updated 12/17/2008 3:55:44 PM ET 2008-12-17T20:55:44

Guests: Raghida Dergham, Rajiv Chandrasekaran, Lynn Sweet, Ross Eisenbrey, Bob Ehrlich, Todd

Harris, Steve McMahon

CHRIS MATTHEWS, MSNBC HOST:  Vice President Cheney says now that we would have gone to war in Iraq, even if we knew Iraq didn‘t have WMD.  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews leading off tonight.  That was no lame duck being thrown past President Bush.  By now you‘ve seen the video, countless times.  President Bush ducking as an Iraqi journalist throws not one but two shoes at the president of the United States.  The journalist who did the throwing is now in jail.  And Mr. Bush laughed off the incident in good humor.  A few thousand supporters of the anti-American cleric Muqtada al Sadr demonstrated today demanding the journalist‘s release, but that doesn‘t necessarily reflect the view of all Iraqis.

What does this extraordinary incident say about how Iraqis feel about the U.S. invasion and occupation more than five and a half years after shock and awe?  Also, in a few interview with ABC News, this is shocking.  Vice President Cheney said that even if the prewar intelligence on Iraq had been correct, in other words, that Saddam Hussein did not have WMD, we still would have gone to war.  That‘s Cheney talking.  We still would have gone to war without WMD.  What does that mean?  Does that mean he is admitting that we were going to war against Iraq no matter what the evidence, no matter what the truth, now matter whether there was WMD, no matter whether they produced the WMD or whether there ever was WMD?

He seems to be saying, he is saying on the record now with ABC tonight, we went to war because we believed that Iraq could produce WMD, and that was enough for a cause of war.

Plus, the Rod Blagojevich scandal.  President-Elect Obama told reporter late this afternoon that a review by his lawyer found that neither he nor anyone on his staff did anything improper.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT-ELECT:  There is nothing in the view that was presented to me that in any way contradicted my earlier statements that this appalling set of circumstances that we‘ve seen arise had nothing to do with my office.

(END VIDEO CLIP)

MATTHEWS:  It‘s still not clear what if any contact Obama‘s incoming White House chief of staff Rahm Emanuel may have had with the governor or his staff and there has been no charge that he has done anything wrong.

And about that auto bailout?  It went down to defeat last week largely because of opposition by Southern Republican U.S. senators.  Here the question, do they believe bankruptcy will wind up they know auto industry or are they more interested in union busting?  We‘ll take a look at that a little later in the show.

And Caroline Kennedy has reportedly decided to pursue actively the U.S. Senate seat being vacated by Hillary Clinton.  That would be an interesting story by itself.  It come with a number of Clinton supporter in New York are saying some very tough things about Caroline Kennedy.  And by the way, it is unusual in Democratic circle for anybody to take a knock at the Kennedys.  Are we look at a Kennedy-Clinton feud here?  It looks like it.  Do the Clintons feel it is their seat to fill?  We‘ll look at that in “The Politics Fix.”

And guess who was honored by the Yale Book of Quotations with the quote of the year.

(BEGIN VIDEO CLIP)

AMY POEHLER, COMEDIAN:  I believe that diplomacy should be the cornerstone of any foreign policy.

TINA FEY, COMEDIAN:  And I can see Russia from my house.

(END VIDEO CLIP)

MATTHEWS:  So why Tina Fey and not the real quote by Sarah Palin?  We‘ll explain that on the HARDBALL side show.  But we begin tonight with that shoe throwing incident over in Baghdad.

Joining me is Raghida Dergham, who is of course columnist for “al Hayat” newspaper the leading independent Arabic daily.  She is also an MSNBC contributor.  And Rajiv Chandrasekaran, former Baghdad bureau chief of the “Washington Post” and currently that newspaper‘s national editor.

Raghida tell me in your own words, as best you can, to what extent does that shoe thrower reflect Baghdad, Iraqi, Arab opinion?

RAGHIDA DERGHAM, MSNBC CONTRIBUTOR:  Not a great extent at all.  There is a division in opinion among Arabs, among Iraqis, about the invasion of Iraq, the staying of the United States Army in Iraq.  The point is that the act it is he is really celebrated in certain very limited quarters whereas quite a number are quite embarrassed about this incident and about the abuse of this so-called journalist of the profession called journalism, in order to make a point in a very ugly way.  So there are different points of view.  You will see celebrations and demonstrations in certain places, such as the southern city where the Muqtada al Sadr followers are.  You will see the state-run television in Syria declaring this man practically a hero.  And you would see courage awards coming from the Qadafi family, in particular the daughter of Muammar Qadafi, the leader of Libya.  But you will see a lot of people saying shame on him for having done that.

MATTHEWS:  Rajiv, we all understand here in this country that every time America is defaced, our flag burned, our president humiliated, it bugs all of us, even these disagree about foreign policy.

Why do you think that the Syrian government in its state support for those people over there, are supporting a rally to make fun of our president?  I thought we had a shot at some sort of peace treaty with Syria.

RAJIV CHANDRASEKARAN, “WASHINGTON POST”:  Well, I think that regimes, across that part of the world, that take issue with U.S. policies see this as low-hanging fruit.  Something they can use to rally people on the streets.  And whip up some images for television and gin up the, some popular anger.

