updated 7/24/2009 10:24:12 AM ET 2009-07-24T14:24:12

Guests: Rebecca Jarvis, Lynn Sweet, Helene Cooper, Michael Duffy, David Corn, Chuck Todd, Josh Gerstein, G. Gordon Liddy, E. Steven Collins

CHRIS MATTHEWS, HOST:  Police story.

Let‘s play HARDBALL.

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

Taking sides.  President Obama asks for last night‘s news conference to talk about health care, but the biggest news may end up being what he said about the arrest of an African-American scholar, Henry Louis Gates.  He said the Cambridge, Massachusetts, police acted, quote, “stupidly” in arresting Gates.

Well, the case and the president‘s answer touched a very sensitive issue in American politics and history.  It‘s called racial profiling, police treating minorities as suspects because they‘re minorities.  We‘ll be joined by, among others tonight, Lynn Sweet of “The Chicago Sun-Times,” who raised that provocative question at last night‘s news conference.

Also Cheney versus Bush.  This week‘s “Time” magazine just out today has a fascinating cover story on how Vice President Cheney tried and failed to get President Obama (ph) to pardon Cheney‘s former chief of staff, Scooter Libby.  The story says Cheney, who some White House staff thought might be engaging in a cover-up here, came close to crossing the line with Mr. Bush.  We‘ll dig into the details in a moment.

Plus, more on those Republicans, the so-called “birthers” who insist in the face of all the evidence that Barack Obama isn‘t an American.  One of the most prominent of them, G. Gordon Liddy of Watergate and radio talk show fame, will join us later to explain what‘s behind this and why he‘s a part of it.

Sticking with the birthers for a moment, Jon Stuart had the best take on why this movement is insanity, and we‘ll have that in the HARDBALL “Sideshow” tonight.

And back to last night.  Why did the president call a primetime news conference about health care if he had really nothing new to say on the matter?  We‘ll ask NBC News chief White House correspondent Chuck Todd whether last night was a lost opportunity for the president.

But we start with what President Obama said last night about the arrest of Harvard professor Henry Louis Gates.  We‘re expecting, by the way, a news conference from the Cambridge Police Department at any moment now.  But with us now is Lynn Sweet of “The Chicago Sun-Times,” who asked the president about the Gates arrest at last night‘s news conference.  And we also have the top reporter for “The New York Times,” Helene Cooper, who‘s White House correspondent for “The Times,” and author of the book “The House of Sugar Beach: In Search of a Lost American Childhood,” now out in paperback.

Thank you, Helene, and thank you—oh, I‘m sorry.  We go now to a hot news story.  Here‘s the Cambridge police holding the presser.

UNIDENTIFIED MALE:  This time in the press conference, I want to turn it over to Commissioner Robert C. Haas of the Cambridge Police Department.

COMMISSIONER ROBERT HAAS, CAMBRIDGE POLICE DEPARTMENT:  Thank you.  I‘m going to read a short statement, then I‘ll be available for some questions.  Thank you for being here.  I realize this is an issue that attracted attention of many people across the country.  I appreciate the seriousness of the events of July 16th and the need for people to hear from me directly, none moreso than the Cambridge Police Department and the members of this community.

I stand behind this department and all the people that work in the city every day to ensure the safety of its residents.  This is a difficult time for the department, Sergeant Crowley and his family.  This department has worked hard to continually improve its reputation in the community.  I am proud of the relationships that we have built with community groups, community leaders and the residents of an economically, educationally and ethnically diverse city.  I will continue my commitment to the city to lead a department whose mission is to serve the city and to do everything in my power to keep it safe.

I believe that Sergeant Crowley acted in a way that is consistent with his training at the department and consistent with national standards of law enforcement protocol.  I do not believe his actions in any way were racially motivated.

I have long held the view that every interaction has potential to teach us lessons in how we conduct ourselves both professionally and personally.  I certainly feel that way now.  I believe that everyone regretted this incident even occurred.  I cannot imagine the outcome is one that anyone is happy with, and I am confident that we will find ourselves in a much better place after we have greater perspective.

I believe—I am also mindful every day how easy it is to evaluate an incident after it has occurred and make judgments.  This is an opportunity to re-examine our policies and procedures, and I am confident that good will come out of this unfortunate situation that we deeply regret occurred.

I‘m in the process of forming a panel of independent notable professionals to join us in an analysis of the July 16th incident, and I invite them to review the entire incident, make recommendations on improvements that can be made.  I look forward to that process, and I want to reassure the community that the department will make records, documentation and staff available for that panel.  I anticipate that this will be a way for the community to provide input, and a final report will be available for public review.

In the meantime, I believe that we should let the process develop, and I ask the media to be respectful of the Crowley family.  I‘ll take a few questions at this time.

QUESTION:  If Sergeant Crowley has done nothing wrong, what can you learn from this?  What can you do differently?

HAAS:  Every time we look at a situation, and a especially situation of this magnitude, I believe that there is always a better way of doing something in the future.  And I think we take this opportunity—it would be a mistake not to take this opportunity to re-examine it and figure out how we things in a better way so we can de-escalate situations.

(COMMERCIAL BREAK)

QUESTION:  The president of the United States said last night—he called it—the action of the Cambridge Police Department—they acted, quote, “stupidly.”  Your response to the president of the United States.

HAAS:  My response is that this department is deeply pained and takes its professional pride seriously.  And the department is basically very much taking this seriously, and I think again, at the end of this process, we‘ll have a much stronger police department because of this crisis.

QUESTION:  What about what the president said, though, Commissioner?

HAAS:  That‘s—I believe that—again, I think it deeply hurts the pride of this agency, and that we take our professional careers seriously.

QUESTION:  If Sergeant Crowley acted by the book and you stand by what he did, why did you drop the charges?

