updated 1/11/2010 10:54:34 AM ET 2010-01-11T15:54:34

Guests: Chris Matthews, Jim Cramer, Howard Fineman, Matt Nesto, Tom Ridge, John Negroponte,  Steve Kornacki, Joan Walsh, Chris Cillizza, Robert Reich

CHRIS MATTHEWS, HOST:  Divided we stand.

Let‘s play HARDBALL.

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

Denial.  The Bush loyalists have been nasty on the offense lately, blasting Obama on everything from not saying the word “terrorist” enough to being a socialist and to not being an American.  But the rear guard, sadly for them, are not so sharp when it comes to defense.  Catch this whopper today from former New York mayor Rudolph Giuliani.


RUDY GIULIANI ®, FORMER NEW YORK MAYOR:  What he should be doing is following the right things that Bush did.  One of the right things he did was treat this as a war on terror.  We had no domestic attacks under Bush.  We‘ve had one under Obama.


MATTHEWS:  Really, there were no domestic attacks under President Bush?  How about the one the president was deliberately, clearly and memorably warned about, the one that was coming, in August of 2001, “Bin Laden determined to strike in U.S.”?  And what about the attacks of 9/1, which, as Joe Biden liked to say, Rudy Giuliani made the chief component of every sentence he spoke running for president?  Is this the new Republican strategy, to speak and act and pretend that 9/11 was some bad memory they inherited from a previous administration and hope that it sticks?

Plus, great new details about the 2008 presidential election in the new—hot new campaign book “Game Change.”  Here‘s one, a campaign staffer warning that Sarah Palin‘s debate performance would be, quote, “a debacle of historic and epic proportions.”  The inside stuff in that book—in that new book.  We have the excerpts tonight.

Plus: What do the new jobless figures tell us about the economy and whether President Obama and the Democrats are ready to stage a comeback?  Also, when President-elect Obama asked Hillary Clinton to be his secretary of state, she told him there was a problem.  The problem, she said, was her husband, Bill, who she said would create a circus.  We‘ll go into the circus later.  In fact, we‘ll visit the circus.

And Rudy Giuliani isn‘t the only Republican who thinks denial is just another river in Egypt.  Wait until you hear what Michael Steele is denying while he‘s on his book tour.  He‘s denying that he ever ran for the office of chairman of the Republican Party.

We start with Giuliani‘s, of course, whopper.  Tom Ridge served as the first Homeland Security secretary and former director of national intelligence John Negroponte is the vice chair of McCarty (ph) Associates now.  Gentlemen, thank you for joining us.

I don‘t want to do a lot of partisanship tonight, but there has been some today.  What does Rudy Giuliani mean when he denies—well, let‘s watch him here—when he denies there was an attack on Bush‘s watch?


GIULIANI:  What he should be doing is following the right things that Bush did.  One of the right things he did was treat this as a war on terror.  We had no domestic attacks under Bush.  We‘ve had one under Obama.


MATTHEWS:  Is that a mental error, a head fake, or a game that‘s being played by the Republican Party to somewhat act like 9/11 wasn‘t part of the problem?

TOM RIDGE, FORMER HOMELAND SECURITY SECRETARY:  I think you‘d have to ask Rudy.  Maybe he meant the second term.  All I do know is that...

MATTHEWS:  But you don‘t think there‘s a game out there being played...

RIDGE:  I hope not.

MATTHEWS:  ... that somehow, the shoe bomber and all these things happening since 9/11 are Democrats‘ problems and everything before were Democrats‘ problems, as well?

RIDGE:  No, I hope not.  I mean, it‘s political theater, sometimes at its best, sometimes at its worst.  Both parties have used the politics of terrorism to advance an agenda.

But there‘s much bigger issues right now that we ought to be talking about, and I would rather have Rudy out there saying President Bush made the FBI the tip of the spear on our counterterrorism effort.  It was President Bush that created the NCTC that‘s had some problems over the past couple months.  It‘s President Bush that beefed up the CIA.  There are a lot of good things that he should be talking about.  But suggesting that there was nothing happened on President Bush‘s watch I think—perhaps he misspoke, and I think he needs to clarify it, not me.

MATTHEWS:  Mr. Ambassador, what do you make of Dick Cheney and others‘ comments that make this partisan?

JOHN NEGROPONTE, FMR. DIR. OF NATIONAL INTELLIGENCE:  Well, I mean, I‘m a career professional.  I happen to be a Republican, but I‘m concerned about foreign policy, national security and intelligence.  And there are a lot of big issues out there, and I think that‘s probably the more important thing to be talking about.

MATTHEWS:  OK, let‘s get to it.


MATTHEWS:  Everybody—I remember reading—like all of us, we grew up with the Bay of Pigs, the Cuban missile crisis.  We‘ve seen how presidents learn on the job.  We‘ve seen how we all have to learn.  And certainly, we learn as citizens.  We learn as journalists.  You folks in public life have to learn.  Politics is a learning profession.

What happened, do you think, with the CIA?  When a father comes into the Lagos bureau—the station chief, and says, My son‘s dangerous, he‘s got something going on with Yemen, and then you find that in Yemen, at the same time, the Yemen station chief is hearing at the CIA, My God, there‘s a Nigerian they‘re going to use for some kind of attack.  Why didn‘t those two station chiefs talk to each other and compare notes?

NEGROPONTE:  Yes.  I‘m not sure that they did or didn‘t.  I don‘t know what exactly they did.  I guess what I‘d say is that, as John Brennan has said, these were fragments.  They were dots.

MATTHEWS:  But they weren‘t fragments.  They were—a father comes in to the head of a foreign intelligence service and says, My son is dangerous.  That‘s not a fragment.  That‘s a human situation.  You go, My God, some big banker in this country, one of the big shots in this country, just warned us his son is dangerous and brought this information to our CIA.  That‘s not a fragment.  That‘s not a dot on the screen.

NEGROPONTE:  Well, my point is simply, Do you draw from that, the fact that he said his son is dangerous, that he‘s ipso facto the terrorist...

