updated 1/28/2009 5:29:21 PM ET 2009-01-28T22:29:21

Guest: Sen. John Ensign, Rep. Mike Pence, Jill Zuckman, Heidi Harris, Rep. James Clyburn, Chris Cillizza, Michael Crowley

CHRIS MATTHEWS, HOST:  Barack‘s plan goes to a vote.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Leading off tonight: Leave the kids out of this.  Barack Obama gets Democrats in Congress to drop contraception from his big stimulus bill.  It turns out the idea of getting people to have fewer children didn‘t sell as national policy.  Maybe people don‘t like Washington, which has done such a bang-up job regulating the sharpies on Wall Street, to decide it‘s now time to regulate the number of kids people might be in the mood for.  Anyway, President Obama went up to Capitol Hill today, the first time since he was inaugurated, to try for some Republican backing of that stimulus package on which debate begins today and the votes come tomorrow.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I am absolutely confident that we can deal with these issues, but the key right now is to make sure that we keep politics to a minimum.


MATTHEWS:  Republicans say it‘ll take more than a visit to get them on board.  They want major tax cuts, and Republican leaders in the House have called on all of its members to vote against the bill.  How risky is it for Republicans to oppose a popular new president‘s economic plan when we have a crisis like this?  And does President Obama need to give into some of their demands, or is it better to just go it alone with a Democratic bill?  Republican congressman Mike Pence and Republican senator John Ensign will be here in just a minute.

Plus, it‘s caught on tape for Governor Rod Blagojevich.  He continued to wage his PR war against the accusers today and made the media circuit, but B-Rod also had a voice at his impeachment trial, albeit not the voice he would have liked.  Some of the federal government‘s wiretaps, those audiotapes of him, were played at the trial, and we‘ll hear them right here on HARDBALL tonight.

And has Rush Limbaugh filled the leadership void of the Republican Party?  President Obama warned Republican leaders not to take their cues from the radio talk man.  Rush says the president is more scared of him than he is of Republican elected lawmakers.

Also, in the “Politics Fix” tonight, why did President Obama choose to give his first White House television interview to the Arab news channel Al Arabiya?  What‘s the message he‘s trying to send?

And what‘s Sarah Palin doing starting a new nationwide political action committee to raise money for like-minded Republicans?  Is this the start of something big from the Alaska governor?  Let‘s get to that in the “Sideshow” tonight.

But first, we begin with President Obama‘s meeting with Republicans on Capitol Hill today.  We‘re joined by two Republican lawmakers who met the president just today, Senator John Ensign of Nevada and U.S. Congressman Mike Pence of Indiana.


MATTHEWS:  You first, Senator.  What did you think of Obama‘s pitch today?  Did you buy it?

SEN. JOHN ENSIGN ®, NEVADA:  Well, he‘s a very skilled politician.  There‘s no question.  He‘s smooth.  And really, he wasn‘t strongly pitching the exact plan because he even admitted there were problems with the plan, some things that he didn‘t like in the plan.  He listened to a lot of our ideas.  He—and there was a good give-and-take in the lunch today.

The advantage that we have in the Senate is that we‘re able to amend the bill.  I feel sorry for those House members, who are just going to basically have probably one alternative, but it won‘t be open for amendment.  The Democrats in the House are afraid of amendments and they aren‘t going to not allow those kinds of amendments.  That‘s a shame.

In the Senate, we‘re going to get our chance to actually change the bill, to change some of the priorities, because, you know, right now, the new score on this bill is over $1.1 trillion.  There‘s a lot of wasteful spending in it.  Some of the tax cuts are not targeted correctly to actually create jobs, and we don‘t do enough to fix the housing crisis in this country.  So there‘s some changes.

I‘d like to be able to vote for a good stimulus bill, but frankly, as what the Democrats in the Congress drew up, this is not a good stimulus bill.  It‘s not really even a stimulus bill.

MATTHEWS:  Well, let‘s talk about, Congressman, what you don‘t want in and what you want in that‘s not in.  What about these contraceptive—this whole condom thing?  The president apparently called Henry Waxman, the chair of the committee that put that stuff in, and says, Yank it out of there.  Was that a smart move to get that embarrassment out of the bill?

REP. MIKE PENCE ®, INDIANA:  Well, sure, it was a smart move, and it was especially smart when Republican leader John Boehner raised the issue at the White House on Friday and the American people were outraged over the weekend, Chris.  But taking out the couple of hundred million bucks for contraceptives doesn‘t solve the problem here.

What this bill is and what President Obama heard in what was a frank but cordial dialogue on the House side of the Capitol today was, Look, this bill is a long litany of liberal pet programs that will have very little to do with actually getting this economy moving again.  There‘s token tax cuts in the form of rebates.  But Chris, I would ask you, and many members asked the president this, what is $50 million for the National Endowment for the Arts going to do to create jobs?  You know, what is $200 million in improving the National Mall going to do to put Americans back to work?

This is a flawed bill.  And as I said to the president personally, this is a bill that was not fashioned with what I believe is his very genuine desire for a bipartisan compromise on issues like the stimulus.  The Democrats in Congress, as I told him, have completely ignored his call for bipartisan compromise, and they‘re bringing a partisan Democrat bill to the floor tomorrow that will not create jobs, will not lift our economy, and Republicans are poised to oppose it.

