updated 6/5/2013 10:03:22 AM ET 2013-06-05T14:03:22

HARDBALL
June 3, 2013

Guests: Jonathan Weisman

CHRIS MATTHEWS, MSNBC HOST: Attack, attack, attack.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington.

"Let Me Start" tonight with this. There`s a lot of attacking going on in
Washington these days. It`s attack, attack, attack. And what did Obama do
to encourage this unstopping attack on him? Did he actually do something
at the IRS? Well, nothing`s come forward yet. The guy running the IRS
during the bad stuff coming out now was an appointee of George W. Bush.

And just who is it that`s leading the attack on the president nonetheless?
It`s Darrell Issa, the congressman from California who spent $13 million
running for the U.S. Senate without luck and lately tries to match the
celebrity of being a senator by turning his membership in the House into
being the big noise in Washington by attacking the president.

Even before he got the chairmanship, Congressman Issa was calling President
Obama corrupt. And not only that, in office just 18 months, Obama was,
quote, "one of the most corrupt presidents in modern times." That was Issa
before he even began his investigations. Based on? Nothing.

Issa set his heart early on tearing down this presidency. He set his heart
on this goal long before he had any evidence against the president, and
pursues it now, even though he`s made none or come up with no evidence so
far.

David Axelrod is a former White House senior adviser. And Howard Fineman
is editorial director with the HuffingtonPost. Both are MSNBC political
analysts.

David, I`m looking at this thing historically. There`s been periods in our
history where one party -- and it has been the Republican Party since World
War II -- that`s tried to make its bonus, if you want to use mafia language
-- make its bones by attacking the other party.

They got in after 20 years or so of the New Deal and the Fair Deal in 1946.
All they did was hold hearings -- hearings, hearings, hearings. They said
they used to open the day with a prayer, end it with a probe. It never,
ever ended. And they ended up being kicked out in two years.

Darrell Issa must have had no knowledge of history because here he is
trying to imitate that period of Congress with HUAC hearings. Then in
1998, they tried to do it with Clinton. They seem to have nothing in their
gun except negativity.

Your thoughts as a political historian (ph) guy. What are they doing? Why
are they repeating the negative past that got them nowhere?

DAVID AXELROD, FMR. SR. OBAMA ADVISER, MSNBC POLITICAL ANALYST: They`re
doing it because I think they`re playing to their base, Chris. I think
that they`re -- you know, my view of the Republican Party right now is that
they have a civil war going between the ego and the id, and the id is
winning.

MATTHEWS: Yes.

AXELROD: They -- you know, they love to -- they love to attack the
president. They love to oppose the things that he`s done. They don`t
offer a positive program in response, and I think that`s why they`re
limited in their growth.

But in their districts, in those homogeneous Republican districts, it
works. I sat next to Marsha Blackburn on a panel yesterday and she said,
Everybody in my district`s talking about Eric Holder. Well, I don`t think
that`s true, but even if it were, her district isn`t representative of the
country as a whole. It`s a homogeneous Republican district. She`ll never
face a general election campaign.

And so that`s their view. And it`s limited. It`s narrowing. And it also
is bad for the country. But that`s the game they`re playing right now.

MATTHEWS: Yes. I`d like to do a jaywalk through the district there. I
know he has the patent on that, Jay Leno. But I`d love to go through
Marsha Blackburn`s district and say, Who`s James Rosen?

I mean, what are we talking about with all their focus on -- let me go to
Howard here. Howard, this use of the subpoena, which they were -- they won
when they won the House -- I always say watch one thing. Nixon saw it in
`72. The minute the other party gets the subpoena, they play with it like
a toy. They got a pony for Christmas, and that`s all they do is play with
the subpoena. They don`t legislate anymore. They don`t do anything. All
they to is investigate and attack.

This is a historic problem with the Republican Party and it`s one reason
why they`ve had a hard time dealing with --

HOWARD FINEMAN, HUFFINGTON POST MEDIA GROUP, MSNBC POLITICAL ANALYST: Well
--

MATTHEWS: -- long-term control of the Congress.

FINEMAN: As David said, if they had an agenda that they were going to
pursue legislatively, maybe they wouldn`t be as fascinated with the
subpoena toy. But --

MATTHEWS: Yes. You mean the Republican alternative for health care.

FINEMAN: Yes. I mean --

MATTHEWS: The alternative.

FINEMAN: Well, yes, which --

MATTHEWS: Or the Republican jobs bill.

FINEMAN: -- which doesn`t exist. Look, from the very beginning, they
said, on the day that the president was first inaugurated, the House
members said, Our goal is to defeat him --

MATTHEWS: Yes.

FINEMAN: -- to stop him, to delay him, to defeat him.

MATTHEWS: Well, what do you make of Issa saying he`s the most corrupt
president in modern times way before they even began the investigation,
"corrupt" meaning he passed health care. He passed the stimulus bill.
What else did he do besides be Barack Obama?

FINEMAN: Well, they`re looking for a way to try to discredit retroactively
what turned out to be a pretty convincing presidential victory.

MATTHEWS: Yes.

FINEMAN: And as David said, Darrell Issa and others -- it`s not just
Darrell Issa. There are lots of other committees. There`s lots of other
subpoena power in the House. And by the way, there are Senate committees,
where the Democrats still control things, where they`re going to look at
these things, too.

But the Republicans have no positive organizing principle right now. And
if you look at the new report that the young college Republicans did about
their own plight --

MATTHEWS: Yes. We`re going to do that in the next segment, by the way.
It`s very important (INAUDIBLE)

FINEMAN: They`re also saying, you know, Where`s the positive message?
They want one, too. The young Republicans want one.

MATTHEWS: The decency factor -- let`s talk about this attack by Issa. He
calls Jay Carney, who everybody knows is a pretty good guy -- in fact, a
very good journalist over the years -- he calls him a liar, a paid liar.

