updated 6/8/2009 3:32:11 PM ET 2009-06-08T19:32:11

Guests: Julia Boorstin, Jim Maceda, Chuck Todd, Brian Moran, Ron Brownstein, Joan Walsh, Evan Thomas

CHRIS MATTHEWS, HOST:  Obama honors D-Day.

Let‘s play HARDBALL.

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

Obama on stage.  How is the world reacting to President Obama‘s speech to the Muslim world?  He told the Israelis and the Palestinians that each needs to recognize the other‘s legitimate goals.  Some on the right are saying he didn‘t use the word terrorist, he said extremist instead.  We‘ll talk to NBC chief White House correspondent Chuck Todd about what the White House is hearing on this, the day after.

And here he is walking in the footsteps of Reagan.  Tomorrow is the 65th anniversary of D-Day.  President Obama will be up there on the bluffs of Normandy, doing what the Gipper did in ‘84 and what Ike did in ‘64 alongside Walter Cronkite, extolling the courage of the boys who stormed Hitler‘s Atlantic wall and won World War II for the good guys.

Plus: When Republicans imagine taking back, well, anything, their playbook includes winning the Virginia governor‘s race this year.  But this weekend is the final fight in the three-way Democratic primary battle, this Tuesday, and one of the candidates happens to be Bill Clinton‘s close buddy and top money raiser Terry McAuliffe.  The other is Brian Moran, the brother of U.S. Congressman Jim Moran.  Brian joins us tonight.

Also: Radio-free Republicans.  Is it possible to be a successful Republican presidential candidate without trucking with the Rush Limbaugh crowd?  We‘ll explore that question in tonight‘s “Politics Fix.”

And speaking of Rush, he and Sarah Palin seem to agree with the wacko idea that the U.S. government is coming to get them.

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN (R-AK), FMR VICE PRESIDENTIAL CND:  And mark my words, this is going to happen next, I fear, bail-out next debt-ridden states, then government gets to get in there and control the people.

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  If Obama is controlling the banks and the banks then will or will not lend to the broadcasters and the newspapers to make them solvent, we could reach a point where Obama controls radio and TV.

(END VIDEO CLIP)

MATTHEWS:  The fear factor.  You just heard it.  More on the folks worried about the black helicopters coming to take them away in the HARDBALL “Sideshow” tonight.  And thank God in America, it still is a sideshow.

And we begin tonight with NBC News political director Chuck Todd, who‘s with the president in far-off France.  We also have NBC correspondent Jim Maceda joining us from London.

Chuck, just a minute here.  The tough stuff coming, the heavy lifting.  The president gave one of the best speeches I‘ve ever heard yesterday, but the question is, can he make it real?  How does he do that?

CHUCK TODD, NBC CORRESPONDENT, POLITICAL DIRECTOR:  Well, he makes it real by kick-starting this peace process, where you start seeing different players get involved.  Now, George Mitchell—one of the things the president announced today in his joint meeting with Angela Merkel in Germany is that George Mitchell, the special envoy, the guy who a lot of folks credit with making the Ireland peace process a reality—which a lot of people 20 years ago said wasn‘t going to be a reality—he goes back to the region next week.  They want to see how this speech played.

He‘s going to be meeting with the Syrians, and having the Syrians at the table are important.  Why?  Because it‘s the Syrians that can talk to Hamas.  You know, the big stumbling block here, right now, between the Israelis and Palestinians, among the (INAUDIBLE) one big stumbling block is that the Palestinians aren‘t united at this point.  You‘ve got the Hamas issue.  They‘re not ready to at all be at the table.

It was something the president referenced in his speech in Cairo, when he acknowledged Hamas‘s popularity but then also said they got to acknowledge Israel‘s right to exist, put down their arms.  And basically it was somewhat of an olive branch, you can interpret it as that, as saying, Look, you guys can get to the table.  President Bush actually used to say the same thing about Hamas after they won—had those successes in those democratic elections.

So you got to figure out how to get Hamas, Palestinians speaking with one voice, and you do that through the Syrians.  And then after that, you see if this pushing of the Israelis...

MATTHEWS:  Yes.

TODD:  ... on the settlement thing gets them anything, Chris.

MATTHEWS:  Well, the way Northern Ireland worked—I know something about it—is it worked because the republicans—that‘s the people who want to have a united Ireland—realized that in the short term, they‘re going to have to live with the fact of the way things are divided.  You have to live with the reality of Northern Ireland being under Protestant rule, to a large extent.  You can share the power, but you have to live with it.

The Arabs are going to have to live with the fact, it seems to me, that Israel‘s there to stay, and they got to deal with it.  And the question is—I want to get back to you on that hot question—can Barack Obama convince the Arab world that Israel is a reality?

Here‘s the president on why Arabs and Israelis and Palestinians can make progress toward peace.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I think that what is different now is, number one, you‘re seeing a U.S. administration and American president engage this issue almost on the day that I took office.  You know, we‘ve only been in office five months, and yet we‘ve seen extraordinary activity already on this issue, and that sent a signal to all the parties in the Middle East that we are serious.

(END VIDEO CLIP)

MATTHEWS:  Jim Maceda, thanks for joining us tonight on HARDBALL.  Read the world on this.  How did it play out there?  Give me the Sardi‘s (ph) review of the speech.

JIM MACEDA, NBC CORRESPONDENT:  Hi, Chris.  Well, first of all, the main event was the Cairo speech.  There‘s no question about it.  I mean, his speech to the Muslim world as a son and grandson of Muslims—the reaction in the Arab street, the Muslim street, if you will, was primarily positive on the level of tone.

There were really two different levels here, the tone level and the theme, the thematic level.  Generally speaking, Arabs across the political spectrum, even those—Chuck mentioned Hamas—even those—I saw pictures of Hamas armed and masked, watching this speech on TV.  They said they appreciated the tone that Obama addressed them in, a tone of respect, of humility.  This is what makes things work in the Arab world.  It‘s respect and humility and honor.

