updated 10/17/2008 12:23:14 PM ET 2008-10-17T16:23:14

HARDBALL

October 16, 2008

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

Guests: Brian Jones, Rep. Jim Moran, Barbara Comstock, Cecile Richards, Barbara Comstock, Jonathan Alter, Tom DeFrank

CHRIS MATTHEWS, HOST: Not since Watergate has the word "plumber" been so political.

Let's play HARDBALL.

Good evening. I'm Chris Matthews. Leading off tonight: Will the real John McCain please stand up? Is the real John McCain the man who suggested Barack Obama lacks the patriotic impulse necessary to be president, or is he John McCain, the man who corrected a woman last week in Minnesota who questioned Obama's Americanness? Campaigning today in Pennsylvania, McCain reminded voters of the man who's become the most famous plumber in the United States since Watergate.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: The real winner last night was Joe the plumber!

(CHEERS, APPLAUSE)

MCCAIN: Joe's the man.

(END VIDEO CLIP)

MATTHEWS: Joe the plumber and McCain the candidate were on Obama's mind today up in New Hampshire.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: He's trying to suggest that a plumber is the guy he's fighting for.

(CHEERS, APPLAUSE)

JONES: How many plumbers do you know making a quarter a million dollars a year?

(END VIDEO CLIP)

MATTHEWS: In a moment, we'll look back at last night's debate and whether McCain can still pull this thing out.

Also, more than a few eyebrows were raised when McCain said this last night about abortion and the health of the mother exception.

(BEGIN VIDEO CLIP)

MCCAIN: His health of the mother-you know, that's been stretched by the pro-abortion movement in America to mean almost anything. That's the extreme pro-abortion position, quote, "health."

(END VIDEO CLIP)

MATTHEWS: So what did McCain mean by that? And what's the deal with the air quotes, like this? We'll talk to people on both sides of the abortion issue about that moment in last night's debate.

And was McCain judged the loser of last night's debate less because of what he said than how he said it? Was McCain betrayed by his own body language?

Also, it's old news to rip a page from a winning playbook, but why would John McCain follow in the footsteps of Gerald Ford and Jimmy Carter? That's in the "Politics Fix" tonight. And who of our HARDBALL regulars predicted accurately that the Phillies would win the National League pennant in five games? That and more in the HARDBALL "Sideshow."

But we begin with McCain campaign senior adviser Brian Jones. Brian, thank you for joining us. I want you to watch this exchange last night between John McCain and Barack Obama.

(BEGIN VIDEO CLIP)

OBAMA: I mean, if we want to talk about Congressman Lewis, who is an American hero, he, unprompted by my campaign, without my campaign's awareness, made a statement that he was troubled with what he was hearing at some of the rallies that your running mate was holding, in which all the pubic reports indicated were shouting, when my name came up, things like "terrorist" and "kill him," and that your running mate didn't mention-didn't stop, didn't say, Hold on a second, that's kind of out of line.

MCCAIN: Let me just say categorically I'm proud of the people that come to our rallies. Whenever you get a large rally of 10,000, 15,000, 20,000, you're going to have some fringe people. You know that. And I've we've always said that that's not appropriate.

(END VIDEO CLIP)

MATTHEWS: Well, you have to ask about the current tenor of this campaign, with the heated comments coming out from those rally participants, why John McCain missed a chance last night, Brian, to say, Cool it out there. My opponent's a loyal American. Stop using that kind of language at my rallies or anywhere. Why didn't he take that opportunity last night?

BRIAN JONES, MCCAIN CAMPAIGN SENIOR ADVISER: He said it last week when he was traveling around the country. There were a couple of instances where people specifically said things that were inappropriate, and John McCain said specifically Barack Obama is a family man. That's inappropriate. He said it last week on the campaign trail.

MATTHEWS: So you believe last night, he didn't have to do it, when you're-with 50 million people watching last night, when he had an opportunity to tell the McCainiacs out there, the people who support him, that this isn't about going after an un-American opponent. This is about a reasonable debate over who should lead the country. You say he didn't have to even bother to do that, just say, as he did in that quote, I'm backing up the people in the rallies.

JONES: Well, look, John McCain throughout this year has done town halls. When people have said something that have been inappropriate, he's called them out on it. Last night, he had the unique opportunity to contrast himself with Barack Obama in their vision for the future. But to say John McCain hasn't called people out on this in the past is just-it's false.

MATTHEWS: Well, let's look at Governor Palin, his running mate, and see what we think of what she's been saying.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL NOMINEE: I'm afraid this is someone who sees America as imperfect enough to work with a former domestic terrorist who had targeted his own country.

(END VIDEO CLIP)

MATTHEWS: You know, she's said on other occasions-I wish we had the right bite there-she says, to pal around with terrorists. Are you happy with that kind of lingo from your running mate?

JONES: Well, again, campaigns are about distinctions between candidates. Barack Obama, when it was convenient, had a tight relationship with William Ayers. When it didn't fit his political ends, he distanced himself. So I think, you know, some of the things that have been brought up on the campaign have been appropriate, to draw these distinctions, to call into question his judgment.

