updated 9/3/2010 2:53:26 PM ET 2010-09-03T18:53:26

Guests: Julia Boorstin, Maria Teresa Kumar, Michael Scherer, David Corn, Joe Sestak, Jonathan Martin, Chris Cillizza, Alfonso Aguilar


CHRIS MATTHEWS, HOST:  Damage control.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews, back down in Washington.  Leading off tonight: Democrats fighting back.  Here‘s the story.  Based on the latest estimates, Democrats are facing a wipeout this fall.  They‘re headed to lose the House and maybe the Senate.  It‘s beginning to look really bad, let‘s be honest.  But the good news is that the Democrats are beginning to fight back.  Here‘s California‘s Barbara Boxer playing offense, which is what Democrats obviously need to do against her Senate opponent, Carly Fiorina, last night.


SEN. BARBARA BOXER (D), CALIFORNIA:  People are going to decide if they want to have me back, or if they want to elect someone who made her name as a CEO at Hewlett-Packard laying thousands and thousands of workers off.


MATTHEWS:  It‘s the record that counts.  Remember, some Republicans are talking about another government shutdown.  Do you really want that to go through—go through that again?  We‘ll look at where things stand as we head into the Labor Day weekend.

In my home state of Pennsylvania, the Democrat fighting (ph) against the hard right is Joe Sestak.  He‘ll join us soon tonight to talk about his come-from-behind fight against Pat Toomey.

Plus, should President Obama have done anything differently to avert a potential November disaster?  Would he have been better off, would we have been better off had there been no stimulus spending, no health care reform bill, no Wall Street reform?  We‘ll debate that point.

And a new poll shows that illegal immigration has actually dropped off.  Is it still going to be a killer issue for the Republicans?

Finally, wait until you see Arizona governor Jan Brewer‘s excruciating 13 seconds of brain freeze in last night‘s debate.  That‘s in the “Sideshow.”

Let‘s start with whether President Obama could have done anything differently to avoid a mid-term election disaster.  Politicsdaily‘s David Corn is Washington bureau chief for “Mother Jones” and Michael Scherer writes for “Time” magazine.

Michael, I‘m going right to you on this—right to you!


MATTHEWS:  I‘m going to quote you.  “In 2008, trust in the federal government was at an historic low, dropping to about 25 percent.  Yet Obama has offered government as the primary solution to most of the nation‘s woes, calling for big new investments in health care, education, infrastructure and energy.  Some voters bought the incongruity, repeatedly telling pollsters that even programs that clearly helped the economy, like the $787 billion stimulus, did no such thing.”

Michael, if he‘d been a nothing, a numbnut, done nothing, been a Jerry Ford, just carried on, done nothing, are you saying he would have been better off than being the activist progressive he‘s been?

MICHAEL SCHERER, “TIME”:  I would distinguish between the stimulus, which even Republicans supported in some form back in—

MATTHEWS:  But that‘s their biggest complaint!

SCHERER:  That‘s one of their—the biggest thing that‘s hurting him in the polls, though, is things like health care.  He gets—he gets hurt in places like Indiana, which is where I went for my story, for the optional things he went for, not for the crucial things he had to go for in some form—

MATTHEWS:  So back to your point.


MATTHEWS:  If he‘d been a Good Time Charlie, a no-rock-the-boat Obama, done nothing really big, just done stimulus, you‘re arguing, you‘re reporting he would have been better off politically.

SCHERER:  I think among independent voters, if he had come in and made jobs and the economy the only issue, the immediate problem, the only issue for 2009, I think arguably, he‘d—

MATTHEWS:  But he still would have been a progressive, big-government guy because he would have pushed almost a trillion dollars in stimulus spending.

SCHERER:  He would—well, a lot of that was tax cuts.  It wasn‘t a trillion dollars in spending, it was a lot—a big chunk of that was tax cuts—

MATTHEWS:  But you‘re saying he would have got—he wouldn‘t be hated now by the center and the right.

SCHERER:  Look, this is not about either/or.  Clearly, the economy is killing him.  Clearly, people are angry at Washington.  It‘s, you know, trying to figure out where the line is.  If you talk to the White House, though, they sort of follow the line you‘re approaching here, which is, There‘s nothing we could have done here—



MATTHEWS:  -- I‘m challenging you because I don‘t know whether there was an easy safe haven or not.  Let me ask you, Corn—


MATTHEWS:  -- if he‘d come in and done sort of the middle of the road, blah, blah, blah, a little stimulus but hands-off, don‘t try anything aggressive or progressive, would he be more popular today?

CORN:  Well, if the stimulus was any less than it was, we‘d have probably higher unemployment.  And right then and there, he‘d be in deeper water than he is now.  If the stimulus was bigger, we might have less unemployment and he might be in a better position.

I don‘t think it‘s what he did, I think it‘s also how he did it.  You know, the long slog on health care reform, at the end of the day, made it seem like a—like a small victory, an ugly victory.

MATTHEWS:  Yes, I know.

CORN:  He was overly deferential—

MATTHEWS:  He didn‘t have much choice, though, did he.

CORN:  Well, he did have a choice.  He—

MATTHEWS:  How could he have gotten it done faster?

CORN:  How long did he spend trying to court Republicans—


MATTHEWS:  What was his alternative?

CORN:  But they didn‘t end up voting for it to begin with!

MATTHEWS:  What was his alternative?

CORN:  And you—you had Democrats in the—

MATTHEWS:  OK, I‘m getting nowhere.  What was his alternative?

CORN:  No, no, no!   His alternative to was sort of forget about

Olympia Snowe and come up with the solution they had at the end of the day


MATTHEWS:  Which was?

CORN:  They passed it without her vote!

MATTHEWS:  No, they ended up getting it because they got 60 votes, right.

CORN:  Well, but without her.

MATTHEWS:  OK, look, all right, I draw the line at reasonable—

CORN:  No, no, no!