And in the streets, they said they never heard anything like this before from any U.S. president.  They mentioned the word affection, the lack of condescension, quoting four times from the Koran, greeting them in Arabic.  One analyst said that Obama spoke more like an imam on Friday—at Friday prayers.  Another Arab analyst again said that Obama didn‘t sound like a U.S. president at all but more like an enlightened regional leader.

And that really struck me because if he‘s an enlightened regional leader, that means that on a very visceral level, some Arabs are responding to Obama as one of them.  And if you‘re going to move any kind of peace process forward, you have to have that empathy first, that trust, and that is what‘s been missing for certainly 60 years.

MATTHEWS:  Jim Maceda, you make me happy.  That‘s what I think we have to do in the world.  Let me go back to Chuck Todd.  It seems to me, if Jim Maceda‘s right and this president hit the high notes here and the people who could potentially grow up to hate us and throw bombs at us and IEDs and everything else—let‘s face it, this is about trying to convince the people in the cafes that want to go to Michigan State and get an engineering degree, it‘s not to want to come and blow us up—we want them to change their goals in life, these young people, the terrorist who‘s 20 years old 10 years from now, 10 years old today—if people can start thinking like that and realize we‘ve got to build a different cooker over there, a positive cooker for us—let me ask you about this whole question of Arab and Israeli.

The president has to walk the line here.  He was at Buchenwald today to remind everybody in the world why there is so much support in our country among Jews and non-Jews alike for Israel.  Do you think that‘s a point that‘s important to make in this world tour he‘s making?

TODD:  It is.  But I want to pick up on something Jim said when he talked about the Arab street and the Muslim street and the respect, and all of that.  One of the goals of this speech for the president, when you talk to folks in the White House, is that he keeps—and the president himself said this—he‘s trying to make space.  He‘s trying to clear away some of the misconceptions a little bit and make space to have reasonable negotiations.

Well, let me give you an example.  King Abdullah—here‘s a guy who privately knows Israel is going to be there, going to be there a while, and, frankly, is probably himself ready to have a positive relationship, acknowledge Israel‘s existence, you know, sort of lead the way, be the king of Saudi Arabia that says, Yes, you know what?  Israel exists, all this stuff.  But he‘s got to always make sure he—he doesn‘t want to rile folks that live in his country.

And if he‘s got—if the average Muslim on the street is starting to feel comfortable with dealing with the American president and with what the American president said, then a King Abdullah can feel comfortable dealing publicly and publicly acknowledging Israel and sending a mission to Tel Aviv, you know, doing these little things that the president wants, that privately, we believe the president probably asked or trying to push the king of Saudi Arabia to have some diplomatic—public diplomatic ties with Israel because when Saudi Arabia comes, the rest of the Arab world will come with them.

And so you got to clear away the brush.  You got to make it easier for these leaders, who privately know what the reality is, which is Israel is here to stay, they‘re going to be a major player in the Middle East for decades and centuries, for however long.  They just need the popular masses not to, you know, have an uprising on them if they jump too soon.  And that was one of the goals of the president‘s speech, Chris.

MATTHEWS:  You know, Jim, getting back to your point—and I love all this conversation because I‘m learning so much.  But Jim, if he did hit the right note yesterday with the Arab and Islamic world, here‘s the question.  Can an Arab person, an Islamic person, speaking more broadly, have self-respect in a world which includes Israel?  It seems to me that‘s the nub.  Can they say, Yes, the sons of Abraham, the sons and daughters of Abraham, have a right to return if they‘re not—if they didn‘t grow up there, to Israel, they have a right to share in the Middle East?  Is that too deep or too—rather, too high a wall to jump for some in the Islamic world?

MACEDA:  I think for some in the Islamic world, Chris, it is too high a wall to jump.  And you can see it when you talk about the themes of that Cairo speech.  You know, we talked about the tone before, but when you get to the themes, the Arab world, the Arab street was really split, and it split along very predictable lines.  The moderate Palestinians in the West Bank, for instance, they said—many of them said and are quoted as saying that they were encouraged by Obama‘s call for a two-state solution, for the freeze in Jewish settlements.  Radical Palestinians, however, were much more suspicious.  They‘re saying the speech was more words, more window dressing, didn‘t address the issue of Israeli violence over six decades against Palestinians.

So you know, look at Iraq.  Many Arabs in Iraq faulted Obama for not apologizing enough for George Bush‘s war there and tens of thousands of civilian casualties.  So again, thematically, it‘s going to be very hard.  But I think Chuck is right, what—I mean, the space making is very important.  The tone creating is extremely important.

MATTHEWS:  Yes.

MACEDA:  And we‘re going to realize how important as time goes on now, I think.

MATTHEWS:  Yes.  Jim, I‘m so happy to have you on.  And Chuck, as always.  Great reports tonight by both of you gentlemen.  Chuck Todd and Jim Maceda, thank you so much for this big update on this big day.

Coming up: President Obama heads to Normandy tomorrow to celebrate or commemorate—actually, celebrate the 65th anniversary of our victory on D-Day.  What lessons can he learn from President Reagan, who 25 years ago delivered a masterpiece at Pointe du Hoc and set in motion events that led to victory in the cold war, you could argue?  Will Obama be Reaganesque?  Are we going to see a return of the good guy president?  You know, I liked the Reagan speech the first time.  In fact, I liked Ike when he talked to Cronkite back in ‘64.  I remember that interview.

Anyway, you‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Tomorrow, on the 65th anniversary of D-Day, President Obama has a tough pair of acts to follow, his own speech yesterday and one given a quarter century ago.  I remember getting up that morning in 1984 to catch President Reagan at Normandy.  It was a real “morning in America” speech.  I believe that Reagan‘s ability to connect with World War II was a reason for his enormous popularity in this country.  Here he was on the bluffs of France saying something very good about America, how we liberated Europe.  That‘s the heart of it, really, the reason Reagan was popular, Roosevelt was popular, Jack Kennedy was popular, and Barack Obama is popular.  Don‘t tear us down.  Don‘t make us feel like victims or the angry guys or the worried guys.  Make us feel American.

