updated 2/25/2009 12:16:50 PM ET 2009-02-25T17:16:50

Time: 19:00

Guest: Jay Rockefeller, Howard Dean, John Ensign, Michael Wolff High: President Barack Obama prepares to address the nation on the country‘s economic crisis in front of a joint session of Congress.  Former Democratic National Committee chairman Howard Dean discusses reforming the health care system in America.

Spec: Barack Obama; Howard Dean; John Ensign; House of Representatives;

Senate; Congress; Economy; Health and Medicine; Politics; Government;

Democratic Party; Republican Party

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 in human terms, make us better? 

One thing he has going for him is his enormous personal popularity.  People like Barack Obama.  They like the idea he‘s our president.  Polls out just 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 the 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 of things.  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 will have to see what it is—from across the aisle. 

We know he will be upbeat.  We know he will try to explain the problem we face.  We know he will try to explain how he‘s fixing the problem.  What we don‘t know now how is well he‘s going to do tonight. 

I have got two senators joining us tonight to talk about it in a few moments. 

Plus, President Obama‘s expected to outline his plans for health care reform this evening.  And who better to talk about that than Dr. Howard Dean, the recent chairman of the Democratic Party?

Also, Senator Richard Durbin has called on his fellow Illinois Democrat, Roland Burris, to quit the Senate, to walk away from the job he got from Rod Blagojevich.

Based upon the catcalls that Senator Burris is getting from the White House and the giant push he got today from his fellow Illinois senator, if he wants a friend in Washington, Senator 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 to run that cartoon.  And I say, good for him.  He took the heat today, Mr. Murdoch did, and didn‘t try to share the blame with someone else. 

And we have got some history to share with you tonight, a look back at how previous presidents, our three most recent presidents, addressed their first joint session of Congress. 

But, first, President Barack Obama will address his first joint session of Congress just two hours from now.  I will be joining Keith Olbermann and Rachel Maddow for coverage of the president‘s speech and the Republican response by Louisiana Governor Bobby Jindal. 

And then stay with us for a special midnight edition of HARDBALL tonight.  We‘re going to come back at midnight tonight and look at the whole evening and how it‘s gone, including the comments made about the president‘s speech. 

Let‘s turn right now to U.S. Senator Jay Rockefeller of West Virginia, who is a Democrat. 

Senator Rockefeller, a lot riding on this speech tonight.  What do you think he has got to give us? 

SEN. JAY ROCKEFELLER (D), WEST VIRGINIA:  He‘s got to give us confidence.  He‘s got to give us practical talk, straight talk.  He cannot raise our expectations too high.  And he‘s got to lay out the whole agenda.  And it is a huge agenda. 

MATTHEWS:  Do you think that his challenge is part teacher tonight, or should he not bother with—this is so complicated.  Senator, I have never seen a political situation so ground into a complicated economic situation. 

Is it beyond the ken of a politician to explain what trouble we‘re in economically? 

ROCKEFELLER:  It‘s—it‘s—it‘s beyond the ability of most politicians to explain, but Obama can—President Obama can do it. 

And I think he will.  I mean, I think that‘s his genius, and to teach, and, yet, at the same time, to control the message and to be honest, so that the American people think that he‘s being very, very straight with them, not to raise expectations too high, to be confident, but don‘t not to ebullient.  Don‘t promise too much.  Understand that it‘s hard to do.  It‘s going to take a long time. 

Part of it will start soon, part of it won‘t, because it‘s—it‘s about a five-part agenda, a huge—a huge task.  But we have to do it.  We can‘t stand on the sidelines. 

MATTHEWS:  Well, here‘s an excerpt from the president‘s speech today released from the White House earlier this evening—quote—“While our economy may be weakened and our confidence shaken, though we‘re living through difficult and uncertain times, tonight, I want every American to know this.  We will rebuild.  We will recover.  And the United States of America will emerge stronger than before.”

Them‘s fighting words.  Senator, do they meet the standard that you have set here? 

ROCKEFELLER:  They sure do. 

And I think he‘s right.  And I think—and it‘s hard to explain, Chris, but I think that Americans, when they do run into a real crisis, and, all of a sudden, they really all come to understand that, not just those affected, but those who are watching those who are affected, we do come together, and we do, do extraordinary things. 

