updated 1/3/2013 5:05:37 PM ET 2013-01-03T22:05:37

HARDBALL
January 2, 2013

Guests: Jon Runyan, Joe Crowley, Lauren Ashburn, Stephen Moore, Jim Moran

MICHAEL SMERCONISH, GUEST HOST: Fiscal cliff hangover.

Let`s play HARDBALL.

Good evening. I`m Michael Smerconish, in for Chris Matthews.

Leading off tonight: Did anyone really win in the fiscal cliff standoff?
On one hand, the deal reached by Congress marks the end of the Reagan
revolution. After all, Republicans voted to raise taxes for the first time
in decades.

On the other hand, the deal could be seen as a big victory for George W.
Bush, whose signature tax cuts are now permanent for the vast majority of
Americans. The winners and losers at the top of the show tonight.

And what about progressives? Some are upset with the deal. They say
President Obama gave too much away, that he should have used his reelection
victory to hammer his Republican opponents. We`ll get a critique from
stage left.

Also, the one guy you don`t want to be today is House Speaker John Boehner.
He`s under fire from both Democrats and Republicans for not holding a vote
to help the victims of superstorm Sandy. New Jersey governor Chris
Christie said that Boehner and House Republicans are to blame for the fact
that people are still suffering.

Plus, Secretary of State Hillary Clinton is expected to make a full
recovery after suffering a blood clot near her brain. So much for her
critics on the far right, who suggested she was faking being sick to avoid
testifying about Benghazi.

And "Let Me Finish" with the reason why it`s so hard to avoid a fiscal
cliff.

We begin with whether anyone really won in the fiscal cliff standoff.
Howard Fineman is the editorial director for the Huffington Post Media
Group. Stephen Moore is with "The Wall Street Journal."

Gentlemen, let`s take a look at who came out the winner on this fight. On
the right, there`s some significant disagreement. Here`s what "Weekly
Standard" editor Bill Kristol wrote just before the House vote. Quote,
"Politically, Republicans are escaping with a better outcome than they
might have expected, and President Obama has gotten relatively little at
his moment of greatest strength."

But then there`s conservative commentator Charles Krauthammer. He had a
very different take. Let`s watch.

(BEGIN VIDEO CLIP)

CHARLES KRAUTHAMMER, FOX CONTRIBUTOR: There are a lot of conservative in
the caucus, the Republican caucus in the House, who hate the bill, and for
good reason. I mean, this is a complete surrender on everything.

(END VIDEO CLIP)

SMERCONISH: So that`s Charles Krauthammer. And I guess I want to go to
you, Howard Fineman, and say, Besides W., whose epitaph I guess now is
going to be linked with tax cuts, who won this thing?

HOWARD FINEMAN, HUFFINGTON POST MEDIA GROUP, MSNBC POLITICAL ANALYST:
Well, I agree with the basic premise that it was kind of a push all the way
around.

First of all, let me say that as far as the average working person is
concerned, this really wasn`t a victory at all. The payroll taxes go back
up. And this really wasn`t a job-creating bill of any kind. So that
should be said.

So what we`re really talking about here, Michael, is politics, who won
politically inside the Beltway. And I think you have to say that the
president came out marginally ahead.

First of all, chaos would have been worse. And even though he could have
tried to blame Congress, he`s the president. And in our system, the
president is where the buck stops politically.

If he couldn`t have gotten a bipartisan deal -- and this was a bipartisan
deal in the end -- then, again, the questions would have arisen. You came
here saying you could be bipartisan or reach bipartisanship, you could
break gridlock, you could change the tone in Washington. You just got re-
elected by 50, 51 percent, and you couldn`t do it.

So on that basis, in terms of that political disasters avoided, I think you
have to say the president won. The stock market went up 300 points today.
So I give him -- I give it to him on points.

SMERCONISH: Stephen, are we all losers, where a self-imposed landmine is
relieved only by a decision to increase taxes on the upper 2 percent? In
other words, all of that systemic change, all of those Simpson-Bowles-like
notions, have at least temporarily fallen by the wayside.

STEPHEN MOORE, "WALL STREET JOURNAL": Yes, I agree with that. I think,
look, for the economy, this was a disaster. I mean, raising capital gains
and dividend taxes and small business taxes at a time when you got 20
million people unemployed makes no sense.

In fact, the president gave a press conference last night where he said,
you know, what we need now in the future is more investment. And we just
had this giant increase -- tax increase on investment.

But I think the Democrats, who are kind of thumping their chests now and
saying, We won, have to realize that tax increases are done. You know,
this is it. There aren`t going to be any more tax increases from this --
certainly from this House of Representatives.

And that means that you got a real question of where the revenues are going
to come from to fund all of the government spending that President Obama
wants to do because the truth is, it`s still -- it`s axiomatic but it`s
still true that most of the income in this country is in the hands of the
great middle class.

SMERCONISH: The way that you just voiced that makes -- lends credence to
the view that this is a tax increase, at least for some. And it brings
this to mind. Anti-tax guru Grover Norquist gave his blessing to the deal
and justified it by saying Republicans didn`t technically raise taxes,
since the Bush tax cuts expired on January the 1st.

He was on with our own Andrea Mitchell today. Take a look at what he had
to say.

(BEGIN VIDEO CLIP)

GROVER NORQUIST, AMERICANS FOR TAX REFORM: No Republican voted for a tax
increase. What happened was Obama had the sword of Damocles over the heads
of the American people with a $5 trillion tax increase over the next decade
that would happen automatically.

