updated 3/24/2009 9:51:40 AM ET 2009-03-24T13:51:40

Guest: Austan Goolsbee, Joe Trippi, David Corn, Chrystia Freeland, Michael Sherer

High: Treasury Secretary Geithner unveils his plan to deal with the so-called “toxic assets,” and the Dow Jones soars nearly 500 points.  Some banks who have taken bail-out loans are still contributing to congressional campaign funds.

Spec: Politics; Economy

CHRIS MATTHEWS, HOST:  Mikey likes it.

Let‘s play HARDBALL.

Leading off tonight: Going for the kill.  And it seems to be working.  Why are jobs getting killed?  Why is the economy in trouble?  Why?  Because of those damned mortgages, that‘s why, because people borrowed money to buy houses they could not afford.  They didn‘t make enough money to pay the monthly mortgage.  Worse yet, because the prices of those houses dropped through the floor, they became the basis for those toxic assets, financial products based upon those damned mortgages again at the heart of this mess.  That killed the financial system, killed the wealth banks thought they had, killed the ability people have to borrow money, and thereby undermined our economy.

Today, for the first time, the U.S. government led by President Barack Obama, has a solution.  Here‘s how it works.  Somebody comes along and puts up, say, $25,000 to buy those damned toxic assets.  The government then matches that $25,000 with another $25,000 of federal money and then offers six times that amount—in other words, $300,000 -- in insurance for the deal.  This allows an investor who comes along who‘s willing to put up $25,000 to win a bid on a toxic asset going at $350,000.  So a person can convert $25,000 into a quick $350,000.

This is the plan announced today by Treasury secretary Tim Geithner and immediately trashed by liberal columnist and Nobel laureate Paul Krugman of “The New York Times,” who says the plan lets private investors put up relatively little money but make piles more if things go well, and the government will be left holding the bag if they don‘t go well.

Well, as they used to say in that cereal commercial, Mikey likes it.  Wall Street is wild about this idea, maybe for the same reason that the liberal Krugman isn‘t wild about it.  Look at the Dow today.  It climbed 497 points in one day on the news from Geithner‘s plan.

And here‘s another story that‘s sure to add to the current populist outrage.  Some banks that received earlier bail-out money, like CitiGroup and Bank of America, actually recycled part of that taxpayer money into, of all things, campaign contributions.  So let‘s get this straight.  A struggling bank gets billions from the government, then turns around and rewards members of Congress with taxpayer money.  “Newsweek‘s” Michael Isikoff broke the story.  He‘ll be on in a moment.

Plus, last week, former vice president Dick Cheney derided President Obama‘s national security policies.  Last night on “60 Minutes,” Mr. Obama hit back.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  How many terrorists have actually been brought to justice under the philosophy that is being promoted by Vice President Cheney?


MATTHEWS:  We‘ll get to more of what the president said about the former vice president in a minute.

And you must be doing something right to get hit by Cheney and some on the left and “The New York Times,” as well.  Let‘s talk about the buzzsaw headed towards Barack Obama.  That and more in our “Politics Fix” tonight.

And finally, Vice President Joe Biden had the right yuck-yucks at Washington‘s annual Gridiron dinner Saturday night.  We‘ll have some of his best stuff in the HARDBALL “Sideshow” tonight.

We begin with the director of the president‘s Economic Recovery Advisory Board, Austan Goolsbee.  Austan, thank you very much for coming on.  It‘s a great time to have you.  You‘re smiling.  Maybe you‘re smiling because the stock market went up 500 points today.  But let me ask you—we‘ve been trying to put this together.  Please tell me we‘ve got it right.  The way we set it up is a business comes along with some money they want to invest.  They put down $25,000.  You guys match the $25,000, then you back it up with an insurance policy of another $300,000.  And that allows somebody to bid on a toxic asset, some sort of financial instrument based upon those bad mortgages, worth what they think is about $350,000.

Is that how it works?  Because it seems to be really making Wall Street happy, this plan.

AUSTAN GOOLSBEE, PRES. ECON. RECOVERY ADV. BOARD:  Well, the only thing that I would differ with you there is the leverage is not insurance.  The insurance makes it sound like the government is going to take the losses if something goes wrong, and that‘s not true.  This is an explicit partnership, where if the private guy makes money, then the government makes money.  And if the government loses money, then the private guys lose money.  This is an outright partnership.

And so the only thing that I would say in your reference to Paul Krugman‘s column is that the only two alternatives to doing it this way are to either have the government pay for the whole thing itself, which would be substantially more expensive and then the government might very well...


GOOLSBEE:  ... over-pay for the assets, or else do nothing.

MATTHEWS:  Well, let‘s take a look, first of all, at what we‘re talking about here.  You go out there on the market and you say, We‘re going to—we have confidence in the American free enterprise system to solve the problem created by the American free enterprise.  The problems of man are man-made.  They can be solved by man, as Jack Kennedy once said.  That‘s your belief.

GOOLSBEE:  Well...

MATTHEWS:  And the way you‘re going about—well, tell me if I‘m wrong.

GOOLSBEE:  Well, I‘m just going to say you and Sean Hannity are both

on cable, but that doesn‘t necessarily mean you‘re both coming from the

same place.  So the fact that they‘re both from the free enterprise system

is not—I don‘t think you can condemn, say, healthy financial

institutions that have money that are going to put in to try to address

this toxic asset problem—I don‘t think you can necessarily condemn that

by saying, Well, the free enterprise system got us...

MATTHEWS:  What are you?

GOOLSBEE:  ... into this...

MATTHEWS:  Are you the princess and the—are you the princess and the pea tonight?

GOOLSBEE:  I‘m the pea!


MATTHEWS:  I‘m simply making a point that you‘re—well, you‘re worse than that.  Look, it seems to me that you‘re asking the free enterprise system to solve a problem created by the free enterprise system.  Is that fair?