MATTHEWS: No. No, let's not skip off so easily with judgment. Governor Palin said he believes America is so imperfect that he pals around with terrorists. He believes America is so imperfect, he pals around with terrorists. That's a statement that he lacks the patriotic impulse, that he hangs around with terrorists because he believes America's so bad. You don't see that as a critical attack on Barack Obama's Americanness? I mean, what else could it be? I mean, we'll play it again five more times, but it's not about judgment. You're questioning his patriotic impulse here.

JONES: It's certainly a critical attack, and it goes to the question of the fact that Barack Obama had a relationship with William Ayers. They served on an education board together for seven years. They had a political affiliation. They've worked together in the past. That is what we're drawing out. That's what we're calling into question. No one's questioning Barack Obama's patriotism.

MATTHEWS: But you said he thinks America is so imperfect that he hangs around with terrorists. What does that mean? He thinks America is so imperfect, he hangs around with terrorists. You're saying that's about judgment?

JONES: It is. It is.

MATTHEWS: It's about whether he cares about his country enough, isn't it?

JONES: No, look, I know this is a point that you want to hit. I know you hit it yesterday...

MATTHEWS: No. Your-your vice presidential nominee has hit it. I want to know whether you agree with it. Do you believe that Barack Obama's view of America is so-he thinks America is so imperfect that he pals around with terrorists? Would you say that?

JONES: Look, no one is calling into question Barack Obama's patriotism. Again, it goes back to his relationship. It's also a question with ACORN. When it was convenient for him to have a close relationship with ACORN, he had it, and now he's moved away from it because it's not convenient for him to have the relationship.

MATTHEWS: OK, let's take a look-let me show you the John McCain that I'm looking for here. Here was John McCain last Friday in Minnesota, when a woman who was having a hard time saying what she wanted to say-but it was something she was trying to say about Barack Obama not being one of us, or whatever, and she finally ended up saying, "He's an Arab." That's how heated this has gotten. Let's take a look at that exchange with your-your presidential nominee.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I've got to ask you a question. I do not believe in-I can't trust Obama. I have read about him, and he's not-he's not-he's a-he's an Arab. He is not?

MCCAIN: No, ma'am. No, ma'am.

UNIDENTIFIED FEMALE: No?

MCCAIN: No, ma'am. No, ma'am. No, ma'am. He's a decent family man, citizen, that I just are happen to have disagreements with on fundamental issues. And that's what this campaign is all about. He's not. Thank you.

(APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: So are we going to see more of that John McCain, the old John McCain who stands up for his opponent's Americanness, or are we going to see the John McCain from last night these next two weeks, who basically passed on that opportunity?

JONES: There's not two John McCains, there's one John McCain. Any time someone says something like that at a rally which out of line, wrong, incorrect, you know, John McCain is going to call them out on it. There's only one John McCain. It's the straight-talking John McCain.

MATTHEWS: OK. Well said. Let's take a look-let's go right now-hey, we're out of time. Brian Jones, thanks for joining us.

JONES: Thank you.

MATTHEWS: Now the Obama campaign and supporter Jim Moran, U.S. congressman from Virginia. Congressman Moran, what do you make of this strange notion where a woman stands up and she's trying to find a word, she says, He's not-he's not-he's an Arab? Obviously, she thinks there's a serious problem with this guy's identity to the point where she says he's an Arab. And then we got Governor Palin saying he finds America so imperfect, he pals around with terrorists. What do you make of that rhetoric?

REP. JIM MORAN (D), VIRGINIA: You know, I think John is running kind of a Jekyll-Hyde campaign. He is a decent person at heart, but he hired a lot of the people-the kind of people that ran that scurrilous campaign on behalf of George Bush against him in the year 2000. But that was a deliberate decision on his part. And they're feeding into this hate radio. You've got people out there that-you know, the vast majority of them can be trusted to act rationally, but not all of them.

And you know, I understand where John Lewis was coming from. Took one person to assassinate Martin Luther King. It took one crazy person to assassinate John Kennedy. The same thing with Robert Kennedy. Timothy McVeigh blows up a federal building. There are people-even though they're a very minuscule minority, nevertheless, some people take this in an extreme manner. And that's what John Lewis is concerned about. He's been there on the front lines, dealing with that kind of hate. That's not what John McCain is about.

But the fact is, this is over. Barack Obama is going to be the next president of the United States, Chris. Last night was John McCain's last chance, and he had to have a Reaganesque moment and he wasn't capable of it. So you know, the cards have been dealt, and they'll-we'll show-show them on November 4 what they reveal. But I think all of us know that have watched this that it's over.

MATTHEWS: Well...

MORAN: This was John's last chance, and Barack looked more presidential than John did, frankly.

MATTHEWS: Congressman Moran, let's take a look at what your candidate thinks because I think he disagrees with you a bit. Here he is warning about, well, what you're talking about here. Here he is.

