updated 4/13/2009 12:13:18 PM ET 2009-04-13T16:13:18

Guest: Jim Warren, Ken Vogel, Ron Brownstein, Rep. Jim Moran, Tom Andrews, John Harwood, Christina Brown, Eugene Robinson

MIKE BARNICLE, GUEST HOST:  Are Republicans going off the rails?

Let‘s play HARDBALL.

Good evening.  I‘m Mike Barnicle, in for Chris Matthews tonight.  Leading off tonight: Fire on the right.  Let‘s face it, it‘s not an easy time to be a Republican.  They‘ve been clobbered in the last two elections.  They‘ve attacked the president, his budget, the deficit, Nancy Pelosi, and none of it has worked.  It‘s enough to make a party to go off the trolley tracks, and that seems to be exactly what‘s happening.  You‘ve got Karl Rove calling Vice President Biden a liar, Michele Bachmann calling for a, quote, “orderly revolution,” unquote, and now an Alabama congressman saying he knows there are 17 socialists in Congress.  Has it come to this, channeling Joe McCarthy?

And Republicans aren‘t the only ones giving the president a headache.  The anti-war left is balking at his $83 billion request for military operations in Iraq and Afghanistan.  And today, General Ray Odierno, on a day when five Americans were killed in Mosul, said U.S. combat troops may not be able to leave Iraqi cities by June 30th, as planned.  How does President Obama keep his most loyal supporters loyal if the two wars go on indefinitely?

But the president did have some good news today.  He said the economy is beginning to improve.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  what we‘re starting to see is glimmers of hope across the economy.

(END VIDEO CLIP)

BARNICLE:  What‘s more, economists surveyed by “The Wall Street Journal” expect the recession to end by September.  If this is the real thing and not a false recovery—and who really knows—it seems as if the president would get the credit and the Republicans would be even more frustrated.

And remember those Republican governors who bragged about rejecting the stimulus money?  Well, they all got a lesson in political reality.  Ideology is terrific, but voters like money.  All three governors have now caved.  That and more in the “Politics Fix.”

And get this.  Arizona State University decided President Obama is good enough to speak at its commencement this year but not good enough to be given an honorary degree.  What‘s up with that?  More on that little conundrum in the HARDBALL “Sideshow.”

We begin with the fire on the right.  “The Washington Post‘s” Eugene Robinson is an MSNBC political analyst and Ron Brownstein is a pathetic Red Sox fan as well as with Atlantic Media.

(LAUGHTER)

BARNICLE:  Gentlemen, on a Friday night, let‘s have a multiple choice game here.  Pathetic, rudderless, panicked, clueless, or all of the above, to describe the Republican Party?  Ron Brownstein.

RON BROWNSTEIN, ATLANTIC MEDIA:  I think that they are moving—I would (INAUDIBLE) maybe that they are focusing, as they have been in the Bush years, primarily on their base at this point.  I think it‘s wrong to say that Republicans have no strategy.  Their clear strategy has been to move in almost lockstep opposition to Obama, to accuse him of extending government‘s reach to a point that America becomes France, in effect, to adopt a very Southernized (ph), small-government, anti-tax, anti-spending agenda.

Now, that is a strategy.  At the moment, it seems to be speaking primarily to the 30 percent of the country that supported Bush when he left office.  But it does—there are some glimmers of concern for Democrats, particularly—at the edge of their coalition, among center-right voters, perhaps New York 20 is a—the special election is an indication of that.  But overall, Republicans are looking more inward than outward at this point, I would say.

BARNICLE:  Hey, Gene and Ron, we‘ve got a couple of clips here, a couple of sound bites, Vice President Biden talking to CNN earlier this week, followed by Karl Rove‘s reaction on Fox last night.  Take a listen to this stuff.

(BEGIN VIDEO CLIP)

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES:  I remember President Bush saying to me one time in the Oval Office—and he was a great guy, enjoyed being with him.  He said to me, he said, Well, Joe, he said, I‘m a leader.  And I said, Mr. President, turn around and look behind you.  No one‘s following.  People are beginning to follow the United States again as a consequence of our administration.

KARL ROVE, FORMER GEORGE W. BUSH ADVISER:  Joe Biden said, for example, that he spent hours with the president.  Joe Biden was never alone with the president for more than a few moments.  There was staff in the room at all times.  He never said these kind of things.

I hate to say it, but he‘s a serial exaggerator.  If I was being unkind, I‘d say he‘s a liar.  But it is a habit he ought to drop.  You‘ll notice every one of these incidents has the same structure.  Joe Biden courageously raises the impudent question.  The president befuddledly answers, and Joe Biden drives home the dramatic response.  And I mean, it just—it‘s his imagination.  It‘s a made-up, fictional world.  He ought to get out of it and get back to reality.

(END VIDEO CLIP)

BARNICLE:  Well, Karl Rove had a made-up fictional world, as well. 

We‘ve all known that for the past eight years.

(LAUGHTER)

BARNICLE:  But Gene, take a shot at trying to figure out, if you can, what‘s Rove doing here?

