updated 12/27/2012 2:49:50 PM ET 2012-12-27T19:49:50

December 26, 2012

Guests: Jim Frederick, Steve Clemons, Jonathan Allen, Michael Kranish, Chip Saltsman

CHRIS MATTHEWS, HOST: Heading over Niagara Falls in a barrel.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington.

Let`s start with this. President Obama and his Republican opponents are
about to go over Niagara Falls in a barrel, but nobody knows for sure how
bad it`s going to be. Will the economy smash on the rocks below? Will the
stock market plunge a thousand points and just keep on dropping? Will the
world money watchers see the U.S. drowning in its own dysfunction?

Or will Obama and the dead-end opposition that faces him be saved by the
public`s horribly low expectations of what they can do? What will prove
stronger for Obama and Boehner, the barrels they`re riding in or the
dangerous power of Niagara Falls itself?

Joining me now is Politico`s Jonathan Allen and "National Review`s" Robert

How about an answer on that one? What`s going to protect these guys more,
the low expectations that people have about them getting anything done or
the damage of just failing to do what they all agreed they`d set out to do?
They all set the deadline. They have a -- what do you call it -- the
stakes are clear, big cut in defense spending, big raise in taxes, payroll
taxes, estate taxes, you name it, income taxes.

They put it all together. And if they blow it, who`s going to get hurt the

JONATHAN ALLEN, POLITICO: Well, I think the Republicans right now are
hammering themselves in the foot over and over and over again. And at some
point, they may figure out how to stop doing that, but in the short term,
it doesn`t look like that`s happening.

I think the low expectations right now are only helpful to them if they can
get a deal done, and it`s not at all clear that that can happen. They may
even fall short of these low expectations that they`ve had for two years
now, essentially, both sides, the White House and the Congress...


ALLEN: ... abdicating their responsibility to get something done.

MATTHEWS: That`s the horrible way to put it. The barrel they`re riding in
is the dysfunction all around them, the image they have of just being, you
know, doofuses -- if that`s a good word.

have already walked away. I was there at the House conference meeting when
Boehner closed down the House, said We`re not even having a vote on plan

We`re in this horrible standstill right now. He`s asked -- Boehner just
came out with a statement asking Harry Reid to act, asking President Obama
to act. But...


MATTHEWS: Harry Reid`s his lifeline. OK, let me ask you this because
everybody watches politics. This isn`t CNBC here, it`s politics. So let`s
get a couple things straight. You say right now, Jonathan, that today,
it`s a Democratic advantage. Obama looks like the guy who`s trying to get
it done. Republicans are the holdouts.

ALLEN: It`s not just me. Look at the Gallup organization. Obama`s
numbers on the handling of this have been going up, up, up, Republicans
have been going down, down, down.

MATTHEWS: Yes, he`s 54, Boehner`s at 26.

ALLEN: Exactly.


MATTHEWS: Right now, is there a Republican advantage -- a Democratic

COSTA: Right now, Democratic advantage, but...


MATTHEWS: OK, midnight Monday, still a Democratic advantage?

COSTA: No. Total -- I think it`s...

MATTHEWS: Midnight Monday...

COSTA: ... a pall (ph) on both house. If you go over the cliff...


COSTA: ... everyone`s in trouble...


MATTHEWS: So Wednesday morning next week, which is only a week away and
we`re into 2013 and no deal`s been made, do you accept the fact it`s even
money, both guys are in trouble?

ALLEN: I think it`s -- I think it`s a jump ball. I`m not sure what
happens at that point. Depends on what the markets do. I will say this.
President Obama doesn`t have to worry as much as the members of Congress do
because he`s not on the ballot again.

MATTHEWS: Yes, but if there`s a second recession...


MATTHEWS: ... doesn`t that kill his second term?

COSTA: I hear Republicans and Democrats and Obama want to come together on
middle class rates. So I we go over the cliff, I think they`re going to
make a deal in early January to extend some part of the current...

MATTHEWS: Yes, but is this a bungee jump, where it really doesn`t hurt?
Are you saying if they do the -- sometime next Friday, for example, nine
days from now...


MATTHEWS: Will the market go down 500, come back up?


COSTA: ... cut a deal, I think, before the cliff because if they cut a
deal before...

MATTHEWS: OK, I know that.

COSTA: Right.

MATTHEWS: But this thing goes over the cliff, will there be permanent
damage to the economy, like a new recession?

COSTA: Republicans are telling me they don`t think -- if it`s a day or
two, they can make a deal on rates in early January. The markets will


MATTHEWS: Do you buy that?

ALLEN: If I could predict the markets, I`d invest a lot of money...

MATTHEWS: Yes, I know.

ALLEN: I am hearing that there`s some baked-in -- some baked-in thinking
on this, that the markets have already reacted to...

MATTHEWS: For a couple days.



MATTHEWS: A couple days.

ALLEN: Yes. But it`s not -- it`s not...

MATTHEWS: You know, I`ve heard another argument. A lot of people say, or
at least the people I`ve talked to, if they can`t do it by the date they
say they`ll do it, they can`t count on anything getting done. It`ll just
get worse every day.

ALLEN: It has been for two years been getting worse every day.

MATTHEWS: Let`s take a look at Johnny Isakson. I have to tell you, I
watch politics like you guys, every day. I`ve never heard him say anything
before. This is the first quote in my life I`ve ever heard...


COSTA: ... big on Foreign Relations.

MATTHEWS: OK, maybe I haven`t followed him there. Here he is, one of
several Republicans who`ve urged their colleagues to pass something before
the end of the year. In other words, they don`t want to -- they don`t
think it`s a win for them to keep fighting. That means letting taxes go up
on the rich. Let`s watch what Senator Isakson had to say this weekend.


SEN. JOHNNY ISAKSON (R), GEORGIA: The truth of the matter is, if we do
fall off the cliff, after the president`s inaugurated, he`ll come back,
propose just what he proposed yesterday in leaving Washington, and we`ll
end up adopting it. But why should we put the markets in such turmoil and
the people in such misunderstanding or lack of confidence? Why don`t we go
ahead and act now?


MATTHEWS: OK, so he says might as well do it, if you`re going to do it.
But you know the Republican reason for not doing it...

COSTA: Right.

MATTHEWS: ... now is?

COSTA: Well, Senate Republicans want to get a deal done. Listen to
Isakson. He wants a deal to be done. But House Republicans are in total
chaos right now!

