updated 7/20/2010 9:17:59 AM ET 2010-07-20T13:17:59

Guests: Clarence Page, John Hofmeister, Mike Pence, Dana Priest
CHRIS MATTHEWS, HOST:  Obama fights for jobless benefits.  Will it benefit his job?
Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews out in Los Angeles.  Leading off tonight: Three months to go.  When President Obama today blasted Republicans for refusing to extend unemployment benefits, you could practically hear Democrats across the country saying, Finally!  The president said the same Republicans who created this deficit and gave tax cuts to the wealthy won‘t help those out of work now.  Come November, we may look back and say this is the day that the mid-term election campaign really began.
Plus, the crisis in the Gulf of Mexico is not over yet, but the cap on the oil well is still holding.  There are concerns that oil or gas may be seeping out beneath the seabed, but no oil has leaked into the gulf for four days.  We‘ll check with our favorite expert tonight.
Also, here‘s my question of the day.  Do Republicans have any ideas about how to cut spending, or do they just went to demagogue the issue?  If you saw “MEET THE PRESS” yesterday, you saw that neither Senator John Cornyn or Congressman Pete Sessions could name a single dollar in budget cuts they would propose.  What I want to know is, why do Democrats let them get away with this bluffing?  Are they afraid to call the bluff?
Plus, a “Washington Post” investigation found that nearly nine years after the September 11 attacks, the federal government‘s intelligence system has grown exponentially.  More than 1,200 government organizations do intelligence work -- 1,200!  But is it making Americans safer?  That‘s my question to “The Washington Post‘s” Dana Priest.  She‘s coming here tonight.
And finally, Sarah Palin, creator of new words?  Palin‘s put herself in the company of William Shakespeare, who she says also created new words.  “Refudiate”—that‘s her new word.  Is this “refudiate-gate,” or does “refudiate” mean to restart a feud?  Check out the “Sideshow.”
We start with the president taking on the Republicans over unemployment benefits.  Charlie Cook of “The Cook Political Report” is an NBC News political analyst and Clarence Page is a columnist for “The Washington Post.” (SIC)
Thank you, Charlie, and thank you, Clarence.  Let‘s go to Charlie first.  Do you think that the—here‘s the president today, and I want to you to analyze this politically, why he decided to go so hard on the Republicans this Monday.  Here‘s the president.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  For a long time, there‘s been a tradition under both Democratic and Republican presidents to offer relief to the unemployed.  That was certainly the case under my predecessor, when Republican senators voted several times to extend emergency unemployment benefits.
And I have to say, after years of championing policies that turned a record surplus into a massive deficit, the same people who didn‘t have any problems spending hundreds of billions of dollars on tax breaks for the wealthiest Americans are now saying we shouldn‘t offer relief to middle class Americans like Jim (ph) or Leslie (ph) or Denise (ph) who really need help.
MATTHEWS:  You know, Charlie, just a few days ago, it seems, the president was saying Washington is the problem.  Every time he left town, he‘d say, I can‘t wait to get out of Washington.  That was the problem.  Now it‘s the Republicans are problem.  He‘s going partisan.  Here it is mid-July.  Is this the way it‘s going to go, and why?
think it is.  And I think part of it is the president—and I think this is kind of an extension of what Robert Gibbs started a week ago Sunday on “MEET THE PRESS,” that, OK, you‘re disappointed in us Democrats.  You‘re mad at us Democrats.  But this isn‘t a free lunch here.  If you throw us out, you‘re putting the other guys, you‘re putting Republicans in.  And this is what they stand for or what they‘re opposing.
So I think it‘s a useful exercise for the president to try to draw some very clear contrasts with Republicans to kind of move beyond the fact that people are disappointed and/or mad at Democrats.
But the other thing I think is that, some of the president‘s personal politics is that, as bright as he is, people see him as cerebral.  They see him as aloof and that he doesn‘t connect with people as much as, say, Bill Clinton did on a personal level.  And I think they‘ve got to work at creating that connection because in those remarks today, he really did talk about the pain, the anguish that a lot of these unemployed people are going through.  And I frankly think he needs to do more of that.
MATTHEWS:  Well, let‘s go to—let‘s go to Clarence on that.  Here he is bringing three people out there to his right there, on the Rose Garden.  The names are Jim, Leslie and Dennis (ph), are their first names.  He is trying to personify unemployment benefits and not just unnamed numbers out there.  There they are, the three people coming out with him.  Is this what Charlie—is Charlie right, he‘s trying to say, I‘m with the worker bees, the people out there who want to work.  This other crowd, the Republicans, are with the rich who want to keep the Bush tax cuts for the very rich.
CLARENCE PAGE, “CHICAGO TRIBUNE”:  That‘s right.  He‘s borrowing a technique from, certainly, Ronald Reagan, certainly was famous for putting a face on problems.  In this case, he brings out real people who are suffering real problems with trying to find a job.  These are not slackers or shirkers, as conservatives will argue, that giving people unemployment benefits takes away their incentive to want to go out and look for a job.  Here are people looking for work and they can‘t find it.  And so he is siding with the people here, while he tries to cast the Republicans as siding with the supply-side theorists, with big business, with people who don‘t care.
