updated 2/4/2009 10:19:35 AM ET 2009-02-04T15:19:35

Time: 19:00

Guest: Brian Williams, Gov. Charlie Crist, Claire McCaskill, Jonathan Alter, Roger Simon> High: Former Senate majority leader Tom Daschle withdraws as President Obama‘s nominee for HHS secretary because of past tax problems.

Spec: Politics; Government

CHRIS MATTHEWS, MSNBC HOST:  “I screwed up.”  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Leading off tonight, Daschle ditches.  And the president takes the blame.  In the end, which came at dawn, Tom Daschle need to bring the plane down in the Potomac.  His engines were gone.  He was out of gas.  His choice came down to hanging up there for three more days of flak and attack or ditch the effort in his own river and save the population.

A few more days of Daschle in trouble would have hurt the man he helped bring to the White House.  Without helping his own cause.  Late today, President Obama owned up to his mistake in not seeing Daschle‘s problems coming in an interview with NBC NIGHTLY NEWS anchor, Brian Williams.

(BEGIN VIDEO CLIP)

BARACK OBAMA, U.S. PRESIDENT:  I‘m here on television saying I screwed up.  And that‘s part of the era of responsibility, not never making mistakes, it‘s owning up to them and trying to make sure we don‘t repeat them.  And that‘s what we intend to do.

(END VIDEO CLIP)

MATTHEWS:  I screwed up.  In a moment Brian Williams will be here with more of that interview.  Want to hear more of that?  Here it is right now.  More Obama making news about the Democrats and whether he‘s pushing the Democrats to get rid of some of that junk in the stimulus bill.  Here he is talking about what he needs to do to make that sellable.  Here he is.  The question is, can he make room for enough Republican stuff in there?

He‘s got top-drawer Republican governors like Arnold Schwarzenegger and Charlie Crist.  By the way, Governor Crist is going to be here in a moment, punching out there for his big plan.

And Missouri Senator Claire McCaskill has come down hard on Wall Street.  Most recently for packing its bags with billions in bonuses.  What will she think about the fact, Wells Fargo which received $25 billion in bailout money from the taxpayers has planned Las Vegas casino junkets to reward its top mortgage lenders?  She called the Wall Street bonus grabbers idiots.  We‘ll see here on HARDBALL tonight what she has to say about the casino headed people when they come here to HARDBALL.

Also in the politics fix tonight, can President Obama change Washington?  That‘s the profound question.  Can he change the country?  Can he be practical enough to lead us but still be idealistic enough to inspire us?

And finally, President Obama nominated Republican Senator Judd Gregg of New Hampshire to be his commerce secretary today.  What did Gregg want to do with the Commerce Department years ago?  Nothing nice.  I can assure you.  You‘ll appreciate that as quite a bit of irony coming up here in the HARDBALL side show tonight.

We begin with Tom Daschle and what the president told Brian Williams about his withdrawal.  Brian joins us right now.

I guess that‘s the headline, isn‘t it, he gave to you for the papers tomorrow.  “I screwed up.”

BRIAN WILLIAMS, NBC NEWS ANCHOR:  Yeah, Chris, it was a strange atmosphere.  I just got finished saying to Chuck Todd, tonight, I guess you go back to the modern era to the Reagan White House to find the invention of the notion of theme of the day.  Story of the day at the White House.  This is how the White House looks at the visitors in the West Wing from the news media.  They put out their theme of the day.  It was perfected during subsequent White Houses.  Clintons were very good at it.  Bush 43 was very good at it.  But sometimes the theme of the day has a funny way of going awry.  It was not a good day at the office for the new administration.

And as we pointed out, tonight, Chris, you‘ve got the inaugural platform still being dismantled on north lawn.  This is a brand new administration.  A problem they did not want and the boss just decided, apparently, A, let‘s get it all out.  We‘ve got five television anchors in the press room who have appointments to come talk to me.  And B, fall on our sword and continue to push the economy and jobs.

MATTHEWS:  Here he is.  The president responding to your question about Tom Daschle pulling out this morning.

(BEGIN VIDEO CLIP)

WILLIAMS:  “Philadelphia Inquirer”, today, “Surely President Obama can find qualified people to serve in his cabinet who are not hustling to write overdue checks to the IRS.  You lost two nominees, two appointments today.  Did that make you angry, I imagine?

OBAMA:  It made me angry and disappointed.  You know, it‘s something I have to take responsibility for.  I appointed these folks.  I think they are outstanding people.  I think Tom Daschle, as an example, could have led this health care effort, a difficult effort, better than just about anybody.  But as he acknowledged, this was a mistake.  I don‘t think it was intentional on his part but it was a serious mistake.  He owned up to it and ultimately made a decision that we couldn‘t afford the distraction.  I‘ve got to own up to my mistake which is that ultimately it‘s important for this administration to send a message there aren‘t two sets of rules.

One for prominent people and one more ordinary folks who have to pay their taxes.  And you know so I‘m frustrated with myself, with our team.  But ultimately, you know, my job is to get this thing back on track because what we made to focus on is a deteriorating economy and getting people back to work.

WILLIAMS:  How do you prevent the lesson from being that no matter how lofty the goals of the new guy coming in, Washington wins in the end?

OBAMA:  Well, no.  I don‘t think Washington wins.  Look, the fact of the matter is Tom Daschle pulled out today.  And I‘m here on television saying I screwed up.  And that‘s part of the era of responsibility is not never making mistakes, it‘s owning up to them and trying to make sure you don‘t repeat them.  That‘s what we intend to do.

