HARDBALL
October 8, 2008
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
Guests: John Harwood, David Shuster, Howard Fineman Ron Brownstein, Joan Walsh, Elijah Cummings, Chris Shays, Chris Shays, Elijah Cummings, Jim VandeHei
CHRIS MATTHEWS, HOST: Barack Obama wins another debate. Governor Palin again goes on the attack.
Let's play HARDBALL.
Good evening. I'm Chris Matthews. Leading off tonight, the day after. If there's any doubt that Sarah Palin has become the ramrod of the Republican ticket, consider this. Today, after Palin addressed a crowd in Bethlehem, Pennsylvania, there was a steady stream of people leaving, even as John McCain began to speak.
One reason may be last night's debate, which may not have hurt McCain but it doesn't seem to have helped him much. We'll look at today on the campaign trail and at the high and low points of last night's debate.
And speaking of that debate, both candidates questioned each other's honesty, and McCain kept at it today in Pennsylvania.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: I don't need lessons about telling the truth to the American people, and were I ever to need any improvement in that regard, I probably wouldn't seek advice from a Chicago politician.
(END VIDEO CLIP)
MATTHEWS: Well, I guess he's given up on the electoral votes of Illinois. Anyway, strong stuff. We'll "truth squad" the debate and see whether either or both of the candidates told any whoppers.
And no matter how well John McCain does in the debates, it's the economy standing in his way. He made a bold proposal about the government taking over bad mortgages last night, but today Barack Obama once again linked McCain to Wall Street's woes.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: We can't afford four more years of no regulation on Wall Street, when Washington isn't paying attention and CEOs are getting golden parachutes and multi-million-dollar bonuses while their workers are suffering and their investors are getting the shaft!
(END VIDEO CLIP)
MATTHEWS: Well, when it doubt, go after the CEOs. That works. We'll talk to two members of Congress about the economy and this election.
And McCain's surrogates have begun to use Obama's middle name, Hussein, as an epithet. What are they up to? And will it work? That's in tonight's "Politics Fix."
And it turns out that one of the four presidential and vice presidential candidates is related distantly to royalty. Which one? Find out in the HARDBALL "Sideshow."
But we begin with the day after and CNBC's John Harwood, who writes for "The New York Times," and "The National Journal's" John-I mean, Ron Brownstein. Actually, it's the Atlantic Media, right?
RON BROWNSTEIN, ATLANTIC MEDIA: (INAUDIBLE)
MATTHEWS: OK. McCain and Palin teamed up in Bethlehem, Pennsylvania, as I said, today. As I mentioned, a steady stream of people headed for the exits when McCain followed Palin's speech. Here's why people are turning out for Palin.
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL NOMINEE: And last night in the debate, we heard again Barack Obama lecturing John McCain on the stakes involved whenever America goes to war. But wait a minute. May I remind Senator Obama that Senator McCain served our nation in uniform for 22 years?
(END VIDEO CLIP)
MATTHEWS: Also, the chairman of the Lehigh County Republican Party, William Platt (ph), referenced Obama's middle name, Hussein, at the rally. By the way, that's the second time this week they wanted the surrogates up on the platform has (ph) going after the name Hussein as the middle name of Barack Obama. And Cindy McCain got into it today. She went after Obama by questioning his support for the troops.
(BEGIN VIDEO CLIP)
CINDY MCCAIN, WIFE OF JOHN MCCAIN: The day that Senator Obama decided to cast a vote to not fund my son when he was serving sent a cold chill through my body, let me tell you. I would suggest that Senator Obama change shoes with me for just one day and see what it means-and see what it means to have a loved one serving in the armed forces, and more importantly, serving in harm's way.
(END VIDEO CLIP)
MATTHEWS: And serving sort of as a good cop, McCain ended his speech by raising the question, Who is Barack Obama? Let's listen.
(BEGIN VIDEO CLIP)
MCCAIN: So who is the real Senator Obama? Is he the candidate who promises to cut middle class taxes or the politician who voted to raise middle class taxes? Is he the candidate who talks about regulation or the politician who took money from Fannie Mae and Freddie Mac and turned a blind eye as they ran our economy into the ditch?
(END VIDEO CLIP)
MATTHEWS: Joe Biden hit back hard at the McCain campaign today for trying to stoke voters' fears over Obama. Let's listen to Joe Biden.
(BEGIN VIDEO CLIP)
SEN. JOSEPH BIDEN (D-DE), VICE PRESIDENTIAL NOMINEE: There's one other option, the one they have chosen, is to appeal the fear with a veiled question, Who is the real Barack Obama? Ladies and gentlemen, to have a vice presidential candidate raise the most outrageous inferences, the ones that John McCain's campaign is condoning, is simply wrong.
The McCain campaign went out and hired some of the very-the very political manipulators in the Republican primary who in 2000 led those vicious attacks against John's daughter and John's lovely wife. They hired those people to come on board, and now these same people-they're attacking Barack Obama in the ugliest of ways. Ladies and gentlemen, this is beyond disappointing. This is beyond disappointing, this is wrong.
(END VIDEO CLIP)
MATTHEWS: Well, let's take a look now at Biden for a last word from the candidates. Here's Biden talking about McCain's performance in the presidential debate last night.
(BEGIN VIDEO CLIP)
BIDEN: The questions from the people at that town hall last night, I believe, personally believe, reflected what a majority of the American people are looking for, a steady hand, leadership, an optimist, not an angry man lurching from one position to another.
(END VIDEO CLIP)
MATTHEWS: Well, there you have it, the picture of the McCain campaign from the Barack view, and the view of Barack from the McCain point of view. One side says he's an angry old man. The other side said he's some kind of a furtive figure. We don't know what he's up to. He may be in a sleeper cell, for all we know, because his middle name is Hussein and he was part of some Weatherman group back in the '60s, although he only met the guy 26 years later. And by the way, he's getting foreign contributions. We're not sure if they're coming from Arab countries.
