updated 3/31/2009 9:58:49 AM ET 2009-03-31T13:58:49

Guest: Gov. Jennifer Granholm, Joe Conason, Cliff May, Joe Conason, Gene Sperling

High: President Obama makes GM CEO Rick Wagoner step aside and announces the company‘s restructuring plan is unacceptable and he‘s giving them 60 days to come up with a new one.

Spec: Politics; Automobiles

CHRIS MATTHEWS, HOST:  President Goodwrench.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in Washington.  Leading off tonight:

Car crash.  The old expression from the 1950s was “What‘s good for General Motors is good for America.”  Today, President Obama reversed that axiom, saying, What‘s good for America better damn well be good for General Motors.

Imagine a president of the United States firing the head of GM.  Well, that‘s exactly what he did.  And after dropping the axe, Obama gave GM exactly two months to get it act together—dumping the bad models, putting its money on the good ones that‘ll make money, streamlining its operations, the works—or else.  He gave Chrysler half that time, telling them to find a new partner because the American taxpayer is tired of playing that role.  Forget the federal money, he said.  Get your money from somewhere else.  Fiat or forget it.

Here he is.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars.  These companies and this industry must ultimately stand on their own, not as wards of the state.

(END VIDEO CLIP)

MATTHEWS:  A lot of people think it‘s about time, that it‘s long overdue that the auto makers were made to face up to 21st century reality and the nasty competition that comes with it.  Michigan‘s Governor Jennifer Granholm, who‘ll join us in a moment, said that the car industry is simply getting some tough love.  But facts are facts.  The president‘s plan raises the very real possibility that one or both of these auto makers could into bankruptcy.  With millions of jobs and billions of dollars at stake, does it make sense to put so much at peril?  I‘ll talk to Gene Sperling, who‘s the counselor to Treasury secretary Tim Geithner.

And you have to wonder what former vice president Dick Cheney would have said about any Democrat who talked about him the way he is said to have talked about Barack Obama.  It‘s one thing to criticize a president at home, but Sy Hersh in this week‘s “New Yorker” magazine reports that in the transition period, Cheney told the Israelis that Mr. Obama was pro-Palestinian and would, quote, “never make it in the big leagues.”  Sounds like Cheney, but is he really this arrogant?

And while we‘re on the subject of the Republicans not exactly keeping with protocol these days, check out what RNC chairman Michael Steele said about President Obama.  Here he is.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Is there any professional jealousy?

MICHAEL STEELE, RNC CHAIRMAN:  Not on my part.  What would I be jealous of?

UNIDENTIFIED MALE:  He‘s the president of the United States.

STEELE:  I‘m chairman of the RNC.  So what‘s your point?

(END VIDEO CLIP)

MATTHEWS:  Right.  Let‘s see, chairman of the RNC, president of the United States.  Really, who‘s got the better job?  Anyway, Michael did pull back a bit.

Also, talk about damning with faint praise, wait until you hear what John McCain said when asked whether he‘d support his running mate from 2008 -- remember Sarah Palin? -- for president.  Then again, you won‘t be that surprised by what he says.

But we begin with the GM and Chrysler crisis.  GM president Rick Wagoner got the gate from President Obama today.  Here‘s Michigan governor Jennifer Granholm reacting this morning on the “Today” show.

(BEGIN VIDEO CLIP)

GOV. JENNIFER GRANHOLM (D), MICHIGAN:  I know that Rick Wagoner has worked for that company for 31 years, and he is a good man.  He clearly is a sacrificial lamb.  But I think that he would say that he‘s doing what is important for the future of the company and for the future of jobs.

(END VIDEO CLIP)

MATTHEWS:  Joining me right now is Michigan governor Jennifer Granholm.  Governor, thank you for joining.  You‘re sympathetic with the GM president who was just sacked.  Was he doing a great job?

GRANHOLM:  Well, look at last year, Rick (SIC).  I mean, General Motors got the “car of the year” by J.D. Powers, got the “car of the year” by “Motor Trend” magazine, got the “green car of the year.”  It‘s not as though they have been producing junk.  They have been producing quality vehicles and the objective validators show that.  He‘s also been in the middle of a massive restructuring plan, and believe me, we‘re ground zero, we‘re the poster child for that restructuring plan having occurred.

But GM and Chrysler and Ford and all the auto companies got slammed with this recession.  So the question is, How do we move forward?  And what I heard today was a president who, frankly, I‘m optimistic is going to stand behind a domestic auto industry that produces the vehicles that will reduce our dependence on foreign oil.

MATTHEWS:  What is it with the auto industry?  I mean, I‘m looking at American know-how, and there‘s companies, high-tech companies—you think of Microsoft, you think of Apple, you think of heroes in American industry like Bill Gates, Billy Gates, you think of Steve Jobs.  Kids around the world—I once saw a Vietnamese kid over in South Vietnam—Vietnam just raving about Billy Gates.  We don‘t have heroes in our auto industry anymore.  What‘s the difference?  Why doesn‘t it work that way?

GRANHOLM:  I mean, I disagree that we don‘t have heroes...

MATTHEWS:  Well, name one that‘s a worldwide hero.  Who‘s a famous auto maker today, a guy or woman we all look up to and say, Great, I want to be that person?  Name that person.

GRANHOLM:  I would say Bill Ford, Jr., would fit that bill.  He‘s somebody who wants to move this industry, to lead the nation in making us independent of foreign oil, of making the green vehicle.

We produce in Michigan the most technologically advanced mass-produced product in the world.  There‘s more technology in your car than there is in your computer.  It‘s got thousands of parts in it.  It‘s extremely sophisticated, all that robotics.  We are having the National Robotics Championships right now.  Michigan‘s got more teams in robotics than any other state in the country, more high schools involved.  The bottom line is that this is exciting stuff.  We just have to make sure that we support this industry going forward.

