updated 1/13/2009 4:03:49 PM ET 2009-01-13T21:03:49

CHRIS MATTHEWS, HOST:  B-Rod looks better getting impeached than the impeachers look doing it.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Leading off tonight, bread and circuses.  While the country awaits action to fight the recession and create the needed millions of jobs, the political world remained caught up in the circus surrounding Illinois Governor Blagojevich, who was today impeached by his state legislature and didn‘t much like it.

(BEGIN VIDEO CLIP)

GOV. ROD BLAGOJEVICH (D), ILLINOIS:  Let me reassert to all of you once more that I am not guilty of any criminal wrongdoing.

(END VIDEO CLIP)

MATTHEWS:  That was just one of the many things Blagojevich said at one of the most remarkable news conferences we‘ve ever seen—anyway, the most remarkable news conference since the last one he held.  There‘s something about this guy I find absolutely captivating.  We‘ll have much more of him in a minute.

Also, a more perfect stimulus package.  It‘s one thing for Barack Obama to get criticized by Republicans.  That‘s expected.  But most of the heat he‘s taking in Washington these days is from Democrats.  His stimulus plan, too timid.  His tax cuts, why now?  On a day when the government announced that another 524,000 jobs—that‘s a half—well, a half a thousand, million, whatever jobs—have been lost and the unemployment rate soared to 7.2 percent, Obama responded to the static.

(BEGIN VIDEO CLIP)

SEN. BARACK OBAMA (D-IL), PRESIDENT-ELECT:  You‘re assuming I expected it to be easy.

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS:  Well, it isn‘t.  We‘ll talk to two Democrats with very different ideas about whether Obama does, in fact, have the right plan to fix this very troubled economy.

Next, the noise continues on that eye-opening interview with Sarah Palin.  We‘ll take a look at some more of the governor‘s knocks at the media tonight.  She‘s certainly got a topic of interest for everybody here.  From friend and foe alike, everybody‘s still fascinated with that woman. 

Plus, look at the hair—I mean, well, I don‘t want to get into this. 

Everybody‘s got an opinion about Sarah Palin.

Plus later on, the “Politics Fix”—more on Rod Blagojevich.  Earlier today, the governor had answered the critical question, What do you do when you get impeached?  Go jogging, of course.  That‘s what Rod Blagojevich did this morning while the Illinois house was voting to impeach him.  Between that curious moment and his remarkable statement to reporters, our question is, Is this guy in denial about the political future, or is he crazy like a fox?

And finally, we‘ll have something new tonight, the winner of the first ever HARDBALL Award, this one for 2009.  It goes to the person who displays a combination of guts and political moxie to win not just the day but our fondest admiration.  And believe me, when you hear who the winner is, you will agree we‘ve set a very high bar.

But first, the impeachment of Governor Blagojevich.  Illinois state representative Susana Mendoza voted for impeachment today and Illinois state senator Kwame Raoul will be one of the state senators who will decide the governor‘s fate.  He holds, by the way, Barack Obama‘s old state senate seat.

Representative Mendoza, you know, when you look at the article of impeachment, with all its specifications, the first eight are simply a reprint of what prosecutor Fitzgerald listed in his complaint.  And the rest of it is sort of a bunch of stuff for the kitchen sink, all kinds of stuff about legislation with doing with flu shots and Canadian drugs, et cetera, women‘s health.

Let me ask you about those first eight items.  Have you proven the guilt of this governor of the charges laid out by the prosecutor?  Is he guilty beyond a reasonable doubt of the charges or not?

SUSANA MENDOZA (D), ILLINOIS STATE REPRESENTATIVE:  Well, keep in mind that we are not a criminal court.  We‘re an impeachment committee.  And so we do not hold the same standards or have to have to hold to the same standards that a criminal court would have to do.  He‘ll have his day in federal court, and that will come soon enough.

But the impeachment committee was charged with finding out whether there was cause, if there was cause that would merit the impeachment and the destitution (ph) of this governor.  So that is what we found overwhelmingly to be the case, given the facts that are quite explicit in that report.  The report actually exhibits egregious examples of the governor‘s misconduct in the office of the governor, and it‘s far overdue for him to leave the position.

MATTHEWS:  When did you first decide, as a representative of the people, that he should be impeached?  When did you first reach that decision?

MENDOZA:  Well, you know, I mean, we all had our comings and goings with Governor Blagojevich, and I‘ve thought for the last couple years at least that he was not doing a good job serving the people of the state of Illinois.  However, impeachment is a very, very serious...

MATTHEWS:  Who did you vote for -- - who did you vote for—who did you vote for in 2006 for governor?

MENDOZA:  Great question.  I will apologize to all Illinoisans (ph) by saying that I voted for Governor Blagojevich, but it‘s a vote that I...

MATTHEWS:  But you said “a couple of years ago,” you thought he‘d be impeached  I mean, did you vote for him at the time you thought he‘d be impeached—he should be impeached—at the same time?  Doesn‘t make sense.

MENDOZA:  No, when I voted for him, I didn‘t realize—no, obviously, I didn‘t realize that he was the horrendous governor that he is until soon after he was reelected.  That‘s when he started showing his colors.  You‘ll remember that it was right after he got elected that he announced a whole new plan that he had never talked about during his reelection campaign, terrible policies like the gross receipts tax that lost 107 to nothing, and after which time he said that it was an up day.

That‘s when we really started to doubt about the sanity of the governor...

MATTHEWS:  Yes.

MENDOZA:  ... and his position on the issues and what‘s best for the state of Illinois.

MATTHEWS:  Do you think he‘s insane?