The Republicans are quite clear. They want the tax cuts extended for
everyone. The president insisted on taking them away from some people.
That`ll hurt the economy. He got his tax increase, but he can`t claim
Republican fingerprints on his tax increase.

ANDREA MITCHELL, HOST, "ANDREA MITCHELL REPORTS": Well, wait a second. I
mean, we`re not living in the "Alice in Wonderland" world here. There is a
tax increase for wealthier Americans. It`s literally a tax increase.

NORQUIST: Well, first of all...

MITCHELL: Rates are up.

NORQUIST: ... what happened yesterday was that all the tax rates went up,
and then the Republicans and the Congress together took them down for some
people, not for everybody.

(END VIDEO CLIP)

SMERCONISH: Stephen, does that pass the smell test? If I were to run
against a Republican who voted for whatever it is they just voted on, and I
said in 2014, My opponent voted for a tax increase, would I not be
literally correct?

MOORE: You know, there are a lot of conservatives that are grousing today,
a lot of them saying, you know, Republicans should have held out and tried
to get a better deal, try to get, you know, fewer -- even fewer Americans
affected by this tax increase. It is a tax increase.

But you know, the question I would pose to you two is, I mean, what else
could the Republicans do? I mean, if we went over the cliff, the stock
market probably would have gone down another 300 or 400 points.
Republicans would have been blamed for that.

They were playing a lousy hand to begin with. And I guess my view is this
may have been close to the best outcome that Republicans could have gotten,
given the fact the president won the election and all the taxes were going
up.

SMERCONISH: Well, Howard, let me talk to you about the dissension now on
the right. Take a look at what conservative blogger Erick Erickson wrote
about the Republican leadership in Washington. Quote, "The Republican
establishment in Washington, D.C., should be burned to the ground and salt
spread on the remains."

(LAUGHTER)

SMERCONISH: "Republicans who saw Mitch McConnell and John Boehner destroy
the last plank of the Republican Party are going to need to look elsewhere
for a savior for their party. Boehner and McConnell have declared they
will survive. Their party? They don`t really care."

Howard Fineman, what`s to come for the GOP?

FINEMAN: Well, I wish -- I wish that Erick would be more forthright and
candid in his views.

(LAUGHTER)

SMERCONISH: Right!

FINEMAN: He might be able to get a position on "The Wall Street Journal"
editorial page.

I -- look, I -- I think there are two types of people who call themselves
nominally Republicans. There is the McConnell/Boehner type. They`re a
little older. They`re a little more establishment. They`re a little more
used to occasionally making deals. They actually like to legislate. They
think legislating is somehow a good idea.

Most of the Tea Party people, most of the people that Erick was speaking
for there, they`re not here to legislate. They`re here to remonstrate.
They`re here to make a point. They`re here as outsiders who intend to
remain outsiders and put as many sticks in the spokes of government as they
can.

That is consistent with their philosophy. That`s what they want to do.
That`s the sentiment that Erick`s expressing there. And there is a real
conflict.

The interesting thing to see is whether -- and I think it`s probably
correct, that, somehow, despite all the abuse, even though he tries to
screw things up, John Boehner will probably be reelected speaker, which in
a way for the Tea Party people is good because they want to keep railing
against the insiders.

If they put one of their own in as speaker, then that person will have to
make deals, and they don`t want to do it.

SMERCONISH: Stephen...

(CROSSTALK)

MOORE: You can`t have it both ways here!

SMERCONISH: If I might ask...

MOORE: Yes? Go ahead.

SMERCONISH: ... which side would you rather be going forward? Because
you`ve already suggested that the president has now surrendered his
leverage, leverage I take it that you mean coming out of the campaign, and
also the fact that the opposition here faced by the GOP, the prospect,
better stated, was that everybody`s taxes could go up, OK? So the
president has played his hand. Who do you think now has the leverage going
forward?

MOORE: Look, I really do think Republicans -- I don`t know if they have
the leverage, but they`re on much higher ground now than they were three
days ago because they will be able to say with great credibility over the
next year -- and obviously, this budget debate is just starting, it`s not
ending -- that the president got his pound of flesh out of rich people. He
got his tax increase on the rich. And now we`re going to talk about the
spending side of the equation.

And I think that`s the -- that, obviously, the next big fight will be over
the debt ceiling. I don`t know if Republicans will play that card or not.
But I think the president`s going to be hard pressed to argue for more and
more taxes when he just -- he`s had two giant tax increases. He had the
"Obama care" tax increase that starts today, and then he has this tax
increase on the fiscal cliff deal. So I think the Democrats are not in as
strong a position as they seem to think they are.

SMERCONISH: Howard Fineman, quite a remarkable exchange, according to
Politico -- Politico this morning had a dramatic account of an exchange
last week in the White House between John Boehner and Harry Reid. This
happened before the deal had been reached, I should point out.

According to Politico, Boehner had strong words for the Senate majority
leader. Quote, "`Go F yourself`" -- Boehner -- "he sniped as he pointed
his finger at Reid, according to multiple sources. Reid, a bit startled,
replied, `What are you talking about?` And Boehner then repeated it, `Go F
yourself.`"

They didn`t cut the deal. In the end, you know, it was Vice President
Biden and it was the Senate minority leader, Mitch McConnell.