You know, I don`t know -- I always disliked that word. I don`t use it. I
always think once you say that, you`re just kicking the table over in terms
of any kind of decent political relationship. What are you going to say
next? Well, I know you`re a liar, but. It does seem to be a game changer
in the worst way of politics.

Your thoughts. He`s a liar, the president`s press secretary.

AXELROD: You know, Chris, first of all, I know Jay very well, as you do.
And I agree with you --

MATTHEWS: I respect him an awful lot. And I don`t understand this rotten
language being used.

AXELROD: He`s a good guy. But beyond that, look, the danger for the
Republicans is always that they will go too far. I think that there is a
legitimate reason for Congress to ask what happened at the IRS. I don`t
begrudge them that.

But to take it as a kind of search-and-destroy mission, and then go over
the top with language like that, I think, is going to damage them. And
this is exactly what we saw going into the `98 election. Obviously, they
had impeachment going on then.

MATTHEWS: Yes, I know.

AXELROD: It`s this overheated rhetoric --

MATTHEWS: Well, let me -- let me go back to what Howard and I were talking
about. Back in October of 2010, a month before the Republicans took the
House and got the subpoena power, Issa was already gearing up to make a
name for himself.

Take a listen.

(BEGIN AUDIO CLIP)

REP. DARRELL ISSA (R), CALIFORNIA: It`s going to be acrimonious. There`s
no question. There`ll be a certain degree of gridlock as the president
adjusts to the fact that he has been one of the most corrupt presidents in
modern times.

(END AUDIO CLIP)

MATTHEWS: What idiotic talk! Until the president adjusts himself to the -
- what kind of -- what does the sentence structure mean? Until the
president adjusts himself to the fact that he`s been the most corrupt
president in history -- what are you talking about? What does it mean?

I want to go to the next point here, but I want to stop on this point.
What kind of logical statement is that? Until the president adjusts to the
fact that he`s one of the most corrupt presidents in modern -- how do you
adjust to that fact?

It doesn`t even make any sense, David. What kind of English is that?

AXELROD: Well, look, I think the bottom line is that what makes it more
ludicrous than just the fact of it, it`s not what the American people
believe. It`s not what the American people know. It`s not how they
perceive Barack Obama. So when you use language like that, you may thrill
the id, you may thrill the base, but most Americans just shake their heads
and say what you`re saying, which is, What are you talking about?

So you know, this really underscores the problem of the Republican Party.
Now, Issa was less active before the election than people expected him to
be. I wonder if the party tried to bridle him --

MATTHEWS: Yes.

AXELROD: -- a little before that election because they thought there`d
be a negative backlash to it. But obviously, it`s Issa unchained now.

MATTHEWS: Yes, it is. Well, then (INAUDIBLE) Politico (INAUDIBLE) I want
Howard to get in here. November 8th Politico article, just five days or
days after the election, this past election -- at this point, Issa is the
incoming chairman, as I said of the -- the article, by the way, is entitled
"Issa plans hundreds of hearings."

Here`s an excerpt of the article. "Issa told Politico in an interview that
he wants each of his seven subcommittees to hold one or two hearings each
week. `I want seven hearings a week times 40 weeks.`" This is Issa.
"Issa sees the committee`s role as not policy but to, quote, `measure
failures.`"

This is the purpose of the guy`s life.

FINEMAN: Yes. And I know Darrell Issa and I`ve covered him, and he`s a
smart guy, but he needs some advice. And what he should do is follow the
example of John McCain, who was on NBC and MSNBC this morning. McCain`s
approach was not in anger but in sorrow, not jumping to any conclusions,
Let`s take our time. Let`s not overreach here. Let`s be careful. Let`s
look at the facts.

And that`s the approach, if you`re going to accept the legitimacy of this -
- and I agree with David, there are things that need to be looked into,
especially at the IRS.

MATTHEWS: Do you know how far Issa is from that?

(CROSSTALK)

FINEMAN: I know how far he is.

MATTHEWS: He`s guilty, let`s have a hearing and prove it.

FINEMAN: I know. But what I also know about Darrell Issa is that he`s a
guy who chafes under the -- what he sees is the idea is he`s not properly
respected in Washington.

MATTHEWS: Well, let me get -- let me try a little --

(CROSSTALK)

MATTHEWS: You`re talking about id here.

FINEMAN: David`s engaging a little psychology. I was going to do the
same.

MATTHEWS: I`ll give you worse (ph) (INAUDIBLE) He spent 35 -- 13 million
bucks and threw it away trying to be a big-shot senator from California.
That didn`t work. So now he`s trying to make being a congressman, one of
50-some congressmen from California, into a big-shot job. And his way of
becoming a California big shot is to follow the old --

FINEMAN: What he`s going to do --

MATTHEWS: -- technique of Dick Nixon --

(CROSSTALK)

FINEMAN: What he`s going to do -- and David`s brethren and sisters in the
White House are very good at it -- is use the jujitsu of spin and
campaigning to make it about Darrell Issa and not about what happened at
the IRS, right, David?

AXELROD: Well, look --

MATTHEWS: Well, that`s what I`m doing!

(LAUGHTER)

MATTHEWS: I think it is about Darrell Issa because they haven`t gotten a -
- let me ask you this. As a former loyalist to the president and a
permanent lifetime loyalist in a personal sense, have they put a finger --
have they touched the president here?


The IRS thing is run by a Republican, Doug Shulman. He`s probably just a
bureaucrat, not a bad guy, yes, but he certainly didn`t run a very
organized shop over there. Nothing to do with President Obama.

Then you get the stuff with Benghazi. I haven`t heard one word that put a
finger on the president, what he did in that horrible tragedy. By the way,
I keep saying look what happened to us on 9/11. We lost New York. We lost
(ph) Washington. Nobody blamed Bush for being a bad guy.

