updated 1/22/2009 12:51:14 PM ET 2009-01-22T17:51:14

Guest: Ron Brownstein, Roger Simon, Debbie Stabenow, Johnny Isakson, Joan

Walsh, Michael Smerconish

CHRIS MATTHEWS, HOST:  President Barack Obama starts his job.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Leading off tonight, day one of the Obama presidency, a day of opening doors unaware of what lies behind them.  So much of it was ritual, the old stuff Obama inherited from the many presidents who‘ve come before him.  It began this morning with that traditional prayer breakfast, or prayer service, rather, at the Washington National Cathedral, a relatively cold event interrupted by a few moments of religious emotion.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Someone has to stand watch and be ready to defend.  And Mr. President—tag!  You‘re it.

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS:  Then came the secular stuff.  With his first executive orders, President Obama signaled a tight ship by warning that senior White House staff, people like Rahm Emanuel and Valerie Jarrett, won‘t be getting raises in the coming years but will have their salaries frozen.  In other words, they get what they start with.  He also outlawed any lobbying of his administration once a staffer leaves the White House.

Here‘s Obama.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  What a moment we‘re in, and what an opportunity we have to change this country.  And for those of us who have been in public life before, you know, these kinds of moments come around just every so often.  The American people are really counting on us now.

(END VIDEO CLIP)

MATTHEWS:  Next, President Obama huddled with his top economic advisers to consider how to save sinking banks and to stimulate the economy.  One top adviser who was not at that meeting, however, his nominee for Treasury secretary, Tim Geithner, who apologized at his confirmation hearing today for failing to pay $34,000 in taxes earlier in the decade.  And he also sounded the alarm for a crumbling economy.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, TREASURY SECRETARY NOMINEE:  Senators, the ultimate cost of this crisis will be greater if we do not act with sufficient strength now.

(END VIDEO CLIP)

MATTHEWS:  But with all the talk about President Obama‘s giant stimulus plan, how will the thing actually work?  How will the combination of government spending and tax cuts actually kick this economy into gear?  We‘ve got CNBC‘s Jim Cramer here to explain the basics, how‘s it work.

Meanwhile, some key Republican senators shot across the bow of this administration, saying if any conflict of interest emerges between the money that former president Bill Clinton collects for his Global Initiative and Hillary Clinton‘s job as secretary of state, that conflict will be scored against the Democrats in the next elections.

We‘ll also take a look tonight at how the world covered Obama‘s inauguration in the “HARDBALL Sideshow” tonight.

And later on in the “Politics Fix,” we‘ll look at how Barack Obama‘s early decisions as president, the ones he‘s making right now, are going to be scored for or against him in the next election.

We begin tonight with “The Politico‘s” Roger Simon and Ron Brownstein of Atlantic Media.

You know, the schedule today was fascinating.  Part of it was just what all presidents do.  They go to the National Cathedral.  Here he is (INAUDIBLE) He started the morning in the Oval Office by himself for about 10 minutes, just sitting there, to read a letter, by the way, that was left behind him on the desk from former president George W. Bush.  White House chief of staff Rahm Emanuel came in later to talk about the day ahead.

Also in this morning‘s business, the president spoke with leaders of Egypt, Israel, Jordan and the Palestinian Authority.  Later, the Obamas and the Bidens attended that service over at the National Cathedral, along with the Clintons.  This afternoon, the president met with his senior staff, signed new executive orders, a couple of them, a couple of memos, and then met with his economic team and then later with his military commanders.

I guess the theme was today, I can walk and chew gum at the same time. 

I can do staff work, ethics work, economic work, religious stuff...

ROGER SIMON, POLITICO.COM:  Right.

MATTHEWS:  ... I shouldn‘t call it stuff—religious services and national security all in one day.

SIMON:  He‘s got to do it, and he‘s got to do it quickly.  I mean, if there‘s one word for this administration in its first 100 days, it‘s velocity.  He‘s got to spend his political capital.  He‘s got to do it quickly.  If there‘s one quality Americans no longer have, it‘s patience.  Nobody elects a new president to go slowly in these tough times.

And he‘s also got to organize and get his package through Congress before the Republican Party decides what it is, what it stands for again, and what it wants.  He‘s got to make his moves now.

RON BROWNSTEIN, ATLANTIC MEDIA:  I don‘t completely agree in the sense I think that the country understands—and all the polling suggests—that we are in a very difficult situation and not expected to be resolved overnight.  But having said that, I agree with Roger.  I mean, the opportunity is certainly there.

The first days of every presidency, it seems, operates on the same theme.  They try to send a message of promises made, promises kept.  They look for ways to affirm that they are going to do what they said they were going to do.  They look for early victories, executive orders that they can do, legislation that can easily be passed through Congress—for example, the expansion of children‘s health insurance for kids of the working poor.  It‘s something that was vetoed by Bush, could be on Obama‘s desk shortly.

But the opportunity for him in this initial economic revitalization bill really cannot be overstated because it really does go, Chris, as we‘ve talked about before, far beyond measures that are designed to respond to this immediate crisis, toward making an incredible long step toward laying down the foundation of what Democrats believe are the investments need for long-term growth.

So he will have the opportunity here to really put his stamp on the direction of the federal budget and federal activities to a degree that even is unusual for an incoming president.

MATTHEWS:  A moment of style here, style consciousness here.  Here‘s Barack Obama back in September, when John McCain suspended his campaign.  Remember, he suspended his campaign?  Here‘s Barack Obama responding.