I think the president‘s speech yesterday was the reason we Americans elected him.  It was grand.  It was positive, hopeful.  It said to the world, If you‘re a good guy, you‘ve got nothing to fear from us.  If you‘ve got national aspirations, if you want to be respected as a people, if you want to be treated as an equal people in the world, we‘re on your side.  If you‘re an aggressor, if you want to hold down another people, if you‘re driven by a predatory ideology, if you‘re out to hurt this country, look out.  We Americans are that rattlesnake on that first flag, “Don‘t tread on me.”

But what I liked about the president‘s speech in Cairo was that it showed a complete humility.  What he did was rob from the enemy, those who want to destroy us, their main case, the belief that only by extremism can the East reach equality of dignity with the West.  The question now is whether the president we elected and spoke for us so grandly yesterday can carry out the great vision he gave us and to the world.  If he can, he‘ll be honoring what happened on D-Day 65 years ago tomorrow.  He will be delivering the world once again from evil.

Evan Thomas is editor-at-large for “Newsweek” magazine.  Evan, you remember ‘84.  It wasn‘t 100 years ago.  Reagan and World War II and the sense of us as the good guys in the world—how‘re we doing?

EVAN THOMAS, “NEWSWEEK”:  Well, we were the good guys in 1984, felt that way.  It hasn‘t felt that way in recent years.  So Obama‘s had, really, a different task.  We‘re seen too often as the bad guys.  And he has a very different job from—Reagan was all about America.  And he talked about it.  Obama is, We are above that now.  We‘re not just parochial, we‘re not just chauvinistic, we‘re not just provincial.  We stand for something—I mean, in a way, Obama‘s standing above the country, above—above the world, a sort of god.

MATTHEWS:  Yes.

THOMAS:  He‘s going to bring all different sides together.  It‘s a very different...

MATTHEWS:  Here‘s Ronald Reagan.  Let‘s take a look—a little Friday night nostalgia.  Here he is, speaking about peace and reconciliation at Normandy back 25 years ago.  Let‘s listen.

(BEGIN VIDEO CLIP)

RONALD REAGAN, PRESIDENT OF THE UNITED STATES:  But we try always to be prepared for peace, prepared to deter aggression, prepared to negotiate the reduction of arms, and yes, prepared to reach out again in the spirit of reconciliation.  In truth, there is no reconciliation we would welcome more than a reconciliation with the Soviet Union so together, we can lessen the risks of war now and forever.

(END VIDEO CLIP)

MATTHEWS:  Let‘s talk about the difference.  He was talking about the “evil empire”...

THOMAS:  Right.

MATTHEWS:  ... trying to reconcile with the people of Russia and the

Soviet Union, but not the country.  Barack Obama the other day was saying -

yesterday—that we don‘t have an enemy out there per se, we have people who choose extremism.  But Islam is not our enemy.  That‘s not the “evil empire.”

THOMAS:  But Reagan did it with a very—for the first term, it was a clenched fist.  I mean, we ramped up the cold war before we ramped it down.  We built up our military.  We—all this D-Day stuff was about war.  That was about fighting.

MATTHEWS:  Right.

THOMAS:  Reconciliation only after the fighting.  That‘s not—Obama is not doing that.  Obama—we‘ve had our fighting.  Obama is trying to sort of tamper everything down.  He doesn‘t even use the word “terror.”

MATTHEWS:  Yes.

THOMAS:  He uses “extremism.”  He‘s all about, Let us reason together. 

I think he has a much tougher job, frankly, because...

MATTHEWS:  What‘s his stick?  Reagan had the United States arms race, winning the arms race.  And we had the threat of High Frontier.  We were going to beat the Soviets at technology.

THOMAS:  I don‘t think he has—his shtick is he‘s the teacher.  He‘s

the teacher.  He is going to say, Now, children, stop fighting and

quarreling with each other.  And he has a kind of a moral authority that he

he can do that...

MATTHEWS:  OK.  If there‘s a world election between him and Osama bin Laden, he‘s running a good campaign.

THOMAS:  Yes, he is.

MATTHEWS:  If there‘s an election.  But there isn‘t going to be an election in the world, is there?  Is there an election going on, an implicit one, between us in the hearts and minds, in trying to win the people of the East?

THOMAS:  I think his bigger problem is not actually the East.  It‘s Israel.  I think his real challenge here is to get Israel across the line.  That‘s going to take extraordinary tact, firmness. 

MATTHEWS:  Yes. 

THOMAS:  We‘re talking about Reagan.  We should talk about Lyndon Johnson.  He‘s going to have to get in there when the doors close, twist some arms.

I don‘t know how he‘s going to do it, frankly.  I think it‘s really, really tough, because they don‘t want to be suckers.  They‘re never going to be suckers again. 

But that‘s his—that‘s his challenge.  If he can bring Israel around, I think other things will—will fall in place, but he must bring Israel around. 

MATTHEWS:  Well, to do that, he has to convince Israel that they have a negotiating partner on the other side of the line, of the Green Line. 

THOMAS:  And...

MATTHEWS:  If they‘re going to go back to the Green Line of ‘67, they have to believe that on the other side of that line is a government...

THOMAS:  And they don‘t. 

MATTHEWS:  ... they can hold to account. 

THOMAS:  They don‘t.  I mean, they—you know, Hamas—Hamas?  No. 

The—I mean, it‘s going to be extremely difficult. 

You‘re going to have the—Syria.  You‘re talking about the Syrians.  You‘re going to have get—get the Saudis in there.  You‘re going to have to get a lot of people there, prop up some kind of entity.  I think Israel is going to be extremely suspicious—and rightfully so. 

I think—look, I think it‘s—it may be—not be mission impossible, but it‘s pretty close. 