MATTHEWS:  Well, Senator, I want to ask you and then the congressman the same question.  It seems like there‘s a real fight over taxes here.  It‘s not just the amount of tax cuts as who gets them.  You want a reduction in the rates so people who pay—even working that pay maybe the 15 percent rate will get a lower rate, maybe 10 percent.  The president seems to want to give a lot of the tax cuts to people don‘t even pay income taxes, people way at the bottom.  What do you think the politics of that‘s about?  Is he going to the very poor people, as opposed to the working people?  What‘s he doing?  Are what are you guys trying to do politically?

ENSIGN:  You know, politically, what we‘re trying to do is choose the right policy, something that actually stimulates the economy, that creates jobs.  And so it‘s not just what we give to individuals, it‘s also the kind of business tax breaks that we can do to actually create jobs.  You know, we have the second highest corporate tax rate in the industrialized world.  Microsoft, which is a great American company, has zero exports from the United States.  They have a lot of exports from Ireland because, guess what?  Ireland has a 12.5 percent corporate tax rate.  We have a 35 percent tax rate.

If we could lower the corporate tax rate, that would be one of the best things that we could do to make American business more competitive in the world and actually help stimulate the economy.

MATTHEWS:  But isn‘t that an old Republican thing you‘ve wanted to do for years, too?  I mean, you accuse the Democrats of basically emptying out file drawer of all their old goals.  Isn‘t that an old goal of the Republicans, lower corporate taxes?

ENSIGN:  You know what‘s funny about that, though, Chris, is it may be an old goal, but it‘s something that‘s worked.  As a matter of fact, Europe is copying the United States.  Now, what are we doing in the United States?  We‘re going to go the other way.  Under the Democrats, we‘re going to actually raise the marginal rates.  We‘re going to raise capital gains taxes.  We‘re going to raise taxes on dividends.  That‘s the opposite way of Europe is going.  Europe is, to be more competitive with the United States, went the other direction.  That‘s the direction we should be going because we‘re in a global economy today, and it‘s about finding ways that we can compete in this global economy to create jobs in the United States so we can have a healthy economy.

PENCE:  Right.

MATTHEWS:  Congressman, let me as you this about the tax cut thing.  Do you agree that the president‘s tax cuts have been aimed at the very poor, the people that don‘t pay income taxes, and they should be aimed at people who work and pay taxes?  What‘s your philosophy about this...

PENCE:  Well, look...

MATTHEWS:  ... your policy goal here?  What are you...

PENCE:  Yes, Chris...

MATTHEWS:  How are you different than him?

PENCE:  Chris, I can‘t say it any better than John did.  And what Republicans would like the opportunity to do is advance the kind of tax relief that will create jobs.  We just did the rebate check thing a year ago, I mean, basically, you know, a $500 tax rebate to individuals, like, what does that turn out to be?  About 10 bucks a week.  That‘s not going to lift the economy, putting 10 bucks a week in everybody‘s pocket.

What‘s going to lift the economy is if we lower taxes dramatically on working families.  Under the Republican proposal, which we have not had the opportunity to add to this bill in a spirit of bipartisanship, you‘d see the average married couple looking at $3,000 in tax relief this year.  And you‘d also allow small businesses, Chris—small businesses, which are the economic engine of this economy—to deduct 20 percent of their profits.  So we‘re pushing for the kind of tax relief that, as John said, is time-tested, time-honored.  It will lift this economy.  And this rebate tax cut business just won‘t work.

MATTHEWS:  Let‘s take a look at the president today up on Capitol Hill.  This is when he was speaking between meeting with the House and the Senate.


OBAMA:  There are some legitimate philosophical differences with parts of my plan that the Republicans have, and I respect that.  In some cases, they may just not be as familiar with what‘s in the package as I would like.  I don‘t expect 100 percent agreement from my Republican colleagues, but I do hope that we can all put politics aside and do the American people‘s business right now.


MATTHEWS:  Senator Ensign, how‘s this going to work?  The House is going to pass this without amendment, apparently.  The Republicans won‘t have the votes to stop it, right?  Then you‘re going to amend it and then send it back to the House.  This is going to take a while, right?

ENSIGN:  Yes, it‘ll take a little bit of time, at least a couple of weeks.  You know, the bottom line is, Chris, is that the president has set the right tone.  He came—he was actually wonderfully gracious today, listened to people, had the right tone.  But the Democrats in the House and the Senate have done just the opposite.

The two first bills to come out of the Finance Committee, the two major bills to come to the floor of the U.S. Senate were done without any Republican input whatsoever, an SCHIP bill that was a bipartisan bill—it‘s the children‘s health insurance bill—a bipartisan bill that came out that President Bush vetoed last year.  They could have taken that bill and passed it again in a bipartisan fashion.  Instead, the very first thing they do is they exclude Republicans from the debate and they craft the bill that they want.  They defeat all Republican amendments.  And then they—they just make this a partisan exercise.

And they‘re doing the same thing with the stimulus bill.  This is not the spirit that President Obama wanted to bring here to Capitol Hill, and it‘s unfortunate that the left and the Democrat Party are not allowing him to be bipartisan the way he wants to be.

MATTHEWS:  OK, Congressman...


MATTHEWS:  Go ahead.

PENCE:  I really do think that‘s—thank you.  I really do think that we were impressed.  I get the impression my Senate colleagues were impressed.  The president is very sincere about this.  I think he really would like on these major issues—he said, Look, there‘s going to be differences, ideological differences down the road.  But on these big items where we‘ve got to figure out what‘s right for the country, I want all the best ideas at the table and foster bipartisanship.  But you know, it may have been a rude awakening for the president today to learn, at least with regard to the House side, Republicans have had no input whatsoever in the bill that‘s coming the floor tomorrow.

