updated 6/4/2009 10:34:30 AM ET 2009-06-04T14:34:30

Guests: Margaret Brennan, Chuck Todd, Neil MacFarquhar, Rep. Peter King, Chris Cillizza, Harold Ford, Ron Kaufman, Mark McKinnon, Peter King, Aaron Schock

CHRIS MATTHEWS, HOST:  Desert fox.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in Washington.  Leading off tonight, the coalition.  President Obama‘s arrival in the Mideast today begins the first big test of his coalition with the Clintons.  Can they, the new secretary of state, Hillary Clinton, the former president and the president exert their combined political clout to woo a peace deal?  Can Secretary Clinton nudge the Likud government in Israel?  Can the president move the Saudis and other Arab states to forge a common stand that meets the security needs of the Israeli people?  Tomorrow‘s a huge day, with his much ballyhooed address to the Muslim world in Cairo.

President Obama laid the groundwork today in Riyadh.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I thought it was very important to come to the place where Islam began and to seek his majesty‘s counsel and to discuss with him many of the issues we confront here in the Middle East.

(END VIDEO CLIP)

MATTHEWS:  Greeting the president was a new message from Osama bin Laden, a message threatening the U.S. for backing Pakistan‘s government crackdown on the Taliban.  NBC News chief White House correspondent Chuck Todd is with the president in Saudi Arabia.  He‘ll be talking to us tonight.

Plus: President Obama recruited another moderate Republican, U.S.

Congressman John McHugh of New York, to be his new secretary of the Army.  McHugh joins Utah governor Jon Huntsman, who the president‘s sending to China, and Arlen Specter, who switched uniforms to stay viable in Pennsylvania.  Have you noticed?  We have a president who appears bipartisan but is out there stealthily giving his Democrats a chance to pick off open Republican seats and to isolate the GOP as a conservative regional party.  We‘ll try showing what the president‘s up to in just a minute.

And while the president continues to poach from the Republicans, a small group of Republicans is positioning itself to run against Obama in 2012.  Newt Gingrich backpedaled on calling Sonia Sotomayor a “racist.”  Minnesota governor Tim Pawlenty is not seeking a third term.  And Mitt Romney didn‘t exactly deny any presidential ambitions on the “Today” show with Matt Lauer this morning.

(BEGIN VIDEO CLIP)

MATT LAUER, “TODAY” SHOW:  Four months into this administration, are you running for the nomination next time around?

MITT ROMNEY (R-MA), FMR PRESIDENTIAL CANDIDATE:  No, I‘m looking right now to try and get some Republicans elected in 2009, again in 2010.  And what happens down the road—well, it‘s a very distant horizon.  We‘ll look at it later.

(END VIDEO CLIP)

MATTHEWS:  We‘ll look at the Republican early bill bird special later on HARDBALL tonight.

Plus, today we learned Dick Cheney was even more involved in we knew in twisting arms for what he likes to call “enhanced interrogation” and what most Americans choose to call torture.  That‘s in the “Politics Fix.”

And it turns out there‘s no escaping the great deflation, especially in home prices, even if you‘re secretary of the treasury.  Tim Geithner‘s personal real estate woes are in the “Sideshow” tonight.

But we begin with President Obama‘s Mideast trip with NBC News chief White House correspondent Chuck Todd, who‘s with the president in Riyadh, Saudi Arabia, and “New York Times” reporter Neil MacFarquhar, who‘s author of this great new book, “The Media Relations Department of Hezbollah Wishes You a Happy Birthday: Unexpected Encounters in the Changing Middle East.”  Gentlemen, thank you.

Chuck Todd, let‘s look right now at the Osama bin Laden audiotape that went out just today.  Quote—this is addressed to our president—“With his orders to Pakistan‘s President Zardari and his army to stop Swat people from practicing Sharia by killing and fighting and destroying and shelling, Obama and his administration planted seeds for hatred and revenge against America.  Let the American people be ready to reap what the White House leaders have sown.”

Chuck Todd, what‘s the White House response?  Let me give you, first of all, Robert Gibbs‘s response, which he made today officially.

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  I don‘t think it‘s surprising that al Qaeda would want to shift attention away from the president‘s historic efforts and continued efforts to reach out and have an open dialogue with the Muslim world.

(END VIDEO CLIP)

MATTHEWS:  Chuck, what does the president believe this all is about? 

Why is bin Laden putting out this word just as he arrives in the Mideast?

CHUCK TODD, CORRESPONDENT, NBC POLITICAL DIRECTOR:  Well, they‘re portraying it as a last-minute sort of propaganda attempt by al Qaeda and bin Laden to force themselves in the news, to try to piggyback off of all the attention that President Obama is getting for this big speech he‘s going to give tomorrow.  And of course, they want to set it up as saying, See?  Look at the progress we‘re making.  Al Qaeda and bin Laden are running scared.

You know, in fact, I had one administration tell me, When was the last time you saw al Qaeda put out two messages in 24 hours?  You know, the number two put out his own message yesterday, and almost as if bin Laden realized, Hey, that didn‘t work, I better go out there and put my own message out there to try to trump my other guy to make sure we get their attention.

So they see it as a—you know, they want to see it as a way to say, Hey, look, it‘s working.  Our outreach to the Muslim world is scaring al Qaeda, they‘re running scared, that‘s why they‘re doing this.  But of course, they did seem to downplay the threat a little bit.  I pushed back a little bit with Robert, you know, Do you just not take this threat seriously?  They didn‘t want to go that for, but they certainly hinted at it, Chris.

MATTHEWS:  Neil MacFarquhar, you know the Middle East pretty well.  You know the media over there.  Why can‘t we nail this SOB?  If he keeps sending tapes over to Al Jazeera, can‘t we intercept and find out where he is?

NEIL MACFARQUHAR, “NEW YORK TIMES”:  I think that they try, of course, but you know, he‘s hidden in Pakistan, probably, or—and you just can‘t, you know, find where he does his sophisticated tapes.