EUGENE ROBINSON, “WASHINGTON POST,” MSNBC POLITICAL ANALYST:  Well, he‘s—whatever he‘s doing, he‘s doing a lot of it.  I mean, he seems very determined to be a player right now and to try to set some sort of tone and agenda for the Republican talking points machine, at least, if not for the Republican Party‘s overall strategy.

You know, just from the outside, that doesn‘t look like such a great idea to me.  Karl Rove was a brilliant strategist for his time.  He‘s bringing forward the same kind of strategy, the same ideas, the same methods and techniques for a different time.  And my theory of political consultants and gurus is that, you know, they‘re for their moment.  When their moment passes, they‘re no longer in—kind of in tune.  They don‘t have that magic connection with what‘s going on with the electorate.  And I think Rove has lost that.

BROWNSTEIN:  Mike, can I add a point there?

BARNICLE:  Yes.

BROWNSTEIN:  I think Rove—I would phrase it slightly differently.  I think Karl Rove was a brilliant tactician in the service of a fundamentally flawed strategy and is now looking, in many ways, to try to redeem his legacy.  Rove‘s vision was that there were no swing voters left in American politics and the way you win was by consolidating and mobilizing your base.  Bush governed in a manner that energized Republicans undeniably through his first term, but antagonized Democrats and ultimately alienated independents.

And so while Rove came in envisioning that Bush would be the linchpin of new era of lasting Republican dominance, like William McKinley in 1896 through 1932, now he faces the prospect that their strategy contributed to the opening the possibility for Democrats to establish a lasting advantage with their hold on the middle, their hold over minority voters, their hold over young people, who voted over 2-to-1 for Obama.

In many ways, what Karl Rove is doing is trying to defend his legacy that has left Republican identification in the electorate at the lowest point that it‘s been since before Ronald Reagan.  So I mean, I look at him as someone who is a combatant very much trying to forestall a Democratic lasting advantage that would grow out of kind of the failure of his own effort to produce a Republican lasting advantage.

BARNICLE:  You know, off of that, when you listen to him—or at least when I listen to him, I guess I should be frank.  When I listen to him, I‘m left with the impression that perhaps we‘re looking at maybe a different kind of Republican Party over the next three or four years as he articulated it.  It‘s almost like the talk radio Republican Party.  Am I wrong in that?

(LAUGHTER)

ROBINSON:  It kind of looks like that to me, as well.  Look, you know, I think what the Republican Party really needs is a somewhat different organizing principle, at this point.  It‘s not as if the party doesn‘t have a lot to work with—you know, individual rights, limited government, strong defense, fiscal responsibility.  I mean, those are not inherently bad ideas, if adapted to circumstances and to the times.

But it seems to me that the party has to articulate a vision of Republicanism for an era in which government necessarily must grow, government necessarily has to play a bigger role.  Income distribution has polarized the country and people have noticed it.  We have all these challenges around the world that are different from the old challenges.  It‘s as if they‘re not dealing with the ways in which the nation and the world have changed since that message, you know, connected 20 and 30 years ago.

BROWNSTEIN:  Mike, your point is, though, I think, an accurate one.  You know, because the Republican base has shrunk, the coalition has contracted so much over the last two elections—if you look at Gallup polling for all of 2008, 70 percent of voters who called themselves Republicans now self-identify as conservatives.  If you look in Congress, there are very few Republicans left in either the House or Senate from truly swing districts or swing areas of the country.  And as a result, what motivates and what drives forward out of that coalition are very conservative positions.

For example, all but 38 House Republicans during the budget and then all but five Senate Republicans during the stimulus voted for tax plans that would have reduced the top marginal rate on the highest earners to 25 percent.  It hasn‘t been that low since 1931.  And You really have to go, you know, a ways to find another example where a party has look to Herbert Hoover‘s era for inspiration.

(LAUGHTER)

BROWNSTEIN:  That is the challenge they face.  Because the coalition is contracted, the loudest voices that are left tend to pursue and support policies that make it even tougher to regain the middle.  I mean, look right now, for example, in polling.  Obama has a 30 to 35-point lead consistently in polls when voters are asked, Who do you trust to develop solutions to the economy, President Obama or Congressional Republicans?

Now, there are some warning signs for Democrats, but overall, Republicans still seem to be in a kind of Rovian “deepen not broaden” kind of mode, and that, I don‘t think, will get it done over the next few years.

BARNICLE:  So Ron and then Gene, is there any more mileage to be gotten by the Obama administration by pointing out that, Listen, we came into office, we wanted to help reduce the polarization that has strangled Washington, D.C., for the past 10, 15 years, whatever.  And we‘ve tried, and yet no Republican in the House of Representatives could find a single good thing in the budget that we threw out there, what, four or five weeks ago.  They voted unanimously against the package.

And so now the Obama administration could go to the country and say, Lookit, they‘re the party of Dr. No.  All they‘re going to say is no, and so we‘re going to deal with our majority and we‘re going to keep on going.  And we don‘t mean to polarize them, but I mean, they are who they are.

BROWNSTEIN:  There are a lot of complicated things here.  I think, ultimately, Bush‘s governing strategy ran off the rails when he basically concluded there was no point in talking to anyone outside of his own coalition.  There was no one who was going to come over to him.  All he was going to do was satisfy the voters who originally elected him.

