updated 2/25/2009 12:13:22 PM ET 2009-02-25T17:13:22

Time: 17:00

Guest: Sen. Jim Webb, Sen. John Ensign, Michael Wolff, Howard Dean High: In an informal state of the union speech at the beginning of his term, President Obama to address a joint session of Congress on the economy and health care.  Louisiana governor Bobby Jindal will argue against the very idea of government providing an economic stimulus in the Republican response.

Spec: Politics; Economy

CHRIS MATTHEWS, HOST:  Tonight, state of the union.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Leading off tonight: We‘re in deep trouble.  Can President Obama get us out?  Standing before the U.S.  Congress and the country tonight, that will be the question on everyone‘s mind.  Does this man, this inspiring American we elected to lead us, have the answer to the failing economy?  Does he hold in his head the prescription for what ails us?  Can he, to put it as humanly as possible, make us better?

One thing he has going for him is strong personal popularity.  People like Barack Obama.  They like the idea that he‘s our president.  Polls out today show a general optimism about the coming four years.  They also show that we the American people want him to be the change he promised to be in his campaign.  They don‘t want him to simply split things with the Republicans.  In fact, they want him to stick to his positions.  On the contrary, they want the Republicans to give way and lean over to President Barack‘s side.

So that‘s how it stands as the new president walks into the House chamber tonight to the hoots and hollers of his fellow Democrats and something more reserved—we‘ll have to watch and see what it is—from the other side.  We know he will be upbeat.  We know he was try to explain the problem we face.  We know he will try to explain how he‘s going to fix the problem.  What we don‘t know is how well he‘ll do tonight.  I‘ve got two U.S. Senators joining me in just a moment to give us a pre-game.

Plus: President Obama is expected to outline his plans for health care tonight, and who better to talk about that than Dr. Howard Dean, the former chair of the Democratic National Committee.  I‘ll ask Dr. Dean what advice he has for the president on health care and how the president should keep working at bipartisanship or whether he should go his own way.

By the way, after 176 House Republicans voted against him in his recovery plan, how does he talk to them tonight?

We also have this piece of late-breaking news tonight.  And we‘ve been covering this story intently.  Senator Richard Durbin of Illinois has now called on his fellow Illinois Democrat, Roland Burris, the senator appointed by Rod Blagojevich, to quit, to walk away from the job he got from Blagojevich.  Based upon the catcalls that Roland Burris is getting from the White House and from the giant push he got today from Senator Durbin, if he wants a friend in Washington, Senator Roland Burris better get himself a dog.

And Rupert Murdoch, who owns “The New York Post,” apologized personally today for that paper‘s now infamous cartoon that many saw as likening President Obama to a crazed dead chimpanzee.  Murdoch called it a mistake, that cartoon.  And I say good for him.  He took the heat today and didn‘t try to share the blame.

We‘ve got some history to share with you tonight, a look back at how previous presidents addressed the first joint sessions of Congress.  That will be interesting to watch.

But here‘s senator Jim Webb, Democrat of Virginia.  Senator Webb, let me ask you about this big problem.  We have an economy which still is falling.  It may not even be in a recession.  It may be in serial decline.  What‘s the president got to do tonight?

SEN. JIM WEBB (D), VIRGINIA:  Well, I think this is a chance for the president to have a forum for the American people that he really hasn‘t had since he was elected and to lay out his agenda.  And I think it‘s also important to point out that he is the president, and even though we are the same party, we are the legislature, so he‘s going to be talking to us.  He‘s going to be giving us his expectations.  And we will be looking forward to working with him toward a solution.  But we are two separate bodies of government here, and that‘s the approach that I think we‘re going to be taking.

MATTHEWS:  Well, do you think, based upon what your words are right now, that you‘re going to be more resistant to him on issues like health care, energy and education than you were with regard to the stimulus package?

WEBB:  Well, I was one of those who worked really hard off-line on the stimulus package to take $100 billion out of it that was not directly related to infrastructure programs or getting money into peoples‘ hands immediately or fixing the mortgage crisis.  So I will continue to do that.  We want to work with the administration.  We are of the same party, but we also—again, I want to emphasize we are the legislative body and we‘re going to analyze these things very carefully.

MATTHEWS:  What do you make of the new poll in “The New York Times” today that said that people would more like him to be a Democrat—in other words, be the guy he ran to be—than split the difference with Republicans?

WEBB:  Well, as people generally say and particularly with respect to the president, you have to be careful about polls.  But I think what we are looking forward to seeing from President Obama is a leader who is going to manage his people, who‘s going to put the right issues before the Congress so that we can work on them together.

MATTHEWS:  Let me ask you about the Democrats.  Bobby Jindal, the new governor of Louisiana—he‘s got a real hard-right speech tonight.  This is not a “split the difference” kind of thing, this is hard right.  He‘s obviously out there competing with Governor Palin and Huckabee for the far right of the Republican Party.

He says that the whole stimulus package, the very thing itself, the Keynesian effort to try to increase government spending and cut taxes in order to offset the decline in consumption and business investment, was wrong.  He says it was irresponsible, it was no way to strengthen our economy, it‘s totally wrong to do what you guys did the other day.

“Democratic leaders say their legislation will grow the economy.  What it will do is grow the government, increase our taxes down the line and saddle future generations with debt.  Who among us would ask our children for a loan so we could spend money we do not have?  This is precisely was the Democrat”...

He is trashed right down the line.  He is betting on red against the success of this president.  He is saying if this economy comes back, the Democrats are going to win.  So if it doesn‘t come back, we Republicans deserve to win.  What kind of a political gamble is that he‘s taking?