These Republicans call Obama a bad guy for what happened in frickin`
western Libya during a revolution! It`s unbelievable, the way they set the
-- he`s evil because some people got killed.

No, he isn`t. Something bad and horrible happened to a very good group of
people. And things happen like that and we can find out what happened.
But the immediate assertion -- the guilt and evil of the president is
brought to play. They play by different rules, David. That`s what I
think.

AXELROD: Yes. Well, look, I think there`s no doubt what you say is right.
The inspector general who did the report, independent inspector general,
said there was no evidence of outside influence. There was no evidence of
political influence.

And Howard, you know, I disagree with you in just one sense. I don`t think
anybody in the White House is fearing where this investigation will lead
because they know the truth, which is they didn`t know any -- look, if
there were a political person involved over there, they would have said,
You guys are nuts. What are you doing?

(CROSSTALK)

FINEMAN: -- I don`t think I said that they were fearing it. I said they
were just going to use it as jujitsu.

AXELROD: But I think the bigger jujitsu, the better political argument, is
-- you know, a congressman last week -- Republican congressman said last
week the president`s bringing up the doubling of student loan rates and the
fact that we have to stop them as a way of distracting people from the IRS
controversy.

(LAUGHTER)

AXELROD: Well, how detached from America can you be? And that`s the real
argument --

MATTHEWS: Yes.

AXELROD: -- which is they`re not talking about the stuff that people are
talking about out here in America, you know?

FINEMAN: David, I`m willing to say right now, having just finished my
friend Jonathan Alter`s book, which is about, among other things, the 2012
campaign and how brilliantly it was run and how focused it was, that if the
administration was as vigilant as you guys were in running that campaign,
then I think it`s possible that some of the things that are being attacked
now and investigated now wouldn`t have existed.

MATTHEWS: By the way, David, silence is consent. You don`t have to say a
word. You just let that go. We`ll know what you think.

(LAUGHTER)

MATTHEWS: Now, if you want to talk now, you`re crazy. David Axelrod,
thank you very much.

AXELROD: Good to be with you guys.

MATTHEWS: Thank you, Howard Fineman, for telling the truth.

FINEMAN: Take care.

MATTHEWS: If they ran the government the way -- the politics of the White
House, the way they ran that campaign, this stuff would be all thrown out
the window.

Coming up: Here`s a dose of reality for the Republican Party looking to win
the youth vote. A new report by college Republicans -- pretty smart report
-- finds young voters think the party, the Grand Old Party is racist,
closed-minded, rigid and old-fashioned and says the big reason for the
party`s image problem among the 18 to 29-year-olds is the outrageous
statements made by Republicans themselves. Young people watch television,
they read the paper, they`re on social media. They know what`s going on.

By the way, the IRS isn`t in trouble enough? A new report shows the agency
spent nearly $50 million on conferences and its employees over the past
three years. And House Republicans released this video of IRS workers --
there they are -- line dancing at one of those conferences. Your taxpayer
dollars at work. Anyway, we`ll have more on that bad news from the IRS.

Plus, Jonathan Alter`s inside account of the Obama White House and the 2012
election. Just how close did America come to electing Mitt Romney
president?

Finally, "Let Me Finish" with how these recent charges against the
president have missed the mark totally.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Well, Senator Frank Lautenberg of New Jersey has died now this
morning. The five-term senator was first elected in 1982 after a
successful business career. I`d say. Lautenberg, the last World War II
veteran to serve in the U.S. Senate, will be remembered for his liberal
voting record, for banning smoking on airplanes, for getting the drinking
age raised to 21, and for championing mass transit.

In 2004, he famously took on Dick Cheney for being, quote, "the lead
chicken hawk" after Cheney criticized John Kerry. Now New Jersey`s
governor Chris Christie must name a replacement, and a special election
will be held to fill the remainder of Lautenberg`s term, which is at the
end of 2014.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. Remember the RNC`s autopsy report
that basically described the enormous hole Republicans had to dig out of
with regard to minorities, women and the candidates they recruit? Well,
that report looks tame compared to today`s report by the college Republican
-- actually the College Republican National Committee on how the GOP lost
the youth vote last November.

It starts out, quote, "Our research finds both a dismal present situation
and an incredible opportunity for turning the GOP brand around." I guess
when you`ve hit dismal, the only possible positive spin is that there`s
room for improvement. You can`t go down any further.

Well, it sums up focus group research that shows, quote, "We`ve become the
party that will pat you on your back when you make it but won`t offer a
hand to help you get there." And Latino voters tend to think the GOP
couldn`t care less about them. These are all in the focus group comments.

And when young voters identified by pollsters as winnable, even those that
voted for Obama, were asked, "What words come to mind when you heard
Republican Party," the responses were brutal. "closed-minded," "racist,"
"rigid," "old-fashioned."

Sam Stein covers politics for the HuffingtonPost and Joy Reid is the
managing editor of TheGrio. Both are, of course, MSNBC now veteran
contributors.

(LAUGHTER)

MATTHEWS: Thank you, both. And I tell you, sometimes I wonder why you
have to pay for a report. I want to start with Sam. I mean, sometimes,
you know -- what`s today`s date? You going to put out a report and have
somebody come back with the information or -- you know, we do know that the
Republican Party, based upon its performance in the last campaign, blew it
with the young people, meaning people in their 20s and late teens.

SAM STEIN, HUFFINGTONPOST, MSNBC CONTRIBUTOR: Yes, and this report, it`s
sort of, as you said, stating what is now the obvious. Mitt Romney lost by
five million votes, they estimate, among voters under 30 years old, which
is a huge amount to make up for any candidate.

And the conclusions here are pretty self-explanatory. The Republican
Party, as you mention, in one of these highlights, is there to accept
people when they`ve made a success of themselves but won`t help people make
a success of themselves.

