updated 1/9/2009 2:02:20 PM ET 2009-01-09T19:02:20

Guests: Jim Cramer, Gov. Jennifer Granholm, Steve McMahon, Todd Harris, Willie Brown, Heidi Harris, Michelle Bernard, Jonathan Alter

CHRIS MATTHEWS, HOST:  Going to the mattresses.  Economic action by Presidents Day.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Leading off tonight, tackling the economy.  President-elect Obama pitched his economic recovery plan today and stressed the need for urgent action.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT:  I don‘t believe it‘s too late to change course, but it will be if we don‘t take dramatic action as soon as possible.  If nothing is done, this recession could linger for years.

(END VIDEO CLIP)

MATTHEWS:  Obama spoke of bold investments in energy technology, health care, infrastructure and education, and asked Congress to work the long hours necessary to get his stimulus plan passed quickly.  Speaker Pelosi said today she‘ll get the big Obama bill through by February 16.  That‘s about a month from now.  That‘s Presidents weekend, the time of all those mattress sales.  So can Obama convince voters and Congress that the Democrats are the best stewards of this economy?  CNBC‘s Jim Cramer joins us in a minute.

And Roland Burris cleared one hurdle Senate Democrats set for him today.  He testified before Illinois legislators that there was no “pay to play” deal between him and Governor Blagojevich.  Well, doesn‘t Burris deserve to be a senator now?  And did Governor Blagojevich outfox Senate majority leader Harry Reid with this appointment?  Our strategists will be here.

Plus, Vice President Cheney.  Was he really the de facto president pulling the strings behind the scenes the last eight years?  He denies it.

(BEGIN AUDIO CLIP)

RICHARD CHENEY, VICE PRESIDENT OF THE UNITED STATES:  This whole notion that somehow I exceeded my authority here, was usurping his authority, is simply not true.  It‘s an urban legend.

(END VIDEO CLIP)

MATTHEWS:  Well, an urban legend.  We‘ll also hear what Cheney has to say about the popular characterization of him as Darth Vader.

Also, it‘s the vice presidential candidate who just won‘t go away.  In an interview for a conservative documentary, Sarah Palin took on the elite media and said she would have been treated much better if just one thing had been different.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R-AK), FMR VICE PRESIDENTIAL CND:  Had I been chosen perhaps to run as a reformer on the Democrat ticket, you would have seen an absolutely different, and I think, if you will, a much prettier profile of Sarah Palin and the Palin family and my administration.

(END VIDEO CLIP)

MATTHEWS:  It‘s called the Democratic Party, not the Democrat Party.  She also had a lot to say about Katie Couric, Tina Fey and Caroline Kennedy.  We‘ll have a lot more of that in the “Politics Fix.”

And what‘s the one item Barack Obama has decided that no modern president can be without?  Well, that‘s going to be up here in the “Sideshow.”

But first: Will Obama be able to get his huge economic recovery bill through the Congress?  Jim Cramer is the host of CNBC‘s “Mad Money.”  His new book is called “Jim Cramer‘s Real Money: Sane Investing in an Insane World.”

Speaking of an insane world, from the title of the book, a friend just called me before the show, who‘s been very smart in his investments.  He knows the economy and he is scared to death.  He worries that we‘re in a house of cards economically and all kinds of things can go wrong in the next year.

You start firing policemen, crime goes up.  Crime goes up, stores close.  Stores close, business goes down.  People don‘t get jobs back, they lose them.  They go to part-time.  They don‘t buy stuff.  Cars don‘t get sold.  Houses don‘t get sold.  When houses don‘t get sold, people lose money, big money.  He sees the thing crumbling, perhaps, if we don‘t get this big bill through the Congress.  Is it that dire, Jim Cramer?

JIM CRAMER, HOST, CNBC‘S “MAD MONEY”:  Your friend‘s dead right.  If we don‘t get this bill through and through fast, we are going to hit 10 percent unemployment.  And when we hit 10 percent unemployment, Chris, everything that your friend said happens, whether it be credit card defaults, housing defaults, nobody buys cars.  Your friend‘s dead right.  This infrastructure package, it must pass now.  We need three million jobs created within the next few months.

MATTHEWS:  OK.  We create three million jobs, a lot of them jobs in public service.  That‘s building highways, fixing highways, building roads, all this stuff that makes sense, potentially, if it‘s done right.  How does that get banks to start lending money to people in business and for consumers who need credit?  How does that get the wheels of money or money moving again, to put it bluntly?

CRAMER:  Well, we need—I know this is going to sound strange because we‘ve been thinking all our lives that this isn‘t right, but we need some inflation, basically.  We need people to feel like that whatever they buy may actually go up in value.  We need to see...

MATTHEWS:  Right.

CRAMER:  And what would happen here is that more people would stay in their homes, Chris.  This whole thing is about trying to make it so that your house stops going down in value.  Once that happens, the banks will lend, but people have to feel like they‘re not going to lose their job or there‘s a job for them.

Now, three million jobs, you can‘t do that in three months.  All the CEOs who come on my show say, Listen, this is a 2010, 2011 scenario.  But we got to get started.  And we do not have anything good going on on Main Street right now in this country.

MATTHEWS:  Oh, so you believe in reflation.  You want a little bit of Robert Mugabe, in other words, a little bit of inflation, not too much.  And I‘m serious now.

(CROSSTALK)

MATTHEWS:  ... taught for years that inflation—we‘ve been taught all our lives inflation‘s been bad.  Even Democrats have accepted that, at least nominally.  You say it‘s important that the house of your value—the value of the house at least goes up nominally every couple years, that it‘s important to the American economy because it moves people from one house to the next...

CRAMER:  Totally.

MATTHEWS:  ... it keeps selling and making money.

CRAMER:  Exactly.  We need some sort of wealth effect.  There was one other time, and I don‘t like to analogize to it because it‘s not this dire.  But between 1932 and 1936, we had tremendous deflation here.  Roosevelt saw it.  Roosevelt did the right things until he decided to get a little more fiscally conservative in ‘37 and ‘38.  We had deflation then.  It is very hard to stop.  We‘ve got to stop it now.