MENDOZA:  I think he‘s out of touch with reality.

MATTHEWS:  OK.

MENDOZA:  And he‘s surrounded himself by people who are very good at telling him yes.  It‘s kind of like the emperor with his clothes.

MATTHEWS:  All right.  Well, let‘s go to the state senator...

(CROSSTALK)

MATTHEWS:  Thank you.  Thank you for your views—I mean, your assessment.  State Senator Raoul, Kwame Raoul—I‘m sorry—Mr. Raoul, let me ask you this question.  Do you have an open mind?  Do you think the guy‘s guilty, should be convicted, kicked out of office?

KWAME RAOUL (D), ILLINOIS STATE SENATOR:  I have an open mind.  In fact, it‘s my job to have an open mind.  Pursuant to article 4 section 14 of our state constitution, I as a senator and my 58 other colleagues are obligated and have the responsibility to have an open mind and to judge this—whatever‘s presented before us objectively.

MATTHEWS:  Well, you‘ve got two weeks to consider this before you go to trial in the senate.  It‘s going to take 40 of you members of the senate to convict.  Is your sense that this guy‘s on the way to being removed from office?

RAOUL:  I don‘t know.  Quite frankly, I haven‘t even looked at all of the items within the articles of impeachment.  They have yet to be delivered to the Senate.  The Senate right now—the committee that has met, they‘ve met today to draft rules for a trial within the Senate, and those rules will be presented to the body, I believe, on Monday.  And so we‘re taking this step by step.

It‘s very important that we maintain integrity in the process because this is a process that will serve as a precedent to any future such actions.  Hopefully, there won‘t be any future such actions, but in the event there‘s any sort of impeachment of any type of elected official in the future, this is a process that will serve as a precedent to that.

MATTHEWS:  Well, what did you make of the complaints by the special prosecutor, by the independent prosecutor, Mr. Fitzgerald?  He listed eight cases there where there were complaints against the governor, involving “pay to play,” largely, in terms of campaign contributions.  They‘ve all been cited as specifications in the impeachment document.  Since those charges were made publicly and they were clearly illustrated to you, do you believe they have the basis in them for conviction?

RAOUL:  You know, those are allegations and they‘re disturbing allegations, and you know, you know, I‘ve got to only—you know, as a—again, judge and juror of whatever impeachment proceeding that will come before me, I‘ve got to deal with what is strictly presented before me.  And it‘s—it‘s a very delicate process leading into that, and I admonish my colleagues who may be out there listening to be very careful as to what they say publicly because we want to treat this process with the highest integrity and we don‘t want to give any ammunition to question the process at all.

MATTHEWS:  Is “pay to play” illegal?

RAOUL:  Is “pay to play” illegal?

MATTHEWS:  Yes.  Is it illegal for you or any other politician to take money from a contributor who wants something and expects something in terms of public service?

RAOUL:  No.  That‘s certainly illegal.  You know, the term “pay to play” is a generic term that‘s been given to that, so that‘s certainly illegal.  You know, the nature of politics is that you compromise and you negotiate and things of that nature.  But giving money for what you‘re supposed to be doing as a public service is illegal.

MENDOZA:  Absolutely.

MATTHEWS:  Did anybody ever come to you and offer you a campaign contribution and say, I‘d like you to do this if I gave you the money?  Has anyone ever been transactional with you—in other words, said to you, I‘m going to give you a thousand bucks for your campaign, but let me tell you I want something done in this area?  Has that never happened to you?

RAOUL:  Never.  Absolutely not.

MATTHEWS:  Really?  Never?  Well, that‘s clean politics.  Let me ask you about the other charges against the governor, not just the ones that were specified by the independent counsel, by Mr. Fitzgerald, involving what we‘re calling “pay to play,” taking money or seeking money from people for doing what should be a public service as governor, but these things like the way in which he‘s handled matters like women‘s health, flu shots, Canadian drug purchases, flu shots, all those other various specifications.  Would you remove somebody from office for those kinds of apparently non-criminal matters?

RAOUL:  You know, removing someone from office is—should be distinguished from a criminal procedure.

MATTHEWS:  OK.

MENDOZA:  I think it‘s important, too, to note that he‘s not removed from office—he was not impeached today because he wanted to help women or he wanted to help sick people.  That‘s certainly not the basis of the charges in the report.  And the governor today, I think, just tried employing a smokescreen and playing to the potential jury pool that will considering his case when it gets to federal court.  But all of us support health care for women and we all support health care for children.

As a matter of fact, today on my floor speech, I said I would appreciate and demand the governor actually release the $8 million that are in question now in that federal complaint for Children‘s Memorial Hospital and the other specialty care pediatricians who he today in his press conference seemed to care about those sick children, but in reality, he was allegedly attempting to extort the president of the hospital for $50,000 in exchange for releasing those funds.  Those are the type of things that brought us to impeachment today, and he shouldn‘t try to confuse the people or the issue.

RAOUL:  It‘s important...

MATTHEWS:  So you believe the main charge—excuse me, Representative Mendoza.  Your main charges against him, in other words, the top eight in the specifications, what he really did to bring about your impeachment vote this morning—what he really did was all this complaint in the prosecutor‘s complaint, formal complaint, involving what looks to be taped evidence of “pay to play”?  Is that what really focused your attention and got this thing moving?

MENDOZA:  That‘s one part.  I think that‘s the part that focussed the media‘s attention, and you know, basically instigated or enticed us to move more quickly.  However, if you read the rest of the complaint—I should say the report—you will see that there‘s plenty of other instances that clearly demonstrate this governor‘s abuse of power on a day-to-day basis...

