updated 6/5/2009 10:34:43 AM ET 2009-06-05T14:34:43

Guests: Julia Boorstin, Pat Buchanan, Bob Shrum, Akbar Ahmed, Roger Simon, Susan Page, Akbar Ahmed, Joe Solmonese, Lorri Jean

CHRIS MATTHEWS, HOST:  Appointment in Cairo.

Let‘s play HARDBALL.

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

East meets West.  Rudyard Kipling said, “East is East and West is West, and never the twain shall meet.”  Well, today in Cairo, in the shadow of the pyramids, the leader of the West, named Barack Hussein Obama, offered his respect, indeed his reverence, for what he called the holy Koran and the grandest achievements of the Muslim world.  He not only was not Bush today, he refused to beat around the bush.  Be conscious of God, he said, and speak only the truth, again quoting from the holy book of Islam.  And here he is speaking more on that subject.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I‘ve come here to Cairo to seek a new beginning between the United States and Muslims around the world, one based on mutual interest and mutual respect.

(END VIDEO CLIP)

MATTHEWS:  The president upheld America‘s national right to hunt down and kill those who carried out 9/11 and condemned the terrorists and raised all the hot issues, the Israeli/Arab conflict and Iran‘s nuclear ambitions.

Tonight on HARDBALL, we‘ve got the best people to explore the punch this speech delivered both here and in the Arab street and try to gauge its power.  We‘ll also check out a fight on the domestic front tonight.  Gay rights groups are getting anxious about our new president.  They want a quick kill of “Don‘t ask, don‘t tell,” also to the Defense of Marriage Act.  And they want the president to get out there on the issue of gay marriage.

And finally tonight, I have the distinct honor of bestowing a HARDBALL Award tonight, a second time to a key actor in the battle for peace in the Middle East.

But first, the president‘s historic speech to the Muslim world today.  We‘re joined by MSNBC political analyst Pat Buchanan and Democratic strategist Bob Shrum.  Gentlemen, thank you for joining us.  Let‘s take a look at this first speech item, which we think is really important.  It‘s about us, 9/11, and defending this country.

(BEGIN VIDEO CLIP)

OBAMA:  I‘m aware that there‘s still some who would question or even justify the offense of 9/11.  But let us be clear.  Al Qaeda killed nearly 3,000 people on that day.  The victims were innocent men, women and children from America and many other nations who had done nothing to harm anybody, and yet al Qaeda chose to ruthlessly murder these people, claimed credit for the attack, and even now states their determination to kill on a massive scale.  They have affiliates in many countries and are trying to expand their reach.  These are not opinions to be debated, these are facts to be dealt with.

(END VIDEO CLIP)

MATTHEWS:  That is a hot statement.  You know, Pat, I was just over there in Egypt with my wife, and I got to tell you, there‘s still smart people who you would normally respect in Egypt who believe, somehow, the pro-Israeli people, the Jewish people in this world somehow carried out 9/11.  They believe it.  And he said, No way.  It was al Qaeda.  It was the enemy that did it.  It wasn‘t some conspiracy, and he said those are facts.  It‘s hard to believe we have to sell this stuff.

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  He was also saying, Chris, that if you think that this was justified, what was done on 9/11, because the Americans this, the Americans that, you are on the other side from us.  This was inexcusable, unpardonable mass murder of innocent people.  There‘s no defense for it.  I think it was a good statement for him to make over there because, you know, bin Laden for a while has had all this sort of cachet as some sort of figure...

MATTHEWS:  Over there.

BUCHANAN:  ... who ought to be respected—yes.  And he‘s saying no to that, even while he was reaching out to the Islamic world.

MATTHEWS:  The word was “fact,” and I thought it was good that he started with something that wasn‘t relative, Bob Shrum?  What did you think?  No argument here.  Fact, they did it, they‘re the bad guys.

BOB SHRUM, DEMOCRATIC STRATEGIST:  Yes, and he said it in the heart of the place where there are 9/11 deniers, just as he took on Holocaust deniers in the speech.  What I think was amazing about this speech, as a political document, was he said at the beginning that he was going to tell the truth, and he often did tell hard truths.  I mean, right there standing in Cairo, he said, Our bond with Israel is unbreakable.  He then turned around and said the Israelis have to stop expanding their settlements.

He was very blunt as he went through issue after issue after issue, all the way down to what I think of as a new realism on democracy, which is the United States is going to stand for it, we‘re going to speak for it, but we‘re not going to try to impose it by force of arms, something I think Pat‘s been waiting for an American president to say for some time.

MATTHEWS:  OK, Pat, let‘s take a look at this other one.  Here‘s where he really goes out like he—in the first instance, he says, We‘re the good guys, we‘re just chasing in hot pursuit the bad guys when we go to places like Afghanistan.  So don‘t think we‘re out with some territorial ambitions.  We‘re just trying to get the guys who went after us, that are still coming after us.

BUCHANAN:  Right.

MATTHEWS:  And here he is going after who we call the bad guys.  Here he is going after the extremists.

(BEGIN VIDEO CLIP)

OBAMA:  None of us should tolerate these extremists.  They have killed in many countries.  They have killed people of different faiths, but more than any other, they have killed Muslims.  Their actions are irreconcilable with the rights of human beings, the progress of nations, and with Islam.  The holy Koran teaching that whoever kills an innocent, it is as if he has killed all mankind.

(END VIDEO CLIP)

MATTHEWS:  There he is, Pat, pretty blunt.

