updated 1/3/2012 10:56:19 AM ET 2012-01-03T15:56:19

Guest: Howard Fineman, Julia Boorstin, Chuck Todd, Perry Bacon, David Yepsen, Matt Strawn, Erin McPike, Jeff Zeleny, Christian Mahtesian


Let`s play HARDBALL.

Good evening. I`m Chris Matthews at Java Joe`s in Des Moines, Iowa.


MATTHEWS: We`re just five days away from the Iowa caucuses. The
candidates are here. The crowds are obviously here. And until the votes
are in, HARDBALL is going to be here every night through the caucuses
Tuesday night.

Leading off tonight: Smelling victory. One day after a new poll put
him first here in Iowa, Mitt Romney is strutting his stuff, showing a new
air of confidence with just five days to go. Romney announced he`ll stay
in Iowa through Tuesday`s caucuses, holding a post-caucus party here in Des
Moines before moving on to New Hampshire Wednesday morning. He`s playing
to win here, hoping victories in Iowa and then New Hampshire will help him
wrap up the nomination quickly.

Romney`s biggest rival right now in Iowa is Ron Paul, a small-
government conservative and darling of the Tea Party. But we`re learning
more about the other side of Ron Paul, the one who buys into all sorts of
conspiracy theories and even supports the John Birch Society. Is this
really a guy anyone wants running our country?

And the wild card in the race might be Rick Santorum. He`s surging at
the right time. Could he replace Newt Gingrich down the road as the
alternative, the conservative alternative, to Mitt Romney?

And the 2012 presidential candidate with the best organization here in
Iowa might not be any of the Republicans, it may just be President Obama,
whose campaign has put together a huge operation aimed at once again
winning the Hawkeye state come November. We`ll go inside the Obama ground
game here in Iowa.

Finally, "Let Me Finish" with the reason why the Obama forces should
be concerned with what`s happening here in Iowa.

We start with Mitt Romney`s smelling victory. It seems so, Howard
Fineman. Howard`s, of course, MSNBC political analyst and the Huffington
Post media group editorial director. And David Yepsen -- we had to have
him on -- he`s political columnist and the director of the Paul Simon
Public Policy Institute at Southern Illinois University, who is the
reigning monarch of journalistic intelligence out here.


MATTHEWS: I want to start with you, the local guy, because as Tip
O`Neill once said, all politics is local.


MATTHEWS: Yes. Iowa -- is it following the country this time in
saying, We`re not going to be stuck picking somebody out in the crazy bin,
we`re going to pick a president, we`re not going to send a message, we`re
going to send the country a president? Are they lining themselves up with
the thinking outside Iowa tonight?

YEPSEN: I think so, Chris. I think, you know, it takes a while to
get there, but you`ve got to remember, the people that are showing up at
these caucuses are activists. They`re people who care about their party,
and they vet candidates and they go through all their little rituals. But
at the end of the day, the purpose of the exercise is to win back the White
House. And right now, to a lot of them, to a growing number of Republicans
I talk to, Mitt Romney seems to...

MATTHEWS: SO they`re getting...

YEPSEN: ... fit that bill.

MATTHEWS: ... to that phrase I use to the distraction of all our
producers -- they`re getting their heads around the challenge of picking a
candidate who will beat Jimmy -- there`s a mistake!


MATTHEWS: Beat Barack Obama.

YEPSEN: Exactly. Exactly.

MATTHEWS: Howard, is that the way you see it?


MATTHEWS: Because a couple days, we were thinking Ron Paul was going
to walk away with this thing, that they`re going to basically vote their
gut, their heart, and not be thinking about who can beat Obama.

FINEMAN: Well, I end up as the same place in David, but in a slightly
different route, having gone to a bunch of rallies the last couple days. I
think the people here, the purists, were hoping to find a purist candidate,
and they`re still searching and searching and searching up to the last
minute for the purist.


FINEMAN: And -- but meanwhile, as they search for the purist, the
non-hard-core is going to -- that division -- since they can`t find one
pure candidate to unite around...


FINEMAN: ... they`re going to be divided. And that is what is going
to allow Mitt Romney to win this thing.

MATTHEWS: Ah! So he`s going to be the old 25 percenter again here.

FINEMAN: He`s going to -- yes. He`s going to be 25, 28. Hey, who
knows? Have a party, 30 percent!


FINEMAN: But it`s because the search for the purist -- it`s more that
-- to me, it`s more the search for the purist that`s going to allow Romney
to win...

MATTHEWS: So going out...

FINEMAN: ... than any positive thing about Romney.

MATTHEWS: Do you agree with that, David, that going out, looking for
the perfect libertarian or looking for the perfect Christian

FINEMAN: The family candidate.

MATTHEWS: ... that they end up...

FINEMAN: Perfect hawk.

MATTHEWS: ... dividing up the conservative vote and letting Mitt win
on the left of the Republican Party?

YEPSEN: That`s right. And Chris, the same thing happened in the
Republican Party in 1980. An unknown former U.N. ambassador named George
Herbert Walker Bush eked out a plurality vote in 1980 because the
conservative chopped up their vote -- Ronald Reagan, Bill Crain (ph). I
mean, and the same thing is happening again, where the more...

FINEMAN: Here`s my question...


FINEMAN: Did you cover that...


YEPSEN: Yes, I did.

MATTHEWS: Yes. I know. And by the way...

YEPSEN: That was back when you could hop in the back seat of a car

MATTHEWS: I have Jimmy Carter on my mind for all kinds of reasons.
But he really started this game out here of being the way outsider back in
`76, right? You were there, too.

YEPSEN: That`s right. But even -- Carter was more of a centrist
Democrat. Go to...

MATTHEWS: He had four liberals he ran against.

YEPSEN: That`s right. In both parties, the more centrist candidate
in the bunch will tend to do well.

MATTHEWS: Here`s Romney trying to stomp finally on the neck of Newt
Gingrich, trying to put him out of the race. It`s like one of these
sidewalk fights where the kid, usually the Irish kid, finally gets the kid
on the cement. You know, Matt Damon plays him in the movies, in "Good Will
Hunting," and puts his head on the cement.