(CROSSTALK)

MENDOZA:  ... that are pretty scandalous.

MATTHEWS:  I know.  Would you have voted to impeach—would you have voted to impeach, Representative, just on the basis of what we all heard from the independent counsel?  Would that have been enough for you—regarding “pay to play”—would that have been enough?

MENDOZA:  Yes, I think it would have been enough.  And as a matter of fact, we did not even include in the report other, you know, kind of connect-the-dot situations.  For example, when he received 435 contributions of $25,000 or more, when the prior governor, who‘s also in jail, had received a maximum, the highest at that time, of 34 contributions, 8 before that, the governor before that.  So you compare 8 with one governor to 34 the next governor, and then 435 in six years from this governor of $25,000 or more.

Let me tell, Chris, that wasn‘t even included in the report.  We were extremely diligent and careful and considerate in determining the types of things that were so egregious that should be in that report.  And that is why today I proudly voted “aye” in support of Illinoisans and trying to clean up our system.  It‘s a necessity.  It‘s not a fun thing, but it needs to happen.

MATTHEWS:  So he‘s a crook.

MENDOZA:  Oh, I would say without any reasonable doubt on my end—this is Susana Mendoza‘s opinion—that he is a thief and he‘s still in the public‘s trust.

MATTHEWS:  OK.  Let me ask you, State Senator Raoul—let me ask you this question.  Do you believe, as a senator in that state, knowing the laws as you do, that Roland Burris, who has been designated by the governor, Blagojevich, as your next United States senator—should he be seated by the U.S. Senate, based on the law of Illinois?

RAOUL:  Based on the law of Illinois and based on the law of the United States of America, he should be seated as a United States senator.  I separate that from what I would have done whether I was in his shoes.  As you know, I removed my name from consideration while Governor Blagojevich held the power of appointment, and so in other words, I would not have accepted such an appointment.  But that aside, he should be seated because he was legally appointed...

MATTHEWS:  So...

RAOUL:  ... to replace Barack Obama.

MATTHEWS:  Yes.  I think in the Catholic church, we call that—it was wrongfully done, but it‘s valid nonetheless.  Thank you very much, Senator Raoul.  Thank you for joining us.  I think we have a very clear distinction.  It works even if it shouldn‘t have been done.  It‘s like when a priest isn‘t doing his job, but he‘s still a priest.  Thank you very much.  He was governor—would you agree with that, Representative Mendoza, that even though the governor did all things that you say were wrong and he‘s a crook and a thief and all those things, he was still governor at the time he made this appointment?  Do you believe that?

MENDOZA:  It is a legal appointment.  Yes, it is.  I‘m with Kwame that there is no chance I would have ever accepted an appointment of this such.  And we made a mistake thinking that there was not a human being alive in Illinois that would accept that appointment, but shame on us.

MATTHEWS:  OK, thank you very much, Representative Mendoza and State Senator Kwame Raoul.

MENDOZA:  Thank you, Chris.

MATTHEWS:  Coming up—thanks for coming on the show.  Coming up:

Barack Obama‘s been in Washington for one full work week, and already he‘s facing criticism from members of his own party.  His stimulus plan, some say it‘s too small and some say, What‘s all these tax cuts doing in here?  That‘s Republican stuff.  Is the honeymoon off to a—well, a staticky start?

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  The honeymoon seems to be a little bumpy for President-elect Obama, even with his own party.  Here‘s “The New York Times” headline today.  Quote, “Senate allies fault Obama on stimulus.”  And here‘s what an Obama adviser, the top one, I guess, on political matters, David Axelrod, said.  Quote, “Obviously, it‘s a big answer to a big problem.”  That‘s the stimulus package.  “And there‘s a lot of component parts to it.”  Mr. Axelrod said that in an interview about balky Senate Democrats.  Quote—here‘s—he said this further, “These folks are not potted plants.  They‘re elected officials, and they‘re doing their jobs.”

With us now are two elected officials who are not potted plants, two Democratic members of the United States Congress, both, well, as I said, not potted plants, Virginia‘s Jim Moran and Ohio‘s Dennis Kucinich.

REP. DENNIS KUCINICH (D), OHIO:  Thanks for the endorsement.

MATTHEWS:  Congressman Kucinich...

(CROSSTALK)

MATTHEWS:  It‘s some minimal respect for you guys.  Let me go further.  That headline in “The New York Times,” “Senate allies fault Obama on stimulus”—what is your fault that you find with it, Congressman Kucinich, with the plan as outlined?

KUCINICH:  It‘s still in process.  I‘ve talked to many members who‘ve been in negotiations.  It‘s still in process.  Of course, Democrats are concerned that the tax cuts not just become some kind of a helicopter drop of cash.  We‘ve been TARP-ed before.  We understand what happens if the money doesn‘t get back into the economy.  We want a full employment economy.  We want to get people back to work, stimulate the economy, want to support our president.  I think this is going to work out.

MATTHEWS:  So you‘re helpful that—you‘re being helpful but not holding it up.

KUCINICH:  Oh, I think that we want to make sure we‘re creating jobs.  That infrastructure component is critical.  We have to rebuild America, and that‘s a way to get people back to work.  That‘s the old-time religion going all the way back to FDR.  And remember something, Chris.  FDR really didn‘t get the New Deal in gear until he was in office a year.  We need a stimulus, but a stimulus is not really a restructuring of the economy.

MATTHEWS:  Congressman Moran, are you confident that the tax cuts are going to do the job, as well as those spending job—spending programs will do it, in getting people back to having enough money to start buying things? 