(BEGIN VIDEO CLIP)

OBAMA:  Presidents are going to have to deal with more than one thing at a time.  It‘s not necessary for us to think that we can only do one thing and suspend everything else.

(END VIDEO CLIP)

MATTHEWS:  You know, it‘s interesting how—I‘m not sure it is

interesting, but clearly, somebody‘s choreographing all this.  The

president goes into the Oval Office for the first time ever and sits there

he‘s allowed to sit alone for this very ritualistic moment—and reads a letter from his predecessor, a letter which is, very much in the Hitchcock tradition, kept from us.  We‘re not supposed to know what that letter—that‘s just between the two great men of our time, Bush and Obama.

Then he makes the big phone calls to the Middle East, to Egypt, Israel, Jordan, the Palestinians, very balanced—very balanced policy there.  Then he meets for 10 minutes—then he meets with Rahm Emanuel to make sure that everybody knows who the chief of staff is, Rahm, meeting with him first.  Then the first lady comes in, and they have that sort of, So this is where you work, dear?  So What‘s it like in here?  Let‘s take a look.  You need some paintings over here.

And then he goes to this National—I‘m religious, but I just don‘t understand these sort of ecumenical “we‘re all in this together” services that end up not really saying anything about what you believe.

Ron Brownstein, it‘s very hard to decipher out of all of that what anybody in that room believes because they all are saying what they believe separately, and it‘s a strange meeting.

BROWNSTEIN:  Speaking of—speaking of deciphering, not to get too meta here, but this conversation that we‘re having is itself an expression of the reality, the new reality that any President Barack Obama finds himself in.  Eight, certainly sixteen years ago, when Bill Clinton came in, even when Bush came in, we would not be having a conversation in the afternoon of the first day about what the message is the first day sent to this extent.

He is living in a—you said, you know, Roger, there‘s no patience anymore.  And in fact, they are living in a media environment that is relentless in judging how—you know, the old Ed Koch question, How‘m I doing?  And that is something they are going to have to manage, expectations of change.

You know, you talked about him calling Middle Eastern leaders.  Even that itself is another marker of change.  President Bush famously felt that the U.S. needed to disengage from the process when he took office and spent a long time before he waded back into it.

There are—I think there‘s an overarching theme here both in the

speech yesterday and many of the things he‘s done today.  He is trying to

underscore that he is offering a change in direction.  Yes, he is talking

about inclusion and he‘s talking about building broad coalitions, but is he

whether it‘s Guantanamo, whether it‘s ethics, whether it‘s calling Middle Eastern leaders, he is trying to underscore the difference in direction and basically push off against Bush, which, in a way, helps also give him more time to get things going.

MATTHEWS:  Is this to show he‘s more engaged?  I watched—I thought

I was watching on C-Span today because it was so incremental.  I‘m watching

him over in the Old Executive Office Building, where he held that meeting

with his staff people.  First of all, he talks to Joe like—it was like -

Joe, who‘s going to do the oath of office now?  I guess you‘ll do it now. 

And then he had him—Where can I get the copy of the oath?  And then Biden has to go find a copy from some staff guy of the oath.

This is the—it was the most amazing thing to see on TV.  And then he shakes hands with each one of his staff people after swearing them in.  It was so procedural.  Is this what meta means?

BROWNSTEIN:  Yes.

MATTHEWS:  I don‘t know.  It was so procedural.  Is this to show that he has moving parts, that he can multi-task, that he‘s not this recessive president who goes and works out in the gym and then sort of disappears to the ranch in Crawford?

SIMON:  All of the above.  This is a presidency that cares about stagecraft, and Rahm Emanuel is an expert on stagecraft.  All these movements, at least to some extent, are choreographed.  They all are fraught with symbolism.

MATTHEWS:  Yes.

SIMON:  They‘re designed to deliver a message about the president and about the presidency.  And that‘s why the church service today not only was unavoidable—I mean, it‘s been done since George Washington—but it was good pictures.  It made people feel good.  And you know, perhaps it‘s not a bad idea for presidents to start with a prayer.  It‘s going to be tough enough out there.  He needs all the help he can get.

BROWNSTEIN:  You know, that clip you showed before was a real turning point in the campaign.  John McCain‘s great strength throughout the summer was the sense that people thought he was more experienced and thus better prepared to be president.  That really flipped in September because Obama seemed more emotionally prepared to be president, a first class temperament, as was said of Franklin Roosevelt.

And in many ways, a successful president—great presidents, I think, succeed in creating more reassurance than events justify, and that is something that really can‘t be taught or managed.  It‘s either there or it isn‘t.

And Obama‘s opportunity here is to get more time from the country just by the sheer calm of his presence and convincing people that he does have kind of a—he is someone who can find a pathway through this even, if it isn‘t apparent today.

MATTHEWS:  Right.  And his pathway is to read a letter from the former president, get used to the office, show the office to his first lady, to his wife, go to church for a couple of hours with a former president and with the new secretary of state and his vice president, come back, meet with his new staff people, tell them they‘re not getting a raise for the next four or eight years, swear them all in, shake hands with them, including Greg Craig and everybody there, get to know all of them from top to bottom, and then go off and meet with his economic team and then go off to meet with his national security team and build the day so that it says, I‘m in charge day to day, all day long, I can multi-task, right?

SIMON:  Bush was almost in isolation in his first days in office.  David Broder wrote a famous column a few months in saying, Where‘s the president?  He just didn‘t talk out about things.  He was not seen...

MATTHEWS:  Well, Cheney was doing all this stuff, right?