And most importantly, Chris, and I know you believe this, too, is supporting the communities and the families that have been affected, the people who are making these cars—and this is what the president said today—through no fault of their own, who are proud of the product that they create have had the rug pulled out from under them.  We need to make sure that we support those communities, those families and the industry, as well.

MATTHEWS:  The problem is that companies like Chrysler have had their hand out since 1980.  This isn‘t just a cyclical problem, it‘s a trend problem, isn‘t it?

GRANHOLM:  No, I think...

MATTHEWS:  The need for federal money is a trend problem that‘s been getting deeper and deeper...

GRANHOLM:  No, I...

MATTHEWS:  ... since ‘80, since Iacocca.

GRANHOLM:  No, I just—you know, so it happened one before, and that was obviously at a time when there was probably very high gas prices and people weren‘t buying.  The bottom line is that in that Chrysler deal, they got—the taxpayers got the money back plus.  Now this industry is slammed with a recession, and every other country is providing help to their auto industry.  And so this country is now going to do the same, but giving it tough love, tough parameters in which to be successful, and I think they can be.

MATTHEWS:  Let‘s look at the hard numbers.  General Motors has gotten close to $13.5 billion.  They want $16 billion more.  That‘ll be about $30 billion.  Chrysler got $4 billion, they want $5 billion more.  This is big bucks.  And I guess I have to ask you about the auto industry.  Is America finished if we don‘t have an American brand?

GRANHOLM:  Yes.

MATTHEWS:  Do we need...

GRANHOLM:  Yes!

MATTHEWS:  Why is that—make the case.  Why is it important it‘s not called Hyundai, it‘s not called Toyota?  Why is it important that it‘s called Ford and called GM?  Why is that important?

GRANHOLM:  Well, as a nation, we‘ve made the decision that we‘re going

to become independent of foreign oil.  As a nation, we‘ve said we‘re going

to be energy-independent.  If you don‘t have an auto industry that‘s

producing the means for you to get there, then you have outsourced your

ability to be energy-independent.  Now we rely on foreign oil.  If we

produce the electric vehicle—or if some other country‘s company produces

the electric vehicle—right now, all that battery technology is in Asia -

you will have just shifted your reliance on oil to reliance on foreign batteries.

We need to be able to be energy-independent, and the automobile and the storage, the electric vehicle, the battery technology is one way of getting there.  And in addition to that, Chris, if we want to have national security, you have to have a manufacturing sector to be able to produce the means to keep your nation secure.  If you don‘t have an auto industry, you will not be secure as a nation because you won‘t have a backbone like manufacturing to be able to put people to work in producing the means to you keep you secure.

MATTHEWS:  Governor, let‘s listen to the president on this very point.

(BEGIN VIDEO CLIP)

OBAMA:  It‘s a failure of leadership from Washington to Detroit that led our auto companies to this point.  Year after year, decade after decade we‘ve seen problems papered over and tough choices kicked down the road even as foreign competitors outpaced us.  Well, we‘ve reached the end of that road, and we as a nation cannot afford to shirk responsibility any longer.

(END VIDEO CLIP)

MATTHEWS:  We‘ve been papering over the problems.  Do you agree with that, Governor?

GRANHOLM:  No.  I don‘t know we‘ve been papering over the problems.  But I do think that there were decisions, management decisions made years ago that didn‘t lead us to the kind of industry that we want today in terms of fuel efficiency and electric vehicles.  And Rick Wagoner would have said that and has said that.

But the question is where do we go right now, Chris?  Where are we headed?  And what the president said today in the clip that you didn‘t show was that he is going to stand up and fight for us, fight for those families, fight for those communities and fight to have a viable auto industry one way or another.

MATTHEWS:  Let me show you some more.  Here‘s more of the president today.  Let‘s hear him, more of President Obama.

(BEGIN VIDEO CLIP)

OBAMA:  Let me be clear.  The United States government has no interest in running GM.  We have no intention of running GM.  What we are interested in is giving GM an opportunity to finally make those much-needed changes that will let them emerge from this crisis a stronger and more competitive company.  The situation at Chrysler is more challenging.  It‘s with deep reluctance but also a clear-eyed recognition of the facts that we‘ve determined after careful review that Chrysler needs a partner to remain viable.

(END VIDEO CLIP)

MATTHEWS:  Do you think GM will make the tough decisions and cut out the models that aren‘t working and focus on the ones that do work, as the president cited?  I think this is dangerous territory, and if you‘re saying that, I agree with you, the president of the United States suggesting which models are going to work.  He‘s saying Buick is great.  Maybe he could have said Cadillac is great.  Maybe he could have said but Pontiac‘s not going to make it and maybe the Hummer ought to go.  But is the federal government the right party to be making these model decisions?

GRANHOLM:  I think what the federal government wants to see is a viable industry, and that means a skinnied-down, streamlined industry where the stake holders have made concessions so that the debt is off the books and they can see a path to viability going forward.  That‘s what they want.  That‘s what the auto task force has been working on.  Nobody want‘s the government running the auto industry.

But we do want the government to be a partner with the industry, and that means partnering on research and development related to the battery, partnering on health care so that we‘ve got a uniquely American solution to the cost of health care in this country, partnering on infrastructure related to that electric vehicle, the things that we can do.  Everybody‘s got a role.  The government has a role.  The government has a role in other countries, as well.  But the question is, Can we get there in 60 days, or 30 days in the case of Chrysler?  I think we can, but everybody has got to work in that direction because bankruptcy should be a last resort.