MORAN:  No, I‘m not, Chris. 

But, unless tax cuts are included, we probably can‘t get a package to President Obama as quickly as needs to be done. 

If we want to get it to him at least by the end of February at the very latest, I think we‘re going to have to have substantial tax cuts to get enough Republican support.  And, of course, there are enough fiscal Democrats—fiscally conservative Democrats who would hold it up unless they see a balance between spending and tax cuts. 

We have a concern—a number of us have a concern that, right now, part of the problem is that 95 percent of the income growth over the last eight years has gone to the wealthiest 10 percent of Americans.  That‘s—that‘s different from traditionally where you had 75 percent to 80 percent. 

And, you know, Americans have kept spending.  It‘s just that their increase in consumer spending is exactly equal to the amount they borrowed off their home values.  And now you‘ve got 40 percent of Americans that are technically bankrupt.  They owe more than they own. 

We want to get money to them, the working class, but it‘s going to be very expensive to provide full tax cuts for the top 10 percent.  That‘s basically the problem. 

Seventy-five percent of Americans pay more in payroll taxes, Social Security taxes, than they do income taxes, but I think you‘re going to have to have $300 billion of income taxes in order to grease the skids on this to get a sufficient bill to President Obama in a timely fashion. 

And as he says—and I think he‘s right—the biggest danger is that we act—that the bill be too little and too late, and that‘s why the tax package, the $300 billion is in there. 

That‘s a lot of money.  I mean, that‘s $1,000 for every man, woman and child in America.  You really have to question whether that‘s the maximum use of that much money. 

MATTHEWS:  OK, here‘s the question for both of you.  It goes back to basic economics to the hell we‘re facing right now, and I worry about it, because people that know more about the economy scare the heck out of me. 

Congressman Kucinich, I am worried that whatever we do won‘t work. 

That‘s what scares me. 

Here‘s the question:  You cut taxes by that $1,000 per family, including giving some of that money back to people who only pay payroll taxes, but pay a lot of percentage of their income—it‘s a regressive tax.  Then you do a lot in job construction.  You go out and create a couple million jobs in terms of building bridges and fixing roads in Cleveland and everywhere else. 

How does all that, even if it all works in the short run, how does that get banks to start lending people money again?  How does that get people buying cars again, buying houses again, getting the economy moving again?  How‘s it work? 

KUCINICH:  Well, you know, you‘re asking the right questions.  The fact of the matter is, with the $350 billion, the first part of the bailout, banks are hoarding the money.  There‘s still a credit freeze.

Congressmen, as I said, they don‘t want to be TARPed again.  If you look at the tax cuts, there‘s no guarantee that money is going to get back into the economy circulating because people, if you look at the retail season over Christmas, people are holding on to their money.

So what we have to do, you prime the pump of the economy.  It‘s classic economics, where you spend money on infrastructure, on housing, on health care.  It‘s the old New Deal, you know, economics.  It‘s a formula that‘s worked before and will work again. 

But you can‘t do it overnight.  A stimulus package is just part of the deal. 

And I would just say that, you know, Democrats control the Congress right now.  We have big votes in the House and we have a strong position in the Senate.  We may need a few Republican votes, but we have a package to pass—I‘m hopeful we can get some Republican support—but I don‘t think it‘s going to take $350 billion of tax cuts to do it.  And I don‘t think that‘s the wisest approach. 

MORAN:  Chris...

MATTHEWS:  Congressman, don‘t tax cuts go immediately to a family? 

The federal government can declare next week the withholding is going down.  You‘ll pay less taxes right away.  That‘s money in the economy immediately, whereas ditch-digging projects or building roads takes a long time to get the contract let, to get the tractors moving, to get people hired.  If you want to move fast, isn‘t the fastest way a tax cut? 

KUCINICH:  Well, you know, Jim or...

MATTHEWS:  Congressman Moran? 

MORAN:  Well, yes, it would seem to be.  The problem, though, Chris, is that consumers have spent 120 percent of their income on average over the last eight years.  Normally they spent 70 percent to 80 percent during most of America‘s history, 120 percent.  Now we‘re finding they‘re only spending 52 cents out of every dollar they‘re earning.  They‘re scared, so it‘s not just the banks.  It‘s the consumers. 

But we feel that, if we can get people into jobs, that jobs are even more important than tax cuts, and jobs will lay a foundation that‘s sustainable...

KUCINICH:  I would agree.

MORAN:  ... so that we‘ll have an even stronger economy in the future.  That‘s what I think we need to look at.  What can help the underpinnings of this economy, especially in communications, transportation, green technology, those kinds of things that will ensure that we‘ll have a better future for every dollar we invest today.  That will keep paying dividends. 

MATTHEWS:  Yes, my big worry is we‘re going to start cutting the number of cops, the number of libraries, the number of swimming pools...

KUCINICH:  That‘s a concern.

MATTHEWS:  ... crime‘s going to go up, crime‘s going to go up, people are going to hide in their houses, the whole economy is going to shut down.

Thank you very much, U.S. Congressmen Jim Moran and Dennis Kucinich of Cleveland.

KUCINICH:  Thanks, Chris.

MATTHEWS:  Up next, the first ever HARDBALL award, we‘re giving it to a person who has demonstrated that rare mixture of political savvy and chutzpah, a potent combination that earns, not just this coveted award, but our admiration. 

Stick around.  We‘re going to announce the first ever winner of the HARDBALL award—next in the “Sideshow,” an appropriate place to showcase that award.

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL.  Time for the “Sideshow.” 

