updated 8/17/2009 11:50:03 AM ET 2009-08-17T15:50:03

HARDBALL

August 14, 2009

Guests: Michael Duffy, John Culberson, Steve McMahon, Mickey Kaus, Jeanne

Cummings, Anne Kornblut

THIS IS A RUSH TRANSCRIPT.

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

LAWRENCE O'DONNELL, GUEST HOST: Going west to save health care reform.

Let's play HARDBALL.

Good evening. I'm Lawrence O'Donnell in New York, in for Chris Matthews. Leading off tonight: On the road again. With polls showing support for health care reform slipping, President Obama hit the road again, this time in Belgrade, Montana. The crowd was much friendlier than those rowdy town halls we've seen for members of Congress, but the president finally did get a couple of questions that were not complete softballs. Chuck Todd joins us in a moment from Montana.

Plus: You know those end-of-life counseling provisions in the health care bills which Republicans like Sarah Palin have distorted into "death panels"? Well, it turns out that Republicans like Sarah Palin were actually for end-of-life counseling before they were against it. That's just one of the inconsistencies we'll discuss with an opponent of reform. Republican congressman John Culberson of Texas joins us in a moment.

Also, how far has he fallen? There's a report that John Edwards is

about to finally admit that he is, indeed, the father of his mistress's

child. So where would we be if Edwards had not been so decisively rejected

by wise Democratic primary voters last year?

Plus, Bill Clinton has some tough words for the netroots crowd on "Don't ask, don't tell." That's in the "Politics Fix."

And what does it mean to be "Palinized"? Just ask someone who says it could easily happen to her, Minnesota congresswoman Michele Bachmann. The definition coming up in the HARDBALL "Sideshow."

But first, President Obama and his latest push for health care reform. NBC News chief White House correspondent Chuck Todd is traveling with the president and is joining us now from Montana.

Chuck, by my count, there were two questions that were not complete softballs in there today. How do these audiences for the president get selected? And how is that different from how the audiences show up at the town halls for the congressmen and senators we've been seeing?

CHUCK Todd, NBC CORRESPONDENT/POLITICAL DIRECTOR: Well, look, there are a few more hoops you got to jump through to go to a presidential town hall, and considering security and all these things, you would assume there should be extra hoops. For this one, however, they did it a little bit differently. They actually handed tickets out in person out in Bozeman, two to a customer, essentially, until they ran out. So you know, it's more likely a supporter is going to, you know, want to get in line early, you know, be, like-being like an old-fashioned rock concert, where you might even sleep overnight, you know, to get your ticket, than an opponent, you know?

With these congressional town halls, as you know, Lawrence, it's a lot easier to get in because you don't really have to worry about registering in advance or getting a ticket in advance and all that. So that's why I think there's been some difficulty for the White House to, you know, make sure they're getting a wide array. But as you pointed out, he got two, I think, pretty tough questions that he had to deal with. And I can tell you in speaking already with the NRA member who asked a question, he was appreciative of the president's answer, but not yet satisfied.

O'DONNELL: All right. Let's listen to his question right now.

TODD: OK.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: As you can see, I'm a proud NRA member. I believe in our Constitution, and it's a very important thing. I also get my news from the cable networks because I don't like the spin that comes from them other places.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You got to be careful about them cable networks, though.

(LAUGHTER)

OBAMA: But that's OK. Go on.

UNIDENTIFIED MALE: Yes. Max Baucus, our senator, has been locked up in a dark room there for months now, trying to come up with some money to pay for these programs. And we keep getting the bull. That's all we get is bull. You can't tell us how you're going to pay for this. You're saving here, you're saving over there, you're going to take a little money here, you're going to take a little money there. But you have no money. The only way you're going to get that money is to raise our taxes. You said you wouldn't. Max Baucus says he doesn't want to put a bill out that will. But that's the only way you can do that.

OBAMA: Well, I'm happy to answer the question.

UNIDENTIFIED MALE: OK. Thank you.

OBAMA: The-look, you are absolutely right that I can't cover another 46 million people for free.

(END VIDEO CLIP)

O'DONNELL: Chuck, what was-you talked to the guy who asked that question. What was his dissatisfaction with the answer? Which, by the way, went on for quite a while after that.

TODD: It did. And what it is, it actually gets, I think, at the nut of what we're seeing in some of this polling with independents. Essentially, he doesn't necessarily believe that when government says they're going to save money on a program that there's really going to be money saved from a program.

And so, look, look at the history of government over the last 10, 12 years, and maybe you do understand why some people might think that. You know, they see a lot of hype about, oh, they claim they're going to save money over here, but then they see waste over there. So it's sort of a little bit of that disillusionment that some in the middle-and he was a McCain-for what it's worth, he told us he was a McCain voter, said he wasn't happy about it.

He drove 300 miles to come to this town hall. Again-he goes-he said-he goes, I think the president answered the question as best he could, and he believed the president was sincere in that he said he didn't want to raise taxes on the middle class. But I think where the disbelief comes from is this idea, Well, once government spends money, they never know how to save it after that. And I'll tell you, that cynicism, I think, has been one of the great challenges this administration has had to deal with starting, frankly, with the bank bail-outs, Lawrence.

O'DONNELL: Chuck, presidents don't go to Montana very often. How much was this performance by the president for an audience of one, Senator Max Baucus, chairman of the Finance Committee sitting up there on the stage? How much was this about President Obama showing him, See, I can even sell this in your home state?