But I think those messages resonate a lot less.  I think there‘s a little desperation in them, too, just because people in the Arab world, you know, they‘ve seen explosions go off in Casablanca and Amman and Riyadh, and you know, they know what the cost of the violence is.  So I don‘t think he‘s as popular anymore as he once might have been.

MATTHEWS:  Well, let me ask you, Chuck, about this other question, this new team over there.  Secretary of State Hillary Clinton seems to me has been doing the heavy lifting for this administration in terms of our relations with Israel and that right-wing government over there of Bibi Netanyahu.  And of course, he‘s got Ehud Barak from the Labor Party joining him, but it‘s a fairly right -wing government.

Here‘s Secretary of State Hillary Clinton really leaning into this guy, Binyamin Netanyahu, in terms of the West Bank settlements.  Here she is, doing her job as secretary of state.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Madam Secretary, when President Obama yesterday talked about the issue of settlements and he said that he wanted the Israelis to freeze their building on the West Bank, does that mean that he wants the settlements, the existing settlements, to be rolled back to the 1967 borders specifically?

HILLARY CLINTON, SECRETARY OF STATE:  We want to see a stop to settlement construction, additions, natural growth—any kind of settlement activity.  That is what the president has called for.  We also are going to be pushing for a two-state solution, which by its very name implies borders that have to be agreed to.

(END VIDEO CLIP)

MATTHEWS:  Chuck, this is powerful stuff.  When you hear Senator Clinton, now Secretary Clinton, using the word “we” in reference to the president and herself, when you‘re taking a tough stand against these settlements, this growth in settlements on the West Bank, as a preparatory to trying to get a Middle East deal, it impresses me we that got our first team in there.  How‘s it feel at the White House end, this effort to get peace over there?

TODD:  Well, look, I know that there were some cynics that probably thought—and it may have been some in the pro—in the very, you know, pro-Israeli side on this issue—that thought, Well, OK, the president putting Secretary Hillary Clinton over there, that‘ll give them a way to back-channel.  That‘ll give Israel real a way to back-channel.  If they ever don‘t like something the president‘s doing, they can back-channel through Hillary Clinton and get the president to soften rhetoric, or something like that.

And right now, you‘re seeing the exact opposite.  You‘re seeing no—there is no line in between the president and Secretary Clinton on this issue of settlements.  They seem to be putting a lot of pressure.

Now, you talk privately to those who are close to the Israeli government, they say, Hey, this is nothing but a posture, public posture, right now because the president wants to get maximum play for his speech in Cairo and he wants to keep his credibility with the Arab world, with the Muslim world.

But I have a feeling you may hear the world “settlements” tomorrow in that speech, Chris, by the president.  And at that point, there‘s no backing down from that.  And you know, as the president says, ask me in another month or two when Netanyahu has had some time to get his government in order.  He really doesn‘t seem to be ready to back off, and neither does Secretary Clinton.

MATTHEWS:  You know, and Neil, I think there‘s no BS coming from this crowd.  I think this administration wants peace.  I mean, Bill Clinton tried to do it, but he only did it after his wife got elected senator from New York.  He waited way too late in his second term to get anything done.

If you have a united Democratic Party in this country—and it‘s about 97 percent united—I wouldn‘t want to be up against this crowd when it came to an issue of peace in the Middle East.  Do you have a sense the Arab world is ready to do its part and come along a little bit from the Saudi plan for going back to ‘67 and be realistic about this thing and recognize that Israel is living on the West Bank, you‘re going to have to cut a little better deal for Israel?

TODD:  Right.

MACFARQUHAR:  I think that this administration puts...

TODD:  Well, that‘s...

MATTHEWS:  Let me get Neil MacFarquhar in here, Chuck.  I‘m sorry.

TODD:  Sorry.  I‘m sorry.

MACFARQUHAR:  I think this administration understands that, you know, charm only goes so far and you have to push a little, as well.  And you know, we all remember Baker-Bush.  You know, they were a unified team.  And after the first Gulf war, they were trying to get everyone around the peace table.  And when Israel was balking a little bit, Baker famously said, you know, Here‘s the number of the State Department.  If you‘re interested in peace, call me.

So you have to push a little, and I think the public on both sides would be with you—or with them if they did push.  And I think that by starting early and by pushing, they can actually make some progress.  You know, the others—the others, Clinton and Bush, both waited way too late in their terms to try and get any leverage.

MATTHEWS:  Neil, if you were an Israeli somewhere in the political center over there, you were somewhat in the middle—I mean in the middle, there‘s a huge middle in that country politically—and you just wanted the country to survive as a Jewish state, and you were pretty liberal about it, you‘re willing to put up with a lot on the West Bank, but you want your country to exist several hundred years from now, at least—in other words, you want a permanent country, OK, would you trust any deal with the Arabs in the long run?  Would you trust them not to just try to push you into the sea the first chance they got?

MACFARQUHAR:  You know, I talk about this a little bit in my book because I lived in Jerusalem in 1993, when the first Oslo accord was put into place.  And you know, there was real optimism on both sides.  You know, the Israelis sort of—they could go to Jericho, they could move around a little bit.  The Palestinians eventually built a casino there, and the Israeli public loved that, that they could go gamble.

The Palestinians thought that they were going to get the Israeli army out of their hair every day and stopping them at checkpointing and telling them where and when they can build their houses.  And you know, it all fell apart because it got hijacked by the extremists.  You know, a Jewish settler shot Rabin and the Palestinian terrorists started blowing up buses and—so it all kind of fell apart.

So I think if you have an assurance from an American president that, you know, they‘re going to get an honest process, that, yes, you could support it.

MATTHEWS:  OK.  Chuck, how optimistic are you, watching the White House?  And you‘re a good judge of politics, I‘d say, at the least.  What do you sense?  Do you think they‘re going for it, the way they‘re going for health care this year, that they think they‘ve got a shot, a big bite at this apple?

TODD:  I think the president does, but I‘m curious to see how the meeting went tonight.  I mean, you talk to people that understand this peace process a lot better than any of us and they‘ll say that the most important Arab player here is King Abdullah, is the Saudis.  The Israelis would trust the Saudis, OK?  The Israelis would trust Jordan.  There‘s a few Arab countries they would trust.  And if the Saudis would sign onto a deal, sign onto an American-led deal, they think that brings the rest of the Arab world, and it could get done.

