updated 11/11/2008 11:55:05 AM ET 2008-11-11T16:55:05

Guests: Rep. James Clyburn, Rep. Dan Lungren, Todd Harris, Steve McMahon, Larry Persily, Margaret Carlson, Rick Hertzberg, Lynn Sweet

CHRIS MATTHEWS, HOST: Days of wonder. The Obamas get the tour from the Bushes.

Let's play HARDBALL. Good evening. I'm Chris Matthews. Leading off tonight: Mr. President, meet Mr. President-elect. Just hours ago, Barack Obama met at the White House with the man whose record-low approval ratings helped make his election possible, President Bush.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: Thank you, sir. Thank you so much. Thank you so much for having us. I'm very grateful.

GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: Turn around for the cameras.

LAURA BUSH, FIRST LADY: How are you? Good to see you. Thank you so much.

OBAMA: Thank you so much.

LAURA BUSH: Great.

(END VIDEO CLIP)

MATTHEWS: Mr. Bush walked Barack Obama into the Oval Office-it was Obama's first-ever visit there to the Oval Office-while first lady Laura Bush took Michelle Obama upstairs in the White House for a tour of their new home. We'll have much more on this historic visit and on what bold moves Obama might make coming into office.

Some Democrats are saying to the president-elect, You have a mandate. Be bold and become a modern-day Franklin Roosevelt-big ideas, big moves, big changes. Others are saying, This is still basically a conservative country and overreaching could imperil your presidency. We'll talk to the HARDBALL strategists tonight about just how bold Obama should be.

Plus: Look who's talking now? Sarah Palin spent much of this week in answering her critics from inside the McCain campaign, like the one saying she didn't know that Africa was a continent, not a country, calling them jerks. That's what she called them. But Palin may still have her eyes on the White House, believe it or not. One route to redemption politically, getting Ted Stevens's Senate seat, if it becomes available. Much more on the Palin plan for greatness later in the show.

Also: This was an election about change, so how much change should Obama offer? Go big or just govern as though, Well, it's the Democrats' turn, just do the usual Democrat things? That and more in the "Politics Fix" tonight.

And what happened with all the new voters on election day? Did a lot of Republicans fail to show up? That would explain the relatively low hike in the turnout. That very surprising not so big number on the HARDBALL "Sideshow."

But we begin tonight with the big stuff with South Carolina congressman James Clyburn, the number three Democrat in the House of Representatives. Mr. Clyburn, Congressman...

JAMES CLYBURN (D-SC), MAJORITY WHIP: Hey, how are you?

MATTHEWS: Mr. Leader, let me ask you this question about the-what did you feel watching that incredible spectacle today of the Bushes welcoming the Obamas to their new house?

CLYBURN: Well, that was something to behold. I think President Bush a few days ago put it very well when he talked about welcoming them there. And the whole sight of those two little children, their daughters, moving in there and becoming the first family of this great nation of ours, it gives you goosebumps. I can't see them well, but I think I've got some.

MATTHEWS: Well, we're watching it right now, Congressman. Michelle is in this bright red, Laura Bush in kind of a brown dress, I guess. I thought it was interesting both Barack and the president wore blue ties today. They were matching up today.

Let me ask you about the substance, not just the theatrics. You know, this election, as you know because you ramrodded a big part of it, is about change. This guy, your guy, came in and said, I'm going to make big changes. Are you with the school that says, Do big stuff, or are you with the school that says, Careful, now, just do the usual Democrat stuff here?

CLYBURN: I think you can be bold and careful. I don't know that you have to sacrifice one for the other. I think that the country is crying out for change. There must be significant change done rather quickly. You know what the numbers are. We have just witnessed a loss of 524,000 jobs in the last two months. We have no way of knowing what this month is going to be like. But if all the headlines I'm seeing coming out of Ohio, with DHL, the number of jobs that they're getting readied to jettison, it means that we're in for some tough times.

And so we're going to have to do some bold things and we have to do it rather quickly. But you can still do that and maintain some semblance of centrality to governance. And I think that's what this president is going to do-president-elect will be doing.

MATTHEWS: Well, one thing that Franklin Roosevelt did back in the '30s-and times were, of course, much tougher then-was put people to work...

CLYBURN: That's right.

MATTHEWS: ... the CCC, WPA. He put people to work. He built bridges. A lot of the city you're in right now, Washington, D.C., including all of the beautiful buildings of Washington we see when we come as tourists, were all built during that period of time.

CLYBURN: Absolutely. Absolutely.

MATTHEWS: Should this president do something like that, start spending money, not writing checks, hot checks, to Wall Street, but spending money to build things, rebuilding train lines, building subways, building bridges, building highways, getting people to work, the smell of construction out there, the cranes in the sky, stuff being done. Is he that kind of president, or is he just going to cut taxes and hope everything works out?

CLYBURN: No. I think he is that kind of a president. He made it very clear that he wants us to do an economic recovery package and wants us to do it now. And so I'm hopeful that next week, we will come back to Washington, we will have a lame duck and we will give the president, this president, a package that, hopefully, he will sign. And President-elect Obama has told us if we don't do it now, he will certainly make that his first order of business come January.

