updated 12/3/2008 10:27:48 AM ET 2008-12-03T15:27:48

Guest: Frederick "Fritz" Henderson, Dan Neil, Ed Rendell, John Dean, Rick Perlstein

CHRIS MATTHEWS, HOST: Is what's bad for General Motors bad for America?Let's play HARDBALL. Good evening. I'm Chris Matthews. Leading off tonight, take two for the big three. To paraphrase that 18th century author Samuel Johnson, nothing concentrates your mind so much as the realization you might go bankrupt in the morning. Two weeks ago, the heads of the big three flew to Washington in separate private jets, all pleading poverty. Now Ford's CEO is driving to Washington in a hybrid, and all the CEOs say they're going to work for a dollar a year. They're all submitting their turn-around plans to Congress today, but can they convince the government to bail them out? We'll talk to one industry expert who says it's time-catch this-to simply nationalize General Motors-just buy the baby. And speaking of people with their hands out, the country's governors met with President-elect Obama in Philadelphia today. They're asking for a big chunk of Obama's planned federal stimulus package.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: I'm not simply asking the nation's governors to help implement our economic plan, I'm going to be interested in you helping to draft and shape that economic plan.

(END VIDEO CLIP)

MATTHEWS: More on what the governors want in a moment. And those Nixon White House tapes are the gift that just keeps on giving. Nearly 200 hours worth were released today, including this sugar plum between President Nixon and Henry Kissinger, who was then his national security adviser and who had just met with Ivy League presidents, people Nixon didn't like.

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RICHARD M. NIXON, PRESIDENT OF THE UNITED STATES: The Ivy League presidents? Why, I'll never let those sons of bitches ever in this White House again. Never, never, never. They're finished. The Ivy League schools are finished. Henry, I would not have had them in. Don't ever do that again. Don't ever have them in. They came out against us when it was tough. Don't ever go to an Ivy League school again ever. Never, never, never.

(END AUDIO CLIP)

MATTHEWS: Like him already. There's so much more where that came from, and we'll talk to former White House counsel-boy, he knows what he's talking about-John Dean. He's coming to HARDBALL tonight. Also, voters are going to the polls, of course, tonight in that Georgia run-off election for the Senate between incumbent senator Saxby Chambliss and his Democratic challenger, Jim Martin. Plus, there's news about Senate seats in Florida, Illinois. And here's the wild card for everybody watching HARDBALL-could Bill Clinton replace Hillary Clinton in New York in that Senate seat? More of that in tonight's "Politics Fix." And if Sarah Palin is thinking of running for the Senate in two years, she's getting the "Bring it on" treatment from her fellow Alaska Republican who now holds that seat, Lisa Murkowski. And Alaska snowball fight in the HARDBALL "Sideshow" tonight. But we begin tonight with the bail-out of those big three auto makers. Joining us from Detroit is the president and chief operating officer of General Motors, Fritz Henderson. Mr. Henderson, well, you look like a happy guy tonight, sir.

FREDERICK "FRITZ" HENDERSON, GM PRES. & COO: I don't know, Chris. I'm just glad to be here. Thanks for taking the time with us.

MATTHEWS: Well, let me ask you about this. There's been a proposal out there that the government simply buy General Motors. If we're going to pay for the bail-out and the bail-out of a company that's basically broke, why not just buy the company and produce cars at the federal level? If the private sector is not working, why not try the public sector?

HENDERSON: Chris, I guess a couple things. First, we've crafted a plan, drafted a plan that's intended to allow us to be competitive, viable. We've asked for support. We have a plan to repay the support. And we think we can get General Motors on the right path. I do have some experience working around the globe, including a number of places where governments have owned auto makers in total, and generally, it doesn't work.

MATTHEWS: You know, Lee Iacocca, when he borrowed the money for Chrysler back in the '80s, repaid that billion dollars. Can you guarantee that you'll repay it? If this is a bridge loan, then you should be able to repay it. And what terms do you offer the government in exchange for borrowing $18 billion?

HENDERSON: We-our plan-what we did is we sized our plan based upon a number of different scenarios, including a very pessimistic or downside scenario in order to stress-test it.

MATTHEWS: Yes.

HENDERSON: Based upon that scenario, we certainly feel confident that we'll be able to repay the loan. And in terms of protections, we would offer the normal taxpayer protections, senior status, warrants, ability to call the loan in case we don't meet milestones, and frankly, an oversight process to make sure we're hitting our milestones.

MATTHEWS: How do you hit milestones, as you put them, sales goals, if we're going into a long recession, it looks like? According to the National Bureau of Economic Research, we've been in one for a year. Projections are that it could be a long and deep one. How can you sell cars when people really don't have to buy cars, they choose to in most cases because they want a new car? What stops people from keeping the old car in a recession?

HENDERSON: Well, we've been in a blizzard-like recession, actually, since over the last year in our industry. Consumer durables-second largest for a consumer. The auto business has been turning down. And if I look at this year, first quarter down versus '07. Second quarter down versus the first quarter. Third quarter down versus the second quarter. And then October and November have just been bleak.

MATTHEWS: Yes.

HENDERSON: So we certainly have seen the impact on the consumer, lack of credit. You've seen it. Our plan-frankly, we developed it not only based on, you know, what would traditionally be viewed as quite conservative baseline assumptions, we developed our down side based them upon volumes less than what we've seen in October and November to try to make sure we were as conservative as possible.

MATTHEWS: So your plan says that the General Motors Corporation can repay the federal government the money it needs to borrow by the end of this year to stay in the black-can pay it back when?

HENDERSON: We would, on the baseline scenario, begin to pay back in '10, in '11, and fully repaid '12. If you look at the down side scenario, the repayment schedule is delayed, and so we would begin to repay in the '11, '12 timeframe.