MATTHEWS:  No, but you call Yemen and say, Have you heard anything about that kid who‘s gone up there, is he causing trouble?  And you find out immediately from the station chief up there, yes, we‘re looking for a Nigerian, this must be him.

RIDGE:  Yes, well, my experience...

MATTHEWS:  I bet the president‘s mad about this.  My sense is that the president‘s having this kind of conversation with his people.  Well, you‘ve been there, you guys.

RIDGE:  Well, you know, this is—I don‘t want to say it‘s an exact analogy, but I know even when we were building the shop, the homeland security entity within the White House, even before we had the department, I had a couple of people that literally would not wait for the next e-mail, not wait for the next fragment of information, but when something seemed unusual, when it broke the norm or was an anomaly, they got on the phone.  They started tracking down through all those other agencies.

And I guess the question is here—not only here in this instance, but with the FBI seeing an e-mail trail between an active duty...


RIDGE:  ... Army colonel and a radical cleric in Yemen—well, somebody just didn‘t use a little common sense, exercise a little judgment, a little initiative, pick up the phone, ask somebody, What‘s going on over there?

MATTHEWS:  Yes.  Aren‘t you worried about Awlaki?  This guy‘s apparently the one who brought into action, recruited Nidal Hasan, the medical officer down in Ft. Hood.  Then he brought into action this kid in Nigeria.  He‘s out there recruiting right now as we speak and sending people to cause death in America right now, Mr. Ambassador.

NEGROPONTE:  Yes, and we‘ve been concerned about him for a number of years.  I mean, he is an American citizen.  He‘s been over there in Yemen for a number of years, and he is a cause of concern.  The other thing that bothers me...

MATTHEWS:  I‘m worried about American people of Islamic background, particularly, being drawn into this jihad.  Aren‘t you?

NEGROPONTE:  Well, that‘s certainly one of the problems that Europe confronts.  That‘s what the British have seen.  I don‘t think it‘s happening on the scale in this country that it happened in the U.K., but it‘s a risk.  And we‘ve seen now some examples of that and it‘s something we‘ve got to be alert to.

MATTHEWS:  What do we do about it?

RIDGE:  Well, I think one of the biggest challenges...

MATTHEWS:  Is the president right in saying, Let‘s not get into—well, you heard him yesterday—We‘re not going to change our country because we got a couple thousand people out there after us.

RIDGE:  Yes, I don‘t think...

MATTHEWS:  What do you think about that?

RIDGE:  Well...

MATTHEWS:  This fight that goes on, the partisan fight, would—I have a point of view about it, and you gentlemen certainly have one, too.  The president—I mean, the other side, the Republican side keeps saying, Say terrorism, terrorism, terrorism.  Pete King is a good guy from New York.  He‘s a congressman.  He says we just have to keep reciting this over and over.

Here‘s Bob Barr, by the way, challenging that.  He‘s the former congressman.  He said, “The sniping at the president by Republicans, including former vice president Cheney and by conservative radio and TV commentators borders on, if not passing into asinine.  Partisanship truly has pervasively infected our political system when a reasonable, measured, factual, timely and substantive response by a president to a single security incident, the roots of which clearly indicate long-simmering problems that predated this—his tenure in office is publicly blasted as irresponsible.  Those leveling such counterproductive attacks are the ones engaging in irresponsible behavior.”

Your thoughts.

NEGROPONTE:  Yes, well, don‘t get me—I mean, I think he‘s done the right thing.  I think he...

MATTHEWS:  Bob Barr‘s right and the president‘s right.

NEGROPONTE:  I think the president has acted responsibly.  He‘s acted in a timely manner.  And they‘re taking corrective steps.  It‘s like the pilot of the airplane getting out, looking at the wingtips, kicking the tires and showing some leadership in his commander-in-chief role.  I think he‘s probably going to have to do more of that in the weeks and months ahead.

RIDGE:  Yes, I...

MATTHEWS:  Are you afraid that—are you afraid, as Americans, that if you have somebody out there who‘s constantly sending people out—well, you‘ve been there with TSA.  Well, you‘ve been there as Homeland Security secretary.  When you went to bed every night, would you be thinking—what would you be thinking what the enemy looks like?  Is it a pocket in Yemen, a pocket in Afghanistan?  How many pockets are there out of there masterminds thinking against us, plotting and sending out these young people to their death?

RIDGE:  Well, I think...

MATTHEWS:  How many are there?

RIDGE:  Well, Chris, I don‘t think we can put a number on it.  We just know there‘s a lot.  And I think there‘s—there is an intersection between cautious language and the real world.  I mean, the president yesterday talked about a war against al Qaeda.  I mean, he‘s really toughened up his language, and I applaud him for that.

But he also earlier talked about isolated extremism.  We have to get away from that.  It‘s not isolated.  It‘s ongoing.  It‘s global.  They‘re out there actively recruiting every time.

And by the way, I thought this report—I read the six or seven-page summary.  It‘s open.  The disclosure of the report and the transparency‘s I think very, very important.  And what it basically said, I think, is the system, frankly, that President Bush built is fine.  We didn‘t use it very effectively...


RIDGE:  ... and we better use that...


MATTHEWS:  Here‘s my question.  What good does it have us to have this sort of cosmic environment, like we had in the cold war growing up, together, all of us, where you thought a lot about communism because there was a worldwide effort by some big countries, especially the Soviet Union and all its satellites, wars of liberation everywhere in the world, constantly coming at us—this was a global threat.  This thing is a couple thousand people, apparently, al Qaeda and its related networks, right?

What‘s the average person supposed to do?  We don‘t have—we don‘t have the draft.  Taxes don‘t go up.  We don‘t have war bond drives.  They never educate us to what to do on airplanes.  We‘re never told to do anything.  What are we supposed to do, just vote Republican?

When I listen to people like Cheney, that‘s all I hear, get real angry

or Peter King—get real angry, get in a bunker mentality and vote right wing.  That‘s somehow the solution.  But is there something we‘re supposed to be doing besides hating jihad?

I‘m just asking, what are the American people supposed to do?

RIDGE:  Well...

MATTHEWS:  What are you supposed to do when you get on an airplane?

RIDGE:  Well...

