updated 5/20/2013 3:24:59 PM ET 2013-05-20T19:24:59

HARDBALL
May 17, 2013

Guests: Rep. Dave Reichert, Rep. Sandy Levin, Thomas Pickering, John Feehery, Neera Tanden, Francis Collins

CHRIS MATTHEWS, HOST: Death and taxes.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington.

"Let Me Start" tonight with this. Call me a Charlie Rangel fan. Today, I
watched him at the hearings on the IRS mess. I heard him say everything I
believe.

It`s this. If you have a problem at a company or on a team or in a
government agency, you deal with it. You get rid of the bad apples. It`s
the one sure way, the only sure way to convince people that what they`re
seeing as bad has been removed.

Now, if you want the company or team or government agency or government
itself to look bad, just hoot and holler and say how bad things are. But
don`t fix the problem, don`t get rid of the bad apples, just let them sit
there and smell up the whole barrel. Let them stink up all the apples.

So Charlie Rangel did it right today. The Republicans have a lot to holler
about here. They`ve got their fat target. But what I`m impressed by is
the lawmaker who sees the problem, wants to actually fix it because he,
like me, believes in what government can do positively.

I`ve got two members of the House Ways and Means Committee joining us
tonight. First of all, Democrat Sandy Levin of Michigan. He`s the ranking
member on that committee on the Democratic site. And U.S. Congressman Dave
Reichert is a Republican from Washington.

I want to start with Congressman Reichert. Sir, I want you to put this in
perspective. We`re going to look at some of the tape from the meeting.
Let`s go to the tape first and then react to what we saw.

Here`s something from today`s hearing on the Ways and Means. Let`s listen.

(BEGIN VIDEO CLIP)

REP. DAVE CAMP (R-MI), WAYS AND MEANS COMMITTEE CHAIRMAN: The reality is,
this is not a personnel problem. This is a problem of the IRS being too
large, too powerful, too intrusive and too abusive of honest, hard-working
taxpayers.

REP. KEVIN BRADY (R), TEXAS: Is this still America? Is this government so
drunk on power that it would turn its full force, its full might, to harass
and intimate and threaten an average American who only wants her voice and
their voices heard?

REP. MIKE KELLY (R), PENNSYLVANIA: You get a letter from you folks, or a
phone call, it`s with terror that you look at it. And now this kind of
reconfirms that, you know what? They can do almost anything they want to
anybody they want, any time they want!

REP. TIM GRIFFIN (R), ARKANSAS: The bottom line is, for those looking,
this is an audit, and it`s helpful, but it`s the tip of the iceberg. It`s
the tip of the iceberg!

(END VIDEO CLIP)

MATTHEWS: Let me go to Congressman Reichert. Is the problem, as you see
it, the fact that we have an IRS, the fact we have an Internal Revenue
Service that collects the federal income taxes from individuals and
corporations, or the problem is you`ve got really bad culture in there
where people can look you right in the eye and say, I`m not prejudiced, I`m
not political, but they are? What is the problem?

REP. DAVE REICHERT (R), WASHINGTON: Well, I was hopeful today to hear some
straight answers from Mr. Miller. It didn`t happen. So as the viewers
watched and as the members of Congress participated in the conversation and
the exchange in answering -- in questions and answers, it became very
obvious very quickly that Mr. Miller was not there to take responsibility.

In fact, he said, Look, I -- I`m -- I don`t -- I`m not comfortable with the
word "targeted." That didn`t go on. He offered an apology. But then he
offered excuses immediately after that.

He wouldn`t even, in my questioning, acknowledge the fact that certain
groups were treated differently. He answered -- in fact, he answered no to
that question. And then when I asked him, Is it not your responsibility to
provide the information that you knew about this situation to Congress, he
would not answer that question.

So Chris, you know, today I think was really a sad day for America as
people watched this interview because the -- it starts with the leadership,
and the leadership today in the IRS showed arrogance...

MATTHEWS: Yes.

REICHERT: ... showed a lack of concern and -- and brushed the -- in my
opinion, sort of brushed the issue aside.

MATTHEWS: Congressman Levin, thank you. You`ve been around. I don`t know
what I saw, but I certainly saw a disconnect today. That Mr. Miller guy --
I don`t know what he was -- it`s like he didn`t see what he knew people --
certainly, right, left and center -- could see, that when you target
particular groups, you`re targeting particular groups.

I mean, if this were on the other foot and this was a George W.
administration, they were targeting groups that were calling themselves
progressives, I would say it`s prima facie evidence of targeting. I don`t
think it`s complicated.

What`s your view, Congressman?

REP. SANDY LEVIN (D), MICHIGAN: My view is that the criteria were very
inappropriate. There was terrible mismanagement. I think there was very
terrible oversight. And there was a failure to be in touch, as they should
have been, with the Congress.

But the IG, the inspector general, when asked, Was there any political
motivation for the people who were in the exempt organization in
Cincinnati, the lower-level people who were working on this, he said no.
Was there any outside influence? And he said no.

And so when the chairman -- and I brought his language -- started off his
opening remarks saying it`s the latest example of "a culture of cover-ups
in this administration," there was no evidence today to support that. It
was politicization of a very, very sad chapter by people who were working
and who mis-worked.

MATTHEWS: Let`s take a look at it. Here`s Steve Miller. He fell back on
a familiar response in Washington, mistakes were made. But he said any
mishandling of cases by the IRS had nothing to do with partisanship.

Let`s listen.

(BEGIN VIDEO CLIP)

STEVE MILLER, ACTING IRS COMMISSIONER: As acting commissioner, I want to
apologize on behalf of the Internal Revenue Service for the mistakes that
we made and the poor service we provided. I think that what happened here
was that foolish mistakes were made by people trying to be more efficient
in their workload selection. The listing described in the report, while
intolerable, was a mistake and not an act of partisanship.

