updated 2/27/2009 11:18:38 AM ET 2009-02-27T16:18:38

Guest: Rep. Duncan Hunter Jr., Rep. Dennis Kucinich, Bob Ehrlich, Joan Walsh, Todd Harris, Steve McMahon, Rep. Barney Frank, Rep. Darrell Issa, Rebecca Jarvis

CHRIS MATTHEWS, HOST:  Obama leans left.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Leading off tonight: President Obama charts a new course for the ship of state, left of center.  That‘s just one way to describe President Obama‘s new budget.  The plan calls for over $4 trillion in spending in the current fiscal year, by far the most ever by the federal government, and a deficit headed toward $2 trillion.  Compared to the size of the economy, that‘s the largest deficit since World War II.

The budget proposal is big.  It‘s honest.  No more not counting things like the wars in Iraq and Afghanistan.  And perhaps more important, it redistributes wealth, increasing taxes on the wealthy and shifting the money to health care.  It is a 180-degree rejection of 30 years of Reagan-Bushism.

Also, the Pentagon has decided finally to lift that curtain on televised coverage of U.S. war dead returning to the U.S.  The decision will be left now to the families.

And if you want a Technicolor look at the wide world of conservative

American politics, look at the stars apparently at the Conservative

Political Action Conference here in Washington that opens its doors today -

Rush Limbaugh, Joe the plumber, John Bolton, the Rev. Mike Huckabee, Newt Gingrich.  Is this the crowd you want coming your party?

And the neo-conservative thinker and writer William Kristol is advising Republicans to do to President Obama‘s agenda what they did to President Clinton‘s, kill it in its crib.  That‘s in the “Politics Fix” tonight.

And how about the Southern Republican governor who says that anyone who wants President Obama to fail is an idiot?  But didn‘t we hear—or didn‘t he hear Rush Limbaugh say this very thing?  That‘s going to be in the HARDBALL “Sideshow,” where it belongs tonight.

But let‘s start with the really big news today, the Obama budget, and what it says about his new America.  Democrat congressman Barney Frank chairs the Financial Services Committee.  He‘s going to join us right now.  Congressman Frank, what do you make of this big shift back to—away from Bushism, if you will, away from tax cuts for people that make more than a quarter million a year, and to begin to fund health care especially?

REP. BARNEY FRANK (D-MA), FINANCIAL SERVICES COMMITTEE CHAIR:  Well, I think it‘s what people voted for.  There was no secret that this was going to happen.  John McCain kept predicting that if Obama won, this would happen, and I think Obama felt an obligation to make an honest man out of John McCain—or to keep him an honest one.  John‘s always been pretty honest.

What‘s happened is this, Chris.  This extreme conservative philosophy has basically said, Look, here‘s how you get a good country.  You don‘t tax capital.  You don‘t regulate capital.  And you don‘t restrict (SOUND DROP-OUT) after a very long period of Republican rule.  They‘ve had the presidency for eight years, both houses of Congress for six of the eight, and the results have been a disaster.

And what you have now is us saying no.  That didn‘t work.  We are big believers in the private sector.  Of course, the private sector is the engine to create wealth.  But we also know, as Franklin Roosevelt knew and as others have known, that the private sector works best when it‘s got a set of rules and a cooperative set of arrangements with the private sector.

And let‘s just take health care.  The biggest single economic problem Americans face today is the fact that health care goes on your job.  If we did not have the health care system we have, we wouldn‘t have the kind of crisis we have in the automobile industry.  If you could take health care off the backs of the automobile industry here, as it is off the backs of the automobile industry in Canada, Japan and Germany, you wouldn‘t have this crisis.

MATTHEWS:  Well, let me ask you about the numbers.  Do you think there‘s enough money in the added income—the re-added income taxes of those above $250,000 a year—is there enough income up there to tax, enough taxable income to bring into the federal Treasury over time to pay for the cost of a real national health care system?

FRANK:  Well, thanks to the incompetence of the—where the financial system has worked the deregulation, there aren‘t as many rich people as there used to be and they‘re not as rich as they used to be.  But over time, it will be there.  But you do have to do more.

And one of the things that I most liked about the president‘s state of the nation speech—which I thought was a very good speech, very well delivered, even better than very good—he talked about ending the spending on cold war weapons.  One of the great things of inconsistency that I think, Chris, of people who worry about spending—they brought us the Iraq war, the single biggest addition to the deficit, and unlike some other things, it‘s all money that we lose.  We don‘t get any of it money back.

They have projected—you know, we are now—according to the Bush budget, we‘re going to spend billions of dollars to protect the Czech Republic from being attacked by Iran.  Now, I‘m not a regular reader of the fatwas...

(LAUGHTER)

FRANK:  Well, that‘s true.  I don‘t regularly read all the fatwas that come out of Teheran, but I am not aware that they are about to declare war on the Czech Republic, and I don‘t see why I should spend billions of dollars to stop it.

MATTHEWS:  OK, let‘s take a look at what House minority leader John Boehner of Ohio and Republican senator Judd Gregg said about the president‘s budget proposal today.  Here they are.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), MINORITY LEADER:  We can‘t tax and spend our way to prosperity.  And it‘s just the formula that appears the president‘s budget is reliant on.  The era of big government is back and Democrats are asking you to pay for it.

SEN. JUDD GREGG ®, NEW HAMPSHIRE:  Where‘s the restraint in spending?  You know, this budget doubles the debt of the federal government in five years, triples the debt of the federal government in ten years, runs up, obviously, massive deficits over this period.

(END VIDEO CLIP)

MATTHEWS:  Well, let‘s bring in right now Republican congressman Darrell Issa to join Congressman Frank, Chairman Frank.  He‘s the ranking Republican on the Oversight and Government Reform Committee.