MATTHEWS:  I‘m waiting for these guys on either party to say, You get on an airplane and you‘re a full-bodied male or strong woman or something, you got a job to do, take down anybody that tries anything that—like in Israel.  But nobody ever educates us.  They just want us to vote right wing.

RIDGE:  Yes.

MATTHEWS:  What are you supposed to do in the battle against terrorism?

RIDGE:  Well...

MATTHEWS:  What am I supposed to do?  What‘s anybody supposed to do?

RIDGE:  Well, I think...

MATTHEWS:  Except do this, wave your arms, vote Republican, yell counter-jihad.

RIDGE:  Well, I think—first of all, I think commentators and analysts and pundits could help to follow maybe Barr‘s suggestion.  We need to have a rational thought.  We need to put some of this political theater away, put it aside us and really accept the notion that we, as a country, have a new norm.

You mentioned the cold war.  During that cold war, the threat was

real.  Yes, it was.  Is the threat with al Qaeda real?  Yes, it is.  Is it

the same dimension?  No.  But is it as serious?  Yes, because we‘re part of

the homeland has already been a battlefield.  So what are we supposed to do about it?  Let‘s have thoughtful reflection on policy and approaches.


RIDGE:  And I think we need a little less theater and a lot more thoughtfulness.


NEGROPONTE:  ... of the threat.  I‘m glad Tom mentioned the word “threat” because...

RIDGE:  Threat.

NEGROPONTE:  ... we have to understand where it‘s coming from, how it‘s behaving.  I mean, for example, the threat from Iraq has obviously diminished.  We‘ve had considerable success against al Qaeda there.  In the Taliban, it was taken down in Afghanistan.  And now you still have this continuing threat in the federally administered travel area.  Let there be no doubt about it.  I think those—there are people in that area that are still plotting against the United States.


NEGROPONTE:  And now you‘re starting to see it move.  I think that‘s the...

MATTHEWS:  In Yemen.

NEGROPONTE:  That‘s the big story now.  It‘s moving towards the Horn of Africa and towards...

MATTHEWS:  OK, gentlemen, we don‘t have enough time.  Thank you.


MATTHEWS:  ... Mr. Tom Ridge.

RIDGE:  Thanks, Ambassador.

NEGROPONTE:  Appreciate it.

MATTHEWS:  Thanks for your service, both of you.


MATTHEWS:  Coming up: There‘s a new book out about the 2008 presidential campaign, and I love it.  It‘s a classic, many believe.  It‘s full of new information, like how badly Sarah Palin‘s debate prep was going.  Steve Schmidt says he was warned it would be a debacle of epic proportions.  How that‘s for good language?

Anyway, Hillary Clinton also warned Barack Obama about putting her—about dealing with her husband if he made her secretary of state.  Talk about being sacrificial.  It‘s all in the new book.  We‘re going to have a lot of that coming up on HARDBALL tonight.

You‘re watching it, only on MSNBC.


MATTHEWS:  Welcome back to HARDBALL.  There‘s a new book coming out.  It‘s going to be a classic, and I love it.  It‘s called “Game Change: Obama and the Clintons, McCain and Palin and the Race of a Lifetime.”  That‘s all in the long title.  You see the cover there.  The authors are “Time” magazine‘s Mark Halperin and “New York” magazine‘s John Heilemann.  That book—we‘re going to—both those authors are going to be on this Tuesday, when their embargoes open.  But there‘s plenty of stuff out there in the air already about this book, and here to talk about it are “Newsweek‘s” Howard Fineman, who‘s an MSNBC political analyst, and the Washingtonpost.com‘s Chris Cillizza.

Gentlemen, let‘s take a look at this.  Here‘s what CBS reports on

“Game Change.”  Everybody‘s getting a piece of this now.  Quote, “When

President-elect Obama called Clinton”—that‘s Hillary Clinton—“again

to convince her to be his secretary of state, Secretary Clinton”—well,

future Secretary Clinton—“told him there was a problem.”  Says Heilemann

he‘s one of the authors, “At that point, she says, “There‘s one last thing that‘s a problem, which is my husband.  You‘ve seen what it‘s like—what this is like.  It will be a circus if I take this job,” Heilemann (ph) reports.

Howard, this was very sacrificial on Hillary Clinton‘s part.  She was about to pass up, I think, the job of the world, which everybody I know would like to be, secretary of state for the United States, our chief foreign minister around the world, by admitting that her husband might be a major distraction.

HOWARD FINEMAN, “NEWSWEEK,” MSNBC POLITICAL ANALYST:  Well, first let me say it looks like they‘ve got some great nuggets in here.


FINEMAN:  The whole world knew that Bill Clinton would be a distraction.  For her to say so is the news.  But I don‘t think it‘s because she didn‘t want the job.  I think she wanted to have absolution in advance.


FINEMAN:  I think she wanted to have...

MATTHEWS:  Don‘t blame me!

FINEMAN:  ... have pre-disastered (ph) in advance...


FINEMAN:  ... and also—and also make sure -

MATTHEWS:  Is that like one of those medicines they sell on television...

FINEMAN:  Pre-disastered?

MATTHEWS:  ... “May cause other problems”?


FINEMAN:  And also, don‘t forget she already knew that Bill had the Clinton Global Initiative and all that.  I mean, Hillary‘s got...


MATTHEWS:  It had a wider swirl to it than that.

FINEMAN:  Yes.  She was getting advance permission.

MATTHEWS:  Hey, Chris, I don‘t know what—I mean, they have a great relationship.  Well, it‘s probably different.  All marriages are different.  But you got to wonder how he responded when he said, Oh, Hill, I‘m glad to see you‘re putting a warning label on me!


CHRIS CILLIZZA, WASHINGTONPOST.COM:  Well, you know, actually, Bill Clinton is someone who is, in my opinion—and knowing people who know him somewhat well—relatively aware of both his weaknesses and his strengths.  So he actually may not have—he may not have been as stunned as you might think.


CILLIZZA:  I do think—I do think, though, Chris, it is evidence that—we all know this.  Hillary Clinton is a very savvy individual when it comes to both her political life and her public image.