So, I don‘t think it‘s unrealistic for him to say that.  And I think it will work. 

MATTHEWS:  Well, here‘s the good news tonight.

ROCKEFELLER:  And I think—I will tell you, the big thing he‘s got to...

MATTHEWS:  Go ahead, Senator.

ROCKEFELLER:  The big thing he‘s really got to focus on, to me, is health care, health care reform.  He‘s got to make it cheaper.  He‘s got to use all that health care intelligence—you know, and I.T., which makes things much more cheap.  It‘s got to do universal.  We have got to do long-term care. 

Health care, in and of itself, just one of the five parts of the agenda, is an enormous process.  But we‘re already at it.  There‘s six of us.  Harry Reid, the majority leader, has already appointed six of us to start working out on this plan to begin to develop it.  So, there‘s a lot going on.  It‘s complicated.  It is not undoable. 

MATTHEWS:  Is it doable this year?  Can this president...

ROCKEFELLER:  No.

MATTHEWS:  ... in this time, do it? 

ROCKEFELLER:  No. 

Parts of it are, like the 95 percent tax cut for working Americans.  That‘s doable.  I—I think, you know, other parts are going to be more complicated. 

But there—there are a lot of it, the construction, I wish there had been more of that, but there‘s the construction, education reform, school buildings, all kinds of things to do with education.  He can start that.  He can get the country thinking in a forward-moving direction. 

See, I think that‘s part of the key.  It‘s just not the program itself.  It‘s, are you going in the right direction?  Are you moving the ball forward?  Are you headed with confidence toward success? 

And I think, in his case, the answer is, that‘s what he‘s doing. 

MATTHEWS:  Well, here‘s Governor Bobby Jindal.  He‘s of course, the freshman governor down in Louisiana. 

Here‘s a quote from his response tonight.  I want, Senator, you to respond to it. 

“Democratic leaders say their legislation will grow the economy.”

Here, the governor is talking about the fiscal package you just passed, the stimulus package. 

“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 children for a loan, so we could spend money we do not have on things we do not need?  That is precisely what the Democrats in Congress just did.  It‘s irresponsible and it‘s no way to strengthen our economy, create jobs or build a prosperous future for our children.”

He‘s saying, “So‘s your old man.”  He‘s saying, “I completely disagree with the Democrats‘ stimulus package.”  He‘s saying: “I don‘t believe in Keynesian economics.  I don‘t believe in the positive role of government to offset cutbacks by people in their spending and businesses in their investment by spending more money in Washington.”

He‘s saying, you‘re completely wrong.  The economy is going to fail, and it‘s going to be your fault. 

It‘s a pretty broad-brush reaction of what you have been doing. 

ROCKEFELLER:  And maybe it‘s not just all philosophical and intellectual.  Maybe he has a political purpose in doing all of that. 

I mean, that‘s one of things that worry me, that some of these Republican governors who say, I‘m not going to accept any of that money, well, first of all, if they don‘t want it, we will take it in West Virginia.  But everybody says that.

But is there a political agenda here?  Do they want the president to fail?  Nobody—how can an American want the president to fail?  Walking away—you see, one of the things I love about what‘s happening, it‘s not just about jobs, the stimulus package.  It‘s about plenty of jobs. 

But it‘s also about putting a huge safety net under the millions of Americans who are absolutely destitute, through—through being thrown out of their houses, through credit crunch, through just—just being—just dropping out of sight. 

And he‘s put an enormous safety net underneath that to make sure people don‘t disappear into the deep black hole, not all people.  He doesn‘t rescue all people.  And that, he will say.

(CROSSTALK)

MATTHEWS:  I know. 

Let me get to something—let me get to something we started with.  It‘s very important to me.  Do you believe that he can get health care done this year? 

ROCKEFELLER:  I think that‘s not entirely likely, but it is not improbable. 

It depends on how the sequencing works.  If we catch fire in our—in our health care planning, and we suddenly come upon a series of things to do with long-term care and universal, you know, health care, not national, but universal health care for everybody, if we catch fire on that, we meet minds all of a sudden, it‘s not like the early ‘90s, but it‘s a new urgency, yes, we could get it done. 

I‘m not saying we will.  I‘m not betting on it, but we could. 