TODD: Can I tell you, I lost count at five references to Max. It was always to, Max over here, you know, what Max is doing over here, what Max is trying to do. It was-it absolutely felt as if he was almost pitching Baucus a little bit, saying, Hey, look, don't you worry, I'm not going to sell you out.

You get me this bill-and yesterday-you know, one of the pieces of news-sometimes the White House makes news and they don't intend to. Yesterday at a press briefing, Robert Gibbs said, when he was asked point blank, What deal did you make with pharma? What is pharma getting? What are we going to see that pharma gets? And he said, Well, look, it's going to be incorporated in the Senate Finance Committee bill.

Well, what does that mean? It means that's the White House bill, Lawrence. None of these other bills are going to be the White House bill. What Max Baucus is writing is what the-and the White House knows every word that Max Baucus is writing. That's going to be the bill. That's what they're going to sell. And I think you're right, that's why he was out here, doing a little family vacation at the same time, but he's out here to send a message not just to Max Baucus but actually the other four committee chairs by saying, Look, Max is writing the bill.

O'DONNELL: You know, Chuck, there's an old joke in Washington, a very old joke in Washington that says the definition of a quorum is the president of the United States and the chairman of the Finance Committee. They together can get anything done. And having worked on the Finance Committee myself years ago, I've always been predicting that it comes down to this committee and really what Baucus can get done.

And so where do we go from here, Chuck? Where does-and I don't mean where does he literally go from here, but OK, you've done the Montana town hall. Now you've got the rest of this break to deal with here. What does the White House have planned?

TODD: Well, I think we've seen some incremental ideas of what's coming. They're setting themselves up to be able to support something that's a co-op for that whole idea of the public option, so that they'll say the co-op will accomplish what his original goal was for the public option.

I notice today the number went down on the cost of health care. These things don't happen by accident. He got down to $800 billion, $900 billion. Remember it was about a trillion, then it's gone to $900 billion. Now were down to about $800 billion, $900 billion. So I kind of think that they must know what the outlines are looking like.

And I'll tell you one other thing. The White House is extremely confident that they're going to pass something. I think they separate out the town hall madness right now. Yes, that's a political fight, but that's a political fight that they're going to have to fight, frankly, for the next three years because it's more than health care. The fight now is getting a bill passed, and I think they-I think they think they will get that done.

O'DONNELL: Thank you, Chuck Todd. It looks like you have to get on the plane, Chuck.

TODD: I guess so. All right, sir.

O'DONNELL: Thanks for joining us.

Joining me now in Washington, "Time" magazine bureau chief Michael Duffy. On this week's edition, there's a story of how Las Vegas is gambling on a big comeback. Michael Duffy, Barack Obama is gambling on Max Baucus's ability to get him a bill that he can sign. How does that look as of today?

MICHAEL DUFFY, "TIME": Well, you have to imagine, Lawrence, that at some point, the president and Senator Baucus did have a conversation about whether they do this in a bipartisan fashion here in the next 30 to 60 days, or whether at some point they have to do it just with Democrats. I suspect that conversation happened somewhere or is happening now, and that's a decision they don't have to make yet. I think everyone in that committee of two, which you just said was the most important, would like to do it with Republicans. It's not clear they'll be able to, and it looks like they're probably prepared to go it alone if they have to.

O'DONNELL: Well, Obama must have asked Max Baucus today, What do you make of these things Chuck Grassley has been saying in the town hall meetings? I think the most important thing Grassley said-you know, forget about the "death panels" reference, but what he said about having kept his finger in the dike, preventing legislation from going forward, and therefore, allowing these protests to go on now, is the most important thing he said. He didn't say he kept his finger in the dike in order to make the legislation better. What he wanted credit for from his Iowa voters was, I slowed this down long enough for you to do these protests that you're doing now. That really has to worry both Baucus and Obama, doesn't it?

DUFFY: He had a town hall today where he talked about, I'm going to vote against anything that is rationing. I'm going to vote against anything that is government-run. He had a whole list of things that he said to a town hall, I think in Winterset-I can't remember where it was today.

But you know, Baucus and Grassley are almost-have something very much in common, and you know this as a former Finance Committee guy, in that neither of their caucuses really wants them to be talking to the other party. Most of the Democrats in the Senate think Baucus is nuts to be trying to do a deal with the Republicans. I'm certain most of the Republicans think Grassley is kind of kooky to be still trying to cut a deal with the Democrats. So they're under huge pressure inside their own caucuses just to be doing this together.

O'DONNELL: And by the way, Michael, it's always been that way.

DUFFY: Yes. Exactly.

O'DONNELL: For the Democrat and the senior Republican on the Finance Committee, their caucuses are always worried about them.

Let's listen to more about what President Obama had to say today about the difficult history of trying to fix health care.

(BEGIN VIDEO CLIP)

OBAMA: ... of health insurance reform. The special interests fight back with everything they've got. They use their influence. They run their ads. And their political allies try to scare the heck out of everybody. It happened in '93. It's happening now. It happened, by the way, when Lyndon Johnson tried to propose Medicare. It happened when John F. Kennedy tried to propose Medicare. We can't let them do it again.

(END VIDEO CLIP)

O'DONNELL: Of course, Michael, Medicare ended up passing the Senate with almost half of the Republican votes in the Senate. There were 68 Democrats in the Senate at the time. So it was a very different situation than he faces now.

Do they-do they have some strategy for-in the White House now about how to prevent this phenomenon that we've seen in polling, which is the more the president goes out there and talks about the plan, the more unpopular the plan becomes? This, by the way, mirrors exactly what happened to Hillary Clinton in 1994.