CILLIZZA:  She understood from the very start that separating herself from her husband—impossible.  And she, I think, didn‘t want it, in fact, to get in the way with the business that she was going to take on in this job.

MATTHEWS:  Yes, but...

CILLIZZA:  She wanted it to get...


MATTHEWS:  ... some credit to both of them that she was willing to admit the potential problem of a fallout or a confusion or whatever, a distraction on all kinds of fronts.

FINEMAN:  Can I add one other thing?


FINEMAN:  Which is that Bill Clinton has turned out to be an asset and a helpmate...

MATTHEWS:  And he hasn‘t been distracting at all.

FINEMAN:  He hasn‘t been a distraction at all.


FINEMAN:  As a matter of fact, he was over at the White House yesterday...

MATTHEWS:  I know.  He‘s been great.

FINEMAN:  ... talking with and counseling Obama.

MATTHEWS:  Let‘s take a look—here‘s Steve Schmidt, who ran the McCain campaign, nobly, I thought, if not so successfully—he‘s on the “60 Minutes” program coming up Sunday.  They‘ve released this from “60 Minutes.”  Here he is, talking about what he heard from a debate preparer for Sarah Palin and this is what got him worried.  Let‘s listen.


STEVE SCHMIDT, FMR. MCCAIN CAMPAIGN ADVISER:  He told us that the debate was going to be a debacle of historic and epic proportions.  He told us she was not focused, she was not engaged, she was really not participating in the prep.

Rick Davis and I sat in the back of the room for a few minutes, suggested everybody take a break, asked everybody to leave the room.  And we had a conversation with her.

ANDERSON COOPER, “60 MINUTES”:  What did you say to her?

SCHMIDT:  I said to her, I said, Governor, this doesn‘t seem to be going very well to me.  And she assented.  She agreed.  She said, you know, I think that‘s right.


MATTHEWS:  And here‘s more from that CBS interview that Anderson Cooper did with Steve Schmidt.  Here it is.  Quote, “Palin had a reflexive tendency to refer to Biden as O‘Biden.  For some reason, every time she said the name Biden, she forgot or somehow got the idea his name was O‘Biden, and it was a real problem with her.”  He says that others in the campaign came up with a solution.  “It was multiple people—and I wasn‘t one of them—who all said at the same time, just say, ‘Can I call you Joe?,‘ which she did.”

And, so, here it is in action at the debate.  Let‘s watch how she avoids saying O‘Biden. 



SARAH PALIN ®, ALASKA GOVERNOR:  Nice to meet you. 

SEN. JOSEPH BIDEN (D), DELAWARE:  It‘s a pleasure.

PALIN:  Hey, can I call you Joe? 

BIDEN:  You can call me Joe.



MATTHEWS:  Wow.  So, she made a point of not saying O‘Biden by saying, “Can I call you Joe?”

We didn‘t know any of this.  And in the actual debate, Governor Palin did actually slip up and did call him O‘Biden.  Let‘s listen. 


PALIN:  And we‘re building a nearly $40 billion natural gas pipeline which is North America‘s largest and most expensive infrastructure project ever to flow those sources of energy into hungry markets. 

Barack Obama and Senator O‘Biden, you‘ve said no to everything in trying to find a domestic solution to the energy crisis that we‘re in.  You even called drilling—safe, environmentally-friendly drilling offshore as raping the Outer Continental Shelf. 


MATTHEWS:  Chris Cillizza, what‘s...


MATTHEWS:  I don‘t know what to make of it.  I don‘t know how you get into a speech problem like O‘Biden.  Where do you get that from?

CHRIS CILLIZZA, “THE WASHINGTON POST”:  Well, the—the—the thing that strikes me, Chris, is that, in the two big live events, her—her big speech at the Republican National Convention and in the debate, she actually was quite good, in my opinion. 


CILLIZZA:  Now, you can say, well, she cleared a low bar.  Say whatever you like. 


MATTHEWS:  Don‘t spoil my party, Cillizza.  Will you get back to the thing about somebody who has something in their cranium the notion somebody has got an O. in front of their name, when nobody has ever put it there but her, and she couldn‘t get it out of her head.  Explain.


CILLIZZA:  People have called me Chris Cizzilla for my entire life, despite the fact the L‘s are way before the Z‘s.  It just happens.

MATTHEWS:  They have never called you O‘Cillizza.


MATTHEWS:  Let me go..


MATTHEWS:  O‘Fineman, it‘s...


HOWARD FINEMAN, NBC CHIEF POLITICAL CORRESPONDENT:  That‘s the Fineman.  That‘s the Irish pronunciation.

MATTHEWS:  O‘Fineman, that‘s right.

FINEMAN:  It‘s because she had to say Obama and Biden.  So, the natural tendency was to say O‘Biden. 

MATTHEWS:  All the time?  But every time she saw the name Biden or thought of this guy, she called him O‘Biden. 

FINEMAN:  It‘s a tick.  It‘s a tick.  And I don‘t want to spoil your party either.



FINEMAN:  However, the Steve Schmidt interview is part of an ongoing campaign by Steve Schmidt and everybody else who was associated with the McCain campaign...

MATTHEWS:  To do what?

FINEMAN:  ... all of whom who were in on picking Sarah Palin. 

MATTHEWS:  To put the dunce cap on her.

FINEMAN:  Yes, in picking Sarah Palin...


MATTHEWS:  By the way, the dunce cap is sitting up there.


FINEMAN:  And, by the way, they were playing rough game out in—in Saint Louis...


FINEMAN:  No, in Saint Paul to push her right after she was nominated, and then retreated. 

MATTHEWS:  So, you‘re saying nobody is innocent here.

OK.  Let‘s take a look at Senator McCain and Palin.  CBS News reports in the—in the upcoming “60 Minutes” when they talk about this book “Game Change.

“Until days before the Republican Convention, Senator John McCain was still thinking Senator Joe Lieberman would be his running mate, until the blowback was so strong.  They feared Lieberman would be rejected by the party, forcing a last-minute choice of Palin for the role.”

