updated 5/8/2009 10:18:46 AM ET 2009-05-08T14:18:46

Guest: Rep. Mike Pence, Ben Smith, Lois Romano, Peter Canellos, Pat Buchanan, Joan Walsh

CHRIS MATTHEWS, HOST:  So what turns on Republicans these days?

Let‘s play HARDBALL.

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

Republicans.  What are they fighting for?  What turns on Republicans these days?  What gets them excited and voting “R”?  What gets them hot and bothered about the country itself?  What will get their blood running, like the old days?  They‘ve lost power in the Senate, in the House, in the White House.  Only one person in five now calls himself or herself a Republican.

What could spring the party back to life?  After all, it‘s come back before, after Goldwater in ‘64, after Watergate in ‘74, after the Clintons came to town in ‘94.  Each time, the party was left for dead and each time, it came back.  Who‘s going to lead the party out of the wilderness this time?  That question coming up on HARDBALL and coming up fast.

Plus: Johnny Edwards, we hardly knew ye.  He was young, handsome, and able to win Southern votes just four years ago.  He came this close to being elected vice president.  Now he‘s fodder for daytime talk, for Oprah, and his wife‘s new book.

Here is Elizabeth Edwards talking about John Edwards‘s infidelity and the possibility he fathered his mistress‘s baby.  Let‘s listen to what happened today.

(BEGIN VIDEO CLIP)

OPRAH WINFREY, HOST, “THE OPRAH WINFREY SHOW”:  And there is great speculation that your husband, John Edwards, is the father of that baby.

ELIZABETH EDWARDS, WIFE OF JOHN EDWARDS:  Right.  That‘s what I understand.  I‘ve seen a picture of the baby.  I have no idea.  It doesn‘t look like my children, but I don‘t have any idea.

(END VIDEO CLIP)

MATTHEWS:  So why is all this happening?  Why didn‘t we know about this when it was happening, back when we were voting on the guy, back when he was considered to be the future hope of the Democratic Party?

And there‘s a new book out about the Kennedys.  It‘s snarky, it‘s tabloid, it‘s—to use a not too polite word—sleazy.  But it‘s been excerpted in “Vanity Fair,” and that makes it newsy—and noisy.  But who are the sources for this story of family intrigue?  Why should we believe any of it?  We‘ll see what it‘s worth tonight on HARDBALL.

And we‘re going to rip the scab off the debate over hiring quotas and what has the look of reverse discrimination up in New Haven.  It‘s sure to be a big issue if President Obama picks a certain front-running candidate for the Supreme Court, and it‘s not going to help her case.  We‘ll get to that in the HARDBALL “Politics Fix.”

And finally, remember that famous Reagan ad about the bear in the woods?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  There‘s a bear in the woods.  For some people, the bear is easy to see.  Others don‘t see it at all.

(END VIDEO CLIP)

MATTHEWS:  That was a hell of an ad.  Well, the group Conservatives for Palin has, let‘s say, updated that ad with a comical bent.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  There‘s a bear in the woods.

UNIDENTIFIED MALE:  Ahhh!

(END VIDEO CLIP)

MATTHEWS:  Well, if you haven‘t guessed so far, that‘s payback for Romney‘s mocking of Governor Palin.  We‘ll have that in the HARDBALL “Sideshow,” and it‘s a hoot.

We begin with U.S. Congressman Mike Pence of Indiana.  He‘s chairman of the House Republican conference, one of the leaders of the House.  You know, I have to ask you, sir, what is it...

REP. MIKE PENCE ®, INDIANA:  Hi, Chris.

MATTHEWS:  You know, Steve Schmidt, who ran John McCain‘s campaign for president last year, was pretty honest recently in the diagnosis, in the post-mortem.  He said the Barack Obama for president campaign was really a continuation of the Bobby Kennedy campaign back in the ‘60s.  It had all the passion of the anti-war movement.

My question to you, sir, what gives passion to Republicans these days?  What turns them on the way fighting the Iraq war—or against the Iraq war has done for Democrats?

PENCE:  Well, I think that returning our government to some fiscal sanity, putting an end to this long train of borrowing and spending and bail-outs is what turned out, you know, hundreds of thousands of people at tea parties, Chris.

MATTHEWS:  Yes.

PENCE:  And I really do believe that a return to fiscal discipline, to

turning our federal government back toward that lodestar of a balanced

federal budget, making the kind of hard choices in Washington, D.C., that

every American family and every American business and family farm is making

I think that‘s a rallying cry that I‘m hearing across Indiana and across this country.

MATTHEWS:  But who believes that?  Because under George W. Bush, we doubled the national debt.  If you want to go back to the lodestar of balanced budgets, you got to go back to Bill Clinton.  He‘s the last guy to balance the budget.  Do you want to go back to Clinton?

PENCE:  Well, it‘s a fair point that the last Congress to balance the federal budget was the Republican Congress under President Clinton.  And it‘s a fair comment.  Look, the criticisms of runaway federal spending certainly extend back into the Bush years.  As you know, Chris, I was one of the harshest critics of big government Republicanism during the Bush era.

But you know, you asked the question not about, you know, Republicans in Washington but people across this country who, by and large, generally will vote Republican or are interested in Republican values.  I think the key to winning back the hearts and minds of those millions of Americans is to turn our party back to practiced real commitment to fiscal discipline and limited government.  We marry that with a strong commitment to national defense and an unapologetic commitment to traditional moral values, and I think we‘ll have the agenda that we can carry forward into the future.

MATTHEWS:  What do you think of these polls that show only 1 in 5 people today, men and women, 1 out of 5 say they‘re a Republican -- 1 out of 5?  I‘d never seen either political party dip that low, have you?

PENCE:  Well, I don‘t know.  I don‘t really have much of a memory for polling numbers.

MATTHEWS:  You‘d remember that baby!

(LAUGHTER)

PENCE:  Well, that‘s a fair point.

MATTHEWS:  One in five?

PENCE:  You know, it does sound to me a little bit like the number of Americans who said they were Republicans before a Californian named Ronald Reagan...

