updated 11/3/2009 10:38:26 AM ET 2009-11-03T15:38:26

HARDBALL

November 2, 2009

THIS IS A RUSH TRANSCRIPT.

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

Guests: Mayor Michael Nutter, Anne Kornblut, Rick Hertzberg, David Corn

CHRIS MATTHEWS, HOST: Republican purge.

Let's play HARDBALL.

Good evening. I'm Chris Matthews in Philadelphia, scene tonight of the World Series. Leading off tonight, the purge of moderate Republicans. What is happening to the Grand Old Party of Lincoln? Is there a drive on to rid it of moderates and go the route of grass roots conservatives only? In tomorrow's Virginia governor's race, Republican candidate Bob McDonnell campaigned as a bipartisan candidate, but in New York's fascinating 23rd special election, the Republican candidate, Scozzafava, dropped out over the weekend, leaving conservative third party candidate Doug Hoffman and Democrat Bill Owens to battle it out. Does this mean the long-awaited party realignment is at hand? We'll preview tomorrow's elections and what they mean for Republicans, Democrats, and President Obama in just a moment.

Plus, Philadelphia mayor Michael Nutter will be here to weigh in on tomorrow's elections, and more importantly perhaps, whether his team and mine, the Phillies, can pull off a win in tonight's game five of the World Series.

Also, memory loss. That was Dick Cheney's excuse an incredible 72 times when federal investigators interviewed him about the CIA leak case. Among the items in newly released testimony where he couldn't recall, quote, "whether he told his chief of staff, Scooter Libby, that Joe Wilson's wife worked at the CIA, whether he spoke with Libby about leaking portions of the National Intelligence Estimate on Iraq to reporters. It's easy to see why the special prosecutor declared there is a cloud over the vice president. We're going to break down Cheney's whopping case of amnesia tonight.

And the special election in New York's 23rd congressional district isn't the only race where a candidate dropped out. In Afghanistan, Karzai's main challenger withdrew from the run-off election, and then Karzai was declared the winner. So how does President Obama send more troops into a country whose president is considered corrupt and illegitimate? That's in the "Politics Fix."

And finally: He may not have been awarded the Nobel Peace Prize, like Al Gore and President Obama, but they love Bill Clinton in Kosovo. More of that in the HARDBALL "Sideshow."

Let's start with tomorrow's big elections with "Newsweek's" Howard Fineman and "The Washington Post's" Eugene Robinson, both MSNBC political analysts. Gentlemen, let me ask you about this situation tomorrow. Siena, the poll-state polling operation up in New York, just Sunday, after Scozzafava's withdrawal, Hoffman, the Conservative, led that poll 41 to 36. Howard, you're shaking your head.

Is the Republican Party in a purge, something like in the '30s in Russia, where they're knocking off...

(LAUGHTER)

MATTHEWS: No, where they're knocking off people that are not politically correct? Obviously, they're not communists, but this kind of roughhouse decision to bop off people-they got rid of-Specter was pushed out of the party. And Linc Chafee's gone. There's no Republicans left in the New England delegation in Congress at all. What's going on?

HOWARD FINEMAN, "NEWSWEEK," MSNBC POLITICAL ANALYST: Yes. Well, as long as we're making wild comparisons, this is sort of the crack cocaine version of reduced Republicanism here. They only have 20 percent standing nationwide. Maybe 20, 22 percent of the American people identify themselves as Republicans.

But those who remain and those who are at the core, and those who, frankly, pushed out Dede Scozzafava and then backed Doug Hoffman, who now looks like he might well win that race, believe that the hard-core skepticism of government message, the anti-tax, anti-big government message is the winning message for Republicans in the Obama era, and they're going to pursue it, whether it's in New York or Virginia or New Jersey. And they may actually get some validation for that tomorrow.

MATTHEWS: OK. Let me-let me let Eugene savor this. Here is what Rush Limbaugh said about the Republican candidate, who has been forced to drop out over the weekend. Let's listen.

(BEGIN AUDIO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: Scozzafava has screwed every RINO in the-we can say that she's guilty of widespread bestiality! She has screwed every RINO in the country! Everyone can see just how phony and dangerous they are. You know, 2010 might be a nightmare for PETA. Two animals may become extinct, RINOs and Blue Dog Democrats. Pelosi's going to kill off the Blue Dogs, and conservatives are going to finally get rid of RINOs. The American people have had enough!

(END AUDIO CLIP)

MATTHEWS: Gene, what do you make of that? RINOs is a name conservative use for "Republicans in name only," meaning people that aren't as conservative as they are. Is this purge for real? By the way, bestiality is an interesting reference point.

EUGENE ROBINSON, "WASHINGTON POST," MSNBC POLITICAL ANALYST: Very bizarre.

MATTHEWS: She, quote, "has screwed every RINO in the country." That is a metaphor from hell. But go ahead.

ROBINSON: Very bizarre. And we don't want to psychoanalyze that because that would take us an hour. But this idea that Republicans who don't believe everything that Rush Limbaugh believes are Republicans in name only is symptomatic of this-call it a purge, call it a civil war, whatever it is that has to take place in the Republican Party. And I think it's going to have to play itself out.