MATTHEWS: Why do they want a deal January 3rd or 4th, rather than now?

COSTA: Because if you -- if all tax rates go up, any deal could be called
a tax cut. It`s just simple like that. If you go over the cliff and all
rates are up, anything`s a tax cut.

MATTHEWS: But if you do it now, how`s it interpreted?

COSTA: Well, if you do it now, the interpretation with maybe some GOP
primary voters is that you danced around on rates. And no one wants to do

MATTHEWS: Or they just pass a bill cutting taxes or continuing the Bush
tax cuts for everybody under $500,000 a year, something they agree on.

ALLEN: Because of what Bob`s saying, which is that they`re worried that
some of their voters are going to look at that as them voting for...

MATTHEWS: And they`re voting...


MATTHEWS: ... that unaware of reality that they would confuse this week
with next week in terms of the same results.

COSTA: Governor Norquist agrees with you! He gave a blessing to plan B.
But it`s some Republicans, especially in the House, who are unwilling to
make that plan B type deal to establish a $500,000 threshold, a $1 million

MATTHEWS: But in the end, do you think -- where do you think it`s going to
end up, $500,000, $600,000?

COSTA: It`s got to -- they`ve got to extend middle class rates. Both
parties want that. It`s going to be somewhere in the middle, probably
closer to Obama`s number of $400,000 because Obama`s winning the
negotiations right now.

ALLEN: Yes, I think that`s about right. Sounds like $400,000...

MATTHEWS: Which leaves out about -- less than 2 percent of the people.

ALLEN: Absolutely.


MATTHEWS: Everybody keeps acting like that`s sort of an average income.
Most people make about $40,000 a year, families. That`s about the average

ALLEN: There`s only -- there`s only a couple cities...

MATTHEWS: $40,000 per -- that`s with three or four kids, too.

ALLEN: There`s only a couple places in this country where somebody would
look at $400,000 and not say that you`re...

MATTHEWS: Oh, by the way...

ALLEN: ... obscenely wealthy.

MATTHEWS: ... there are 50-some counties in Pennsylvania where nobody`s
seen that kind of money. In fact, the average income -- $50,000`s a huge

COSTA: Even in Washington, D.C., you make $400,000 a year for a couple,
family of four, you`re rich.

MATTHEWS: OK, according to a "Wall Street Journal" story this weekend, the
president`s been a tough negotiator, as you just said, Jonathan, with
Republicans. I think he`s been very tough. "The Journal" reports about
one meeting with Boehner. Quote, "At one point, according to notes taken
by a participant, Mr. Boehner told the president, `I put $800 billion in
tax revenue on the table. What do I get for that?` `You get nothing,` the
president said. I get that for free.`"

Well, that`s nice. "At another meeting, Mr. Boehner said he wanted a deal
along the lines of what the two men had negotiated in the summer of 2011 in
the fight over raising the debt ceiling." That was August of 2011. "`You
missed your opportunity on that," the president told him."

Now, I`m suspicious of the way these quotes are remembered. First of all -
- I`ve learned this from reading lots of books. Nobody remembers whole
quotes from the -- oh, three years ago, the guy said to me, and you get the
exact, verbatim -- you go, Wait a minute. What, did you have a recording
device? No.

So these words are sort of grabbed from sources. Sources have their own
way of remembering, sometimes politically.

These make the president look like a shmuck, that he talks like -- does the
president -- and any time you`re hearing (INAUDIBLE) You get nothing --
what kind of -- he doesn`t talk like that, does he?

ALLEN: Well, it depends. I mean, look, it could be partial quotes. Could
be part of the conversation...

MATTHEWS: How about the...

ALLEN: It doesn`t make him look like a shmuck to his base. It makes him
look like a hard negotiator to his base.

MATTHEWS: "You get nothing!"

ALLEN: Which is what they worry about.



COSTA: ... presents Obama as always playing too hard...

MATTHEWS: But if you`re negotiating with someone, you try to soften it up.
You put a cushion around your words. You want your base to think you`re
tough, but when you get in the room -- how about this? Look, we`re already
there, buddy. I`d like to give you more, but you know, that`s really where
we were last year. You talk like that, don`t you, in a meeting, or do you
just say "Screw you"?

ALLEN: Well, I don`t know. It sounds like these guys are sick of each
other at this point. I will say this...


MATTHEWS: Is that something you can report, they don`t like each other,
they do talk like guys on a street corner?

ALLEN: Look, they`ll all -- they`ll all say that they like each other,
they enjoy each other`s...

MATTHEWS: But do they really talk to each other like guys...


ALLEN: ... really liked each other, they`d work out a deal.

MATTHEWS: ... talk like guys toughing out each other on the street corner?

ALLEN: I think they do sometimes. I think when they get to...


COSTA: ... buddies! I mean, what`s amazing about that story in "The
Journal" is that they`re actually still having a conversation between Obama
and Boehner about a grand bargain.

MATTHEWS: Didn`t you get the feeling that this was -- not that ""The Wall
Street Journal" is -- its editorial pages are conservative, it`s a straight
paper in the other part of the paper.

Did you get the sense this is a little tilted towards the Republicans
because of the sourcing?

COSTA: Look, I`m...


MATTHEWS: ... just about the way they admitted the source. Didn`t the
Obama people say, We didn`t want to participate in this, because they
thought it would harm the negotiations in progress?

ALLEN: Mike Allen from Politico had a little bit of extra reporting around
that. And basically, he says, look, the president was saying when he said,
I get the $800 billion for free, he was pointing out people like Johnny
Isakson, Tom Cole in the House, conservative Republicans, who have gone out
there said, Look, we ought to get this done for the middle class.

I think Obama was saying to Boehner, Look, I don`t need to give anything to
get that.

MATTHEWS: All right...

ALLEN: Your own guys...


MATTHEWS: Because the arithmetic is -- $700 billion just for getting the
middle class tax through, just for that. Yes.

COSTA: Well, this is why Boehner...

MATTHEWS: Tax cut.

COSTA: ... has walked away from the House. This is what he told his
members in the conference. Because of the stories like this, they can
paint the picture to the voters that Obama`s not playing ball. Let`s just
leave town.