MATTHEWS:  Well, let‘s take a look at something that bothered me today.  I picked up “The New York Times” this morning and I saw this headline right at the top, “China losing taste for debt from the U.S.”  Now, one thing we know, China holds a lot of our paper.  The reason we can borrow a trillion dollars here to run a deficit is because countries like China buy our paper, they invest in American paper, whether it‘s T-bonds or whatever.

CRAMER:  Right.

MATTHEWS:  Are you worried that we won‘t have a market for our debt?  In other words, the American government, which was going to be the great leverager of economic recovery, won‘t be able to sell its paper?

CRAMER:  No.

MATTHEWS:  Does that scare you?

CRAMER:  No, I‘m not worried.  As a matter of fact, we had a gigantic auction today and all that chatter was around, and the auction went terrific for the federal government.

Here‘s something people don‘t talk about.  The Chinese made—they have a trillion dollars in debt.  They made a gigantic amount.  It turned out to be an unbelievable investment.  Everyone laughed at them, said, Oh, man, are they stupid to buy U.S. Treasuries.  They are up huge on it.  They have a 20 percent GDP stimulus package there.  Unlike (ph) worried about off-year elections, they‘re worried about off-year beheadings, off-year executions, off-year insurrection!  They got the gun to their head!  They got to start spending!  They need the money!  I‘m not worried about them selling.  They got to put it to work!

MATTHEWS:  I like it, the way you remind us that in China, if you blow it and you have a big responsibility, you get decapitated.  Here‘s, by the way...

CRAMER:  Well, look, that FDA guy got killed.

MATTHEWS:  ... a man with a little less at stake—a little less at stake, President-elect Barack Obama down at George Mason today, laying out his huge economic program, which if you‘re right, Jim Cramer and everybody‘s right, this is the key—this is the key to our coming back as a strong American economy.  Here he is.

(BEGIN VIDEO CLIP)

OBAMA:  It is true that we cannot depend on government alone to create jobs or long-term growth.  But at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.  Only government can break the cycle that are crippling our economy, where a lack of spending leads to lost jobs, which leads to even less spending, where an inability to lend and borrow stops growth and leads to even less credit.

(END VIDEO CLIP)

MATTHEWS:  So that‘s basic Keynes economics, Keynesian economics, Jim.  We were taught it in school.  If consumption goes down and investment goes down, if people don‘t spend money to buy stuff, if businesses don‘t invest, then the government has to make up for it.

CRAMER:  Totally.  Exactly right.  End of story.  It‘s a Keynesian situation.  He‘s doing exactly what Keynes would say to do.  There is no government—there‘s no spending without the government right here.  There‘s no lending without the government.  Those markets are completely shut down.  It‘s our last resort, but we got to use it.

MATTHEWS:  Well, one thing people can spend their money on at every

airport in America and every book store is your book, Jim Cramer.  I see it

by the way, you‘ve got a hell of a deal.  You‘re at the end of every counter, facing me at every newsstand, every airport.  “Jim Cramer‘s Real Money”—he knows how to sell books—“Sane Investing in an Insane World” by Philadelphia‘s own James Cramer.  Thank you, Jim, buddy.

CRAMER:  Thank you very much.  Good to see you.

MATTHEWS:  Thank you.  Up right now—that‘s “Mad Money,” by the way. 

It airs weeknights at 6:00 and 11:00 Eastern on CNBC.

With us now, Governor Jennifer Granholm of Michigan, one of the most troubled economies in the country.  Governor, thank you so much for joining us.  I want to give you a chance now, an unusual chance for the governor of Michigan.  Name me a really good Ford product that‘s good on gas that we should buy, and a good Chrysler product and a good GM product.  Name me the best cars we should be buying right now.

GOV. JENNIFER GRANHOLM (D), MICHIGAN:  Well, I can tell you that if you like a green car and you like it big, you can get the Tahoe.  If you like a Ford product and you want a hybrid, you can get the Escape.  If you like a General Motors product, well, we‘ve got the Volt coming out, but the Malibu is a tremendous product.  We have got all—and in fact, the auto show is next week.  You have all sorts of electric vehicles and hybrid electric vehicles coming on line which will make all Americans very proud.

MATTHEWS:  Do they still make those hot cars like Mustangs out there, the kind of cars we grew up with?  Can you still buy a hot American car that‘s fun and not...

GRANHOLM:  Yes, you can.

MATTHEWS:  ... just necessarily fuel-efficient?

GRANHOLM:  Yes, you can buy it, but it‘d be good to combine both, and that‘s what they‘re working on.

MATTHEWS:  OK, let‘s talk about this.  The president of the United States spoke today and offered up his huge plan to save our economy.  I want to show you another piece of it.  I want you to respond to it and tell us how the people of Michigan, where we buy—where the American brand is big for cars, is going to be saved by this.  Here he is, Barack Obama today down at George Mason, outlining his plan.

(BEGIN VIDEO CLIP)

OBAMA:  We‘ll put Americans to work in new jobs that pay well and can‘t be outsourced, jobs building solar panels and wind turbines, constructing fuel-efficient cars and buildings, and developing the new energy technologies that will lead to even more jobs, more savings and a cleaner, safer planet in the bargain.

(END VIDEO CLIP)

MATTHEWS:  How does the government...

GRANHOLM:  Beautiful!

MATTHEWS:  ... of the United States under Barack Obama or George Bush get us to buy fuel-efficient cars?  How does it do it?

GRANHOLM:  Well, first of all, you have to make sure that the price is the right price, right, because people aren‘t going to spend $95,000 to have a purely electric vehicle because people don‘t have the money.  So you have to be able to bring down the price of battery technology, and that means that the government has to be a partner in investing in the research and the development and the production of that battery technology.  And I hope that that‘s a piece.  I believe that that will be a piece of what Barack Obama talked about today.