MATTHEWS:  Yes.

PENCE:  ... came into the White House.  I think when Ronald Reagan became president, about 20 percent of Americans said they were Republicans.  When he left office, he had doubled the size of the party.  Why?  Because Ronald Reagan arrives in Washington, D.C., with a strong commitment to a national defense, with a commitment of balanced budgets and fiscal discipline—it‘s tough in a Democratic Congress, you might remember—and also with an unapologetic commitment to traditional moral values.

That combination of American ideals put into practice, not just talked about, was the prescription then.  I‘ll be honest with you, I believe it‘s still the prescription today, Chris.

MATTHEWS:  You know what about Reagan?  I was there because he knocked our socks off.  I was working for the other guy.

PENCE:  I remember.

MATTHEWS:  And he was damn good because he stood there in front of the Statue of Liberty—or rather—the Statue of Liberty, actually, in New Jersey, out on that plain (ph) in that regular shirt he was wearing—and I‘ll never forget it—and he talked about American patriotism.  He was passionate.  He was a romantic about American life.

PENCE:  Right.

MATTHEWS:  Do you have anybody in your party that can arouse those passions of positive love of country the way Reagan could?  I mean, he was bigger than just complaining about high taxes.  He was an American hero.  You got one now?

PENCE:  Well, let me say there‘s an awful lot of talented men and women in this party across the country.  But let me say with authority I know we had one until this last Saturday night.  You know, when I became a Republican—I started out as a Democrat, Chris, it may come as a surprise to you, in my early political years, but when I heard the voice of Ronald Reagan and when I saw the example and heard the voice of Jack Kemp, that‘s when I became a Republican.

And you know, that was a tremendous loss to our party, but as we think about how we find our way forward, I got to tell you, Jack Kemp‘s large-hearted conservatism, his belief in free market entrepreneurial capitalism, his commitment to equality of opportunity for all Americans, his commitment to traditional values, we go looking for a role model for a 21st century GOP, Jack Kemp is my pick.

MATTHEWS:  The only problem is he talked about the big tent, but he didn‘t get too far.  Let‘s take a look at—and I liked Jack Kemp.  Let‘s look at this verbal shot today from Jim Bunning, the senator from Kentucky, against his fellow senator from Kentucky and fellow Republican Mitch McConnell.  Quote, “Do you realize that under our dynamic leadership of our leader, we have gone from 55 senators to probably 40 in two election cycles.  And if the tea leaves that I read are correct, we‘ll end up with about 36 after this election cycle.  So if leadership means anything, it means you don‘t lose approximately 19 seats in three elections with good leadership.”

There you have two people from the same state, both Republican U.S.  senators, one whacking the other one.  Is that trouble for your party when you have that kind of discord?

PENCE:  Well, you got to remember I grew up in southern Indiana, and so seeing sharp elbows across the Ohio River, down in Kentucky, is not a new thing to me.

Look, I don‘t want to get in between those two senators in that argument.  I just—I really do believe the way back for the Republican Party is to renew and practice our commitment to fiscal discipline like opposing the stimulus bill, opposing the president‘s recent budget bill, and opposing the national energy tax in the cap-and-trade legislation that‘s going to result in higher utility rates on virtually every American.

We get back to defending the interests of taxpayers, of utility rate payers, we get back to defending the interests of the American people, the American people will rally to our side.

MATTHEWS:  You know, the Democrats have a lot of people who are passionate about climate change, people like Al Gore, and they‘ll go out there and fight for it.  They‘ll campaign for it.  Young people especially really care about green stuff.  My wife is a big green person.  But Republicans aren‘t known for being green.  Your party‘s come up with this alternative, but nobody really believes you got any passion on the subject.

If there‘s any passion on the subject, it‘s Limbaugh.  It‘s people like Glenn Beck, who don‘t believe in climate change.  It‘s people like Jim Inhofe, who don‘t believe.  How can your party be credible on dealing with CO2 emissions, with greenhouse gases, when the loudest voices in your party don‘t believe in it?  They just don‘t believe in it.

PENCE:  Well, let me tell you—and I think the science is very mixed on the subject...

MATTHEWS:  OK, well, then, how can you...

PENCE:  ... of global warming, Chris.

MATTHEWS:  ... get excited about it?  Then why should your party believe you‘re going to get serious about it if you say the science is mixed?

PENCE:  Yes, it‘s a fair question.  But look, I‘m all for clean air.  I‘m all for clean coal technology.  I‘m sure reducing CO2 emissions would be a positive thing.  You‘re going to see Republicans, like at our energy summit today—you‘re going to see us oppose this massive national energy tax...

MATTHEWS:  Yes.

PENCE:  ... in the cap-and-trade.  But you‘re also, Chris, going to see Republicans come out with an “all of the above” strategy, more opportunities to explore our own domestic reserves—oil and natural gas and coal—clean technologies, fuel efficiency standards, conservation, wind, solar, nuclear.

MATTHEWS:  Yes.

PENCE:  We call it an “all of the above” strategy.  And you just wait and see.  We‘re going to go all across the country with these energy summits, hear from the American people, and we‘re going to educate the American people...

MATTHEWS:  Yes.

PENCE:  ... on a 21st century Republican agenda for the environment.

MATTHEWS:  OK.  You want to educate the American people about science and its relevance today.  Do you believe in evolution, sir?

PENCE:  I—do I believe in evolution?  I embrace the view that God created the heavens and the earth and the seas and all that‘s in them.

MATTHEWS:  Right.  But do you believe in evolution as the way he did it??

PENCE:  The means, Chris, that he used to do that, I can‘t say.  But I do believe...

MATTHEWS:  You can‘t?  Well, if you believe...

PENCE:  ... in that fundamental truth.

MATTHEWS:  Did you take biology in school?  Did you take science, which is all based on evolutionary belief and assumption?

PENCE:  Well—well, Chris...

MATTHEWS:  Do you believe—in other words, the reason I‘m asking this...

PENCE:  No, no, no, no.  It‘s great...