And it goes through a litany of the data points to show that there`s image
problems. But more importantly, I thought, was that the main takeaway is
that there`s a real policy problem, that there is no proactive policy that
the Republican Party has introduced that would captivate a young voter`s
attention at this point in time.

And I think that is the bigger issue facing the GOP, is what can they put
together proactively, as opposed to something they can change
communicatively?

MATTHEWS: Well, let`s talk about the reality because I think the voters
are smart. Joy, I always -- and Sam, I always assume rationality. I don`t
think voters are driven by some sort of unclear charisma. Even with
Reagan, it was -- and Kennedy, it was focused in reality, and FDR. All the
charismatic presidents had clear messages that people clearly understood.

So let me start with Joy on this. Same-sex marriage -- big differential
with people under 30. Let`s be honest about it. I mean, you`re African-
American. I`m not. But I tell you, my sense is you can almost predict a
difference in attitude on ethnic issues based upon age.

People -- 70-year-old white people, I`ll bet they voted overwhelmingly
against Obama. They didn`t even know why they did it, they just did it.
Whereas kids in their 20s said, What`s the issue about ethnicity or race?
And they were open to it -- in fact, maybe thrilled by it. So I think that
-- these issues I think are real. I don`t think it`s about PR or
organization. I think it`s about basic values, differencing -- becoming
different as you get -- in the younger groups.

Your thoughts? Your experience?

JOY REID, THEGRIO.COM, MSNBC CONTRIBUTOR: Yes, no, I totally agree with
you. You have a president who sort of represents Generation X values.
Right? He listens to hip-hop. He listens to Jay-Z. He kind of signifies
to a younger voter like their cool uncle, right? So, it`s different to --

(CROSSTALK)

MATTHEWS: Well, he also sings Al Green, so he`s not that cool.

REID: And Al Green.

MATTHEWS: OK.

REID: So, he`s got a little bit of both. And he`s just on the cusp of Gen
X. Right?

MATTHEWS: Yes.

REID: But I think to younger voters, especially when you look at how
culture has sort of metastasized across race, so hip-hop is not just an
African-American form of music. White kids are listening to it, too.

The same cultural cues work for white and black younger voters. And when
you have the Republican Party essentially have a huge over-the-top anti
reaction to the election of this president where everything they have got
is thrown into hating this president, denying that his election was valid,
throwing everything they have got at him, you`re also reacting against the
whole cultural norm that defines younger people.

MATTHEWS: Yes, I think so.

REID: So, younger people look at this overreaction by Republicans who
generally are older and whiter, and they see a generational problem there,
too. They`re like your mean dad.

Obama`s like your cool uncle. It`s not hard to figure out which side young
people are going to pick.

MATTHEWS: I`m wondering when hip-hop is going to get to my little station.
I listen to `60s --

(CROSSTALK)

STEIN: It might take a while.

MATTHEWS: -- on XM.

MATTHEWS: It may not break through my brain yet.

(LAUGHTER)

MATTHEWS: Anyway the College Republicans report also cites bumbling 2012
candidates for the party`s misfortune -- quote -- "It`s not hard to find
examples of Republican missteps in the 2012 election that enhanced this
brand challenge, whether the infamous 47 percent remarks made by Romney or
the `legitimate rape` comments made by Republican Todd Akin in his Senate
campaign. Then there were numerous examples of Republican leaders making
statements that were terribly out of step with where voters, particularly
young voters stand."

Sam, jump on that because I think words do matter because they convey
ideas.

STEIN: Sure.

MATTHEWS: And ideas convey policy and values.

Again, I believe the voter is rational. They`re voting for what they
believe in, what they connect with. And I think that Romney, not an evil
guy, seemed like at least a square, as we used to say.

STEIN: Yes.

MATTHEWS: You know, a guy not connecting at all. And then all these
platitudinous things about same-sex and abortion, nobody really believed
him on those. He just said what he had to say..

(CROSSTALK)

STEIN: The words matter --

(CROSSTALK)

MATTHEWS: Because he believed it, too.

STEIN: The words matter to the extent that they echo or confirm a policy
standpoint.

And I want to point out two things. One was gay marriage. For the young
generation, this really is a civil rights issue. If you are against LGBT
causes, it is tantamount to almost bigotry. And that`s because a lot of
young people, myself included, happen to know people who are gay or are
related to people who are gay.

And it`s just a facet of our lives that the elder generations have not yet
experienced and never will. But that`s the future. And the Republican
Party probably has to understand that.

And the second thing, and it`s a little bit harder to explain, is health
care. But I think, for the Latino community especially, health care reform
was a big deal. It was a promise to move up the economic ladder, because
health care can be such a burdensome --

(CROSSTALK)

MATTHEWS: Why do you think it worked with them? Why did it work? Sam,
you know so much. Why do you think it worked particularly well with a
Latino community, which includes, by the way, people who have been here 200
or 300 years, not just people that got here this generation?

STEIN: Because it`s not -- it`s not -- it`s an economic issue for them.
It is a matter of survival economically as well.

And, listen, I think part of the problem was not just that the Republican
Party was anti-Obamacare. It was that they never filled in the gap about
what they would replace it with.

MATTHEWS: Exactly.

STEIN: And so what we had a month ago was Eric Cantor putting out a bill,
a very, you know, sensible conservative bill that would have expanded high-
risk pools using funds from preventative health care in Obamacare.

It was just transferring money. He couldn`t get it through the Republican
House. He had to -- he had to pull that off the floor.

MATTHEWS: Yes.

STEIN: I think that`s a huge signal to the Latino community, to other
communities that the Republican Party isn`t putting out a platform that
they can attach to.

(CROSSTALK)

MATTHEWS: And here`s a takeaway, Joy. I want you to -- here`s a takeaway.
I like to give people takeaways on this show. It`s a teaching role here we
have.

