updated 7/23/2009 10:12:49 AM ET 2009-07-23T14:12:49

HARDBALL

July 22, 2009 - 5 PM

THIS IS A RUSH TRANSCRIPT.

THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

Guests: Rebecca Jarvis, David Axelrod, Rudy Giuliani, Howard Fineman, Roger Simon, Dee Dee Myers, Tony Blankley

CHRIS MATTHEWS, HOST: Is there a doctor in the house?

Let's play HARDBALL.

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

Does this make or break? I'm talking health care, President Obama's health care. Tonight, the president holds a primetime news conference with one thing in mind, win public support for an historic plan to bring health care insurance to those who don't have it, that guarantees protection to those who do.

His poll numbers have been slipping. Conservative Democrats are concerned about the bill and the price tag. Republicans are circling like hyenas. Today, the president lost Senator Orrin Hatch of Utah as a possible ally. In a moment, the president's senior adviser, David Axelrod, joins us for a talk about what the president needs in the bill and what it will do for the average person, including those who already have health insurance.

Also, Rudy Giuliani joins us at this table. We're going to ask Rudy some tough questions, such as whether he agrees with those on the right now raising hell that President Obama is an undocumented alien of some kind, some interloper who managed to get through the electoral system without anyone knowing. And we'll have more on that strange, wacko crowd known as the "birthers," the people who refuse to believe-again on that topic-against all evidence that Barack Obama was not born in the USA.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I want to go back to January 20, and I want to know why were you people ignoring his birth certificate?

(APPLAUSE AND CHEERS)

UNIDENTIFIED FEMALE: He is not an American citizen! He is a citizen of Kenya!

(END VIDEO CLIP)

MATTHEWS: I should say, refuse to believe that he was born in the USA. Last night, Republican John Campbell of California admitted, finally, his belief that Mr. Obama was born in the U.S., but that wingnut base of the Republican Party that traffics in this kind of nonsense is threatening now to become a big problem for the GOP, at least if the party wishes to grab hold of reality on its way back to power.

Think this talk isn't important? Do you remember that the guy who shot and killed the guard at the Holocaust Museum was one of these people? Much more on that a little later.

Plus, Secretary of State Hillary Clinton gets hit overseas with questions about her ultimate presidential ambitions. The people of Thailand want to know. The latest on that in the "Politics Fix."

And if you think the fight over health care is rough, check out what just happened in South Korea's parliament. We'll get to that real political fight in the HARDBALL "Sideshow."

And a programming note. We'll be back at 7:00 PM Eastern tonight with a new edition of HARDBALL. Then at 8:00, Rachel Maddow and Nancy-

Dr. Nancy Snyderman join me as MSNBC brings you President Obama's news conference. At 9:00 Eastern, it's "The Rachel Maddow Show," and we'll be back at 10:00 o'clock with a special late night edition of HARDBALL. That's tonight at 10:00 Eastern. And then at 11:00, it's time for an all-new "Ed Show" with Ed Schultz.

But first, President Obama's fight to win public support to reform health care. We're joined right now by White House senior adviser David Axelrod. David, thank you for joining us. It's a big night for the president. But before we get to health care, which is right on the front burner right now, what do you make of these members of the U.S. Congress, including Senator Shelby, who are out there saying they don't know whether Barack Obama is legitimate as president, that they don't know whether he's a native-born American or not?

DAVID AXELROD, WHITE HOUSE SENIOR ADVISER: Boy, I got to tell you, Chris, given the problems that we have to deal with in this country and the struggles that people are going through in their daily lives, I would think they'd be awfully frustrated that time was being wasted on something as silly and trite as that. I thought we left this behind when-in the campaign, when people were challenging both McCain and Obama over whether they were constitutionally qualified. Those issues were resolved, and this is a heck of a time to resurface them.

MATTHEWS: OK, let me ask you about what's on the front burner, as I said, health care. Is there any feature of this bill that's being debated in the Senate Finance Committee especially right now where the president will tell us what he wants? Will he say he wants individual mandates, employer mandates, something on portability, something on pre-existing conditions? Is there anywhere where he will say, I'm taking the lead, I want this in the bill?

AXELROD: Well, Chris, a number of these things have been broadly agreed to not just in the Senate Finance Committee but in all the five committees that are considering this legislation. Certainly, banning the exclusion of people who have pre-existing conditions from getting health coverage is one of those. There are a series of health insurance reforms that are going to be very important for people who have insurance that everybody agrees to. In fact, 80 percent of what would go into a health insurance reform plan, a health reform plan, are agreed to. There are a few issues left that need to be resolved, and that's what's being discussed.

MATTHEWS: Well, where's the president on an individual mandate-in other words, the requirement that young and healthy people have to share the costs of national health care? Is he for that?

AXELROD: The president has said that he embraces the concept that everybody should be in the system, and the reason is very simple. Every single American is paying for those who are not covered now to the tune of $1,000 or $1,200 per family in their health care premiums to pay for unreimbursed care. So it's important that we deal with that issue.

MATTHEWS: Let me ask you about-I guess I have to ask the question, what's in it for people who are insured?

AXELROD: Yes, well, I think it's a very good question, and it's one the president will address tonight. And you know, other than the stability, which is primary, that if you lose your job, change your job, move, if you become ill, you'll still have coverage and it will forbid insurance companies to do some of the things that they've done before, such as banning people who have pre-existing conditions, such as removing from coverage people who get sick.

We have this perversion in the system called "rescissions" that allows insurance companies to say, You know what? We didn't realize you were going to have this serious illness, and so we're rescinding your coverage. All of those kinds of reforms will be part of this package, and so there's an enormous amount to be gained.

And understand that in terms of bending the cost curve of health care, people in this country are paying 10 percent more every year. In the last decade, their health care costs have doubled. Their out-of-pocket costs have increased by a third. And there is more and more and more-more and more people are underinsured, losing their insurance, 14,000 a day. We have to change the dynamic here, and that's important for everyone, whether they have insurance or not.