Congressman Issa, I‘m looking at these new numbers.  I‘m looking at the actual budget figures for FY ‘09.  That‘s the current fiscal year, which ends at the end of the September.  The numbers are pretty powerful.  It‘s almost $2 trillion in receipts this current year under the new plan, almost $4 trillion in outlays—that‘s actual checks being written—and a deficit approaching $2 trillion, $1.75 trillion.

These numbers have a World War II sound to them.  In other words, the ratio of deficit to outlays to receipts in that World War II category.  We don‘t have wage and price controls.  We don‘t have rationing.  We don‘t have bond drives to soak up the extra cash or whatever.  So is this scary in terms of just fiscal policy, these numbers, or not?

REP. DARRELL ISSA ®, CALIFORNIA:  Well, Of course, it‘s scary.  What‘s scarier, though, is that President Obama has proposed that these budgets—these deficits created under a Democrat Congress—he‘s going to cut them in half over a long period of time.  The fact is, the last time Republicans were in charge, even including the war, we were below $400 billion in deficit.  So the president‘s not proposing getting to $200 billion or $100 billion, he‘s talking about getting below a trillion over the next few years, after we double the size of the debt.

MATTHEWS:  Well, I think the Democratic Party calls itself the Democratic Party, not the “Democrat” Party.  Do we have to do this every night?  Why do people talk like this?  Is this just fighting words, to get the name wrong?

ISSA:  No, this isn‘t intended to be fighting words...

MATTHEWS:  They calls themselves the Democratic Party.  Let‘s just call people what they call themselves and stop the—the Mickey Mouse here.  Save that for the stump.  Seriously.

ISSA:  Chris—Chris—Chris...

MATTHEWS:  Now, let‘s get to the issue here.  Seriously.  We got a fiscal challenge—I want to go back to Congressman Frank and to some English here.  Congressman Frank, are you worried about the size of these World War II numbers here?  Again, $1.75 trillion deficit this year, a spending level of almost $4 trillion.  We‘re almost running deficits as big as the revenue number we‘re bringing in.

FRANK:  Well, Chris, let me first of all come to the defense of my colleague, Mr. Issa, and the Republicanistical Party that he represents...

(LAUGHTER)

FRANK:  ... and say that...

ISSA:  Thanks, Barney.

FRANK:  You‘re welcome, Darrell.  The point is this.  For him to say, Oh, these are the Democrats‘ deficits—I have never seen people disavow their own handiwork so quickly.  And I knew that “born again” was an important strain in our society, but born again deficit haters—that‘s a new version.

The Republican Party under George Bush inherited from Bill Clinton a much lower level of deficit.  We were on track to, in fact, have surpluses.  Alan Greenspan was worried at the end of the Clinton administration that we wouldn‘t have a deficit, which would make the Fed—it would make it difficult for them to do monetary policy.

They ran up these enormous deficits.  Now, it is true they‘re going up now because of the legacy the Bush administration, this terrible financial crisis brought about, I believe, by an absence of appropriate regulation.  That adds to it.  If there were no plans to cut it down, it would be different.  But President Obama does plan to raise taxes on the wealthy.

And let‘s go back to 1993.  I voted for the Clinton tax increase that raised the top tax rate on people—on incomes over $200,000 by 3 percent.  I voted for other taxes on the wealthy.  The predictions from the Republicans were this would be economically devastating.  Few predictions have been more flatly repudiated by reality.  In fact, in the years after the Clinton tax cut, we had one of the best sets of economic statistics in our history.

Secondly, my Republican colleagues have continued to pump up a military budget that includes wonderful weapons that are aimed at defeating the Soviet Union, that are aimed, as I said, to defending the Czech Republic against Iran.

MATTHEWS:  OK...

FRANK:  And if we were to cut back substantially on that amount of waste, we would still be the strongest nation in the world and reduce the deficit.

MATTHEWS:  Mr. Issa?

ISSA:  Well, I guess the Democratic Party, filled with proud Democrats, just wants to say that the previous two years under Speaker Pelosi and Harry Reid were somehow Bush‘s fault.  Well, now, suddenly, it‘s going to not be Obama‘s fault.

The fact is, the projected deficits show no level of austerity.  They show no peace dividend.  What they do is get us to half of a record level.  The truth is, the American people were disgusted with the growth in spending, the growth in deficits.  They were thrilled to have lower taxes, but they didn‘t want lower taxes if they weren‘t sustainable.

Barney and I would agree on one thing, I‘m sure, which is lowering taxes without controlling spending is inevitably a disaster.  I‘ll take the blame for all of that during the six years of the eight that I‘ve served that Republicans were in charge.  But today, what we‘re dealing with is a TARP that was passed with Democrats voting the majority of it and with Republicans, in fact, majority voting against it.

(CROSSTALK)

MATTHEWS:  Congressman—that‘s a good point.  I want Congressman Issa to address the philosophical point that you did, Mr. Frank...

FRANK:  Could I just add to—could I correct the facts, though?

MATTHEWS:  Go ahead.  Yes.

FRANK:  Because in the Senate, a heavy majority of republicans voted for this.  So it‘s true in the House, about 40 percent of the Republicans voted for the TARP and 60 against.  But it was a Republican proposal from a Republican president, a Republican secretary of Treasury, and it was strongly supported by the House Republican leadership and by a great majority of Senate Republicans.

MATTHEWS:  Mr. Issa, let me ask you a philosophical question which Mr.

Frank...

ISSA:  Of course.

MATTHEWS:  ... addressed, which is this.  And I think when people are trying to figure out which party they align with these days, they‘re trying to deal with these priority questions.  If the Democrats are willing to come right out front and say, Raise the taxes on better-off people back to at least where they were before, if they‘re even (INAUDIBLE) the fact of not giving full deductibility for charitable contributions at the marginal rates, if they‘re willing to go that far in ideology and saying, This is to pay for health care, can you say that you have an alternative way to pay for national health care, or we‘re not going to have national health care ever again because we‘re not going to change the tax rates from the Bush era?