Look at this, 18-to-29-year-old voting bloc. Look how it`s gone. They
haven`t always voted different than older people. In 1984, for example,
Ronald Reagan won 59 percent of the youth vote to Walter Mondale`s 40
percent. That spread reflected the overall national vote, same thing, same
exact vote. And by 2008, the youth vote had pulled far away from the
national vote in supporting Obama.

That year, the president got 66 percent of the youth vote going up to age
28, to McCain`s 32 percent, putting the president`s success with young
voters 13 points ahead of the overall national vote.

So, Joy, this disconnect isn`t endemic. It`s not historic.

REID: Right.

MATTHEWS: The inability of the Republican Party to reflect the new -- the
views and news of the people in their 20s and late teens is new and a big
problem for them.

REID: Yes, no.

And every president has had it different. With Kennedy, it was also this
politics of aesthetic. Right? He represented that generational change.
Reagan represented the politics of assertiveness. And I think that there
was a point at the `80s where the younger voter wanted an assertive
president, somebody who could stick out America`s chest again. And that
really appealed to younger people.

So, you`re absolutely right. The Republican Party has not always had the
problem. And Reagan was a much older man, but he could still channel --
maybe because he had that he Hollywood background -- something that
appealed to a younger person and to even some Democrats who voted for him.

But if we go back just for one second, policy does matter, too -- you
talked about health care. The Obama folks and the Democrats did a lot of
things wrong when it came to selling the Obamacare. But the one thing they
did right was that they put the parts of it early that appealed to younger
people.

Being able to stay on your parents` insurance, I think Republicans
underestimated just how appealing that would be not just to the moms and
the dads, but to the kids.

MATTHEWS: Yes.

REID: If you`re a college graduate, not having to worry about that, and
being able to stay on your parents` insurance until you`re 26 was huge.

STEIN: Yes.

REID: And also the ability to get things like free mammograms and other
sort of preventive care, for young women, when they graduated from college,
that sort of void you go into on health care if you don`t have a job that
gives you benefits, those things really appeal to younger people, to women,
and to minorities.

MATTHEWS: Yes.

REID: And so that`s one of the reasons Obamacare has stuck in the younger
communities and among minority voters.

MATTHEWS: You`re amazing. You`re amazing. You talk faster as me. You`re
as smart as me or smarter.

(LAUGHTER)

MATTHEWS: And everybody I bump into says you`re great.

REID: Thank you.

MATTHEWS: So, you`re unbelievable. Joy, you are something.

And, Sam, you`re great, too, I guess.

STEIN: Oh, thank you.

(LAUGHTER)

MATTHEWS: Just kidding, Sam.

(LAUGHTER)

REID: Appreciate it.

MATTHEWS: You`re not -- you`re catching on. You`re really good.

STEIN: I`m almost as good as Joy.

MATTHEWS: I can`t even figure out -- I can`t even figure out your
politics, Sam. And I have been on with you maybe 100 times now. And I
can`t figure you out yet. I think I have figured out Joy.

STEIN: Well, thank you.

MATTHEWS: She`s like me. I haven`t figured you out.

(LAUGHTER)

MATTHEWS: Up next, was Virginia`s Republican candidate for governor
actually for his far-right running mate before he was against him? This is
fascinating. He is trying to disentangle himself from E.W. Jackson, who`s
pretty wild.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

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

First to Virginia`s race for governor. Remember when Republican
gubernatorial candidate Ken Cuccinelli said this about his party`s nominee
for lieutenant governor, E.W. Jackson?

Quote: "We are not defending any of our running mate`s statements now or in
the future."

What E.W. Jackson, the Republican governor for lieutenant governor, said
about Planned Parenthood is likely in that mix of statements.

(BEGIN VIDEO CLIP)

BISHOP E.W. JACKSON (R), LIEUTENANT GUBERNATORIAL CANDIDATE: The Democrat
Party has created an unholy alliance between certain so-called civil rights
leaders and Planned Parenthood, which has killed unborn black babies by the
tens of millions. Planned Parenthood has been far more lethal to black
lives than the KKK ever was.

(END VIDEO CLIP)

MATTHEWS: Well, here`s a new development. Jackson now says Cuccinelli
nudged him to run for lieutenant governor back in 2010 when Jackson was
running for the U.S. Senate.

Jackson told "The Washington Post" -- quote -- "Cuccinelli said,
essentially, I think you would make a good candidate for lieutenant
governor. Have you thought about it? I do remember him suggesting if it
worked out, he would be proud to have me as a running mate."

Well, the statement prompted a response from Cuccinelli`s spokesman, who
said -- chalked it off to a possible miscommunication -- quote -- "Ken
asked why the Senate and if he ever thought to run for anything else like
maybe lieutenant governor. E.W. may have misconstrued that as a direct
ask."

Well, I would have.

Next, an update from the fringe. We go to Cathie Adams, the former chair
of the Texas Republican Party. The idea that anti-tax crusader Grover
Norquist is a secret Muslim is nothing new for the far right. They point
to Norquist`s Muslim outreach group and his marriage to a Muslim woman as
evidence.

At a recent Tea Party event, Cathie Adams floated some more, well, she
calls it evidence.

(BEGIN AUDIO CLIP)

CATHIE ADAMS, PRESIDENT, TEXAS EAGLE FORUM: Many of us know him because
oftentimes we like what he says about economic issues.

But Grover Norquist is trouble with a capital T. As you see, he has a
beard and he`s showing signs of converting to Islam himself. He`s married
to a Muslim woman, but he denies that he has converted himself. He denies
that.

(END AUDIO CLIP)

MATTHEWS: Well, I guess Abraham Lincoln was a Muslim, too.

Anyway, there`s a reason to suspect someone on a path to radical Islam
because they have a beard? Again, the Lincoln example.