BUCHANAN:  He‘s saying, We are embracing Islam, but it is not an embrace that includes this element of Islam, and that these we cut out.  They‘re outside, but we want to embrace the rest of you.  I think it‘s a necessary presupposition to what he was going to say.  Once we get those outside the equation with you, we can work.

And Chris, he was forthcoming on Iran.  He said—virtually said, they can maintain their peaceful nuclear program if they demonstrate to us that they are not moving to nuclear—clandestine nuclear weapons.  If this fellow Mousavi wins on June 12th, which he could, over Ahmadinejad, I think you‘ll see an entente of sorts...

MATTHEWS:  Yes.

BUCHANAN:  ... between the United States and Iran...

MATTHEWS:  Well, that would be—that would be a bell ringer for this speech, if this president of ours had in some way helped win...

BUCHANAN:  I think he has done that...

MATTHEWS:  ... the battle against Ahmadinejad in Iran.

BUCHANAN:  He‘s done that by pulling back and saying, We believe you are entitled to peaceful nuclear power.  But not pushing hard on him, he didn‘t help Ahmadinejad.

MATTHEWS:  Well, I think he allowed them to get some national prestige out of having a nuclear capability by saying, But you‘re not going to get the weapons.

BUCHANAN:  That‘s their rights.

MATTHEWS:  Let‘s go—let‘s take a look at—here he gets something that does not get a good reaction.  Here he is defending the ultimate right of Israel to exist, a very strong statement.  Here he is.

(BEGIN VIDEO CLIP)

OBAMA:  America‘s strong bonds with Israel are well known.  This bond is unbreakable.  Threatening Israel with destruction or repeating vile stereotypes about Jews is deeply wrong and only serves to evoke in the minds of Israelis this most painful of memories while preventing the peace that the people of this region deserve.

(END VIDEO CLIP)

MATTHEWS:  Now, we left that on for that deafening silence.  It‘s something you come across when you‘re in the Arab world, even among sophisticated people.  They don‘t want to give any love to Israel.

BUCHANAN:  Chris, let me tell you, if you had a referendum in the entire Arab world, they would probably vote 90 to 10 to throw Israel and all its people right into the sea.  There‘s no question about it, especially after the Lebanon and the Gaza wars.  There simply is no support.  But he did the right thing in saying, This is our policy...

MATTHEWS:  Right.

BUCHANAN:  ... and we believe they‘re entitled to this piece of land in the Middle East, which is exactly what Sadat said.  This peace in the Middle East belongs to you.  Of course, Sadat was assassinated over there, but I think you‘re right.  I mean, the president—I mean, Israel has got one good friend in the entire world, and it‘s the United States.

MATTHEWS:  Bob Shrum, give us help here.  This is interesting because the president today made clear just from witnessing, as we all did, the silences over there, that even among the smarter, better people, if you will, more sophisticated—these are students, young people here at Cairo, University of Cairo—they‘re not going to applaud anything about Israel.

SHRUM:  I think that‘s right, but what‘s remarkable is not the lack of applause but that an American president went into the heart of Cairo, went to that audience, and said this.  The speech was brilliantly constructed because right after he said that, he also said, We recognize the right of the Palestinian people to a state and Israel has to stop expanding its settlements.  In that sense, it was—the architecture of the speech worked for the president.  It was also culturally a sensitive speech, not only the use of Arabic but the quotations from the Koran.

MATTHEWS:  Yes, I guess the big question is how big is our presence?  I think of an NBA game, where the referee may be about five feet tall and he‘s playing with seven-foot players over there.  You wonder whether we have enough to get in the middle of that fight.

Let‘s take a look—here he is making a point—you‘ve got the point here, Bob Shrum.  He went from giving a very pro-Israeli speech—I mean, powerful speech—to making an equally powerful case for why there has to be respect for the Palestinian people, including the creation of a Palestinian state.  Here‘s the president again.

(BEGIN VIDEO CLIP)

OBAMA:  On the other hand, it is also undeniable that the Palestinian people, Muslims and Christians, have suffered in pursuit of a homeland.  For more than 60 years, they‘ve endured the pain of dislocation.  So let there be no doubt, the situation for the Palestinian people is intolerable and America will not turn our backs on the legitimate Palestinian aspiration for dignity, opportunity, and a state of their own.

(END VIDEO CLIP)

MATTHEWS:  So he‘s going head-to-head with Bibi Netanyahu here, the Likud bloc.  He‘s basically saying to the Lieberman (ph) forces—the people in the—not our Lieberman but their Lieberman in Israel—the far right forces in Israel who say, basically, Take over the West Bank and eventually find some way of getting the Arabs out of there.  He‘s saying, No, they live there.  It‘s an intolerable situation.  They deserve a state.

BUCHANAN:  He‘s going head-to-head with the government of the state of Israel.  Bibi Netanyahu won election saying no Palestinian state on the West Bank, no division of Jerusalem is coming, division of Jerusalem is coming, the settlements are going to continue to grow, and we ought to focus on Iran.  Barack Obama has said, There is going to be a Palestinian state, and there‘s going to be no growth in the settlements.  And he has told, I understand, Ehud Barak in a personal meeting of 15 minutes, You‘ve got until July to give us Israel‘s plan for peace and a Palestinian state on the West Bank.  I think he‘s going to break Bibi.  I think Bibi is boxed...

MATTHEWS:  Well...

(CROSSTALK)

MATTHEWS:  Let me put that—let me suggest that differently.  I think he‘s appealing to the Israeli public, who are somewhere in the center.  It always seems to me they end up in the center somewhere.  And he‘s saying to them, This is the time, let‘s work together here, Bibi better join in the international effort here.  What do you think, Bob, he‘s up to?