MATTHEWS:  Here‘s the point.  Why are the voters now in these polls—now, some of the polls are robocall polls.  They‘re not the most reliable polls.  But I‘m seeing enough evidence to think there‘s something going on.  When people say—independent voters say they‘d rather have Bush back—

SCHERER:  That‘s right.

MATTHEWS:  -- after Iraq and taking this economy—doubling the national debt, bringing the deficit out of nowhere, when Clinton left it with a big, fat surplus, why would you want that back?


MATTHEWS:  What‘s your reporting tell you?

SCHERER:  What a lot of these voters are voting for—these are independent voters.  You know, the miracle of Obama in 2008 wasn‘t that he got elected, it was that he got elected in a lot of states like Indiana and North Carolina that didn‘t go Democrat very often.  He did that by grabbing independent voters who were sick of President Bush, who thought the country was going in the wrong direction, and he offered a broad promise of hope and change that hasn‘t been delivered.  That‘s what he‘s suffering for.

And I think in a place like Ohio, where you‘re talking about that poll, what people are saying is, Look, you know, we weren‘t being treated well with the last guy.  We‘re not treated being well with this guy.  We‘ll take whatever we can get.

CORN:  There has been a message problem out of the White House.  When you have polls showing that people don‘t believe the stimulus has created jobs or saved jobs and you have Republicans echoing and—and reemphasizing that particular lie, and it sets in, well, that‘s something that actually, I think, is within the realm of control for the White House.

MATTHEWS:  There are two choices when you vote, D or R.  If the people push R, does your reporting tell that they know they‘re voting for more lackadaisical administration, like Katrina, more hawkishness and neo-conservative fighting of wars that are wars of choice, not necessity?  Do they know they‘re voting for that kind of thing?  And they‘re voting for a guy who was so sloppy on fiscal policy, refused to veto a single spending bill, that we doubled the national debt?  Do they know that that‘s what R means when they vote R this November?

SCHERER:  When I was in Indiana—I was in South Bend, Elkhart, Joe Donnelly, very tough reelecting, won with 67 percent—


SCHERER:  -- of the vote—

MATTHEWS:  I liked that part.

SCHERER:  -- a couple years ago—he is dealing with voters who were telling me Barack Obama‘s not the guy I voted for.  I thought he was going to turn the economy around.  He didn‘t turn the economy around.  I didn‘t know he was going to do this health care thing.  I thought he was going to change Washington (INAUDIBLE) Washington change.  That‘s what they were voting for.  It has nothing to do with the wars, the other—

MATTHEWS:  Well, that‘s the election talk, right.

SCHERER:  No, but these are independent voters.  These are people—you know, they‘re not high-information voters—


MATTHEWS:  When Obama was running for reelection or running for election, the economy wasn‘t in the tank.  It went in the tank during the transition.  Doesn‘t anybody remember that?  It was the last quarter of the Bush administration that everything went to hell.

SCHERER:  Obama went to Elkhart, Indiana, in February of 2009, couple weeks after he gets in office, he says, I‘m going to pass the stimulus.  It‘s going to help you.  I‘m going to keep my promise—


SCHERER:  -- to Elkhart.  Elkhart‘s unemployment now is over 13 percent and it‘s been rising again this summer.

MATTHEWS:  Because it was rising when he came in.

SCHERER:  It was rising—


CORN:  -- probably would be higher now if Obama hadn‘t—


CORN:  And you know, this is—this is the administration‘s

obligation, and Democrats on the Hill are livid because they don‘t think

the White House is living up to this obligation of making a stronger case -


MATTHEWS:  There‘s so much—

CORN:  -- making the case that you just made!

MATTHEWS:  Let‘s make the points through the numbers.  Unemployment when Bush came in was 4.2 percent.  When he left office, it was up to 7.6 percent, way up from where he came in.  When Bush came into office, we had a $281 billion Clinton-led surplus.  When he left, we had a $1.2 trillion deficit.  And he doubled the national debt.  Those are the facts on the table.

Let‘s go back to the politics again.  The voter out there, he can only choose between what he had and what he has.  You‘re saying he‘s going to choose what he had in Elkhart, Indiana.

SCHERER:  They‘re not voting for Bush in Elkhart.  They‘re voting—they‘re voting because they‘re—


MATTHEWS:  Their memory of what?

SCHERER:  No, they‘re disappointed with what they have.


SCHERER:  It‘s not about—this isn‘t an election between Bush and Obama.  There‘s, you know, polls in Ohio that say there‘s different things.  But I‘ll give you an example.  There‘s a poll the Bennison (ph) Strategy Group did—

MATTHEWS:  But—excuse me.  But you know more than the average voter because you know what it means.  The people waiting over at the American Enterprise Institute right now could come rushing back into this government the second the Republicans (INAUDIBLE) will be pushing the buttons for more wars, whether it‘s Iran or it‘s Syria, or whoever else they have on their list they want to go fight next.

CORN:  But the—

MATTHEWS:  They will be pushing for an easier time on Wall Street, less regulation of the oil industry, more tax cuts for the big business crowd.  All that stuff is just waiting to get back into power.

SCHERER:  I was—

MATTHEWS:  Doesn‘t the public think like that?

SCHERER:  I was at a house party for the Republican candidate in Indiana 2, Jackie Walorski.


SCHERER:  I was talking to voters who previously had voted for Donnelly, had voted for Obama, who are now furious at both.  They‘re going to pull the lever for Walorski.  They‘re employed.  One of the things they said to me is, I thought Obama was going to get us out of this war.  He got us into another one.

MATTHEWS:  He got us into Afghanistan?

SCHERER:  Afghanistan.  So they were actually using the war argument as an argument against Obama.

MATTHEWS:  Because he surged in Afghanistan.


SCHERER:  -- thought we were going to be out of these wars—

CORN:  The war‘s unpopular.  The economy‘s unpopular.  If Obama wants to make a case—

MATTHEWS:  By the way, I might be with them on that one!


CORN:  If Obama wants to make the case that things will get worse under the Republicans, he‘s not making it strong enough.  Look at the last few speeches he‘s given when he talks about Iraq and says, It‘s time to turn the page.  Let‘s tell you how great things are going in Afghanistan—


MATTHEWS:  You‘re getting to my soft (ph) area.