WEBB:  Well, you‘re articulating the cleavage that has now grown between the two parties on issues where we really need to come and work together.  It‘s been the Republican Party strategy to rebuild their party and rebuild their base on this issue.  We‘re all in uncharted territory here.

And you know, I just spent two weeks down in southwest Virginia, which

is probably one of the most conservative places in America, not simply in

Virginia, and once people started listening to what we were doing and

related it not only to the global situation but to what‘s happening locally

for instance, I have a cousin that I stayed with down in southwest Virginia who has a cattle farm.  And the price of his feed has gone up.  The price of his electricity has gone up.  And at the same time, we‘re facing challenges in terms of moving product all through the economy.

So when people start to hear that and understand it, I think they‘re going to be with us to the point where we have to produce.  Now, the trick is—and quite frankly, this is the gamble I think that the Republicans have taken—it‘s going to be very difficult to demonstrate success, while it‘s going to be very easy to sit back and pick apart one item or another.  So this is the big issue coming—going into the next two years.

MATTHEWS:  What do you make of this new poll that‘s come out that said that—that says that Republicans should work in a bipartisan way with President Obama and not stick to their GOP policies?  Only 17 percent of the people in this poll say, Stick to Republican policies, and overwhelmingly, 4 out of 5, 79 percent, say, Work in a bipartisan way.  So the Democrats are being urged to be Democrats, the Republicans are being urged to be bipartisan.

WEBB:  Well, as I said, we are all in uncharted territory here.  And I believe that what we have put forward, with the reductions that I and probably 14 other senators were able to make in programs that weren‘t going to directly affect the stimulus, is the way for us to go.  And we ought to all be working together to try to save the nation‘s economy and to help solve this world economic problem.  And I think Americans understand that.

This isn‘t—this is a place for respectful disagreement, but it‘s not a place to hope where one side or the other fails.  We‘ve got to come together and fix the country.

MATTHEWS:  Well said.  Let me ask you, should Senator Roland Burris retire from the Senate?

MATTHEWS:  He is, from all of—all evidence that I see, in the Senate legally.  And it‘s up to the Illinois delegation to resolve that issue in the future.

MATTHEWS:  What do you make of Dick Durbin, your whip, your party whip, calling for him to quit today, late today?

WEBB:  I have great respect for Dick Durbin, but he‘s also from Illinois.  So I think they need to solve their problem.

MATTHEWS:  So this is a Chicago problem.  You don‘t want to touch it with a 10-foot pole, in other words?

WEBB:  Well, I tend to...

MATTHEWS:  You sound like you don‘t want to be anywhere near this baby!

WEBB:  Well, you know, I tend to respect the Constitution legal process.  And that process put Senator Burris into the Senate, and the rest of it they‘re going to have to sort out.

MATTHEWS:  Do you think the Republicans are going to cheer tonight or sit on their hands?

WEBB:  I don‘t know.  I really don‘t know.  What we need to do—I have many friends in the Republican Party and we‘ve worked on issues together, and I think that—whatever the disagreements are, we have to agree that we‘ve got to solve this economic situation.  It‘s affecting everyone from the one home down the street to the global economy.  And we need to do this with some seriousness.

MATTHEWS:  OK.  Thank you very much, Senator Jim Webb of Virginia.

WEBB:  Thank you.

MATTHEWS:  Well, tonight Louisiana governor Bobby Jindal‘s going to give the Republican response to the president.  Take a look at this number, by the way, from “The New York Times” today.  Seventy percent in “The New York Times” poll says President Obama is trying to work with Republicans.  Only 31 percent say Republicans are trying to work with him.  So there you have a skewed set of numbers there showing Barack wants to play, President Barack wants to play, and the Republicans have yet to join him.

Of course, that backs—is backed up by reality, of course, in the House of Representatives.  Not a single member of the House of Representatives voted for the stimulus package.  Three Republicans (SIC) did.

Well, let‘s listen to—Speaker Pelosi‘s holding a press briefing right now on the topic of the president‘s speech tonight.  This is live.

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE:  ... in health care and in energy to build a new green economy.  We will, again, be contributing not only to the wellbeing of our people but the strength of our economy—to do all of this in a fiscally sound way with transparency and accountability to the public.  We think it will be a serious speech but one full of hope and optimism, and no one will say it better than the president himself.  So we look forward to that this evening.

MATTHEWS:  All right, Speaker of the House Nancy Pelosi, getting ready for the big speech tonight.  She‘ll, of course, be sitting up there in the Speaker‘s chair right behind the president.

We are joined right now by Senator John Ensign, Republican of Nevada.  Well, you‘ve been hearing these numbers, Senator Ensign.  “The New York Times” poll shows that the Democrats in the form of the—are playing bipartisan with your side of the aisle, but your side of the aisle is not doing—or not reciprocally.

SEN. JOHN ENSIGN ®, NEVADA:  (INAUDIBLE)  Can you hear me OK, Chris?

MATTHEWS:  Yes, I can, Senator.

ENSIGN:  OK.  You know, we want bipartisanship.  I think that‘s what the American people are asking.  You need to start the process from the beginning in a bipartisanship fashion.  If we‘re going to craft a bill, you need Democrats and Republicans sitting down together to work things out.

What happened with the stimulus bill, for example, is that the Democrats in the House of Representatives wrote that.  That was a mistake the president made.  He knows he made that mistake.  And that‘s why you saw so little Republican support.  I think as we‘re going forward, whether it‘s health care, whether it‘s any other issues, we need to start with Republicans and Democrats together at the table to solve some of these major challenges that we have coming forward.

MATTHEWS:  Well, do you believe in the basic idea that when consumption is down, as it is now, and all the numbers show that people aren‘t buying anything and that business is not really investing like it should in a normal fashion, that the government has to step in through a combination of spending and tax cuts to compensate?  Do you buy that basic Keynesian notion?