But Chris, he‘s also talking about creating a whole new economic sector for—all kinds of jobs for all kinds of people, jobs in IT, jobs in building, jobs in new energy.  And that—for a state like Michigan, which has been so concentrated in manufacturing, that is like manna from heaven.  It‘s a phenomenal plan, and it‘s going to, for us, help people on the ground.  This is the Main Street bail-out.

MATTHEWS:  I just saw that movie “Grand Torino” with Clint Eastwood, about the retired auto worker who helped build those cars back in the ‘60s and ‘70s.  He was a bit ticked off by the changes in this country.  But among those changes is the economic one.  Will there be jobs, like there have been for his father and himself, the people right now in the auto industry, in the future?  Will there be enough jobs for the people that rely on those jobs, or do we have to have another field out there in Michigan of industrial opportunity?

GRANHOLM:  Well, I do think we have to diversify our economy in Michigan, and that‘s why this new energy economy‘s so important for us.

But Chris, you raise a tremendous point.  In this nation, are we going to have a robust manufacturing sector?  Are we going to build things like vehicles?  Are we going to sell off our ability to be energy-independent, at least free of fossil fuels like oil from the Middle East—are we going to give that away to international companies and not have the ability to ourselves control our own ability to be independent?  That is really the best question.

When you talk about trade policy, when you talk about manufacturing policy and investing in job creation, you better believe we are the poster child, Michigan is, for the global shift in these manufacturing jobs.  And that‘s why it‘s so exciting to have a president-elect who cares about keeping jobs and making things in America.

MATTHEWS:  Well, you know, when I grew up—I‘m older than you.  When I grew up, you could come out of high school, you could go work at a big Bud plant or a Virtal (ph) plant, a Boeing plant.  You could build planes or subway cars or train cars.  And America produced that heavy stuff, and guys and women could get those jobs and they could make enough to provide for a family with maybe just one person working outside the home.  Is that the ‘50s and ‘60s, or could that be the 21st century, as well?

GRANHOLM:  Well, I certainly think that the opportunity is there in this green economy sector.  When those guys who are building cars right now, whose jobs have gone on a slow boat to China or the Internet to India or a fast track to Mexico—if they‘re used to bending steel, if they know how to do that CNC (ph) machining, why not take that skill and be able to build wind turbines?  Why not go into a clean tech environment factory and make solar panels?  That demand is going to be huge.  Those jobs are going to be in demand, and I think they‘re going to be high-paying jobs.  So that‘s the sector that gives us a win/win both for individuals, for states, for the economy and for the planet.

MATTHEWS:  Well, you just described the light at the end of the tunnel, Governor.  I hope we can get there, and that‘s a bipartisan hope, I‘m sure, from all Americans, can we get...

GRANHOLM:  And I hope we get there soon!

MATTHEWS:  ... to that new 21st century...

GRANHOLM:  I mean, that‘s the thing.  When you were talking with Jim Cramer, it‘s got to be immediate.  We have to train people still, remember.  And if you‘re going to train people, that means you need a little bit of lead time before those jobs are created, if you‘re going to put them in there.

There‘s urgency in this moment, and that‘s why I hope that the message that Barack Obama gave today to Congress—and I believe and I hope that they‘re listening—is that it‘s got to be done, whether they work day and night, weekends to make sure...

MATTHEWS:  OK...

GRANHOLM:  ... that we can get this economic recovery under way.

MATTHEWS:  OK.  Is February 16 fast enough?  Nancy Pelosi says—the Speaker says that they can get this bill through by Presidents Day weekend.  Is that soon enough?

GRANHOLM:  I wish it were sooner.

MATTHEWS:  OK.  Thank you very much, Governor Jennifer Granholm of Michigan.

When we come back, the strategists—I mean, the political strategists—on whether Democrats should seat Roland Burris in the United States Senate.  That‘s become sort of the circus of this week.  We‘re going to get to the substance.

And later: Sarah Palin speaks.  Wait‘ll you catch this interview.  She now concedes her interview with Katie Couric was a bomb.

(BEGIN VIDEO CLIP)

PALIN:  So I knew it didn‘t go well.  I didn‘t know—I knew it didn‘t go well the first day, and then we gave her a couple of other segments after that.  And my question to the campaign was, After it didn‘t go well the first day, why were we going go back for more?

(END VIDEO CLIP)

MATTHEWS:  That‘s it, blame the handlers.  Much more.  There‘s a lot, and you won‘t want to miss it, from that interview later in the show with Sarah Palin.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Today Illinois governor Rod Blagojevich got one step closer to possible impeachment when the Illinois house panel recommended that course of action.  In other words, the impeachment committee of the Illinois legislature, according to a draft report, called for his impeachment.

And late today, Roland Burris, who Blagojevich appointed to take Barack Obama‘s Senate seat, testified before that impeachment committee.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  (INAUDIBLE) you directly or indirectly aware of a quid pro quo with the governor for the appointment of this vacant Senate seat?

ROLAND BURRIS (D), U.S. SENATOR-DESIGNATE:  No, sir.

(END VIDEO CLIP)

MATTHEWS:  Well, that‘s pretty direct.  The political strategizing involved in filling Obama‘s Senate seat has been a remarkable thing to see.  And to weigh in, we‘re joined by the strategists, Democratic strategist Steve McMahon and Republican strategist Todd Harris.

Let me ask you about this—well, let‘s take a look at how Harry Reid‘s had to deal with this.  I think this tells you a lot.  Here‘s Senator Reid.  The Senate leader was on “Meet the Press,” and then later on, catch the second bite, where he‘s talking yesterday.  There‘s a difference.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER:  There is a cloud over Blagojevich, and at this stage, a cloud over the state of Illinois.  They don‘t have a vote.  And if—as long as Blagojevich has done the appointing, it‘s really a tainted appointment.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

REID:  We know that the state of Illinois is entitled to representation, but until we remove the cloud from this Blagojevich nomination, we cannot move forward.  And I think it‘s a pretty easy hurdle to get over.

(END VIDEO CLIP)

MATTHEWS:  Well, there it was.  Is there a change?

