updated 6/16/2009 10:40:00 AM ET 2009-06-16T14:40:00

Guests: Margaret Brennan, Richard Engel, Robin Wright, Michael Isikoff, David Corn, Katty Kay, Joan Walsh, Kathleen Sebelius

CHRIS MATTHEWS, HOST:  Trouble in Teheran.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews back in Washington.  Leading off tonight: The streets of Teheran.  Is this what revolution looks like?  Tens of thousands, maybe hundreds of thousands of poured into the streets of Iran‘s capital today in a silent and peaceful protest, somewhat, against the disputed presidential election results.  It‘s the biggest demonstration since the 1979 revolution, and already the regime is showing signs of buckling.  The supreme leader, the Ayatollah Khamenei, has now ordered an inquiry into claims that the election was rigged.  NBC News chief foreign correspondent Richard Engel and author Robin Wright, who‘s covered Iran for over 30 years, will be here tonight.

Also, does Dick Cheney want to see the United States attacked?  That‘s not agitprop from the far left.  Here‘s what Leon Panetta, the current head of the CIA, told “The New Yorker” magazine.  Quote, “I think he smells some blood in the water on the national security issue.  It‘s almost a little bit gallows politics.  When you read behind it, it‘s almost as if he‘s wishing that this country would be attacked again in order to make his point.  I think that‘s dangerous politics.”

So why is the head of the CIA blasting president Bush‘s G-2 (ph), the guy in charge of intelligence who ramrodded the case for war with Iraq?

Plus, the war over health care began today with President Obama going before the American Medical Association, which fought Medicare back in the ‘60s, just as Bill Kristol, the guy who killed Clinton health care in its crib, has once again today called for a right-wing jihad against health care.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  The cost of our health care is a threat to our economy.  It‘s an escalating burden on our families and businesses.  It‘s a ticking time bomb for the federal budget, and it is unsustainable for the United States of America.

(END VIDEO CLIP)

MATTHEWS:  So is President Obama ready to fight to get health coverage to the 45 million uninsured Americans?  Is he going to win the fight?  That‘s our question for secretary of Health and Human Services Kathleen Sebelius, who‘s coming to HARDBALL tonight.

Plus, what can Sarah Palin learn from Hillary Clinton?  That‘s what Tina Brown of The Dailybeast has to tell us.  We‘ll get her big thought in the “Politics Fix.”  And we‘ll show you what happened on Friday after I was a guest on “Real Time With Bill Maher.”  That‘s in the HARDBALL “Sideshow” tonight.

But we begin with what‘s going on in Teheran.  Richard Engel is NBC‘s chief foreign affairs correspondent and just got back from Teheran, and long-time reporter Robin Wright just visited Iran in March.  She‘s the author “Dreams and Shadows: The Future of the Middle East.”

Richard, thank you for joining us.  What do you make of it?  What is the real story as we watch these crowds?  What‘s going on in Iran?

RICHARD ENGEL, NBC CORRESPONDENT:  You‘re seeing a fundamental shift.  For the first time in decades, hundreds of thousands of people came out onto the streets, defying a ban on protests.  And for the first time, we saw also Mir Hussein Mousavi, the man they say was robbed of the presidency of Iran—he was out on the streets today, speaking from outside of his car.  He claimed that he had been under house arrest.  And a changed position from the supreme leader.  He said that he will allow an inquiry to investigate these claims of fraud.

This is all something the government had not expected.  The government thought there would be an election, it would be over, and that the country would have moved on from this painful discourse.  It is a problem that is not going away.

Also today, at least one person was shot dead and killed in that protest.  Very graphic images have been circulating through the Internet.  This is becoming something of an Internet revolution, as people—those students and demonstrators are exchanging videos and photographs and posting them on line, and the government is having real trouble containing this.

MATTHEWS:  Well, we can‘t hear the sound of that.  I wish we could right now because it looks to me like one of the most amazing crowds we‘ve ever seen, certainly going back to the ‘79 revolution that brought the ayatollahs into power.

Robin Wright, you‘ve been there.  What‘s this mean?  Is this a possible revolution against the crowd that‘s been there since ‘79?

ROBIN WRIGHT, WOODROW WILSON INTERNATIONAL CENTER FOR SCHOLARS:  A

counterrevolution.

MATTHEWS:  Yes.

WRIGHT:  What makes this unrest so interesting is that it plays out in many of the same venues, using much of the same language as you saw in the revolution of 1979.  And what distinguishes this from past protests, like the 1999 student uprising, is that you have the revolutionaries, the senior people involved in ousting the shah, fighting each other politically.  This is not a small group of dissidents.  This is not students.  This is...

(CROSSTALK)

MATTHEWS:  ... the crowd.  It‘s as far as you can see.  It‘s to the horizon.  Richard, back to you.  Why is the government, the predatory government that runs that country—why are they letting this demonstration of secular—or let me just say young, adventurous even, politics against their regime?

ENGEL:  They also have very powerful friends in the clergy.  Several of the top ayatollahs are backing the student movement.  So it is not just the students.  They are the energy behind it.  They are providing the passion and the enthusiasm.  But they also have very powerful allies within the establishment itself, and that is, I think, one of the reasons why you haven‘t seen a more ferocious government crackdown.

MATTHEWS:  Well, I was, Robin, one of those people back watching television back in ‘79, screaming as they burned our flags and trooped our hostages around over there in Teheran.  And I‘m just wondering—the politics of this—let‘s see—when does a rally become a political change?  When does it get out of hand?  When are they going to bring in the firehoses, the troops, and start mowing down this crowd or dispersing it?  Robin?

WRIGHT:  Well, the government has already used the young paramilitary vigilantes to get out and try to stop the students.

MATTHEWS:  That‘s who shot that guy.

WRIGHT:  We don‘t know.  But they‘re the ones who‘ve been seen on the streets using their batons, riding the motorcycles, trying to contain the students.