What does this say about the inability to work together?

FINEMAN: Well, I also like the fact, according to that story, that Boehner
then went around bragging to everybody that he`d said that to Harry Reid.
I think both Boehner and Reid were at the bottom of the food chain here of
the decision makers.

And they were kind of fighting at the bottom of the chain while Mitch
McConnell and Joe Biden were putting together the deal. I think both
Boehner, in a way, and Reid, in a way, were powerless in this situation for
-- for obvious reasons.

And they -- the White House -- I was told by David Plouffe a month ago, the
White House strategist, that he much preferred to work with McConnell than
with Boehner. What Plouffe said is McConnell knows how to play chess,
Boehner doesn`t.

SMERCONISH: Well, he got his wish.

FINEMAN: (INAUDIBLE) he got his wish.

SMERCONISH: Thank you, Howard Fineman...

(CROSSTALK)

MOORE: By the way, that`s also true on the -- on the Republican side.
When I talk to the Republican senators, they said just the same thing about
Harry Reid. They couldn`t deal with him. As you know...

(CROSSTALK)

MOORE: That`s why Biden was brought into the picture.

SMERCONISH: Right.

FINEMAN: Right.

MOORE: But you know, though, what -- I don`t know if this story is true.
I don`t know if John Boehner really said what`s he`s -- what`s been
reported by Politico. But if it is true, what there`s no question about is
the enmity and the animosity between these two sides is greater than I`ve
seen in the 30 years I`ve been in Washington.

SMERCONISH: Such...

MOORE: I mean, these...

SMERCONISH: Such a shame.

MOORE: These two guys really hate each other right now.

SMERCONISH: Stephen Moore, thank you. Howard Fineman, as always, thank
you very much.

FINEMAN: Thanks, Mike.

MOORE: Thank you.

SMERCONISH: Coming up, why some of the left are unhappy with the fiscal
cliff deal. We`re going to talk to one of the Democrats who voted against
the deal.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

SMERCONISH: The two men whose names have become synonymous with fixing the
country`s fiscal problems are calling the fiscal cliff deal a missed
opportunity. Alan Simpson and Erskine Bowles, the co-chairs of the
president`s commission on deficit reduction, released a statement, saying,
in part, "The deal approved today is truly a missed opportunity to do
something big to reduce our long-term fiscal problems. But it`s a small
step forward in our efforts to reduce the federal deficit. Washington
missed this magic moment to do something big to reduce the deficit, reform
our tax code and fix our entitlement programs."

We`ll be right back.

(COMMERCIAL BREAK)

SMERCONISH: Welcome back to HARDBALL. Columnist Charles Krauthammer
called this week`s bipartisan plan a complete rout by the Democrats, but
it`s not just conservatives displeased with this new deal. On Monday
night, as the contours of the agreement were coming into focus, the
progressive group Moveon trashed the deal. And AFL-CIO head Richard Trumka
tweeted, "We can`t set the stage for destabilizing hostage-taking from Rs
in the form of another debt ceiling crisis and another sequester crisis."

Last night, a few House Democrats voiced dissatisfaction with the
concessions made and worry about their future bargaining leverage when it
comes time to debate the debt limit and sequester again.

(BEGIN VIDEO CLIP)

REP. EARL BLUMENAUER (D), OREGON: This proposal represents the absolute
least we could have done under these circumstances and tragically
institutionalizes for the next Congress the madness around here of short-
term frenzy around self-inflected deadlines.

REP. JIM MORAN (D), VIRGINIA: We`re going to look back on this night and
regret it.

(END VIDEO CLIP)

SMERCONISH: One of the Democrats who voted no is Virginia congressman Jim
Moran, who`s with me now. Congressman, thank you for being here. Charles
Krauthammer said on the right said this was a rout for the Ds. You
apparently disagree.

MORAN: Yes. Normally, when the far right and the far left are in
agreement, the middle makes the most sense. But not in this case. I think
this is a very bad long-term deal for Democratic priorities, and thus for
the president, because what we did was to take $3.9 trillion off the table
permanently and set up three more fiscal cliffs over the next three months
-- the sequester, the debt ceiling, and then the expiration of the
appropriations bills, which will happen in March.

And what it does is to say we will never bring in more than 15 percent of
GDP. But we have never had a robust economy when federal spending wasn`t
about 20 percent of GDP because you need that investment in research and
innovation and education and skills training, and so on.

And what`s going to happen is that interest on the debt is going to be
greater than any of the programs that provide that kind of seed corn
investment in our children`s future.

So that`s what we did last night. We concretized revenue at an
extraordinarily low rate, a rate that you`d have to go back to before
Medicare, Social Security, before the Baby Boom generation came into
adulthood, and before the rest of the world started growing competitive to
the U.S. economy.

SMERCONISH: Congressman...

MORAN: Yes. Go ahead.

SMERCONISH: ... last night, President Obama warned Republicans not to try
to turn raising the debt ceiling...

MORAN: Yes.

SMERCONISH: ... into a fight for cutting spending. Take a look at what he
had to say.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: While I will negotiate over
many things, I will not have another debate with this Congress over whether
or not they should pay the bills that they have already racked up through
the laws that they passed. Let me repeat. We can`t not pay bills that
we`ve already incurred.

(END VIDEO CLIP)

SMERCONISH: What leverage does the White House have left, if they`ve
already now played the card on the precipice of the fiscal cliff with the
election result at their back? Why now, going forward, would they have the
leverage to entertain some type of a grand bargain, or to not have to
negotiate over the fiscal -- the debt ceiling limitation?