MATTHEWS:  We in America count on the profit motive to get people to do the right thing.  That‘s our basic American notion when it comes to business.  And yet I‘m told that when the UAW gets together with the auto manufacturers, they decide, they have to, to go with the bigger car, the heavier car, the SUV, because that‘s where the profit is.  That‘s where the per car profit comes in, and you need that kind of per car profit to pay the health care costs, to pay the union fees, to pay the workers‘ salaries at the level we‘d like to have.

Is there a structural problem that leads the American auto industry to continually make decisions that don‘t go with the hybrid car, that don‘t keep up with the foreign competition when it comes to state-of-the-art automobiles?  Is there a problem which has to do with health care costs, which has to do with union contracts, that need to get a higher per car profit out of the business?  Is that a problem?

GRANHOLM:  I think that there is clear—no doubt that the SUVs were

more profitable.  I think that‘s no doubt.  But I also think that there is

a model here where the government can help to—what do I want to say—

take to scale the technology associated with the electric vehicle.  In

other words, help to buy down that initial cost of the price of an electric

vehicle so that we don‘t have the early entry to be so expensive that it‘s

a barrier to production and a barrier to profitability.  I think that‘s a

role that the government can play, is to bring down the cost of that early

technology, to bring down the cost of the battery so that, in fact, people

everyday middle class folks can buy a car.

MATTHEWS:  OK.  Thank you very much, Governor Jennifer Granholm. 

Thanks for coming on HARDBALL tonight on this big night.

We‘ll have much more on the president‘s plan for the auto manufacturers later in the show.

But coming up: Dick Cheney said President Obama would be soft on our enemies.  He said that Obama‘s policies would make us less safe.  And we got a new story he‘s got about how he‘s going to be pro-Palestinian and basically anti-Israeli.  We want to get to that story.  We‘re getting the latest from Cheney.  And he just keeps giving, doesn‘t he.  What‘s with this guy?

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  It seems like former vice president Dick Cheney makes news every few weeks—actually, we like it—usually by criticizing the Obama administration.  In a February interview with “Politico,” the newspaper, he says the Obama view of international diplomacy is naive.  Here he is.

(BEGIN AUDIO CLIP)

RICHARD CHENEY, FORMER VICE PRESIDENT OF THE UNITED STATES:  We need from time to time to use military force or all of the resources at our command in order to defend the nation and defend our friends.  Sometimes that requires us to take actions that generate controversy.  I‘m not at all sure that that‘s what the Obama administration believes.  I think there probably are some who actually believe if we just go talk nice to these folks, everything‘s going to be OK.  I don‘t think the world works that way.

(END VIDEO CLIP)

MATTHEWS:  Well, in March, the former vice president criticized Obama for not keeping America safe.  Here it is.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Do you believe the president of the United States has made Americans less safe?

CHENEY:  I do.  I think those programs were absolutely essential to the success we enjoyed of being able to collect the intelligence that led us to defeat all further attempts to launch attacks against the United States since 9/11.  Now he‘s making some choices that, in my mind, will, in fact, raise the risk to the American people of another attack.

(END VIDEO CLIP)

MATTHEWS:  Well, now in the coming April 6th issue of “The New Yorker” magazine, now on newsstands, Dick Cheney pops up again.  In an article about prospects for Middle East peace, Sy Hersh, the great reporter, reports that during the transition, quote, “Cheney portrayed Obama to the Israelis as a pro-Palestinian who would not support their efforts, and in private disparaged Obama, referring to him at one point as someone who would ‘never make it in the big leagues‘”—or, I should make it accurate, “never make it in the major leagues.”

Is former vice president Dick Cheney out of line in the protocol here?  Joining me are Joe Conason, national correspondent for “The New York Observer,” and Cliff May, president of the Foundation for the Defense of Democracies.

Well, it‘s great to have you two guys going against each other on any reason but—Dick Cheney—I don‘t know what he is.  Let me start with Joe.  He always talks like he‘s in the situation room and he‘s speaking out of regret at what he sees as the weakness of the other side.  He‘s always letting us know that, among us grown-ups, it‘s too bad these lefties on the other side don‘t have enough spine.  That‘s always the message.  He did it again by saying, apparently, to the Israelis, according to Sy Hersh, This guy‘s on the other side, don‘t trust him.  What do you make of this?

JOE CONASON, “NEW YORK OBSERVER”:  Well, he thinks of himself a hammer, Chris, and then everything is a nail.  I mean, you know, when I heard this quote or when I first read this quote—and I‘m assuming, as you do, that Sy got this right—then you have to wonder what would be the reaction of the Republicans if Al Gore, right after Bush and Cheney had—or just before they took office in 2001, had gone to some of our allies in Europe and said, You know what?  George Bush is not bright enough to be president.  He can‘t handle this job.  He‘s going to be a big problem for you.  He‘s going to probably push us into a war we don‘t want, and that had been—that had come out as news, that the last administration had said something that—in that poor taste that—borderline unpatriotic about an incoming administration.  I think the Republicans would have been up in arms about that, and rightly so.

Al Gore never did anything like that.  He waited years before he started to anything critical publicly about the last administration, and I think that was the right thing to do.  It‘s amazing that Cheney would do something like this.

CLIFF MAY, FOUNDATION FOR THE DEFENSE OF DEMOCRACIES:  Well, let me just...

MATTHEWS:  Cliff?

MAY:  Let me start by saying I‘m not as confident as you guys are that Sy Hersh necessarily got it right.  He has an interesting record.  He‘s a bit of a conspiracy theorist.  He‘s predicted any number of occasions that the U.S. under Bush was going to invade Iran, as you know.  And he was on a panel with Walter Mondale the other day in which accused Dick Cheney of heading up an executive assassination squad.  You guys—you guys both saw that story?  So, I don‘t know that this is an accurate characterization. 