MATTHEWS:  Because, every time Israel has cut a deal—and I‘m no Likudnik.

THOMAS:  Yes. 

(CROSSTALK)

MATTHEWS:  I‘m not out on the right here.  But, every time they cut a deal, what happens is, there‘s the deal.

THOMAS:  Yes. 

MATTHEWS:  They give away the...

THOMAS:  Right.  I mean, Arafat would not take yes for answer.

MATTHEWS:  They give the Gaza away.  The next thing, the bombing starts...

THOMAS:  Right. 

MATTHEWS:  ... right across, the next day. 

THOMAS:  Right. 

So, I—I—look, I—I—I understand there‘s skepticism.  I‘m not saying that I don‘t.

MATTHEWS:  Yes. 

THOMAS:  But I think, you know, he—if he‘s going to be a great leader—he‘s taken a big gamble here.  He‘s basically given himself about a year, because Israel wants to go after Iran.  And he‘s saying, give us a year to make some peace here. 

MATTHEWS:  Yes. 

THOMAS:  He...

(CROSSTALK)

MATTHEWS:  OK.  Here is my hunch.  On the other side of that, like he

has to do health care to succeed domestically—I think we agree on that -

he has to achieve that goal. 

(CROSSTALK)

MATTHEWS:  He has to cut a deal in the Middle East to succeed.  And

that‘s my belief—and I have been saying this on this program for weeks -

that‘s why he picked Secretary of State Hillary Clinton, because he needs the backing of a 100 percent Democratic Party.  He needs his party united...

THOMAS:  Right.  Right. 

MATTHEWS:  ... 100 percent behind any Middle East deal.

THOMAS:  He sure does.

MATTHEWS:  And the Clintons are the—are the underwriters of that. 

THOMAS:  They—they sure are.  I mean, they‘re going to have to get, you know, the—the large Jewish support...

MATTHEWS:  Right. 

THOMAS:  ... for—for the Democrats.  They‘re going to have...

MATTHEWS:  Right.  And the Clintons are strong in that community. 

THOMAS:  And they—they are.  And they‘re—they will have to be.  That‘s—you will have to get—everybody has got to—every piece has got to be perfectly in place for this to happen. 

MATTHEWS:  OK.  Can we...

(CROSSTALK)

THOMAS:  It‘s a long shot. 

MATTHEWS:  In studying the world, if you‘re—if you‘re on the right in Israel or you‘re on the right on Israeli politics here in America, do you have any confidence that he can deliver on the other end, building some kind of reasonable Palestinian state to take responsibility across the Green Line? 

THOMAS:  No.  No.

MATTHEWS:  Do you have any confidence that you could help turn the tide in Iran against the mullahs, that you can get a somewhat more moderate government elected over there...

THOMAS:  No.

MATTHEWS:  ... that you can turn against that nuclear threat over there?

THOMAS:  Not much.  My friend Charles Krauthammer, I know, is extremely skeptical.  I don‘t think he stands for the right, but he‘s—you know, he‘s...

MATTHEWS:  He‘s pretty far right.

THOMAS:  He‘s—yes, you would—ask him.  I think he would...

(CROSSTALK)

MATTHEWS:  No, I read him this morning. 

(CROSSTALK)

THOMAS:  I think he‘s pretty doubtful. 

(CROSSTALK)

MATTHEWS:  I would say he gave a bad review to the president‘s speech. 

(LAUGHTER)

MATTHEWS:  And I read him. 

But I was looking at David Brooks, who is somewhat center-right.

THOMAS:  Right.  Yes. 

MATTHEWS:  And I thought Brooks was pretty even-handed in the way he looked at it. 

(CROSSTALK)

MATTHEWS:  David Frum was very tough, too.

I read the right.  I know these guys. 

THOMAS:  Yes.  There‘s a chance, but it‘s a long shot. 

MATTHEWS:  I‘m like Barack Obama.  I know these cable guys. 

(LAUGHTER)

MATTHEWS:  Anyway—hi, Mr. President. 

(LAUGHTER)

MATTHEWS:  Anyway, Evan Thomas, thank you for joining us. 

We will be right back in a moment. 

But, first, today in Germany, on a serious matter, President Obama toured the Buchenwald concentration camp, the camp his great uncle helped liberate.  Here he was with German Chancellor Angela Merkel and Holocaust survivor, the great man of all, Elie Wiesel.  Here he is. 

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  Now, these sites have not lost their horror with the passage of time.  As we were walking up, Elie said, “If these trees could talk,” and there‘s a certain irony about the beauty of the landscape and the horror that took place here. 

More than half-a-century later, our grief and our outrage over what happened have not diminished.  I will not forget what I have seen here today. 

(END VIDEO CLIP)

(COMMERCIAL BREAK)

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

First up:  Hold the presses.  Look, I think Rush Limbaugh is a brilliant broadcaster.  He‘s a showman and pretty smart.  Ladies and gentlemen, he‘s even a HARDBALL Award winner. 

So, I could only figure that he‘s trying to scare the wagon train with this latest talk of his.  Last night, on Sean Hannity‘s TV show, he was talking trouble in River City over the prospect that President Obama could grab control of the newspapers and even the radio stations.  Rush built all this on the fact that ad revenues are down. 

(BEGIN VIDEO CLIP, “HANNITY”)

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  What if all these radio companies can‘t make their debt payments next year or the year after that, and have to go Chapter 11?

If Obama is controlling the banks, and the banks then will or will not lend to the broadcasters and the newspapers to make them solvent, we could reach a point where Obama controls radio and TV, because he will own it, by virtue of the banks he controls owning it. 

(END VIDEO CLIP)

MATTHEWS:  Well, I will say what I said last night.  Rush is running a support group for scared people.  The more scared they are, the more they will need old Rushbo to buck them up. 