The challenge for the opposition and the followers of Mousavi is to sustain a protest long enough over a great enough period of time that the supreme leader and the clergy actually has to take action into their own hands and make sure that their concerns are addressed.

But there‘s a serious question about whether there‘s a sustainability of this opposition movement.  And I think one of the reasons the supreme leader called for an investigation is to try to sap the energy, the momentum that now is getting people by the hundreds of thousands out on the streets.

MATTHEWS:  You know, Richard and Robin, I‘m a political guy, not a foreign policy expert, obviously, in terms of this region especially.  But could it be that  there‘s a 60/40 situation over there either way, and we don‘t know which way it is?  In other words, we have a divided society we‘re watching right now, and clearly, this election didn‘t reflect that entirely.  What do you think, Richard?  The election looked like a slam dunk, when, in fact, it looks like more of a divided society, more of a—more between the 50 yard lines, actually.

ENGEL:  Most people thought that it would go to a run-off.  That was -

the large number of analysts that I spoke to leading up to the election thought there‘s a good chance that there would not—neither candidate would reach 50 percent and that it would go to yet another election.

But the election campaign was so divisive, there was so much mudslinging.  And something that was unexpected in Iran, they were leveling accusations of corruption at each other, talking about the fundamental problems in the society, that after the election was held, the Iranian establishment, the supreme leader and the Revolutionary Guards, decided they didn‘t want to go through that again, so goes the theory, and picked a candidate, but may have misjudged the reaction.

MATTHEWS:  OK.  Let‘s take a moment here and talk about what happened in Israel this weekend.  Last night Bibi Netanyahu—who we‘ve always followed in America—I always kid he‘s the only world leader with a Philadelphia accent because he grew up in America went to MIT.  His father was working over here.  He‘s such a forceful leader of the right, yet he knows the politics of (INAUDIBLE) Let me guess this and go to Richard on this.  It seems to me—let me start with you, Robin.  It seems to me he got the message.  Obama is very popular in Israel.  He didn‘t want to fight with him this week, so he said, OK, I‘ll buckle in principle.  You can have your two-state solution, but I‘ve got so many qualifications to that, it‘ll take months or years to get anything done.

WRIGHT:  I think, in fact, it probably ensures that the peace process won‘t take a step forward.  He not only said a qualified, heavily qualified Palestinian state, which is a position that‘s even less than the last Israeli government held, but he also continued to support “natural growth,” as they call it, in the settlements...

MATTHEWS:  So you think it‘s a no to Obama.

WRIGHT:  I think it‘s a no to Obama, and I think the Israel press, in fact, took some very strong stands today in saying that, This sets us back not moves us forward.

MATTHEWS:  Well, that‘s the reason I question that—well, I‘m surprised at that—is because President Obama seemed to welcome it.  The president, Shimon Peres, who‘s a moderate, seemed to see hope in it for a two-state solution.  What did you see, Richard?

ENGEL:  It seemed like it was more aimed at appeasing the Washington community than it was really advancing the peace with the Palestinians.  There are fundamental issues, outstanding issues about Gaza, about closures, about prisoners, about engaging with other Arab countries.  And this seemed like an internal politics move, trying not to isolate Obama and alienate the American president, but not necessarily really advance peace on the ground.

MATTHEWS:  OK, you‘re George Mitchell.  You‘re our guy over there trying to reach a deal between the Likud bloc, which is a pretty right-wing bloc over there, a bit to the right of Israeli society, and on the other side, you‘ve got Mahmoud Abbas, who‘s a weak leader of the West Bank who doesn‘t even control Gaza.  Is there hope, if you‘re the ringleader here—rather, if you‘re the referee—in getting some kind of a deal in the next couple years?  Your thoughts, Richard?

ENGEL:  I think there actually is because a lot of the Arab states right now are much more concerned about what‘s happening in Iran, much more concerned about the potential of Iran going nuclear than they are about the Israeli-Palestinian conflict.  So Gulf states—the UAE, Saudi Arabia—are looking east, and that is something that can be capitalized.  There‘s a lot of good will on the general Arab street that could be capitalized.

MATTHEWS:  OK...

ENGEL:  So I would try and get the other Arab states involved because they‘re more concerned about Iran than Israel right now.

MATTHEWS:  Broad strokes.  There‘s two issues here.  Will the Arab states surrounding Israel—and they‘re surrounding it—recognize its right to exist in principle by name, the state of Israel—not the “Zionist entity” or that crap, the state of Israel?  Will they recognize it?

ENGEL:  Yes, I think...

MATTHEWS:  Will they do it?

ENGEL:  They will.  They‘ve said they will.  And generally, the “Zionist entity,” you don‘t hear that so much.  That‘s very old dialogue. 

You hear it in Iran and you heard it under Saddam Hussein‘s Iraq, but I‘ve

met with many Arab leaders and they‘re quite pragmatic.  It goes back to

what President Obama—if you remember what he said in Cairo, what we need

is the people in the Arab world or the leadership in the Arab world to say

in public what they are saying in private.  When they talk to me in private

and Robin and I‘m sure others—they are not so concerned about Israel. 

They would like to get on it.

MATTHEWS:  Wow.

ENGEL:  They are very concerned about Iran.

MATTHEWS:  Unbelievable.  You sound like there‘s a revolution going on in the thinking over there.  Do you share that, Robin, that the Arab leaders see  Iran as the enemy now, not Israel?

WRIGHT:  I think they see Iran, because of its controversial nuclear program, as the more imminent threat.  But I think the White House has discovered this weekend, with both Israel and Iran, that the rule of thumb in the Middle East is that diplomacy is always overtaken by events on the ground.  And you found that happen both with Bibi Netanyahu‘s speech and with the Iranian election, in that this important initiative that just a week ago looked like it might spawn a whole new era of U.S. relations with the Islamic world and prospects of peace in the Middle East look quite diminished today.