But I do think the president thinks he‘s got about a two-year window to do it.  If he can‘t get it done in two years, he may not get it done at all and he may see himself as yet another American president who fails at getting a peace plan.

MATTHEWS:  Yes, and I think nothing would drive Ahmadinejad or whoever replaces him more crazy than to see some kind of settlement whereby the moderate Arab people—and there are some of them over there, and certainly, there are Arab governments that are moderate—have a relationship with Israel which looks like a normal relationship for countries in a neighborhood.  If that gets done, the Iranians are going to have to change their tune.

Anyway, thank you, Chuck Todd.  Thank you, Neil MacFarquhar.  Good luck with your book.

MACFARQUHAR:  Thank you.

MATTHEWS:  Coming up: President Obama‘s stealth war on moderate Republicans.  This is so fascinating.  He‘s out there picking off Republicans to join his administration and thereby reducing the Republican Party to its Southern roots, basically.  It‘s a win-win for Obama.  He‘s able to be bipartisan and still weaken the opposition.  Clever stuff‘s going on, and I think the guy at the heart of it is Rahm Emanuel.  Watch this fellow in the White House.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Well, is President Obama waging a stealth war on the Republican Party by wooing away its moderates secretly?  He just nominated New York congressman John McHugh to be his new secretary of the Army after sending Utah governor Jon Huntsman off to China and getting Arlen Specter to switch parties, although I think Specter had his own intentions there.  So is the president trying to isolate Republicans and make them the party of the South?

Aaron Schock is a newly elected Republican congressman from Illinois. 

Congressman, welcome aboard.

REP. AARON SCHOCK ®, ILLINOIS:  Thank you.

MATTHEWS:  And U.S. Congressman Peter King has been aboard for a while.  He‘s one of—well, he‘s one of only two Republicans left standing in New York.

Peter King, you‘re a man who understands politics better than I do since you‘ve been elected to something.  Let me ask you, do you have a sense that they‘re treating you like the last of the Mohicans, your moderate Republican Party up there in the Northeast, that Barack Obama‘s just looking around for guys he can pick off and make them, like, secretary of the Army and things like that?

REP. PETER KING ®, NEW YORK:  Well, first of all, as far as secretary of the Army, John McHugh is superbly qualified.  He‘ll be a great secretary of the Army.  And it could well be that President Obama is combining good government and good politics.  I mean, it‘s good government to have John McHugh as secretary of the Army.

If you‘re saying that Rahm Emanuel, who some people say is a combination of Rasputin and Machiavelli...

(LAUGHTER)

KING:  ... may have another motive—Rahm is a great friend.  He‘s always thinking politics.  He‘s always thinking government, too.  So I have no problem with this.  First of all, we as Republicans should hold onto that seat.  If we don‘t, it‘s our fault.  To me, I give the president credit for picking John McHugh, and it‘s up to us to hold the seat and I think we can.

MATTHEWS:  Well, what do you want, Peter?  Do you want the Vatican or Ireland?  What‘s the best bet you can come up with here?

KING:  I just want to keep going on HARDBALL with you, Chris.  As long as I can do that, I‘m the happiest guy in the world.

(LAUGHTER)

MATTHEWS:  OK.  Congressman Schock, congratulations.  You have a great congressional seat.  I think it was Abraham Lincoln‘s legislative seat you represent.

SCHOCK:  Right.

MATTHEWS:  And you represent great people like Ray LaHood, and before that, Bob Michaels.  So congratulations on being elected.  Do you feel that there‘s a cold draft out there, that the president of the United States is looking for moderate Republicans to put into his team—onto his team and keep them off the Republican team?

SCHOCK:  Well, I don‘t feel a cold draft.  I don‘t feel at all threatened.  I think the president‘s being very smart.  As Mr. King mentioned, you know, he‘s made a pledge to be bipartisan.  He made a pledge to include Republicans in his cabinet, and he‘s doing just that.  And it makes sense that he would pick moderate Republicans who would be the closest to the ability to carry on his administration‘s plans and policies.

And for the most part, you know, I think we can hold onto the seats in the vacancies that he‘s created.  You mentioned Ray LaHood, who is my predecessor, who now is transportation secretary, who‘s doing a great job, but I‘m his replacement.  Another Republican...

MATTHEWS:  OK...

SCHOCK:  ... someone who‘s younger and someone who‘s also looking forward to rebuilding our party.

MATTHEWS:  Well, Congressman, you lack my Machiavellian sensibility.  Let‘s look at what John Thune of South Dakota—he‘s a Republican.  Here‘s what he said.  The senator from South Dakota says this.  And he‘s a Republican.  “They‘re making some really strategic moves in terms of sending them to China or plucking them out of New York.  It‘s obviously a loss to us, a loss to Republicans in the House, and a loss to the party in that region of the country in general, but obviously, a great get for the new administration.  I just hope McHugh would stay here instead of going there.”

Now, Congressman King, look at these names—Jim Leach of Iowa—they picked him off.  He got defeated, but they grabbed him and made him head of the National Endowment for Humanities.  They took Judd Gregg and almost made him secretary of commerce, but he pulled out.  Ray LaHood retired, basically, but they made him secretary of transportation.  Specter‘s now a “D,” Huntsman‘s now his ambassador to China, our ambassador to China, and McHugh now.

Do you sense that your part of the party, your Northern Republican Party, the party of Javits and Keating and Rockefeller and all those guys in the past, is getting diminished here?

KING:  Also the party of Jim Buckley and Al D‘Amato.  No, listen, you know, we are—we are being diminished, and it‘s up to us to fight back.

MATTHEWS:  No, Jim Buckley was a conservative.

MATTHEWS:  No, Jim Buckley was a conservative.

KING:  Yes.  But he also ran on the Republican line the second time around, when he ran against Moynihan. 

MATTHEWS:  Right. 

KING:  No, listen...

MATTHEWS:  But he lost.