CORN:  That is—


MATTHEWS:  -- he gave a neocon speech the other night.

CORN:  Right!

MATTHEWS:  And I don‘t know why—


MATTHEWS:  Everybody knows he‘s a dove.  He should have talked like a dove.  And you‘re right, (INAUDIBLE) surge in Afghanistan.  You guys are smart.  Good reporting in “Time.” I may disagree only about the fact that I don‘t like what I‘m reading, although it may be true.


MATTHEWS:  David Corn and Michael Scherer, thank you, guys.  It‘s always great, Corn.

Up next: John—Joe Sestak from my home state of Pennsylvania—he‘s fighting hard, the good fight against Pat Toomey, the Club for Growther of the far right.

And later, I‘m going to tell you exactly what I think about President Obama and what he needs to do to answer these questions and avoid being a one-term president.

You‘re watching HARDBALL—HARDBALL! -- on MSNBC.


MATTHEWS:  Beam him up, Scotty!  Jim Traficant‘s on the ballot in Ohio‘s 17th congressional district.  The ex-con former congressman got 11 more petition signatures than he needed to get his name back on that ballot, and he will run for his old job, this time as an independent.  Traficant held that seat 17 years before his convictions on racketeering, bribery and tax evasion in 2002.

HARDBALL will be back in a moment.


MATTHEWS:  Welcome back to HARDBALL.  Congressman Joe Sestak pulled off a big upset back in May when he beat Arlen Specter, who‘d been senator forever in Pennsylvania, in that primary.  Sestak might need another upset, another surprise, come November.  He faces a tough political climate up there.  Pat Toomey, the Club for Growther of the far right, is averaging a 6-point gain on him right now in the latest Pollsters (ph) Average poll.

Congressman Sestak joins us right now.  You know, Pennsylvania, as you know—I mean, I‘m talking to an expert.  It‘s a purple state.  It‘s somewhere in the middle.  It‘s a John Wayne state.  It‘s not a far-right or far-left state.  How come Toomey‘s doing well when he‘s on the far right?  What is going on?  Isn‘t he a Santorum type?

REP. JOE SESTAK (D-PA), SENATE CANDIDATE:  Well, you know, there‘s been—I just came from the Grange fair parade, 35,000 Pennsylvanians sitting dead center in the heartland of Pennsylvania, shook every hand in the parade.  Let me tell you, even after Congressman Toomey‘s special interest groups, Karl Rove‘s special interest groups, Club for Growth, which Congressman Toomey headed, founded by Wall Street when he was a lobbyist—after they poured $5.5 million into negative ads, I‘m sitting pretty darn well.

You know, I tell everybody I‘m just a Navy guy.  We‘re not liberals, we‘re not conservatives in the military.  We don‘t breed them.  We breed problem solvers.  And I‘m going to stand up to even my own party every time it‘s wrong.  And you know, you‘re seeing us a couple points behind.  Got it.  Now, this is Pennsylvania, Chris.  You know it well, pretty commonsensical people.  They‘re not going to have a sheep in wolf‘s clothing (SIC) all of a sudden deceive them again that, Let‘s give zero taxes, zero taxes to corporations, let‘s take private Social Security and privatize—


SESTAK:  -- and let Wall Street gambling with it.  No, they want someone fighting for them, not a (INAUDIBLE)

MATTHEWS:  OK, Admiral and Congressman, let me ask you this one.  It‘s close to my heart.  When I grew up in north Philly and later northeast Philly, there were real jobs for guys and women, real jobs at big factories that built big things like train cars and subway cars with steel.  They had real jobs to go to.  They didn‘t have to go make hamburgers or go join the drug trade.  They had real proud jobs to come home with.  They could provide for a family with one person working.  How do you bring back that Pennsylvania?  Give me the common sense solution to that one.

SESTAK:  Absolutely.  I just did an event down there.  You‘re talking the Lehigh, Germantown corridor (ph).  That‘s exactly where you‘re talking about.  I just came out of there last week.  It‘s all about small businesses, nanotechnology, the tool and die shop.  If we were given a 15 percent tax credit for every new payroll job, we would create five million jobs in just two, two-and-a-half years.

And then second, it is getting community banks to start lending again.  They‘re not lending, Chris.  We should be guaranteeing their loans up to 98 percent.  And then it‘s getting, as I said, zero capital gains for any company, any person that invests in a small company because small companies create 80 percent of all jobs.  And that Philadelphia—


SESTAK:  -- that you‘re talking about, they have had a negative 4 percent growth in small businesses in the last 30 years.  That‘s why 100,000 jobs have disappeared.   It‘s focused on small businesses, and that‘s why I‘m vice chairman of small business, and that‘s what I‘m going to focus on from the Senate.

MATTHEWS:  You know what you should do, is call the chief engineer in every town in Pennsylvania, every county, and ask them how many bridges are below safety code and fix them.  Get them fixed.  This country says they can‘t do jobs—

SESTAK:  Without question.

MATTHEWS:  I think (INAUDIBLE) get a job.  Let me ask you about the support from the establishment up there.  You beat the heck out of those people.  You took the money people and big—in Philly, you took the machine, such as it was, on that day—could be more interested (ph), I think, on general election day—and you beat the heck out of them.  You pulled the biggest upset.  Are those guys still mad at you for being the underdog, for beating their guy, Specter?

SESTAK:  I‘m told they‘re all going to be there.  And a lot of them are gone for pre-Labor Day, and they‘re going to be there right after Labor Day.  But look, I‘m not going to depend upon that.  You know, we raised close to $2 million in just about four weeks right after the election.  We‘re out there working every day.  But more than that, I am going to help leverage those Centers of Excellence, but I‘m also—I have over 25 offices open, 25,000 phone calls a day since 1 January.