ISSA:  Well, first of all, if it‘s about health care, I believe there needs to be universal responsibility for health care.  Those who can afford to pay for it, including all employers, need to pay for it.  And I want to preserve people‘s individuals rights to choose the doctors of their choice.  Until that‘s been tried, I don‘t want to go to a single payer system which ultimately is the end of the road.

The fact is, Barney and his party are in a position now to raise our taxes.  They will raise our taxes.  It‘s inevitable.  They will raise our taxes to a greater portion of the GDP than it‘s ever been before, just as in my state of California, we have an 11 percent top tax rate and we still have a $40 billion deficit.

(CROSSTALK)

ISSA:  ... question is, will we control spending?

MATTHEWS:  ... charge of the Congress for all those years—but Congressman Issa, you—your party was in charge of the Congress and the presidency, both sides of the Hill, and you never produced a health care plan for the American people.  So why do you say you have this alternative in mind that never seems to come out?  It never emerges, this Republican plan for national health care.

ISSA:  Well, first of all, Mitt Romney had one which he executed on in Massachusetts.  My governor, Governor Schwarzenegger, had one, which he couldn‘t get across the finish line in a state that has two thirds Democrats in both the Assembly and the Senate.  But quite frankly, I came out in support of this basic concept that we shouldn‘t have employers cost-shifting to either employers...

FRANK:  Can I...

ISSA:  ... or to taxpayers.

FRANK:  Can I just say on taxes...

MATTHEWS:  Sure.

FRANK:  My colleague says we‘re going to raise your taxes.  I‘m going to vote to raise my taxes and Darrell Issa‘s taxes, his probably a little more than mine.  But I‘m not going to vote to raise the taxes of well over 90 percent of the American people.  We are talking about raising the rate on incomes above $250,000.  That raise happened under Bill Clinton.  It helped us reduce the deficit and it had no negative affect whatsoever on the economy.  And I want to go back, and I know Congressman Issa keeps avoiding this—you cannot talk...

ISSA:  I avoid nothing, Barney.  Nothing at all will I avoid.

FRANK:  You cannot talk about reducing the deficit responsibly and not keeping us from being able to do things we have to do and continue to support a military budget that‘s full of the cold war weapons like F-22, like the Osprey, a missile system to defend Poland and the Czech Republic against Iran, a greatly bloated military budget.  If you get out of Iraq more promptly than the Bush administration plan, which I think should be done, and you cut these excessive cold war weapons, you generate a lot of revenue that can be used in part to reduce the deficit and to meet other pressing needs.

MATTHEWS:  OK...

ISSA:  Barney, you‘re not going to have an objection if we go through the defense budget line by line, we look at programs for the types of wars that we really believe we‘re unlikely to be in.  You‘re absolutely right.  On the other hand, after China shoots down its own satellite to prove it can shoot down satellites, I do believe that we need to be prepared to at least launch the technology to protect Americans.

FRANK:  I think we need...

ISSA:  I hope we can both agree on that.

FRANK:  We are not debating whether or not we should be the strongest nation in the world.  Of course we should be and will be.  We‘re debating by what multiple.  Do we have to be five times as strong as the next one or four times?  But while you say that, Darrell, the fact is that the Bush budget and the Republican majorities kept pushing that higher and higher.  Democrats haven‘t been as good as I‘d like to be.  We haven‘t been as bad as giving the Pentagon a total blank check.

MATTHEWS:  Hey, thank you, Congressman Issa.  Please come back again...

ISSA:  Absolutely.

MATTHEWS:  ... and you can call the Democrats the “Democrat Party,” if you want to in normal circumstances.  We‘re in very critical times right now.  Thank you very much.

ISSA:  Chris, you will always have my support that the Democrats are in the Democratic Party.

MATTHEWS:  OK.  Thank you, sir.  Thank you, Congressman Issa, for straightening it out.  Barney Frank, Congressman, chairman of the banking committee, thank you for joining us.

FRANK:  You‘re welcome.

MATTHEWS:  Coming up: the conservatives have come into town for their annual CPAC conference.  There‘s a real rallying of the right going on here in Washington.  What‘s there to celebrate?  We‘ll find that out when we come back.  The Republican Party is getting smaller lately.  Its rising star is obviously Governor Bobby Jindal.  Lately, he didn‘t have a—well, we‘ll talk about his night the other night.  And of course, who are the other stars?  Newt Gingrich is coming back.  He‘s on the cover of “The New York Times” magazine, although I can tell you from experience that‘s not necessarily a good thing.  Our strategists will be up in a moment.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Today in Washington, the biggest annual gathering of conservatives kicked off.  It‘s called CPAC, short for Conservative Political Action Conference.  What‘s their strategy for regaining power?  That‘s the question.  It‘s time for our experts, Todd Harris, who‘s a Republican, Steve McMahon‘s a Democrat.  They win campaigns for a living.

I want to get a look right now at some of the speakers.  Here‘s John Bolton, recently the head of—or our Ambassador to the U.N.  He‘s a real hawk, a real so-called neo-con.  Her he is, really giving the old-time religion at CPAC.

(BEGIN VIDEO CLIP)

JOHN BOLTON, FMR AMBASSADOR TO THE U.N.:  ... just seen a vindication of President Bush‘s surge policy in the recent provincial elections.  You know, the Democrats...

(APPLAUSE)

BOLTON:  We‘re seeing an administration so committed to satisfying the left of the Democratic Party that it could well jeopardize all of that.