GOOLSBEE:  Two different parts...

MATTHEWS:  I‘m not knocking it...

GOOLSBEE:  ... of the...

MATTHEWS:  ... I just think that‘s your approach.  OK...

GOOLSBEE:  Two different parts of...

MATTHEWS:  ... the better—the better angels of the free enterprise system are being called upon here, whereas the devils are being taken care of.  The Geithner—the plan, in other words, based on the idea of getting some people to put some skin in the game, as they say...


MATTHEWS:  ... in business...


MATTHEWS:  ... you‘re trying to get someone to belly up with some money, give you some money, and you‘re going to go in partnership with it.  Do you have confidence that—we saw in the Wall Street response today, that 500-point hike, that spike in the market, is that a sound assessment?  Do you think they‘ve really done due diligence on this plan?

GOOLSBEE:  Well, look, the president...

MATTHEWS:  When they figured that out—or what do they see that you

do they see the full picture, in other words?

GOOLSBEE:  The president was clear.  When the stock market is down, he was saying, This is not an—this is now how we should evaluate our economic program.  And when the stock market‘s up, he‘s going to say same thing.  This is not the way you evaluate the economic or financial program.

What we want to evaluate is that this is one important brick in a whole lot of bricks that are going to make up a new house.  And what we had is a house that burned down.  Now, we had a housing program, and we‘ve started to see good outcomes from that foreclosure prevention program.  We had the biggest stimulus ever.  We got a small business lending facility.  We‘re going to have regulatory reform.  We‘ve got this TALF to unlock student loans, automobiles, consumer credit.

This part is to get the toxic assets, those risky assets, off the balance sheets.  To do that, it‘s a public/private partnership which saves the government money and gets us out of the business of having people in the government try to figure out what these things are worth.

I liked how you called them the damned toxic assets.  You got to be careful, Chris.  They‘re going to start calling them DTAs and they‘re going to attribute...

MATTHEWS:  OK, well...

GOOLSBEE:  ... the acronym to you.

MATTHEWS:  ... I‘ll risk that.  Let‘s go back—Wall Street seems to like this idea on first look.  Geithner (SIC), who‘s a man of the left politically, the Nobel laureate in “The New York Times,” doesn‘t like it.  Here‘s what he said in his column.  Shoot this down—no, I‘m sorry, Krugman.  Krugman said this.

“The Geithner scheme would offer a one-way bet.  If asset values go up, the investors profit.  If they go down, the investors can walk away from their debt.  So this really isn‘t about letting markets work, it‘s just an indirect disguised way to subsidize purchases of bad assets.”

Your response, Austan?

GOOLSBEE:  Well, I don‘t—yes, I don‘t agree with that completely.  As I say, this is a partnership, and if the private sector loses money, that‘s the only way the government loses money.  It‘s not an insurance policy, it‘s a partnership.  Both sides have skin in the game.  If they profit, then the government profits, too.

The alternative is somebody‘s got to figure out how will a guy from the government figure out what to pay?  There‘s a huge implicit loss if the government has to price these assets because they‘re going to overpay.  That‘s been a historic problem.

MATTHEWS:  Why would somebody go buy some of these financial instruments based upon bad mortgages, if the banks don‘t want them?  Why would somebody want them more than a bank would want them?

GOOLSBEE:  Well, the capital requirements for banks are different than for these other investors, and so I think the other investors are going to look at this and say, Is there a business reason to make this investment?  And if there is, then they‘re going to come forward and do it.

MATTHEWS:  So the good news here, when I read all about it, is what could happen here if you guys are right and the president‘s right in his oversight role here and leadership role is—what could happen here is, all of a sudden, the sharpies that went out of the market two years ago, smart enough to get out of the market, will now have enough cash in their hands to say, Wait a minute, there‘s a killing to be made—like Joe Kennedy did in the old days.  He had cash in the Great Depression when nobody else had it.  They come back into the market now and they start buying up the stuff, thinking, You know, some of this stuff‘s going to be valuable in a few years.  Real estate values are going to go up.  We‘re going to make some money.

By coming back in and buying this stuff, these damned toxic assets, they‘re going to raise the prices of those toxic assets on the market, which is going to give banks a lot more reserve strength than they had before, right?

GOOLSBEE:  Well, that—it could work that way, but...

MATTHEWS:  I thought that‘s what you wanted to happen.

GOOLSBEE:  Well, that is—that would be highly desirable.  It doesn‘t just have to happen that way.  If you look at these banks, the fact that they have these super-risky assets on their balance sheets makes them reluctant to lend, even without the bidding up of the price.  Getting this risky stuff off of there makes them more willing to lend.

MATTHEWS:  OK.  Thank you.  Please come—I want to have you over to the house some night.  You can spend three hours with me.

GOOLSBEE:  All right.  Any time, Chris.

MATTHEWS:  I‘ll get you a drink and you can—we‘ll light up a fire and you can teach me some of this because I‘m trying to learn it.  But you‘re so touchy.  I‘m trying to help you explain this here on HARDBALL.

GOOLSBEE:  Touchy?  I‘m not touchy.  I‘m happy.

MATTHEWS:  We‘re all in this together, Austan Goolsbee.

GOOLSBEE:  I agree.

MATTHEWS:  Thank you, sir.

Joining us now...

GOOLSBEE:  Great to see you again.

MATTHEWS:  ... is Erin Burnett, anchor of CNBC‘s “Street Signs,” who was on today.  She‘s also co-anchor of CNBC‘s “Squawk on the Street.”  Erin, thank you.  You‘re busy today.  You‘ve interviewed everybody.  I‘m trying to learn the business you know by heart.  I‘m trying to understand how we get out of this hellhole we‘re in.

Is it true that we‘re basically trying to get business people to come back into the market to buy these lousy mortgages, these mortgage-based assets, so that we can clean out our banks of all the crap in it so that we can have healthy banks again, and it might just work?  The Street seems to think so.  What do you think?