MATTHEWS: Here it is right now. A super-PAC put out this. It`s
Mitt`s super-PAC trying to put away Gingrich for good. Let`s watch.


UNIDENTIFIED FEMALE: Ever notice how some people make a lot of

was probably a mistake.

I made a mistake.

I`ve made mistakes at times.

UNIDENTIFIED FEMALE: Whoops! So far, Newt Gingrich has admitted his
mistakes or flipped on teaming up with Nancy Pelosi, immigration, Medicare,
health care, Iraq, attacking Mitt Romney, and more.

GINGRICH: I made a big mistake in the spring.

UNIDENTIFIED FEMALE: Haven`t we had enough mistakes?


MATTHEWS: Well, Howard, you know the game here, which is to
completely humiliate your opponent. But here he is on the way to winning,
perhaps, the Iowa caucuses. Is he planning to get rid of Newt or having
Newt follow him down the...

FINEMAN: Mitt Romney? Yes.

MATTHEWS: Is Romney trying to get Newt out of the way so he won`t
have to face him in South Carolina.

FINEMAN: Yes. Yes. And that is a ka-boom of an ad. And I was
driving over here, racing over here from Muscatine, which is why I didn`t
get properly dressed for the show.

MATTHEWS: It was a concern of mine because I would never dress down
for Iowa!


MATTHEWS: If I were in New York, I would wear a suit and tie.


MATTHEWS: I would wear a suit and tie if I were in New York, but I`m
out here in Iowa. I want to show the same respect.

FINEMAN: I promise to be properly dressed tomorrow.

MATTHEWS: I know big city people have this attitude about this place
out here.


MATTHEWS: Just kidding. Howard...


FINEMAN: Newt -- Newt -- Newt had several ads on the Rush Limbaugh
radio show, which is on WHO, the big...


FINEMAN: ... 50,000-watt station here. He had lots of ads saying,
I`m a great guy. Then Mark Steyn, who`s substituting for Rush, comes back
on and just bangs Newt over the head again. The whole conservative
movement has decided that Newt is a mistake waiting to happen. I can quote
Mark, who said, Newt Gingrich is like Yosemite Sam, the dynamite`s going to
blow up in his pants.



FINEMAN: That`s a conservative!

MATTHEWS: I think -- I think -- David, a local perspective here.
We`ve watched these -- one of these Frosty the Snowmans after another melt,
week after week. That`s my new metaphor for the winner here. The fact is
that we`ve watched -- even Donald Trump melted in about two weeks. And
Herman Cain took about three or four weeks to melt. And Michele Bachmann
melted pretty quickly.

And now it looks like Newt has melted down -- he`s down on the ground,
like Frosty the Snowman. Of course, not many people are weeping for him
like they were for Frosty the Snowman.

YEPSEN: Conservative are shopping around. They`re looking for a
leader, for a champion, for the next Huckabee that social conservatives can
rally around.


YEPSEN: And right now, here in the end game, the guy who`s doing the
surge is Rick Santorum. Now, I don`t know that...

MATTHEWS: Huckabee would have walked away with it this year, wouldn`t

YEPSEN: Huckabee was moving much -- by this time, he was moving.

MATTHEWS: He would have won...


YEPSEN: Oh, no question about that.

MATTHEWS: No question about it.


FINEMAN: My take on the question, though, that you asked was, why
would Mitt Romney stomp on Newt Gingrich, who`s plummeting in the polls,
and not go after Rick Santorum?

MATTHEWS: Who`s coming up.

FINEMAN: Yes. The answer to the question is, as nutty as Newt can
be, he`s a crazy genius who could still -- to mix metaphors...

MATTHEWS: He`s imaginable as a nominee, whereas Santorum is not.

FINEMAN: He can Till hit the three-pointer, whereas Santorum does not
have the money, he doesn`t have the national infrastructure. Unlike Newt,
he didn`t even -- Santorum didn`t even submit signatures to try to get on
the ballot in Virginia, for example. So they`re trying to pick their

MATTHEWS: I love...


MATTHEWS: I love the way you think.

FINEMAN: The Romney people are trying to pick their third tier
candidate, and they would rather have Santorum than either Newt Gingrich or
Rick Perry.

MATTHEWS: Even though you dress casually...

FINEMAN: However much they (INAUDIBLE)

MATTHEWS: ... you came here formally with a great idea.

YEPSEN: Thank you very much.

MATTHEWS: No, seriously, it`s a hell of an idea. If he picks
Santorum to go around the country with for the next six months, beating him
at almost every -- maybe losing one or two to him, right, that`s good for
Mitt Romney.

YEPSEN: Sure because it makes him look more centrist, and that`s
where this election is going to be decided. Suburban women in a lot of

MATTHEWS: Who are pro-choice.

YEPSEN: Who are pro-choice or who are scared by some of the stuff...


YEPSEN: So Santorum would make a neat foil for Mitt Romney.

FINEMAN: But it`s mostly based on money. They worry -- at least,
according to the Romney people I`ve talked, they worry -- they have a
residual worry that Newt Gingrich or Rick Perry can still raise big bucks
or they can get big independent PACs for them.


FINEMAN: Adelson for Gingrich, et cetera...


FINEMAN: They think -- they think Santorum can`t get together the
organization or raise the money.


FINEMAN: That`s what they...

YEPSEN: Chris, I don`t think we`ve heard...


YEPSEN: I don`t think we`ve heard the end of Mike Huckabee in this
campaign. Wouldn`t he make a nice running mate...

MATTHEWS: That`s what I was thinking, too.

YEPSEN: ... for Mitt Romney?

MATTHEWS: I`m glad you said that because I`ve been thinking that. I
that`s a smart thought. Let`s talk about what`s really going on here.

So Mitt Romney`s grabbed what we call the eastern division, the
moderate wing of the Republican Party, not the biggest wing, but the
moderate wing. He`s basically trying to pick the winner of the western
division, the conservative he will have to fight around the country.