So there is a huge chasm between President Obama‘s very sincere call for bipartisan compromise to aid our economy and the conduct of House Democrats, which is a “my way or the highway” laundry list of pet projects and big government spending that won‘t stimulate the economy, that‘ll just stimulate more government and more debt.

MATTHEWS:  But didn‘t President Bush push through his tax cut back in 2001, basically, with Republican votes, with the Democrats screaming opposition but it didn‘t have any effect?  Did he have Democrat participation in that tax cut of his?

ENSIGN:  There was very much Democrat—leading up to—it was working together.  It got partisan as the process went along, but it was very much bipartisan going into it.  And that‘s what we need to do, at least start in a bipartisan fashion...


ENSIGN:  ... so that—you know, at the end of the day, you may not agree.  You may not even be able to vote for the bill.  But Democrats don‘t have all the answers.  Republicans don‘t have all the answers.  The challenges that we face today are the same kind of challenges and maybe even greater in some degrees than they faced back in the Great Depression.  It is not time to be partisan.  It‘s time to be Americans...


ENSIGN:  ... and to solve these major problems.

MATTHEWS:  Well, I want to have the debate on this show, HARDBALL.  Please tell your colleagues to come on.  I want this debate to happen here, even if it doesn‘t happen on the floor.  Gentlemen, thank you very much.

PENCE:  We welcome it, Chris.

MATTHEWS:  Senator John Ensign of Nevada, Congressman Mike Pence, thank you for joining us from Indiana.

Coming up: tale of the tapes.  The Blagojevich impeachment trial goes on in Illinois right now, and today we heard—well, we finally heard the voices of the governor.  Unfortunately, they were the wiretap voices.  We‘re going to get those tapes.  We‘re going to play them for you right here.  You decide if he sounds guilty.  I think these tapes are kind of murky, but let‘s hear what you think when we play them for you live here on HARDBALL.

You‘re watching HARDBALL, only on MSNBC.


MATTHEWS:  Welcome back to HARDBALL.  Embattled governor Rod Blagojevich made another round of the TV interviews today as some of the wiretapped audiotapes of him were played for the first time at his impeachment trial in the Illinois senate.  For more on B-Rod‘s PR battle and the newly unveiled—or newly listened-to audiotapes—we‘re going to listen to them right now, by the way—let‘s bring in MSNBC contributor Jim Warren and “The Chicago Tribune‘s” Jill Zuckman.

Did you fellows—well, let‘s listen together here.  We‘ll have a common moment of prayer here, actually—a little ironic.  We‘re going to hear now—let‘s listen to Blagojevich and his brother, Rob, discussing getting campaign money from a harness racing business guy named Johnny Johnson (ph), I think it is.  No, actually, we‘ll find out who he is in a minute.  But let‘s listen to the conversation.




GOV. BLAGOJEVICH:  How‘re we doing?

ROB BLAGOJEVICH:  Good.  Talked to Lon, and he says Johnny Johnson‘s good for it.


ROB BLAGOJEVICH:  He‘s going to give you—you know, he didn‘t get it, but he said, you know, I‘m good for it.  I got to just decide what—what account to get it out of.  And Lon‘s going to talk to you about some sensitivities legislatively tonight when he sees you with regard to timing of all of this.

GOV. BLAGOJEVICH:  Right.  Before the end of the year, though, right?

ROB BLAGOJEVICH:  Oh, yes.  Yes.  Yes.  So there was no waffling

there.  It‘s just, you know, we got to—we just got to figure it out and

so he‘ll give you the specific details.

GOV. BLAGOJEVICH:  Oh, good.  He‘s going to be there tonight, right?

ROB BLAGOJEVICH:  He‘s going with you.


ROB BLAGOJEVICH:  It‘s a basketball game?


ROB BLAGOJEVICH:  Yes.  He knew it was (REDACTED), United Center, wasn‘t sure what the venue was but—good.

GOV. BLAGOJEVICH:  OK, so—but clearly, before the end of the year, right?



MATTHEWS:  Jill, what‘s that about?  He‘s trying to get some money.  His brother says this guy‘s going to give him some money.  This guy Johnny Johnson‘s going to give him some money.  What‘s that about?

JILL ZUCKMAN, “CHICAGO TRIBUNE”:  Well, and notice that the governor says, “Before the end of the year, right?”  And what that is about is the new stricter ethics guidelines for campaign contributions that kicked in at the beginning of this year.  He was focused like a laser beam that if he was going to do something for someone, that they were going to make a contribution to him and that it was going to happen in 2008, not 2009.

MATTHEWS:  Jim Warren, is that incriminating, what they‘re hearing in the state senate in the impeachment trial today, what we just heard?  Is that incriminating?  And how so?

JIM WARREN, MSNBC CONTRIBUTOR:  Yes, I mean, I think a little bit.  It‘s more sort of the Mob-like tone, the speaking in code, if you listen to that and a couple of more ones which you—some of which you may play—again, speaking in code, paraphrasing things, the obsession with that end of the year date.

I mean, on one hand, Chris, I think this particular one and some of the other ones that we know are coming aren‘t anything that doesn‘t go on in this country every single day.  But what we‘re seeing now is sort of a primer of what happens, I think, every single day in this country, and it raises some interesting questions about what‘s legal and what‘s illegal.