HAAS:  We basically felt that this was a situation that we needed to move on from and that we didn‘t want this to be a prolonged situation and we needed to focus back on what we do in terms of providing safety and protection for this community.

QUESTION:  Professor Gates has called your Sergeant Crowley a “rogue cop.”  He did so on national television.

HAAS:  Sergeant Crowley is a stellar member of this department.  I rely on his judgment every day.  He‘s got a long career.  He‘s grown up in this city.  He grew up in a very diverse community.  And I don‘t consider him a rogue cop in any way.  I think he basically did the best for the situation that presented to him.  He was thrust into a crime in progress, as it was reported, and he tried to work his way through that situation.

(CROSSTALK)

QUESTION:  Have there been any complaints against him in the past?

HAAS:  We are checking our records now to see if there‘s any formal complaints ever lodged against Sergeant Crowley.

QUESTION:  How about any commendations?

HAAS:  Sergeant Crowley has been widely recognized.  In fact, he‘s one of our certified instructors in the department.  And again, he‘s got a job with responsibility and he exercises a great deal of independent judgment every day.

(CROSSTALK)

QUESTION:  ... officers to arrive on the scene (INAUDIBLE) understand correctly, were Latino and African-Americans.  What have they told you?

MATTHEWS:  Well, we‘re back.  We‘re going to cut back from that because I think the announcement‘s been made.

It seems to me, Lynn Sweet and Helene Cooper, that the Cambridge Police Department is taking this seriously.  They‘re standing by their man, this Sergeant Crowley, who was engaged in that incident last night with the professor at Harvard.

Let‘s go back to what we take care of here, as that commission makes its report in the next couple of days and weeks, the president of the United States.  What‘s the sense of the White House, Lynn?  You raised the question last night, you asked it.

Here‘s what President Obama said last night after your question about the arrest of Professor Gates.  Let‘s listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  The police are doing what they should.  There‘s a call, they go investigate what happens.  My understanding is at that point, Professor Gates is already in his house.  The police officer comes in.  I‘m sure there‘s some exchange of words, but my understanding is, is that Professor Gates then shows his ID to show that this is his house, and at that point, he gets arrested for disorderly conduct, charges which are later dropped.

(END VIDEO CLIP)

MATTHEWS:  Well, Lynn, the president—what‘s the sense?  Were you surprised he was so engaged and took—basically, took sides in this case, on the side of the professor against the police, saying they acted “stupidly,” saying that the professor provided his ID, although the police report says he did not initially provide his ID, said that the man lost his keys, when in fact, he hadn‘t lost his—he got a couple facts wrong last night, the president, apparently.

LYNN SWEET, “CHICAGO SUN-TIMES”:  I‘ll tell you, I was surprised that he used that “stupidly” phrase.  This is—I‘ve followed him for so many years, Chris.  He‘s usually so in control.  To see something—to say something that is a kind of a radioactive phrase that could just hurl out into the talk show and blogosphere universe—and also, you could be judgmental without having used that kind of language.

You know, I knew that Professor Gates was a friend of his.  I knew that Obama had lived in Cambridge when he was in law school.  I knew that, you know, he did, as he reminded all of us when he talked about it—that he had spent many years dealing with profiling issues in the state senate.  But even so, I was surprised with the passion and emotion that he brought to this answer.

MATTHEWS:  Well, here‘s what the president said late today.  I want your response to this, Lynn.  You cover the president all the time.  Here‘s what he said today.  Quote, “I have to say, I‘m surprised by the controversy surrounding my statement because I think it was pretty straightforward commentary—it was a pretty straightforward commentary.  You probably don‘t need to handcuff a guy, a middle-aged man who uses a cane who‘s in his own home.”

The White House also put the statement the president was not saying that the officer, Crowley, the sergeant, was in fact, stupid.  The situation got out of hand.  So they‘re softening their criticism.

HELENE COOPER, “NEW YORK TIMES”:  Yes, but they are still also backing up what he said.  They didn‘t—I don‘t think they walked away from his criticism very much at all today, not when Robert Gibbs talked to reporters on Air Force One on the way to Cleveland this afternoon and not when President Obama repeated it later today in an interview.

I thought it was really interesting how comfortable President Obama sounded, after listening to that hour-long interview, where he basically filibustered with so many of these health care questions and we were, you know, practically falling asleep.  I mean, he had his talking points prepared.  And then he got to Lynn‘s question, and for that first time in that entire hour, he sounded on point.  It was as if you were talking to him in a bar.  You know, it was like you and I are in a bar and we were talking, What do we think about this?  And you know, in a lot of ways, that seemed almost refreshing after listening to the health care—the health care...

SWEET:  I got a lot of flak today from readers who thought my question was inappropriate because I should have asked yet another question on health care.  And this was not a press conference called where everyone had to ask health care questions.  It was just a press conference.

MATTHEWS:  What kind of...

(CROSSTALK)

SWEET:  I had it from...

MATTHEWS:  Were they anti-Obama or pro-Obama?

SWEET:  Well, it came from both ends.  People who thought that—who were—wanted the Obama agenda to get advanced in Congress thought that I created a distraction, and people that were against Obama thought that I was a plant, which, by the way I was not and the White House had no idea what I would ask.

MATTHEWS:  Yes.

SWEET:  So...

MATTHEWS:  I wouldn‘t take those comments too seriously.

SWEET:  Well, but...

MATTHEWS:  I wouldn‘t even read them.

SWEET:  I...

(LAUGHTER)

COOPER:  But the Obama—White House officials did say today that they expect—they expected that at some point, President Obama would get asked about the Gates issue.

MATTHEWS:  Yes.

SWEET:  But that‘s...

(CROSSTALK)

MATTHEWS:  Let me ask you...