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  Well, obviously, there‘s a change. 

I mean, the remarkable thing here is that they had a news conference early on, when they made the appointment.  Bobby Rush immediately plays the race card.  If it had been any other appointee, the question wouldn‘t have been whether he gets confirmed or not or seated or not.  It would have been an obvious answer:  No.  He appointed in a tainted process.  He doesn‘t get to sit in the United States Senate. 

Because he was an African-American, it made it difficult for Harry Reid.  And I think what you are seeing now is the fact that—that you‘re seeing that play out.  It is difficult to say no to the only African-American who might be seated in the United States Senate.

MATTHEWS:  Do you think—I‘m not sure I buy that.  What do you think, Todd? 

TODD HARRIS, REPUBLICAN STRATEGIST:  No, I—I totally agree with that. 

I think, to put all this in context, people—a lot of people aren‘t aware of this, although more are finding out.  Roland Burris is a guy who has erected his own mausoleum, a tribute to himself, in a cemetery in Chicago, where he calls himself...

MATTHEWS:  That‘s a picture of it. 

T. HARRIS:  There it is.  He calls himself a trailblazer. 

(CROSSTALK)

MCMAHON:  ... modest tombstone. 

T. HARRIS:  A small—a trailblazer for being the...

MCMAHON:  Don‘t you have one of those?  Come on, Todd.  You have one of those.

T. HARRIS:  ... the first American-African elected attorney general. 

MATTHEWS:  Your point being?

T. HARRIS:  But my point is this.

There are clearly two thing that are important to Roland Burris, Roland Burris and race.  And those two things are what combined to put Harry Reid into the bind that he‘s in.  Harry Reid has completely reversed himself. 

MATTHEWS:  What about the law here?  It seems to me that—that the appointment was made by a governor, which is required, and apparently is all that‘s required, to get somebody to the United States Senate to fill a vacancy. 

MCMAHON:  Well, it‘s not all that‘s required.  The secretary of state has to certify it.  And, of course, the United States Senate...

MATTHEWS:  He doesn‘t have to.  It‘s recommended that he do so. 

MCMAHON:  OK.  And the United States Senate has to seat the person...

MATTHEWS:  Right. 

MCMAHON:  ... or recognize the victory or the—the legitimacy of that person. 

Harry Reid very early on said, this is a product of a tainted process, and, not unlike the product of a tainted search if you‘re a police officer, that the fruit of poisonous labors get—gets excluded. 

And this is a case where, if this man was trying to do a pay-to-play, and if every other candidate...

MATTHEWS:  Well, there‘s no evidence that he was. 

MCMAHON:  No, not—not Roland Burris.  I‘m sorry.  If the governor...

(CROSSTALK)

MATTHEWS:  Yes.  But there‘s no evidence Burris did anything wrong. 

MCMAHON:  No, there‘s no evidence that Burris did anything wrong.

MATTHEWS:  OK. 

MCMAHON:  But the process is tainted.  And the person who appointed him is tainted.  And, therefore, it‘s probably—the taint gets into the Democratic Caucus if you seat him. 

But for the fact he—that he is an African-American, he absolutely would not be seated. 

MATTHEWS:  Do you believe that? 

T. HARRIS:  Yes, absolutely. 

MATTHEWS:  This was A race test? 

T. HARRIS:  Absolutely. 

I mean, 50 members, 50 Democratic senators signed a letter saying that, no matter who Blagojevich appoints, we‘re not going to seat him.  All of a sudden, he appoints Roland Burris.  Harry Reid completely changes the position.  You have all these senators changing their positions. 

MATTHEWS:  OK.  You say race was the tool of his entry, that he used race to get in the door, and he shouldn‘t have been able to do it.

Had he gone another route, had he not shown up under those umbrellas standing out in front of the Capitol lawn there, had he not pursued this aggressively, would he have gotten through? 

MCMAHON:  No. 

MATTHEWS:  Would he have been able to roll, if you will...

(CROSSTALK)

MCMAHON:  And had he been a white man, he wouldn‘t have gotten through. 

Listen, this wasn‘t something that Roland Burris did.  I don‘t blame Roland Burris at all.  Roland Burris stood there and said, you know what?  If he wants to make me a United States senator, there‘s a pretty good chance I can get there. 

Roland Burris was right.  Blagojevich was clever.  And the Democrats in the United States Senate didn‘t say what they said they were going to do.  They‘re going to seat—they‘re going to probably now seat somebody who is the product of a tainted process. 

T. HARRIS:  Roland Burris has made his entire career in elected office about race.  And as evidenced by that mausoleum, he wants to make his entire afterlife...

(CROSSTALK)

MCMAHON:  That has nothing to do with it, Todd.

T. HARRIS:  No, it does.  It does.  This is a guy whose entire self-tribute to himself is all about race. 

MATTHEWS:  OK.  Let me—let me try to get back to the Democrats here.  Was there any way out for Senator Reid and Dick Durbin, the top leaders?  If they had said, come on in, no problem, they would have looked like hacks.

MCMAHON:  They could not have done that. 

(CROSSTALK)

MATTHEWS:  If they had done that, they would have looked like hacks.

MCMAHON:  They couldn‘t have done that.  In fact, I actually think...

(CROSSTALK)

MATTHEWS:  In other words, they had no way out. 

MCMAHON:  They had no way out.  That‘s exactly right.

T. HARRIS:  No, they did. 

MATTHEWS:  What was their way out?

T. HARRIS:  Dick Durbin‘s original recommendation, which was put this to the vote of the people of Illinois, have a special election, and let‘s...

MATTHEWS:  And why didn‘t the Dems go with that? 

MCMAHON:  But that‘s not their way out.

T. HARRIS:  Because they were afraid that a Republican would pick up the seat. 

MCMAHON:  By the way, by the way, I hate...

(CROSSTALK)

MCMAHON:  I hate to agree with you, but he‘s right. 

MATTHEWS:  Is he right; the Democrats were afraid of a special election?