I just wish he did more bucking up and less fear-mongering.  As long as conservatives want to hear conservatives on the radio, by the way, that‘s who they‘re going to hear on the radio.  And Rush knows this better than anybody, more than you or me.  This is a free country.  And my friend should stop talking like it isn‘t.  Dare I say, it‘s beneath him.

Sarah Palin, meanwhile, is sowing her own brand of paranoia up in Alaska.  The governor was giving a speech in Anchorage introducing Michael Reagan, son of the late president, when she decided to give the audience a little econ 101. 

(BEGIN VIDEO CLIP)

GOV. SARAH PALIN ®, ALASKA:  Some in Washington would approach our economic woes in ways that absolutely defy economics 101. 

Friends, we need to be aware of the creation of a fearful population and of fearful lawmakers being led to believe that big government is the answer, to bail out the private sector, because, then, government gets to get in there and control it, and—mark my words—this is going to happen next, I fear—bail out next debt-ridden states.  Then, government gets to get in there and control the people. 

(END VIDEO CLIP)

MATTHEWS:  Well, the government is going to get in there and control the people. 

Yes, the black helicopters are on their way.  Fear, fear, fear—same old, same old, same old stuff. 

Time for tonight‘s “Big Number.” 

This year, members of the Obama administration fanned out across the country to hype their stimulus bill and personally hand out some of that $787 billion in spending. 

Think—well, it looks like the Obama team was playing favorites.  How many of those 66 stimulus events were held in states President Obama won in November?  Fifty-two out of 66.  How many Southern states got visits?  Only Georgia. 

So, here is to the never-ending campaign.  Almost all the Obama team‘s stimulus stumping, 52 events, were in states that voted blue in 2008 -- tonight‘s “Big Number.” 

Up next:  It‘s the hottest race in the country right now.  Virginia‘s Democratic gubernatorial primary is this Tuesday.  We have got one of the candidates in that tough race coming up right here next.

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

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

Stocks closed mixed.  The Dow gained 13 points.  The S&P 500 lost two points, and the Nasdaq was down fractionally.

The economy lost 345,000 jobs in May.  That‘s much fewer than expected and the lowest number since last September. 

But the nation‘s unemployment rate jumped to 9.4 percent, the highest level in 25 years. 

A federal appeals court has approved Chrysler‘s sale to Fiat, but the court put the deal on hold until Monday afternoon to allow time for an appeal to the Supreme Court. 

Meantime, General Motors has a tentative deal to sell its Saturn brand to auto racing legend Roger Penske‘s dealership chain.  The deal could save all of Saturn‘s 13,000 jobs.

And oil briefly topped $70 a barrel for the first time this year, but crude closed down at $68.34, down 37 cents for the day. 

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

HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

The big story in politics right now is coming this November.  And we‘re giving—giving you an early look at it.  It‘s the race for Virginia governor.  Virginia always has an election right—like New Jersey does—right after the presidential election.  So, it makes it fascinating for which way the wind is going. 

Is it going to be a Republican or a Democratic state this year?  We want to know what strength the two parties have nationally, Virginia is a great place to find that. 

But, first, there‘s the primary.  That‘s this Tuesday, three Democrats facing off against each other.  We invited all three of them to come here to play HARDBALL, but only Brian Moran came.  And we‘re not mentioning the other guys. 

Brian, let me ask you about the—the role of Barack Obama in this race.  He‘s president of the United States.  He carried Virginia by six points. 

BRIAN MORAN (D), VIRGINIA GUBERNATORIAL CANDIDATE:  Carried it for the first time a Democrat won Virginia since 1964.  Barack Obama carried Virginia.  We were so, all, very, very proud of Virginia joining other states in making Barack Obama the president of the United States. 

MATTHEWS:  Who is he for in this race, this primary this Tuesday? 

MORAN:  He will be for me come June 10. 

MATTHEWS:  OK.  That‘s a nice catch.

MORAN:  I look forward to working with him very well.

MATTHEWS:  Let‘s take a look at the polling.  I said we wouldn‘t mention the other candidates now.  We‘re going to mention them all right now.

The most well-known nationally is Terry McAuliffe.  Of course, he was a longtime friend and fund-raiser for Bill Clinton.  There he is.  His numbers are—well, they are doing something there.  And then you have got your—his—his is plunging right now.  You saw that green line dropping dramatically, I guess because he‘s Irish.  It‘s McAuliffe.  But you‘re Irish, too, so that doesn‘t help. 

(CROSSTALK)

(LAUGHTER)

MATTHEWS:  And then we have got this guy.  Who is the other fellow that is running?  Creigh Deeds, how is he doing?  He‘s going up.  And you‘re somewhere in the middle there.

This race, what‘s the differences among you three guys? 

MORAN:  There‘s a lot of differences.  I‘m the only one who opposes offshore oil drilling, only one who opposes a new coal-fired power plant in the Chesapeake Bay watershed.  I‘m the only one who has a plan to enroll every single Virginia child in health care. 

Now, I have been the legislative partner with Mark Warner and Tim Kaine moving Virginia forward, making critical investments in our future with education, health care, transportation, economic development. 

Virginia is the best place to live, work, and raise a family.  I want to make sure that I‘m the governor to make sure that...

(CROSSTALK)

MATTHEWS:  Well, what role is Clinton going to play in this race?  He‘s a friend of McAuliffe‘s.  Is he going to come in and put his thumb on the scale?

MORAN:  Well, you saw the numbers.  President Clinton—Clinton, who I have a great deal of respect for and admiration, has come in several times now for his friend, Mr. McAuliffe, and—but Terry‘s number—this is Virginia.  All politics is local. 

You may have heard of that, Chris.  And this is about Virginians choosing their Virginia governor.  And that‘s why I‘m enjoying support all across Virginia, from the great southwest, to the Eastern Shore, to Hampton Roads, to Northern Virginia. 

We‘re going to win on June 10 because I‘m—I have a 20-year record of fighting for Virginians, standing up for Virginia families. 