Again, Howard, this is fascinating, because if he was just on the—we had heard this from other sources—was right on the verge of trying a real game-changer in having a Democrat run with him, a hawkish Democrat, does that mean that Joe Lieberman was ready to join that ticket on the other side, to become the Republican ticket?  Was he willing to go that far?

FINEMAN:  Well, I don‘t think there‘s any question about it.  He spoke there.  And he‘s behaving, in many respects, especially on foreign policy, today as a Republican. 

As a matter of fact, I think the White House is concerned about the

hearings on Homeland Security that he‘s going to chair as chairman of that

chairman of that committee in a couple weeks, for example. 

MATTHEWS:  And he might go after the president? 

FINEMAN:  And I think he might go after the administration a little bit more...

MATTHEWS:  Right. 

FINEMAN:  ... than they would find comfortable. 


FINEMAN:  So, I think he was ready to do it.  I—this begs the question.  And I hope they answer it in this book.  Who exactly pushed him aside at the end, that is, Lieberman, and put Palin in his place—in her place? 


FINEMAN:  I don‘t know the answer exactly.

MATTHEWS:  Chris...

CILLIZZA:  Howard is exactly—Howard is right. 

Look, John—John McCain—we have known this—John McCain wanted to pick Joe Lieberman, his personal friend.  He thought it would be a game-changer, to borrow their topic. 

The—the sort of senior staff level in the McCain campaign wanted Tim Pawlenty, safer choice, governor of Minnesota.  I think what happened is, they basically worked themselves into an absolute deadlock, and, at the last minute, they picked Sarah Palin.  This idea that Sarah Palin had long been considered, that is—it‘s not accurate. 

Tim Pawlenty, Joe Lieberman were the two axes on which the campaign argued over the last few months about who the vice president was going to be.


CILLIZZA:  And wound up going with neither. 


MATTHEWS:  It‘s such a transition.  It‘s like, I can‘t have a steak. 

Give me a fish and chips.


MATTHEWS:  I mean, it‘s a weird decision to make between Pawlenty, who is a heavyweight governor of Minnesota, and Sarah Palin. 

FINEMAN:  I totally agree, which is why it wasn‘t going to be him to McCain. 


FINEMAN:  But I want the scene.  Maybe they got the scene of who says, you know what, it can‘t be McCain—it can‘t be Lieberman, it can‘t be Pawlenty.  I want to know who and how they threw Palin in there at that last minute. 


FINEMAN:  And I hope they got it. 


FINEMAN:  It‘s the story of the campaign. 

MATTHEWS:  Maybe they got a call from Bill Kristol. 


MATTHEWS:  Anyway, thank you, Howard Fineman, Chris Cillizza.

We can‘t read the...

CILLIZZA:  Thanks, Chris.  

MATTHEWS:  ... wait to read the whole book. 

I would like to say something nice, by the way, and true about Jean Biden, the vice president‘s 92-year-old mom, who passed away today.  I was fortunate to meet her a few times.  But let—let‘s let her son do the honors. 


BIDEN:  As a child—as a child, I stuttered, and she lovingly would look at me and tell me, “Joey, it‘s because you‘re so bright you can‘t get the thoughts out quickly enough.” 


BIDEN:  When I was not as well-dressed as the other kids, she would look at me and say: “Joey, oh, you‘re so handsome, honey.  You‘re so handsome.” 


BIDEN:  And when I got—when I got knocked down by guys bigger than me—and this is the God‘s truth—she sent me back out and said, “Bloody their nose, so you can walk down the street the next day.” 

And that‘s what I did. 


BIDEN:  You know—and after the accident, she told me, she said, “Joey, God sends no cross that you cannot bear.”  And when I triumphed, my mother was quick to remind me it was because of others. 

My mother‘s creed is the American creed:  No one is better than you. 

Everyone is your equal, and everyone is equal to you. 



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

Well, when it comes to Michael Steele, the hits keep coming.  Just a year ago, Steele ran a hard-fought race, beating out a quartet of party rivals to win election as chairman of the Republican National Committee.  Can you imagine anyone forgetting then that being Republican leader is a job you have to run for, a top political position, that you need to run a campaign to get, that it isn‘t just bestowed on you, like a kingship?

Well, someone did forget.  That someone is Michael Steele.  Here he is yesterday on Dennis Miller‘s radio show acting all non-ambitious about things. 


MICHAEL STEELE, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE:   I mean, I didn‘t ask for this.  I didn‘t seek this job.  I didn‘t ask for it.  It wasn‘t part of my, you know, charted course in life to wind up as chairman of the RNC.  You know, there was a convergence of moments here.


MATTHEWS:  Didn‘t ask for the job?  He ran for it. 

Speaking of the Republicans, “National Journal” asked their group of Republican insiders who they thought was most likely to win the party‘s presidential nomination in 2012.  The results?  Well, tied at number five position, Indiana Governor Mitch Daniels and Sarah Palin. 

Hey, did you expect a bunch of insiders to pick the right‘s most popular outsider?  At number-four position, that smart good old boy Mississippi Governor Haley Barbour.  Just ahead of Haley, Senator John Thune, the comer in the pack.  He‘s pulled up to number three.  In the number-two position among the insiders, Minnesota Governor Tim Pawlenty, who is, of course, good old good and plenty, and, number one, according to party insiders—again, these are the insiders—Mitt Romney. 

I‘m still skeptical about Romney, about Mr. Right being the genuine article.  I just don‘t see the excitement with this guy, no palooza.  Then again, Republicans tend to nominate the guy who came in the second last time.  Look at Dole.  Look at McCain.  Look at Nixon.  Look at Bush.  That‘s the way they do things. 

Anyway, that gets us to tonight‘s “Big Number.”

What percentage of Republican insiders say Romney is the most likely nominee two years from now?  Sixty-two percent, three in five.  That‘s a huge percentage, a total landslide.  Sixty-two percent of party Republican insiders place their bets on Mitt Romney being their nominee come 2012. 

That‘s the “Big Number” tonight. 

Up next:  The jobs number out today, well, the White House wasn‘t hoping for this number.  so, when will the numbers start going down?  I‘m talking about jobless figures?  CNBC‘s Jim Cramer, Mr. Excitement, and former Labor Secretary Robert Reich are going to be here to two-team this one.