(END VIDEO CLIP)

MATTHEWS: Congressman Reichert, I respect everything you`re doing here.
I`m just questioning some of the thinking by the chairman of the committee,
Mr. Levin mentioned. Is there any evidence on your side of the aisle that
there was interference from the White House in the IRS mishandling of these
cases?

REICHERT: Well, I think it`s important to remember that what we heard in
the committee hearing today was that this is an audit, and that the
investigation, although the -- Mr. George could not confirm verbally in the
hearing that the investigation was continuing, I think that`s the
impression he left upon all of us in the committee. There is an ongoing
investigation.

Now, the audit occurred. Now the investigation occurred. But you can draw
your own conclusion, and so can your viewers, when you listen to the
testimony of Mr. Miller. Mr. Miller can`t even remember his -- the names
of the people who are in his chain of command. He can`t even remember who
he talked to last, what was the conversation about. Did he talk to anybody
in the secretary of treasury`s office? He can`t even remember dates, times
and places.

And finally, he couldn`t remember, when I asked him, Who did you talk to
about this? Who came up with the criteria?

MATTHEWS: Yes.

REICHERT: He finally gave me the name...

LEVIN: Chris, can I break in?

REICHERT: He finally gave me the name, Chris, but he could not remember
what she told him. Now, look, this isn`t somebody reporting...

LEVIN: But let me break in here...

REICHERT: This isn`t somebody -- this isn`t somebody reporting late to
work, Chris.

MATTHEWS: OK...

(CROSSTALK)

REICHERT: This is a serious issue that addresses civil rights.

(CROSSTALK)

MATTHEWS: OK, Mr. Levin, is that true? Did they find out who was the one
who said look for patriot groups, calling themselves patriot groups? Look
for groups that have Tea Party in their names. Do we know who that was
now?

LEVIN: I don`t think we have all the names. The people who did that were
mistaken. It was a serious mistake.

But you asked Mr. Reichert a question. Was there any evidence of this
hearing to support the statement by Chairman Camp? And again, I read it,
it was "part of a culture of cover-up in this administration." There was
no evidence whatsoever at this hearing.

The IG, when asked, said it was not politically motivated and there was no
outside influence. And there was no evidence of corruption.

So you asked Mr. Reichert a question, the answer is no, there was no
evidence. These were serious, serious mistakes made in the exempt
organization people in Cincinnati.

REICHERT: Mr. Levin, when the witness cannot answer the question, cannot
even remember who he spoke to...

MATTHEWS: Right. That`s -- that`s a good point, but what about my point?
I agree. We made that point. You made the point that Mr. Miller didn`t
respond to your very good question, who came up with the idea of coding
these people?

My question to you is, in the day of hearings and anything before that in
terms of your committee investigations, have you come upon any evidence
that the White House was involved?

REICHERT: Look, the...

LEVIN: The answer to that is no.

MATTHEWS: Well, I`m asking Mr. Reichert.

REICHERT: Mr. Levin...

MATTHEWS: Mr. Reichert, is it yes or no?

REICHERT: ... I think the question -- the question was addressed to me.
And I...

MATTHEWS: And what`s the answer?

LEVIN: Then answer it.

REICHERT: Mr....

MATTHEWS: Go ahead, Mr. Reichert.

REICHERT: If I`m allowed to answer it, Mr. Levin? Thank you very much. I
think Mr. Camp may have information that I don`t have, and so that would be
a question you could put to Mr. Camp. All the members of the committee
have different levels of information that they have access to.

MATTHEWS: Yes.

REICHERT: But over the course of this investigation, we will learn the
answers to those questions. And the fact that this witness today,
represents the United States government, our White House, our secretary of
treasury, our IRS, and the fact he can`t remember a thing...

MATTHEWS: OK, I accept that.

REICHERT: ... highly -- highly suggests to me...

MATTHEWS: That`s a good point. But if...

(CROSSTALK)

MATTHEWS: OK. I agree. But if Mr. Levin is correct and the IG is
correct, because he did stipulate this, as well, he found this, that there
was no evidence of White House influence or Obama campaign influence -- if
that`s correct, is this still appropriate of your chairman to keep saying
"culture of corruption" throughout the government and this is an example of
it, if it had nothing to do with the presidential influence at all?

REICHERT: I don`t think that`s proven yet. Mr. Levin...

MATTHEWS: But if it is, is that...

(CROSSTALK)

REICHERT: Mr. Levin may say that -- no, I don`t think it is the end of
this charge because we -- we have a duty to find out what happened in the
IRS...

MATTHEWS: Well, sure you do.

REICHERT: ... why -- why were certain people...

MATTHEWS: But you continue to -- look -- OK, here`s the question. If you
have no evidence right now, this Friday, of any White House involvement and
don`t have any evidence next week and the week after that and the week
after that, when do you stop accusing the White House of being corrupt in
this regard?

REICHERT: No, I`m not accusing...

MATTHEWS: At what point do you say, We don`t have evidence? We can`t keep
calling them corrupt.

REICHERT: Chris, I`m not accusing the White House of anything. I haven`t
made that statement at all.

MATTHEWS: But the "culture of corruption" from this administration --
what`s that mean?

REICHERT: That`s not coming from me. I didn`t say that. What I`m saying
is -- Look, I`m an old cop. I want to base my -- what I say on facts. And
so...

MATTHEWS: Good.

REICHERT: ... today I was looking for facts from Mr. Miller. Mr. Miller
did not provide any facts, Chris. Listen to the testimony.

(CROSSTALK)

LEVIN: Could I say -- let me say a word.

REICHERT: There were no facts, Mr. Levin, that Mr. Miller provided to this
country...

MATTHEWS: OK...

LEVIN: But Chris...

REICHERT: ... as to why and how this criteria was applied.

(CROSSTALK)

MATTHEWS: Mr. Reichert, you did a good job here. I want Mr. Levin now to
take a minute. What do you want done here?