MATTHEWS: You know, up on Capitol Hill, where I worked all those years, they had something called the Federal Employees Credit Union, where you could borrow money, say, for a big purchase like a car and get it at a pretty low interest because nobody was making any money on it. Like all credit unions, it was a shared cooperative. Is that the role model, perhaps, for a kind of a co-op which would meet the needs that Democratic liberals want to have for a public option and that may not offend the conservatives to the point they wouldn't be on board the bill? Do you think it's something the president would go for?

AXELROD: Look, I think that the public choice, the public option that he has proposed, would function in much the same way. It's not going to be subsidized more than private plans would be subsidized. The administrative costs would be lower because it would be a not-for-profit, and that would force the insurance companies to compete. It's a way of keeping the insurance companies honest and creating more competition, and so he believes that the public choice is the way to achieve that.

Others may have other ideas. I've said many times that the president is interested in moving this process forward, and so he's not drawing bright lines in the sand, except on a few issues, that this has to-certainly, it has to pay for itself. We can't add to our deficits through this reform. And it has to achieve the goal of bending the cost curve on the growth of costs in health care.

MATTHEWS: But you know what the conservatives are most concerned about, a national health system, like have you in Britain. They don't want a big bureaucracy controlling all decisions about rationing of medical-of any kinds of operations you might need, or a heart transplant or a liver transplant. They don't want the federal government deciding that. Isn't cooperatives something that your president, our president, could accept, rather than that kind of big, bulky, English-style bureaucracy?

AXELROD: Look, Chris, nothing that has been proposed, either a public plan or the co-op, would deliver a single-payer system of the sort the Republicans who oppose this have held up. That's a strawman. The fact of the matter is, if you want to talk about rationing, there's a lot of rationing going on in the health care system today, only it's controlled by the insurance companies who are denying people care that they need. So what we need are insurance reforms that will protect consumers in this process, and that will be delivered through this health care reform.

MATTHEWS: The big question has been raised by some Democrats -- 19 of the Democrats in the House have raised the question of abortion. The Hyde amendment is strict on this. Dick Durbin was on our show a couple nights ago and said the Hyde amendment still obtains. You cannot use federal money for abortions, period. Is that going to be the case with regard to a national health bill?

AXELROD: I know that this issue is being discussed and there are-people have great concern about this. Our position is that we ought not to be dragging that issue into this debate. We want to get people health care that they can afford. We want to hold down this inexorable, prodigious rise in rates that are crushing people, businesses and the government, and we ought to focus on the main issue and not make this another forum for that debate.

MATTHEWS: But if the federal government spends money on abortions, that means people who believe abortion is evil would be forced to have their tax money go to pay for abortions. How do you justify that?

AXELROD: I think that if people have the option to-we want to provide people with choice within the health care system, and they also will make a choice about their own personal decisions. We are not prescribing, you know, that they choose abortion. In fact, the president has talked about discouraging abortion.

But to me, this is a way of diverting the debate from the main issue, which is what we're going to do about our runaway-what are we going to do about our runaway health care costs?

MATTHEWS: Those 19 Democrats who wrote the letter to the president weren't trying to divert. They're probably for national health insurance. But I'm asking you, can you promise them that monies paid by the federal government for this national health plan will not go to pay for abortions, along the lines of the Hyde amendment, which makes that very clear you can't do that?

AXELROD: I'm sure this that issue is being discussed and I'm sure that we will arrive at a solution that people can live with.

MATTHEWS: OK, let me ask you a last question-timing of this. We've got the recess coming up in August. Is there a sense on your part that it's now or never, that if you let this slip into the fall, that the organized opposition to any kind of national health effort will win the fight over the recess and you'll have an even tougher time when you get back?

AXELROD: Well, that, of course, is the game plan that Senator DeMint laid out in his conference call with conservatives over the weekend, when he said, you know, If we stop him now, we can break Obama. Well, it's the American people who are being broken by the costs of this health care system. I believe that we need to move forward.

Understand that even if this bill passes out of the House and passes out of the Senate, individual bills, we're still going to have a big debate in the fall as they try and reconcile the two. What they want to do-the opponents want to do is stop the process now. They want to stop thoughtful consideration. They want to stop the process from going forward, and I think that would be a disaster for the American people.

MATTHEWS: Thanks so much for joining us on HARDBALL, David Axelrod, senior adviser to the president. It's a big night for everybody tonight, including everybody watching tonight, everybody who cares about health care. Thank you very much, David Axelrod.

AXELROD: OK. Good to be with you.

MATTHEWS: Coming up, Republican reaction from former presidential candidate Rudy Giuliani. He's going to be right here at this table. And a woman in a town hall meeting in Delaware rails about the validity of President Obama's birth certificate. How big a problem does the Republican Party have with its lunatic fringe?

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. With us now, the former mayor of New York City, Rudy Giuliani. Mr. Mayor, thank you.

RUDY GIULIANI ®, FORMER NEW YORK CITY MAYOR: Nice to be with you.

MATTHEWS: You know, I keep thinking, are you going to run for governor?

GIULIANI: I don't know. I haven't made a decision, like you did!

(LAUGHTER)

MATTHEWS: Well, I made a decision I'm not running. So I can give you an answer. I'm not running. Are you?

GIULIANI: I don't know yet.

MATTHEWS: Do you think you can knock off Paterson?

GIULIANI: I have no idea.

MATTHEWS: Can you knock off Andrew Cuomo?

GIULIANI: I don't know that, either.

MATTHEWS: He's tougher, isn't he? Come on, admit it. He's tougher than Paterson.

GIULIANI: All I can do is tell you the polls that exist. Right now, Andrew Cuomo is ahead of Governor Paterson. But who knows-who knows...

MATTHEWS: And you're a vote behind. (INAUDIBLE) You're beating Paterson. How are you doing with Cuomo?

GIULIANI: A little behind.

MATTHEWS: A little behind. But you can beat him. You endorsed his dad!

GIULIANI: Gosh! You always-maybe his dad will endorse me, if I run.

(LAUGHTER)

MATTHEWS: OK. Let me ask you about health care tonight, a big issue. You're a Republican. Is this a partisan issue, opposition to the president's health care plan?