I think we ought to do it now. People have got to begin to feel much better about themselves. We've got to start restoring dignity in people's lives. And we cannot do that waiting for another 70 days to see whether or not we can do this under the next president. We need to do it right now. Roads and bridges and water and sewage-these things are much needed. We have a lot of programs that have been put on the back burner over the last few months, waiting for money to get them done.

So we ought to have this infusion of-I don't know the size of it, but it ought to be a significant recovery package that will do a number of things. Certainly, we've got to take care of unemployment insurance. We've got to do something with food stamps. But we ought to start building things so that our infrastructure can get stood back up.

MATTHEWS: I don't understand why we don't do something like go to all the approved public works business that's out there in every state in the union-every city has got approved projects, the project is approved, they know the job has to be done. The bridges are below code. The highways are falling apart. Everything's ready. It's been approved. You've got the authorization. All you need is the money-and turn on the spigot. I don't know why you don't just do that. I guess that's old school. Is that old school?

CLYBURN: That is old school, but it's for-sometimes old is good. It's trusted. It's true. We know it works. So why not do it? I think we ought to. We tried to do it in the first bail-out package. We tried-not the bail-out package, but you know, the package we did-the stimulus package we did before. We've got a $6 billion shortfall in our highway trust fund. At that time, we tried to get the White House to agree to let us put that in that original package. All they wanted to do were these rebates, $300 per person rebates, $500, $600 per couple. That to me will not get people back to work.

And if people can go to work, earning an income, paying their bills, restoring dignity in their households, and by the same time providing some common good with schools and roads and bridges, all of these things that need to be built-I represent the so-called "corridor of shame" that got talked about quite a bit during this campaign. And President-elect Obama visited that area. He talked about it all over this country. That's the kind of stuff that we ought to be doing, and we'll get a lot of common good out of it and we'll have people doing work and feel dignified for having done it.

MATTHEWS: Toughest question. Should the president let those big tax cuts that the upper-income people got during the Bush administration-should he let them lapse or should he let them continue as part of this effort to stimulate the economy? Should he let the rich get a tax break in addition or keep what they've been getting, or should he let it lapse?

CLYBURN: I think that ought to be the first thing he does come January. He ought to let those things lapse. He ought to use the money that comes from that and give middle-income people a tax break. That tax break needs to be given to middle-income people. We need to start once again stabilizing those families, and the money will then bubble up. This old trickle-down stuff-give the wealthy the tax breaks and maybe something will fall down on the not so wealthy-let's let some of that-reverse that psychology a little bit and see if we can get the economy moving again.

MATTHEWS: OK. Thank you very much, Congressman Jim Clyburn, one of the House leaders.

U.S. Congressman Dan Lungren is a Republican from California. Dan Lungren apparently wants to be a House leader. Are you going to go for leader, Mr. Lungren, in this new Congress?

(CROSSTALK)

MATTHEWS: The buzz tends to be true in this town.

REP. DAN LUNGREN ®, CALIFORNIA: I'm mulling it over.

MATTHEWS: You're mulling it over. OK. Well, let me ask you what your policies are and then we can decide or the public can decide whether you'd make a dandy new leader of the Republican opposition. You just heard Congressman Clyburn say that you need public works, accelerate public works, put people to work, put people to work in the old way of the New Deal, construction, sewers, highways, bridges. Do it like FDR did, put them to work. It creates jobs, all the luncheonettes and all places around where people work get to sell their hot dogs and hamburgers and lunches and there's food and there's money spread around because these guys and women are working again.

Is that a good approach to getting this economy rolling again?

LUNGREN: Well, Chris, if it worked, we would certainly consider it. But if you look at the sharp downturns in the economy that have taken place over the last 30 years, you'll see whenever we tried that approach, it didn't work for several reasons. One is those type of programs you're talking about take a long time to actually meet the road. And in every single instance we've had when we had that as the major thrust of a program, the actual jobs that were created were created after the economy responded, and then you had additional government funding working against - - that is, additional government spending working against the revival of the economy.

If you're asking, Do we need to do stuff about our infrastructure? Absolutely. I mean, 10 years ago, when I ran for governor of California, I tried to talk about it, and no one wanted to listen about that thing. It's not a sexy thing. But what you're saying is, we use that as the prime way reason-or prime way to prime our economic pump-frankly, it doesn't work, number one.

Number two, what you're talking about, Chris-I heard your whole interview there. You not once talked about where does this money comes from. And one of the messages that came out of this election, at least as far as Republicans were concerned, is that we had failed the people on the test of, Will you be fiscally responsible? I would hope that the Democrats don't make the same mistake we did. And I would hope that we would come together and understand that that was a verdict against part of the leadership that we had over the last four to six years. So I would hope we wouldn't move in that direction.