I mean, clearly, you're going to see the pattern of one side's attack. Let's start now with, clearly, the end game of the Republicans. Are they trying to make this guy look like he's subversive? Is that what they're up to here?
BROWNSTEIN: They're trying to make him into someone you can't fully trust. And I think the larger-the unifying threat here is that McCain wants the race to be as personalized as possible. He wants voters to narrow the lens. He wants them to see this fundamentally as a choice between two individuals and to assess their qualities, their values, their judgment.
MATTHEWS: Right.
BROWNSTEIN: The celebrity ad this summer, the values arguments at the convention, the closing statement in the debate last night-you know, a steady hand at the tiller. Obama wants the race to be much broader. He wants it to be a choice not so much between two individuals as between but two directions for the country. And he wants it to be-wants voters to be thinking, Which one of these guys is going to provide the change that I'm looking for?
And the challenge McCain has is, is that in this effort to make this about Obama, he is competing not only with Obama but with events. With the magnitude of events that are going on now, I think it is very hard to make the race fundamentally about the challenger, as opposed to your competing approaches to sort of getting the country out of the ditch, as John McCain talks about.
MATTHEWS: Are they trying to appeal to the nuts? I mean, when you hear people yell, Kill him, terrorist, every other line, yelling out from the crowd, and from the podium, from the stage, his name's Hussein, you don't want to wake up and know that the guy named Barack Hussein Obama's your president-very ethnic. They're billing him as a furtive, dark figure of danger who's got connections with terrorists, who may get foreign money. I mean, it seems like they're building the case he's in a sleeper cell, practically.
JOHN HARWOOD, "NEW YORK TIMES," CNBC CORRESPONDENT: Well, look...
MATTHEWS: He's dangerous personally. Isn't that what they're saying here?
HARWOOD: I think the first set of people who are motivated by sentiments like that are already voting for John McCain. I think they're aiming for...
MATTHEWS: Well, let's do it. Let's talk about the fourth quintile...
(CROSSTALK)
MATTHEWS: ... I always talk about, the people that might go either way.
HARWOOD: I think they're looking at those...
(CROSSTALK)
MATTHEWS: ... -subject to switching.
HARWOOD: ... swing voters, who, if you plant a seed of doubt in their mind, you can make Barack Obama a riskier figure. And you know, Ron raised the point about...
MATTHEWS: Older voters.
HARWOOD: Sure, older voters in particular. Ron raised the point about McCain trying to narrow the lens. The reason is the atmosphere is working for Obama. The policy arguments are working for Obama. If you heard McCain in the debate last night, he's ceding some of the most important parts of the policy argument to Barack Obama. He's not even competing on that front.
He reminds me of Bob Dole at the end of the '96 campaign, when Bob Dole was facing a younger man with a lot of talent, more talent than he had as a politician, and I think Bob Dole was convinced that he had more moral fiber, that he deserved to be there, that he's somebody who'd sacrificed for his country. I think John McCain feels the same way, and like Bob Dole in '96, he's kind of ticked about it and it shows...
(CROSSTALK)
MATTHEWS: ... phrase "that one"-I mean, I don't even know what it means. I remember-it's an old sort of Irish expression of a couple generations ago. You're one of the smart ones, that "one," that use of the word "one" -- (INAUDIBLE) familiar with the idiom. Does anybody here...
(CROSSTALK)
MATTHEWS: ... "that one"?
BROWNSTEIN: But you know, I mean, the debates are adding to the challenge that McCain faces in trying to shift the race into this personal comparison, as well, because Obama, both through the financial crisis and these first two debates, is clearly making progress at convincing more voters that he is capable and ready to be president.
You know, a lot of us-a lot of the pundits and-myself included -
thought McCain got the better of it in the first debate. And obviously, the polls all said Obama did. And I think what we missed was the most important interaction in that first debate-and I bet again last night-was not between Obama and McCain, it was between Obama and the viewer. And it was really...
MATTHEWS: Obama...
BROWNSTEIN: And the viewer...
(CROSSTALK)
BROWNSTEIN: Exactly right.
MATTHEWS: ... because of the word of mouth. And every time this guy walks on the stage and shows himself, it seems to me, my suggestion is that he's always better than the advanced word on him.
BROWNSTEIN: And I thought...
MATTHEWS: They've been putting out on him.
BROWNSTEIN: The first debate, I didn't think he was anything special. I thought last night-I thought he gave a significantly better performance than McCain did. He was-he exuded calm and control and command of the issues, and McCain seemed a little kind of frantic at points. And you kind of look at the two, and you're-and again, over this last month in dealing with the financial crisis, who is projecting the demeanor of a president? You can see why Obama is making gains on that score, which had been McCain's biggest advantage.
HARWOOD: Obama is undeniably steady, and he has been through this crisis.
MATTHEWS: Yes.
HARWOOD: But look at the policy debate. The big initiative that John McCain rolled out was $300 billion...
MATTHEWS: To issue to...
HARWOOD: ... to buy mortgages.
MATTHEWS: ... the 810 (ph).
HARWOOD: And this is the guy who's been trying to make spending control his mantra. This is...
MATTHEWS: And Governor Palin says-she knocks people for saying it's patriotic to pay taxes. But as Tom Friedman said in his column today, if you're going to spend all this money on overseas military operations and you're going to spend all this money on the bail-out, somebody's got to pay for it.
HARWOOD: Exactly. And you're also trying to make the free market, cut taxes argument in the campaign.
MATTHEWS: Yes.
HARWOOD: And when the financial crisis happened, he started railing about greed and corruption on Wall Street. So I was getting e-mails during the debate last night from disappointed Republicans who said, A, he's not taking the personal fight to Obama that they advertised about. They started doing it again today, but he didn't do it last night. And he's also not making the argument, the core argument on taxes, for example, that conservatives wanted to hear. There's a bit of incoherence about the McCain campaign...