GIULIANI: I think it's a-sure, but I think...

MATTHEWS: You think it's a partisan issue to beat the guy, like DeMint says?

GIULIANI: Oh, no, no, no, no. I think...

MATTHEWS: Beat him and make it his Waterloo, like he's Napoleon or somebody.

GIULIANI: I think that's a mistake to put it that way. I think there's an issue of principle for me. I think the president is making a fundamental mistake. I think he's going to ruin our health care system by creating this, whatever you want to call it, massive government insurance program. The government already dominates too much of the health care market. It will totally obliterate the health care market. I mean, like taking over General-taking over the automotive industry, taking over the financial industry, taking over the banks, now health care, and then eventually energy. We'll have nothing left.

MATTHEWS: So what does your party do?

GIULIANI: Baseball (ph).

MATTHEWS: OK. Let me put it on your side. What's your party do for the person who gets up in the morning, catches the bus, works 40, 50 hours a week, but doesn't have health care at work? What are you going to do for them?

GIULIANI: I think we change the tax code to make it possible for people to deduct the cost of health care, try to reduce the advantage that you get for employer-based health care. I think we try to work on reducing the cost of health care by something...

MATTHEWS: Is that going to...

(CROSSTALK)

GIULIANI: ... tort reform...

MATTHEWS: Is that going to get a person insured, though? I understand all these things are good ideas, but that's not going to get a working guy or a working woman insured, is it?

GIULIANI: I bet it will.

MATTHEWS: How?

GIULIANI: By bringing the cost down. If you make health care marketable, if you make it-most of the people that don't have health insurance, at least half of them, have televisions, they have cars, they have cell phones.

MATTHEWS: I know.

GIULIANI: They have lots of stuff. They don't buy it because either they don't want it because they're too young, which I think is an American choice, you just basically say, I don't want it, or...

MATTHEWS: I know, 70 percent of the people that don't have health insurance are under 45. That makes sense. I understand that.

GIULIANI: Well, they make that choice. And the second thing is, if you can make-if you could price a product around $7,000, $8,000 instead of $15,000, $16,000, you'll end up with people buying it.

MATTHEWS: OK. In New York and every other state in the union, you make a younger driver who turns 16 or 17 -- they got to pay insurance if they want to get on the highway. What's wrong with saying, like they do in Massachusetts now, You've got to help-you've got to kick in. You've got to have health insurance now matter how-because if you get in trouble, somebody's going to have to help pay for that.

GIULIANI: I actually think the more we reduce the number of choices people have, the less we become America. I mean, you get the choice not to have health insurance and you...

MATTHEWS: So you get the choice to go to the ER and have somebody else pay for it.

GIULIANI: Well...

MATTHEWS: That's what happens.

GIULIANI: Or not, if you're in a state that doesn't do that. Some states...

MATTHEWS: No. ERs have to take care of you, no matter what. So in other words, you're saying to people, Go to an ER.

GIULIANI: Some states don't guarantee...

MATTHEWS: Isn't that what Republicans are saying to poor people, Tough luck, go to the emergency room?

GIULIANI: Absolutely now. What we're saying is we do not want to become Canada. We do not want to become England. We don't want to become a socialized medicine country. To say this isn't national health insurance is just a-a...

MATTHEWS: So you don't want to have a program to help-to provide...

GIULIANI: I want a program-I want a program...

MATTHEWS: ... insurance for the uninsured.

GIULIANI: ... that tries to create more private health insurance, tries to bring down the cost of private health insurance, tries to get it within the means of people. And then ultimately...

MATTHEWS: By the way, your party was in complete control of this government until recently. You had both houses of Congress and the presidency, and you didn't do what you just said you wanted to do.

GIULIANI: We did the best reform ever for seniors in terms of bringing down the cost of drugs. The Republican Party did that and got in trouble with some of its conservative...

MATTHEWS: OK. But apparently, that's working out. Let me ask you about guns...

GIULIANI: It is working out really well.

MATTHEWS: You're a big city...

GIULIANI: And President Bush, who gets a tremendous amount of blame for everything, which he shouldn't, should get credit for that.

MATTHEWS: OK. You're a big city guy. Gun control is important in big cities. Let's face it, right? You're with that, right?

(CROSSTALK)

MATTHEWS: In other words, you don't like this right to carry thing that Thune from out in South Dakota is trying to push through...

GIULIANI: I think-I-I...

MATTHEWS: ... that says you can take a right to carry license out of South Dakota and walk into New York state with it.

GIULIANI: States' rights says to me New York should be able to make its choice. North Dakota should be able to make its choice.

MATTHEWS: OK. So you're against this deal.

GIULIANI: California should make their choice.

MATTHEWS: OK.

GIULIANI: That's a much better solution.

MATTHEWS: So you're against the thing they tried to do today.

GIULIANI: I think it makes more sense to leave it as a matter of states' right.

MATTHEWS: OK. Let me ask you about Sotomayor. I haven't heard you on this. She's a New Yorker. She grew up in New York, of Puerto Rican descent.

GIULIANI: I like all that.

MATTHEWS: Yes, I know. It's very political to be for her.

GIULIANI: And I was impressed with her.

MATTHEWS: And you're impressed with her. Would you vote for her?

You're a lawyer. You're a former prosecutor.

GIULIANI: You know, I-I...

MATTHEWS: You know as much as anybody could know.

GIULIANI: Probably-the answer is probably yes. And I will tell you probably yes is-it would have been the same for Ginsburg and for...

MATTHEWS: Breyer.

GIULIANI: ... and for Breyer, on the theory that I believe that the president gets his choice.

When we elected Barack Obama, we didn't think we were going to get a conservative justice. If he gives me a good justice, then I vote for her. Now, on that theory, they should have voted for Roberts; they should have voted for Alito. So, there is a bit of hypocrisy here.

MATTHEWS: How about Bork? Would you go that far?

GIULIANI: And Estrada should be-and Estrada should be on the court.

MATTHEWS: Would you have gone that far with Bork?

GIULIANI: Oh, I would have voted for Bork, sure. I think Bork was highly qualified.