(END VIDEO CLIP)

MATTHEWS:  Well, that‘s John Bolton.  He‘s a hawk.  He‘s spelling (ph).  Now let‘s look at Joe the plumber.  His name isn‘t actually Joe.  His first name‘s not Joe, it‘s Sam, but that‘s all right.  His middle name is Joseph.  And he‘s not exactly a plumber and he doesn‘t exactly pay taxes, but he is Joe the tax-paying plumber.  Here he is at CPAC.

(BEGIN VIDEO CLIP)

SAMUEL JOSEPH WURZELBACHER, “JOE THE PLUMBER”:  Essentially, I don‘t see anybody with a firm—I don‘t see anybody as far as a leader in the Republican Party right now.  No one‘s...

(END VIDEO CLIP)

MATTHEWS:  Well, what do you make of these characters?  There‘s Huckabee‘s out there today taking a few shots at me and other people, having some fun.  I like Huckabee.  Is that your party, sort of, or is this the base?  Is this the yahoos, the full-mooners?

TODD HARRIS, REPUBLICAN STRATEGIST:  This—this...

MATTHEWS:  How would you describe it?  Or is this the heart of your party? 

HARRIS:  Well, this is the base of the party.  These are the activists who knock on doors, make the phone calls.  These are the people, the nuts and bolts...

(CROSSTALK)

MATTHEWS:  The nuts? 

(LAUGHTER)

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  The nuts?  Are they the nuts, or are they the bolts? 

MATTHEWS:  The nuts and the Boltons. 

(LAUGHTER)

MATTHEWS:  Go ahead. 

(CROSSTALK)

MATTHEWS:  Go ahead, please.

(LAUGHTER)

HARRIS:  The nuts and bolts of—of the party operation that you need to win...

(CROSSTALK)

MATTHEWS:  Would you go to a party with these people?  Would you hang out with this crowd? 

HARRIS:  I have been to the CPAC Convention. 

MCMAHON:  Were you there today?

HARRIS:  I was not there today. 

MATTHEWS:  OK.  Yes, take your shot.  You‘re already in here, Steve.

This party includes obviously people on the foreign policy right, the so-called neoconservatives, who have been somewhat—and Richard Perle is denying, that there is such a thing as neoconservative. 

Joe the plumber, sort of the populist, angry anti-taxer.  Huckabee, the Christian right, modified form in his case.  But it is all—and then Gingrich, the somewhat intellectual, you know, the commissar of the right, you know, the intellectual idea man, all coming together. 

Is this an electoral force or just a...

(LAUGHTER)

MATTHEWS:  ... a complaint group, a complaint desk? 

MCMAHON:  It certainly is an odd combination of characters. 

You have Joe the plumber, who, as you pointed out earlier, is not named Joe and isn‘t a plumber.  We don‘t have to get into his tax issues, but this is the big star of the Republican right.

(CROSSTALK)

MATTHEWS:  Well, that was...

(CROSSTALK)

HARRIS:  Nice.  “I will not make my opponent‘s adultery an issue in this campaign.”

(CROSSTALK)

(LAUGHTER)

MCMAHON:  And what I wonder is what Newt Gingrich, who is a thoughtful, articulate conservative, is doing with this bunch of goofballs. 

You know, they‘re—they‘re out there, and they‘re basically making fun of this guy, re-litigating a war that everyone has turned against.

MATTHEWS:  Let‘s take a look at this picture on the cover of...

(CROSSTALK)

MATTHEWS:  This is a Mephistophelean picture.  I think we have the picture of Newt that‘s going to be on this Sunday.  We got it?  Newt is going to be on the cover—look at that.  He posed for that.  It‘s frightening. 

(CROSSTALK)

HARRIS:  Well, we don‘t know that he posed for that. 

MATTHEWS:  He looks like a warlock. 

(LAUGHTER)

HARRIS:  He may been getting ready for what he thought was going to be the pose.

Remember “Rosemary‘s Baby”?  That‘s Steven (sic) Cassavetes, the—the warlock.

MCMAHON:  Chris, he is the most—he is the most thoughtful conservative in... 

(CROSSTALK)

MATTHEWS:  This is a setup here.

MCMAHON:  No, this is true. 

(CROSSTALK)

MCMAHON:  He‘s the most thoughtful conservative in the Republican Party.

(CROSSTALK)

MATTHEWS:  There is a setup.  To what effect?  You want him to be the nominee, don‘t you?

MCMAHON:  No, no, no, no.  Well, I think it would be fine if he were the nominee.  I don‘t think he will be. 

I think it‘s interesting that Sarah Palin, who probably is the star of the Republican right, right now, skipped this thing.

MATTHEWS:  Yes. 

MCMAHON:  Because she knows what so many people, including Bobby Jindal, didn‘t know.  This president of ours has about an 81 percent rate of people who are optimistic about the future with him.

And it got even higher after the—the State of the Union address. 

And then you got Bolton out there basically wanting to re-litigate the

failed Iraq strategy that the Bush administration got us into.  And it just

it‘s so out of touch with the American people. 

MATTHEWS:  OK.  One of the most thoughtful people, smartest people—actually, he‘s a friend of mine—Bill Kristol.  You hate to hear it, but Kristol is a charming guy, smart guy, has a column in “The Washington Post” today.

His strategy is basically crib death, kill Obama in his crib, before he gets popular, before he gets anything passed.  Don‘t let him pass anything big, like health care, energy and education.  Kill it.  And that way, you won‘t run against its success later down the line.  It‘s what he did to the Clintons with health care.

Here he is right now today in “Washington Post.”

Bill Clinton (sic) wrote—quote—“Obama intends to use his big three issues—energy, health”—this is Bill Kristol—“energy, health care and education—to transform the role of the federal government as fundamentally as did the New Deal and the Great Society.  Conservatives and Republicans will disapprove of this effort.  They will oppose it.  Can they do so effectively?  Perhaps—if they can find reasons to obstruct and delay.”