MCMAHON:  It is difficult for an African-American candidate in a statewide race to win election, even today, even after Barack Obama.  It would have been difficult...

MATTHEWS:  So, that you assume there would be an African-American candidate on the Democratic side if there was an election? 

MCMAHON:  Well, I think that there was a—there was a desire on the part of the Democratic Caucus, rightly so.  There was a desire on the part of the Obamas to have an African-American...

(CROSSTALK)

MATTHEWS:  ... the only African-American? 

MCMAHON:  Right.  Exactly. 

MATTHEWS:  OK, tonight, unusual, I disagree with both of you. 

(CROSSTALK)

MATTHEWS:  I think the appointment was made profoundly, formally, legally.  It was a legal appointment by a guy who‘s not been impeached, had not been indicted.  It was clean. 

(CROSSTALK)

MATTHEWS:  He did it.  And it worked.  And this guy is going to be the senator from Illinois for the next couple of years. 

(CROSSTALK)

T. HARRIS:  The fact that he accepted this appointment shows to me that he doesn‘t have the judgment to sit.  He should have done what Congressman Danny Davis did, and say no to that appointment. 

MATTHEWS:  Well, you know what his title is going to be now? 

T. HARRIS:  Senator. 

MATTHEWS:  Right. 

Thank you, Senator McMahon.

(LAUGHTER)

MATTHEWS:  I mean, Steve McMahon, Todd Harris.

(LAUGHTER)

MATTHEWS:  Up next:  What‘s the one thing president-elect Obama can‘t live without?  It‘s technology, his BlackBerry.  His security aides want him to give it up, but he‘s hanging on.  By the way, who has the number to call the guy?  That‘s the funny part.  He‘s president of the United States.  He‘s meeting with who knows who.  He get this is call on the BlackBerry. 

Or do you get a call on a BlackBerry?  You don‘t.  You get an e-mail. 

MCMAHON:  You get it from your wife. 

MATTHEWS:  OK. 

T. HARRIS:  Do you think he will get spam on the presidential BlackBerry? 

MATTHEWS:  OK.  OK.  Oh, that‘s great.  That is great. 

(LAUGHTER)

MATTHEWS:  He gets the one I get, the Canadian health drugs. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL, and time for the “Sideshow.” 

First up, do you remember Harriet Christian, the somewhat overzealous Hillary Clinton supporter?  Here‘s one of her memorable moments at that Democratic Rules Committee meeting back in May. 

(BEGIN VIDEO CLIP)

HARRIET CHRISTIAN, HILLARY CLINTON SUPPORTER:  And the Democrats are throwing the election away. For what?  An inadequate black male? 

(END VIDEO CLIP)

MATTHEWS:  Wow. 

Well, the race may be over now, but what‘s Mrs. Christian—or Mrs.  Christian—up to?  She has publicly now asked to be named to fill Senator Clinton‘s Senate seat from New York.  Christian said she represents the state‘s ordinary citizens better than Caroline Kennedy could ever hope to. 

Well, maybe she has got a case. 

Moving on, our colleague John Harwood yesterday got Barack Obama to do something politicians hardly ever want to do—in fact, never—pick the winner in an upcoming sports event.  Obama is now predicting that Florida, the University—University of Florida, will beat the University of Oklahoma during tonight‘s BCS football championship for the number-one college team. 

You think that‘s a brave pick?  Well, as the song goes, freedom‘s just another word for nothing else to lose.  Oklahoma is not exactly Obama country.  Let‘s face it.  He didn‘t win a single one of the state‘s 77 counties.  Not a single county of Oklahoma voted for Barack. 

Obama also revealed he is having trouble with one of the realities of becoming president. 

(BEGIN VIDEO CLIP)

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT:  You still got one of these in your pocket? 

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT:  You know, I actually took it out as consequence of this interview, but I‘m still clinging to my BlackBerry.  They are going to pry it out of my hands. 

(END VIDEO CLIP)

MATTHEWS:  God, are we talking Charlton Heston here, you know, the cold dead hands and all that NRA stuff?

Anyway, tomorrow night, we‘re going to announce the winner of the first ever HARDBALL award of this year, 2009.  It goes to that person who displays the combination of guts and political moxie to win not just the day, but our fondest admiration. 

We‘re going to offer this award on an irregular basis throughout the year.  I sincerely believe, when you hear the winner tomorrow night, you will realize that we have set a very high standard. 

If you think the economy is bad here, just wait you here about tonight‘s “Big Number.”

Zimbabwe has actually printed a $100 billion Zimbabwe dollar note, $100 billion dollar.  There it is.  The country‘s hyperinflation rate is the highest ever known in history.  Some economists place it around a quadrillion percent inflation, in other words.  That‘s 1,000 trillion percent.  How‘s that for perspective?

Zimbabwe‘s $100 billion note, sure to be a collector‘s item—tonight‘s “Big Number.” 

Up next:  Dick Cheney is revealing in his exit interview that he is not really Dick Cheney.  He is not the really the power behind the throne.

And, later, Sarah Palin answers the easy question she couldn‘t answer during the campaign. 

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN ®, ALASKA:  Of course I read newspapers.  I read publications.  I spend a lot of time, of course, reading our local papers and our—the highly circulated publications here in Alaska, because that‘s my job, is to know the business of Alaska and our communities, but also “USA Today,” yes, and “New York Times.” 

(END VIDEO CLIP)

MATTHEWS:  Wow.  Coming up, Sarah Palin, more than you can believe. 

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

SHARON EPPERSON, CNBC CORRESPONDENT:  I‘m Sharon Epperson with your CNBC “Market Wrap.”

Stocks closing mixed today.  The Dow Jones industrials shed 27 points, while the S&P 500 gained three, and the Nasdaq picked up almost 18. 

Major retailers cut their earnings forecast, after reporting dismal sales figures for December, among them, Wal-Mart.  Its sales actually rose, but far less than analysts expected. 

Macy‘s also cut earnings estimates, after reporting sales fell 4 percent in December.  In addition, it announced it will close 11 underperforming stores in nine states. 