DUFFY: Yes, it's one thing to actually go out and calm fears, which they tried to do this week. It's another thing to convince a growing number of people, a lot of whom are independents and who wanted to give Obama a chance, to get them over on the side of, I'm for this.

As other people have noted, I think the fear about health care reform is sort of a metaphor for fear about government spending, a fear about government takeovers, a fear about just the overall Democratic agenda. And what we didn't hear today from Obama was a real attempt to separate that out. Today was really just about health care. He didn't say, I'm going to deal with the deficits, I'm going to deal with that down the road. He didn't do that today.

I was a little surprised when he was asked that question about, Are you going to raise our taxes, that he didn't say, I am concerned about the deficits and I'm going to have to fix that at some point. We all are. But he didn't disconnect them that way. So that surprised me a little bit. Maybe we'll see that in Colorado, at the next town hall.

I think the range of questions, Lawrence, showed us just how much of a selling job they still have to do. These were intelligent questions. They were personal questions. And it's very difficult to get a good source of information on the answers. The only people who really know what's on that bill were on that stage.

O'DONNELL: Yes, that's a good point. Thank you, Michael Duffy.

Coming up: Why are conservatives and Republicans so adamantly opposed to the health care bill? We'll ask Texas congressman John Culberson.

And watch "Meet the Press" this Sunday. Moderator David Gregory will tackle the health care issue with former congressman Dick Armey, Senator Tom Coburn, former majority leader Tom Daschle, and the host of MSNBC's "Rachel Maddow Show." I'm going to let you figure out who that is.

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

O'DONNELL: Welcome back to HARDBALL. Joining me now, Republican congressman John Culberson of Texas. Congressman Culberson, let's listen to Katy Abram at Senator Specter's town hall meeting.

REP. JOHN CULBERSON ®, TEXAS: She's my hero.

O'DONNELL: Oh, good. That's why I want you to listen to her. We're going to roll the tape right now.

(BEGIN VIDEO CLIP)

KATY ABRAM, ASKED QUESTION AT SPECTER'S TOWN HALL: I don't believe this is just about health care. It's not about TARP. It's not about left and right. This is about the systematic dismantling of this country. I'm only 35 years old. I have never been interested in politics. You have awakened sleeping giants. We are tired of this. This is why everybody in this room is so ticked off! I don't want this country turning into Russia, turning into a socialized country! My question for you is...

(APPLAUSE, CHEERS)

ABRAM: What are you going to do to restore this country back to what our founders created according to the Constitution?

(CHEERS, APPLAUSE)

(END VIDEO CLIP)

O'DONNELL: Congressman, I-you-you choose your heroes well.

I have to tell you, I had her on this show the other day, after she did that. And, you know, she doesn't do this kind of TV every day, like-like you do. And I asked her exactly how would she want Senator Specter to answer that question? What would she want him to do to restore the country back to where she wanted it to be.

What would be on your checklist for-let me give you her question that she said to Specter. "What are you going to do to restore the country back to what our founders created, according to the Constitution?"

What are the things in the government now, Congressman Culberson, that you would eliminate in order to do what Katy wants?

REP. JOHN CULBERSON ®, TEXAS: I have drafted legislation, Lawrence, which I will file when Congress reconvenes, which will make all federal grant programs optional, that the state legislatures would have to pass a law on a record vote and approve every single federal dollar with every string.

O'DONNELL: OK.

(CROSSTALK)

CULBERSON: Now, that's important...

O'DONNELL: Grant programs-grant programs are nickels and dimes.

CULBERSON: No, no, no, this is-Lawrence.

O'DONNELL: Let's get to the entitlements. Let's get to the single biggest thing in the federal budget. What would you do about Social Security?

CULBERSON: Now, Lawrence...

O'DONNELL: I assume you would repeal it, because that is socialism, isn't it?

CULBERSON: Lawrence, let me tell you, Katy's question...

O'DONNELL: Would you-hey, Congressman...

(CROSSTALK)

CULBERSON: No, no, no, I'm answering your question.

(CROSSTALK)

O'DONNELL: No, the question is, would you repeal Social Security?

CULBERSON: No, Lawrence, I'm answering your question, because Katy is asking what would we do in Congress to restore the Constitution?

O'DONNELL: OK. Grants. What else?

CULBERSON: Her question is-there are $600 billion worth a year of grant program money going out the door every year, Lawrence. That's big money that the states accept...

O'DONNELL: It's nickels and dimes.

CULBERSON: No.

O'DONNELL: Hey, it's nickels and dimes compared to Social Security.

CULBERSON: Let me tell you, $600 billion a year is real money.

You're being argumentative, Lawrence.

O'DONNELL: It's nothing compared to Social Security.

CULBERSON: No, Lawrence, let me tell you, what you should...

O'DONNELL: Tell me what you would do about Social Security. It is socialism. It was imported from Germany. It was Bismarck's invention.

CULBERSON: Lawrence...

O'DONNELL: FDR took it on. It is pure socialism. You must want to repeal it, don't you?

CULBERSON: Lawrence, the way the federal government has-has taken over...

O'DONNELL: All right, you're not going to answer that.

CULBERSON: No, sir, I'm answering your-if you want-if you want an answer...

O'DONNELL: Do you want to repeal Medicare?

CULBERSON: Lawrence, if you want an answer...

O'DONNELL: Do you want to repeal Medicare? It's a single-payer socialized system.