(CROSSTALK)

MATTHEWS:  Here we are, leading the show with it tonight because it‘s got legs, as we say in the journalism business.  The president weighed in, in a particularity, in a criminal—not a criminal case, but what could have been a criminal case.  I‘m remembering back to Richard Nixon and the Manson case, something far more severe, obviously, a murder case, a multiple murder case, when the president got in trouble for venturing any opinion in a matter involving the police.

SWEET:  That...

MATTHEWS:  Should a president be venturing factual claims about a case involving potential criminal charges?

SWEET:  I—I—you would say no.  He could have still stood up for his friend, Professor Gates, and said, as he—he started to say the right thing, right, “I really don‘t know the facts but,” and then he said the “acted stupidly,” which I thought said he came to the conclusion...

MATTHEWS:  Right.

SWEET:  ... no matter what...

COOPER:  I‘m not so—I don‘t know about that.  I don‘t want to get into the position of opining on this, but I think at some point, you‘re the president of the United States, and if somebody asks you a question, as you did, you want him to answer it, and he did.

SWEET:  And that I appreciate.  But if you‘re looking at the part where, Did he go too far for somebody who‘s usually measured in drawing a conclusion as to what happened, you know, maybe he did.  But...

COOPER:  But I think that underestimates the anger in the black community over this.

MATTHEWS:  Yes.

COOPER:  I mean, there are a lot of people who—when you‘ve lived in sort of that skin for that long, you‘ve dealt with racial profiling, I think it‘s really easy to say that a president—you know, a president should be measured in his response.  And I think a lot of what he did spoke spoke...

MATTHEWS:  Well...

SWEET:  Oh, absolutely...

(CROSSTALK)

MATTHEWS:  I admit, I respond to the Rorschach test like everybody else on earth.  When you hear about something and you weren‘t there, you make your own judgments and project our own life experience into that situation.  I think the president did that, as well as we all are doing it.

SWEET:  And here‘s what makes this different.

MATTHEWS:  Everybody does that.

SWEET:  Here‘s what makes this very different.  Of all the people in the world—just think, this was a situation that involved someone he actually knew.  The lawyer he got, Charles Ogletree, is very close to the Obamas.

MATTHEWS:  Right.

SWEET:  They—you know, he went—he lived in Cambridge.  He went to law school there.  He knows this person.  So this was not an abstract case where you‘re just saying there was a gentleman who had an incident...

MATTHEWS:  That does explain why he would be so sympathetic so quickly.  Anyway, thank you, guys.  Thank you, Lynn Sweet.  Thank you, Helene Cooper.  Top reporters here.

Coming up: Cheney—that‘s how you pronounce it—Cheney versus Bush.  “Time” magazine reports today that in the last days of the Bush presidency, former vice president Dick Cheney got in President Bush‘s face, pushing him hard for a pardon for his long-time chief of staff, Scooter Libby.  The White House staff thinks he may have been part a cover-up.  They‘re talking about the vice president here, who wanted the cover-up continued by getting his guy a pardon.  Inside that fight coming up next.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  “Time” magazine‘s cover story out today, a special report on the final days of the Bush and Cheney administrations.  It describes a vice president obsessed with convincing the president to give his aide, his top aide, Scooter Libby, a pardon.  And it shows a strained relationship between Bush and Cheney in those final days.

Michael Duffy is assistant managing editor of “Time” and David Corn is a “Washington Post”—well, he is the bureau chief for “Mother Jones” and a columnist for “Congressional Quarterly” politics.

Let‘s go to this, Mike Duffy.  Let‘s show a big (INAUDIBLE) Here‘s an excerpt from your piece on a concern about a cover-up.  Quote, “And there was a darker possibility.  As a former Bush senior aide explains, quote, ‘I‘m sure the president and Josh Bolten‘ “—that‘s the president‘s chief of staff—“ ‘were afraid, had a concern, and Fred Fielding, of course, the president‘s counsel, had a concern that somewhere deep in there, there was a cover-up.”

Your piece is pretty astounding.  It says the vice president of the United States was involved in a cover-up of his behavior by trying to get a pardon for his chief of staff because his chief of staff was covering for him.

MICHAEL DUFFY, “TIME”:  I think even the White House wasn‘t entirely sure.  That‘s what that quote suggests, that when it came to the moment, the third time that officials had sought a pardon for Scooter Libby—once in 2007, once in 2009, and then on the very last four or five days of the Bush era—President Bush had several concerns about whether it was true.  One, was he—did he show any repentance?  Did he show any remorse?  Two, did he lie or not?  And three, at the back of their minds, said one official to us, even they weren‘t sure whether perhaps Scooter Libby had someone taken the fall in the investigation for his boss.

MATTHEWS:  This all gets to the question of why we went to war with Iraq, the WMD case that was made by the vice president‘s office, the role Scooter Libby played.  He was in deep all the way with everything Cheney did.  Cheney wanted him pardoned because Cheney wants him free and not sitting back there without his law license, maybe wanting to write a book some day to provide for his own future.

DAVID CORN, “MOTHER JONES”:  Cheney is the only—is the only person I think in Washington who can say with conviction that Scooter Libby is an innocent man.  As the piece in “Time” showed, even people within the Bush administration --  you asked the question, Did Scooter Libby lie to the FBI?  That was the—what he was tried for, not for being a leaker.  Did he lie to the FBI?  And they all came to the conclusion that, basically, yes, he did.  Now, you raised the point, Why did he lie?  Well, it was Dick Cheney who told Scooter Libby that Valerie Plame worked for the counterproliferation division at the CIA, which...

MATTHEWS:  That‘s what “Time” reports today, and you know that...

(CROSSTALK)

CORN:  ... what Mike Isikoff and I reported in our book, too.  There‘s a lot of overlap here.  That‘s not a new fact, that Cheney was the one who told Scooter Libby where she worked, and that earlier, Scooter Libby, on behalf of Dick Cheney, had been rounding up information from the State Department and the CIA on Valerie Wilson.