I mean, look, you've got a situation where Newt Gingrich, whose whole career has been as a flame-thrower and kind of bomb-thrower who says inappropriate things and shakes things up-he's the voice of reason and stability in the Republican Party right now. That tells you that they're in for a long few years.

FINEMAN: Hey, Chris, can I disagree here for a second?

MATTHEWS: Sure.

FINEMAN: I don't think there is-I don't think there is a civil war in what now is the Republican Party. The right has won. The right is in control. They're in control of things. They brushed aside Scozzafava. They got Doug Hoffman in there. They blessed him retroactively. Even Newt's with him now. A lot of the grass roots people dismiss Newt because he's been in Washington too long and he, you know, is messing around with health care reform, and so forth.

I mean, the-they are in charge. These people are in charge. They got their guy in Virginia. They finally ended up getting their person in New York state. They may have a version of him in New Jersey who's got a chance to win tomorrow. They, I'm going to predict, are going to feel pretty empowered in their version of events by tomorrow night.

And to me, there's no war within the party. It's a question of whether independents who have fled the Republican Party, who have fled the Democratic Party...

MATTHEWS: Right.

FINEMAN: ... and are lying out there-they're out there, they're sitting out there-whether this brand of Republicanism can draw them back in 2010 and 2012.

MATTHEWS: Who's their next target on this anti-gay campaign, anti-gay rights, anti-choice campaign? Is it Charlie Crist of Florida? Gene, are they going to knock him out in the next fight? Is that the goal?

ROBINSON: I think absolutely they're going to go after him. And they can get some traction in Florida. As you know, there are a lot of conservatives in Florida, and Charlie Crist had that infamous hug with President Obama that's going to be-going to be used against him in the next election. It's going to be ugly down there, probably.

MATTHEWS: Well, let's go to a state that's more middle of the road. Let's go to New Jersey. Quinnipiac's latest poll has Christie, the Republican, up 42 to 40, with Daggett, the third party, sort of a Republican himself, at 12. My weird guess-it's been consistent for several days now-is that Christie's going to pull an upset-Howard.

FINEMAN: Yes, I think that's quite possible. And I'm just fascinated to see what Sarah Palin does. I know that sounds maybe a little silly, but she has been ahead of the curve, first in criticizing Scozzafava. Now on her FaceBook page, she's attacking Chris Daggett, the third party candidate, the tax reform candidate, because I think the people now in charge of the Republican Party, that core conservative Republican Party, are worried that Daggett will draw too many votes away from Christie. That's what's going on right now. It's trench warfare via FaceBook.

(LAUGHTER)

MATTHEWS: Yes.

FINEMAN: And Sarah Palin, whoever is advising her-it's not just her sitting there at her kitchen table up in Alaska. She's got people here in Washington and around the country who are using her. And she's leading, and people like Tim Pawlenty from Minnesota and these others who want to establish their conservative credentials, come in behind whatever she does.

MATTHEWS: By the way, her quote is, quote, "I've never even suggested he should drop out of the race, but come to think of it"-she's getting a little wistful in her power here. If this guy Daggett doesn't get any votes, Gene, it looks like Sarah Palin is-by the way, I'll make another prediction. Watch out. She's going to be bigger this time next year than she is now. I think she's growing.

ROBINSON: Well, I think she is. Obviously, she is, and she is playing a huge role in this off-off-year election.

MATTHEWS: OK.

ROBINSON: And we'll see if she can keep up this momentum for next year and beyond.

MATTHEWS: Gene...

ROBINSON: But she's doing it now.

MATTHEWS: Gene, who wins the New Jersey governor's race tomorrow night when we report it on MSNBC? Who will win?

ROBINSON: You know, I actually think that Corzine is going to squeak it out, but it's going to be very close.

MATTHEWS: OK. Howard, who do you think?

FINEMAN: I don't know the answer. It depends on whether Corzine and the Democrats-it's a very Democratic state-whether they can get out enough money and machinery to get out the core vote on tomorrow. It's not clear. Obama matters there and Obama's support matters. If he can get out the votes in Newark, I think he's got a chance to pull it out.

MATTHEWS: OK. Well, here's the president, President Obama, pitching for Corzine. Let's listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: He was one of the best colleagues I had in the Senate, but he's also one of the best partners I have in the White House. We work together. We work together!

(END VIDEO CLIP)

MATTHEWS: Do you buy that, Gene, that you can sell Obamaism by just having a guy show up over the weekend? Does he spread the charm? I don't think so. What do you think?

ROBINSON: I don't think it necessarily rubs off. I think-but you may get people who otherwise wouldn't have been more energized to go to the polls. If you can get the Democrats to go to the polls, which many of them won't-but if you can get them to go to the polls, then Corzine can win.

MATTHEWS: OK. Let's...

FINEMAN: Corzine is also facing the fact that he used to work on Wall Street, which is not a good thing in New Jersey or anywhere today.

MATTHEWS: You're with me, Howard. I think he's got real problems of incumbency and Wall Street and that labor purse (ph) that he gave the money to, he was hanging around with, I mean, I think there's problems there.