CULBERSON: Of course, no one...

O'DONNELL: Do you want to repeal it?

CULBERSON: No one in Congress has suggested repealing either Social Security or Medicare.

(CROSSTALK)

O'DONNELL: So, none of you want to go back to where the founding father were, do you?

CULBERSON: You're not-you're not...

O'DONNELL: None of you do.

CULBERSON: Lawrence, of course I do. Lawrence, I'm a Jeffersonian Republican.

O'DONNELL: Didn't-did Jefferson anticipate Medicare, or is that a socialistic invention of the 20th century?

CULBERSON: Lawrence, you know, I-I guess you don't want me to answer the question.

I'm a Jeffersonian and a Texan.

O'DONNELL: How can you live with Medicare?

CULBERSON: And I am answering your question.

O'DONNELL: How can you accept Medicare?

CULBERSON: Lawrence...

O'DONNELL: Is Medicare socialism?

CULBERSON: You know, I'm not sure you want me to answer the question, Lawrence.

O'DONNELL: Is Medicare socialism?

CULBERSON: Of course, no is suggesting that anyone would-no one wants to either repeal...

O'DONNELL: Is Medicare socialism? Can you say yes or no? Is Medicare socialism?

CULBERSON: Of course not. Medicare is a program that's been in place...

O'DONNELL: It's not socialism?

CULBERSON: ... for many, many years.

O'DONNELL: Tell me why-oh, because it's old it's not socialism, because it was done in the '60s?

CULBERSON: You know, Lawrence, you're...

(CROSSTALK)

O'DONNELL: Tell what is not socialism about Medicare.

CULBERSON: I think, Lawrence, you illustrate-you know, for your listeners, you're illustrating why MSNBC's viewership is in the tank, because you don't allow your people you're interviewing to answer questions.

O'DONNELL: Is single-payer health care socialism?

CULBERSON: And, you know, Lawrence, this is why Katy and everybody else is going to Facebook. Everyone is going to the Internet, because why listen to MSNBC, when you won't even let the people you're interviewing answer the question?

I'm a very serious Jeffersonian.

O'DONNELL: I don't want you to spin your time away. I want you to get serious, OK?

(CROSSTALK)

CULBERSON: I am serious, Lawrence. You haven't-you're not serious. You're trying to change the subject, my friend.

O'DONNELL: What-if Medicare is not socialism-if Medicare is not socialism, why don't we delete the over-65 part of Medicare and make it available to everyone? What's your argument against that?

CULBERSON: Lawrence, no one has ever suggested repealing Medicare or Social Security.

O'DONNELL: Why not? They're both socialistic programs.

CULBERSON: Because we have to-every-if we're going to restore the country to the constitutional framework the founders gave us, Lawrence, you have got to start with the federal grant programs that are-sent $600 billion a year that are sent out the door every year to the states. And once the states accept that money, Lawrence, then the federal government has got its tentacles and its hooks in the states.

O'DONNELL: So, if you were there-if you were there in 1935, you would have voted for Social Security, right?

CULBERSON: Of course. In 1935, it was designed...

O'DONNELL: You would have? Republicans hated it.

CULBERSON: It was designed as a safe...

O'DONNELL: Didn't anyone tell you that?

CULBERSON: Lawrence, excuse me. Wait a minute.

(CROSSTALK)

CULBERSON: Am I going to be able to give an answer here or not?

(CROSSTALK)

O'DONNELL: Would you have voted for Medicare in 1965?

CULBERSON: Do you wonder why nobody listens to MSNBC? May I answer the question?

O'DONNELL: They don't want to hear your endless spinning. Would you have voted for or against Medicare?

CULBERSON: No, sir, it is not spinning.

I'm-in 193...

O'DONNELL: Would you have voted for or against Medicare?

CULBERSON: In 1935, Social Security was set up as a safety net, Lawrence, for-as a last resort.

O'DONNELL: It still is. It still is.

CULBERSON: And, therefore, of course it was there for people who-my father, who grew up in the Depression, told me, my dad told me, without those safety nets, John, people just died.

O'DONNELL: That's right.

CULBERSON: And that's unacceptable. And that was a safety net.

O'DONNELL: Enacted by Democratic presidents, over the opposition of Republicans like you.

CULBERSON: I know, your heroes, Lawrence. And-Lawrence, your heroes. I know that.

O'DONNELL: Was FDR...

CULBERSON: And there are safety nets.

O'DONNELL: Are you saying FDR was wrong to enact Social Security, or you're saying he was right?

CULBERSON: I just told you, Lawrence, if I were here in 1935, the very limited scope of Social Security, as it was designed, as a safety net of last resort, of course I would have supported that.

(CROSSTALK)

O'DONNELL: How would you have voted in 1965 on Medicare?

CULBERSON: In 1965 -- I voted against, in fact-Lawrence, I wasn't here in 1965, but I did vote against the Medicare prescription drug bill.

O'DONNELL: Congratulations.

CULBERSON: I voted against both farm bills. I voted against...

O'DONNELL: Would you have voted against the invention of Medicare in '65 by Lyndon Johnson...

CULBERSON: You know, Lawrence...

O'DONNELL: ... a Democratic, liberal president.

CULBERSON: ... I'm not sure why you had me on today, if you're going to do the whole show. I am giving you a very serious answer to Katy's very serious question. What will we do...

(CROSSTALK)

O'DONNELL: You can just go yes or no and move on.

If you answer whether you had voted-just give me a yes or no or whether you would have voted for Medicare, and then you can talk for the rest of the segment.