(CROSSTALK)

MATTHEWS: Let me ask you about Governor Palin. You have been saying nice things about her. And I wonder if that's just political.

GIULIANI: No. It's not political.

(CROSSTALK)

GIULIANI: There's no need...

(CROSSTALK)

MATTHEWS: ... political.

MATTHEWS: You're from very different wings of the party than she is.

GIULIANI: But I respect her. And I think-and I honestly think she was treated horribly.

(LAUGHTER)

MATTHEWS: By whom?

GIULIANI: By everyone.

I think that...

(CROSSTALK)

MATTHEWS: Hey, I keep building her up. I keep saying that she's the most exciting politician in the country.

GIULIANI: She is.

(CROSSTALK)

MATTHEWS: I would love to see the Republicans take her seriously.

GIULIANI: I took her to Yankee Stadium.

MATTHEWS: Right.

GIULIANI: I was kind of concerned about it. Bronx is Democratic territory.

MATTHEWS: They didn't give her the Bronx cheer, huh?

(CROSSTALK)

GIULIANI: They gave her a tremendous reception. I think the audience has got to be 80 percent Democrat. They all wanted her autograph. They wanted her picture. They wanted to see what she looked like, what her husband looked like.

She has that star quality...

MATTHEWS: I agree.

GIULIANI: ... that kind of-that we...

(CROSSTALK)

GIULIANI: ... about Barack Obama.

MATTHEWS: Mr. Republican, would you vote for her if she ran against Barack Obama?

GIULIANI: If she ran against Barack Obama?

MATTHEWS: Yes.

GIULIANI: Yes, darned right I would.

MATTHEWS: You would? OK.

Would you support her if she were the nominee of the Republican Party generally? Would you campaign for her?

GIULIANI: Oh, if she were the nominee of the party, she was able to win the nomination of the party?

MATTHEWS: Yes.

(CROSSTALK)

GIULIANI: Yes. I support...

(CROSSTALK)

MATTHEWS: If she called you up and asked her to join her...

(CROSSTALK)

GIULIANI: But I don't know that I would support her right now with all the group of candidates that are out there.

(CROSSTALK)

MATTHEWS: Well, suppose she got the nomination and called you up and asked you to run with her?

GIULIANI: Oh, I'm not going to answer that question.

(CROSSTALK)

MATTHEWS: Why not? It's a good-it's a fun question.

GIULIANI: I have no idea.

(CROSSTALK)

MATTHEWS: You still harbor political hopes, then.

(CROSSTALK)

GIULIANI: I have no idea.

(CROSSTALK)

MATTHEWS: Otherwise, you would enjoy the question.

GIULIANI: I have no idea.

MATTHEWS: You would say, that's a fascinating idea, attractive candidate like that, a dazzler politically from the right. I'm from the center of the Republican Party, or even the moderate wing, if you're allowed to say that anymore. I would be a perfect running mate for her.

GIULIANI: And I'm running for vice president?

(CROSSTALK)

GIULIANI: I never had any desire to run for vice president.

(CROSSTALK)

MATTHEWS: OK. You're too proud.

(LAUGHTER)

MATTHEWS: Let me ask you about this native-born thing.

GIULIANI: Yes, we should get off that.

MATTHEWS: What do you make of people like Shelby, who is a ranking top Republican, saying things like he's saying? What do you make of...

GIULIANI: Look, we all make mistakes. And we all say things that are wrong.

(CROSSTALK)

MATTHEWS: No, these are not mistakes. These are deliberate statements.

"I haven't seen any birth certificate." That's the senator from Alabama. "I haven't seen any birth certificate."

A spokesman for Congresswoman Blackburn says, "People are losing faith in the system because he won't show his birth certificate."

I mean, these comments-Posey, this guy, look at these.

(CROSSTALK)

MATTHEWS: I have got the birth certificate right there. I showed it to you.

GIULIANI: Well, show it to them. Send it to them. They will keep quiet.

MATTHEWS: There it is again. I keep showing it to-Posey says he can't swear on a stack of Bibles he's a citizen or not.

You have got Rush Limbaugh out there saying, Jesus-oh, he says, God and Barack Obama, neither one has a birth certificate.

(LAUGHTER)

MATTHEWS: What is this about in your party?

GIULIANI: I don't know. I think maybe it's something we should get off.

(CROSSTALK)

GIULIANI: They all have a right to their own...

MATTHEWS: But why does your party-it's the un-Americanization of a candidate. Why does your party do this? To Dukakis. Every time...

GIULIANI: Oh, come on.

(CROSSTALK)

MATTHEWS: No, they do it over and over again.

GIULIANI: Look what the Democrats did to George Bush. I mean, he's a criminal. He should be investigated. He should be prosecuted.

(CROSSTALK)

MATTHEWS: No, no, no, but this undocumented alien crap that Rush Limbaugh is pushing, that he's somehow undocumented, that-Lou Dobbs does it. Everybody is doing it on the right now. He's not documented.

Why do you keep pushing that thing, your party?

GIULIANI: I don't push it.

You mean, why do some people in my party push it? I don't push it.

(CROSSTALK)

MATTHEWS: They're big shots.

(CROSSTALK)

MATTHEWS: Rush Limbaugh, you guys all think he's great, Rush Limbaugh. And he's doing it.

GIULIANI: I think he's great on a number of things. But...

MATTHEWS: You have got nine House members pushing that story.

GIULIANI: Every party has disagreements.

(CROSSTALK)

MATTHEWS: Does it have whackies? Does it have whack jobs?

GIULIANI: Every party has people who take up issues that aren't the best issues.

MATTHEWS: OK.

GIULIANI: And we can't be responsible for all of it. The Democrats have plenty of that.

(LAUGHTER)

MATTHEWS: But they're in your playpen, and you're responsible for them.

(LAUGHTER)

MATTHEWS: So, let me just put this to rest.

GIULIANI: Nobody put me in charge of...

(CROSSTALK)

MATTHEWS: The reason I brought this up is the guy who shot up the Holocaust Museum. This isn't a joke. These full-mooners are spreading this kind of talk. And then the people who are lunatic pick up on it and they think God's on their side in doing something about it. The guy shows up and blows away that African-American guy who...