SHRUM:  I think that‘s absolutely right.  And we all—we can‘t forget that the last time something like this happened was in 1997, 1998, when Bill Clinton put pressure on Netanyahu, who was then prime minister.  Ultimately, there was an election in which I was involved in 1999, where Ehud Barak defeated him.

The Israeli public, whatever its concerns—and they have every right to be deeply worried about security—does not think that it is in the interests of Israel or its long-term future to have an Israeli government fighting with the United States.  So I would think that by July, we‘ll begin to see some progress.  And quoting supposedly unrecorded minutes of conversations with the Bush administration...

MATTHEWS:  Right.

SHRUM:  ... about settlement expansion doesn‘t do them any good at all.

MATTHEWS:  I don‘t think that‘s much of a claim.

(CROSSTALK)

MATTHEWS:  By the way, Pat, it seems to me that Israel, as a public, as a general—as a society, including its friends here, know that in the long run, occupation is lethal.  You can‘t keep occupying hostile people forever.

BUCHANAN:  The problem is that Bibi is either going to have to defy the president of the United States or he‘s got to defy the people who put him into office, including Lieberman...

MATTHEWS:  Well, I think...

BUCHANAN:  ... and including the right wing...

MATTHEWS:  OK.

BUCHANAN:  ... of his own party, Chris!

MATTHEWS:  I think Bibi Netanyahu has a chance at history here.  I watched him—he does not want to be a three-time loser.  He‘s been knocked out twice...

BUCHANAN:  So he‘s going to cave?

MATTHEWS:  No.  You say “cave” because you don‘t want him to.  I want him to make a deal.

(LAUGHTER)

BUCHANAN:  Well, he said...

MATTHEWS:  I‘m not saying, Go ahead and make my day.

(CROSSTALK)

BUCHANAN:  You‘re playing Clint Eastwood here.  The president of the United States is not playing Clint Eastwood with Bibi Netanyahu.

BUCHANAN:  He said...

MATTHEWS:  In the end, they have a mutual interest.

BUCHANAN:  Bibi said, What in the hell do they want from me?

SHRUM:  I think he knows after today!

MATTHEWS:  They want him to be a leader.

(LAUGHTER)

MATTHEWS:  And by the way, I‘ll once again say the only world leader with a Philadelphia accent.

(LAUGHTER)

MATTHEWS:  Bibi Netanyahu will come through in the end.  Thank you, Pat Buchanan.  He grew up in Philadelphia, Cheltenham High.  Thank you, Pat Buchanan.  Thank you, Bob Shrum.  All politics is local.

Coming up: So did the Arab world like what it heard in President Obama‘s speech?  We‘re going to hear from some experts.  We‘ve heard from the American side.  Let‘s hear from the Middle East side.  We‘ll be right back to find out.  Don‘t go away.  You‘ve got to hear the other side.

You‘re watching HARDBALL, only on MSNBC.

(BEGIN VIDEO CLIP)

OBAMA:  There must be a sustained effort to listen to each other, to learn from each other, to respect one another and to seek common ground.  As the holy Koran tells us, Be conscious of God and speak always the truth.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  And I‘m also proud to carry with me the good will of the American people and a greeting of peace from Muslim communities in my country, assalaamu alaykum.

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  More reaction to Obama‘s speech today from Professor Akbar Ahmed.  He‘s Islamic Studies chair at American University, right across the street here.  He‘s also a religious scholar.  We also have religious scholar Reza Aslan, whose new book is “How to Win a Cosmic War.”

Gentlemen, thank you for joining us.  We want to get a sort of a more global look at this speech today and its impact.  Please be candid.  Let‘s take a look at this first speech element.  It‘s the president, our president, talking about the right, as he sees it, of Iran, even revolutionary Iran, to have a nuclear capability in terms of peaceful uses.

(BEGIN VIDEO CLIP)

OBAMA:  And any nation, including Iran, should have the right to access peaceful nuclear power if it complies with its responsibilities under the nuclear non-proliferation treaty.  That commitment is at the core of the treaty, and it must be kept for all who fully abide by it.  And I am hopeful that all countries in the region can share in this goal.

(END VIDEO CLIP)

MATTHEWS:  What would be the impact of the president conceding the right—maybe concessions is the wrong word—the right of Iran, even though it‘s hostile to us, to have nuclear capability economically?

AKBAR AHMED, FMR PAKISTANI HIGH COMMISSIONER TO ENGLAND:  A huge

impact, Chris, because he is now being seen as the philosopher king as dreamt of by the Greeks, not simply representing the United States of America.  He‘s raising an issue which is global, not just concerning his own nation.  And therefore, he‘s respecting Iran and saying, If you have the right, we have the right, and if you don‘t give you the right, then we challenge our own right.  So he‘s raising, really, a fundamental issue in terms of nuclear weapons with...

MATTHEWS:  Right.

AHMED:  ... nations and...

MATTHEWS:  Well, not—he doesn‘t say “weapons.”  He says “peaceful use.”  Let me ask you, Mr. Aslan, it seemed to me he separated the peaceful development of nuclear energy—which the French use heavily, and we‘re getting into more and more, it seems to me, nuclear energy in this country.  Is that going to make the people of Iran feel, the ones who are more secular, that this president respects their dignity, and even though we disagree on the weaponry issue, the weaponizing issue, that we do respect their right to advance their science and technology?

REZA ASLAN, DAILYBEAST.COM:  Well, let‘s be frank for a minute.  There‘s nothing anybody on this earth can do to keep Iran from developing its nuclear civilian program.  The real problem with the Bush administration is that it could never figure out what it actually wanted.  Did it want Iran not to have nuclear weapons or did it want it to not have nuclear technology?