(END VIDEO CLIP)

MATTHEWS:  Do you get a sense from that, just strictly listening to that, that he‘s admitting his problem is not in bad vetting but in once he learned that the guy had a big tax problem in six figures he didn‘t cut him loose?  Is that the message we‘re getting here?

WILLIAMS:  I think subterranean, Chris, they are very proud that the president used three words, today, that we did not hear in that setting on the record over eight years of the last administration.  I think they worked very fast and remember, Andrea Mitchell had that phone call this morning with Tom Daschle.  She said he was tearful and very, very emotion.  And all it took, what put him over the top was the “New York Times” editorial.  I think cutting him loose, clean slate, let‘s break.  We‘ve got to keep to the plan.  We can‘t be the ones saying this is a new Washington and at the same time trying to limp through.  What it does with the Geithner questions, guy sitting at Treasury who got passed a tax problem, I‘ll leave that to smarter people.

MATTHEWS:  Let‘s take a look.  You quoted Howard Fineman on HARDBALL last night when you asked the president today about making exceptions to his own rules.  Let‘s take a listen.

(BEGIN VIDEO CLIP)

WILLIAMS:  Among the levers your enemies on the Hill are using is about this personnel matter.  This is from Howard Fineman, “Newsweek” magazine, MSNBC last evening.  “If they keep saying,” they, the Obama White House, “that all these people deserve special treatment because they‘re indispensable, Geithner is indispensable, it begins to sound only hypocritical but elitist.  It‘s like there are rules for everybody else and rules for indispensable people and that‘s exactly the opposite of the grassroots message that he,” meaning you Mr. President, “came here with.”

OBAMA:  Well, Brian, as I just addressed, there are no—there are not two sets of rules.  That‘s exactly why I think today was an embarrassment for us.  I think it was a problem and we‘re fixing it.  But I think that we have appointed, now, hundreds of people.  All of them top notch.  Everybody I think acknowledges that, you know, you look at somebody like Janet Napolitano or Stephen Chu or Arne Duncan, outstanding Cabinet members and equally outstanding sub Cabinet members.  So, did I screw up in this situation?  Absolutely.  And I‘m willing to take my lumps.  That‘s part of the job here.  But I think it‘s important not to paint a broad brush here because overall not only have we gotten in place a functioning government in record time, but overall the quality of these people are outstanding.

(END VIDEO CLIP)

MATTHEWS:  Do you get a sense, Brian, sitting with him for those minutes that he‘s a bit relieved?

WILLIAMS:  Oh, I think probably.  I can‘t put thoughts in his mind.  Beyond going there today to do my job and that is quote HARDBALL, which, of course, every red-blooded American was watching along with me last night.  Look, I think they were looking—they were looking a protracted fight in the eye.  Out of senatorial courtesy, as you know, Chris, they could have gotten the votes for the former majority leader.

This education consultancy was going to come up.  That was the next thing.  They probably could have gotten this.  They didn‘t want to win ugly, I‘m guessing, but, again, that story comes out in the hours and days to come in the news cycle.

MATTHEWS:  Let‘s go back to meat and potatoes.  You asked the president how he is going to get the economy back on kilter.  I guess it‘s the question we‘ve been asking here, how do you translate, Mr. President, in a fireside chat, how this almost trillion dollars in federal spending and tax cuts is going to get the economy turned around?  You put it to him.

(BEGIN VIDEO CLIP)

OBAMA:  Every day I‘m waking up thinking, how do I make sure ordinary families are able to survive, thrive, send their kids to college, keep their homes, keep their jobs?  And there‘s no magic bullet.  We dug a deep hole for ourselves.  And because of, I think, some bad decisions that were made, we have the worst economy since the Great Depression.  Now the recovery package we have put together has not only immediate relief to families.  If they lost their job, they‘re going to get extended unemployment insurance, they get to keep their health insurance.  We‘re going to make sure that states don‘t have to lay off teachers and that they can train teachers for the math and science that is so important for our children.

We‘re also investing in critical infrastructure.  Green jobs.  Making sure we‘re weatherizing 2 million homes.  Making certain that we‘re laying an electric grid that can save energy over the long term and wean ourselves off Middle Eastern oil.

And so there are a range of investments that not only provide jobs immediately but are also designed to lay the groundwork for long-term economic success.  Is everything in this bill going to be providing immediate direct relief?  I hope that the overwhelming bulk of it will.  But it‘s not the only thing that we‘re going to have to do.

(END VIDEO CLIP)

MATTHEWS:  It seems like he‘s setting expectations a bit low there, Brian, and it‘s an important message.  Almost Churchillian.  We‘re not at the end of the beginning, maybe the end of the beginning here.  He‘s saying this may not do the job.  I thought it was a fascinating answer.

WILLIAMS:  Chris, they‘ve just started to roll that out.  You‘ll have to go back two or three days to find the legislative history on that.  First of all on the electrical grid.  It would be great to have a White House with e-mail.  Their system crashed again today.

Second, notice the little micro categories like weather stripping American homes.  Those he uses in his arsenal of weapons, but on the Hill at the same time, today, you had Mitch McConnell talking about, mocking the subsidy for Hollywood film producers to go out and purchase film.  It‘s this laundry list of stuff.  One person‘s stimulus is another person‘s pork and waste and money misappropriated.