MATTHEWS:  Well, you know, I‘m going to disagree with you.  I‘m more optimistic because I‘m surprised that there‘s even a close election in Iran.  It looked like there really was one.  I think our side, although we don‘t like to talk about that, the anti-Ahmadinejad crowd, did very well in the voting, the actual voting, to the point where they‘re in the streets right now, showing the way they voted.

And number two, I think Bibi Netanyahu recognized that the first round goes to Obama, therefore there is hope.  He‘s for a two-state solution.  He has crossed the Rubicon, as one of his people said the other day.  I think change is in the air.  I see the potential for peace.  Chalk it up to my thinking.  I think like Shimon Peres, the president of Israel.  I‘m an optimist.

Thank you, Richard Engel.  Thank you, Robin Wright.

Coming up: An amazing statement from CIA director Leon Panetta.  He says former veep Dick Cheney seems to be wishing for a terrorist attack so he can be proven right.  Is Panetta right?  Is that what Cheney‘s up to here?  Cheney versus Panetta.

You‘re watching HARDBALL, coming up in a minute.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  In the latest issue of “The New Yorker” magazine, CIA director Leon Panetta has this to say about former vice president Dick Cheney.  Quote, “I think he smells some blood in the water on the national security issue.  It‘s almost a little bit gallows politics.  When you read behind it, it‘s almost as if he‘s wishing that this country would be attacked again in order to make his point.  I think that‘s dangerous politics.”

Today Cheney responded with this statement.  “I hope my old friend Leon was misquoted.  The important thing is whether the Obama administration will continue the policies that have kept us safe for the last eight years.”

With us now, “Mother Jones‘s” David Corn and “Newsweek‘s” Michael Isikoff.  Well, the first comment was real.  Clearly, Leon Panetta meant to say what he said, that this guy is looking for trouble that he can claim victory from.  And that other part was just this sort of drawing room dryness of the British, which is, I hope he was misquoted.  Come on!  Give me a break!

DAVID CORN, “MOTHER JONES”:  I think Leon Panetta made the sin of saying what was on his mind.  And remember, last time he was a public official was not in the age of the Internet and the blogosphere, when he worked for the Clinton administration, when any one word, you know, one sentence flies around the globe very quickly.  And then after Cheney made that statement, what did Leon Panetta do?  He came out and said, I never said it, I was misquoted.

(CROSSTALK)

CORN:  So he caved.

MATTHEWS:  No, he‘s not saying that.

CORN:  No, no.  That‘s what the—that‘s what the CIA spokesperson said.

MATTHEWS:  OK.  We‘ll get to that later.

CORN:  OK.

MATTHEWS:  We‘ll go with his statement that appeared in print, which is on tape, I‘m sure...

(CROSSTALK)

MATTHEWS:  “I think he smells some blood in the water on the—“ “It‘s almost a bit gallows politics.  When you read behind it, it‘s almost as if he‘s wishing that this country would be attacked again.”  Does anybody here deny he said that?

CORN:  Except for—except...

MATTHEWS:  Do you deny he said that?

CORN:  I‘m sure he said it.

MATTHEWS:  Are you sure he said that (INAUDIBLE)

CORN:  Oh, I‘m sure he said it!

MATTHEWS:  OK, so let‘s move on.  He said it.  Now what?

MICHAEL ISIKOFF, “NEWSWEEK”:  Well, right, now what?  I mean...

MATTHEWS:  Well, here it goes.  Throughout the day, this story began -

a daisy chain of these things began.  Here‘s Senator McCain talking to Fox today.  Quote, “I think Mr. Panetta should retract and retract immediately.  By the way, I hear morale is at an all-time—is at an all-time”...

UNIDENTIFIED MALE:  High.

MATTHEWS:  ... “is not at an all-time high at the CIA under Mr.  Panetta‘s leadership.”  In other words, he puts a little shot to the groin there as he makes his point.

ISIKOFF:  Right.  Look, let me...

MATTHEWS:  So there you got Panetta.  You got McCain jumping in on McCain‘s side—I mean McCain jumping in on Cheney‘s side and...

(CROSSTALK)

ISIKOFF:  All right.  Look, I mean, politically, clearly, Republicans and—you know, it was a little surprising to see McCain joining with Cheney on this since they were so famously at odds on this very issue of interrogation policies during the last administration.  But they do smell blood in the water on the, you know, larger issue of national security, of policies relating to interrogations and all.  You know, so they‘re attacking.  Guantanamo has become...

MATTHEWS:  McCain doesn‘t share Cheney‘s view on torture.

ISIKOFF:  ... the symbol, so—no, he doesn‘t.  That‘s why it was a little surprising to see McCain jumping in.  But I think the—actually, the more significant issue here is...

MATTHEWS:  By the way, Cheney has a pattern here.  Excuse me.  He has a pattern in the way he talks about people.  Here he was talking about General Colin Powell a month ago.  Quote, “I think my take on it was that Colin had already left the party.  I didn‘t know he was still a Republican.”  So you get this kind of smarmy kind of comment pretty regularly from this guy.

(CROSSTALK)

CORN:  And through the conversation today, the question has been Leon Panetta should not be questioning the motives of Dick Cheney.  That was the Republican talking point.  But Dick Cheney back in February said, I think that this bunch in the White House now are more concerned with protecting the rights of al Qaeda than protecting America.  So he got to the question of motivation first, and that was pretty much—as much a dig as Leon Panetta‘s comment was, except Leon Panetta...

MATTHEWS:  So, Cheney can...

(CROSSTALK)

MATTHEWS:  Cheney can kick in the balls, basically, and the other guy can‘t kick back?

ISIKOFF:  Well...

(LAUGHTER)

MATTHEWS:  Here he is, by the way, lately.  This is a late-afternoon development.  The CIA issued this statement on behalf of its director, Leon Panetta. 