But I think what this incident reflects is a deep seated frustration among a lot of Iraqis at the U.S. presence.  While I agree with Raghida that many Iraqis would not condone the throwing of a shoe at anybody, even President Bush, it does speak to what has been a real sort of growing resentment at the American presence in Iraq, even though violence is down over the past year.  Basic services still lag.  Iraqis look at the situation three and they say my life hasn‘t really improved as I would have hoped in the last three years.

And that translates into sort of a seething resentment at the American presence and directed personally at the president of the United States.

DERGHAM:  Not by all Iraqis though.

MATTHEWS:  Let me tell you something that causes seething resentment here in the United States by a lot of people, tens of millions of people here.  The vice president of the United States is quoted on ABC News.  Let me give you the quote here.  It is shocking.  Even from Vice President Cheney who is quite a hawk.  This is an interview by Jonathan Karl of ABC news with the vice president.  Here‘s part of the exchange.

Jonathan Karl said this to the vice president.  “You probably saw Karl Rove,” he of course was the recent White House political operator, “last week said that if the intelligence had been correct we probably would not have gone to war in Iraq.”

In other words if there wasn‘t any WMD there, Karl Rove was saying, we wouldn‘t have gone to war.

Here is what Cheney said in the interview quote.  This is overwhelming.  “I disagree with that.  I think - as I look a the intelligence with respect to Iraq, what they got wrong there was that there weren‘t any stockpiles.  What they found was that Saddam Hussein still had the capability to produce weapons of mass destruction.  He had the technology, he had the people, he had the basic feed stocks.  This was a bad actor and the country‘s better off, the world is better off with Saddam gone and I think we made the right decision, in spite of the fact that the original NIE,” that‘s the National Intelligence Estimate, “was off in some of its major judgments.”

That is Cheney talk, Regida.  I‘m telling you he is saying right there that everything we pretended to do before we went to war, we had a demand for inspections.  An inspections regime which we got.  We weren‘t satisfied with having inspections for several weeks.  Then we said we want them to bring out all their weapons of mass destruction.  Their stockpile and burn them in front of us like the South African whites did.  They didn‘t do that.  In other all the demands we made on Saddam Hussein to avoid the war before the war were a joke.  They were opera buff, they were pretension.  We intended to go to war whether he had the stockpile or not.  That‘s the statement of the vice president.  What does that say to you?

Raghida?

DERGHAM:  He is now saying the truth.  Because if you would remember, Chris, in the run-up to the war, I had said that on your show on MSNBC consistently, that I was convinced that the administration knew that there was not any .

MATTHEWS:  How did you know it?  Now we‘re getting it from the VP.

DERGHAM:  Because I covered the United Nations beat and I knew the inspectors, and I knew the inspections and I knew the disarmament of Iraq was done largely by the inspections.  And then since the administration kept moving the goalpost, I knew the decision was taken already.  That it didn‘t matter what was going to be the reaction of the Iraqi government.

MATTHEWS:  That‘s what I thought.

DERGHAM:  The point is the decision was taken to get Iraq, to get Saddam Hussein, to really launch an attack on Iraq even before probably 9/11.  And 9/11 came to give a very good excuse or pretext in order to say that we have been attacked though it was never established that there was anything to do with Iraq.

The point of the matter is that they kept moving the goal and they kept saying, this is a different story.  But the fact of the matter is that there was a decision to attack Iraq, probably to bring down Saddam Hussein because he needed to be gotten rid of, but also as a service for both Iran and Israel.  That‘s what it was all about.

CHANDRASEKARAN:  You know, Chris .

MATTHEWS:  I‘m going to get to this point with Rajiv.  I‘m sorry, Raghida.  This says, that all that performance by Colin Powell which I think in his part, he was being legitimate.  He thought he was doing the right thing, before the United Nations, presenting evidence of WMD production, presenting evidence that we had to go to war because of the threat.  We would be hit in this country by a nuclear weapon.  All of that was a charade.

And that is what the vice president is saying now, the mushroom cloud.  We‘re going to get hit with—We‘re going to war to defend ourselves.  Not for some geopolitical reason.  Now the vice president comes out, you have to admit, the guy is for real.  He admits why he went to war.

By the way, what struck me today, he knows why we went to war and we would have gone to war even without the evidence.  Is he the guy who took to us war or the decider?  Was it Bush?  He talks like it was his decision because he knows what it would have been.

CHANDRASEKARAN:  Well, when you compare what he is saying now with the rhetoric that they delivered before the war, it‘s night and day, and if the standard were people there who had the knowledge to build weapons of mass destruction.  How many other countries in the world does that apply to?

MATTHEWS:  Let‘s go to war with Denmark, let‘s go to Norway, let‘s

take down Sweden.  I‘m sure

DEGHRAM:  But Saddam Hussein was a prototype for them.  So he served as a prototype.  That it wasn‘t available in a number of circumstance that‘s would make them bring down.  Again, it was an excuse.  There was never a clarity on why we went .

CHANDRASEKARAN:  But Chris, another point to be made here is that if they were so intent on going to war and they had made up their minds well before the actual invasion, that Saddam had to be taken out, why wasn‘t there a better plan for the post-war occupation, the reconstruction, why didn‘t we send enough troops?  It seem like we sort of went in to respond to an immediate threat without all of the necessary planning which is really been the reason why this has been so long and so bloody.