ERIN BURNETT, CNBC:  Chris, I think you‘ve got it.  You don‘t need to be taught.  You‘ve got it.  I mean, that‘s exactly what it is.


BURNETT:  But I mean, the bottom line is this, right?  We‘ve got maybe a couple trillion dollars of these bad assets.  The plan deals with up to potentially a trillion.  So it‘s part of it.  It‘s not all of it.  It is incremental.  That‘s fair to say.  All the investors out there who are—who potentially would be bidding on these assets or involved and all the banks who might be selling the assets agree this is not some giant panacea, silver bullet.  You‘re not going to see CitiGroup coming right in off the bat and selling their assets, and they‘ve got potentially the most of them.

So it is fair to say this is not a panacea, so—and it‘s going to take a while to get started.  So the market surges today.  Who knows whether it lasts.  I think Austan‘s right to not take too much away from the market today.

But Chris, there are very serious questions about this.  It‘s the best idea we‘ve had so far, but the same old issues about pricing—how much is this stuff worth?  And in an auction environment, are you going to come out with a price that‘s going to clear?  Nobody knows the answer to that.  So we may still end up in a situation where we end up with the stuff staying exactly where it is, which is on the banks‘ books.  And that‘s not necessarily a bad thing, Chris.  I mean, the banks are the ones lending right now.  It‘s the non-banks that aren‘t lending.  The banks are lending.

MATTHEWS:  Well, you know, when you hear about these houses which have been all condemned and repossessed, mortgages foreclosed, or you see about cars that have been—people that can‘t make their monthlies on it—every once in a while, you hear about these auctions somewhere in some small town, and they‘re—there‘s a big auction I read about this week.  Is this a chance for the—not the average person but the wealthy person who‘s got some cash to go make a killing?  Is there a chance here?

BURNETT:  You know, there is.  And first of all, Chris, you‘re right to point out all these smaller auctions that are going on.  You know how every Friday night, you might see headlines, the FDIC seizes a bank, some small first federal in Iowa—and I‘m sorry if there is one and it hasn‘t been seized.  But the point is, then they go and they sell everything that bank had at auction.  That already exists now, and high net worth individuals can play in that.

What‘s interesting about the plan today is that some of the big asset managers involved—you know, I spoke to Larry Fink (ph) from Black Rock, which is likely going to be one of the asset managers out there that‘s going to manage this stuff—they‘re interested in starting mutual funds, you know, a toxic pile of you-know-what and you...

MATTHEWS:  Yes, like everybody...


MATTHEWS:  ... can buy in for a...

BURNETT:  Right.

MATTHEWS:  So an individual could buy in for a few thousand dollars. 

They can say, Wait a minute, I want piece of this.

BURNETT:  Right.  Absolutely.  The problem is, Chris...

MATTHEWS:  They‘ll syndicate it.  I thought that would happen.  Let me ask you about the smell on the Street today.  I disagree with Austan Goolsbee.  I think the Street does tell you something.  It tells you the immediate almost psychic or nervous reaction to something.  Why up there are they so happy about this plan?

BURNETT:  They‘re happy because they actually got a plan.  I mean, Chris, there was real concern about the Treasury secretary.  And everyone always says he‘s smart, he knows what he‘s doing, he can roll up his sleeves, nobody knows the intricacies of the problem better than he does.  But then his presentation and—he promised a plan, remember, a couple—

Obama came out and said, I don‘t want to upstage my Treasury secretary, and then there was no plan.  So I think there was a real potential crisis of confidence in terms of the leadership from Treasury.

So the fact that they got a plan and it was fairly specific, although there are, again, I want to emphasize, some key questions that are not answered...


BURNETT:  And I spoke to the Treasury secretary and he did not have answers for them.  So it‘s no panacea.  But I think the market was just saying, Thank goodness we actually have a plan.  We‘re going to know we‘re going to have these auctions, and some main investors said they‘d participate.  It was more a relief rally than anything else.

MATTHEWS:  I watched you interview him today.  Is he just a man that‘s

I mean, it‘s an evaluative question, but is he just personally shy, not used to the spotlight?

BURNETT:  Yes.  I‘d say he‘s introverted.


BURNETT:  I mean, he is a shy person.  I don‘t think he enjoys doing those sorts of interviews at all.

MATTHEWS:  Yes, I don‘t think he likes the spotlight, the klieg lights, much.  Anyway, Erin, I saw your interview.  Great work.  Thank you for coming on HARDBALL tonight.

BURNETT:  Thanks, Chris.

MATTHEWS:  Coming up: As if the bonuses at AIG weren‘t outrageous enough, how about the banks that took that bail-out money turning around a chunk of it and giving it as campaign contributions to the Congress that approved this stuff?  Your tax dollars at work in campaigns for Congress.  We‘ll follow the money when we return.  I guess this is public financing of campaigns.

You‘re watching HARDBALL, only on MSNBC.


MATTHEWS:  Welcome back to HARDBALL.  After a week of pitchforks and torches, for AIG, “Newsweek‘s” Michael Isikoff has this whopper in the magazine‘s latest edition.  Quote, “Another money trail could make voters just as angry, the campaign dollars to members of Congress from banks and firms that have received billions via the Troubled Asset Relief Program, TARP.  While a few big firms such as Wells Fargo and JPMorgan Chase have curtailed their campaign giving, others are quietly doling out cash to select members of Congress, particularly those who serve on committees that oversee TARP.”

Looks like we‘re going to need more torches.  With us now, “Newsweek‘s” Michael Isikoff, who‘s also an MSNBC contributor, and “Mother Jones‘s” David McCorn—David McCorn or David Corn?


MATTHEWS:  ... who are co-authors of a great book called “Hubris.” 

Both you guys, thank you for that book, as well.