(BEGIN VIDEO CLIP)

OBAMA: New Hampshire, we are 19 days away from changing this country...

(APPLAUSE, CHEERS)

OBAMA: ... 19 days away. But for those who are getting a little cocky, I've got two words for you-New Hampshire. I learned right here with the help of my great friend and supporter Hillary Clinton that you cannot let up, you can't pay too much attention to polls.

(END VIDEO CLIP)

MATTHEWS: Well, he's trying to remind supporters that he did lose the New Hampshire primary when the polls thought-said he would win it. Congressman Moran?

MORAN: He's absolutely right, and we're not taking anything for granted. We're going to be out every day and night. We're still registering voters. We're not going to let up.

But in terms of the public's conclusion as to who is better prepared to lead this country at a time of crisis, I think that those who have watched carefully and reflected on what is in their best interests-more importantly, their children's best interests-they're reaching a consensus, and that consensus is that Barack Obama is of more presidential timber than John McCain has proven himself to be.

MATTHEWS: Are you worried that some of the rhetoric that we've heard on the campaign trail, some of the more violent sounding rhetoric we've heard at some of these McCain/Palin rallies, might discourage, say, older voters for voting for-not just-I'm not talking about with violence especially, but urge them to vote against this guy who's been sort of villainized in these conversations, Barack Obama?

MORAN: Right. You know, I don't that's going to happen so much. Everyone is tuned into this. This is their country, and I think they understand the importance of this. I don't think many people are going to sit this one out. This is about them and the things they care about.

So I think you're going to see an historic turnout. You're already seeing that in the early voting in those states that allow it. We've got massive early voting in Virginia, which is a battleground state, as you know. You know, the ads-a large portion of folks now have already made their decision. I'm finding that. As I go, you know, to these debates every night, people say, Well, I've already voted. I wanted to get my vote in, and everything that has happened subsequently just confirmed my decision.

Of course, this is northern Virginia, but it's also one of the places with some of the highest levels of income and highest political participation you'll find in the country. I'm blessed that way. But I do think they reflect the trend that the country has gone in, Chris.

MATTHEWS: OK. Thank you very much, Congressman Jim Moran, Democrat of Virginia.

By the way, I'll be watching, as everyone will, to see which John McCain emerges in the next couple of weeks. Will he be the guy that corrects that woman when she says-questions-she raises questions about the identity of his opponent, or will he take a bye on that? We'll see.

Thank you, Congressman Moran.

Coming up: Did John McCain cross the line and offend moderate, well, pro-choice women last night with his remark in last night's debate?

(BEGIN VIDEO CLIP)

MCCAIN: His health of the mother-you know, that's been stretched by the pro-abortion movement in America to mean almost anything. That's the extreme pro-abortion position, quote, "health."

(END VIDEO CLIP)

MATTHEWS: We'll take a closer look at what John McCain may have meant with that statement and with those sort of air quotes, they're called, and whether he's in trouble politically for having said so with pro-choice Republican, as well as independent women.

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. Abortion remains a hot-button issue in this country and it was brought up in last night's debate. Watch this exchange between Barack Obama and John McCain.

(BEGIN VIDEO CLIP)

OBAMA: With respect to partial-birth abortion, I am completely supportive of a ban on late-term abortions, partial-birth or otherwise, as long as there's an exception for the mother's health and life. And this did not contain that exception.

MCCAIN: Just an example of the eloquence of Senator Obama. His health of the mother-you know, that's been stretched by the pro-abortion movement in America to mean almost anything. That's the extreme pro-abortion position, quote, "health."

(END VIDEO CLIP)

MATTHEWS: Well, there's been some reaction from women on John McCain using air quotes, as they're called, on health of the mother. Let's get more from Cecile Richards, who's president of Planned Parenthood Action Fund, and Barbara Comstock, a John McCain supporter.

Let me start with Cecile. I guess the health exception-we understand it well from Roe v. Wade. It gives, even in the case of a late-term situation, a woman-if her health is threatened by carrying a baby to term, or a fetus to term, however you want to word it, that she has that option of having that procedure, an abortion. John McCain said that's overused, that term. He made fun of the term "health." What do you make of that?

CECILE RICHARDS, PLANNED PARENTHOOD ACTION FUND: Well, I think it was an incredibly telling moment. What he was talking about is what the law of the land under the Supreme Court, as you say. I think it showed a complete lack of regard for women's health, for mothers' health, and it really followed on his entire career in Congress.

In 26 years in Congress, he's voted against women's health 125 times, including very basic issues like affordable birth control, support for family planning, and even when he was asked by a reporter, couldn't say whether or not he supported insurance coverage for birth control, even though he'd voted against it twice. I think this really was simply in keeping with John McCain's record as being very out of touch on women's health issues.

MATTHEWS: Barbara, what do you make of his use of those quotes in the air by saying "the health of the mother" in terms of the exception where you are permitted to have the procedure, or abortion, late-term?