ENSIGN:  No, I really don‘t, and—but I do believe that government is what caused the problem in the first place.  I think the underlying probably in all of this was the housing problem, and this was government-caused.  This was the Community Reinvestment Act and Fannie and Freddie.  You take that away those two factors, and the housing market never has the bubble and never has the burst.

And any time you have that kind of a major sector of the economy dragging the rest of the sector—or the rest of the economy down, you need to fix that sector of the economy, and that‘s housing.  And this stimulus bill didn‘t do that.  I had a proposal in the stimulus bill that would have done that, and that‘s what I believed we should have done.  The president has now come out with a housing fix.  But the markets obviously have reacted very, very poorly because I don‘t think it‘s really well thought out.

MATTHEWS:  So Governor Jindal will be speaking for you tonight because he is really delivering a roundhouse punch at the very notion that the president believes in profoundly, which is the role of government at a time of recession, or perhaps depression, is to offset the losses in consumer spending and business investment by big government spending and tax cuts.  You basically join Governor Jindal in not believing in that approach, right?  Well, that‘s profound.

ENSIGN:  Well, no.  Look back at history.  First of all, Chris, I‘ve talked a lot about this on the Senate floor.  The Great Depression had huge amounts of spending, and we were in a Great Depression for 10 years.  The stock market took 25 years to recover.  During Japan during the 1990s, they had six different stimulus packages.  They spent over $6 trillion.  It did not recover their economy.  As a matter of fact, it‘s called the lost decade.  They still haven‘t recovered today.

So I don‘t think you can make a good argument that a stimulus package and spending is going to take you out of a recession.  The right kind of tax cuts targeted especially towards small business to incentivize them to invest and create jobs is the way you pull yourself out of a recession.  That‘s what‘s done it in the past, and I believe that‘s what would help do it today.

MATTHEWS:  But—but doesn‘t everybody know that the reason we got out of the Great Depression was the huge spending that went on when we began to support Britain in the war against the Nazis, that huge amount of government spending that went on in the late ‘30s and early ‘40s?  That‘s what got us out of the Depression, right?

ENSIGN:  Yes, but think about this, Chris.  The spending during the 1930s, even in the—you know, with Hoover, as well as with FDR—they had all of this spending.  Shouldn‘t we have come out of the Depression before World War II, if government spending was actually what was going to bring (ph) out of it?  I mean, you had the New Deal, which was huge increases in government spending, and that didn‘t take us out of the Depression.  As a matter of fact, in 1937, we had a depression within a depression.

MATTHEWS:  Yes.

ENSIGN:  The bottom line is we should have crafted a stimulus bill in a bipartisan fashion.  You could have had some spending on things like infrastructure.  I‘m a big believer in infrastructure, but it should be in things—infrastructure that is going to improve the efficiency of the economy, not just on paving roads but actually on building new roads, on building bridges that are going to make our economy move more efficiently, and even on building some of our infrastructure on information technology.  The problem with the bill we had before us, for instance, on health IT, is that money‘s going to be spent four or five years from now, not in the next two years.

MATTHEWS:  OK.  Will you be helped by the economy—will the economy of Nevada be helped by that new rail line from LA, north of LA to Las Vegas?

ENSIGN:  It certainly won‘t in the next couple of years because...

MATTHEWS:  But will it help you ultimately?

ENSIGN:  Ultimately, if it was built.  I‘d rather see it built with private money, and there‘s private investors out there that have been talking to me for the last couple of years.  They actually want to get their own high-speed rail going without government assistance.  And so I don‘t know that the money was needed, you know, for that.  I believe in infrastructure, but this was not necessarily infrastructure that we needed.

MATTHEWS:  Well, I believe in high-speed rail.  I‘m completely with you on that, Senator.  I just wish these guys would start building those railroads.  Thank you very much, Senator John Ensign of Nevada.

President Obama‘s address to a joint session of Congress will happen tonight at 9:00 Eastern right here on MSNBC.  Much more on what the president needs to say tonight to convince Congress and the country that he can fix the horrible economy coming up in a second.  We‘re going to have former DNC chair Howard Dean, who‘s a medical doctor, to talk about the role that health care is going to play in this speech tonight.  He‘s got some insight into what‘s coming.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Tonight we expect to hear President Obama talk about reforming the health care system, a long overdue agenda item for the Democrats  It‘s an issue important to Dr. Howard Dean, who‘s a medical doctor, a former governor of Vermont, former chairman of the Democratic National Committee.  But once a doctor, always a doctor, right?

HOWARD DEAN, FORMER DEMOCRATIC NATIONAL COMMITTEE CHAIRMAN:  Well, I

guess so. 

(LAUGHTER)

MATTHEWS:  Just like a priest.

So, what do you think about this?  I mean, the Democrats have been promising health care for this country since Harry Truman...

DEAN:  Sixty-some years ago.

MATTHEWS:  ... and have failed relentlessly. 

Ted Kennedy, according to this new book about him, which is pretty favorable, by “The Boston Globe” said that he regrets that he didn‘t cut a deal with Nixon back in ‘71, when Nixon declared for a total national health care program, which included mandated benefits requiring employers to provide health care for all their employees.  That was an opportunity. 

OK.  I‘m just asking you to set that up.  You don‘t have to revisit that. 

DEAN:  All right. 

MATTHEWS:  Is the answer here not to go left and move to the center, but to put together a real coalition with the pharma people, with people like the Chamber people, who are business people, who do know they need health care funding to help reduce their costs, and go at it a new way, try some new way to go after this thing?

DEAN:  Barack Obama‘s health care bill actually does that.  It‘s a very, very good bill.