Let‘s take a look at the money that‘s being dolled out, thanks to your reporting, Mike.  CitiGroup $29,620, Bank of America, $24,500, Huntington Bank $17,200, Goldman Sachs $10,000, KeyBank $4,000, for a total of $85,320.

Now, let‘s look at who was getting the money here.  This is always interesting.  Steny Hoyer got 1,500 bucks from Bank of America.  Richard Neil of Massachusetts got $9,000 from Bank of America and CitiGroup.  Jeff Merkley of Oregon—he‘s a Democrat—got $7,500 from Bank of America and CitiGroup, Jim DeMint—he‘s a senator from South Carolina—got $3,000 from BofA, Jim Clyburn, he got $1,000 from BofA.  He‘s from South Carolina, as well.  And Eric Cantor, who‘s the number two Republican in the House—he‘s whip—got (INAUDIBLE)

Now, these are, to put things in perspective, not a huge amount of money, given the fact that you can max out.  An individual can give, what, $4,600 in two cycles, primary and general.  Mike, what do you make of these things, these numbers you‘ve dug up?

MICHAEL ISIKOFF, “NEWSWEEK,” MSNBC CONTRIBUTOR:  Well, look, I mean, it‘s interesting because, obviously, there‘s been a lot of nervousness about this whole issue ever since the TARP bail-outs came out.  I mean, Wall Street—these Wall Street firms have been a traditional major source of cash for members of Congress for decades.  I think it was $37 million in the last cycle alone from the big Wall Street investment banks and banking firms.

MATTHEWS:  Thirty-seven million dollars...

ISIKOFF:  I think it‘s $37 million from TARP recipients.

MATTHEWS:  ... going to members of Congress who then voted on legislation for...

ISIKOFF:  Right. 

MATTHEWS:  ... for giving them the bailout money.

ISIKOFF:  That is sort of standard the way things have always operated on Capitol Hill.

But once you start putting the taxpayers‘ money in there, it kind of changes the equation a bit.  So, I think a number of House and Senate leaders have recognized this is going to be a problem. 

Nancy Pelosi, the speaker, has said she is not going to take money from TARP recipients.  Barney Frank, the chairman of the House Financial Services Committee, has said the same thing.  Chris Dodd, Senate Banking, has said the same thing. 

And, yet, the—you know, some of these banks, Citigroup, Bank of America, some of these others, are continuing to operate the way they always have.  These are their political action committees.  Technically, it is not the...

MATTHEWS:  Well, why?  Why, Michael?  Is it like, when you turn your car off, and, if you have an old car, and it won‘t go off? 


ISIKOFF:  Yes.  Right. 

MATTHEWS:  You turn the key and there‘s a thing called pre-ignition. 

It‘s a bad term.  But I think it should be post-ignition. 

But you turn the car off, and it‘s still running. 

ISIKOFF:  Exactly. 


MATTHEWS:  Is that what is going on?


MATTHEWS:  ... David Corn.

ISIKOFF:  I mean, that‘s—I mean, that‘s the way—that—this is, from their perspective, the way Washington works.  They still need these guys.  They need—still need the access.  They still need to get in the room and...


ISIKOFF:  ... and press their points of view. 


MATTHEWS:  ... the question, David Corn.


MATTHEWS:  When we watched how that was very trickily done—that‘s not the verb form, but trickily done...


MATTHEWS:  ... when, all of a sudden, the top bonus receivers at AIG suddenly were protected by the law, by an amendment thrown into that House-Senate secret meeting we found out that got in there. 

My theory is, the reason they got access is, they paid for it. 

CORN:  Well, of course. 

I mean, the thing is, this is not anything new.  This has been going on for the last couple of decades, if not longer.  And we are just getting people mad at what‘s coming out of Congress.  So, that puts more of a spotlight on what goes into Congress, big donations.

I have some numbers from last year.  Mike talked about $37 million in total spending.  Citigroup, they gave $4.4 million in the last cycle, Bank of America, $2.4 million.  AIG, they‘re kind of a piker, only $854,000.

And, you know, people who have been writing about political reform for years here have raised the issue.  This is like paying off the ump.


MATTHEWS:  But here‘s how it works. 

Michael, you are an expert on this.  It‘s why members of the Senate and members of Congress wish to be assigned to committees like Banking...

ISIKOFF:  Oh, right, of course.

MATTHEWS:  ... right, or Ways and Means, because, automatically, you have these new friends.  You never met them before.  They‘re your new friends.  And they bring money to you, because they like you because you‘re on those committees. 

ISIKOFF:  Right. 

MATTHEWS:  Your thoughts, Michael, on what you have been able to investigate. 

ISIKOFF:  Well, look, the—the—the House Financial Services Committee is considered an exclusive committee by the Democratic Congressional Campaign Committee. 

What does that mean?  That means that its members are expected to kick in more, in terms of campaign cash, to the Democratic Congressional Campaign Committee, so it can dole out to Democrats running for Congress. 

Now, why is it exclusive?  Why are they expected to kick in more?  Because they know the banks, the Wall Street firms that need access to members of the House Financial Services Committee are going to cough up those amounts of money. 

I mean, there‘s this sort of, you know, extortion racket that‘s been going on for years.  There‘s nothing new about it, as David said.  But what is new here is, they‘re now all getting federal bailout funds.  They‘re getting billions...


ISIKOFF:  ... from the taxpayers.  And, so, that kind of changes the equation...

MATTHEWS:  OK.  Here‘s the...


ISIKOFF:  ... when these guys start giving it...

MATTHEWS:  This is what I hear.

ISIKOFF:  ... and recycling it, in a—in a way, back to members of Congress. 


MATTHEWS:  OK, Corn, just a minute, because this is what I hear is the bad—somebody should focus on this.  And I‘m going to focus on it now. 

What I hear is the real disease in public life today is the amount of money you have to raise.  And what it teaches you as you get into this business, not only do you have to take care of these guys, but you begin to automatically, in your nervous system, not think about ways to patrol them, to police them. 