You‘re watching HARDBALL, only on MSNBC.  


MATT NESTO, CNBC CORRESPONDENT:  I‘m Matt Nesto with your CNBC “Market Wrap.”

Stocks with a late-day push, finishing slightly higher today, investors taking a disappointing jobs report in stride, the Dow up 11 points, up 1.8 percent for the first week of the new year, the S&P adding three points today, and the Nasdaq with a 17-point pop of its own. 

Well, today‘s jobs report was a reality check for investors, 85,000 jobs lost in December, the unemployment rate holding steady at 10 percent, manufacturing and construction showing the biggest losses, but some sectors did see modest gains.  Professional business services increased payrolls by 50,000, and 35,000 jobs were added in the education and health services sectors. 

For the stocks, well, UPS one of the big winners today, Big Brown adding almost 5 percent after boosting its fourth-quarter earnings estimates. 

And Goldman Sachs down nearly 2 percent after an analyst downgrade, as well as a lawsuit being filed in Illinois.  The pension fund there is trying to recover billions of dollars the company has set aside for bonuses and other compensation of Goldman employees. 

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


MATTHEWS:  Welcome back to HARDBALL. 

Jobs, jobs, jobs.  After months of fighting over health care, President Obama is making a hard pivot to talk about jobs.  Can he make the case that the economy is getting better if the jobs numbers stay bad? 

Jim Cramer is the host of CNBC‘s “Mad Money,” of course.  And Robert Reich is the former labor secretary for President Clinton. 

Let me start with Jim.

Jim, what would the unemployment rate—it‘s 10 again today, 10 percent, and holding there—what would it be if the Republicans had won last November?  What number would we have today facing us this—in this report for November—for December?

JIM CRAMER, HOST, “MAD MONEY”:  My thinking, it would be exactly the same. 

MATTHEWS:  Exactly the same? 


CRAMER:  Exactly the same.  I mean, he was dealt a bad hand.  Whoever came in would be dealt a bad hand.  This is a very difficult economy. 

I think it‘s turning on its own, through private enterprise.  First quarter will be good, but I don‘t see any difference between Republican and Democrat about where this rate is right now. 

MATTHEWS:  Are you confident that the rate will continue or begin to go down, and go down, and not go up again to, say, 10-plus or say 12 or something like that?  Are we definitely heading no worse than we are right now?  Is that a definite?

CRAMER:  Absolutely.  Absolutely, things are better. 


CRAMER:  They will be better.  I think we will be at 9 by midyear. 

MATTHEWS:  Let me go to Robert Reich. Let me go to Robert Reich.

It‘s Friday, late in the afternoon.  It‘s the dark part of the year.  We have no sun in most of the country this time of day now.  It‘s not a happy time, right after the holidays.  Do you have any good news?  Will the economy get better, Robert Reich?

ROBERT REICH, FORMER U.S. LABOR SECRETARY:  Oh, you put it that way, I

you know, it‘s very hard.  You put me in a corner here. 

MATTHEWS:  That‘s what I do.

REICH:  I wish and hope the economy would—would get better, Chris, but, look it, 85,000 job losses, that‘s 40,000 on average the last two months.  There‘s not a great positive trend here. 

I think that, had there not been a big stimulus package, the unemployment rate would be much higher today.  There would be many, many more job losses. 


REICH:  The Fed has had a big part to play.  If the Fed had tightened too early, and if it does tighten too early, in terms of money supply and interest rates, we‘re going to see a double-dip recession.

But I will tell you something.  These are not great numbers, and not good for the administration. 

MATTHEWS:  Well, I agree with you on 2009, but I‘m worried about 2010.  I still want to try to get an answer from both of you.  Where are we headed?  And what policies do we need to change if we‘re not going the right way?

Here is President Obama today talking about the jobless number that came out.  As I said, it‘s the same as it was, 10.00. 


BARACK OBAMA, PRESIDENT OF THE UNITED STATES:              The jobs numbers that were released by the Labor Department this morning are a reminder that the road to recovery is never straight and that we have to continue to work every single day to get our economy moving again.

For most Americans, and for me, that means jobs.  It means whether we are putting people back to work. 

Now, job losses for the last quarter of 2009 were one-tenth of what we were experiencing in the first quarter.  In fact, in November we saw the first gain in jobs in nearly two years. 

Last month, however, we slipped back, losing more jobs than we gained, though the overall trend of job loss is still pointing in the right direction. 

What this underscores, though, is that we have to continue to explore every avenue to accelerate the return to hiring. 


MATTHEWS:  Let me ask you, Jim.  You know that great movie “Jerry Maguire”?  Remember Cuba Gooding, when he said, “Show me the money”? 

CRAMER:  Right. 

MATTHEWS:  At some point, people are going to say to Barack Obama, show me the jobs.  And I‘m going to ask you again...

CRAMER:  Sure.

MATTHEWS:  ... and, as we go toward these November elections, will anything change dramatically? Is there something dramatic he has to do to make it happen? 

CRAMER:  I think it would—it could get worse.  I actually—remember, I think private industry is getting better.  But small business is paralyzed.  That‘s who does most of the hiring.  They‘re paralyzed because of Congress, not because of lending problems.  The banks will give you a loan.  But Congress, we doesn‘t know what they‘re going to do.  How much is it going to cost to hire someone with health care?  What‘s it going to cost with the EPA coming down with the jackboot all over the country.  What‘s it going to cost with cap and trade?

Congress is making things too dicey for small business to hire. 

MATTHEWS:  You sound like such a Republican, Jim. 

CRAMER:  Listen, I‘m a lifelong Democrat. 

MATTHEWS:  It‘s the regulators.  It‘s the government.  I want to ask Reich to respond to this.  Robert, that is classic, local boosterism.  That‘s the stuff you hear here at the Lion‘s Club and the Rotary.  What do you have to say?

REICH:  That is the line the Republicans are going to be using.  They‘re also going to be saying the Democrats are creating a gigantic deficit and that hangs over the American economy like a sword of Donicles (ph). 