The last thing I'd say, when you talked about tax cuts, the last thing you want to do is to have an effective income tax increase or corporate tax increase. I don't know of a single economist out there who says that's what you do in the downturn of an economy, and we certainly are seeing a downturn right now. So it may make some people feel good, but in terms of economic terms, it really-it creates more problems than it solves.

MATTHEWS: Let me ask you this.

LUNGREN: Yes.

MATTHEWS: The two things you point there-first of all, I want to challenge you on (INAUDIBLE) You think that-you say the Democrats ought to pay for what they spend, and Congressman Clyburn just said, We'll do that. We're going to raise taxes on the rich. You say, Don't raise taxes on the rich, don't pay for what you want to spend money on. How can they possibly win the argument?

LUNGREN: I didn't say that. What I said was we have to be-we've got to be careful. We've got to be disciplined like every household in America.

(CROSSTALK)

MATTHEWS: ... raise taxes to pay for the spending.

LUNGREN: You have to establish priorities. There's something known as cuts.

MATTHEWS: Yes.

LUNGREN: There's something known as at least freezing expenditures.

MATTHEWS: Yes.

LUNGREN: My suggestion of what we need to do is prioritize...

MATTHEWS: Yes. OK.

LUNGREN: ... all of the things we do in government from 1 to 100 or 1,000 or whatever it is, and then go and look at that. Those that are least-of the least priority ought to be the ones that get the least support, and perhaps we even might think about stopping funding for some of those programs, the way you and I do with our households and the way most Americans are being forced to do at the present time. Look-look...

MATTHEWS: I just don't see the argument here because-let me-it's a good argument because it's historically true. A lot of recessions have been short. The Reagan recession was very deep and relatively short. It was brutally deep but very quick. It was over in a year-and-a-half or two.

But this recession we're looking at right now, you're actually going to go to the American people and say, We're afraid that this recession's going to be over with faster than a public works program will have effect. It looks like it's going to be deep and long, rather than the Reagan one, doesn't it? Isn't that the fear we're all facing now?

LUNGREN: Well, that's the fear, and the question is, How do you make sure it isn't? And I would suggest if you want to make sure it's going to be long, then what you do is raise taxes during that period of time. I don't know of a single economist who suggests that that's good. When we have some of the highest tax rates with respect to corporate tax in the world vis-a-vis some of our competitors, that doesn't make sense. But could I just say one thing, Chris?

MATTHEWS: Sure.

LUNGREN: I just want to say, as a representative of the Republicans and as a Republican, I thought Barack Obama's speech on election night was magnificent, as I thought John McCain's was. And if Barack Obama is going to govern in accordance with what he articulated on election night, you will find Republicans eager to join him because what he said, any conservative Republican could say. The one president he quoted was the founder-founding president of our party, Abraham Lincoln. If that's the spirit, we can begin to engage and debate and discuss things about the economy, things will be better for this country. That's my hope.

MATTHEWS: Congressman, what was it that grabbed you about-I thought it was-both speeches, I agree with you, were-I thought John McCain's was absolutely magnanimous and actually wondrously powerful for a man who just went through the heartbreak of losing this long campaign. He's been running, what, for eight years now, basically, and he lost his dream, I mean, to be president of the United States. And he's a war hero and everything.

But I thought-what did you like about-I mean, you're a pretty conservative Republican. What did you like about the Barack statement of election night?

LUNGREN: I'm a conservative Republican who believes in the institutions of politics and governance in this country. That was a magnificent example-and I'm talking about both of those speeches together-to the United States, the people of the United States and the world, that we're going to have a peaceful transition of power. And as John McCain says, He's no longer my opponent, he's my president. That's how I view it. That is such a wonderful message for the American people, particularly the young people, to understand. We take this for granted far too often.

This was a tough race. These were people who had two very different visions of where America was going. To be able to come back right that day as the votes were still being tallied...

MATTHEWS: Yes. That's right.

LUNGREN: ... is a magnificent tribute to this country and to both of those citizens of this nation, one whom is going to be president, another of whom is going to return to the Senate of the United States.

MATTHEWS: OK. Well, it's nice to know-I mean it seriously-to see a congressman, a politician like yourself and all that you've been through and you're still a romantic about this country, sir. It is wonderful.

LUNGREN: If you lose the sense of awe when you show up for work at the Capitol, it's time to go home.

(CROSSTALK)

MATTHEWS: Thank you, sir.

LUNGREN: And that helped me that day.

MATTHEWS: Oh, it makes me happy that we agree on that. It was magnificent on both parts, sir. Thank you very much, Dan Lungren, U.S. Congressman. And let us know when you're running for leader of the House. They could use one. And we'd like to have you on as our guest the night to announce it. Please come to MS...

LUNGREN: Thanks, Chris.

MATTHEWS: ... and announce. It'll surprise everybody.

(LAUGHTER)

LUNGREN: We've just got a new photograph, by the way, of the president and the president-elect meeting-this is going to be a historic picture-inside the Oval Office. We're going to show it to you right now. There's President Bush-this is one of those great historic pictures, wide angle, wide lens, the photographer there catching it. You know, those print pictures are the ones that really last. I hate to knock our medium, but there's just something about print pictures that you savor when you look at them. And there's an amazing look of the president and the future president.