(CROSSTALK)

MATTHEWS: ... protecting a museum.

(CROSSTALK)

GIULIANI: I think the Republican Party would be much better off if we stuck to the issues.

MATTHEWS: OK.

GIULIANI: I think there's nothing wrong with Barack Obama. I think he's a fine person. He has got a wonderful family.

I think he's doing-in certain respects, I admire the things that he's been able to accomplish and do. I think he has the wrong ideas, except this is a fight about principle, not about whether he's a citizen. I mean, that's over with. That's already been...

(CROSSTALK)

MATTHEWS: Do you have more of an electoral future than Hillary Clinton?

GIULIANI: I have no idea.

(LAUGHTER)

GIULIANI: You...

(CROSSTALK)

GIULIANI: ... thought we were going to be nominated.

(CROSSTALK)

MATTHEWS: I had been saying you both...

(CROSSTALK)

MATTHEWS: How do you remember? I thought you would both be the nominees. But I can't predict.

(LAUGHTER)

MATTHEWS: Politics is phenomenal, as you know, Mr. Mayor.

GIULIANI: It is. It is. It is phenomenal. This is a great-it's a great-this is a great period of time.

MATTHEWS: My best to your love.

GIULIANI: Thank you. Thank you very much.

MATTHEWS: And thank you very much, Rudy Giuliani. It's great to have you on.

Up next-he is running for governor. He thinks he can beat the younger Cuomo, even though he love the older Cuomo.

(LAUGHTER)

MATTHEWS: Up next, is Governor Mark Sanford still wearing his wedding ring?

(LAUGHTER)

MATTHEWS: He can't believe this stuff.

I didn't write that line.

We will tell you the HARDBALL "Sideshow."

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL. Time for the "Sideshow."

First up, it's hard to change the subject.

Just last month, South Carolina Governor Mark Sanford disappeared to Buenos Aires and admitted to a connection with an Argentinean woman. Well, yesterday, Sanford was hoping to get back to business with a press conference at a local DMV in order to talk about federal I.D. cards.

Well, the questioning didn't go as planned.

(BEGIN VIDEO CLIP)

QUESTION: Do you think your affair will always be a distraction?

GOV. MARK SANFORD ®, SOUTH CAROLINA: Life and the choices that we make begin each day anew. And, so, it's as much a distraction as you want to make it.

(CROSSTALK)

SANFORD: I-I'm going to move on with my life. The question is, will you-I turn it to you this way. Have you made a mistake large or small in your life?

QUESTION: I'm asking you.

SANFORD: Well, I'm asking you.

QUESTION: Where's your ring?

SANFORD: What's that?

QUESTION: Governor-Governor...

QUESTION: Where's the wedding ring?

(CROSSTALK)

QUESTION: Governor, where is your wedding ring, and why aren't you wearing it?

(CROSSTALK)

QUESTION: You're still married to your wife, correct? Or are you still taking trips down to Argentina to see your soul mate?

SANFORD: Keep going. Anything else?

(END VIDEO CLIP)

MATTHEWS: Why do politicians have to go through this ritual of calling things like this mistakes?

Did he think it was his wife down there waiting for him in Argentina? Did he make a mistake? Did he think it was his wife he was writing those e-mails to? Did he make a mistake?

Why doesn't he just say it is what it is? If he fell for the woman, shouldn't he keep his feelings about it to himself and his family? Why do these guys have to debase themselves for us?

Next up: Behind closed doors, catch this scene in South Korea's parliament earlier today. Members from the ruling party were hoping for a speedy vote on a reform bill that would ease restrictions on ownership of media networks.

Well, to stop them from doing it, some opposition members of Congress blocked the door with a pile of furniture, at which point the ruling party forced their way through that door and began trying to conduct a vote.

At this point, the opposition leaders stormed the parliamentary leader's podium and tried to stop the vote. They failed. The bill ended up being passed, however. Talk about a sharp-elbow democracy.

Now for tonight's "Big Number."

Back in May, not so long ago, born-again Democrat Senator Arlen Specter led Republican Pat Toomey by 20 points. Well, what a difference a few months have made. Old Toomey has closed the gap. According to a new Quinnipiac poll, Specter now leads Toomey 45-44, which means it's a one-point race. Given the limitations of polling, of course, it basically means it's a tie.

Folks, anything can happen here. People in Pennsylvania have this crazy idea that democracy means having a choice. We have got a one-point race for the Pennsylvania Senate in the 2010 -- tonight's "Big Number."

Up next: Nutty questions about the president's birth certificate are being raises not only at Republican town hall meetings, but also in the halls of Congress. What is the Republican Party going to do about this?

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

REBECCA JARVIS, CNBC CORRESPONDENT: I'm Rebecca Jarvis with your CNBC "Market Wrap."

The closing bell brought an end to the winning streak for the Dow and the S&P, but the 11th straight day of gains for the Nasdaq. The Dow Jones industrials lost 34 points, the S&P 500 down half-a-point, and the Nasdaq added about 10 points.

Disappointing earnings from Morgan Stanley and Wells Fargo put a damper on financials today. Wells Fargo ended the day 3.5 percent lower. Morgan Stanley lost a fraction-of-a-percent.

Qualcomm shares are losing ground in after-hours trading. They reported earnings slightly lower than last year, but, still, that was better than Wall Street had expected.

EBay reporting just after the bell also-the online auctioneer reported lower earnings that still managed to beat expectations.

And Amazon says it will buy the online shoe store Zappos.com for about $807 million in stock. An additional $40 million in cash and stock will go to Zappos employees.

That's it from CNBC. We're first in business worldwide-now back to

HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

Tonight, President Obama holds his fourth prime-time press conference, but some folks watching at home don't believe he's a legitimate president. Why? Because some right-wing conspiracy freaks out there are fueling rumors he's not an American because he does not have a birth certificate. Of course, that's baloney, but that doesn't stop the woman at-well, actually, this woman at Republican Congressman Mike Castle's town hall meeting in Delaware. Let's take a watch.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I want to go back to January 20, and I want to know why are you people ignoring his birth certificate.