MATTHEWS:  Well, here you are going at him on that question.  Is there some excelsior in this bill that has to be taken out?  Here you are hitting the president with that question.

(BEGIN VIDEO CLIP)

OBAMAM:  I suspect Senator McConnell had some opinions that he thinks are good policy that other people might not agree with.  And I understand that.  That‘s part of the process.  I think it‘s important to point out that of all the things that some opponents of the package have talked about, if you tally all those up they amount to less than one percent of the entire package.  Nobody disputes we should extend unemployment insurance.  Nobody disputes it is important for us to make sure the people who lose their jobs through no fault of their own still have some meaningful access to health care.  Nobody disputes if we don‘t use some of this money, this enormous expenditure, to deal with our energy dependence or the rises cost of health care, that we are going to continue to be in a very perilous situation 10 years from now or 20 years from now.

So are there ways we can improve the bill?  Absolutely.  And I want to continue to work with Democrats and Republicans to find some common ground.

(END VIDEO CLIP)

MATTHEWS:  Brian, you‘ve been in the room with other presidents going back several years, now, in different capacities as a news person.  Did you have any sort of reading on the atmospherics?  It‘s warmer in there, literally warmer in that Oval Office now.

WILLIAMS:  It is incredibly warm there.  HVAC must be working extra hard on it.  Because it was a real complaint he had coming in.  Then we had lights on, today.  It was like a terrarium in there.  Number two, Chris, you‘ve been in there a lot as well.  The detritus of the presidency is not there.  I actually wrote on my blog today if I had to guess, looks like he‘s not using the Oval, certainly not for day to day work yet.  No tchockes, no family photos.  Nothing on the credenza.  He hasn‘t picked out all his artwork yet.  Those dishes still in the cabinets.  He said on the record he‘s not a dish guy.

Remember, he also hasn‘t used Marine One, Air Force One or Camp David yet.  He just discovered the bowling alley a few nights back.  They have—

Say what you will about the quality of the work and the policies but they have devoted as many waking hours to just working without settling in as arguably any modern presidency apparently.

MATTHEWS:  Feng shui presidency.  Thank you Brian Williams.

Coming up, congressional Republicans don‘t like President Obama‘s economic recovery plan.  But some prominent Republican governors are on board in a big way.  One of them is Florida‘s Charlie Crist.  He‘s going to join us in just a minute.  You‘re watching HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  President Obama‘s reaching out to Republican governors to find support for his economic plan.  With us now, one of those Republican governors, Florida governor Charlie Crist.  Governor—I was going to call you Charlie because I like you so much, but thank you for coming in.

GOV. CHARLIE CRIST ®, FLORIDA:  Charlie‘s fine.

MATTHEWS:  Why are you aboard the Obama bail-out bandwagon?

CRIST:  Well, I call it a stimulus for the economy, to try to help the people of my state.  And it‘s really that simple, Chris.  You know, you look at the kind of deficit that we‘re facing here in Florida—we just came through a special session where we had to cut over a billion dollars more as it relates to making sure that we stay in balance.  This program will help us with education, with health care, Medicaid specifically, infrastructure.  These are the kinds of things that produce jobs.  It could mean $13 billion to the “Sunshine State.”  It comes at a time when we need it.  People need jobs.  It‘s about jobs, jobs, jobs.  This will help us produce that, and I think it‘s important to move forward.

MATTHEWS:  If you were Franklin Roosevelt and you were on the radio tonight and you wanted to explain the budget—the stimulus package, it‘s called, how would you explain it to people in a way that would make them feel confident that the economy could come back if it were passed?  Explain it...

(CROSSTALK)

CRIST:  Sure.  I think so.  You know, this is a plan where your tax dollars that have already been sent to Washington—I‘m speaking to my fellow Floridians—you know, we have been a donor state for a long time, which means that every dollar we send up there, we get something less back.  This gives us an opportunity to get—this gives us an opportunity as Floridians to get more back, to invest in education, you know, to build schools, to build infrastructure, to improve our highway system, to have the opportunity to make sure that we have enough for health care for Medicaid for the poor, the most vulnerable in our society, and do it in a way that‘s fair to Florida and that Florida gets her fair share.  And that‘s my perspective, and I know that‘s what my fellow Floridians want, so long as it‘s done right, so long as the money is spent wisely and that tax cuts are included within it to stimulate small business throughout the “Sunshine State.”

MATTHEWS:  Are you confident there‘s no junk in this package?

CRIST:  No, I‘m not.  I mean, you know, as a governor, I‘ve never seen a perfect piece of legislation in my life, but I understand that there‘s a time when we‘re in need.  And our country and my state, we‘re all in need.  And people want us to work with each together in order to try to make this better and get through this difficult time. 

You know, somebody said to me the other day, Chris, we may have all gotten here in different ships, but we are all in the same boat now.  That is true of this economic situation.  And I think, in a bipartisan way, you know, the Republicans, I think, will help to improve this bill.

And I think that, you know, it has been reported that the president has reached out to Democrats in the Senate and say, work with these—these fine men and women on the other side of the aisle.  Listen to their ideas.  Let them incorporate, you know, some of their proposals in this plan to make it a better plan for our country.

And so long as we do that and work together, that‘s what the American people want.  I don‘t think they want to see, you know, Republicans and Democrats kind of going at each other.  They want to see them working together to try to do what‘s right to help this country get through this challenging time.