(CROSSTALK)
MATTHEWS: ... all day trying to read through all the speeches. On one hand, they want to stay on the economic territory that everybody's thinking about all day. I'm thinking about my money in the market. Everybody's thinking-What happened to me today? How much did I get hit today? And he knows it's hard to change the subject. But he's still got Governor Palin out there as the ramrod and the people in the crowd bringing up this "who" question. What's it going to be, who or what?
BROWNSTEIN: Well, I think, you know, that is a fundamental choice they face because if he-I think there was a reason he didn't raise it at the debate last night. I think partially, it was town hall...
MATTHEWS: Why? He'd get booed?
BROWNSTEIN: Because there is a risk that when very serious things are going on, like what we're going through right now, you will look trivial or beside the point if you are trying to focus on these kind of associations. Now, there are other voters for whom that might matter, but for John McCain to go into a last debate, even, and emphasize these issues at a time when, as you say, all Americans are worrying if the college funds they set up for their kids they've been saving for 15 years are going to be adequate or what their retirement looks like or what their job looks like, he might look like someone...
MATTHEWS: Whether they can retire.
BROWNSTEIN: ... who is very much-yes-who is very much beside the point.
MATTHEWS: Yes.
BROWNSTEIN: And that would be the danger.
MATTHEWS: This is the hottest question. What are they up to? We know Barack's riding the economy. We don't know what the other side's up to. It's either going into personal assassination, basically, of his character or they're going after what?
HARWOOD: They're trying to make him risky. They're trying to get people halt before they go into that booth and say, Wait a minute. Can I really...
MATTHEWS: Who is this guy?
HARWOOD: Can I really take the risk of...
MATTHEWS: They make him...
HARWOOD: ... putting him in the White House.
MATTHEWS: ... an international man of mystery.
BROWNSTEIN: When 70 percent of...
MATTHEWS: And not Austin Powers. Anyway, thank you, John Harwood.
Thank you, Ron Brownstein.
Up next: So who stretched the truth the furthest in last night's debate? HARDBALL's David Shuster and our truth squad checks the facts on McCain and Obama last night.
You're watching it, HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
MATTHEWS: Welcome back to HARDBALL. At last night's presidential debate, John McCain and Barack Obama both stretched the truth on occasion, it could be said. HARDBALL correspondent David Shuster has been looking into the truthfulness of what we heard last night and has this report.
(BEGIN VIDEOTAPE)
DAVID SHUSTER, HARDBALL CORRESPONDENT (voice-over): On Tuesday night, both candidates took credit for warning about the housing crisis and the troubles at mortgage companies Fannie Mae and Freddie Mac.
MCCAIN: And you know, there were some of us that stood up two years ago and said, We've got to enact legislation to fix this, we've got to stop this greed and excess.
SHUSTER: It's true that McCain co-sponsored legislation that would have increased oversight, but at the time, McCain was reacting to accounting scandals and not the loose lending practices that sparked the subprime mortgage mess. And a year ago, McCain told a New Hampshire paper that he did not anticipate the collapse.
So what about Obama?
OBAMA: Two years ago, I said that we've got a subprime lending crisis that has to be dealt with. I wrote to Secretary Paulson, I wrote to Federal Reserve Chairman Bernanke and told them, This is something we have to deal with, and nobody did anything about it.
SHUSTER: That's true. Obama did write that letter in March of 2007, but that was well after the housing crisis was apparent. And by then, the Senate Banking Committee had already held hearings.
The candidates also clashed on health care.
MCCAIN: If you're a small business person and you don't insure your employees, Senator Obama will fine you. Will fine you. That's remarkable.
SHUSTER: While Obama would require larger employers to either provide coverage or pay a tax, his plan specifically exempts small businesses from that requirement.
Now, what about McCain's plan?
OBAMA: He would also strip away the ability of states to provide some of the regulations on insurance companies to make sure that you're not excluded for preexisting conditions or your mammograms are covered or your maternity is covered.
SHUSTER: McCain would deregulate the industry by allowing people to buy health care insurance across state lines, but he has not proposed allowing the insurance industry to remove coverage requirements, although some economists argue that could be the result.
On foreign policy, McCain hammered Obama's approach towards Pakistan.
MCCAIN: Senator Obama likes to talk loudly. In fact, he said he wants to announce that he's going to attack Pakistan. Remarkable.
SHUSTER: But here's what Obama actually said. Quote, "If we have actionable intelligence about high-value terrorist targets and President Musharraf will not act, we will." Furthermore, on at least two occasions, Sarah Palin has backed Obama's approach.
Meanwhile, Obama hammered John McCain on the Iraq war with this.
OBAMA: We're spending $10 billion a month in Iraq at a time when the Iraqis have a $79 billion surplus -- $79 billion.
SHUSTER: Well, not quite. As Factcheck.org points out, Iraq was once projected to have that surplus, but they only have $29 billion in the bank right now.
McCain, of course, returned fire on Obama over Iraq and invoked the former commander of U.S. forces there.
OBAMA: ... with General Petraeus, our chief of-our chairman and (ph) our Joint Chiefs of Staff...
SHUSTER: But actually, Petraeus is not chairman of the Joint Chiefs.
He will soon run CENTCOM, one of six American regional commands.
(on camera): All of the flubs and half-truths, though, can be redeemed. After all, the candidates will try again in their final debate exactly one week from tonight.
I'm David Shuster for HARDBALL in Washington.
(END VIDEOTAPE)
MATTHEWS: Thank you, David Shuster.
Tucker Carlson is MSNBC's senior campaign correspondent, and Joan Walsh is with Salon.com.
I have got to start with you, Joan.