MATTHEWS:  Well, I‘m rooting for you. 

Senator Jay Rockefeller of West Virginia is working on the health care issue already. 

The new CBS/”New York Times” poll shows that three-quarters of Americans now say President Obama is trying to work with Republicans—he‘s trying to be bipartisan, people think—while only three in 10 think Republicans are trying to work with him. 

Earlier, I asked Republican Senator John Ensign of Nevada about that very question. 

Here‘s Senator Ensign. 

(BEGIN VIDEOTAPE)       

SEN. JOHN ENSIGN ®, NEVADA:  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 have 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 out of it? 

(CROSSTALK)

ENSIGN:  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 L.A., north of L.A., 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 would 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.

(END VIDEOTAPE)

MATTHEWS:  In less than two hours, President Obama‘s address to a joint session of Congress, it‘s coming at 9:00 Eastern. 

And up next,: much more on what President Obama needs to say tonight to convince the Congress and the country that he can fix this horrible economy.  Former DNC Chairman Howard Dean will be with us to talk specifically about how to fix the country‘s health care system. 

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Coming up:  Rupert Murdoch, the media baron who owns “The New York Post,” says the newspaper that he owns made a mistake with that chimpanzee cartoon. 

That‘s coming up later in this HARDBALL.

(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 is 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.  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 the 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)

MILISSA REHBERGER, MSNBC CORRESPONDENT:  I‘m Milissa Rehberger.  Here‘s what‘s happening.  Officials tell NBC News, President Obama is expected to announce plans later this week to withdraw a majority of American troops from Iraq by August of 2010.  Troop levels are to be cut from the current 142,000 to around 50,000.

Federal Reserve Chairman Ben Bernanke told Congress the recession should end this year if actions taken by the government stabilize the financial market.  That prompted a rally on Wall Street with the Dow gaining 236 points.

A NASA satellite designed to monitor global warming plunged into the ocean near Antarctica minutes after launch from Vandenberg‘s Air Force Base in California.  An equipment malfunction is to blame.

And the hero pilot who splashed US Airways jet down in the Hudson river in January told Congress experienced pilots are quitting because of deep cuts in their pay and benefits.  Chesley Sullenberger says his own pay has been cut 40 percent in recent years and his pension has been terminated.  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‘ll 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 better understand the hurt this cartoon has caused. At the same time, I‘ve 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, the man who owns the news.  “Inside the secret world of Rupert Murdoch,” that couldn‘t be more on the target.  And Michelle Bernard, who is an 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:  Well, this is a first time that I know and the entire Murdoch history where he‘s been the one to apologize.  There have been apologies before.  There was—the “Sun” in London said some horrible things about the rampage at a soccer stadium in Liverpool which had an incredible backlash.  But even there the editor, himself, apologized. 

During the Hitler diaries fiasco, even that was not a real Murdoch upfront 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. 

WOLFF:  And I think you have to remember, Rupert Murdoch is incredibly fond of Barack Obama.  I would even go so far to say he has a little bit of a crush on the guy.  So I think 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 don‘t know Rupert Murdoch obviously the way that this gentleman does and I haven‘t written about him but the ad, the cartoon was absolutely revolting and it was repulsive.

And to have our first African-American president, to be in the first 100 days of his presidency and then have this sort of cartoon and have the kind of talk we‘ve 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 types of thoughts himself.

WOLFF:  But I think you have to see that in a different context 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 the almost 30 years, more than 30 years, 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 essentially say, I want, you know, I want nothing to do with what this newspaper has done.

MATTHEWS:  Michael, you‘re a media critic.  And I want to get to both of you on this.  Start with Michael because you‘ve written so well on this.  I just wonder, I always like it when something new happens in America.  And we are a phenomenal culture.  And every once in a while a new—well, as Bill Maher would say, a new rule.  We get a new rule, a new standard gets set.  It is something like this happening with Don Imus where he made a comment that got him in huge trouble and cost him his job.  But may have 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 macaca and a couple of comments over the year, 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 run 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‘s over.  It‘s over.  It‘s not going to get done anymore.  You‘re 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 be scared to death of the ghost or whatever.

BERNARD:  Exactly, yeah. 

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

BERNARD:  Yeah. 

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

BERNARD:  Well, I don‘t think it‘s 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 5. 