So that‘s the theater here.  That‘s the optics.  And it‘s important now at a time when his approval ratings are low but his personal approval is still high.  People still like him as a person, but his approvals as far as his job performance are down.  But his numbers are still better than the Republicans in Congress, and Democrats in Congress, too, for that matter.  So that‘s—that‘s the way he‘s drawing the line in the sand.
MATTHEWS:  You know, I wish conservatives would come to Washington or any big city around 6:00 o‘clock in the morning, guys, and see who‘s waiting for the bus to go to work in the morning, the poor people.  They‘re out there trying to get to work.  And any time a job opens, an entry-level job, as I said the other day, at any hotel or any business in any big city, the lines go around the block.  So people who say people don‘t want to work are lying, or at least they‘re refusing to see the facts.  The poor people get up the earliest.  They catch public transportation, if they can find it, and they go to work in nine chances out of ten.  And that‘s what‘s going on and that‘s why you got to keep thinking about what side are you on sometimes.
Here‘s the president today.  Let‘s listen.
OBAMA:  Over the past few weeks, a majority of senators have tried not once, not twice, but three times to extend emergency relief on a temporary basis.  Each time, a partisan minority in the Senate has used parliamentary maneuvers to block a vote, denying millions of people who are out of work much needed relief.  These leaders in the Senate who are advancing a misguided notion that emergency relief somehow discourages people from looking for a job should talk to these folks!
MATTHEWS:  There‘s a little expression, Charlie, that the Tory party‘s the stupid party.  I don‘t think so.  I think the Republicans have calculated who‘s going to vote this November.  The unemployed are not going to vote.  The poor people aren‘t going to vote.  The worried people aren‘t going to vote.  The angry people are going to vote.  The better-off people are going to vote, and that‘s who they‘re talking to here.  Go after deficits.  Blame it on the Democrats.  Screw the working guy who‘s out of work because they figure that guy or that woman isn‘t going to work for them—isn‘t going to vote for them this fall.
COOK:  I think angry people...
MATTHEWS:  Is that their calculation?
COOK:  Angry people are the people that voted in 2006, and those angry people tended to be Democrats.  And now the angry people tend to be Republicans.
But I think the way the Republican leadership is looking at this is voters, a lot of voters, are really disappointed, angry with the president, angry at Democrats.  Why should we throw him a lifeline and give him any successes?  And I think what the White House is now trying to say is, OK, if that‘s the game you‘re going to play, let‘s put a cost on that.  Let‘s make you pay the price for opposing things like extending unemployment compensation so—or unemployment insurance.
So I think what we‘re doing is we‘re looking at—you know, we are seeing battle lines drawn in a way that we had not seen earlier in this election cycle.  I think you‘re absolutely right.
MATTHEWS:  Let‘s be brutal Clarence.  Is it a real calculation by the Republicans that the better-off people, the people above the national economic average, are saying, I want to keep my tax cuts.  I‘m smart enough to vote Republican if I want that goal.  And I know a lot of pain out there.  I‘m not a compassionate conservative this year.  It‘s every man and every woman for himself this time around.  I don‘t even want to pretend to be compassionate this time.  Screw the people who are unemployed.  I want my taxes cut and kept cut.
PAGE:  Well, whether they‘re quite that caustic or sarcastic in their thinking...
MATTHEWS:  You don‘t think?
PAGE:  ... there‘s no question that their base feels like there—this—jobless benefits only help to keep people unemployed, keep them lazy.  That‘s what I‘m hearing in e-mails from tea party folks and other members of the Republican base right now.  But the thing is, though, in those districts where Republicans have chance...
MATTHEWS:  You‘re hearing from the happy people, Clarence.
PAGE:  I‘m sorry?
MATTHEWS:  You‘re hearing from the happy people.
PAGE:  Happy people.  Right.  But you know, they‘ve got to get swing voters, though.  That‘s where the real battle is for these seats that Democrats have that are vulnerable.  Republicans need to win swing voters.  The swing voters, a lot of them want—well, for them, this is a choice election.  Is the person who is challenging the incumbent better than the incumbent?  And that‘s where Democrats have to show that they‘re the party with a heart here that is going to really answer the problems of the—of working folks, whereas, you know, the Republicans are...
MATTHEWS:  OK, let‘s...
PAGE:  ... the party that is standing on the sidelines.
MATTHEWS:  ... let‘s look at the president.  Here he is today.  Here‘s the president.  I‘m sorry.  Let‘s watch the president for a second, then you‘re in here, Charlie.
OBAMA:  It‘s time to stop holding workers laid off in this recession hostage to Washington politics.  It‘s time to do what‘s right not for the next election but for the middle class.  We‘ve got to stop blocking emergency relief for Americans who are out of work.  We‘ve got to extend unemployment insurance.  We need to pass those tax cuts for small businesses and lending for small businesses.  Times are hard right now.  We are moving in the right direction.  I know it‘s getting close to an election, but there are times when you put elections aside.  This is one of those times.
MATTHEWS:  Charlie, is he renewing his marriage vows with Nancy Pelosi here?  Is he making up for what Gibbs said the other day about how the Democrats might lose the House?
COOK:  Well, I think he‘s trying—I think he‘s—Democrats are disillusioned.  They‘re dispirited.  And you know, there‘s a sense, on the one hand, that they need to be realistic and let Democrats know, Hey, you know, we‘re in danger of losing everything.  But on the other hand—and they do need to fire them up.