SESTAK:  We‘re going to build a warfare coalition, just like those 30 ships I had when I was a Navy admiral doing the retaliatory strikes off Afghanistan, working together.  But I want you to know this, Chris.  I‘m also focused on moderate Republicans and independents.  I think when they find how extreme Congressman Toomey is—I mean, you like Rick Santorum, you‘re going to love Pat Toomey.

MATTHEWS:  Give me some examples.  I know I asked about the steel industry a while ago, and he said, basically he‘s, a free marketer.  Let it rot.  Don‘t do anything.  The government has no responsibility to save industries that are in trouble.  What‘s your view?  And what‘s wrong with his?

SESTAK:  Well, let me tell you, in his book, he calls it “creative destruction.”  It‘s OK that we have China subsidizing their exports because it‘ll have creative destruction in America, where people will be unemployed, but they‘ll find a job somewhere else.  You know, zero, zero taxes for corporations where you don‘t have to pay for (INAUDIBLE)  Look, when he was in Hong Kong working for a Hong Kong billionaire, he actually worked on those currency swaps that helped China keep down over the years those—the value of the yuan.

And so we have someone who believes, benefit big business, benefit Wall Street, and wealth might trickle down.  Look, he actually believed—and when he was on the Small Business Committee, he slashed in half the small business budget.  He voted against studies for women to find out why they‘re only getting about 2 percent of all federal contracts supposed to go to small businesses.  He just voted against that.

Time after time, whether it‘s education—here‘s Philadelphia—you talk about a challenge in Philadelphia?  Only 28 percent of African-American males are graduating from high school there.  And Chris—


SESTAK:  -- it‘s only 33 percent of whites.  And so I‘m on the

Education Committee.  Look, this is about the common good, and he helped

slash the education budget by $3 billion and voted against Pell grants.  He

what he did when he was president—and this is the worst, I think. 

When he was president of Club for Growth—and I like Pat, I‘ve had a beer with him.  But when he was president of Club for Growth, which John McCain called a grab bag for the ultra-rich—when he was president, he actually had as his principal mission purging the Republican Party of moderates and went after Senator Lincoln Chafee and others.

MATTHEWS:  I know. 

SESTAK:  To my mind, we don‘t need an ideology.

MATTHEWS:  Is he a right-winger?  Is he a right-winger? 

SESTAK:  We need someone who is willing to work. 

MATTHEWS:  Is he a right-winger? 

SESTAK:  He‘s farther on the right—yes.  He‘s much—he‘s extreme.


MATTHEWS:  Let me ask you.  Let‘s talk—let‘s talk turkey, Admiral, Congressman.  I mean, you deserve both titles.  You have earned them. 

Let me ask you this.  Are you going to get Bill Clinton in there?  It seems to me that, if you look at southwestern Pennsylvania, you look at anywhere in that state among the African-American community, which has been hammered with unemployment—they—if they had the jobs that the Irish guys had in the neighborhoods I grew up in today, they would unbelievably middle class.  They would such in great shape.  Those jobs are gone, those steel jobs. 

Let me ask you, are you going to bring Bill Clinton in there?  Because it seems to me, he would be even better than the president to help you in Pennsylvania.

SESTAK:  Yes.  He‘s already come in for Scranton.  Great rally.  Unfortunately, I was down in Washington for the good business of voting for that FMAP bill that Congressman Toomey opposed, and would have had 12,000 Pennsylvanians been laid off if we hadn‘t passed it. 

MATTHEWS:  Well, you going to bring him back? 

SESTAK:  Absolutely.  Actually, I was talking with him the other day. 

And they just want to know what days.  They tell me I‘m their top priority.  And I‘m going to keep working on that.  So, I hope to see him out there a lot.

MATTHEWS:  Well, I hope your party—hope your party gets organized up there, because the Democratic Party, Ed Rendell, and you, and all those other guys up there, ought to get together with Brady and win this thing.

Anyway, thank you, Congressman Joe Sestak, running for Pennsylvania senator. 

Up next:  This is worth waiting for.  You have got to see this coming scene.  Arizona Governor Jan Brewer has been in office for a while now.  But she had what we call in our business, anybody who has to be on television, a brain freeze.  Now, I sympathize with this, but it is something to watch.  That‘s in the “Sideshow.”  You cannot miss this coming up.  Hang in there.  Don‘t go away.  Wait for this one.  It‘s the interesting moment of the night. 

You‘re watching it, HARDBALL, only on MSNBC.  


MATTHEWS:  Back to HARDBALL.  And now for the “Sideshow.” 

OK, remember when you had to get up and speak in school and you got a cold brush of stage fright?  Remember?  Anyone who has been through it or chickened out because they were afraid of it can feel for Arizona Governor Jan Brewer during last night governor‘s debate. 

Here‘s her attempt at a concise opening statement of what she‘s accomplished in two years in office.


GOV. JAN BREWER ®, ARIZONA:  Arizona has been brought back from its abyss.  We have cut the budget.  We have balanced the budget.  And we are moving forward.  We have done everything that we could possibly do. 


BREWER:  We have—did what was right for Arizona. 


MATTHEWS:  Well, the—will that brain freeze cost her the governorship?  Probably not.  Polling shows she‘s ahead of her Democratic challenger by double digits. 

Now, brace yourself for this next story.  Could John Bolton—that was the super hawk, a former ambassador to the U.N. under Bush—could he actually run for president?  Let‘s—well, he didn‘t rule it out.  Let‘s listen.


UNIDENTIFIED FEMALE:  Are you running for president in 2012? 



Well, you know, it‘s a great honor when people ask me that question.  And I have been asked the question.  I—I don‘t think anybody involved in politics should worry about that until after the elections this fall. 

UNIDENTIFIED FEMALE:  So, you‘re not saying no? 

BOLTON:  I‘m not saying no.  That‘s right. 



MATTHEWS:  Well, I hope he runs.  He will remind everyone of what the country voted against in 2006 and 2008, of the ideology that led us into attacking a country that never attacked us, an ideology that wants us to make some sort of permanent garrison in the Middle East.  This guy is the super hawk of all time. 