I think it would be a mistake for Obama to replicate that decision and to decide there was simply no point in trying to negotiate with Republicans because the congressional Republicans who are left are, in fact, unlikely to come along with him.

I think the place in between is that you kind of acknowledge to yourself and to the country that, Look, it‘s going to be difficult to get many of these Republicans to vote with us because—as a Democratic administration because so many of them come from conservative areas, but I‘m still going to reach out to Republican governors, I‘m going to reach out to business interests and others who usually align with the Republican Party.  I want to run an exclusive administration.  I think abandoning the goal is dangerous both legislatively and politically.

ROBINSON:  But I would add, Mike and Ron, that Obama and the Democrats get points for doing something, for trying something.  And if you look at recent polling, for example, most people don‘t like the fact that we‘ve had to write such a huge check to the banks, but you know, a substantial number, almost half, understand that, Well, OK, we can see how maybe that‘s necessary, maybe that, in the end, will benefit us all.  So even unpopular policies can be sold by the administration.  But just saying no and doing nothing seems to me to be a losing strategy for the Republicans.

BROWNSTEIN:  It‘s a big gamble.  It‘s a big gamble for the Republicans.

BARNICLE:  You know, Ron, you mentioned, you know, the congressional Republican Party as opposed to, like, governors, some Republican governors, some Republican businessmen who seem to be more inclined to work with the administration.  Back to the problems that the Republican Party has out of Congress and out of the Senate.  Here‘s what “The Montgomery Advertiser” in Alabama reported this week about Republican congressman Mike Rogers.

“Despite President Obama‘s commitment to bipartisanship, Rogers says Speaker of the House Nancy Pelosi, whom he described as ‘crazy,‘ ‘mean as a snake,‘ and ‘Tom DeLay‘ in a skirt, and Senate majority leader Harry Reid didn‘t get that memo.”

And here‘s another Alabama Republican, Spencer Bachus, quoted in “The Birmingham News” this week.  Obama, President Obama, “”is a better listener than George W. Bush,‘ Bachus said.  ‘He tries to get ideas from people,‘ but he said he is worried that he‘s being steered too far by the Congress.  ‘Some of the men and women I work with in Congress are socialists.‘  Asked to clarify, Bachus said 17 members of the U.S. House are socialists.”

(LAUGHTER)

BARNICLE:  I mean, this is crazy talk, is it not?

BROWNSTEIN:  Yes.  Well, I have a list here in my pocket.  We‘re back in Wheeling, West Virginia...

BARNICLE:  Yes.

BROWNSTEIN:  ... right?  Joe McCarthy.  But look, I think there are two things going on here.  As I said, what‘s left of the Republican Party after these last two elections is increasingly Southernized and conservative.  I think about half the House members in the GOP caucus are from the states of the old Confederacy.  Twenty-six of the forty-one Senate Republicans are either from the South or from the northern mountain West, the most conservative parts of the country.

So—and that is what you hear—that is the voice the Republican Party is speaking with.  It makes it tougher to regain ground in places like Silicon Valley or Bergen County, New Jersey, or Fairfield County, Connecticut, upper-middle-class suburbs where they‘ve eroded enormously over the last decade.

Having said all that, there is still an instinct in the country, there is still an anxiety about—that can be an anxiety about unified control.  There are some polling numbers that have had some recoil from congressional Democrats among independent voters.  And I think Obama has to be conscious about having an expansive and inclusive view that, ultimately, it would be a mistake to replicate the Bush and Rove strategy of concluding that no one beyond your base will come over to you and the only thing—the only way to govern is by consolidating your own supporters.

If it‘s not with congressional Republicans, certainly there are governors like Schwarzenegger, Crist and Huntsman who will work with him.  And beyond that, there‘s a broad array of business interests that Obama has the possibility here of peeling away from the GOP coalition precisely because it has moved in such a rigidly conservative direction in these first few months of his presidency.

BARNICLE:  Well, he‘s never going to—he‘s never going to peel anything away from the talk radio Republican Party.

BROWNSTEIN:  No.

(LAUGHTER)

BARNICLE:  That‘s my summation.  Gene Robinson, Ron Brownstein, thanks very much.

Coming up: Fire from the left.  With President Obama asking Congress for $83 billion in additional war funding, some liberal Democrats are pushing back.  And now we get word that we might not get our troops out of Iraq as fast as we thought.  Can the president convince his party to say with him?

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

BARNICLE:  Welcome back to HARDBALL.  The anti-war left is questioning President Obama‘s $83.4 billion request for military operations in Iraq and Afghanistan.  And today, the top U.S. commander in Iraq said we may miss our first deadline to reduce troop levels in Iraqi cities by June 30th.  Is the president in danger of losing support from the anti-war crowd?

Democrat Jim Moran, the pride of Holy Cross, from Virginia, is a member of the Out of Iraq Caucus and the Appropriations Committee, and former Maine congressman Tom Andrews, the pride of Portland, Maine, is the national director of Win Without War.

Congressmen, today, sadly, five American soldiers killed in a suicide car bombing in the city of Mosul in northern Iraq.  It is not now, I would think, out of the realm of possibility that General Odierno would perhaps go past the deadline for removal of troops, don‘t you think, this summer?