MATTHEWS: OK, try to explain this to somebody from Pluto right now. How
about Australia, OK? Somebody`s over watching the American situation right
now, with -- the Congress wrote the cliff, defined it, defense cuts, tax
increases on payroll, tax increases on income, tax increase on estate.
They wrote it all up as this horrible thing that nobody in Congress would
ever want to face, either side, right? They designed it that way. And now
they`re walking right over that cliff, over Niagara Falls. Explain.

ALLEN: It`s hard to explain...

MATTHEWS: How do you explain to somebody...

ALLEN: It`s like Congress is on Pluto and we`re all on Earth. I mean, I
think this is...


ALLEN: Look, they say they want deficit reduction. If you go over the
cliff, you get deficit reduction. You just don`t get it in the
responsible, accountable...

MATTHEWS: No, you get it rather abruptly!

ALLEN: Right. It`s like chopping off on arm...


MATTHEWS: You want to take a shower? I`m going up to Niagara Falls, yes.

ALLEN: But look, they set -- they set this up so that the -- that it would
be there, and they still can`t get it done. We`re dysfunctional, Chris.
There`s no other explanation.

MATTHEWS: That`s the word for it.

COSTA: I think they built this roller-coaster, they can stop the roller-
coaster, they can make it go. They`re doing a dance right now because
Republicans don`t want to do something about rates. Obama wants to play
hardball. But I think come early January, they`re going to cut a deal on
middle class rates and have the rest of the long-term argument later in the
month and later in the year.

MATTHEWS: Well, I guess I believe that both of them think it`s better to
go over this falls than to cut a deal that`s going to hurt them at home.
And I think -- I`ll say this at the end of the show. Tea Party people
don`t respond to Boehner or to Cantor or McCarthy or any of these -- any of
them -- Rodgers. They respond to the person at the next Tea Party meeting
they have to go to who`s going to be yelling from the back of the room, You
sold us out. That`s the guy or woman they`re afraid of.

I`ll get to that later in the show, but I think that`s why the Tea Party`s
never going to be really that functional when it comes to government
because they really don`t respond to getting things done or making the
government work. They respond to anger back home.

COSTA: Well, I think 2014 Democrats are also aware of these tax increases
because they don`t want to have to run in a state like Pennsylvania and in
a Rust Belt state with these tax increases. That`s why they want to
ultimately cut a deal...

MATTHEWS: Republicans.

COSTA: No, Democrats. If you`re running 2014, you don`t want all these
increases on your shoulders.

MATTHEWS: Yes, I know. OK.

ALLEN: Max Baucus in Montana with the estate tax, watching some of the
farmers and ranchers there suddenly having to pay a lot more when it`s a

MATTHEWS: You know what I have to say about Max Baucus? He`s a very
careful man.


ALLEN: Very careful man!

MATTHEWS: Very careful man. He`s been there a long time in a conservative
state. You`ve got to be careful -- you got to be careful if you`re a
Democrat in Montana.

Anyway, thank you, Jonathan Allen. Happy New Year, I guess. We got to
have a new...

ALLEN: Happy new year.

MATTHEWS: ... new theme song here. And Robert Costa. Thank you, buddy.

Coming up, we`ll talk about plenty of reasons Mitt Romney lost the
presidential campaign. But the reason that trumps all has come from
Romney`s eldest son, Tagg. He says his dad, Romney -- his dad -- that`s
Mr. Romney -- just wasn`t into being president. Are we supposed to believe
that? I saw this guy run his butt off for about six years for president.
I don`t buy it, but we`ll see what the argument is.

Plus, the Chuck Hagel for defense secretary trial balloon has been pretty
well popped last week by floating names of potential cabinet secretaries.
Did Obama`s picks risk being borked, as in Robert Bork, before they even
get nominated? I don`t like this process.

And new reports the Tea Party organization FreedomWorks was imploding,
imploding well before election day, complete with a coup attempt that saw
the group`s chairman, Dick Armey, trying to seize control with an armed
aide, a guy carrying a gun at his side -- in a holster, of course

Also, we`ll have Politico`s top viral videos of 2012, including this one.


UNIDENTIFIED MALE: We`re all on our own if Romney has his way. And he`s
against safety nets. If you fall, tough luck. So I strongly suggest that
you wake the (EXPLETIVE DELETED) up!


MATTHEWS: Actually, that`s Samuel L. Jackson. He`s a very nice fellow
when you meet him personally. Anyway, that`s going to be in the

And this is HARDBALL, the place for politics. He really is a nice guy. I
met him.


MATTHEWS: Former President George H. Walker Bush is suffering from an
elevated fever today after spending Christmas in a Houston hospital. Bush
has been hospitalized since Thanksgiving for bronchitis. And despite slow
but steady improvement, his health took a turn for the worse over Christmas
Eve. Doctors say they are, quote, "cautiously optimistic" that the 88-
year-old will recover. We wish him well.

We`ll be right back.


MATTHEWS: Welcome back to HARDBALL. "Boston Globe" reporter Michael
Kranish has written a dissection of why Romney lost the presidential
campaign this year. It includes remarkable access to insiders who went on
the record, including Romney`s oldest son, Tagg, who says of his father,
quote, "He wanted to be president less than anyone I`ve met in my life. He
had no desire to run. If he could have found someone else to take his
place, he would have been ecstatic to step aside. He`s a very private
person who loves his family deeply and wants to be with them. But he has
deep faith in God and he loves his country, but he doesn`t love the

Well, joining me is Michael Kranish himself. He`s with "The Boston Globe"
and author of "The Real Romney." And former Huckabee campaign manager Chip
Saltsman is with us, too.

Gentlemen, this is so much fun, I should not be paid for it. This is
joyful to do this because I love to know motive. I love to know reasons.

But I find it hard because I was never a big Romney fan. I didn`t have any
personal problem with him, but I never thought of him as authentic. In
fact, the one time I caught him out in Iowa and he was going through,
signing autographs, a million autographs, signing people`s posters. And it
was a rainy day.

And I said to him, Can you say "Let them eat cake" in French? Because you
know, it`s the ultimate side (ph) of being above everybody else, Marie
Antoinette. And he said, I can, but I won`t.

And he looked -- he wouldn`t look up at me. So he`s so trained and
disciplined, he wanted me to know he was smart enough and fluent enough in
French, where he`d been a missionary, but he wasn`t going to be stupid
enough to give me a quote on camera saying `Let them eat cake` in French.

Now, that Romney, that`s not this one, are we now to believe he really
didn`t want this job, he didn`t really go for it with all he had, Michael?