(CHEERING AND APPLAUSE)

UNIDENTIFIED FEMALE: He is not an American citizen. He is a citizen of Kenya.

(END VIDEO CLIP)

MATTHEWS: "Looney Tunes."

And this craziness has spread to Capitol Hill for real now, where a group of congressional Republicans is pushing a bill to require presidential candidates to provide their birth certificates. Well, we know why-that is coming from.

Dee Dee Myers was press secretary to President Bill Clinton, is now a contributing editor to "Vanity Fair." And Tony Blankley was Newt Gingrich's press secretary when he was speaker of the House. He now writes a syndicated column.

This isn't a joke, actually. Senator Shelby, Richard Shelby, who has been around a long time, from Alabama, he has got a lot of rank and seniority. He says: I haven't seen any birth certificate. He's putting out that word.

We have got spokes-we have got somebody out here, Congresswoman Blackburn-we know her pretty well-from Tennessee said-her person is out putting the word out, people are losing faith in our system because they haven't seen his birth certificate.

(LAUGHTER)

MATTHEWS: And then, of course, we have got the-Posey, this guy Bill Posey from Florida, who's a U.S. congressman, saying, "I can't swear on a stack of Bibles whether he is or he is not a legitimate citizen."

Then you have got the guy Randy Neugebauer from Texas. He's got the guy that beat Charlie Stenholm down there. He doesn't know whether Obama is a citizen or not.

These guys are openly questioning whether he's an undocumented alien.

DEE DEE MYERS, FORMER CLINTON WHITE HOUSE PRESS SECRETARY: Right.

MATTHEWS: What's this about? It-it smacks to me of what the Republicans did to Mike Dukakis, de-Americanize the guy.

MYERS: Well, that was part of-there was a certain element that tried to do that from the beginning of the campaign until the end. And they have just picked up the thread of this.

I guess it's coming back around now because of that-Congressman Castle's town hall, which we saw. And you saw how quickly-you didn't show it just now, but the crowd turned on him. When he said, "I actually think he's an American citizen," the crowd turned on him.

But every...

MATTHEWS: They went with the woman.

MYERS: Yes, they went with the woman.

Every shred of evidence suggests that his birth certificate is legitimate. You have a copy of it right here. State officials in Hawaii...

MATTHEWS: I feel like I'm in court here. I have got to defend the guy.

(LAUGHTER)

MYERS: State officials in Hawaii, including...

(CROSSTALK)

MATTHEWS: He's not trying to get a job on a farm in California somewhere.

(CROSSTALK)

MATTHEWS: And we have to show the document here? I mean, what-what's going on here.

(CROSSTALK)

TONY BLANKLEY, REPUBLICAN STRATEGIST: Can you confirm the chain of custody of this document, sir?

(LAUGHTER)

MYERS: Right.

(LAUGHTER)

MATTHEWS: You take this. Excuse me. Let me move on to the other witness here.

(LAUGHTER)

MATTHEWS: Excuse me for a second. Back to you in a minute, Dee Dee.

Tony Blankley, sir, what is this about the Republican Party, that it contains this-this wing?

BLANKLEY: It's not about the Republican Party. It's about American politics.

Both parties, inevitably, have some faction or fraction of their base that refuses to accept a certain fact or believe something wrong about the other candidate. We had the Bush derangement syndrome. We had, as you recall, people who thought that Kennedy couldn't keep a secret from-from the pope because he was a Catholic.

MATTHEWS: Yes.

BLANKLEY: I remember hearing friends of parents of mine say that, Protestant.

MATTHEWS: Yes.

BLANKLEY: You-you had people who thought Eisenhower was a communist, and it didn't matter that his whole history...

(CROSSTALK)

BLANKLEY: Yes. Yes. This happens.

Now, what happens is, the politicians...

MATTHEWS: No.

(CROSSTALK)

MATTHEWS: And his brother Milton were both...

(CROSSTALK)

BLANKLEY: Yes.

(CROSSTALK)

MATTHEWS: I mean, were both communists, yes.

BLANKLEY: Now, what happens in politics, as we all understand, is that no politician wants to offend any part of his base.

MATTHEWS: Even those who are certifiable?

BLANKLEY: So, for instance, I can remember many liberal Democratic-well, not even liberal-Democratic congressmen over the last-people-over the eight years who wouldn't fundamentally disagree with the crazy stuff that some of their people said about George Bush or-or the vice president.

It didn't mean that they-they shared the view. I mean, they-as a practical matter, we have all been in politics. We understand that's what happens.

MATTHEWS: OK.

What do make of-what you make of-but, before we go completely legitimate here with who is doing it...

(LAUGHTER)

MATTHEWS: ... because I want to this-about this congressman who was on the show last night. I practically had to water-board him last night.

(LAUGHTER)

MATTHEWS: Well, here he is last night. He seems like a good guy, John Campbell.

He came on with the pretense he was just doing this to clear the air, as if it needed to be cleared. Here he is talking about a requirement in this bill that presidential candidates show their birth certificates, like they're going for a job somewhere. Let's take a look. I don't care if they have to show their birth certificates, but we know why they're doing this. Here we go.

(BEGIN VIDEO CLIP)

MATTHEWS: OK, let me ask you this, do you have any doubts, Congressman, about the authentic native birth, in this country, of our president? do you have any doubts.

REP. JOHN CAMPBELL ®, CALIFORNIA: Chris, my-it doesn't matter.

MATTHEWS: Do you have any doubts?

CAMPBELL: It doesn't matter if I have doubts or not.

MATTHEWS: You won't answer this simple question.

(CROSS TALK)

MATTHEWS: No, no. You are feeding the whacko wing of your party. Do you believe that Barack Obama is a legitimate native-born American or not?

CAMPBELL: That is not what this bill is about, Chris.

MATTHEWS: What do you believe?

CAMPBELL: As far as I know, yes, OK?

MATTHEWS: As far as you know? I'm showing you his birth certificate.

CAMPBELL: I'm looking in a camera right now. I can't see that.

MATTHEWS: Do you want me to mail it to you?