SIMON:  We want to see this president before us.  This president wants to be before us.  He wants to be talking to the American people directly.  He wants to be talking to the press.

BROWNSTEIN:  Do you remember when the crew that was apprehended by China in 2001 came back...

(CROSSTALK)

BROWNSTEIN:  Yes.  And Bush did not go.  I remember writing a column myself calling him the A-4 (ph) president in early 2001.  Obviously, events intervened there.  But yes, I think—Roger‘s right.  In a moment like this, when the country is so apprehensive and so uncertain, the presence of the president and the visibility of the president in seeming to work on a solution is important.

As I said, Obama—one of the things Obama may be able to do is create more reassurance than events would seemingly justify through the confidence in his own...

MATTHEWS:  Yes.  Well, that‘s...

BROWNSTEIN:  ... through the confidence in his own—you know, yesterday was a wonderful symbol for the twin dynamics of his presidency—huge, expectant, optimistic throngs, and a sharp decline in the stock market.  It is both the hope and the challenge right there in front of him, and both, in a way, feed off each other.

MATTHEWS:  The market came back 229 points today, by the way.  A gruesome question is, the past president who left office yesterday, George W. Bush, famously or infamously refused to go to funerals of service people killed in action in Iraq and Afghanistan, refused to let the military—anybody—let the military let photographers by to take a picture of the bodies coming home at Dover, Delaware.  There was a lot of cover-up, in a sense, of the horror of war, the cost of war in human life.

I wonder if this president‘s going to go to funerals.  I wonder if he‘s going to let people take pictures of the coffins coming home.  Is he going to let us see the cost in a transparent way, not just in dollars and accounting sheet information, but people we‘re losing in our life?

SIMON:  I think he should do both.  Ronald Reagan certainly did.  I think it‘s very important for Americans to see their president...

MATTHEWS:  Grieving.

SIMON:  Yes, exactly, grieving, grieving not only on behalf of himself and his family, but on behalf of the nation as a whole.

MATTHEWS:  Are we going to see what he‘s going to do about Iraq and Afghanistan in the days ahead?  We‘re going to talk tonight about what he‘s going to do about Gitmo.  Is he going to close it down, like the French closed down the Bastille after the French revolution?  Is he going to get that dramatic?  We‘ll see.  Will he go to the funerals.  These are questions—the doors have opened.  We don‘t know what‘s behind them right yet.

Anyway, Roger Simon, thanks very much.  Ron Brownstein, thank you.

Up next—do you make fun of human frailty?

(LAUGHTER)

MATTHEWS:  Up next: It‘s the biggest challenge facing President Obama, how to fix the economy.  What can the new president do to shore up the economy when the government‘s in the red and with joblessness going up a half million jobs lost a month and the stock market trending down until today?  It went back up a bit today.  Will that $800 billion stimulus package be enough to turn this economy around?

And how would it work?  I‘m going to ask Jim Cramer, who talks regular

Philly street corner English—I‘m going to ask him—ask him—ask him

ask him—how does this thing work?  How does this stimulus package put people back to work?  How does he get banks to start lending again, cars being sold, houses being built and sold?  I‘m going to ask him all those questions.  Common sense economics—coming back with Jim Cramer in just a minute.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  What‘s President Obama going to do to save this economy from a great depression?  Is Tim Geithner the one to help him do it?  Jim Cramer is host of CNBC‘s “Mad Money.”  He has a special show tonight called “The State of Cramer-ica.”  That‘s 6:00 and 11:00 Eastern.

Tim, (SIC) thank you for joining us.  I want you to answer the question that Denzel Washington once posed to a client.  Explain it to me as if I‘m your grandmother.  Explain to me, Mr. Cramer, exactly how cutting taxes 500 bucks to 1,000 bucks per family, creating jobs to build bridges, et cetera, et cetera, fixing roads—how does that get banks to start spending money again, lending money again?  How does that get our economy moving again?

JIM CRAMER, HOST, CNBC‘S “MAD MONEY”:  It changes psychology, Chris.  I mean, this really is in some ways an FDR moment.  People are very fearful.  People do not know where their next job‘s going to come from because they think they‘re going to lose this one.  They certainly don‘t want to spend.  Two thirds of our economy is based on spending by consumers.  We need to make them feel better, and then they‘ll take out loans and banks will feel better to give them.

MATTHEWS:  Some fellow or woman gets a $500 check from the government, a tax refund, say, two or three months from now.  What does Uncle Sammy want that person to do with that check to most stimulate the economy?

CRAMER:  They want them to go to the mall immediately.  Now, it didn‘t work last time, when President Bush did it.  I‘m not against it...

MATTHEWS:  Go to the mall, retail sales, merchandise, just regular merchandise off the shelf.

CRAMER:  Absolutely.  Because the retailers are doing terribly and because we want to start consumption.  This is the first time in many, many years, Chris, that we have a savings rate that‘s not tolerable.  I know it sounds silly because other countries are much less profligate than we are.  But suddenly, America‘s lost its desire to spend.  We got to change that.

MATTHEWS:  You mean it‘s bad to put money in the bank?

CRAMER:  We don‘t want that.  People are being a little bit too conservative.  But again, why not be worried?  I actually don‘t think that part of the plan makes sense.  Much better to give a tax credit to people who buy a home.  It‘s house price depreciation that‘s behind almost everything.

MATTHEWS:  OK.  Now, will houses stop dropping in value at some point?  In other words, a house costs 100,000 bucks when buy it, it‘s down to $75,000 now.  When‘s it going to stop dropping?