But you know, and you and Clarence both talk to Republican members of Congress off the record all the time.  And if you ask them, Where did the Republican Party go wrong in the last decade, and most of these Republicans would say, We betrayed our principles, we gave up conservative principles, we spent too much.
And so they‘re sort of born-again free—conservatives in the sense they‘re saying, Now we need to start drawing lines and we‘ve got to draw lines immediately and starkly.  And that‘s what you heard, for example, from Senator McConnell yesterday on “MEET THE PRESS,” is that, yes, we misbehaved, we were bad, but we got to draw hard lines now.  And that‘s what they‘re doing and...
COOK:  ... you know, we‘ll see whether Democrats can stick them with it.
MATTHEWS:  Well, they still didn‘t have the guts to say what they‘re going to cut when David asked them.  We‘ll get to that later in the show.  The Republicans were asked—Cornyn was asked and—and the other guy was asked, Pete Sessions was asked, Name one program you‘re going to cut.  Again and again, David tried to get an answer out of them, and neither guy was going to talk.  So that tells you a lot, too.  They love the argument of cutting government spending, but they won‘t name a single program they personally will put their name on cutting.
Thank you, Charlie Cook.  Thank you, Clarence Page of “The Chicago Tribune.”
Coming up, that cap on the BP oil well is still holding, which is good
news, but there are signs of seepage on the ocean floor, which could mean -
below the (INAUDIBLE) which could mean disaster is far from over.  The latest on the oil spill from an experience, our favorite expert, Hofmeister, when we return.

You‘re watching HARDBALL, only on MSNBC.
MATTHEWS:  In what states does President Obama enjoy his highest approval ratings?  Well—and in which states does he have the lowest?  Well, first the states where he‘s highest.  Tied for fifth place, New York and Connecticut, where 57 percent approve the job the president‘s doing.  At four, Maryland, then Delaware, home of the vice president, Hawaii, where President Obama was born, and the District of Columbia, where 85 percent approve.
We‘ll have the five states where President Obama has his lowest approval numbers later in the hour.  You can guess what they are by then.
HARDBALL back after this.
ADM. THAD ALLEN, U.S. COAST GUARD (RET.), NAT‘L INCIDENT CMDR.:  We have agreed that we will go forward with another 24-hour period from today to tomorrow.
MATTHEWS:  Welcome back to HARDBALL.  That‘s national incident commander Admiral Thad Allen, of course, announcing the oil leak will remain capped for now.  But both BP and the government are on edge.
John Hofmeister is a former Shell Oil executive and author of “Why We Hate the Oil Companies.”  John, as always, I welcome your expertise.  What do you make of this?  Keep it in civilian terms here.  They‘re keeping the cap on.  That‘s good news.  What‘s the worry here?
JOHN HOFMEISTER, FORMER SHELL OIL PRES.:  Well, they‘re going to take it day by day, which is really important because credibility and confidence, I think, are really critical to what the next steps might be.
In the case of confidence, there are many people, including in the White House, including the Department of Energy, who doubt the integrity of the well casing, who believe that the well casing could well be ruptured or damaged in some respect, and that could cause leaks way down in the well, where oil could be—with the pressure cap on, could be working its way out of the casing, into the space between the wellbore, which is where the original hole was dug, and the casing itself.
It‘s not a lot of space, but that oil could be moving up into the geology above the earth, where the break point is, and could be emerging somewhere, as what we have heard about today, you know, the seepage, the possible seepage.  So confidence is critical—leaving the cap on another day, take more tests, see if the pressure keeps rising—that‘s really what they‘re trying to do.
MATTHEWS:  Well, we‘ve all learned through weeks of this that the real hope for ending this catastrophe is the relief well drilling that‘s going on right now.  Would this problem you‘re talking about, the possibility of basically internal bleeding, to use a human term—is that a danger to the operation of bringing up this relief well?
HOFMEISTER:  Depending upon where the leak might be, if there is a leak, yes, it could be a danger.  It could be that they somehow enter the casing and cement the casing shut, and that‘s shut down, but outside the casing in the perimeter where the wellbore is, that they get continued leakage.  Now, what they can try to do is design the killing process, the relief well process, to try to cement both inside and outside the casing.  That would be a little different than what their intentions have been, but I don‘t see any technical reason why they couldn‘t do that.
MATTHEWS:  Does it matter whether the break in the pipeline, the well, is above or below where they intersect it with the relief well operation?
HOFMEISTER:  Yes, I think if the break is below and they cement outside the well—outside the casing as well as inside the casing, that should bring it to a stop.  And that‘s, of course, what they want to do.  If for some reason the break is above and they don‘t cement the outside of the wellbore, then you could get continued leakage, seepage, above where they might have cemented the casing, and we could have a problem for a long time to come.
MATTHEWS:  Boy, that‘s complicated.  Let me ask you about the possibility that this well is tapped out and that‘s the explanation of why there‘s lower pressure than expected.
HOFMEISTER:  Well, you know, 6,700, 6,800 pounds per square inch is still a lot of pressure.  That‘s like—you know, imagine a square inch with 3.5 tons of pressure on it.  That‘s a lot of pressure.  It might have been as high as 25,000 or 30,000 psi.  Some people thought it was even higher.