Let me-let me-also, I don't think making fun of somebody for being fat is smart politics. There are a lot of people fighting waistline wars these days. They don't want to hear somebody taking potshots at them.

ROBINSON: Hear, hear.

MATTHEWS: By the way, Virginia always votes...

(LAUGHTER)

MATTHEWS: Well said, Hear, hear. But Virginia always votes the opposite of after we vote for a presidential election. But here's the question, Howard. Between 10 and 15 points, what's more likely to be the result for McDonnell, 15-point spread or 10?

FINEMAN: I think he's winning going away. I think it could be closer to 15 than 10. That would be my guess right now. Deeds has-Creigh Deeds has just sunk like a stone in Virginia.

MATTHEWS: These metaphors are unbelievable!

(CROSSTALK)

MATTHEWS: Howard Fineman-sunk like a stone. I just love it! And you're like Rex Reid. I mean, these are going to be quotes for generations!

(LAUGHTER)

FINEMAN: Not so much praise, you know.

MATTHEWS: Another one of those. Gene, are you willing to predict one Republican will win tonight? How about this one? Gene?

ROBINSON: Yes?

MATTHEWS: Are you going to predict one Republican is going to win tomorrow? It'll break your heart, but say it.

ROBINSON: Absolutely, McDonnell wins, I think. And you know, the Deeds campaign had-you know, ran the gamut from A to B. So...

MATTHEWS: Oh, God.

ROBINSON: ... in terms of its skill, so...

MATTHEWS: OK. Look, I think we're agreeing.

ROBINSON: (INAUDIBLE) cliches.

MATTHEWS: Virginia is in It's going Republican again and backing off from where it was last year, a state that once again has gone red, it looks like, tomorrow night. New Jersey still very close. It looks to me like either guy could win. My hunch is Christie. I think people don't like fat jokes. Just a thought. And also, they like change in New Jersey and don't like taxes. Anyway, Howard Fineman, Gene Robinson, a lot of fun.

Tomorrow night, we'll be back with the results on MSNBC all night. We're going to have a HARDBALL show, by the way, running through 1:00 in the morning.

Coming up, the mayor of Philadelphia, Michael Nutter, great guy, here to talk about hot stuff going on, how you save jobs and how you save the Phillies. That's a big one. They're down 3-to-1 in the hole right now, but teams have come back, and the Phillies are great on the road, if they could just get back on the road after winning tonight.

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL, originating tonight from Philadelphia. Joining me right now is the city's mayor, Michael Nutter. Mr. Mayor, why are so many New Jerseyites commuting to this city angry enough to dump an incumbent Democratic governor? What's up?

MAYOR MICHAEL NUTTER (D), PHILADELPHIA: Well, good evening, Chris. I don't necessarily know about that. Obviously, it's a close race, but Governor Corzine has had to make some pretty tough decisions and that sometimes can upset folks. But he is a great leader. I have a great working relationship with him.

And I know you were asking earlier for predictions. Governor Corzine takes that race tomorrow. Maybe a little closer than any of us would like, but I believe he's going to win.

MATTHEWS: OK, I'll remember that and note that tomorrow night, Mr. Mayor. Let's take a look at President Obama today on the importance of jobs because I want to talk to you about big cities and jobs rates when we get back. Let's listen.

(BEGIN VIDEO CLIP)

OBAMA: Having brought the economy back from the brink, the question is, how are we going to make sure that people are getting back to work and able to support their families? It's not going to happen overnight. But we will not rest until we are succeeding in generating the jobs that this economy needs.

(END VIDEO CLIP)

MATTHEWS: Wow. You know, when the president spoke like this last week about saving 650,000 jobs-what does it mean to save a job? You've got all these-you've had all this lay-off challenge in the city with this recession. What's it mean when the president says, I've "saved" a job?

NUTTER: A saved job is a person who's still working, who's still taking care of their family, still taking care of their responsibilities At the local level, of course, that's a person who's still paying taxes and helping us to provide high quality services.

There is no question that the president is focused like a laser beam on the issue of saving and/or creating jobs here in America, getting Americans back to work, getting Philadelphians back to work. We're utilizing our economic recovery dollars to put people in training programs or to start projects. But also, it is about saving jobs.

And we're very appreciative in Philadelphia for the great work that the president is doing. He's made his White House accessible to mayors all across the country. I was just in D.C. last week with a group of mayors, meeting with the director of the National Economic Council, Larry Summers, and his team to talk about the difficulties that cities are still having in balancing their budgets, providing services. And none of us want to lay people off, but we have to live within the budgets that we have.

The president cares a great deal about that, and his team is working to help our cities provide high quality services, but more importantly, keep people working, or create jobs and get Americans back to work.

MATTHEWS: Philadelphia's got $157 million in stimulus money this

year, but only about $14 million or so, I hear-you can check me on this

has actually been spent yet. How does that stand, and why don't we feel this-you know, this real comeback of spending?

NUTTER: Well, the challenge here is-and we're very-as I mentioned earlier, we're certainly very appreciative. We've been awarded $157 million. But you know, the timeframe between the award and actually receiving it in our treasury, there is a little bit of a lag, not just for Philly but cities all across America.