And I think this administration has figured out what the rest of the world has figured out, which is there‘s a huge step between allowing Iran to have civilian nuclear capabilities and allowing those capabilities to become weaponized.  And I think that the sooner we begin to negotiate with Iran without preconditions, which is what Obama said, the sooner we can keep them from developing the weapons that are the real problem here, not the actual nuclear technology.

MATTHEWS:  Well, here he is separating himself from President Bush, his immediate predecessor, his Republican predecessor.  Here he is really questioning, if not really railing against our decision to go to war with Iraq back in 2003.

(BEGIN VIDEO CLIP)

OBAMA:  Unlike Afghanistan, Iraq was a war of choice that provoked strong differences in my country and around the world.  Although I believe that the Iraqi people are ultimately better off without the tyranny of Saddam Hussein, I also believe that events in Iraq have reminded America of the need to use diplomacy and build international consensus to resolve our problems whenever possible.

(END VIDEO CLIP)

MATTHEWS:  Ambassador, will that be seen as an apology for having fought a war that was only a war of choice, not of necessity?

AHMED:  Chris, it depends who is seeing this. 

I know that some of your channels have become hysterical in the last 24 hours, seeing everything that he‘s saying in the Muslim world as an apology. 

On the other hand, the Muslims are going to be seeing an American president who is treating them with seriousness, not underestimating their intelligence, and even showing them respect. 

MATTHEWS:  Wow.

Well, let‘s take a look at this one.  This is about his background.  We all know his name is Barack Hussein Obama.  He used his full name when he took the oath of presidential office. 

But here he is talking about what he sees as that significance of his background in addressing this part of the world. 

(BEGIN VIDEO CLIP)

OBAMA:  Part of this conviction is rooted in my own experience.  I‘m a Christian.  But my father came from a Kenyan family that includes generations of Muslims.  As a boy, I spent several years in Indonesia and heard the call of the azaan at the break of dawn and at the fall of dusk.

(END VIDEO CLIP)

MATTHEWS:  You know, Mr. Ambassador, I was struck by this.  As an American, I was struck by the fact that he kept saying holy Koran.  I mean, that‘s another thing that President Bush or any of the other predecessors would never have said, “holy.”

AHMED:  Chris, as a Muslim, that gives me goose pimples.  Here is an American president respecting me and my religion, irrespective of what I think of him as a politician. 

And I think this is the best of America.  If you go back to the founding fathers, whether it‘s Washington, Jefferson, Franklin, do you know that the Koran that Obama referred to is the Koran owned by Jefferson, which is what...

MATTHEWS:  Yes. 

AHMED:  ... Keith Ellison used for his swearing ceremony?

So, you have America at its finest, in terms of the vision that Obama is talking about.  The Muslim world, whether they agree with his policies or not, are going to be saying, here is a man who respects us on our terms.  He‘s not wanting to bully us, cajole us...

MATTHEWS:  OK. 

AHMED:  ... strike us, but, in fact, wanting to reach out in genuine friendship. 

MATTHEWS:  Mr. Aslan, let‘s talk about the—the voltage of this speech, the—the—the power of it. 

Could it be that this would help, in some marginal way, to change the elections in our country, former country, of Iran?  Could it be that this will help the secular forces in that country? 

ASLAN:  No.  And I think you should stop talking about it as secular forces.  This has nothing to do with secular or religion. 

It‘s just sort of two different views of how the country should move forward. 

MATTHEWS:  All right.  Well, help me out, then. 

AHMED:  And, in that regard—no, the best thing—the best thing that Obama can do is just do nothing, because, really, this is going to be an election that‘s ultimately going to turn on the economy.  And, if that‘s the case, then Ahmadinejad really doesn‘t have a chance. 

On the larger issue, though, of how this speech is going to be seen in the rest of the Muslim world, I think that that still remains to be seen.  It‘s a—it‘s a dialogue-starter.  Let‘s put it that way.  There was some very frank talk in here.  I mean, this is the first American president to ever use the term “occupation” when talking about the situation in the Palestinian territories, indeed, the first president to say the word “Palestine.”

These words are going to have ripples across the Muslim world.  The key is, is that he‘s thrown the gauntlet down.  Now the dialogue has to start in the Muslim world.  And we will see where that goes.

MATTHEWS:  Well said. 

Thank you, Mr.—Mr. Aslan. 

And, thank you, Ambassador Ahmed.

Up next, we have got a HARDBALL Award to give tonight to someone who is playing on this team and playing as kind of a blocking back.  What a job she‘s doing.  I think you can guess who it is. 

We will be right back.

By the way, and there‘s the president today at the Great Pyramids of Giza after his speech.  There he is climbing up there.  He goes inside, by the way, which is quite claustrophobic, I would bet.  There he is going inside.

By the way, when he spotted a hieroglyphic that reminded him of himself, here is his response. 

(BEGIN VIDEO CLIP)

OBAMA:  That looks like me.  Look at those ears. 

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS:  The hieroglyphic that the president saw, there it is.  It looks like him a little bit, doesn‘t it?  Anyway, a lighter moment in an otherwise serious day in Cairo.

We will be right back with HARDBALL after this. 

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL. 

President Barack Obama‘s speech today was grand, historically important.  But nothing that is said by our new president will move history without the unity of America here back at home.  That means political unity, unity within the Democratic Party that now holds sway.