Then when the investigators come along a couple months later to look into all this, he says, Oh, I heard it from Tim Russert.

MATTHEWS:  Yes.

CORN:  And he says that he—it‘s his lying, which is why it—why he—why he was convicted was he said he completely forgot that Dick Cheney ever talked to him about this, and then when he heard it from Tim Russert, it was like he was learning it for the first time.  A jury listened to him say that.  They said, That‘s baloney.  That‘s why he was convicted.

MATTHEWS:  Let‘s talk about where this ends right now.  The president said no to him.

DUFFY:  Three times.

MATTHEWS:  The president said no.  Do you have a sense from your reporting that the president believed that Scooter Libby and the vice president were in cahoots on trying to out Valerie Wilson as a CIA agent, as part of the effort to cover up, basically, the whole question of why we went to war with Iraq?

DUFFY:  There‘s some evidence in the grand jury testimony, in fact, that came out in the trial that, perhaps, the vice president and Libby actually asked Bush to come to Scooter‘s defense at the time in 2003. 

It‘s not clear—and I don‘t know, we don‘t know—whether Bush was aware that that was incorrect, whether he found out later, whether he cares even now.  What‘s clear is that, when it came time to decide to cut this guy a second break, under considerable pressure from the vice president, pressure that was really unrelenting, he—he declined. 

MATTHEWS:  Here is a guy, Scooter Libby, right, who came down to Washington, gave up a big white shoe law firm practice in Philadelphia.  He could have made a lot of money.  But he wanted to come down here and become one of those wise men, one of those great people over the years, last 50 years or so, in the Cold War period, who basically stood up for America for no money, the good guys. 

CORN:  Mm-hmm. 

MATTHEWS:  He came down here to play that role.  He‘s a bit to the right.  He‘s a neoconservative.  He served this president and vice president. 

He didn‘t tell the truth to the prosecutors for one reason.  There‘s only one explanation why he didn‘t tell the proof—the prosecutors.  Because he didn‘t want to tell what was going on in the administration.  He wasn‘t out robbing gas stations at night.  He wasn‘t doing something else outside the line of—of duty. 

He was performing his political duty on behalf of this administration. 

And even the vice president said, don‘t leave one of our guys in the field. 

What‘s he say?  Don‘t leave one of our combatants in the field. 

(CROSSTALK)

DUFFY:  Don‘t leave anyone on the battlefield.

MATTHEWS:  On the battle—so, he admitted that he was part of the team.  So, if the president knows he was part of the team, knew he was doing the business of the team, then he knows he was lying for the team.  That‘s the obvious fact here. 

(CROSSTALK)

CORN:  Well, yes.  Well, the president doesn‘t want to acknowledge that he was lying to protect the president‘s number-one guy, which is Dick Cheney. 

I mean, Dick Cheney says, you don‘t leave someone on the team.  But, you know, Scooter Libby took a bullet for Dick Cheney.  It‘s...

MATTHEWS:  Why? 

DUFFY:  Why?  I think there are two reasons. 

Well, I think the overarching reason is, he just didn‘t want to admit that Dick Cheney and he were—were trying to dig up whatever they could find on Joe Wilson—and it turned—led to his wife—to discredit...

(CROSSTALK)

MATTHEWS:  By the way, this is going to help—this is going to help that movie a lot, your story, by the way...

(CROSSTALK)

CORN:  Yes. 

(CROSSTALK)

MATTHEWS:  ... because this opens up the whole wound again about Scooter Libby.  It reminds—we‘re all getting reminded of this horrible story about how we get talked into the war with phony WMD, how they got upset by the fact that the CIA was blaming them for the phony WMD, so they start blaming the CIA, including Valerie Wilson of the CIA. 

(CROSSTALK)

CORN:  But, remember, there‘s—there also is legal—a question of possible legal liability here. 

Leaking Valerie Wilson‘s name was a possible federal offense.  So, Scooter Libby had to worry about his role in that and he had to worry about what—Dick Cheney‘s role in that, too.  So, it wasn‘t just covering up a political act.  It was covering up a possible crime. 

So, he took one not for the team.  He took one for his leader, being Cheney, not Bush.  And I think Cheney is being somewhat of a stand-up guy.  I think he‘s delusional when he says that Scooter Libby is—is an innocent person.  But he was trying to protect the guy who took a bullet for him.

MATTHEWS:  When Sean Wilson—when Sean—when Sean—what‘s his name?

CORN:  Penn.

MATTHEWS:  Sean Penn shows up playing showing Joe Wilson in the movies, I think the public will know who the good guy is. 

(LAUGHTER)

MATTHEWS:  At least the liberals will say, I think Joe Wilson is the good guy, and the Cheney is the bad guy, and Scooter is the bad guy.

DUFFY:  Hollywood gets the last word. 

MATTHEWS:  They do, don‘t they? 

Let me ask you about any other story coming out of this, besides Scooter‘s guilt and all that stuff. 

DUFFY:  A little one, and it‘s not as important or as interesting as this. 

But they—this does reflect a difference of views after the presidency.  This fight that takes place in the final 72 hours, 36 hours, goes down right down to the last day, does reflect how they are going to behave and perform after they leave office.

(CROSSTALK)

MATTHEWS:  Right.  How so?  How are they different?  Bush goes back to Texas to do the library. 

DUFFY:  Bush goes back to Texas.  He‘s going to the historians do the legacy.

MATTHEWS:  What‘s Cheney up to...

(CROSSTALK)

DUFFY:  Cheney comes right back into the fray.  He goes—you know, he moves right into a Washington think tank in a few weeks.  He‘s...

(CROSSTALK)

MATTHEWS:  No, you‘re not calling the American Enterprise Institute a think tank, are you? 

(LAUGHTER)

DUFFY:  OK.