CULBERSON: OK. Yes. In 1965, Medicare, if it was designed-and I don't know how it was originally set out in '65, but I can tell you, Social Security was a last resort in 1935.

(CROSSTALK)

COOPER: Did we get a yes on Medicare somewhere in there? Was there a yes?

CULBERSON: Because Medicare-Medicare is a very successful, but wasteful, program that wastes a lot of money that we need to focus on...

O'DONNELL: Is there a yes in there? You would have voted for it? Is that what you're saying?

CULBERSON: Medicare, in 1965, Lawrence, yes, I probably would have voted for it.

O'DONNELL: OK. Go ahead. Spin away.

CULBERSON: Now-thank you very much.

We have a crisis of cost today, Lawrence, in the cost of health insurance. This-this government, the new Congress, the new president, has taken advantage of an economic crisis to, as-as the chief of staff of the president has said, to do as much as they can to take-not let a good crisis go to waste.

And they're attempting to exercise full government control over the entire health care system. And that's what Katy and the rest of us are objecting to. We know there's a crisis in cost, Lawrence. And we, on the fiscal conservative side, simply want the focus on the crisis in cost, eliminating the one-eliminating waste...

O'DONNELL: Congressman Culberson, you know-let's go to the crisis in cost.

CULBERSON: Yes, let's talk about that.

O'DONNELL: Now, you know that Medicare is a completely government-run health care system.

CULBERSON: Right.

O'DONNELL: And, yet, you're saying you would have voted for it.

CULBERSON: And we today need to focus on eliminating the fraud, waste, and abuse in Medicare, Lawrence. And that's...

O'DONNELL: OK. Let's do that.

CULBERSON: Why don't we focus $1 in $3 spent durable medical devices under Medicare and Medicaid are wasted or fraudulent. These Scooters that you see advertised, a lot of that is unnecessary and pushed on people in ways that are fraudulent.

There's a new scheme in Harris County to set up ambulance services to charge $500 to Medicare to drive people to the doctor. Focus first, Lawrence, on eliminating the waste, fraud, and abuse.

O'DONNELL: All right. We agree on-let's-we agree on that.

CULBERSON: Focus, then, on-we agree on that.

O'DONNELL: We want to get rid of the waste, fraud, and abuse, all of it in government, wherever it exists.

Let me just get this straight. You would have voted in 1965 for a single-payer, government-run, totally government-controlled health care system for people 65 and over? You said you would have voted for that?

CULBERSON: I'm not-I'm not completely familiar with the way Medicare was structured in '65.

O'DONNELL: Oh, really?

CULBERSON: But I do know how Social Security was set up. I can tell you, '35 -- 1935, Lawrence, I know Social Security was a safety net.

O'DONNELL: Really? You know what happened in '35, but not '65?

CULBERSON: I'm more familiar with the way it was set up originally in '65, as a last resort.

O'DONNELL: But you're sure you would have voted for Medicare, even though you don't know what was in it in 1965.

CULBERSON: You know, Lawrence, we are in 2009 at a time of record debt and deficit. And you won't even permit the people you interview, who are-I'm-listen, I'm here in good faith and earnestness to offer and talk to you and your listeners about the fiscal conservatives in Congress who are working hard to lay out alternatives to control costs...

O'DONNELL: Congressman, here is my problem. Here is my problem.

CULBERSON: ... to stop fraud, and to protect the patient-doctor relationship.

O'DONNELL: You-you-Congressman, you lie to America about the evil...

CULBERSON: Excuse me? What?

O'DONNELL: ... of-of government health care, because you people, not one...

CULBERSON: Lawrence, you don't know who I am. You don't know...

(CROSSTALK)

O'DONNELL: Not one of you liars about government health care is willing to repeal Medicare, to stand up and be consistent and say, I hate government-run health care, so I want to repeal Medicare.

Instead, you go out and lie to Medicare recipients that you're on their side, and then you tell everyone else government-run health care is evil.

CULBERSON: Lawrence, I would suggest you don't-you don't-

Lawrence, you don't know the first...

(LAUGHTER)

O'DONNELL: And that, sir, is an evil lie that you guys perpetrate every day.

CULBERSON: Lawrence, do you wonder why nobody watches MSNBC?

O'DONNELL: And I don't want you wasting our airtime with that.

CULBERSON: This is unbelievable.

Lawrence, do you wonder why nobody watches MSNBC? You argue with me.

O'DONNELL: We have got a couple of people watching us.

CULBERSON: You argue with me. You don't know who I am. You call me a liar on national television.

O'DONNELL: Yes.

CULBERSON: It's objectionable. It's offensive.

(CROSSTALK)

O'DONNELL: You lie about government-run health care.

CULBERSON: I have never-you know what, Lawrence? You have never interviewed me, buddy.

O'DONNELL: On one hand, you say it's OK for people over 65, and...

CULBERSON: You don't know who I am, Lawrence.

O'DONNELL: ... then you lie and pretend it's an evil for other people.

CULBERSON: Lawrence, I can tell you that my constituents are very happy with me. I just had a town hall meeting last week. It was a great success.

It was very uplifting and energizing, because we're on the same page, Lawrence. We don't want the government or anybody else between me and my doctor. My constituents and I agree that we have the greatest health care system in the world. And I'm going to fight to my last breath to protect M.D. Anderson, the Texas Medical Center, to protect my constituents' right to make the decisions about their health care with their doctor, without interference from this government or this Congress or this president.