I understand you have a view-you weren't on last night, so I want to hear your fresh take on what we saw last night in Nashville.
(LAUGHTER)
MATTHEWS: A lot of numbers back and forth. I have a sense that they
most people tuned out a lot of the numbers and watched the two guys, just looked at them.
JOAN WALSH, EDITOR IN CHIEF, SALON.COM: I think that's right, Chris.
And I think that McCain and Obama came closer to a tie two weeks earlier, although the undecided voters broke for Obama. This time, I don't think it was a tie at all. I think it was a clear victory for Obama.
And it was partly on policy and a lot on atmospherics. It really did look once again like it was difficult for John McCain to be in the same space as Barack Obama.
You called it. I was yelling at the television set when it happened. When he said "that one," didn't even look at him, pointed, "that one," it was like, I don't know, Mr. Wilson, get that one off my lawn or something. It was just really kind of an unthinkable moment. And there were several moments like that.
MATTHEWS: Well, just for devilish delight, Joan, let's watch him do that thing, which we will always wonder about what exact idiom that was.
(LAUGHTER)
MATTHEWS: But let's watch Senator McCain...
WALSH: Yes.
MATTHEWS: ... go after Senator Obama in that sort of impersonal way.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: By the way, my friends, I know you grow a little weary with this back-and-forth. It was an energy bill on the floor of the Senate loaded down with goodies, billions for the oil companies, and it was sponsored by Bush and Cheney.
You know who voted for it? You might never know. That one. You know who voted against it? Me.
(END VIDEO CLIP)
(LAUGHTER)
MATTHEWS: Well, Joan...
(CROSSTALK)
WALSH: I can't get enough of it.
(CROSSTALK)
MATTHEWS: ... I have to tell you, but it's "that one." It's "my friends." We're going to tell the number of times he said "my friends" last night. But he never referred to "my friend over here." It's "that one."
WALSH: It's "that one."
MATTHEWS: Why did that stick to you as a significant point in the back and forth?
WALSH: You know, it seemed disrespectful. And I have to say the Irish Catholic thing might be a part of it. My grandmother used to took care of all her nine grandchildren, all nine of us at the same time, sometimes. And I could hear that coming out of her mouth. Who broke the coffee table? That one.
(CROSSTALK)
WALSH: It was definitely-it was definitely that.
But it was more, going back to the previous debate, where he wouldn't even look at him. There's just a kind of contempt there that I think is really turning off and even scaring the voters. You don't have to vote for Barack Obama, but treat him with respect.
MATTHEWS: Tucker.
TUCKER CARLSON, MSNBC SENIOR CAMPAIGN CORRESPONDENT: Oh, please.
(LAUGHTER)
CARLSON: I mean, come on.
I have never seen-I mean, I actually thought it was kind of appealing. He was-McCain was all fired up. He seemed to say it half in jest. To make it into this kind of macaca moment or to laden it with supposed racial subtexts, as many Obama supporters have today...
MATTHEWS: Do you believe-do you believe it was?
CARLSON: Well, it's ludicrous.
(CROSSTALK)
CARLSON: Never have supporters cried racism more often. There is racism in this world.
(CROSSTALK)
CARLSON: There is racism in this world. You devalue the term if you use charge it when it doesn't exist. And this is a case where it doesn't exist.
WALSH: You know what? Tucker, I agree with you. I completely agree with you on that point.
MATTHEWS: I don't know what the racism is, but some people did react that way.
Let me ask you about "that one," because I have to tell you, Joan, I do remember, somewhere in my head, I hear an Irish woman of a certain age saying, you are one of the smart ones. You are one of the smart ones.
That use of the word ones, I do think...
WALSH: Ones.
MATTHEWS: ... it has a resonance from the old days.
But, Tucker, you don't buy that? You don't think of it as kind of a putdown?
CARLSON: Oh, of course it's a putdown. Oh, of course it's a putdown.
I just don't think it's out of bounds. McCain absolutely...
(CROSSTALK)
MATTHEWS: OK. How about this opening line?
CARLSON: If he was winning against Hillary, he wouldn't treat her that way.
MATTHEWS: OK. What about the opening line with the moderator, "Not you, Tom"?
(LAUGHTER)
MATTHEWS: What did you make of that one?
CARLSON: I didn't know what to make of it.
(CROSSTALK)
MATTHEWS: Out of nowhere, he took a shot at the moderator. What do you make of it?
(CROSSTALK)
MATTHEWS: Was it grumpiness?
(CROSSTALK)
CARLSON: ... guy. I don't know. I mean, Yes, McCain can be grumpy. There's absolutely no question about it. But he's also this sort of-it depends the lens you are looking through.
When he was running against George W. Bush, these exact ticks were seen as charming and appealing by a press corps that contempt for Bush.
WALSH: I'm not sure, Tucker. I don't think...
CARLSON: Nothing-McCain has not changed. I have covered him before.
WALSH: I think he has changed.
CARLSON: This is the same guy.
MATTHEWS: OK. Your thought.
(CROSSTALK)
WALSH: I don't agree.
(CROSSTALK)
MATTHEWS: ... Joan.
WALSH: I-I really-I think-I think there's a-he always had a temper. He's always-you know, his old nickname was McNasty. But the humor was directly slightly differently. And I think that there is a level of bitterness now that is coming out.
Tom Brokaw, one of the most respected names in journalism, really doesn't deserve that kind of putdown. Why would you do that? It seems like he's a little bit out of control.
CARLSON: Oh, but he's joking around.
I mean, look, here's the differences. Now he is running against Jesus, and everyone is all upset. You can't be mean to Jesus.
(LAUGHTER)
CARLSON: You know, you can't treat him with contempt.
No, I'm serious. That's what it is. Let's be totally honest. The people who run the country, people with college education and higher, the press, they love Barack Obama. They are emotionally committed to Obama. We all know that's true.