As far as the substance of it, look, there was controversy during the campaign because Obama had been in the same social circles as Rashid Khalidi, who is clearly somebody, a Colombia professor, anti-Israeli, I think it is fair to say.

In fact, however, I give Obama credit.  He hasn‘t appointed Rashid Khalidi as an ambassador or anything like that.  He has appointed Dennis Ross, Richard Haass, Richard Holbrooke, pretty—pretty much centrist guys.

MATTHEWS:  He‘s named Haass already?  I didn‘t know it.

MAY:  Well, Haass is on the—the short list, if he hasn‘t been named yet.

MATTHEWS:  Right.  OK.  You are ahead of me on this one.  Go ahead.

(CROSSTALK)

MAY:  You will—Google it, you will see Haass is on the list there. 

MATTHEWS:  Right. 

MAY:  But he‘s named fairly centrist Democrats, I would say, to some of these positions, which I think is...

(CROSSTALK)

MATTHEWS:  Is he anti-Israeli? 

MAY:  We have seen no evidence of that whatsoever.

There was a controversy during the campaign.  We have not yet seen any evidence of it.  Now, is there a—is there cause for concern about the negotiations that Sy Hersh writes about in “The New Yorker” with Syria?  Sure, there is. 

(CROSSTALK)

MATTHEWS:  I mean, I‘m watching Cheney, as you watch him.  You‘re a friend of his.  I‘m an observer of his.  And I watch Cheney.

I want Joe to respond to this. 

I watched him as vice president, who would do things to undercut Colin Powell.  Powell would be meeting with Prime Minister Sharon over in Israel, representing the United States administration of George Bush, and he would be meeting with Bibi Netanyahu back in Washington the same hour, constantly sending the message to our allies over there, hey, the real tough guy is me.  Talk to me and Scooter.  Don‘t be talking to this guy. 

He was always offering himself up as the hard side, the tough guy side, the real face of the—of the Bush administration. 

It seems like he is doing it again, Joe.  He‘s offering himself up as your real friend, the tough guy. 

JOE CONASON, COLUMNIST/POLITICAL EDITOR, “THE NEW YORK OBSERVER”: 

Right. 

That was inappropriate enough doing when he was doing that to undermine official U.S. policy in the region to push his hard line.  It‘s even worse now, Chris, or when this incident supposedly happened in Israel, because he‘s out of power.  I mean, he‘s—he is gone.  These issues were debated during the election, you know, in some cases, ad nauseam.

(CROSSTALK)

MATTHEWS:  Well, it was actually, technically, during the...

(CROSSTALK)

MAY:  It was during the campaign.  So...

MATTHEWS:  Joe, before you...

(CROSSTALK)

MATTHEWS:  It‘s not a Logan Act violation because it was during the transition, but yes. 

(LAUGHTER)

MAY:  Yes. 

CONASON:  During the transition, but they had lost, and their policies had been rejected.

And the fact is, however naive or—or troublesome Cheney finds these policies to be, they are the policies of the United States government now.

And he ought to be respectful enough of our democratic processes to basically not try to use his former office to interfere with these kind of policy decisions. 

MAY:  Of course...

MATTHEWS:  Let‘s do a—let‘s—gentlemen, let‘s do a fact-check. 

Here‘s General Petraeus, who both sides, politically, and everybody respects for his service to the country and his leadership in the Iraq surge, here he is talking about this whole question.  And it‘s going to be followed in the same bite here by former Secretary of State Condoleezza Rice. 

Here, listen to this, comments by both about the effectiveness of this new president. 

(BEGIN VIDEO CLIP, “STATE OF THE UNION WITH JOHN KING”)

JOHN KING, HOST:  Are the American people less safe because of this new president, as Vice President Cheney says? 

GENERAL DAVID PETRAEUS, COMMANDER, U.S. CENTRAL COMMAND:  Well, I wouldn‘t necessarily agree with that.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP, “THE TONIGHT SHOW WITH JAY LENO”)

CONDOLEEZZA RICE, FORMER U.S. SECRETARY OF STATE:  My view is, we got to do it our way.  We did our best.  We did some things well, some things not so well.  Now they get their chance.  And I agree with the president.  We owe them our loyalty and our silence.

(END VIDEO CLIP)

MATTHEWS:  What do you make of General Petraeus‘ comment, vouching, basically, for no reason to question the security role that‘s going to be played by the president, the new president?

MAY:  Yes.  I‘m a great supporter of General Petraeus and I support what he had to say in this instance.  However...

MATTHEWS:  Is Cheney saying the same thing? 

MAY:  What Cheney—here is what Cheney is saying.

Cheney is saying that, for seven years after 9/11, we weren‘t hit on American soil.  That is not because of luck.  That is not because of terrorists were being nice to us or giving us a break.  It‘s because of certain policies we have in place.

And he is concerned that those policies not be changed.  Now, most of them have not been to this moment.  For example, as a senator, Obama voted for the—for the FISA reform, in other words, that you don‘t need probable cause in order to listen in on terrorists aboard. 

Yes, he says he wants to close down Guantanamo, but he‘s not going to do it for at least a year, because nobody knows how to do it.  Renditions, that‘s still the policy of the U.S. government.  Torture, he says we won‘t do it, but so did Bush.  No one yet knows what will be allowed and under what conditions.

(CROSSTALK)

MATTHEWS:  Well, no, but there isn‘t—there is—water-boarding is not in anymore. 

MAY:  Water-boarding—well, three people were water-boarded ever, ever, ever, ever. 

MATTHEWS:  But that was in under...

(CROSSTALK)

MAY:  It was under very...

(CROSSTALK)

MAY:  ... circumstances. 

(CROSSTALK)

CONASON:  I don‘t know how Cliff knows how many people were water-boarded. 

MATTHEWS:  Do you know how many were water-boarded?