As soon as the dollars come in, we're going to be working hard to kick them back out and get people to work. There are 300 to 400 folks in a training program for alternative energy and sustainability right now in Philadelphia. Thousands of young people this past summer were working as a result of ARRA funds availability. So there is job activity taking place in Philadelphia and many other cities across the country.

But if you can try to imagine getting over $700 billion out of the federal doors from a variety of agencies and departments, some of whom their funding sources were brand new and had the right regulations. The president and his team are working hard. We know that. And as soon as those dollars come in, we're sending them right back out to get Americans working.

MATTHEWS: Yes, Philadelphia's got an unemployment rate of over 11 percent right now. How long do you think it'll take for all this federal money to stimulate that big reduction in the unemployment rate?

NUTTER: Well, I think that, you know, the tail end here of '09, we're still going to be challenged, and more than likely into '10. But getting people to work-and as I mentioned earlier, some of that activity is starting to happen. I would think that through the calendar year 2010, we should start to see literally thousands of people back to work or newly created jobs through weatherization funds and the green economy, energy efficiency, all those programs, take place right here on the grouped.

We're looking to retrofit many of our own municipally owned buildings. Those are jobs that can't be outsourced. They have to take place right here in Philadelphia.

Last week, I was at a-a training graduation. Twenty-four guys who all were unemployed last Monday all now have jobs from a solar panel installation panel training program. Five were ex-offenders. Six were veterans. And many others had different stories, but all had a common theme, all unemployed, dislocated workers, now with this training program, in just a few weeks...

MATTHEWS: Yes.

NUTTER: ... back into the work force.

MATTHEWS: What do you make of this-you know, it's good to be optimistic. But let's take a look at this Macy's ad that ran in "The Philadelphia Inquirer" this morning, full-page. I know you have seen it.

(LAUGHTER)

MATTHEWS: This is an unfortunate prediction as to how Philadelphia is going to do.

It has basically got the Phillies winning the World Series. Would you please explain what impact that is going to have on people's morale to see that this magazine-I mean, I love Macy's.

(LAUGHTER)

MATTHEWS: It's the old Wanamaker's, but...

NUTTER: Sure.

MATTHEWS: ... that's a lot of money to spend on a mistake, especially when things aren't looking so hot over at the-at the Bank.

NUTTER: Well, I think, first of all, Philadelphians are supremely optimistic. And, you know, we certainly want folks to shop at Macy's. They have been a great corporate partner here in the city.

Look, it's -- 3-1 is a very tough circumstance. But these guys have come back time and time and time again, took the first game up in New York. And we're, of course, optimistic about tonight, sending the series back to New York to battle it out up in Yankee Stadium.

But you can't take anything away from what the Phillies have done, whether it was last year, taking the World Series, this year, coming back to the game, back-to-back appearances. And they're going to do everything they can, I know, Charlie Manuel, and the guys to bring us a win home tonight.

(CROSSTALK)

MATTHEWS: What's a polite way to say, Yankees suck?

(LAUGHTER)

NUTTER: Go, Phillies.

(LAUGHTER)

MATTHEWS: Let's take a look.

Well, tonight, I-I do make a prediction. The Phillies, if they win tonight, could win in New York, because they are one murderous team on the road.

NUTTER: Yes. Oh, yes.

MATTHEWS: They are a great road team. You will see how good I look in this hat, Mayor. I'm born to wear this hat, and, in fact, I was born wearing it.

Thank you very much, Mr. Mayor.

NUTTER: Thank you.

MATTHEWS: Mayor Michael Nutter of Philadelphia.

Up next, talk...

NUTTER: Go, Phillies.

MATTHEWS: As I say.

(LAUGHTER)

MATTHEWS: Up next, talk about an ego trip. Bill Clinton heads halfway around the world. Well, he deserves it. It shouldn't be an ego trip-an 11-foot statue of him in Kosovo. They love him in Kosovo. He won the war for the people over there. That's next in the "Sideshow."

Not exactly a Peace Prize-it's a war prize.

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

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

First up: Bill Clinton larger than life. The former president was in Kosovo's capital yesterday for the unveiling of an 11-foot statue in his honor. Of course, he's a hero over there for leading the 1999 NATO bombing campaign that ended the crackdown on Kosovo's ethnic Albanians.

Anyway, here is former President Bill Clinton at the ceremony.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I never expected it anywhere someone would make such a big statue of me.

And, this morning, when I talked to my wife, who said to tell you hello...

(APPLAUSE)

CLINTON: ... she said, I had to make a photograph in front of this, and send it to her to make sure it was true and I didn't make this whole thing up.

(END VIDEO CLIP)

MATTHEWS: Wow. You think that's really what happened?

Anyway, next up: a call to action. Minnesota Congresswoman Michele Bachmann is organizing a special in-house rally right in the U.S. Capitol this Thursday against health care reform. She explained her plan to FOX late Friday.

(BEGIN VIDEO CLIP, FOX NEWS)

REP. MICHELE BACHMANN ®, MINNESOTA: I have never done this before, but I'm asking people to come to Washington, D.C., by the carload.