And the reason it‘s a good bill is...

(CROSSTALK)

MATTHEWS:  He has a bill?

DEAN:  Yes, he has a bill.  He talked about it in the campaign.  I have not actually seen a written bill, but I know he has got a plan and he had it in the campaign. 

I have been doing this since ‘78 or something, when I was a medical student, chasing around Ted Kennedy and Jacob Javits.  This is the best one I have seen.  And the reason is, the change comes at the pace the American people are comfortable with it. 

The bottom line, to make a very complicated subject simple, is, if you have no insurance or you work for a small business, you get to choose, just like the Congress people do, from maybe 15 insurance companies.  One of those insurance companies is essentially Medicare.  It‘s a public entity. 

If Americans can do that, they will change the health care system at the pace they‘re comfortable changing it.  And that—if that bill passes, he has succeeded in restructuring health care.

MATTHEWS:  Won‘t everybody choose Medicare? 

DEAN:  Not everybody will choose Medicare.  But a lot of people will, which is why the health insurance industry..

MATTHEWS:  People love Medicare. 

DEAN:  People love Medicare.  It works. 

MATTHEWS:  Yes. 

DEAN:  And it‘s—a lot of people will choose it.  It is the solution for the car companies, for example, to get the retiree health care costs for -- 55 -- if you retire at 55, which many autoworkers do, they have 10 years with no government benefits of any kind. 

The companies pick that up.  It‘s one of the reasons they‘re in

trouble financially.  You could do a lot for small business and American

business by enacting Barack Obama‘s plan for universal health care.  And

the American people will be completely comfortable with it, because there‘s

all we are doing is rearranging the options that people already have. 

We‘re not introducing any new options.

There‘s nothing they have to understand that‘s different or complicated or “Harry and Louise”-like...

(CROSSTALK)

MATTHEWS:  Yes.  Well, look, this country has got 40 million, 50 million people out there that don‘t have health insurance. 

DEAN:  Right. 

MATTHEWS:  They have got to go the emergency rooms.

If Barack Obama is successful, will he be able to fix that problem, so they don‘t have to go to emergency rooms anymore?

DEAN:  Yes. 

MATTHEWS:  They will have a doctor? 

DEAN:  You will have a doctor, because, if you‘re on Medicare, if you choose that option, you will have a doctor.  And you don‘t have to choose that option.  The...

(CROSSTALK)

MATTHEWS:  OK.  We haven‘t been able to do this in good times.

DEAN:  Right. 

MATTHEWS:  We haven‘t been able to do this, Republican, Democrats.  We have been dicking around about this thing for years, decades now.  It‘s just not gotten solved.  Why do you think we can solve it during the worst economic crisis we have had since the ‘30s? 

DEAN:  Because it is the worst economic crisis we have had since the ‘30s. 

People finally get this.  The business community has been really in trouble for years over this particular issue.

MATTHEWS:  Yes. 

DEAN:  And, finally, they can‘t afford it anymore. 

Because we‘re in terrible economic times, the large number—a large number of middle-class people are either losing the health insurance or know somebody who is. 

MATTHEWS:  OK. 

DEAN:  Small businesses get bailed out by this.

(CROSSTALK)

MATTHEWS:  OK.  Give me hope. 

You have got Mitt Romney up in Massachusetts.  He wasn‘t much of a politician, but he did get through some health care plan.  Schwarzenegger had some problems in California, another Republican who has got a health care plan. 

Can you put together their modicum of success and progress with the fact that businesspeople, like the Chamber, Tom Donohue, people like that, I assume are for health care, and pharma people, people like that, the insurance companies, the health companies, the pharmaceutical companies, can you put it together politically, so it‘s actually going to happen, for once? 

DEAN:  You can‘t put it together without making some enemies. 

In this case, the enemies will be health insurance companies, because when you can choose Medicare, they don‘t like that. 

MATTHEWS:  Yes. 

DEAN:  But the truth of the matter is, you want to maximize the American people‘s choice.

MATTHEWS:  Can they beat you? 

DEAN:  We are going to find out. 

Bipartisanship sometimes means putting together new coalitions.  We would like the Republicans to support Barack Obama‘s bill. 

MATTHEWS:  Yes. 

DEAN:  If Barack Obama‘s bill gets changed to exclude the public entity, it is not health insurance reform.

MATTHEWS:  Yes. 

DEAN:  And, if it—if it—but if it stays the way he talked about in their campaign, it is major health insurance reform.

And the goal of Harry Truman from 60 years ago, the goal of the business community, the goal of doctors—even the pharmaceutical companies will be on board for this—this bill that Barack, his folks have put together.

But the—it rises and falls on whether the public is allowed to choose Medicare if they‘re under 65 or not.  If they are allowed to choose Medicare as an option, this bill will be real health care reform. 

MATTHEWS:  Right. 

DEAN:  If they‘re not, we will be back fighting it—about it for another 20 years ago, before somebody tries again. 

MATTHEWS:  Who‘s point person inside right now in the administration? 

Who‘s health care...

(CROSSTALK)

DEAN:  That‘s not clear to me.  I don‘t know the answer to that, although there‘s an awful lot of talk that it‘s the director of the OMB, who happens to know a great deal about health...

(CROSSTALK)

MATTHEWS:  Orszag?

DEAN:  Yes, Peter Orszag. 

MATTHEWS:  Yes, he‘s a smart guy.

DEAN:  Yes. 

MATTHEWS:  Well, I wish you luck.  I hope you become head of HHS, by the way.

(LAUGHTER)

MATTHEWS:  I think you would be great.

DEAN:  Thanks for the—thanks for the lobbying job.

MATTHEWS:  It‘s my opinion.  And I won‘t ask you yours.