And the keystone of that unity is the service of Hillary Clinton as secretary of state.  With her as backup, with all that that means to the country, to the Democratic Party, and especially to those Americans most devoted to the security of Israel, this administration has a rendezvous with destiny. 

Here is Secretary Clinton last month in a sharp statement of American interest in the Mideast given to Al-Jazeera. 

(BEGIN VIDEO CLIP)

HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE:  I think it is significant that the Obama administration is not waiting.  We are starting this intensive engagement right now.  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:  Listen to this stuff. 

Here she is last week again doing the heavy lifting, alongside Egypt‘s foreign minister, backing up President Obama on the need to get Prime Minister Netanyahu to stop settlement on the land of the future Palestinian state. 

(BEGIN VIDEO CLIP)

CLINTON:  With respect to settlements, the president was very clear when Prime Minister Netanyahu was here.  He wants to see a stop to settlements—not some settlements, not outposts, not natural growth exceptions. 

We think it is in the best interests of the effort that we are engaged in that settlement expansion cease.  That is our position.  That is what we have communicated very clearly, not only to the Israelis, but to the Palestinians and others.  And we intend to press that point. 

(END VIDEO CLIP)

MATTHEWS:  Are people listening to this stuff? 

And the two of them, President Obama and Secretary Clinton, have done just that in Egypt again today.  President Obama this morning echoed his secretary‘s statement by firmly rejecting the legitimacy of those continued Israeli settlements. 

And who would have thought these former rivals, who, just one year ago, were battling it out for the nomination, could now mirror each other in words and in action, seamlessly and without room for reproach?  Could there be a stronger face of American unity in the quest for peace and security? 

And, so, tonight I hereby bestow in Secretary Clinton her latest HARDBALL Award.  I say latest, because she‘s the only person to get the award twice, for once again proving, in the country‘s interests, that she‘s one tough hardballer. 

Up next:  Gay-rights groups thought they had a friend in President Obama, but some of those groups are showing increasingly to be impatient with the president.  They say he‘s broken some of his campaign promises to them.  Is that a fair charge?  We are going to have a debate within the gay community coming up.

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

JULIA BOORSTIN, CNBC CORRESPONDENT:  I‘m Julia Boorstin with your CNBC “Market Wrap.”

The markets bouncing back to finish in positive territory, after getting off to a wobbly start this morning on disappointing retail reports.  The Dow Jones industrials added almost 75 points, the S&P 500 up about 10 point, and the Nasdaq gained more than 24 points. 

A rough start for the markets this morning, as three-quarters of the nation‘s retailers missed earnings estimates for May.  But reports showing a drop in jobless claims helped turn things around, with the new claims falling for the third straight week.

Financials finished mostly higher on analyst upgrades for Goldman Sachs and Morgan Stanley and steadying interest rates overseas.  Energy shares also gaining ground, as oil prices hit fresh highs for the year.

And late word today that the SEC is charging former Countrywide execs with fraud—they‘re accused of deliberating misleading investors about significant credit risks the company was taking.

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

HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

While President Obama delivered on his pledge to address the Muslim world, gay-rights groups today want to see him follow through on his campaign pledges to end the military‘s don‘t ask/don‘t tell policy, also to repeal what‘s known as the Defense of Marriage Act. 

Has the president backed away from his campaign promises to this community? 

Joe Solmonese has been here many times.  He‘s president of the very important Human Rights Campaign.  We have got a new guest tonight, Lorri Jean.  She‘s the CEO of the Los Angeles Gay and Lesbian Center. 

Lorri, what do you make of it?  Let‘s start with some of the issues that people all know about in and outside of the gay community.  Let me ask you this.  Don‘t ask/don‘t tell, where do you understand that issue to be right now?  It was brought in under President Clinton by statute.  The Congress passed it.  Where is it now? 

LORRI JEAN, CEO, LOS ANGELES GAY AND LESBIAN CENTER:  Well, Chris, it‘s still being implemented today.

And the military is drumming out of its ranks openly gay people who are helping to keep our country safe.  And President Obama is standing by.  He could put a stop to that, and he hasn‘t done it, even though he promised he would. 

MATTHEWS:  What do you get bounced out—in real life, you follow these issues, obviously.  Who gets thrown out of the military today in the gay community?  Who is getting thrown out?  Is it what you say, what you do?  Is it speech, conduct, acceptance, or admission of your orientation?  What is it that gets you thrown out? 

JEAN:  Merely saying who you are. 

The most recent example is Dan Choi, who is a linguist for the military, one of the few people who can really understand what the terrorists might be saying to one another.  And, simply because he has a boyfriend, or could technically have one, because he said he‘s gay, they‘re drumming him out. 

MATTHEWS:  So, voice alone, in other words, just self-expression enough, enough, throws you out, still?

JEAN:  That‘s right.  It‘s still enough, and that is way too much. 

MATTHEWS:  OK. 

Let me go right now to Joe, who I have spoken with and dealt with many times, and support, in fact, pretty much.

What do you make of this assertion that the president has—has foot-dragged on this?  I understand he‘s talking to the military about it.  My sense is, he wants to keep in good—good faith with the military, like Gates and Jones, and the rest of those guys, including Petraeus.  He doesn‘t want to shake things up too much.

What‘s he up to? 

JOE SOLMONESE, PRESIDENT, HUMAN RIGHTS CAMPAIGN TO END DISCRIMINATION

AGAINST GAYS:  Well, I think, on any measure of issues that we‘re working on right now with the White House, whether it‘s movement on the Matthew Shepard hate crimes bill, the Employment Nondiscrimination Act, or overturning don‘t ask/don‘t tell, the White House is working on these issues. 