And I that‘s what I think they deserve.  And I know it will help my state.  And that is why I support it. 

MATTHEWS:  What did you think of the fact that, in the House of Representatives up here in Washington, not a single Republican voted for the stimulus package? 

CRIST:  Well, there are different perspectives. 

I mean, if you are a House member in the Florida House of Representatives...

MATTHEWS:  Not a single Republican. 

CRIST:  No, I understand that. 

MATTHEWS:  Not one.

CRIST:  You know, I—I read it last week, too. 

And that‘s OK.  I mean, I respect that.  People are going to have differences of opinion.  And that‘s what‘s great about our democracy.  But, if you‘re a member of the Florida State House or the Florida State Senate, you probably have a different perspective on this issue, because we know that we need the money.

And a lot of it that‘s going to come back to Florida are from our fellow Floridians who have sent it there.  It‘s going to help their children.  It is going to help their traffic situation.  It‘s going to help produce more jobs here in the Sunshine State.  That‘s a perspective that I have to have...

MATTHEWS:  OK. 

CRIST:  ... as, in essence, the CEO of Florida.  And that‘s why I support it. 

MATTHEWS:  How does spending a trillion dollars in federal money through tax cuts, which is not really spending, but giving back to people, tax cuts, and—and projects that spend money, how does that get banks to start lending money to people again, which they‘re not doing? 

CRIST:  Well, I think, you know, that‘s a whole different issue.  I think what I‘m talking about...

(CROSSTALK)

MATTHEWS:  But how does it work?  If it doesn‘t work, will we solve the problem?

Mitch McConnell says all this talk About stimulus package is not going to solve the country‘s economic problem, because it does not get to the housing problem.  And everybody knows the housing problem is this.  People bought $400,000 houses, even though their income only supports about a $200,000 house.  Now they‘re stuck with this house that is diminishing in value. 

They‘re losing the money they put in.  They can‘t get a re-fi, because the house is worthless.  They‘re afraid to get a reappraisal, because then they will owe money to the mortgage company they can‘t even afford to pay now in monthlies. 

So, I mean, it‘s a horrible situation for all these working poor people that own homes now they can‘t afford.  How does this stimulus package or anything else solve that basic financial crisis problem?  How does it work?

CRIST:  By providing jobs—by—by providing jobs for people who need work.  I come from a state now where the unemployment rate, Chris, is at 8.1 percent.  That‘s above the national average. 

I want to do everything I possibly can to make sure that the people of this state, who want to work, have that opportunity to do so.  You give them a paycheck, you give them the chance to work, you give them the opportunity to have, not only that pride, but that money in a bank account, so that they can make the mortgage payment, you know, and month after month, they can have that for their family, they can produce the opportunity for their child to hopefully go to a community college or to college, that‘s—that‘s the bridge, I think, that we‘re looking for in order to give people hope, give them an opportunity, give them a good-paying job, an honest day‘s work, so that they can move their family forward, and understand that we‘re going to get out of this, but we‘re only going to get out of this if we continue to work together.

And I think that‘s what this can offer to people.  I don‘t think it‘s perfect, but I think...

MATTHEWS:  Yes. 

CRIST:  ... we need to do something in order to help our country.  I really do. 

MATTHEWS:  Rush Limbaugh broadcasts out of Florida, I understand, down there in the sunshine.  And he thinks that the best thing America could do is beat—basically destroy Barack Obama‘s administration.  He wants it to fail.  He says so. 

Where are you on that?  Do you think that is a healthy view for a leading conservative voice?

(CROSSTALK)

CRIST:  I want the president to succeed. 

You know, I‘m—I think it‘s very important that—listen, I supported Senator McCain.  He is a great man, a great American hero.  I campaigned hard for him.  He didn‘t win.  So, my guy didn‘t win.  But President Obama is my guy now.

And I want to do everything I can make sure that my president succeeds, because this is about my country.  And I want our country to be successful.  I want us to move forward.  I want us to get out of this economic mess.  I want to make sure that we‘re doing everything humanly possible together, as Americans, to make sure that the administration is successful, because, if it is, then my country is successful.  And that‘s what I care about. 

MATTHEWS:  Well—well, the Republican Party is alive in Florida. 

Thank you very much, Governor Charlie Crist of Florida. 

Up next:  Five days after his removal from office, ex-Illinois Governor Rod Blagojevich is still out there proclaiming his innocence.  - Rod‘s latest next in the “Sideshow.”  He‘s still out there.  It is still exciting to watch.

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

Ex-Illinois Governor Rod Blagojevich—B-Rod to us—continued his post-impeachment media tour this morning.  Here‘s B-Rod sharing some choice words with Meredith Vieira about the Illinois State Senate. 

(BEGIN VIDEO CLIP)

ROD BLAGOJEVICH (D), FORMER ILLINOIS GOVERNOR:  I view what happened on Thursday as a hijacking by a legislature that removed a governor and prevented that governor from proving his innocence. 

This is America.  And I still believe this is a place where, as it‘s written in the Bible, the truth will set you free.  I—I‘m clinging to the truth, embracing the truth.  I will ride the truth and I will clear my name. 

(END VIDEO CLIP)

MATTHEWS:  Wow. 

Next up: when sports and politics collide.  Remember this shout-out from Steelers owner Dan Rooney after the Super Bowl? 

(BEGIN VIDEO CLIP)

DAN ROONEY, OWNER, PITTSBURGH STEELERS:  I would just like to thank President Obama and all of the Steeler nation for supporting us on through the years. 