MATTHEWS:  A lot of people are going to be looking at this race this November.  No matter which of you guys win, they‘re going to be trying to figure out, is the economy hurting or helping Barack Obama?

Is this election going to be a bellwether on that?

MORAN:  Well...

MATTHEWS:  In other words, if the economy tanks again between now and November, I would assume it will help the Republican, right? 

MORAN:  I—I grew up...

MATTHEWS:  Isn‘t that a fair question? 

MORAN:  I...

MATTHEWS:  Isn‘t that a fair question?  Isn‘t that a fair question?  If the economy tanks between now and next November—or this coming November, it‘s going to help the Republican candidate, right? 

MORAN:  Virginians are proud of Barack Obama.  He‘s doing everything he can to get this economy moving again.  He‘s making the critical investments in transportation in this economic stimulus package. 

Chris, maybe like you, I grew up playing high school football in a WPA project.  It was built with labor to get people back to work.  That‘s why my parents are Roosevelt Democrats.  They grew up during the Depression. 

And Roosevelt understood the best social program of all is a job.  Barack Obama understands that as well.  That‘s why he enjoys a great deal of support all across America, because he‘s putting people back to work again.  And that‘s what we‘re going to do in Virginia.  We‘re going to get people back to work again and promote—you know, build the economy from the ground up, investing in small businesses, Main Streets all across Virginia. 

We‘re going to keep the doors of the stores on Main Streets open, not just Wall Street.  We are going to invest in people again.  And that‘s the type of governor I‘m going to be. 

MATTHEWS:  How is the fight going on between—between the Clinton people and the Barack people, Barack Obama people in the Democratic Party?  That‘s my last question to you.  How is that doing?  Is it better to have been for Barack Obama or better to have been for Hillary Clinton in this fight? 

MORAN:  I—I...

(LAUGHTER)

MATTHEWS:  Come on.  This is HARDBALL, Brian Moran. 

(CROSSTALK)

MATTHEWS:  Is it better to be an Obama person or better to be a Hillary—a Hillary Clinton person? 

MORAN:  Well...

MATTHEWS:  What‘s the stronger suit to be...

(CROSSTALK)

MORAN:  Barack Obama...

MATTHEWS:  You were sort of in the middle, weren‘t you? 

MORAN:  Yes, I voted for President Obama, but this isn‘t about...

MATTHEWS:  In the primary? 

MORAN:  Yes, I did.

MATTHEWS:  Who did you vote for in the primary?

MORAN:  I voted for Barack Obama. 

I believed he represented the best change for America.  And, you know, we need—had eight terrible years.

MATTHEWS:  Did you ever tell anybody that before? 

MORAN:  I was asked that this morning. 

MATTHEWS:  OK. 

(CROSSTALK)

MORAN:  But I will tell you the same answer I gave...

MATTHEWS:  So, you voted for Barack Obama.  And Terry McAuliffe was with the—Senator Clinton.  So, that is the issue...

(CROSSTALK)

MORAN:  But I—I—you know, I—respect the work Senator Clinton has done. 

This race is about me and the future of Virginia...

MATTHEWS:  Yes. 

MORAN:  ... and what the progressive vision I have Virginia—for Virginia. 

I have a record of standing up for Virginians.  That‘s why—another reason why Barack Obama did well in Virginia.  Democrats had been laying the—the foundation for Democratic success, Mark Warner, Tim Kaine.  We have making those critical investments in—in people, investing in people and health care and education and economic development. 

That‘s why, when we had an extraordinary candidate, like Barack Obama, he was able to win, first time since 1964.  That‘s the type of progress I want to continue...

(CROSSTALK)

MATTHEWS:  OK. 

And you have got a brother named Jim Moran, who sits in that seat a lot.  He‘s a member of the Appropriations Committee. 

Thank you, Brian Moran, candidate, running against a couple other people...

(LAUGHTER)

MATTHEWS:  ... for the Democratic nomination for governor in the state of Virginia, the Old Dominion.

Up next:  Depending on what side of the political aisle you‘re on, President Obama‘s speech yesterday in Cairo was either magnificent or an attempt to make nice with terrorists.  That‘s what the right thinks. 

The wildly divergent political reaction to the president‘s big speech to the Muslim world next in the “Politics Fix”—should he have used the word “terrorist,” or was “extremist” just as good? 

This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Back with the fix.  Earlier in the show, we talked about the Middle East‘s reaction to the president‘s big speech in Cairo yesterday.  So how was the speech received here at home, which matters as well.  Check out the “New York Times.”  Here they are.  Here is the cover of the “New York Daily News.”  It shows the president standing in front of a camel with the headline “Talk Like an Egyptian.”  President wows them on his trip to the Mid-East.

Now to the cover of the “New York Post.”  Usually a somewhat more lively paper.  It‘s got a picture of two masked armed men who certainly look like terrorists by the look—let me just say they‘re terrorists, watching the president‘ speech on TV.  The headline, “Let‘s Be Friends, Hamas Thugs Watch Bam Woo Muslims.” 

Wow.  Ron Brownstein is Atlantic Media‘s political editor and Joan Walsh is the editor in chief of “Salon.”  You‘ve got to expect—this is ripping the scab off.  This is a very hot issue in America, especially people who care about Israel.  Here we have a president saying we‘ve got to do some heavy lifting here.  And Hillary Clinton is going to do it for me.  Hillary Clinton‘s from New York, going to do it for me.

She‘s going to convince the government of Israel that they‘ve got to pull back from this any more building on the West Bank, and that building has been going on, creeping along for years.  There‘s always a new house somewhere in the east part of Jerusalem.  It‘s always going on.  And it‘s part of Likud ideology and strategy.  As Golda Meir, who I always looked up to, said new fact. 

And he‘s saying to the Israelis, no more.  I want to go with Ron first.  No more new facts.  Live with the deal the way it is.  We‘re going to cut a deal from here.  That‘s a hell of an argument. 