Finally, Sarah Palin whacks at the media.  Old story, right?  Well, she debuted a new line of attack yesterday on Sean Hannity‘s radio show.  Remember, this is the same day that a scathing profile of her ran in “Vanity Fair.” 

Here she is going after the author. 


SARAH PALIN ®, FORMER ALASKA GOVERNOR:  I hear there‘s some pretty ugly stuff right now coming out.  And those who are impotent and limp and gutless, and then they go on—they are anonymous.  They are sources that are anonymous.  And impotent, limp and gutless reporters take anonymous sources and cite them as being factual references. 



MATTHEWS:  Let me get this straight.  Impotent.  Limp.  I guess you don‘t go messing with mama grizzly. 

As for the reporter of that offending article, the guy she was so tenderly describing, well, he said he had actually kept some of the worst stuff out of the article. 

Now to the “Big Number.”  Think Jan Brewer is the only governor who will sign tough anti-immigration laws?  Think again.  A whole crowd of gubernatorial candidates this year are hawking bills similar to the one in Arizona.  In how many states?  At least 20.  That‘s out of 37 states with races for governor this year.  Twenty states, they are pushing that, everywhere from Massachusetts, to Georgia, to Alabama, candidates pushing the anti-illegal immigration line.  Twenty states, they are doing it—tonight‘s “Big Number.”

Coming up:  We‘re exactly two months away from the midterm elections, and the Democrats have finally started fighting back to avoid big losses.

You‘re watching HARDBALL, only on MSNBC. 


JULIA BOORSTIN, CNBC CORRESPONDENT:  I‘m Julia Boorstin with your CNBC “Market Wrap.”

Modest gains for stocks today, ahead of tomorrow‘s August jobs report

the Dow Jones industrials climbing 50 points, the S&P 500 higher by nine, and the Nasdaq adding 23. 

Investors reacting cautiously to some slightly-better-than-expected retails sales reports, but mostly just buckling up ahead of Friday‘s crucial unemployment numbers. 

Department store chains did particularly well, sending Nordstrom shares soaring 8 percent.  Saks shares are up as well, but they have been all over the place this week on rumors of a possible takeover bid by an investment consortium. 

Teen retailers faring not quite as well on somewhat bleaker results, Abercrombie & Fitch and Aeropostal both moving lower today. 

Dell shares up just a bit after bowing out of that bidding war for 3Par.

And Burger King shares having a whopper of a session, after confirming it‘s being sold to 3G Capital for more than $3.25 billion. 

That‘s it from CNBC, first on business worldwide—now back to



Democrats long hoped that the economy would bounce back this summer, ahead of the midterm elections.  But there is some good news out there.  Here‘s what the Associated Press put out today.  New applications for unemployment benefits declined for a second straight week, after rising in the previous three weeks.  Retailers reported surprisingly strong sales in August.  And more people signed contracts to buy a home.  Well, that‘s surprisingly good news.

But it might be too late.  Here‘s what the UVA‘s, University of Virginia‘s Larry Sabato wrote today: “Given what we see at this moment, Republicans have a good chance to win the House by picking up as many as 47 seats.”

Jonathan Martin is Politico‘s senior political writer.  And “The Washington Post”‘s Chris Cillizza is managing editor of TheWashingtonPost.com.

Gentlemen, let‘s take a look at something that might be the beginning of the opening shot of a strong Democratic counterattack led by a very strong, certainly a veteran, smart politician, who always seems to win, even in tough races. 

Here‘s Barbara Boxer, who knows how to fight, in a debate last night ribbing the scab off Carly Fiorina and her jobs record. 


CARLY FIORINA ®, CALIFORNIA SENATORIAL CANDIDATE:  If you look at Senator Boxer‘s long track record of 28 years in Washington, D.C., you will see this.  She is for more taxes.  She is for more spending.  She is for more regulation.  And she is also for big government and elite, extreme environmental groups. 

SEN. BARBARA BOXER (D), CALIFORNIA:  People are going to decide if they want to have me back, or if they want to elect someone who made her name as a CEO in Hewlett-Packard laying thousands and thousands of workers off, shipping their jobs overseas, making no sacrifice while she was doing it, taking $100 million.  I don‘t think we need those Wall Street values right now. 


MATTHEWS:  You know, Chris, that gets to the heart of it.  After all the B.S. or talk or rhetoric or ideology, it comes down to what you have done in your life. 

Back in the old days, remember, Mitt Romney got hit hard on this, not having health insurance for his employees.  People look to your actual track record.  This woman had a messy departure from H.P.  And now you find out that she laid off tons of people.  That‘s a hard thing to get past to people who have to vote for you. 

CHRIS CILLIZZA, “THE WASHINGTON POST”:  Well, Chris, two things.

One, the situation is slightly unique in California, in that Carly Fiorina resume is not exactly the resume that you want to be running on in this election.  And Barbara Boxer did a very good job of making clear what that is, removed as H.P. executive, took a big golden parachute, et cetera, et cetera. 

Number two, though, what you saw in those clips, I think, is fascinating.  The first clip, Carly Fiorina, basically, referendum.  This is a referendum on Barbara Boxer.  She‘s been a politician too long.  She‘s been in Washington too long. 

Barbara Boxer comes back and says, look, this is a choice.  This is a choice between what I have done and what Carly Fiorina has done.  That, broadly, is the two arguments that the parties are making, Democrats trying to make it into a choice, Republicans trying to make it into a referendum. 

JONATHAN MARTIN, SENIOR POLITICAL WRITER, POLITICO.COM:  Well, here‘s the choice.  In this environment, which is worse, a career politician or a longtime CEO?  I think both figures right now are not held—

MATTHEWS:  Who fires people. 

MARTIN: -- are not held in very high esteem by the American public. 


MARTIN:  But keep in mind, though, Boxer in the past has been helped by the top of the ticket.  Three times she‘s run, she had Bill Clinton, Gray Davis, and John Kerry winning California by big margins every time.  That‘s not happened this time around.  


MATTHEWS:  Yes, but she‘s also been very good at having opponents that are vulnerable.