(END VIDEO CLIP)

MATTHEWS:  Rooney, of course, was an early supporter of Barack Obama‘s candidacy.  Now it looks like the president may return the favor. 

“The Irish Times” newspaper is reporting that Rooney tops Obama‘s short list to become the ambassador to Ireland.  Rooney, a well-recognized friend of Ireland and Irish America, says he doesn‘t expect any sort of payback for his support, but, if President Obama calls on him, he will do he can. 

It sounds like the perfect pick to me.

Next:  He voted to demolish.  Then he decided to lead it.  Today, President Obama‘s tapped Republican Senator Judd Gregg for commerce secretary.  But get this.  “Congressional Quarterly” reports that, back in the 1990s, Senator Gregg voted in favor of abolishing the Commerce Department twice. 

One Republican aide explains Senator Gregg‘s turnabout by saying—quote—“I guess, if you can‘t destroy it, go be in charge of it.” 

I remember Ronald Reagan, by the way, wanted to get rid of the Department of Education, then gave it to one of its most outspoken department heads, Bill Bennett. 

Time now for the “Big Number.” 

With it comes a warning that honeymoons don‘t last forever.  Just three weeks ago, 83 percent of Americans approved of the way Barack Obama was handling his job as president-elect.  Now, amid some tough decisions, President Obama is, in the new “USA Today”/Gallup poll, down to a still groovy, but not still heavenly, 63 percent job approval, which translates to a 19-point drop in three weeks. 

Message from Ben Franklin:  In order to get some things done, President, a stitch in time saves nine. 

Obama‘s 19-point approval rating drop says get going with your program.  That‘s tonight‘s “Big Number.” 

Up next:  Banking giant Wells Fargo took $25 billion in taxpayer bailout money.  And now we learn that Wells Fargo is planning a corporate junket to a Las Vegas casino to reward its mortgage lenders, this after Wall Street executives gave themselves a $18 billion package of bonuses after taking bailout money. 

What is Washington doing about it?  Senator Claire McCaskill joins us next. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

Health care and housing lending support to the market today, with the Dow Jones industrial average gaining 141 points, the S&P 500 gaining by 13, and the Nasdaq higher by nearly 22. 

The National Association of Realtors reports that pending home sales rose 6.3 percent in December from the previous month, that as buyers snapped up properties at deep discounts and with cheap mortgages. 

But more dismal news from U.S. automakers.  They were worse than expected.  Chrysler sales plunged 55 percent in January.  GM sales dropped 49 percent, Ford sales down 40 percent.  Meantime, GM and Chrysler are both offering a new round of buyouts to their hourly workers. 

And oil prices ended higher today, with crude rising 70 cents, closing at $40.78 a barrel. 

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

MATTHEWS:  Welcome back to HARDBALL. 

Well, Wells Fargo, the bank, has become the latest bank to thumb its nose, if you will, at the American taxpayer.  The bank took $25 billion in bailout money from the government.  That‘s us.  And now it‘s planning a corporate junket at Las Vegas casinos to honor their top mortgage lenders.

Democratic Senator Claire McCaskill of Missouri wants to cap salaries of banking executives at 400K a year.  That‘s 400,000 bucks, which is what the president gets.  She‘s a member of the Commerce and Armed Services Committee.

Senator McCaskill, I‘m a big fan of yours, but I have to ask you, do you really, really believe that you have the constitutional authority to cap salaries in the private sector? 

SEN. CLAIRE MCCASKILL (D), MISSOURI:  Only...

MATTHEWS:  Really? 

MCCASKILL:  Only if—in very limited circumstances, Chris—only if they are dependent on public money and only until they pay us back, the public money that we have given them. 

It‘s none of our business what people make in the private sector, unless the taxpayers are on the hook for hundreds and hundreds of billions of dollars. 

MATTHEWS:  Well, how do you pass this law?  Let‘s get to the fine details.  How do you get a law signed by the president, passed by both houses, that says employers, big shots at these big firms in New York mainly, can‘t give themselves more than $400,000 a year?  How do you get that into law and make it actually happen, not just talk about it? 

MCCASKILL:  I believe—I believe we have got a real—real chance of getting that done, Chris, because we‘re going to try to offer an amendment on this bill in the next few days which will basically say, going forward, if you want federal money, then you must agree, as a condition of getting public money, that everyone who works at your company must limit themselves to $400,000, $500,000 a year.

And, if you want to make more, if you want to have deferred compensation, that‘s fine, but you can‘t get it until you pay us back. 

MATTHEWS:  Are you going to get that past the big-shot senators from New York, like Chuck Schumer and the new senator up there in Gillibrand?  Are you going to get that past Chris Dodd and Lieberman, the ones who have all those Wall Street people in their states?  They are not going to go along with this, are they? 

MCCASKILL:  I don‘t need...

MATTHEWS:  That‘s their constituency.

MCCASKILL:  The good is, I don‘t need every vote.

MATTHEWS:  Right. 

MCCASKILL:  But I think there‘s wide support for this, Chris.  I really do.

My phones have not stopped ringing since we proposed this. 

MATTHEWS:  Do you think President Obama will sign a bill that cuts the salaries of people that may be his contributors next time around? 

MCCASKILL:  I‘m optimistic that he will.  And I am busy trying to work with the White House as we speak to work out this—this plan. 

MATTHEWS:  OK. 