REP. JIM MORAN (D), VIRGINIA:  He may.  But Mike, the reality is that we are losing more troops now in other parts of the world, in Afghanistan particularly, than we are in Iraq.  The fact is that violence has subsided substantially.

Now, a lot of Iraqis are losing their lives, but I think they understand the United States is on a path to pull out in the very near future.  That‘s exactly what President Obama committed to, and in fact, this supplemental that he just asked for, 95 percent of it is devoted to fulfilling his promise to end the war in Iraq, at least our participation in it, and focus on the conflict in Afghanistan and Pakistan.

BARNICLE:  Tom Andrews, what if someone said to you tonight that five years from now, we would still have a base in Iraq, we‘d still have troops in Iraq, that 10 years from now, we would still have a base in Iraq and troops in Iraq?  Would you be surprised?  And what would you think would happen internally within the Democratic Party if that did happen?

TOM ANDREWS (D-ME), FORMER CONGRESSMAN, WIN WITHOUT WAR:  Well, Mike, first of all, that‘s exactly what Pulitzer Prize winner Tom Ricks is saying will happen.  He was on “Meet the Press” a few weeks ago.  He just has published a new book.  He wrote the book “Fiasco.”  And he‘s saying that among military circles, there‘s a quiet consensus that we‘re only halfway through combat operations and that we‘ll be in combat operations through 2015.

I mean, obviously, General Odierno did not get the message that President Obama delivered.  In Iraq, the biggest cheer he got from those troops was when he said it was time for the United States to give responsibility and full sovereignty for Iraq to the Iraqi government. 

Does that mean there‘s going to be no violence?  Does that mean that the Sunnis are all going to get along with the Shia, that Arabs are going to get along with Kurds?  No.  It means that the responsibility for that is going to be shifted over to, once and for all, what the Iraqi people want, namely, their government to be in control. 

That is what is at issue here.  And General Odierno came up with a whole laundry list of possible problems that could result in the United States escalating.  In fact, that‘s what he said today.  He said, escalate in Mosul and Baquba. 

That‘s ridiculous.  If he listens to what the president is saying, he‘s saying, the United States is getting out.  And that is what we should be doing.

BARNICLE:  Congressman Moran, I mean, given the president, some would say, his—his—his lack of props on military matters, his lack of foreign policy experience, obviously, before he became president, real foreign policy experience, isn‘t it possible that, as Tom Andrews pointed out on the opposite side, that President Obama didn‘t get the message—or that General Odierno didn‘t get the message? 

Maybe President Obama got a message from General Odierno that we‘re going to be in there for a while. 

And what would happen if that is the case within the Democratic Party? 

REP. JIM MORAN (D), VIRGINIA:  I think the Democratic Party has a great deal of confidence in our president. 

He have—does have judgment.  He listens, he reads, he thinks.  And

and we know that his ultimate objective is to extricate the United States from this conflict in Iraq, because Iraq still is no threat to the United States, although we do have an interest in it stabilizing the Middle East. 

Now, in terms of what we will leave behind, the residual force that will continue to train Iraqi forces and continue to advise them on setting up a civil society, that has yet to be fully determined.  There‘s no question in my mind we—we will withdraw at least another 100,000 U.S.  troops out of Iraq. 

But how many we leave and—and what their role will be, we know it‘s not going to be military—looking for any kind of military victory.  But I think we can probably play some positive role.  And we—as long as it‘s a positive role, President Obama will support that. 

But there‘s no question, when you look at his budget, when you look at the supplemental request, the focus is now on Afghanistan and Pakistan, because that does present a real, clear threat the United States and to Europe, and we have got to deal with that. 

And I think that the—the Democrats in the Congress understand that his—that the president‘s priorities are in place. 

BARNICLE:  Yes. 

Tom Andrews, $83 billion supplemental request for Iraq and Afghanistan I mean, are you opposed to that?  Are you opposed to spending more money, sending more troops into Afghanistan?

ANDREWS:  I think the Congress, Mike, has a very, very important role to play here. 

And that‘s why Jim is—it‘s so important that he‘s in the position that he is in, because I think that they have to set specific benchmarks and conditions that reflect what the president has said, reflect the status of forces agreement that the United States now has with the Iraqi government, and make certain that this very Herculean task, really, of guesting those troops out, getting them out safely, getting that equipment out, all the logistics that have to go on, that‘s going to take some investment and some money. 

And, yes, if we‘re spending that money on that mission that the president has laid out and that this country has agreed to, then, yes, they should have a supplemental, and support the president, and support the—the troops getting out. 

But I think the Congress should exercise its oversight responsibility and establish some very clear benchmarks, accountability, make sure that General Odierno and others are following through and committing themselves and implementing that president‘s policy, and making sure we‘re on track for having all troops out, residual and combat troops out, by 2011. 

Remember, June—that‘s the end of May, the end of next month—all combat troops should be out of the cities.  By August of 2010, they should be out of the country.  All combat troops should be out of the country completely.  The residual forces that Jim just mentioned, they will remain there for—for training purposes and other specific purposes.

But even they will be out by 2011.  That‘s the status of forces agreement that we have and that I believe we need to be committed to if we‘re going to responsible to the American people. 