MATTHEWS: Let me go back to the problem you have. I've just got a report that says that your assets at GM are $32 billion in terms of what you have, forklift, whatever you can pick up off the floor, the shop floor, and yet you have $45 billion in liabilities. That suggests to me that you're in the red $13 billion. Do you think people normally lend money, like, $12 billion, to companies that are $13 billion in the red?

HENDERSON: Actually, those numbers are wrong. We're actually more in the red. If you look at our deficit net worth at the end of September, it was close to negative $60 billion.

MATTHEWS: Yes.

HENDERSON: So we've got to get the facts right. One of the things we've done here is-frankly, as part of this plan, we said, We need to restructure our capital structure. Overall level of indebtedness is excessive for the size of the business. And the plan is comprehensive in that it calls for a pretty significant restructuring and resizing of the liability structure and the balance sheet, as well.

MATTHEWS: Well, you said to get the facts straight and you corrected me on the numbers. So let's go in that direction. What is the down side, to use your terminology, of you guys not repaying the debt you're getting from the government? What's the down side to you?

HENDERSON: Well...

MATTHEWS: Personally and corporately. What will happen? Will you guys be in trouble? Will you be in debtors' prison? What would happen, actually?

HENDERSON: Well, the taxpayer protections provided in here call for the government to be able to, frankly, not only have senior status on the loan but be able to call the loan in the event that we don't reach milestones. So, you know, the government, basically, as the senior lender, would have the ability to, if we don't hit our numbers, we don't hit our milestones, we don't hit the things-first of all, they don't have to lend to us because we call for draws in the first quarter of this year.

MATTHEWS: Yes.

HENDERSON: And if we don't achieve our milestones in terms of labor, manufacturing, competitiveness, you know, what we're doing across the board in terms of our restructuring plan, including liabilities, they don't have to lend to us. And frankly, we've called for and strongly support an idea of an oversight board to make sure we are hitting those things, we are hitting our milestones in the near term.

MATTHEWS: OK...

HENDERSON: Long term, we'll have the senior stats (ph), obviously, and the government will have the senior position of the capital structure.

MATTHEWS: Well, let's go to the worst-case scenario. If you don't get the federal government's help because the Congress doesn't lend you the money, when do you go broke?

HENDERSON: Well, in our application today, we asked for $4 billion of financing in the month of December. We asked for it because we need it. The situation is urgent.

MATTHEWS: I see.

HENDERSON: Our need for liquidity is critical, which is why we laid it out.

MATTHEWS: So General Motors Corporation, which is probably the most famous American brand, I would say, over the years-and it was once said by your CEO back in the '50s, What's good for General Motors is good for America-is on the brink of bankruptcy. Is that fair to say?

HENDERSON: Our liquidity is badly tested. We laid out-actually, in our application, we laid out our cash numbers in the month of December, January, February and March in the U.S. to try to understand what the near-term impact was. And clearly if you look at without government support, we fall below our minimum levels in the month of December.

MATTHEWS: You're going to dump some of your assets. You're going to shed some of them, apparently. Tell me what you're going to do to Hummer. I always wonder what the economic value of Hummer was. It's terrible on mileage. It has no room in it. It seems to have all machinery in it when you get in the car. There's very few seats. Why did you buy Hummer to begin with? It seems like that's the kind of decision that got GM in trouble. It got a lot of consumers in trouble, too, because it's just a gas eater.

HENDERSON: Actually, a couple things. We didn't-I mean, if you look at the creation of the Hummer brand in terms of its application in a light vehicle scenario, we launched the Hummer brand-our timing couldn't have been worse and fuel prices shot up.

MATTHEWS: Yes.

HENDERSON: If you look at the Hummer brand in terms of the products themselves, they have incredible attributes for off-roading. The consumers that buy them love them and swear by them and they provide significant...

MATTHEWS: Yes.

HENDERSON: ... you know, benefits for off-roading. It just shouldn't be owned by General Motors today.

MATTHEWS: Do you think that we've made a mistake in America of going with big cars, SUVs, cars that get low mileage but are big sort of-you know, they're urban defense vehicles, giant, heavy cars that make people feel good but eat up the gas, eat up the space. Is that good for America to have those big cars? Was that a good investment for the consumer?

HENDERSON: Well, in the end, the consumer decides what's a good investment for the consumer. And if I look at it...

MATTHEWS: Well, what do you think?

HENDERSON: We basically-you know, from my perspective, we've developed a plan going forward which is focused on passenger cars, crossover vehicles and much more fuel-efficient vehicles. These are vehicles which are rolling out today. We're very confident to be able to be competitive and win in the marketplace. In the end, consumers are disparate. They make their own choices. They-we offer, you know-for example, our pick-up trucks, which are still our largest volume product, are segment leaders in fuel economy in that segment. The pick-up trucks do things that our Chevrolet Aveo (ph) can't do. But in the end, the consumers make choices based upon a lot of different factors. What we're prepared to do and are doing is making sure we're devoting our product development resources to more fuel-efficient vehicles going forward.

MATTHEWS: So the auto industry has made the right decisions. It's followed the consumer. It hasn't advertised its way to heavy vehicles, it's just followed consumer taste. It's not your fault, what's happened. Is that your point?

HENDERSON: Well, actually, no...

MATTHEWS: You're going to make (ph) the Congress-it was simply economic conditions, or was-you know, were the Japanese smarter than us? Were the Germans smarter than us? Do they understand the need for smaller, lighter vehicles that are better on mileage per ton? Have we gone too heavy with our vehicles? Have we really made a big mistake here going with big cars? Is that-you say it's up to the consumer, but advertising is relentless on television, car advertising. You encourage people to buy certain cars, don't you?