I‘m going to ask you the same question I asked Governor Charlie Crist, who was on.  He‘s from Florida.  He‘s a Republican.  I guess you would call him a moderate Republican, because he doesn‘t want Barack Obama to fail as president.  I guess that‘s a moderate these days. 

(LAUGHTER)

MATTHEWS:  He wants him to succeed, he said, which is refreshing to hear from any politician, especially one from the other side of the aisle. 

I want to ask you the same question I put to him.  You‘re on television right now.  Explain to the person watching how spending almost a trillion dollars in either tax cuts, because that‘s what in effect—you‘re not collecting the money—you‘re giving it back to people that gave it in the first place in most cases—or you‘re spending money on building things or whatever, how does that get banks to start lending money again?  How does that solve the housing problem?  How does it deal with the problem that started all this? 

MCCASKILL:  Well, what has happened is, because there‘s such uncertainty and lack of confidence in the market, there‘s this retraction. 

That‘s what a recession is.  What does this does, it puts money into the economy.  It causes growth in businesses.  If a business goes to a bank and says, hey, I just got a contract to build this building for the federal government, that bank is going to look at that loan application in a whole different light than they would today, without that kind of stimulative effect.

So this is, in fact, a way of injecting this money into the economy to put people back to work.  That—it is just that simple. 

MATTHEWS:  So, you‘re counting on the checks that the government‘s going to write, either in tax cuts or in spending for jobs or in transfers through Medicare, Social Security, whatever, you‘re counting on those checks going to people right now who have mortgage problems? 

MCCASKILL:  I‘m counting on that—and I think...

MATTHEWS:  That‘s what I don‘t get. 

MCCASKILL:  I think there will be some housing provisions in this bill, too, Chris.  This is a work in progress.  We have got do three things in this bill. 

We have got to help the safety net, because that money goes right into the economy, food stamps, unemployment insurance.  We have got to make sure we‘re creating jobs in the infrastructure by spending money in a stimulative way on jobs.

And, then, finally we need to something in the housing sector.  And I think we are trying to find that way forward right now in a bipartisan way.  And I‘m optimistic we‘re going to get it done. 

The big stuff in this bill is so important.  If we do nothing, it is a disaster.  And the Republicans who are not honest about that really need to do a gut check. 

MATTHEWS:  Let me ask you this. 

Somebody buys a house for $400,000.  Their income doesn‘t justify that kind of an expenditure.  They got talked into buying a house with a balloon mortgage, an ARM, if you will.  It came due.  It got switched back.  They have realized they‘re facing higher interest rates.  Then they realize the economy is not growing.  They‘re not getting a raise, not getting a promotion.  They‘re stuck.  They can‘t make the payments.  They can‘t afford to live in this house.

Now they realize the house‘s value is going down, but they owe the money on a much more expensive house than it now is.  They‘re afraid of an appraisal.  They‘re afraid of a reassessment.  They‘re afraid of everything.  They‘re afraid the company, even going back to them for a re-fi. 

They‘re scared to death.  They won‘t even answer phone calls when they the mortgage company or the bank calls them.  What do we do about that problem?  Because people tell me that situation‘s in the millions right now and it‘s at the heart of our problem.  How do we solve it?  People that can‘t afford the house they live in; should the government bail them out?  Skip all the intermediaries, give them the checks.  I‘m just asking. 

MCCASKILL:  First of all, if we start just giving checks to everyone who can‘t pay their mortgage, then we‘re going to have a lot of people deciding not to pay the mortgage.  That‘s not the right answer.  We do need to do something about the housing inventory.  We do need to give people the tools to renegotiate their mortgages, which most of these companies want to do, Chris.  The people who are going to own these houses if people walk away, they don‘t want more housing inventory. 

Really, there‘s an impetus right there to get it worked out.  And the worst thing people can do is not answer the phone.  They need to be picking up the phone, calling the housing agencies in the community, calling all of the do-gooders that are out there helping people.  We have helped a lot of people in Missouri work through this crisis. 

At the end of the day, there are going to be some people that lose their homes.  And we can‘t fix every single problem in the housings sector.  But I think we can take some valuable steps in this bill. 

MATTHEWS:  Does it bother you that Tom Daschle didn‘t pay 140,000 dollars in taxes? 

MCCASKILL:  Yes.  But, you know, this whole situation kind of give me a stomach ache.  That is a good guy who has worked hard and has such respect up on the Hill.  I get the rules around here.  The rules are you live in a glass house.  And if you make a serious mistake like this, you pay the price. 

But it is too bad, because he had a lot to offer our country and I really admire him, because nobody made him do this.  This wasn‘t the White House.  This wasn‘t people in Congress.  He decided it was the patriotic thing to do, because he was a distraction to this president at a time of crisis.  He stepped aside and he deserves a pat on the back for that. 

MATTHEWS:  What‘s the bad blood between Obama and his crowd in the White House and Howard Dean?  Howard Dean is the chairman of the Democratic party.  He had a big hand in bringing this big victory you all enjoy this year.  He‘s a medical doctor.  He succeeds in so many ways in building your party up and raising money and doing everything right.  He began this whole populist thing back in the last election.  He didn‘t get there, but he helped Obama.  How come he‘s not HHS secretary?  He is getting squat from the president.  What is that all about?  I don‘t get it. 

MCCASKILL:  I don‘t know that he‘s getting squat.  I don‘t know—I think that—

MATTHEWS:  He is getting nothing. 