Now, here`s Rick Perry still battling for that -- what we call, or I
call, the western conference championship. He wants to be the guy that
knocks off Santorum. Here he is today going after Santorum today. Let`s
watch Rick Perry, still in the fight.


is a -- is a friend. And I mean, he is -- I`ve got great respect for him.
But when he talks about fiscal conservatism, every now and then, it kind of
leaves me scratching my head and -- and -- because he was a prolific
earmarker. You know, I love Iowa pork, but I hate Washington pork.


PERRY: And Senator Santorum, he loaded up his bills with Pennsylvania
pork. And he even voted for the Alaska "bridge to nowhere."


MATTHEWS: So is that kind of cornpone going to work out here?

YEPSEN: No. And you can see Rick Perry`s numbers...


MATTHEWS: ... talking down to people. If it`s possible for Rick
Perry to talk down to somebody, he`s doing it.

YEPSEN: Well, it`s conservatives in a circle particular firing squad,
and they`re just trashing each other. And the real winners of this are
Mitt Romney and probably Barack Obama.

FINEMAN: I will say this, though, having just come from a Santorum
event and having interviewed a bunch of people there, the one thing that
they didn`t like about Santorum is that he sometimes lapsed into


FINEMAN: Remember how Bob Dole used to say, I passed this bill, or I
passed that bill.

MATTHEWS: Or Mondale used to say, "Moment of personal privilege."

FINEMAN: Moment of personal -- you know, I`ve been in the Senate --
and Santorum -- because his record is from the Senate, for the most part,
talks about the bills he passed, and that reminds people -- suddenly, a
lightbulb goes off over their head...

MATTHEWS: He`s one. He`s one of them.

FINEMAN: He`s one of them.

MATTHEWS: Yes, that`s...

FINEMAN: That`s his only...

MATTHEWS: My favorite is, "That`s bill`s in markup."

YEPSEN: Yes. And the other reason that won`t work...

MATTHEWS: Let me go to -- let me go -- let`s size it up here right
now because you`re the expert, the local, and you`re the national expert.
Locally, does it look like Romney next Tuesday night?

YEPSEN: I think so.

FINEMAN: I`m not 100 percent sure.

MATTHEWS: Who`s the challenge?

FINEMAN: He wasn`t on the -- Romney was not on the radio today, at
least not on WHOO -- WHO. My question is, why? And I think David and I
agreed why. He doesn`t want to stir anybody up. Romney wants to kind of
tiptoe out of here with a narrow victory.


FINEMAN: I don`t -- he`s getting good crowds. Our guy from the
Huffington Post who`s with him says he`s getting excellent crowds. I think
he`s going to underperform slightly. I do. I don`t know who that`ll help.

MATTHEWS: OK, let`s look at the next week.

FINEMAN: I wouldn`t bet the farm on it.

MATTHEWS: Earlier this week on "TODAY," I predicted it was going to
be Paul, Romney, Santorum as the finish, the one, two, three. Now I begin
to -- I don`t know about one, two, but I do bet Santorum for three. Is he
still the best bet?

FINEMAN: Right now, in that third tier race, yes, I would say.

YEPSEN: And I agree with that. I mean...

MATTHEWS: So he gets to go on in the race. He gets a ticket out of

YEPSEN: I`m not sure that ticket is worth that much because he
doesn`t have time to raise the kind of money that...

FINEMAN: Well, he`s going to skip...


FINEMAN: He`s going to skip New Hampshire.

MATTHEWS: Is Newt Gingrich going to finish out of the money here?


FINEMAN: Yes, I think so.

MATTHEWS: That`s powerful stuff. We never thought that would happen.

FINEMAN: Well, it`s been...

MATTHEWS: He dies in Iowa.

FINEMAN: It`s been the consistent pattern. There have been six
different front-runners in Iowa in the last six months.

YEPSEN: Chris, you know this. Campaigns don`t quit, they just run
out of gas.


YEPSEN: And some of these people are simply not going to be able to
raise the money to stay in the race.

MATTHEWS: It just looks like Romney`s trying to croak him. He`s
trying to get him out of the race...


FINEMAN: Get who out?

MATTHEWS: Get Newt out.

FINEMAN: No question because he`s unpredictable.

MATTHEWS: Kill him in Iowa.

FINEMAN: He`s unpredictable.

MATTHEWS: Wow, this is great stuff talking to two pros like you, you
know? You`re unbelievable, you guys. You`re the best. Howard, even in
old clothes, you`re great.


MATTHEWS: Howard Fineman, David Yepsen.

Coming up: Ron Paul under siege. His critics are saying his foreign
policy or lack thereof is dangerous or worse and that he`s a conspiracy
buff and supporter, in fact, a big party (ph) of the John Birch Society.
Is this going to scare voters here in Iowa? That`s coming up here right
away on HARDBALL. Also, we caught up today with Michele Bachmann out on a
campaign stop. Here we were in Des Moines with Michele Bachmann.


MATTHEWS: Congresswoman, how`s it looking for Tuesday?

thrilled. We`re excited. We are just completing today, Chris, our 99-
county tour in Iowa. We started the morning after the Sioux City debate,
and a light switch got turned on. We had just -- audiences that were
completely different than before, huge audiences. And also, they were
robust. I think it`s because they saw me when I took on Ron Paul on the
issue of dealing with a nuclear Iran. That really hit a nerve.




MATTHEWS: Could you back -- Newt Gingrich said the other day he could
never back somebody like Paul -- Paul for the presidency. Is that your
position, as well? Could you back Paul for president, if it came down to

BACHMANN: I intend to be the nominee of the Republican Party.

MATTHEWS: If he were the nominee, where would you be?

BACHMANN: It`s never going to happen. It`s never going to happen.
I`m going to be the nominee.



MATTHEWS: Welcome back to HARDBALL. That`s myself trying to get some
information from Congresswoman Bachmann. I was asking her about whether if
Ron Paul were the nominee, could she back him in the general election, and
she gave me a very good political answer, which is she`s going to be the
nominee, which is a good answer.

We`re at Java Joe`s in Des Moines, Iowa. The story out of Iowa
Tuesday night could be the strong showing of Ron Paul. Polls show the
Texas congressman in striking distance of first place, and his supporters
are passionate and well organized, a winning combination on caucus night.