CRAMER:  We‘ve seen the only—the only two places in the country where we‘ve seen house price depreciation stop are in the “inland empire” in southern California and on the West Coast of Florida.  Both places peculiarly (ph) dropped to down 45 to 50 percent.  Once we got down there, buyers emerged.  Obviously, the rest of the country is only down 18 about percent.  We have much further to fall. 

MATTHEWS:  Houses aren‘t—aren‘t moving anywhere now, are they? 

CRAMER:  No, despite the fact that mortgage rates are incredibly low, 20-year low, and affordability of homes are very big, one, because you have to put down more down payment, and, two, because the foreclosures are still so rampant that people feel like if they buy a house and their neighbor forecloses, their property goes down. 

MATTHEWS:  OK.  Let‘s get back again.  The government gives you a tax break of 500 bucks to 1,000 bucks.  You get the money, you go to the shopping mall, you go out to whatever, the best outlets and get some good bargains on clothes.  That money goes into that store, into their coffers.  That money makes that store richer. 

How does that—and maybe they have got more clerks working on the floor because there‘s more business coming in, right? 

CRAMER:  Right. 

MATTHEWS:  So more people are making money at that store.  Maybe they increase their hours, right?

CRAMER:  Right. 

MATTHEWS:  What does that do to get the banks starting lending again? 

CRAMER:  Well, banks are not going to start lending until they feel the collateral that they‘re lending against is not going to go down. 

That‘s why this plan—that part of the plan just won‘t work.  I could stand on my head and tell you, look, I just think it‘s a stupid thing to do.  It will not start banks to lend at all.  The thing that would start banks to lend is not giving them money, is not giving the people money, is to find a way to be able to get the bad loans off their balance sheet. 

I call it the Sheila Bair plan, the FDIC. 

MATTHEWS:  Right. 

CRAMER:  She actually has a much smarter way to approach this than our treasury designate, Tim Geithner. 

MATTHEWS:  I thought that was done months ago, when the government had the bailout plan, and it authorized the government to let these big financial institutions sell off their—their—their toxic properties, their toxic assets.  I thought that was all taken care of.  But it‘s not, right?

CRAMER:  No, exactly.  Exactly. 

And another time—I know, Chris, you know me as more rough and tumble.  Another time, I would have said that Hank Paulson lied.  Now I just say maybe he made some misstatements about what he was going to do with the money. 

MATTHEWS:  OK. 

CRAMER:  But we were supposed to be buying those assets. 

MATTHEWS:  OK, speaking of which...

CRAMER:  That‘s what was supposed to happen.

MATTHEWS:  OK, Paulson, that‘s one Dartmouth grad.  What about this other Dartmouth guy, Geithner, who is up for secretary of the treasury? 

Both guys—well, this guy, the new guy, has a tax problem.  He said he made a mistake and didn‘t pay $30,000, $34,000 in taxes.  If you steal a very expensive car, that‘s called grand theft auto, and you go to jail for maybe 10 years. 

Why does a guy who cheats an his taxes, doesn‘t pay $34,000 in taxes, and says he didn‘t know about it—but it turns out that he got audited.  It turns out that he was notified that he hadn‘t been paying his Medicare and his Social Security withholding, and, even after being notified of it for a couple of years, he refused to pay back the earlier two years he also knew he hadn‘t paid. 

It‘s pretty obvious he knew he didn‘t pay Social Security and Medicare taxes in 2001 and 2002, after he was told he hadn‘t paid them in 2003 and ‘04.  I don‘t see how he can claim he don‘t know the one, having been told about the other. 

And, therefore, it‘s not an oversight.  It‘s a decision not to pay taxes.  Why would you make a guy like that secretary of the treasury? 

CRAMER:  OK, let‘s understand, I absolutely agree with everything you said.  I think it‘s disgraceful.  I think it‘s outrageous.  I think it‘s embarrassing. 

Chris, we are such in a jam, we are such in perilous a moment, we have to overlook this.  This is not a guy going to the labor secretary...

MATTHEWS:  Well, would the government ever overlook it if you did it or I did it?  Would they overlook it, as you put it, overlook it?

CRAMER:  I would be indicted tomorrow. 

(CROSSTALK)

CRAMER:  Are you kidding me?  I would be—they would perp-walk tomorrow for me. 

But we are literally in a situation where we have got to overlook these things.  I know no one wants to do that.  I would also like to know, frankly, what he had to do with some of the big bank destructions that have caused so much havoc. 

MATTHEWS:  Right. 

CRAMER:  We don‘t even spend any time doing that.  We‘re too busy with with—with his tax returns.

But we are in a jam.  I have been against this guy from day one.  But, Chris, it‘s too late.  We have got to install him.  We have got to get this bank situation solved.  We have to just accept his apology and move on. 

MATTHEWS:  Well, what about all those financial institutions in New York that went down, like Lehman Brothers, and all the—Wachovia, I mean God, and Merrill, they all went down under his watch in New York, and now we‘re saying, let‘s put him in charge nationwide. 

CRAMER:  No, look, it is—again, I know it‘s outrageous.  I wish Obama hadn‘t picked him.  I wish that he had picked Sheila Bair from the FDIC.  He didn‘t.  We are in a jam on Wall Street.  I know it‘s our own creation.

MATTHEWS:  Yes. 

CRAMER:  But Geithner has some credibility on the Street.

MATTHEWS:  OK. 

CRAMER:  And he‘s needed to get this job fixed. 