And, next Thursday, at noon, I will be at a press conference on the steps of the Capitol. I would love to have every one of your viewers join me, so that we can go up and down through the halls, find members of Congress, look at the whites of their eyes and say, don't take...

SEAN HANNITY, FOX NEWS: They will be hiding. They will be hiding.

BACHMANN: ... don't take away my health care.

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS: Wow. Don't talk until you see the whites of their eyes?

There is something strange in the neighborhood.

Anyway, here is some more out of the right-from right-field talk for-for you to listen to, what Congresswoman Virginia Foxx had to say. She is a Republican from North Carolina. Here's what she said on the floor just this afternoon.

(BEGIN VIDEO CLIP)

REP. VIRGINIA FOXX ®, NORTH CAROLINA: I believe that the greatest fear that we all should have is-to our freedom comes from this room, this very room, and what may happen later this week, in terms of a tax-increase bill masquerading as a health care bill.

I believe we have more to fear from the potential of that bill passing than we do from any terrorist right now in any country.

(END VIDEO CLIP)

MATTHEWS: OK., more to fear from the passage of a health care bill than from any terrorists. Hmm. Think about it.

Now for the "Big Number."

It will be an upset of history if Democrat Creigh Deeds wins tomorrow's election in Virginia for governor. Historically, the party that controls the White House also loses Virginia's gubernatorial contests. In fact, how many elections straight has that pattern held? Eight straight times, every election since 1977. That's certainly a bad omen for Democrats this year. The president's party has lost the Virginia governor's race each of the past eight elections-tonight's "Big Number."

Up next: Dick Cheney repeatedly claimed loss of memory when the FBI interviewed him about the CIA leak case. Is this the behavior of a vice president or a criminal defendant?

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SIMON HOBBS, CNBC CORRESPONDENT: Good evening. I'm Simon Hobbs with your CNBC "Market Wrap."

A seesaw day for stocks, with a late rally helping to push the markets into green. The Dow Jones industrial average added-added 76 points by the close. The S&P was up six, and the Nasdaq up four.

Stocks started out with a surge on surprisingly good readings on manufacturing activity and home sales. Manufacturing logged its third straight months of growth, its highest reading since April.

And pending home sales jumped to their highest level in nearly three years-big swings in financial stocks driving a lot of the volatility today. American Express was the biggest gainer on the Dow, adding a little over 2 percent. But Citigroup fell almost 2.5 percent, finishing below $4 for the first time since August.

These moves came on the heels of a Fed official warning about potential losses on commercial real estate loans.

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

HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

The biggest question of the last decade is how our country was led into invading Iraq based on a Bush administration fact that turned out not to be a true fact, that Iraq had or was on the verge of having nuclear weapons.

In July of 2003, just after the U.S. invasion of Iraq, former Ambassador Joe Wilson wrote an article in "The New York Times" that said that he had personally traveled to Africa to check out a concern by Vice President Cheney in 2002 that Iraq had tried to buy nuclear materials from Africa.

Wilson said that he could find no hard evidence that Iraq had tried to buy the nuclear materials, but that Cheney and President Bush had ignored his report and continued to use the claim of an Iraq deal with Africa as a key justification for war with Iraq.

The way in which Cheney's office reacted to Cheney-Wilson's charge remains under what the U.S. special prosecutor calls a cloud of dust thrown in the air by Cheney's chief of staff, Scooter Libby, who was convicted on charges of perjury and obstruction of justice.

After all these months, we now have Vice President Cheney's testimony in the Libby case and have a chance to see it in a greater light.

"Newsweek" reporter and MSNBC contributor Michael Isikoff wrote about Cheney's interview with the FBI in his new blog, Declassified. And David Corn is the Washington bureau chief for "Mother Jones" magazine, which also dissected Cheney's interview.

Michael, I want you to tell us where you can find cases where what Cheney told the FBI doesn't square with what his chief of staff told the FBI under oath-or, rather, told the court in public testimony.

MICHAEL ISIKOFF, INVESTIGATIVE REPORTER, "NEWSWEEK": Well, in terms of contradictions, the most glaring one is-is how-is whether or not Cheney had shared the information that Joe Wilson's wife, Valerie Plame Wilson, worked at the CIA with Scooter Libby.

It was the outing of Valerie Plame Wilson that prompted the whole criminal investigation in the first place. And, in the trial of Scooter Libby, one of the pieces-pieces key pieces of evidence were-were Libby's own notes showing that he learned about-first learned about Valerie Plame Wilson working at the CIA from Dick Cheney himself, after he had a conversation with then CIA Director George Tenet.

In this FBI interview, Cheney says he doesn't recall ever sharing that information with Scooter Libby. It's one of, I think, the AP calculated, 71 instances where he said he didn't recall during the interview.

So, in terms of the substance, that's probably the one contradiction that leaps out the most. But I think the more interesting part of the whole interview is just the sort of raw look at Dick Cheney, the irascible, uncooperative witness who has disdain for the CIA-he talks about them as amateur hour, and talks about their incompetence-disdain for the press, disdain even for the investigators themselves.