But with us -- but with his front-runner status has come new scrutiny
of his background. He`s been criticized for newsletters he published under
his name in the late `80s and early `90s. Paul now says he didn`t write
them, but they were published, as I said, under the name of Ron Paul, and
he did make some money from them.

Another aspect of Paul`s back story is troubling to many Republicans.
In the past, he supported fringe groups like the big one, the John Birch
Society. Remember them? People my age remember that they believed that
Eisenhower and his brother, Milton, were communists. And he was given
background (ph) himself to deep conspiracy theories. He`s got all kinds of
theories. He may even be a "truther." Are they going to hurt him on
caucus night?

Erin McPike is covering the race for RealClearPolitics and Matt Strawn
is the Republican Party chairman out here in Iowa.

I want to go to the man himself, since you are the Republican leader
out here. What -- I -- tell me about the kind of person that would like
Ron Paul, even when they hear this tough stuff about him.

MATT STRAWN, IOWA GOP CHAIRMAN: Well, the first thing you got to
realize is the campaign Ron Paul`s running here in Iowa -- let`s go back to
right before the straw poll. The ad he used to introduce himself to Iowa
voters was his opposition to increasing the debt ceiling. So that was
really the jet fuel that propelled him at the straw poll, to start bringing
new people in. And his latest ad, where he talks about cutting $1 trillion
of spending in year one, he talks about closing five different departments
-- in fact, he shows depictions of the departments blowing up -- it really
strikes to that -- to that conservative, less government...

MATTHEWS: So he`s the genuine article?

STRAWN: When he`s talking about cutting spending, at a point where
you`ve got most of your Republican electorate say that cutting spending and
the debt, the $15 trillion debt, is the top issue, you bet that (INAUDIBLE)

MATTHEWS: So you think that might dominate any of his past baggage.

STRAWN: So far, it`s proving the case. I think you look at one and
two in the polls, Mitt Romney`s ads are talking about the debt and the
deficit, as well. So those spending arguments are what`s driving the
debate right now, and Ron Paul and Mitt Romney are examples A and B as to
how that`s being effective.

MATTHEWS: Erin, what do you see? I know, by the way, you`re younger
than I am, and maybe younger than him, probably, and I think -- what I`ve
been hearing a lot is there`s a lot of Ron Paul enthusiasm among people in
their 20s.

ERIN MCPIKE, REALCLEARPOLITICS.COM: Oh, in college kids, for sure.
And I`ve talked to a lot of Democrats, actually, who have now changed the
registration to Republican in order to caucus for with Ron Paul because
they -- they agree with his anti-Washington kind of message. The thought
Barack Obama was this new figure, but they really are seeing something
different with Ron Paul.

MATTHEWS: What is it about -- everybody`s anti-Washington. Is it
that they want to -- is this...


MATTHEWS: ... I don`t want to have to wear a motorcycle helmet, I
don`t want to have to have an individual mandate for health insurance?

Is it that whole freedom, personal freedom thing?

MCPIKE: Well, and that`s what he talks about everywhere he goes, are
personal liberties and how the government is taking that he away from us.

MATTHEWS: That really reminds me of the old days. That really
reminds me of Barry Goldwater. I felt the appeal. Hillary Clinton felt
that appeal in our 20s and early, late teens, this idea that ideally, we
don`t need government.

Of course, when you reach 65 or 70 and you get health problems and you
realize you have parents who are getting old, you realize that government`s
pretty healthy, sometimes, it`s pretty healthy to have it around.

STRAWN: Right.

And someone here in Iowa that personifies non-establishment, the way
he talks. You go to his event, it`s new people. College campuses, it`s
amazing, he`s had crowds of thousands at Iowa State University, at the
University of Iowa. There`s a tremendous movement. That challenge is
turning those new people out on caucus night.

MATTHEWS: It`s also turning -- you get a lot of criticism from

When you get to the front, people start looking at you. Here, a "New
York Times" blog post today, James Kirchick accused Ron Paul of supporting
anti-government conspiracy theories.

He wrote -- quote -- "It`s impossible to know what Ron Paul truly
thinks about black or gay people or the other groups so viciously
disparaged in his newsletters. What do we know? What we do know with
absolute certainty, however, is that Ron Paul is a paranoid conspiracy
theorist who regularly imputes the worst possible motives to the very
government he wants to lead."

Now, my question to you, Mr. Chairman, does that offend people? For
example, if they were to think that Ron Paul has flirted with the idea of a
truther, that maybe the government in its effort to get us into a war with
the Islamic states out there, really did have something to do or knew
something about 9/11 ahead of time, does that strike people as wacky or as

STRAWN: Well, I think that`s some of the stuff we`re going to find
out over the last five days.

MATTHEWS: Well, what do you think it is? Do you think it`s wacky to
think that George Bush was pushing some sort of detonator that blew up the
World Trade Center, that those weren`t airplanes flown by terrorists?

STRAWN: No, of course I don`t believe that. But ultimately the final
decision will be made by Iowans who have a chance to ask him that question
directly. And that`s what the Iowa caucus process...

MATTHEWS: But if he does say I do think there`s something to that,
would he be dead?

STRAWN: Oh, he would have tremendous difficulty. Of course he would.

MATTHEWS: Erin, what about with young people? Would they still say,
well, maybe there is something to these theories?

MCPIKE: I don`t think they`re paying close attention to that thing.

But also there are five days left until the caucuses. When Herman
Cain was being targeted for the allegations of sexual harassment, it took a
month for him to fall down in the polls and get out of the race. We only
have five days left.

MATTHEWS: So you think bad news about a candidate can`t in the short-
term bring him down?

MCPIKE: Well, in this -- we`re talking about Rick Perry changing his
position on abortion and talking about whether or not Romney can now win
Iowa. All these other things that are happening, these dynamics in the
last few days, I don`t think...


MATTHEWS: Let`s go to some evidence here. Ron Paul has never
endorsed the 9/11 truther moment implicitly, but when offered the chance to
repudiate those theories, the ones like the White House had something to do
with blowing up the World Trade Centers, here is what he said. Let`s watch
as he responds when confronted with a question about 9/11.