MICHAEL KRANISH, "BOSTON GLOBE": Well, this story -- my editor said after
the election, Take a month and try to really dissect what happened in the


KRANISH: And to understand why Mitt Romney lost, you have to understand
that this is the story of a very private man...


KRANISH: ... going for the most public job in the country. And he did not
want to talk about certain things in his life and his campaign strategist
did not want to talk about his Mormon faith, his background. So there`s
always this...


MATTHEWS: We knew that about -- his business career was kind of

KRANISH: Yes, business career...


MATTHEWS: The Mormonism was -- by the way, I think is a credit to the
Democrats, Chip. I think it`s a credit -- nobody likes to be that nice to
anybody in politics, but I`ll say this. I never heard a word spoken
against his religion. And I would have been really been offended by that
because I like LDS people.

Your thoughts about that, Chip? It never came up as a negative anywhere I
could ever find. I never saw it anywhere.

CHIP SALTSMAN, REPUBLICAN STRATEGIST: Well, I agree with that, and I think
it would have backfired if it would have. But I mean, you give credit to
where credit`s due. They didn`t take a shot on him on his religion. I
don`t think that would have worked, not in this country anyway.

And like I said, Michael, this is -- this is better than an inside baseball
story. This is an inside the dugout story. And Chris, I`m not getting
paid and I love talking about it.


MATTHEWS: Me, too. Let`s talk -- what did you find as a journalist --
what did you find? Because you`ve been watching Romney since he was a
moderate Republican not that long ago.

KRANISH: Right. Well, in 2002, of course, he called himself moderate and
progressive, and so forth. So the Romney that ran in 2012 -- he was very
hesitant to run, as we`ve talked about. He was talked into it by his son,
Tagg, and his wife, Ann. And once he decided to run, obviously, he was all

But there was this question, how do you run? What do you say? And the
decision was, Let`s focus on the economy. Let`s focus on President Obama`s
handling of the economy and lesser emphasis on biography.

MATTHEWS: That thing -- that worked so well in that first debate. I was
dying, he was so good in that first debate. He came in commanding. Maybe
it was arrogant, but it worked. Where was that guy the rest of the -- why
didn`t he stay on that line that he was on that first debate right to the

KRANISH: Well, there`s an anecdote that I tell in the story. And Mitt
Romney came into the office of one of his top aides, Beth Myers, and said,
We`re going to have a Manhattan Project, named after the development of the
atomic bomb. And that project was to have 16 debate preparation sessions.

So over the course of the year, Mitt Romney put extraordinary emphasis on
debate preparation, and it certainly paid off.


ALLEN: And Barack Obama obviously did not do the same thing. He had 11
day (ph) preps, but he skipped two preparation sessions and just wasn`t
really as into it as Romney. So coming into the debates, yes, that was a
strong point. But Obama had a great advantage in the ground game and also
in their advertising...

MATTHEWS: (INAUDIBLE) I`ll get to that. I love the ground game because I
learned about that.

Chip, that`s a point, I think. When you show your strength and you know
you had the night of your life, why don`t you do it again? That`s what
they do in sports. They find the sweet spot, they do it again. Why didn`t
he try to be that Romney again in the next two debates?

SALTSMAN: You know, I think some of it, Chris, is -- remember, a week
before that debate, we were already starting to write the eulogy for Mitt
Romney, and nobody thought he could win.


SALTSMAN: And we were talking about the NRCC kind of dumping Romney and
worrying about their House members. Well, all of a sudden, in one night,
everybody believed.

MATTHEWS: Yes. They should have.

SALTSMAN: And it kind of just changed the dynamics of the race.

MATTHEWS: So why didn`t he keep it up?

SALTSMAN: And then, all of a sudden...


SALTSMAN: ... OK -- because I think everybody jumped...

MATTHEWS: Why`d he go after Benghazi for two weeks? Why`d he change the
subject from his business experience?

SALTSMAN: I have -- I have no idea.

And, you know, really, you almost saw what happened. It`s like all of a
sudden they woke up and said, oh, my God, we can win this thing.


SALTSMAN: And then they just didn`t keep on the same path. They kind of
started going out in different ways. Everybody started kind of taking
credit for that one good night, instead of trying to recreate it night
after night.

MATTHEWS: Let`s cut ahead.

I love what you said about David Axelrod and the fact he knew that the guy
wouldn`t sell his religion. He couldn`t sell -- but he could sell his work
in his religion. I guess that was the tricky part. He couldn`t sell the
good work he did with Relief Society and looking out for his members of his
stake, you know, his LDS group.

KRANISH: Mm-hmm.

MATTHEWS: He didn`t want to -- he couldn`t do that without selling, what,
the philosophy, the religion? What -- what -- why...


KRANISH: Well, there were family and friends who wanted the campaign to
emphasize things that Mitt Romney had done, because that was who Romney
really was, talk about that.

And so, at the convention, there was this effort to put forward people that
have been helped by Romney. There was a very moving convention video, you
may recall. The problem is that this ran before the networks broadcast in
prime time, the commercial networks. And then in prime time, of course,
was Clint Eastwood. So the message that got out to voters was not the
message that his family and friends wanted.

MATTHEWS: That was a Hail Mary, that Clint Eastwood. It could have been
worked, but it didn`t.

KRANISH: The family and friends, some of the people close to Romney, they
were very upset by that, no question about it.

But talking about the dynamics of the race, the dynamics were that the
ground war of Obama...


MATTHEWS: OK. Let`s talk about the ground war.

I have a friend of mine, Marion Houlihan (ph), who is fantastic at coming
up to me after the election and said, you won`t believe what we did. She
is down in Coral Gables, Florida, right near Miami. And she talked about
how they have a systematic basis -- and she`s a grown-up person, my age.
And she said, it would be, I would meet one person, they`d meet another.
We`d have seven contacts with every voter.

And you knew if you got seven contacts with every single voter, they could
get that person to vote. And they could know by every time they made a
contact, that would -- they would convince them they were doing something
that would actually have an effect, not just trying.

And it worked.


MATTHEWS: I mean, in every single part of the United States where they
needed to win, like Florida, they did this.

KRANISH: Well...

MATTHEWS: And Romney had none of this.

KRANISH: The Obama campaign had an extraordinary ground game. They
started really building on the 2008 effort.