Finally, a break from politics. It`s not just kids and pets that get
spooked by thunder and lightning. Last night`s game at Yankee Stadium got
hit with the rain delays. And there was plenty of thunder in the mix.
Here`s what happened in the Yankees` dugout during one particularly loud
clap.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Booming thunder rocks Yankee Stadium moments ago.
That`s Brett Gardner and company.

(END VIDEO CLIP)

MATTHEWS: Anyway, the poor dears.

(LAUGHTER)

MATTHEWS: And now over to the reaction from the Red Sox in the exact same
moment.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Jarrod Saltalamacchia says, I`m out, no mas.

(END VIDEO CLIP)

MATTHEWS: Wow. A little more subdued.

Both teams spooked by the thunder there. It`s one thing the Yankees and
the Red Sox have in common. They don`t like lightning.

Up next, the IRS is under fire, again, as I said for spending nearly $50
million on conferences for its employees, including this one where IRS
workers were videotaped line dancing. That`s ahead.

And you`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

JULIA BOORSTIN, CNBC CORRESPONDENT: I`m Julia Boorstin with your CNBC
"Market Wrap."

Gains accelerated in the final hour of training. The Dow ends up 138
points. The S&P 500 and Nasdaq add nine.

One big winner today was Merck. Shares jumped nearly 4 percent after the
company`s melanoma drug shrunk tumors in 38 percent of patients with
advanced melanoma.

And automakers Ford and General Motors posted strong sales in May. Sales
at GM rose 3 percent, while Ford surged 14 percent.

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

MATTHEWS: Well, here`s some recent unpleasantness.

Just when you thought it couldn`t get worse at the IRS, a new inspector
general report just out from the Treasury Department, it`s coming out
tomorrow, will detail nearly $50 million spent on conferences for employees
between 2010 and the year 2012. One meeting in Anaheim, California, for
2,600 workers from Maryland, they all trooped out there on an airplane. It
cost $4 million.

Some perceived -- or received perks that included presidential suites,
apparently very expensive, like $3,500 rooms, and baseball tickets. And
employees were shown videos of their colleagues, one even in a leg cast
performing a dance called the Cupid Shuffle.

That video along with a separate "Star Trek" spoof cost the IRS over 50
million bucks. Well, news like this is precisely what Republicans use to
attack big government -- maybe fair enough -- in general and the president,
Obama, in particular. I don`t get that part.

Jonathan Weisman is a congressional reporter reporting on this story for
"The New York Times," and David Corn of course is Washington bureau chief
for "Mother Jones" and is an MSNBC political analyst.

Let`s get the straight scoop.

Jonathan, I was trying to get the datelines here. Doug Shulman, who was a
George W. Bush appointee to head the IRS, was still head of the IRS during
all this escapading, apparently.

JONATHAN WEISMAN, "THE NEW YORK TIMES": That`s right. He was.

He left toward the end of 2012, November 2012. So, in fact, all of those
travels and junkets and things like that were all under his watch.

MATTHEWS: What stuns me is, you know, I can understand in probably a job
that requires a lot of tedious work, hard work, repetitive work, and maybe
certainly indoor work at a desk, you never get up, that they figure that
every couple months they have got to give the employees something to look
forward to. I understand that.

But why do they take 2,600 employees from Lanham, which is out here on the
Beltway, and fly them all the way to California, to Anaheim, for a
conference? Why didn`t they go to, like, Williamsburg or somebody by bus
or something you can do without this enormous expense of travel? Any
explanation?

WEISMAN: Yes, it sounds crazy, especially since, remember, there was the
GSA scandal, the Government Service Administration scandal, over kind of
lavish spending and craziness, and that -- and these things keep cropping
up.

It makes it like Whac-A-Mole. You send some new inspector general, some
new head to stop it, and then some new agency comes up and starts doing it
again. I feel really sorry for Danny Werfel as the guy from the White
House Budget Office just sent over to IRS to stop all this just when all
this is coming up. I mean, he`s a guy who`s basically a green eyeshade
kind of guy who`s experienced in doing this, but he`s got a really
thankless job ahead of him.

MATTHEWS: Yes. Well, this is an example, by the way, the I.G.`s reporting
-- the is not the Republican Party.

DAVID CORN, MSNBC POLITICAL ANALYST: Yes.

MATTHEWS: The I.G., which is part of the U.S. government.

CORN: Yes.

MATTHEWS: By the way, when the Republicans are putting down the U.S.
government, which they have a right to in this case --

CORN: Yes.

MATTHEWS: -- they ought to give a little allowance to the fact this was
discovered by, reported by, and in fact exposed by the I.G.

CORN: In a way, the system worked.

They had this -- I`m all for conferences if they`re going to teach people
how to do things better and boost performance. That`s not so bad. But
when you have these boondoggles, they get reported. The last one they had
was in 2010 of these Anaheim trips, and they stopped it.

So, the last few years, they haven`t done that. So, the I.G., as in the
case of the, you know, of picking on the Tea Party groups, sometimes things
go awry in government, as in private business certainly as well.

But fortunately, in government, you have inspector general. Citigroup
doesn`t have an inspector general.

MATTHEWS: Let me -- let me make a point here that`s very important. When
you sit down and do your taxes, you do your own. Most people do their own.

They`re sitting down and making conscientious decisions to be honest.

CORN: Sure.

MATTHEWS: They make, obviously, the system works today. So, they sit
there and going, should I put this in there, not put this income in?
Should I push a little bit on my deductions? Should I -- they`re thinking
now about these jokers. They`re thinking, oh, I give them a little more
money, a few more bucks, they can have a better trip next year. And it may
not be fair, but nobody wants to be a chump, liberal or Democrat.

CORN: No, no, no.

MATTHEWS: Anyway, a statement on the upcoming I.G. report, acting IRS
commissioner Danny Werfel who is as clean as they can be. He`s just in
there now on the Anaheim meeting. The one where they went all the way from
Maryland, 2,600 employees on an airplane, to have some sort of conference
on the other side of the country.