Some good news from the jobs front.  First-time claims for unemployment fell unexpectedly for a second straight week, hitting a three-month low.  Still, analysts expect a jump in the nation‘s unemployment rate when the government releases its monthly jobs report tomorrow. 

And oil prices fell 93 cents, closing at $41.70 a barrel.  That‘s after oil hit $50 a barrel on Tuesday. 

That‘s it from CNBC, first in business worldwide—back to HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

Vice President Cheney was up on Capitol Hill today to preside over the official Electoral College tabulation.  Barack Obama won.  With just two days left on the job, however, the vice president is in a sharing mood. 

Here he was with CBS Radio‘s Mark Knoller. 

(BEGIN AUDIO CLIP, CBS RADIO)

RICHARD B. CHENEY, VICE PRESIDENT OF THE UNITED STATES:  I‘m going to miss it.  It‘s been an amazing experience, something I never thought I would have a chance to do.  I had served 25 years in the government, and then went off to the private sector.  And I have—I have loved being vice president.  It‘s been a great job, a fascinating time to be here. 

(END AUDIO CLIP)

MATTHEWS:  With us now is former San Francisco Mayor and Former California Assembly Speaker Willie Brown, and radio talk show host Heidi Harris, another favorite face on this show. 

What do you make—let‘s take a look.  Here‘s—I want you both to get a big piece of this before you comment.  Here‘s the vice president on who‘s been in charge over that issue of is he really the man behind the curtain. 

(BEGIN AUDIO CLIP, CBS RADIO) 

CHENEY:  Well, the notion that somehow I was pulling strings or making presidential-level decisions, I was not.  There was never any question about who was in charge.  It was George Bush. 

And that‘s the way we operated.  And this whole notion that somehow I exceeded my authority here or was usurping his authority is simply not true.  It is an urban legend.  It never happened. 

(END AUDIO CLIP)

MATTHEWS:  Heidi Harris, your thoughts on that.  Is Vice President Cheney a less strong figure than he has seemed to be?  Well, let me put it to you.  How do you react to that comment by him? 

HEIDI HARRIS, RADIO TALK SHOW HOST:  Well, listen I—I think he is being honest, I guess.

You know, I don‘t know why everybody always assumed that he was the power behind the throne, as if George Bush needed somebody to put their hand in his back and make him talk.  I don‘t know where that—where that legend came from.  And, so, Dick Cheney is just trying to refute that. 

(CROSSTALK)

MATTHEWS:  Mayor Brown, your thoughts on this?  Do you think Dick Cheney has been the guy operating?  Has he been the Geppetto here?

WILLIE BROWN (D), FORMER MAYOR OF SAN FRANCISCO:  Oh, there‘s no question about it. 

As a matter of fact, from the first time that he was given the job to find a vice presidential nominee for Mr. Bush, you recall he found himself. 

(LAUGHTER)

BROWN:  And that clearly is an indication of where his head really is, has been, and will be. 

MATTHEWS:  Heidi, what do you think?  Do you think he was smart enough to Svengali-like lead president-elect Bush into thinking he was picking, of his own volition, Dick Cheney, when, in fact, he was led to that because of a series of brilliant moves by Cheney to knock out all other contenders, including Tom Ridge, from contention? 

(LAUGHTER)

H. HARRIS:  You know what, ultimately?  You know, I don‘t know what went on behind the scenes, but—but George Bush—everybody assumes that George Bush has no ability to think for himself.

And I‘m kind of surprised that everyone assumes that.  What is that based on?  There‘s no—I don‘t understand.

MATTHEWS:  Maybe...

H. HARRIS:  Just because people think that‘s what goes on behind the scenes, you know, I don‘t—I don‘t believe it. 

MATTHEWS:  Well, maybe not, but it‘s based on—well, something. 

BROWN:  Well...

MATTHEWS:  Here‘s Dick Cheney on whether he owes any apologies to anyone. 

Here, Mayor, just a second.  You first on this one.

(BEGIN AUDIO CLIP, CBS RADIO)

CHENEY:  No, not really. 

There are moments of tension, shall we say, that occur over time.  I occasionally expressed myself rather forcefully toward some of my—my compatriots, like Pat Leahy from Vermont.  I‘m sure others did the same where I was concerned.  But I—I wouldn‘t—I wouldn‘t worry about those. 

I don‘t think they define your time in office.  Everybody occasionally feels the need to verbalize their sentiments.  And I did.  And I thought I was pretty effective at it. 

(END AUDIO CLIP)

MATTHEWS:  Well, we all know about that scene up at the president‘s desk in the Senate, Mayor Brown.  I guess he is not ready to apologize for that comment to Pat Leahy.  I don‘t know if Pat Leahy wants that apology.

What is your thought here?  He did shoot somebody by accident. 

BROWN:  I was...

MATTHEWS:  I guess he already apologized to that guy. 

BROWN:  I was going to say, first thing is, he really should apologize to that lawyer in Texas that he shot on the hunting trip.  That‘s one apology he owes. 

Number two, I think he does owe the country an apology for what he and Rumsfeld did on misleading this country and this nation and literally the world on Iraq.  I know that was not George Bush‘s base of thought.  That came from two people whom he trusted and Cheney was one of the two.  So he does owe the nation an apology for Iraq. 

MATTHEWS:  Heidi, he was G-two.  He was the intelligence chief for the White House.  He had the paper flow.  He had all the intelligence gathering responsibility.  We went into Iraq and he still says they didn‘t have the stock piles, but they had the justification for us to go to war and overtake that country.  What do you make?  Was he justly serving his country or not? 

HARRIS:  There‘s no question about the fact that if you rely on other people to bring you information, that they can pick and choose exactly what information they want you to have and to try to sway your opinion.  But, once again, I think George Bush is smarter than people give him credit for.  And whether you agree with his decision to go into Iraq or not, I don‘t think he was this little marionette.  I just don‘t. 