MARTIN:  And weak. 

MATTHEWS:  She went after Bruce Herschensohn, Michael Woo (ph). 

She also finds something that turns it around at the end.  Here she is going against Fiorina, who is pro-life in a state that hasn‘t elect a pro-life person in, what, 20 or 30 years, since Deukmejian.


MATTHEWS:  Here she is hitting the weak spot, if you will, politically, out there of Fiorina.  Let‘s listen. 


FIORINA:  I am pro-life because of my personal experiences.  My husband‘s mother was told to abort him.  She did not.  Her health was threatened as a result.  She lived a ripe old age to 98.  And the—my husband obviously is the rock of my life. 

BOXER:  I respect everybody‘s personal view.  And everybody has a story as to why they come to a certain opinion.  I respect it.  That‘s why I‘m pro-choice.  I let people decide. 

But what the people of California have to understand is that if my opponent‘s views prevailed, women and doctors would be criminals.  They would go to jail.  And women would die like they did before Roe v. Wade. 

So, this isn‘t about my opponent‘s personal view or my personal view. 

It‘s about the women and the families of our state and of our country. 


MATTHEWS:  You know, whatever your view is about abortion rights and whether it should be outlawed, whether people should be punished for it, et cetera, et cetera, Chris—and that‘s always going to be something of a debate in our country—I think a lot of younger voters have forgotten what the old laws were like. 

And she is sort of reminding, especially young women, don‘t think this thing is locked in, this right you have here under the law.  It‘s always going to be a debate in this country, how we treat this very sensitive moral question. 

Your thoughts, Chris?

CILLIZZA:  Given where the economy is both nationally, and specifically in California, Chris, Barbara Boxer wants to fight on the social ground. 

Carly Fiorina is—she has the personal story, which she told and which she will continue to tell.  But the simple fact is that the vast majority of Californians are pro-choice.  Barbara Boxer is in safe territory here.  She knows it.

And she knows painting Carly Fiorina as an extremist on social issues helps her, because an economic fight in this economic climate, with Democrats in control of the White House, in control of Congress, even in a Democratic state like California, may not be a winning argument for Barbara Boxer. 

So, she is smart strategically to focus on those social issues. 


MATTHEWS:  And she did say in there—we didn‘t show it—she did say, if I had the opportunity to outlaw abortion, she would do it, or take away Roe v. Wade, rather, just get rid of that right. 

MARTIN:  She says she would—right—she would overturn Roe v.


MATTHEWS:  Get rid of the right, yes.

MARTIN:  Which is really striking. 

But Chris mentions a very good point.  With the economy as it is, can Boxer drive the cultural issues sort of into the fore of the campaign?  And I think it‘s going to be very tough for her to do.

MATTHEWS:  Well, women voters tend to—not all women voters—obviously, this is a hot issue.  But it seems to me California has been so consistent on this. 

MARTIN:  Right, for decades. 


MATTHEWS:  Pete Wilson, all the Republicans who have ever won out there have been pro-choice. 

MARTIN:  Well, Schwarzenegger, obviously, too.


MARTIN:  But here‘s the question, though.  Not just with the economy being what it is, but also is Roe under threat right now?  Is Roe vs. Wade under threat?  If it‘s not—and a lot of folks think that it‘s not—can Boxer drive that issue?

MATTHEWS:  OK.  Let me ask you this.  What I liked about last night‘s debate, without taking sides on the particular points she raised, I like the fact that she didn‘t play defense. 

Let me go into this, Chris.  We‘re talking basic politics.  When you‘re fighting for your political life, as the Democrats are now, with big stakes, whether we fight wars or don‘t fight them, whether the government takes an active role in solving unemployment problems in the country or it doesn‘t, or what to do with Wall Street or doesn‘t, these are—whether it‘s with health care or the oil industry, these are hot stakes. 

And the question is, are the Democrats going to get out there and say, do you want us or do you want them?  Don‘t just complain or bitch, if you will—

CILLIZZA:  Yes.  Yes. 

MATTHEWS: -- and say, I‘m voting no.  You can‘t get away with just going into the voting booth and say, I don‘t like the way things are going.  I‘m voting no.  You have to choose. 


MATTHEWS:  The Democrats, if they‘re going to win this election or cut their losses, have to force people to choose in the voting booth between what they got now, which they may not like, and something they can describe as worse. 

CILLIZZA:  And, Chris, to be honest, that‘s their best—you know, people always say, oh, I hate negative ads. 

I would say, in this electoral environment, if you‘re a Democrat,

negative ads are what you should do.   You need to say to people, OK, you

may not like President Obama, you may not like the Democratic congressman -




CILLIZZA: -- but this alternative is worse and here‘s why it‘s worse and here‘s what if this person was in charge, if they were running things, here‘s what they would do.  That‘s the only way that Democrats win in an environment like this.

MATTHEWS:  You know—

CILLIZZA:  You can‘t just—you can‘t let Republicans be an empty vessel.

MATTHEWS:  You know who they could learn from?  The right.  Here‘s a montage of some Senate ads that the group called American Crossroads, a conservative fundraising group led by Karl Rove is running in key states.  If the Democrats want to learn how to play hardball, watch Rove and let‘s listen.

MARTIN:  Or the show.


MALE NARRATOR:  Obamacare is the wrong way for Kentucky.  And Jack Conway is going the wrong way, too.

FEMALE NARRATOR:  Coloradans are in debt to Washington, deeply in debt.  Big spenders like Michael Bennet are spending an average $2.5 billion per day.

FEMALE NARRATOR:  Missourians want to make their own health care decisions.  But Robin Carnahan disagrees.  She supports the Obamacare law.

MALE NARRATOR:  With spending already out of control, Harry Reid spearheaded the stimulus spending bill.


MATTHEWS:  You know, they always make the guy look terrible or the woman look terrible.


MATTHEWS:  You have to find the worst shots, grainy, darker.  And Karl Rove, the architect of the Republican‘s loss to the House, the Senate, and the presidency.  Here he is again.