MAY:  We know three people were water-boarded.  And one of them...

(CROSSTALK)

CONASON:  You know of three, perhaps. 

MAY:  ... was Khalid Sheikh Mohammed.

MATTHEWS:  How did you get that information? 

MAY:  Oh, I think we have that...

(CROSSTALK)

MATTHEWS:  How did you get it? 

CONASON:  Yeah, yeah, yeah.

MAY:  I got it from people like Mark Tyson (ph), who was in the White House, who has talked about this.

CONASON:  Yeah, yeah.

(CROSSTALK)

MATTHEWS:  That‘s their defense, yes. 

(CROSSTALK)

MAY:  ... that only three people. 

But, look, let‘s get rid of water-boarding.

The question is what you will or will not do in order to get information from a terrorist who can—if that information will save maybe hundreds or thousands of American lives. 

MATTHEWS:  Will we keep attacking countries that don‘t attack us, like Iraq?  Now, there‘s a policy shift, I would say of substantial... 

(CROSSTALK)

MAY:  To Obama‘s credit, we are going all in this Afghanistan.  To Obama‘s credit, we are not going to give up the gains we have made in Iraq over this time.

CONASON:  Yes, to Obama‘s—to Obama‘s credit—to Obama‘s credit, he‘s trying to take care of the problems that were left to him by the last administration, including especially Afghanistan...

MAY:  Every president has to do that, Joe. 

CONASON:  ... the Taliban and al Qaeda, that were not dealt with properly by this administration in the first—the last administration in the first place.  Now, I don‘t know...

(CROSSTALK)

MAY:  Joe—Joe, every president...

CONASON:  Seriously...

MAY:  ... inherits—inherits problems.  And there‘s no question Obama has many of them.

CONASON:  Well, he inherited a lot of problems.

MAY:  But the good news is—and I hope you agree it‘s good news—is that Obama is saying, as far as Afghanistan‘s concerned, we‘re going to up the ante there.  We‘re not going to be beaten by al Qaeda and the Taliban.

(CROSSTALK)

MAY:  And we have beaten al Qaeda in Iraq.

MATTHEWS:  OK. 

MAY:  And that‘s a good thing.  And he‘s not going to let that go. 

MATTHEWS:  Thank you. 

MAY:  I hope you‘re—I hope you‘re on board with that. 

MATTHEWS:  Cliff, thank you for joining us.  I like your argumentative style. 

CONASON:  I‘m good with solving the problems in Afghanistan, yes. 

MATTHEWS:  I think you make the best possible case for Dick Cheney. 

Thank you very much, Cliff May.

Thank you, Joe Conason. 

Up next: more delusions of grandeur from the new Republican Party chair.  You have got to—Steele is great.  It‘s great.  Just listening to Michael Steele is always fun.  The “Sideshow” is coming up.  Wait until he shows the comparisons he‘s putting between the position he holds and that of this guy named Barack Obama, I think it is.

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

Speaking of U.S. automakers, check out this sugarplum in today‘s “New York Times.”  General Motors is apparently trying to decide whether to drop production of the Hummer—that, or sell it. 

But it turns out there‘s a strong overseas markets for these gas-guzzlers, at least in one city, Baghdad.  It seems the Hummer‘s become the new status symbol in war-torn Baghdad, with canary yellow and fire engine red being the most popular colors, not exactly camouflaged. 

“The New York Times” there may be soon a day in Iraq when there are more civilian Hummers on the road than military ones. 

Sure glad we‘re teaching the Arabs how to waste gas.  What a ridiculous—ridiculous development this is. 

Anyway, next up, the hits keep coming.  Here‘s RNC Chair Michael Steele, as I promised, dishing on his relations with President Obama in a CNN interview that aired this weekend.  Here he is. 

(BEGIN VIDEO CLIP)

MICHAEL STEELE, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE:  I like the president personally, even though I think he‘s got a little thing about me.  I haven‘t quite figured out what that is, but I like him.

DON LEMON, CNN ANCHOR:  You haven‘t spoken to him, have you? 

STEELE:  No. 

LEMON:  And you have reached snout?

STEELE:  Several times.  And I‘m—I‘m done. 

LEMON:  So, there‘s no bipartisanism going on there? 

STEELE:  No, no, not that I know of.

LEMON:  Is there any professional jealousy? 

STEELE:  Not on my part.  What would I be jealous of? 

LEMON:  He is the president of the United States. 

STEELE:  I‘m chairman of the RNC.  So, what‘s your point? 

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS:  Well, Steele went on to say that he wasn‘t equating the two jobs.  But you have to wonder why he‘s so open about his feelings.  What is this unrequited love thing going on here? 

Anyway, speaking of political romance, Caroline Kennedy waded back into the spotlight this weekend at an annual roast of New York City reporters and politicians.  Get this.  Caroline took part in a skit with Mayor Bloomberg, where she was in the running to replace him in public office. 

Sound familiar?  Well, proving she‘s kept a sense of humor about her abandoned Senate bid, in a send-up, she said she would run only if she could do lots of campaigning and lots of interviews. 

Well, everybody knows that‘s not true.  But everybody loves Caroline, at least from my generation, sweet Caroline. 

And, finally, because it‘s never too early, it‘s looks like we might have, already have, a candidate mulling a presidential run next time, in—actually, in 2016, two times from now.  Who‘s this familiar face?  Vice President Joe Biden. 

When asked about the possibility of that, Biden‘s spokesman, the great Jay Carney, told “The New York Times”—quote—“We‘re not ruling anything in or out.”

That‘s about 2016.  Joe Biden for president, he‘s not ruling it out. 

Now for tonight‘s “Big Number.”