BARNICLE:  Well, we will find out.  I have the funny feeling we will be talking about troops in Iraq for several more months to come past these deadlines.

But, Congressman Jim Moran and Tom Andrews, thanks very much for joining us. 

ANDREWS:  Thank you, Mike.

BARNICLE:  Up next:  Arizona State University invites President Obama to speak at its graduation, but it won‘t give him an honorary degree because he hasn‘t yet done enough.  Are you kidding me?  The “Sideshow” is next. 

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

(MUSIC)

BARNICLE:  Welcome back to HARDBALL.  And it‘s time for the “Sideshow.” 

And we should point out that Bruce Springsteen has asked permission to include the HARDBALL theme in his next album. 

(LAUGHTER)

BARNICLE:  First up: missing the cut. 

President Obama will give the commencement speech next month at Arizona State University.  But get this.  The school will not grant him an honorary degree.  Why?  Well, apparently, the degree is only awarded for lifetime achievement.

A spokesman for Arizona State said—quote—“It‘s our practice to recognize an individual for his body of work, somebody who has been in their position for a long time.  The president‘s body of work is yet to come.”

Huh? 

Barack Obama was the first African-American president of the Harvard Law Review.  He‘s a bestselling author.  He‘s a former United States senator.  And now he‘s the first African-American president of the United States and the leader of the free world.  What do you figure they are waiting for? 

Well, late today, we learned the university may have a change of heart.  Arizona State‘s president tells Politico.com that they are reconsidering the decision not to award the president a degree, saying—quote—“There was no intended slight.  We don‘t want anyone to think we do not recognize what he‘s achieved and what he means in America”—unquote. 

Good call, guys. 

Moving on, get a load of this scene at the White House yesterday.  You can see President Obama and Secretary of State Hillary Clinton there hanging out at a picnic table by the White House swing set. 

Hi, kids. 

The video has been getting a lot of play today.  So, to prove what a difference a year can make, we dug through some tape to see what they were saying about each other exactly one year ago today on the campaign trail. 

Check it out. 

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE:  Senator Obama, on the other hand, says he will end the door, but his top foreign policy adviser said he won‘t necessarily follow the plan he‘s been talking about during this campaign. 

SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE:  I will not just meet with our, but with our enemies, not just with leaders we like, but leaders we don‘t. 

(CHEERING AND APPLAUSE) 

CLINTON:  One candidate only says he end the war, and one candidate is ready, willing, and able to the end war. 

(CHEERING AND APPLAUSE) 

OBAMA:  And I was told by, you know, Senator Clinton and Senator McCain and George Bush, you can‘t do that.  And I said, yes, I can. 

(END VIDEO CLIP) 

BARNICLE:  Boy, what a difference a year makes, huh? 

Speaking of that epic primary battle, listen up, Clinton supporters.  Hillary‘s old campaign is LOTT:  trying to pay off its debts.  Clinton confidant James Carville sent out an e-mail yesterday describing what he called once-in-a-lifetime opportunities to anyone who shells out at least five bucks. 

Here‘s a look at some of the prizes being offered, first up, an exclusive power lunch with none other than James Carville and Paul Begala.  My heart be still.

And if that doesn‘t make you jump out of your chair, here‘s another one: tickets to the finale of FOX‘s “American Idol.”  Or, better yet, how about a veteran American idol?  A day with the big guy himself, former President Bill Clinton in the Big Apple, New York City. 

There you go.  Open up your hearts and your checkbooks to the Clinton campaign. 

Now, speaking of Secretary of State Clinton‘s debt, it‘s time for the “Big Number.” 

Remember Mark Penn, Hillary‘s chief strategist?  He and his P.R. team famously advised Clinton to run as a tough, ready-on-day-one candidate, instead of running as the agent of change.  That didn‘t work out that well.  And that strategy failed.  And, in case you forgot it, it also wasn‘t cheap. 

At the end of last year, nearly six months after Senator Clinton dropped out, guess how much the campaign still owed Mark Penn‘s P.R. firm?  Five-point-four million dollars.  I guess there‘s no-money-back guarantee for bad advice. 

The Clinton camp still owes Mark Penn‘s team $5.4 million.  That‘s tonight‘s “Big Number.” 

Up next:  President Obama says he sees glimmers of hope in the economy.  Well, have we hit rock bottom, and are we now on the upswing?  Where this financial crisis stands right now and what it means for the president—next.

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

CHRISTINA BROWN, NBC CORRESPONDENT:  I‘m Christina Brown.  Here is what is happening. 

A swarm of possible tornadoes touched down this afternoon in Tennessee, Kentucky, and Alabama.  This was the scene in Murfreeso—

Murfreesboro—excuse me—Tennessee, where officials say two people were kill and another 30 people injured. 

Meantime, officials say three people were killed when a tornado slammed through Mena, Arkansas last night.  And wind-driven wildfires are still burning in Oklahoma and Texas.  Fires in Oklahoma destroyed more than 100 homes and left 34 people injured. 

Officials say a fire that destroyed more than 50 homes was intentionally set.  Meantime, wildfires in Texas killed at least three people. 