CORN:  Right. 

MATTHEWS:  You don‘t think like a regulator, because the last thing you want to do is cause trouble that you don‘t have to cause with the people who are bankrolling your campaign.

So, you have a—you have a—an almost a mechanical, trained muscle system that says, don‘t regulate, don‘t think of ways to regulate, because it will offend your new friends. 

CORN:  Why would you kill your golden goose? 

MATTHEWS:  Right. 

CORN:  I mean, case in point, Democrat Chuck Schumer.

AIG, he was one of the top donors, behind Chris Dodd and George W.  Bush, to the right of Barack Obama, $111,000.  Remember, what was it, a year or two back when there was talk about taxing hedge fund managers at the rate that the rest of us pay?


CORN:  Who intervened in that?  Chuck Schumer.  Hedge funds, they‘re in New York.  They‘re constituents and their donors got a lot of Democrats really mad.  Here was a Democrat, you know, getting in the way of a populist issue at a time when the economy was already heading in the wrong direction.

So, I mean this happens again and again.  And, so, Chris Dodd now is really, because he took money from AIG, and then didn‘t let that provision go through, he is now one of the most vulnerable senators in 2010. 



MATTHEWS:  Mike, can you ever find an example in your research where a

and this is hard to prove—quid pro quo, money came in the door, doors opened that wouldn‘t have opened otherwise for these guys who represent these big companies?

ISIKOFF:  Well, I mean, you know, take a look at, you know, countless numbers of earmarks that have been slipped in over the years, and, in so many cases, you can draw it directly to campaign contributions from the beneficiaries of the earmarks.  I mean, that‘s not hard...

MATTHEWS:  Increasingly, this is trans...


MATTHEWS:  This is increasingly transparent, right? 

You are able to access, through the FEC, as you did when you broke

this story this weekend for “Newsweek,” you were able to access the first -

and you got the investigation even more developed later in the weekend—of who‘s getting money from these TARP corporations.

But, also, you get the money on the earmarks.  Are we getting more transparency on that front as well, Michael? 

ISIKOFF:  Well, we are supposed to, but it‘s going to be—I mean, supposedly, there are—you know, now—now it becomes a semantic game.  What‘s an earmark?  And Obama said...

MATTHEWS:  Well, I know what it is. 

ISIKOFF:  ... there are no earmarks in the...


ISIKOFF:  ... in the stimulus package.  But, you know, you can define earmarks in different ways, so that it‘s the same thing. 

MATTHEWS:  Yes, it‘s got to go to a Catholic college somewhere in the Boston area...

ISIKOFF:  Right. 

CORN:  Right. 

MATTHEWS:  ... that is served—served by a mass transit system that what—you know, I know how it‘s done.  It‘s defined as a way it has to go to your guy.

ISIKOFF:  I think it‘s going to be interesting, Chris. 

I think this—the—the TARP stuff is going to be interesting to see how it plays out, because I think everybody is aware—I talked to one bank lobbyist who said, you know, the last thing he wants to do is wake up and see his PAC—his bank‘s PAC check being burned on C-SPAN in some PAC-burning session. 

They all realize there‘s sort of a new environment out there and that these are very treacherous waters.  So...



MATTHEWS:  What you broke today, your story this weekend...


MATTHEWS:  ... proves that that car keeps running.  They keep spending the money.  The spigot is still open.  The money keeps going, even though everybody is watching. 

Thank you very much.  Congratulations, Mike Isikoff.

ISIKOFF:  Thank you. 

MATTHEWS:  As always, David Corn.

Up next:  So, how‘s President Obama doing?  His job approval ratings are still high.  What about his NCAA bracket picks?  Actually, they‘re close to brilliant.  It‘s amazing how the guy has extra I.Q. points to do this stuff.  But he is incredibly on target with—of course, he‘s picked the higher seeds, of course.

You‘re watching HARDBALL, only on MSNBC.  


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

First up, roasting the town—Vice President Biden, a frequent target in the gotcha world, got raves from the white-tie types at this weekend‘s Gridiron dinner.  It‘s an old-school ritual featuring supposed roasts of in-the-news politicians.

But here‘s some of Biden‘s better zingers. 

On the boss, President Obama: “He can‘t be here tonight because he‘s busy getting ready for Easter.  He thinks it‘s about him.”  Ooh.

On Treasury Secretary Tim Geithner: “He‘s always there when you need to borrow money, no questions asked.” 

And in a reference to Governors Arnold Schwarzenegger and Jennifer Granholm, Biden took this shot—quote—“We have a Republican speaker tonight who was born in Austria.  And tonight‘s Democratic speaker was born in Canada.  Folks, this is Lou Dobbs‘ worst nightmare.”

A-material from a guy who gets roasted a lot, but never loses his mojo.

Next up:  President Obama‘s following George W. Bush in at least one respect, getting mocked by Hugo Chavez.  Yesterday, the Venezuelan hotshot called our new president an ignoramus for saying that Venezuela exports terrorist activities in Colombia. 

It goes to show that there will always be people in other countries who make their livings and careers attacking this country, no matter who is our president. 

Now for tonight‘s “Big Number.” 

March madness is in full swing, which gives us the opportunity to study the predictions of the basketball aficionado now working in the Oval Office.  How many teams in the Sweet 16 did President Barack Obama correctly pick?  Unbelievable.  Fourteen of the 16.  He got them right.  The two teams he didn‘t expect to make it and did were Arizona and Xavier. 

President Obama correctly picked 14 out of the Sweet 16 -- tonight‘s “Big Number.” 

Now let‘s hope he has got as good of pick in percentaging in the financial crisis.  Let‘s hope he‘s as sharp there. 

Up next:  President Obama hits back against former Vice President Dick Cheney, taking on Cheney‘s accusation that the move to close Guantanamo Bay has made us more vulnerable to terrorism.  Obama vs Cheney—next.