KING:  Yes, he did.  Well, listen, you know, Moynihan was a good candidate.  He was from the old type of Democrat. 

No, but, Chris, yes, we are diminishing.  A lot of it is our own fault.  Also, demographics are changing.  But I don‘t blame the president.  If you want to pick John McHugh to be secretary of the Army, again, it‘s good government and it‘s good politics. 

I don‘t think we should be sitting around whining and saying:  Rahm Emanuel outsmarted us or President Obama out—outsmarted us.  We should get good candidates, put them up there, and run. 

And I do come from a pretty tough political school in New York.  I have dealt with some, you know, tough people over the years.  So, I know how the game is played.  And maybe there is some gamesmanship here.  But, also, the president is picking good people. 

It would be one thing if he was putting in hacks or unqualified people and giving them some plum ambassador‘s jobs somewhere where they do nothing.  He‘s taking good guys and putting them in tough positions, Ray LaHood in transportation, John McHugh in the Army, Department of the Army.

Especially in a Democratic administration, it is really important that the Army have confidence in the commander in chief.  And I think John McHugh is going to help do that, is going to show President Obama is doing the right thing in Iraq and Afghanistan. 

So, this—it comes together.  And, again, I hope we defeat President Obama in 2012.  But I—I don‘t blame him at all.  I think he‘s doing the right thing here by picking a guy like John McHugh. 

MATTHEWS:  Congressman Schock, I want to ask you about Illinois, in your state.  It seems to me the only Republican chance in big states like Illinois or New York anymore is if the Democrats have a very weak incumbent, like Senator Burris or Governor Paterson in New York.  It‘s—your only prayer anymore in these big states is to have a withering—withering-on-the-vine Democrat who you can pluck off, if the Democrats don‘t do it in the primaries. 

For example, you guys—you could beat Burris, probably, couldn‘t you? 

(LAUGHTER)

REP. AARON SCHOCK ®, ILLINOIS:  Well, Chris, I‘m not old enough.

I‘m only...

MATTHEWS:  After what happened last week?

(LAUGHTER)

SCHOCK:  I‘m only—I‘m only 28.  I‘m not old enough to run for Senate. 

(LAUGHTER)

MATTHEWS:  Well, that‘s—that‘s a hell of a situation.

SCHOCK:  But, Chris, that‘s really—that‘s really a defeatist...

(CROSSTALK)

MATTHEWS:  You are going to have to wait two years. 

But go ahead. 

SCHOCK:  That‘s really a defeatist mentality. 

MATTHEWS:  Yes.   

SCHOCK:  I don‘t believe that we have to have weak Democrats to win. 

We have to have strong Republicans.  We have to have the right candidates. 

Part of this is message and part of it‘s messenger.

And I‘m in a congressional district that Barack Obama won.  I‘m from his home state.  And I‘m a Republican, and I still carried the seat.  So, we can win in the Northeast.  We can win these seats back in New York, but we have got to have the right candidates who are out there aggressive, people who are younger, people who represent different minorities, and can reach out to these demographics that have been neglected by our party in the past years. 

Nobody‘s irreplaceable.  And with the right candidates and the right message, we can make a comeback in 2010, and I think can win back the presidency in 2012. 

MATTHEWS:  You know, Congressman King, I want to ask you this, because I keep looking at this, like—we‘re going to talk about this when we come after the—at the half-hour, about the Republicans running for president.

And what stuns me is the popularity within your party of the far-right people.  If you take a look at the numbers—we‘re going to talk about them at length later on—it‘s not the Mitt Romneys that are getting good numbers, or the more moderate members.  It‘s the Sarah Palins.  It‘s the Huckabees.  It‘s—it‘s the Newt Gingriches.

It seems like the people on the right are dominating your party in terms of preference—preferences right now.  It shows to me the party‘s getting smaller when Sarah Palin and Huckabee can get almost half the vote. 

KING:  Yes, well, actually, I—I think Sarah Palin is sort of a phenomenon.  I would put her—yes, she is very conservative.

But, also, there is a real women‘s vote that she does appeal to, maybe not the—you know, the NARAL women, but there are a number of women who really are attracted to Sarah Palin. 

MATTHEWS:  Yes. 

KING:  I think Governor Romney would be a good candidate. 

You know, I think any time you lose an election, I think people are more likely to, you know, go back to their base in the short term.  But it‘s a long time between now and 2012.  I mean, three years ago, I endorsed our next president, Rudy Giuliani.  Most Democrats endorsed their next president, Hillary Clinton, and, you know, look where we are today. 

So, it‘s -- 2012 is a—is a lifetime away. 

MATTHEWS:  Yes. 

SCHOCK:  And, Chris, let‘s look at who the Democrats used to—to come back to the majority. 

They nominated the most liberal guy in the United States Senate, not Hillary Clinton, but Barack Obama.  And he‘s ultimately the one that led them to victory. 

MATTHEWS:  Yes, OK.  I guess that was a shot at him, right? 

SCHOCK:  Well, no, it‘s just the point that, just because you—you elect someone or nominate someone who is ideologically to the right or the left doesn‘t mean that they can‘t carry the day in the general election. 

A lot of it comes down to personality and ability to carry the message forward.  Obviously, George W. Bush did a better job than Al Gore did in the 2000 elections.  And, obviously, John...

(CROSSTALK)

MATTHEWS:  Why do you say that?  He got fewer votes. 

KING:  But he won the election. 

(LAUGHTER)

MATTHEWS:  But he got fewer votes. 

SCHOCK:  OK.

KING:  Yes, he got the most electoral votes, Chris.  He got the most votes that count.

(CROSSTALK)

MATTHEWS:  I know, but he said he did a better job.

(CROSSTALK)

MATTHEWS:  He got fewer votes.  I mean, we have got to keep remembering that...

SCHOCK:  OK.

MATTHEWS:  ... that Al Gore got more votes.

(CROSSTALK)

SCHOCK:  Chris...

KING:  Chris, he got the most electoral votes.

MATTHEWS:  With all his stiffness and his terribleness as a candidate, he got more votes than George W. Bush. 