MORAN: The answer is none, Michael. When I heard the president said that,
I thought, Good luck with that.

SMERCONISH: Right.

MORAN: You know, the one thing that this Republican-dominated Congress has
proven over the last four years that it can do is nothing.

But we had two points of leverage. They had to deal with the sequester and
they had to deal with things like the estate tax and upper -- and taxes on
the wealthiest. So we gave away those two face cards, if you will.

I don`t think we got anything in return that`s going to matter over the
long term because we`ve set ourselves up for a situation where the only
questions being asked is what programs are we going to cut, and how deeply.

I don`t think that the majority in the House leadership really cares that
much about the full faith and -- I shouldn`t say the leadership, but in the
majority of House Republicans -- care about jeopardizing the full faith and
credit of the U.S. government with the debt ceiling. Some of them were
almost giddy when we went into the last crisis last year.

and how deeply. I don`t think that the majority in the House leadership
really cares that much about the full faith and -- or I shouldn`t say the
leadership, but in the majority of House Republicans care about
jeopardizing the full faith and credit of the U.S. government with the debt
ceiling.

Some of them were almost giddy when we went into the crisis last year. And
certainly they have no intention of postponing this so-called sequester,
which is going to cause real damage to federal programs and the federal
work force.

So I think the Democrats are in for a real tough time without much leverage
in these negotiations. That`s my concern.

SMERCONISH: Understood.

MORAN: I want him to have a legacy that he can be proud of and that is
going to enable us to provide a better life for our children and
grandchildren than we inherited from our parents. And I doubt that that
can be done with the diminished resources that we voted for last night.

SMERCONISH: Congressman Jim Moran, thank you for your time, sir. We
appreciate it.

MORAN: Sure, Mike.

SMERCONISH: David Corn is Washington bureau chief for "Mother Jones," as
well as an MSNBC political analyst.

David, good to see you again. Happy new year.

Could John Boehner and President Obama, could the president and the House
speaker have cut a deal between the two of them? I ask you that question
because there`s a perception out there that I happen to share that those
two men in the room could probably cut a deal. Whether they could keep
their respective constituencies in order for that deal is a separate
question.

DAVID CORN, MSNBC POLITICAL ANALYST: Well, I think it`s been pretty clear,
particularly if you look over at the last year-and-a-half and go back to
the first debt ceiling fight, that the president is far more able to get
the votes he needs for any sort of grand bargaining, big compromise from
his side than John Boehner is.

John Boehner, going back a year-and-a-half, couldn`t get his own people to
support a budget plan he put forward. And this time around, they didn`t
support plan B. He couldn`t even bring it up for a vote. And last night,
he didn`t even bother speaking in favor of the bill which he did support,
while the rest of his leadership was against it.

So I think John Boehner is sort of speaker in name only. Call him a SPINO
instead of RINO. And he just can`t -- he can`t speak for his caucus, so he
can`t cut a deal, which is why the White House -- Biden did this, but Biden
did this with speaking for the president and ended up cutting a deal with
Mitch McConnell.

SMERCONISH: What I guess I`m suggesting is I don`t know that it`s
necessarily Speaker Boehner`s shortcoming. I don`t know that anyone could
negotiate on behalf of the Republicans in the House and deliver the votes.

CORN: Well, I think -- yes, but, I mean, I`m not saying -- yes, well, he`s
-- Speaker Boehner is obviously not Superman. And he`s been very weak.

But the way he sort of has viewed his role as a leader here has been really
to kowtow to the Tea Party folks and has not been able to find a way to
persuade them to follow him. Now, maybe that -- they -- that`s an
impossible task and a bridge too far.

SMERCONISH: You heard from -- you heard a moment ago Congressman Moran,
who voted against this last night -- and I sense frustration in his voice,
which I share, because this Band-Aid that was applied doesn`t seem to
provide any of the systemic change that`s necessary to put us on a long-
term path. Can you give a more optimistic take?

CORN: Well, I compare this to the 2010 tax deal, in which -- where
President Barack Obama essentially got a second stimulus of $240 billion or
so in return for giving on the Bush tax break on the wealthy.

I think that was a better deal. He had more to show for it. This time
around, I think he -- he basically -- the big win here is that he did get a
lot of Republicans to support his basic conception that taxes have to go up
on the rich in order for things to be fair and in order for things to be
fair and in order to generate more revenue, so we can deal with the deficit
and continue investments in things that we need to invest in, education,
and infrastructure, innovation, and the like.

He didn`t get enough revenue with this deal. Still, he gave on that, you
know, that $200,000, $250,000 limit, went up to $400,000, $450,000.

SMERCONISH: Well, I guess my point is it`s going to be harder for him to
get more revenue without spending cuts in the next go-round because of
this.

David, I`m out of time, but I appreciate you being here, as always.

CORN: OK. Thank you. Sure thing, Michael.

SMERCONISH: Up next -- thank you.

New year, new laws. While the rest of us were celebrating 2013, some wacky
new laws have gone into effect around the country. Stick around for the
"Sideshow."

And if you want to follow me on Twitter, you just need to figure out how to
spell Smerconish.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

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

When the clock struck midnight on December 31, new laws went into effect in
several states. Some of them seem they were yanked from The Onion. Here
goes.