Quote, "This conference is an unfortunate vestige from a prior era. While
there were legitimate reasons for holding the meeting, many of the expenses
associated with it were inappropriate and should not have occurred."

Well, that`s putting a fairly nice comb on to it.

But what do you make of this, Jonathan, do they know -- let me ask you
this. It`s hard to report the intangible. The old argument was, don`t do
anything if you`re in public life that you don`t want on the front page of
"The New York Times." Where was that whistleblower inside saying, you know
what, we don`t have to meet in Anaheim, why don`t we meet in D.C. at the
National Harbor Place? It`s a pretty nice place. We`ll get some work
done. They go visit the sites in D.C. Why do we have to fly all the way
across the country, all 2,600 people, to meet among ourselves out there?

JONATHAN WEISMAN, THE NEW YORK TIMES: I mean, I think it really does speak
to a culture there because you would think that more than one person would
look at this and say, what are we doing? This just seems wrong.

And this is, remember, the IRS, and this administration, the Obama
administration has been saying the IRS needs more money, needs more money,
more money. More money for IRS enforcement will yield more money into the
Treasury because there`s this huge tax gap of hundreds of billions of
dollars of money that really should be paid and wouldn`t be that hard to
get if we just had somebody on the other end of the line calling you up and
saying, hey, where are your taxes?

But it`s very hard to ask for more money when these things happen.

MATTHEWS: Yes, OK.

WEISMAN: You give these symbolic things for those who don`t want give them
more money. And they`re (INAUDIBLE).

MATTHEWS: First to you, then, David, is the IRS independent of the
treasury secretary? To what extent is it independent? Is it, in fact,
just like any other department of government or sub-department, it`s under
the leadership of the president of the United States as chief executive.
What exempts him from personally going into the IRS and cleaning it up?

Jonathan?

WEISMAN: Well, I`ll tell you -- on one huge thing is civil service rules.

I mean, look, Lois Lerner, who is the head of exempt organizations during
all this IRS targeting of conservative groups, she -- Danny Werfel went in
there, wanted to fire her and she said no. She was hauled in. She said,
no, I`m not going to go. They had to put her on paid administrative leave.

Lois Lerner is still on paid administrative leave. She can`t just leave.
And President Obama has no recourse whatsoever on those matters.

CORN: Yes, it`s a quasi --

MATTHEWS: Does the Republican Party want to fix that? They`re doing all
these probe, do they want to fix that?

CORN: It`s a quasi-independent agency. And they`re --

MATTHEWS: What does that mean? How does the American voter get to
somebody like that?

CORN: Well, there are rules, and you can -- the commissioner can fire
people and they can go through the procedures. The president has a way to
get rid of the commissioner. But the point was there used to be that Nixon
would go in and tell people do this, do that.

MATTHEWS: The average person out there watching right now -- tell them how
to solve this kind of problem because they want it fixed.

CORN: Well, I -- we have a new commissioner, and I think there are ways to
get hi but at the same time, you know, you`re right. You`re absolutely
right. The IRS should be like Cesar`s wife, beyond reproach. But while we
-- you know, obsess about --

MATTHEWS: I`m not obsessing. I want it fixed.

CORN: You know, we`re very selective when it comes to our outrage about
waste in government. And so, "Star Trek" video for $30,000 gets people
really upset, as it should.

MATTHEWS: It`s a total waste. Look at this stuff. It`s role playing
here.

CORN: In a second, the Pentagon is wasting, you know, billions of dollars
--

MATTHEWS: OK. Two wrongs don`t make a right.

(CROSSTALK)

MATTHEWS: Let me tell you what, David. Every time the government screws
up, the Democrats get hurt.

CORN: Of course. That`s right.

MATTHEWS: They`re the party that trusts government more than -- and
Republicans, you can have straight reporting like Jonathan`s and in the
end, the conservatives sit back at home and say I told you they`re a bunch
of bums.

CORN: Yes, they want to discredit, all government.

MATTHEWS: Thank you, Jonathan Weisman. Great reporting. I love "The New
York Times."

And thank you, David Corn. I love, I guess, "Mother Jones."

Up next, inside the Obama White House and the president`s battle for re-
election. This is going to be fascinating. Why the campaign ran so well
while the second term has been in rough patch.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Back in a moment with Jonathan Alter, his new book, a hell of a
book about the Obama White House and the president`s re-election. It`s
called "The Center Holds." Jonathan is joining us next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You know, I recognize that
times have changed since I first spoke to this convention. Times have
changed and so have I. I`m no longer just a candidate. I`m the president.

(CHEERS)

(END VIDEO CLIP)

MATTHEWS: What a line. I`m the president.

Welcome back to HARDBALL.

That was one of the high points of last year`s presidential campaign from
the Democratic point of view. There was certainly many lows from the clown
show that made up the Republican field early on, to the president`s awful
performance, we all agree now, in the first debate.

Jonathan Alter chronicles it all in his book in his new book, "The Center
Holds." He writes the contest between Obama and Romney may have been the
most important in recent history and, quote, "The last election wasn`t the
closest contest of recent times, but it may have been the most
consequential, a hinge of history. The 2012 campaign featured trivial
moments, of course, but it struck me," that`s him talking, he`s right here,
"at its core as the titanic ideological struggle all the way Americans see
themselves, and their obligations to one another. The Social contract
established during the New Deal was on the line."

What I want to know here from Jonathan is how did an election campaign run
so well turn into a second term with so many speed bumps?

Jonathan Alter joins us now.

Now, this is tough because nobody likes to criticize people they know.

JONATHAN ALTER, AUTHOR, "THE CENTER HOLDS": Right.

MATTHEWS: But why did David Plouffe put together a brilliant campaign with
mistakes, but there`s always a coherence to it -- social media, get out the
vote, the young vote, minority vote, blow them away by surprise on Election
Day. It all came together even though I was like scared to death what was
going to happen.