And the American captain being held hostage by four pirates on a lifeboat off Somalia tried to escape and swim for his freedom.  However, captain Richard Phillips was recaptured.  The pirates are reportedly demanding a $2 million ransom and threatening to kill Phillips if U.S.  warships attack them.  A Navy destroyer is at the scene and more Navy ships are en route—now back to HARDBALL. 

(BEGIN VIDEO CLIP)

OBAMA:  We‘re starting to see progress.  And, if we stick with it, if we don‘t flinch in the face of some difficulties, then I feel absolutely convinced that we‘re going to get this economy back on track. 

(END VIDEO CLIP)

BARNICLE:  Well, welcome back to HARDBALL.  That was the president earlier today, obviously better than a stick in the eye.  He was sounding optimistic, after meeting with his top economic advisers.

And, in another positive sign, a “Wall Street Journal” survey shows most economists say, the recession will end in September. 

Has the economy turned a corner?

Joining us now, Joshua Cooper Ramo, author of “The Age of the Unthinkable: Why the New World Disorder Constantly Surprises Us And What We Can Do About It,” age of the unthinkable, and “The New York Times”‘ John Harwood, who is also the CNBC chief Washington correspondent. 

Joshua, a few days ago, I saw the president telling me that, if I bought a Chevy, my car warranty was going to be covered, no problem.  Don‘t worry about it.  Yesterday, I believe, I—I saw him telling America that, you know, now is the time to go out, refinance your house, you know, get lower the interest rate, get a fixed-rate mortgage for, you know, 20, 30 years. 

Is the president at risk here of becoming too involved as a spokesman for an economy that still has huge question marks to it? 

JOSHUA COOPER RAMO, AUTHOR, “THE AGE OF THE UNTHINKABLE: WHY THE NEW

WORLD DISORDER CONSTANTLY SURPRISES US AND WHAT WE CAN DO ABOUT IT”:  Well, I think he doesn‘t have a choice.  He needs to talk up the economy. 

But you‘re right that he‘s trying to identify exactly sort of the fault line of how much of a booster he can be, because the reality is, as you point out, his credibility is on the line here.  It‘s not simply the policies, but it‘s his own word. 

And if this crisis gets worse, and people want to turn for him for explanations, he has got to maintain that credibility. 

The one thing we know is that we‘re living in this networked world today.  One of the points of my book, “The Age of the Unthinkable,” is the reason we‘re constantly hit with unthinkable surprise is that problems anywhere on the network can propagate to anywhere on the network. 

So, the fact that we live in a world where China is still a huge question mark, where there‘s European countries that may default this year, where it‘s not clear what the consumer credit crunch in the U.S. is going to look like five months down the line makes it very hard to be conclusively optimistic. 

So, I think the president is trying to get as close as he can to being positive, but walking very along that line where his credibility is at jeopardy. 

BARNICLE:  Here‘s another clip. 

John Harwood, listen up to this one.  President Obama‘s chief economic adviser Larry Summers is also sounding optimistic. 

(BEGIN VIDEO CLIP)

LAWRENCE SUMMERS, DIRECTOR, WHITE HOUSE NATIONAL ECONOMIC COUNCIL:  I

think the sense of a ball falling off a table, which is what the economy has felt like since the middle of last—since the middle of last fall, I think that is going to—I think we can be reasonably confident that that‘s going to end within the next few months, and that you will no longer have that sense of freefall. 

(END VIDEO CLIP)

BARNICLE:  OK, John, you‘re coming at this issue with a “New York Times” hat on and a CNBC hat on.  Can you give me any sense of what the relationship with Geithner, Tim Geithner, secretary of the treasury, Larry Summers?  Who—who is running the shop here?  Is everyone running it?  Is there any one central voice here?  Who does the president listen to the most, do you think? 

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT:  It‘s an interesting question. 

Larry Summers is head of the National Economic Council.  You know, you talk to people who are involved in economic policy-making, they will say that Larry Summers is the smartest guy in the world on this stuff. 

And, yet, Tim Geithner became the treasury secretary, a job that Larry Summers had some interest in. 

I think the president probably listens to Larry, at the end of the day, more so than Tim Geithner.  That‘s hard to say.  They‘re both in the room.  Tim Geithner has certainly seemed to have turned the corner in the last few weeks, in terms of public perception of how he‘s doing. 

Larry was sort of understated there in talking about—OK, the president is talking about signs of hope.  Larry says the ball is not going to be falling off the table any more.  That‘s a little bit different tone. 

I think the balancing act the president has to strike has to do with talking up what‘s good about the economy, without ignoring the fact that unemployment is 8.5 percent.  Five million people have lost jobs in this recession, and more are going to lose their jobs.  That rate is going to go up. 

So even as the economy is coming back, joblessness is going to be a lagging indicator.  That‘s going to be a political problem for him as he tries to talk up what‘s good. 

BARNICLE:  Josh, off of what John said, unemployment climbs maybe to double digits by the middle or the end of the summer.  Credit card defaults rise in May, June and July, because people have loaded up so many normal expense onto their credit cards.  They can‘t pay them.  We have that indicator going. 

Do you think, you know, with what we watched today on cable TV and in the newspapers every day—and of course it‘s the number one topic in Washington, do we—is possible to pay too much attention to the daily fluctuation of the Dow Jones Average? 