And we want to control costs, absolutely. We want to make health care affordable and available to small businesses, sole proprietors, individuals.

But you do that, Lawrence, by using commonsense, fiscally conservative approaches that are just, you know, frankly common sense. And you protect the patient-doctor relationship.

And that's something that my constituents and I agree on, Lawrence. I have never-and, you know, you and I have never even talked before. It's stunning to me that you would, you know, call me a liar on national television, when you don't even know who I am. You have never talked to me before.

And I'm glad you're finally giving me a chance to talk here, Lawrence, because town hall meetings in District 7 are uplifting and positive, because I represent my district...

O'DONNELL: Congressman-Congressman, I'm sorry. We have got to go.

CULBERSON: ... with honor and integrity.

O'DONNELL: We have got to go. Go look up that 1965 Medicare statute.

It might surprise you. It is a socialistic program.

Thank you, Congressman Culberson.

Up next: Newt Gingrich has a six-point plan for success for ex-Alaska Governor Sarah Palin-details next on the "Sideshow." You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

O'DONNELL: Back to HARDBALL. Time for the "Sideshow."

First up: Michele Bachmann is back in action. The Minnesota

congresswoman continues to raise the bar for bizarre behavior. This week,

she put out a fund-raising e-mail with the subject line, "Don't Let Them

Palinize," attaching the Urban Dictionary definition of Palinize-quote -

"to smear or mock someone using falsehoods, baseless accusations, or unsubstantiated character assassinations."

So, why would she be Palinized? According to Bachmann, "With Governor Palin taking a well-deserved step out of the spotlight, it appears that I may be absorbing even more of the liberal scorn."

Don't worry, Congresswoman. I am betting, as everyone else is, that Sarah Palin won't stay out of the spotlight much longer.

Speaking of which, former House Speaker Newt Gingrich has some unsolicited advice for the ex-governor of Alaska. He gave Politico.com his six-point plan for a 2012 Palin comeback. She's already got the first one down, writing a book. Next, land a regular commentator slot on television. He also says Palin should get a condo in New York or Washington and master three types of speeches, what Newt calls the money-making speech, the brand-making policy speech, and, of course, the campaign stump speech.

Palin should create some sort of national project or center or something like that, and Newt would have her working really, really hard on this plan now.

But-but, Sarah, be careful of Newt's advice, because, you know, he wants to be the next president of United States, too.

Up next: The John Edwards' scandal continues to provide drama. Did he use campaign funds to buy the silence of his former mistress?

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

JULIA BOORSTIN, CNBC CORRESPONDENT: I'm Julia Boorstin with your CNBC "Market Wrap."

A disappointing report on consumers' mood dragged markets lower, snapping a four-week winning streak. The Dow Jones industrials are down 76 points for the day and 50 points for the week. The S&P 500 lost eight points, and the Nasdaq fell almost 24 points, to finish the week back below 2000.

U.S. consumer confidence fell more than expected in early August. Consumers are increasingly worried about their own personal financial situations. Their outlook on the overall economy is more upbeat.

Shares in J.C. Penney skidded after the retailer posted a smaller-than-expected net loss, but a gloomy outlook for the rest of the year.

Nordstrom shares also fell. The high-end department store hits its earnings target, but reported same-store sales falling more than 12 percent.

And Boeing shares took a big hit today on reports of supply-side problems with their new 787 Dreamliner.

That's it from CNBC, first in business worldwide-now back to

HARDBALL.

O'DONNELL: Welcome back to HARDBALL.

One year ago, John Edwards admitted to ABC News that he had had an affair with Rielle Hunter, but denied that he was the father of her baby. Edwards said: "It's not possible that this child could be mine because of the timing of events, happy to take a paternity test, and would love to see it happen."

Today, WRAL in Raleigh reports that sources have told them that they expect Edwards to finally admit that he is the father of his former mistress' 18-month-old daughter.

What a difference a year makes.

With us now, Slate's Mickey Kaus, and Democratic campaign strategist Steve McMahon.

Steve McMahon, Democratic Party voters showed their wisdom, I thought, when they had their chance in the primaries, keeping Edwards nowhere close to the top. I have got to say, through almost all of his career, I thought he was the emptiest of the empty suits on the Democratic side of the aisle. And your party has got to be pretty lucky that he didn't get anywhere last year.

STEVE MCMAHON, DEMOCRATIC STRATEGIST: Well, I'll tell you what.

You're absolutely right.

I can only imagine what would have happened. You know, he wasn't very

far off in Iowa. He finished third in Iowa. And right up until the very

end, there were a lot of people who thought John Edwards was right in it

and might be the winner in Iowa. And, had he been the winner, it would

have been obviously a different story probably for him, and probably for

the country, because I can't imagine that this affair and that-and that

that these-these circumstances that we're talking about tonight would have gone undiscovered by the Republican attack machine.

It's a very good thing he got out when he did.

O'DONNELL: Mickey Kaus, this, for me-and I know for you-is as much a story of the failure of the press as it is a story of the failure of John Edwards.

This-this guy was given an incredible pass, even after the story originally broke. What was that about? Was there some Elizabeth Edwards shielding-sympathy shielding going on with the press?

MICKEY KAUS, COLUMNIST, SLATE.COM: Well, totally. First, there was the standard liberal bias that we always argue about.

And the second, nobody wanted to punish this woman who-who they actually liked and in many cases actually knew any more by delivering the bad news of her husband's infidelity. So, there was a whole protect Elizabeth sort of movement, which she, of course, stoked to protect her husband.