MARTIN:  Well, exactly.  I mean, this group is sort of filling the void for the RNC.  What the RNC cannot do financially, this group is stepping in and doing.  And also, they are crafting ads that have a very good message in places like Kentucky and Nevada, where the campaigns there, with these insurgents, you know, may not be running such top quality ads sort given, at least, previously the state of their campaign.

MATTHEWS:  OK.  Thank you.


MATTHEWS:  Yes.  Go ahead, Chris.  Last word.

CILLIZZA:  The one thing that you see in all those ads, that montage you just played, the word Washington, which people hate.


CILLIZZA:  You know, being connected to Washington is an absolute no starter in an election.  Whether you‘re a Republican, Democrat, independent, green, Constitution—if you are connected to Washington, you will not win.

MATTHEWS:  Yes.  And if the voters go in there, just vote no, I don‘t feel well, the Democrats get killed.  The Democrats force the voters to think a little bit before they vote, they might just pull this one out.

Thank you, Jonathan Martin.

Thank you, Chris Cillizza.

CILLIZZA:  Thanks, Chris.

MATTHEWS:  Up next: Republicans across the country are using illegal immigration, which is a very hot issue, as a campaign issue, to get elected this fall.  New numbers show a drop in illegal immigration over the last five years, believe it or not.  How will that play in November?  Will it lessen the heat?

This is HARDBALL, only on MSNBC.


MATTHEWS:  More trouble for Colorado Republican gubernatorial hopeful, Dan Maes.  Maes told supporters that he worked undercover in Kansas for state investigators gathering information on local book making ring.  But the Kansas Bureau of Investigation denies Maes ever worked for them.  Wow.

And now, former United States Senator Hank Brown is withdrawing his support for Maes, saying it‘s because of concerns about his credibility.  I love when they get caught.

HARDBALL will be right back.



NATHAN DEAL ®, GEORGE GUBERNATORIAL CANDIDATE:  Liberals won‘t like it when I empower local law enforcement to help deport illegal aliens.  But it must be done.  Because the federal government has failed to secure our borders and illegal aliens are costing Georgia taxpayers over $1 billion every year.  I‘m not worried about the liberals, my concern is you.


MATTHEWS:  Wow.  Welcome back to HARDBALL.

Georgia gubernatorial candidate Nathan Deal is not alone in making immigration a hot campaign issue.  “Politico” reports candidates in 20 states are endorsing anti-illegal immigration laws.  But the numbers tell a different story.  A new Pew report shows illegal immigration actually has dropped sharply over the past decade from an average of almost 1 million, well, 850,000, almost 1 million a year, at the start of the decade, to just 300,000 at this time right now.  And the estimated number of illegal immigrations overall living in the U.S. is down now from a peak of 12 million to 11.1 million in 2009.

So, why are politics on the right ratcheting up the fear factor?

Maria Teresa Kumar is an MSNBC contributor and executive director of Voto Latino.  And Alfonso Aguilar is executive director of Latino Partnership for Conservative Principles.

Maria Teresa, where does this stand as a political issue right now?  We‘re going to show you some tough stuff here from Jan Brewer.  But we‘ll start with this so we know and maybe you jump off for this.

Here‘s Jan Brewer.  We showed her on our brain freeze a moment ago. 

Here she is on (AUDIO BREAK) in June.


GOV. JAN BREWER ®, ARIZONA:  It‘s a good bill.  And it‘s another tool for us to be able to use in order to get our borders under control.  We cannot afford all this illegal immigration and everything that comes with it, everything from the crime and the drugs and the kidnappings and the extortions and the beheadings.  And, in fact, people can‘t feel safe in their communities.  It‘s wrong.


MATTHEWS:  Well, beheadings may have grabbed you that word.  Medical examiners and coroners in border counties said they hadn‘t seen immigration-related beheadings.  So, reporters challenged Governor Brewer after last night‘s debate to see what is she talking about?

Let‘s listen to her non-response.


REPORTER:  Governor, why wouldn‘t you recant the comment you made earlier about the beheadings in the desert?

REPORTER:  That‘s a serious question, Governor.

BREWER:  Well, this was an interesting evening tonight.

REPORTER:  Please answer the question about the beheadings.  Why won‘t you recant that?  Would you still believe that?  Come on, Governor.

BREWER:  OK.  Thank you, all.



MATTHEWS:  Maria Teresa, fill me in on beheadings.  Is that an issue?  I mean, it‘s a serious issue, I‘m not going to play it down.  I want illegal immigration stopped.  I want a legal system—a liberal system, but I want it enforced.

So, I may not be with a lot of liberals on this, but I think we ought to have a system of guest workers, a system of liberal immigration.  But I want it on paper.


MATTHEWS:  I want the game to end.  I want the cheap exploitation of labor to end.  I don‘t want anybody getting hired in this country under the table anymore.  I want everybody getting Social Security, everybody paying taxes and getting the benefits of residence, legal residence, when they‘re working here.

I don‘t want any more game-playing by the Democrats or the businesspeople or anybody else, even the civil liberties people.  Everybody is playing a game on this issue.  That‘s my setup to our conversation.

So, let‘s have a serious conversation.  There are no good guys in the suit.  Everybody is playing a game.  Tell me seriously where this is going to play politically this November.  How is this issue going to cut, this illegal immigration issue?

KUMAR:  I mean, I think, first of all, the Republicans are actually feeling leadership backing when it comes to immigration, sadly enough.  And they‘re using it by creating racial profiling.  And that‘s one of the reasons that Brewer bill was gutted by the federal court.

What needs to happen, and this is a prime opportunity for the Democrats really to space it is instead of cowering to the Republicans, they have to come up with a comprehensive (ph) solution.

And in fact, the comprehensive immigration reform bill that was recently offered, that does exactly what you‘re saying, Chris.  It‘s incredibly tough on undocumented individuals.  They have to pay taxes.  They have to get to the back of the line.  They have to secure the border, more than anything.  And more importantly, there‘s E-verify.