HENDERSON: Yes. We promote our vehicles when we develop them and launch them. As I look at it, first of all, we do make mistakes. I think all manufacturers do. We certainly have made mistakes in the past. I think it's-looking forward, it's about how do we get our cars and crossovers, get the right level of fuel efficiency and win in the marketplace? I would say that our competitors-all of our global competitors also launched larger vehicles and pick-up trucks and SUVs because the consumers had a demand for those. And frankly, the products-even our SUVs have segment-leading fuel economy. But they're bigger. And so therefore, we're going to focus our resources on smaller, more fuel-efficient vehicles going forward.

MATTHEWS: OK, how many jobs are at stake, Mr. Henderson, at GM and your suppliers and all the multiplier effects of your business?

HENDERSON: We think-you know, if I look at in total, including dealers, suppliers, about three million people are touched by this in virtually-in all 50 states are touched by the auto industry, whether it's suppliers, dealers particularly. And it's an important part of the fabric of the U.S.

MATTHEWS: OK. Thank you very much for coming on HARDBALL, Mr.

Henderson. Good luck in your appeal to Congress. Joining us right now, the automotive critic for "The Los Angeles Times," Dan Neil, who proposes that simply the federal government buy General Motors. What did you think of that, sir, Mr. Neil? We just heard from Mr. Henderson of General Motors. Do you think they have a good case?

DAN NEIL, "LOS ANGELES TIMES": Well, I am concerned how General Motors is going to guarantee these loans if they don't hit these benchmarks, or however they want to judge it. OK, six months down the road, are they...

MATTHEWS: Well, he says the government can simply demand the money.

NEIL: Are they not still too big to fail, though, Chris? I mean, don't we-don't they put the gun back to their heads in another six months or a year? I mean, I don't really see any kind of leverage that the government has going forward. So you know, I have my doubts about this plan. I'm not prepared to say that they shouldn't get federal money at all, but I think there are other options on the table.

MATTHEWS: You think that the government-if the government were to buy General Motors, as you suggest, do you think the people in Washington would be better planners, better engineers, better designers, than those in Detroit?

NEIL: Oh, God, no! That's not the idea. Government ownership-an ownership stake in General Motors doesn't mean that you-you know, you take away the top-tier engineers, product planners, and so forth. In fact, I would argue that many of these people, this enormous talent in this company, has been hamstrung by externalities that are macroeconomic and have to do with our political planning. For example, we didn't ever pass a substantial gas tax. Now, I'm in Missouri. Gas is $1.65 a gallon. What we should do, what we should have the political courage to do, is build a floor under gas taxes so that gas prices can't go below, say, $2 a gallon.

MATTHEWS: Yes.

NEIL: And that would have focused their product planning a lot better. And they would be prepared for the future better.

MATTHEWS: And you think that's politically feasible? I mean, it should be.

NEIL: Well, that's-I mean, it should be politically feasible, and that's the big problem is that Congress has abrogated this vital responsibility, and so the...

MATTHEWS: OK...

NEIL: ... car companies rise and fall on gas prices. And right now, you know, it's the perfect storm to...

MATTHEWS: OK. Well, let me ask you about this idea of buying General Motors. Are you serious? The government should buy GM? Yes or no?

NEIL: Well, I use the phrase-yes.

MATTHEWS: OK. Well...

NEIL: If you demand an unqualified answer, then I'll tell you, yes. And I'll tell you why. This is an opportunity that can be brought out of crisis. We have-bail-out or bankruptcy are both untenable options. There's a third thing at stake, and that is our future automotive demand and our energy security. We need a company in the car business, and we need a company that will work, frankly, at a loss to build plug-in hybrids and electrics until that technology becomes commercially profitable.

MATTHEWS: What success...

NEIL: And General Motors...

MATTHEWS: What-give me an example of a successful federally owned company.

NEIL: OK. Conrail was failing in the 1970s. The federal government bought it, nationalized it, in essence, in 1987. In the largest public offering to date, Conrail went public again. Government sold its interest and returned almost $2 billion to public coffers. We nationalized the railroads in World War I. And when you think about defense contractors, United Technologies, the Groton boatworks, the Electric Boatworks, these are captive companies. They're nationalized companies.

MATTHEWS: So you're confident that the United States government would be a good executive in terms of running the auto companies.

NEIL: Well, the devil is in the details, but I honestly believe that a federal ownership stake, with a controlling interest in the direction of this company, would make a difference. Also, the federal government would have the power to abrogate contracts. One big problem GM has is they have so many dealers. Well, how do you break those contracts with dealers? I think you're going to have to use the power of the federal pen to break those contracts and dramatically downsize GM expeditiously.

MATTHEWS: OK, Dan Neil. We're going to get back to politics on HARDBALL in just a moment.

Coming up: The economy getting worse. The governors are asking for a bail-out, as well. Let's talk politics again. Eddie Rendell, the governor of Pennsylvania, is coming on. He's the head of the National Governors Association. Let's see what he's got to say, if he can make a strong case for the government bailing out the states. We just heard from the auto companies. Everybody's got a cup and they're shaking them. We're talk to the head of the governors association in just a moment. You're watching HARDBALL, only on MSNBC.

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MATTHEWS: Welcome back to HARDBALL. President-elect Obama met with the country's governors in Philadelphia today to across the states' budget crises. The meeting's attendees including many of his future rivals, perhaps, including Sarah Palin and Minnesota Governor Tim Pawlenty.

And here is what Obama, the president-elect, said to those Republican governors.

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SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT: I offer you the same hand of friendship, the same commitment to partnership as I do my Democratic colleagues. If you can show me something you are doing that's working, or if you tell me that this program or this regulation is hampering us from doing smart things that will advance the interests of our state, then you're going to have a ready ear.