(LAUGHTER)

DUFFY:  He was first in a transition office, but he went right back in the fray, started attacking the new administration...

MATTHEWS:  OK. 

DUFFY:  ... and is waging this battle.

MATTHEWS:  So, he‘s going to be the Perle Mesta of Washington for the next 20 years?

(CROSSTALK)

MATTHEWS:  Holding salons, soirees, sitting around...

(CROSSTALK)

CORN:  All you could say of the shark in “Jaws” is, it never goes away.

MATTHEWS:  Yes.  You know, there used to be a decent interval when people were—who lost office left office and left town.  Al Gore left town.  Everybody left town.  This guy sticks around. 

DUFFY:  Right. 

MATTHEWS:  He‘s Freddy Krueger. 

DUFFY:  Right. 

MATTHEWS:  Anyway, Michael Duffy...

(LAUGHTER)

MATTHEWS:  Oh, not really.  Oh, he‘s not—well, maybe he‘s worse. 

David Corn, thank you. 

Up next:  Jon Stewart takes on the birthers, those right-wing crazies who don‘t think Barack Obama is one of us.  He‘s an American.  They can‘t handle the fact he won the election, so they‘re saying he‘s not an American.  That‘s their argument.  We will see how Jon Stewart handles it.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

(LAUGHTER)

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

First up, speaking of the birther movement, Comedy Central‘s Jon Stewart carried the conspiracy theory to its logical roots last night, showing the ends to which some people believe, must believe that other people went to get this fellow into the White House.  He calls it the old Kenyan prince birth announcement scam. 

Here it is. 

(BEGIN VIDEO CLIP, “SATURDAY NIGHT LIVE”)   

JON STEWART, HOST, “THE DAILY SHOW WITH JON STEWART”:  Here is how it goes. 

You want to destroy America from the inside, but you can‘t, because you‘re a foreigner. 

(LAUGHTER)

STEWART:  So, first, you got to find yourself a good old American willing to reproduce with you. 

(LAUGHTER)

STEWART:  Then, you have that child on foreign soil, while simultaneously placing the birth announcement for that child in one of our fringe states‘ local newspapers...

(LAUGHTER)

STEWART:  ... your Hawaiis, your Alaskas, your Pennsylvanias.  You heard me. 

(LAUGHTER)

STEWART:  All right. 

(APPLAUSE)

STEWART:  And then...

(LAUGHTER)

STEWART:  I‘m kidding.  And then...

(LAUGHTER)

STEWART:  Hold on.

You wait...

(LAUGHTER)

STEWART:  ... until this baby is a middle-aged man. 

(LAUGHTER)

STEWART:  Now the trap is set. 

(LAUGHTER)

STEWART:  You just sit back and let that child go out and win the election for president of the United States. 

(LAUGHTER)

(APPLAUSE)

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS:  Thanks, Jon. 

Next up: corruption in jersey.  Earlier today in New Jersey, the FBI arrested about 40 people in a sweeping money-laundering sting, including the mayors of both Hoboken and Secaucus, and a state legislator, and several rabbis. 

What is it about the New Jersey waterfront? 

Anyway, now for tonight‘s “Big Number,” a sign of the times. 

During last time‘s prime-time press conference, how many times did the president mention the words—or the wars or even the words Iraq or Afghanistan?  Zero.  Nada.  None.  What a difference a year makes.  All eyes on the health care bill. 

By the way, we have lost 35 troops in Afghanistan this month, but no mention of that, zero mentions of the wars overseas—tonight‘s “Big Number,” zero. 

Up next: back to the birthers, those crazies on the far right who continue to question President Obama‘s, well, Americanism, American-ness, despite the overwhelming proof that Barack Obama was born in America.  Well, so what is going on here?  We will ask one of the birther movement‘s most prominent members, radio talk show host G. Gordon Liddy.  He‘s coming here next.

And you‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

REBECCA JARVIS, CNBC CORRESPONDENT:  I‘m Rebecca Jarvis with your CNBC “Market Wrap.”

A solid rally sends the Dow above 9000 for the first time since January, and the Nasdaq logs its 12th straight gain.  The Dow Jones industrials up 188 points.  The S&P 500 added 22.  The Nasdaq finished higher by 47 points. 

A big day for the Dow, but, right now, futures are reacting to some important quarterly reports.  They just came out after the closing bell.  Microsoft shares, they are tumbling in after-hours trade, after second-quarter earnings and revenue fell short of expectations. 

American Express also moving lower in the after-hours trade—earnings beat expectations, but their sales there, they came in lighter than expected.             

Meanwhile, Amazon reported profits falling by 10 percent.  They had some foreign currency fluctuations, legal settlement with Toys “R” Us weighing on things as well.  The online retailer also lowered its sales outlook.  Shares are off more than 7 percent in the after-hours trade. 

That‘s it from CNBC.  We are first in business worldwide—now back to HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

Was President Obama born in the USA?  The answer is yes.  The president‘s birth certificate says he was born in Honolulu at 7:24 p.m. on August 4, 1961. 

Check out this these pictures of the birth certificate held by FactCheck writer Joe Miller.  State officials in Hawaii say they have seen the original birth certificate and verify its authenticity.  By the way, that includes the governor of the state, who is—who is a Republican. 

“The Honolulu Advertisement—“Advertiser,” which is a big newspaper there, has faxed to NBC News last night Barack Obama‘s birth announcement, which went out at the time of his birth back in August of 1961.

So, why are conservative radio talk show hosts fueling doubts about the president‘s citizenship?  By the way, nine members of Congress are doing that, as well as Senator Shelby of Alabama.

E. Steven Collins hosts a radio show for WRNB in Philly.  And G.

Gordon Libby is a conservative radio talk show host and a pal of mine.

So, here we go.

What is your argument, Gordon? 