MATTHEWS:  I‘m not just picking a fight.

PENCE:  It‘s great to—I...

MATTHEWS:  If your party wants to be credible...

PENCE:  I‘ve always wanted to...

MATTHEWS:  ... on science, you‘ve got to accept science.  Do you...

PENCE:  Yes, I always wanted...

MATTHEWS:  ... accept science?

PENCE:  I always wanted to play in “Inherit the Wind.”  But on the global warming issue, I know that in the mainstream media...

MATTHEWS:  See how you‘re hedging?

PENCE:  On the—on the...

MATTHEWS:  This is why people don‘t trust Republicans.

PENCE:  In the mainstream media, Chris, there is a denial of the growing skepticism in the scientific community about global warming.

MATTHEWS:  Well, do you have a...

PENCE:  Republicans are more than willing...

MATTHEWS:  Is there a rising skepticism about evolution?

PENCE:  Chris, Republicans are more than willing to stand for a cleaner environment and cleaner air.  We‘re going to promote clean coal technologies, give incentives, but we‘re not going to raise a national energy tax on every household in America.

MATTHEWS:  OK.  OK.  Do you believe we should be teaching science in school or creationism?  See, this is the problem.  I asked you, Do you have a passion?  And I don‘t think the Republicans have a passion for global warming and issues like the green movement.  You have skepticism about it, which you‘ve admitted.  You‘ve been very honest here.  You‘ve admitted you have a problem with your credibility on fiscal responsibility the last eight years.  You‘ve admitted that you have a split position on the issue of global warming.

I would argue you have a very strong split position on the issue of science.  You have people in your party who don‘t believe in stem cell research and federal funding of that, who don‘t believe in evolution...

PENCE:  Oh, come on, Chris!

MATTHEWS:  Well, let me ask you this.  Does your party...

PENCE:  Come on!  What is—what is...

MATTHEWS:  ... agree on stem cell...

(CROSSTALK)

PENCE:  Science is an exploration of demonstrable fact, isn‘t it?

MATTHEWS:  Right.  Right.

PENCE:  I think, in our schools, we should teach all of the facts about all of these controversial areas and let our students...

MATTHEWS:  Right.

PENCE:  ... let our children and our children‘s children decide...

MATTHEWS:  OK.

PENCE:  ... based upon the facts and the science.  Now, you talk about ignoring...

MATTHEWS:  So you accept the scientific method, then.  You accept the scientific method.  Therefore, you still hold to this belief about...

PENCE:  I certainly—Chris, come on.  I accept the scientific method.

MATTHEWS:  OK.

PENCE:  But what the administration did on stem cells was ignore...

MATTHEWS:  OK.

PENCE:  ... scientific breakthroughs that obviated the need to destroy human embryos for research.  You know that.  They ignored all those...

MATTHEWS:  OK, here‘s the problem...

PENCE:  ... major breakthroughs that made destructive embryonic stem cell research no longer necessary.  The Obama administration and Democrats in Congress put ideology over science with that recent decision on stem cell funding.

MATTHEWS:  OK.  Here‘s the ludicrous part.  And you‘re obviously as educated as I am, Congressman.  I‘m not challenging your bona fides to have this argument.  But there are people on your side of the argument who believe that all the prehistoric bones we‘ve discovered in the world, all the dinosaur bones and all that stuff was somehow planted there by liberal scientists to make the case against Bible.  There are people that really are against science in your party, who really do question not just the science behind climate change but the science behind evolutionary fact that we were taught, you and I, in our biology books.

They don‘t accept the scientific method.  They believe in belief itself.  And once you hold that truth that, I‘m not going to be busted here on science, I‘m not going to lose the argument on science, people say, I don‘t think your party really believes in progress, in human progress.

PENCE:  You know, it‘s an interesting strawman you put up.  I don‘t know...

MATTHEWS:  I‘ve asked you, Do you believe in evolution.

PENCE:  ... that I‘ve met...

MATTHEWS:  Let me go back to the...

(CROSSTALK)

PENCE:  I don‘t know too many Americans that actually think that way, Chris.

MATTHEWS:  I don‘t think you...

PENCE:  I think most Americans are curious...

MATTHEWS:  ... question, sir.  I think you believe in evolution...

PENCE:  ... and study science...

MATTHEWS:  ... but you‘re afraid to say so because your conservative constituency might find that offensive.

PENCE:  No, I‘ve said to you, Chris, I believe with all my heart that God created the heavens and the earth, the seas and all that is in them.

MATTHEWS:  Right.

PENCE:  How he did that, I‘ll ask him about some day.

MATTHEWS:  But you don‘t believe—you don‘t take a fundamentalist view of the seven days of creation, do you?

PENCE:  Chris...

MATTHEWS:  I‘m just asking.  Do you?

PENCE:  Chris, where are we going with this?

MATTHEWS:  Where we‘re is the question...

PENCE:  Is this the caricature of how Republicans...

MATTHEWS:  Yes!

PENCE:  ... are anti-science and...

(CROSSTALK)

MATTHEWS:  Because there are polls that show that a huge percentage of the American people don‘t believe in evolution.  A lot of people don‘t believe in climate change.  And I‘m just questioning your passion of your party for climate change.

You‘ve spent the day in your party talking about your passionate commitment to climate change legislation as an alternative to what the Democrats are doing on “cap and trade.”

PENCE:  Right.

MATTHEWS:  And I‘m saying I don‘t trust it because I don‘t think your party is passionately committed to science or to fighting global warming or to dealing with the scientific facts we live with.  That‘s all I‘m saying.

PENCE:  Well, you know, tell me what you really think, Chris.

MATTHEWS:  That‘s what I really think.

PENCE:  I‘m in the party of Teddy Roosevelt.  I‘m in the party of...

MATTHEWS:  Right.

PENCE:  ... that has a long and storied history in conservation.  I think Teddy Roosevelt created the first national parks.

MATTHEWS:  Right.

PENCE:  And look—you know, and I‘ve supported extensive increases in funding to the National Institute of Health.

MATTHEWS:  Right.