But Lorri Jean brings up an incredibly important point, particularly with regard to don‘t ask/don‘t tell.  There‘s overturning the policy, which I believe that the administration will do within the course of the year or so, and then there are good hardworking people like Dan Choi, an Arab language interpreter, who could potentially be thrown out of the military in the next few weeks.

And the president has the opportunity to stop that from happening.  We have asked him to do that and pressed him to do that, and hope that he will. 

MATTHEWS:  But, if he does that by executive order, what is he worried about?  Why is he not doing it, Joe? 

SOLMONESE:  Well—well, we don‘t know what—I mean, he may do it, and—and he has the opportunity to do it.  I mean, it may be that—I don‘t know why he wouldn‘t do it.

But, I mean, with regard to overturning the policy generally, I mean, you brought up—I don‘t think it‘s a case that he wants to not necessarily upset these military leaders, but I think, you know, he understands that there‘s an implementation part of this policy that has to be worked through. 

And I think, on any measure that he‘s working on with us—and I see it—you know, we‘re working daily with them on getting the hate crimes bill to his desk right now—that he approaches these things in a way that they will be sustainable and will work in—in a way that‘s going to, you know, work for the community, as opposed to an expeditious manner, which I think you saw President Clinton undertake in the first days of his administration that actually got us don‘t ask/don‘t tell. 

MATTHEWS:  Lorri, what is the issue here?

JEAN:  Yes, but, you know, he has...

MATTHEWS:  Wait.  Lorri, I wanted you to help explain this to everybody watching.  We have a pretty broad audience, including, I‘m sure, a substantial number of gay Americans watching right now who are keenly interested in this.  But everybody is.

How do you work out a system whereby you have people who have—who are gay or lesbian who want to serve in the military, they want to serve in the usual capacity, in combat, in confined submarine service, everything they want to get into?  How do you maintain the usual sort of conduct that‘s now maintained among people or between who have sexual interest in each other?  We have men‘s and women‘s separations. 

How do we do that in terms of discipline, if we have a new system of getting rid of don‘t ask/don‘t tell?  How do we do it?

JEAN:  Well, getting rid of don‘t ask/don‘t tell doesn‘t really get rid of—and doesn‘t change what‘s already been happening. 

Gay and lesbian people have been in the military for decades, for hundreds of years.

MATTHEWS:  Right. 

JEAN:  And those kinds of problems don‘t exist. 

While they figure out how they are going to work out all of those permutations, the president could take a very simple step.  He could issue a stop-loss order, and could say, hey, look, right now, our country is under attack by terrorists around the world.  We need every able body that we can have, every valuable person.  And, so, let‘s stop drumming people out now...

MATTHEWS:  OK. 

JEAN:  ... while we figure this out. 

MATTHEWS:  OK.  Short-term, it‘s not that the president...

JEAN:  I think it‘s a red herring to suggest that there‘s a sexual...

MATTHEWS:  In other words, he doesn‘t need statutory authority to do that.  He doesn‘t need the Congress to change don‘t ask/don‘t tell.  He can right now say, no more—nobody else get drummed out under this don‘t ask.

Do you agree with that, Joe? 

SOLMONESE:  Yes, he can.  And, yes, I do. 

MATTHEWS:  Do you think he should?

OK. 

SOLMONESE:  Yes, I do.

MATTHEWS:  Let me ask you about another issue, DOMA, Defense of Marriage Act.  I‘m trying to understand the law.  I have been working here with our experts about this. 

Why is it important?  Why would a state—if a state doesn‘t want to recognize—we have six states now that have same-sex marriage.  If some other state doesn‘t want to be forced to accept that, why do they need the domestic—the Defense of Marriage Act?  Why can‘t they do it themselves?

What‘s your thought about that, Lorri Jean? 

JEAN:  Well—well...

MATTHEWS:  If we leave this up to the states?

JEAN:  What the states have been worried about is that, one day, the Supreme Court would step in and say, hey, look, you can‘t have 50 different rules about how you‘re recognizing relationships.  It‘s got to be the same across the country, just like what they did for interracial marriage. 

And—but the other element of—of the Defense of Marriage Act is that it prohibits same-sex couples from being treated equally under the law with regard to federal benefits.  And those are very important, like access to equal Social Security. 

MATTHEWS:  So right now, if you get married, and you‘re same-sex marriage in, say, Vermont or New Hampshire, or Massachusetts, you don‘t get Social Security benefits honored the same way. 

SOLMONESE:  That‘s right. 

MATTHEWS:  That‘s right.  Also, I am legally married in the state of California.  And my partner would not be able to get my Social Security benefits.  We have to file multiple tax returns.  We have to do one for California, a separate one for the federal government.  If she were a citizen of another country, we would not have the same immigration rights.  So there are a whole host of things that go along with equal federal recognition, whether it‘s called civil unions, domestic partnership or marriage. 

MATTHEWS:  OK.  I was thrilled the other day—I mean, I am a straight guy, but I was thrilled the other day, because I do support your cause so strongly, Joe.  I want to ask you this, what did you make of Ted Olson, a conservative who backed up Bush in his big fight to become president before the Supreme court—he‘s a conservative, joining up with David Boise, who is a liberal, who was on Gore‘s side of that fight, to try to get equal protection and due process recognition of same-sex marriage under the Constitution?  What do you think of that cause right now? 

SOLMONESE:  Well, I think Lorri Jean would agree with me on this, that it‘s a good idea if they win that fight before the Supreme Court.  And it‘s a really bad idea if they lose it. 