If you live in Kentucky and happen to be playing host to a wild hog, say
hello to your permanent household pet. That`s right. It`s now against the
law in Kentucky to release a feral hog or wild hostage, as they`re known,
back into the wild.

And to Kansas. The whole concept of a crazy cat lady just became obsolete.
No more than four cats per household are allowed in the state of Kansas.
North Carolina is cracking down on slippery fingers, literally. Stealing
unused cooking oil is now classified as a misdemeanor.

Finally, driverless vehicles got the green light to hit the road in
California. But don`t get too excited. Self-driving cars are still in the
testing phase and someone must be in the passenger seat.

Next: from high school to the House. House Republicans were by no means
united in favor of the fiscal cliff deal. Speaker Boehner wanted it
passed, but Majority Leader Eric Cantor was against it.

It turns out the tension goes a lot farther back for two other members of
the caucus. It starts with Darrell Issa, who voted against the fiscal
cliff.

(BEGIN VIDEO CLIP, CNN)

REP. DARRELL ISSA (R-CA), OVERSIGHT AND GOVERNMENT REFORM COMMITTEE
CHAIRMAN: I`m with Eric Cantor. I can`t vote for it in its current form.

The Senate, the president and the vice president failed to meet their
obligation, their own stated obligation which was to bring us a balanced
bill, one that had tax adjustment, yes, but also had spending cuts. This
one fails at that and fails badly.

(END VIDEO CLIP)

SMERCONISH: OK. So enter Ohio Republican Steve LaTourette, who wasn`t
jazzed about the deal, but took the plunge and voted yes.

(BEGIN VIDEO CLIP, CNN)

REP. STEVEN LATOURETTE (R), OHIO: I went to the same high school as
Congressman Issa, Cleveland Heights High School, and we haven`t agreed on
much since.

WOLF BLITZER, CNN ANCHOR: Did you agree in high school? Were you there at
the same time?

LATOURETTE: Well, I didn`t see him a lot in class, so I don`t know.

(LAUGHTER)

(END VIDEO CLIP)

SMERCONISH: Somehow, I doubt they will show up together at the reunion.

One point of agreement, though, both congressmen suggested that New Year`s
Eve was partially to blame for what the Senate put together.

(BEGIN VIDEO CLIP)

LATOURETTE: I think it`s a little unreasonable for Senator Reid to say
that something they produced on New Year`s Eve produce by a bunch of sleep-
deprived octogenarians is what we should adopt within 48 hours.

ISSA: I can`t account for what happens after midnight and all of that
partying and revelry and drinking that goes on New Year`s Eve at 2:00 in
the morning.

BLITZER: Are you suggesting that Mitch McConnell and your fellow
Republicans in the Senate, they were a little bit drunk when they voted on
this last night?

ISSA: Of course not. I was having a little bit of fun with you, Wolf.

The fact is that it was after midnight. It was a piece of legislation that
was intended to be passable, not necessarily to be right.

(END VIDEO CLIP)

SMERCONISH: Also, the fiscal cliff taking cues from "Les Mis," the classic
book that became a Broadway smash that has become a hit movie.

This might be the first viral political meme of 2013, "Les Mis" lines
transposed on Washington. Politics, you could say, meets Broadway.

From the gridlock stage, "I had a dream my life would be so different from
this hell I`m living."

Or John Boehner`s, "Crying at all is not allowed, not on my castle on a
cloud."

And when the bill passed in the House, it`s Eric Cantor with, "What a life
I might have known," and the final vote tally.

Up next: Why has it taken so long for House Speaker John Boehner to hold a
vote on an aid package to help the victims of Hurricane Sandy?

That`s ahead. You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

AMANDA DRURY, CNBC CORRESPONDENT: I`m Mandy Drury with your CNBC "Market
Wrap."

Well, hello, 2013. On the first day of trade this year, the Dow soared
more than 300 points. The S&P jumped by the 36 and the Nasdaq climbed by
93. The jump-start came from Washington, where last night`s 11th-hour
fiscal cliff deal in the House gave investors renewed confidence. Among
big winners, well, Apple jumped nearly 3 percent amid news that the company
is testing a new iPhone and the next version of its iOS software.

That`s it from CNBC for now. We`re first in business worldwide -- now back
over to HARDBALL.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE (R), NEW JERSEY: There`s only one group to blame for
the continued suffering of these innocent victims, the House majority and
their speaker, John Boehner. We respond to innocent victims of natural
disasters not as Republicans or Democrats, but as Americans. Or at least
we did, until last night.

Last night, the House of Representatives failed that most basic test of
public service. And they did so with callous indifference to the suffering
of the people of my state.

(END VIDEO CLIP)

SMERCONISH: Welcome back to HARDBALL.

When a politician, even one as outspoken as Chris Christie, the Republican
governor of New Jersey, trashes his own party like that, it`s news. In
fact, the failure of the House to vote on a relief package for Hurricane
Sandy is one of the few areas on which Republicans and Democrats can agree.

Here`s what it sounded like on the floor this morning.

(BEGIN VIDEO CLIP)

REP. PETER KING (R-NY), HOMELAND SECURITY COMMITTEE CHAIRMAN: We cannot
believe that this cruel knife in the back was delivered to our region.

REP. FRANK LOBIONDO (R), NEW JERSEY: An emergency and disaster means
emergency and disaster.

REP. MICHAEL GRIMM (R), NEW YORK: I think it`s inexcusable that we did not
have this vote.