DEGHRAM:  Having said that—Can I say one thing, Chris, on this?

MATTHEWS:  Yes, Raghida.

DERGHAM:  The fact of the matter is that right now, the Iraqis, half the Iraqis at least, if not three quarters of them, they feel the continued presence of the American forces is absolutely necessary for them so that the country does not disintegrate.  The country is out of the difficult situation because of the American presence and because of, you go, the fight against al Qaeda by the Sunnis in Iraq as well.  So I don‘t think we should rush to say that the country, that Iraq is angry with the United States no matter what.  This incident today should not blind us to the fact that a lot of Iraqis are grateful for the United States for having the country to where it is right now without Saddam Hussein.

CHANDRASEKARAN:  It‘s a grudging dependence.

MATTHEWS:  On that point, Rajiv, what would be the reaction if everybody in the Arab world pig up a newspaper tomorrow morning, everything in the world, including the Western world, pick up a newspaper tomorrow and read the vice president of the United States said we did not think it was important that they had stockpile of WMD, nuclear, chemical or biological.  They simply had the potential to do that.  Because if that is the basis of war, then there is nothing the evil Saddam Hussein could have done to prevent the war because he didn‘t have anything to burn, nothing to present.  It seemed to me we set up an ultimatum that required war.  Everything else was pretense.  Your thought, Rajiv.

CHANDRASEKARAN:  Yeah, I don‘t think Arabs picking up newspapers would be at all surprised by Cheney‘s comment and I also don‘t think that any of the neighboring countries have Iraq, their leaders would be particularly scared because they looked at what happened and how U.S. troops have, were for such a period of time, bogged down in Iraq.  That the threat that we have of using overwhelming force in that part of the world, our credibility has been quite frankly strained by what has occurred in Iraq.

But just getting to Raghida‘s earlier point there, I think that there is a grudging acceptance of U.S. forces there.  I don‘t think, yes, she is right that most Iraqis now want U.S. troops to stay because they believe it will protect them.  But that‘s the result of the deteriorating situation there.  That the Shiites feel they need Americans there to protect them from al Qaeda linked Sunni militants and vice versa.  They don‘t really want the American there but they feel it is their only option to stay alive.

MATTHEWS:  I understand that.

Thank you very much Raghida Dergham, for coming on tonight.

DERGHAM:  Thank you.

MATTHEWS:  And Rajiv Chandrasekaran.

Coming up, Barack Obama said late today that a review by his lawyer found that no one on his staff did anything improper in any conversations with Illinois Governor Rod Blagojevich.  This is as pressure mounts on Blagojevich to quit.  Republicans are hoping to get a special election out there in Illinois to pick the next senator out there, thinking the corruption scandal gives them edge in any popular vote.  The latest on the Illinois corruption case coming up next on HARDBALL.  You‘re watching it on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Barack Obama‘s chief of staff Rahm Emanuel reportedly spoke with Governor Blagojevich‘s office and provided a list of suggested candidates to fill Barack Obama‘s U.S. Senate seat.  When asked about these reports today, Barack Obama said his transition aides did nothing inappropriate.

Lynn Sweet is the Washington bureau chief of course for the “Chicago Sun-Times and Jim Warren is an MSNBC contributor.

Lynn, I want to be careful here.  Because Barack Obama‘s people did what you normally do.  Throw some name before the Blagojevich people.  Four or five names.  Tammy Duckworth, Valerie Jarrett, comptroller Dan Hynes, Representative Jan Schakowsky, Lisa Madigan, the attorney general.  Nobody said there was something improper about throwing some names before the Blagojevich people.

The question is what in terms of ethics.  What is the governing question now about whether the Barack people may have done something that doesn‘t pass muster?

LYNN SWEET, “CHICAGO SUN-TIMES”:  The question is whether or not anyone in the Obama operation knew or suspected there was a scheme at play.

MATTHEWS:  To make this appointment pay.

SWEET:  And remember for everyone out there, we don‘t know if that‘s the case.  That is one of the questions out there.

MATTHEWS:  And then the question, is Jim Warren, thank you for joining us.  Suppose somebody did get a smell that this guy, Blagojevich, who has a reputation for that smell, wanted something for this appointment.  What is the responsibility of a political person, to turn him over?  To say this guy was something for it?  I can tell he is trying to euchre some benefits personally for this or he wants a big campaign contribution.  Do you rat him out?  What are you supposed to do in politics in this case?

JIM WARREN, MSNBC CONTRIBUTOR:  That‘s a good question.  Do you step back and conclude that something illegal is going on here?  I mean, come on Chris, off the top of your head .

MATTHEWS:  I‘ll not concluding it.  I‘m asking it.

WARREN:  No, no.  I‘m saying, what does one conclude?  For instance, if candidate A in a Democratic presidential primary knows that candidate B is getting out and then he goes to candidate B and says, hey, you endorse me, I‘ll help you retire that big campaign debt of yours.  Is that illegal or is that just politics?

MATTHEWS:  I raised that question the other night I think.  You‘re talking about in that case, Hillary Clinton and Barack Obama and the fact if anybody from her campaign or whatever representing her that, can you help with us the fundraising reduction or payoff, I don‘t think that‘s illegal.

SWEET:  There is a line.

WARREN:  I absolutely agree.  I absolutely agree.