UNIDENTIFIED FEMALE: Why don`t you come out about the truth about

handle the controversy. I have the IMF, the Federal Reserve to deal, the
IRS to deal with, because -- no, I just have more -- too many things on my


MATTHEWS: Ron Paul is also a repeat guest on the radio show of Alex
Jones now, who has suggested the United States government was involved in
the 9/11 attacks.

Earlier this month, Ron Paul discussed with Jones the recent plot,
allegedly, by Iranian operatives to assassinate the Saudi ambassador in
Washington. Paul called the whole story that they were out to get the
Saudi ambassador a propaganda stunt. Let`s listen to the two of them, Alex
Jones and Ron Paul.


PAUL: There was this so-called attempt to kill the Saudi -- or the
Iranian ambassador. That kind of stuff is just way too much.

ALEX JONES, RADIO TALK SHOW HOST: Even mainstream media had to admit
that was totally phony and a pretext to attack Iran.

PAUL: Yes, that was the real excuse, to blame it on them. It`s just
another propaganda stunt, as far as I`m concerned.


MATTHEWS: So the government of the United States is -- I mean, I
understand there`s neocons out there that would like us to go after Iran
and a lot of other people too as well who care about Israel and care about
our security. I understand that argument.

But to suggest that the United States would put together a phony plot
to go after the Saudi ambassador, just so we could do it, that it would
build the case against Iran, is that credible talk?

MCPIKE: It doesn`t seem like it.

But, you know, a lot of people are talking about Ron Paul`s views on
national security and foreign policy generally, and that it`s out of line
with the mainstream of the Republican Party. But I`m not so sure that some
of his views -- now, that`s a little bit different -- but generally
speaking, that we that we shouldn`t have Iran sanctions and we shouldn`t go
after Iran, you know, I think you`re finding that the Republican electorate
is shifting a little bit.

MATTHEWS: I do. I want to ask you about it.

Key question. Have some Republicans, maybe not a majority of them, in
this state of Iowa, got war fatigue? Iraq, Iran -- I mean, Iraq and
Afghanistan, one war 10 years, the other is eight-and-a-half years, just

If you come out as somewhat of a peacenik, in other words, enough of
these wars in an Islamic part of the world, can you get votes?

STRAWN: Well, there`s always a strain of that prairie pacifism that
still runs through the heartland. So I think you sense some of that with
war fatigue. I have had people anecdotally that have approached me and
said they will caucus for Dr. Paul simply of his non-interventionalist
stance of foreign policy.


MATTHEWS: Too many wars. Too many wars.

MCPIKE: I have too.

MATTHEWS: So that is -- and four years ago, if Paul were to say
something like that, which he did, Rudy Giuliani would blow the whistle on
him and everybody would applaud, right? That`s changed.

STRAWN: Yes, but the corollary to that though is the discussion
relative to Iran has driven some evangelical Christian voters in other
directions away from Congressman Paul as well. I think the foreign policy
argument cuts both ways.

MATTHEWS: We have got to talk about that. The biblical notion of
going to war with Iran scares me.

Anyway, thank you, Erin.

Not you.

Erin McPike, thank you.

And thank you, Matt Strawn, the Republican leader out here.


MATTHEWS: Up next, we`re going to see what voters here at Java Joe`s
are thinking with just five days to go before the caucus. We`re going to
go talk to the folks here.

You`re watching HARDBALL from Des Moines, Iowa.



MATTHEWS: Robert Reich, the former Cabinet member of the Clinton
administration, said in a column today that he thinks the president,
President Obama, is going to change his running mates this time around.
He`s going to have Hillary Clinton on the ticket.

I want to ask the people here where are they with, Biden or with
Hillary Clinton as a running mate.

You, sir?




UNIDENTIFIED FEMALE: I would have to go with Biden.


MATTHEWS: Who do you prefer? This is HARDBALL.


UNIDENTIFIED MALE: I would go with Biden.




UNIDENTIFIED MALE: Joe Biden as secretary of state, and Jennifer
Granholm, former governor of Michigan, as his running mate.

MATTHEWS: Boy, you`re original.


MATTHEWS: Who do you think, Biden or Hillary?

Biden or Clinton?

UNIDENTIFIED FEMALE: I`m so sorry. I didn`t hear.

MATTHEWS: Biden or Clinton for vice president running this time with
the president.

UNIDENTIFIED FEMALE: I like them both.


MATTHEWS: Boy, you`re a tough voter.

UNIDENTIFIED FEMALE: AARP is a nonpartisan...



MATTHEWS: Yes, yes, yes, you got the name in there, AARP. I never
heard of the organization in my life. So...


MATTHEWS: I have never -- I`m just kidding.


UNIDENTIFIED FEMALE: Are you a member?


MATTHEWS: No, but I`m eligible.

Sir, Biden or Hillary Clinton?



MATTHEWS: Neither one?


MATTHEWS: Neither one. Well, that`s good.

What do you think?

UNIDENTIFIED FEMALE: Clinton, definitely.

MATTHEWS: I think we`re running about even here, but it`s moving
towards Clinton, moving towards Clinton here.

UNIDENTIFIED FEMALE: Definitely Clinton.


MATTHEWS: Definitely Clinton.

Clinton or Biden?

UNIDENTIFIED FEMALE: Oh, definitely Hillary.

MATTHEWS: Definitely Hillary.


MATTHEWS: Stay with Joe.

Are we having a correlation of male/female here? Everybody here who
said Hillary Clinton, raise your hand. All the women raise your hand and
keep it up. OK, the men who said Hillary Clinton.

Well, see, way back there, they`re Hillary Clinton supporters.

How about Biden, both genders. Hillary Clinton, two or three to one.

OK, do you think it`s going to happen, yes or no? Yell yes if you
think so, no -- no if you think it`s not going to happen. No.

OK, so here we are, another irrelevant debate.


MATTHEWS: Anyway, thank you.