BARBARA COMSTOCK, REPUBLICAN STRATEGIST: Well, first of all, let's understand about the partial-birth abortion ban that passed was supported by overwhelming Senate, including people like Tom Daschle, Joe Biden, Dick Gephardt. And remember, back when it was first passed in the '90s, Senator Daniel Patrick Moynihan supported it without the health exception because he likened it to infanticide. You have got to understand that there's never a health reason to do this particular procedure. There might be a...

MATTHEWS: No, we're talking about a late-term abortion, period.

COMSTOCK: I know. And, so, you never need to do the particular-this particular procedure...

MATTHEWS: Well, I know, but that's a side issue.

What about having a late-term abortion...

COMSTOCK: No.

MATTHEWS: ... if there's a health threat? What about that? Where do you stand?

COMSTOCK: Well, you can-you can-if you have a health problem, and you need to deliver, you can always go and deliver.

What he wanted to do, with the partial-birth abortion ban, is assure a dead baby is delivered. That's what the whole partial-birth abortion thing is about. And I would quote to you from Warren Hern, who is an abortion...

MATTHEWS: But why do you keep talking about partial-birth abortion?

I want to ask you about a late-term abortion...

COMSTOCK: Because that is what you asked about.

(LAUGHTER)

MATTHEWS: ... which is permitted under Roe v. Wade-no-it's permitted under Roe v. Wade...

COMSTOCK: No, it's not.

MATTHEWS: ... if there's a-a danger to the health of the mother.

COMSTOCK: No. If there's a danger to a health to the mother, you go in and you have a procedure. You're not guaranteed a dead baby when you deliver in an early procedure.

Chris, if you're nine months pregnant, and you have to go in early, before you have gone into labor, they deliver a baby. They don't go in and execute and put...

MATTHEWS: OK.

(CROSSTALK)

COMSTOCK: I don't want to describe...

(CROSSTALK)

COMSTOCK: ... partial-birth. That's why Patrick-Daniel Moynihan...

MATTHEWS: I-I-I understand Roe v. Wade. Correct me if I'm wrong.

And I want to start with Cecile Richards, and I want to go back to Barbara.

I want to make a very simple statement. There's a health of the mother exception that permits an abortion in late term.

COMSTOCK: Not for a partial-birth abortion.

MATTHEWS: I'm not even talking about partial-birth. Stop bringing up that issue.

COMSTOCK: That's-you're talking about...

MATTHEWS: Let's please talk about the right of a woman under Roe v.

Wade to a late-term abortion when there's a health situation.

Please explain, Cecile.

RICHARDS: Well, that's-there is a protection for women's health and life. And that's been under the Supreme Court. It's been the law of the land for decades now.

And that's what, I think, Senator McCain was questioning. But I think the real point-I thought Senator Obama made this point very well last night. The American people, this is-this is a divisive issue. It's a very personal, private issue. And what, really, the American people want to see is a focus on getting to the root of the problem in this country, which is, we have highest unintended pregnancy rate and teen pregnancy rate in the Western industrialized world.

There's so much we can do to come together to support affordable family planning, to support information for young people, to support insurance coverage for birth control. Those are the kinds of things that could reduce unintended pregnancy and the need for abortion. John McCain has opposed every single one of them his entire career. And that really, to me, is the issue.

MATTHEWS: Barbara, I'm just going to ask you...

COMSTOCK: Well...

MATTHEWS: ... do you think that court-the court should get rid of the health exception in Roe v. Wade?

COMSTOCK: The court-listen, the-I think-yes, I think Roe vs.

Wade should be overturned and the states should decide it.

But let's-Barack Obama thinks that we should overturn all of the state laws we have right now that allow-that-he's for federal funding of abortion, taxpayer funding of abortion. He was against that Born Alive Act. He has the most extreme position. He wanted to let-if a baby is born alive, he said-and I quote-"If this is a child," the baby born alive, "well, then it's an anti-abortion statute, so we have to be against it."

That is a radically extreme position that most other Democrats don't support. But Cecile and Planned Parenthood, you know, he is bought and paid for with them. He has said he wants to pass the Freedom of Choice Act, one of his first bills he wants to sign, which would allow for everyone to get a paid-for abortion, and would overturn all those statutes that ban funding.

MATTHEWS: OK.

COMSTOCK: No more parental consent laws or notification. That is an extreme position. And the press has been ignoring that. And I know you want to ignore that and talk about things that are not at issue.

MATTHEWS: No, you-but, Barbara, your point is-your point is, you just made a charge there. You said that Barack Obama has been bought and paid for by-by, what, Planned Parenthood? Was that your charge?

COMSTOCK: Yes.

He supports all of their extreme bills. He has said, the first-I want sign the Freedom of Choice Act as the first bill. He has said, I'm your guy.

MATTHEWS: Right.

COMSTOCK: That's why more of them were supporting him than Hillary, because he's 110 percent, when she was only about 95.

MATTHEWS: OK.

Cecile, did you buy and pay for Barack Obama? That's the charge here.