SCHOCK:  OK.

(CROSSTALK)

MATTHEWS:  That should have been a leading indicator of the problem, right?

(CROSSTALK)

KING:  Chris—Chris...

SCHOCK:  All right. 

(CROSSTALK)

SCHOCK:  Well, let—can we agree on this?  George W. Bush did better than John Kerry...

KING:  Right. 

SCHOCK:  ... who was arguably more conservative than Barack Obama?

KING:  And John Kerry had the entire media behind him. 

Chris, in 1977, the Republican Party looked toward Ronald Reagan, who was considered the right wing of the Republican Party.  And he won big in 1980. 

So, again, these things play out.  History has a way of working itself out.  And you and I will be fighting about this in 2011 and 2012. 

MATTHEWS:  Yes.  Well, this show is a free-fire zone.  So, thank you, gentlemen.

KING:  And—and Aaron Schock will be running for president.

Chris, can you imagine if you were that smart, when you were 28, like he is? 

MATTHEWS:  I lost when I ran for the House in -- 28.  I‘m jealous of this guy.  I will admit it.

(LAUGHTER)

MATTHEWS:  He can‘t—he can‘t be senator from his state because he‘s not old enough? 

(LAUGHTER)

MATTHEWS:  God, that‘s a pretty good deal.

(LAUGHTER)

MATTHEWS:  Peter, are you going to run for the statewide?  Are you going to try to knock off Gillibrand?

KING:  I—I am seriously looking at that.  I will decide by Labor Day. 

And, as I said, I will announce it on your show. 

SCHOCK:  Wow.

MATTHEWS:  We take that as offer, and we accept. 

Accepted, sir.

(LAUGHTER)

MATTHEWS:  We have booked to lead the hour that night. 

(LAUGHTER)

SCHOCK:  Great.

MATTHEWS:  Thank you very much, Congressman Aaron Schock...

SCHOCK:  Thanks, Chris. 

MATTHEWS:  ... and my good friend, the Irish-American, Pete King. 

Up next...

KING:  Thank you, Chris. 

MATTHEWS:  ... the bad economy hits home for the one man tasked with trying to fix it.  Treasury Secretary Geithner can‘t sell his house.  His troubles—next in the “Sideshow.”

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

First up: French kiss. 

Here‘s President Obama in his first TV chat with our sister republic saluting the return to the greatest side order in the history of our country, french fries.  Then again, being Irish myself, I love potatoes period, mashed, baked with lots of butter, and, of course, looking to the old country, boiled. 

Anyway, here‘s the president. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  How can you qualify the nature of the relationship between the French people and the American people? 

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I think the American people continue to love all things French and...

UNIDENTIFIED FEMALE:  What do you love about France, if I may ask? 

OBAMA:  Well, you know, let‘s see.  We have got the food.  We have got the—we have got Paris.  We have got the South of France, Provence. 

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS:  What a sophisticate. 

And, by the way, don‘t you love the way that French reporter asked that question?  How many ways do you love us? 

(LAUGHTER) 

MATTHEWS:  Next up:  The bad economy hits home for Tim Geithner.  The treasury secretary‘s five-bedroom house just outside New York City has been on the market ever since he packed up and came down here to D.C. in February. 

But, three months later, even after reducing the price—this is the secretary of the treasury—has apparently given up selling his house.  He‘s going to rent it instead.  Real estate experts say, by the way, that Geithner will probably end up eating a big loss on his house.  Finally, maybe, some empathy. 

Now for tonight “Big Number.” 

British Prime Minister Gordon Brown is weathering a scandal at home over the parliament spending public money on everything from phony home allowances, to swimming pools, to massage chairs. 

In just the past two days, how many ministers in his government have resigned from Brown‘s administration over there?  Four ministers.  That tally includes his community secretary, his home secretary.  In just a couple days, four of Gordon Brown‘s ministers have left his administration. 

It looks like they‘re going to have an election over there pretty soon

tonight‘s “Big Number.” 

Up next:  They‘re lining up already, Mitt Romney, Mr. Excitement, Tim Pawlenty, Newt Gingrich, Mr. Nice Guy, already talking—talking up going up after Obama next time.  Let‘s size up the Republican field for 2012.  It‘s already forming.  This is the early-bird special coming to dinner, and it‘s only 5:15. 

Let‘s take a look at this touching moment, by the way, former first lady Nancy Reagan at the U.S. Capitol Rotunda today for the official unveiling of the bronze statue of President Reagan.  I was there, by the way, as well, by the way, the chairman of the Republican Party, Michael Steele, was with me.  And he has again promised to come on the show next week. 

Of course, he‘s promised to come on the show next week many, many weeks now.  But we‘re hoping to get him next week.  That‘s Michael Steele committing to HARDBALL. 

Isn‘t that a great statue?  It really looked like him today.  We were over there at the Capitol with Nancy Reagan, who is great, today.

Anyway, HARDBALL is coming back right after this.

(COMMERCIAL BREAK)

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

Stocks fell off four days of gain, with the Dow Jones industrial average losing 65 points.  The S&P 500 shed 13, and the Nasdaq dropped almost 11. 

Part of that because of mixed economic news—a private report shows companies cut 532,000 jobs in May.  That‘s fewer than economists had forecast.  The Labor Department releases its own unemployment figures for May on Friday. 

Meantime, factory orders rose in April, but the increase was less than expected. 

And Fed Chairman Ben Bernanke urged Congress and the Obama administration to cut record-high budget deficits that are expected to reach almost $2 trillion this year.  He warned they could erode investor confidence and endanger the economy‘s long-term health. 

And oil prices tumbled on word of a big increase in U.S. inventories last week and a stronger dollar.  Crude oil fell $2.43, closing at $66.12 a barrel. 

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

(BEGIN VIDEO CLIP, “THE TODAY SHOW”)  

MATT LAUER, CO-HOST, “THE TODAY SHOW”:  Four months into this administration, are you running for the nomination next time around?