PENCE:  That happened under Republican administrations and Republican Congresses.  This anti-science thing is a little bit weak.

MATTHEWS:  The trouble is that your—your Mt. Rushmore new includes Rush Limbaugh and Glenn Beck, Sarah Palin, and these characters that don‘t share either your intellect or your honesty.  And thank you for showing your honesty today, U.S. Congressman Mike Pence, leader of the Republican conference—in fact, the leader of it—and a leader in the House of the Republicans.

PENCE:  Thanks, Chris.

MATTHEWS:  Coming up: The news that John Edwards is under investigation for possible misuse of campaign funds caps a stunning fall from grace for this one-time rising star of the Democratic Party.  And now his wife today, Elizabeth, breaks her silence about her husband on Oprah.  You don‘t want this conversation going on if you have a political future. 

We‘ll be right back with the Edwards saga, this chapter.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  So just how far has John Edwards of North Carolina fallen?  Federal prosecutors are now investigating whether he used campaign donations as hush money to silence his ex-mistress.  And his wife, Elizabeth, today broke her silence about his infidelity and the state of their marriage by going on Oprah Winfrey in a taping that airs this Thursday.  Edwards has always denied fathering a child with his ex-mistress, but his wife didn‘t exactly issue a full-throated denial asked her about it.

Let‘s listen.  This is all now in the political domain for some reason.

(BEGIN VIDEO CLIP, “THE OPRAH WINFREY SHOW”)

OPRAH WINFREY, HOST, “THE OPRAH WINFREY SHOW”:  The other woman has a baby. 

ELIZABETH EDWARDS, WIFE OF FORMER SENATOR JOHN EDWARDS:  That‘s what I understand. 

WINFREY:  And there is great speculation that your husband, John Edwards, is the father of that baby. 

EDWARDS:  Right.  That‘s what I understand.  I have seen a picture of the baby.  I have no idea.  It doesn‘t look like my children, but I don‘t have any idea. 

(END VIDEO CLIP)

MATTHEWS:  Well, this is a sad story. 

A year ago, this guy was a real contestant for president, one of the top three in the race, alongside Barack Obama and Senator Clinton. 

Ben Smith is a senior political reporter for the Politico.  And Lois Romano is a “Washington Post” columnist. 

Lois, this is so strange.  And let‘s get away from the human interest aspect, or even the human aspect, and go to the political.  Elizabeth Edwards, who everybody in the press has always liked, and cottoned, I must say, better than they have cottoned to her husband—they find her more, well, genuine and more likable—she‘s coming out in a very bad part of her life. 

She‘s in bad health, obviously.  And she‘s coming out and talking about something that happened within a year.  Last year, her husband was running for president.  We were covering these debates. 

What‘s going on? 

LOIS ROMANO, COLUMNIST, “THE WASHINGTON POST”:  I think it‘s just classic Elizabeth Edwards. 

She doesn‘t want to be a victim.  She doesn‘t want to be a long-suffering wife.  And it‘s a way to get back control of the situation.  I mean, this had to be enormously painful, as we know. 

We know they don‘t need the money, so I think it‘s just her saying: 

I‘m still in control.  I‘m OK. 

MATTHEWS:  You know, going after—Ben, this is tricky stuff, but going after these questions of having had a baby with somebody else is normally not anybody‘s business.  It‘s just a marital problem.

But here is a guy running for president, and there‘s issues now whether he used campaign money to hush her up, or whatever.  There‘s talk of $100,000 for her filmmaking, which apparently had no real value, $14,000 for some furniture that never apparently existed.  I guess that‘s the doorway into this conversation.

But the fact is, this guy did come close.  He was part of a very popular ticket in 2004 that almost won, except for Ohio.  He was almost vice president.  In fact, he was a real heavyweight candidate in 2000. 

BEN SMITH, SENIOR POLITICAL WRITER, POLITICO.COM:  Yes, absolutely. 

I mean, even after this story really started to broke—break in the fall of ‘07, I mean, he—he could have won the caucus.  Even—Barack Obama was hammering in December, in the hopes of stopping him. 

But, you know, part of it is, he‘s always ran on his personal integrity, his personal story.  His love—his love of his wife was so central to who he was.  And I think that is part of the reason that—that, you know, people are interested in this. 

MATTHEWS:  Yes, the human interest part. 

Here is Oprah Winfrey—and she is obviously the most popular person on television, certainly daytime, and now all kinds of television—asking Elizabeth about what she believes about her husband. 

Now, for—for Elizabeth to go on this program is really trumpeting all this story for the nation to hear.  And we just happened to get it early, because we‘re on at 5:00 in the afternoon, and they gave out the—

Oprah‘s people and her gave out these clips. 

Let‘s watch. 

(BEGIN VIDEO CLIP, “THE OPRAH WINFREY SHOW”)

WINFREY:  Did you believe that this was the only time? 

EDWARDS:  I did.  I did.  You know, I believed...

(CROSSTALK)

WINFREY:  Only time with her. 

EDWARDS:  Only time with her. 

WINFREY:  Did you believe it was the only time ever? 

EDWARDS:  Yes.  I mean, I—I—I believe that.  I want to believe that. 

(END VIDEO CLIP)

MATTHEWS:  Again, Lois, this conversation is in real time now.  Why? 

ROMANO:  I—again, I think Elizabeth feels her sense of mortality.  She knows that, you know, she‘s terminally ill.  And I think she wants to make a record for her children that she‘s not a victim. 

I think this is part of the healing process for her.  And—and I think, you know, it‘s her way of seizing control.  She was very hurt by this man. 

He—he wove an amazingly tangled web of lies and let so many people down.  And, as you say, he—he could have won.  And then where would the country have been?

MATTHEWS:  Ben, what do we make of the timing of this?  Apparently, this is all—was in their time.  It‘s like Colombo.  They knew things we didn‘t know. 

SMITH:  They knew...

(CROSSTALK)

MATTHEWS:  They all knew about this relationship when they began this campaign for president a year-and-a-half ago. 