Now, a well does reduce its pressure as time goes on.  That‘s what causes wells to go into decline.  So, that‘s evidence that the well is in decline.  But, still, at that level of pressure, this is still a high-pressure well. 
MATTHEWS:  In civilian terms again—and I appreciate you for using them—“The Wall Street Journal,” which has been doing great report on this—by the way, it‘s the reporting part of “The Wall Street Journal,” not the crazy op-ed page or the crazy editorial page, but the reporting part of “The Wall Street Journal,” which is still sound as a dollar, I think, they‘re pointing out the fact of what went wrong here.  What did go wrong, based about that, John, about the latest reporting? 
HOFMEISTER:  Well, you know, from the earliest moment, when I heard about this blowout, I immediately thought human factors, because the systems, the processes, the procedures, the equipment, the engineering, I mean, the industry has earned with credibility the right to drill in the Gulf of Mexico, 40,000 -- or—I‘m sorry -- 35,000-plus wells, 40 years of experience. 
None of this has happened before.  So, you immediately go to what could possibly have gone wrong?  And you start thinking about bad judgments, or, as I said in an op-ed many, many months ago, that the issue of communications, human-to-human communications, the issue of chain on command—chain of command on a drilling rig, these are critical success factors. 
And if you don‘t have the open communications, the ability to resolve conflict amicably and come back for more conflict amicably, if you can‘t do that, and have a proper chain of command, and you have got somebody giving orders that perhaps does not have the experience or the knowledge that exists, then you have got a real problem. 
It‘s like a village on that rig.
MATTHEWS:  And is part of the problem that the—is part of the problem that, as they said in politics years ago—I think it was Ozzie Myers with the—whatever it was—Abscam—he said money talks.  Could it be that the money coming down, the money issue from the top of these oil companies said to the management put the pressure on speed here, not safety?
HOFMEISTER:  I think it all depends upon what is baked into the DNA of the operators. 
If they have a safety management system which has been taken on board, which is sacrilegious to violate it, then money doesn‘t matter.  There are any number of projects, Chris, all over the world that go beyond budget and beyond timing.  And there‘s no problem with that, other than, hey, it costs more, it was delayed. 
But you don‘t jeopardize people lives if you have got a safety management system that is intact, that is baked into the DNA of the culture, the hearts and minds of the people on that rig. 
MATTHEWS:  OK.  That‘s if you have straight arrows in the management division.
Anyway, thank you very much, John Hofmeister, as always. 
Up next:  Sarah Palin says she‘s like Shakespeare, that she‘s able to make up new words.  She‘s at ease with that.  Anyway, the “Sideshow” is coming up.  This is an interesting topic.  Pick your side when we come back.  Maybe she‘s right.  Maybe she does have the power to create words like “refudiate.”
You‘re watching HARDBALL, only on MSNBC.  
MATTHEWS:  Back to HARDBALL.  Time for the “Sideshow.” 
Well, first: Sarah Palin with her word of the day.  On FOX last week, the ex-governor whacked the NAACP for its resolution condemning what it called racism within the Tea Party movement.  Listen for the word she used. 
SARAH PALIN ®, FORMER ALASKA GOVERNOR:  And the president and his wife—you know, the first lady spoke at NAACP so recently.  They have power in their words.  They could refudiate what it is that this group is saying. 
MATTHEWS:  Wow, interesting word there, refudiate.  By the way, that was not Tina Fey.
on Sunday, Palin used the term again, this time in a Twitter post about the mosque being built near the World Trade Center site.
She called upon peaceful Muslims, as she called them, to refudiate its construction.  After getting some teasing in the blogosphere, Palin took down that Twitter post and later put up this one—quote—“Refudiate, misunderestimate, wee-wee‘d up.”  Those were examples she suggests of new word. 
English is a living language, she argued.  “Shakespeare liked to coin new words, too.  Got to celebrate it.”
Well, that‘s her.  Let‘s keep listening to her.  Maybe we will get a clue. 
Next:  The Tea Party reaches its tipping point.  It started when Tea Party Express leader Mark Williams wrote a fictional, you might say, letter in defense of slavery to President Abraham Lincoln—quote—these are his words—quote—“We coloreds have taken a vote and decided that we don‘t cotton to that whole emancipation thing.  Freedom means having to work for real, think for ourselves, and take consequences along with the rewards.  That is just far too much to ask of us colored people.”
Well, that‘s—Williams called that satire.  The leaders of the National Tea Party Federation called it trouble.  Yesterday, they expelled Williams. 
The sentiment continued today.  The Tea Party Nation, the group that hosted that big party convention down in Nashville, has just put out a statement saying they have—quote—“zero tolerance,” a zero-tolerance policy against racism, and they will ban any other members who show themselves to be racist. 
OK.  I‘m going to wait to see just one of those Tea Party people pull down one of those racist signs at the next Tea Party rally.  I‘m going to just wait.  Reach over, grab the sign and tear it out of the guy‘s hands.  Then I will believe you. 
Finally, Alvin Greene makes his campaign debut.  South Carolina‘s come-out-of-nowhere candidate gave his first speech as the Democratic U.S.  Senate nominee yesterday.  Let‘s listen to his words. 
