feet into the cement of the status quo. 

SHRUM:  I agree with that.

MATTHEWS:  And, hence forth, from that moment forward—Carville, your old partner, made that point.  Once he did that, he had to defend the way things are. 

SHRUM:  Yes. 

BUCHANAN:  Here‘s his problem.  He is not a culture warrior.

He doesn‘t believe in the issues...

(CROSSTALK)

MCCAIN:  McCain is not.

BUCHANAN:  He‘s not.

Secondly, he‘s not a populist.  Let me tell you, Chris, the issues out there in Ohio, as Hillary and Obama showed when they out there, jobs are going overseas to China.  And it‘s because of these darn trade deals, and people know it.  But he believes on the other side of it.  That‘s why he...

MATTHEWS:  Did you see Sherrod Brown, the guy who voted for the deal yesterday? 

(CROSSTALK)

BUCHANAN:  Well, no.  I did see some Democrats who were...

MATTHEWS:  Amazing.  I was surprised by that.  He is very—he‘s like you.  He‘s very populist, very anti-NAFTA, that kind of thing.

BUCHANAN:  Well, that is what wins Ohio.  That will Pennsylvania.

Central Pennsylvania, they are talking about jobs going overseas.  But he‘s not—he doesn‘t believe it.  And you can‘t do a good job at saying it if you don‘t believe it.  And that‘s why he has got a real problem, if he goes back to the basic things he did with Obama.  I think he won the debate.

MATTHEWS:  Why are the conservatives turning on this guy?  Why is everybody I read in the paper, all the thoughtful people like you, write columns and put 800 words together every of three days, Krauthammer, David Brooks, you, Kathleen Parker, all stripes of conservatives are taking whacks at your candidate.  What‘s going on? 

BUCHANAN:  Basically, John McCain and I have been on the other side of the Republican party for years.  These other guys I don‘t understand. 

MATTHEWS:  They‘re all going at him. 

BUCHANAN:  You made a good point the other night when you say, what did they do?  They had this wonderful asset in Sarah Palin and they‘re not even letting her talk to Rush Limbaugh. 

MATTHEWS:  They‘re attacking her. 

BUCHANAN:  So they did a terrible job.  You saw her when she was herself.  You know what McCain ought to do—

MATTHEWS:  Let me ask you one last question, what do you make of a candidate who goes into a debate and says, I may not answer the questions that either the moderator or you want to hear?  Is this working hard and playing by the rules or what?  I‘ve never seen anybody say, I may be here, but I‘m not going to play by the rules. 

SHRUM:  It was her safety net because there were questions she couldn‘t answer.  The one you cited about, for example, the powers of the vice president was a classic case.  She was giving herself some kind of safety net.  It works with the base.  I must say, by the way, listening to Pat, that he is clearly starting the Palin 2012 movement.  He‘s written off McCain.  He‘s moving to the future. 

MATTHEWS:  Palin/Buchanan maybe. 

BUCHANAN:  McCain ought to get sick on Tuesday and let her go in.  The ratings would be phenomenal.  It would be a roll of the dice, but do you think—

SHRUM:  She lost the debate, Pat, by double digit margins.  They asked Joe six-pack.  They asked the middle class, people said she lost. 

BUCHANAN:  The country wanted to see Joe Biden? 

MATTHEWS:  Bob, the conservatives have gotten to the point, now they say, we don‘t like the rules, we don‘t like the polls.  Nothing counts anymore. 

BUCHANAN:  She threw out the rules. 

SHRUM:  Pat was never—

MATTHEWS:  I just wonder when we‘re going to believe the polls anymore. 

BUCHANAN:  I think the reason the CBS poll is—you know why?  Because the country wants to elect Obama/Biden and they didn‘t change their mind.  She changed some minds.  She didn‘t change enough. 

MATTHEWS:  I think you are right.  There was a lot of grimacing on the left there last night. 