We'll be right back. That's, of course, George W. Bush and Barack Obama getting along rather swimmingly there, it looks like.

Coming up: Barack Obama won the election by over 6 points, so how bold should he be? This is the big question tonight I'm trying to ask people. Jim Clyburn said bold. Dan Lungren said, Be careful, pay for what you're going to do, but don't raise taxes. Our strategists are going to debate that big question. Should this guy be FDR or Bill Clinton? Don't go in too bold, just be a little bit more Democrat than the other guy. I think he's got to take some chances and go big-time. This country's got big challenges. We'll see. That's just my opinion.

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP, "MEET THE PRESS")

REP. JAMES CLYBURN (D), SOUTH CAROLINA: Senator Obama, now president-elect, made it very clear during the campaign that he will govern from the center. He may at times be center-right, sometimes center-left, but always the center.

I think that we have made significant mistakes in the past by lurching too far to the right or too far to the left.

(END VIDEO CLIP)

MATTHEWS: Welcome back to HARDBALL.

That's, of course, Congressman Jim Clyburn, a name you're going to be seeing a lot of and a face you're going to be seeing a lot of in the years ahead. He's one of the top members of the United States House of Representatives, one of the top Democrats.

Is he right? Will things only get done in the middle? Well, he had a little different nuance on that a couple minutes ago. He seemed to be saying the fact they're going to be much bolder. Perhaps his definition of bold isn't the same as others.

Let's bring in Todd Harris, a Republican strategist, and Steve McMahon.

I guess, Steve, my definition Steve of bold is do something that really puts people to work. Don't wait for tax cuts to do it. Don't wait for the usual monetary policy to do it. Get out there and do it with a steamroller, hire people, create contracts, bring them up to date, accelerate public works, have it visual. You see people being hired. You see people working. They're going to buy lunches at places.

They're on-they're on the job. That's how you put people to work.

The other way seems passive. What do you think?

STEVE MCMAHON, DEMOCRATIC STRATEGIST: I think a bold economic move.

And I think that's what Rahm Emanuel was signaling yesterday when he did George Stephanopoulos' show. The economy is job one for this president. And doing something dramatic and bold on the economy, I think, is something they're very interested in doing.

Health care reform, by the way, might be something that is dramatic and bold on the economy, as well as something that Barack Obama promised and people in this country are waiting for, because every single time someone loses a job, a family loses their health care.

MATTHEWS: Yes.

MCMAHON: So, there are a lot of different ways that he can be dramatic and bold, but I think lurching too far to the left or too far to the right, which he, of course, wouldn't do, isn't necessarily the way to get it done.

The middle decided this election. And the middle of the country, the swing voters, are waiting for him to address their economic concerns.

MATTHEWS: Well, you know what? I don't know what-I think I disagree with what Steve said.

Let me go back to Todd. Let me go back to Todd. Todd, it seems to me that he's got one chance to get everything done. Ronald Reagan taught everybody that. Get it done the first year, or don't talk about it anymore. It seems to me, if the Democrats are going to deliver on what they promised-it's not anybody else's promise-it's their promise-they have got to get health care done. They have got to create a universal health care system. They have got to deal with energy, create green jobs, the five million green jobs he promised to produce. He's got to do it. He can't say, I will put off until after the year after next. He's got to deal with it in his first Congress. That means get it done basically by June of next year. Just in political terms, do you think this guy can survive as president if all he does is do a little tax cuts and push SCHIP or does the

removes the ban on-on stem cell?

(CROSSTALK)

TODD HARRIS, REPUBLICAN STRATEGIST: No, I don't. But big doesn't need to be conflated with liberal. He can-he can be big and still govern from the center.

I think it's important that people not lose sight over what this election was and what it wasn't. What it was, was a historic victory for Barack Obama. What it was not was a wholesale realignment of American politics to the left. If you look at...

(CROSSTALK)

MATTHEWS: You guys are so-you speak with a forked tongue, Todd.

You speak with a forked tongue.

HARRIS: Chris, Chris, Chris, Chris...

(CROSSTALK)

MATTHEWS: Let me just tell you something. When Ronald Reagan won with 51 percent...

HARRIS: Twenty-two percent -- 22 percent-Chris, 22 percent of the people who showed up...

MATTHEWS: Let me finish my point. When Ronald Reagan won with 51 percent, when your guy George W. Bush won with less votes than Al Gore-you talk about mandates-he came in there and did exactly what he wanted to do.

He cut taxes for the rich across the boar. He did everything he wanted to do. He took us to war in Iraq, the way he wanted to do it. The idea that you should pussyfoot if you're a Democrat, but, if you're a Republican, go in there whole-hog, you have a totally-two standards here.

HARRIS: No, Chris.

MATTHEWS: Republicans should take advantage of every victory and call it a mandate. Democrats should go in and be very cautious: Gee whiz, I'm sorry for being here. I hope we don't offend the conservative.

I mean, isn't it...