But I think the problem here for Blagojevich is by the time this stuff has come out—and something that people are forgetting in the debate about Blagojevich and this media tour of his, that even before December 9th under the criminal complaint and the surfacing of these audiotapes, this was a guy who was in deep trouble.  There probably was a consensus in the Illinois Senate that he had to go just because he had done a lousy job as a governor.  He got a $4 billion deficit.  This guy has not been seriously taking care of business, and he was circumventing the legislature illegally by spending hundreds of millions of dollars even when a court told him not to.

But as far as this stuff, you know, I could debate this, how incriminating this stuff really is, given what we know goes on all the time and the legalized extortions, particularly in Washington.  I mean, I could not help but thinking back, Chris, to the famous “K Street project” of Tom DeLay.  After Republicans took over in ‘94, remember, he brought the lobbyists into his office.  He said, Here are the statistics of what you guys have given Republicans and Democrats, and if you want access, you better pony up to us.  Plus, you better stop hiring Democrats at your firms.

MATTHEWS:  Yes, what about when the guy says, I got you your damn earmark, now I want my money for my campaign by May 1?  I mean, this stuff goes on.  I know it goes on.  You know it goes on, Jill.


TRIBUNE”:  Yes. 

MATTHEWS:  And it is—it is pay-to-play. 

Let‘s take a look here.  And this guy got caught on tape.  And maybe that‘s the distinguishing characteristic, at least to some extent.  I know he‘s done other bad things.

Here‘s an exchange between the former Blagojevich aide, a guy named Alonzo Monk—his nickname is Lon, apparently—talking about getting money about—from this racetrack guy again, Johnny Johnston. 




So, I‘m just leaving there.  And I talked to him about commitment.  He goes—and I said, two separate conversations, “What about your commitment”?

He goes: “Lon, I have to leave in two weeks.  And I‘m going to be gone for two weeks.  I know that I have to have this in your hands by the end of those two weeks.”

And I said, “Look, there‘s a concern that there‘s going to be some skittishness if your bill gets signed because of the timeliness of the commitment.”

He said: “Absolutely not.  I mean, do you want me to put some into next quarter?”

“I said: “No, that‘s not my point.  My point is, this has all got to be in now.”

He goes: “I‘m going to have—I‘m hopefully going to have it next week.  But you have my commitment.  I have always been there.  I‘m going to be there.  And I have got to have it in the next two weeks, because I‘m going to out of town.”



MATTHEWS:  So, Jim Warren, the state senator sitting and listening to this tape, they must be examining their conscience, to use a Catholic phrase, for when they past—they last got money from a contributor and discussed terms with him or her. 

WARREN:  The hypocrisy is so rank.  And one cannot forget the fact that the state of Illinois is in the trouble it is, with about a $4 billion budget deficit. 

Chris, billions of dollars sitting in the District of Columbia that should be out this away, transportation money included, because the Democrats here couldn‘t get their act together.  And many of these same guys have undoubtedly done the same thing every single day.

So, not too many are going to protest too much.  But they‘re just going to be knocking on wood that they haven‘t been taped in the very same way.  And I think what shafts him is the fact that this stuff now is on tape.  And it came at a point where most of these guys wanted him out anyway. 

And I think conspicuous by its absence right now is anybody, even on

the Democratic side—and there are some slimeballs on the Democratic side

nobody defending this guy. 

MATTHEWS:  You know, Jill, I want to ask you about...


MATTHEWS:  Let me ask you about this question of, why are they getting access, the state Senate out there, to use in the impeachment trial this material?  Is this like extra stuff, crumbs from the table of Patrick Fitzgerald; he doesn‘t need this to win his case, his criminal case, later on? 

ZUCKMAN:  I think that‘s exactly right. 

He is not giving them his best stuff.  He‘s giving them a little something for them to use.  He is allowing his lead FBI investigator to go and vouch for the affidavit that was put together, to tell—tell the Senate, here is what happened, here‘s what we learned, so, that they have some sort of firsthand information in front of them. 

It‘s—it‘s still a compelling—you know, it is still like a car accident.  You just can‘t—you know, you can‘t avert your eyes.  But I do agree with my friend Jim.  I think that there are probably a lot of people listening to this, watching this today, a lot of politicians, saying...


ZUCKMAN:  ... there, but for the grace of God, go I. 

MATTHEWS:  Yes, well, let‘s—let‘s imagine, along the theme of what Jim Warren was saying—and I‘m glad you‘re saying it first, because I echo it.  You‘re a great reporter. 

Imagine we threw a net out there right now, an electronic net, and went into every earmark that has ever been granted by Congress where they specifically set aside money for a particular college with a particular aspect that gets the money, or a particular hospital that gets a certain amount of money.

And then check and see how much PAC money came back or how much money came back from the other direction.  Do you think we would find quid pro quo in there, Jim? 

WARREN:  Every single day. 

I mean, just look in recent history, great reporting by “The New York Times.”  Chuck Schumer—Chuck Schumer, I should say...


WARREN:  ... now the happy senior senator from New York, you know, Chuck Schumer, you know, being Wall Street‘s big friend when it comes to legislation in the U.S. Senate, and, then, in a seamless way, picking up the phone and hitting these guys up for contributions. 

“The New York Times” laid it all out.  We have spoken on this program before about the similar “New York Times” disclosure of that Syracuse, New York, mall developer who got a break through some legislation that Hillary Rodham Clinton put in.  And, lo and behold, six, seven months later, a $100,000 contribution to Bill Clinton‘s Foundation. 