Note to Democrats:  It looks like Republicans are ready to go to the mattresses, as they say in “The Godfather,” over this Minnesota Senate race.  Senator John Cornyn, who is chairman of the Republican Senate Campaign Committee, is threatening what he calls World War III if Democrats try to seat Al Franken after the state supreme court has ruled on Norm Coleman‘s appeal out there. 

How long has this recount stretch passed Election Day?  One hundred and forty-six days.  And there‘s no assurance that Coleman will not take his appeal even further, to the U.S. Supreme Court, which the head of the Republican Senate Campaign Committee said could take years. 

To date, the recounts and court deliberations have lasted 146 days, just short of five months since Election Day—tonight‘s “Big Number.” 

Up next: the road ahead for GM and Chrysler.  Could either automaker survive bankruptcy if it came to that?  We will be joined by Gene Sperling, the counselor to Treasury Secretary Tim Geithner. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

Stocks fell sharply today, as the administration gave GM and Chrysler one last chance to turn things around.  But the market headed downward.  The Dow Jones industrial average closed above its lows, but down 254 points on the Dow.  The Nasdaq lost 43 points. 

General Motors‘ shares plunged more than 25 percent, after the administration rejected recovery plans from GM and Chrysler.  President Obama is demanding painful concessions, while giving GM 60 days to come up with an acceptable restructuring plan or potentially face bankruptcy. 

On his first day on the job, GM‘s new CEO, Fritz Henderson, said a controlled bankruptcy is still an option.  He said he‘s confident that Washington would provide enough support to make the bankruptcy as painless as possible. 

Financial stocks finished at their lows for the day, on fears that several big U.S. banks are going to need more government assistance, that following statements from Treasury Secretary Geithner over the weekend.  Bank of America shares shed 18 percent.  Citi lost 12 percent, J.P. Morgan more than 9 percent.

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

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I‘m confident that, if each are willing to do their part, if all of us are doing our part, then this restructuring, as painful as it will be in the short term, will mark not an end but a new beginning for a great American industry, an auto industry that is once more outcompeting the world.

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL. 

President Obama said bankruptcy was an option if General Motors and Chrysler were unable to come up with a viable restructuring plan.  But could those automakers survive bankruptcy?  And has the president been tougher with the auto industry than he has been with the failed banking industry?

Gene Sperling is counselor to the treasury secretary, Tim Geithner. 

Gene, thanks for coming on tonight to explain this.

It seems to me you had options on the table that you chose not to go with, not pushing bankruptcy, not pushing continued bailout.  Is that right? 

GENE SPERLING, COUNSELOR TO TREASURY SECRETARY TIMOTHY GEITHNER: 

Well, I think what we were looking for was, how do we get to the end point we want, which is a restructured, revitalized American automobile industry?

And, Chris, we wanted to make sure that whatever plan we had meant that they were having positive cash flow, they were doing well when we were back in a period of economic recovery. 

Of course, it is tough now, with nine million cars being sold.  But we wanted to make sure that, if we‘re putting American taxpayer dollars behind them, it‘s for a—viable, stand-alone, independent companies in the future. 

MATTHEWS:  You know, we had Governor Granholm on a minute ago, Jennifer Granholm, a Democrat, and she‘s been reelected out there.  She‘s a major force in that state.

And she defended the auto industry, but she said it is going to take federal help to take the auto industry of that state into the 21st century, in terms of battery-operated cars, electric cars, the future. 

Are the American people going to have to pay for that threshold cost of a new auto industry?  It seems like that‘s going to be a lot of money to catch the Chinese in this regard. 

SPERLING:  Well, listen, you know, Chris, as you know, I‘m from Michigan, too.  That‘s my governor, Governor Granholm.

And I think what is great is that she is talking about the future.  And that means not only revitalizing the American automobile industry, but us, as a country, thinking about how we invest in the green jobs in the future.

And I think what the president said, Chris, is that it‘s not so much whether you put support, but what you are putting support for.  If it‘s just kicking the can down the road, if it‘s for a plan that we looked at closely and decided was not going to lead to companies with positive cash flow when we‘re into recovery, then I think that would not have been justifiable.

And the president was tough about that.  But he was also reassuring that if they make the tough plans, if Fiat and Chrysler can come together, that we would be putting our money behind this, because of the importance of us having an American automobile future for our manufacturing, for growth, for energy independence in the future. 

MATTHEWS:  Will the United States pay for the R&D and the capital costs, the up front costs of putting the American electric cars on the road?  That‘s what she said will have to have happen.  Is that true or not?  

SPERLING:  Look, I think there are some things in which it is worth having a bit of government, partnership because there are broad effects beyond just the company.  And I think we have made a commitment and will be making a commitment to investing in green energy jobs and encouraging companies to move towards a more fuel efficient future.  And that‘s not just because that‘s our vision of how they‘re more profitable.  It‘s our vision of what we think is best for our economic future for the globe, and for our energy independence and national security.

So, yes, some partnership is necessary and might be needed here.  But the important thing is people don‘t want to think we are just kicking the can down the road and providing money to kind of live another day.  They want to know that this is being restructured for a more competitive, revitalized auto future. 

MATTHEWS:  Have you been tougher on the auto industry—some people out in Michigan obviously believe so—than you were on the banking industry the last couple of weeks? 

SPERLING:  You know, I think people should remember that the banking industry has got hit pretty hard.  Remember Merrill Lynch?  Remember Lehman Brothers?  Remember Bear Stearns?  Gone.  Share holders gone, executives gone.  The head of AIG was gotten rid of before they got their initial help in September. 

So, you know, I think that we have taken a pretty consistent approach.  But we have said, and Secretary Geithner has said that we do not have the full tools we should have for resolving, you know, major companies like AIG that have systemic risk.  And we do need more legal tools so that we can deal with them in a way that the public sees is more fair and consistent, and that we believe is more fair and consistent with the way other companies would be treated in similar circumstances. 