MCCASKILL:  I don‘t know that he wants anything, Chris.  I think there‘s a perfectly cordial relationship between Howard Dean and the White House.  I think he‘s respected in Democratic circles for the job that he did and I think he‘ll continue to play a role in our party.  I don‘t think there‘s any bad blood there. 

MATTHEWS:  He‘s going overseas to Europe to help liberal parties do well in elections.  I can‘t believe that‘s his first goal in life.  It sounds to me like he didn‘t get what he wanted, which was a role in this administration.  Just asking.  He‘s a medical doctor.  It seems perfect to make him head of HHS.  You have an opening now, senator.  I‘m just curious why these things don‘t fit into place.  Anyway, just a thought. 

Thank you very much for coming on, Senator Claire McCaskill, a big Obama booster from Missouri. 

Up next, cabinet nominees withdrawing, a show down with Republicans over the economic recovery plan.  They want to have a bigger piece of it.  Is President Obama‘s first 100 days hitting a rocky patch or just a speed bump.  Pat Buchanan calls it something else.  I‘m not sure, not at all.  It may just be the usual bumpy road to greatness.  Anyway, the politics fix is coming up.  This is HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.  Time for the politics fix with “Newsweek‘s” Jonathan Alter, whose book, “The Defining Moment,” is out in paperback.  It‘s all about the Roosevelt administration, the first 100 days of that, what a great book.  I don‘t fall in love with that many books, but this one I definitely fell in love with.  And the “Politico‘s” Roger Simon, who is due for a great book these days.  We‘ll wait until you write some great books soon. 

OK, you guys are great writers.  Tell me the drama here.  Tom Daschle

I used the metaphor of the pilot who has to bring the plane down in the Potomac so it doesn‘t hurt anybody else.  I‘m being kind.  It is a bad day for him. 

JONATHAN ALTER, “NEWSWEEK”:  I‘m not sure I can beat that metaphor,

but, look, this town sort to speak is full of people that came to do good -

-

MATTHEWS:  You need a—

(CROSS TALK)

ALTER:  You know you‘re in trouble when you use that.  But they came to do good and they stayed to do well.  And Tom Daschle is beloved by a lot of people here for good reason.  He is a good guy.  He‘s one of the good guys.  But he somehow got accustomed, when he left the Senate, after he was defeated—

MATTHEWS:  The cars. 

ALTER:  Yes.—to a certain life style and a certain sense of what was his due that just didn‘t fit when it came time to go back into government.  I think he probably never thought he would go back to government. 

MATTHEWS:  I don‘t know whether he understood the tax law.  But if you have a car and driver at your service for 80 percent of the time, and you get up in the morning and there‘s a guy waiting outside for you—didn‘t take you to the airport.  It‘s not some particular thing he got a ride for.  He‘s always there.  You‘ve got to believe that‘s a service you are getting. 

ROGER SIMON, “POLITICO”:  Come on. 

MATTHEWS:  You‘re getting an income. 

SIMON:  It was said he was naive.  Someone gives me a free limo for two years, I figure he wants something.  I‘m not naive.  I may not give him it, but I figure he wants something. 

MATTHEWS:  Wait a minute. 

SIMON:  Daschle had things going for him. 

MATTHEWS:  Right. 

SIMON:  As Jonathan said, a nice guy, well connected, would probably have made a great secretary of HHS.  But there was a fourth element; he didn‘t play by the rules.  And do you want to send a message that you only have to pay taxes in America when you get appointed to Obama‘s cabinet?  That‘s the only time these guys did pay their taxes, after their appointments were made. 

MATTHEWS:  They paid their income taxes, but they didn‘t realize their income taxes included this other income, which is a car and a driver.  And then the other case, you know, didn‘t pay—Geithner didn‘t pay—let me go through the pattern here.  I have a theory.  Every one of these people has gotten in trouble for personal finances, not something they did in public.  Geithner had a problem with not paying—when he was at IMF, not paying his Social Security and his Medicare, and apparently something else he wasn‘t paying, workers comp or something.  I don‘t know what it was. 

The fact is that this guy‘s in trouble because he didn‘t pay the taxes on a car and driver he had.  He had income.  What else?  The woman who is a deputy OMB director had a lien against her for not paying D.C. taxes or something.  You‘ve got—the only public case I guess that got in trouble was Richardson got in trouble with some outstanding investigation going on out in Santa Fe about a big contributor with a consulting deal with the state government out there. 

The big problems we came in with, we thought, were the Marc Rich pardon, where Eric Holder would have to pay the price for that, and Bill Clinton‘s international enterprise, which 90 percent philanthropic or whatever.   The big problems were dealt with smoothly.  The little problems are what‘s caused them all the trouble. 

SIMON:  It‘s not so little.

MATTHEWS:  I mean personal trouble.

SIMON:  This is a Leona Helmsley problem.  Only little people pay taxes.  Most Americans pay taxes. 

MATTHEWS:  You‘re jumping on me when I am saying the personal stuff, not the big-picture stuff. 

ALTER:  Especially since Obama set this high standard.  If you go on the big pedestal, you‘re going to get knocked off more easily. 

MATTHEWS:  Did we put him on it? 

ALTER:  No, he decided himself.  He was warned by people that he was setting the standard too high.  I think it‘s good that he set a really high standard, but he had to know he was going to—

MATTHEWS:  Is there a lower standard that allows you to—

ALTER:  Absolutely.  There‘s a—

(CROSS TALK)

SIMON:  What is all this talk about a high standard?  You‘ve got to pay your taxes.  That‘s a high standard?  People get thrown in jail every day in America for not paying taxes. 