That‘s legal, I guess. 

MATTHEWS:  Well, the car will be around for the check.

ZUCKMAN:  It‘s a—but...

MATTHEWS:  Thank you very much, Jill Zuckman.

Thank you, Jim Warren. 

I love the knowledge base you both come to this show with. 

Up next:  Sarah Palin‘s planning on staying on the national stage.  We have got her latest move for you in the “Sideshow.”  It is big-time.  Sarah Palin has been watching Senator Clinton and how she got to the top job she got, secretary of state.  I think Sarah Palin is aiming much higher. 

You‘re watching HARDBALL, only on MSNBC.  


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

First up—no surprise here—Alaska Governor Sarah Palin is laying down the groundwork for a future in national politics.  She‘s got a new political action committee.  It‘s called SarahPAC.  It‘s modeled on the one Hillary Clinton hard that was called HillPAC.  It will allow her to raise money for other Republicans.

The PAC‘s Web site promises the Alaska governor will support local and national candidates across the country who share her goals, which I guess now includes running for president next time.  Anyway, the Web site went up this morning and is already soliciting donations. 

I know there are skeptics, but the pattern is clear here.  When Republicans get beaten running a moderate, like ‘60 back in Nixon, or Jerry Ford in ‘76, or John McCain in ‘08, the next time they tend to go right, as in Goldwater in ‘64, Ronald Reagan in ‘80, OK, maybe Palin in ‘12.  It‘s the pattern.  Maybe it will change, but maybe it won‘t. 

Keep your eye on Palin. 

Next up:  Remember last week, when Joe Biden cracked a joke at the expense of Chief Justice John Roberts in this oath of office stumble? 

Let‘s listen. 


BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  Joe, you want to administer the oath? 


OBAMA:  For the senior staff. 

BIDEN:  For the senior staff.  Oh, right.


OBAMA:  Yes.  A number of the Cabinet members have already...

BIDEN:  My memory is not as good as Justice Roberts‘, Chief Justice Roberts‘ is. 



MATTHEWS:  Well, we know what the icy look of Barack Obama looks like. 

Well, I guess things—some things are sacred.  So, it turns out that the vice president, Joe Biden, called up Chief Justice Roberts and made sure his feathers were not ruffled. 

These are two, by the way—Joe Biden and John Roberts are the most regular people in the world, the least pretentious people in Washington.  Anyway, nothing is a problem—no problem there. 

Anyway, time now for the “Big Number.” 

Somebody at the new Treasury Department, now under Democratic management, yesterday called up somebody at the big financial house Citigroup and got them to kill plans to buy a new executive jet. 

How much were they planning to spend on the jet?  Fifty million dollars.  Well, the Treasury, under—under the new guy, Geithner, apparently got them to shut that idea down—no new plane.  By the way, all these millions of dollars going to Citigroup, and they were thinking about buying a $50 million plane?  The plans are dead right now for the executive—well, the million-dollar executive jet is gone, no more on that. 

That‘s our “Big Number”—a $50 million jet they had in mind. 

Anyway, up next:  Rush Limbaugh says President Obama is afraid of him.  In these dark—are these dark days for Republicans so dark that Rush has become the de facto leader of the Republican Party?  You would think so, with Obama going at him and him going back at him. 

You‘re watching HARDBALL, only on MSNBC.  


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

Stocks rose for a third straight day, despite some negative economic news.  The Dow Jones industrial average gained 58 points, the S&P 500 up by nine, and the Nasdaq higher by 15. 

Breaking news after the closing bell—the Obama administration is reportedly close to deciding on a plan to buy bad assets from banks.  CNBC‘s Steve Liesman reports that the plan could be announced next week. 

Also after the bell, Yahoo! reported a quarterly loss of $303 million, but the results were not as bad as analysts feared.  And Yahoo! shares are higher in the after-hours session. 

And more layoffs today—we just learned that Target laid off 600 workers today and will lay off another 500 later this year. 

And oil prices tumbled, with crude oil falling $4.14, closing at $41.58 a barrel.  It‘s a 9 percent drop. 

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


RUSH LIMBAUGH, RADIO TALK SHOW HOST:  I thought I was irrelevant now.  I thought all Republicans were irrelevant.  So, why—why all this vitriol aimed at me?  This has nothing to, by the way—well, some of it has to do with Obama mentioning my name, because it just makes them mad.  It just makes them mad.  They wish that I would just vanish. 



MATTHEWS:  What a performer. 

Welcome back to HARDBALL. 

Is Rush Limbaugh running the Republican Party?  Is President Obama trying to pick a fight with him? 

With us now, MSNBC political NATO Pat Buchanan, in Las Vegas, radio talk show host Heidi Harris. 

Patrick, you and I are historians of the last 50 years.  I recall when LBJ took a shot at Richard Nixon, your guy back in ‘66, and, by going after him as a chronic campaigner, he made him into the leader of the Republican Party. 

Is this what he‘s doing to—to Rush Limbaugh?  Why is President Obama going after a radio guy...


MATTHEWS:  ... even as big as Rush?


BUCHANAN:  And it—look, and—and Rush is enjoying it as much as Nixon did.  It elevated Nixon to the leader and voice of the Republican Party in 1966, as you said, Chris, moved him into the lead for the Republican nomination. 