MITT ROMNEY ®, FORMER MASSACHUSETTS GOVERNOR:  No, I‘m—I‘m looking right now to try and get some Republicans elected in 2009, again in 2010.  And what happens down the road, well, it‘s a very distant horizon.  We will look at it later. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.

Well, if Mitt Romney is not running for president again, then, why is he standing in the middle of the street with Matt Lauer at 7:00 in the morning to talk about President Obama?  I think he‘s ready. 

Anyway, it‘s probably the same reason why Minnesota Governor tip decided not to run for another term as governor yesterday.  These guys want to be president.  But are they really campaigning already?

DailyBeast.com contributor Mark McKinnon is a former presidential campaign adviser to George W. Bush and to John McCain.  And Ron Kaufman is a senior adviser to the Romney campaign—was, in fact. 

Let me go to you, Mark McKinnon.

You are always somebody I look to for these things, being a man of some polish...

(LAUGHTER)

MATTHEWS:  ... and—let‘s put it this way—some style. 

Do you think that what‘s going on right now is a warmup for 2016, or it‘s a real race for 2012?  Are these guys getting in the queue now, so that the guy who comes in top—in the Republican tradition, the one whose turn it is gets it next time, that Mitt wants to win it next time, so he can run the next time? 

MARK MCKINNON, FORMER MEDIA ADVISER TO PRESIDENT GEORGE W. BUSH: 

Well, Chris, you‘re raining on my leg, but it‘s warm, and it feels good. 

Thanks.

(LAUGHTER)

MCKINNON:  It‘s never too early to talk about presidential politics or run for presidential politics. 

You know, the interesting thing is, I hear a lot of people in the media talk—and even some in the Republican Party—that just think it‘s a forgone conclusion that Obama will be a two-term president.

But I remember in—in—and I‘m sure Ron does, too -- 1991, when George H.W. Bush had favorables in the—in the 80s, and everybody assumed that—that he would be a two-term president, and—and the real heavyweights, like Lloyd Bentsen and Dick Gephardt, took a pass.  And that‘s how Bill Clinton got to be president. 

So, whether or not they‘re running for 2016 or 2012, the important thing is to get in and lay down a marker early and be a player.  Ninety percent of the game is still showing up. 

MATTHEWS:  Well, that‘s what Woody Allen says.

But let me ask you, Ron, it seems to me that the reason George W.

Bush‘s father got in trouble, he had health problems. 

RON KAUFMAN, FORMER SENIOR ADVISER TO MITT ROMNEY:  That‘s right. 

MATTHEWS:  You talk to people, his press secretary at the time, Marlin Fitzwater, said that something didn‘t click after he had that problem—and that health problem. 

He never was really in touch with reality when he was debating Bill Clinton there.  You could see it in that debate.  If something like that happened, sure, anything can happen.  But, given the health of the president, is there any reason to believe this guy‘s really vulnerable next time? 

KAUFMAN:  Oh, sure.  It‘s much too early. 

The world changes so fast.  I remember, in 1985, our good friend Lee Atwater saying, the Republicans have a lock on the presidency because they have Florida, California, and Texas forever.  That lasted one cycle.  And then we were unbeatable in—in 1990, and lost in ‘92.  And Clinton had a lock on it for only one cycle.  In ‘94, we come back and clean...

(CROSSTALK)

KAUFMAN:  ... clock.

MATTHEWS:  Well, one thing I agree with you guys, you never can pick the next president four years out. 

Let‘s take a look at Romney today on “The Today Show” with Matt Lauer. 

(BEGIN VIDEO CLIP, “THE TODAY SHOW”) 

LAUER:  You have called it part of a tour of apology.   And you don‘t mean that in a good way. 

What‘s wrong with this form of diplomacy? 

ROMNEY:  Well, nothing wrong with going out and meeting leaders of other nations and showing our respect for people in the world of Islam.

But the prior visits that the president has had, for instance, to Europe really resulted in kind of apology I think is inappropriate.

LAUER:  What...

ROMNEY:  As the—the “Guardian” newspaper said, the president was more critical of his own nation on foreign soil than any president in the history of the United States.

That‘s the—that‘s the wrong way to go. 

(END VIDEO CLIP)

MATTHEWS:  Gentlemen, let‘s take a look at the new poll.

Here‘s the three-way poll right now for 2012 among Mike Huckabee,

Sarah Palin, Mitt Romney, and Newt Gingrich.  It‘s all pretty much like a -

a basketball team there.  The—the scores are pretty well divided right now, in the low 20s and the high teens or whatever.  It doesn‘t look like anybody‘s pulled out from the pack. 

But doesn‘t Romney strike you, Mark, as just sort of going by some sort of formula?  Now, that was paint-by-numbers commentary right there.  The low-hanging fruit of the Republican Party is obviously taxes and security.  It‘s like he‘s reading off the most obvious, lacking-in-instant comments there. 

I mean, there—there‘s no sense of—of juice or—or moxie coming out of his mouth, no gift, is there? 

MCKINNON:  Well, I think the interesting thing is—

MATTHEWS:  Do you hear any gift in the voice of Mitt Romney about politics?  Anything you didn‘t expect to come out of any tinker toy politician running today, saying the most obvious things? 

MCKINNON:  Well, three out of the four people listened to that poll have run before, which makes me think it‘s—running for president is a lot like sex.  Once you‘ve done it, it‘s hard to give up. 

But I think Mitt Romney became a great candidate in the last month of the last race.  And had he run his whole campaign like that, likely would have been the nominee.  And I expect that over the course of the next four years that—I suspect he will run and I suspect he‘ll run like the governor, reformer, job creator that he really is and that we‘ll see Mitt Romney run more like Mitt Romney. 

MATTHEWS:  Why are you so careful, Mark?  Did you see any gift coming out of the mouth of Mitt Romney then with Matt Lauer this morning? 

MCKINNON:  I saw a gift from Mitt Romney in the last month of the last campaign.  That‘s when I saw it.  That‘s when I saw his real natural ability and appeal. 

MATTHEWS:  When he lost? 