WALSH: A lot of people love Barack Obama.
(CROSSTALK)
CARLSON: And they look at this and they say...
(CROSSTALK)
MATTHEWS: How does that relate to the way in which this debate seemed to be once again a case where, when you poll people-CNN did it-CBS does it-it seems, no matter who does the polling, the public, in real time, keep coming out on the side of either Barack or on the side of Joe Biden.
(CROSSTALK)
MATTHEWS: I have a suspicion of why that happens. And I don't think it has to do with performance exactly. But what do you think?
CARLSON: Well, I think part of it has to do...
(CROSSTALK)
MATTHEWS: I think it has to do with the national mood. They want a change.
CARLSON: It's a Democratic year. That's exactly right. Any Republican is going to be in a tough situation.
WALSH: Right.
CARLSON: Part of it is McCain's age. This is a country that reveres youth and newness and freshness and inspiration.
MATTHEWS: Yes.
CARLSON: You know, some people look at McCain hobbling around the stage and say, gosh, he has endured, he's suffered for the country. That's a great thing.
But, for a lot of people, they say...
MATTHEWS: Hobbling?
CARLSON: Well, he was.
(LAUGHTER)
CARLSON: No, he was.
WALSH: Hobbling? Yes.
CARLSON: I don't mean that as an insult. For me, that is impressive.
MATTHEWS: Yes.
CARLSON: The guy has been around.
MATTHEWS: Yes.
(LAUGHTER)
CARLSON: He has-he has stuck it out. I like that.
WALSH: He can still hobble.
CARLSON: Most people-a lot of people don't.
MATTHEWS: Yes. I think you are right. I think it's all in the eye of the beholder. And I do think he bears the scars of serving his country. There's no doubt about it. And we know why his arms are suspended that way.
CARLSON: Yes.
MATTHEWS: We know what happened. They were torturing him in that way.
Anyway, thank you, Tucker, for a different perspective.
Thank you, Joan, for a perspective more familiar to me.
(LAUGHTER)
MATTHEWS: Up next: Last night's debate took place before an audience of undecided voters. That's what they said they were. You have got to wonder who is still undecided, by the way, in this race. The numbers are like 97 percent of those who have decided. But they found that 3 percent.
But, to John McCain, it was a friendly crowd, or was it? We will explain why in the next "Sideshow."
You're watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
MATTHEWS: Well, now it's time for the HARDBALL "Sideshow."
One of the sizzling moments of last night's presidential debate was when Senator John McCain walked into a power punch from Barack Obama.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: Now, Senator McCain suggests that somehow, you know, I'm green behind the ears and, you know, I'm just spouting off, and he's somber and responsible.
MCCAIN: Thank you very much.
OBAMA: Senator McCain, this is the guy who sang, "Bomb, bomb, bomb Iran," who called for the annihilation of North Korea. That I don't think is an example of "speaking softly."
MCCAIN: I say-I was joking with a veteran-I hate to even go into this. I was joking with an old veteran friend, who joked with me, about Iran.
(END VIDEO CLIP)
MATTHEWS: Really? Senator McCain actually sang the "Barbara Ann" song in April of 2007 during a campaign rally in South Carolina.
(BEGIN VIDEO CLIP)
MCCAIN: That old Beach Boys song "Bomb Iran," you know?
(singing): Bomb, bomb, bomb.
Anyway...
(END VIDEO CLIP)
MATTHEWS: At the time, McCain told those who said he was out of line to be singing songs about bombing to get a life. But I doubt if we're going to hear any more of this jokey karaoke from John McCain.
Now to John McCain's running mate, Governor Sarah Palin. She takes great pride in calling herself an ordinary hockey mom and friend of Joe Six-Pack and out there slamming elitists. But it seems Palin has some royal blood, if you believe in that nonsense, flowing through her veins.
Ancestry-Ancestry.com uncovered Palin is 10th cousin to Princess Diana. Princess Palin? You betcha.
People are losing their shirts on Wall Street. But one smart entrepreneur wants to make a few bucks off a T-shirt with the most memorable line from last night's debate. "That one," as we mentioned earlier, is how John McCain referred to Barack Obama. And now you can wear that line all the way to Election Day. The T-shirt comes in four sizes. And the enterprising-makers even scooped up the Internet address, thatone08.com.
Now, the "Big Number" of tonight.
The old expression from Harry Truman is that, if you want a friend in Washington, get a dog. At last night's debate, Senator John McCain kept using that phrase of his, "my friends."
(BEGIN VIDEO CLIP)
MCCAIN: My friends.
My friends.
My friends.
My friends.
My friends.
My friends.
My friends.
My friends.
And, my friends.
My friends.
My friends.
My friends.
And, my friends.
My friends.
My friends.
And, my friends.
My friends.
My friends.
My friends.
My friends.
My friends.
(END VIDEO CLIP)
(LAUGHTER)
MATTHEWS: As Bette Midler sang, you got to have friends.
And, at last night's debate, Senator John McCain said "my friends" 22 times -- 22...
(LAUGHTER)
MATTHEWS: ... tonight's "Big Number."
Coming up: Is the economy the mountain that John McCain just can't move? With most Americans ranking the economy's as the top challenge facing the country, can McCain do anything to make the economy a winning issue for him, or will Obama successfully link McCain to the worries over Wall Street?
You're watching HARDBALL, only on MSNBC, my friends.
(COMMERCIAL BREAK)
JULIA BOORSTIN, CNBC CORRESPONDENT: I'm Julia Boorstin with your CNBC "Market Wrap."
More big losses, despite an unprecedented coordinated move by the Fed and other central banks worldwide to cut interest weights by a half-percent. The Dow Jones industrials ended a volatile day down 189 points, closing at a fresh five-year low. The S&P 500 fell 11 points. And the Nasdaq dropped 14.