SHRUM:  I‘m not grimacing.  I thought Biden did great. 

MATTHEWS:  Not from Bob Shrum.  He was strong of jaw there.  Thank you, Pat.  Bob, it‘s great to have you on with Pat.  I think you are equally qualified to offer your various views of the universe. 

Up next, after last night‘s vice presidential debate didn‘t move the needle, what can you expect on Tuesday when Barack Obama and McCain go at it again in Nashville?  Is this one of McCain‘s last chances to change the trajectory of this race?  This is HARDBALL, only on MSNBC. 

(BEGIN VIDEO CLIP)

PALIN:  I‘m still on the tax thing, because I want to go correct you on that again.  I want to let you know what I did as a mayor and a governor.  I may not answer the questions the way that either the moderator or you want to hear, but I‘m going to talk to straight to the American people and let them know my track record also. 

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.  It‘s time for the politics fix.  Michelle Bernard is an MSNBC political analyst.  Chris Cillizza covers politics for the “Washington Post.”  Chris, I haven‘t heard from you in a while.  I now want to know what happened last night.  I want to know what happened from your unique perspective.  Did you believe there was something beneath the rather well-done veneer in the presentation of Sarah Palin? 

CHRIS CILLIZZA, “THE WASHINGTON POST”:  Well, Chris—

MATTHEWS:  Is there something below the surface that suggests thinking, originality, conviction? 

CILLIZZA:  I think she does have convictions.  I think she was very nervous last night.  I think you saw it in the beginning of the debate.  You know, for an old hand like you, Chris, being on TV is not nerve wracking, but it is nerve wracking, I think, if you‘re Sarah Palin.  She was nervous.  Her voice, you could hear it sort of catching. 

But I think she did demonstrate an ability to speak from her talking points and I do think some of her beliefs.  Again, I think she stayed very, very close to those talking points.  I think she tried to bring everything back on the domestic front to energy.  She brought a lot of things back to John McCain, his maverick reputation, her record in Wasilla as the mayor and then the governor of Alaska. 

She was not expounding or thinking off the top of her head, no.  But I think she knew she had to get through this for the good of the campaign.  So I wouldn‘t judge her by that one night. 

MATTHEWS:  Is there anything you heard from her last night that couldn‘t have been done by any B-plus college grad?  In other words, if you have a week and a half with somebody to prep them, you set them up for about 10 or 20 topics, and you have an answer taught to them, is there anything that she showed in her ability last night that a smart kid coming out of college couldn‘t have done last night?  I am going to go to Michelle on this.  She recited answers that are off the shelf.  They were not original answers.  What are we learning from this? 

MICHELLE BERNARD, MSNBC POLITICAL ANALYST:  Well, if you look at what she did last night in the context of the three television interviews we‘ve seen her do, she pulled off a miracle last night.  I mean, most conservatives that I know were really thinking that last night was going to be the end of the McCain campaign and it was going to be a disaster.  So she showed that she‘s a quick study.  She got through the debate.  If she had one major gaffe last night—

MATTHEWS:  But they were memorized answers to predictable questions.  Where is the intelligence in that?  I‘m asking you again, what college grad couldn‘t have done what she did last night? 

BERNARD:  I don‘t know.  I don‘t know. 

MATTHEWS:  I‘m asking you, Chris.  We‘re talking about the ability to recite coached information, where‘s the talent?  What‘s smart about that? 

CILLIZZA:  Chris, I don‘t want to necessarily defend her—

MATTHEWS:  You punch the button energy.  You punch the button budget.  You punch the button taxes.  In each case, the person has an answer to respond with the button.  In each case, she gave the button response.  I don‘t know what it shows us about her. 

CILLIZZA:  I do think, Chris, you may be judging her a little too harshly given that she is the vice presidential nominee.  The job of the vice president, and Joe Biden did this last night too—although I grant you he was clearly more fluent with issues not looking down at his notes a lot.  I grant you that.  But the job of the vice president is to advocate for the president.  We all know that.  We know that if you look back in history, by and large, who the vice presidential pick is does not materially determine who wins the election. 