So, that means every single person in the United States—

MATTHEWS:  I‘m with you on that.

KUMAR:  Right.

MATTHEWS:  What‘s your view?  You have a different view.


think we‘re oversimplifying.

MATTHEWS:  But just to respond her.  She says let‘s do something on verification, no more illegal hiring.  Let‘s have some kind of border control.  Let‘s let people become Americans if they‘re willing to pay the price and do it right.

What‘s your alternative?

AGUILAR:  I think you made the point.  We need to strengthen border security, but at the same time, we need a guest worker program.  The root of the problem here—

MATTHEWS:  Who‘s against that?

AGUILAR:  The Democrats are.


AGUILAR:  Because they‘re controlled by the unions.  The president of the AFL-CIO is going around the country saying that comprehensive—that you cannot have comprehensive immigration reform with a guest worker program.  They‘re against it.

Obama, so far, has only mentioned employer sanctions and legalization.  That‘s not comprehensive—without a guest worker program to facilitate the legal flow workers that our economy needs, we‘re not going to solve this problem.

And guess what?  Only Republicans are mentioning a guest worker program.  Carly Fiorina (INAUDIBLE) --

MATTHEWS:  OK.  That‘s part of the issue.  Is—let me get back to you so you can respond—Maria.

KUMAR:  I think, I mean, fundamentally, what the Republican Party, the only thing that you found with the 20 states that you mentioned that are introducing this tough on undocumented individuals is basically, you know, promoting racial profiling.  Those are not solutions.

MATTHEWS:  Why do—respond to what he said, though.  Respond to what he said.  Part of the solution is, to me, clean up the system, no more games.  No more under illegality, no more under the table, no more cheap hiring and exploitation of labor.  No more ethnic game-playing by the Democrats.

Let me ask you this: Are you for guest worker program as part of the solution or not?  He said you‘re not?

KUMAR:  No.  I think, I mean, we have to have smart solutions.  That‘s part of the legislation.

MATTHEWS:  No, but you‘re not answering the question.

KUMAR:  No, no, but I am, Chris.  That‘s part of—that‘s actually one of the—that‘s part of the project—excuse me, part of the legislation that Schumer introduced was a guest worker program.  Now, it‘s also talking about making sure that you‘re talking about E-verify.


KUMAR:  No.  Pardon?

AGUILAR:  It‘s a commission.

MATTHEWS:  It‘s a commission that does what?

AGUILAR:  What they would create is a commission, another bureaucracy.

MATTHEWS:  To do what?

AGUILAR:  To determine how many people come in each year.  In the Obama administration, he would appoint people with ties to the labor unions.  Let the market determine how many people come in.


MATTHEWS: Who‘s going to help this election, Maria Teresa?

KUMAR:  Right now, it‘s going to help the Republicans because the Latino vote right now doesn‘t see any leadership from either the Republicans or the Democrats.

MATTHEWS:  OK.  Thank you very much, Maria Teresa Kumar, as always.

Alfonso Aguilar, nice to meet you.

AGUILAR:  Thank you.

MATTHEWS:  When we return, I‘m going to have some thoughts about the dire political future facing Democrats two months from today.

You‘re watching HARDBALL, only on MSNBC.


MATTHEWS:  Let me finish tonight with a dire political future facing the Democrats two months from now.  Here it is straight from the shoulder.  No bedside manner, strictly HARDBALL.

It looks like the Republicans are going to win control of the U.S.  government next January.  If they win the House of Representatives, that‘s enough.  They‘ll control tax policy, spending policy, overall fiscal policy, trade policy and they‘ll control the power of subpoena.  They can push tax cuts up to the hilt and launch endless investigations of this administration.

Mr. Obama will still be president but the opposition will be controlling the headlines and what gets done.  Except for foreign policy, where he‘ll keep control of things like the Mideast and the Afghanistan war, this transformative presidency will be pretty much stymied.

As I said, I‘m giving it to you strictly HARDBALL—this is the way it looks.  Even if the Republicans don‘t win the Senate with some smart people like the University of Virginia‘s Larry Sabato who think they could do.

Right now, the biggest danger the president‘s party faces is low or even bad morale.  People who voted for him are disappointed by the bad economy, disillusioned with this surprisingly distant guy in the White House.  They felt closer to him two years ago when they cheered and voted for him than they do now.

He‘s got two months to do something about it to salvage a rough result, from what clearly threatens to be a catastrophe—to save the Senate seats of progressives, Barbara Boxer, Patty Murray and Russ Feingold, to give candidates like Joe Sestak and Jack Conway and Alexei Giannoulias in his home state of Illinois a better chance, and maybe help bring in Harry Reid, as well.

Every one of these candidates could lose, bringing about a total Democratic calamity in the night of November 2nd.  On the other hand, every one of these Senate candidates has a solid chance of winning.

The key is for the president to campaign to be the person he was from 2004 through 2008, the inspiring, hard-working, focused Democratic hero that he was.  He needs to sell his connection as he did through all that time with the prospect of change.  He‘s been working on change, creating jobs, doing health care, cleaning up Wall Street, working for a peaceful U.S. role abroad.

He‘s got to sell it—sell the fact that he, Barack Obama, not only gives a damn but has put together a tough effort to eventually turn our problems around.  He‘s got to make the case that losing this November begins the job of killing everything he‘s began.  He needs to use the presidency starting Labor Day to cut his losses and to set the terms for the next two years of political combat.

The Republicans—it‘s clear already—will use the coming two years to win back the White House.  Their opposition, if it continues on course, will be mainly destructive.

That means the president needs to challenge the voters, his voters with some lethal questions: do you want wars on demand which will be the case if the hawks get back in power?  An untamed gluttonous Wall Street, which will be the case if the happy deregulators get back in?  A rising gap between the top and the middle which is certainly be the case if the Republicans get their tax policies securely in place.

And he better start now making that sound as terrible as it is.  He better start cheerleading, he better start warning, he better start reminding—because the other side is counting on the opposite, the Democrats despairing, the right-wing voting, and independent voter forgetting.

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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