ALVIN GREENE (D), SOUTH CAROLINA SENATORIAL CANDIDATE:  Let‘s get South Carolina and America back to work. 
GREENE:  Let‘s move South Carolina and America forward. 
GREENE:  Let‘s get South Carolina back to work from Alvin, South Carolina, to Greenville, South Carolina. 
GREENE:  Let‘s reclaim our country from the terrorists and the communists. 
MATTHEWS:  Wow, that was Mr. Greene speaking.  I don‘t get this whole thing. 
Now for tonight‘s “Big Number.”  How Americans know that it was President Bush who enacted TARP, that 7$00 billion bank bailout.  Well, according to a new Pew survey, just 34 percent of us.  Almost half, 47 percent, think it was President Obama who did it.  Just a third of Americans know that President Bush, his team, engineered the big bank bailout—just 34 percent, tonight‘s not-so-“Big Number.” 
Boy, is that important. 
Up next:  Republicans say they‘re against government spending, but why can‘t any of them say what programs they would cut if they were in charge?  It happened again this weekend on “Meet the Press.”  We‘re going to try to get some answers out of Republican leader U.S. Congressman Mike Pence. 
That‘s coming up next here.
You‘re watching HARDBALL, only on MSNBC. 
HAMPTON PEARSON, CNBC CORRESPONDENT:  I‘m Hampton Pearson with your CNBC “Market Wrap.”
A late-day rally setting up some moderate gains today, the Dow Jones industrials adding 56 points, the S&P 500 climbing six points, and the Nasdaq finishing 19 points higher. 
Stocks struggled early in the day on a decline in homebuilder confidence.  But it turned around toward the close on earnings optimism in the tech sector.  IBM reporting just after the closing bell quarterly profits coming in line with expectations, but top-line revenue was a bit light.  Shares are tumbling in after-hours trading. 
And Texas Instruments also posting after the bell.  Again, a big jump in earnings was right in line with forecasts, but the revenue was on the shy side.  Elsewhere, Halliburton shares soaring 6 percent after reporting an 83 percent jump in second-quarter profits, but the company says the ban on deepwater drilling could hurt its full-year results. 
And Boeing got a boost after racking up around $9 billion with new orders at the Farnborough Air Show.
That‘s it from CNBC, first in business worldwide—now back to
MATTHEWS:  Welcome back to HARDBALL. 
What‘s the Republican plan if they take back power in Congress?  Do they have any real plans to cut spending? 
Indiana Congressman Mike Pence is the Republican Conference chairman, the number-three leader in the House of Representatives. 
Congressman, thank you for joining us. 
MATTHEWS:  I want you to listen to your colleagues, Congressman Pete Sessions and Senator John Cornyn.  They were with David Gregory on “Meet the Press” yesterday.  Let‘s listen to what they said. 
DAVID GREGORY, MODERATOR, “MEET THE PRESS”:  What painful choices are Republicans prepared to make?  Are they going to campaign on repealing health care, for instance, repealing financial regulation?  Would you like to see those two things done? 
REP. PETE SESSIONS ®, TEXAS:  Well, first of all, let‘s go right to it.  We‘re going to balance the budget. 
GREGORY:  How do you do it?  Tell me how you do it?  Name a painful choice the Republicans are prepared to say we have to make. 
SESSIONS:  Well, first of all, we need to make sure that as we look at all that we are spending in Washington, D.C., with not only the entitlement spending, but also the bigger government, we cannot afford anymore.  We have to empower the free enterprise system.  See, this is where...
GREGORY:  Congressman, these are not specifics. 
SESSIONS:  We need to go back to the exact same agenda that is empowering the free enterprise system, rather than diminishing it. 
GREGORY:  Senator, I‘m sorry.  I‘m not hearing an answer on specific -
what painful choices to really deal with the deficit.  Is Social Security on the table? 

SEN. JOHN CORNYN ®, TEXAS:  Well, the president has a debt commission that reports December the 1st. 
My hope is they will come back with a bipartisan solution to the debt and particularly entitlement reform, as you mention.  But I...
GREGORY:  But wait a minute.  Conservatives need a Democratic president‘s debt commission to figure out what it is they would want to cut? 
CORNYN:  I say we need to do this on a bipartisan basis. 
MATTHEWS:  Well, Congressman Pence, I would like to follow up on that.
What are the Republican plans?  You have a good shot at taking back the House of Representatives.  Do you have an agenda for balancing the budget? 
PENCE:  We sure do.  Different than Democrats in Congress this year, Republicans passed a budget last year that actually would reduce deficits by $5 trillion over 10 years and reduce federal spending by $3 trillion.  That was in the budget that we passed. 
We had a stimulus alternative that cost half as much as the president‘s.  And, according to their economic analysis, it would have created twice as many jobs.  We had alternatives on health care, alternatives on energy.  And as we go forward with the solutions that we have been offering, Chris, those are going to be a big, big part of the conversation we have with the American people going forward. 
MATTHEWS:  Well, the big problem, as you and I know, Congressman, and nobody wants to say what they want to cut.  It‘s always Alphonse and Gaston:  You tell me. 