Thank you. 

Well, Mr. President, if you‘re watching, this is your guy...

(LAUGHTER)

MATTHEWS:  ... chairman of the party, brought you to victory.  Give him a piece of it. 

Anyway, thank you, Howard Dean, Dr. Howard Dean. 

Up next:  What kind of tone—that‘s always a big question—will President Obama take tonight?  Will he be consoling, comforting?  Will he warn us?  Will he make us feel like a doctor at our bedside that has got the solution to our problem?  That‘s what I think he needs. 

We will take a look at recent presidents and their first addresses to Congress.  They‘re all interesting addresses, Reagan, Clinton, and President Bush 43. 

You‘re watching HARDBALL.  You are going to see those fellow in just a minute in the revere—What do you call it? -- the rear-view mirror. 

We will be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL. 

Tonight, the president of the United States gives his first address to a joint session of Congress.  It‘s his first report to the country of where we stand, where he‘s going to take us, more to the point, what the hell is wrong with the economy, how‘s he going to fix it, and how long is it going to take. 

Here‘s a look back at some earlier presidential first addresses. 

(BEGIN VIDEO CLIP, FEBRUARY 18, 1981)

RONALD REAGAN, PRESIDENT OF THE UNITED STATES:  The taxing power of government must be used to provide revenues for legitimate government purposes.  It must not be used to regulate the economy or bring about social change. 

(APPLAUSE)

REAGAN:  We have tried that, and, surely, we must be able to see it doesn‘t work. 

(END VIDEO CLIP)

(BEGIN VIDEO CLIP, FEBRUARY 17, 1993)

BILL CLINTON, PRESIDENT OF THE UNITED STATES:  Nobody likes the tax increases, but let‘s just face facts.  For 20 years, through administrations of both parties, incomes have stalled, and debt has exploded, and productivity has not grown as it should.  We cannot deny the reality of our condition.  We have got to play the hand we were dealt, and play it as best as we can. 

(END VIDEO CLIP)

(BEGIN VIDEO CLIP, FEBRUARY 27, 2001)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  And government is charging more than it needs.  The people of America have been overcharged.  And, on their behalf, I‘m here asking for a refund. 

(CHEERING AND APPLAUSE) 

(END VIDEO CLIP)

BLITZER:  Boy, did Bill Clinton look young in that picture. 

So, Reagan didn‘t like government trying to direct economic traffic.  Clinton said, government deficits were the problem.  President Bush said government surpluses were the problem.  Interesting. 

Tonight, President Obama‘s task is clear.   Be our doctor.  Tell us what‘s wrong.  Tell us what he‘s going to do to cure our problem.  Tell us when we‘re going to get better. 

Up next, Rupert Murdoch apologizes for that cartoon in “The New York Post” which critics say linked President Obama to the shooting of a chimpanzee.  That‘s next. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

JULIA BOORSTIN, CNBC CORRESPONDENT:  I‘m Julia Boorstin with your CNBC “Market Wrap.”

A rally after Federal Reserve Chairman Bernanke told Congress the recession should end this year, if actions taken by the government stabilize the financial markets.  The Dow Jones industrials gained 236 points.  The S&P 500 rose 29 points.  And the Nasdaq gained 54 points. 

Fed Chairman Bernanke also downplayed the idea of nationalizing major banks.  With that, financial stocks posted healthy gains today.  The only Dow stock to finish lower today, Microsoft.  Its CEO repeated a gloomy forecast for the rest of this fiscal year, ending in June. 

Meantime, oil prices rose.  Crude gained $1.52, closing at $39.96 a barrel.  And gold continued to slide.  After topping $1,000 an ounce on Friday, gold fell another $25.50 to $969.10 an ounce.

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

HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

Last Wednesday, “The New York Post” ran this cartoon making light of a chimpanzee attack in Connecticut.  The cartoon showed two police officers who shot a chimpanzee dead.  One officer says to the other, “They will have to find someone else to write the next stimulus bill.”

Well, two days later, “The Post” issued what it called an apology, which read, in part: “To those who were offended by the image, we apologize.  However, there are some in the media and in public life who have had differences with ‘The Post‘ in the past—and they see the incident as an opportunity for payback.  To them, no apology is due.”

Well, after that sniping, today, nearly a week after the cartoon ran, this one ran, this time from the boss, Rupert Murdoch himself.

It reads—and this is heavy-duty—“As the chairman of The New York Post, I am ultimately responsible for what is printed in its pages.  The buck stops with me.  Last week, we made a mistake.  We ran a cartoon that offended many people.  Today, I want to personally apologize to any reader who felt offended, and even insulted.  Over the past couple of days, I have spoken to a number of people, and I now know better—I better understand the hurt this cartoon has caused. 

“At the same time, I have had conversations with ‘Post‘ editors about the situation.  And I can assure you—without a doubt—that the only intent of that cartoon was to mock a badly written piece of legislation.  It was not meant to be racist.  But, unfortunately, it was interpreted by many as such.  We all hold the readers of ‘The New York Post‘ in high regard.  And I promise you that we will seek to be more attuned to the sensitivities of our community.”

With us right now is “Vanity Fair”‘s Michael Wolff, author of “The Man Who Owns the News: The Inside”—well, “Inside the Secret World of Rupert Murdoch.”  That couldn‘t be more on the target.  And Michelle Bernard, who is a MSNBC political analyst and president of the Independent Women‘s Voice. 

Michael, thank you for joining us.

You are the expert.  What do you think went into Rupert Murdoch‘s command decision to fall on the sword himself? 

MICHAEL WOLFF, AUTHOR, “THE MAN WHO OWNS THE NEWS: INSIDE THE SECRET

WORLD OF RUPERT MURDOCH”:  Well, this is—this is the first time that I know in the entire Murdoch history where he‘s been the one to apologize. 