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, you‘re going to stop putting up with this?

BERNARD:  Yeah. 

MATTHEWS:  Because of commercial need. 

BERNARD:  I think they‘re going to because they don‘t want—the free market has spoken.  He does not want to lose his viewership.

(CROSSTALK)

MATTHEWS:  Do you think viewers make a connection between what they see on Channel 5 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 “New York Post?”

BERNARD:  Absolutely, absolutely. 

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

WOLFF:  Yeah.  I think the market has 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 newsroom 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‘ll 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 looked at the “Washington Post” doing that story about Jack Valenti.  I wouldn‘t even go into the content of it.  It was horrendous, horrendous and they ran it because the guy was dead and he couldn‘t sue them.  And that‘s the kind of journalism I think is desperate right now.  It‘s unbelievable.  Anyway, thank you Michael Wolff.  Thank you Michelle Bernard. 

Up next, back to the president‘s big speech of the president tonight.  With all the economic turmoil out there and fear and loathing that‘s growing about this economy, what does President Obama need to say tonight?  The stakes for president, next in the politics picks.  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:  Wow, that‘s Senator Dick Durbin, the number two Democrat in the Senate and number one Democratic senator in Illinois saying his fellow Democratic senator from Illinois, Roland Burris, should quit.  We‘re back with the politics fix with MSNBC political analyst Pat Buchanan and Lawrence O‘Donnell.  Patrick, I don‘t know why they do this on the day of the president‘s big address, but they did it.  One of the top Democrats told his colleague to quit.  I‘ve never heard that before. 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  What is he doing this for?  Leave it to Roland Burris.  He knows his problem or something like that.  I know a lot of other senators have been in trouble.  People don‘t go public and say my colleague ought to quit.  I think that‘s a grand stand play by Senator Durbin, quite frankly.

MATTHEWS:  And it‘s backed up, Lawrence, by the comments by Robert Gibbs at the White House, a couple of hints, hints strongly coming to him that the man ought to walk. 

LAWRENCE O‘DONNELL, MSNBC POLITICAL ANALYST:  Well, Durbin was talking to the Illinois media.  He‘s been under a certain amount of editorial pressure there on the Burris question, where some of the newspapers there think he has influence over Burris. 

You‘ll notice he was most clear about saying I have no influence over the guy.  I told him not to accept the job in the first place, he didn‘t listen to me.  I‘m telling him to resign now, he doesn‘t seem to be listening to me.  This is really Durbin saying I need to wash my hands of this guy in Illinois. 

MATTHEWS:  I think it‘s a problem for the campaign committee for the next time around.  My hunch is his presence in the Democratic Caucus is going to hurt the recruitment and going to hurt their image as a Senate caucus when they run, try to pick up 60 seats next time.  Let me ask you about the president‘s key line.

BUCHANAN:  I don‘t think so. 

MATTHEWS:  You don‘t?

BUCHANAN:  No, no, I think it‘s separate thing.

MATTHEWS: You think it‘s Illinois politics?

BUCHANAN:  I think it‘s Illinois. It‘s one guy that‘s got a problem. 

Other senators and other parties have problems.

MATTHEWS:  So what‘s the motive for the attack on the guy?

BUCHANAN:  I don‘t know why they attacked—leave it be.  The guy‘s got a problem in terms of credibility because of his testimony.  But let him work it out himself.

MATTHEWS:  OK, let‘s talk about tonight‘s speech, Lawrence, you first.  Here‘s the key line, I think, although there will be others.  “The day of reckoning has arrived,” this is President Obama.  “The day of reckoning has arrived.  The time to take charge of our future is here.”  This is Churchillian. 

O‘DONNELL:  Yes, and he will precede that by talking about having inherited a trillion dollar deficit in the financial crisis.  There will be a careful delineation that this stuff isn‘t his problem.  That this was created by the Bush administration.  He won‘t want to make it look like he‘s blaming them, but he‘ll want to remind the audience that this is where it started.

And then, you know, in a very kind of strong way take on the problem of saying I‘m in charge now and here we go.  And he‘ll try to do things with some, I think, specific examples in specific human beings‘ lives citing individuals no doubt who will be up there in the presidential box.