You‘re watching HARDBALL, only on MSNBC.  


BERTHA COOMBS, CNBC CORRESPONDENT:  I‘m Bertha Coombs with your CNBC “Market Wrap.”

Stocks soaring on good news about the economy‘s biggest problems, banks and housing, the Dow Jones industrials soaring nearly 500 points, closing at 7775.  That‘s after the Dow closed at a 12-year low, below 6600, just weeks ago.  The S&P 500 jumping 54 points, and the Nasdaq gaining nearly 100. 

Investors cheering the Obama administration‘s long-awaited plan to rid banks of troubled assets.  The plan includes the government partnering with private investors to relieve ailing banks of up to a trillion dollars in those so-called toxic assets, those bad loans. 

Also fueling today‘s rally, existing home sales jumping a surprising

5.1           percent last month.  It was the largest monthly increase in nearly six years.  Prices were down 15 percent, though.  A lot of those homes were foreclosed. 

And, as stocks rallied, so did oil prices.  Crude rose $1.73, to close at over $53 a barrel.  Oil prices have now risen more than 30 percent this month. 

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


MATTHEWS:  Welcome back to HARDBALL. 

A week ago, former Vice President Dick Cheney emerged from his disclosed location, Northern Virginia, to knock President Obama on everything from national security to the economy. 

Last night, the president hit back on “60 Minutes.”  Here‘s President Obama responding to Dick Cheney‘s assertion that Obama‘s policies have made us less safe. 


BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I fundamentally disagree with Dick Cheney, not surprisingly.

You know, I think that Vice President Cheney has been at the head of a movement whose notion is somehow that we can‘t reconcile our core values, our Constitution, our belief that we don‘t torture, with our national security interests.

I think he‘s drawing the long—wrong lesson from history.  The facts don‘t bear him out. 


MATTHEWS:  Well, obviously, I love this. 

With us now, MSNBC political analyst Pat Buchanan and Democratic strategist Joe Trippi. 

What do you make of this interesting rearguard action by Dick Cheney?  I have said before he will be the Perle Mesta of this era.  In other words, he will stay in Washington.  He will hang around.  He will have parties.  And, at midnight, over sifters of brandy, he and the old boys will talk about how this new crowd are not quite keeping up to our standards. 


MATTHEWS:  They‘re blowing it. 

I can hear these conversations.  You know, “General, Scowcroft, what do you think of that?”


MATTHEWS:  You know, I can hear these conversations. 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  I don‘t know if Scowcroft will be there.


MATTHEWS:  Maybe not Scowcroft. 


MATTHEWS:  But Doug Feith...

BUCHANAN:  The realist.


MATTHEWS:  Doug Feith will be there. 

BUCHANAN:  You know, he is right down—Cheney is right down the street from me.  He‘s moved in—he‘s moved into McLean.  But, look...

MATTHEWS:  There‘s a lot of cars in the driveway? 

BUCHANAN:  They‘re—I think he—they just finished the hotel.  I think they moved the stuff in.  It‘s out by—it‘s out by the Kennedy mansion...


BUCHANAN:  ... right across the street almost. 

MATTHEWS:  Right. 

BUCHANAN:  But let me say this about Dick Cheney. 

I mean, he really believes his legacy is in the national security area, that the country has not been attacked since 9/11, that the tough measures he took have—have broken up plots, have saved this country, that they‘re the right thing to do, that, in—in moving the other direction, Obama‘s responding to liberal values, if you will, and making the country less safe.


BUCHANAN:  There‘s no doubt about it he believes that seriously. 

And Obama believes just as seriously on the other side.  What is going to happen, I fear, Chris, is that, someday, we are liable to get some horrible explosion here in this country...


BUCHANAN:  ... some horrible thing, like we almost got in Haifa yesterday, and then people will say, Cheney was right.

MATTHEWS:  So, the killing—Pat, I want to ask you the tough, the HARDBALL, question.  Did killing 100,000 Arabs in Iraq make us safer...

BUCHANAN:  I don‘t believe...

MATTHEWS:  ... or make us more enemies?

BUCHANAN:  I don‘t believe it did.  And I do believe we have expanded the pool of hatred from which al Qaeda draws.


BUCHANAN:  But there‘s no doubt they have hammered al Qaeda, gone after it relentlessly. 

MATTHEWS:  They haven‘t caught the guy.

BUCHANAN:  No, they haven‘t got that guy.  But they have killed an awful lot of them. 


MATTHEWS:  The president, he said—the last president we had—and we all respected for this—said:  I‘m going to get the guys who knocked down this building after 2001. 

And he didn‘t get him. 

JOE TRIPPI, DEMOCRATIC STRATEGIST:  But what Cheney did was...

MATTHEWS:  He got—he started a war that didn‘t matter. 


BUCHANAN:  He got Khalid Sheikh Mohammed.

TRIPPI:  But Cheney threw out the Constitution, threw out the—you know, the moral high ground that we have had.

You can‘t do things that aren‘t—aren‘t consistent with our values and with the Constitution, which is what he wanted to do. 

And I—and—and look at where it got us.  I mean, it got a lot of anger in the world, a lot of hatred, and a lot of people who want to come get us.  It—it‘s an open book yet.

MATTHEWS:  Do you think Cheney is a cruel customer who likes this torture stuff personally? 

TRIPPI:  I think he watched too many “24” episodes and thinks he‘s Jack Bauer. 

MATTHEWS:  Really? 

TRIPPI:  Yes, I do.  I absolutely believe that. 

BUCHANAN:  Let me ask you, if he really violated the Constitution, why didn‘t the Democratic party have the guts, when they control both Houses, to impeach him and say exactly where he violated the Constitution? 