There have been apologies before.  There was in—“The Sun” in London said some horrible things about the—about the rampage at a soccer stadium in Liverpool, which—which had an incredible backlash.  But, even there, the editor himself apologized. 

During the Hitler diaries fiasco, even though that was not a real Murdoch up-front apology.  So, this is extraordinary.  And I think what it means is that Murdoch himself was livid.  He was—I think he—this offended him personally. 

MATTHEWS:  Powerful stuff, Michael.  And you are the expert, writing the biography of the fellow.  That‘s what I felt.  I felt that he decided that he wanted it clear that he didn‘t like the cartoon, that he thought it was racist, in effect, if not in intent. 

(CROSSTALK)

WOLFF:  And I think you have to—you have to remember, Rupert Murdoch is incredibly fond of Barack Obama.  I would even go so far as to say he has a little bit of a crush on the guy.

So, I think that this was a moment in which Rupert saw this cartoon, and he said:  Wait a minute.  This is a problem. 

MICHELLE BERNARD, MSNBC POLITICAL ANALYST:  The apology was more than overdue.  I‘m glad he did it. 

I mean, I don‘t know Rupert Murdoch, obviously, the way that—that

this gentleman does.  And I haven‘t written about him.  But the—the ad -

the cartoon was absolutely revolting, and it was repulsive.  And to have our first African-American president to be in the 100 days of his presidency, and then this sort of cartoon and the kind of talk that we have had about it, it was absolutely necessary for Murdoch himself to make the apology, because most Americans would start to wonder if he actually holds these—these type of thoughts himself. 

You would always ask that question.

WOLFF:  Well, yes, but I think you have to see that—I think you have to see that in a different context, which—or in a broader context, which is, this is nothing new for “The New York Post.” 

“The New York Post” has been doing this for its—for the almost 30 years, more than 30 years, that—that Rupert Murdoch has owned the paper.  It is part of what “The Post” does.  And you can like it or hate it, but it‘s part of its tabloid soul.

So, the really interesting thing—and, in the past, Murdoch has always defended that.  So, the really interesting thing is to see, in this single instance, Murdoch decided to walk away from “The Post” and—and essentially say:  I want—you know, I want nothing to do with what this newspaper has done. 

(CROSSTALK)

MATTHEWS:  Michael, you‘re a media critic.  And I want to get your both view on this...

BERNARD:  Yes. 

MATTHEWS:  ... and start with Michael, because you have written so well about this. 

I just wonder.  I always like it when something new happens in America.  And we are a phenomenon culture.  And, every once in a while, a new—well, as—as Bill Maher would say, a new rule—we get a new rule, a new standard gets set.  It is—something like this happened with Don Imus, where he made a comment that got him in huge trouble and cost him a job, that might have been gotten away with two weeks before that, three years before that, 10 years before that.  We don‘t know when these lines are drawn.

But, clearly, the monkey reference, coming off of “macaca” and a couple other comments over the years, I know—I know about it.  We all know about it, the way it‘s done.  It‘s a racist reference.  The fact that it‘s two white police officers—police officers—in New York shooting dead a chimpanzee, and referring to him as the author of the stimulus package.  Well, I tell you, this was in the cross hairs for me a thousand years ago.  But I don‘t think you could have ran that in Capetown in 1950.  But is a new line being drawn here?  No more racist, ethnic jokes? 

WOLFF:  Well, I think it is.  I mean, I think when you get—

MATTHEWS:  I mean, no way.  It is over.  It is over.  It‘s not going to get done anymore.  You are not going to get away with it.  It‘s not funny.  It‘s not within the license of literary or journalistic fun and games. 

WOLFF:  Well, I would say—I mean, I would say great if that were the case.  To be honest, I don‘t think it is the case.  And I think that—

I think we will see versions of this on Fox.  We‘ll see versions of this in the Post again.  But I think in this instance, at this point, when it caught—when it came to the forefront like this, when it confronted Rupert Murdoch, Murdoch had to come out and he had to say—and this is a personal thing—he had to say, this is not me.  I don‘t want to be associated with it. 

MATTHEWS:  You know, when you see the old movies—I don‘t have to tell you, a woman of color.  But when you see these old movies that have only like one black guy in the whole movie and he would be scared to death of the ghost or whatever. 

BERNARD:  Exactly, yes. 

MATTHEWS:  Don‘t fail me now, some line like that.  Or you have a Pullman car operator, with big eyes, looking at something, and you say, do they have to do that in these old movies?  They did.  They had to throw in some racism. 

BERNARD:  Yes. 

MATTHEWS:  Then there would be the Alfred Hitchcock movies on 5th Avenue, not a single black person on the whole street.  Did they clear the street?  You know?  At what point do you draw this line and say stop it? 

BERNARD:  Well, I don‘t think it is going to stop right away.  I think, moral character aside, if you look at what—everything that Murdoch owns, it‘s not just stepping away from the “New York Post.”  Look at the number of African-Americans that watch programming on Fox.  Not the Fox News Channel, but programming on Fox, the number of shows that are pitched directly to the African-American population in this country. 

MATTHEWS:  Channel Five. 

BERNARD:  Yes.  It is going to stop.  It is absolutely going to stop, at least I think at Fox.  And I think that‘s—

MATTHEWS:  You mean they are going to stop putting up with this? 

BERNARD:  Yes. 

MATTHEWS:  Because of the commercial need. 

BERNARD:  The free market has spoken.  He does not want to lose his viewership.

(CROSS TALK)

MATTHEWS:  Do you think viewers make a connection between what they see on Channel five, which might be down market, which is classic Murdoch, obviously—down market is what he does.  But you think they connect that with a cartoon in the “New York Post?” 