BUCHANAN:  I don‘t remember Churchill saying it wasn‘t my fault.

MATTHEWS:  I know.  I can‘t resist old jokes, guys, especially when I‘ve got two Irish guys here.  You know the story about the guy who was a drunk and was smoking in bed and started a fire and the cops came and he said the bed was on fire when I got in it?  You remember the joke.  It‘s a stupid joke, it has no relevance to this thing.  But that is an interesting point.  He did say in his speech—

O‘DONNELL:  But it‘s part of building—

MATTHEWS:  He makes the point in his speech, Lawrence, that he inherited a trillion dollar deficit.  If you‘re very proper and correct about it, you say wait a minute, the deficit was about a half of trillion when he came in.  He raised it dramatically with the stimulus package.  He didn‘t inherit the stimulus package, he chaired it through Congress.

BUCHANAN:  They did the update of the—Bush got a $450 some billion deficit, but it was estimated just before Barack Obama took the oath at $1.2 trillion.

MATTHEWS:  Really?

BUCHANAN:  Oh, yes.  We inherited it.  Look, you can do that, but don‘t overdo it.  You‘re the leader now.  And the leader doesn‘t say, I didn‘t do it, it‘s not my fault. 

MATTHEWS:  He can clarify he inherited it, though. 

O‘DONNELL:  I think he‘s going to be careful not to overdo it.  He‘ll be careful not to overdo it.  He just wants to remind people, I didn‘t do this to begin with and that‘s one reason to have confidence in me to fix this, because I didn‘t create the problem. 

MATTHEWS:  OK, enough heavy duty.  Let‘s go to the lightweight stuff.  I‘m fascinated by the pictures we‘re going to see tonight.  This is a visual meeting going on right now.  Tonight we are going to see for the first time a number of pictures which I find interesting.  I am going to start somewhat comically. 

Behind the president of the United States will be Senator Joe Biden.  Behind him will be Speaker of the House Nancy Pelosi.  This will be the first time in history that we will have one white guy, an African-American guy, and a woman sharing power in this country. 

This is a dramatic statement about diversity of power, right, Pat?  It doesn‘t grab you romantically like it does me.  Let me try Lawrence on this one.  Perhaps you will be more attracted to this tableau than Pat is, the idea that white guys don‘t rule the country in all of the key posts, just a point, visually to look for. 

O‘DONNELL:  Yes.  The least powerful guy in that shot is the white guy.  He‘s taking orders from the African-American in front of him.  And, by the way, also taking orders from the woman who runs the House who tells him what‘s possible legislatively.

MATTHEWS:  OK, you‘re smiling.  I have to get you on this because you‘re in the right mood to ask you.  Will Joe Biden be able to avoid engaging in any secondary characteristics tonight to cause our vision to go to him during Barack‘s speech?

BUCHANAN:  What he‘s going to do is he‘s going to...

O‘DONNELL:  I think he will.  He has a lot of training as a senator.  He has a lot of training as a senator.  They know the cameras are on them during State of the Union addresses.  So I think he‘s ready for this one, Chris. 

BUCHANAN: That‘s the problem.  He knows the camera‘s on him.  Look.

MATTHEWS:  You know who couldn‘t do it right, Dan Quayle, bless his soul, Dan Quayle didn‘t know how to do it because he looked around the room. 

BUCHANAN:  How about, McCormack was one.  He was up there, he sat there.  It was an old man, his mouth was open and we used to say in the Nixon White House, he looks like a guy will fall over and you will see an Indian arrow in his back. 

MATTHEWS:  Oh, my god.  Is that an Oklahoma story? All I can tell you is you just said he‘s an old man with his mouth open.

BUCHANAN:  He was very old and he just sat up there, you know.  But I tell you, we were making sort of jokes.

MATTHEWS:  We will be right back with Pat Buchanan.  This is a serious night, believe it or not.  Lawrence O‘Donnell, Patrick Buchanan.  We‘ll be right back with the politics fix.  I want to talk more about the visuals of Senator Hillary Clinton, now Secretary of State Hillary Clinton, in the room.  John McCain, who‘s been grumpy lately, in the room.  What‘s that going to look like? You‘re watching HARDBALL.  Let‘s go for the visuals, on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Pat Buchanan and Lawrence O‘Donnell, having some fun on a serious evening.  Let‘s take a look at some pictures here.  Here is John McCain at one of these presidential economic fiscal responsibility summits held the last couple of days, asking a question of the president of the United States.  And it had something to do with the helicopter.  He didn‘t want him buying a new fancy state of the art helicopter and the president had to agree with him. 