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MATTHEWS: Pennsylvania Governor Ed Rendell is chairman of the National Governors Association. He joins us from Philadelphia. Governor Rendell, was he that even-handed in that meeting? That was a meeting that was off-camera for the press.

GOV. ED RENDELL (D), PENNSYLVANIA: Yes, he really was, Chris. In fact, when one or two of the governors challenged the idea of running up more debt, he handled it very respectfully. And he said: Look, my goal is to reduce the federal deficit. I think we have to get it done. But that has to be secondary to the need to have a stimulus program that will aid the economic recovery. And he quoted the fact that virtually every economist, conservative or or liberal or progressive, had said that, right now, the most important thing that we can do is to have a recovery program that really pumps real juice into the economy, creates new jobs, creates orders for U.S. businesses and factories and things like that. So, he was very respectful, even when there were some philosophical differences voiced by some-not many, actually-but by some of the Republican governors there.

MATTHEWS: Well, let's talk about that. Warren Buffett said that in a meeting I was attending and moderating out in California a couple weeks ago. The only institution in America he said that can overleverage-in other words, spend money that it borrows and put some juice into the economy, as you put it-is the federal government. I hear that Steve Forbes is saying that. It seems to be irrespective of ideology. Was there really an argument there that the federal government shouldn't help the states? Was that an argument from some governors?

RENDELL: It was advanced by Governor Sanford of South Carolina, Governor Perry of Texas.

MATTHEWS: I see.

RENDELL: But the majority of Republicans, I think, understood that we had to do something right now, and that there should be a stimulus plan. And the only thing I would disagree with, Chris, is, you said that the governors sought a bailout from the federal government. We aren't. First and foremost, understand that virtually every governor in that room has already taken things into his or her own hands and making-made significant cuts. By the end of this month, the Pennsylvania budget for this fiscal year will be down nearly a half-a-billion dollars. And the half-a-billion dollars are painful cuts, as you know. Secondly, our asks today were first for things that benefit our citizens, extending the period of unemployment compensation benefits, food stamps. Those go directly to our citizens, don't help the state governments themselves. Secondly, infrastructure-infrastructure is something that, unlike any bailout that we have had, the banks, the insurance companies, et cetera, we know that they will produce jobs. Economists say, for every billion dollars of infrastructure spending, we create between 30,000 and 40,000 new jobs that can't be outsourced. And, thirdly, we asked for some help dealing with the safety net programs that are-the demand is increasing because the economy is bad. When people lose their jobs, they lose health care, and it creates tremendous tension on our Medicaid programs, for example. So, we weren't looking for a bailout. We're-we're willing to make tough decisions ourselves. But we need some help from the federal government. And, most of all, we need to use infrastructure, rebuilding our roads and-and our-and our bridges and highways and-and our water systems. We need to do those things that will create jobs immediately, good jobs, family-sustaining, paying jobs, and will create orders for steel companies, concrete companies, asphalt companies, lumber companies, and the like. This is the first bailout that's actually going to-first recovery plan that's actually going to create jobs.

MATTHEWS: Did you a get a sense-let's make some news, Governor. Do you get a sense from the president-elect that he's open to the numbers you gave, $136 billion for infrastructure? That's bridges and stuff like that. He's getting requests for money obviously from the auto industry tonight. And Congress, Nancy Pelosi, the speaker, is going to have deal with that. But let me ask you, did you get a sense that he's willing to go-some people are talking about a trillion-and-a-half-dollar stimulus package, something really, you know, equivalent to something like we saw-or could have seen-maybe we should have seen-in the early days of the New Deal, something really big.

RENDELL: Well, we didn't actually get into talking numbers, although we did lay on the table, because the-one of the things that president-elect wanted to find out from us is, what did we estimate were ready-to-go projects that we could have a shovel in the ground in the next 18 months? And we used a compilation of different things to say $136 billion. And I don't think that was something that shocked him or that he found...

MATTHEWS: Yes.

RENDELL: ... in and of itself, to be too extreme. That's number one. Number two, there was nothing I heard that would indicate a trillion-and-a-half stimulus program. I think it's going to be significant, certainly more significant than anything Congress has talked about, but-but not on that level...

MATTHEWS: Yes.

RENDELL: ... not on that level.

MATTHEWS: The argument is, of course, that the U.S. economy, the GDP, is about $13 trillion, and, over three years, it would be $39 trillion. And to have a real impact over the next three years is what we're probably talking about, you need more than -- you need a lot more juice than a trillion bucks. That's what I'm talking about, Governor. It's got to be big-time.

RENDELL: No, I understand that. And I think that they are thinking big and they're thinking bold. And, you know, Paul Krugman said that FDR failed not because he didn't have the right vision, but because he didn't have the courage to-to do it in the scale that was needed.

And I-I think president-elect Obama understands that.