TRIPPI:  I‘ve got—that‘s a question I ask myself a lot.  I think we weren‘t tough—

MATTHEWS:  Eric Holder still has that question floating around somewhere in the Department of Justice, which is aptly named now.  Here‘s President Obama on Cheney‘s philosophy about the world. 


OBAMA:  I think he is—that attitude, that philosophy has done incredible damage to our image and position in the world.  The fact of the matter is, after all these years, how many convictions actually came out of Guantanamo?  How many terrorists have actually been brought to justice under the philosophy being promoted by Vice President Cheney? 

It hasn‘t made us safer.  What it has been is a great advertisement for anti-American sentiment, which means that there is constant effective recruitment of Arab fighters and Muslim fighters against U.S. interests all around the world. 


MATTHEWS:  You‘re closer to him than you are to Cheney, aren‘t you, Pat?  Foreign policy? 

BUCHANAN:  I think that point is exactly valid.  I do think we have increased the size of the pool out of which the hatred comes.  At the same time, I do agree that Cheney and—I think they have gone after—look, one thing the American people thought McCain was better on than Obama, even at the end, was the war on terror. 

MATTHEWS:  That‘s right. 

BUCHANAN:  They believed the administration was focused and solid on that. 

MATTHEWS:  Don‘t you have to hate the bad guys?  Don‘t the Republicans do a better job of displaying hatred for the people that killed us, whereas Democrats are a little too sophisticated about it, a little too—what‘s the word? 

TRIPPI:  Kind of like, if you think hatred gets you somewhere, it gets you more hatred.  That‘s what it gets.   

MATTHEWS:  Who do you want standing in your army, the guy who hate the other side or—

TRIPPI:  -- goes after the right people.  We should have stayed in Afghanistan.  We shouldn‘t have gone into the war in Iraq.  We would have been much safer today because—

MATTHEWS:  This visceral anger that you see in Cheney‘s face, that sort of Dickensian thing, is it better for our foreign policy to look angry? 

BUCHANAN:  I know Cheney.  I think he‘s a tough, purposeful guy, quite frankly.  I don‘t think he‘s full of anger and hatred.  I think he believes he knows what he is doing.  And I think believes he‘s made the country safer.  And I think there‘s a persuasive argument that they kept us safe, at the same time they did -- 

MATTHEWS:  Was there a way to fight the war on terror smart and tough? 

BUCHANAN:  I would have fought it focused on the war on terror, those guys.  Saddam Hussein wasn‘t one of them. 

TRIPPI:  Now we are in big agreement about Saddam Hussein.  That‘s where—they made a lot of mistakes.  I agree that Cheney thinks he‘s right and that he thinks—

MATTHEWS:  Cheney was after Iraq long before we got hit by the terrorists.  He wanted to get Iraq.  There could have been no terrorism in the world, he still wanted to get Iraq.  Here we are—one more bite.  Let‘s take a look at one more bite from Cheney—from Obama—President Obama going back at Cheney. 


OBAMA:  The whole premise of Guantanamo, promoted by Vice President Cheney, was that somehow the American system of justice was not up to the task of dealing with these terrorists.  I fundamentally disagree with that. 

Now, do these folks deserve Miranda rights?  Do they deserve to be treated like a shop-lifter down the block?  Of course not. 

But this is the legacy that‘s been left behind.  And, you know, I‘m surprised that the vice president is eager to defend a legacy that was unsustainable. 


MATTHEWS:  Put your political hat back on, not geo-political.  Is he trying to hook him in a fight, a permanent fight?  Does he want Cheney to be the voice of the rear guard? 

BUCHANAN:  The very fact that he went on and on and on about Cheney says, I want this fight and I want this particular adversary. 

TRIPPI:  Absolutely.    

MATTHEWS:  He wants Cheney and Limbaugh to be the bad guys. 

BUCHANAN:  Gibbs called me out on it and he was correct.  The Bush people let a lot of folks go from Guantanamo, and they have shown up in bombings and other places.  This is a bad crowd down there.

MATTHEWS:  But that was with Bush.  And that was after they tortured these guys.  They still couldn‘t figure out—

BUCHANAN:  Why do you say they tortured them at Guantanamo? 

TRIPPI:  The policies did not make us safer. 

BUCHANAN:  There was no attack, no attack in seven years. 

MATTHEWS:  You‘re trying to prove a negative.  How can we prove a negative?

MATTHEWS:  Pat Buchanan, Joe Trippi, thank you, gentlemen. 

Up next, President Obama takes some heat from some prominent voices on the left.  Paul Krugman doesn‘t like this guy‘s economics.  We‘ll be right back with that.  We got some more on the politics fix tonight, liberals going after Obama, some of them.  Let‘s watch who they are and what they have to say next on the politics fix.  This is HARDBALL, only on MSNBC.


MATTHEWS:  Welcome back the.  We‘re in the politics fix right now.  Michael Sherer is the White House correspondent for “Time Magazine,” whose cover this week is about the bailout bomb, and why AIG equals WMD.  And Chrystia Freeland is the US managing editor if “The Financial Times.”  both of you, thank you, Chrystia and Michael. 

Let‘s take a look at some shots that the president took from the left, if you will, from Frank Rich, at least the center left.  Quote, in this Sunday‘s “New York Times”—quote, “unless and until Barack Obama addresses the full depth of America‘s anger with his full arsenal of policy smarts and political gifts, his presidency and, worse, our economy will be paralyzed.  Rhetoric won‘t tamp down the anger out there.  Neither will calculated displays of presidential outrage.  We must have governance to match the message.”

He believes, Chrystia, Frank Rich, who is pretty smart and a supporter of Barack Obama, says the president is missing the mark.  He is deliberately or accidentally creating a Katrina situation, where this president is so out of touch with reality.  Do you buy it?  He‘s not angry like we are, that‘s the argument. 

CHRYSTIA FREELAND, “THE FINANCIAL TIMES”:  Well, I do think the president understands the anger.  And I think an interesting moment in his address to Congress a couple of weeks ago was when he actually said, look, I get it. 