MATTHEWS:  But why is he such a mumbler and a mealymouth?  The guy, I mean, I‘m not saying he should be a shouter or anything, like you or me, but I‘m wondering, why does he have to talk like Fredo?

Why can‘t he come out when asked questions today and give clear, strong, adult answers?  I just didn‘t hear that kind of response to the questions.  He was mumbling.  And it was just—it was weak. 

CRAMER:  Totally weak.  There wasn‘t anything about the testimony that you would have to—that you could point to as being significant.

MATTHEWS:  Yes. 

CRAMER:  But, again, I mean, it is a terrible time.  Is this guy selling himself well?  No.  He‘s obviously embarrassed.  He obviously didn‘t have a clue what he‘s talking about in terms of what he did before. 

MATTHEWS:  OK. 

CRAMER:  But, Chris, look, he‘s a bad pick, but he‘s the guy we have.

MATTHEWS:  OK. 

CRAMER:  And we are in that much of a jam that we need to see this guy approved. 

MATTHEWS:  OK.  Thank you very much.  You‘re always clear in your thinking, Jim Cramer.

A special of edition, by the way, of “Mad Money: The State of Cramerica”—“Cramerica”—pronounced “Cramerica”—I figured it out—airs tonight at 6:00 and 11:00 Eastern on CNBC—“Cramerica” tonight, 6:00 and 11:00.

Up next:  Does Rush Limbaugh hate this country?  Wait until you hear what he said about the new president.  He wants him to fail.  What an amazing—I have never heard anybody say they wanted a new president to fail.  Usually, you want the new president to succeed.  And, then, later on, you argue the politics of what he or she does.  But to want him to fail at the outset, what‘s that about? 

Plus, President Obama, he has big news around the globe.  He‘s making news.  Wait until you see the headlines of the way this story‘s been played worldwide. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL.  It‘s time now for the “Sideshow.” 

Yesterday‘s presidential inauguration was watched and celebrated around the world.  Look at these overseas newspapers, from Australia, to Germany, to Barack Obama‘s—well, the birthplace of his father over there in Kenya.  The story is always about this new, young American president, a potent symbol of youthful America, and its dreams. 

Anyway, the full majesty of this week‘s swearing-in is not something we will all know for quite some time.

But it turns out that not everyone has warm wishes for the new president.  On Friday radio talk show host Rush Limbaugh said he was asked by a major print organization to offer 400 words on his hope for the Obama presidency. 

Here‘s what Rush had to say just days before the inauguration. 

(BEGIN AUDIO CLIP, “THE RUSH LIMBAUGH SHOW”) 

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  I disagree fervently with the people on our side of the aisle who have caved and who say, well, I hope he succeeds.  We have got to give him a chance. 

So, I‘m thinking of replying to the guy, say, OK, I will send you a response, but I don‘t need 400 words.  I need four:  I hope he fails. 

(END AUDIO CLIP)

MATTHEWS:  Well, Rush must have a lot of acorns squirreled away, not to share everyone else‘s hopes that the economy does come back.

And now that Hillary‘s been confirmed for secretary of state, who will take her New York Senate seat?  Well, after weeks of a very public and heated debate, Governor Paterson of New York says he has pretty much made up his mind, his decision has been pretty much made, and he will announce it this week.  The best bet, it‘s still Caroline Kennedy.

More hot speculation on that coming up later in HARDBALL tonight. 

Time now for tonight‘s “Big Number.”

A brand-new Associated Press poll has some very encouraging news for the president.  How many Americans polled just yesterday say they‘re more optimistic about the country‘s future now that Barack Obama‘s in charge?  Fifty-three percent more optimistic than the day before.  Talk about fresh political capital right out of the starting gate.  A solid majority, 53 percent of Americans, say they‘re now more optimistic about the country with Obama calling the shots -- 53 percent, tonight‘s “Big Number.” 

Up next:  Hillary Clinton is confirmed now as secretary of state, but only two people voting against her, but not without some political gamesmanship from Republicans.  They are setting up the scorecard.  Are the Republicans going to demonize Hillary and the Democrats for political gains in the next elections?  Well, one thing they‘re going to be doing, watching where the money comes from that goes to her husband over the next two years, looking out there for conflicts.

We‘re going to talk about that when we come back on HARDBALL, only on

MSNBC. 

(COMMERCIAL BREAK)

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

Stocks rallies, regaining most of yesterday‘s steep losses, with the Dow Jones industrial average surging 279 points.  The S&P 500 picked up 35, and the Nasdaq gained 66. 

Breaking news after the bell—troubled bank Citigroup has named former Time Warner chairman and CEO Dick Parsons as its new chairman.  He will succeed Sir Win Bischoff.  Meantime, many analysts are wondering whether Citi‘s CEO, Vikram Pandit, can hold on to his job. 

Also, after the close, Apple reported quarterly earnings that easily beat estimates.  Shares are soaring in the after-hours session.

Meantime, computer chipmaker Intel announced it‘s going to consolidate its operations and cut 5,000 to 6,000 jobs. 

Oil prices surged today, with crude rising $2.71, closing at $43.55 a barrel. 

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

MATTHEWS:  Welcome back to HARDBALL. 

Hillary Clinton was confirmed this afternoon as secretary of state.  Two Republicans voted against her, Louisiana‘s David Vitter and South Carolina‘s Jim DeMint. 

Joining me right now is senator Debbie Stabenow of Michigan and Johnny Isakson of Georgia. 