Here we are at Java Joe`s. We will be right back. But we speculate

More HARDBALL coming up.



"Market Wrap."

A good day all around on Wall Street, the Dow up 135 points, the S&P
up 13, and the Nasdaq closed up 23 points. Leading the pack, J.P. Morgan
and Bank of America, both rebounding after yesterday`s sell-off. Also
showing signs of life, the euro, which made up some losses against the

Still, continued volatility in the Eurozone held it near a 15-month
low. On the jobs front, mixed news. Weekly jobless claims rose last week,
but the four-week average still fell to the lowest level in more than three

Those for-sale signs you have seen on lawns everywhere this year, get
ready to watch some come down. Pending home sales hit a 19-month high.

And still low, but not bottom basement, mortgage rates for fixed 30-
year loans climbed from a record low to 3.95 percent. Finally, the
government of Belgium wants to know if two popular beer-makers are engaged
in price fixing. Both Anheuser-Busch and Heineken announced a price hike

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


MATTHEWS: Welcome back to HARDBALL.

With Romney showing -- here we are. Look at this crowd.



Well, with Romney showing a lot of strength out here, he may win next
Tuesday night here in Iowa, who will emerge as his chief conservative
alternative? Can Santorum`s momentum carry him through Tuesday night and
all the way to South Carolina? Is he the new Newt Gingrich?

Chuck Todd is NBC`s chief White House correspondent and our political
director, of course. Jeff Zeleny covers politics for "The New York Times."

Chuck, you were with Newt Gingrich today. Does he have a sense of
fading? Or how would you read the reporting on him today?

Newt yesterday. Today, I was with Ron Paul.

But let me start with Gingrich, because you`re right, I interviewed
him yesterday. He clearly knows that he`s got a problem here. And he`s
trying to play up this aspect, oh, you know, it`s going to be a real
muddied field, and then I will break through in South Carolina.

There`s no doubt that South Carolina is sort of the final stand for
any potential conservative candidate. But there was a little bit of a
pattern I detected at the Gingrich rallies I went to yesterday.

And that is a lot of people I pulled aside to have the chats with --
and we all do it now, and a million of us are here to have those
conversations. You know, about a third of every audience is political
tourists, which I love. I love that people come out here, visiting
relatives, and they want to see this stuff too the way we do.

But the Iowans I talk to at these Newt rallies, Chris, they`re saying
-- coming away from them going, well, I`m undecided, this or that. Had a
couple Newt folks even volunteer that the Virginia ballot stuff bothered
them a little bit. So, you could sort of sense what you`re seeing in some
of this polling just by the conversations you`re having with the actual
activists, the Iowans that are there.

And, as Jeff knows, these audiences are about half Iowans, half

MATTHEWS: Let me go to Jeff on this whole question of Romney.

Romney`s got Chris Christie coming out here tomorrow. And Christie`s
very popular from the part of the country I`m familiar with, Northeast,
suburbanite, different kind of Reagan Democrats, if you will. They go back
and forth. Does the he look like the nominee`s running mate already?

JEFF ZELENY, "THE NEW YORK TIMES": I don`t know. It`s hard to tell.

Chris Christie is popular here. A lot of Republicans were really
hoping he was going to run. This summer, this group of prominent Iowans
flew to New Jersey, part of this recruitment committee.

It didn`t work, but I think that he is sort of the star of the party.
So, I think a lot of people would like to see that. But, interestingly,
Chris Christie and Mitt Romney are not going to be together. Not
surprisingly, they`re splitting up so they can cover more ground.

But I don`t hear many of the Romney supporters thinking that far
ahead, you know, to who his vice presidential candidate is going to be. I
think they`re still sort of focused on this right now. And I was in Mason
City today seeing Mitt Romney. Had a fairly good crowd. Ran into a lot of
those undecided voters, saying, yes, I have narrowed it down to probably
two or three.

But even in his crowds, even in Romney`s own crowds, you don`t find a
lot of people who are as gung-ho for a Mike Huckabee as they were four
years ago or, on the other side, a Barack Obama.

MATTHEWS: Are they picking a president or are they picking the person
who appeals to their gut or their heart? Are they into the president-
picking business yet, or is this about feeling good about the candidate?

ZELENY: I think we`re almost to the full stage of picking a
president. Not everyone is going to do that, of course. Some people, you
know, are -- want to give Rick Santorum some love for coming here so much.

Some people want to send a message with Ron Paul. But most of the
Romney people are getting close to the stage of picking a president.
They`re fed up with President Obama. I talked to two Obama voters in this
Mitt Romney audience today, and said they`re done with him, they`re
shopping around for a Republican.

So, that`s sort of the crosscurrent going -- undercurrent here, that
Iowa`s a general election state as well.

MATTHEWS: Chuck, how were your -- what`s your sense of smell out
here? Do you sense that, the sense that they`re beginning to pick a
president, rather than go with their gut?

TODD: You know, I think it`s -- I go with Jeff.

I think you`re seeing sort of a split there. I think there are some
people -- I remember, I talked to one woman today at a Paul rally who was a
die-hard Michele Bachmann supporter and said, but you know what, I don`t
think she has a chance. I haven`t seen Romney yet, but I`m kind of leaning
Romney, but I want to go see him.

And she had plans to go. She knew his schedule. She was going to go
see him later tonight.

So, you know, she was in that "I got to pick a president" mode.

But then you come -- particularly when you go to a Paul rally, his
folks, this is -- this is about changing the course of the Republican
Party, sending a message inside the Republican Party. There is a devotion,
an intensity of support to Paul, and even to Santorum.

And that`s sort of the -- I think that`s the unknown factor here.
You know, the shocking thing about Mitt Romney is he`s been at the top of
the Iowa polls now, I`d argue, internally, for a couple of weeks. We`ve
known maybe seven to 10 days. And yet when you look at what the other
campaigns are doing, they`re not attacking him.

Here`s the guy who`s the front-runner who`s sort of sailing over this
campaign right now, while all of the other folks trying to position
themselves as the anti-Romney ignore him for a while and beat the living
daylights out of each other. I think they`re going to look back on this
moment and regret it, because Mitt Romney could steal Iowa without really
working very hard for it.