MATTHEWS:  Then it is illegal to talk about helping Blagojevich get reelected in troubling times.

SWEET:  That‘s the issue that has dragged Jesse Jackson into this thing know by his helping out with the fund-raiser for Blagojevich.  That‘s why there is so much tolerance for pay to play politics in Illinois.  Because people do a lot of fundraising for each other all the time who end up getting contract jobs, et cetera.

MATTHEWS:  Does it cross the line when Blagojevich talks with his chief of staff about getting 500,000 tangible up front.  Does that mean personal or does that mean political campaign contributions.  What does tangible mean in Chicago?

SWEET:  Well, if that happened—we don‘t know how that went down.  And if Emanuel will was there or not.  That‘s why we have to see exactly what he knows.

MATTHEWS:  Are you suggesting, Jim, what we‘re saying here is like in “Casablanca,” he can‘t believe gambling is going on here?  This is the norm of political activity.  You scratch my back, I‘ll scratch yours.  You get me the job I want, I‘ll help you raise money.  I‘ll be your financer or whatever.

WARREN:  Not when it comes .

SWEET:  That‘s how it works .

MATTHEWS:  I‘m asking Jim.

WARREN:  Not when it come to the blatant quid pro quos that are outlined in the criminal complaint.  Get me a job with this union-backed organization.  Make sure my wife can get 150 grand.  Let‘s bring Warren Buffett into this so I can help my family treasury.  No.

Among the fascinating questions, when we were listening to Obama talk about how he has done this review and he‘s totally confident, are there for instance FBI wiretaps in which Rahm Emanuel famously compulsive speed dialer, is perhaps caught talking to treated chief of staff or maybe the governor?  What does Rahm say?  What is the inflection of his voice?  There is also possibility.  I would not discount it.  That maybe Rahm Emanuel heard something that he thought was beyond the pale and maybe he moseyed on down to the federal building to talk to Patrick Fitzgerald.

You‘ll know today as opposed to the most recent Cabinet announcements.  There on the side was Rahm Emanuel and he was looking decidedly more upbeat than he was 48 or 72 hours ago when he was being chased by half the television cameras day and night in Chicago.

MATTHEWS:  He was sort of daring the press room.  Isn‘t what he was just suggesting, Jim, the defense of the Obama people, back up by the recordings that we know through the wiretaps.  That Blagojevich and his chief of staff were saying, basically, they got snubbed.  They weren‘t getting anywhere with candidate number one.  And therefore, all they were getting was appreciation.  Which is I think still legal to give somebody appreciation.

And they didn‘t like that but they were looking somewhere for money.

SWEET:  That‘s why .

WARREN:  Can I just say, Lynn .

SWEET:  Yes, Jim?

WARREN:  Right.  If I could just say, what we have here is basically, mostly a lot of secondhand stuff from the chief of staff.  But it is crystal clear, when we get into certainly post election, that for some reason, the governor of the state of Illinois is really, really frustrated with the Obama camp.  How was that signaled to him?  How was it signaled that he wouldn‘t get anything that was on his wish list.  And I can certainly conceive of Rahm Emanuel saying, sorry guys.  You are friggin‘ crazy.  You won‘t get anything like that out of us.  And maybe we‘ll hear that one day the FBI wiretaps.

MATTHEWS:  I love it.  It reminds me of Billy Green in the old ABSCAM situation where they say don‘t mess with him.  He is a Boy Scout.  It was the best endorsement of a politician anyone heard on the wiretaps.  Don‘t mess with him.  He‘s a Boy Scout.  In other words, you can‘t buy him.

SWEET:  But you just have to figure out that wheeling and dealing is OK, wheeling and dealing with an explicit quid pro quo is not OK and knowing about a scheme and not doing anything, that‘s not okay either.

MATTHEWS:  Let‘s get started.  I want Lynn to begin this.  The definition of pay to play.  Is it when you want to deal with the city government, Philadelphia, Chicago, New York, whatever, pay to play means if you want to get any city services, if you want to get any activity, any license approved, any real estate deal approved, you have to give a certain amount to the mayor or the city council.  Is that pay to play?

SWEET:  Legalized bribes are called campaign contributions.

MATTHEWS:  Is that pay to play?

SWEET:  Yes.

MATTHEWS:  Is that your definition of pay to play?  Jim?  And does it go on.

WARREN:  It might be.  He also, I think there is a whole realm mere might disgust the average American citizen that had been determined to be totally legal.  And there is a lot of horse trading that people would fine unseemly.  You give $50,000 to the campaign and low and behold know your kid has a summer job in the senator‘s office.

Is that illegal, we have decided it‘s not.

MATTHEWS:  Or an ambassadorship.

SWEET:  We‘re not disagreeing.  That‘s why at the root of all this is campaign money which has become a way, what I call legalized bribes.  It‘s a legal way to do stuff.  Look at how politicians stroke donors, the savers, who gets internships in summer offices.  It is all going to people who help them and vendor contracts, that‘s pay to play.

MATTHEWS:  When you list, Patrick Fitzgerald listed the indictment said, the complaint, rather, formally said, his complaint, Jim, it seems to me he is doing what we‘re talking about now.  For services rendered, such as a Senate seat that as vacant.  He describes that as crime.  Is it?