MCKINNON:  When he lost.  Had he run the whole pain that way, I think he would have—

MATTHEWS:  OK.  Ryan, your approach?  Do you see any gift?  We‘re going to run down this lift.  Who‘s got the stuff? 

KAUFMAN:  If you watched the beginning of the show with Matt Lauer, Matt Lauer said, you know, Mitt, you were 1,000 percent correct six months ago on “The Today Show,” when you said we should restructure GM and do a bankruptcy that way.  You would have saved tens of billions of dollars. 

MATTHEWS:  OK.  Put him in charge of GM.

KAUFMAN:  That‘s one thing.  If you got to his defense speech, where he got standing ovation after standing ovation on knocking this president and the defense budget.  And the next day what happens?  Secretary of defense agrees with Mitt Romney.  I think there‘s a lot of leadership.  People want a leader and people have be screaming—on the show, you‘ve been screaming for someone to speak up and speak out for the GOP.  And, quite frankly -- 

MATTHEWS:  No, I think there are some issues Republicans are always going to be strong on.  One, it‘s always good to be Republican to be for lower taxes.  It‘s always going to good to be tough on defense.  These are facts.  But they don‘t show a lot of moxie yet. 

KAUFMAN:  To take on a popular president? 

MATTHEWS:  Let me ask you this about the Republican part; Mark, do you think the Republican party is more Yahoo, heck if you will, not interested in sophisticated solutions like Romney‘s offering?  Or do you think it‘s more of a party that‘s looking for smart policy?  Which way would you say it wants to go, with people that just sort of singing the old songs of the old-time religion—Sarah Palin is great at it, by the way.  She‘s very attractive as a candidate, I think.  Huckabee can be very winning. 

But they‘re not really selling sophisticated answers to complicated problems, whereas Romney is trying to figure out a complicated time.  What do they want in your party? 

MCKINNON:  Well, I think that‘s the big question and that‘s the struggle we‘re going to see over the next few years.  There‘s a lot of different approaches going on.  Look at people like Tim Pawlenty, who just decided that he‘s not going to run for governor again.  He‘s got a very different populist approach.  And look at people like Mitch Daniels and others out there who have some really decidedly new approaches.  And I think that—

MATTHEWS:  Mark Sanford is pretty impressive too.  You got a lot of light heavyweights.  There‘s no doubt about it.  The question is, do you have anybody that can go into the ring against Barack Obama.  I‘m just wondering who you got.  Let me go to Ron Kaufman here.  Let me take a look at Newt Gingrich, who certainly has the brains to do anything.  Charm, he‘s a little slight on, but here he is talking about taking back his term.  He used the word racist—I‘ve made them certainly—in referring to Sotomayor‘s commentary about affirmative action as racist. 

Today, he walked it back, writing, quote, “my initial reaction was strong and direct, perhaps too strong and too direct.  The sentiment struck me as racist and I said show.  The word racist should not have been applied to Judge Sotomayor as a person, even if her words sometimes are themselves unacceptable.”

So he‘s trying to get back from the crazies. 

KAUFMAN:  Yes, sure.  Newt Gingrich, as you know, is one of the smartest guys in this town.  He has more ideas than any ten people together, and will be a voice over the next three or four years.  Listen, I know you‘re the campaign manager for the re-election campaign for this president. 

MATTHEWS:  Why are you saying that? 

KAUFMAN:  Because you told Joe Scarborough that? 

MATTHEWS:  What did I say? 

KAUFMAN:  You said to Joe Scarborough that you would be for the president. 

MATTHEWS:  Since you‘re paraphrasing me, let me help you.  The first week after he was elected, Joe was going after Rahm Emanuel as a bad pick.  I said, let‘s let this president take off before we go after him.  Let‘s give him a shot.  OK?  I don‘t think you should kill a baby in its crib.  So, if you‘re going to quote me, remember.

KAUFMAN:  I think Joe said, are you going to be for him?  Is that right?  You said, I‘ll be for him. 

MATTHEWS:  I‘m for him to get started, sure.  But this show is a pretty critical show, if you watch it with any attention.  You‘ll notice, Ron Kaufman, if you watch this show with any allegiance, that I‘m quite critical of everything. 

KAUFMAN:  You are.  But the bottom line is this, the bully pulpit is in the hands of the president and it should be. 

MATTHEWS:  Do I hope he succeeds?  To make your point, I hope he succeeds.  Go ahead. 

KAUFMAN:  Every American does.  But when he‘s wrong, it‘s our job as a party to call him on it, as Mitt has done, as others have done over time.  But the majority of the time, the focus is going to be the president, as it should be.  But it‘s a long way to 2012. 

MATTHEWS:  Mark, when you look at these guys—I know you have had questions—you didn‘t want to be a part of a campaign that went against Barack Obama.  Let me ask you about the way in which this is going to happen over the next year or two, because clearly, I think, Ron is right, people want to be in the field.  You have to buy a ticket to get a chance in this business.  And you have to run fairly early, even if you can‘t win.  You can‘t enter these things the week before or year before or even two years before. 

You almost have to get into the lineup right now, don‘t you, Mark? 

MCKINNON:  No, you do.  The way these things are structured now, you have to start running three or four years out.  You‘ve got to build a base, got to build a fund-raising network.  And it‘s so complicated. 

But let me just say that, A, you do have to run now, jump in early, lay down your markers, get things started.  But I‘m very happy to see Newt Gingrich reel back in that statement.  That sort of language and remarks from Republicans out there I think is really bad for the Republican party.  I wrote about it last week in the “Daily Beast” and I‘m very pleased to see him reel that in. 

MATTHEWS:  Well said.  Thank you, Mark McKinnon.  I do think civility doesn‘t hurt.  Ron Kaufman, I‘m going to have to help you with some of my lines now. 

Up next, president Obama in the Middle East.  By the way, welcome back.  Can the president, along with Secretary of State Hillary Clinton and former President Bill Clinton, use their political moxie to get a peace deal done?  That‘s a big thing.  Wouldn‘t it be great if our politicians could be great politicians and do the work of politicians?  The politics fix is next.  This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.  It‘s time for the politics fix with former US Congressman from Tennessee and MSNBC political analyst Harold Ford Jr., and Chris Cillizza, who writes “The Fix”—wonder where you got that name from, “The Fix.”