Lots happening, as we in Washington await the inauguration.  Millions of people are coming to this capital city, all kinds of people from every walk of life, big shots, regular folks, all of them hoping for the best from this new administration, because hope is something this country needs right now. 

But here on HARDBALL, on this august night, we want to recognize another part of the human character, moxie, the political instinct and street smarts that makes a person get from A to B, to through the door that would otherwise have been closed shut, slammed shut. 

Tonight, we give the first ever HARDBALL award to a person who has just displayed that moxie, the soon-to-be-Senator and already honorable Roland Burris of the state of Illinois.  He could have slunk away when the president-elect and the Senate leadership told him he shouldn‘t come to Washington. 

He could have cowered and taken the abuse that was thrown at him for being the recipient of an appointment from a soon-to-be-impeached governor.  He didn‘t slink.  He didn‘t cower.  No, he showed up in the rain.  He stood there under those umbrellas, under the Washington downpour, and demanded what was his right. 

Let‘s watch, day to day, how this gutsy man stood up to the plate. 

(BEGIN VIDEO CLIP)

ROLAND BURRIS, FORMER ILLINOIS ATTORNEY GENERAL:  I‘m honored that I have been appointed.  And we will deal with the next step in the process. 

Well, I am not tainted, because the governor is following the Constitution.  He has appointed me.  I‘m qualified to sit in the seat. 

I will sit down and talk to Mr. Reid.  That‘s what I‘m going to tell him.  I‘m here to take my seat.

Members of the media, my name is Roland Burris, the junior senator from the state of Illinois. 

Certainly no pay to play involved, because I don‘t have no money.

My whole interest in this experience has been to be prepared, Roland, to represent my great state.  And that is my love.  That is my desire.  And, very shortly, I will have the opportunity to do that. 

(END VIDEO CLIP)

MATTHEWS:  Ladies and gentlemen, boys and girls, this is what I tell people, especially young people.  If you want something, show up and demand it.  Make the other guy or the other woman say no.  Don‘t you say no for them. 

In that spirit, and recognizing that the Senate leadership is still holding up his seating, I hereby bequeath the first ever HARDBALL award to Roland Burris, the man who teaches us all that HARDBALL lesson, that important HARDBALL lesson, don‘t be afraid to ask for what you believe is yours. 

Up next: more highlights of a new interview with Sarah Palin, where she lashes out at the mainstream media for what she says is unfair treatment of her and her family during the past campaign. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MARGARET BRENNAN, CNBC CORRESPONDENT:  I‘m Margaret Brennan with your CNBC “Market Wrap.”

Stocks falling, as the nation‘s unemployment rate hits a 16-year high.  The Dow Jones industrials average dropped 143 points on that news.  The S&P 500 closed down 19, and the Nasdaq lower by 45.

Government figures show that the economy shed 543,000 jobs in December.  That brought job losses for the year to 2.6 million.  And it also pushed the nation‘s unemployment rate up to 7.2 percent.  That‘s the highest rate since 1993. 

Meantime, airplane-maker Boeing announced it‘s going to cut 4,500 jobs.  That‘s about 3 percent of its work force.

And oil prices fell another 87 cents, closing at $40.83 a barrel. 

That‘s after touching $50 a barrel back on Tuesday. 

But, despite those falling oil prices, AAA reports that gas prices rose for the 10th straight day, inching up 2 cents, to a national average of $1.78 a gallon. 

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

MATTHEWS:  Welcome back to HARDBALL.

Alaska Governor Sarah Palin takes aim at the press in her new interview for a forthcoming conservative documentary.  The documentary is entitled “Media Malpractice: How Obama Got Elected.” 

Take a look at a piece of it. 

(BEGIN VIDEO CLIP, “MEDIA MALPRACTICE: HOW OBAMA GOT ELECTED”)

GOV. SARAH PALIN ®, ALASKA:  I heard Barack Obama state in one of his interviews on national television that his wife was off-limits, meaning family‘s off-limits.  You know, attack me.  I‘m the public official.  Come after me.  I can handle it.  And we will duke it out, if need be, but family‘s off-limits. 

I naively believed, OK, they—they respected that in him, in his demand for that to be adhered to, naively believing, oh, that must apply to all of us, right?  But it didn‘t apply. 

(END VIDEO CLIP)

MATTHEWS:  Jonathan Martin is with “The Politico,” and Ruth Marcus is with “The Washington Post.”

Jonathan, let‘s start with you. 

JONATHAN MARTIN, SENIOR POLITICAL WRITER, “THE POLITICO”:  Yes. 

MATTHEWS:  Sarah Palin, apparently, according to her staff today—I talked to them out in—in the capital out there...

MARTIN:  Right. 

MATTHEWS:  ... did this interview under the notion that it would come out in about six weeks.  It would be part of a documentary.  She would be many...

MARTIN:  Right. 

MATTHEWS:  ... one of many voices, that this wasn‘t done as some sort of provocation or distraction from the—the upcoming inauguration. 

Of course, it‘s turned out that way.  John Ziegler, the producer of the documentary, has seen his opportunity, and he‘s taken it...

MARTIN:  Right. 

MATTHEWS:  ... to exploit this thing. 

Why is this woman, who everybody in the elite thinks isn‘t for real, so much for real?  Because there‘s something here—I‘m telling you...

MARTIN:  Chris...

MATTHEWS:  ... I saw it from the beginning—that‘s real. 

MARTIN:  Chris, there is a...

MATTHEWS:  Go ahead.

MARTIN:  ... fascination with Sarah Palin that just seemingly is profound and one that is not going to end any time soon. 