RICHARDS: With respect-with respect, Barbara...

COMSTOCK: Is there anything he opposes that you support?

(CROSSTALK)

RICHARDS: Barbara, I think it's-Barbara, with respect....

COMSTOCK: He doesn't oppose anything that you support.

RICHARDS: I think it's my turn. I think it's my turn, Barbara.

COMSTOCK: OK.

(CROSSTALK)

MATTHEWS: Cecile, please.

COMSTOCK: Yes. Five-over five million people come to Planned Parenthood every year. One in four women in America has been to Planned Parenthood in their lifetime for some kind of health services.

And 97 percent of the health services we provide are for prevention, to prevent unintended pregnancy and the need for abortion. And what we're simply saying is, we wish John McCain was more focused on women's health, on preventing unintended pregnancy in the first place, and bringing this country together, rather than dividing it.

I heard nothing from John McCain last night about he wanted-what he wanted to do to support women's health care. And that's what I think is the issue.

MATTHEWS: OK.

Thank you very much, Cecile Richards.

And thank you, Barbara Comstock.

I believe that John McCain made a mistake last night by making light of the health concerns of women.

(CROSSTALK)

MATTHEWS: Up next: new revelation about the other big star in last night's debate, a fellow named Joe the plumber, the most famous plumber in American politics since the Watergate plumbers. We're learning more about him today. And he's speaking out about last night. That's next on the HARDBALL "Sideshow."

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL.

Time for the "Sideshow."

As we told you earlier, America has got a new personality. His name is Joe the plumber. Last night, Joe was invoked, his name, 25 times by the candidates. That's even more than the word Iraq.

So, what does Joe think about all those shout-outs?

(BEGIN VIDEO CLIP)

JOE WURZELBACHER, RESIDENT OF OHIO: Like I said, it was just a focal point. And, if it helps the debate, then-then I'm happy for that. But I wish they would have, you know, I don't know, probably talked about more important issues.

None of this is national, is it?

(END VIDEO CLIP)

MATTHEWS: Great line.

Anyway, the story gets better. It turns out America's most famous plumber isn't really a plumber. Reporters today uncovered that Joe Wurzelbacher doesn't have a plumbing license in Ohio.

By the way, in case you missed it, Barack Obama has been advertising on Xbox video games in an effort to promote online registration and early voting. Now we have word that Obama is taking on yet another American pastime, the most sacred one of all, baseball.

Yesterday, the MLB, Major League Baseball, agreed to delay the start of game six of the World Series by 15 minutes, all so that FOX can accommodate, along with other major networks, Obama's 30-minute ad buy on October 29.

Just check out the Republican Party's response to all this. It's kind of over the top-quote-"It's unfortunate that the World Series' first pitch is being delayed for Obama's political pitch. Not only is Obama putting politics before principle, he's putting it before our national pastime."

Well, by the way, for those who haven't heard, the Phillies won the National League pendant in five last night. That's a great call by our own Michael Smerconish. He predicted it on the nail.

Time now for the "Big Number."

This week, the Ohio Republican Party won a federal appeals court ruling that would review records of new voters whose driver's licenses or Social Security numbers don't match records in other government databases.

What does this mean? Well, according to today's "New York Times," because of this decision, a lot of Ohio voters could be blocked from casting ballots on Election Day. How many? More than 200,000.

By the way, in 2004, President Bush beat John Kerry in Ohio by less than 120,000 votes. Now 200,000 Ohioans could-mention could here-be unable to vote on Election Day-tonight's "Big Number."

Up next: How the candidates look is sometimes more important than what they say. So, what did the candidates tell us last night when they weren't talking? What nonverbal cues did they give us? We're going to look at the body language of McCain and Obama last night and what it tells us about this race.

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

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

Big gains after a late-day rally, with the Dow managing its second up session so far this month. The Dow finished 401 points higher on the day. That's after being down 380 points at one session-at one point in the session. The S&P 500 finished higher by 38, and the Nasdaq up 89.

Oil prices fell $4.69, closing at $69.85 a barrel. That's the lowest level in 14 months.

Consumer prices were flat in September. That's after the government's most-watched inflation barometer actually dipped a tenth-of-a-percent in August.

Meantime, new claims for unemployment benefits dropped by a larger-than-expected 16,000 last week, but totals still remain at levels associated with a recession.

General Motors announced that it's going to lay off another 1,600 workers. The cuts will be made at three plants in Michigan and in Delaware.

And some important earnings news after the closing bell today-both IBM and Google reported that quarterly earnings beat analyst estimates. That should provide some support for Friday's trading session.

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

(BEGIN VIDEO CLIP)

OBAMA: The notion that I voted for a tax increase for people making $42,000 a year has been disputed by everybody who has looked at this claim that Senator McCain keeps on making. Even FOX News disputes it, and that doesn't happen very often when it comes to accusations about me.

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS: Welcome back to HARDBALL.

Barack Obama's mention of FOX News got a rise out of John McCain. You just saw it. But a lot of McCain's body language last night was less than friendly.