G. GORDON LIDDY, RADIO TALK SHOW HOST:  My argument is, this whole thing could be settled in a minute, if the president would simply produce a valid birth certificate. 

So far, in so far as I know, he has not.  All he‘s produced has been a quote—“certificate of live birth.”  You can‘t get a passport with that.  You can‘t even register your son for little league with that.  That‘s the problem. 

MATTHEWS:  I understand that he presented a—what‘s called the short version of the—of the—of the birth certificate, which is what you need to get a birth—a passport.  And that‘s adequate—and that‘s adequate to get one.  That‘s what people expect you to turn over when you go to the State Department. 

The document he has is what you‘re supposed to show, this thing right there.  This is what you show the State Department if you want to get a passport.  And this is what he‘s got. 

LIDDY:  Let me see it, if you would.  It‘s interesting that it‘s redacted. 

MATTHEWS:  Yes, it‘s redacted.  Do you want to see—we have a copy of the certificate number.  It was redacted by the state officials because they don‘t want that in circulation.

But they made that decision to redact those numbers.  We have a copy we will show you in a minute of the—there it is.  Well, we have it.  That‘s the redacted part.  We have a—we will be able to show you now an exhibit showing the—in fact, the—a photograph copy of the—of the certificate number.  We will be showing you. 

This is all available, Gordon.  Here it is.  So, we have the number. 

What do you think now? 

LIDDY:  Well, I would like to check it out. 

The preponderance of the evidence is as follows.  You have got a deposition, which is a sworn statement, from the step-grandmother, who says:  I was present and saw him born in Mombasa, Kenya.

You have the certificate of live birth that they—that they have here.  It‘s not a birth certificate.  It says right on certificate of live birth. 

MATTHEWS:  How do you explain the announcement in the—in “The Honolulu Advertiser” back in ‘61, when he was born that he was born?  How do you explain that...

LIDDY:  Well, I would want..

MATTHEWS:  ... to the parents he was born to?

LIDDY:  I would want my child born in the United States, or at least I would want people to think he was born in the United States, so he could have all the advantages of being a United States...

(CROSSTALK)

MATTHEWS:  But it listed their address in Honolulu. 

LIDDY:  Yes.  And, also, you have got a statement that it was the...

MATTHEWS:  OK. 

LIDDY:  ... Kapi‘olani Hospital.  And then you have got—you have got the statement that it was the Queens Hospital.  They can‘t even get the hospital...

(CROSSTALK)

MATTHEWS:  So, if he wasn‘t born here, and he‘s never gone through a naturalization process, right, that you know of...

LIDDY:  Not that I know of. 

MATTHEWS:  ... therefore, he‘s here illegally. 

LIDDY:  That would follow.

MATTHEWS:  Then you‘re saying he‘s an undocumented alien?

LIDDY:  Illegal alien. 

MATTHEWS:  He‘s an illegal alien?  So, the president—so, he should be picked up. 

(LAUGHTER)

LIDDY:  Well...

(CROSSTALK)

MATTHEWS:  No, but I‘m serious.  I mean, let‘s go all the way.

And, by the way, who do you think is in on this, Gordon?  Do you think his wife is in on this?  Do you think his mother is in on this?  Who is in on the—how many people are in on this conspiracy to make him look like he was born here? 

I figure his mother must be involved, his grandparents must be involved.  How many people are part of this cover-up? 

LIDDY:  Well, his mother is dead. 

MATTHEWS:  No, how many people were part of this presentation to us that he was born here? 

LIDDY:  I don‘t know. 

MATTHEWS:  Well, it would have to be—the mother would have to say it.  She saw him run for president.  She saw him—how about the colleges he went to. 

He went to Occidental College, where Jack Kemp went.  Do you think they knew he was here illegally?  Columbia University, Harvard Law?

LIDDY:  We would like—we would like to see the—the records of those places.  Apparently, they have been available to you, but they‘re not available...

(CROSSTALK)

MATTHEWS:  Well, we have got the state health director who says he was born here.  They have got the certificate.  The Republican governor of the state says he was born in Hawaii. 

Why would—why would Linda Lingle, the Republican governor, lie? 

Why would—why would everybody lie going back to 1961? 

LIDDY:  Well...

MATTHEWS:  And nobody—nobody gave away the story?

LIDDY:  I don‘t know that...

(CROSSTALK)

MATTHEWS:  Do you think Axelrod is a liar? 

LIDDY:  Who? 

MATTHEWS:  His—his chief spokesman. 

(CROSSTALK)

MATTHEWS:  Do you think David Axelrod is a liar? 

LIDDY:  I don‘t have—why would I think Axelrod is a liar? 

MATTHEWS:  Because they are all saying they have got documentation, that he has presented documentation that he was born in the United States. 

LIDDY:  Well, if he would...

MATTHEWS:  Is the governor of Hawaii a liar? 

LIDDY:  If he would put out the birth certificate...

MATTHEWS:  They have done it.  Here it is. 

LIDDY:  No, that‘s a certificate of live birth. 

MATTHEWS:  Well, we have got—the—it‘s the rule in that state they don‘t hand out copies of the birth certificate.  They have got pictures of it we just will show you over and over again here, pictures of the actual, original birth—here they are—the birth certificate.

What do you think, that was fabricated? 

LIDDY:  I—I can‘t really see it, but I would like to have—I would like to see it. 

MATTHEWS:  OK.  We will bring those in. 

(CROSSTALK)

MATTHEWS:  If—we could bring in copies of the original.  We have copies of the original photographed. 

But we have gone to a real effort here, Gordon, to establish that he was born in Hawaii.  And I just think—and, Steven—I want to bring in E. Steven, because it seems to me the challenge Gordon has—because you have said he was born in the Kenyan slums. 

That means he‘s an illegal alien.  That means he‘s not only illegally president; he‘s illegally in the United States, and he ought to be picked up. 