I personally want to see the bad apples thrown out of the barrel. And I`m
not going to be satisfied watching this. As a typical person, if you`ve a
big problem, there`s got to be a big solution. Two people walking isn`t
enough. The American people are still going to believe, if they see the
same people there, they`ve got the same problem there. Only if you -- as
Charlie Rangel said today, Mr. Rangel said there`s a cancer here, you got
to remove it. Do you agree with Mr. Rangel?

LEVIN: I think there has to be action. Look, I was the first Democrat to
say that Mr. Miller should be relieved of his responsibilities, and so Ms.
Lerner. I said that a few days ago.

I believe absolutely we need to get to the bottom of it. Just don`t throw
apples at the top if you have no evidence to support it. And in the
hearing today, there was no such evidence. We should have a nonpartisan
hearing, not look for political points.

MATTHEWS: OK. OK, let me agree with -- thank you both very much for
coming on. Mr. Reichert, please come back again. Mr. Levin, my old
friend, thank you, sir, for coming on.

LEVIN: Nice to be with you.

MATTHEWS: I think we made two points. I think we heard ships passing in
the night. The one point was that Mr. Miller, the acting head, did not
answer the questions, which were appropriate. He must have known they were
coming. Give us a sense of your chain of command. Give us a sense of your
structure so that we can identify who made this decision to code these
various organizations trouble.

And then also, I think there is a real challenge here to the chairman of
that committee, who wasn`t with us today. Don`t keep accusing this White
House of corruption if you can`t find the smallest bit of evidence that
this president or his people or his campaign staff had anything to do with
this. You can`t just keep saying it!

We had a guy on the other day, Turner, who said, I`m going to have an
investigation to see if I know what I`m talking about. You can`t make
accusations before you even have any evidence of wrongdoing. That`s my
thinking. I think it`s common sense.

Coming up, the scandal that wasn`t, Benghazi. Thomas Pickering headed the
investigation into the Benghazi incident. He`s been eager to testify in
public. And this afternoon, he learned he`s going to get his wish. He`s
been subpoenaed to testify next week about his investigation. We`re going
to hear from him, however, first, and we`re going to hear it tonight. It`s
coming up next.

Also, Republicans are gleeful in their outrage over the IRS and other
stories, so much so that the influential Heritage Action is urging
Republicans to not bring up any legislation, in other words, pass nothing
of worth to country, just keep the scandal industry going.

But it won`t work if President Obama plays his cards right. If he`s got
something positive to do and all they got is trouble to make, I think the
country`s going to go with the positive.

Plus, our series, "The Unkindest Cut," how sequester cuts are endangering
critical medical research that actually could affect you and your family
and your health at the National Institutes of Health.

And if you believe that evolution is a lie or that you can just stop being
gay just because somebody told you to, well, then the Republican Senate
primary in Georgia is made for you. Wait until you hear these points of
view.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Would Hillary Clinton keep Virginia blue if she runs for
president in 2016? It sure looks that way. Check the HARDBALL
"Scoreboard." We`re doing it.

According to a new Quinnipiac poll, Secretary Clinton would defeat Senator
Marco Rubio, the leading Republican right now, by 13 points in Virginia.
It`s Clinton, Mrs. Clinton, 51, Rubio 38. And against former vice
presidential nominee Paul Ryan, it`s Clinton in VA, 50 to 40.

Barack Obama won Virginia in both his presidential campaigns. And by the
way, that`s when I knew he was going to win that night.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. Well, this week, the White House
tried to put to rest talk of some massive politically motivated cover-up on
Benghazi, releasing 100 pages of e-mails -- there they are -- showing
exactly how and by whom the talking points for that appearance on Sunday
morning`s "MEET THE PRESS," of course, by Susan Rice was put together. But
Republicans seem far from satisfied.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: And you don`t have to be Sherlock
Holmes to figure this out. The story of Benghazi, if accurately reported,
would undercut the narrative bin Laden`s dead, al Qaeda`s on the run, and
they manipulated the evidence to help their political reelection. That`s
pretty obvious.

(END VIDEO CLIP)

MATTHEWS: Well, that was Lindsey Graham of South Carolina speaking after
the White House released all those e-mails showing it was actually the CIA
who played the largest role crafting the talking points in the end.

Well, one man who knows more about what happened in Benghazi than nearly
anyone on the planet is Ambassador Thomas Pickering. He co-chaired an
independent review of the Benghazi attacks. Ambassador Pickering, of
course, has a legendary career as a diplomat serving both Democrats and
Republicans in many of the world`s hottest spots. His review of Benghazi
certainly didn`t sugarcoat what happened, concluding there were systemic
failures and leadership and management deficiencies at the State
Department.

Yet Republican congressman Darrell Issa has strongly criticized the report,
and Issa wants the ambassador to answer questions, but not at a public
hearing. Let`s listen to his rationale for that.

(BEGIN VIDEO CLIP)

REP. DARRELL ISSA (R-CA), OVERSIGHT COMMITTEE CHAIRMAN: The fact is we
don`t want to have some sort of a stage show. We had fact witnesses. They
testified. We have the ambassador and Admiral Mullen, who conducted and
oversaw the ARB. We`re inviting them on Monday. We`ll go through, not in
front of the public but in a nonpartisan way, questions and answers, and
then obviously, a hearing to follow at an appropriate time.

(END VIDEO CLIP)

MATTHEWS: This afternoon, U.S. Congressman Issa took the next step,
issuing a subpoena for Ambassador Pickering. He wrote, quote, "In light of
your continuing refusal to appear voluntarily for a transcribed interview,
however, I have found it necessary to issue a subpoena to compel your
appearance at a deposition."

Ambassador Pickering joining us right now. What`s your response to this,
sir?