RON BROWNSTEIN, ATLANTIC MEDIA:  No U.S. president since George H.W.

Bush has confronted the Israeli government as publicly as Obama has done.  Since the first Bush presidency, the entire spectrum of American political debate about Israel has moved in a direction that has made it tougher I think for a president to publicly disagree with the Israeli government. 

Certainly, the Clinton administration had plenty of disagreements with Netanyahu when he was in power the first time.  Now—I think they were more cautious.  I think it is striking; Obama, while affirming his overall commitment to Israel, was clear and tough and has been consistently in a way that is I think pressing that consensus since the early 1990s. 

MATTHEWS:  Joan, it seems to me—Ron, it seems to me American presidents at their best have recognized the need to wear two hats in the Middle East.  One is pro Israeli and the other is honest broker.  Bush only wore one.  He never wore that honest broker one.  Clinton tried to where both.  You could argue that George Bush the first was too much the honest broker, not enough pro—in fact, the Arabist.  You could say that Eisenhower was a little bit too tough on Israel.  Reagan was a little bit easy.  You could argue that.

But they both had to wear—all presidents—Joan, you take it over. 

Presidents have two big roles.  Of course, it‘s our alliance over there.  But we have to live in peace in the world and somehow find a deal over there.  Go ahead. 

JOAN WALSH, “SALON”:  Right, and he‘s taken back the hat of the honest broker.  The thing that impresses me most, it is a beautiful speech.  It was a beautiful speech.  He hit all the right notes in terms of our unbreakable bond with Israel, but also the intolerable—he called it intolerable suffering of the Palestinians. 

He talked about Palestine.  You often here Palestinian state, but to say the word Palestine raises certain hackles.  But the most important thing he did is not speak, Chris, but immediately announce Hillary is on this.  George Mitchell is going to the region.  He‘s striking with the fierce urgency of now, which is his hallmark as a president.  And he‘s saying we‘re going to get something done now.  So I think that‘s the most important thing that‘s come of this. 

MATTHEWS:  The best thing you said there, and it‘s the smart thing he‘s done, of course, is Mitchell.  Mitchell went to Northern Ireland and convinced the people on—by the way, now they have the toughest guys over there, Jerry Adams and Robinson, the toughest people.  The trouble is we don‘t have real negotiating partners to deal with over in the Middle East.  We don‘t have a strong Arab leader on the West Bank.  You don‘t have a Mandela or a tough person on the other side.  You don‘t have a person that you can deal with and say, OK, this guy is a different point of view, but I‘m going to deal with.  Who do you deal with?  Mahmoud Abbas?

BROWNSTEIN:  Especially because you‘re dealing in the desert, the waters are not going to part.  No matter how eloquent and thoughtful both the speech was, and no matter how effectively he‘s positioning the U.S. as someone who can try to bring the parties toward agreement, it is structurally very difficult.  That doesn‘t mean there isn‘t value in simply restarting a peace process, and engendering some hope that there may be a way out of this impasse. 

But right now, as you say, both the Israeli government and what is there on the other side will have difficulty moving to agreement. 

To underscore Joan‘s point, Obama said at one point in his speech, if we see this from only one side, we will be blind to the truth.  That is as clear an affirmation of the U.S. returning to more of an honest broker role as you can imagine. 

MATTHEWS:  Joan, let‘s go back to your point of timing. It seems to me on health care, we all agree, I think he wants to do it this year.  He knows this is his window of opportunity.  I have talked to smart people.  I was talking to Mark Whitaker, our bureau chief, here the other night.  And I get the sense this is a longer term thing here.  If Bibi Netanyahu remains head of the Likud block—he also has a liberal party member, Ehud Barak, as one of his ministers.  He is not going to get knocked out of power in the next year.  He‘s going to be head of Israel.

If he doesn‘t want to move, he doesn‘t move.  Can we reach the Israeli center and get Bibi Netanyahu to move over and cut a deal?  Or do we have to wait for him to rebuild his coalition somehow, move to the left, knock out Lieberman, who is the hard liner?  There‘s a lot of things that have to happen for this thing to work. 

WALSH:  They do, but you know what really—it just puts a smile on my face anytime I hear him or read him saying this, Chris.  Obama just consistently says, look, I have been in power five months, and Mr.

Netanyahu just came to power.  You can‘t expect us to have this all figured

out.  He‘s extending a certain kind of expectation of good behavior to

Netanyahu and kind of pretending—it‘s the willing suspension of

disbelief.  I‘m not going to think about all that stuff he said and I‘m not

I‘m going to act like he‘s not a hard liner.  And I‘m going to extend him the courtesy of believing that he is open-minded, and that he cares about his country and the best course for his country is peace.

And I love this.  I think it‘s so important.  I don‘t know it‘s going to work.  I don‘t know if it‘s going to work, but it‘s all he can do, and let‘s see maybe Netanyahu—

MATTHEWS:  I‘m sorry, does Bibi—Finish up, Joan, I‘m sorry. 

WALSH:  Maybe he‘ll rise to the occasion.  That‘s all, Chris. 

MATTHEWS:  I think—does he want to be De Gaulle?  Does he want to be the great leader of the Middle East?  Or does he want to be a three-term loser as a Likud leader and get knocked out again because he is too fractious and because the liberals come back, or the Kadima party comes back? 

BROWNSTEIN:  In the end, for me at least, it‘s hard to see Obama and Netanyahu ending up on the same page.  I think many people inside the administration are skeptical that can happen.  But that doesn‘t mean there isn‘t value, as I said, in trying to move out of this very barren feeling now that there‘s a total dead end and rebuilding. 

Look, at the beginning of the presidential campaign, many of the people who supported Obama, the reason they were supporting him was because they thought he could change America‘s interest in the world—image in the world, especially in the primaries.  And yesterday was as dramatic a statement of his opportunity to do that.  Perhaps we will see both the opportunities and the limits of what that can achieve.  But there‘s no question that many of the people I talked to in Iowa and New Hampshire, yesterday was what they were imagining when they voted for Obama. 