Treasury Secretary Henry Paulson said it could take several more weeks for the Treasury Department to start buying up bad debt from financial firms under the government's $700 billion rescue plan. He also said-quote-"The turmoil will not end quickly."
Meanwhile, oil prices dropped to a fresh 10-month low. Crude fell $1.11, closing at $88.95 a barrel.
There was a glimmer of hope in the troubled housing industry, as pending home sales jumped a larger-than-expected 7.4 percent in August from the previous month. However, the nation's realtor-retailers reported dismal September sales, with some suffering double-digit declines.
That's it from CNBC, first in business worldwide-back to MSNBC.
MATTHEWS: Welcome back to HARDBALL.
As Congress held hearings on the Wall Street meltdown this week, McCain-that's Senator McCain-proposed that the government buy bad mortgages. And Obama went after AIG executives who splurged on an expensive spa retreats just days after their company was bailed at, at the tune of $85 billion.
Take a look at Obama last night.
(BEGIN VIDEO CLIP)
OBAMA: It means that we are cracking down on CEOs and making sure that they're not getting bonuses or golden parachutes as a consequence of this package. And, in fact, we just found out that AIG, a company that got a bailout, just a week after they got help went on a $400,000 junket.
And I will tell you what, the Treasury should demand that money back and those executives should be fired. But that's only step one.
(END VIDEO CLIP)
MATTHEWS: Well, can the Treasury demand money back from AIG, those big executives, after they got their massages down there in California, for bad behavior?
U.S. Congressman Elijah Cummings of Maryland is a Democrat, and U.S. Congressman Chris Shays of Connecticut, he's a Republican. Both sit on the Oversight and Government Reform Committee, which has been holding hearings on the AIG bailout.
Congressman Shays, can you-can Congress actually act on something like that proposal by Senator Obama last night to grab back the cost of that spa retreat at $400,000 from AIG?
REP. CHRISTOPHER SHAYS ®, CONNECTICUT: Well, we are sure going to try. I mean, give me a break.
This is-this is a really sick situation. You have these-these committees, these compensation committees, that allow incredible bonuses. Instead of building up reserves, they were giving it out to a lot of their executives.
And then to do things like this, they have no credibility, and there is no way Elijah or I want to be connected with them.
MATTHEWS: But is there any legislative way, Mr. Cummings, to try to get that money back from these guys, or make them pay for their apparently $3-a-minute massages, that sort of thing, that sort of luxury living, if you want to call it that?
REP. ELIJAH CUMMINGS (D), MARYLAND: I agree with Chris.
But what-let me tell you what we did. Henry Waxman and two of our colleagues, immediately, as soon as we heard this information during the hearing yesterday, wrote to Secretary Paulson and said to him that he has to say to any of these companies getting help from the federal government and taxpayers that they had to cease and desist from type of activity.
I want every single dime back. And I think that we will find a way to get it back. By the way, the head of AIG then wrote to Secretary Paulson and let us know that he was going to take action. And he pretty much apologized for what had happened.
But guess what. They-we just found out today they have got another one of these junkets scheduled for next week. So, we have got work to do. And we are going do our best to make sure that this doesn't happen again.
MATTHEWS: Let me ask you all, now that we have under this-the punitive level of this thing that doesn't bother me a bit, Mr. Shays, first of all, you know, everybody is trying to figure this darn thing out.
And I guess they are trying to figure out if it's ever going to end. Can Congress end this thing? Can you folks up on the Hill, through punitive action, through corrective steps, can you wind back the clock to a year or two ago, so that we can have ourselves a credit market again in this country, a cash market?
SHAYS: Well, you have the Government Oversight Committee that is going to look at why this happened. You have the Financial Services Committee that's going to look to make systemic changes.
But the bottom line is, can we undo what has happened in the last year? I don't think so. But there is sure a lot of that lessons that we've learned and the bottom line is we have two problems. We have a liquidity problem and we have a capital adequacy problem.
And we dealt with liquidity problem, but we took a week to get there. And I think that kind of shook the market a bit. But we still have a problem with the capital market issue. Fortunately, we did provide $250,000 for security on people's deposits at banks because we believe we are going to have some run on some banks. And at least we lifted that level up.
MATTHEWS: But what are you telling people, Mr. Cummings, in your district in Maryland? I mean, they may have money in the bank, have it in the market, they have it 401(k)s, I mean, I keep watching this thing, I feel like we're the classic sort of-what is it, the frog in the pot that keeps getting up to boiling level and it goes up a couple of degrees and you don't even notice it, and all of a sudden, you are boiling?
I mean, nobody is selling-don't sell, everybody says, don't sell, stay in. And I wonder where we are all going to get-I mean, we've lost 38 percent of the value of the stock market this year.
REP. ELIJAH CUMMINGS (D), MARYLAND: What I tell my constituents is, first of all, this is America and we will get through this. And I tell them the truth. The fact is, is that deregulation and failure to regulate has been one of our major problems. And we have got to get back on that. And that's part of the reason why we holding the hearings that we are holding.
But the fact is, is that a lot of people are suffering the pain. And you know, I was listening to the earlier reports about last night's debate and I hoped that Senator McCain gets it, and I don't think he does, that there a lot of people in pain, in a lot of pain. And somehow we've got to turn this around?
MATTHEWS: But what about his proposal? What about his proposal, Mr.
Cummings, to go out there and buy up all the bad mortgages?
CUMMINGS: Well, he's a little late-he's a little late. Well, it's interesting now he threw that out. He's a little late on that proposal. But as a matter of fact, Barack Obama had asked and tried to get-make it so that people could resolve their mortgage problems through the bankruptcy courts.
And basically our friends on the other side shot that down and we were not able to get it as a part of this package. And Barack Obama has made it clear that he is going to try everything in his power if he becomes president to make that happen. And I'm going to support him a million percent.