SMITH:  Yes, absolutely.

This is in October of 2006.  Edwards and Rielle Hunter get back from Africa.  And the staffers who were with them start saying to the other staffers, we have got a real problem here.  And his former campaign manager then confronts him, and says, you know, if you had an affair, you cannot run for president.  And he denies it. 

But a lot of them really doubted that at the time.  And a lot of them didn‘t then come work for him partly because they doubted it.

MATTHEWS:  They didn‘t deny—they didn‘t accept his denial?

SMITH:  Right. 

ROMANO:  You know...

MATTHEWS:  So, what do we make of Elizabeth Edwards going along with this charade, if you will, to—to get him to be president? 

SMITH:  I mean, you know, some of—some of their—some of their supporters blame her, too.  I mean, I quoted a—you know, a guy from Iowa who said, “You know, I—I trusted him because I trusted her.

MATTHEWS:  What do you make of this, that a lot of campaign people were very upset about this, including his campaign manager, Lois?

ROMANO:  I mean, one of the things I was going to say about this investigation is that everybody was furious when the money situation came out, because a lot of people had taken cuts in pay, or they were doing a lot of the work at the end volunteer. 

So, I think, you know, that it‘s possible that it‘s one of them, one of the former staff, that, you know, kind of steered this to the—to the federal prosecutors.  People were very, very angry about this. 

MATTHEWS:  Well, this is a sad ending to a political career, it looks like.  And it looks like an end, right, Ben? 

SMITH:  It sure does, yes. 

MATTHEWS:  Lois, it looks like the end of this guy‘s career for presidential politics.

ROMANO:  Oh, please, yes. 

MATTHEWS:  Well...

SMITH:  I mean, you know, and I think, you know, the other thing is, she really did pull back on the father of the child thing.  I mean, you know, she denied that last time.  She denied that in August, when this broke.  And now she‘s saying, “I don‘t know.”

MATTHEWS:  Yes. 

ROMANO:  I mean, he‘s finished. 

MATTHEWS:  Yes.  Yes.  OK. 

Thank you very much, Lois Romano. 

Thank you, Ben Smith. 

Up next:  Yesterday, we told you how Mitt Romney had mocked Sarah Palin the other day.  Now Palin‘s supporters have released a very funny look at Mitt Romney running from a bear.  Is this a preview of the 2012 race?  This is much happier than the story we just told you.  The “Sideshow” is coming.

You‘re watching HARDBALL.

(COMMERCIAL BREAK)

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

First up, remember this campaign classic from 1984?

(BEGIN VIDEO CLIP, POLITICAL AD, 1984)

NARRATOR:  There‘s a bear in the woods.  Some people say the bear is tame.  Others say it‘s vicious and dangerous.  Since no one can really be sure who is right, isn‘t it smart to be as strong as the bear, if there is a bear? 

(END VIDEO CLIP)

MATTHEWS:  Well, that was the “bear in the woods” ad from 1984, which many said did the trick for Ronald Reagan‘s reelection.

Well, Politico now reports that the group Conservatives for Palin has manipulated that ad to mock the heck out of the guy who was recently heard mocking the heck out of their hero—make that heroine. 

Here are the fans of Sarah Palin—yes, the woods are full of them—taking the bark off of Mitt Romney.

(BEGIN VIDEO CLIP, AD)

NARRATOR:  There‘s a bear in the woods. 

(SCREAMING)

(END VIDEO CLIP)

MATTHEWS:  Now, that‘s clever.  I love her luxuriating there on the bear she just brought down. 

If she runs, she should hire these guys to make her ads. 

Keep keeping it light, Governor.  Get huffy, and you lose this fight. 

Time now for tonight‘s “Big Number.” 

You know that old phrase “He‘s a tough act to follow”?  Well, nobody would have said that about New York Governor Eliot Spitzer when he got caught and bounced out of office for a string of sessions with a Washington call girl, would they?  Wrong. 

This is how bad thing are for New York Governor David Paterson right now.  He‘s the guy that succeeded Spitzer.  Fifty-one percent of New Yorkers now say they would rather have Spitzer back in office.  A majority of New Yorkers would like to have Spitzer back, 51 percent.  Seriously, folks, could this be a verdict on Paterson? 

Tonight‘s “Big Number.” 

Up next:  What‘s the political future of the Kennedys? 

You‘re watching HARDBALL—HARDBALL—only on MSNBC.

(COMMERCIAL BREAK)

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

Stocks slipping, despite some optimistic comments by Fed Chairman Ben Bernanke.  We didn‘t continue that momentum we had on Monday.  The Dow Jones industrial average instead shed about 16 points on Tuesday, the S&P 500 just a little bit more than three, and the Nasdaq lower by more than nine. 

Fed Chairman Ben Bernanke told Congress that the economy appears to be stabilizing on a number of fronts and should start growing again later this year.  But he said the recovery is likely to be slower than usual and warned about—quote—“further sizable job losses.”

Investors are still nervous about the results of government stress tests which will be released on 19 of the nation‘s largest banks on Thursday.  Reports out now say that 10 of the banks may need to raise more capital.  But that‘s fewer than initially expected. 

And after the close, Dow component Disney reported better-than-expected quarterly earnings.  Disney shares are trading higher in the after-hours session. 

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

MATTHEWS:  Welcome back to HARDBALL. 

An upcoming book on the Kennedy family describes what happened when Caroline Kennedy had that short-lived race for the Senate and what the Kennedy families are doing right now to think about the future. 

There‘s an except of the new book of the Kennedy family future in the new edition of “Vanity Fair.”

With us now is MSNBC political analyst Mike Barnicle, and “The Boston Globe”‘s Washington bureau chief, Peter Canellos, who rewrote—or actually co-wrote...

(LAUGHTER)

MATTHEWS:  ... “The Last Lion.”  It was a great big book on the rise and fall of the Kennedy—of Ted Kennedy and the family. 

I want to start with Peter and this big question. 

Is there anything of value in this new excerpt that ran in the “Vanity Fair,” anything in value in terms of the sourcing, the news, the facts in that article about Ted Kennedy, Caroline Kennedy, and the future of the family?