RAMO:  Absolutely.  The Dow Jones is a terrible indicator of the health of the economy for all sorts of reasons, not the least of which, as we‘ve seen over the last 12 months, the behavior of financial actors and financial instruments is largely uncorrelated with the needs of the overall economy.  We‘ve had this tremendous recovery in the Dow.  That‘s a long way from having a tremendous recovery in the economy.

The reality, as you just pointed out, on those and a long list of other concerns we have yet to see the full impact of this recession hit.  The lesson of living in this world is that as those things start to come online, each one of those introduces a new peril.  So focusing on the Dow is fine, but it doesn‘t give you a lot of information about what the next eight or 12 months are likely to look like. 

HARWOOD:  Mike, if I could just add on that, if the Dow were a great indicator, the fact that it hit 14,000 in October of 2007 might have told us we were headed for some good times, right?  That was not happening.  So oftentimes the Dow reflects the mood, the emotion of the moment, but has very little predictive power. 

BARNICLE:  Here I am attempting to put a smile on people‘s faces who have lost so much over the past six or seven months, John.  And I‘m going to ask you a question that maybe you can‘t answer.  Is it possible that the president speaking as he has spoken, and Larry Summers in the clip that we just heard—is it possible that they have a few more signs that are brighter than we‘ve come to realize in the daily public prints.  Is it possible that the bank stress test show much more strength in the financial services industry than we‘ve been led to believe? 

HARWOOD:  Well, I think it‘s going to show some.  Look at those Wells Fargo numbers yesterday.  Those were certainly encouraging.  People at Treasury tell me that some of the bank stress test results are going to be ugly.  I think we‘re going to see some ups and downs.  And there‘s a debate going on right now over whether we‘re seeing, in effect, a dead cat bounce, in terms of the Dow, going up, headed to go back down again, before we‘re conclusively in a recovery. 

So I think it‘s hard to draw some of those conclusions.  But the bank stress tests at the end of April are going to be an interesting sign about whether or not that recovery is broadly reflected in the results for those 19 banks.  And maybe some of those banks won‘t need as much public money as anticipated when we started this process. 

BARNICLE:  Joshua, off of something John Harwood said earlier in the segment, how important is it to the financial segment, specifically to Wall Street, the dreaded Wall Street—how important is the cosmetics of the presentation?  In other words, Tim Geithner‘s presentation, which is markedly improved over the past two or three weeks, compared to what it was a couple of months ago.  How important is that?

RAMO:  It seems to matters a lot.  It‘s a symbol of something else that‘s very important.  We‘re missing, to some degree, what‘s going on here.  This is not a crisis of the Dow.  It‘s not a subrime crisis.  It‘s not even a financial crisis.  The reality is what we‘re facing is a much broader existential crisis, that we‘ve arrived in a world that is fundamentally so complex that our old institutions are no longer able to manage it or control it or predict what‘s likely to happen. 

At the highest level, that‘s the reason our society has to be reengineered, to some degree.  It‘s the reason our regulatory institutions have to be reinvented.  I think Obama understands this.  His goal is to get us to a place of basic stability, where we can begin that reengineering.  I think the Dow movement are really irrelevant.  I think what‘s important for people at home—you talk about putting a smile on the face of people who lost all this money.  The reality is this not a time to smile. 

This is a time to prepare for the fact this is a likelihood this is going to get much, much worse before it gets better.  That really should be the primary agenda right now, preparing people, making them more resilient for the fact that there are many, many risks that lie ahead of us. 

BARNICLE:  Joshua, what are the odds that I won‘t be able to pay for my Red Sox season tickets in 2010? 

RAMO:  You still pay for your Red Sox seasons tickets. 

BARNICLE:  Yes, I do. 

RAMO:  I think you‘ll be OK. 

HARWOOD:  Don‘t flinch now, Barnicle. 

BARNICLE:  Puts a smile on my face, John. 

HARWOOD:  Exactly.

BARNICLE:  John Harwood, Joshua Cooper Ramo, thanks very much. 

Up next, on second thought, Governor Sarah Palin, Bobby Jindal and Mark Sanford seem to be backing off their hard line stance on taking stimulus money from the federal government.  Have they had a dose of political reality?  The politics fix is next.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

BARNICLE:  Time for the politics fix with the former managing editor of the “Chicago Tribune,” and a great one, and MSNBC contributor Jim Warren, and the “Politico‘s” Ken Vogel.  This is off the “Politico” today.  You have to read that website.  You have to go that website.  It‘s a must read website. 

Here we go.  “The list of governors threatening to decline federal stimulus money last month read like a list of Republicans considering running for president in 2012.  Governors Mark Sanford, Bobby Jindal and Sarah Palin led the anti-stimulus charge.  But what began with a bang is ending with something closer to a whimper.  All three of those governors have been forced to scale back their expectations to varying degrees, as the push of conservative philosophy gave way to the pull of political reality.”

Jim Warren, I understand, I think, a bit about where conservative wing of the Republican party and conservatives in general are coming from.  But let‘s take South Carolina for example, and Mark Sanford, who is a pretty good golfer, and I guess has been a pretty good governor down there.  South Carolina has a very high unemployment rate.  I don‘t get what‘s going on when you turn back money, or said you were going to turn back money that could help the people in your state.  What‘s the deal you think? 