“The director,” Leon Panetta, “does believe—does not believe the former vice president wants an attack.  He did not say that.  He was simply expressing his profound disagreement with the assertion that President Obama‘s security policies have made our country less safe.  Nor did he question anyone‘s motives.”

ISIKOFF:  All right, can I...

(CROSSTALK)

MATTHEWS:  Clearly, he did both. 

(CROSSTALK)

ISIKOFF:  Hold on a second.

(CROSSTALK)

ISIKOFF:  Can I—can I just switch this? 

I don‘t think...

(CROSSTALK)

MATTHEWS:  Don‘t switch it.  Continue.

(LAUGHTER)

ISIKOFF:  With Cheney—for all his, you know, faults and flaws, which have been amply documented on this program and elsewhere, I don‘t think anybody really thinks he wants an attack on the United States, OK? 

MATTHEWS:  What‘s he want? 

ISIKOFF:  I mean, let‘s—we could agree on that. 

He wants vindication for his policies.  And what‘s significant here is that Panetta, for—you know, despite this kind of swipe, actually, if you look at what he‘s doing at the CIA, he is supporting, a lot more vigorously than anybody would have expected, agency policies that were born during the Bush/Cheney era. 

He‘s been resisting disclosure of documents about interrogation policies.  He‘s been pushing for more latitude to maintain extraordinary rendition and other programs that came out of this.  And that‘s really what‘s significant about Panetta. 

So, while he‘s—you know, make—takes this rhetorical shot at Cheney, you know, the real focus should be on what Panetta is doing at the CIA, because he‘s been the outlier here from where a lot of people expected Obama policies to be.

MATTHEWS:  Is he loyal to his institution? 

ISIKOFF:  He‘s become very loyal to his institution...

MATTHEWS:  OK. 

ISIKOFF:  ... more so than a lot of people would have expected. 

MATTHEWS:  During the—during the cover-up for the war in Iraq, when it was clear that the arguments made on intel beforehand weren‘t accurate, there was a big back-and-forth peeing match between the vice president‘s office and the CIA, Cheney and Scooter on one side.  You guys wrote about it beautifully.  On the other side was the institution of the CIA. 

How does this thing follow up on that, this current fight between this new CIA director and the last vice president?  It seems like a continuation of the old fight.  But am I wrong? 

CORN:  Well, I—I think Cheney saw a political opening.  You know, he didn‘t go after Panetta until Panetta made this statement. 

I mean, the key issue now is that Panetta is there, as Mike just noted.  And he‘s become a—a company man...

MATTHEWS:  Yes. 

CORN:  ... no pun intended.  He‘s—he‘s—he‘s defending the institution‘s prerogative.

(CROSSTALK)

MATTHEWS:  Company being the nickname for the CIA. 

(CROSSTALK)

CORN:  ... CIA.

And on the—so, in that sense, you know, I think the—the—the -

the gulf between the CIA and the White House doesn‘t exist the way it used to.  And Panetta is very careful with that.

MATTHEWS:  OK.  You know, people watching this show are trying to get to the truth, not to the P.R. and the cover-up. 

We have had four levels of cover-up all this afternoon trying to cover

up what was said.  I want to ask you if you believe this is what Dick—

what Leon Panetta thinks

Quote—this is what he said to “The New Yorker “ magazine on the record.

(CROSSTALK)  

MATTHEWS:  Quote: “I think he, Dick Cheney, smelled some blood in the water on the national security issue.  It‘s almost a little bit gallows politics.  When you read behind it, it‘s almost as if he is wishing that this country would be attacked again in order to make his point.  I think that is dangerous politics.”

ISIKOFF:  Right. 

(CROSSTALK)

MATTHEWS:  He accuses the former vice president of dangerous...

ISIKOFF:  He‘s making...

(CROSSTALK)

MATTHEWS:  ... politics. 

CORN:  Right. 

ISIKOFF:  Right. 

MATTHEWS:  And all this day of puffery that‘s gone all day to cover up that, what is your thought about the real truth here? 

I think Panetta, now head of the CIA, doesn‘t like what Cheney has been saying. 

CORN:  Right. 

MATTHEWS:  He thinks Cheney is trying to build a case that is dangerous politically.

(CROSSTALK)

MATTHEWS:  Go ahead—for the country. 

CORN:  I said—listen, he said it to Jane Mayer, who is a friend of ours and who is a great reporter.  So, there‘s no doubt he said it. 

What he was thinking at the time is probably that Dick Cheney is waiting for an—for an “I told you so” moment. 

MATTHEWS:  Right. 

CORN:  That‘s what he waiting for.  You talked about vindication a moment ago.  That would be one form of vindication. 

MATTHEWS:  That‘s a reasonable assertion, by the way.

CORN:  Does—does he wish for that?  I don‘t know what is in his heart.

MATTHEWS:  Well, of course he‘s not wishing for it.  That‘s different. 

CORN:  Yes. 

MATTHEWS:  But, you know, when you get proven right, there is that advantage, even when there‘s horror.

CORN:  Right.  And he‘s setting—he‘s setting himself up that way.

(CROSSTALK)

ISIKOFF:  Yes. 

(CROSSTALK)

MATTHEWS:  I agree.  I agree.  I think we know what he was saying.  I think he was saying that Cheney‘s language has been so volatile, so vicious, it‘s almost as if he wants to see something to happen to prove he was right, because he‘s being so vicious in his critique of Barack Obama.

CORN:  Yes. 

MATTHEWS:  I think we know what was said here after all the kerfuffle. 

ISIKOFF:  Right. 

MATTHEWS:  Your thoughts?

ISIKOFF:  I—I—I agree.  And—and I think Panetta‘s comments were on the political main, but, like I said before, I think what we really should be focusing on, or what people should be focusing on, is on the policy issues going on right now within the Obama White House, where Panetta, aligned with—with John Brennan on—in the National Security Council, have been resisting disclosures, resisting truth commissions, resisting anything that might explore some of the excesses, not because they will taint Dick Cheney and George Bush, but because they will taint people who have been at the CIA, and at least—and people—some people who are still at the CIA. 