I don‘t know why Obama is doing this.  I think of it was more of a slip, because it elevates Rush, puts him on a level with the president of the United States.  Talk radio, Chris, you know, it‘s an us-or-them media.  These guys are not detentists.  They love a fight. 

Can you imagine how you would have reacted, Chris, if you heard in the Cabinet Room, Bush and Cheney said, you Democrats have got to stop listening to Chris Matthews? 

MATTHEWS:  I have...


BUCHANAN:  You have got to stop listening to him.


MATTHEWS:  I have lusted in my heart for such a day. 


MATTHEWS:  Heidi, I hate to use that language, but the fact is, who wouldn‘t want the president of the country to pick them out as the most bothersome voice? 


MATTHEWS:  It‘s—it‘s fabulous.  It‘s P.T. Barnum stuff. 

HARRIS:  Just get the call letters right and spell my name correctly. 

MATTHEWS:  I know.

HARRIS:  Thank you very much.  Cha-ching, cha-ching, cha-ching. 

I don‘t have no idea why Barack Obama is doing this.  And I agree with Pat.  He is elevating him.  Now, you know, Barack—king—Rush Limbaugh is obviously the king of talk radio.  We know that.  But Barack Obama is the leader of the free world.  And the idea that he‘s even giving Rush all that attention, big mistake on Barack Obama‘s part.  And it‘s certainly not going to hurt Rush one little bit.

MATTHEWS:  Well, here‘s—let‘s hear some Rush.

BUCHANAN:  And I will tell you, Chris...

MATTHEWS:  Let‘s listen to some more Rush, because he‘s in his heyday right now.  This guy is—is storming—storming with now.

Here he is now going back against the president, Rush Limbaugh. 


LIMBAUGH:  If his stimulus is such a great plan, then why not take sole authorship of it, as the Democrat Party, so that, when it works, you can really finish off the Republicans, and, when it works, you can say, and this prosperity was brought to you by Obama and the stimulus package, and not one Republican helped out, not one Republican thought it would—that would be the end of the Republican Party as we know it. 

So, why doesn‘t he do it if he‘s so confident it will work?  Because he is not confident it‘s going to work in the way you hope it works.  It is going to work for what he has in mind.  But it ain‘t going to work in the ways you hope. 

It‘s going to work in building and strengthening the Democrat Party for as long as we live. 


MATTHEWS:  I love it, Pat, the way—and Heidi—the way he goes from that tirade to that voice of sober authority.  He does an amazing acting stunt there.


BUCHANAN:  Right. 


MATTHEWS:  Look, let‘s get back to the facts here. 


MATTHEWS:  Does he have something here by saying that Barack Obama is trying to get the Republicans to join him, at least a handful of them, so that he can share the blame if it doesn‘t work?  Is that a reasonable claim? 


It is, Chris.  Look, go back the ‘94.  Remember, Clinton didn‘t get a

single Republican vote for his tax increases?  He lost both houses of the -

of the United States Congress and the lower house for the first time in 40 years.  All his guys were on board.  All the Republicans were against it. 

Rush is emerging as of now, because there‘s a huge vacuum , here as the de facto leader of the loyal opposition on the stimulus package.  It is working in every possible way for him.

And one reason it is, Chris, is because Boehner and McConnell and those fellows do not look like they‘re leading.  They‘re figuring out what they‘re going to do.  Some Republican is going to move into this vacuum and be the strong voice of populist conservatism in—on Capitol Hill.


BUCHANAN:  And that guy‘s going to have a good inside track to the nomination.

MATTHEWS:  Is that what you hear, Heidi, out West? 

HARRIS:  You know what?  I have got to tell you, Chris, I agree with Pat.

I have had members of the Nevada Republican Party approach me about running against Harry Reid.  That‘s how thin the bench is, OK, when it comes to Republicans.  We need some leadership.  We need some good candidates.  And if the Republicans go along with this bailout, they‘re done.  This is the only thing that will save them in 2010, is to not go with this and let this thing fail.  I was against the last bailout, the one over the summer.  It shouldn‘t happen. 

The Republicans, I can‘t believe they‘re getting sucked into this.  It‘s sickening to watch.  It‘s their own fault.  We need some leadership, the Republican party.  I don‘t know where it is going to come from at this point. 

MATTHEWS:  Could it be, Pat and Heidi, that Rush Limbaugh doesn‘t have to worry about reelection.  He‘s very popular, very ensconced.  So he can take shots at the Democrats for trying to put together a bill which he says is politically driven to get the poorest people, who don‘t pay income taxes, to get money back from the government they never really paid in income tax—they paid it in payroll taxes.  In other words, it‘s a self funding Democratic reelection campaign machine.  And he‘s calling it for what he thinks it is, but no Republican elected official can be so raw as to call it that.  Is that what‘s going on?

BUCHANAN:  You can be this raw, Chris.  Look, what Obama is doing, spending 900 billion dollars, six percent of the Gross National Product, coming out of the Congress of the United States, nobody can tell me they‘re not thinking maybe we ought to move it in this direction.  This will help us politically.  I think Obama believes it will work economically.  I think he believes it will get the country back to work.  He also believes it will solidify the Democratic party, the way FDR did in the 1930s. 

Whatever it did economically, FDR won three straight elections.  There were about 16 Republicans in the Senate by the time you got to 1937. 