And they decided to do something really unprecedented in presidential
politics. They really wanted this one -to-one voter contact you`re talking
about. They had workers, including volunteers, on a 50-to-one basis, say
keep track of 50 voters, this one person would do.


MATTHEWS: This is like running for state rep.

KRANISH: They -- they -- well, Jeremy Bird, the national field director,
told me it was similar to how people were lobbying the Boston City Council,
that it was that direct.


KRANISH: And they wanted to replicate that 1,000 times over. So, they
were able to do that.

MATTHEWS: There are committeemen and committeewomen who don`t have that
much contact with their people on their streets like they did.


KRANISH: They had a big head-start. And one of Romney`s advisers said
that Obama had more people in Florida than Romney had nationally on a paid
basis. So it gives you a sense of how...


MATTHEWS: Oh, God, this is great reporting, I will tell you.

I will tell you, Chip, isn`t this something everybody`s going to take away
and use in politics? How do you run for any office from now on without
paying attention to this playbook of Obama`s, it seems to me. Your

SALTSMAN: It is absolutely true.

I mean, look, this is -- this is how you win elections. And each
presidential election, we learn something new and we try to build on it,
just like the Obama campaign in Michael`s article said they built on George
W. Bush`s campaign in 2004 where they increased his turnout.

And we never saw it coming. So, this is what you build on. And their
software program in 2008, which was Houdini, which everybody thought was
wonderful, it crashed, it was terrible. Then they build on that and they
made this great voter contact software that actually worked this time

MATTHEWS: Yes. So, bottom line, Chip, bottom line, even Mike Huckabee
couldn`t have beaten this guy, huh?

SALTSMAN: Well, you tried to get me on that before.


SALTSMAN: I think Mike Huckabee would have been a great candidate for us
and I think we could have beat -- could have beat Obama because we would
have been able to frame the issues a little bit different than they ended
up being framed for Mitt Romney.

MATTHEWS: OK, a little more authenticity, perhaps more authenticity.

SALTSMAN: But thanks for trying.


MATTHEWS: I want to hear you some day say...


SALTSMAN: Oh, no question.

MATTHEWS: Thank you, Michael Kranish. Congratulations. Great reporting,
great journalism. And it`s the stuff that I eat for breakfast.

Anyway, Chip Saltsman, happy new year to both of you guys.

Up next: the viral videos that defined the political scene this past year,
a little look back.

And this is HARDBALL, the place for politics.


MATTHEWS: Back to HARDBALL. Now to the "Sideshow."

Some unwanted attention for Idaho Republican Senator Mike Crapo. Well, the
day before Christmas Eve this year, the last place you might want to be is
the police station after getting stopped for driving under the influence.
That`s where Senator Crapo wound up Sunday morning after he was pulled over
for running a red light and then failed a sobriety test.

Crapo released a statement apologizing for his actions, but something else
about the situation is not getting lost in the kerfuffle. As a Mormon,
Crapo has pointed out in the past to Idaho voters that he abstains from
alcohol entirely and once said that he has planned to -- actually, he
planned to celebrate the passage of a new bill with swigs of root beer.

But my advice to the senator, tell the truth, the whole truth. Good people
respect it. To hell with the others.

Also, Starbucks enters the fray over the fiscal cliff. If you want to make
a stop in one of the Starbucks in Washington, D.C., the next few days, you
might notice the words "Come together" in your cup -- on the top of the
cup. It`s not an homage to the Beatles. Howard Schultz, the CEO of
Starbucks, wants employees to pen that message on D.C. coffee cups to push
members of Congress to come to an agreement on the fiscal cliff.

Obviously, concentrating the effort in D.C. ups his chances of getting it
to matter. Schultz followed up with a blog post urging everyone to put the
pressure on Congress.

A cartoonist for "The Hill" blog went a more pessimistic approach with this
97th day of Christmas themed mockup, a promising box labeled deficit crisis
compromise and the warning, do not open `til, with all the winter holidays
crossed out, signed Boehner, Obama, and the congressional elves.


Next, what will Samuel L. Jackson, "Call Me Maybe" and "The Simpsons" all
have in common? Well, they`re all featured on Politico`s list of the top
viral videos of 2012, the political ones, of course. Here`s a look back.


SAMUEL L. JACKSON, ACTOR: In the silvery moonlight that bathes every town,
people lie dreaming so safe and so sound. They`re warm in their beds,
snuggled up in the sheets.

But four years before, they were out in the streets. Sorry, my friend, but
there`s no time to snore. We`re all on our own if Romney has his way. And
he`s against safety nets. If you fall, tough luck. So, I strongly suggest
that you wake the (EXPLETIVE DELETED) up.



UNIDENTIFIED ACTOR: There`s only one thing that might deny us the
presidency that is the God-given property of the Republican Party.

UNIDENTIFIED ACTOR: The 47 percent tape?


UNIDENTIFIED ACTOR: The empty chair?




UNIDENTIFIED ACTOR: Swiss bank accounts, $10,000 bet, I like to fire


It`s a shaggy dog story about an actual shaggy dog. Apparently, while on
vacation, old Mitt strapped his mutt to the roof of his car for a brief
650-mile jaunt.



SARAH SILVERMAN, COMEDIAN: Hey, you all, it`s me, your Jewish friend

Can you believe it`s election time again? Time to go to the polling local
place, cross your name off the list and vote. But this year, it`s not
going to be that easy, because there are these brand-new super (EXPLETIVE
DELETED)-up laws which are presented as a way to prevent voter fraud, but
are in fact designed to make it hard for specific people to vote, black
people, elderly people, poor people, and students.

Hmm. I wonder what those demographics have in common. Oh, yes. They`re
probably going to vote for this guy.



this is crazy. But here`s my number. So call me maybe. It`s hard to look
right at you, baby. But here`s my number. So call me maybe.


MATTHEWS: Actually, when we look back on the off the wall of 19 -- or
actually 2012, it will be hard to hunt -- actually, to beat the real thing.

Up next: defending Chuck Hagel. President Obama may find that filling the
role of secretary defense is more difficult than he thought if Congress
plans to Bork whoever he picks.

You`re watching HARDBALL, the place for politics.


"Market Wrap."

No holiday spirit whatsoever on Wall Street today. For a third straight
session, losses abounded, the Dow off 24, the S&P down seven, and the
Nasdaq down by 22.