WARREN:  I think in some of the cases, I can see where he‘s coming from.  When you go to a chairman of a company and say, in this case a major media company, and say that if you want that $100 million in state assistance to sell your baseball stadium, you‘re going to have to can an editorial writer we don‘t like.  When it is presented that way and is essentially extortion, yes, I think that is illegal.  And some of the other stuff the devil is going to be in the details.

We‘ll see what happened with Candidate Number Five actually who we now thing is Congressman Jesse Jackson.

Clearly, Patrick Fitzgerald is being very, very purist about this and I think there are some people who might disagree and argue as they did in Scooter Libby conversations and debates as you did right here that in some ways he was an apostle of criminalizing political conduct.

MATTHEWS:  I think what we heard laugh week, we‘ve all been talking about from Patrick Fitzgerald.  He included a lot of apples and oranges.  He included a lot of quid pro quos which involve campaign contributions, but also those that included personal aggrandizement, jobs for the wife, jobs for him, sinecures created at labor unions, et cetera, et cetera which were clearly - let‘s just say probably illegal.

Anyway, Lynn Sweet, thank you, Jim Warren.

Up next, you don‘t want to miss Saturday Night Live‘s take on Blagojevich - I mispronounced his name—Blagojevich‘s corruption case in Illinois.  That‘s coming up.

Here‘s a bit of it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  First of all, senator, because it was a federal prosecutor who spiked my deal to sell the Senate seat in the first place.  And second, because if I don‘t get bailout, I swear to God, I will appoint some psycho mother (EXPLETIVE DELETED) who will tear this (EXPLETIVE DELETED) place apart.

(END VIDEO CLIP)

MATTHEWS:  Much more of that if you like it.

Coming up on the “Sideshow.”  You‘re watching HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL.  Time for the side show.  First up, this time last year, the British magazine “The Economist” went out on a limb, making some bold predictions for the year 2008, the year just now ending.  Here‘s a few cases where they now admit they didn‘t quite get it right.  The economist predicted that OPEC, the oil producing cartel, would aim to keep prices at a high of 60 to 80 dollars a barrel.  Well, they missed that one.  Oil prices got up, at one point in July this year, to 147 dollars a barrel. 

The magazine predicted that Canada would pull its troops out of Afghanistan.  It didn‘t. 

And here‘s a big one.  That right now Hillary Clinton would be on her way to the White House.  Her true destination after all the sturm and drung, of course, is the State Department.  Can‘t blame that on “The Economists.”  This time last year, Senator Hillary Clinton was more than 22 points ahead of Barack Obama.  In fact, last December 22 points ahead of Barack Obama. 

Next up, “S&L‘s” take on the scandal du jour.  During the show‘s opening skit this week, Governor Blagojevich made his pitch to Congress for some of that bailout money. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  You‘re currently facing federal charges for attempting to sell to the highest bidder the Illinois Senate seat left vacant by the election of Senator Obama.  Why do you feel entitled to a government bailout? 

UNIDENTIFIED MALE:  First of all, senator, because it was a federal prosecutor who spiked my deal to sell the Senate seat in the first place.  And second, because if I don‘t get this bailout, I swear to God, I will appoint some psycho mother (EXPLETIVE DELETED) who will tear this (EXPLETIVE DELETED) thing apart.  Believe me, I will do it and you will not be happy. 

UNIDENTIFIED FEMALE:  In my opinion, you are a disgrace to the state of Illinois.  Well, maybe not to Illinois, but you know what I‘m saying.  If were you the governor of any other state, you would be a disgrace to that state.   

UNIDENTIFIED MALE:  (EXPLETIVE DELETED) you.

(END VIDEO CLIP)

MATTHEWS:  Speaking of “S&L,” according to the Yale Book of Quotations, guess who earned quote of the year?  A while back in September, Governor Palin tried to boost her foreign policy credentials by telling ABC‘s Charlie Gibson, quote, you can actually see Russia from land here in Alaska.  But it was Tina Fey‘s parody of that line that topped Yale‘s list of 2008‘s most memorable quotes.  Here it is on “S&L.” 

(BEGIN VIDEO CLIP)

AMY POEHLER, “SATURDAY NIGHT LIVE”:  I believe that diplomacy should be the cornerstone of any foreign policy. 

TINA FEY, “SATURDAY NIGHT LIVE”:  And I can see Russia from my house. 

(END VIDEO CLIP)

MATTHEWS:  Why this quote?  Well, the editor of the list says it helped Americans realize just how inexperienced Governor Palin really was.  Other mentions on the list—here‘s something you ought to remember—

Phil Gramm‘s nation of whiners quote.  Remember that nation of whiners?  He was talking about us.  That and John McCain‘s statement which really hurt the McCain campaign, when he said, “the fundamentals of the American economy are strong.”  I remember James Carville, the raging Cajun, saying that was the end of the McCain campaign. 

By the way, it‘s official.  Barack Obama has been elected our 44th president.  The 538 members of the electoral college from all 50 states and the District of Columbia formally cast their votes today for the next president.  Of course, the process is more ceremonial than anything else, since electors normally vote the way their states voted on that first Tuesday after that first Monday in November. 