HARRIS: Well, Chris, if Obama wants to...

(CROSSTALK)

MATTHEWS: Steve McMahon, would you jump in here, Steve, please?

MCMAHON: Yes. Yes, I will.

HARRIS: Wait. Hold on. If Obama wants to end his presidency with a 22 percent approval rating, then he can do what just George Bush did.

(CROSSTALK)

MCMAHON: He's not going to do that.

But, first and foremost, Chris, there's a $700 billion bailout package that Barack Obama thinks was too tilted to Wall Street and the financial interests. The first thing he needs to do is get control of that, so some of that money is redirected towards some of the things you talked about.

But he also promised health care reform and he promised to insure every American. He made big promises. And these things are going to be very difficult to do. But there's not going to be enough money to do everything that he wants to do right away, so he's going to have to pick some priorities and try to get them done.

And I think what's important for Barack Obama is that the priorities he picks are mainstream. Values are mainstream priorities for the swing voters, who got him 10 or 12 states that John Kerry wasn't able to win. Those are the people who delivered this presidency to him, not the left. And he needs to address their economic concerns with big ideas and with bold programs, but with programs that the country can afford.

HARRIS: No, and I think Steve is right about that. And I think he ought to be looking for ways to work in a bipartisan way.

And the first one-first thing that he could do that I think everyone can agree on is the enactment of his middle-class tax cut.

MATTHEWS: Yes.

HARRIS: I don't think that there should be a single Republican who would be opposed to that.

I also think working toward energy independence is something that both parties could agree on, and, on a foreign policy front, working to win the war in Afghanistan, something he talked a lot about, something every Republican ought to be able to get behind.

MCMAHON: And bringing the troops home.

MATTHEWS: Well, let's go through that. That sounds like a Republican platform.

First of all, the middle-class tax cut, Todd, you didn't mention-

Mr. Clyburn was on, Jim Clyburn, one of the top Democrats. And he said, as part of the middle-class tax cut, the president and Congress should allow the-the Bush tax cuts for the upper-income people to lapse. Do you agree with that, too, to offset the tax cuts for the middle class? Do you think that's part of the package?

HARRIS: I think it probably will be part of the package. My-do I personally agree with it? No. No, I don't.

(CROSSTALK)

HARRIS: But he's got to pay for all of this somehow, so they're going to have to raise taxes somewhere.

MCMAHON: You know, it's funny, Chris. The fiscal conservatives out there and all the Republicans who say balance the budget and don't overspend understand that-that you can't do the tax cut for the middle class, which everybody favors, without repealing the tax cuts for the very wealthy.

MATTHEWS: Yes. Yes.

MCMAHON: But they don't want to repeal the tax cuts for the very wealthy.

MATTHEWS: I just hear-I just hear an almost like a freeze going on. You say-at least if you put it together with what Dan Lungren said and what you said, Todd, is, don't-don't raise the deficit, but don't increase taxes.

So, what are you allowed to do, actually?

HARRIS: Look, I said that I think he probably will increase taxes.

I personally don't like tax increases, but he's going to have-Steve is absolutely right. He's going to have to pay for all of this somewhere.

MATTHEWS: Right.

HARRIS: And if he's-and if he's going to be enlarging the size of the military to send more troops to Afghanistan, if he's going to be tackling things like health care...

MATTHEWS: Yes.

HARRIS: ... if they're going to be extending unemployment benefits, all of that costs money. And he's got to pay for it somehow.

MCMAHON: Well, you know, Chris, there are bold things that he can do that the Republicans haven't done.

For instance, he can-he can accelerate his time frame for getting our troops home from Iraq, something that would make the left very happy...

MATTHEWS: Yes.

MCMAHON: ... and something that would save our country $10 billion a month.

And then he could take that $10 billion and he can do more things that are bold with respect to the economy and creating jobs. There's no question he wants to do all the things that we have been talking about tonight, that you have been talking about.

MATTHEWS: Yes.

MCMAHON: But there's also no question that, when you inherit a $1 trillion deficit, you can't do everything. So, you have got to figure out what you're going to pick your big fights on, and try to go win those fights, instead of going down in flames.

MATTHEWS: You know, I guess we will have to see, because some people do well by doing modest things that are highly symbolic, like President Clinton did with school uniforms and family home leave and some welfare reform, which was basically a Republican push.

And other people, like-I always like the example of Barbra Streisand. Either her career is going to be big or it's going to be nothing.

(LAUGHTER)

MATTHEWS: I'm wondering whether Todd-I wonder whether Barack Obama better be bold, or he will be forgotten, and he will not be what he promised to be. I think he has to be bold. I may be wrong.

I think he better do it in his first year, like Ronald Reagan, or he won't get to do it. That's just my view.

MCMAHON: But, Chris...

MATTHEWS: I listen to other views.

Yes, Steve?

MCMAHON: But, Chris, don't you think-don't you think, if he could pass health care reform in the first year and bring the troops home from Iraq, that people would say he had done something enormously bold on both of those fronts?

There are things that he promised, things that he talked about.