MATTHEWS: But, Mr. Shays, the question on the table now is put there by the candidate of the Republican Party, which is, the federal government got out and in cases where a guy or a family buys a house for $100,000 and puts $5,000 down and all of a sudden the house value is about $85,000 or less, and they walk away from it or they are thinking about walking away from it, the government says no, we will renegotiate your mortgage, you only have to owe $85,000, not $100, 000, something like that.
That $15,000 the government is just swallowing, we're just saying, according to the plan put forward by McCain, the government is just going to take the loss that the people are suffering. Do we have that kind of money in the federal Treasury to just take the loss of everybody that has gotten a bad mortgage deal?
SHAYS: Yes, you know, first, Chris, people are losing sight of what we are already doing. We have FHA Secure, which is allowing people to refinance with FHA even if they had been delinquent in their past mortgage payments once the interest rates went up.
And we had the other thing that took effect October 1st. We are allowing banks to-we're allowing FHA to buy at the present market value any debt at 85 -- and mortgage-set a mortgage of 85 percent of it.
So banks can come to the FHA, give them their bad debt at the market value today. The bank has to take the hit and then they get the value back later on when the property value goes up.
This is a program that started October 1st and it's going to impact over a half a million homes.
MATTHEWS: OK. Well, thank you.
CUMMINGS: But, you know, one.
MATTHEWS: We have got to go, Congressman, I'm sorry. This is complicated, but I think the question is.
CUMMINGS: Very complicated.
MATTHEWS: . are we going to get to the bottom of this damn thing?
And I guess we're hoping we will.
CUMMINGS: We will.
MATTHEWS: . in the next week or so.
CUMMINGS: We will.
MATTHEWS: Anyway, thank you very much. U.S. Congressman Elijah Cummings.
CUMMINGS: Thank you.
MATTHEWS: And U.S. Congressman Chris Shays. Up next, if the economy won't recede from the top of the news, can John McCain make the economy work for him? It looks like these economic problems facing the country are not going to go away. So it's a question of who do you trust to deal with them? Nobody is going to change the subject this month.
Anyway, the "Politics Fix" coming in next, that seems to be the conclusion everybody is making. You can't change the subject when everybody is scared to death. This is HARDBALL only on MSNBC.
(COMMERCIAL BREAK)
MATTHEWS: We're back now with the "Politics Fix." Newsweek's Howard Fineman, he was with me in rain last night, that monsoon down there in Nashville. He is an MSNBC political analyst, and of course the top guy with Newsweek. And Jim VandeHei is with politico.com.
I want you both to talk about some of this stuff here. The sheriff of Lee County in Florida speaking at a program before a Palin rally on Monday had this to say.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: On November 4th, let's leave Barack Hussein Obama wondering what happened.
(CHEERING AND APPLAUSE)
(END VIDEO CLIP)
MATTHEWS: If the people in uniform talk like that, what do the criminals have to have on their mind? Anyway, today in Pennsylvania, speaking before a McCain-Palin really, the chairman of the Lehigh County Republican Party made reference to Barack Obama's middle name. He said, just imagine if you wake up the morning after election and a guy named Barack Hussein Obama is president of the United States, what are you going to do with yourself?
Anyway, we do not condone-this is what the campaign is putting out afterwards. "We do not condone this inappropriate rhetoric which distracts from the real questions of judgment, character, and experience that voters will base their decisions on in November."
Now, Howard, I have to wonder, I think they are pushing this line of personal attacks. I think it's ethnic. I think they have been doing it now from the time they talked about Bill Ayers, they're talking about the contributions coming into his campaign perhaps from abroad.
They are digging into this dangerous territory and these people are jumping on the platform, saying "Hussein," they are yelling from the crowd, "killer." You know, get his head or whatever. The most amazing lines are coming out of these crowds. What do you make of it?
HOWARD FINEMAN, MSNBC ANALYST: Well, what I make of it is that the Obama-I mean, the McCain campaign operates on three levels. It operates on the above board level that you saw in the debates last night. It operates in some very tough advertising. All of the McCain ads are negative, all of them. And not all of Obama's are, by the way. Most of them are still positive.
And then there is this netherworld down there which occasionally the McCain campaign has to issue a statement of condemnation of, but which they know darn well is deep in the psyche of America. And they're going to plumb the depths of it or allow those depths to be plumbed between now and Election Day.
Because they're going to make this connection. They're going to say, Barack Obama is comfortable around terrorists, i.e., the retired terrorist bomber Bill Ayers. And because we face Islamic fundamentalist terrorism in the world, that makes a guy named Barack Hussein Obama not someone we can trust as president.
Now they're-the.
(CROSSTALK)
MATTHEWS: And may dig into his contributions, raising the issue, is he getting foreign dangerous (ph) money?
FINEMAN: Yes. The Palestinian contributions and all of that kind of thing. They're going to allow the-they're going to place the dots next to each other and let other people connect them. That's the way they're going to operate.
MATTHEWS: Including the nuts in the crowd, the ones who get up on the platform.
Jim VandeHei, your sense of this, how much of it is orchestrated? How much of it is just that what comes when a guy has a middle name of Hussein and people begin to notice it?
JIM VANDEHEI, POLITICO.COM: I think there is no doubt that the McCain campaign, because of the approach it has had, especially since the debate, has created a climate where this stuff can thrive. Do I think that they're telling these people to go out on stage and say, Hussein, Hussein, Hussein? I don't think that's the case.
I think when you get conservatives who tend to be the people who introducing the candidates and the vice presidential candidates, they get pretty fired up. They tend to be meat-eating conservatives and they know that the crowd is going to love it when they use that Hussein line.
I think clearly if McCain said, cut the crap and made sure that beforehand that this stuff didn't happen, maybe that could silence some of it, probably not all of it, but certainly an element of it.