MATTHEWS:  So, he‘s the man defending the institution. 

ISIKOFF:  So, that‘s the significant thing, yes. 

(CROSSTALK)

ISIKOFF:  Panetta...

(CROSSTALK)

MATTHEWS:  The other stuff was politics. 

ISIKOFF:  Right. 

MATTHEWS:  This is institutional. 

ISIKOFF:  Right. 

MATTHEWS:  Thank you very much.  You guys are the best, David Corn, Michael Isikoff.  It‘s hard to read through these tea leaves sometimes. 

Up next, I was a guest on “Real Time with Bill Maher” the other night, Friday night, but Bill has got a hell of a critique of President Obama that you might be surprised by.  I was.  I guess you could say it came from the left, but his main argument is that President Obama ought to be as ruthless as George Bush when coming from the left as Bush was coming from the right. 

That‘s, believe it or not, in the “Sideshow” tonight.  And it‘s hard business. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

First up, I was a guest on HBO‘s “Real Time with Bill Maher” Friday night.  But the big story was watching Maher go after Obama hard.  It was an example, I think, of someone knocking the new president for not being ruthless enough. 

(BEGIN VIDEO CLIP, “REAL TIME WITH BILL MAHER”)

BILL MAHER, HOST, “REAL TIME WITH BILL MAHER”:  Barack Obama needs to start putting it on the line in fights against the banks, the energy companies, and the health care industry. 

What he needs in his personality is a little George Bush.  George Bush had horrible ideas—torture, deregulation, preemptive war, tax cuts for the rich—but he pushed them through in their full measure. 

(LAUGHTER)

MAHER:  Never mind the Congress or the Constitution...

(LAUGHTER)

MAHER:  ... the Geneva Convention...

(LAUGHTER)

(APPLAUSE)

MAHER:  ... Magna Carta. 

(LAUGHTER)

MAHER:  What we need to do is to marry...

(LAUGHTER)

MAHER:  ... the good ideas that Barack Obama has with a little bit of that Bush attitude and certitude.  I would love it if Obama came out one day and said, “Jesus told me to fix health care.”

(LAUGHTER)

(CHEERING AND APPLAUSE) 

(END VIDEO CLIP)

MATTHEWS:  Well, if—and I say if—Bill is really being serious here, you have to ask, do we really want more of what we had in the last president, even if it is for a different set of policies? 

Think about it. 

Speaking of the Obama team, Vice President Joe Biden was on yesterday‘s “Meet the Press” when he said he hasn‘t yet given up the hunt for that big office in the sky, the presidency itself. 

Here is David Gregory‘s question and the vice president‘s answer. 

(BEGIN VIDEO CLIP, “MEET THE PRESS”)

DAVID GREGORY, MODERATOR, “MEET THE PRESS”:  ... never worked this close to a president before.  Are you sure you don‘t want to be one? 

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES:  No, no, no.  Look, we—we have the order of this operation correct.  We have got the order correct.  He‘s the president.  I‘m the vice president. 

GREGORY:  But you don‘t want to become president?  You won‘t run?

BIDEN:  Well, I didn‘t say that.  I think...

(LAUGHTER)

BIDEN:  What I—what I said was...

GREGORY:  You still think about it?

BIDEN:  What I said was, I think he‘s going to be a great president, and I think he‘s off to a great start.  And I‘m glad to be a part of it. 

GREGORY:  But you—you won‘t rule it out, that you will think about being president?

BIDEN:  No, I won‘t—I won‘t rule that out, no. 

GREGORY:  OK. 

(END VIDEO CLIP)

MATTHEWS:  Well, I wonder if he could have given any other answer.  Had he ruled it out, Biden would have turned himself into a second Dick Cheney, a lame-ducker who started out as a lame-ducker. 

And, finally, an update on a “Sideshow” favorite, B-Rod.  That‘s indicted former Governor Rod Blagojevich of Illinois.  He showed up at Chicago‘s famed Second City comedy club Saturday night for the opening night of “Rod Blagojevich Superstar,” a take, if you will, on the rock opera “Jesus Christ Superstar.”

Never one content with sitting in the stands, B-Rod took the stage.  And you won‘t believe the position he found himself in.  There he is, our B-Rod, doing a mock crucifixion.  He later noted the cheers from the sold-out crowd and said, “Where were you when I was impeached?”

Well, I say this personally to B-Rod.  I think he better be careful. 

And this isn‘t legal advice. 

Speaking of the blogosphere, or the blogosphere, it‘s time for tonight‘s “Big Number.” 

Senator Burris has dodged questions about his association with the pay-to-play scandal surrounding the Senate seat he won from B-Rod, asking people to focus on the job he says he‘s been doing as Illinois senator. 

Well, let‘s take a look at that one.  One rough measure of legislative work is the number of amendments you sponsor on the floor of the U.S.  Senate.  So, out of 1,300 amendments this year, how many has Senator Burris been the lead sponsor on?

Well, according to the Politico, zero, none, nada.  So much for hunkering down and hitting the books, Senator Burris.  He has sponsored zero of 1,300 Senate amendments this year. 

That‘s tonight‘s zero number. 

(LAUGHTER)

MATTHEWS:  Up next:  President Obama makes his sales pitch for national health care to the American Medical Association, an organization that doesn‘t always agree with him, and, by the way, tried to kill Medicare back in the ‘60s.  We will ask Health and Human Services Secretary Kathleen Sebelius what the president can get done and what will this plan end up looking like—next.

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

Wall Street suffers its biggest down day in a month, with the Dow Jones industrial average losing 187 points, to close at 8612, the S&P dropping about 22 ½ points to almost 924, the Nasdaq lower by 42, almost a 2 percent decline there. 