It was a pretty shameful performance on the part of the press.

O'DONNELL: And it seemed to me to be a pretty obvious story. I had my own insight into it, because I actually know Rielle Hunter. I haven't talked to her in decades, but I met her a long time ago and knew her for a while. And I have friends who are very close to her, who were reporting early on that there's no doubt about this. None of her friends had any doubt about who the father of that child was. And she wasn't promoting any doubt among her friends about who the father of that child was.

And, Mickey, it didn't seem to me, knowing what I knew-it didn't seem to me that it would be very hard for the press if they wanted to spend, oh, you know, a day and a half on this, to penetrate the wall.

KAUS: No. It was the worst kept secret on the Eastern seaboard. I'm not a great reporter. If I found out about it, how hard would it have been for somebody else to find out about it? Keep in mind, this is even in his confession speech, last year before the Democratic Convention-he told a whole second edifice of lies about how it was only a short affair in 2006, when in fact it had lasted into 2007, which is how he could be the father of this child.

And, to me, the interesting question is how in on it was Elizabeth?

O'DONNELL: Steve McMahon, for Democrats, for politicians generally, the rule established by the Clintons, as far as I can tell, is adultery is OK as long as your wife says it's OK. Meaning, if your wife is willing to go up on their on the stage and say, in effect, as Hillary said, it's OK with me. Let's all move beyond this.

But this involved something else. This involved a child. And this involved a politician denying his child. And beyond that, it involved him, in effect, apparently, lying to his own children that they have a sibling out there that he is pretending does not exist. I mean, this is an issue that goes far beyond adultery, isn't it?

MCMAHON: Oh, absolutely. I mean, the real question here is, is it arrogance or is it stupidity that is sort of taking the lead here, because it's clearly both. But one of them is trumping the other. I think the question of whether or not, and under what circumstances a reporter would reveal this is an interesting one, because, as you know, Lawrence, in the law, there's a presumption that the-that a husband and wife, that the child of that husband and wife is the child of that union.

And when you have a Rielle-and I can't remember the gentleman's name who said he was the father-it would be interesting to know whether or not the same presumption exists. I think you're right, the press could have pierced this very easily, if they could have gotten a source. But obviously nobody got a source on the record who was willing to say it, or I'm sure it would have been written.

O'DONNELL: Well, "The Enquirer" did, and people just weren't taking "The Enquirer" to be reporting facts. Mickey, Edwards did get one of his campaign operatives to say, I am the father of the child. That campaign operative was married and had children of his own at the time. It was an idiotic story from minute one. It was-there was nothing acceptable about it on its face. How would this have been treated if this was a Republican candidate for president, trying to get away with this?

KAUS: Well, I think it would have been excoriated-the Republican would have been excoriated, especially if he was a guy like Governor Sanford, who seemed moralistic and Christian. He would have been raked over the coals. But the story was so idiotic, Lawrence, that some reporters, including some from this very network, told me, it's so idiotic, it has to be true. Nobody would fess up to fathering the child unless it was true, because their kids are going to be made fun of at school. No aide would do that for their boss.

O'DONNELL: All right, thank you Mickey Kaus and Steve McMahon.

Mickey Kaus and i are not surprised by this news today at all.

Up next, Bill Clinton tries to rally support for President Obama's health care reform, after failing at his own reform efforts more than a decade ago. The politics fix is next. This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

O'DONNELL: We are back. Time now for the politics fix, with Jeanne Cummings of "Politico" and the "Washington Post's" Anne Kornblut.

Let's listen to what Bill Clinton had to say stumping for Obama's health care reform.

(BEGIN VIDEO CLIP)

BILL CLINTON, FMR. PRESIDENT OF THE UNITED STATES: I'm telling you, I don't care how low they drive support for this, with misinformation, the minute the president signs a health care reform bill, approval will go up, because Americans are inherently optimistic.

Secondly, within a year-within a year, when all those bad things they say are going to happen don't happen, and the good things do begin to happen, approval will explode.

(END VIDEO CLIP)

O'DONNELL: Anne, should the Obama White House be taking advice from the biggest failure in the history of the health care reform crusades of the past?

ANNE KORNBLUT, "THE WASHINGTON POST": Well, I mean, in a sense, they already are taking the advice by trying to do the opposite of what the Clintons did. They left it to the Congress to come up with their own plan. They've obviously moved very quickly on it, and said anyway that they're going to conduct it much more openly and transparently than the Clintons did. So, in some senses, they are sort of doing the opposite.

You know, I think former President Clinton is trying to be a good team player in all of this. And what else is he going to say? But it does lead the question, if he does not pass health care reform, is Obama's popularity going to drop? So he may be setting the bar there for the president's success or failure.

O'DONNELL: Jeanne Cummings, Bill Clinton did not pass health care reform, got completely wiped out. And the voters didn't mind that at all when it came for his re-election. What it seemed happened in the Congress was that the Congress actually ended up scaring the public enough about what they were intending to do with health care reform that they rejected the Democrats in the midterm election, and brought in the Republicans to a new majority in both Houses.

But the president himself escaped any negative verdict by trying to push health care and failing. Is that possible with Barack Obama?

JEANNE CUMMINGS, "POLITICO": Well, it's possible he ends up with a great, big government shutdown in between the two events. One of the big reasons Clinton that survived is because the national debate moved on, and the Republican Congress suddenly became as scary as the health care reform debate.