MATTHEWS:  Maybe elections matter, Pat and Heidi.  The people who voted for Barack are getting a break.  Wouldn‘t that be something?  I have watched Republicans give themselves a break when they win elections.  Excuse me, Pat, but the wealthiest people in the country got a hell of a break back in 2001 -- 

BUCHANAN:  But you don‘t—

MATTHEWS:  -- because they won the election. 

BUCHANAN:  Are you telling me that Democrats are sitting up there on the Hill and saying, look, we don‘t want that earmark stuff.  Let‘s do something that‘s simply good economically?  Of course they‘re thinking politically. 

MATTHEWS:  Yes, well, elections matter. 

HARRIS:  I want my earmarks.  I want my earmarks. 

MATTHEWS:  Thank you. 

HARRIS:  They want to spend 800 billion.  Where‘s my mob museum?  I just want a mob museum.  That‘s all I‘m asking for.  Not too much. 

MATTHEWS:  Blagojevich ain‘t no stranger.  Thank you very much, Pat Buchanan, Heidi Harris.  I think he has got a lot of familiar types. 

Up next, President Obama gives his first formal interview since taking office and it‘s on Arab TV, a moderate Arab station which is somewhat pro-western.  Apparently, he‘s really making an effort to try to connect to the Arab world, which is something the last president never really tried to do.  We‘ll talk about that when we get back from the break.  Lots going on in this country, lots going on with this new administration,  this first 100 days.  HARDBALL back in a minute on MSNBC.


MATTHEWS:  Welcome back to HARDBALL.  Well, those Republicans ripped the scab off early in the show.  And House Majority Leader Jim Clyburn is here with us now to deal with it.  Congressman Clyburn, what did the Republicans say wrong here?  What did the House member and the senator have to say that you didn‘t like? 

REP. JAMES CLYBURN (D), SOUTH CAROLINA:  Well, you know, today the president came out to meet with the Republicans, trying to build bipartisanship going forward.  And I thought it was kind of interesting.  One hour before he arrived on the Hill, the Republican leadership in the House put out a directive instructing all of its members to oppose this recovery package. 

Now, they say they wanted the president to come over to listen to them, get their input, so that they could help fashion a bill more to their liking.  Yet, before they ever get a chance to talk or to give that input, they instructed everybody to just oppose the package.  That, to me, is not bipartisanship.  That‘s very disrespectful and very insulting to the office. 

MATTHEWS:  Well, we have got a report, Congressman, that said that John Boehner and Eric Cantor told House Republicans, and they‘re the leaders, that all Republicans should vote against the stimulus bill, if it remains in its current form. 

CLYBURN:  Well, we are going through a process to try and get everybody‘s input vetted in such a way that we can have a good bipartisan bill.  But you can‘t expect for the speaker of the House to capitulate to every one of their demands.  You can‘t expect for the president, who went out before the American people for two solid years—they vetted him.  And he won the election.  And he is now responding to what the American people expressed last November 4th

Let‘s do what the American people want us to do: work together and get it done.  And we can do all this policy stuff next year when we get into the elections. 

MATTHEWS:  OK, Congressman.  Please come on tomorrow or the next, whatever night you can, for a longer time.  We only had a minute.  A little time for you to retort to this tonight.  But please come on.  You‘re always welcome here, Congressman Jim Clyburn, top—

CLYBURN:  Thank you very much. 

MATTHEWS:  He‘s actually majority whip of the Democratic party in the House and he‘s from South Carolina. 

Time now for the politics fix.  Joining me now is Chris Cillizza of the WashingtonPost.com, and Michael Crowley of the “New Republic,” whose new book is “‘08, a Graphic Diary of the Campaign Trail.”  Thank you, gentlemen. 

What do you make of Barack Obama giving a speech to al Arabia, the Arabic language network, Chris? 

CHRIS CILLIZZA, THEWASHINGTONPOST.COM:  Well, you know, Chris, I think that it‘s clearly a signal, especially this coming less than a week after Barack Obama‘s inauguration speech, in which he used very similar language, that if you unclench your fist, you will find a hand waiting to shake it.  He‘s sending a message. 

I had a conversation with a Republican strategist today and he said to me, I don‘t know about this.  This first interview, this seems politically questionable.  I said, well, it‘s January 2009, remember, not January 2012.  Barack Obama is pretty far removed, at least in electoral terms, from running for re-election.  This is the kind of thing you do in the start of an administration, put a marker down and show that yes, things are going to be different under Barack Obama than they were under George W. Bush. 

MATTHEWS:  Michael Crowley, what would be wrong with addressing the Arab world?  There‘s about a billion people in the Islamic world, 300 million in the Arab world.  Why wouldn‘t you want to talk to those people?  We‘ve got to deal with them.  They‘re people. 

MICHAEL CROWLEY, “THE NEW REPUBLIC”:  Absolutely nothing wrong with it.  There‘s absolutely no reason why you wouldn‘t want to do it.  The question is one I think people would like to put to the out-going administration; why didn‘t you make more of an effort to do this?  Karen Hughes was supposedly trying to do this at the State Department.  of course, we never really heard much of that, didn‘t seem to go anywhere. 

This is of a piece with what we‘ve seen in the past week, the order to begin closing Guantanamo, reassessment of interrogation procedures, and now this kind of unprecedented outreach.  We‘re also seeing the beginning of a diplomatic push with George Mitchell going to the Middle East. 

It‘s a signal that America is ready to reconsider how we‘ve been doing things.  We want diplomacy.  We want dialogue.  We want to negotiate.  It really comes at low cost.  We‘re not yet giving anything away in any negotiations, promising anything to anyone else.  It‘s really just a way of saying, hey, let‘s start over and talk again.  There‘s really no cost to it. 