HARRIS:  Well, we can oppose.  We don‘t have the votes to—to stop it, as we saw with—with the stimulus bill.

But I think what you are going to see over the next several years, as we—as we head into 2010, you are going to see Republicans working with the president where we can, but not at the abandonment of our core principles. 

MATTHEWS:  So, not a scorched-earth policy? 

HARRIS:  I don‘t think you‘re going to see a scorched-earth policy.

I do think what you will see is Republicans holding the president accountable for the very specific and detailed promises that he‘s made.  This is not something amorphous, like an increase in consumer confidence. 

He said three million new jobs, closing Gitmo, getting out of Iraq. 

MATTHEWS:  So, you‘re for those things? 

HARRIS:  Halving, halving the federal deficit. 

MATTHEWS:  You‘re for those things?

HARRIS:  Of course we are for those things. 

MATTHEWS:  Getting out of Gitmo, the whole thing, getting out of Iraq?

HARRIS:  We‘re for those things.  He has promised to do them.  We‘re going to know.  We‘re going to have a benchmark.

MATTHEWS:  I‘m confused. 

(CROSSTALK)

MATTHEWS:  You are keeping score on something you oppose? 

(CROSSTALK)

HARRIS:  No, no.  Look, if he can create three million new jobs, that‘s great. 

But, if he can‘t, we‘re going to make sure that this was a promise that he made that he didn‘t keep.  If he can halve the deficit, that‘s great.  But, if we can‘t, we‘re going to make sure that people know it‘s a promise he didn‘t keep. 

MCMAHON:  One of the most basic rules in politics is, when your favorability rating is 30, you are not going to probably help yourself by going after somebody who‘s favorability rating is 75. 

These are issues that have been litigated in—in the elections.  They are issues where the American public stood with Barack Obama.  The Republicans, if they stand against him, when—when—when all of America wants them to work with him and solve some of these problems, are going to do so at their peril.  And they‘re going to pay for it in 2010.

MATTHEWS:  OK.  I have a theory about your party.  Test me on this. 

And you test me.

I thought, historically, your party, the Republicans, tend to go ideological when they lose an election.  We saw it after Nixon lost to Kennedy.  You went to Goldwater.  After Jerry Ford lost to Carter, you went to Reagan, effectively in that case. 

I thought, for a while, you were going to go to somebody like Governor Palin, Governor—Governor Jindal, Mike Huckabee, somebody on the sort of right wing over there.  And now I‘m beginning to think the most frightening threat to Barack Obama three, four years from now, in fact, beginning in a couple years, is a sound person of the center-right, who really knows how to manage the economy, somebody with business horse sense that could come in and say, I can fix the banking crisis.  This guy can‘t.  I can fix the homeowner problem, the mortgage problem.  He can‘t. 

Practically on the slightly right-wing side would be more frightening to Barack. 

Do you have a candidate like that?

HARRIS:  Well...

MATTHEWS:  Do you have anybody like that? 

HARRIS:  Well, if you look—look at California, which is often an incubator for what happens nationally, the two front-runners right now in the Republican primary for governor, Meg Whitman, former CEO of eBay, and Steve Poizner, the state insurance commissioner, who was a successful businessman in his own right, both campaigns are talking about using business solutions to tackle state government problems. 

MATTHEWS:  Yes.  You got anybody national like that, anybody national like that?

(CROSSTALK)

HARRIS:  Mitt Romney. 

MATTHEWS:  He doesn‘t have the personality for national politics, does he? 

HARRIS:  I don‘t know.  You know, I think Mitt Romney...

MATTHEWS:  He could.  He doesn‘t.

HARRIS:  I think, of all of the survivors of the last election cycle, I think Mitt Romney is probably looking...

(CROSSTALK)

MATTHEWS:  Yes.  He didn‘t sell himself personally very well, I don‘t think.

MCMAHON:  He had a difficult time, because he‘s a little wonkish.

MATTHEWS:  Yes. 

MCMAHON:  But there are three of them really in the Republican Party.  One of them is Mitt Romney, who has a business experience and pedigree that nobody can match. 

MATTHEWS:  He‘s got a lot of money.  That‘s good proof.

MCMAHON:  Got a lot of money. 

One of them is Charlie Crist.

MATTHEWS:  Yes. 

MCMAHON:  And one of them is Michael—or is Bloomberg.  And I don‘t think Bloomberg probably...

MATTHEWS:  He‘s a Republican? 

MCMAHON:  Well...

HARRIS:  Not anymore.

(LAUGHTER)

MATTHEWS:  I think Crist may be a case. 

Anyway, thank you.  I like the fact you‘re doing this, you know, star-hunting?

(LAUGHTER)

HARRIS:  Well, he‘s actually, like, being reasonable, meeting in the middle this time. 

MATTHEWS:  Star search—star search with Steve McMahon.

Anyway...

(LAUGHTER)

MATTHEWS:  Right-wing star search.

(LAUGHTER)

MATTHEWS:  Anyway, Todd Harris, Steve McMahon, we found—I think we‘re into something here, practicality and victory. 

Up next:  What Republican governor, which one essentially implied that Rush Limbaugh is an idiot, not a big fat idiot, like Franken called him, but just an incident?

That‘s ahead in the “Sideshow.”

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MATTHEWS:  Time for the “Sideshow.”

As I said before, the American right is rallying here in Washington for a three-day conservative political action conference known as CPAC.  The man giving the closing benediction this Saturday is the high priest himself, Rush Limbaugh. 

Here he is with a warning to his dittoheads. 