THOMAS PICKERING, FORMER U.S. AMBASSADOR TO THE U.N.: Well, I`ve just seen
this, Chris. And certainly, I`m consulting with the State Department and
the lawyers there. And my response, I hope -- we`ll find a way to move
ahead.

I`ve always wanted a public hearing. Apparently, that`s not going to be in
the offing. I think that`s a serious mistake. And this is a serious step,
and obviously, I take it that way. I`m interested in finding a way to make
sure that our report is defended, that I answer all the questions. My hope
is to do so in public because the public deserves to know.

MATTHEWS: When you think -- when you`re explaining to people who really
seem to have -- I didn`t know the gentleman. Everybody loved him,
Ambassador Chris Stevens. He struck me as a dashing foreign service
officer, a diplomat willing to take some reasonable calculated risks,
willing to go into areas that aren`t completely protected.

And we can`t put a bunch of uniformed men into a country that we don`t have
sort of a post-colonial or a historic connection to anyway like Libya. And
you can`t have lots of people around, especially if you`re protecting or
covering a CIA facility -- lots of factors here.

Do you think there was any way to have protected him, short of him not
having gone to Benghazi that day?

PICKERING: Yes, I believe there was, and I in our report listed the
shortcomings that may well have helped in that regard.

This is only a guess. Chris was a wonderful ambassador. Chris worked for
me for two years. I admired his work. I think he was a comer. He
certainly was. And he had absolutely the right concept. Americans need to
get out and talk to people and understand what things are happening in
these countries overseas.

MATTHEWS: Yes, I was a Peace Corps volunteer, too, and I think it`s
wonderful when these guys and women become diplomats, because they don`t
hide in the compound and eat hamburgers and watch Super Bowls. They get
out and meet people.

(LAUGHTER)

MATTHEWS: And I think he was that -- you know what I mean. And that`s
exactly -- he wasn`t a striped pants guy.

I have got David Corn here of "Mother Jones." I want to get him on,
because he and I were talking, Mr. Ambassador. Here`s some good questions.

DAVID CORN, MSNBC POLITICAL ANALYST: Yes, i have a question for you, Mr.
Ambassador.

You guys put out a very thorough report, unclassified version. But there
also was a classified version of your report, which I don`t really expect
you to talk about right here. But is there a way to fully understand what
happened in Benghazi and the security challenges there without really
knowing what was going on in what you described as the annex, which I
assume was covered in the classified version, which has been publicly
reported as a CIA facility?

It seems like we`re only getting a part of the story because a lot that was
going on there was classified.

PICKERING: Yes, to the best of my recollection, action at the annex was
also covered in the unclassified report, particularly in the discussion of
what happened on the night of September 11-12, 2012. And I would ask you
to read that. I think it was done with care.

It avoided the classified, but I think it`s there. Certainly, that action
was important in looking at the whole picture, and we reviewed it.

CORN: But in terms of the security position there, and what was happening
before the attack, and whether there should have been more security or less
security and why these sites are targeted, I mean, those sort of questions,
it seems as, you know, you have to tiptoe around some very important issues
here.

PICKERING: Well, I didn`t in the classified report, obviously.

But I think it -- our report was heavily focused on the State Department
facility. That`s correct. I think it is important to know that in our
report, we listed a number of shortcomings. We held people responsible.
It was a tough report. It was not an easy report for us to put together.

All of that, if there are people who have questions, and if Chairman Issa
has questions, I want to respond to all his questions. But I would
certainly prefer to do it in public, just as the criticisms of our report
were made part of the public record. And my sense is that we have answers
to those questions. I have spoken in a number of places about them. I
will be glad to speak to you about them here.

MATTHEWS: You know, Mr. Ambassador, with all respect -- and I think I do -
- well, I do have respect for you. I`m not using it in the usual term,
where people don`t mean it. I mean it.

(LAUGHTER)

MATTHEWS: But I think there`s two questions that loom out there for the
average person who reads the paper.

Why wasn`t Hillary Clinton examined by you since she was apparently on the
phone several hours after the first attack? Let`s start with that one.
Why didn`t you interview her?

PICKERING: Sure. There are two pieces there.

One, we had a good discussion with her just about a week before we wound
up. That discussion took place after we had completed a number of our
findings, including the fact of who made the decisions that affected
security in Benghazi and who reviewed those decisions? They did not go to
Secretary Clinton.

The second piece was on the night of, she had meetings. We reviewed a
number of the events at those meetings with the people who attended those
meetings. Had we had any additional questions, we would have asked them.
There were no additional questions with respect to that. And I believe
that we covered that thoroughly.

MATTHEWS: The strange thing is -- and we cover the news here almost 24/7
around here, and I didn`t know that Hillary was even on the phone with
Tripoli until a couple of days ago.

So, it wasn`t -- wasn`t that important to you to make sure that was
highlighted, that she was, in fact, engaged in the early troubleshooting
here and, in fact, after the tragedy was exposed?

PICKERING: I believe that was covered in our report. Certainly, it was
something we knew about. It was my understanding at the time that it had
been in the public, but I could be wrong there, Chris.

MATTHEWS: OK.

Let me ask you the profound political charge made, and then David can with
one last question here.

PICKERING: Sure.

MATTHEWS: The Republican argument here, and I generalize here, is there
was some sort of cover-up in the way that this tragedy which cost the lives
of our people over there was presented by the administration.

The charge is made that the White House made a point of putting Susan Rice,
who was almost to me very much on the verge of being considered for
secretary of state, put her on national television on "Meet the Press" with
the idea of carrying the case that somehow this was really not another case
of terrorism so close to the election, but it was, in fact, a demonstration
against a movie out in California, a controversial, in fact, I would say
troublemaking movie, and it was really about that and it turned into a riot
and turned into a tragic attack on the facility there, and it was really
all along known to be Ansar al-Sharia, all along known to be one of several
attacks on our facilities over there, and clearly a case of terrorism. It
was covered up by the White House.

Your response?