Towards the interview-end of the interview, he is complaining he is pressed for time, to sort of say, I don't even have time for you guys. I don't have to be sitting here listening to...

MATTHEWS: OK.

ISIKOFF: ... listening to these questions.

MATTHEWS: David...

ISIKOFF: I think that's the most interesting part of the-of the-of the interview.

MATTHEWS: David, David Corn, what blows my mind on this is the loyalty of Scooter Libby, who took the fall. As they used to say in the old mystery stories, he took the fall. He basically went down on charges of perjury and obstruction of justice for-for saying that he got the information from somebody in the media, for saying that the vice president had nothing to do with this.

The vice president said he had nothing to do with this over and over again. In fact, he said, "I don't remember." In other words, all this was going on in the vice president's office, according to the trial. The vice president knew none of it, none of it, except to deny he had anything to do with outing Valerie Wilson.

DAVID CORN, WASHINGTON BUREAU CHIEF, "MOTHER JONES": Right. Well...

(CROSSTALK)

MATTHEWS: That's the only thing he said on the record. He couldn't remember anything else, except that.

(CROSSTALK)

CORN: I-I-I think the interview transcript showed, too, that Dick Cheney probably was in the crosshairs of Special Counsel Patrick Fitzgerald for possible lying to the investigators.

I mean, he wasn't-it wasn't a sworn statement, but they still were investigators-because when he said, as Mike just laid out, that he-he didn't say that he just didn't recall what he told Libby or what he didn't tell Libby. He said he had no idea-that's his words-no idea how Scooter Libby learned that Valerie Wilson worked for the CIA, when, in fact, Libby's own notes show that Dick Cheney told him.

And it's not just they had one conversation about this in June 2003. Later, a few months later, in the fall of 2003, once the investigation is up and running, Scooter Libby starts going through his records, probably to see what evidence there is that he has to worry about, and he finds the note that shows that Dick Cheney told him.

What does he do? He tells Dick Cheney about this note. So, Dick Cheney was reminded by Scooter Libby in the middle of the investigation that you, Mr. Vice President, you told Scooter Libby, your chief of staff, about this key fact.

And then, several months later, when the FBI and Patrick Fitzgerald are asking Cheney questions about this, Cheney says he has no idea. I mean, this comes really close to perjury in spirit, if not in a legalistic manner.

So, Dick Cheney may be quite lucky that he is walking amongst the free today.

MATTHEWS: Well, interestingly enough, Michael Isikoff, you have covered this case or written about it in your great book, but-by the way, what was the name of your book?

(LAUGHTER)

CORN: You take it, Mike.

ISIKOFF: "Hubris."

And-and there was a co-author there...

MATTHEWS: OK.

(LAUGHTER) ...

ISIKOFF: ... who is on the show tonight.

MATTHEWS: "Hubris."

CORN: Right.

(LAUGHTER)

MATTHEWS: Let me ask you about-about Dick Cheney...

(CROSSTALK)

MATTHEWS: ... the fact that he was, at least on the record, trying to get a pardon in the end for his chief of staff.

His chief of staff has lost his-his legal license. He's basically a felon on five counts of perjury and obstruction of justice. He will never be able to work in a white-shoe law firm again. He will never be what he was before, a wise man at the level of foreign policy.

And, yet, they go out and give them awards the other day. Frank, the other day, they're giving him these awards for what? For putting service above self, for basically covering up. for service above self. It's the most outrageous thing. The guy gets a trophy, instead of a law license and his good name, and the vice president walks away with a smile and another trophy.

This is like the little leagues, where even the losers get trophies.

(LAUGHTER)

MATTHEWS: It's-it's-you're laughing, but it's not funny if you're Scooter Libby.

(CROSSTALK)

ISIKOFF: If it's service before self, I guess the service was to Dick Cheney.

MATTHEWS: Yes, that's what I mean.

ISIKOFF: If you believe that Scooter Libby fell on his sword to protect his boss, the vice president, then that would certainly fit with the theme of that award there, which is self sacrifice. Because, I mean, look, as we just pointed out, the-if the original information to the White House about Valerie Plame Wilson and her employment at the CIA came from Dick Cheney, then that put him, you know, at the very center of the whole investigation.

And that was something that Scooter Libby had to deny. He couldn't deny it that-because it was in his notes. He had to insist, implausibly, that he forgot it, and then only learned it later from Tim Russert, which, of course, the jury-

MATTHEWS: The jury did not believe.

ISIKOFF: -- not plausible.

MATTHEWS: David Corn, are we going to have to wait for one of these Rose Bud moments or I believed moments from Bill Casey kind of thing, where somebody, in the end of their life, finally says what happened here? I have never seen a more complete-complete case of where we just don't get the information that the public would like to know. How did we get into that war in Iraq based on bogus-a bogus case that there was an Iranian deal-or an Iraqi deal to buy Yellow Cake from Niger? And how in the world did the vice president get away with simply being called a cloud of, what, dust? Instead of having to face the music?