PETER CANELLOS, AUTHOR, “LAST LION: THE FALL AND RISE OF TED KENNEDY”: 

Well, there‘s a lot of gossip in there that‘s sourced to friends and family.

And it‘s—it‘s very hard to source—to sort it all out, when—when that‘s what the sourcing is.  But this is a—this is an excerpt that...

(CROSSTALK)

MATTHEWS:  I couldn‘t find a single—Peter, I couldn‘t find a single sourcing to any member of even the extended family. 

I saw sourcing to I don‘t know what—who are these people?  I didn‘t even—it didn‘t even say—except one 95-year-old guy, whose name is Benedict...

(LAUGHTER)

MATTHEWS:  ... who claimed that Rose Kennedy gave Hyannisport to the Benedictine monks at one point. 

(LAUGHTER)

MATTHEWS:  I mean, I—I don‘t know about the sourcing.

Go ahead.

CANELLOS:  Well, it also—it also tries to paint the idea that, at the day of his first seizure, of Kennedy‘s first seizure, when everyone is surrounding his hospital bed, before they have even diagnosed what has happened to him, everybody is plotting and thinking about succession. 

It‘s a little ridiculous. 

MATTHEWS:  Let me go to Mike Barnicle. 

You know the Kennedy family, certainly better than I do.  And I wanted to ask you this.  Is there—is there any truth to the fact that—or to the story in this new account—that, when Caroline Kennedy was thinking about becoming a senator from New York, that she thought she could do it without campaigning, that the governor, Paterson, who is now in such big trouble, was just going to hand it to her?

Is that true? 

MIKE BARNICLE, MSNBC POLITICAL ANALYST:  I don‘t know whether that‘s true or not.

I—I do know that the portion of the book that alludes to—Ed Klein apparently indicates that Ted Kennedy forced Caroline to run for the Senate, wanted her to run as the Senate, as the heir to the Kennedy throne.  I don‘t think that‘s true. 

I think she chose to run on her own, because, in Barack Obama, the prior summer of 2007, 2008, she heard her father‘s voice for the first time, really, and that‘s why she ran. 

MATTHEWS:  So, she was inspired to get into public life.

BARNICLE:  Yes. 

MATTHEWS:  And she never had been before...

BARNICLE:  Right.  

MATTHEWS:  ... as a grownup.

Let me go to Peter on that question. 

There‘s an account in the book that she was—decided to pull out of the race for Senate in New York, recently, because her kids came to her as she was about to go out for the evening with her husband—it sounds like a scene we all grew up with, parents all dressed for the evening, ready to go out.  Kids come in and sit on the bed and start talking to you. 

It certainly had what seemed like a slice of life to it.  Is there any truth to it? 

(LAUGHTER)

CANELLOS:  Well, again, I don‘t know.  I mean, it‘s sourced to the same family and friends that nobody knows who they are. 

But I will say that, you know, Ted Kennedy is a loving uncle of Caroline Kennedy‘s.  And he would support her and want her to do whatever she wanted.  And, if she wanted that Senate seat, he would obviously support her for it.  But there‘s no evidence whatsoever that he was lobbying either behind the scenes or to Paterson for—for her to get that appointment. 

MATTHEWS:  OK.  Ted Kennedy is ill.  We all know that, and are rooting and praying for him.  Certainly, we are. 

I want to ask you about the future down the road.  Is the Kennedy family legacy, the dynasty, if you will, going to continue, and through whom?  Besides Patrick in Rhode Island, is there any Kennedy who would like to run for senator from Massachusetts at some point, anybody that would like to run in New York?  Is there any true ambition that‘s apparent in that family at this point? 

CANELLOS:  Well, I mean, I think the—the—the name that does get mentioned is Vicki Kennedy, Ted‘s wife. 

Now, she has not said anything to anybody, so there‘s no actual, you know, evidence that she might be considering running at some point, but she‘s a political animal.  She comes from a large political family.  She‘s been with Ted for a long time, 18 years.  So, you know, it‘s logical to think that she might make the leap. 

MATTHEWS:  What about Joe, the—the oldest son of—of Robert Kennedy?

CANELLOS:  Well, Joe Kennedy has not behaved like a person who is running for the Senate.  He‘s not been out and about in Massachusetts all that much. 

You know, this article says that, you know, he appears on an ad for his oil, heating oil, company, which is like a veiled Senate campaign.  But he‘s been doing those ads for a long time....

MATTHEWS:  Yes. 

CANELLOS:  ... for decades, in fact, you know?

MATTHEWS:  And I don‘t think associating with Hugo Chavez is a great campaign move...

(LAUGHTER)

MATTHEWS:  ... with the Irish and Italians in Massachusetts—maybe with the liberal elite, but it‘s not exactly a strong push to the center, is it, Michael?

(LAUGHTER)

BARNICLE:  You know, the funny thing about...

(CROSSTALK)

MATTHEWS:  And there is a political center in Massachusetts that may not like Hugo Chavez.  Just guessing. 

BARNICLE:  Yes.  I mean, you know...

MATTHEWS:  Our friends in Venezuela—I love that ad. 

BARNICLE:  Hugo carries Cambridge, but that‘s about it, in Massachusetts. 

(LAUGHTER)

BARNICLE:  But the interesting thing about this whole talk about, you know, the theory about succession to Senator Kennedy, I don‘t think that Joe Kennedy is a candidate for anything in the future.  I really don‘t.  He just doesn‘t—as Peter just indicated, he doesn‘t give you the sense that he wants to run again, put up with the public barrage from the media, everything. 

But he has two sons, Matthew and Joseph, who are very attractive young guys, very smart, very accomplished.  I would not be surprised if, down the line, people of that generation of the Kennedys got involved. 

The other thing about Ed Klein‘s book that struck me, just from the excerpt in “Vanity Fair”—haven‘t read the whole thing.  It‘s kind of a mean-spirited book. 

MATTHEWS:  Snarky. 