MATTHEWS:  Well, that‘s having it both ways.  Do you think it‘s right to fight it?  You first, then Lorri.  Is it right to take that fight?  I think these are the smartest lawyers in the country.  I really do believe that.  It seems to me you could find in the Constitution—God, life, liberty, and the pursuit of happiness, that‘s in the Declaration.  It seems to me you could find it in equal protection of the laws.  You could certainly find it under substantive due process. 

We‘ve done this before.  You base it on the Lawrence case.  It seems like the natural development of that substantive due process.  I‘m becoming an expert, to some extent. 

SOLMONESE:  One would think that.  And, of course, that was the supposition in the Hardwick case, which unfortunately we lost with a very talented Constitutional lawyer, Larry Tribe.  And it was 17 years until we were able to come back and win the Lawrence case. 

So I think there are many steps they will go through.  And there‘s perhaps a public education element to this that will raise the level of attention to this issue.  But I think it is a very weighty question.  And if you look at other cases, I think most people would agree that there would be a sense and an expectation that more states would move towards marriage equality before a case like this would be brought. 

Now, I think in pretty short order we will be there with places like New York and New Jersey and other states, and hopefully California. 

MATTHEWS:  State by state still safer?  What do you think, Lorri? 

Last word.  Do you think it is better for this case to be fought or not? 

JEAN:  I think it‘s a big risk, but there‘s something I like about it, because we are going to put the Supreme Court and our nation to the test.  Does equal justice for all apply to gay and lesbian people.  Hopefully, those guys are smart enough to have counted their votes.  And I hope they win.  If they don‘t, it‘s going to be a tragedy. 

MATTHEWS:  I think it‘s possible.  I think you might be right with the five four.  It could be a close one.  It could be five four, because there were five votes—look, assume that Sotomayor is as liberal as Souter, that‘s five, right, under the substantive due process.  You get another one, perhaps it could be six three. 

Thank you very much, Joe Solmonese, who is a more cautious fellow, and Lorri Jean, who is clearly not that cautious.  But maybe she‘s right. 

Up next, back to President Obama‘s speech this morning in Cairo.  How far will it go towards bridging the gap between American and the Muslim views of the world.  This is HARDBALL.  We‘re back to the big story of the day when we come back. 

(BEGIN VIDEO CLIP)

OBAMA:  The people of the world can live together in peace.  We know that is God‘s vision.  Now that must be our work here on Earth.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  All of us share this world for but a brief moment in time.  The question is whether we spend that time focused on what pushes us apart or whether we commit ourselves to an effort, a sustained effort, to find common ground, to focus on the future we seek for our children, and to respect the dignity of all human beings. 

(END VIDEO CLIP)

MATTHEWS:  We‘re back with the politics fix.  That was President Barack Obama in Cairo today delivering his much-anticipated speech.  To say the least, much anticipated.  He called for a new beginning between the US and the Muslim world.  Did the president‘s message get across? 

Roger Simon, he‘s here, not over there, but he‘s going to give us a sense of this.  He‘s with “Politico,” of course.  Susan page is with “USA Today.” 

Susan, you first.  It seems to me that after all the run-up during the Bush administration, with Karen Hughes and the rest, public diplomacy—we‘re going to speak clearly to the Arab world, the Muslim world—this is the first time it was done through multimedia.  Let‘s face it, Facebook, Twitter, text messaging; it seems to me in every cafe in the Middle East, they must be talking about this. 

SUSAN PAGE, “USA TODAY”:  Translated it into a dozen languages.  That‘s one reason I think the president‘s language was I think so plain and simple, was to facilitate everybody understanding the same words in different languages. 

You know, a speech like this doesn‘t bridge differences between the two sides.  But maybe it starts a conversation.  And there were things in the speech that appealed to each of the players in the Middle East and things that did not appeal to each of them as well.  So maybe that‘s a good way to get things started.  We can hope anyway. 

MATTHEWS:  You know, you got to wonder, Roger, I always try—I‘m not Jewish, but I always try to think about the Israeli center.  I‘ve been over there many times.  The center is just like here.  It‘s the center.  It‘s not particularly super religious.  It‘s somewhat religious.  It has a national destiny and all that stuff.  But it‘s always looking for the pragmatic solution. 

ROGER SIMON, “THE POLITICO”:  Absolutely.  The center of Israel, the majority of the people want people and is willing to trade land for peace. 

MATTHEWS:  A reasonable risk. 

SIMON:  Absolutely.  The Israelis have traded land for peace.  This is Netanyahu‘s fundamental problem. 

MATTHEWS:  How about the entire desert? 

SIMON:  The desert, plus Gaza, where they had to really uproot Israelis from little mini-cities and move them out.  But that‘s Netanyahu‘s response.  He said look, we gave up land for peace, and what we got was rocket attacks.  Now you‘re asking us do it again.  What are our guarantees this time?

This is the mountain that President Obama has to climb with dealing with Netanyahu.  You‘ve got to show him that there‘s—

MATTHEWS:  What are going to be the metrics on this, to use an old Rumsfeld term?  You first, Susan, the metrics?  Is it some success in terms of the election in Iran coming up, where Ahmadinejad perhaps doesn‘t win, which we would all applaud.  That would be one to wake up in the middle of the night and have a beer for, if he loses, from our perspective.  Is it that Netanyahu says I‘m going to bounce one of my coalition partners and move over to the left a bit and try to bring in a bit of Kadima here?  What is the sign of success here for the president? 