The Republican Party I grew up with was the party of fiscal responsibility.  So, it seems to me your party could take the lead here and say what you want to cut.  Do you want to cut in the entitlements?  Where?  Medicare?  Social Security?  Where in the discretionary domestic spending? 
Where in Defense?  Where in foreign aid? 
Give me about three or four, even one or two, big-chunk ways to reduce a $1.6 trillion deficit. 
PENCE:  Well, right.  That‘s $1.6 trillion this year.  It‘s the second year in a row the deficits have been over a trillion. 
Some of that, I admit, was inherited by the economic and the bailout policies of the last administration.  But, look, again, Republicans went on the record last year.  We committed to a 10-year budget that was—had $5 trillion less in deficits, $3 trillion less in spending.
For my part, I have co-authored with Jeb Hensarling of Texas a spending limit amendment to the Constitution.  You know, getting spending under control begins with electing a party that wants to get spending under control. 
Since the Democrats took control of the Congress, Chris, there‘s been an 84 percent increase in non-defense discretionary spending.  Now, the president wants to freeze it at that level.  But that‘s freezing it at an 84 percent increase. 
We need—we need to set goals.  They need to be serious goals.  And then we need to be prepared to do the hard work on—on everything in this budget through fiscal restraint and reform to bring our federal budget within its means and within the means of the American people. 
MATTHEWS:  I sympathize with you, Congressman, but you‘re the party of fiscal responsibility.  The people watching and listening right now on radio or on television, who are listening now, where do you want to cut the federal budget?  Give me some programs you want to cut.
PENCE:  Well, look, I mean in the category of discretionary spending, I personally have associated myself with hundreds of billions of dollars of wasteful government programs, you know, whether it be defense spending, intelligence spending, all the security issues, or whether it be traditional discretionary spending or whether it be entitlement reform.
Republicans have really a long record of proposals that we have embraced over the years that—that we‘re prepared to move on.  But, again, I think it all really begins with electing a majority in Congress that wants to get federal spending under control. 
This president and this Congress have us on a pathway for $1 trillion deficits as far as the eye can see.  And the American people have had it, Chris.  They feel like Washington is out of touch. 
PENCE:  They‘re not making the hard decisions. 
And, as I said, Republicans committed to a budget last year that would put $5 trillion less on the deficit, $3 trillion less in spending.  And we‘re willing and ready, if awarded with the ability to lead this Congress again, we‘re ready to go to work on that and put the American people‘s money where our mouth is. 
MATTHEWS:  Right.  But, you know, that cartoon—you know we grew up with “Popeye.”  And there was the character in “Popeye” named Wimpy.  And he would always say, I will gladly pay you on Tuesday for a hamburger today. 
You‘re asking for control of Congress today on the promise—promissory note that you will come up with actual program cuts.  Now, I keep throwing out—you know the biggest causes of the deficit.  You‘re more well-read on this than I am.  Social Security, Medicare, Medicaid—you put all the federal receipts we commit and taxes, and they all could just be gone right there, exhausted in those three programs.  We got defense systems you could name.
But nobody wants to name what they want to cut by name, do they? 
Isn‘t that fair to say on both parties?
PENCE:  Well, it may be fair towards some members of Congress.  But, again, I hasten to add Republicans—and it is astonishing to me the Democrat majority did not even try to pass a budget this year.  But last year, Republicans adopted a budget that had $3 trillion in spending cuts in it, and that would be cuts in discretionary spending, and it also would be cuts through reforms of entitlements.
I think, you know, it‘s all going on the table.
PENCE:  I understand the politics of saying, well, name this, name that program.  But I can tell you, take a look at the Republican budget last year, Republicans have been on the record about—about rolling back this runaway freight train of spending that frankly begun under the last Republican administration, has been put on steroids under this one.  The American people want to get federal spending under control and as our budget shows, we‘re ready to do it.
MATTHEWS:  OK.  See that—that‘s a good headline.  The Democrats and Republicans on steroids when it comes to spending, I know with the promise cuts.
Let me ask you about this extension of unemployment right now.
PENCE:  Yes.
MATTHEWS:  The president is pushing for it and you party says he‘s not willing to pay for it.  What is going to happen to those unemployed people?  What should happen to them?
PENCE:  Well, what should happen to them—
MATTHEWS:  They‘re not going to get benefits.
PENCE:  Well, no—what should happen to them is we should extend unemployment benefits, but we ought to pay for it, Chris.  I mean, Republicans will offer an alternative.
MATTHEWS:  OK.  What will you cut—
PENCE:  The stimulus bill.
PENCE:  Our alternative said you take $34 billion in unspent stimulus funds.  I mean, the American people know the stimulus bill has utterly failed.  So, why don‘t we take $34 billion out of the stimulus funds that hasn‘t been spent and use that to pay to help Americans who are the victims of these—the failed policies of this and frankly the previous administration?
I mean, this economy is struggling.  The American people want us to get this economy moving again.  But we need to help people at the point of need.  We just got to pay for it.
I mean, when I‘m home, people are saying, for heaven‘s sake, we‘ve got to see job creation.  We got to have economic policies that work.  But we‘ve also got to get spending under control.
We can do that.  Take the unspent stimulus funds, $34 billion, provide that in unemployment benefits to Americans that are hurting, and then let‘s try some new economic policies that will release the inherent power of this economy.