MATTHEWS: Well, I'm-I'm definitely with Krugman on that. I think the New Deal was a little slow in acting. Or Roosevelt should have been a lot more gutsy than he was in the beginning, and he was gutsy enough. Let me thank you very much, Governor Ed Rendell, chairman of the-of the National Governors Association, that hosted president-elect Obama and vice president-elect Joe Biden this morning in Philadelphia. Up next: If Sarah Palin is thinking about running for the Senate, she's getting a warning shot from the Republican who has the job right now, Lisa Murkowski. Wait until you hear her bring it on. She's not afraid of Palin. Plus: Obama's new Cabinet, strong personalities and pretty damn strong on the basketball court. The b-ball talent of this team is amazing. The national security adviser, the new attorney general, and the U.N. ambassador all have great all-star b-ball talent. Interesting stuff here. We will be back. It's the face of Benetton. It's also apparently a hell of a basketball team. You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: I think we have got to change the faces on that merry-go-round for the inauguration. Anyway, back to HARDBALL. Time for the "Sideshow." First up: Back off, Sarah. That's the message from Senator Lisa Murkowski to fellow Republican Sarah Palin, amid buzz that the Alaska governor is eyeing her Senate seat. Murkowski tells "Politico" that Palin's in for a-quote-"tough election" fight if she chooses to challenge her in the 2010 Senate primary. She said-quote-this is Murkowski-"If she"-Palin-"wants to be president, I don't think the way to the presidency is a short stop in the United States Senate"-close quote. Next up: It's a dream team Cabinet in more ways than one. While president-elect Obama's love for a game of hoop has been well-documented. There he is. He hit that three-pointer, by the way, over in Europe. "The New York Times" reveals that Obama's picks for attorney general, U.N. ambassador and national security adviser were also avid basketball players, on the varsity, apparently, back in their school days. Speaking of talent, here's Secretary of State Condoleezza Rice doing some piano work for the queen of England last night at Buckingham Palace.

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(MUSIC)

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MATTHEWS: Boy, talk about pressure. Anyway, that was Secretary Rice. In the past, she's expressed her wish to play at Buckingham Palace. And this was apparently her last official trip to London before leaving office next month. Now for tonight's "Big Number." With Hillary Clinton off to the State Department, "The New York Post" threw Bill Clinton into the list of potential replacements for Senator Clinton, although they also put the odds at 100-1. Actually, the move from the Oval Office to Capitol has been done before. How many ex-presidents pulled it off? Well, two. After finishing their terms, John Quincy Adams won a House seat in 1830, and Andrew Johnson went to the Senate in 1875, even after being impeached, but not convicted, as president. Two ex-presidents made the move to Capitol Hill-tonight's "Big Number." Up next: the gift that keeps on giving. And I mean this. I'm an expert at this stuff. The Nixon White House audiotapes were released today more of them, rather. They just keep coming out. And, like in the past, Nixon comes off as a bit ruthless, a bit coarse. Well, you decide. These quotes are great. The highlights from the latest batch of Nixon tapes with former Nixon White House counsel John Dean, a real expert, joining us. He is going to be live with us in a minute. You're watching HARDBALL-Nixon coming up-he's back-only on MSNBC.

(COMMERCIAL BREAK)

JULIA BOORSTIN, CNBC CORRESPONDENT: I'm Julia Boorstin with your CNBC "Market Wrap."A big rally in the final hour of trading-the Dow Jones industrials surging 270 points, after yesterday's huge losses, the S&P up 32, and the Nasdaq up 51 points. The Big Three automakers have been a drag on stocks, after reporting dismal sales for November-Ford sales down 31 percent, GM sales down 41 percent, and Chrysler sales down 47 percent. The news came as the Big Three submit updated requests for emergency federal loans-GM saying it needs at least $12 billion to keep operating, Ford saying it needs $9 billion, and Chrysler saying it needs $7 billion, the total now $28 billion, not the $25 billion originally requested. Congress will hold new hearings on those requests this week. And oil dropped another $2.32, closing at $46.96 a barrel. Crude is now down more than $100 a barrel from July's record high. That's it from CNBC, first in business worldwide-back to HARDBALL.

MATTHEWS: It's been 34 years since Richard Nixon resigned as president, in the wake of the Watergate scandal. Since then, hundreds of thousands of documents and 2,200 hours of tape recordings have been released on the inner workers of the presidency, Nixon's presidency. Today, 200 hours of new tapes and 90,000 documents were declassified, giving even more insight into the Nixon administration. Here to help shed some light on the Nixon tapes are Rick Perlstein, author of the great new book "Nixonland: The Rise of a President and the Fracturing of America," a hell of a book, and John Dean, who was Richard Nixon's White House counsel and who is author of the book "Broken Government."

Let's listen right now. Some of these tapes are brand-new. Some of them are not. I want you to look at one that has always fascinated me, because I did some reporting on this back in the '90s. This is one where Richard Nixon, the president of the United States, is telling his chief of staff to break into the Brookings Institution and get some material dealing with the Vietnam War-break in.

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RICHARD NIXON, PRESIDENT OF THE UNITED STATES: I can't have a high-minded lawyer like John Ehrlichman or, you know, Dean, or somebody like that. I want somebody just as tough as I am for a change. We're up against an enemy, a conspiracy. They're using any means. We are going to use any means. Get it done. I want it done. I want the Brookings Institute's safe cleaned out. And have it cleaned out in a way that it makes somebody else take the blame.

(END AUDIO CLIP)

MATTHEWS: Well, gentlemen-and, John Dean, of course, is an expert on this, and Rick Perlstein, who has written this great book on Nixon-I have a recording from the night before, which I broke back in the '96 period for my newspaper, "The San Francisco Examiner," that had Nixon, the night before, telling Haldeman, with Henry Kissinger sitting in the room: "I don't want the-I want the break-in. I want you to get in there. I want you to rifle the files. I want you to bring me the stuff. I don't want any problem break-in.""This isn't a domestic-this is a foreign thing." That's Haldeman talking. And here's Nixon again: "Just go in and take it. Go in around 8:00 or 9:00 and clean it up." John Dean, here is the president of the United States ordering a break-in. Subsequently, he ordered a break-in of the Republican headquarters to make it look like a Democrat job to cover up for Watergate. Do you know about this Nixon, the fellow that is capable of ordering break-ins by his chief of staff?