Major retailers like Wal-Mart and Macy`s struggled today after one report
showed that retail sales this holiday season were the weakness since the
recession year of 2008. And Amazon stock took a big hit after Netflix
blamed the company for a widespread movie streaming outage that angered its
customers on Christmas Eve.

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

MATTHEWS: Welcome back to HARDBALL.

President Obama`s choice for secretary of state, John Kerry, is expected to
sail through his confirmation process, but the president has yet to name
his choice for the next secretary of defense. That may be because the
candidate who is reportedly the White House`s top choice, former Republican
Senator Chuck Hagel of Nebraska, could prove to be a political powder keg.

He`s been attacked by neocons for his views or Iranian sanctions, engaging
groups like Hamas and most problematic past statements he`s made critical
of the Israeli lobby here in Washington.

Well, today, in "The Washington Post," a group of former national security
advisers, including James Jones, Brent Scowcroft, Zbigniew Brzezinski, all
defended Hagel, saying he is -- quote -- "a man of unshakable integrity and
wisdom who has served his country in the most distinguished manner in peace
and war."

But far more telling may be comments from over the weekend from influential
senators. Lindsey Graham and the retiring Joseph Lieberman are both
hawkish on national defense and they both expressed trepidation about
Hagel. Here they are.


SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: A lot of Republicans are going to
ask him hard questions, and I don`t think he`s going to get many Republican

I like Chuck, but his positions -- I didn`t really, quite frankly, know all
of them -- are really out of the mainstream and well to the left of the
president. I think it will be a challenging nomination.

SEN. JOSEPH LIEBERMAN (I), CONNECTICUT: I wouldn`t say that his votes
disqualify him, but if I were in the Senate on the Armed Services
Committee, and he was nominated, I would have some really serious questions
to ask him.

President Obama obviously has earned the right to nominate whoever he
wants. But I think this will be a very tough confirmation process.


MATTHEWS: Well, Chuck Schumer is also just like those guys were.

Is this going to be too much of a fight for president?

Steve Clemons is the Washington editor at large for "The Atlantic," and Jim
Frederick is international editor for "TIME" magazine.

Gentlemen, thank you.

I want to start with Steve on this one.

This Sunday, when given the opportunity to defend Chuck Hagel, a very
influential Democrat, Chuck Schumer I just mentioned, refused to do so.
Listen to what this very smart senator from New York had to say.


SEN. CHARLES SCHUMER (D), NEW YORK: That`s his choice. I think, once he
makes it, his record will be studied carefully. But until that point, I
think we`re not going to know what`s going to happen.


SCHUMER: I would have to study his record. I`m not going to comment until
the president makes a nomination.

GREGORY: All right.


MATTHEWS: Steve, I have a sense that this knocking of this candidate has
gone beyond neocons, people of the right, and certainly people -- it`s
including people who -- who are just generally pro-Israeli, which is about
most people in politics.

And I get the fear -- the fear, I think -- I would have to call it fear,
because I always liked Hagel, that he may be in trouble right now, because
the shots that have been taken at him about what he said, calling it the
Jewish lobby, which is a problem because obviously people are very pro-
Israeli from the Christian right. In fact, they may outnumber the Jewish
people who are pro-Israeli at this point.

To use that infelicitous term these days is the kind of thing that just
ends up causing a lot of problems with people who are generally in the
middle politically. And they go, wait, why would he say it that way? And
it may sound like a small point to others, but to the people who learned
their politics` lingo -- their lingo of politics, it`s important.

Your thoughts.

STEVEN CLEMONS, "THE ATLANTIC": Look, I think that Tom Friedman got it
beautifully right in "The New York Times" today, where he basically said...

MATTHEWS: He`s pro. He`s pro-Hagel, yes.

CLEMONS: Yes. He`s pro-Hagel, but I think it took him awhile to get


CLEMONS: And I think he`s kind of demonstrated right away that the view of
the Jewish-American community on Hagel is not monolithic and that despite
that use of "Jewish lobby," which I think Senator Hagel wished he hasn`t
used, I think he was trying to express the fact that this is a difficult
discussion to have in Washington.


CLEMONS: And he was trying to put it forward and say, you know, I`m trying
to make the best decisions both for Israel`s interests and more importantly
for America`s interests.

And I remember him speaking very often in his speeches where he says, you
know, I`m not going to make a false choice being a strong advocate of
Israel`s interests and also being an advocate of other nations` interests.
They have got to eventually envision a structure in the Middle East where
all that neighborhood can get along.

And for doing that, he`s been basically run over by certain aspects of the
American-Jewish community. And I think that that`s really who`s been
driving the debate. But Tom Friedman, I think, just put a lot of wind in
the Hagel sails again...


CLEMONS: ... that had gone a little bit soft.

MATTHEWS: Well, here`s what he said, the great Tom Friedman of "The New
York Times."

He defended Hagel today from charges he was anti-Israel. He wrote -- quote
-- "I am certain that the vast majority of U.S. senators and policy-makers
quietly believe exactly what Hagel believes on Israel, that it is
surrounded by more implacable enemies than ever and needs and deserves
America`s backing. But, at the same time, this Israeli government is so
spoiled and has shifted so far to the right, that it makes no effort to
take U.S. interest into account by slowing itself, isolating settlement

And, Jim Frederick, I agree with that. I think when Netanyahu moved and
closed the circle around east Jerusalem, cutting off any chance of a united
West Bank government, he basically took a step that was completely in the
face of U.S. policy going back to W. -- George W. Bush.

JIM FREDERICK, TIME MAGAZINE: Yes, that`s true. But I mean, I think one
of the things to be keep in mind is this pre-nomination process seems to
have gotten completely out of control.


FREDERICK: Where Congress has almost entirely too much to say in who the
presumptive nominees that any president offers forth. I mean, over history
only 20 cabinet nominees have been knocked back, seven have been rejected
and 13 have withdrawn those names. Seven of those have happened under the
past three administrations.

So I think there`s something wrong with this whole process where a
presumptive nominee is litigated in public and the administration --

MATTHEWS: How do you avoid this? How do you do it?

FREDERICK: Well, the administration -- well, I think he`s got to make a
decision. I think Obama has either got to nominate him when he gets back
to Washington tomorrow, he`s got to move on, because we saw this happened -

MATTHEWS: Is this the vetting process that we`ve got now? In other words,
the president doesn`t decide who to pick. He gets an idea, a hunch, puts
their name out there and let`s see how it rides? But it`s twisting in the
wind. Is that a good process, too?