It‘s not what motorists want to hear.  The price of gas rose today for the 48th straight day.  That matches a record going back to the 1970s.  AAA says that the average price at the pump is now $2.66 a gallon. 

The price of oil, meanwhile, is slipping, falling $1.42 today to settle below $71 a barrel. 

And it‘s another sign of consumer troubles—U.S. credit card defaults rose to record highs in the month of May.  Bank of America says its default rate rose to 12.5 percent last month. 

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

MATTHEWS:  Welcome back to HARDBALL. 

Joan Walsh is the editor of Salon.com, and Katty Kay is correspondent for BBC World News and co-author of the hot new book now on “The New York Times” bestseller list “Womenomics.”  “Womenomics,” a hell of a book.

Let me talk to you now about the issue of Iran. 

Katty, you‘re a woman of the world who has been over these parts of the world covering for BBC.  Is this good news for America, that there‘s such a clash of opinion about who won that election the other day in Iran? 

KATTY KAY, CO-AUTHOR, “WOMENOMICS”:  In a sense, Chris, this is a very difficult outcome for the Obama administration. 

If there had been a clear Mousavi win, that would have been one thing. 

If there had been a clear Ahmadinejad win, that would have been another.  But the kind of mess that you have in Iran at the moment makes it difficult for the Obama administration to know how to play their cards, how to engage, whether just to keep quiet until there‘s some sort of revolution, because—resolution, because, whoever is in government, they‘re going to have to deal with. 

If Ahmadinejad stays in power, the Obama administration is going to have to carry on dealing with them.  And if they have come out here in Washington and said, “We dispute”—forcefully saying, “We dispute this election,” that‘s going to weaken their position, potentially, dealing with him in the future. 

MATTHEWS:  Joan, we have noticed that this administration has been very careful.  They haven‘t played this card, like Mitt Romney has and Eric Cantor...

JOAN WALSH, EDITOR IN CHIEF, SALON.COM:  Right. 

MATTHEWS:  ... of trashing Iran.  They have more stakes, because this administration is trying to get some kind of arrangement going over there. 

WALSH:  Exactly.  I mean, Katty is totally correct.  There‘s no way for Obama to jump in here.  He has to be very careful.  Hillary Clinton has been very careful. 

I have been a little bit impressed that they—they—they do acknowledge, but so does the supreme leader, that there are allegations of fraud, they need to be investigated.  But I think they have got to be very careful about appearing to jump in on the side of the demonstrators, even though so many of our hearts are with them. 

We really need to see what the outcome is going to be.  There‘s supposed to be a general strike tomorrow in Tehran.  And, if that‘s huge, and if the unrest continues, you know, we will be in a very different situation. 

But, for now, I think all they can really do is watch and wait. 

MATTHEWS:  Dare I say I‘m heart-warmed by this demonstration, because I love to see people in the streets, especially when they‘re protesting a government we don‘t like, I don‘t like. 

But is this, to be honest, something that wouldn‘t happen in Saudi Arabia, wouldn‘t happen in Egypt, wouldn‘t happen in the Emirates?  Is there a degree of freedom in Iran that we‘re seeing here, or is that just a Potemkin village we‘re looking at? 

It looks real to me. 

KAY:  It looks...

(CROSSTALK)

KAY:  ... real.

MATTHEWS:  It looks like a country you can demonstrate in.

KAY:  It looks really real...

(CROSSTALK)

WALSH:  It does.

(CROSSTALK)

MATTHEWS:  So, what does that tell you about the murkiness of trying to figure out what kind of a society that is?  It‘s not Third World.  It‘s somewhere between Third World and First World.  It‘s not hopelessly a basket case.  It‘s a country with oil wealth and sophistication and lots of educated people. 

Look at them. 

KAY:  Lots of educated people, Chris...

WALSH:  Well...

KAY:  ... and also pro-Western people. 

MATTHEWS:  Right. 

WALSH:  Pro-Western.

KAY:  I mean, one of the ironies of America‘s relationship with Iran over the last 30 years is that this is the country with the most pro-Western population in the region. 

WALSH:  Exactly. 

KAY:  If only you could tap into that, then this is—this is a relationship that potentially could be forged between these two countries.  I think things are a bit...

(CROSSTALK)

MATTHEWS:  Well, if we could get the couple million Iranians living over here now to go home and vote...

KAY:  And, you know, I have been speaking to...

(CROSSTALK)

MATTHEWS:  ... would win the damn election. 

(LAUGHTER)

KAY:  I have been speaking to Iranians all day today. 

(LAUGHTER)

KAY:  And they are...

MATTHEWS:  Because I know a lot of Iranians I like in this country. 

KAY:  ... giddy with excitement.

MATTHEWS:  And their politics differ...

KAY:  Yes, they are—right.

MATTHEWS:  ... from the—the ayatollah‘s. 

I guess...

WALSH:  Well...

MATTHEWS:  ... the question comes down to—the scary thing, Joan, when I was just out in L.A. this week talking to a lot of people who care about Israel, the amazing hawkish feelings you get from people, I mean, incredibly hawkish, about how we‘re going to have to do something or Israel is going to have to do something about the bomb potential over there. 

Then we had a fellow on the other night here who—or who grew up in Iran, saying, no, they don‘t have a bomb. 

Let‘s face it.  This country is America-centric.  We care about whether they are going to war over there with a weapon or have a weapon of nuclear potential. 

WALSH:  Right. 

MATTHEWS:  Isn‘t that issue?

WALSH:  We do care.

MATTHEWS:  And does this election tell us anything about that—that possibility? 

WALSH:  I‘m not sure.  I‘m not sure it does yet.  We don‘t—we don‘t know what the outcome is.

But what I would say, not to beat at the dead administration horse, but what‘s really tragic here is that Katty is right.  This is a pro-Western country.

MATTHEWS:  By the way, this is the place to do it, Joan, if you want to...

(CROSSTALK)

MATTHEWS:  I know.