So, you know, given some big, seismic change in between, President Obama may indeed get re-elected and not pay a price. However, you know, as much as president Clinton did not succeed with health care reform, he is instinctively still one of our smartest politicians. And I'm not sure the poll numbers would go up because people are optimistic, but they may well go up because there are probably some Democrats and independents now who are very frustrated that nothing is moving in Washington.

When they see action, those poll numbers could turn around. And he's right, I do think, if time goes by and horrible thing don't happen, the independents will come around as well. I do also think that if Obama fails, that this will be a turning point for him. because in all likelihood, cap and trade and the energy bill will be next in line, and it could set off a really hard downhill slide for his administration.

O'DONNELL: Go ahead, Anne.

KORNBLUT: I would add to that, I think Jeanne's exactly right and I think the administration knows it. This is the high-stakes game. That's why they're treating it like that. That's why it's pretty much the only number one thing on an agenda that was previously packed with many things. This is now it. This is their sole focus. I think they recognize they've gotten away with really no major foreign policy crises or any other unexpected crises. That's not going to last forever. I think they know this has to work or that it's really going to-he will really suffer for it.

O'DONNELL: Anne, if there are a majority of voters when they get down to October, November, when they're trying to vote on a final passage of this thing, let's say-if there's a majority of voters who are opposed to what the Congress and President Obama are trying to do, and they then-and the Congress then passes it and Obama signs something that a majority of voters are opposed to, exactly how would Obama benefit with voters by signing something that they were opposed to?

KORNBLUT: Well, obviously he wouldn't. I think that would presume they have failed to define it in a way that voters would embrace. I mean, that's why the communications plan, what he's trying to do at these town halls, what he's trying to do, frankly, in recapturing the message that they've lost control of over the last few weeks, is so important.

Whatever they pass, whatever Congress ultimately winds up settling on, he's got to figure out how to convince people to support it, so that he does not wind up in that situation you just described.

O'DONNELL: We'll be back with Anne Kornblut and Jeanne Cummings for more of the politics fix. You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

O'DONNELL: We're back with the "Washington Post's" Anne Kornblut and Jeanne Cummings of "Politico." Bill Clinton spoke at the Netroots Nation Conference in Pittsburgh last night, and pushed back at someone who shouted him down for his don't ask, don't tell policy. Let's take a look.

(BEGIN VIDEO CLIP)

CLINTON: In order for them to join that debate, they have to abandon

--

(INAUDIBLE)

CLINTON: You know, you ought to go to one of those Congressional health care meetings. You'd do really well there.

You want to talk about don't ask, don't tell? I'll tell you exactly what happened. You couldn't deliver me any support in the Congress. And they voted, by a veto-proof majority, in both Houses, against my attempts to let gays serve in the military.

And the media supported them. They raised all kinds of devilment. And all most of you did was to attack me, instead of getting me some support in the Congress. Now, that's the truth.

(END VIDEO CLIP)

O'DONNELL: Anne Kornblut, a classic Bill Clinton version of history.

It wasn't my fault.

KORNBLUT: Yes, absolutely. You've got to feel for the guy. I mean, it's 15 years later, you know, two administrations later. And he's still talking about the first major disaster of his administration. You give him points for the crack about the town hall meetings. He's still got that. But, you know-he did have a point.

But it was interesting to see he's still got it. He's still got his spirit out there at these town hall meetings.

O'DONNELL: Jeanne Cummings, he really doesn't like dissent in those normally hand-picked audiences he talks to. You can see it wasn't just that he was going to take the position it wasn't my fault. He actually blames the questioner, points at the questioner and blames the questioner; it's your fault for not delivering me the Congress that I needed.

CUMMINGS: And that's really not the Bill Clinton that we've seen over the years. He looked very tired. He usually is pretty good at finessing around opposition, and then pivoting and working it to his advantage. But in this case, he came across simply as angry. The finger-pointing is very ineffective. And, you know, let's face it, that little guy in the audience, he couldn't build support for Congress.

Of course, he was talking about the community. But the truth is, we all know Bill Clinton also mishandled that at the time. And so it was very unusual to see that sort of response. But, you know, we've-in the last few years, we've seen that he still can have like a trigger of anger when people are critical of his administration.

O'DONNELL: Anne, if Bill Clinton was auditioning for a surrogate role in the Obama health care campaign, to go out there on the road and help him sell it, I would say he failed in that particular audition.

KORNBLUT: Yes, I don't think that's going to happen. I don't think it was going on happen in any event. I think they're going to leave him doing diplomacy and rescuing people in foreign countries.

O'DONNELL: Thank you, Anne Kornblut and Jeanne Cummings. Chris Matthews will be back Monday at 5:00 and 7:0 Eastern for more HARDBALL. Right now it's time for "THE ED SHOW" with Ed Schultz.

ED SCHULTZ, MSNBC ANCHOR: I'm Ed Schultz. This is "THE ED SHOW."

Good evening, Americans. Live from 30 Rock in New York, it's "THE ED SHOW" on MSNBC.

Tonight, the president's in Big Sky Country selling his health care plan. He was all hat and plenty of cattle. The governor of Montana will join me in just a moment.

Plus, the dumber than Joe the Plumber crazies are ratcheting up the madness. Congressman Adam Schiff, he drew a crowd of 3,000 people to this town hall. He'll join me to talk about it at the bottom of the hour, what he ran into.

The Newtser's got a six-point battle plan for Caribou Barbie. Newt, I got one for you too. It's number seven. Sarah, stop lying to people about how the death panel is going to be wiping out the senior citizen population in America.

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

END

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