Now for tonight‘s big number.  When it comes to positions in this new administration, everyone expects a seat at the table.  Today, Politico, the political magazine, picked up on one group that may be feeling left out.  It turns out zero, count them, zero southerners have been named to the Obama cabinet so far.  Granted, that way may change, but the president-elect still has some slots to fill for now.  But at least now, zero—this is going to be heard in Dixie.  Zero southerners, zero appointees from the old confederacy have made it on to the Obama cabinet.  That hasn‘t happened going way back past the Kennedy administration.  Tonight‘s big number, zero. 

Up next, Wall Street gets a bailout.  The auto companies don‘t.  The Republican who voted down that auto bailout last week are blaming the uppers.  Do they believe bankruptcy is best for the auto makers or do they just want to bust the union?  That debate is coming up next.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

(NEWS BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Southern Republican senators voted against the auto bailout last week.  But do they believe bankruptcy is really a better path for reviving the American auto industry?  Or are they just out to bust the unions, the UAW, which is represented by the workers—or actually represents the workers in many of the northern auto manufacturers.  Bob Ehrlich is a former governor off Maryland, a former Congressman from this area.  And Ross Eisenbrey is the vice president of the Economic Policy Institute, which is a pro-labor group. 

Governor, thank you for coming on.  You have a thought, I was told, about this Blagojevich thing.  Because the Blagojevich testimony, rather the tapes, show an interest in working some kind of a deal through the Service Employees Union, with regard to picking a candidate that Barack Obama wanted to have replace him in the Senate.  What do you want to talk about in that regard? 

BOB EHRLICH, FORMER GOVERNOR OF MARYLAND:  Well, Chris, it confirms the worst suspicions everybody has about politicians.  We need to remind ourselves, not everybody works this way.  That‘s one thing. 

I think your earlier conversation was really informative.  I think people when they read this story, try to understand this story, see all the reports on this story, they need to try to categorize the allegations.   What is clearly illegal—you don‘t have to be a lawyer to understand, Chris, if the seat is for sale; you give my wife a job, I give you—it‘s pretty clear.  Parts of this story are also horse trading as well.  So I thought your attempt to delineate what‘s legal from illegal was a good conversation to have. 

And I think we need to have that conversation.  It‘s certainly going to reply out in the court of public opinion over the coming weeks. 

MATTHEWS:  Also, in the real courts, because what is legal doesn‘t get punished.  What is illegal does get punished.  That‘s the way our system works. 

(CROSS TALK)

MATTHEWS:  It is either legal or not to trade campaign contributions for some sort of advantage.  But you‘re not allowed to trade your office.  You can‘t sell a Senate seat.  I think that‘s the thinking of Fitzgerald, the prosecutor.  You can‘t sell a Senate seat.  That‘s literally selling your office.  Let me bring in—

(CROSS TALK) 

MATTHEWS:  Let me ask you about this whole question.  The way the deal went down last week, helping the auto industry; the argument was whether the UAW, led by Gettelfinger, should have recognized the need to compromise and agree to a date sometime in 2009 to equalize the pay of union and non-union workers to reduce the cost of producing a car in union shops.  They didn‘t agree.  Now it is up to the president to find some money in the bailout, the overall financial bailout money.  Who was right? 

ROSS EISENBREY, ECONOMIC POLICY INSTITUTE:  Actually, I have talked to the UAW negotiators.  They say they reached a deal with Senator Corker, and he took it back to the Republican caucus and then never returned.  That they actually had an agreement. 

MATTHEWS:  Did they agree to a date to their reduce salaries, their wages?   

EISENBREY:  He relented.  They didn‘t to have agree.  They left him with an agreement where they didn‘t to have agree to March 31, which didn‘t make any sense, since nothing was being done about dealers, suppliers, much bigger money than they were talking about in labor costs. 

MATTHEWS:  I‘m reading a lot in the papers.  I still read the broad sheet newspapers, the big ones you have to open up and read.  I‘m impressed by these full page ads attacking the union movement, going after the SEIU, going after labor for wanting to have this card check thing.  It seems like a lot of money is being spent right now to blast away at the union movement.  Do you sense that‘s true in the Republican party? 

EHRLICH:  Well, I think card check is an abomination.  Put that aside.  I hope President-Elect Obama will not push forward with card check, as un-American idea as I‘ve seen.  Getting back to the—

MATTHEWS:  Describe card check, if you will, the Employee Free Choice Act.  Explain that. 

EHRLICH:  Well, basically, it would be the end of private ballots in the union elections, in union organizing elections, which is about as un-American as you can get.  Also, Chris, I will say this, it polls horribly when Americans find out exactly that this initiative will end private ballot elections, and basically all you need will be to hand in your card, show your card as far as whether you want to listen. 

I‘m for—listen, if people want to organize, that‘s fine.  Let do it in the American way. 

MATTHEWS:  Ross, you‘re here for labor.  What does labor say about that?  You‘re here for them.   

EISENBREY:  We have card check now.  And it is up to the employer to choose whether to use card check or to insist on a secret ballot.  All this does is give the employees the choice.  Instead of letting the employer decide, it lets the employees decide. 

MATTHEWS:  Has any employer ever chosen card check. 

EISENBREY:  Yes, lots of employers.  In fact, most people who organize these days organize through card check.  So this is completely American.  The governor doesn‘t what he is talking about. 

(CROSS TALK)

EHRLICH:  With all due respect—

MATTHEWS:  Governor, do you support the labor movement? 