The fact of the matter is this: in the short term, whether we like it or not, we need more deficit spending, because consumers don‘t have any money.  They don‘t have th money to buy all the goods and services that capable of being produced at full employment.  And businesses are not going to make new investments when there are not consumers out there going to buy. 

In classic Keynesian way, we need the government to do even more spending.  I‘ll tell you what‘s going to happen.  Obama is not going to announce a big new second stimulus.  Instead, there are going to be a whole bunch of policies, extended unemployment insurance, more cash for clunkers, maybe a new jobs tax credit, a whole bunch of things that, when you add it up, is sort of a second stimulus, won‘t sound like one, but will at least convince the public that the Democrats and the Obama administration are focusing like a laser on jobs. 

MATTHEWS:  Well, I would like to know --  an old saw of mine—why don‘t we make a major capital investment, amortize it over years from now, fast rail transit in this country, not just intra-city, but inter-city.  Why can‘t we be like the Europeans?  The past president we had would make fun of the French.  He would make fun of them.  But they have a rapid train system in their country which is beautiful to ride on.  You don‘t know you‘re going 300 miles per hour. 

Why are the French, who have a tunnel all the way to England—and you can do that in no time at all, a couple of hours—why are we behind the times in terms of infrastructure?  I just want to know. 

REICH:  You are asking America to look to France as our leader? 

MATTHEWS:  I‘m asking why we‘re not state-of-the-art.  Why aren‘t we state-of-the-art in terms of—Jim, I want an investment program.  I want to build trains, build rail, build stuff, give real jobs to real people, not this unemployment compensation. 

CRAMER:  The president was talking about wind power today.  He should be talking about building major highways, using United States made steel, using Caterpillar tractors.  Democrat, Republican, it doesn‘t matter.  The projects he‘s talking about are small, tiny.  He‘s worried about trying to be able to cut the negatives in carbon.  Go natural gas.  We can hire hundreds of thousands of people. 

MATTHEWS:  Robert Reich, I appeal to you as a liberal.  Pat Moynihan believed in this, and Maglev (ph) and fast transit.  Everybody that goes back and forth from Philly to New York, New York to Boston, Boston down to Washington—we‘re going down to Richmond more and more.  The northeast corridor is real.  We could have a corridor that goes to Chicago.  We could have a country that‘s united like a north by northwest.  A real America again, instead of being tied up by airplanes and terrorists.  We could be a country that moves safely.  It could happen. 

REICH:  Anybody who travels around the world comes back to America, to airports, and tries to get from the airport to even the city that‘s supposed to be next to the airport, is embarrassed.  We don‘t have any kind of light rail.  We don‘t have a public transit system.  We don‘t have any kind of the public investments—

MATTHEWS:  You know what we have in Washington, D.C.?  We have busses to take you from the airport back to the terminal.  Busses. 

REICH:  Can I just say one thing?  Look it, the big question politically is whether Obama is going to basically blink when Republicans say, we‘ve got to turn now to deficit reduction and debt reduction, or whether he‘s going to say, we have got to do more public investment; we have to re build the country; this is our best opportunity. 

MATTHEWS:  Thank you very much, Robert Reich, a liberal who is right, and Jim Cramer, Rotarian, nice try.  Thank you, Jim Cramer.  Go Eagles this weekend.  Go beat Dallas!

CRAMER:  We‘ll beat them!

MATTHEWS:  It ain‘t America‘s team.  “Mad Money,” it airs weeknights at 6:00. 

Up next, let‘s go back to Rudy.  Rudy Giuliani says there never was a terrorist attack under President Bush‘s watch, and there‘s already one under Obama.  You have to get back to Rudy.  Is this lunacy going to spread?   The politics fix is next.  This is HARDBALL.


MATTHEWS:  It‘s Friday and we‘re back with the fix.  Steve Kornacki is the “New York Newspaper,” a great newspaper, and Joan Walsh is the great editor in chief of “Salon.” 

Let‘s take a look at what Rudy Giuliani said today about—well, it‘s about whether we were hit under the Bush administration. 


GIULIANI:  What he should be doing is following the right things that Bush did.  One of the right things he did was treat this as a war on terror.  We had no domestic attacks under Bush.  We‘ve had one under Obama. 


MATTHEWS:  We had no domestic attacks under Bush.  Steve Kornacki, how do you think like that, if you‘re Rudy Giuliani, with soot all over your face?  The one thing you‘re known for is 9/11, and you forget it.  By the way, later, he said he didn‘t really mean to skip that. 

STEVE KORNACKI, “THE NEW YORK OBSERVER”:  That confuses me more.  This sound crazy to say, but even if you put 9/11 aside, there was still an identical incident under Bush, Richard Reid the shoe bomber.  He‘s taking Obama to task.

MATTHEWS:  December 2001.

KORNACKI:  Same point in his presidency, December of the first year. 

There was a near terrorist bombing of an airline.  Same thing. 

MATTHEWS:  Has this become almost the mantra, Joan, where you don‘t think anymore, you just repeat this over and over again?  We weren‘t hit; they might get hit.  If they do, they blew it.  We‘ll come back into power.  Is that the game that‘s being played here, the brutal game?

JOAN WALSH, “SALON”:  I think it is.  This started, Chris, with Mary Matalin, a few weeks ago, saying that the Bush administration inherited 9/11 from the Clinton administration.  So they are going to try this.  It‘s not going to work. 

I think the really, really stark contrast here is between George Bush and President Obama yesterday afternoon, standing there, looking angry, looking resolute, telling the American people within two weeks of the incident what had gone wrong, promising to fix it, and finally saying, but the buck stops with me.  We never saw that from President Bush, under any circumstance. 

So they are afraid of that contrast.  We are in danger.  Something else may happen.  We can‘t be kept perfectly safe.  But this president has a way of governing that is going to make a difference, I believe.  And he‘s got a demeanor and candor that their guy could never match. 

MATTHEWS:  I never heard President Bush—and I‘m not going to knock him any way.  He‘s been out of the action.  I think he‘s been handling this protocol very well. 

WALSH:  Yes. 