MATTHEWS: Well, it seems to me this campaign-I'll say it again. I said it a colloquium, you and I were at the (INAUDIBLE) the other. It is always tricky to try to make guesstimates about this, but there are certainly white people out there, to be blunt about it, who won't vote for a black guy.
There are people that won't vote for a guy with a Swahili name, Barack Obama. They are just not going to do it. But there is that fourth quintile out there that is reachable by Barack Obama, and is trying to make up their minds. They have a little bit of suspicion. It is kind of a new thing to be voting for a guy with an African name, right, with his background. And they don't know him that well.
You're working that fourth quintile. Isn't that what's going on here?
FINEMAN: Yes, that's what the McCain people are doing.
(CROSSTALK)
MATTHEWS: And that's what Barack has got to work too.
FINEMAN: And I agree with Jim. It's not like the McCain campaign is saying, go say this. But they are allowing the dots to be out there to be connected. Now what Obama is doing in response is two things.
His bearing, his comportment at the debate. He has got to look like a commander-in-chief and behave in the cool, collected fashion that he is trying to project. And the other thing is to have his own missile gap strategy.
Remember deep in history, Jack Kennedy attacked Richard Nixon from the right, saying there is a missile gap and we've allowed the American missile defense system to atrophy under the Eisenhower years.
What Obama is doing is attacking from the right on Pakistan. He is the guy who is saying, I'm going to go into Pakistan. I don't care what the Pakistanis say. We're going to stop coddling the Pakistani military leaders, and if we know that Osama is gettable, we're going to go get him.
(CROSSTALK)
MATTHEWS: What do you make of that theory? That he is kind of pincering the guy, he is going to his right in saying, I'm going to get the guys that got us on 9/11, instead of letting them keep getting away with it while we focus on Iraq?
VANDEHEI: I don't dispute that. One thing I do want to come back on is, there is no doubt that a lot of these games are played on the Obama side, too. I mean, if you listen to what the Obama camp has been saying over the last couple of days, you don't really have to be a sort of political scientist to figure out what they're trying to say is that he is like a nutty old man. That McCain is erratic. He's crazy. He's too old to be president. That's not nice stuff either. So.
MATTHEWS: Erratic is the word used, yes.
VANDEHEI: . this stuff happens on both sides, and the Obama campaign has just been more clever than the McCain campaign with its negative ads. They do a lot of it through radio, a lot of it in states. They don't advertise it to the media like the McCain camp does. So it happens on both sides. And that's the point I want to make.
MATTHEWS: But what you see on stage, there is more resonance between the charge of him being a grumpy old man in what you see, than there is resonance between the charge he is dangerous and what you see from Barack on stage, right, Jim?
(CROSSTALK)
MATTHEWS: I mean, when he goes there and takes the tag.
(CROSSTALK)
VANDEHEI: Listen I think Republican have telegraphed-Republicans have been pretty clear in telegraphing from the beginning that they were going to paint Obama as an exotic, unfamiliar creature in politics. And everything they do goes through that lens. And I think people are obviously hypersensitive to the fact that it could be a racial undertone or even blatant racism in this campaign. So it gets called out, sometimes it's legitimate, sometimes it's not legitimate.
MATTHEWS: Well said. We'll be right back with more. We'll be right back with Howard Fineman and Jim VandeHei. I want to find out, by the way, what we think the end game is going to be. Are they going to fight economics? Are they going after the character and put the shiv in like they start to do every once in a while? We'll be right back on MSNBC.
(COMMERCIAL BREAK)
MATTHEWS: Well, here are the results of our text message survey. Now these had to be taken with some grain of salt. I mean, I just do think you have to know what you're watching here. Eighty-eight percent of those said that Barack Obama did more to help himself in last night's debate. Well, they clearly -- 12 percent said McCain. That's a wipeout. By the way, you can watch other networks with totally different results.
We're back with Howard Fineman and Jim VandeHei for more of the "Politics Fix." Maybe that tells us who was watching last night. But anyway, I have got to ask you this question. You're a tough guy. So is VandeHei. Both of you guys have seen some of the worst in politics.
I'll start with you, Jim. If you're Steve Schmidt, the tough guy behind John McCain, are you telling him, stick to the economy because that's all anybody is thinking about? Or are you saying, if we stick to the economy, we're going down with the Titanic? What are you telling the guy?
VANDEHEI: I think you have got to go for the jugular. You're down. You're looking at polls in red states you should be winning that are tied now. If you're talking about the economy, you know, Barney the Dinosaur probably has as good a chance as McCain to win because the Republican brand, Bush, McCain, everything that's attached there on the economy is just bad for Republicans.
He has got to raise questions about Obama's readiness to lead. And I think that would have been an effective line of attack if the economy weren't such an overwhelmingly powerful issue right now.
MATTHEWS: A chance to go from the what to the who.
FINEMAN: Well, the other stuff isn't working. I mean, the latest Gallup poll, and it is only one poll, has Obama up by his largest margin of 11 points.
MATTHEWS: Eleven points.
FINEMAN: And if you look at it state-by-state, the game is being played on McCain's.
MATTHEWS: In Indiana.
FINEMAN: In places like Indiana, Virginia, North Carolina, it's being played on Republican turf.
MATTHEWS: I thought.
(CROSSTALK)
FINEMAN: So they have got to do something. They have got to do something. And I don't think it is, by the way, equivalent to go after McCain as an older fellow versus this other stuff. It's a different.
MATTHEWS: I think you-people make that judgment.
FINEMAN: It's a different level of thing (ph).
MATTHEWS: I think the older people make that judgment, the older people themselves. Thank you, Howard Fineman. Thank you, Jim VandeHei. We had a great time last night in Nashville. Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL. Right now it is time for "RACE FOR THE WHITE HOUSE WITH DAVID GREGORY."
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