PICKERING: Yes, Chris, our report did not cover the question of criminal
culpability here. That was the FBI.

So the question of who did it, when they did it, why they did it, and
whether there are criminal charges against him is part of the FBI report,
which is ongoing. Secondly, our group did not review the question of the
talking points. That happened after the fact. I don`t believe it bore any
relationship to the principal security questions under the law we were
required to review.

And I have to tell you that I`m not the expert on that, and I have really
nothing to offer. I hope to clarify the questions you have got. Those are
questions obviously the people involved should respond to. I think they
have by presenting the documents, but that`s not my area of endeavor.

MATTHEWS: OK. Thank you. Thank you very much, Ambassador...

PICKERING: Thanks, Chris, very much.

MATTHEWS: ... Thomas Pickering for coming on HARDBALL.

And thank you, David Corn, as always, for helping with this.

Coming up, when you`re right, you`re wrong? What? The candidates in the
Republican Senate primary in Georgia are practically tripping over each
other to say the most extreme things down there. We will be back with some
of the craziest.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL and now to the "Sideshow."

This past week was a banner one for Minnesota Congresswoman Michele
Bachmann, with the 37th House vote to try and repeal Obamacare. On top of
that, Bachmann`s first 2014, you got it, 2014 campaign ad has hit TV
screens in Minnesota, 17 months before the election out there. Any guesses
on the subject matter?

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R), MINNESOTA: Great news. The U.S. House just
passed my bill to repeal Obamacare. Obamacare promised us lower costs and
a better health care system, but the truth is just the opposite. Passing
my bill is just the first step toward lower costs and improved health care.

(END VIDEO CLIP)

MATTHEWS: Look, I have been watching these for years. I know what her
problem is her. Her poll person is telling her -- her pollster person is
telling her she has got wickedly bad numbers on the issue of effectiveness.
All she does is give right-wing speeches. She`s trying to prove she`s
doing something, which she isn`t.

Next to a trio of Georgia Senate candidates. "Mother Jones" found whoppers
in the quote file for the three Republican candidates down there, Paul
Broun, Phil Gingrey, and Jack Kingston, all currently U.S. congressmen.

Here goes on the subject of why same-sex parents shouldn`t be allowed to
adopt children.

Phil Gingrey said: "If they wanted a baby bad enough, they could make that
choice."

Do you believe it? This is the 21st century. In other words, just don`t
be gay.

Next, on the subject of evolution, Jack Kingston said: "I believe I came
from God, not a monkey. I don`t believe that a creature crawled out of the
sea and became a human being one day."

Is that what evolution is?

Finally, before Obamacare was passed, Paul Broun said -- quote -- "If
Obamacare passes, that free insurance card that`s in people`s pockets is
going to be as worthless as a Confederate dollar after the war between the
states, the war of Yankee aggression."

Boy, there`s interesting thinking. And that`s a race to keep your eye on
down there in Georgia. I don`t think anybody can win there.

Karen Handel -- Handel -- Handel, by the way, announced today she would
also be joining that race. Handel resigned from the Susan G. Komen
Foundation last year after her involvement in their decision to cut grants
to Planned Parenthood.

Finally, catch this headline from "The Washington Post" -- quote -- "Even
Obama`s umbrellas are a scandal now."

Well, at yesterday`s press conference with the Turkish prime minister, the
president called on some Marines for some cover when it started to rain.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I am going to go ahead and
ask folks, why don`t you -- why don`t we get a couple of Marines? They`re
going to look good next to us.

(LAUGHTER)

OBAMA: Just because I want to -- I have got a change of suits, but I don`t
know about our prime -- our prime minister.

(LAUGHTER)

OBAMA: There we go. That`s good.

You guys, I`m sorry about.

(END VIDEO CLIP)

MATTHEWS: I thought he handled that well, but -- so how did the umbrellas
become a point of debate?

Well, people like Sarah Palin , who tweeted, "Mr. President, when it rains,
it pours, but most Americans hold their own umbrellas."

Well, apparently, Palin doesn`t always put herself in that most Americans
category. Let`s flash back to a drizzly day in 2008, when Palin was the
Republican candidate for vice president. Here she is exiting a plane, but
thanks to that guy in front of her, she`s not getting wet. How`s that
happening? Oh, he`s holding the umbrella for her.

Anyway, up next, Republicans are desperate to keep those controversies
alive, of course. And now they`re being advised to not bring up any
legislation that would actually take the focus off Benghazi, the AP and the
IRS. In other words, don`t govern, grandstand.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

JANE WELLS, CNBC CORRESPONDENT: I`m Jane Wells with your CNBC "Market
Wrap."

Stocks end the week on an up note. The jump -- the Dow jumps 121 points to
finish at yet another all-time high. The S&P adds 17, also hitting another
record, and the Nasdaq adds 33.

Consumer sentiment a bright spot this month. It rose to its highest level
since July of 2007.

And a report from the Labor Department shows hiring is improving.
Unemployment fell in 40 states last month.

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

MATTHEWS: Welcome back to HARDBALL.

A crisis is a terrible thing to waste, of course. The GOP knows that. And
you better believe they do. About one-third of all House committees are
now investigating the Obama administration in one form or another thanks in
part to a trio of administration missteps. I will call them that.

The thing is that doesn`t take away any of the major issues facing this
country then, things like immigration, tax reform, the debt ceiling, the
economy and jobs. But faced with a choice of doing something on those
issues vs. doing nothing by keeping the scandal drumbeat alive, some
conservatives are pressing the party to take the path of least resistance.
Do nothing.

Just where will that take them? Well, John Feehery is here. He`s an
expert. He`s a Republican strategist. And Neera Tanden is the president,
of course, of Center for American Progress.

By the way, your group wasn`t tagged by the IRS. American apparently is
not a word that causes trouble.

NEERA TANDEN, CENTER FOR AMERICAN PROGRESS: We started in 2003 under the
Bush administration. We got our tax status. It`s all good.