MATTHEWS: Yes.

MCMAHON: And one of them saves us money, instead of costs us money.

But both of them would be hugely bold.

HARRIS: And bold doesn't-bold doesn't have to be liberal.

MATTHEWS: I think doing what you promised-I think doing what you promised to do is a damn good start.

Thank you very much, Todd Harris.

Thank you, Steve McMahon.

HARRIS: Thanks, Chris.

MCMAHON: Thank you.

MATTHEWS: Up next: Barack Obama isn't even president yet, but, already, we have learned his Secret Service code name. We're going to give you that, along with the code names of all the incoming first family. I can't believe we know this. And it's now public record. It's been put out. It's apparently not as sensitive as it used to be, not sensitive at all, because it's out there now. We used to keep these-well, we used to hear they were kept secret. We didn't know what they were all the time.

You're watching HARDBALL. We're going to tell you in a minute the Secret Service code name for Barack and the one for Mrs. Obama, as well, and their kids, I guess.

We will be right back.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL. Time for the "Sideshow" tonight.

First up: ram speed-or Rahm speed. Obama's chief of staff, Rahm Emanuel, was on the receiving end of the president-elect's jabs back at a charity fund-raiser three years ago. And we have got the tape.

(BEGIN VIDEO CLIP, 2005)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: Rahm studied ballet for years.

In fact, he was the first to adopt Machiavelli's "The Prince" for dance.

(LAUGHTER)

OBAMA: It was...

(LAUGHTER)

OBAMA: It was an intriguing piece.

(LAUGHTER)

OBAMA: As you can imagine, there were a lot of kicks below the waist.

(LAUGHTER)

OBAMA: It hasn't been easy for Rahm, though. As a young man, he had a serious accident. I think many of you are aware of this. He was working in a deli. He-accident with a meat-slicing machine. He lost part of his middle finger. As a result of this, this rendered him practically mute.

(LAUGHTER)

(APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: How I love old videotape. You can't kill it, but it can kill you.

Next: Secret Service code names are a great guessing game in D.C. It's a lot of fun. This time around, the Secret Service confirmed the names of the incoming families for us. Here they are, the Obamas.

I love this. Barack Obama's Secret Service code name, Renegade. Mrs. Obama, the first lady, Renaissance. The Bidens, Celtic-or Celtic, if you will-and Capri. That's Jill's. By the way, the Service says these names don't carry the importance they did or the critical question to keep them secret because the new communication systems are more sophisticated.

So, we're not endangering anybody.

Time now for the "Big Number."

There's been a lot of speculation that this election was going to be different, that, with two wars and a broken economy, eligible voters were going to show up at the polls in record numbers.

Well, the numbers are in. And, according to turnout expert Michael McDonald of George Mason University, here's the number -- 130.4 million Americans voted. That's 61.2 percent of eligible voters. That's people above 18 who are eligible to vote.

So, how does that compare with four years ago? It's just 1.1 percentage point increase over the last election of 2004. One possible explanation, which I believe is the explanation, is that the smaller-than-expected increase is a result of the fact that fewer Republicans turned out.

A lot of new voters, and a lot of younger voters, a lot more minority voters, excited new voters, but a lot of regular voters from the past didn't show this time. Just a 1.1 percentage point increase in eligible voters, once all the votes are counted-that's tonight's not-so-big number.

Up next: Sarah Palin is still talking. Is the Alaska governor really the Republicans' best hope four years from now, or will she talk herself right into disaster? She is making her case, big-time. We are going to talk about what she's saying about the leakers who have been dumping on her.

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SHARON EPPERSON, CNBC CORRESPONDENT: I'm Sharon Epperson with your CNBC "Market Wrap."

Stocks falling on continued economic concerns, despite a good start to the day triggered by China's half-a-trillion-dollar economic stimulus package. The Dow Jones industrials lost 73 points, the S&P 500 down 11, and the Nasdaq down 30.

Circuit City has filed for Chapter 11 bankruptcy protection. The nation's second biggest electronics retailer also said it will cut 700 more jobs, after announcing a week ago it closed 20 percent of its stores and laid off thousands of workers.

German shipping giant DHL is abandoning its efforts to compete in the U.S. with FedEx and UPS. DHL says it will eliminate another 9,500 U.S. jobs. It cut 5,400 U.S. jobs earlier this year.

And the government is boosting its bailout of insurance giant AIG by buying $40 billion of the company's stock. That raises the total government bailout of AIG to $150 billion.

That's it from CNBC, first in business worldwide-now back to

HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

Sarah Palin is not going away quietly. She's set to speak at the Republican Governors Association meeting in two days in Miami, and she's hitting back hard at negative leakers within the McCain campaign. Here's what she said about reports that she was geographically illiterate and was unaware that Africa was a continent, not a country.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN ®, ALASKA: I think that if there are allegations based on questions or comments that I made in debate prep about NAFTA and about the continent versus the country, when we talk about Africa there, then those were taken out of context there. And that's cruel. It's mean-spirited. It's immature. It's unprofessional. Those guys are jerks if they came away with it, taking things out of context, and then tried to spread something on national news that's not fair and not right.