Lawrence, this is going to be a reversal of fortune.  Here he is, a guy who is running neck and neck with Barack Obama in the early fall of last year and now he is going to be sitting in the audience tonight, alongside the secretary of state, who is going to be in the first row.  It is going to be quite a panoply of faces out there tonight.

O‘DONNELL:  Well this is the fun of having senators run for president when one of them has to lose and stay in the Senate.  We haven‘t seen that in a while.  We have had these governors running and winning. 

So, yeah, we have a real drama there.  I don‘t think McCain was well-advised at that White House forum to stand up and try to press his case.  He kind of looked like a disheveled White House reporter throwing a question at the president.  It was, I think, beneath his dignity at that stage of the game.  And tonight we‘ll see.  I think he doesn‘t have a speaking part tonight.  All he has to do is sit there and look for respectful.  I think he‘s pretty well trained on that. 

BUCHANAN:  I agree with Lawrence in this sense that he looked pretty petty.  It‘s something you do in a debate to score a debate point.  What about your helicopter?  I thought Barack Obama handled him—handled it as well, and he starts laughing about it and he says, I never had a helicopter before.  I guess I was deprived as a child and everybody‘s laughing.  That is Obama at his best, the wit, it‘s Kennedy-like. 

MATTHEWS:  But deep down, don‘t you think he was a little ticked that the guy took away his option?  Because the fact that he had to make that choice in public, he had to forego the expensive helicopter.

BUCHANAN:  These helicopters, it is a serious—

MATTHEWS:  I know.  Don‘t you like to make those decisions on your own?

BUCHANAN:  I think he intended to make it.  He probably already knew about that.  Let me say about his speech, Chris, it was Reaganite at the end.  These three anecdotes and stories, they really tug at the heart strings.  They are very well done. 

I‘m not that high on some of the earlier boilerplate, progressive rhetoric you always hear.  But at the end, those things talk to people when you use stories and things like that.  That‘s what Reagan did to reach people.  It wasn‘t the language, this writer‘s language.  It‘s anecdote and story.

MATTHEWS:  Here‘s the problem.  Here‘s the problem.  We understood at the time that Reagan faced a fairly understandable recession, was caused by tight money.  We knew what was going on.  It wasn‘t going to last forever.  It was part of the business cycle.  But Volkrait (ph) tightened up the money too much.  This one is a strange animal.  We don‘t know if it‘s a recession.  This could be worse.  This could be something that takes us down for a long time.  And this is scary.

BUCHANAN:  There‘s an elements of near panic with this.  We hit one floor and then you drop to the basement and you say oh, my goodness, we dropped further.  How far until we hit bottom?  And people don‘t know where that is.  That‘s why it‘s good news. 

MATTHEWS:  Lawrence, the concern on my part and Pat‘s and others watching right now and we will be watching tonight by the millions is that we‘re not in a cycle, sort of like a bungee thing that is going to get down and will bounce back up.  It looks like we‘re in a bouncing ball that gradually hits the ground.  It bounces a little higher, a little lower each time, a little lower the next time and then finally the ball‘s on the ground.  That‘s what it looks like we‘re going through with the cycles every night. 

O‘DONNELL:  Right, Chris.  And this panic has changed our politics dramatically.  That clip you showed earlier of Reagan saying in a Buchanan-inspired line, the government must not regulate the economy and bring about social change.  That is exactly what Barack Obama is doing, and doing with great approval out there in the polls. 

MATTHEWS:  Right. 

O‘DONNELL:  So far. 

MATTHEWS:  Lawrence, thank you. 

O‘DONNELL:  And it‘s only that brought about that chance.

MATTHEWS:  Thank you, buddy, thank you Lawrence O‘Donnell from L.A.  Thank you, Pat Buchanan.  One hour, 9:00 Eastern, President Obama will address a joint session of Congress.  I will be back at midnight eastern with a special live edition of HARDBALL.  “COUNTDOWN” with Keith starts right now.

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

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