(CROSSTALK)

MATTHEWS: Congratulations.

(CROSSTALK)

MATTHEWS: It was like missing the draft, missing the draft.

TANDEN: It`s all good.

MATTHEWS: Anyway, let`s talk about this. This is what I`m talking about.

The conservative Heritage Action for America Group, an offshoot of the
Heritage Foundation, is urging Republicans to stay on the scandals. In a
letter to House Leaders John Boehner and Eric Cantor, they wrote -- "It
would be imprudent to do anything that shifts the focus from the Obama
administration to the ideological differences within the House Republican
Conference. To that end, we urge you to avoid bringing any legislation to
the House floor that could expose or highlight major schisms within the
conference" -- a little Catholic word there, schisms.

John Feehery, I want to start you.

JOHN FEEHERY, REPUBLICAN STRATEGIST: Yes.

MATTHEWS: Is this good politics to focus entirely on the drumbeat, IRS,
FBI going after AP, and Benghazi, and don`t allow immigration to come up,
which will be divisive, and don`t focus on things, anything else that might
be divisive, like a jobs bill?

FEEHERY: I think it`s a bad strategy.

I think that at the end of the day, the House Republicans have to govern.
I think they have to get things done. I think immigration is very
important. I think that John Boehner has said they`re focused on jobs. I
think, if anything, on where this comes with IRS, link it to Obamacare
because I think Obamacare is going to be a big issue.

It would be good if they came up with an alternative to Obamacare. I
think...

(CROSSTALK)

MATTHEWS: Alternative? It`s in law.

FEEHERY: Well, they have got to repeal it.

(CROSSTALK)

TANDEN: The 38th time, the 38th time.

(CROSSTALK)

MATTHEWS: John, before you slip over to that baby, you can`t repeal unless
the Senate agrees to repeal it, and then you have got to get the
president`s signature to repeal.

FEEHERY: Well, they will repeal it at some point in time because it`s
going to be very unpopular.

(CROSSTALK)

MATTHEWS: They`re going to get a two-thirds vote in both houses? When is
that going to happen?

(CROSSTALK)

FEEHERY: It`s going to be like catastrophic.

(CROSSTALK)

MATTHEWS: You guys are still...

(CROSSTALK)

FEEHERY: Anyway, last -- last point. This IRS thing shows that there`s a
need for fundamental tax reform.

I think the president -- this would help get the president out of this
thing.

MATTHEWS: How would it work?

FEEHERY: Well, you know what. You would simplify the tax code as much as
possible, maybe two or three rates, and get rid of all those loopholes,
except for some...

(CROSSTALK)

MATTHEWS: But what about the tax-exempt status of the 501(c)(4)s?

FEEHERY: Listen, I think if you want to form a political organization like
yours, you shouldn`t have to pay taxes. It`s ridiculous.

TANDEN: And we`re a (c)(4).

MATTHEWS: You shouldn`t have to pay taxes?

FEEHERY: I don`t think you should have to pay taxes. It`s ridiculous.

MATTHEWS: How about paying taxes on all the political contributions we all
make or people make? I can`t make them, but everybody else makes them.

FEEHERY: Well, if you make a political contribution, then you don`t -- you
don`t get a tax break for that.

MATTHEWS: I know you don`t.

FEEHERY: Well, that`s fine.

MATTHEWS: Well, why should these groups be tax-free then?

FEEHERY: They`re not giving campaign contributions.

MATTHEWS: Oh.

(CROSSTALK)

FEEHERY: What they`re doing is they`re exercising their fundamental --

MATTHEWS: In other words, if it doesn`t go for the candidate --

(CROSSTALK)

NEERA TANDEN, CENTER OF AMERICAN PROGRESS: You`re talking about --

MATTHEWS: That`s the George Will approach.

Neera, here`s the question. Are the Republicans smart to focus on the
Democrats when they`re down on the IRS? I do think the IRS is a problem,
unless they fire a lot of people and actually act as angry Republicans are
pleased by this. That`s my thought.

TANDEN: You know, I think that --

MATTHEWS: Do you think something big has to be done at IRS?

TANDEN: I think -- they should find out who did what wrong and those
people should be punished. Absolutely. I think, Democrats and
Republicans, fired. They should be fired. Absolutely should be fired.

MATTHEWS: As long as they`re still.

(CROSSTALK)

TANDEN: Yes, they should be heard.

But I think the issue with this letter, and what (INAUDIBLE), it`s great
advice to the House Republican caucus, is it represents exactly what people
hate in Washington, which is only focus on partisan posturing and ways to
hurt your political opponents instead of doing your job to solve the
country`s problems. I think you`re seeing that with the polls out today,
which is people think jobs and the economy is what`s really important and
they don`t think IRS or all these other issues.

And with all due respect, the IRS issue is really about the fact we have a
campaign finance system that`s been run amok by a Supreme Court --

MATTHEWS: OK, you guys need reform. I`ve never believed in long-term
reform.

Let me ask you about current questions.

FEEHERY: Yes, Chris.

MATTHEWS: I hear from everybody in and out of the Republican Party that
they know they face a problem with Hispanics. They`ve lost the African-
American vote for years. And that goes back probably to the `60s. The
problems they had back then with civil rights not supporting enough,
although a lot did. Your party was good in civil rights in certain cases,
certainly the passage of the `64 bill.

You have to get the Hispanic vote back. If that grows and communities grow
over time and grows all Democrat, 90 percent, like the black vote is,
you`re finished in terms of winning national elections. So, is it better,
tough question, to get an immigration bill that shows your party is fair
and open to Americanization to people who have been here a while, or is it
better to keep beating the drum on scandal? If you have to choose, and you
might have to choose because the Republican Party may be split on
immigration. Is it better to do immigration reform and get it behind you
or keeping this scandal bump (ph)?