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

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  The people on our side are really making a mistake if they go after Bobby Jindal on the basis of style, because, if you think—people on our side, I‘m talking to you—those of you who think Jindal is horrible, you think—in fact, I don‘t want to hear from you ever again if you think that Bobby Jindal was bad and what he said was wrong or not said well, because, folks, style‘s not going to take our country back. 

Solid conservatism, articulated in a way that‘s inspiring and understanding, is what is going to take the country back. 

(END VIDEO CLIP)

MATTHEWS:  But here‘s the fun stuff.

Remember how Rush said he hoped that President Obama would fail?  Well, South Carolina Governor Mark Sanford, who is coming to CPAC, must not be a dittohead—quote—“I don‘t want him to fail,” he said in an interview—quote—“Anybody who wants him to fail is an idiot, because it means we‘re all in trouble.”

Well, the last person to call Rush Limbaugh an idiot was a former talk show host named Al Franken.  Remember him?  His book was “Rush Limbaugh Is a Big Fat Idiot.”

Well, he not only called Rush an idiot and got away with it.  It got him elected a United States senator.  Anyway, I don‘t—I guess Rush...

(LAUGHTER)

MATTHEWS:  I don‘t know.  I guess Rush didn‘t—I don‘t know what we‘re talking about here—didn‘t know whether he‘s going to fail.

Anyway, Republican star Joe the plumber is pushing his new book at the CPAC convention today.  Yes, Joe the plumber is now an author.  And, according to “The Washington Post,” about 11 people showed up for his book signing in the basement of Borders last night.  The name of Joe the plumber‘s book, “Joe the Plumber: Fighting for the American Dream.”

Joe the plumber told “The Washington Post” he is still not a fan of Obama‘s, but confessed—catch this—that he never really liked McCain either.  By the way, total copies sold last night, five. 

Finally, last night, President Obama presented American music legend -

and I meant it—Stevie Wonder with the Library of Congress‘s Gershwin Prize for popular song.  It‘s the highest award for popular music.

(BEGIN VIDEO CLIP)

(MUSIC)

(END VIDEO CLIP)

MATTHEWS:  Well, the president, who used Stevie Wonder‘s song “Sign, sealed and delivered, I‘m yours” during his campaign, praised Wonder, saying his music was the soundtrack of his youth. 

And all I want to say is, I just want to say I love you. 

Now for tonight‘s “Big Number.” 

We all know all too well that General Motors is going through rough times.  GM has already received $13.4 billion in U.S. dollars—that‘s our dollars.  And its top executives are back in Washington today asking for more billions of dollars.  Today, the company announced that it lost $9.6 billion in the fourth quarter alone -- $9.6 billion in one quarter.  That‘s something else. 

How much did they lose for the year?  Thirty-one billion dollars.  That‘s about $100 for every man, woman and child in America.  Thirty-one billion dollars, that‘s tonight‘s “Big Number.” 

Up next:  Is it a good idea for the Pentagon to lift the ban against photographing America‘s war dead coming home?  We will talk to two members of Congress about that very sensitive topic—coming up next. 

You‘re watching HARDBALL, only for MSNBC.  

(COMMERCIAL BREAK)

REBECCA JARVIS, CNBC CORRESPONDENT:  I‘m Rebecca Jarvis with your CNBC “Market Wrap.”

Stocks finishing lowering, after President Obama unveiled his $3.5 trillion budget plan.  The Dow Jones industrials lost 88 points.  The S&P 500 fell 12.  And the Nasdaq lost almost 34 points. 

The drumbeat of bad economic news continued today, with first-time jobless claims rising more than expected last week to 667,000.  Meantime, the number of people continuing to receive unemployment benefits topped five million for the first time ever.

Orders for big-ticket manufactured goods plunged in January for a record sixth straight month.  Also, sales of new homes fell to their lowest level on record in January. 

And General Motors reported a fourth-quarter loss of $9.6 billion.  For all of 2008, GM lost almost $31 billion.  And GM executives are meeting with Treasury officials today about the additional $16 billion they requested earlier this month to avoid bankruptcy. 

That‘s it from CNBC.  We‘re first in business worldwide—now back to

HARDBALL. 

MATTHEWS:  Welcome back do HARDBALL. 

Since 1991, the press has not been allowed to cover the return of fallen U.S. troops to Dover Air Force Base in Delaware. 

Here‘s President Obama talking about it on February 9. 

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I have said before that

you know, people have asked me, when did it hit you that you are now president?  And what I told them was the most sobering moment is signing letters to the families of our fallen heroes.  It reminds you of the responsibilities that you carry in this office and—and the consequences of the decisions that you make. 

Now, with respect to the policy of opening up media to loved ones being brought back home, we are in the process of reviewing those policies in conversations with the Department of Defense, so I don‘t want to give you an answer now before I have evaluated that review and understand all the implications involved. 

(END VIDEO CLIP)

MATTHEWS:  Well, the decision is made. 

Here‘s Defense Secretary Robert Gates today. 

(BEGIN VIDEO CLIP)

ROBERT GATES, U.S. SECRETARY OF DEFENSE:  As you know, the president asked me to review this policy. 

After receiving input from a number of sources, including all the military services and organizations representing military families, I have decided that the decision regarding media coverage of the dignified transfer process at Dover should be made by those most directly affected, on an individual basis by the families of the fallen. 

We ought not presume to make that decision in their place. 

(END VIDEO CLIP)

MATTHEWS:  Wow. 

Well, Republican Congressman Duncan Hunter of California is a veteran of the Iraq and Afghanistan wars.  Thank you for joining us, Congressman.  He‘s the son of a guy who was on this show many, many times.  Thank you for joining us.  Thank you for your service.  He‘s already on the Armed Services Committee.  Democratic Congressman Dennis Kucinich of Ohio, of course, sits on the Oversight Committee. 