CORN: Patrick Fitzgerald ended the trial by saying there is a cloud over the vice president, because Scooter Libby covered up, and did not tell the truth. And to this day, because Patrick Fitzgerald-his job was to prosecute a crime, not to produce a public report, to give us all of the details. There are still lots of questions.

We still don't know a lot about Karl Rove, who was one of the initial leakers, and what did he tell the president? The White House lied to the public when it said that Karl Rove was not involved, when, in fact, he was involved. And today, he does quite well as a talking head on yet another network, and having once had a column from Mike's own news magazine.

So, I mean, you know, Scott McClellan, who is a low-level figure, did his tell-all. But the question is whether the neo-cons and others, who are a very tight-knit bunch, as you just saw at that award ceremony-Doug Feith was there, as well. Don't forget him.

Whether any of these guys end up dropping a dime on the whole gang at some point, I'm not sure I would bet on that, Chris. We may be waiting a long time.

MATTHEWS: Meanwhile, Cheney has developed this dynasty. He has a dynasty of family members out there selling the case. It seems like it's going to go on forever. He has become the Pearl Mesta (ph) of Washington. He's out there holding salons and soirees. It never ends, except we never get the truth.

Let me ask you, what's the value to historians and to journalists of finally this weekend-at the end of last week finally getting this transcript, except to see that there is a conflict between what Cheney said on the record now, with what his chief of staff said, with regard to how he got the information about the CIA identity of Valerie Wilson? Your thoughts, Michael, first?

ISIKOFF: Well, like I said, I thought it was a very revealing look at Dick Cheney behind closed doors, how he operates, how he thinks, how he treats people, what he thought of people, his views of the CIA. You know, probably-everybody was fixated at the time on the criminal case there about the outing of Valerie Plame Wilson. But the real larger political crime, as I think David and I wrote in "Hubris," was the distortions and manipulations of intelligence.

And one of the issues that came up during that interview was the-the selective declassification of a National Intelligence Estimate that allowed Scooter Libby to go out and selectively leak details to Judy Miller of the "New York Times," leaking those details that supported the White House position, and, of course, withholding a lot of details that undercut what the White House was saying publicly.

And that was a process in which the president declassified, at the request of Cheney, and then Cheney directed, according to testimony at the trial, Libby to go out and-and do that. And, of course, Cheney in that interview, said he had no recollection. And then said he wouldn't answer any questions about his conversation with Libby about that, because it was covered by presidential privilege.

MATTHEWS: He is not-

CORN: And Chris, I think a big picture here-you asked what historians are going to look at. They're going to look back and read this transcript, and they're going to see that this it was not a truthful bunch. This was a-this was a criminal investigation, in which the president asked everybody to cooperate.

Dick Cheney was part of that-those officials asked to cooperate. And as Mike mentioned, he was a reluctant witness. He is acting more like a criminal defendant than as a vice president who cares about the truth, and cares about honesty in government.

It's on every single page, whether he is denying things or not recalling things. It's that attitude that comes through. And I think it was the attitude that led them to believe they could get away with one of the greatest cons in American foreign policy, that there was a reason for war in Iraq.

MATTHEWS: Thank you, David Corn. Thank you, Mike Isikoff, for excellent investigative reporting.

Up next, Karzai has been declared the winner in the presidential election of Afghanistan after his opponent, Abdullah Abdullah, quit the run off. So does President Obama now send troops to a country whose president is considered corrupt and illegitimate? The politics fix coming up next. This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. Time now for the politics fix. Rick Hertzberg writes for "The New Yorker," and his new book is called "Obamanos"-I think i said it right-"The Birth of a New Political Era," and Anne Kornblut covers politics for the "Washington Post."

Rick, this new story that just emerged this afternoon about the behavior of Lyndon Johnson, then vice president, in the moments and hours right after to the assassination of John F. Kennedy, November of 1963 -- what do you make of the fact that this general is saying he was hiding on a toilet seat in the president's bathroom of Air Force One, where no one could find him, scared to death?

RICK HERTZBERG, "THE NEW YORKER": Well, as I understand it, the general was an anti Johnson guy. I don't doubt that LBJ was in the bathroom. And I don't doubt that he was crying. A lot of us were crying that day. One thing that the story seems to suggest is that LBJ probably did not arrange the assassination.

MATTHEWS: Yes. I think that's-Oliver Stone may lose on this mark. Rick, wasn't it consistent, however, with the Johnson worry that this was like the Lincoln assassination? It wasn't, perhaps, one guy, Lee Harvey Oswald, but it might have been a conspiracy of the right at that point? And he was afraid he was on the list? That's fair enough.

HERTZBERG: Right. And LBJ knew something about Texas and the atmosphere in Texas. A lot of people felt that way. A lot of people were worried about that in the hours after the assassination.

MATTHEWS: Yes, that they were going to go around, like they did with the Lincoln assassination, go after the cabinet members. Anne Kornblut, you start off tonight with what's happening tomorrow. It looks to me like the big noise coming out of the elections tomorrow probably will be that the Republican party is in kind of a purge mode right now, that if you are not a right winger, if you're up for election-you're a nominee or a potential nominee-you're dead if you're not a right winger.