FEEHERY: I was in the House leadership in 1998. We focused on scandal.
We focused on impeachment of Clinton. We lost seats because of it.

Immigration -- and it`s not just passing immigration reform. We have a
vested interest in getting Hispanics, more them into the middle class so
they can vote for Republicans. I think not only that, but, you know, this
is the whole point. You got to pass immigration reform because it`s a
long-term strategy. If you focus completely on scandal, it`s a short-term
loser.

MATTHEWS: Is he right?

TANDEN: Absolutely. I mean, I remember `98, Bill Clinton, second term,
third election, picked up five seats. That happened, five seats in the
House. That happened because Republicans overreached.

And this is something that has benefited --

MATTHEWS: OK. Thank you. By the way, I`m going to hit you with a
question.

TANDEN: Go ahead.

MATTHEWS: It`s part of my closing remarks tonight. Is it -- they use to
say -- somebody said, a football coach, the best defense is good offense.
Now, that`s my belief.

If the Democrats were talking jobs now -- jobs, jobs, jobs, immigration
reform, immigration, the engine would be moved and the party would be --
something would happen. They seem stuck in the water right now. That`s
why they`re sitting ducks.

TANDEN: Well, I think the president today was --

MATTHEWS: Why isn`t the president talking jobs?

TANDEN: I mean, he was talking about jobs today in Baltimore.

MATTHEWS: Where? Does he have a big jobs bill?

TANDEN: Well, this is a big thing.

MATTHEWS: OK, you don`t. You don`t have a big jobs bill. Absolutely.
The biggest mystery in this administration -- no. You`re great.

But the biggest -- you can`t change the president but I can criticize him.
I do occasionally.

You know when I criticize him? He`s not doing what every Democratic
president ought to stand for, man, woman or whatever. Fight for jobs,
create them in the government, the private sector is not doing, because
people have to work. That`s the number one thing in this country, have a
job.

TANDEN: I agree with you --

MATTHEWS: Feehery, thanks for all your honesty. You`re right, let`s go
reform. Stop the drumbeating on the bad side. You showed your good side,
Feehery. You do have one.

Neera, you do, too. Thank you, Neera Tanden.

TANDEN: Thank you.

MATTHEWS: Up next, the latest report on our series "The Unkindest Cut."
We`ve got have a real hero coming here tonight, Francis Collins. He`s
coming to talk about health research which affects all of us, like my mom
who died from Alzheimer`s, things that really matter to people, pancreatic
cancer. We`ve got a deal with these challenges.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Well, we got some new polling data for some of the hot races
coming up. Let`s check the HARDBALL scoreboard.

First to Massachusetts where a new PPP poll shows U.S. Congressman Ed
Markey with a seven-point lead over Republican Gabriel Gomez in that
special election for the U.S. Senate. It`s Markey, 48, Gomez, 41. That
election takes place at the end of June.

Next to the governor`s race down in Virginia. A hot one down there. Two
new polls out this week. First, a Quinnipiac poll shows Terry McAuliffe
leading, first time, over Republican Attorney General Ken Cuccinelli by
five among registered voters, 43-38. That`s good for Terry.

But a Republican leaning poll, from Wenzel Strategies, Cuccinelli is up by
eight. These polls are all over the place, 44-36. That`s among likely
voters.

This is too early, but we`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL.

In our series, "The Unkindest Cut," we have showcased the ways Congress`s
arbitrary, across-the-board spending cuts have had real world effect, real
world negative effects on people across this country of ours, like cuts to
Head Start for children, Meals on Wheels for the home bound.

Well, today, we look at cuts for funding for medical research. This may
sound like it wouldn`t affect you, but it does. Cutting funding for the
National Institutes of Health, the largest supporter of biomedical research
in the world, means delays to the universal flu vaccine that could fight
every strain of flu. No more rolling of the dice hoping your type of flu
is covered by the flu shot.

Cancer drugs in development that could isolate, would isolate the disease
and cause less trauma to the rest of the body, and research on drugs that
could lessen the debilitating effects of old age like dementia. I guess
we`re talking Alzheimer`s there.

Dr. Francis Collins is the director of the National Institutes of Health.
He was awarded the National Medal of Freedom for his groundbreaking genetic
research as leader actually, a leader of the human genome project. He`s
the one that did.

Joy Reid, of course, one of our regular guests here. She`s managing editor
of "The Grio" and an MSNBC contributor.

I think you and I, Joy, are both lucky to be on the same segment as this
fellow here, Dr. Collins.

I`ve met you a number of times.

So short-term, long-term effects, the kind of -- when I hear pancreatic,
when I hear Alzheimer`s, I know we`re in trouble with somebody --
somebody`s in real trouble. Research, what`s going on right now in all of
these areas?

DR. FRANCIS COLLINS, DIR., NATL. INSTITUTE OF HEALTH: See, Chris, this is
the paradox that research in areas like pancreatic cancer, or Alzheimer`s
disease, or diabetes or this universal flu vaccine, is at a remarkable
pitch, amazing progress being made at an exponential rate.

And yet, here we are at the moment where the science is moving the fastest
it ever has and the support for that science, because of the sequester, is
under a greater threat than it ever has been. And the risks in terms of
slowing down a remarkable advance in medical research, many of them are
quite substantial.

But people may not feel that today if they`re --

(CROSSTALK)

MATTHEWS: Who`s going to tell them? We have to tell them. You are
telling them. The United States is actually cutting back on medical
research at a time that other countries, our competitors are ramping up
their fund.

Look at this bar chart. This is stunning. China and India increased their
spending 20 percent between 2011 and 2012. Brazil, South Korea, and Japan,
up by 10 percent. Even austerity countries -- Germany up 9 percent.

The United States has been cutting its spending 5 percent. So, we`re down
and they`re all up.