Everybody remembers the 1988 debate, “I knew Jack Kennedy.  Jack Kennedy was a friend of mine.  You‘re no Jack Kennedy.”  Well, George H.W.  Bush won that race, not Michael Dukakis.  Even with that great line of Lloyd Benson, it didn‘t wind up working out.  I think we probably put too much on it. 

The job of the vice president during this campaign is to advocate for the president‘s position.  I thought both of them—

MATTHEWS:  No, it‘s not.  The job of the vice president is to be with the president and council him or her on what the wise choice of action is. 

CILLIZZA:  Chris, that‘s in governing, not the campaign. 

MATTHEWS:  Well, that‘s what I‘m talking about.  This is what this is about, picking the next vice president of the United States.  This is not Jeopardy.  This is not a TV quiz show.  It is not the dating game.  It is about whether this person should be one of our top leaders.  I had Orrin Hatch on the other night and said, who is leading this country?  Bush ain‘t.  Who is running the country tonight?  Chris Dodd and Barney?  Who is calling the shots?  It a little scary. 

We‘re in an airplane right now that‘s in turbulence, this country.  We don‘t know what is going to happen to the stock market next Monday.  We don‘t know how many more plant closings there will be.  We don‘t know what‘s happening to our currency in the world right now.  This could be Zimbabwe in a couple of years and we don‘t know it.  We‘re trying to pick leaders.  And we‘re going through some spelling bee way of picking them.  It is a little scary.  Sure, she can memorialize material that she‘s taught.  But what does that teach us about her?  That‘s all I‘m asking.

BERNARD:  I think the question that you should be asking is what does it teach us about John McCain?  I disagree with Chris in one sense, that normally you‘re only looking at the top of the ticket.  Let‘s face it, I think, in this election, if John McCain wins or loses, it will be because of who is number two on the ticket. 

MATTHEWS:  Who is going to pick next Hank Paulson?  Who is going to pick the next General Petraeus?  We‘re talking about wisdom at the very top here.  There‘s the number two job.  I don‘t think it‘s about recitation. 

CILLIZZA:  I don‘t think it‘s about recitation either.  I‘m not arguing this point of view, but I will tell you, the McCain campaign will say, we‘ve got plenty of experience in picking the next Hank Paulson, picking the next David Petraeus.  His name is John McCain.  Sarah Palin brings something else to the ticket, that outsider.  You heard her say, I may not answer the questions the way you or the moderator wants to answer.  The McCain campaign thinks that‘s great, because they think it speaks to this urgent need to have different kinds of faces in Washington. 

MATTHEWS:  You make it sound like the job description of Dana Perino.  It is all right if Dana Perino doesn‘t know what the Cuban Missile Crisis is, because her job is basically to put out the word from the president, from Ed Gillespie, whoever else is writing the daily message.  Isn‘t the vice president supposed to have a principal‘s role, not simply a role as a staffer?  That‘s all I‘m asking.

CILLIZZA:  Absolutely.  And I would say that I think her weakest moment by far was a very stumbling answer she gave on what role the vice president should have.  I think that was problematic.  She benefited from the fact that was in the last 15 or 20 minutes of the debate.  She was clearly flustered.  She clearly didn‘t know what to say.  She looked at her notes repeatedly.  That‘s not a good sign. 

But again, if you‘re talking about the campaign politics of it, that‘s 45 or 50 minutes into the debate.   

MATTHEWS:  You‘re looking at very narrowly to what will get us through the night, as Frank Sinatra would put it.  Remember, he used to say, baby, whatever gets you through the night. 

CILLIZZA:  He was Italian like me. 