I think he got a lot of information from a lot of people.  And maybe some of it wasn‘t exactly correct.  But I think he ultimately made his own decision, because George Bush‘s big focus is to try to spread freedom throughout the world.  I disagree with him on some aspects of that.  But I think that was his larger focus.  He believed if we showed them the way, that they would make the entire world more free. 

BROWN:  I think you‘re absolutely—Heidi,

(CROSS TALK) 

MATTHEWS:  Go ahead.  Mayor, you‘re up.

BROWN:  Well, I think, Heidi, you are correct when you say that George Bush does have the ability to think.  But unfortunately for all of us, the supply of information will twist your thought processes. 

HARRIS:  Right. 

BROWN:  What he did was he trusted Bush—Bush trusted Cheney and he trusted Rumsfeld.  He should have known out the door that neither of those two people are worthy of trust.  That‘s where he didn‘t exercise good judgment.  The two of those guys knew that they could bamboozle Bush under those circumstances, and they did.  And they have created a problem for this nation that even as awesome as Barack Obama is, he may not be able to repair. 

HARRIS:  Well, here‘s a larger issue that nobody‘s talking about, regardless of whether you think we should have gone to Iraq or not, Dick Cheney, George Bush—and if you really think Dick Cheney was the power behind the throne, then Dick Cheney should get credit for the fact that we have not had an another attack on our soil in seven years.  That is not an accident.  There have been numerous attacks thwarted since then.  None of them have succeeded.  That is not an accident and Dick Cheney deserves credit for that, and so does the Bush administration. 

MATTHEWS:  I agree, you‘re right.  On that point, you are dead right, so far.  I hope it stays that way. 

HARRIS:  I do, too. 

MATTHEWS:  We are secure, so far.  Vice president, here he is—this is something we can all agree on, I think, Heidi, his lack of popularity.  Here he is, Vice President Cheney defending himself against all manner of folk. 

(BEGIN VIDEO CLIP)

CHENEY:  I‘m aware of that. 

UNIDENTIFIED MALE:  Are you troubled by it? 

CHENEY:  No.  It goes with the turf.  We got elected in one of the closest elections in American history in 2000.  Some people never got over that.  And then I‘ve had to, in my capacity as vice president, be actively involved in some very tough decisions that some people find controversial. 

I think we made good decisions.  I think we knew what we were doing and I think that‘s why the nation‘s been safe for the last seven and a half years. 

(END VIDEO CLIP)

MATTHEWS:  Well, he neglected to point out, Heidi—I know it‘s a small point that he got—both of them, he and George W. Bush, got fewer votes than Al Gore and Lieberman.  That‘s a small point, I know, but it‘s not just it was a close election.  He had fewer votes. 

HARRIS:  Oh, boy. 

MATTHEWS:  What do you think about his unpopularity?  Why is he detested? 

HARRIS:  You know, I think there are people on the left—go ahead. 

Me? 

BROWN:  Go ahead, Heidi. 

MATTHEWS:  To you. 

HARRIS:  I think a lot of people hate him because they think he is the power behind the throne, and they would rather hate him, I guess, than George Bush.  And Dick Cheney doesn‘t give a lot of interviews and he doesn‘t act like a game show host when he is on television.  And I guess he doesn‘t really make an attempt to ingratiate himself with a lot of people.  So if you disagree with George Bush‘s policies, it is easier to hate Dick Cheney and blame him for everything.  And I just don‘t think that‘s fair. 

Whether you like Dick Cheney or not, you can‘t blame him for everything.  And that‘s what some people are trying to do.  Yes, he‘s unpopular in a lot of polls and that‘s one of the reasons. 

MATTHEWS:  Mayor? 

BROWN:  I think his absence of popularity is rooted in his conduct.  I think the fact that he got all of the information about energy and energy policies and he held that, refused to reveal it, would not under any circumstances reveal it; I think his efforts to expand the authority of the vice presidency, as it relates to the Senate, is a foundation for people saying, what gives with this guy?  I think the whole aspect of what he has been about with reference to that outfit that contracts out and takes all of what America needs to do, Halliburton, and deals with it from his perspective—all of those things constitute the foundation of his unpopularity. 

MATTHEWS:  Well said.  Heidi, you call me a game show host? 

HARRIS:  No, I‘m not.  No, I‘m not.  There are some politicians, Chris, you and I know that—listen, I would be happy to listen to Barack Obama read the owner‘s manual of my car to me.  OK?  Because he‘s that smooth in his approach.  But there are politician who are very smooth, and Dick Cheney just doesn‘t make an effort.  I mean, I have seen him in person.  I find him to be interesting and charming, but he‘s not somebody who tries to come across that way.  And maybe that‘s something that‘s been lost on some people.  They just want someone to vilify.  And I guess he is a good target for them. 

MATTHEWS:  In other words, you agree with me; he lacks our charm factor. 

HARRIS:  He has nowhere near the charm you and I have.  That‘s right.

MATTHEWS:  OK, thank you Willie Brown.  Thank you, mayor.  Thank you, Heidi Harris from Las Vegas.  

Up next, the highlights, and there are many, of Sarah Palin‘s new interview about the media and how we covered her.  This is hot stuff and it‘s coming up here at the tail end of HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back now with the politics fix, with “Newsweek‘s” Jonathan Alter.  He‘s also the author of the new book, the great book “The Defining Moment, FDR‘s 100 Days and the Triumph of Hope.”  By the way, the book is out again because of the popularity.  The president is reading that book.  That‘s why everybody wants to read it.  And MSNBC political analyst Michelle Bernard. 

Let‘s take a look at this new interview, Sarah Palin, an interview with a documentary filmmaker about her interview with Katie Couric.  Here it is. 

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN ®, ALASKA:  I knew it didn‘t go well the first day, and then we gave her a couple of other segments after that.  And my question to the campaign was, after it didn‘t go well the first day, why were we going to go back for more?  And because however it works, you know, in that upper echelon of power brokering in the media and with spokes persons, it was told to me that, yes, we were going to go back for more.  And going back for more was not a wise decision either. 