FREDERICK: No. It`s a particularly cruel process to everybody involved.
And we`ve used the phrase Borking.


FREDERICK: We`ve gotten around to the notion we have to do this with
Supreme Court justices because it`s a post for life. But until recently,
the president was given the leeway that he gets to run his administration
and his cabinet the way he wants. And the only reason that a nominee would
be knocked back, if there were some question of gross ethical, legal, or
moral constraints.

And we were seeing this now again and again where these -- it`s an overused
word, but these picks are being politicized to everybody`s detriment.

MATTHEWS: I know. Steve, I mean -- Steve, you know, here`s where I think
it is unfair. I mean, going back to the `90s and going after a person`s
on-the-record comments about gays, what it does is it basically -- it
doesn`t give a person any allowance for growth. We`ve all grown on the
topic of gay rights and gay marriage and same sex.

CLEMONS: That`s right.

MATTHEWS: I have grown. I`ve moved from being skeptical to being all for
it. I think I`m like so many people on that subject, especially younger
people than many of us, three guys.

And to hold a guy to what he said back at the time we were doing DOMA and
we`re doing "don`t ask, don`t tell" as national policy and say there`s
something wrong with this guy`s thinking, I think that is unfair.

CLEMONS: You know, I think, you know, that was 14 years ago. And I think
that one of the things that I`ve tried to encourage the Human Rights
Campaign and other gay rights groups to do is begin reaching out to these
people who are not normally part of the gay silo. I mean, if you`re not a
gay rights advocate, you`re not starting out there, sometimes people don`t

I happened to have talked to Chuck Hagel about discussions I had with Mike
Mullen a couple of years ago on "don`t ask, don`t tell".


CLEMONS: And I wrote about that conversation with Hagel on my blog at the
time. And it`s one of the only times that someone that actually in a
journalistic way had encountered and talked to Hagel. But his comments
about James Hormel who is a great leader and I think Hagel has incredible
regret for those comments he made 14 years ago, haven`t been sought. And
so, I told Human Rights Campaign, invite Hagel to speak at a dinner, you
know, put him record and reach out to him --


MATTHEWS: We always get -- I get into this. Everybody knows I get into
this. You say something the wrong way.


MATTHES: He referred to them as aggressively homosexual or something like
that. What he meant was he was a gay rights advocate. It wasn`t in his
personal life, you know, the aggressive term there just jump out of you,
what`s this guy`s story? What`s he accused the guy?

All he was accused the guy of is believing deeply in the rights of people
like him, born like him, to have the same rights as other people. That`s
what the aggressive line meant. Yes?

CLEMONS: I think that Hagel at the time said that he wasn`t sure that
someone of that aggressive homosexuality should represent the United States
of America. So I think it was a more serious statement, actually, than
just saying he was aggressively homosexual.

MATTHEWS: Well, what do you think he meant? What -- yes, he meant in
terms of rights. He meant in terms of rights.

CLEMONS: He was the first gay -- out gay ambassador of the United States.
There may have been many other gay ambassadors, but we -- they were not out
at the time. I think he was basically raising -- you know, look, I was in
Chuck Hagel`s office years ago and there was a picture of Hagel standing
next to doing bear hugs with George Bush and John McCain, with Bush wrote a
note on it saying, who`s the thorn and who are the roses?

And this guy was deep into the heart of GOP territory. And so, his
comments back then don`t surprise me at all. He`s not there today, and I
think people need to understand what an independent-minded man he is to
have left that kind of close relationship with McCain which people aren`t
remembering and also George W. Bush and how close he was to the heart of,
you know, GOP biases about these issues at this time.

That`s why I think his independent track and walk today has been important
and I think so misunderstood.

MATTHEWS: Thanks for reminding us, that`s also the opposition to same-sex
marriage and gay rights generally is still under the platform as we speak.

And, by the way, Ambassador Hormel was, in fact, made an ambassador from
the United States in representing the president during a recess
appointment. So that got through.

Anyway, thank you so much, Steve, for enlightening this, so many points.

Jim Frederick, thanks for joining us tonight.


MATTHEWS: Up next, an attempted coup, if you will, is the latest antic
among Tea Party Republican to derail a movement that seems to be perhaps
setting off the tracks, although I think they still have a lot of
influence. Look at the cliff. Why are we going over it? The Tea Party
will not act affirmatively to keep the government going.

This is HARDBALL, the place for politics.


MATTHEWS: Still no word on who may inherit Senator John Kerry`s Senate
seat now that he`s been nominated for secretary of state. But we know who
won`t take the senator`s place. Ted Kennedy Jr. says he won`t run for the
Massachusetts seat because he considers Connecticut his home.

And it looks like actor and director Ben Affleck is sticking to life in
Hollywood instead of heading to Washington. The star of "Argo", a great
movie, says that he, quote, "loves Massachusetts and our political process,
but I`m not running for office."

We`ll be right back.


MATTHEWS: Welcome back to HARDBALL.

The Tea Party movement, if you will, call it a movement, has given plenty
of material since they got started in 2009. But sheer drama, this anecdote
about an attempted with the national Tea Party organization FreedomWorks
takes the prize.

In today`s "Washington Post," Amy Gardner reports on the power grab.
Quote, "Richard K. Armey, the group`s chairman and a former House majority
leader, walked into the group`s Capitol Hill offices with his wife, Susan,
and an aide holstering a handgun at his waist. The aim was to seize
control of the group and expel Armey`s enemies. The gun-wielding assistant
escorted FreedomWorks` top two employees off the premises while Armey
suspended several others who broke down in sobs at the news. The coup
lasted all of six days."

What does people like this at this main Tea Party organization mean for the
future of the movement itself?

David Corn is Washington bureau chief for "Mother Jones" magazine, and an
MSNBC political analyst. He`s also reported on the FreedomWorks story,
adding that an internal investigation is underway.

Joan Walsh, of course, is editor-at-large for "Salon" and an MSNBC
political analyst.

This is fascinating stuff.


MATTHEWS: None of the three of us are real insiders when it comes to the
Tea Party.

CORN: Right.

MATTHEWS: But let`s talk about what`s going on inside? You start with
what you`ve got. Dick Armey, I`ve known forever.

CORN: Yes.