MATTHEWS:  You guys raised a lot of noise and anger and heat—I think you shared it with the country—about the AIG bones.  Do you think Rick Wagoner, who you guys fired yesterday—today rather—should get a 20 million dollar retirement package?  Twenty million dollars for a guy you canned. 

SPERLING:  I think GM is going to have to, as they go through the restructure, abide by the laws that are in place in terms of executive compensation and how things are worked out in restructuring.  And I think there will be a lot of understandable scrutiny on that.  And I wouldn‘t—you know, I can understand why there would be high emotion depending on how that turns out.  They have abide by the executive compensation laws and guidelines that we have right now. 

MATTHEWS:  Do you want to see that package looked at by the federal government, this bailing out?  We are putting maybe 15 billion dollars into that industry, GM alone.  Shouldn‘t we be looking at the retirement package? 

SPERLING:  I think that we should be looking at options that are legal, that are permissible and are consistent, again, with the executive compensation laws that we have and the guidelines we have.  But I think the most important thing is what is going to happen to protecting jobs that can have a future in that area, and economic development, and a more revitalized manufacturing future in the Midwest, where I‘m from, and where I think we have to believe in and invest in. 

MATTHEWS:  Thank you very much, Gene.  Thank you very much, Gene Sperling of the Treasury Department.  Thanks for coming on tonight, on this big night in American history, really. 

Up next, why did Senator John McCain hedge rather dramatically when David Gregory asked him yesterday on “Meet The Press” whether he would support his one-time favored running mate Sarah Palin for president this next time?  What happened?  She was qualified to be president last year, but she is not qualified to be president three years from now?  What‘s changed?  That‘s next on the politics fix.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.  Time for the politics fix with Howard Fineman of “Newsweek” and Pat Buchanan.  They‘re both MSNBC political contributors.  Let‘s look at this gem from “Meet the Press” on Sunday.  Senator McCain and David Gregory.  Here‘s a great question from David for the former presidential candidate. 

(BEGIN VIDEO CLIP)

DAVID GREGORY, “MEET THE PRESS”:  Would you like to see Sarah Palin become president? 

SEN. JOHN MCCAIN ®, ARIZONA:  I‘d like to see her compete.  I think we have got some very good candidates, John Huntsman and—the problem when I run down these names, I always leave out a name.  Bobby Jindal, Tim Pawlenty.  There‘s so many—there‘s a lot of good, fresh talent out there. 

GREGORY:  Would you support Palin?  

MCCAIN:  Oh, I‘d have to see who the candidates are and what the situation is at the time.  But have no doubt of my respect, admiration and love for Sarah and her family. 

(END VIDEO CLIP)

MATTHEWS:  Have no doubt.  Pat Buchanan, I was thinking, if Olympia Snowe runs, count me out on Palin.  He was going through the longest list in the world and he wanted more on the list than her. 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  He has respect, admiration and love for her and her family.  When LBJ said that, it was usually the end of you. 

MATTHEWS:  Doesn‘t love mean never having to say you‘re sorry?  What happened in this thing?

BUCHANAN:  What‘s interesting is he left Romney and Huckabee off that list.  I think Romney and Huckabee two of—

MATTHEWS:  He put Huntsman on. 

BUCHANAN:  He put Huntsman on.  Yes, he put Huntsman on and Pawlenty and Bobby Jindal. 

HOWARD FINEMAN, “NEWSWEEK”:    I think he is making a statement there by his selective memory of who the likely candidates are. 

MATTHEWS:  You are a great reporter, Howard.  I‘m going to set you up. 

You are a great reporter.  You are the best, the best in the business. 

FINEMAN:  OK. 

MATTHEWS:  What happened between those two? 

FINEMAN:  It was a lost weekend that didn‘t go beyond the weekend. 

MATTHEWS:  He thought she was something special. 

FINEMAN:  He had no idea, with all due respect to the senator.  He had no idea what he was getting.  They came into the convention.  I was covering it closely at the time. 

MATTHEWS:  What was she, a mail-order bride?  How could he have no idea who she was? 

FINEMAN:  He really didn‘t know.  He didn‘t know her.  They didn‘t have any other good choices.  They had a boring convention they were facing in St. Paul.  They wanted to liven it up.  They said, hey, let‘s pick this conservative young woman governor from Alaska.  He crossed his fingers and said, fine.  It was a great convention.  It was exciting.  It was fun. 

MATTHEWS:  It was like one of those basketball games where—

FINEMAN:  That was the end of it. 

MATTHEWS:  There‘s two seconds to go.  You have the ball at the wrong end of the court.  And you throw one of those incredible hail Mary shots.  They mostly don‘t go in. 

FINEMAN:  Unless you‘re Lebron James. 

BUCHANAN:  There‘s other factors, here, Chris.  First, he came out of

there, put him in the lead.  She took him from eight or ten down, put him

five in the lead, until Lehman Brothers.  Then he blew it on that.  She

also became far more popular.  She was drawing the crowds for him.  She is

the love of the party.  He is not.  She‘s got all the affection.  There‘s a

little touch I think of envy.  She‘s got a future and John McCain, frankly

--

MATTHEWS:  Pat, you made a case.  You know that party well.  Your former party, right? 

BUCHANAN:  Yes.  I tend to vote Republican.  I‘m an independent conservative—

(CROSS TALK)

MATTHEWS:  Western Pennsylvania and certainly parts of the country, she‘s popular.  I know for a fact, having talked to a lot of people, that she really turned off a lot of Republicans in the suburban areas, around Philly, Florida.  I once thought it was Sarah Silverman who brought Florida back to the Democrats and Barack.  No, it was Sarah Palin. 