CAMPBELL: No.

(END VIDEO CLIP)

MATTHEWS: Well, it got a little heated. He was a good sport about it. Clearly, he changed direction. He went from saying I don't know to I know.

BLANKLEY: That reminded me of what Hillary did during the campaign, when she said to the best of my knowledge she didn't know. Same exact thing.

(CROSS TALK)

MYERS: Not the same exact thing.

BLANKLEY: She didn't want to offend that part of her --

MATTHEWS: No, she wanted to win the fight. If you can get doubts about your opponent's basic right to run, you've got a leg up on them.

BLANKLEY: Look, that's the thing. You were having fun. He was wiggling a little bit.

MATTHEWS: I think he was a good sport. Crazy to cosponsor a bill he didn't really believe in though.

MYERS: I think he does believe it. I thinks he thinks it helps in his base. The problem for the Republicans on this-you're right. Tony's absolutely right. This is something that happens in both parties. The problem for the Republican party now is they're trying to rebuild the base that's been shrunken by events over the last decade. And it doesn't help when you are trying to build from the fringes in. You need to build from the middle out.

MATTHEWS: It's more prevalent on the Democratic side, to be even Stephen here.

(CROSS TALK)

MATTHEWS: -- believes that the Ohio election results were fixed, that the Diebold Company was in league with the Republicans, and they fixed the machines out there. Isn't that equivalent.

BLANKLEY: That's a good one.

MATTHEWS: Would you say that's equivalent? Do you want to defend that?

MYERS: That person is therefore not a legitimate president in either election.

BLANKLEY: -- crazy when they said that.

MYERS: I believe that Bush was-I mean he didn't win the popular vote.

MATTHEWS: Do you believe that those machines were fixed?

MYERS: No, of course, not. I want to remind the people that Bush did not get a majority of the popular vote in 2000. But I still believe that he was legitimately elected.

(CROSS TALK)

MATTHEWS: You guys are both communication experts. I mean this, seriously. I used to do it. We both all did it. In fact, we all three ex-communications experts, flacks. What's he have to do tonight, the president?

MYERS: He has to reassure the American public that he has a plan for health care that's going to be good for their individual families.

MATTHEWS: And for people who have health insurance.

MYERS: Right, because 90 percent of Americans have health insurance. And the majority of people feel pretty good about that, although the healthier they are, the better they feel about their insurance, which is an interesting wrinkle.

MATTHEWS: Tony, the president seems to be off the tracks right now a bit. I don't think so a week or two ago. But right now I feel that with Orrin Hatch dropping off of the committee of willing, it's now down to two Republicans, Olympia Snowe of Maine and Charles Grassley of Ohio on that Finance Committee. It's pretty precarious. And Mike Enzi from Wyoming. It's pretty precarious now for them. They got to get three Republicans to help them.

BLANKLEY: I don't know the head count there. Whip counts don't matter until you're up to the vote.

MATTHEWS: I'm talking about getting out of committee, getting to the floor.

BLANKLEY: Yes. But here's the fundamental problem that I think the president has: his vision, as he's described it, about health care and the deficits and reducing costs, are not consistent with what the CBO says the legislation coming up is about. That fundamental contradiction he's got to fix somehow. He's either got to fix the legislation so it's consistent with his vision of what he's been calling for since the campaign, or he's got to modify his vision in some way.

But if he keeps trying to push those two things that aren't the same together, I think eventually he's going to lose more and more ground. So he needs to make a cold decision sometime in the next-I think this is going to happen in September or October. So it's not going to happen next week.

But he needs to decide which one of those pieces do I want to fix? Do I want to change my vision or do I want to change the stuff --

MATTHEWS: You're saying it's a compromise.

BLANKLEY: He's got to be consistent.

(CROSS TALK)

MATTHEWS: The numbers have to match the policy. Do you agree with that?

MYERS: I agree that right now he's losing the argument on whether this will save money. I think you can make a very strong argument that more people will be covered under the bills we see coming out of the House and the one being negotiated in the Senate. But CBO keeps saying costs are going to rise, not shrink.

MATTHEWS: How come the Democrats didn't raise the cost of the Iraq war before the war in the way Republicans raise the cost of health care before-

MYERS: Circumstances were different. They were trying to go along with it by leading enough wiggle room to say later, I told you so.

BLANKLEY: Here's the Democrats' problem: Republicans or any opponents of the president can take his own words when political ju-jitsu-his own words of what he wants to accomplish, and oppose them on the legislation that's coming out.

MATTHEWS: You're good at this. Thank you very much. You both believe the president's an actual native born American. Right?

BLANKLEY: I do. I do.

MYERS: With all my heart.

MATTHEWS: You're among the sane. Thank you, Dee Dee Myers. Thank you, Tony Blankley. You can't speak for Newt though, can you.

Up next, a look ahead to tonight's press conference with President Obama. Can he win public support for an historic health care plan tonight? And this is the night. This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We're back. Time now for the politics fix. "Newsweek's" Howard Fineman, my buddy, an MSNBC political analyst, of course, and Roger Simon is chief political columnist for "Politico."

Roger, your piece the other day in "Politico" about your experience firsthand with Walter Cronkite was dreamy. It was wonderful.

ROGER SIMON, "POLITICO": Thank you. Very kind of you.

MATTHEWS: That was very nice of you to write that. Let's ask, seriously, you first, what does the president got to do? Can he still do it? You're pretty good at the bottom line. Is it already lost, health care?

HOWARD FINEMAN, "NEWSWEEK": No, it's not lost. The American people want some version of health care reform, and they want the reassurance that he's going to try to give them tonight. I was over at the White House a little earlier listening to the pre-spin from them. Two key words, security and stability.

MATTHEWS: Can you tell me who was briefing?

FINEMAN: No, I can't.

MATTHEWS: I think I can guess, though, right?

FINEMAN: Yes, security and stability, because the Republicans have had some success in saying, watch out for this risky thing that's going to destabilize the insurance you already have. So his main audience tonight are the 85 percent of the American people who already have insurance.