And yet this White House seems to have had no leader -- sure, the president
is titular head. No real chief of staff. Three or four people are
bumbling around trying to avoid getting blamed for something. This White
House is not organized on any way the way campaign was.

Do you know why?

ALTER: I don`t know why. But, you know, Dennis McDonough is pretty new in
the job.

MATTHEWS: Is he the boss?

ALTER: And Obama -- no, Obama is the boss.

MATTHEWS: No, who is the chief of staff? Who runs -- who is the chief
operating officer?

ALTER: They have a small circle. They don`t have a chief operating
officer. Remember what Princess Diana said when Prince Charles had his
mistress who is now his wife? He said the marriage got a little crowded,
there were three of us.

Well, that`s what it felt like to people like Bill Daley and Jack Lew,
anybody who was chief of staff in that White House, because there was a
group that includes Valerie Jarrett, Pete Roust, a small group of other
people around.

MATTHEWS: That does it ever work for president.

ALTER: It doesn`t work as well as it should have.

MATTHEWS: I`ve only got one motto. Jim Baker, the president is the boss.
He sets the ideological course. He puts in charge a chief of staff whose
job is to hire and to fire, make sure people obey the president, throughout
the government -- IRS, everywhere -- a complete span of control. That`s
how presidencies work.

When you don`t run it that way, you`ve got to explain why. And I have a
real problem. If Valerie Jarrett is so powerful, and it comes across in
your book, you don`t say negative things about her, incredibly powerful.
Why doesn`t she become chief of staff? I don`t understand.

ALTER: She`s actually -- she would not to be a good chief of staff. That
doesn`t match up well with her strengths. And there is a lot of fear of
her.

MATTHEWS: But your book makes clear that she`s boss --

ALTER: No, she`s not the boss of that White House.

(CROSSTALK)

MATTHEWS: You said that she undercut -- you said that she undercut a
number of the chiefs of staff.

ALTER: She did, but that doesn`t mean that she would be better in the job.
Look, I mean, the problem with Valerie Jarrett`s role is it`s like the CEO
putting his sister in charge of marketing. He describes her as a sister
figure.

MATTHEWS: Yes.

ALTER: Very close confidant who probably shouldn`t have all these line
responsibilities. It`s the blurring of lines.

But that part about the White House is such a small part of my book.

MATTHEWS: I know. Well, let`s -- you have the right to push the book
here. What I like about it is it`s clarity of writing, and I want to talk
about a couple of things and I read parts of that, the beginning is really
gripping.

Let me ask you about the debates. I wasn`t the only one that went nuts
when I saw faltering in the first debate. It`s like he was overwhelmed by
the arrogance of Mitt Romney. How did that happened? Romney owned that
stage for some reason.

ALTER: Well, he -- the fascinating thing to me and I`m interested in
what`s going on behind closed doors, not the out in front of 70 million
people. So I don`t actually write very much about the debate itself. But
in debate prep, Obama was 0 for 6, 0 for 6.

MATTHEWS: Against John Kerry.

ALTER: Everybody around him knew -- against John Kerry playing Romney.
Everybody knew he was going blow the debate.

MATTHEWS: He said when the red light goes on, I`m going to be all right,
in the book.

ALTER: And he wasn`t.

And then, afterward, you know, he was very honest about eventually, you
know, conceded that he completely blew. I think his disdain for Romney
worried both him and his aides, that it would spill over in the debate.

MATTHEWS: Yes.

ALTER: So he pulled back to much. It was almost like Michael Sheehan, the
debate coach said, it was like watching a man running under water. You
know, you`ve got no --

MATTHEWS: Why did he win the later debates?

ALTER: Well, because he`s the guy who wants to have the ball when the game
is on the line and hit that three pointer. And so, he said to his staff,
look, I don`t like debates. I wasn`t good at them in the past. I will win
the second debate. I will win the third debate.

When he focuses, he delivers because he`s a talented politician when he
puts his mind to it. His problem is he thinks -- doesn`t like to think of
himself as a politician --

MATTHEWS: I like the line in the second debate, "Proceed, Governor."

(CROSSTALK)

ALTER: They explain how they were in a hotel, they planted this whole
thing.

MATTHEWS: Read the book, everybody. Read the book if you love politics
like we do. The book is called "The Center Holds" by one of our great
political historians.

Thank you, Jonathan.

ALTER: Thanks, Chris.

MATTHEWS: We`ll be right back after this.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this.

There are two points I think everyone watching here can agree upon.

Point one: the charges against the president have missed the mark. They
are not about him personally because the cases have come together as
scandals have occurred without him being involved. That doesn`t mean they
don`t involve trouble. Simply that they don`t point to the president as
the troublemaker nor do they necessarily point to corruption. Much of this
could just be governmental or, rather, political ineptitude.

But this gets to my second point -- a failure of sharp, quick, on-the-job
politics. I still don`t understand why the president wasn`t on top of the
IRS mess from the moment his people heard about it. He could have been
right there backing up the inspector general, could have been the guy
wearing the white hat instead of the one taking flack, he could have been
on top of this mess instead of being vulnerable to charges of being behind
it.

I can continue to think the White House lacks a strong chain of command
that the president trusts to keep him politically strong. As we read in
Jonathan Alter`s new book, "The Center Holds," the White House lacks the
strong organizational coherence that the campaign had.

If anyone disagrees, from inside or outside the White House, please tell me
the chief of staff of the White House is the top person reporting to the
president. Tell me that he has the authority, the ability to hire and fire
and that he is the one giving orders on the president`s behalf. That he
has the authority and the power to do so.

I just don`t see it. What I see are a group of people who aren`t confident
the president has their back, not confident therefore to cover his back.
I`m calling it as I see it.

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

"POLITICS NATION" with Al Sharpton starts right now.


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