MATTHEWS:  He never came out and said, yeah, I did get a briefing that said al Qaeda to strike within the United States, a clear briefing the month before, and I blew it.  I didn‘t take any action.  Nobody‘s ever gone back and whacked him for that.  And he said he never—they‘ve whacked him, but he‘s never come out and said, you got me. 

KORNACKI:  Of course.  The interesting thing is from very close after 9/11, there was an effort by Republicans to make it Clinton‘s tragedy, Bill Clinton‘s tragedy.


KORNACKI:  Do you remember that he ignored all of these warning signs in the 1990s, all of these terrorist incidents here, Kenya, whatever it was.  You remember when he was on Fox News Channel three or four years ago -- I think it was Chris Wallace.  And Chris Wallace tried to play that argument with him.  And I have never seen Bill Clinton in an interview, on a substantive matter, as heated as he was when he went back at Chris Wallace for saying, did you miss this sign, did you miss that sign.  Because Clinton is very sensitive, obviously, to his legacy, as all presidents are, and to this specific attack that the Republicans have been pushing since 9/1. 

MATTHEWS:  He should have known when he went on Fox that he was going to get that. 

KORNACKI:  Sure, nothing helps his standing with -- 


MATTHEWS:  I think it‘s fascinating that you said that, that Mary Matalin has the ability to sort of create the lingua franca (ph), the way you talk, the language you use, and then people of Rudy Giuliani‘s stature are starting to talk like that, as if this is the way you talk.  You just say it never happened, or the Democrats did it.

WALSH:  To go to Steve‘s point about Clinton, it was a terrible, terrible crusade to hang it on him.  It didn‘t work.  It came back again, in a way, when Dick Cheney—let‘s bring him in here—immediately, before inauguration, started talking about how Obama will not keep us safe.  That is the worst—Bill Clinton got angry because that is the worst thing you can say about an American president.  You can say he lied, he stole, but he didn‘t keep us safe.

So it just shows you the effort they made from day one to say that this president is a failure, and the worst kind of president that you could be, and they are not going to give up. 

MATTHEWS:  Steve, what bothers me is that they never tell the American people what to do, the real hawks, about terrorism.  I don‘t mind if they say terrorism all the time.  But tell us what to do besides vote Republican.

KORNACKI:  I was going to say, they tell you to do—

MATTHEWS:  Tell us something to do.  When you get on an airplane, be ready to be alert and ready to act.  Pay higher taxes, maybe, to pay for some of this cost for the anti-terrorism, bond drives, something, recruitment to work in the military. 

We‘ll be right back with Steve Kornacki and Joan Walsh.  Ask us to do something besides just vote Republican.

This Monday at 9:00 a.m. Eastern, join Chuck Todd and Savannah Guthrie for a new show every morning at 9:00 Eastern, “THE DAILY RUN DOWN.”  Their first guest Monday morning will be Rahm Emanuel.  That‘s Monday at 9:00 Eastern. 

You‘re watching HARDBALL, only on MSNBC. 


MATTHEWS:  We‘re back with the “New York Observer‘s” Steve Kornacki and the “Salon‘s” Joan Walsh for more of the fix. 

Let‘s go to this question; the “New York Magazine” is going to have a big excerpt of “Game Change”—that is the new book coming out on the ‘08 campaign.  It focuses on John Edwards.  Here‘s their tease: “Edwards pursued an affair with loopy videographer Rielle Hunter so brazenly that his aides planned to sabotage his campaign, while his wife combusted in rage and self-delusion.  And all of that before Edwards tried to strike a secret deal with then candidate Obama, first to be his running mate and then his attorney general.” 

Steve?  That‘s a lot of soap opera. 

KORNACKI:  Yeah.  And I can feel for the people who sort of gave their lives to John Edwards and then found out what a complete fraud he was. 

MATTHEWS:  Should they have stuck around to sabotage—

KORNACKI:  I‘ve been very skeptical that there was this plot afoot to sabotage the campaign, if he got—and I think by the time—if you read the chronology of this, by the time everybody sort of realized that this was legit and this was happening, his campaign was kind of going to pieces anyway. 

And the story about he tries to forge this alliance with Obama to be his VP or to be his attorney general—I‘ve said before, they actually did have an informal alliance between Edwards and Obama between Iowa and New Hampshire in 2008.  It looked terrible.

MATTHEWS:  In the book, it‘s very clear, Joan.  Leo Hindery, the entrepreneur, was the go-between.  He was commissioned by John Edwards.  He was one of the big supporters of Edwards, one of the fund-raisers—to go talk to Obama‘s people, to try to cut a deal, right when it was clear that he wasn‘t going to win, to get number two spot on the ticket like he had in ‘04.  Then he went back again to get AG.  It was all in the book and it was all documented. 

WALSH:  It‘s crazy.  We‘ve heard about it for a long time.  He is truly delusional to think that he could have brought that kind of baggage and that mess to the Obama campaign.  It‘s unthinkable that he thought that that was a good possibility for the Democratic party, the country, and his family.  He—shame knows no bounds. 

MATTHEWS:  The important thing is he basically was willing to be the poison pill of the campaign.  If he got the job of running mate, and all of this crap came out about his private life, the whole campaign would have gone down. 

KORNACKI:  Not to mention, all Barack Obama had to do was pick up the phone and call John Kerry and say, hey, how loyal was he as a running mate? 

MATTHEWS:  I have heard that, by the way.  One thing in the book we‘ll get to is whether he ever reads anything.  Steve Kornacki, thank you.  And Joan Walsh, the book is really good.  I‘ve been reading it.  I can‘t talk about it yet.  Join us again Monday night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now it‘s time for “THE ED SHOW” with Ed Schultz. 



Transcription Copyright 2010 CQ Transcriptions, LLC  ALL RIGHTS  RESERVED.

No license is granted to the user of this material other than for research.

User may not reproduce or redistribute the material except for user‘s

personal or internal use and, in such case, only one copy may be printed,

nor shall user use any material for commercial purposes or in any fashion

that may infringe upon MSNBC and CQ Transcriptions, LLC‘s copyright or

other proprietary rights or interests in the material. This is not a legal

transcript for purposes of litigation.>


Watch Hardball each weeknight at 5 & 7 p.m. ET


Discussion comments