BERNARD:  Absolutely, absolutely. 

MATTHEWS:  Michael, your thoughts, do people put it together? 

WOLFF:  Yes.  I think the market‘s spoken in another way, and this is a point I made on my column on Newser.com this morning, which is that the “New York Post,” the newspaper industry itself, has become so much weaker that it‘s there trembling.  Everybody on the news room of the “New York Post” is afraid for their jobs, not just because of a racist cartoon, but of the state of the newspaper industry. 

So really, in that respect, everybody says, you know, we got to—you know, we can‘t buck it anymore.  We can‘t have that kind of, you know, we will go to war with anybody, because our jobs are at stake. 

MATTHEWS:  Well, what scares me is people do anything to get the newspaper sold.  I look at the “Washington Post” doing that story about Jack Valenti.  I won‘t even go into the content of it.  It was horrendous, horrendous.  They ran it because the guy was dead and he couldn‘t sue them.  That‘s the kind of journalism I think is desperate right now.  It‘s unbelievable. 

Thank you, Michael Wolff.  Thank you, Michelle Bernard. 

Up next, back to the president‘s big speech tonight, with all the economic turmoil out there, and worry and fear and loathing that‘s growing about this economy.  What does President Obama need to say tonight?  The stakes for the president next in the politics fix.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. DICK DURBIN (D), ILLINOIS:  I told him that under the circumstances I would consider resigning, if I were in his shoes.  He said he would not resign. 

(END VIDEO CLIP)

MATTHEWS:  Senator Dick Durbin, there he is, the number two Democrat in the Senate and the senior Democrat of Illinois, telling his fellow Democratic senator from Illinois, Roland Burris, to quit.  We are looking right now at the politics fix.  We have MSNBC political analyst Pat Buchanan joining us and Lawrence O‘Donnell.  We‘ve got an all Irish team here.  Brass knuckles are in place.  Are you ready to talk, Lawrence?  Roland Burris, should he stay?  Should he quit or hunker down? 

LAWRENCE O‘DONNELL, MSNBC POLITICAL ANALYST:  I think we know what he‘s going to do, Chris.  He seems like the hunker down type.  And at this point, the only thing that can get him out of there is, starting off with the Senate Ethics Committee, is a removal investigation.  That could take quite a while.  It would involve testimony from him, possibly testimony from Blagojevich.  It would be quite a circus.  It would drag on for quite a while. 

So he‘s got—if he wants to let that process run its course, he‘s got a year there at least. 

MATTHEWS:  I don‘t see how even that, Patrick, disqualifies him as a senator, because there‘s nothing in the deal.  He was appointed by the governor, accepted by the Senate. 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  Right. 

MATTHEWS:  What‘s wrong with the deal?  What clears the deal?  I‘m not sure it does. 

BUCHANAN:  There‘s nothing wrong with what he did.  I think his problem is he may have made a mistake and misspoken under oath. 

MATTHEWS:  Before the impeachment committee in Illinois. 

BUCHANAN:  Yes.  If he did that, there‘s a possibility of an indictment.  But usually you have to have it much harder and more solid than I have seen it. 

MATTHEWS:  Does an indictment cost you a Senate seat?  They haven‘t kicked anyone out of the Senate since the Civil War. 

BUCHANAN:  I know.  The Senate Ethics Committee will then have to start moving—

MATTHEWS:  Oh, come on.  Come on. 

BUCHANAN:  Bottom line, I think if all they have got is what they got now, Roland Burris rolls into 2010 as our nominee.  

MATTHEWS:  Oh, Lawrence, you worked in the Senate in a high position on the finance committee.  You were staff director.  Do you know anything in the Senate rules that shows there is a Senate rule about membership?  I mean, Stan Brand, the attorney, points out in his fight for Larry Craig on a totally different matter, they don‘t want to set standard for expulsion, because then someone they like might have to be expelled. 

O‘DONNELL:  That‘s right, they very much play it by ear.  But look what happened to Bob Packwood.  It took about 18 months and they chased him out.  They were on the verge of an expulsion vote and Packwood resigned.  That wasn‘t over any indictment.  That wasn‘t over any even chargeable offense.  It was, you know, some form of sexual harassment around the office over a period of 20 years.  So that wasn‘t any standard involved there.  They just chased him out. 

BUCHANAN:  Chris, what about Senator Vitter, who‘s had some public problems here in D.C. and down in Louisiana?  He‘s getting stronger and stronger, one of two votes against Hillary Clinton.  He looks like he may get re-elected.  Louisiana is a very tolerant state.  So, Chris, I think you‘re right.  I don‘t think the Senate Ethics Committee—

MATTHEWS:  I love the way you talk.  I love the way you adjust your social policy to your political goals.  It‘s a very tolerant state.  Did you hear that, Lawrence?  I‘ve always said if you had your fifth divorce and everything‘s gone wrong in your life, you show in New Orleans and the bartender‘s going to say, great to have you here.  Welcome aboard, buddy.  It is a forgiving state. 

BUCHANAN:  That‘s Edwards‘ country. 

MATTHEWS:  It is the Mardi Gras country.  Do you think Vitter last?  Just to bring up the—prostitute in Washington, a prostitute in New Orleans, all on the record, is that enough to knock him out of there?  

O‘DONNELL:  Not through the Senate Ethics Committee process.  That looks like it‘s going to be up to the voters of Louisiana.  The voters of Louisiana do have a very forgiving record. 

MATTHEWS:  OK.  Let‘s talk about something serious—

BUCHANAN:  They don‘t want to pull that double edge sword. 