MATTHEWS:  Chris, I was struck by the fact the president didn‘t use the word terrorism in his Inaugural Address.  He sees terror as a danger, but it‘s not an ism, not like Communism or Fascism or Imperialism.  It‘s a technique, a method, a horrible method.  We don‘t like it.  It‘s evil.  But it‘s not an ism.  The ism is this jihadism, this hatred of the west, trying to figure out the basis of all that, the Wahhabi stuff.  Isn‘t he trying to get to the root of this thing? 

CILLIZZA:  Chris, I think, to be honest with you, he‘s trying to offer a nuanced perspective to the American people, that no, we cannot paint all people who happen to be Islamic with this broad brush of terrorist or terrorism.  This is a huge scope of people with variant viewpoints.  The truth of the matter, it‘s a relatively small group of people who are labeling the rest of the community. 

So I do think Barack Obama is trying to offer nuance.  He‘s trying to offer perspective.  Again, is it smart from a policy perspective?  It is.  I agree with Mike, there‘s a very low cost to it.  Politically, I think Republicans, in the long run, will try to use some of these things against him. 

He spoke—this was his first interview and he gave it to the Muslim speaking world.  I think they will try to use it against him.  How he does between now and when Republicans and Democrats fight in 2010 and then again in 2012 will tell you whether it‘s powerful electorally for Barack Obama or a weakness. 

MATTHEWS:  Here he is on al Arabia. 


OBAMA:  My job is to communicate to the American people that the Muslim world is filled with extraordinary people who simply want to live their lives and see their children live better lives.  My job to the Muslim world is to communicate that the Americans are not your enemy. 


MATTHEWS:  We‘re going to come back and talk to Michael Crowley and Chris Cillizza about this weird back biting against Caroline Kennedy.  Did it come from Governor Paterson?  It seems like it came from a lot of people.  What is all this attack on Caroline Kennedy before, during and after her bid for that Senate seat of Hillary Clinton‘s?  We‘ll be right back on MSNBC. 


MATTHEWS:  We‘re back with Chris Cillizza and Michael Crowley for more of the politics fix.  Here‘s New York columnist Fred Dicker this morning, quote, “Governor Paterson yesterday insisted he had no idea of who did the slime job on Caroline Kennedy, although the source of the information is about at close to him, the governor, during the day as his wife is at night.  He‘s a liar.” 

Well, that‘s strong stuff.  Here‘s Governor Paterson denying any role in the smearing of Caroline Kennedy. 


GOV. DAVID PATERSON (D), NEW YORK:  I had nothing to do with any negative characterizations of any of the candidates, particularly Caroline Kennedy. 


MATTHEWS:  Michael, I‘ve got to tell you, the characterization by Fred Dicker, who is an Albany reporter, was so strong.  He said the governor put the word out on Caroline.  He put the contract out on her, in terms of her reputation.  And now he is lying. 

CROWLEY:  Yes, called him a flat out liar.  Dicker was someone who actually had nice things to say about Paterson at the beginning of the process.  That‘s about as bad as it can get if you‘re a governor.  Look, I think that Russ Feingold now has a proposal to take the appointment of these empty Senate seats out of the hands of governors.  I think the news in the last couple months has shown us that maybe that‘s the way to do it.  These soap operas, these sagas, people horse trading, smearing each other; clearly there‘s something wrong with this system.  This would seem like the right time for people to reassess how we fill these seats.  It‘s not working. 

MATTHEWS:  Chris Cillizza, the question obtains, do we get a decent turnout in these special elections?  Or are they controlled by machines, by the regular-party hacks?  Who‘s going to vote in August?  Who‘s going to vote in April?  Who‘s going to vote in a lot of these elections?  Usually, people show up in November in even-numbered years.  Other times, they don‘t show up. 

CILLIZZA:  You‘re 100 percent right.  Though to Michael‘s point, you‘re almost certain, if you have special elections, to have an electorate larger than one, which is what it currently is.  The one thing I don‘t understand, and you sort of have to love New York politics, where Fred Dicker, who is widely seen as the dean of the political press corps of New York, calls the governor of the state a liar. 

But what I don‘t understand is this is a no-win situation for Paterson and for Kennedy.  Paterson is running in 2010 for his first term.  He does not want to upset the New York City community that supports Caroline Kennedy, very affluent community, who is clearly offended by this.  For Kennedy, I know she is, herself, not getting involved in this.  But it just goes further to tarnishing what has been a pristine legacy, that she ran these two months, this two-month semi-campaign where she surprised everyone by getting in and then surprised everyone by getting out. 

Now, we‘re seeing this relitigated about who told whom she was getting

out, whose choice it was, was he really going to pick her or not?  It just

it looks bad on everybody‘s part at this point. 


CROWLEY:  Joe Biden has got to be thanking the stars that he did the handoff of his seats pretty smoothly, under the radar.  Got it done with no controversy.  Right?

MATTHEWS:  Maybe they should all turn them over to a seat warmer, some good government type who serves for two years or six months, and then you have a real election.  Maybe you‘re right.  Thank you, Michael Crowley, some compromise—don‘t put in somebody who will want to stay there.  That‘s pure politics.  Thank you, Chris Cillizza, as always.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.

Right now, let‘s join David Shuster and “1600 PENNSYLVANIA AVENUE.”



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