(END VIDEO CLIP)

MATTHEWS: Governor Palin is getting an interview with Matt Lauer today. I guess that will be on tomorrow. Can she clean up the damage that's been done and remake her image, or fix it up again? Is she planning for 2012? Margaret Carlson is with Bloomberg and "The Week Magazine." Larry Persily worked as a staffer for governor Palin.

I've got to go to Larry first. You've got to answer this question, sir. Is this person unaware of basic grade school information like Africa is a country of 57 or so countries. It's not a country. It is a continent? South Africa is a country, not a region? Does she know what North America consists of? Is it plausible to you, having worked for her, that she doesn't know these things, yes or no?

LARRY PERSILY, FMR. PALIN STAFFER: No, I don't think that's really plausible.

MATTHEWS: OK. Margaret, let's go to the question of her politics here. Is she smart to go out and challenge the wreckage that's coming out of "Newsweek Magazine" on her, all this tit for tat? They call it tick tock, point by point delineations of her stupidity? Is she smart to challenge that charge of stupidity or should she let it go? I think she's smart to challenge it because I think she's winning the argument. What do you think?

MARGARET CARLSON, "BLOOMBERG NEWS": Well, somebody has to stop to make these things stop. But clearly she's not going to be the one. And in this last go-around, she may have shifted the tide a little bit back in her favor, because some of these people around her, these handlers, are little jerks, you know, for squealing things and probably twisting them a little.

Because the original sin, Chris, was Senator John McCain chose somebody unprepared to run for vice president. Everything else flows from that. You know, maybe in debate prep she was asked questions and it was twisted around. Every school child-there's a rhyme for the continents. So every school child knows the continents. I doubt that all of this is exactly right. Some of it is true, because she wasn't prepared. Boy, was she badly managed and boy are these people leaking to cover up for their sins and for their guy and blame it all on Sarah Palin. It can't be all her fault.

MATTHEWS: Larry, give me a critique, a fairly nice one, on this topic of her having worked with her.

PERSILY: I don't know if I'd give a nice one. Look, I think one thing that Palin is having a problem with is, in Alaska the media doesn't go with anonymous sources. So anybody during her political life over the last 12 years, if they were going to criticize her, they had to put their name on it. In Washington, anonymous sources are the rule. So again it's her naivete. She didn't know what she was coming into here. She calls it cruel and-I forget what word she used.

MATTHEWS: She called them jerks.

PERSILY: Right. That's the world of Washington national politics. So I agree the McCain-we've got some McCain people who their candidate lost, they're upset, they're looking to blame. Well, blame themselves. They picked her. She was not prepared and this shows it.

MATTHEWS: Welcome to Washington, Governor Palin. It's one thing you and I can agree on certainly. You make a comment, it is going to be taken out of context, Margaret. Everything is taken out of context. People snip out three words and make it into a case because it's a lot more fun.

CARLSON: But, Chris, she thinks she's in debate prep with her own people.

MATTHEWS: Yes. What's your hunch about her? My hunch is that she has a certain talent for the fact we're talking about her, the fact that she did get the nomination for vice presidency. She can give a great platform speech. She can deliver to a big crowd and make them want to come watch her. What do you think? Is there a future here nationally for her?

CARLSON: She has a compelling personality. She has what some people call it. And the magnetic part of her is still going. People are paying attention. Matt Lauer is going up to Alaska to interview her. But it may not be in governing beyond Alaska, where, as Larry says, there are different rules.

MATTHEWS: Yes. Well, I yell that phrase, where in the world is Matt Lauer? He's with Governor Palin up in Alaska. They've got a limited budget at "The Today Show" these days and they're spending it on her. That tells you something. Larry Persily, is she somebody who would be a good interview, if you interviewed her? Do you find her interesting intellectually or is she just you betcha?

PERSILY: She's engaging. She does have it. She's got that personality, that spark. She's very disarming. She is warm and friendly. I'm not sure it's an intellectual. It wouldn't be an intellectual discussion or interview, but she does have a certain charm and drive. I don't think it ever gets her to 50 percent plus one on a national stage. I agree, it may just be governor is the height and then she becomes a spokesperson for a certain wing of the country. But I don't see her ever getting to 51 percent on a national election.

MATTHEWS: Well, my experience lately is you can make a lot of mileage in this country with a four percent approval rating if those people are willing to watch every night. Thank you very much, Margaret.

CARLSON: Not you, Chris.

MATTHEWS: I'm talking about me. Larry Persily, thank you, sir, for coming on here.