REP. JERROLD NADLER (D), NEW YORK: It`s the most disgraceful action I have
seen in this House in the 20 years I have been here.

REP. CHRIS SMITH (R), NEW JERSEY: We have been devastated. And I would
hope that the speaker will bring this to the floor as quickly as possible.

(END VIDEO CLIP)

SMERCONISH: Late this afternoon, we learned that Speaker Boehner appears
to be giving some ground. The House will vote on Friday on a $9 billion
package, a supplemental for flood insurance, followed by another vote on
the $51 billion package on January 15.

Congressman Jon Runyan is a Republican of New Jersey. He met with Speaker
Boehner this afternoon. He joins us now.

Good to see you, Congressman. What did Speaker Boehner say today?

REP. JON RUNYAN (R), NEW JERSEY: Well, he really touched on what you
really said, starting it off Friday with the relief on the flood insurance
aspect of it, and really capping it off and taking the vote I think we all
think we should have been taking this afternoon, taking that on January 15.

You know, I -- and I think what Speaker Boehner really said when he first
sat down, he goes: "I know there`s been a lot of frustration, a lot of
anger that`s been directed at me." And he goes: "I own it. I deserve it."
He goes -- I don`t know. He could -- just kind of explained it where he
didn`t feel it was the right situation or he didn`t like the vote count he
had for the fiscal bill, which I would disagree with, because, like I think
you just had the quote of Congressman Lobiondo there, saying, this is
disaster. This is disaster relief.

We`re already 66 days into this process. You know, people are suffering.
And it`s about getting them the relief they need. And it`s frustrating to
be able to sit here and be two years and at the end of the Congress come
tomorrow still making these same mistakes, dragging these things on,
instead of making the decision and moving on.

SMERCONISH: Well, and it`s also self-inflicted, because at least from the
outside looking in, you look at this and you say, of course they`re going
approve a superstorm Sandy package of relief. Why wouldn`t they?

And then to have this delay go off the clock is just a further wounding of
the party.

RUNYAN: And it is very, because it -- like you -- like you just said,
Michael, it`s self-inflicted.

And I don`t think -- I think everybody, bipartisan, bipartisan-wise, would
say, this is going to happen. Why are we delaying it? Let`s get it done.
The -- you have heard the rhetoric back and forth of the Senate bill coming
over here. And I think the -- what we have in place here in the House,
we`re actually going to clean that up, make it disaster-related, take all
the pork, take those Senate earmarks out of there, make it a clean bill,
and do what it`s intended to do is help the people, my constituents, the
residents of New Jersey, New York.

That`s what the job is. And putting this off is only going to hurt us in
the long run, because you forget about this. And, Michael, I know you know
the Delaware Valley region pretty well. The Jersey Shore is a $34 billion-
a-year industry.

SMERCONISH: Sure.

RUNYAN: And if that`s not close to up and running when it comes spring-
summertime, that`s going to take a hit to our economy in New Jersey.

SMERCONISH: Hey, Congressman, let me ask you a question, if I might, about
your governor, because of course soon Chris Christie will stand for
reelection. And here he is so straightforwardly commenting and criticizing
Speaker Boehner.

And it comes on the heels of him appearing with President Obama. I guess
my question is, within the party, does the Republican apparatus get tired
of its governor stepping out of line from the typical partisan mode?

RUNYAN: No, I think what Governor Christie brings to the table is kind of
what the American people are looking for, somebody that is going to shoot
them straight.

SMERCONISH: Right.

RUNYAN: If you have got to call names and call people to the mat and hold
people accountable, that`s what needs to be done. Accountability at the
end of the day is, I think, what everyone`s frustrated about.

It`s what I`m frustrated about. That`s why I ran. That`s why I got
involved. And it`s here every day trying to push somebody, trying to kick
somebody in the seat of the pants just to do their job and take care of
their constituents.

SMERCONISH: Got it.

Congressman Jon Runyan, thank you very much.

RUNYAN: Thank you.

SMERCONISH: Joining me now, Democratic congressman from New York, Joe
Crowley.

Congressman Crowley, is any of this rooted in a bias against the Northeast?

I ask you that because the "Associated Press" reports that New York
Congressman Peter King sees a regional bias in the Sandy aid bill
postponement. He said, quote, "Some Republicans have a double standard
when it comes to providing aid to New York and New Jersey compared with
other regions of the country suffering disasters. Somehow," he said,
"money going to New York and New Jersey is seen as corrupt."

Do you see it the same way?

REP. JOE CROWLEY (D), NEW YORK: You know, I can only speak for my own
perspective of my district, of the people that I represent, the people in
Queens and in the Bronx and New York City -- hardworking Americans, people
who get up every day, who go to work, put their kids into school, get home,
have dinner, and do that repeatedly.

They love this country. They don`t think of themselves as New Yorkers.
They think of themselves as Americans.

And when something like this happens in California or if it happens in
Texas, in Florida, in the Carolinas, or in Kansas when the tornado hits,
you know, I don`t ask -- are they really Americans or are they really
Kansans? Or they -- I hope that`s right. Or are they Californians? You
know, or are they Texans?

I don`t ask that question. I just say, what can we do to help?

SMERCONISH: Yes. Peter King noted, Congressman, that $60 billion was
appropriated within 10 days for Katrina. I think that`s part of the
predicate of him making that statement.