Let's bring in NBC News political director Chuck Todd and MSNBC's chief Washington correspondent, Norah O'Donnell.

Now for the nonverbal part of tonight's show, trying to understand what their language of their bodies were saying. What did make-well, take a let's look at this one. We watched it together after Obama first mentioned George Bush.

(BEGIN VIDEO CLIP)

OBAMA: When President Bush came into office, we had a budget surplus and the national debt was a little over $5 trillion. It has doubled over the last eight years.

And we are now looking at a deficit of well over half a trillion dollars.

So one of the things that I think we have to recognize is pursuing the same kinds of policies that we pursued over the last eight years is not going to bring down the deficit. And, frankly, Senator McCain voted for four out of five of President Bush's budgets.

We've got to take this in a new direction, that's what I propose as president.

BOB SCHIEFFER, MODERATOR: Do either of you think you can balance the budget in four years? You have said previously you thought you could, Senator McCain.

MCCAIN: Sure I do. And let me tell you...

SCHIEFFER: You can still do that?

MCCAIN: Yes. Senator Obama, I am not President Bush. If you wanted to run against President Bush, you should have run four years ago.

(END VIDEO CLIP)

MATTHEWS: What did we make of that, Norah? I thought that was a pretty good line. I mean, it was obviously a set piece, but it was a good line.

NORAH O'DONNELL, NBC CHIEF WASHINGTON CORRESPONDENT: It was clearly the line that the McCain campaign is most happy about today, where he tried to separate himself from President Bush. And they think it played very well.

I watched that with focus groups down in Kansas city, Missouri, of course, the ultimate battleground state, the ultimate bellwether state, if you will. And-and they did respond well to McCain's particular line to try and separate himself from President Bush. But you could see there that whole clip where McCain looked really testy listening, really angry listening to Obama.

MATTHEWS: What do you make of that, Chuck? Is it OK to be testy, or is that not OK these days of...

(LAUGHTER)

MATTHEWS: You know, we don't like any friction, any arguments these days.

(LAUGHTER)

MATTHEWS: It's gotten so dainty, sometimes, in these-it seems, by the way, the people you talk to last night, Norah, are really-they like daintier politics, much more pleasantness, than they like fighting, it seems.

What do you think, Doug-I mean Chuck?

CHUCK TODD, NBC NEWS POLITICAL DIRECTOR: Well, it's anyway-remember, that's the politically correct answer to say to a reporter or a pollster: Of course I don't like negative ads.

But one thing I think we have got to remember, it is television, as a friend of mine sent to me in an e-mail today, and emphasis on the word "vision." It is a visual.

And the-when you watch this thing on-on mute-and it was all three debates-I think the stark contrast between Obama and McCain visually-McCain has looked agitated in all of these debates. He is an intense man by nature. And that intensity, over a 90-minute period, doesn't intensely come across well, I think.

I think we know him.

O'DONNELL: Right.

TODD: We here sit there and we-and that's why so many of us said, you know what? McCain did a good job tonight. He did this. He did that. He was aggressive.

And you had a whole bunch of viewers sit there and-and say, you know what? That guy Obama, he won the debate. He seems calm, cool, collected.

And, so, I-I don't-you just wonder, did McCain's intensity just not play well for a 90-minute period?

MATTHEWS: Well, let's look at McCain's reaction to Obama's explanation of John Lewis' criticism of McCain campaign rallies.

(BEGIN VIDEO CLIP)

OBAMA: At some of the rallies that your running mate was holding, in which all the Republican reports indicated were shouting, when my name came up, things like "terrorist" and "kill him," and that you're running mate didn't mention, didn't stop, didn't say "Hold on a second; that's kind of out of line."

And I think Congressman Lewis' point was that we have to be careful about how we deal with our supporters.

Now...

MCCAIN: You've got to read what he said...

(CROSSTALK)

OBAMA: Let-let-let...

MCCAIN: You've got to read what he said. You've got to read what he said.

OBAMA: Let me complete my response. I do think that he appropriately drew a comparison between what was happening there and what had happened during the Civil Rights Movement. And we immediately put out a statement saying that we don't think that comparison is appropriate.

(END VIDEO CLIP)

MATTHEWS: Norah? John McCain, his body language.

O'DONNELL: There's no doubt he was annoyed, as anybody would be being compared to George Wallace. But what was he writing there? He was scribbling rather than looking at Barack Obama. All of these cues are very important in terms of temperament. I-again, watching with a focus group, they were much more attuned to this, I think, probably because I've covered John McCain and I'm used to his personality. So I didn't notice it as much. But many of them, independents, remarked about it.

It's the independents that matter. It's the independents who think that these nasty, negative attacks have backfired. They scored well when McCain started talking about policy, alternative sources of energy, when Barack Obama said voters are sick of tit for tat. They want to focus on the issues. The numbers shot up. They did not like it when they got into this negative back and forth on these particular issues.