MATTHEWS:  I don‘t know why I thought of that.  He used to say that great line, whatever gets you through the night, babe.  We‘ll be back with Michelle Bernard and Chris Cillizza for more of the politics fix.  We‘ve got the final number of how many people watched last night‘s debate.  That‘s also coming up next.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Michelle Bernard and Chris Cillizza for more of the politics fix.  It is getting near the end of the week.  We have the final word.  By the way, we just got the word on last night‘s vice presidential debate.  The audience, take a guess, Chris Cillizza, what was it last night? 

CILLIZZA:  Well, Chris, I would like to guess, but the producer told me. 

MATTHEWS:  You honest man; 69.9, just about 70 million people. 

CILLIZZA:  Chris, I hear it‘s 69.9 million, is that right? 

MATTHEWS:  You‘re guess is absolutely -- 

BERNARD:  You‘re brilliant, Chris!

MATTHEWS:  Spot on, as they would say in Britain, spot on.  That means about 20 million more than watched the presidentials.  And, of course, next Tuesday night, our own Tom Brokaw is going to be doing the presidentials again.  We‘ll see if Tuesday night is a better night than last Friday.  But obviously we‘re going to get about 60 or 70 million watching that one.  I want to move ahead to that.  And I just want to move ahead to that.  I really think that‘s the question I would like to move forward tonight. 

Chris, you first on this.  Give us your take.  John McCain is facing what looks to be a set of poll numbers out that has got him about seven points behind.  And it is starting to gel like Jello.  People are getting used to the idea of Barack Obama in the lead.  They‘re getting used to the idea of him being our next president.  Does that mean he has to do it—I hate to use the cliche of the year, which is game-changer.  Does he have to pull one, do something different? 

CILLIZZA:  To your first point, I talked to a Republican consultant today who has been looking at a lot these numbers and he said to me, things are starting to harden, that McCain is behind and people‘s views are getting cemented, that there‘s not going to be a lot of change.  So, yes; look, on Tuesday, we will be 28 days, one month from election day.  John McCain is going to have very few opportunities, other than Tuesday and October 15th, when he has 40, 50, 60, 70 million people tuning in to rejigger the dynamic of this race. 

I think it is harder than we make it out to be.  We go into all these debates asking for the game changer, who is going to win and who is going to lose.  These guys have been at it a long time.  They‘re both professional politicians.  They usually don‘t either win or lose so that it‘s so clear.

MATTHEWS:  What if he does something like this?  Suppose he just throws the dirt ball, if you want to look at it from the Democratic side, and say, you know, we can talk about issues here, but I‘ve never gotten over the fact that you spent a good part of your adult life hanging out with Jeremiah Wright, who hates America.  And it makes me wonder whether you‘re really truly patriotic, like I am, Mr. Barack Hussein Obama.  I mean really get tough with the guy.  I mean tough.  Can he do something like that, really throw the cultural bomb at the guy and say you‘re not one of us? 

CILLIZZA:  Chris, he could.  My guess is—and I do think we‘re going to see this.  We are going to see Jeremiah Wright.  We‘re going to see William Ayers on television.  I don‘t think those words are going to come out of John McCain‘s mouth.  I think it‘s going to be either his campaign or some sort of outside group.  It is too dangerous, I think. 

MATTHEWS:  Michelle?  Will he throw bomb and try to change it to culture and get away from the economy, which is killing him? 

BERNARD:  No, he can‘t.  The economy is the only issue that the American public cares about right now.  He can leave culture issues to 527s and to negative ads.  But on Tuesday night, people want to know who will get us out of this mess. 

MATTHEWS:  Well said, Michelle Bernard, as always.  Chris Cillizza, thank you, buddy.  Join us Monday night at 5:00 and 7:00 Eastern for more HARDBALL.  And on Tuesday, we‘re in Nashville for the second presidential debate between John McCain and Barack Obama, moderated by our own Tom Brokaw.  Right now, it‘s time for RACE FOR THE WHITE HOUSE with David Gregory.

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