JOHN DEAN, FORMER WHITE HOUSE COUNSEL: Painfully so, Chris. I do. In fact, this is one of four conversations where he had this subject. Actually, a year before the famous Watergate arrest in-in-July 17 of '71, he orders the first Brookings break-in. I had had a conversation with Haldeman. He had said, what about black bag jobs ordered by the president or the FBI? I said, Bob, absent emergency times, this is very dangerous. A week after this last conversation, I had to fly to San Clemente and kill a threatened fire-bombing of the Brookings Institute.

MATTHEWS: Right.

DEAN: It had reached that degree where they were going to firebomb the place and send burglars in afterwards to try to get in this copy of the Pentagon Papers.

(CROSSTALK)

MATTHEWS: That was Colson's-that was Colson up to that one.

DEAN: It was Colson.

MATTHEWS: Ha! What a crowd.

DEAN: . but I believe it was also.

MATTHEWS: Rick Perlstein.

(CROSSTALK)

MATTHEWS: Rick Perlstein, your thoughts on how this affected America, the fact we had a president capable of ordering break-ins. We don't know if he ordered-nobody has ever had evidence he ordered the break-in of the DNC, the Democratic National Committee, that cost him his presidency, but here he is at work.

RICK PERLSTEIN, AUTHOR, "NIXONLAND": Yes, that's the fascinating thing about this stuff. We really are learning new stuff all the time. It's not just the tapes that are exciting. It's these new documents. I mean, you mentioned the Brookings stuff. The reason he was doing that was because he wanted to find stuff that he thought the Kennedy administration had done that was beyond the pale, assassinations and things like that. Well, I have in my lap right here a fiery hot document where months before that happened, he's saying, these are the files I want you to declassify, the Bay of Pigs files, the Cuban Missile Crisis files, the murder of Trujillo, and I want you to declassify those to use it to discredit the Democratic Party so they can never win another election, and I also want you to investigate Clark Clifford's tax returns. He says, do that right away, full field audit. This is long before Watergate, I mean, I have.

(CROSSTALK)

PERLSTEIN: . going back 30 months before Watergate.

MATTHEWS: Yes. He was trying to prove that Kennedy had a hand in killing Diem, and also in killing Trujillo of the Dominican Republic. Let's take a look at the newest.

PERLSTEIN: That's right.

MATTHEWS: one. Here's another tape. It has to do with-he's talking to Charles Colson, his henchman, right after he beats George McGovern in practically ever state. Here he is, the victor.

(BEGIN AUDIO CLIP)

RICHARD M. NIXON, 37TH PRESIDENT OF THE UNITED STATES: What in the hell did you think of McGovern's statement on the election? Wasn't that the sour grapes crap again?

CHARLES COLSON, FORMER NIXON CHIEF COUNSEL: Well, it's unbelievable, the arrogance of the guy. God, what a bad man, just awfully glad we got him buried and put away for good. I think he is.

NIXON: OK. He's buried, he's buried.

(END AUDIO CLIP)

MATTHEWS: Ha! It's not good enough just to beat the guy, John Dean.

You have to bury the guy, huh?

DEAN: Yes, indeed, in this conversation they're also talking about their Wallace strategy, which they realize had paid off. And it was a very devious strategy to bribe Wallace to keep him out of the primaries. And this is just-this was just typical hardball Nixon politics that are now.

PERLSTEIN: It's worse than that, actually.

DEAN: . we are getting much more of as these.

MATTHEWS: Well, here he is.

(CROSSTALK)

PERLSTEIN: . in the Democratic Party to destroy the Democratic Party and then keep him out of the running as a third-party candidate in a general election.

MATTHEWS: Well, let's take a look at Nixon. Here he is talking about the press, as he calls them, "those poor dumb bastards." That's Nixon, here he is, no fan of the press here.

(BEGIN AUDIO CLIP)

NIXON: Return the calls to those poor dumb bastards (INAUDIBLE) who I know are our friends, you know what I mean? Now do it. (INAUDIBLE) we made the same mistake Eisenhower made, but not as bad as Eisenhower made, because he (expletive deleted) The Times too much. God damn it, don't talk to them for a while, will you enforce that for now?

H.R. HALDEMAN, FORMER NIXON WHITE HOUSE CHIEF OF STAFF: I'll try.

(END AUDIO CLIP)

MATTHEWS: Well, we cleaned it up a little bit, John Dean. What do you make of it? Nixon didn't like the press too much, did he?

DEAN: No, he didn't. This is actually a good example of Nixon building that reservoir of ill will that he could draw so deeply on when he got in trouble. He would periodically tell Haldeman to instruct the White House not to talk to The New York Times, The Washington Post, whoever was the target at the time. And this was just another example of that policy.

MATTHEWS: Rick Perlstein, you know all about this. What's the impact of Richard Nixon-quickly, sell your book, what's the impact of "Nixonland" on the land we live in? Is it Karl Rove? Is that the residue?

PERLSTEIN: Well, one of the big political strategies Nixon had going, and this was why he wanted George Wallace in the Democratic primaries, was to create as much division as possible in the political process, make a cacophony, raise it up to a fever pitch so then he could present himself as the savior who was going to make everything better and peaceful again. So he had a vested political interest in division, a vested interest in conflict.

MATTHEWS: OK. Your book "Nixonland" is better than coal in your stocking. Ha! It's a great gift for somebody who really likes the dark side of politics, which I do enjoy at times. Thank you, Rick Perlstein, great author. John Dean, as always. Merry Christmas to both of you guys. Up next, voters in Georgia head to the polls today to decide that Senate runoff, that's another election being held today between Saxby Chambliss and Jim Martin. A Chambliss victory would end the Democrats' hopes of winning those 60 veto-proof seats. The latest on that race, plus, the leading contenders to replace Barack Obama in Illinois and Hillary Clinton in New York. Could Bill Clinton really be in the running? Apparently, according to his spokesperson, no way. But we'll see when we come back. A beautiful picture, by the way, there of the White House Christmas tree. That's of course the Christmas tree at the U.S. Capitol, rather. They both have Christmas trees. The Congress has one of its own up there, just lit up tonight for the first time just moments ago. That's always a big ceremony as well. This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Coming up, Bill Clinton for the U.S. Senate. I don't think so. But will he take Hillary's seat once she is confirmed as secretary of state? His spokesperson says, completely false. These rumors keep flying. The "Politics Fix" next when HARDBALL returns.