MATTHEWS: Yes. That`s what we call the eastern division. I mean,
if he wins the moderate wing of the party, such as it is, what`s all this
talk about spending his time in eastern Iowa? Is that more moderate or

ZELENY: A lot of the population base is in eastern Iowa. But he`s
sort of moving --

MATTHEWS: Where are we now?

ZELENY: We`re in central Iowa. The smack dab of the middle of the
state. He`s moving --

MATTHEWS: Excuse me. As the old person, I don`t know where I went
to. I flew!

ZELENY: He`s moving west across the state, but interestingly, his
new schedule of where she`s going to be spending New Year`s Eve, in the
northwest Iowa, Sioux City, the heart of conservative Iowa.

To me, that shows that he`s trying to compete in all parts of the
state. He actually won that area four years ago. So, Mitt Romney,
pretense is out the window. He`s trying to win here.

MATTHEWS: Let`s talk about rick Santorum, who could come out here
with the big ticket. If Romney wins the thing, he ekes out a victory over
Ron Paul or the other way around. They`re both in the same position.
Romney is probably going to be the winner in that case, either way.

If Santorum, who`s always been seen of a guy as too far out. Even in
Pennsylvania, he lost by 18 points when he ran for re-election. Too pro-
choice or too pro-life, if you will, too anti-gay in the way he presents
himself. He seems to be anti-gay, period. Too much of that.

Is he -- is he going to be the guy who becomes the alternative to
Romney down the road based on his performance out here?

ZELENY: I think if he beats Rick Perry, that`s certainly a
potential. Santorum has spent a fair amount of time in South Carolina.
When he`s not been here in Iowa, he`s been in South Carolina, thinking
ahead to that possibility.

So I think that he is hoping that he finishes above Rick Perry. For
him, that is a huge win.

MATTHEWS: And also above Bachmann?

ZELENY: No question. And the surest sign that Santorum is rising
today, finally someone attacked him in an ad.


ZELENY: Rick Perry put up a radio ad, and he is drawing attention,
Santorum. He`s been waiting for it all year. Finally --

MATTHEWS: OK, suppose -- I want my "Today" show predictions to come
true. It`s always a mistake to make a prediction, Chuck, as you know,
because then you want it to happen. You ought to just get that out of your

But I was thinking it was going to be Paul, Romney, Santorum on
Monday morning when I got on "Today" with Savannah, your colleague there.
And I was just thinking, is that possible, or is it beginning to look like
Romney, Paul, Santorum?

TODD: Well, look, Romney got 25 percent last time. Think about
that. If he just get that 25 percent this time, that`s a winning number.
That was a losing number four years ago.

You do sense that the attacks on Ron Paul are an attempt by the rest
of the field, but even Romney got into it, to not lower his number, but to
simply stop his growth. And they assume he sits in that 20 to 24 percent

So I think your one, two prediction is pretty good. But again
Romney`s intensity of support is softer than I think a couple of these
other candidates. We`ll have some more polling coming out over the next
couple of days, but you do sense that.

And I wouldn`t be surprised, of the four candidates, three through
six, that are fighting for the conservative slot -- Newt, Perry, Santorum,
and Bachmann -- I wouldn`t be surprised if two end up in single digits and
two sort of surge with one, surging a little farther. In that, whether
it`s Santorum or Perry or maybe Newt, if one of those three ends up in
really close third or second.

MATTHEWS: I think it`s going to be Santorum, because of the absolute
knowledge on the part of the voter. If you vote for Rick Santorum, you
know exactly what you`re getting.

He`s barely even a politician, in the sense that we know a
politician. He doesn`t trim. He says what he believes. You can like it
or not, but when he says it, you know it`s true, for him. It may not be
true for the universe of man, but it`s true for Rick Santorum.

Anyway, thank you, Jeff Zeleny.

Chuck Todd, thank you as well. Great to see you out here.

Up next, the candidate with one of the biggest campaign operations
here in Iowa is President Obama. There is a Democrat caucus coming up
Tuesday night and his campaign is treating those caucuses look like a dry
run for November. We`re going to go inside the Obama campaign, the ground

This is HARDBALL from Des Moines, only on MSNBC.



would never come. They said our sights were set too high. They said this
country was too divided, too disillusioned to ever come together around a
common purpose.

But on this January night, at this defining moment in history, you
have done what the cynics said we couldn`t do.


MATTHEWS: Welcome back to HARDBALL.

Well, Barack Obama`s victory right here in Iowa back in 2008 proved
the critical moment for his campaign, I believe, and in 2012, even though
he`s unopposed here, the Obama re-election team is charging hard here in
Iowa. They`ve opened up eight campaign offices around this state. And on
Tuesday night, the president plans to address Democratic Iowa caucusgoers
via video link.

Why is the Obama campaign putting so much emphasis on the Ohio ground
game and can they reignite the grassroots support that powered them to
victory in `08?

Charles Mahtesian is "Politico`s" national politics editor and Perry
Bacon is a MSNBC contributor and political editor for The Grio.

I want to start with Perry, the sense of -- what is the emphasis
being put in -- explain it, and why is Obama making such an effort here in
Iowa when he has he has no opponent?

PERRY BACON, MSNBC POLITICAL ANALYST: Well, he`s -- this is a big
state for the election, of course. It`s a swing state. Remember, Bush won
in `04, Obama won in `08.

And it`s also a place where he`s had basically a year to be attacked
over and over again by nine different people. So, to hold this -- to hold
Iowa, again, he needs to get out and get out there early, which his
campaign is doing. Remember, Rahm Emanuel was here a few weeks ago, at a
Republican debate, sort of giving Obama`s argument for him.

MATTHEWS: Let me ask you about this fight here. I was impressed by
how close the polling is right now. It`s really within a point for the
general election. This is a state -- we always have to one the close ones,


MATTHEWS: The president has to win out here.