WALSH:  Exactly. 

MATTHEWS:  Thank you.  That‘s what I thought.  That‘s what I wanted. 

I wanted a big picture guy. 

You know who I‘d like to have at this table, besides the three of us brilliant people, is Rahm Emanuel sitting here.  It‘s not just because he‘s Jewish or because he‘s Chicago, or any connection at all.  It‘s because I know, having lived there—he grew up—he was in the IDF.  He knows the politics in the Middle East.  He knows the politics of Barack Obama.  He knows how you have to bring it all together. 

He is there at the sort of true north situation here. 

BROWNSTEIN:  Real quickly, Rahm Emanuel‘s view has been that Obama, by reaching out in the way that he is doing most emphatically yesterday, denies these Middle Eastern leaders the unifying power of anti-American message.  He forces them in these autocratic countries to kind of stand or fall on their own merits.  In fact, what Obama is doing is taking away the club of anti-Americanism as a way to justify rule. 

MATTHEWS:  Which is our perceived lack of respect for them. 

BROWNSTEIN:  Exactly right.  So what Obama is doing is not necessarily giving them a free pass, as some conservatives argue, but, in fact, forcing them to deal with the underlying issues without being able to simply point towards America as the Great Satan. 

That doesn‘t mean all the waters are going to part or all our differences are going to disappear.  But he is I think moving this dialogue in a different direction by simply changing the image of America in the street and in the elite as well. 

MATTHEWS:  I got to keep reminding us that the terrorist of tomorrow is the young teenager.  If that young more person‘s mind is moving towards our direction, he is much less likely, she is much less likely to strap on a belt of dynamite. 

We‘ll be right back with Ron Brownstein and Joan Walsh.  More coming up.  Let‘s talk about the politics in the Republican party.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back.  We got Atlantic Media‘s political editor, Ron Brownstein, and Joan Walsh, who is editor in chief of “Salon.”

Ron, you had a thought about this, because I was—I don‘t mean to be kidding, but the president seems to be running for worldwide office against the bad guy, Osama bin Laden.  I wonder what the polls will show a week from now. 

BROWNSTEIN:  In the last year of Bush‘s—Certainly through bush‘s second term, America‘s image in the world, as measured empirically, through Pew Research Center polls and among others, really it hit bottom.  The last Pew Poll in these Muslim nations in 2007, 11 percent of people of Egypt said that they have faith in Bush to make the right decisions, seven percent in Jordan, two percent in Turkey, seven percent in Pakistan.  About as low as it can go. 

Obama I think is testing the liberal belief that changing America‘s image among these voters and reaching out in this way will ultimately produce outcomes that are more favorable to our national interest.  I think, in that way, this is an important test, because he‘s probably making as effective a case as you can imagine an American president making to the broad reach of the Muslim world. 

The question will be, I think conservatives will rightly ask, will this produce changes in behaviors either at the mass level or at the elite level that advances the goals that we have in the world of living together in a secure and safe environment.  This isn‘t a laboratory experiment on what people wanted during the eight years of Bush.  We have now moved to the opposite end of how you interact with these countries.  And the question is, what do we get out of it? 

MATTHEWS:  The question to you, Joan, is what percentage of the third world or the Islamic world do you need on your side—if it‘s ten percent, five percent, whatever—to launch a terrorist campaign against us?  Do you need a majority of the people to wreak havoc on this country?

WALSH:  No, you don‘t need a majority of the people.  They did it with a small minority of people.  They did it with tiny, tiny, horrible cells of evil people, Chris.  Paradoxically, what the United States did in the wake of 9/11 was take many measures, some of which defended ourselves and were fine, but many of which were recruiting—were like recruiting camps for terrorism, and really turned the average middle class, middle thinking Muslim against us. 

The neo-con establishment really wanted a clash of civilization.  They wanted a war against Islam.  And finally Obama is saying, we don‘t want that.  We have common ground.  Our great religions share—you know, have a lot in common.  And that‘s all you need. 

MATTHEWS:  Well, you and I are a sister/brother act on that argument. 

Let me go to this other question.  We do not have any argument on that.  You smile and I smile.  We completely agree on that perception.  Some people wanted an Armageddon struggle and they got one for a couple of years. 

Let me ask you—I‘m changing the topic.  Don‘t let anyone watching

right now think I‘m making the same moral equivalence.  In the Republican -

a totally different question, but there are interesting parallels.  These people that are running states, responsible people like Mark Sanford, who is an impressive guy, some other governors, Tim Pawlenty, very impressive guy, and also Sarah Palin out there, they seem to be deciding they have to choose between governance, taking care of their states in terms of economic recovery, and joining the rush to the right, the radio guys, trying to catch up with Rush on the crazy side. 

WALSH:  It‘s very disappointing.

MATTHEWS:  Why do you think they have to choose between being good governors and being good candidates for 2012?  Joan? 

WALSH:  Because I think they believe that victory in the Republican primary, where the base is fairly conservative, requires that they pander to that base, that they reject the stimulus money, and that, frankly, they act the interests of their own constituents, Republican and Democrat.  There are people—there are Republicans—there are low-income kids in South Carolina who are Republican who is Sanford is turning back the school money.

I think it‘s pathetic and depressing, because my hope, and I bet Ron feels the same, is that the best hope for a new kind of moderate Republicanism to emerge would be from the governors, who are where the rubber hits the road and are more pragmatic. 

BROWNSTEIN:  Real quick, it‘s the crystilization of the problem facing the Republicans.  As the party has shrunk, the hard core conservative base is a disproportionate share of what is left.  But at the same time, they need to reach out to the middle.  And the challenge is being able to -- --

MATTHEWS:  Catch 22.  Catch 22.  Ron Brownstein, thank you.  Joan Walsh, happy weekend.  Join us again Monday night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now it‘s time for “THE ED SHOW” with Ed Schultz.

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

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