MATTHEWS: The people that Michael Moore addressed his movie "Sicko" to really, not the poor people who work hard and don't have health insurance, but the people who find out after they get in trouble in terms of medical challenge they're not covered.

SIMON: He's got to change his selling job. He's got to start tonight. He's been trying to scare people into the arms of the health care reform. If we don't reform the system, it will go bankrupt and everyone will lose their insurance. That's what he said. The trouble is the CBO statement by Douglas Elmendorf sort of knocked the props from under that.

MATTHEWS: It outbid them for fear.

SIMON: We'll go bankrupt faster under your system. And secondly, the desire for change has been dulled a little bit. Just six months ago, seven months ago, eight months ago, we all wanted change. Great, get rid of the old guys. Change is wonderful. Let's do it.

Now people are saying hey, what if it's expensive? What if my taxes are going to go up? What if I might lose my job? Is this plan really a good idea? He's got to sell those people on the fact that this change will be good for them, not just to scare them into the arms-

MATTHEWS: Let's talk about the medium we're on right now, and whether it really works in these kinds of moments. My experience and our experience on Capitol Hill is when you want to get down to the short strokes, you have to get down to the bottom. And you need two or three members to do something for you.

Is television the right medium? In other words, would he be better off having dinner to night with Chuck Grassley or Mike Enzi? I'm serious, and Olympia Snowe? Would that be a better dinner for him than meeting five or 20 million people tonight?

FINEMAN: I think the easy answer is that he has to do both, because the numbers are slipping on this. And Roger is right, people haven't been quite scared into the arms of health care reform. But they are also in this recession fearful of change, concerned about keeping the health care that they have.

So one of the things Obama is going to stress tonight is new insurance regulation that will make sure you can keep the health care you have, that you can move it from job to job.

MATTHEWS: Why is that the most important thing?

FINEMAN: That if you have a pre-existing condition and you go to another health care company, that they can't deny your benefits. He's going to stress the stability side of the equation for exactly the reasons Roger says. And that's necessary.

MATTHEWS: Here's how he could be doing better. Remember back in that campaign when Harris Wafford (ph) beat Thornberg (ph) in Pennsylvania, a state that had 99 percent insured. He said you got to have health insurance, because if a criminal has a right to a lawyer, the average working family has a right to a doctor.

And I asked Paul Begala why it worked? He was working the campaign. He said because people are worried about losing their jobs and the first thing they worry about when they lose their job, if you're a spouse or a worker, is you're going to lose your health insurance. So talk to those people.

SIMON: We should, in fairness-the president has already accomplished quite a bit. Some things are now all accepted by all sides in this matter that weren't accepted just a few years ago. Universality, the fact that you get to keep your health insurance, the fact that insurance companies will no longer be allowed to turn people down.

MATTHEWS: Why doesn't he sell that stuff? Portability, pre-existing conditions, those are the language of people who care.

FINEMAN: That's what I heard at the White House today. I believe we'll hear it tonight.

MATTHEWS: Howard Fineman, Roger Simon, back in a minute with more of the fix.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Will we ever get to see you as president of the United States?

HILLARY CLINTON, SECRETARY OF STATE: Wow, that's not anything I'm at all thinking about. I think the job I have now is incredibly demanding.

(END VIDEO CLIP)

MATTHEWS: Wow, they want to know. The people demand to know in Thailand, are you going to be president some day. Roger?

SIMON: Joe Biden is saving this tape. I don't know, she would probably make a pretty good candidate. She would only be 69, but Joe Biden would already be 74.

MATTHEWS: She'll be coming off the world stage to run for president.

Pretty good situation.

SIMON: She'd run a much smarter campaign with smarter people and a different pollster.

MATTHEWS: I think she would have a different tone too. I think she would come out of this as a heavy weight who didn't have to sort of be plaintiff trying to get it. She would have the gravitas already.

FINEMAN: I am just always in awe of the irrepressibility of the Clintons. They're going to keep their options open wherever it is on the planet.

(CROSS TALK)

MATTHEWS: I don't always show all fairness. A lot of these guys, including her. But isn't it fair to say why should she foreclose it?

SIMON: She shouldn't foreclose it.

MATTHEWS: Biden won't.

SIMON: The only way she'd foreclose if they gave her the Supreme Court instead.

MATTHEWS: Gave her? that would be-

SIMON: I thought she was going to be appointed this time. I really did.

FINEMAN: What I like about that is here we are, they're over in Thailand. But she's considering this as though she were sitting here on HARDBALL.

MATTHEWS: Because we brought it here on television.

FINEMAN: She knew --

MATTHEWS: that I was going to-

FINEMAN: No, that wherever she goes, whatever she says anywhere on the planet, no matter how much of a throw-away and a setup press conference, she's going to make news. She's going to make news and people are going to watch.

MATTHEWS: How's she doing? Roger Simon?

SIMON: I think she's doing fine. She's doing especially well in not doing too fine. She does not upstage the president or try to.

MATTHEWS: She's been ministerial. She's done the job without showing off.

SIMON: Exactly.

FINEMAN: Yes, and I think she'll continue to. She's nothing if not disciplined. There's no more disciplined-

MATTHEWS: Bill Clinton down in Haiti as a special envoy with Paul Farmer. How has he been doing?

SIMON: I think he's been doing well. He's been doing everything that an ex-president should do. That doesn't include playing golf and serving on boards of directors. He's been doing good stuff.

MATTHEWS: I think so too.

FINEMAN: He has. And by the way, all of his work as far as healthy foods for kids in schools, which there has been a lot of attention to lately around the health care bill, is very worthy stuff.

MATTHEWS: This is the undergirding of the Democratic party unity right now, this coalition with the Clintons. Nobody talks or writes about it. It's the key. Not just on the Middle East and tricky questions like that. They are together as a party, the Democrats, like they've never been before because of this appointment. I think the Clintons are key to any success Barack has.

Anyway, Howard Fineman, Roger Simon, you heard it here. Join us again one hour from now at 7:00 Eastern for more HARDBALL live. Then at 8:00 pm Eastern for President Obama's live press conference tonight from the White House. That will be right here on MSNBC.

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.

END

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