LIDDY:  Unless he‘s been—

MATTHEWS:  He‘s never been naturalized.  He‘s never claimed to have gone through a process.  So, by your account, he‘s illegally in the country, and his mother is involved in this, and everybody who has ever dealt with him.  His wife, do you think she knows, Michelle, that he was not born here? 

LIDDY:  I can‘t look into Michelle‘s—

MATTHEWS:  But all these people say he was.  Is she part of the cover-up?  Or was she lied to by him?

LIDDY:  I have no idea. 

MATTHEWS:  You claim he was born in the Kenyan slums.  You say that as a fact. 

LIDDY:  A hospital in Mombassa.  I didn‘t say the Kenyan slums. 

COLLINS:  What‘s the difference?  Chris, Chris—

MATTHEWS:  I mean, where—which hospital in Mombassa?  I have been over there so many times.  Where is all this happened?  You have a whole history of this fellow in Kenya.  Do we have any evidence it ever happened? 

LIDDY:  What after happened? 

MATTHEWS:  That was born in Kenya? 

LIDDY:  Yes, I have the deposition of the step-grandmother, who said she witnessed it. 

MATTHEWS:  OK.  Your witness.  E. Steven go ahead, I‘m sorry. 

COLLINS:  I‘m flabbergasted because this is so ridiculous.  It really is.  I met Barack Obama before he was president.  And many people across this nation and around around the world know him to be an honest person. 

This is so ridiculous, Chris.  This goes to is he a Muslim and all of that ridiculousness started by the same person.  Did he—is he not a true American?  The little flag issue. 

Come on.  This is just another desperate move, I think, by the Republican party to try to pull down this great man.  And I just don‘t understand why there‘s such a consistent pattern here.  You have all that information up there.  If you got it, then Gordon can get it and everybody else in America can get it. 

Why do that?  We have serious issues right now.  We have a huge economy, millions of people out of work.  People are concerned about health care and want to see something done.  And we‘re sitting here tonight wasting time talking about is he an American. 

Come on.  That‘s just—you know what?  Final point I want to make here is if Barack Obama was an Irish American or a Polish American or a German American, there would be no discussion anywhere in this country about his citizenship.  This is because many people in this nation cannot still accept the fact that a brilliant African-American is the commander in chief.  And they‘re looking for ways to reduce the greatness of his—not just his intellect, but his honesty and his purity as a person who is serving this nation. 

LIDDY:  Well, we‘ve got several military officers who have refused to recognize him as a commander in chief.  And there are cases working their way, I guess, through the courts on that.  But I think what will happen is that when he registers to run in 2012 for the second term, then you will have the opportunity to prove that he is an American citizen, if you can. 

COLLINS:  Why do we have to even begin, Mr. Liddy, to even justify that statement?  Why?  The president—I spoke to the White House today.  They were crystal clear in indicating everything Chris just went through, all of the details.  They‘ve done it. 

I‘m paying attention to what he‘s actually doing, which is focusing in on issues that matter to America.  Health care matters—

LIDDY:  What you‘re doing is making a speech. 

COLLINS:  I‘m not making a speech.  I‘m not.  This is a point of fact. 

What other president had to go through this? 

(CROSS TALK)

LIDDY:  The question of fact is not, you know, whether he‘s focusing on this problem or that problem.  The question of fact is was he or was he not born in the United States. 

COLLINS:  But that already has been addressed.

MATTHEWS:  I want to give the viewers some guidance here.  The state health director in Honolulu has put out this statement, that the records are available in the files there.  The governor of the state has said the records are there and they‘ve all seen them.  There are all kinds of evidence.  They don‘t allow those original documents to go out. 

They put out this document.  They have redacted the certificate number on it.  They‘ve done what you normally do to get a Passport.  There was a birth announcement at the time.  I don‘t see how you can believe that the mother of this president, the white mother, if you will, back 48 years ago, connived to put out an announcement in Hawaii that her boy was born there, so that someday 48 years later he could can become president of the United States.  What other reason would she have to confect dishonesty?

LIDDY:  The other reason she would have is it‘s a wonderful thing to be a citizen of this country, rather than a citizen of Kenya.  And you don‘t have to—everyone wants their child to be able—

MATTHEWS:  According to the government of Hawaii, he was born at 7:24, August 4th, 1961, in Honolulu.  He had an African father, a Caucasian mother.  The names are family to us all. 

LIDDY:  Which hospital? 

MATTHEWS:  It just says state of Hawaii. 

COLLINS:  Just like my birth certificate. 

LIDDY:  They‘ve given out two different hospitals. 

COLLINS:  It says exactly the same thing. 

MATTHEWS:  If this is proven at any point in the next several weeks to your satisfaction, what will you do about it? 

LIDDY:  I‘ll broadcast it. 

MATTHEWS:  And you‘ll say you were wrong. 

LIDDY:  Sure I‘ll say I was wrong if I was wrong. 

MATTHEWS:  OK, thank you.  That‘s all I want.  Thank you, G. Gordon Liddy and E. Steven Collins. 

Up next, President Obama backs off the idea of getting health care done before the August recess.  Now saying he wants it done by the fall.  Will Congress meet his new deadline?  The politics fix is next.  This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.  Time for the politics fix with NBC News chief White House correspondent Chuck Todd and “Politico‘s” Josh Gerstein. 

Let me go to Chuck.  Last night, two points—it‘s a double barrel last night.  First of all, what was the president trying to say or not say during that hour press conference last night on health care? 

CHUCK TODD, NBC NEWS CHIEF WHITE HOUSE CORRESPONDENT:  It seemed that he was trying to do two things.  One, trying to rally some support from middle America, trying to put some of this stuff into English.  But it also to me sounded like he was also negotiating a little bit with Congress.