CHRIS CILLIZZA, “THE WASHINGTON POST”:  I‘m not a former congressman.

MATTHEWS:  We call it “The Fix.”  By the way, you write for the WashingtonPost.com. 

I want to talk to Congressman Ford here about this whole development.  We live in a protean country that keeps changing.  And you‘ve got to keep up with it.  Six states now—starting tonight, it‘s New Hampshire just signed a bill, the governor just signed on same-sex marriage.  Vermont, Massachusetts, Connecticut, New Hampshire.  Maine‘s approved it to take affect in the fall.  And Iowa, six states now. 

This thing is making progress.  The vice president is on board in terms of it being done by the states.  Who would have believed it?  Things are changing on that issue. 

HAROLD FORD, MSNBC POLITICAL ANALYST:  Let the record reflect Dick Cheney and Chris Matthews are in agreement of a significant policy issue.  I think two things—and you framed it just right, Chris.  This notion and the idea and now the codification of the acceptance of gay marriage is something, particularly among the younger generation in this country, is more widely accepted. 

The more you see states like Iowa, and certainly the northeast corridor—not to suggest that is not momentous that you see legislatures and now governors signing into law these new laws.  But to see a state like Iowa, the first state in the nation to hold a caucus in the presidential race, is a significant development.  And I think you can see over the next year—I think if Chris and I were to come back on the show a year from now, I wouldn‘t be surprised if five or six, if not more states, would have done the same thing, governors would have done the same thing. 

MATTHEWS:  You know, this is the hottest issue in the country.  The interesting thing, Chris, is it doesn‘t seem to be a barn burner between the two parties anymore.  I don‘t want to get ahead, but can you imagine the Republican convention next time around, somebody giving up a real bloody speech against same-sex marriage?  I can‘t hear it.  I think they are going to stop doing it, especially with Dick Cheney now coming aboard with this issue. 

CILLIZZA:  I think you‘re right.  I was going to say, I‘d love to hear the last panel, Mark and Ron, talk about it.  I think if they were candid about it, they would say, look, this still could potentially be a winner in a Republican primary, where the electorate is extremely conservative and probably still, by in large, opposed to same-sex marriage.  But in a general election, they want to stay as far away from this as possible. 

I was doing a story about this recently, and I talked to one very high level Republican strategist who said, we‘d rather talk about the economy and George Bush than talk about gay marriage.  So it shows you where they think it is, in terms of their priorities, as a winner.

MATTHEWS:  It‘s amazing, Congressman Ford, it seems to me—again, it‘s empathy.  Everybody makes fun of the president for using the word empathy with regard to court appointments.  But if you have a gay friend or a gay member of the family, as the former vice president does, you certainly take a different tact.  It just happens. 

FORD:  It does.  I think, to answer your question even more poignantly, the politics of it, I think when you see a southern state, a southern governor sign into—sign legislation allowing gay marriage in his or her state, I think we can begin to see the pendulum move in a significant way, and, most important, in a partisan way for Republicans.

Think about it, 12 years ago, New York was, I believe, the first city to ban smoking.  Who would have thought in my home state of Tennessee was passed almost a year ago a no smoking ban in public places.  And in the state of North Carolina, they too have passed, some 11 or 12 years later. 

I think if there was some big public policy or big public change in attitude, I think the smoking issue as—not to compare smoking and marriage.  But from the public policy standpoint in the eyes of southerners, particularly maybe Republicans, when you see a southern governor sign into law a gay marriage bill in a lot of ways, I think we will have turned a significant page in Republican/Democratic politics, from a partisan standpoint. 

MATTHEWS:  I agree with you, Congressman.  I saw shocked to see that North Carolina, the Tar Heel state, had outlawed smoking in public places.  I‘m like, wow.  I went to school down there.

We‘ll be right back with Harold Ford and Chris Cillizza to talk about this Mid-East thing with the Clintons aboard.  Hillary Clinton and Barack Obama double-teaming the Middle East challenge.  Can they do it together?  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Chris Cillizza, then Congressman Ford, I want you both to give me your take on how well Senator Clinton, now Secretary Clinton, is doing at state, in terms of the heavy lifting on the Middle East.  Right now, Chris? 

CILLIZZA:  Well.  I would expect nothing else.  I mean, I think when President Obama picked her to be secretary of state, he knew he was getting a package deal for the good, for the most part, occasionally for the bad.  But Secretary of State Clinton and former President Clinton are both people with enormous credibility in the region, know the region, and can speak with authority.  So you have a three-headed argument being made with credibility, which is hard to match in any other past administration. 

FORD:  Ditto.

MATTHEWS:  Congressman Ford, it seems like their job is to bring in the pro-Israeli crowd, which is huge in our country, of course.  We‘re all pretty much pro-Israeli.  To bring that crowd aboard in any deal? 

FORD:  I would echo every point.  I thought Chris was spot on.  I would add to it, the addition of Dennis Ross and the addition of Dick Holbrooke, and obviously George Mitchell—but when you add that team there as your emissaries and envoys there on the ground, you do nothing but strengthen your hand. 

The president is—I would add that probably maybe the secret weapon hasn‘t been written about over the last few weeks, in particular, the last week in the national magazines.  Rahm Emanuel will play an increasingly important role in what may come to be some shuttle diplomacy between Palestinians and Israelis with regard to the two-state solution that the president—

I think it‘s important.  Tomorrow is going to be interesting.  The president‘s speech tomorrow may be two or three of the most important speeches he‘s given up to this point.  It will set the tone, build on what he said in his inaugural speech and be the first sign, physical and tangible sign to the Arab world, Muslim world, what this administration will look like.  

MATTHEWS:  Thank you.  We‘re watching Rahm Emanuel.  Thank you, Congressman Ford.  Thank you, Chris Cillizza.  Join us again tomorrow night at 5:00 and 7:00  Eastern for more HARDBALL.  Right now, it‘s time for “THE ED SHOW.”

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