Charlie Crist looks like he's on the list right now. They're anti-gay rights. They're anti-abortion rights. It looks like if you're not on the right wing team now on the Republican party, you're a target.

ANNE KORNBLUT, "THE WASHINGTON POST": Well, I wouldn't want to read too much into the election before it takes place. But I would point out I think there's something to that. I think, obviously, in upstate New York, if the conservative candidate wins there tomorrow-and there's a lot of suggestions that he will-then I think we're going to be talking a lot about the fight for the soul of the Republican party and whether you have to be conservative.

On the other hand, in Virginia, we see Bob McDonnell, who's been ahead in many of the polls, who is not running a right-wing race at all. In fact, he's running a pretty moderate race. Everyone knows he's a social conservative. But that's not his emphasis.

And if he wins tomorrow, I think there's going to be a legitimate debate on both sides of that argument about who really controls the Republican party.

MATTHEWS: That's a great question. Rick, should the Republican right fold its tent or act a bit more mainstream? McDonnell has come across as a centrist in this campaign. His daughter went to Notre Dame. She fought for the country, sort of basic military tradition of Virginia. None of the right-wing cultural stuff from where we went to school in Virginia Beach, Pat Robertson stuff. None of that stuff.

HERTZBERG: He doesn't have to emphasize that stuff because the audience for that stuff already knows he's on their team, so he doesn't have to make corrections toward the right, just toward the left. The Republicans do seem to be kind of marginalizing themselves, purifying themselves as a conservative party. And they will gain, probably, in the 2010 Congressional elections, and they will draw the conclusion that those two are causally related.

Actually, they're the only alternative and if people are-if people want to express themselves against the administration, they'll vote Republican. They've got no other choice.

MATTHEWS: Yes. It's a tough time to run if you're a Democrat. You never want to run as the candidate of the party in government in a bi-election. It's too easy to be swatted at.

Anyway, we'll be right back with Anne Kornblut and Rick Hertzberg. I want to talk about Afghanistan, your thoughts on the fact there's not going to be a runoff because there's not going to be an opposition candidate. Does that delegitimize the government that we're fighting to protect over there? You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We're back with Anne Kornblut and Rick Hertzberg for more of the politics fix. Rick, the big challenge here, it seems, for the president is to have a government to defend in Afghanistan. It's terrible for our troops over there. They're losing limbs. They're losing their lives. It's the most dangerous place in the world for Americans now. It's as if they've invited us in there to be killed and maimed. The question is, do we have a government now to defend?

HERTZBERG: The question is, are we there to defend that government? I think the answer is no. That's not the purpose of our being there. It wasn't the purpose of our going there. We weren't invited there. We went in there legitimately to go after al Qaeda.

And if the president is going to continue this war, he's going to have to defend it in terms of our national interests, not defending a government in Afghanistan. And they're also going to have to get tough with that government and change it, because this one will not due as a government that we are fighting on the same side of.

MATTHEWS: Anne Kornblut, do we have a word as to when the president will come down and decide whether to give McChrystal, the general in the field over there, the 40,000 some troops?

KORNBLUT: Well, until the cancellation of the run off, I think everyone assumed it would be later on in the month, because there would be the run off on the 7th, and then they'd have to wait and see the results. Obama's going to Asia. Now that it's been canceled, there's some chance chance there could be a decision in the next week or so. I've heard mixed signals all day today about which it's going to be.

MATTHEWS: Here's the president talking about Karzai and the situation, the electoral situation in Afghanistan.

(BEGIN VIDEO CLIP)

OBAMA: This has to be a point in time in which we begin to write a new chapter, based on improved governance, a much more serious effort to eradicate corruption. He assured me that he understood the importance of this moment. But as I indicated to him, the proof is not going to be in words. It's going to be in deeds.

(END VIDEO CLIP)

MATTHEWS: That sounds like we will defend him if he does the right things, as if our role over there, our mission, is to help him if he does the right thing. It sounds like the opposite of what you said, look out for our interests.

HERTZBERG: You could interpret it either way. He's saying it's going to be a new day there. That suggests he's not going to just passively accept the situation as if Karzai had been elected in an election as we understand an election. There are going to have to be changes. What those changes are, maybe he doesn't even know. But the status quo with this election is not going to be acceptable.

MATTHEWS: Anne, the problem, it seems to me, based upon what I know, is that the 40,000 troops are going to be deployed to defend the major population centers, not the outposts, the outlying regions, but also to help rebuild that government, almost like in a supervisory capacity. We're going to have soldiers and officers watching cabinet ministries and seeing if they're doing their jobs.

That sounds like nation building. It sounds like hell.

KORNBLUT: Yes, I'm not sure I'd jump to that conclusion yet. The way it sounds to us, everything we understand, President Obama is still making that decision. It may be well short of 40,000 troops.

MATTHEWS: I heard the advice, not the decision. Thank you very much, Anne Kornblut. Thank you, Rick Hertzberg. Good luck with the book, "Obamanos." Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL. Coverage of those big elections here on MSNBC, New Jersey, New York, Virginia, the country. Right Time, it's for "THE ED SHOW" with Ed Schultz.

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

END

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