BARNICLE:  Mean-spirited.  And he misses a lot in the book.  First of all, the attribution, it could have been the woman selling the doughnuts in lobby of Mass General talking about Senator Kennedy.  The second thing about it—

MATTHEWS:  It could have been a Howie Carr fan too.

BARNICLE:  It could have been.  But if you really inquired about what Senator Kennedy has been doing since he came down with the brain tumor; he would transport himself every day, be driven to Mass General, from the Cape, for the chemo therapy treatments, books on tapes in his ears.  There were several times, Chris, on the way back from the Mass General, back to the Cape, that he made stops at the homes of families who had lost a son or a daughter in Iraq or Afghanistan.  He spent considerable time with them. 

No headlines, no newspapers.  That‘s out there.  You could have gotten that for your book. 

MATTHEWS:  You could probably skip “Vanity Fair” this month, for those of you watching.  This isn‘t a great piece of journalism.  I‘m sorry, stuff about Kathleen Kennedy Townsend, how she couldn‘t have a future because she‘s pro-choice.  Most of the Kennedys are pro-choice.  Or that she‘s for contraceptives.  In what political campaign in our lifetime have contraceptives been a political issue?  Give me a break, Ed Klein. 

BARNICLE:  What about the fact that Teddy is in the hospital after suffering the seizure that morning last May, and within hours the entire family has gathered to arm wrestle over his Senate seat.  Please? 

MATTHEWS:  And there‘s somebody sneaking bottles of booze into the hospital.  Give me a break.  Ed Klein is out to lunch with this piece.  “Vanity Fair” shouldn‘t have run the piece.  Mike Barnicle, Peter Canellos, thank you. 

Up next, as President Obama looks to fill a seat on the Supreme Court, his pick will no doubt face questions on where he or she stands on things like affirmative action.  But a case for a fire fighter who was passed over for promotion gets a lot of people hot, like me.  I just wonder why this guy passed the test and flunked out because he was the wrung ethnic group.  You got to wonder what the courts are up to. 

We‘ll get to that with Pat Buchanan, who I‘m sure will be a lot hotter than I am, and Joan Walsh.  I don‘t know where she‘s going to be on this one.  Coming up on the politics fix.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back in time for the politics fix with MSNBC‘s Pat Buchanan and Salon.com‘s Joan Walsh.  Well, let me ask you this about this affirmative action case up in New Haven, Connecticut.  A lot of people would say it‘s not affirmative action.  A court basically held that the city of New Haven was right to deny promotions to white fire fighters because they passed a test and no blacks passed the test. 

Therefore, it was an unfair test and the courts are going to rule on that at the Supreme Court now.  You have to wonder about Justice Sotomayor, who is also up for the Supreme Court, who ruled apparently against the white fire fighters.  What do we make of this, Joan? 

JOAN WALSH, SALON.COM:  Yes, I think she was in a seven to six majority ruling against the white fire fighters.  They chose not to hear it is what I recall, Chris. 

Look, you know, here we are, three Irish Catholics talking about the toughest, one of the toughest, I think, affirmative action cases in the country.  And the reason these firefighter cases—discrimination cases are so difficult, Chris, is that these kinds of mechanisms where somebody takes a test, passes a test, and then is denied—they break your heart and, in my opinion, they are unfair. 

But if I can just talk about the other side of the coin for a minute, before Pat jumps on me—and I know he will.  You know, there‘s a reason that we have these ugly cases, and that‘s the failure of our politics to really resolve some of these ugly conflicts.  We have fire departments all over this country, God bless them, that are still disproportionately not just white, but Irish Catholic. 

My home of San Francisco is that way.  And I‘m here in New York today.  And it‘s about—a majority of New Yorkers are black or Latino, and only 10 percent are fire fighters.  So what‘s happened in a lot of these cases, Chris, is that the Irish Catholic dominated unions have really fought efforts to make the test more fair. 

MATTHEWS:  I‘m suspicious of your argument, Joan, because I think we‘ve had in the past a lot of Italian barbers.  I don‘t think there‘s any problem with that.  We have a lot of Mexicans running Mexican restaurants.  I don‘t see the problem.  But if you can prove discrimination, I‘m with you. 

WALSH:  Do you really not see a problem?

MATTHEWS:  You have to prove it.  You can‘t just assume it.  

WALSH:  We think there‘s something uniquely Irish Catholic about being able to fight fire? 

MATTHEWS:  It‘s called tradition.  It‘s been going on since the 19th century. 

WALSH:  And it discriminates against black people. 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  Wait a minute, Joan. 

WALSH:  It does, Pat. 

BUCHANAN:  There is rank and ugly discrimination and it‘s against a man who studied 13 hours a day, got rid of a second job, listening on tape because he‘s dyslexic.  His dream—his American dream is taking a test with 70 other guys and coming in the top eight so he can be promoted to lieutenant.  He succeeds and wins.  And the only reason he‘s not promoted is because his ancestors came from Italy and this guy is white. 

This is a rank act of discrimination, which is an outrage.  And it‘s not a tough case at all.  It‘s a simple case.  You denied the guy a job he deserved. 

WALSH:  I didn‘t. 

MATTHEWS:  Because he‘s a white man. 

WALSH:  And a black firefighter in San Francisco was served dog food at his fire house just a couple years ago, Pat, not 20 years ago.

BUCHANAN:  So what?  Nobody is saying that‘s a good thing.  You‘re telling me what they did to Frank Richie (ph) is a good thing?

WALSH:  No, I‘m not.  I said that from the beginning.  I don‘t think it is a good thing.  I don‘t think it was fair.  I think these are very ugly cases that have very ugly outcomes, where basically everyone is harmed.  The city of New Haven hasn‘t had new blood in its leadership because they‘re choosing not to make these promotions.

So I think everyone who looks at this case knows that there is something wrong with it.  But I don‘t we think can lose sight of what the history is.  When we have had affirmative action that has elevated African-Americans to leadership positions in my city of San Francisco, they are wonderful firefighters.  They are great leaders.  They do a terrific jobs. 