Senator Isakson, where are you on the issue of what standards should be applied to former President Bill Clinton‘s fund-raising globally?  What standard do you like?

SEN. JOHNNY ISAKSON ®, GEORGIA:  Well, in the hearing, I said openly I supported what ranking member Dick Lugar from Indiana said.

And that is, if a contribution of greater than $50,000 was given, that it ought to be reported at the moment it was given.  If a pledge of $50,000 came in, it should be pointed at the time it was pledged and given, and, then, lastly, if an individual made a gift of $50,000 or more, that it be reviewed by an ethics group in the State Department, just like country contributions are. 

MATTHEWS:  Well, that‘s—well, let‘s go to Senator Stabenow. 

What is your view about that?  Is that too high a standard? 

SEN. DEBBIE STABENOW (D), MICHIGAN:  Well, Chris, first of all, I should say that we‘re thrilled that she was approved with only two no-votes, only one no-vote in committee.  It‘s really terrific for the country. 

But, as far as I‘m concerned, the agreement that they came up with, which was well beyond what was required under ethics rules or legally, really meets the test.  They have gone the extra mile, President Clinton, our now Secretary of State Clinton, and the president. 

And I think they have vowed to have every transaction transparent. 

MATTHEWS:  But not transparent immediately, only reportable at the end of a year; is that right? 

STABENOW:  Well that‘s my understanding, but I think that...

MATTHEWS:  And that‘s good enough? 

STABENOW:  Well, as far as I‘m concerned, I think having those reported, I have very great trust in both our new secretary of state, as well as the president, and the administration, and President Clinton.  And so I‘m sure that they‘re going to be well above what is required. 

MATTHEWS:  Well, let‘s take a look at some other voices. 

Here‘s Senator Jim DeMint—he‘s a Republican—today.  He was one of the two senators who actually voted against the confirmation of Senator Clinton as secretary of state.  Here he is today on the Senate floor. 

(BEGIN VIDEO CLIP) 

SEN. JIM DEMINT ®, SOUTH CAROLINA:  If there is suspicion that certain nations or international players are gaining advantage by virtue of contributions to the Clinton Foundation or its initiatives, that will compromise our new secretary‘s effectiveness. 

(END VIDEO CLIP)

MATTHEWS:  Senator Isakson, that is your view?  Are you that strong on this, that you believe it compromises the effectiveness of Secretary of State Clinton? 

ISAKSON:  I voted for her confirmation because she‘s unquestionably qualified.  She did a brilliant performance at the hearing. 

My concern is that a donation to the Clinton Foundation, unreported, but discovered late at the end of a year, could retroactively cause her difficulty.  And she needs to be—does not need to be compromised in any way. 

Transparency works for Debbie and I.  We have to report every quarter the contributions that we receive.  Timely reporting is a good guarantee that you‘re not going to have anything go wrong. 

STABENOW:  You know, Chris, I‘m hopeful that—and—and completely confident—that we‘re going to see the kinds of transparency and the kinds of actions that we all want coming regarding this issue.

But I‘m also hopeful that we‘re going to focus on the fact that we have now a new secretary of state that is extraordinary.  She brings the—a wealth of experience, both from first lady, as well as here in the Senate, on Armed Services Committee. 

I will never forget being in Beijing in 1995 when she spoke out as first lady on behalf of women‘s rights against the Chinese government.  It was an extraordinary time to be an American.  And I‘m very proud of her. 

Let‘s hear one more voice here in opposition.  It‘s Senator John Cornyn, who is chairman of the Republican, well, Senatorial Committee.  His job, by the way, is to increase the number of Republican Senates in the United States Senate. 

But here he is talking about Senator Clinton and her nomination, which was effectively confirmed today, overwhelmingly, by the Senate.  Here he is opposing. 

(BEGIN VIDEO CLIP)

CORNYN:  I argued to Senator Clinton yesterday—or I didn‘t argue to her, but I explained to her my position that I thought greater transparency would make it better for her as she enters this new job as secretary of state, because any cloud or question that remains because of the lack of transparency, the lack of disclosure, really I think hurts her, and hurts the Obama administration at a time when we want to see it succeed. 

(END VIDEO CLIP)

MATTHEWS:  Senator Cornyn voted for Senator Clinton, even though he questioned the standard she had accepted.  He thinks it should be higher.  Let me ask you both about a hot issue, which is of course charming the tabloids.  You first, because you‘re a Democrat Senator Stabenow, the likelihood it seems now that one of your new colleagues will be Senator Clinton‘s replacement in New York and it could well be a Kennedy, Caroline Kennedy.  How would you like to see her join the Senate as an appointed member? 

STABENOW:  I think Caroline Kennedy is absolutely terrific.  The most important thing is that this is the governor‘s decision from New York.  But I think she certainly would meet every test. 

MATTHEWS:  Whose decision would it be if it‘s not the governor‘s?  That‘s what somebody else said the other—I‘m always wondering when people say well, it‘s the governor‘s decision. what did you mean by that?  We know that, but why would that be important to say that again? 

STABENOW:  I think it‘s important, because I can have my view, other members of the Senate can have their view. 

MATTHEWS:  Yes. 

STABENOW:  And certainly do, but it‘s the governor‘s decision ultimately.  In two years, whoever runs, the people of New York will either reaffirm or deny that decision.  So people in New York and the governor ultimately have to decide.  But she‘s certainly someone that I believe could serve in a very competent way. 

MATTHEWS:  Senator Isakson, what do you think of Jack Kennedy‘s daughter, surviving daughter as the next senator from New York? 