MATTHEWS:  Right now, it looks to me like we all look at this big Niagara Falls coming at the end here.  At some point, the Congress is going to have to decide what to do with the Bush tax cuts, especially for the upper income people.  And I know the very upper income people pay a lot of taxes.  We all know that.
Is it your party‘s position right now, Congressman Pence, that you‘re going to try to keep the Bush tax cuts for the very wealthy, even at the time you‘re saying no extensive unemployment?  And even though both factors could lead to a higher deficit, you‘re going to lean towards keeping tax cuts for the rich, but lean hard against extending unemployment benefits?  You‘re comfortable fighting this next election on that line: keeping the Bush tax cuts for the rich, avoiding extending unemployment benefits for the working poor.  You‘re comfortable fighting this election on that issue?
PENCE:  No, I‘m comfortable fighting this election on being the party that wants to pay for unemployment benefits by making sure—
MATTHEWS:  But what about the tax cuts?
PENCE:  Absolutely.  Let me be as clear as a bell on HARDBALL.  House Republicans are determined to fight and to oppose the largest tax increase in American history with everything we‘ve got.
PENCE:  I don‘t know anybody back in Indiana, or anywhere across the country that thinks allowing the largest tax increase in history to take effect in January makes any sense in getting this economy moving again.
MATTHEWS:  OK.  These are great rhetoric.  And I understand the business everybody is in.  We‘re in journalism, too.  You like hyped-up words, too.  But you use the words like steroids and largest tax cuts in history.
But the bottom line is, your party position going into this election is no extensive unemployment benefits unless cuts are made elsewhere.  And yet, you will not stop—in other words, you will continue the Bush tax cuts for the very wealthy at the cost of a higher deficit.
That‘s fair enough, isn‘t it?  That‘s a fact.
PENCE:  I don‘t know—I don‘t know—I don‘t know anybody who thinks that they pay too little in taxes.  I don‘t know anybody who thinks that by raising taxes in January, they‘re going to create jobs.  I mean, come on, Chris.  This is—
MATTHEWS:  Well, you got me there.  Nobody wants to pay taxes.  Let me ask you this: what‘s the unemployment—
PENCE:  The administration may think that raising taxes in January is a pathway to prosperity.  But I would venture to guess—almost every American knows you don‘t raise taxes during a recession.
MATTHEWS:  OK, with a guy making $10 million a year is going to keep his tax cut.  And the guy who‘s hoping to get unemployment comp this week isn‘t gong to get it because the Republican leaders, and I understand that‘s your position.
What‘s the unemployment rate in Indiana right now, sir?
PENCE:  It‘s banging right up to 10 percent.  It‘s worse in some counties in my district.
MATTHEWS:  And you‘re willing to face it.  It‘s 10 percent as of the last couple of months.  Are you willing to face that unemployment rate and still say no to the people on unemployment comp, even though they paid into it?
PENCE:  I am—I am willing to stand up for every American to help Americans at the point of need and also to say that I want to be a part of leadership in Washington, D.C. that‘s willing to make the harder choices, to put a priority on some spending over others.
Look, the American people want to help people at the point in the need.  They want to see us pursuing policies that will create jobs.  But, Chris, I got to tell you, maybe you can hear it out there on the west coast.  Back home in Indiana, at a county fair on Friday night, all I heard about was when are you people going to get serious about getting spending under control?
MATTHEWS:  I think the unemployment rate is even worse out here.
Thank you very much.  And keep coming back to HARDBALL.
Congressman Mike Pence—
PENCE:  You bet.
MATTHEWS:  -- number three Republican leader in the House.
Up next, in the wake of the September 11th attacks, the federal government built up its national security and intelligence bureaucracy.  But did it make us safer?  That‘s the problem, it were so complex it‘s so difficult to manage.  One has to wonder whether we‘re getting the job done of protecting us and keeping us safe.
We got a huge story coming up here—thanks to Dana Priest, who wrote the big story for “The Washington Post.”  She‘s coming here next.  You got to hear this one.
This is HARDBALL, only on MSNBC.
MATTHEWS:  Welcome back to HARDALL.
A “Washington Post” investigation shows a national security and intelligence system so completely disorganized and unwieldy that it‘s mindboggling.  Dana Priest, by the way, led “The Washington Post” investigation.
We‘ll be right back.  We‘ll be right back.
MATTHEWS:  Welcome back to HARDBALL.
Well, are we safer than we were before 9/11?  A new “Washington Post” investigation casts a lot of doubt on that.  Dana Priest led “The Washington Post” investigation.
Welcome, Dana.  Thank you.
You‘re a heck of a reporter.  So, here‘s the question.  I think a lot of people want to bottom line this as you would want do as a journalist: 9/11, something like that, a conspiracy, a well-coordinated attack on the United States.  Would we—would we be more likely to catch it with all this moving around of boxes and bureaucracy?
DANA PRIEST, THE WASHINGTON POST:  Well, simultaneous hit from airplanes, yes, I don‘t think that‘s going to happen again.  We‘ve pretty much locked down—locked down the airline industry and done a good job there.
But this report really is not about that.  It talks about how big the whole system has grown and we found that there‘s over 2,000 corporations that work for it, and 1,300 government organizations working at the top secret level.