MATTHEWS: Let's take a look-Chuck, you first here this time. Let's take a look at Obama's reaction to McCain's mention of Bill Ayers and ACORN. I think we're going to see the happy chuckling face here of Barack Obama.

(BEGIN VIDEO CLIP)

MCCAIN: Mr. Ayers, I don't care about an old washed-up terrorist. But as Senator Clinton said in her debates with you, we need to know the full extent of that relationship. We need to know the full extent of Senator Obama's relationship with ACORN, who is now on the verge of maybe perpetrating one of the greatest frauds in voter history in this country maybe destroying the fabric of democracy. Same front outfit organization that your campaign gave 832,000 dollars for, quote, lighting and site selection.

(END VIDEO CLIP)

MATTHEWS: I said last week, Chuck, that Senator Obama is blessed with a happy smile. He just has one. There he is sort of delighted at what he obviously takes to be the overreach of his opponent's attack.

TODD: Yes. It looked like he was easily deflecting this. It just goes-again, McCain just seems so intense and so-visually just so disturbed, frankly, by the fact that he's losing to this guy. Obama looks like a guy that's in the lead. I think it's kind of funny that Obama borrowed the Hillary Clinton trick when you get attacked, which is to smile or laugh. Now, he didn't laugh as loudly sometimes as Hillary Clinton would. But remember during those debates when they would go after her on something personal or negative, she would just laugh it off and do all that. It seems to be something that Obama learned from Senator Clinton.

O'DONNELL: Chris, I think because there was such pronounced body language and differences between McCain and Obama in this debate, and also because Joe the Plumber was mentioned so many times, this is going to be ripe for "Saturday Night Live." We've got it tonight. We've got it on Saturday. But I think comedy will exaggerate that. I'm curious to see how they portray McCain, because we play these clips. McCain many times rolled his eyes during this debate last night, which suggests either contempt or disgust. How will they play that and how do independent look at that? It didn't seem that he seems comfortable being there.

MATTHEWS: Let's watch what you're talking about. Here it is.

(BEGIN VIDEO CLIP)

MCCAIN: Free trade with Colombia is something that's a no-brainer. But maybe you ought to travel down there and visit them and maybe you could understand it a lot better.

OBAMA: Let me respond. Actually, I understand it pretty well. The history in Colombia right now is that labor leaders have been targeted for assassination on a fairly consistent basis, and there have not been prosecutions. And what I have said-

(END VIDEO CLIP)

MATTHEWS: Sometimes I think I'm watching Bugs Bunny and Elmer Fudd here. Bugs Bunny is driving him crazy. He's laughing, running away. And Elmer can't get his eyes off the guy. Thank you, Chuck Todd. Thank you, Norah O'Donnell. That was an old guy's reference point, Bugs Bunny and Elmer Fudd.

Up next, 19 days to go behind in the polls, and the Republicans are borrowing material from President Carter? The RNC's new ad against Obama looks a lot like an old Carter TV ad. We'll play the two. You decide next in the politics fix. This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. Time now for the politics fix. Jonathan Alter is senior editor and columnist for "Newsweek." He's also an NBC News analyst. And Tom DeFrank is Washington bureau chief for the "New York Times." Let's take a look at two ads. Gentlemen, these ads are very interesting because they're so much alike. The first one is put out by the Republican National Committee to push McCain. The second one is an ad from Jimmy Carter's campaign for reelection back in '80. Let's watch both together.

(END VIDEO CLIP)

UNIDENTIFIED MALE: Meltdown, foreclosure, pensions, savings wiped out, and now our nation considers elevating one of the least experienced people ever to run for president, Barack Obama. He hasn't had executive experience. This crisis would be Obama's first crisis in this chair.

The Republican National Committee is responsible for the contents of this advertising.

UNIDENTIFIED MALE: Each day many people come to the Oval Office with advice and information. But when it comes time to decide something, President Carter must decide alone. No matter how many advisers and assistants, a president can never escape the responsibility of truly understanding an issue himself. That is the only way that a presidential decision can be made, and the only way that this president has ever made one. President Carter.

(END VIDEO CLIP)

MATTHEWS: John Alter, it seems to me that the guy who runs those desk ads always loses. Ford did it. Jimmy Carter did it. Bush Sr. did it when he was running for reelection. Every time you hide behind that desk and say, nobody else can work this desk like I can, you lose.

JONATHAN ALTER, "NEWSWEEK": Experience is just a loser in American politics. Richard Nixon ran on that again JFK in 1960. He lost. Look at Hillary Clinton. She had to get off the experience message during the primaries in order to make any progress. It is not that the American people don't like experience. It's just that it's not a forward-looking enough message for a presidential campaign. These campaigns are about the future; experience is about the past.

MATTHEWS: Could it also be, Tom, that it looks like you're clinging to office? You are hanging on to that desk? Don't throw me out of this game, I need this desk. I don't know.