ALTER:  Wait a minute.  I‘m not disagreeing with you.  I‘m not trying

to minimize his mistakes.  But the “New York Times” had an interesting

story recently that if you want to pay all the taxes on your housekeeper,

for instance, it takes, like, 30 hours of paperwork, unless you want to

hire somebody, pay them thousands of dollars to do this.  Quite a number of

quite a number of better off Americans have these problems. 

Why is it that the Republicans—do you know in the Bush transition they had Ken Lay from Enron—

MATTHEWS:  Roger, by the way—

ALTER:  -- interviewing everybody.  I‘m not disagreeing.  Why is it the Democrats always get tripped up on this, and when Republicans do things that are pretty sleazy in their transitions, like having Ken Lay interview who the energy regulators are going to be, when he‘s at Enron, and nobody bats an eye?  All the people are confirmed anyway. 

So Democrats, because they set this higher standard, when they fall short, they get held more accountable and they should. 

MATTHEWS:  Let me go back to my favorite guy, Dick Cheney here.  Get a conflict of interest.  One of the things that‘s been moving around the air the last couple days is that Tom Daschle not only had the big taxes he didn‘t pay, but that he is a lobbyist for the health industry.  Suppose a Republican were putting an energy lobbyist in as energy secretary.  A lot of us would criticize that. 

ALTER:  They wouldn‘t be stopped and they wouldn‘t quit. 

MATTHEWS:  You say they would be shameless about it.  Would they be stopped?  Here you have a health lobbyist headed towards the health bill. 

SIMON:  This is a case of President Obama setting a high standard, no lobbyist in the administration, but then failing to meet it.  No lobbyists in the administration, except the ones I give waivers to, and except faux lobbyists who weren‘t technically lobbyists, but worked for lobbying firms.  It is a high standard, but great, do it, meet it.  Meet your own standard in your first two, three weeks of office. 

MATTHEWS:  We‘re going to come back and talk about how we‘re going to deal with this politics, and what everybody out there cares about, I think, not judging it.  Is the economy still heading down hill?  The question is, is anybody in Washington really going to get something done that prevents it from going down hill any further and heads in back in the other direction by the end of the year? 

We‘ll be back with Jonathan Alter and Roger Simon.  I still want an explanation.  My problem is this—

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Jonathan Alter and Roger Simon, two of the best writers in the country.  I‘m going to ask them do the job that nobody is doing in Washington.  Roger Simon, again, fire-side chat—you got 20 minutes with the American people tonight on the radio—on the radio.  You‘ve got to explain to them how this president is going to get the job done of turning the economy around so it doesn‘t keep going downhill.  We keep losing jobs in every industry and every brand name we know.  It‘s going to begin to go up hill.  Explain how his bail out of the financial institutions, how his stimulus package, how those two work together to save our economy. 

SIMON:  I think the president has a mountain to claim in explaining that.  He‘s been trying to.  I think before passage, he may have to. 

MATTHEWS:  Reagan could do it.  Every cab driver knew what Reagan was doing, cutting taxes to release the American energy of economic energy or whatever. 

SIMON:  Reagan lived in an era where you could say it‘s morning in America and everyone said, oh gosh and gee, I love this guy.  It‘s morning in America.

MATTHEWS:  I think he was better than that.  He was the great communicator for a reason. 

SIMON:  Times were simpler.  We‘re facing a greater crisis than Ronald Reagan faced.  People are losing their jobs and they don‘t know why.  I don‘t think the administration and all financial geniuses that they‘ve assembled truly know what‘s going to work.  But they know they have to try something.  I think President Obama should be praised for that.  Some of it will work, some will fail. 

MATTHEWS:  If you‘re going to spend a trillion dollars—these numbers you‘ve got to use—a trillion dollars in tax cuts and spending, you better tell me what you‘re spending it on that‘s going to work.  How does that trillion dollar package that‘s going to come out—that this president is going to sign in a couple weeks, going to turn the economy around?  Somebody has to tell me how that‘s going to work. 

ALTER:  Couple things.  First of all, Reagan‘s budget and tax plans were dead on arrival in Congress until he was shot in March of 1981.  So Obama‘s prospects for his program are actually a lot better.  This stimulus package is going to pass.  But it isn‘t being packaged as well as it could be in PR terms.  They should call it a job‘s bill. 

Rahm Emanuel is trying to say this is about jobs, jobs, jobs. 

MATTHEWS:  If it doesn‘t have al this malarkey in it, condoms and Hollywood money and the stuff they put in there. 

ALTER:  That‘s what the president got upset about behind closed doors yesterday with the Congressional leadership.  He threw all the staff out.  He made them stay in the cabinet room.  He brought the Congressional leadership into the Oval Office and he said get all that junk out of this bill.  He‘s upset about precisely what you‘re talking about.  He knows it‘s hurting him.  It‘s a tiny percentage of the bill. 

MATTHEWS:  OK, look—

ALTER:  He hasn‘t conveyed that message yet. 

MATTHEWS:  I think he has a problem of pre-marketing, putting together the right product and then selling it.  The product‘s not refined yet.  Jonathan Alter, Roger Simon.  Right now it‘s time for “1600 PENNSYLVANIA AVENUE” with David Shuster.

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

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