(LAUGHTER)

WALSH:  Well, I know you would let me get away with it, Chris.

(LAUGHTER)

WALSH:  I know.  I know you‘d let me get away with it, Chris.  But, you know, they turned their backs on Khatamei.  They turned their backs on Iran.  They really set the conditions.  They wanted war with Iran, and they set up the conditions to demonize Iran, when there‘s so much pro-western feeling.  There are so many educated relatively middle class Iranians. 

There‘s a strong women‘s movement.  They‘ve looked to the west for freedom.  And we demonize them.  We called them the axis of evil.  That‘s what created this situation. 

MATTHEWS:  Let‘s assume that the election over there was close enough that that crowd we‘re looking at there is reflective of the opposition, that it was somewhere between 40 percent and 60, but it wasn‘t like a two-thirds thing.  It was somewhere close to 50/50. 

WALSH:  Which is what all the pundits were expecting. 

MATTHEWS:  If it really was a 50/50 election, robbed from these people, at least we would have seen it was close—what does that tell us about the potential four years from now?  Is the tend against the Ayatollahs? 

KAY:  I think a big question is going to be how long these demonstrations last.  And that‘s going to give us a sense of how powerful the movement is.  I spoke to our Persian service correspondent just this afternoon.  He had been on the phone with some of the demonstrators.  They say they‘re absolutely determined to come out in big numbers tomorrow.  The shooting of one person makes them more determined. 

If you remember back in ‘79, it was when the security services started shooting people and those people became martyrs—the people then rallied around the martyrs, rallied around the places where the martyrs were being buried. 

This is a dangerous moment I think for Ahmadinejad.  But even if they don‘t go out on the street tomorrow, the fissures in Iranian political classes are still there and they‘re not going away. 

MATTHEWS:  Joan, you and I have studied history together.  We know that there‘s the French revolution, the Russian revolution and the Iranian revolution.  There‘s always the time when those in government has to figure out how much pressure to let off.  How much noise do you let people make before you crush them.  If you don‘t let them get a little noise off, you have a danger of having a cracking administration.  If you let too much pressure in the streets, you lose control.  The army won‘t even back you.  Where are we at here do you think? 

WALSH:  I think we‘re at a very dangerous point.  It‘s horrible that a person was killed.  There are reports of other injuries, but that‘s relative restraint.  I think we‘re seeing divisions within the top leadership about what to do exactly about this election.  I think they hoped that they would damp this down quickly, but clearly some people are advocating for an escape valve, in terms of the street riots, but also investigation of whether there was fraud.  So there‘s definitely a clash within the ruling circles. 

MATTHEWS:  I wouldn‘t put a lot of money on that investigation by the Ayatollah. 

WALSH:  Well. 

MATTHEWS:  We‘ll be back with Joan Walsh and Katty Kay in just a moment.  We‘re going to be talking with Secretary of Health and Human Services Kathleen Sebelius in just a moment.  You‘re watching HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Joan Walsh and Katty Kay, author of the great new book, “Womenomics.”  On the “Daily Beast,” however, today, Tina Brown wrote a piece entitled “What Hillary Can Teach Sarah Palin.” 

It reads in part, quote, “here is the second thing Sarah could learn from Hillary.  It‘s the substance that sustains, not the exposure.  In terms of raw talent, on the hustings, Sarah Palin is far more of a political natural than Hillary Clinton.  She might get somewhere in the long run if she would just go away in the short run and read some books.”  Joan? 

WALSH:  I agree with Tina completely.  I think if she could get the secretary of state to take time out from her busy schedule, do a little tutorial—

MATTHEWS:  You‘re rubbing it in. 

WALSH:  But clearly this business with, you know, Letterman and trading insults all weekend, she took what was a one-day story and made sure it was a five-day story.  And really seems to be engaged in that kind of media date-to-day drive-by, you know, shooting match, rather than substance.  And I think it‘s unfortunate. 

MATTHEWS:  What do you think, Tina?  I mean, what do you think, Katty? 

KAY:  Chris, I agree with you—

MATTHEWS:  Not me.

KAY:  No, I agree with you that Sarah Palin has appeal. 

MATTHEWS:  I have always believed that. 

KAY:  The Republican party is wrong to think she doesn‘t and try to dismiss her.  That‘s clearly not going to work.  But I remember one Republican saying to me after the last election, if she was savvy, what she would do is she would go away and she would give three or four over the next year and a half keynote addresses on issues of substance.  She would take foreign policy.  She would take an economic issue.  She would study and she would give a speech on those issues at some serious venue, and that would be a way to kind of get over the whole Katie Couric interview thing. 

MATTHEWS:  Yes, but I think behind those tanks, she needs infantry.  She needs to read and think.  We have been surrounded by politicians our lives who have brought themselves up intellectually.  Bobby Kennedy, Nelson Rockefeller; not everybody starts as a genius.  You teach yourself.  It seems like that‘s—Arthur Schlesinger once said, Joan, to me—in a meeting I was at—he said politics is essentially an educational experience.  You have to keep learning and learning and learning.  There‘s nothing wrong with it. 

WALSH:  Right. 

MATTHEWS:  But she‘s not doing it. 

KAY:  It‘s not just the politics.  It‘s the issues themselves.  What was it that was her undoing?  What was it that brought down John McCain‘s numbers because of Sarah Palin at the end of the election?  It was because people didn‘t feel she knew her stuff.  They didn‘t feel confident in her.

Until she can go out there and reassure people that she‘s actually on top of the issues here, however much she can get into a fight with Letterman isn‘t actually going to help anybody. 

WALSH:  Right. 

MATTHEWS:  That said, she‘s got a lot that a lot of politicians don‘t have, which is she‘s interesting.  We prove it every night here.  Thank you, Joan Walsh, as always.  And you‘re interesting, too, Joan.  And you are too, Katty, especially because of your new book, “Womenomics,” which is about how tough it is.  I‘m serious, it‘s a hell of a book. 