MAHTESIAN: It`s a tight state. People forget this is historically a
really tough state, 50-49 in 2004, 49-48 in 2000. It`s not a gimme state.
I think it has a reputation because it`s historically dullish, there`s a
strong labor component, to a certain degree because of Tom Harkin and folks
like that, that this is a strongly Democratic state, but it`s really not.
At the presidential level, it`s very competitive under the right

MATTHEWS: Let me ask you, Perry, about this desire to get the troops
out there. Is this an attempt to try to reignite the excitement? I mean,
I don`t think most people -- even real Obama gung-ho people -- maybe those
working in the campaign remember what a great candidate Obama was.

When you see that picture of him there, four years ago here in Iowa,
giving that kind of speech, you remind yourself, I remind myself how
sterling a candidate he was.

As president, he`s had problems. They`re clear to everybody. He`s
had successes, but also problems.

As a candidate, he seemed to have no problems. He was out there
delivering sterling addresses, exciting every group he went in front of,
can he do it again by winning these caucuses and beginning to energize his
campaign on the ground?

BACON: He can`t win this way again. I mean, no matter how much he
does this in Iowa, it`s not an election about great speeches and energy as
much as -- he`s been saying this himself for a while. He`s president now,
people are flustered about certain things.

It`s going to be an election much more negative than last time where
he`s going to make it much more about his contrast with the Republican than
the sort of hope and idealism the last time.


MATTHEWS: I mentioned this earlier, with our crowd out here, the
possibility that the president would select Hillary Clinton to be his
running mate for the year 2012, rather than Joe Biden, perhaps naming him
to be secretary of state in the second term.

Perry Bacon, that`s always a exciting discussion point in political
parties to get together. Is it real?

BACON: I don`t think it`s real, and I`m not exactly sure it would
matter. People don`t vote based on the vice president unless it`s someone
like Sarah Palin who maybe they feel like is not capable of taking the job.
I`m not sure that -- Clinton is more popular now, that`s because we`ve
forgotten the controversies of the 1990s and things like that. If she got
back in the race, she`d become more political, I mean, more of a
traditional figure and have the controversy around her again.

MATTHEWS: I wonder about that because -- what do you think? It`s a
wide-open question. Of course, it`s up to the president.

MAHTESIAN: I`m with Perry on this. It`s just (INAUDIBLE). I mean,
why would the get rid of Joe Biden, when the president has a problem with
white working collar voters -- I`m sorry, white-class blue-collar voters?
That`s the people Biden --

MATTHEWS: Did you see the poll we took in here?


MATTHEWS: It was overwhelming for Hillary Rodham Clinton.

MAHTESIAN: Really? Well, here`s the thing, I mean, Biden has a
proven record, which is not to say anything bad about Hillary Clinton. But
why would she want to be Obama`s number two? And why would you get rid of

MATTHEWS: Because it would establish her into succession, the
succession for the next election, where she could clearly run for president
in 2016.

MAHTESIAN: If she wants to at over 70 years old in 2016.

MATTHEWS: Perry? Perry, your thought?

PERRY: If Hillary wants to be the president in 2016 or the nominee,
she will be anyway. If she ran against Biden, she would be the heavy
favorite, no matter if she`s vice president or not right now.

MATTHEWS: Except it allows the Democratic Party to present itself as
a part of the future, not as the party that sort of ending at the end of
the next term.

MAHTESIAN: I think we`re also forgetting two very important names in
Democratic Party, Andrew Cuomo, somebody like Martin O`Malley. I mean,
those people are not exactly weak candidates or weak contenders.

MATTHEWS: Andrew Cuomo against Hillary Clinton? Are you serious?


MAHTESIAN: I`m not matching them up. I`m saying --

MATTHEWS: Are you serious?

MAHTESIAN: Two very ambitious people.

MATTHEWS: The former New York senator and the New York governor, and
then the rest of the country, the 49 states. How do you do -- how does
Andrew contend in the other 49 states against Hillary Clinton?

MAHTESIAN: I don`t know, Andrew has got some sharp elbows.

MATTHEWS: I know, but they don`t win elections.

Let me ask you this, Perry Bacon, last thought here. Would you be
worried about this performance by the Republicans, if they`re really
aligning behind Mitt Romney, a man who`s probably their best candidate for
the general election and growing up politically out here in Iowa, wouldn`t
that concern you if you`re part of the Obama camp right now? It`s not
going to be the clown car running against you next November, it`s going to
be probably now Mitt Romney?

BACON: Yes, the Obama people for months have been signaling they
think Romney is the most -- the best candidate. They`re trying to get
Republicans not to vote for him, and reminding him about his flip-flopping
in part because they know he`s the strongest candidate. So a Newt Gingrich
or a Rick Perry would be much easier for Obama. It looks like things -- I
think I agree with Chuck Todd who said earlier, it looks like Romney is
probably going to win this caucus now.

MATTHEWS: I think Rick Perry would be an easy candidate for Soupy
Sales to run against. What are we talking about, Rick Perry for president?
After this performance?

BACON: Well, I think --

MATTHEWS: He`s had a few weeks now to prove that he`s absolutely
ridiculous as a presidential candidate. He think there`s eight members to
the Supreme Court. Over and over and over, he gets things wrong. Isn`t
that relevant?

He can`t pass a citizenship test?

MAHTESIAN: I think people don`t vote on citizenship tests, though.

MATTHEWS: OK. What you`re learning out here is that Romney is
probably the front-runner, but Ron Paul could possibly knock him off next
Tuesday, right?

MAHTESIAN: Yes, I think a lot is going to be contingent on the
turnout. But, I mean, we`ve seen real energy on the devotion. It`s really
on the poll side right now.

MATTHEWS: What do you think, Perry? What do you think out here?
What do you smell?

MAHTESIAN: Romney 1, Paul 2, Santorum 3. It looks like me.

MATTHEWS: That`s what I said on Monday. We`re on the same table,
same page.

Anyway, thank you, Perry Bacon. Thank you, Charles Mahtesian.

That`s HARDBALL for now. Thanks for being with us. And thanks for
everyone out here at Java Joe`s in Des Moines. Lots of nice people out
here. I think they`ll vote for Democrats out here.

"POLITICS NATION" with Al Sharpton starts right now.


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