MATTHEWS:  Let‘s talk about the big speech tonight.  We‘re going to come right back and talk about tonight.  I want to talk about the Republicans tonight, because the camera‘s going to be on them.  Bobby Jindal, speaking of Louisiana, is giving a very no-way-Jose approach to this presidential approach tonight.  Fight stimulus packages, per se, they‘re dead wrong on the whole approach.  He‘s going to the far right in his reaction.  Should the Republicans go completely in the rejectionist mode tonight or try to be accommodating when they make their responses tonight? 

Do they stand up, sit down, applaud or not?  Pat Buchanan, Lawrence O‘Donnell back in a moment with the politics fix.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Pat Buchanan and Lawrence O‘Donnell for more of the politician fix.  Lawrence, give me a sense of what you know about how the Republicans might react to this popular new Democratic president. 

O‘DONNELL:  Chris, they‘ve read the polls.  They know how popular he is.  They know that their strategy so far isn‘t playing well.  They‘re going to look for every chance they can to clap for him, to find a spot of agreement where they can clap for him.  They don‘t want to be caught on camera sitting on their hands the entire time.  So they‘ll be looking for every agreement spot they can find.   

MATTHEWS:  The camera will be looking for the grimmest of John McCain tonight, right? 

O‘DONNELL:  Exactly.  Chris, funny story, one time during a Clinton State of the Union Address, I got there late and I had floor privileges.  My Republican friends gave me a seat on the Republican side.  I was down in the front row.  Bill Clinton says something and I start to jump up to applaud and I realized, wait a minute, I can‘t do that; I‘m on the Republican side.  The whole country would be wondering, who‘s this Republican clapping for the tax increase? 

So I just did exactly what the Republicans did.  I sat when they sat, and I didn‘t clap when they didn‘t clap.  But it‘s very carefully orchestrated, as you know. 

MATTHEWS:  I used to stand in the corner. 

BUCHANAN:  Lawrence is exactly right.  I think, look, everybody knows this is a very likable man.  He‘s doing his best.  And the country likes him a great deal.  And the Republicans are going to be looking for occasions to agree with him, stand up and applaud, even when they disagree.  I think they‘re going to be respectful.  What‘s the sense of getting up there and being grumpy? 

He won the election.  He got his program through.  We might not have liked it, but he won the program.  I think that‘s the way they‘re going to behave, as gentlemen and ladies.

MATTHEWS:  So when they do the—when the president says, I‘m glad we‘re able to get through that big stimulus package, will three Republican senators stand up? 

(CROSS TALK)

MATTHEWS:  Let me ask you about this challenge.  Let me get to serious ground here.  We‘ve got three minutes now, gentlemen.  You two guys split it between you.  The president of the United States, Dr. Barack Obama tonight.  He has to tell us, I think, the problem we face, his prescription for fixing it, and some sense of how long it‘s going to take.  That‘s my view.  What‘s yours, Lawrence? 

O‘DONNELL:  Very delicate balance.  Let us know how bad it is and how bad we know it is.  We need to know the president realizes knows how about it is.  Then he‘s got to find the optimistic course of the future, to suggest that this solvable, and, most importantly, solvable within his first term. 

If he doesn‘t get towards a solution in his first term, if not a complete solution, then there‘s not going to be a second term.

MATTHEWS:  That‘s great.

BUCHANAN:  I think it‘s going to be Churchillian in this sense: dark days, difficult days lie immediate in front of us.  But we‘re going to see this through.  We‘re going to see the sunny uplands.  We‘ve got it within us to do this.  We‘ve got tremendous problems, inherited bad problems.

I think it‘s a speech, Chris, about confidence and certitude.  The best thing that happened to Obama today, 250 point rise in the Dow, because Bernanke came out and on this banks thing, said, in effect, we‘re not going to wipe all you people that got shares and bonds in banks; we‘re going to try work with you.  That‘s the big factual, substantive problem.  The rest of it, I think, Barack Obama can handle, if he can get the bank piece of it solved. 

MATTHEWS:  But the problem, Lawrence, is real.  It‘s not rhetorical.  The problem is—and it‘s not in the people‘s hands to solve it.  It‘s banks are not willing to lend.  Isn‘t that the problem right now?  They don‘t have the capability or the desire to lend money out? 

O‘DONNELL:  Exactly.  And so much of this problem, actually, lies just outside the reach of government.  And I think Obama knows that.  And, yet, he has to give people a feeling that this is where the solution‘s going to come from.  It‘s a very tricky thing to map.  That‘s why there‘s so much vagary around this discussion.  The truth of it is, the solution is just beyond government‘s reach.  And so people are asking for more specifics from the Treasury secretary, more specifics from everybody. 

How can there be more specifics?  They don‘t have a solution that reaches outside of government‘s powers. 

MATTHEWS:  Does he need to pick a new secretary of the Treasury, Pat? 

BUCHANAN:  I think he probably is going to need to very early, unless he gets something done.  Chris, not simply banks won‘t lend, people don‘t want to borrow.  People have been burned.  They wiped out half of their savings.  They are pulling in.  They‘re not borrowing.  Solid people, they‘re not going out and getting new mortgages.  They‘re not buying new cars.  They‘re down to about nine million cars instead of 17. 

That‘s the problem out there.  Everybody‘s freezing up.  And everything‘s going down. 

MATTHEWS:  Well said.  Thank you, Pat Buchanan.  Thank you, Lawrence O‘Donnell.  The president has to thaw us out tonight.  Join us again in one hour at 7:00 Eastern for another edition of HARDBALL, as we pregame the big speech tonight.  Then President Obama‘s address to a joint session of Congress at 9:00 Eastern.  I‘ll be back live, by the way, at midnight to look at how the evening went. 

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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