FINEMAN:  Those aren‘t Republicans, with all due respect. 

MATTHEWS:  They‘re conservative Democrats, hawkish Democrats. 

FINEMAN:  Those people in the suburbs of Philly.  Sarah Palin is not going for the people McCain feels comfortable with.  She‘s going for the Pat Buchanan voters in Alaska. 

MATTHEWS:  The pitch forks.

FINEMAN:  No, not pitch forks.  She appointed as attorney general the guy who was vice president of the NRA.  She‘s making a statement on gun control, on abortion—

BUCHANAN:  Pro-life. 

MATTHEWS:  Pat, are we looking at a ticket right now, you and her? 

BUCHANAN:  She‘s got a huge hurdle to cross.  Howard is exactly right.  You take the grassroots of the party, the conservative, CPAC, she would have lifted the roof off of CPAC.  You take her out fund-raising, Chris, she can raise more for this party than any other candidate, get bigger crowds. 

MATTHEWS:  What does it mean, Pat—I know you‘re a believer.  But what does it mean when she said I couldn‘t find anybody in the McCain campaign to pray with?  What do statements like that—what does it mean? 

BUCHANAN:  This is a deeply religious woman. 

MATTHEWS:  But what does that statement mean? 

BUCHANAN:  She means you‘ve got a lot of secular guys in there, who are probably all interested in politics and things like that, who didn‘t share her personal beliefs and values.  That‘s what she said. 

FINEMAN:  She‘s going to run as the—as the conservative religious candidate in the 2012 race. 

MATTHEWS:  Can you win the nomination with that? 

FINEMAN:  Possibly.  She‘s staking out that territory.  Romney is going to run again.  If he runs again, he‘s going to be the business man. 

MATTHEWS:  So the brackets are set up.  Setting up the brackets for that religious—she has to knock out Huckabee. 

BUCHANAN:  Yes.

MATTHEWS:  Who else does she have to knock out on that side. 

BUCHANAN:  Huckabee and probably five or six other conservatives who are usually in there. 

MATTHEWS:  Who‘s on the moderate? 

BUCHANAN:  Brownback if he‘s in there. 

FINEMAN:  On the business side would be Romney as the business man, and Huntsman, who‘s a moderate. 

MATTHEWS:  Huntsman to me is the hot ticket.  After he came out for liquor by the drink in Salt Lake, he‘s willing to go anywhere.  We‘ll be right back with Howard Fineman and Pat Buchanan.  I‘m serious.  It‘s an issue out there.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MCCAIN:  Instead of sending General Motors and Chrysler into the pre-packaged bankruptcy they deserve, we now have taken the unprecedented step of firing the CEO of General Motors, a remarkable move by the federal government, I think unprecedented in the history of this country. 

(END VIDEO CLIP)

MATTHEWS:  That‘s Senator John McCain today, making a very correct statement, unprecedented in history.  An amazing statement.  So amazing that he‘s not ready, Pat, to say if it‘s bad or good.  Just stunning, a president of the United States—remember Kennedy going after big steal?  Remember Reagan going after Patco?  This beats them all in terms of power over the economy. 

BUCHANAN:  I think it‘s disgraceful what they did to Rick Wagoner, quite frankly. 

MATTHEWS:  Why so?  Did he do a good job?

BUCHANAN:  Look, Rick Wagoner, they said, didn‘t know the financial crisis was coming.  Paulson didn‘t know.  Bernanke didn‘t know.  Goldman Sachs didn‘t know and they‘re in that business.  Chris, what this is—Mr.  McCain, with due respect, has an us or them relationship with Detroit.  You think Tokyo would have an us or them relationship with Honda or Toyota if they‘re in trouble.  Those countries understand manufacturing is really the engine of any country, and we‘re letting this thing go down. 

MATTHEWS:  Do you think those companies have been good for America the way they‘ve performed?  You‘re a nationalist on the economy.  Have they been nationalistic or have they simply been profit-driven? 

BUCHANAN:  They‘ve been driven by the fact of the United States tax and trade policies of this country, which, frankly, have thrown open our market to competition by economic nationalists from abroad, Korea and Japan, who have taken them down, the same way the Japanese military took all those islands. 

MATTHEWS:  We have call kinds of competition in this country.  Our people can beat it.  Microsoft can beat anything coming at them.  So can Steve Jobs at Apple, right?

FINEMAN:  At the end, the great misfortune for Detroit is to be located where it is on the continent.  They were isolated for a long time from the competition.  Pat is right about the taxes and the imports and so forth.  But if you look at a magazine like “Consumer Reports” and it lists the top ten most desirable cars to have in this country, there‘s only one American car in the top ten.  If you look at the top ten most reliable cars, as reported by thousands of people in all kinds of independent testing, there‘s only one American car. 

MATTHEWS:  Which one? 

FINEMAN:  I think it‘s the Buick. 

MATTHEWS:  Right.  The president pointed to that. 

FINEMAN:  One out of ten.  By the way, it‘s a little—to go to Pat‘s point, both of the cars they were bragging about at the White House briefing today, the Chevy Malibu from last year and the Buick from this year, are made by General Motors.  So Wagoner must have been doing something right. 

(CROSS TALK)

MATTHEWS:  Respond to that about consumer products.  If a consumer chooses a better car, what‘s wrong with that? 

BUCHANAN:  Because, Chris, we are Americans, in the last analysis.  Before—let me tell you, when we were coming up as a country, the British built everything better than we did.  We put tariffs on it—

MATTHEWS:  The problem is quality.  Howard Fineman, thank you.  Pat Buchanan, I agree with you in principle.  But the voters and the consumers choose differently.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now it‘s time for “1600 PENNSYLVANIA AVENUE.”

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

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