But I also agree with Frank Rich that the policy response hasn‘t seemed to get it.  I do think that‘s really dangerous for the Obama administration.  I think that unless President Obama can convince American people that he understands why they‘re really, really angry at Wall Street, and that any program which he puts together to fix the financial crisis will be about really fixing the financial crisis, not rewarding Wall Street bankers, he won‘t be able to do what he needs to do. 

I think we‘re already seeing that problem in action.  I think there‘s a very strong argument for the government spending a lot more money directly to recapitalize the banks.  And the big reason why that‘s not happening is because President Obama and his team are worried they couldn‘t get the public and the political support to do that. 

MATTHEWS:  Should he stick his head out the window of the apartment building and yell, I‘m mad as hell and I‘m not going to take it anymore?  Should he be Peter Finch from Network?  Should he, Michael?  Should he be angry publicly so? 

MICHAEL SHERER, “TIME MAGAZINE”:  He‘s got two roles.  He wants to channel the anger of the American people, but he also has to be the optimist in chief.  He also has to guide us beyond this anger.  He has to guide us to something new.  I think President Obama has been incredibly good over the last two years at understanding what the American people want.  I think there have been some slip ups. 

MATTHEWS:  Is he out of sync right now, so debonair and breezy?  Is he out of synch with the mood of the country?  AIG, the country liked that 90 percent tax of those guys who got the bonuses.  I and the president both believe it‘s unconstitutional.  That‘s an historic point and a fact, I believe.  But the mood, is he off base on the mood? 

SHERER:  You know, what happened last week with AIG was they were dumb struck.  It came out of nowhere.  It Struck them.  They weren‘t ready for it.  They were reacting.  They were playing defense the whole time. 

MATTHEWS:  But that‘s a description of what happened to the president, the last president with Katrina.  He didn‘t know what was going on.  In that case, it was an intellectual miss.  The argument here is he might be psychologically—I want to read you something by Arthur Schlesinger—actually, he picked up a quote from Woodrow Wilson, who said this about presidents: “Great presidents also have a deep psychic connection with the needs, anxieties, and dreams of the people.”  This is what Wilson said, “I do not believe who any man who can lead, who does not act under the impulse of a profound sympathy with those whom he leads, a sympathy which is insight, an insight which is of the heart rather than of the intellect.” 

Chrystia, can a president lead who doesn‘t have a heart in contact with the people? 

FREELAND:  No, not at all.  I think, particularly at a moment like this, that point applies.  I think what we‘re seeing actually is that the American public is ahead of Washington and Wall Street.  We have seen a really radical shift in the relationship between business and government, especially those businesses which are now government—on government welfare. 

And I think the core problem here is the businesses, themselves, and some of their political sponsors, don‘t understand that the world has changed, that once they‘re on the government dole, you can‘t get your bonuses anymore.  It‘s a new world. 

MATTHEWS:  You can‘t keep giving money to politicians and campaign money at the same time you‘re getting billions out the back door.  Anyway, thank you.  We‘ll be right back with Michael Sherer and Chrystia Freeland to talk about another shot coming at the president from the left.  This is about the substance.  We‘ll be right back with that.  You‘re watching HARDBALL, only on MSNBC.


MATTHEWS:  We‘re back with Michael Sherer and Chrystia Freeland for more of the politics fix.  Speaking of politics, the attorney general of New York State, Andrew Cuomo, has just announced this evening that 15 of the 20 top bonus receivers at AIG have agreed to give the money back, nine of the top ten.  so at the very top, they‘re most sensitive to this.  They apparently get the message.  They got it from the AG of New York.  I think it‘s a big win for Andrew as well.  Your thoughts on that important development just tonight?  Chrystia?

FREELAND:  Yes, I think it‘s a really important development.  It makes you ask why last week, before the whole scandal erupted, someone from the Treasury didn‘t say to these guys, look, this just isn‘t going to fly.  Why don‘t you spare yourself and us terrible embarrassment and let‘s just not do this? 

MATTHEWS:  I guess it looks good for Andrew Cuomo, who has put the heat on these guys.  He threatened to—somewhere behind all of this is the threat that you will be exposed, I think. 

SHERER:  And the biggest issue with all of what happened last week was that the president didn‘t know and the Treasury secretary didn‘t know.  The Fed was talking about it in February.  We didn‘t know—no one knew until a week into March.  So now it‘s being taken care of.  It should have been taken care of before. 

MATTHEWS:  OK, so it works out tonight that most of the money is going to come back, at least from the top people.  I‘d love to know who that one out of the top ten, who is holding back, is.  Here‘s a critique of the president‘s program, announced today, about buying up those toxic assets.  “New York Times” columnist Paul Krugman, who is, of course, a Nobel laureate, wrote today, “Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and the bankers know what they‘re doing.  It‘s as if the president were determined to confirm the growing perception that he and his economic team are out of touch, that they‘re economic vision is clouded by excessively close ties to Wall Street.  And by the time Mr. Obama realized he needs to change course, his political may be gone.”

So basically two points to that.  One, he‘s got it wrong and he‘s going to pay for it. 

SHERER:  There are a bunch of economists, not just Paul Krugman, who are saying there is a risk for this.  If is doesn‘t work, we‘re going to have to come back.  It‘s going to be very politically unpalatable at that point. 

That said, there‘s something elegant to this plan.  You do have the private marketplace coming in.  You don‘t have the effect of the nationalization of the banks. 

MATTHEWS:  For the first time ever, Wall Street likes Barack Obama.  Thank you, Michael Sherer, thank you Chrystia Freeland.  Five hundred point hike today in the Dow.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  Then at 8:00 Eastern, President Obama‘s prime time news conference.  I‘ll be back afterwards with all the analysis.  Right now, time for “1600 PENNSYLVANIA AVENUE” with David Shuster.



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