BUCHANAN:  That is fine, as long as if you give them a test, they win it fair and square, and the test is fair.  There is no evidence this test was unfair.  Brian Weber, down in Louisiana, didn‘t get a promotion, white working class guy, even though he came out ahead.  Alan Bakke out there, trying to get into medical school, one of the last guys, an older guy, denied it. 

What is happening now to white men right now is exactly what was done to black folks—

MATTHEWS:  No, I don‘t buy that.  Joan, my problem is there is results based unfairness.  If 15 guys go out for a basketball team or any sports team, and ten of them who win happen to be one ethnic group, I‘m not going to say there‘s something wrong with the try out.  I would say the top ten won and that‘s why they are on the team.  I wouldn‘t say redo the tryout so that you have racial balance on the team or any other kind of sports event.  I think it‘s about fairness, not about results. 

WALSH:  Public sector jobs are a very different animal from a sports team.  There are plenty of black and Latino and female firefighters who can do the job, who can meet requirements for the job.  But these tests have often historically been rigged and the entire promotion system has been rigged.  We are unrigging it. 

BUCHANAN:  You have not shown me any test that‘s been rigged.  If there‘s a test that is rigged, that gets all Irish Catholics in, and no Italian Catholics, no blacks, no Hispanics, no Polish Catholics, I would say, take a hard look at the test.  Nobody has said this test was rigged at all.  This guy worked for it.  They all took it.  It‘s simply they came in with results and all of them were white, except for one Hispanic guy.  So they threw it out because of race. 

That‘s really an outrage.  It‘s like what was done to Jackie Robinson.  He‘s not playing second base earlier for one reason.  He‘s the best player, but because he‘s black. 

MATTHEWS:  One of the arguments I accept from Clarence Thomas, who I normally disagree with, was he said the problem with this kind of so-called affirmative action—I‘m for some—I‘m certainly for reaching out to people that don‘t normally make the list and I‘m certainly for aggressive recruitment.  But when it comes down to rigging tests so you get a certain result, that‘s when Clarence Thomas says his presence at Yale Law bothered him.  He said, there are some people that see a fellow like him at Yale Law and say, you got in because they had some quota that got you in. 

He didn‘t like that notion out there.  And this kind of Supreme Court ruling, if they go in that direction, is going to sell that idea.  The only way a minority gets a break in this country is because somebody gave them a break. 

(CROSS TALK)

BUCHANAN:  Chris, it stigmatizes African-Americans who are succeeding.  You‘re exactly right.  It discriminates against white guys who had nothing to do with slavery or segregation.  Italian Americans didn‘t even come to this country until the 1880s. 

MATTHEWS:  Frank Richie is Italian.  The other complaint in the case is Hispanic.  I don‘t think it‘s all about the Irish.  But I do think the Irish have a proud tradition of fire fighting.  Damn it, Joan, the guys that got killed on 9/11, a lot of them were Irish.  They chose to be fire fighters.

WALSH:  Chris, I have fire fighters in my family.  Don‘t race bait me. 

MATTHEWS:  They believe in it. 

WALSH:  Don‘t race bait me, please, Chris.  I have fire fighters in my family.  God bless them.  They‘re brave. 

MATTHEWS:  Why are you accusing them of bigotry? 

WALSH:  Because the fact of the matter is they have protected those jobs for their brothers, for their sons.  They are public sector jobs.  This isn‘t a family business. 

MATTHEWS:  We‘ll see if that was a fair test or not.  You can‘t judge a test by the results.  You got to judge a test by its basic fairness.  And we‘ll see when the final court rules on this.  Thank you very much, Pat Buchanan. 

BUCHANAN:  Chris, you talk about the Republican party.  They ought to be the party of Frank Rickie.  That‘s exactly who they should represent. 

MATTHEWS:  We will be right back with Joan Walsh and Pat Buchanan to talk about the Kennedys.  More Irish talk when we come back.  We‘ll be back with more HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back on a lighter note with Pat Buchanan and Joan Walsh for more of the politics fix.  Catch this, Senator Arlen Specter was asked the following question by the “New York Times Magazine”, quote, “with your departure from the Republican party, there are no more Jewish Republicans in the Senate.”  Talk about quotas.  “Do you care about that?”  And he answered, “I sure do.  There‘s still time for the Minnesota courts to do justice and declare Norm Coleman the winner.” 

Pat Buchanan, give me a (INAUDIBLE) of that Biblical statement.  Is he for real or kidding or what?  What?  Is this ethnic solidarity, party disloyalty?  What is it here? 

BUCHANAN:  I think Arlen lost it for a minute is what happened. 

There‘s no way the court can hand that thing to Coleman.  They might say,

we‘ve got to do further stuff or call Frank the winner, because there‘s no

I haven‘t seen any count yet that puts Coleman ahead in the last couple months. 

MATTHEWS:  Did he fail to reboot there, Joan?  He failed to readjust his answer given his recent switch? 

WALSH:  I think he completely spaced out on it, Chris.  It just totally slipped his mind that he‘s now a loyal Democrat, or not so loyal Democrat.

MATTHEWS:  The thing is he may be friends with Norm Coleman and he felt some loyalty to him, because he‘s been rooting to him for months.

This is the thing, Pat, which you‘ve never had to do, which is change parties from one to another.  Although you did create one of your own at one point.  This idea you have to switch on everything.  Your wife has to change parties.  Your kids have to change registrations.  It gets very complicated. 

BUCHANAN:  It sure does.  Look, right now, you‘ve got Arlen now, Chris.  He‘s your problem, not ours anymore.

MATTHEWS:  No, he‘s not.  I‘m in this business.  Thank you, gentlemen and ladies.  We‘ll argue affirmative action until we die.  Thank you, Pat Buchanan.  Thank you, Joan Walsh.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  We‘re going to have a lot more on the Kennedys for years to come and a lot more on affirmative action for years to come.

Fortunately, I‘m about to turn over the time to one of the great men in our business, Mr. Ed Schultz.  “THE ED SHOW” is coming up 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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