As you guys know, when you talk about her on TV, it draws huge viewers.  Certainly, you know, online, folks are very interested in her. 

Chris, I think it‘s become—well, that‘s a political story, though -

and—and become more of a fascination with a sort of personality.  It‘s more of a sort of persona story now. 

MATTHEWS:  What‘s new? 

MARTIN:  Well, yes, but it‘s...

(CROSSTALK)

MATTHEWS:  Well, why is that new? 

(CROSSTALK)

MATTHEWS:  Interest...

(CROSSTALK)

MATTHEWS:  Excuse me, Jonathan.  Interest in Caroline Kennedy is a political story or is it a personality story of the daughter of an assassinated president?  That‘s the ultimate personal story. 

MARTIN:  Right. 

MATTHEWS:  Isn‘t it? 

MARTIN:  No, of course it is.  Sure. 

MATTHEWS:  So, what‘s new here? 

MARTIN:  No, look...

(CROSSTALK)

MATTHEWS:  Did you see that state legislature—legislative body in Illinois today on television?  A bunch of nondescript people, regular people, they could have been at the DMV, nothing wrong with them...

MARTIN:  Right.  Right. 

MATTHEWS:  ... but every 10,000 or 100,000 politicians, there‘s someone that comes along who‘s interesting. 

MARTIN:  Exactly. 

(CROSSTALK)

MATTHEWS:  You know, it can be somebody you like or don‘t like, like Rudy Giuliani.

MARTIN:  Right.  That‘s right. 

MATTHEWS:  It could be somebody you find eminently boring, like Mitt Romney.

MARTIN:  Right. 

MATTHEWS:  But rarely is it a person that seems interesting. 

MARTIN:  That‘s exactly right, Chris.  Love her or...

(CROSSTALK)

MATTHEWS:  Do you find her interesting as a public figure, as a person you would like to write about as a journalist? 

MARTIN:  Oh, sure, sure, absolutely. 

MATTHEWS:  OK.

MARTIN:  She—because she has a fascinating background.

And I think this is part of it, Chris, that she is different.  She‘s got a different background that is sort of unlike the typical law school, chamber of commerce, state rep track that...

MATTHEWS:  Thank you. 

MARTIN:  ... we see so often.

MATTHEWS:  You made my point. 

MARTIN:  Right. 

(CROSSTALK)

MATTHEWS:  She is not from the Jaycees, OK?

(LAUGHTER)

MARTIN:  Right.  Exactly. 

MATTHEWS:  She‘s not the class president that ran—that went to law school, that went...

MARTIN:  Sure.

MATTHEWS:  ... for Congress, and then ran for the Senate...

MARTIN:  The state rep, yes, exactly. 

MATTHEWS:  ... and we met in high school, the Bill Clintons.  There‘s millions of them. 

MARTIN:  That‘s right. 

MATTHEWS:  We met them all in school. 

MARTIN:  Sure. 

MATTHEWS:  She‘s—well, yes, let me—Ruth Marcus, one of the great columnists here in Washington.

You‘re part of the Washington world here.  This is inside the beltway, this nefarious place.  And I‘m watching on television, because everybody I work with on television agrees with me, there‘s something about her, with that—that—what do you call, windshield-wiper wave, and the three-quarter-length sleeves, and the glasses...

RUTH MARCUS, “THE WASHINGTON POST”:  And the hair.

MATTHEWS:  ... and the hair in some cases, although she‘s changed it. 

It‘s fascinating.  And the way she talks is provocative. 

MARCUS:  Well, she is authentic, I think, is the word. 

And she was incredibly compelling to watch during the campaign, both when she was doing well, like her acceptance speech at the Republican Convention...

MARTIN:  Right. 

MATTHEWS:  Yes. 

MARTIN:  ... and when she was hugely messing up. 

And I think it‘s very interesting that both she and Caroline Kennedy -

you raised Caroline Kennedy—do not come—they‘re very different people, obviously, very different backgrounds, but they are not the classic...

MARTIN:  Right. 

MARCUS:  ... high school class president always running for this. 

(CROSSTALK)

MATTHEWS:  That‘s right.   

MARCUS:  And that may be one reason with these different backgrounds that we‘re fascinated by both of them. 

MARTIN:  That‘s right. 

MATTHEWS:  I think all of us had enough of our class presidents.  Sorry—Here‘s Palin reacting to a “Saturday Night Live” clip about her daughter.  Here she is reacting to what she thinks is a below the belt shot here. 

(BEGIN VIDEO CLIP)

PALIN:  Momma grizzly rises up in me, hearing things like that.  You know, here again, cool, fine, come attack me.  But when you make a suggestion like that, that certainly attacks a kid, that kills me. 

(END VIDEO CLIP)  

MATTHEWS:  Does anybody want to remind her that John McCain‘s kids were gone after by the Bush campaign?  They went after her because she was born in Bangladesh and they made an accusation that she was somehow his illegitimate daughter or whatever.  I mean, this is not new, this Rat Pack attack on kids.  And it‘s not nice, but it isn‘t just for her.  Go ahead.  I‘m sorry, Jonathan. 

MARTIN:  I was going to say, to speak up for my fellow journalists, this is a frustration for us, when politicians complain about their families coming under the microscope, yet at the same time when they use their families for political benefit when it‘s convenient.  The fact is, she talked about her kid being in the Army who was 18 years old at every stop along the we.  And that‘s OK, because politically that‘s helpful. 

But, hey, don‘t talk about those elements of my family that are not politically helpful.  Pick it.  It‘s one or the other.  Right? 