EHRLICH:  Here is the deal, Chris, as far as the unions -- 

MATTHEWS:  Do you support the labor movement generally? 

EHRLICH:  Do I support the labor movement or do I support labor?  I support labor.  Do I support the union bosses who represent the left wing of the Democratic party only?  No.  Put that aside, Chris.  We‘re talking about—

MATTHEWS:  We have a whole year to argue about this, guys.  Governor, thank you very much.  It‘s great to have you on.  We‘ll talk about this more.  Ross Eisenbrey, we‘ll be talking about this I‘m sure throughout the year.  Up next, is there a feud brewing between the Kennedys and the Clintons?  It‘s exciting stuff.  This is HARDBALL. 

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.  It‘s time for the politics fix.  Just one topic tonight.  Will Caroline Kennedy will be the next United States senator from the state of New York?  With us now, the strategists, Democrat Steve McMahon and Republican Todd Harris.  Todd, you first.  Caroline Kennedy put forth the news in the “New York Times” today that she is, in fact, wanting to be the next senator from New York, along with Chuck Schumer.  She wants to replace Hillary Clinton.  What do you make of the negativity we‘re getting?  Usually, when the Kennedys names are mentioned within the Democratic party, nobody squawks.  It‘s always adoration. 

TODD HARRIS, REPUBLICAN STRATEGIST:  It‘s clear that despite President-Elect Obama and Senator Clinton standing side by side, there are really some deep fissures still in their supporters.  Before Caroline Kennedy was able to make the call to Governor Paterson, you had Representative Ackerman, Representative Wiener—

MATTHEWS:  Gary Ackerman said, “I don‘t know what Caroline Kennedy‘s qualifications are, except that she has name I.D.  But so does J-Lo.” 

HARRIS:  He‘s comparing her to J-Lo.  This is someone—John McCain, Mayor Bloomberg have all come out and said that she would be a fantastic senator.  I‘m a little surprised at that the sniping at this prominent member of the Kennedy family is coming from the left. 

MATTHEWS:  Well, the Democratic side.  You call that the left, huh? 

HARRIS:  Gary Ackerman?  Yes, I would call that the left. 

MATTHEWS:  Go ahead. 

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  I‘m actually very surprised.  This is exactly the kind of thing that if Senator Clinton wanted to shut down, she could shut down very quickly.  I‘m surprised she hasn‘t done so by either sending a message to these people privately or by saying something publicly.  I mean, the notion that somebody in New York State who‘s connected to a president with no previous electoral experience might want to be a United States senator isn‘t a foreign idea to Hillary Clinton.  It shouldn‘t be a foreign idea to anybody up in New York State who watched Hillary Clinton. 

MATTHEWS:  Here‘s Anthony Wiener, of course.  He‘s very aggressive, very ambitious young congressman from Brooklyn: “I do think you have to be not only willing to milk cows at the state fair, but you‘ve got to like it or at least be very good at acting like you like it.  If she has the gift of milking cows, it‘s been utterly hidden from the people of the state of New York.”

A lot of New York City people that grew up in Manhattan, including Brooklyn, where Wiener‘s from, are not used to milking cows. 

(CROSS TALK) 

MATTHEWS:  People like that do learn how to do it for political reasons and it is not unusual.  Ed Koch wasn‘t so good at it. 

MCMAHON:  I‘ve never seen Congressman Wiener milk a cow, but I would actually like to see that. 

MATTHEWS:  Is that the new standard?  Here‘s the one I like.  Here‘s Andrew Cuomo, who is a respected guy.  He was HUD secretary under Clinton:

“I have a high opinion of her, Caroline Kennedy, but that is going to be up to the governor.” 

Here‘s a guy who benefited to a large extent, let‘s be honest, because of his famous name.  He‘s Mario Cuomo‘s son.  Mario Cuomo was a very popular governor for many years of New York.  He served 12 years.  His son was made HUD secretary.  We know the name because of his dad.  Is he in any position to question legacy appointments? 

HARRIS:  I think what you‘re seeing here—I agree with Steve that if Senator Clinton wanted to shut this down, she could and she should.  I think the feeling within the Clinton world is Clinton world—

MATTHEWS:  Look, I was down in Arkansas one time and I was giving you a hard time, because that‘s what I do, Todd, to everybody.  It is not Burmese pronunciation of Clinton.  It‘s Clinton.  That‘s how you pronounce the name.  Go ahead.  

HARRIS:  It is clear that just like Barack Obama feels that he has the right to have his voice heard for who should take his seat in the Senate, that she feels that her voice ought to be heard. 

MATTHEWS:  Fair enough.  Does she have a preference?  Apparently—we‘ll get to this later tonight, the next edition of HARDBALL tonight, but the question is does she have a preferred list?  Apparently, there was a list of five or six names that were given to Blagojevich from the Obama team, from Rahm Emanuel, to consider.  And apparently the Clinton people didn‘t have a list of people to replace Senator Clinton.  So what is the beef? 

MCMAHON:  I think there might be somebody who would be on the list that she wouldn‘t want to replace her.  That would be the person who came out with Senator Kennedy and perhaps turned the momentum in the primary campaign. 

MATTHEWS:  You mean that Potomac primary? 