COLLINS: And isn`t that amazing? Because they read our playbook. They
looked at the American success story over the last 60 years where much of
our economic growth has been coming from science and technology. And now,
it`s bio medicine that`s leading that and, yet, we seem to have forgotten
our own story.

MATTHEWS: The one thing I know for sure, Joy, you jump in here with your
thoughts. I don`t really have a question for you, I want your thoughts.

But every time a dictator in the world has got all the power in the world,
from any part of the world, they get sick, he comes here.

JOY REID, THE GRIO: Yes.

MATTHEWS: This is where you come from the state-of-the-art medicine,
state-of-the-art science, if you`re trying to extend your life by a year or
two. We`re the best at it. We`re also where all the drugs come from. We
did the peer research, somebody else are probably doing the applied
research.

Cost do you believe politically, and why do you think this is happening?

REID: Yes. And, Chris, it just goes to show, you know, this blunt
instrument of the sequester and how hard it cut across programs like
poverty programs, programs like the sciences. You know, where were the
constituents? Where were the members of Congress to stand up for the
science spending?

It used to be a bipartisan belief in this country, that we ought to invest
in science. There`s certain thing -- you know, Bobby Jindal, just real
quickly, the governor of Louisiana, just tweeted just while we were in the
break that Democrats and liberals don`t believe in the power of freedom,
the dynamic power of freedom.

Well, you know what? There`s certain things only the federal government
can do. When those levees broke in his state and all those people died in
the hurricane Katrina, that was a federal failure. Those levees were
something no private company was going to build.

MATTHEWS: Yes.

REID: No private company was going to take us to space when we were sort
of competing with the Russians in the space. That was also about science.
It was about improving the human condition.

And that used to be a bipartisan thing. We used to all believe that
America should lead in terms of innovation in the world. But now, we`re
just cutting away all of the things that are the best that our country`s
government is capable of doing and it`s really sad that no one really stood
up and talked about this when the sequester was going into place.

MATTHEWS: Tell me about diabetes research.

COLLINS: Well, gosh, my own lab work is on diabetes. I know a lot about
this.

MATTHEWS: So do I.

COLLINS: I know you do, too, Chris.

So, we have made more discoveries about the causes of diabetes in the last
five years than probably in any time before that. We`ve learned what the
genetic factors are that place people at risk and we`ve learned that those
point us to new pathways that are waiting for the next generation of drug
development to be achieved. We have an opportunity now to build an
artificial pancreas that would be able to supply insulin to people who
don`t have quite enough of it, in the way that sort of feeds back your
glucose levels so that you don`t have to go through the business of these
shots and all these --

(CROSSTALK)

MATTHEWS: When is that going to come to play?

COLLINS: It`s slower now --

MATTHEWS: In my time, in my time?

COLLINS: It should be in your time. But, you know, when we lose $1.6
billion in one fell swoop because of the sequester, we swallow a poison
pill. It slows down everything and it will slow this down, too.

MATTHEWS: On dementia, how much are we losing because of these cuts? In
terms of where we`re getting, because I keep thinking, we might just make
a breakthrough, but I don`t know.

COLLINS: Well, look at these issues. So, dementia, we just had this
report figuring that the United States is spending probably $200 billion a
year on care of individuals with Alzheimer`s disease. And how much are we
spending on the research? Oh, about 500 million and now it`s 5 percent
less than that. Just at the point where we were trying to ramp this up and
their great new ideas about the science of Alzheimer`s in terms of figuring
out ways to do prevention and treatment.

But you know what I worry about most, it`s the young scientists who are
coming into the field, who have great new ideas about diabetes and
Alzheimer`s and they are looking at this landscape in the United States and
going, well, maybe there`s not a career here for me. I got better do --

MATTHEWS: I know. The best people do something else.

COLLINS: Or move to another country where they`ll get better --

MATTHEWS: Joy, last thought here. It looks to me the politics of this are
pretty damming. It looks like there`s no hope right now.

REID: Absolutely.

MATTHEWS: Stay the sequester. Last thought.

REID: And just at the time when we`re talking about cutting long-term
health costs, this is really short-term thinking, because you think about
it, Chris, we`re speeding towards the day when half of this country`s
adults are going to be seniors. We need to cut our medical spending and
cut it and the only way to do that is with scientific research. It`s a
shame.

MATTHEWS: Thank you so much, Joy. Have a nice weekend, Joy Reid.

REID: Thank you, too.

MATTHEWS: And thank you. An honor for both of us, Joy, to be with you,
Francis Collins, thank you, from NIH. He`s heading it.

We want to hear more about cuts that affect you out there. Tweet us at
#unkindestcut. I think some Shakespeare. I know it is. You could also
join the conversation, on our Facebook page, at Facebook.com/hardball, or
go to our Web site at TV.MSNBC.com and click on HARDBALL.

We`ll be right back for a minute.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this.

I believe the best way to deal with this week -- for the President -- is to
adjust the way he does business.

This is his second term. It`s a dangerous time because it tends to be when
Presidents get into trouble.

Think of Iran-Contra. Think further back to Franklin Roosevelt`s second
term when he tried to "pack" the Supreme Court.

What happens is that you get surrounded by people who are afraid to
challenge you. Maybe they think you`re too great because you`ve been
elected twice to the American presidency.

Well, the problem is the people who survive into second terms can include
cheer-leaders who don`t help when you need help -- when you`re on the verge
of doing something wrong.

This president needs a team for offense -- a team to find ways of getting
things done he wants done - has promised to get done, like making
healthcare actually work; writing an immigration law this country intends
to enforce; creating millions more jobs.

He also needs a defensive team that enforces solid, honest, progressive
action by the government agencies and troubleshoots problems.

He shouldn`t have to read in the paper that some agency is screwing up,
shouldn`t have to learn second-hand about what his Justice Department is up
to.

Offense and defense. He needs a team that will deliver on both.

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

"POLITICS NATION" with Al Sharpton starts right now.

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