Up next, the future president meets the current president. It's still a spectacular story that's hard to get used to. I'm sorry. Six days in, it's still amazing to see these pictures of Barack Obama and Michelle Obama walking into the White House and about to move upstairs and live there for the next four or eight years. It's still a spectacular story. I'm sorry. It may not be news, it's history, though. This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. Time now for the politics fix. Joining me, Lynn Sweet of the "Chicago Sun Times" and Rick Hertzberg will be joining us from the "New Yorker." Lynn, we saw Michelle Obama. We're looking at these amazing pictures of her basically accepting her new living rooms and places. She's going to be first lady of the United States. That all comes here. Here's this wonderful picture of her upstairs with Laura Bush. You know, I think the idea of the Obamas as heads of state in this sense, Barack Obama not just as commander-in-chief or chief executive, but as our country's emblem, is so important. Let me ask you about Michelle. What kind of a first lady is she going to be, based on your reporting?

LYNN SWEET, "THE CHICAGO SUN TIMES": I think what she is going to do is try to be non-controversial. She is not going to take on any kind of controversial policy. You will not see her on the Hill, at least for a while. She is going to focus on military wives, military families and education and women issues. And, of course, she will always have as her main portfolio taking care of her two daughters.

MATTHEWS: I love, Rick, the way that Barack Obama turns around and spends that time helping his wife get out of that car. That is going to score some points.

RICK HERTZBERG, "THE NEW YORKER": It certainly is.

MATTHEWS: It's old school. What do you think about-let me ask you about Barack Obama as the head of state. You talked about it in your column this week, in talk of the town. What will it be like to see him coming out of Air Force one in some far off country.

HERTZBERG: Isn't that going to be something? He is going to be the face of America. You just imagine that huge beautiful plane with the United States of America emblazoned on it. And the red carpet rolled out and the guard of honor, and the door opens and out steps Barack Obama and Michelle Obama. And that's the United States of America.

MATTHEWS: That's who we are. Lynn, your thoughts on that, having covered them.

SWEET: I was with him in Kenya. And I saw how he was treated, as a national hero. And I think that also gave him some of his first taste of what it would be like to be a head of state. He knew-and I saw him in Berlin and Sarkozy practically had a love affair with him. They were so warmly greeted at the palace. So I think he knows that what happened already happened, that things change instantly.

One other quick thing about Michelle, she's shopping for schools in Washington right now. There's a big contest on among all the private schools, especially, as to who are going to get those two adorable girls as students, Chris.

MATTHEWS: Is it between Georgetown Day School and Margaret?

SWEET: Well, Sidwell might be in the running. To all the viewers out there, these are some of the best schools in town. Michelle visited Georgetown Day today. She might have had time for a second visit. I predict the girls will go in private school. They're in private school in Chicago right now, at the University of Chicago Lab School, near their home.

Where they go will send a signal. Like I say, I doubt if it would be public school here.

MATTHEWS: I'm betting on Georgetown Day, just guessing. We'll be right back with Lynn Sweet and Rick Hertzberg for a look at the first family of the United States. They are there. the kids. Amazing. I'm sorry, it's only six days and I'm still amazed by the whole thing. Call me sentimental, but it is different. anyway, you're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We're back with Lynn Sweet and Rick Hertzberg with more of the politics fix. I want to spend the last three minutes of the show tonight with a serious discussion as to how bold this new president is going to be. Andrea Mitchell reported, and we just got our hot note here at NBC, coming out of the meeting with the president, the president-elect said that he discussed the stimulus package and his call for the president to sign something pretty dramatic before he leaves office, to do something with the auto industry before he leaves office, and to do something about these foreclosures, by allowing people to stay in their houses by redesigning their mortgages or whatever, to keep this foreclosure situation under control.

My question to you, Lynn, will he be much bolder than that as president himself?

SWEET: I think for the issues he identifies as the big ones, he will be. The foreclosure one is a big one because it does impact individuals. If you're looking for a bold move early on on an issue like health care and immigration, I'll say no. They won't take on any extra controversy. They have a plate full now. They are not going to add to it. So it will be limited big issues, very limited.

MATTHEWS: Will he do a big jobs program? Not just tax cuts, but hire a lot of people with public works? In other words, Roosevelt style boldness, do you think, Lynn?

SWEET: Well, that kind of boldness, I think, in terms of the-you just put out something there. Let me think. I could see him doing something like that. I don't know if there is money to do that. And that's what is going to tie his hands. You know, I think the boldness will come in something more dramatic, maybe in energy, maybe in consumption or maybe in finding some alternative big stroke on energy. Look for the issue of sacrifice to be there.

MATTHEWS: A big push on green jobs, big push on jobs overall. What do you think, Rick?

HERTZBERG: I think he is going to go big and he's going to go bold. He has to if he wants a chance to be a really great president. We need a lot of the new federal spending, not just tax cuts, but spending, because when you spend the money, it actually gets spent. If you just give it in tax cuts, people tend to save it. Especially if you give it as tax cuts for the rich, they just invest it or buy a yacht. If you want the money spent, the best way to do it is to spend it. If you spend it on things that will actually improve the future of the economy, things like science and schools and health care, these are things that are investments, national investments, that will actually make for a better economy in the future.

MATTHEWS: OK. Lynn Sweet of the "Chicago Sun Times" and Rick Hertzberg of the "New Yorker." Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL. Right now it is time for "1600 PENNSYLVANIA AVENUE" with David Gregory.

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

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