MCMAHON:  What I mean is right after Nevada—

(CROSS TALK)

MCMAHON:  Senator Clinton came back and won New Hampshire, then she won Nevada.  It looked like the Clinton machine was back in force.  And Ted Kennedy stood up with Caroline and said, hold on, not so fast.  It is OK to believe in Camelot and this is the guy.  That turned the race, in my opinion.  He was the single—and she were the two single most important people, outside the campaign, that helped Barack Obama.  It is clear to me that Barack Obama would like Caroline Kennedy to get this seat.  It‘s probably clear to Governor Patterson. 

MATTHEWS:  You‘re clear on that.  You know this. 

MCMAHON:  No, I don‘t know it because they‘ve told me.  I know it because of the role she played in the campaign and the relationship she has with the president. 

MATTHEWS:  Have you heard this moment where at an event, a public event, where Ethel Kennedy, the widow of Bobby Kennedy, went up to Barack Obama and said to him, you‘re going to carry the torch now. 

HARRIS:  Yes.

MATTHEWS:  Amazing statement.  So there is a Kennedy connection with Obama.  It skips the Clintons and I think the Clintons don‘t want to be the seat warmers of the Democratic party between the Kennedys and the Obamas. 

MCMAHON:  I‘m sorry.  There is also another sort of Kennedy Senate sub text here.  That is Kerry Kennedy, Ethel Kennedy‘s daughter, used to be married to Andrew Cuomo.  They‘re divorced now and there is not a lot of love lost between the two families.  So I think Bobby Kennedy Jr. and Caroline Kennedy would love to see the Senate seat stay in the Kennedy family and not go to the person who divorced -- 

MATTHEWS:  We‘re going to talk more about this.  This is like Shakespeare, the Capulets and the Montagues.  Or the Hatfields and the McCoys.  We‘ll be right back with Steve McMahon and Todd Harris to talk more about the feudal feuding.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Steve McMahon and Todd Harris for more of the politics fix.  Let me give you a quote here.  It‘s from Anthony Wiener.  I mentioned him before.  He‘s a Brooklyn congressman, very loyal to the Clintons, of course, as most New Yorkers are.  Quote, “this isn‘t a Jihad or anything, but I would be lying to you if I said that supporters of Hillary don‘t remember where she”—that‘s Caroline Kennedy—“was in the primary.”   So there is—when you say it is not a Jihad, you mean it is a jihad. 

HARRIS:  Exactly.  You referred to this before the break as sort of feudal. 

MATTHEWS:  Feudal.

HARRIS:  And it actually is, because there is only a certain amount of political territory, political oxygen and there‘s a finite amount in any state.  If you take—you remove the Clintons and if you insert in that position someone like Caroline Kennedy, that sucks up a lot of the New York political oxygen, and it does it, as long as she‘s successful—it does it as long as she wants to have it. 

MATTHEWS:  Ever since the Clintons moved to New York, I‘ve noticed among my friends and associates an almost Yankees and Mets sense of protection of the Clintons.  Hillary and Bill Clinton are enormously popular in New York.  They‘re a sense of they‘re ours.  They chose us.  We like us.  Like Bobby Kennedy was accepted in New York when he moved to New York. 

MCMAHON:  Yes, the Kennedys are pretty popular in New York, too.  Having watched the polling data  up there for a long time, every time there‘s an open Senate seat or an open statewide office, and Robert Kennedy Jr‘s name is floated, he floats to the top. 

MATTHEWS:  I know.  He led the poll before Senator Clinton got in last time. 

MCMAHON:  So the Kennedys are very popular.  The Clintons are very popular.  I think so is Barack Obama.  He is, after all, the president of the United States.  Just because he isn‘t making his preference known doesn‘t mean that there aren‘t—

MATTHEWS:  Is this a zero sum game?  If the Kennedys win, the Clintons lose? 

MCMAHON:  Yes.

HARRIS:  Yes.  When she is done being secretary of state, if she wanted to be able to return to the Senate to have some kind of political platform, Caroline Kennedy is in that seat—my guess is that she would be popular, would not be going away any time soon.  That‘s going to box her out.

MATTHEWS:  And Caroline Kennedy, in expressing her interest in getting this job, in fact her ambition to get the Senate seat in New York, which is really dramatic, if you think about it, given her reticence to be involved in public life generally—she obviously intends to be a brass knuckles politician, to some extent, because she has to duke it out with the Republicans to hold that seat in two years.  She will be up for election. 

MCMAHON:  She will be up for election and she‘s a Kennedy.  She will have every single Kennedy.  It is a Democratic state.  She‘ll have every Kennedy that is able to campaign for her out there campaigning for her. 

MATTHEWS:  And she will not be challenged in the primary, will she? 

MCMAHON:  I don‘t think she will be challenged in the primary if she is, and she‘s the U.S. senator.  She will cross her opponent. 

HARRIS:  She will do to Senate fund raising records what Barack Obama did to presidential fund raising records.

MATTHEWS:  We‘re waiting to see if Anthony Wiener is right.  Does she know how to milk a cow?  That‘s the new standard for Brooklyn politics.  I‘m just kidding.  It‘s upstate politics.  Steve McMahon, Todd Harris, we‘ll be right back at 7:00 Eastern for another edition of HARDBALL, a live one.  Right now, it is time for “COUNTDOWN” with Keith Olbermann.

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

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