TOM DEFRANK, "THE NEW YORK DAILY NEWS": I can't figure this out, Chris, because the Republicans seem to have forgotten that Hillary Clinton tried this against Obama in the primaries. She attacked him on age and inexperience and association with unsavory characters. None of that worked. I had to laugh out loud when Bill Clinton figured out that Obama had pre-empted the change message; he started calling Hillary an experienced agent of change, as though her experience in Washington was going to win back the change argument.

That didn't work for Hillary against Obama. It's hard to see how this is going work for the Republicans six months later, when the country has gotten to know Obama a little bit better, or a lot better.

MATTHEWS: You know, John, on the other point of this question will white voters vote for a black candidate for president-of course, it is all untested waters at this level. But I've noticed in all the polling last night and in all the polling in the focus groups that Norah O'Donnell did for us, the undecided voters, who are the people who may vote, who may be hiding out there as potentially anti-Barack voters, don't like the campaign tactics used against Barack.

So I'm trying to figure out how this is going to work out. We've looked at this as the suspects who are hiding there to vote against Barack, who won't say so, are the undecided voters. Yet, in every poll we take in the last 24 hours, the undecided voters don't like the anti-Barack tactic.

ALTER: I think most Democrats expect that the undecided will break for McCain. That's why their is not over-confidence in the Obama campaign. They anticipate that there is going to be some late-breaking movement to McCain, and not enough they hope for him to prevail. But if people haven't made up their mind yet, it means they haven't gotten comfortable with Obama yet after three debates.

But there were an awful lot of folks, millions of them, who did become comfortable. A friend of mine explained it this way, talking about white voters and African-American candidates; they tuned in. They hadn't voted in the primaries. They tuned in really for the first time. They were anticipating that they might see Jesse Jackson and they saw Will Smith. They said, you know what, we like Will Smith. This guy's OK.

MATTHEWS: That's how they sized it up? Yes. What do you make of that, Tom, that the undecided voters, many believe, are the ones that may have an ethnic problem with Barack Obama, yet they're the ones who don't seem to like the tactics, if you ask them, of the McCain campaign in these debates.

DEFRANK: It is an anomaly, Chris, because I think historically, undecideds usually break for the challenger, not the incumbent or in this case the incumbent party. So it is hard to gauge. Of course, you have the other thing out there, which is the youth vote. I think they are going to turn out in larger numbers than expected, but usually they don't turn out in grand numbers. So Obama thinks that's his hidden weapon. There is clearly a hidden racial vote of some sort. We'll have to see.

MATTHEWS: Sarah Silverman is talking about getting her grand mom and mother down in sunny Florida to vote for Barack. Let's talk about the other end of the generational spectrum, kids, because I noticed that Barack Obama today is getting nervous about complacency, and he seems to be worried that some of his voters think he has already won this thing, and may not go to the effort of actually going and voting for him on election day. I think he is worried about the young voters. We'll be right back to talk about whether the grandparents have to call the grandkids now to make sure they show up. We'll be back with John Alter and Tom DeFrank. You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We're back with "Newsweek's" Jonathan Alter and Tom DeFrank of "the New York Daily News" for more of the politics fix. All of a sudden I love asking the question, what is new today. What is new today, Tom, is that for the first time Barack Obama, coming off of the last debate, and perhaps being declared the winner in all three that he was in, and also having Biden declared the winner in the other, feels enough confidence that he is worried about overconfidence. Here he is with an eight point spread right now, an eight point lead, warning his supporters for the first time against complacency. What do you think that's about?

DEFRANK: I think he is nervous that some of his supporters will figure it is a slam dunk, so if the weather is bad on November 4th or they don't want to take an hour or two off from work, they will stay at home because it won't matter. It always matters. It always matters. He had a great sound bite today, where he said, for those of you who think this race is over, I have two words for you, New Hampshire. As everybody remember, after he beat Hillary in Iowa, the conventional wisdom was that he had the election-the primaries were over.

And then we know what happened. Hillary teared up. Women empathized with her. The vote turned in the last 36 minutes -- 36 hours, I should say. And Hillary won handily. So New Hampshire is a-what that tells you is that he is worried that his supporters will sit it out because they think they can. It is always a risky bet.

MATTHEWS: John?

ALTER: You know, younger voters historically don't show up. They say I meant to vote but I had to go work out. I had homework.

MATTHEWS: Check my e-mail.

ALTER: Go on Facebook, whatever. They don't show up. I think this year looks difference and there is a reason. A lot of times if it looks like a campaign is going to one side, people don't vote because they're mostly voting as an anti-vote. They want to throw the guy out. They figure, hey, that's already being done. I don't have to show up. In this case, there are a lot of people who are truly for Obama. It is almost an act of affirmation in themselves and in their country to go out to the polls.

So a lot of the ones that we've been talking to, even in states like New York, that are in the bag for Obama, are going to out and vote just as a show of force.

MATTHEWS: Jonathan Alter, it's great having you on. Tom DeFrank, as always. Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL. Right now it's time for "RACE FOR THE WHITE HOUSE" with David Gregory.

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

END

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