MATTHEWS:  OK, Harry Truman once said—you guys know politics, all you guys.  Jon, you know it.  Harry Truman said “if you don‘t like the heat, stay out of the kitchen.”  but If you bring your family into the kitchen with you, are they fair game? 

MARCUS:  Sure.  I would like to speak up for the mama grizzlies of the world. 

MATTHEWS:  What‘s the yiddishism for mama grizzly. 

MARCUS:  I don‘t know, Boobi.  Look, if somebody attacks your kids, of course you are going to be very unhappy about it.  But as you say, Chris, that‘s part of the game.  I‘m sorry.  She knew—

MATTHEWS:  Is it fair? 

MARCUS:  Yes.  It‘s fair because—there are some things that are fair.  There are some things that are not fair.  We try to leave things off limit that are private.  But let‘s get serious, when you‘re pregnant, unmarried, high school daughter is there and you are the vice presidential nominee, you cannot expect people not to cover it. 

MATTHEWS:  OK.  That‘s the tough—here‘s the cutting edge question about fairness: when she accepted the vice presidential nomination and she came out of nowhere—she‘s obviously a very attractive candidate on every level.  She‘s just fascinating.  She knew her daughter was impregnated.  She knew her daughter was going to have a baby.  She knew her daughter wasn‘t married yet.  She may have known her daughter was planning to get married.  She had a fiance and all that, and a good relationship with some guy, Fine. 

But she must have been known that was going to be a target of attack.  Should she have not accepted that nomination, Jon, knowing that would be a target of attack?  Should the press have not mention it?  Where does the line get crossed here, I guess, I‘m asking?  John? 

MARTIN:  Somebody who is governor of state should be politically savvy enough, and I assume that she was, to know—and I won‘t say attack, but to know, Chris, it was at least going to be a story.  She should have known it was going to be a story and she should have been prepared for how it was going to be covered.  Now, there‘s no preparation for some of the rumors out there that came after she got the nomination.  But, look, she should have known going into this that, of course, that would have been covered here in the campaign. 

MATTHEWS:  You know, my hunch is about her, as a political property—my hunch is that she‘s the genuine article.  Whatever you think of her, I think she has reading habits.  I think she is crazy like a Fox.  I think she knows exactly what she‘s doing.  She‘s playing to the elite liberal media, if you will.  She‘s rattling the cage and it works. 

MARCUS:  I am not so sure. 

MATTHEWS:  You don‘t?  What are we doing right now? 

MARCUS:  Well—

MATTHEWS:  Are we talking about the governor of Idaho? 

MARCUS:  But look at where her approval rating.  Look at—

MATTHEWS:  It‘s about 80. 

MARCUS:  No.  When?  And look at the role that she played in the campaign.  It was not a good role for John McCain.  And that she gave this interview and she says, well, she didn‘t mean to have it come out—well, she‘s telling us that she‘s hopelessly naive.  That doesn‘t seem to be particularly—

MATTHEWS:  I think that—you think it‘s unfair to blame the handlers, the big shots? 

MARCUS:  I‘m sorry, but she‘s always blaming somebody.  She was very happy to get great press until it was bad. 

MARTIN:  Right. 

MATTHEWS:  Yes.  I work in a world where people know how to do that.  Let‘s—here‘s Sarah Palin.  Here‘s what she said about the press.  I think this is an interesting point.  She said they have would have treated her different if she were a Democrat.  Let‘s listen. 

(BEGIN VIDEO CLIP)

PALIN:  I think they would have liked me as a candidate.  Yes, 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:  Well, you never know how much of that is stylized and how much of that is brilliant politics.  When she lets her eyes go up in the air and she has this wonderful way of inflecting and slowing the cadence down, and sticking it to those criticizing her.  I think she is a pro, Jon.  I think she knows how to make her enemies look weak and make her friends love her. 

MARTIN:  I think she knows what she is doing, I think, when it comes to talking about the media, especially in this documentary.  But to answer the substance of her charge, look, she may have been treated somewhat differently.  But I‘ll tell you this, if any candidate for high office picks somebody out of the blue that the media didn‘t know anything about, you can be darn sure that all of us would have scrambled to have done a zillion investigative pieces to find out who this person is, Democrat, Republican, or otherwise. 

MATTHEWS:  OK.  We‘ll be right back with more.  But thank you Jonathan Martin.  Thank you Ruth Marcus. 

Up next, the impeachment of B-Rod, Rod Blagojevich.  How does it affect Roland Burris‘ chances to become the United States senator from Illinois?  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

GOV. ROD BLAGOJEVICH (D), ILLINOIS:  So this is not something that‘s came as a complete surprise to me.  It happened kind of fast.  But, again, kind of expected and part of the process that has essentially been the dynamic in Illinois since I was re-elected governor in November of 2006. 

(END VIDEO CLIP)

MATTHEWS:  We‘re back in time for the politics fix with New York One senior political correspondent Dominic Carter and “Chicago Tribune” Washington bureau chief Lynn Sweet. 

There‘s nothing like we‘ve ever seen today, the governor of Illinois impeached by the state legislature, acting like one of those cartoon character that keeps walking after they go off the cliff, keep walking as if there‘s no abyss below.  Lynn Sweet?  Let‘s go to the Burris case, which is more fascinating to us in Washington.  Is Roland Burris on his way to being a senator or not? 

LYNN SWEET, “THE CHICAGO SUN TIMES”:  It was a bad day for him because he‘s now in limbo.  He needs that signature from the secretary of state.  The state of Illinois said that the secretary of state doesn‘t have to do it.  And the secretary of state wanted a court order to get him out of this hell he‘s in.  Now the senators in Washington, Durbin and Reid, have been saying, we need the signature. 