CROWLEY: Not to make light of it, I think it`s actually $64 billion in 10
days was allocated towards Katrina. I supported that effort as well.

SMERCONISH: Sure.

CROWLEY: I believe that when it comes to a disaster, you know, people
constantly ask, what role does government have in my life? You know, you
realize what the role of government is during a natural disaster like
Sandy.

I don`t live in the Rockaways, I don`t represent that area. But it`s where
my mother is from. I have family down there. I`ve been down to the
Rockaways. I`ve seen the devastation multiple times.

And these are people who don`t ask for anything. They pull themselves up
by their own boot straps and they get going again. But they`re suffering
right now.

And every day that we delay -- and look, I understand what Mr. Boehner was
going through yesterday. I know he had a tough vote in his conference.
That wasn`t fun.

But you know what? Neither is not having power in your House.

(CROSSTALK)

SMERCONISH: Understood. Congressman, may I ask you this? Because this is
being attributed to a scheduling snafu. Are you aware of any organized
opposition to relief for the victims of superstorm Sandy?

CROWLEY: Absolutely not. I haven`t heard of any organized effort. I
heard some of my colleagues on the Republican side say they`d like to give
a lot less than the $60.4 billion.

SMERCONISH: Right.

CROWLEY: But I haven`t heard of anything organized like that. In fact, we
thought we had the votes on Republican side to pass the amendment to make
it a $60.4 billion bill.

SMERCONISH: Got it. OK, thank you, Congressman Joe Crowley. Appreciate
your time.

CROWLEY: Thank you.

SMERCONISH: Up next, Hillary Clinton`s expected to make a full recovery
after doctors discovered a blood clot near her brain. The same might not
be true of her harshest critics who accused her of faking illness to avoid
testifying about Benghazi. That`s ahead.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

SMERCONISH: History is being made in New Hampshire where every member of
the state`s congressional delegation for the 113th Congress will be a
woman. Women won the state`s two House seats in the November election.
And they already held both Senate seats, making the Granite State the first
all-female congressional delegation in history.

And the state`s new governor is a woman. As are the statehouse speaker and
the chief justice of the state`s Supreme Court.

Overall in the United States Senate, one in five members will be a woman.
And women will make up nearly 18 percent of the new House. Both are record
highs for Washington.

We`ll be right back.

(COMMERCIAL BREAK)

SMERCONISH: We`re back.

Doctors say they`re confident Secretary of State Hillary Clinton will fully
recover from a blood clot found on Sunday between her brain and skull.
While she spent time out of the public eye recuperating from effects of a
fall last month, she endured criticism from conservative critics who
suggested before Sunday that she was faking illness to avoid questions
about the deaths of four Americans in Benghazi.

Here`s a taste of what they`ve had to say.

(BEGIN VIDEO CLIPS)

REP. ALLEN WEST, R-FLORIDA: I`m not a doctor, but it seems as though that
the secretary of state has come down with a case of Benghazi flu.

CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: Apparently, she`s suffered from
acute Benghazi allergy which causes lightheadedness when she hears the word
Benghazi.

JOHN BOLTON, FORMER U.S. AMBASSADOR TO THE U.N.: When you don`t want to go
to a meeting or a conference or an event, you have a diplomatic illness.
And this is a diplomatic illness to beat the band. I mean, I certainly
hope it`s nothing serious, but this was revealed in a way that I think was
not transparent.

KIMBERLY GUILFOYLE, FOX NEWS: This is a duck and cover, let`s be honest.
And the Clintons are great at this.

GREG GUTFELD, FOX NEWS: How could she get a concussion when she`s been
ducking everything?

(END VIDEO CLIPS)

SMERCONISH: Joan Walsh is "Salon`s" editor-at-large, as well as an MSNBC
political analyst. And Lauren Ashburn is a contributor to "The Daily
Beast".

Lauren, what explains all this twisted thought that they`re spreading?

LAUREN ASHBURN, THE DAILY BEAST: Well, they think she`s faking an
accusation is what they`re saying, I mean faking an illness. And it`s an
accusation that you would hurl at a third grader. I mean, I don`t
understand why people insist on making fun of someone who is sick. It`s
just -- it`s not human behavior that is Christian or right at all.

SMERCONISH: Once the seriousness of Secretary Clinton`s condition was
revealed this week, John Bolton was asked again whether he believes she`s
been away for health reasons. Take a look at what he had to say.

(BEGIN VIDEO CLIP)

QUESTION: Do you believe now the explanation that she`s being treated for
a blood clot in a New York City hospital? Or do you continue to believe
that there is some sort of an effort here to prevent her from having to
testify fully about what she knows about Benghazi?

BOLTON: I didn`t think that was the effort to begin with. I think that
they`re trying to walk a fine line that does not affect the potential
presidential candidacy that we expect.

(END VIDEO CLIP)

SMERCONISH: Joan Walsh, dissect what you`ve just heard in both of his
clips?

JOAN WALSH, SALON.COM: Oh my God, Michael. I`d like to help Lauren out
here because I think it`s obvious. It`s not mysterious at all, what
they`re doing.

This is kind of a continuation of Clinton derangement syndrome. It`s --
let`s say it`s birtherism with crossed with the old Clinton chronicles,
like Vince Foster was murdered.

SMERCONISH: Right.