ISAKSON:  I think both what happened in Illinois and the controversy over this bears out the fact that we probably ought to have special elections to replace senators rather than gubernatorial appointees.  We changed the constitution.  Governors used to appoint all members of the Senate.  Then the Constitution was changed to have a popular election of the people. 

I think a popular election of the people, make sure the people have spoken.  Speaking through a governor, sometimes you end up having a controversy, which quite frankly may even be unfair to the appointee themselves, as in the case of the appointment in Illinois. 

MATTHEWS:  Actually, governors didn‘t pick senators in the past. 

State legislatures did. 

ISAKSON:  State legislatures.  I‘m sorry, state legislators.  Popular election was changed by the Constitution. 

MATTHEWS:  Right, but you think you should have it like in the House?  You can‘t replace a House member without an election.  You can‘t be an appointed member of the House.  You‘d like to see that applied to the Senate? 

ISAKSON:  I would.  And that‘s how I got to the U.S. House of Representatives. 

MATTHEWS:  Senator Stabenow, do you think that would be a better way, a more Democratic way of picking U.S. senators, to have them elected rather than appointed by governors? 

STABENOW:  You really have a combination.  In the House, they only serve for two years.  So it makes sense doing it differently.  But in the Senate, with the six-year term, I think the fact that a lot of states they have constitutions that set up the governors to make those appointments make sense, as long as they have to run within two years.  I think it‘s a good combination. 

MATTHEWS:  OK, Senators Debbie Stabenow of Michigan.  Thank you, Senator Johnny Isakson of Georgia.  Thanks for joining us. 

Up next, a look at how President Obama‘s first 100 days will be scored in the next election.  What he‘s doing right now in terms of the economy, in terms of Gitmo, in terms of all the decisions he‘s making in the next couple of days, how they‘re going to be used against him or for him.  Like if we get struck again by a terrorist, what will a decision to close Gitmo mean?  If the economy doesn‘t turn, what will the decision to spend 800 billion dollars in a stimulus package mean, if it doesn‘t work?

This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Time now for the politics fix.  We‘re going to look at the politics of what we‘ve been talking about with Michael Smerconish and Joan Walsh.  I can‘t think of a better dueling team than you two. 

Michael, happy new year.  You‘re not with Rush Limbaugh, by the way. 

You‘re not rooting for this guy‘s failure. 

MICHAEL SMERCONISH, RADIO TALK SHOW HOST:  No. 

MATTHEWS:  Smerconish, you‘re not one of these radio guys that says, gee, I hope this guy goes down in miserable defeat, because that will help me with my support group out on the highway selling stuff.  Is this your view?  Do you hope Barack fails? 

SMERCONISH:  Hell no. 

MATTHEWS:  I know because this—what is Rush Limbaugh‘s problem, rooting for the guy‘s failure?  What‘s that all about? 

SMERCONISH:  You know, unfortunately, there‘s a part of my industry that‘s sort of predicated on stirring the pot and being the opposition.  I want this guy to succeed.  I looked at those images yesterday and I feel wonderful. 

Look at that first family.  Look at those daughters.  You want to talk about the politics of this, imagine the political capital that the two daughters are going to bring to the table on behalf of the first family.  No, I want them to succeed, absolutely. 

MATTHEWS:  I just kept thinking my daddy‘s president.  I just tried to imagine what it‘s like to be one of the girls.  The bigger question to everybody is if this guy fails, the only president we have now, on the economy, taking office as it‘s going down, that‘s killing everybody.  How can you root for the failure of the only guy at the lever, at the steering wheel? 

JOAN WALSH, SALON.COM:  It‘s an outrageous thing to say, but Rush thrives on being outrageous.  Michael is a smart conservative, who I believe endorsed—we‘re going to get along for a minute. 

MATTHEWS:  Michael, I like being the (INAUDIBLE) -- what do you call them, those summer places.  Let me ask you this, if Gitmo is closed, if the prison part of Guantanamo is closed, those prisoners are taken back here for trial and they‘re given some sort of military trial; but basically the whole place is closed as a symbol and as a place to dump people you don‘t know what to do with, because you really can‘t try them, but you don‘t want to let them go; if that goes down and then we get hit again, I put to you two questions: how does this president deal with that?  Does he get blamed for softening things up by your lights?  

SMERCONISH:  OK.  My answer would be, to that question, what becomes of those prisoners?  If it‘s a scenario where they‘re turned free and they show up back on battlefields, well then there‘s going to be a political for him to pay.  I don‘t think anyone‘s talking about that scenario. 

You know, Chris, I have to remind you of something.  There‘s a lot of talk about torture of not only Khalid Sheikh Mohammed, but Mohamed al Qhatani.  Al Qhatani is the one who was taken off the list of those who was to have been tried.  This is a guy who was rejected a month in advance of September 11 in Orlando from an astute INS agent. 

What happened when we let him go?  He showed up on a battlefield outside of Tora Bora.  You‘ve got to be careful what you do.  I‘m not for this open-ended commitment of all these individuals.  By the other token, I think we need to remember exactly who we‘re dealing with. 

MATTHEWS:  Are you worried that a softer approach to prisoners, in other words, you say we‘re going to insist on not holding anybody we can‘t try, results in the release of some of these people, and they come back and hit us?  Joan? 

SMERCONISH:  I want them to be tried. 

MATTHEWS:  I want Joan Walsh to answer this question. 