MATTHEWS:  How can they be paramount, if the state that sends this man as the senator, appointed legally by the governor—how can they say that he‘s not the appointee?  How can they reject somebody sent by the state?  Can they demand that the state send somebody else? 

SWEET:  They‘re saying that it‘s their long tradition since 18-whatever.  I say that the long tradition just might have come to an end right now. 

MATTHEWS:  Yes, we used to have a tradition, Dominic, where the tallest guy always won the presidential election.  But it wasn‘t important when Nixon beat McGovern.  Traditions are traditions, are they laws? 

DOMINIC CARTER, NY-ONE:  The bottom line here is that tradition doesn‘t matter.  Lynn is correct, and I agree with her in terms of—for Burris, there are still the legal hoops for him to get through.  The bottom line is, Washington is saying—the bottom line is that without the signature from the secretary of state, it is a no go for Mr. Burris. 

MATTHEWS:  What do you think?  Why is that the case, if the state of Illinois Supreme Court says the signature‘s not required? 

CARTER:  Well, Washington Democrats, obviously, Chris, not wanting to be seen as beating up on an African-American—they are passing the buck, as of right now, back to the state.  And the bottom line is he needs this signature.  And without it, he‘s going to be in trouble.  There‘s also the issue of the cast that‘s been shadowed over him.  He may end up being a U.S. senator.  But right now, it‘s still very much up in the air. 

MATTHEWS:  So, who is the secretary of state, Jesse White‘s, boss?  In other words, politically, who does he have to worry about as his constituent, Lynn?  There‘s a guy out there hanging fire now.  Everybody‘s blaming him as the fall guy.  He could put his signature on the document right now and this would be over with, and Burris would be a senator.  The fact that he chooses not to do it, that he takes the heat, tells me he has got people behind him.  Who is behind him?

SWEET:  He comes out of the Illinois political establishment. 

MATTHEWS:  Cooke County? 

SWEET:  Cooke County.  He‘s a northsider of Chicago.  Those are the strong leaders in the state. 

MATTHEWS:  They‘re—at 3:00 in the morning, they‘re calling him saying, hang in there. 

SWEET:  I don‘t think they have to call him.  He‘s in the middle, because he‘s an African-American statewide office holder, and, unfortunately, some of the racial angle here has been putting pressure on him.  By the way, this wasn‘t the last step.  I just want to remind everybody that if the signature had gone on today, the next step would be to the Senate Rules Committee, and Burris still would have had to have had a full Senate vote.  It‘s an amendable proposition.  It would have been three fifths, so he needed Republicans.

MATTHEWS:  We‘ll be back with Dominic Carter and Lynn Sweet for more of the politics fix.  Going to talk about Blagojevich, B-Rod, we call him, who was standing up against reality today.  He‘s been impeached and he keeps walking and jogging as if nothing happened.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with New York One senior political correspondent, Dominic Carter, and the “Chicago Sun-Times‘” Lynn Sweet with more of the politics fix.  I want you to start up, Dominic, from up in New York, from your vantage point in the Big Apple there; this country awaits a new president, almost as much as it awaits Franklin Roosevelt back in 1932, in March of that year, when it was in big trouble.  We‘re in pretty big trouble now, and probably facing worse, based upon the unemployment number today, 7.2 percent, half million people thrown out of work in one month, more coming perhaps every month for the rest of the year, maybe into next year. 

Are we focusing too much on the circus and not enough on the bread, not enough on this economic issue?  Is television hard to do on the economy, explaining this stuff, this tough economy? 

CARTER:  Chris, there‘s no doubt about it, it‘s a very tough economy.  When you bring up the questions of fluff versus substance, if you‘re asking if the media is doing a good enough job of covering the substance, I think that we are.  The bottom line is bread and butter issues for Americans and whether or not they have a job.  And from my vantage point, and from the way we see it in New York, the bottom line is folks want to be able to have a job to go to.  I think the media is doing a good job of covering it. 

MATTHEWS:  Bread and circuses.  Caesar, I think thought of that phrase, back about the first century.  It seems like politics this week.  Look at it, you‘re from Chicago.  This crazy thing of Blagojevich, this crazy thing with Roland Burris, probably being nominated—being nominated, but will he get seated?  Hitchcock, it‘s exciting stuff. 

SWEET:  It is.  I think I‘m watching local news now when I‘m watching

--

MATTHEWS:  Yet, at the time, your new guy, our new guy, Barack Obama comes to time.  He‘s staying at a hotel for the next two weeks.  All hopes lie with him. 

SWEET:  It is.  Also, I mean—again, it‘s a big convergence of stories for me, the past, present, and the future here, with all this machinations, all flowing, actually, from Obama, because the part of the story that is most gripping, the selling of the Senate seat, is really what I think has caught the nation‘s imagination here, because it‘s so astounding.  The other stuff that Governor Blagojevich is accused of is pay to play graft, which we would not be spending this much time on, if it didn‘t have this other element of the Senate seat.  To put frosting on the cake, it‘s Obama‘s seat. 

MATTHEWS:  Four of the last eight governors of Illinois have gone to prison.  Will he?

SWEET:  Most likely, hard to see how he won‘t.  Part of what he did today in this press conference was I think talking to a jury pool. 

SWEET:  OK, thank you very much, Dominic Carter, up in New York, and Lynn Sweet for Chi-town.  Join us again Monday night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now it‘s time for “1600 PENNSYLVANIA AVENUE.”

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

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