(COMMERCIAL BREAK)

MATTHEWS: We're back. Now for the "Politics Fix," let's bring in NBC News political director Chuck Todd and NBC News political analyst Charles Cook of "The Cook Report." Let's talk about these Senate elections this night-this election. Saxby Chambliss, one-termer, going for his second term against Jim Martin. Anything going to happen there? You've got all of the Republicans in there, like Sarah Palin, they think this is a victory circle.

CHARLIE COOK, NBC POLITICAL ANALYST: I would be stunned if Jim Martin pulls off an upset here. How in the world can Democrats replicate the African-American turnout that they had for Barack Obama?

(CROSSTALK)

MATTHEWS: And that was an 80,000 undervote. They didn't vote for the for senatorial line.

COOK: Yes. I think there's a good reason why President-elect Obama hasn't gone in there.

MATTHEWS: Why?

COOK: He would be setting himself up for a loss.

MATTHEWS: Say it, say it.

COOK: He would be setting himself up for a loss.

MATTHEWS: Doesn't want to take the loss. Is that a fair estimate?

CHUCK TODD, NBC POLITICAL DIRECTOR: It's totally fair. They made that decision. And-but I think they're over-it would actually be beneath him right now. He is trying to look presidential.

MATTHEWS: Why play a postseason game when you've won the championship?

TODD: There is no reason to go to Hawaii for the Pro Bowl when you've already won the Super Bowl.

MATTHEWS: OK. Let's talk about the Senate seat in New York. Is there anything to this Bill Clinton rumor? I mean, his spokesman has said is completely false, that's the beginning of the conversation usually. What do you make of this?

COOK: I mean, I don't think there is anything to it.

MATTHEWS: He is a citizen of New York. He votes up there.

COOK: Oh, no, no. I mean, it would be legal, and certainly it would keep him occupied. I mean, I can see.

MATTHEWS: He's giving up all of these speeches and all of this outside economic activity, wouldn't this give him a career?

COOK: Yes, I mean, I don't think it's going to happen, but the biggest...

(CROSSTALK)

COOK: . for the Obama administration, why not?

(CROSSTALK)

MATTHEWS: Does he want to be a senator? You know, obviously, he would be a hell of a candidate.

COOK: Yes, but you have got to think that everybody that.

(CROSSTALK)

MATTHEWS: You know, you laugh, Chuck. And I'm laughing because the shot in The New York Post today had 100 to 1 odds.

TODD: Can I just say, I laughed when Charlie Rangel suggested the Hillary Clinton idea, when it happened, and I think we all laughed at it. So can you laugh at this? No. Is it the easy way out for Paterson? In an odd way, it would be. Who could criticize him for putting the ex-president in the United States Senate?

MATTHEWS: OK. Let's take a look at Kerry Kennedy, one of Robert Kennedy's daughters, speaking on "MORNING JOE" this morning about her brother, Bobby Kennedy Jr., perhaps being that replacement senator in New York.

(BEGIN VIDEO CLIP)

KERRY KENNEDY, DAUGHTER OF ROBERT KENNEDY: I think that would be very, very exciting. I was actually talking to him about it yesterday and encouraging to go, go, go to Washington. I think he would be so extraordinary, especially on environmental issues, and on these poverty issues that we care so much about.

JOE SCARBOROUGH, CO-HOST, "MORNING JOE": What a remarkable selection that would be.

MIKA BRZEZINSKI, CO-HOST, "MORNING JOE": Is he hearing anything? Has Governor Paterson spoken to him about it?

KENNEDY: I think Governor Paterson has-he is definitely on the short list.

(END VIDEO CLIP)

MATTHEWS: Well, the great irony here, is a little dark, is that her former husband, Andrew Cuomo, is at the top of the likely list right now.

TODD: Well, he is. There are some real political issues that Paterson wants to deal with, right? Number one, he has to figure out, could Cuomo primary him? Is he worried about it? I talked to people who said Cuomo has already lost.

MATTHEWS: He would run against him in the primary.

TODD: Exactly, and for governor. Cuomo has already lost to one African-American for governor the last time he ran for governor. He doesn't want to do that again. So there isn't that fear. He is more likely to appoint a woman, a Latino, or somebody from Upstate New York. Upstate New York has no representation in any of the elected offices. They wanted-I think the only candidate he would appoint is Caroline. I don't see the RFK Jr. one.

MATTHEWS: I just love the Democratic liberals are, because they won't run against the African-American candidate because they don't want to do it sort of as a matter of belief.

TODD: No, no, no, no. Cuomo didn't want to lose.

MATTHEWS: And then Rudy Giuliani comes along and runs in the general against Paterson. Yes, and Rudy Giuliani is ready to run against him in the general, right?

TODD: I'll believe it when I see it.

MATTHEWS: OK.

TODD: I'll believe it when Rudy files.

COOK: Rudy Giuliani would be the most miserable person in the U.S.

Senate.

MATTHEWS: No, governor.

TODD: No, governor.

COOK: Oh, for governor, I thought you said...

(CROSSTALK)

MATTHEWS: I'm sorry, I misspoke, run for governor of New York.