He had just gotten off the phone, Chris, about an hour before the press conference, with Max Baucus, chairman of the Senate Finance Committee.  He got an update from Baucus about where they are. 

So I think, for instance, that‘s why you didn‘t hear a detailed defense and plan about what the government-run health plan would look like.  You heard some vague references to it, but you didn‘t hear exactly how it would work. 

Why?  Because we know Baucus is working on this idea of a co-op, so he was trying to fuzz up that language.  And frankly, I think that‘s what made last night‘s news conference a bit of a waste for the president.  Why?  Because it was supposed to be the conference that was going to be to explain the health care plan.  Well, he had nothing to explain last night.

MATTHEWS:  Josh, it seems to me that one of the things we saw last night was a president who did not want to do what Hillary and Bill Clinton did in ‘94, which was to try to jam something through.  So he went the other way and sort of felt his way and never said, I want an individual mandate.  I want an employer mandate.  I want this.  I want that.

It‘s almost like he was saying, by the way, I have three Republicans up on the Hill I really like, Chuck Grassley, Olympia Snowe, and Mike Enzi.  He wanted them to feel good. 

JOSH GERSTEIN, “POLITICO”:  I thought it was, as Chuck said, a rather unfocused performance last night.  I thought, in the beginning, he gave different answers to the same question.  At one point, he seemed to tell people, oh, you‘ll never have to sacrifice anything in your care.  But then later he said, well, we could be talking about a fairly dramatic overhaul of the health care system. 

I wasn‘t clear what the viewer at home was supposed to do?  Were you supposed to call your Congressman?  Were you supposed to feel better about the situation?  Were you supposed to get mad at someone about something?  Maybe he was trying to tell us just to stay calm, but it‘s a little strange to have a press conference for that. 

MATTHEWS:  Chuck, what‘s the time table look right now?  The Senate Finance Committee put out the word—Max Baucus put out the word this afternoon, and you‘ve seen it, as well as we all have, that they are not going to be able to get the bill through the Senate before the August recess, but they still hope to get it through the committee. 

It seems to me that would be pay dirt, if they could even get it out of committee. 

TODD:  That‘s right.  The plan now—and the focus is get it out of the Senate Finance Committee, so that during the August recess, Reid and the Senate leadership can figure out how to merge the Dodd/Kennedy bill out of the Health Committee and the Finance Bill. 

Meanwhile, though, Rahm Emanuel, chief of staff, has been on Capitol Hill all day today, meeting on the House side with the Blue-Dog Democrats, those conservative Democrats, and with the leadership, because they still want to try to get an actual bill passed in the House.  And the question is, do these House conservative Democrats in the swing districts want to walk a plank before they know what‘s coming out of the Senate. 

You talk to a lot of them, and behind the scenes they say, hey, wait a minute, we just did it on cap and trade, and we have no idea if the Senate is ever going to vote on cap and trade.  Don‘t make us vote for something that the Senate doesn‘t end up voting for. 

We‘re going to know by Monday, Chris, whether the president and Rahm Emanuel can get a bill out of the House. 

MATTHEWS:  We‘ll be back in two seconds to talk about Dick Cheney and what that‘s all about, the big “Time” story, with our top reporters here.  Back in a minute with HARDBALL and the Cheney/Bush war that seems to be going on right now.  Back in a minute.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Chuck Todd and the “Politico‘s” Josh Gerstein for more of the fix.  This is a great story.  Vice President Cheney‘s testimony under oath in the Scooter Libby case; are we going to ever see that testimony? 

GERSTEIN:  This is testimony he gave—not really testimony, but just an interview to the prosecutor Pat Fitzgerald. 

MATTHEWS:  Under oath? 

GERSTEIN:  I don‘t believe it was under oath.  I think it was an informal sit-down interview with Pat Fitzgerald.  A public interest group here in Washington has been trying to get it for quite a while.  The Bush administration refused to turn it over.  To the group‘s surprise, the Obama administration, Obama‘s Justice Department, Lanny Brewer, a former Clinton White House attorney, also refusing to turn over this Dick Cheney interview, saying it would chill future White Houses from cooperating with criminal investigations. 

MATTHEWS:  The question is, Chuck, five years, ten years, the judge is trying to decide how long something can be a political football, and when it becomes a need for history.  How do we decide—as a journalist at the White House, you would like to have access to everything, right? 

TODD:  Absolutely.  You want all of it opened up.  I think this is something—I remember I wanted more questions asked during the campaign, and I know we did during debates.  But it‘s amazing to me, it doesn‘t matter which party the president is, it‘s funny how executive privilege and this idea of protecting, you know, the secrecy issues that a president has at their disposal.  No president usually wants to give that up once they have it. 

MATTHEWS:  Let me ask you a question.  Why doesn‘t Ax, David Axelrod, or somebody at the White House, grab a copy of the original document of the president‘s birth certificate—you‘re laughing because this is an absurdity.  But just throw it out there to some reasonable reporter that just types it up and makes it an official story and makes it available in some bin somewhere so people can come look at it, like the whack jobs. 

TODD:  Because, Chris, there‘s an argument to be made that the minute the Obama—then the Obama campaign posted that copy of the certificate of live birth from the state of Hawaii, that they fed the conspiracy theory.  Every time you throw something—you decide, OK, I‘ll throw another—maybe this will shut them up.  Well, it only feeds the theory that you have something. 

See?  We wouldn‘t have gotten that piece of information if we didn‘t -so there‘s that argument that says the more you talk about it, the more you actually help the cause of the whack jobs. 

MATTHEWS:  The trouble is the zoo bus is becoming a convoy out there. 

And maybe this is a—

TODD:  That‘s the Internet‘s fault. 

MATTHEWS:  I agree.  Chuck, you‘re the best.  Thank you, sir.  Chuck Todd, Josh Gerstein.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now it‘s time for “THE ED SHOW” with Ed Schultz. 

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

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