WALSH: These wing nuts, these wing nuts, have been assailing our popular
Democratic presidents going back to Bill Clinton and now you`ve got a wing
nut trifecta. So you get to smear former President Clinton, the current
popular president, Barack Obama, and the possible future president, Hillary
Clinton. They`re like pigs in whatever.

(CROSSTALK)

SMERCONISH: Is it driven by those concerns, meaning, the concerns of the
folks you just saw in that B role about the 2016 and her prospects or just
a deep-seated hatred of Hillary, regardless of her future?

ASHBURN: I think it`s both, actually. You know, I think that they hate
her now, they`re going to hate her then. And they are afraid of her. They
don`t want to have to run against a Hillary who has been a very popular
secretary of state, a very popular senator, who has run as first lady and
no matter what your politics are, she has done a good job for the country.

And I think, while she didn`t run as well as she could have in 2008, she
would be a formidable opponent.

SMERCONISH: No doubt. And even before, we should point out, even before
Secretary Clinton suffered these injuries, Republicans were already worried
about her potential 2016 prospects. Here was Newt Gingrich on "Meet the
Press" in early December.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), FORMER PRESIDENTIAL CANDIDATE: If their competitor in
`16 is going to be Hillary Clinton supported by Bill Clinton and presumably
a relatively still popular President Barack Obama, trying to win that will
truly be the Super Bowl. And the Republican Party today is incapable of
competing at that level.

(END VIDEO CLIP)

SMERCONISH: And certainly, the Republican Party hasn`t helped himself
since Newt Gingrich said what he said, Joan Walsh.

WALSH: No, she`s a very, very formidable candidate, Michael, you and I
both know that. So there`s an element here where, you know, let`s say, the
craziness has really been on the far right. John Bolton is not a
mainstream figure in anyway -- although I guess President Bush tried to
make him one.

However, I would like to see, you know, Kathleen Parker had a great piece
in "The Washington Post" this morning, calling these people out for their
craziness. I`d like to see more mainstream Republicans do the same,
because the more this is gossiped about and talked about, the more it can
metastasize so that it`s like -- well, there, we don`t really know. We`re
not seeing that that`s what she did. But blah, blah, blah, there`s a cloud
hanging over her candidacy.

ASHBURN: You know, Joan, I think it`s a problem not just with
conservatives, but I criticize people who said about Bush 41, that he
should die a miserable death when he was in the ICU. I think this is a
culture of anger. It was on Twitter, it was all over Twitter.

(CROSSTALK)

WALSH: These people are -- I`m sorry, Lauren. I can`t agree with you.
These people are going on FOX News and saying that, did you have any
liberals going on, say, MSNBC and saying we hope -- I mean, it`s just,
like, unthinkable. I can`t even repeat something like that.

That`s the kind of false, false equivalence that so many mainstream
reporters fall into which is why we are in the mess we`re in today. People
won`t call out the far right.

SMERCONISH: Lauren, you can have the final word, go ahead.

ASHBURN: The final word I think is that we are in a culture right now,
especially a political one, driven by the media where both sides are very
nasty. And in this case in particular, I wrote a piece in "The Daily
Beast" that said, people have to stop the Hillary hating, especially when
she`s sick.

SMERCONISH: Yes, incivility is out of control.

Thank you both.

Thank you, Joan Walsh.

Thank you, Lauren Ashburn. We appreciate you being here.

When we return, the big reason it`s become so difficult for Congress to cut
a deal.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

SMERCONISH: Let me finish tonight with this question. Why was it so
difficult to avoid the fiscal cliff? Especially where in the end, we
didn`t even get a grand bargain? We`ve got a quick fix. That`s a question
I`m sure voters who have been clamoring for compromise would like answered.

Nate Silver had a partial response in a recent "FiveThirtyEight" blog post.
Silver noted that where in 1992, there were 103 members of the House who
were elected from what might be regarded as swing districts, which he
identified as those where the margin in the presidential vote was within
five percentage points. Today, Silver calculates that number at just 35.
Think about it. It means that 400 of 435 races are virtually predetermined
by party affiliations.

And as competitive districts have diminished, landslide districts where the
presidential margin deviated by at least no points from the national
result, they have roughly doubled in the same period. The point is that
members of Congress who are elected in hyper partisan districts have no
incentive to compromise. I think that`s a true explanation as far as it
goes. Gerrymandering has become a massive problem.

And add in closed primaries, nominating contests open to only party members
where the most reliable voters are ideologues and who they nominate?
Ideologically-driven candidates who are then assured election in those non-
competitive districts. The polarized media is also a factor in positions
in so far as issues are presented in black and white terms and offered in
short sound bytes.

And don`t forget about the role of money. Gone are the days when members
truly lived in Washington, D.C., moved their families with them, and
socialized with one another. Nowadays, they`re essentially at work just
Tuesday, through Thursday, with lots of recess. The rest of the time,
they`re back at home raising money to spend in reelection campaigns,
despite the near certainty that they will be reelected. No one stop
solution seems evident for this problem.

Instead, each of the elements requires its own response. But don`t wait
for our politicians to provide any answers, because one thing that our
dysfunctional system excels at is rewarding those who are dependent upon
it.

That`s HARDBALL for now. Thank you for being with us.

"POLITICS NATION" with Al Sharpton starts right now.

AL SHARPTON, MSNBC HOST: Thanks, Michael.

And thanks to you for tuning in.

Tonight`s lead: Done deal. This fiscal cliff is a big step forward in the
fight for fairness.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

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