PAGE:  You know, the things that happen immediately would be very encouraging.  But it seems that‘s the wrong timetable when you think about things in the Middle East.  Things don‘t happen that fast.  It takes a long time.  The encouraging thing here for those who want to see a really active Middle East peace process is that President Obama is doing this in the beginning of his term.  President Bush didn‘t really turn to this problem until late in his term. 

MATTHEWS:  Or President Clinton, who waited for Taba, after the New York elections in 2000.  He was a little late to the game. 

PAGE:  Yes, but President Obama, what is this, 120 days or however many days he‘s been in office?  This is an early start.  He didn‘t talk about this as everybody should do it because it‘s the right thing to do.  He talked about mutual interests.  That is a way to get people engaged, mutual interests.  This serves your interest if you pursue peace and negotiation. 

MATTHEWS:  I think if I‘m bin Laden—now there‘s a leap, to try to imagine what it‘s like to be Osama bin Laden and his coterie, Zawahiri.  They‘re thinking, here‘s a guy who is poaching.  He‘s coming into our part of the world, where people are Islamic.  They‘re Arab in many—most of them—a third of them are Arab.  And he‘s coming over to our kids, and he‘s trying to recruit our kids to his goodwill.  This is a direct challenge. 

SIMON:  And this is why Osama bin Laden released that statement on the eve of this.  He is worried. 

Look, the president spoke at Cairo University, a famous educational institution in the heart of the Arab world. 

MATTHEWS:  In a real country, by the way.  It wasn‘t just created by Churchill.  I mean, really, Egypt exists. 

SIMON:  But it is a myth that terrorists come from poverty. 

Terrorists come from the middle classes.  Many suicide bombers—

MATTHEWS:  No, the education of the level of the five guys leading the 19 was scary. 

SIMON:  Exactly.  President Obama is very smart to talk to young, college-educated people in the Middle East, and address his remarks to them.  These are the people he has to win over. 

MATTHEWS:  By the way, I always thought you‘re sitting around the Cairo cafe, are the kids saying, I want to go to Michigan State, or are they saying, I want to blow up Michigan?  I want to know what side they‘re on.  I want them on the side of I want to go to Michigan State, or Michigan or Knoxville, go done to Tennessee. 

We‘ll be right back with Roger Simon and Susan Page for more of the politics fix.  This is a battle over the hearts and minds of the Arab street.  In fact, it‘s the Arab cafe I think we‘re talking about.  And it‘s people under 30.  You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  If al Qaeda wants to demolish the America we know and love, they had better hurry, because Obama is beating them to it. 

(END VIDEO CLIP)

MATTHEWS:  We don‘t know what this guy is up to.  That‘s Rush Limbaugh last night on Fox News.  That was on Sean Hannity‘s TV show I think last night.  What do we make of this, Roger Simon and Susan, Susan Page?  Is this guy just figuring Barack‘s got the center, we‘ll go for the hard right and we‘ll just play the game here?  We‘re just going for the low-hanging fruit of ideology here?  We‘ll just take him on on everything and just be bastards about it? 

SIMON:  Sure.  It is theater.  What is the down side for Rush Limbaugh to be a hyper-partisan.  There‘s a down side for the party.  There‘s a downside for people who actually have to get elected, because the American people have not responded well to hyper partisanship.  It was one reason Barack Obama got elected.  But if you‘re a radio guy or a TV guy, and you‘ve got that audience, why not? 

MATTHEWS:  I‘m just trying to figure, Susan, reasonable people—I have right-wing friends that are pretty far over in my family, I‘ve got to tell you, if you want a full listing.  And they get angry at Thanksgiving time.  That‘s always why I bring in a friend to do the fighting for me.  What do you make of someone who really doesn‘t—he‘s dumping—he‘s raining on the president‘s effort to try to bring peace to the Middle East. 

Isn‘t there something we can agree on that‘s good, to try to end this

endless threat from that part of the world, from people who are brought up

--

The kid who‘s going to blow us up in ten years is probably 10 years old right now.  Doesn‘t everyone see where this is coming from?  They‘re being raised in the mentality of the cauldron of hatred against us.  That‘s where they‘re coming from, especially the 15 thugs from Saudi Arabia.  We can have friendly governments, but if you don‘t have friendly people, at least don‘t hate us—that‘s what he‘s trying.  Anyway, you‘re witness.

PAGE:  I do think there‘s something of a debate in the Republican party about whether the party is better served by trying to make more persuasively its case against President Obama and for conservative principles, whether it‘s on the Supreme Court or on battling national security issues, or whether they‘re better off trying to forge some kind of course that reaches out to more moderates or independents in the middle. 

Rush Limbaugh would definitely be in the first category of people who think that arguing your conservative principles in the most vigorous way is how you‘re best served.  Though I think Roger makes a good point, Rush Limbaugh does not have to run for office and his ratings are probably served by being just as tough on Barack Obama as he can be. 

MATTHEWS:  I always think—I‘m glad we have a woman here, because, you know what I think Rush Limbaugh appeals to?  He appeals to white guys driving around in their cars all day trying to sell stuff for three hours a day.  They‘re worried about social change in this country.  They‘re worried about minority rights, women‘s rights.  All they‘ve got going for them are Rush Limbaugh. 

PAGE:  So people like Roger Simon, for instance? 

MATTHEWS:  I think that‘s what it‘s about.  It‘s politics.

SIMON:  As I said about Dick Cheney, he‘s white and bitter; he‘s the face of the Republican party. 

MATTHEWS:  OK, thank you, Roger Simon and Susan Page.  I like it.  You went lower than I did.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now it‘s time for “THE ED SHOW” with Ed Schultz. 

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

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