JIM WARREN, MSNBC POLITICAL ANALYST:  First of all, Mike, speaking about money, namely how costly Red Sox tickets will be next year; as a Yankee fan, may I wish you and the entire Red Sox nation, Ben Affleck, Steven King, a painful and long season. 

But back to politics and real money.  You know, it‘s not just a matter of politics.  You have something like 11 percent unemployment rate in South Carolina.  You‘ve got a substantial number of kids, 18, 19 or 20 percent living in poverty.  And though I think Mark Sanford is being very intellectually honest.  I think he‘s a very smart guy.  I think he‘s a true blue conservative. 

When even your best bud, Lindsey Graham, U.S. senator, turns against you, when a couple days ago he could only get 11 out of about 100 Republicans in the legislature to be standing next to you, you know you‘ve got problems.  I think the underlying problem is that right now the Republican party, Mark Sanford included, is relegated to just saying no, no, no to everything the Obama administration is doing.  And as a national party, they don‘t seem to have formulated, as yet, any real coherent response to all this. 

So the old mantra, which has held them in good stead, one will have to admit, particularly in states like South Carolina, of lower taxes, less spending, smaller government, is just not working.  When you listen to something like Joshua Ramo, who you had on before, talking about the complexity of the situation, you realize why the old, seemingly tried and true answers aren‘t working, which is why the public is very, very supportive of Obama, and conservatives in states like South Carolina are not heeding their Republican governor. 

BARNICLE:  Ken Vogel, as you cover this, as you write about it, where does it happen—or does it happen that ideology has a strangle hold on common sense, especially among Republicans on the right? 

KEN VOGEL, “POLITICO”:  Well, look, ideology and saying no just to be the party of sort of loyal opposition is a lot easier when you‘re in Congress and less damaging.  These governors have to actually run a state.  What we‘re seeing here is a situation where using the governorship as a platform to raise your national profile is actually in conflict with governing and running that state.  So in these cases, these governors all really got beaten up over this at home by their state legislators, by their local media. 

Maybe they came out of it with a little bit higher of a national profile.  Sanford certainly spent a lot of time talking about this on the cable news shows.  I think it ends up being a wash, because you have to be a good governor to use the governorship to position yourself for a run at the presidency or anything else. 

BARNICLE:  Yes, I agree with you, Jim, about Mark Sanford.  I think he is intellectually honest.  It begs the question, off what Ken just raised, who would be the big Republican, if you had to name one right now, the odds on choice to top that ticket in 2012? 

WARREN:  I don‘t know.  If you remember at this time, you know, in the last cycle, if you would have bet a dollar on some guy named Barack Obama from Illinois, no way.  What about six, seven months after his Boston convention speech.  I don‘t know.  I think Sanford is a strong guy.  If you had some beauty polls right now, Sarah Palin would obviously show up high. 

But the complexity of what‘s going to play out, particularly with this economy, is such that I think you would be rather foolish in betting on any single guy right now. 

BARNICLE:  I know.  But at least two or three years ago, there were some big names on both sides.  Now there are names that very few people have ever heard of.  But we‘re going to be back with Jim Warren and Ken Vogel for more of the politics fix.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

BARNICLE:  We‘re back with Jim Warren and Ken Vogel.  Ken, the polarization factor in the House and the Senate, Washington, D.C. actually; give me a sense of where you think it is.  Same as it ever was?  Better?  Worse? 

VOGEL:  I think it‘s pretty much same as it ever was.  Certainly, there were some overtures early on and Obama really reached out to the House Republican caucus, as well as the Senate Republicans.  There was a little bit of a compromise on stimulus.  Democrats got three Republicans on board.  I think that‘s kind of collapsed a little bit here.  And we‘re seeing the positions really harden, particularly on spending, when we talk about the stimulus, when we talk about the budget, where Republicans are starting to coalesce around this idea that more spending is not going to fix this problem. 

Though they do risk becoming the party of no, it‘s a clear position for them.  And I think we‘re going to see the polarization continue here, as they focus more and more on exclusively economic revitalization types of measures. 

BARNICLE:  Jim Warren, you have known and covered this president for several years.  Give me a sense of his personality and how he deals with this polarization.  Does he keep going at it to try to draw people from the other side of the aisle?  Or eventually does he just drop the current and say we‘re going our own way? 

WARREN:  Well, no.  I mean, what I think you see is a very compromising initial impulse, a guy who wants to bring everybody into a tent.  He also sees this preternatural calm, which I think is holding him in very good stead, and maybe one reason why so many Americans, even low income Americans, are trusting him right now.  But he does ultimately have an agenda.  He wants to change the political calculus in this country. 

He reached out on Capital Hill.  Folks can come back.  So he‘s now laying down the law in a very, very straight, clear, at times ideological fashion.  It‘s not necessarily his first intent and modus operandi. 

BARNICLE:  Jim Warren, Ken Vogel, thanks very much.  Chris Matthews returns Monday night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now, it‘s time for “THE ED SHOW” with Ed Schultz.

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

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