MATTHEWS: He`s a very attractive guy in his sort of off the wall way, very
different. He`s very, what you call, I think really rich and eccentric.
If he was rich, you`d say eccentric. There he is.

CORN: Yes.

MATTHEWS: And the other guy is on here all of the time.

CORN: Matt Kibbe.

MATTHEWS: Matt Kibbe seems like his own guy. Who`s the good guy? Who`s
the bad guy in this fight?

CORN: I think they should say I am. But it`s become very bitter. And
I`ve been reporting on this --

MATTHEWS: But coming in with a gun, with that armed guard and then telling
everybody to get out.

CORN: Well, what`s happened is that story obviously came about because
people favorable to Kibbe wanted that out and wanted to make Dick Armey
look like a complete madman. But "The Post" then report who the gunman
was, I just did about an hour, shortly before coming on the show here, I
spoke to Dick Armey and a spoke to the guy with the gun. He`s a former
Capitol Hill police officer who Dick Armey has used time and time again as
a private security guy when his in Washington, the guy volunteers his

MATTHEWS: Why did he need him in that moment?

CORN: Well, what happened was they knew it was going to be a contentious

MATTHEWS: So bring a guy with a gun?

CORN: So his wife and assistant said bring Beau (ph) along just in case
the FreedomWorks guys go ballistic. The thing is Beau Singleton, who`s the
name of the guy --

MATTHEWS: What was he going to do with the gun?

CORN: He`s done private security for FreedomWorks to begin with.


CORN: So, they knew him. It wasn`t like they didn`t know who he was. And
to me, a big mystery here is why "The Washington Post" didn`t say who this
guy was. They made it sound like a guy in a hoodie brought off the street.
He was a guy who has done security at FreedomWorks and was brought in. And
it wasn`t as menacing as it sounds.

But this indicates how bad the blood between the two sides. And there is
now -- people aligned with Dick Armey --

MATTHEWS: What`s the issue between -- the people on the left and the
middle now don`t understand the internals of the whole Tea Party movement.
What`s the riff here between right and left, right center, far right?

CORN: Kibbe says that Dick Armey wanted to make this a conventional
Republican establishment organization. Dick Armey says no -- Matt Kibbe
and others misusing resources and were basically enriching themselves.

So each side has a completely different narrative. Now, there`s a legal


MATTHEWS: Joan, jump in there. Is it the right versus far right? Or what
is it? Is it about money?

JOAN WALSH, SALON.COM: It`s the right versus the far right. They`re all a
bunch of grifters. I love you and David to death, but you`re both being
way too nice to Dick Armey. First of all --

MATTHEWS: They`re both -- wait a minute. You`re calling him a grifter?

WALSH: Yes, I am. He walked away with --

MATTHEWS: Meaning he`s stealing money?

WALSH: He walked away with -- grifting isn`t stealing, necessarily. He
walked away with $8 million and he`s mad at Matt Kibbe?


MATTHEWS: But that was the negotiation he got (INAUDIBLE) for. You can`t
call a guy a grifter when they say we`ll give you $8 million to get out of
here. That`s an offer.

WALSH: Yes, you can. You absolutely can.

And, David, for you to be saying it`s not a big deal that he walked in with
a guy with a gun because they supposedly knew the guy, I mean, they`re all
crazy, a pox on all of their houses. Come on, you guys.

CORN: Joan --

MATTHEWS: Are we reflecting the right wing argument here? Are you just
doing it right now, saying that both of us have gone moderate because I`m
not ready to assassinate the guy and calling him a crook, because I`ve got
a golden parachute?

WALSH: I`m not calling --

CORN: All I`m saying is the guy with the gun was a security guy who`s been
in and out of FreedomWorks a lot and it wasn`t a big mystery that he was
there. That`s all I`m saying.

WALSH: Well, he scared some people. Apparently, he scared some people
according to the post.

CORN: Well, maybe, but maybe they --


WALSH: And I once sat here while Dick Armey told he was glad he couldn`t
be married to me. He`s a grifter.

CORN: Well, OK, so everybody had a dog --

WALSH: He`s not an attractive or decent -- well, I don`t have a dog in the
fight. I came on TV to talk about politics and I was insulted. I think
he`s a jerk. I think his wife came with him and she`s a big jerk. And I`d
say a pox on all their houses. I`m glad they`re shooting at each other and
not at the rest of the America.

MATTHEWS: That`s why I like you, Joan. The truth. The truth is the
power. By the way, I`m only saying I don`t think he`s a crook. I`m not
defending him like you try to make it --


CORN: The big point is, and Joan is right about this, that FreedomWorks is
very important to the Tea Party --

MATTHEWS: Well, we want Matt Kibbe back here. I want them both back.


CORN: -- if the group collapses, it`s bad for the Tea Party. It`s good
for those who don`t like the Tea Party.

MATTHEWS: I just want them to get out of the way of government and let
government work. That`s my number one concern.

WALSH: We all agree on that.

MATTHEWS: Joan, happy New Year. I mean it.

WALSH: Happy New Year, Chris.

MATTHEWS: That`s fantastic (INAUDIBLE). David Corn, you two are my
favorites. I don`t want to get everybody mad at me, but maybe you`re among
my favorites.

When we return, let me finish with who is really watching the Tea Party.

You`re watching HARDBALL, the place for politics.


MATTHEWS: Let`s end with this tonight:

If you`re a member of Congress and a member of the Tea Party, who is your
boss? Is it John Boehner, the speaker of the House? Was it Mitt Romney?

Don`t bet on it. The real boss of every Tea Party-backed politician is a
man or a woman in the back row of the next Tea Party meeting -- the angry
one who stands up and scolds him. You sold us out, you raised taxes, you
betrayed, you`ve turned on, you`re one of them.

It`s that angry voice rising up from the back of the room that haunts the
Tea Party-backed Republican now deciding where he or she wants to be
midnight this New Year`s Eve. Do they want to be the person who voted with
the party leadership? Or, worse yet, the Democratic president? Or do they
want to vote against all of that and stayed true to the purity of the Tea
Party dogma: no taxes, no deals, no compromises, no nothing, period?

So, this is the wall that those of the Tea Party have raised up. The wall
beyond which the people they`ve elected are now captured. They can`t vote
for what they campaigned against, and what they campaigned against was
spending money on government, because that is what taxes are. Got it?

And that`s HARDBALL for now. Thanks for being with us.

"POLITICS NATION" with Al Sharpton starts right now.


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