Congressmen, I want both of you to respond to Secretary Gates‘ decision, which was acting on I guess a call from the president.  First of all, Mr. Hunter. 

(BEGIN VIDEO CLIP)

REP. DUNCAN HUNTER, JR. ®, CALIFORNIA:  I think that the Dover Policy was a good policy.  And I am talking to these military families, families that lost sons and daughters over there.  This was the most important moment to them, when those sons or daughters came home.  This was their bodies coming home.  This was more important than their funeral or anything else, because they were arriving back in America and they had served.  They had sacrificed.  They had paid the ultimate price. 

It‘s between that family and those loved ones.  It‘s not for the media.  I don‘t care what the media wants to see.  And also, journalists can always talk to families and ask to be—ask to go to their funerals or have private interviews.  That‘s always acceptable and that‘s always been allowed. 

I don‘t think it ought to be DOD policy to allow media in to these. 

This is a private moment. 

MATTHEWS:  So let me ask you, we had a policy until today, Congressman, of not allowing the media.  It was a government policy that said there would be no pictures taken of the bodies coming home to Delaware, and now it‘s up to the families.  Which policy do you support?  The past policy or the current policy? 

HUNTER:  I like the past policy.  Here‘s why: these are grieving fathers, grieving mothers.  They all are not always aware of what they‘re signing, when they‘re asked to sign a release form to have the media come in to see their flag-draped coffin of their son or daughter coming home, their most precious child.  They aren‘t totally coherent in that case.  That‘s why it‘s good government policy, I think, to not allow the media in.  If that family wants to invite the media in for their funerals, that‘s different.  But that‘s the family‘s choice. 

MATTHEWS:  Are you going to push legislation in this regard to prevent the photographing of the loved ones viewing their—the one coming home from the war, the body coming home?  Are you going to try to fight this? 

HUNTER:  I don‘t know yet, Chris.  We are going to see how things play out, how many families choose to allow the media in, what the media does with these pictures, and how it‘s seen by the military and those over there serving right now. 

MATTHEWS:  OK.  Thank you for that.  Back in 1989, of course, TV news caught this awkward split screen of then President Bush 41, the senior President Bush, joking with reporters on one side, and the bodies of war dead coming home on the other side.  At the next opportunity in 1991, the Pentagon banned coverage at Dover Air Force base.  I guess that‘s the providence of why the pictures weren‘t allowed for all these years. 

Let me go to Congressman Kucinich.  Your view of the new decision by the president and the secretary of defense to allow media coverage if they get permission from the families? 

REP. DENNIS KUCINICH (D), OHIO:  Well, it‘s the families that made the sacrifice too.  And they should be in the position of making the decision.  Chris, there‘s a larger question there, which is it‘s too bad that we are still there and that bodies keep coming back.  I think that we owe it to the families to be able to decide whether or not they feel it‘s appropriate to let the nation know that they‘ve lost a loved one, first of all.  And I think it would also be good for the media to put the pictures of—out with the soldier with the families when they were alive. 

I think we—the nation needs to be aware of the sacrifice. 

MATTHEWS:  OK.  Let me talk about that issue.  Let‘s get to the larger picture, as you put it, Mr. Kucinich.  This is the question; we have a report here from Jim Miklaszewski, a very respected journalist here at NBC.  It hasn‘t been challenged in the last couple of days, that sometime later this week, probably tomorrow, the president‘s going to make a statement withdrawing from 142,000 down to about 50,000 our compliment of troops in Iraq.  What do you make of that? 

KUCINICH:  I think he is going in the right direction, if that‘s going to be announced.  And I would hope that eventually we will end the occupation, bring the troops home, and begin a new era in relations with the country of Iraq and with the international community, whose help we are going to need to end the occupation. 

MATTHEWS:  So you accept the 19 month schedule of withdrawal down from 142,000 to 50,000?  You accept that?

KUCINICH:  I don‘t think that‘s enough.  I think you cannot leave 50,000 troops there and call it a withdrawal.  But it‘s a step in the right direction and I think that ought to be supported. 

MATTHEWS:  Mr. Hunter, where are you on that issue of a withdraw?  If it is going to be the policy tomorrow, and we have good reporting that it is, 142,000 now.  You have been there, fought there, served your country;

142,000 down to 50,000, does that tell you we have too few troops there to prevent an overthrow of that government, to keep control of events?  What do you think of 50,000 troops? 

HUNTER:  First off, the withdrawal has to be methodical and it has to be flexible.  If violence spikes and bad things start to happen, we have to be able to surge troops back in.  So the DOD and Mr. Obama I think need to be flexible on this withdrawal.  What I think this shows—and I would have to disagree with my good friend Mr. Kucinich here. 

I was over there twice in Iraq.  It is not an occupation.  We have made the world safer and that‘s how I see it.  That‘s how it is. 

MATTHEWS:  What would you call it?  What would you call it, if not an occupation?  What would your word be? 

HUNTER:  Liberation of a despotic dictator over there, who was killing people and planning on killing Americans, too.  We made the Middle East more stable and we have made America safer.  But let‘s go back to the original question.  I think what we have seen now is that the—President Bush‘s plan, instituted in 2006, General Petraeus, General Odierno, and Secretary Gate; when this was signed, that signaled success, and we just started drawing down. 

I think the president‘s right here.  We can draw down, as long as we stay flexible and we do it methodically. 

MATTHEWS:  That sounds like an open ended word to me.  Let me go back to Congressman Kucinich.  Are you concerned that 50,000 troops is still enough to regain—to continue the fighting over there? 

KUCINICH:  Well, I think we ought to get out totally, Chris.  Years ago, when we first went in, I had a plan to get out.  And it involves the total withdrawal of American troops.  You cannot stay there without the risk that our troops are going to be put in mortal danger. 