You know, when we started to do this, we started looking at the secret level and there were too many organizations there to actually even hope to track.  So, we went up to top secret because that was a smaller universe.  And yet, still, we found 850,000 people who have top secret clearances.
And maybe the most disturbing thing to me as a reporter with some decent sources in the government is just how many senior officials said, we don‘t really know how many people are employed here, we don‘t know how much the system costs, and it‘s become so unwieldy that we can‘t determine whether it‘s effective and we can‘t determine whether it‘s making us safer.  So that was really the bottom line.  That there‘s a lack of information that‘s become so big that it‘s in some sense has overwhelmed the progress that‘s been made in other areas like information sharing.
MATTHEWS:  Well, when we had the Christmas bomber, we had information coming from the father of the suspect who said my son‘s on the warpath.  He‘s coming to the United States.  We had simultaneous information from Yemen that something was up in that area, and nobody put the dots together.
What has your reporting told us about dot connection?
PRIEST:  Well, that‘s a perfect example of how the largeness of the system has overwhelmed some of the progress, because really, it‘s become so big that it‘s blurred the lines of responsibility where people aren‘t sure whether they‘re the ones that are responsible for getting to the very bottom of a tip.
And we had this new National Counterterrorism Center that was created where thousands of people work.  It costs billions of dollars to set up.  It was supposed to be the premier organization do that, and yet on this incident, what happened was they didn‘t run the tips to ground and what happened after that when they admitted that they had a problem was that they asked for more analysts, they asked for more air marshals, they asked for more money.
And that‘s always been the solution for a problem, is just to throw more and more and more money at it.
And as director of the CIA, Leon Panetta, and Secretary of Defense Robert Gates tell us, that more is not always enough.  That more is—it really is too much at this time with deficits and with the recession that they all expect that they‘re going to be having to cut back.  And so, they‘re going to go review their programs and look to see where it‘s most sensible to do that.
But we found incredible overlap and redundancy, organizations doing the same sort of thing.
MATTHEWS:  You‘re president of the United States and you have a problem.  You read something in the paper that scares you about something happening somewhere in Yemen or somewhere in Somalia.  You‘re worried about what‘s happening in Uganda.  Who do you call and have a serious chat with and really learn something from?  Is it Leon Panetta?  Is it the national director?
Who is it that really is the president‘s guy or woman on this thing?
PRIEST:  Well, I think if it‘s overseas, you probably call the CIA director and the national security agency director.  You don‘t call the DNI, the director of national intelligence unless you want to wait a little while to get them to call the CIA and them to call the national security agency and really get it together.
MATTHEWS:  Yes.  Right.
PRIEST:  That system is not quite working as I think a lot of Americans think that it should be.  Put one guy on top.  He‘s in charge.  It‘s not really working that way.
MATTHEWS:  Got you.  Got to go.  Dana Priest, congratulations on a big piece of journalism and a lot to absorb now.
PRIEST:  Thank you.
MATTHEWS:  When we return, let me finish with some thoughts about why Republicans can‘t say what programs they‘d cut, even as they grumble appropriately about government spending, tell us what to cut, put your neck on the line.  They‘re not doing it.
You‘re watching HARDBALL, only on MSNBC.
MATTHEWS:  Let me finish tonight with something my colleague David Gregory started yesterday.  On “Meet the Press,” he pressed the top Republican campaigners, Senator John Cornyn and Congressman Pete Sessions on government spending.  So, what are you going to cut?  I love that question.
Here‘s Gregory calling their bluff.  “You‘re here bashing the other side for spending too much.  You say you want to cut spending, OK, Senator, and Congressman, you‘re the two the folks out there raising money for Republicans to take over the Congress.  You‘re out there hitting the Democrats for not cutting back on spending, blasting that $1.6 trillion deficit this year.  OK now, show me your cuts.”
Cornyn and Sessions had nothing—no plan to cut the deficit, no cuts, nothing.
I‘m not surprised just depressed.  How many years have we put up with this?  OK, from both sides.
But Republicans used to be the party of fiscal responsibility—you know, cash and carry, not buying something you can‘t afford.  That was when the party was based in the Midwest heartland, when Republicans thought like farmers and small business folk.  They knew the price of things and haggled over price and squeezed the budget, both at the store and at the kitchen table so they could stay out of debt.  That was the party of Bob Taft and Jerry Ford and later Bob Dole and it‘s gone.  G-O-N-E.
What‘s left is the party of supply side, see you later budgeting, dynamic score-keeping and all the rest.  Ronald Reagan started this with his promise to cut the deficit by eliminating, quote, “waste, fraud and abuse” from government spending.  Well, that was a smoke screen for, quote, “I‘m not going to tell you what I want to cut because you‘ll kill me for it.”
Well, watch Cornyn and Sessions scramble to find the rhetorical ploy.  It won‘t be “I‘ll gladly pay you on Tuesday for a hamburger today.”  That was wimpy in the “Popeye” cartoons, but it will be exactly that and other cleverly chosen words, and it will still be a bluff like they tried on David Gregory Sunday morning.
That‘s HARDBALL for now.  Thanks for being with us.
Right now, it‘s time for “THE ED SHOW” with Ed Schultz.
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