(END VIDEO CLIP)

MATTHEWS:  There ought to be a law against politicians blaming their handlers.  What do you think, Jonathan? 

JONATHAN ALTER, “NEWSWEEK”:  This is just so lame, Chris.  I mean, why didn‘t it go well the first day?  It wasn‘t because Katie Couric was asking awful questions.  Her questions were very straight, no spin on the ball.  The problem was Sarah Palin couldn‘t answer the questions in a way that showed the knowledge that is required to be vice president and, quite possibly, president. 

So if she had decided not to go back for the rest of the interview, she would have been conceding that she simply wasn‘t qualified to be vice president if she couldn‘t answer Katie‘s questions. 

MATTHEWS:  Michelle, I want you to respond to this next one.  Here Katie Couric talked about Palin on “David Letterman” and then Palin reacted to what she said.  Let‘s take a look at the combination. 

(BEGIN VIDEO CLIP)

KATIE COURIC, “CBS EVENING NEWS”:  You know, even in the post election interviews, Dave, that she‘s done, nobody has really asked her, why didn‘t you answer that question? 

PALIN:  Because, Katie, you‘re not the center of everybody‘s universe.  Maybe that‘s why they didn‘t think to ask that question, when so many other things were to be asked.  To me, the question was more along the lines of, do you read?  What do you guys do up there?  What is it that you read?  And, perhaps, I was just too flippant in my answer back to her.  But of course I read newspapers.  I read publications.  I spend a lot of time, of course, reading our local papers, and the highly circulated publications here in Alaska, because that‘s my job.  It‘s to know the business of Alaska and our communities.  But also “USA Today,” yes and “New York Times.”

(END VIDEO CLIP)

MATTHEWS:  Who‘s right, Katie or Sarah? 

MICHELLE BERNARD, MSNBC POLITICAL ANALYST:  Clearly, there‘s no love lost between Sarah Palin and Katie Couric.  She clearly is not very happy with the interview.  She still didn‘t answer the question even when it was asked in this documentary.  I think she would have come out a little better if she would have named some of the publications and the newspapers that she actually reads. 

I don‘t know who‘s right, but obviously it did not bode well for Sarah Palin. 

MATTHEWS:  Let‘s take a look at another byte here.  More of Sarah Palin.  Here it is. 

(BEGIN VIDEO CLIP)

PALIN:  I‘ve been interested also to see how Caroline Kennedy will be handled, and if she‘ll be handled with kid gloves, or if she will be under such a microscope also.  It‘s going to be interesting to see how that plays out.  And I think that as we watch that, we will, perhaps, be able to prove that there is a class issue here also that was such a factor in the scrutiny of my candidacy versus say the scrutiny of what her candidacy may be. 

(END VIDEO CLIP)

MATTHEWS:  Good point, John? 

ALTER:  Chris, you wrote the book on Kennedy and Nixon.  This is Sarah Palin acting like kind of a Nixonian Nanook of the north.  She‘s trying to play that class argument against the Kennedys.  That goes back a long way.  It‘s had some success in American politics.  At this point, it‘s kind of comparing apples and oranges.  She was on the threshold of becoming vice president and possibly president.  Caroline Kennedy hasn‘t even been, you know, chosen yet for the U.S. Senate, as one of a hundred.  So, you know, the standards in covering them aren‘t quite comparable.  Not to mention the fact that Caroline‘s had a pretty tough press so far.  She has hardly been handled by kid gloves in the last couple weeks. 

MATTHEWS:  You‘re right.  We‘ll be right back with Jonathan Alter and Michelle Bernard for more of the Sarah Palin interview.  It‘s got a lot of stuff in it and it‘s all coming up on HARDBALL, with the politics fix at the end of the show.  You‘re watching it, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Jonathan Alter and Michelle Bernard for more of the politics fix and more of Sarah Palin.  Here she is, the governor of Alaska, talking about how the press would have treated her differently, she argues, had the case been that she was on the Democratic ticket with Barack Obama, instead of being on the ticket with McCain.  Here she is. 

(BEGIN VIDEO CLIP)

PALIN:  I think they would have loved me as a candidate, yes.  Had I been chosen, perhaps, to run as a reformer on the Democrat ticket, we would have seen an absolutely different and, I think, if you will, a much prettier profile of Sarah Palin, and the Palin family and my administration. 

(END VIDEO CLIP)

MATTHEWS:  Michelle, is there a school where they teach Republicans how to talk like that, and say things like Democrat party, Democrat—it‘s Democratic.  It‘s an adjective.  What‘s so hard about giving the Democrats their adjective? 

BERNARD:  I guess it‘s like trying to pronounce nuclear properly.  I don‘t know. 

MATTHEWS:  What do you think of that?  I think it‘s a good shot. 

BERNARD:  It‘s probably a fair shot, but I also think that if she had been running on the Democratic ticket, the Obama campaign ran a superior campaign.  It was managed well.  You did not see people turning on their own the way you did at the end of the McCain campaign.  There were all kinds of leaks about Sarah Palin being a diva, being out of control.  That would have never happened during the Obama campaign. 

For that reason, she probably would have been treated differently, not because she would have been on the Democratic ticket. 

MATTHEWS:  John, would she have gotten better treatment if she had been on the D ticket?

ALTER:  First of all, Chris, she never would have been on the Democratic ticket.  John McCain said the first requirement for his pick was that that person be qualified to step in at a moment‘s notice and deal with terrorism and all the big international issues.  So he violated his own standards.  That was also Barack Obama‘s standard for who he would put on the ticket, and he chose somebody with the requisite experience. 

If she had been—the subtext of this is that somehow Democratic candidates are treated better by the press.  Ask Bill Clinton the way he was treated by the press. 

MATTHEWS:  Ask Jimmy Carter. 

ALTER:  Ask Jimmy Carter. 

MATTHEWS:  He got terrible press.  Thank you Jonathan Alter.  Thank you Michelle Bernard.  Right now it‘s time for 1600 PENNSYLVANIA AVENUE with David Shuster.

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

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