WALSH:  Theoretically, of course, I worry about this, Chris.  But Michael is right.  I think we‘re not too far off on what happened today.  First of all, Barack Obama has to get his mind around—get his people around what exactly is going on there in our name.  We know that there are bad guys there.  We know there are bad guys. 

But we also know there are teenagers, like Mohammed Jawad, who has been held since he was 15, tortured and probably did nothing.  His own prosecutor quit as a prosecutor because he tried to get him released and the Bush administration would not release the kid.  That‘s what‘s going on in our name.  That‘s what Barack Obama wants to stop. 

For every young person like that—there are probably ten young people like that for every one bad guy. 

MATTHEWS:  If this guy doesn‘t—the new president, not this guy—

President Obama doesn‘t close Gitmo, will he face a fire storm from supporters? 

WALSH:  Yes, he will.

MATTHEWS:  He has to do it. 

WALSH:  He has to do it.  He may do it too slowly for some real strict civil libertarians.  There was a lot of concern about some statements he made a couple weeks ago, when he seemed to take a longer time frame.  That‘s why I think it was important for him to wake up this morning, after all he did yesterday, and prepare this executive order and suspend these trials while he understand what is being done in our name. 

To Michael‘s point, Michael acknowledges, no one is talking about letting these guys run free.  We‘re talking about working with other European countries, bringing some of them here, establishing how to try them and how to figure out who is guilty. 

MATTHEWS:  We‘ll be right back with Michael Smerconish and Joan Walsh for more of the politics fix.  More coming back on the implications of what he‘s doing right now, Barack Obama.  We‘ll be back in a minute.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Michael Smerconish and Joan Walsh for the politics fix.  Hillary Clinton was sworn in as secretary of state in her own Senate office just moments ago after winning a 94 to two confirmation vote.  The only opponents were David Vitter of Louisiana and Jim Demint of South Carolina. 

Joan, it seems to me the Republicans were setting up a little bit of a score card for her.  If there‘s any trouble between now and the next election of 2010 about her husbands‘ conflicts of interest, if there are any, in terms of money coming from some potentate somewhere, and then the president of the United States makes a visit to that person or Hillary Clinton receives that person, there will be a claim of conflict.  A deal was struck.  Are they setting this up for the next election? 

WALSH:  I‘m sure they are.  I‘m truly believe Barack Obama would not have made her secretary of state if he was worried about there being ugly, apparent—either the appearance of conflict or actual conflict.  I think the Clintons have been careful about this.  I think it was clearly a big point and a big concern in her confirmation, her selection originally. 

And I think the Republicans are being incredibly petty with this.  They have one thing.  She‘s terrifically—if you watched her hearing last week, she‘s terrifically qualified. 

MATTHEWS:  That‘s for sure.  She was fabulous, a tour de force. 

Michael, back to you.  The question, of course, is why did Dick Lugar, who is the must-respected Republican centrist, who is the ranking member on the Foreign Relations Committee, why did he push this issue?  We need immediate transparency.  If anybody gives 50K—he says better off that nobody gives her money from overseas.  He doesn‘t like anybody giving her money, or giving her husband money.  But if somebody gives 50,000 bucks to the Clinton organization, there should be immediate posting of that, so that everybody in the country knows what‘s going on.  The Clintons rejected that standard. 

SMERCONISH:  I think we are entitled to that sort of information.  To me, it‘s reminiscent of the way we approach the funding of elections.  We all have a right to see where money comes from for the funding of candidates.  That‘s the federal law.  I feel the same way about this. 

Look, I think she‘s a good selection.  You of course know she‘s going to be a campaign issue four years from now.  It almost doesn‘t matter what the next four years bring in this regard.  And that‘s because of what the Clintons bring to the table, both positive and negative. 

I share Lugar‘s interest in seeing.  I think we should have that kind of a paper trail.

MATTHEWS:  What‘s interesting, of course, is the politics of this, which is Demint is up for re-election next time.  David Vitter, who has had problems with prostitutes, maybe not problems with prostitutes, but problems with us knowing about his relationships with prostitutes, he‘s up next time.  John Cornyn is chairman of the Republican committee to get these senators re-elected next time.  You‘ve got to wonder if there‘s an overlap. 

Talk about conflict of interest or confluence of interest.  Could he be pushing this because he wants to set up a score card, that if anything does emerge about Bill Clinton, it‘s used immediately against the Democrats and the administration? 

WALSH:  I think that is what they‘re doing.  I think they are trying

to set that up.  I think she‘s proven enormously popular, even with

Republicans.  And it will be hard.  If there‘s something that really

smells, that would be terrible, they will use it.  These people are really

poor David Vitter, if this is how low he has to sink to create political chaos. 

MATTHEWS:  You sympathize with him? 

WALSH:  Oh, every day.  Troubled man. 

MATTHEWS:  Michael, will this be an issue in 2010?  Will it come up as a legitimate campaign issue, a possible conflict between the former president‘s activities worldwide, which are philanthropic, let‘s face it, and Senator Clinton‘s role as secretary of state?  Will there be a conflict in the money area? 

SMERCONISH:  Yes, absolutely.  Opposing the Clintons plays well to the GOP base and is a terrific fund-raising tool.  So I think you answered your question a moment ago by pointing out who‘s coming up in the next cycle. 

MATTHEWS:  I certainly pointed out the motives.  Thank you.  I like finding motives.  It makes me happy.  Anyway, Michael Smerconish, Joan Walsh.  Right now, let‘s join David Shuster for “1600 PENNSYLVANIA AVENUE.”

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