We need to end the occupation, close the bases, bring the troops home.  Now, I honor my good friend‘s service to our country and all those who have served.  But there‘s a point at which we have to recognize the war in Iraq was a dreadful mistake and we have got to take a new direction.  I‘m glad the Obama administration is taking the first steps towards ending the war. 

MATTHEWS:  Well, this debate‘s not over tonight, gentlemen.  We‘ll have you both back.  Thank you Congressman Duncan Hunter and thank you again for your service, both generations.  And thank you Congressman Dennis Kucinich for being very clear on that.  

Up next, the politics fix.  The risk for President Obama for essentially saying I‘m going to tax the rich to pay for health care for the working people.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with the politics fix, with Bob Ehrlich, the former Republican governor of Maryland, and Joan Walsh, editor in chief of Salon.com.  You know, this election last November clearly mattered, governor and Joan.  It clearly mattered.  It is becoming clear how much it mattered today, with the release of the president‘s budget.  We‘re talking about a major fiscal shift, a return to higher tax rates for people who make a lot of money, and perhaps the emergence of the real possibility, for the first time since Harry Truman promised it, of a national health care plan. 

I want Joan, who agree was this policy, I believe, to defend it.  Is this a smart fiscal move for this country to shift the tax burden to the wealthy, raise enough money to create the probability or at least the possibility of a national health care system for working people? 

JOAN WALSH, SALON.COM:  Yes, it‘s a brilliant move, Chris.  What it does it sends us back to the days of the Bill Clinton economy, frankly, which was a time of peace and prosperity.  We have those exact same tax rates, and what we saw in the ‘90s is that the rich got richer, despite their higher taxes, and the poor got richer, too.  Poor people got jobs.  Working class people did a little bit better.  And that‘s what we need to go back to. 

In the meantime, I think business in the long run will look back at this as an incredibly forward-looking move, starting to remove the absolute burden on business of our entire health care system.  Barney Frank made the point before, you know, our auto companies, as well as our small businesses, are just staggering under the increasing burden of health care. 

So I think the other thing about it that I think is so rewarding—and it should be rewarding to Republicans, but I won‘t speak for Governor Ehrlich—this man is actually doing what he said he was going to do.  He said he was going to raise this tiny tax rate for these five percent of people, and he said we were going to get universal health care insurance. 

I see everybody kind of babbling.  Well, whoa, what‘s going on?  Well, it is the shock of seeing a president actually do what he campaigned on.  I think it is wonderful. 

MATTHEWS:  Governor Ehrlich, your assessment of this fiscal decision to go to higher taxes for the wealthy, well off, I should say, and use it to put together a trust fund to begin to accumulate enough money to fund a real national health care system. 

BOB EHRLICH ®, FMR GOVERNOR OF MARYLAND:  I disagree with the policy, Chris.  The politics should not be surprising to anybody.  And I agree with the last statement, in fact.  This is the platform he ran on.  This defines him as a political being.  It reflects his voting record in the state legislature.  It reflects his voting record in the United States Senate.  It reflects the hard left positions he took during the campaign. 

WALSH:  They are not hard left. 

EHRLICH:  Oh, punishing success, raising capital gains.  I gave you your time. 

WALSH:  I‘m sorry, you are right. 

EHRLICH:  This is all about class warfare.  It‘s all about punishing success.  It‘s anti-small business.  But just say it all comes together and the raise all the taxes on the dividends and capital gains.  It does not begin, Chris, to pay for what he is talking about doing.  That‘s the problem.  The numbers don‘t add up. 

MATTHEWS:  OK, thank you.  We will be right back with Bob Ehrlich, who doesn‘t believe in punishing success, and Joan Walsh, who believes in national health care.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Joan, are you shocked—I know you are a liberal in your heart, but are you shocked by the numbers?  Here‘s the federal budget that he just to us today, the new president, two billion in receipts, two billion in deficits, four billion in spending.  We are only taxing the country enough to pay for half the budget.  The rest is borrowed.  Not since World War II have we lived like this. 

WALSH:  Not since World War II have we had a crisis like this, Chris.  I think the man inherited a terrible fiscal, domestic, international crisis.  It is a time of war.  He‘s actually putting war spending on the books, instead of the secret way that the Bush administration accounted for it.  He is trying to do a lot.  I think he is looking—looking to bring the deficit down. 

But most economists say for these next two years, we should be much less concerned about deficit than about the utter collapse of our economy.  Sure, they‘re shocking numbers.  They have been shocking for a while.  They were shocking—it was shocking when the Bush administration took a surplus and ran us into a deficit. 

MATTHEWS:  This is what Warren Buffett says we have to do, governor, is over-leverage at the federal level.  But a four trillion dollar outlay level and two trillion dollar deficit—we‘re only taxing people enough to pay half the cost of the government here. 

EHRLICH:  It doesn‘t work, Chris.  As you know, the stimulus was not the stimulus as well.  Chris, I would have been much more positive about this if the stimulus was actual—was an attempt to actually stimulate the economy, get small businesses going.  It meant nothing to small business, basically.  Now we are going to punish them through the tax code. 

Bad policy after bad policy.  As you know, Chris, you could have done most of that spending through the regular appropriations process.  It was just an excuse to get Harry Reid and Nancy Pelosi to do their spending outside the regular process. 

MATTHEWS:  Do you like Rush Limbaugh, yes or no? 

EHRLICH:  I think he is an interesting guy.  I don‘t know him personally. 

MATTHEWS:  What careful answer. 

EHRLICH:  No, no. 

MATTHEWS:  You are a moderate.  You are a moderate, a private secret moderate. 

EHRLICH:  A secret moderate?  What‘s that? 

MATTHEWS:  -- and Joan Walsh.  Join us again Monday—tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now, time now 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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