When we return, Health and Human Services Secretary Kathleen Sebelius on President Obama‘s health care plan.  You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  Just in case you didn‘t catch it the first time, let me repeat: if you like your health care system and your doctor, the only thing reform will mean to you is your health care will cost less.  If anyone says otherwise, they are either trying to mislead you or don‘t have their facts straight. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  That‘s President Obama today talking to the AMA, the American Medical Association, out in Chicago.  Can he get what he wants?  Joining us right now is the person who ought to know, Kathleen Sebelius, who is the secretary of Health and Human Services. 

Madame secretary, I guess the big question is will we have insurance to cover the 45 million people currently uninsured? 

KATHLEEN SEBELIUS, SECRETARY OF HEALTH AND HUMAN SERVICES:  That‘s certainly the goal of the president‘s, of mine, of the team that‘s working on health reform.  The good news is on the House and Senate side, Republicans and Democrats are really rolling up their sleeves, and understand that the public thinks what we have currently is a broken system: unsustainable costs, too many people without coverage, and erratic quality. 

So that needs to change and it needs to change this year. 

MATTHEWS:  When I listen to the president today, I heard him talk

about the fact that a lot of treatments are unnecessary.  If people get a

stent—they might have been able to get some drugs.  If they got a stent

if they got surgery, maybe they should have had a stent.  He talked about the calibrations of medical treatment and some of it being excessive.  Who‘s going to decide under a new health care system, an Obama plan, who makes those decisions as to what‘s an excessive treatment? 

SEBELIUS:  Well, right now we have groups of providers and hospitals working together to look at the best possible protocols, the best possible outcomes.  I was in a great hospital, Lakeside Hospital, in Omaha two days ago, and talked extensively to the head docs and the hospital officials who say they have a practice protocol developed by the providers in the hospital to drive quality of care, and make sure that, day in and day out, whoever comes through the doors of that hospital gets the highest quality care, get what works. 

They say not only does it help to eliminate redundancies, extra tests, extra procedures, drugs that people don‘t need, but it absolutely lowers cost.  So it‘s really the providers who come up with the highest standards of care. 

And as you know, Chris, it‘s evolving.  It changes on a regular basis. 

We get new tests.  We get new drugs.  We have new generics on the market.  They figure out through the science a better way to treat colon cancer, a faster way to go after early breast cancer.  And so it‘s a constantly updated situation.  It isn‘t government officials, and it sure shouldn‘t be insurance companies.  It should be health care providers. 

MATTHEWS:  You know what the concern is out in the suburbs, among Republicans and everybody, is that someday we‘ll have a health care system whereby somebody in Washington will say, no, you can‘t get the transplant. 

SEBELIUS:  You know, actually, what‘s interesting about that fear is that it goes on every day.  It‘s private insurers who often are telling their clients that, no, you can‘t get this recommended treatment that the doctor has made.  No, you can‘t get this drug.  No, you‘re not going to be able to stay in the hospital an extra day.  No, you‘re not going to get this because we‘re concerned about costs. 

So people who say, oh, this is a terrible idea; this could happen someday in the future—it‘s happening every day.  But it‘s really private insurance plans that are making those decisions.  What we‘re hoping to do is change those situations.  Private insurance companies should no longer be able to decide who gets health coverage and who doesn‘t, what kinds of benefits are available. 

And we want to make sure that it‘s really health care providers that make those choices in the future, that we‘re informed by the science.  What is the best treatment?  I don‘t know a single patient, if they can get better with one test rather than six, if they don‘t have to have surgery and could take medication instead, if they can spend time in their own home with health providers and not going to the hospital, who wouldn‘t opt to do that? 

What we don‘t do is have that protocol followed day in and day out. 

MATTHEWS:  You know, you and I have watched this debate go on.  We‘re not old enough to know it, but I hear it goes back to the Truman administration, whether to have a health care plan.  It‘s always failed because the Republicans, the other side has been pretty forceful in scaring people.  Let me ask you this, Rahm Emanuel, the president‘s chief of staff, said the only non-negotiable issue, basically, is defeat here.  He wants success here. 

SEBELIUS:  That‘s right.

MATTHEWS:  Could you have a deal—what would stop the president from going along with whatever deal Senators Baucus and Grassley agree on?  Is there anything he would say no to if those two, the chairman of the Finance Committee and the chairman—ranking Republican of that committee—if they got together and said, this will get you 60 votes in the Senate, this will pass, would the president say no to anything at that point? 

SEBELIUS:  Well, I think he says no to any plan that doesn‘t lower costs, improve quality, and insure all Americans.  Those have really been the principles around which he has talked about health reform from the beginning of his campaign.  It‘s the principles that he still talks daily to the members of the House and Senate, that he talked to the doctors about today, that he talked about in the radio address, that he‘s been pushing forward. 

So if you have an insurance plan for all Americans but we don‘t get a handle on the costs that are crushing our businesses and making our workers less competitive, I think he would say no.  If you have a plan that gets after the cost, but doesn‘t provide coverage for all Americans, provide higher quality care, he would say no.  If you have a plan, at the end of the day, that makes a lot of people change a plan that they like, change doctors, get rid of the insurance coverage that works for them and their family, he‘d say no. 

MATTHEWS:  What happens if your insurance—if your insuring boss decides that he likes this public plan better than the one he‘s got because it‘s cheaper for him or her to give you.  Then you do lose your plan, right? 

SEBELIUS:  I think that the outlines that I‘ve seen—as you know, Chris, the bill specifics are just being written.  But the outlines of the health exchange always assume that we would reinforce the current system in place.  So you‘d have the health exchange for people who don‘t have coverage. 

MATTHEWS:  Thank you very much, Health and Human Services, Madam Secretary—thank you, Kathleen Sebelius, who‘s ram-rodding the health care bill. 

Right now it‘s time for “THE ED SHOW” with Ed Schultz. 

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