TODD: He would be the most miserable person in Albany.

MATTHEWS: Against Paterson.

COOK: Yes, yes.

(CROSSTALK)

MATTHEWS: I think-I hear Rudy is coming back to run for governor of New York.

TODD: I would be-I'll believe it when I see it.

MATTHEWS: OK. Let's talk about-let's take a look at Jesse Jackson Jr. Again, on "MORNING JOE," he is making the news. Here he is setting the agenda for HARDBALL again. "MORNING JOE," here is Jesse Jackson Jr. of Illinois, the Congressman from the South Side-is it the South Side?

COOK: He is a South-Sider.

MATTHEWS: South Side, here he is, a man who maybe apparently wants to be the next senator from Illinois, replacing Barack Obama.

(BEGIN VIDEO CLIP)

REP. JESSE JACKSON JR. (D), ILLINOIS: Obviously, I would be honored and humbled to succeed Barack. We share a vision to build a more perfect union for all Americans. Ultimately, whoever the senator is has to share that vision, because Barack is going to need help in the United States Senate. That vision to fix the economy and put all Americans to work, to make the nation more energy independent, to provide health care for all Americans, and to provide every American with a world class education. Joe, as you know for more than 13 years, I've tried to do that in the Congress of the United States. And it is ultimately the governor's decision. And if I were selected, I would be honored.

(END VIDEO CLIP)

MATTHEWS: Run, Jesse, run. Reaction to Jesse Jackson Jr.'s appeal there for an appointment from Chuck Todd and Charlie Cook after this quick break. You're watching HARDBALL, the "Politics Fix," right after this.

(COMMERCIAL BREAK)

MATTHEWS: We're back with Chuck Todd and Charlie Cook. You know, this election started with the idea the Democrats maybe getting 60 Senate seats, which means that they could break any filibuster. That basically, one-party government. That scared a lot of people, because they figured the Democrats have a wish list that a lot of people don't share, right? You have a problem with that?

TODD: No, I don't think it did scare a lot of people. That's the thing. I think there was anger at the Republicans.

MATTHEWS: So let's have the Democrats have their chance.

TODD: Yes, and not only that. You know, and then I think they're going to get judged now, they're in charge, and they're going to get judged. So I don't think.

MATTHEWS: So with 58 seats, they're still going to be judged-do it or not, it is your job.

TODD: You get it to 58, it's a lot of Senate seats.

MATTHEWS: It sure is.

TODD: You can get a lot done with it.

MATTHEWS: Just like the old days.

TODD: And you know what, the way things are looking in two years from now, the Democrats have as good a shot as getting to 60 two years from now if they don't.

MATTHEWS: Yes, but a lot of it depends on the economy.

TODD: Well, of course.

MATTHEWS: And by the way, there is always a reaction a couple of years later. There is always a reaction.

TODD: Not always though.

COOK: But you know, just to.

(CROSSTALK)

MATTHEWS: When was the last time that any party won three elections in a row? They won 2006, 2008, they are going to win 2010?

TODD: Well, the Republicans, 2000, 2002, 2004, I mean, it was a run for them. I mean, it happens.

COOK: My colleague Jennifer Duffy points out, this is the first time that a party has gone two consecutive elections without losing a single incumbent since we started electing senators.

TODD: That's amazing.

MATTHEWS: That is a safety program for Democrats. Let me ask you about Jesse Jackson Jr. He is a very impressive guy. He just spoke right there. He wants the seat. Is there a requirement on the part of Richie Daley, head of the Cook County organization, the mayor of Chicago, and the whole Democratic Party that it should be an African-American just to keep the balance?

COOK: I don't know that's Mayor Daley's call. I mean.

(CROSSTALK)

MATTHEWS: Is this what they want? Isn't he better off with Jesse Jackson there rather than running against him?

COOK: I think he might. I'm not sure that Jackson helps himself by campaigning for the job. I mean this is a.

MATTHEWS: But is it better for the party of Illinois, for the Democrats to have a balanced ticket with a black person in the U.S. Senate?

COOK: That probably wouldn't be-I think that's a good calculation.

(CROSSTALK)

MATTHEWS: Because you had Carol Moseley Braun and you've got Barack Obama. You have got a pattern there.

TODD: You've got a governor who is wondering every day if he is going to get indicted, OK?

MATTHEWS: Blagojevich.

TODD: Blagojevich. Who still thinks he might be able to run for a third term when everybody else knows he probably can't.

MATTHEWS: Right.

TODD: So he is trying to figure out, who helps me in a Democratic primary? Well, who would help then in a Democratic primary? If he got credit for putting Jesse Jackson Jr. in the Senate because...

MATTHEWS: So that's a good line to have there.

TODD: That is what a Blagojevich-that would be the only reason why Blagojevich would do that.

MATTHEWS: OK. So it looks like Jesse Jackson Jr.?

TODD: But I'll tell you.

MATTHEWS: But does Blagojevich like Jesse Jackson Jr.?

TODD: Nobody-here's the thing with Blagojevich, you talk to everybody in Chicago...

MATTHEWS: You notice how I ask these questions.

TODD: No.

MATTHEWS: . like I know something?

TODD: Well, no, you talk to these-all of the Chicago pols, they sit there and say, nobody knows because Blagojevich won't speak to anybody else.

MATTHEWS: OK. What are you betting on New York? Is it going to be a Cuomo, a Kennedy, or a Clinton?

TODD: I will take the field.

MATTHEWS: Against all of those three?

TODD: Yes.

COOK: I would do that. But if it is a Kennedy, it would be more Caroline than Bobby.

TODD: That's what I think.

MATTHEWS: Well, that would be wild, Caroline Kennedy. Chuck Todd, Charlie Cook. 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.

END

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