updated 8/22/2013 12:04:12 PM ET 2013-08-22T16:04:12

HARDBALL
August 21, 2013

Guests: Michael Tomasky, Jim Moore, Chad Brown, Dana Milbank, Chris Van Hollen, Nia-Malika Henderson, Katy Atkinson


CHRIS MATTHEWS, MSNBC HOST: Cruisin` for a bruisin`?

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington.

Tonight, invasion of the body snatchers. The soul of a major American
political party is suddenly up for grabs. The party of Lincoln and the
Emancipation Proclamation, of Teddy Roosevelt and an American Constitution
-- actually, the American conservative -- conservation movement, the party
of Ronald Reagan, who signed the deal with the Soviets that eliminated a
whole category of nuclear weapons could be going ballistic.

Ted Cruz of Texas, grabbing the lingo of the Cuban missile crisis, talks in
brinksmanship terms about shutting down the American government. He speaks
in cold war language of not blinking when it happens, letting the
government drop before him as he gazes on in cold contempt. He uses the
tactics of Joe McCarthy, suggesting that now Defense Secretary Chuck Hagel,
a fellow Republican, might be an agent of this country`s enemies, Iran and
North Korea.

Will the Republican Party fight back? Will they refuse to let their
party`s soul be grabbed by this new hard right that hearkens back to the
worst methods of the early 1950s? Will they, or will they buckle and let
the Cruzes and the Pauls and the rest dictate the new terms of political
warfare in this country, where no one blinks even when the U.S. government
defaults on its debts, goes bankrupt and leaves the world`s creditors to
pick up the pieces?

Michael Tomasky is special correspondent for "Newsweek" and the DailyBeast
and editor of the journal "Democracy." And Jim Moore is director of
Progress Texas, a political action committee. He was also co-author of
"Bush`s Brain."

Anyway, let`s talk about this thing now with Ted Cruz. Let`s take a look
at what happened last night and -- what happened there. Let`s talk about -
- for Republicans, by the way, before we get to some of the pictures, who
care about winning in the future, some of the extreme tactics by people
like Ted Cruz and others, like threatening a government shutdown in order
to defund the Affordable Care Act, makes them nervous.

Here`s what Republican strategist Mike Murphy -- and he`s one of the smart
guys out there -- here`s what he told "The Washington Post." "The party" -
- that`s the Republican Party -- "is acting as if the entire world is a GOP
primary, and that`s a very dangerous way to operate. We have massive image
problems with the greater electorate, and the silly antics of the purist
wing are making our dire problems even worse."

Mike, Mike Murphy`s a smart guy. He has to win elections. What`s Cruz up
to?

MICHAEL TOMASKY, "NEWSWEEK": Cruz is running for president. There`s no
question about it.

MATTHEWS: But does he win the presidency on the hardest right we`ve ever
seen?

TOMASKY: I doubt he`s going to win the presidency, but I wouldn`t put it
past him winning the nomination. I think it`s possible. He`s a very smart
guy. He`s very smart.

We watched that town hall last night. He had 1,000 people there. He knows
what he`s doing. He knows what he`s saying. Picking "Obama care" as his
issue to go after -- that is the reddest of the red meat for those folks,
and he can`t --

MATTHEWS: Going after a matter of law.

TOMASKY: Yes, well --

MATTHEWS: It is an act of law.

TOMASKY: Of course it is.

MATTHEWS: It is not just "Obama care."

TOMASKY: Of course it isn`t.

MATTHEWS: The Affordable Care Act of 2010.

Well, let`s take a look. You brought it up. Here`s last night. Ted Cruz
rallied the base, as you said, Michael, against any attempts to compromise
on health care, or in his words, blink. There`s the language of the Cuban
missile crisis. Don`t blink.

Let`s watch.

(BEGIN VIDEO CLIP)

SEN. TED CRUZ (R), TEXAS: What happens next is President Obama and Harry
Reid are going to scream and yell, Those mean, nasty Republicans are
threatening to shut down the federal government!

(LAUGHTER)

CRUZ: What has to happen after that is we`ve got to do something that
conservatives haven`t done in a long time. We`ve got to stand up and win
the argument! If you have an impasse, you want to know one side or the
other has to blink. How do we win this fight? Don`t blink!

(CHEERS AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: Jim Moore, what`s the appeal of that Cuban missile crisis lingo,
where, of course, the Soviets blinked and they took out their missiles? Is
it that way now? It`s not American politics and debate anymore, it`s down
to, basically, cold war brinkmanship. We (INAUDIBLE) bring down the
government to win.

JIM MOORE, CO-AUTHOR "BUSH`S BRAIN": Chris, I think the same thing is
happening here that has been happening all along for Senator Cruz. And he
sort of has become the de facto brand for the Republican Party. And when
he starts into this sort of nonsense, he ends up being the image that the
rest of America gets about Republicans.

And people like Lamar Alexander and everybody else who`s complaining about
all of this, they are offering him this vacuum because they are unwilling
to anger the folks that are going to vote in the primary by going out and
offering some leadership. Instead, they`re letting Cruz become their voice
to get the base fired up, which is good for Cruz, but as everybody has
suggested, it just isn`t good for the Republican Party in the general
election.

MATTHEWS: Well, I think --

MOORE: And when you start this stuff about blinking, you end up with a
confrontation that doesn`t get resolved and leaves the country in a
standoff mess.

MATTHEWS: You`re talking about a guy actually running for president and
using this language and actually asking the American people, I guess,
implicitly to give him the nuclear football. Give him the buttons. Give
him the codes. A guy like that, who talks and thinks like this in these
cold war terms, given the power to blow us up.

I mean, at one point, do you separate just good rhetoric and rabble-rousing
with possibly governing this country? That`s my question to you, Jim.
Could some people say, Give him the power?

MOORE: Well, the problem -- the problem with this whole "Don`t blink" --

MATTHEWS: Who would say that?

MOORE: Well, I mean, I think the problem with this whole "Don`t blink"
ideology and I think a person who isn`t very bright says that. And I think
Mr. -- Senator Cruz`s intellect is wildly overrated at this point because
it`s easy to go out and agitate people and get them fired up.

But the problem with all of this is, if you`re going to sand there and not
blink, you end up with a country that doesn`t have a government, that
doesn`t have funding, that doesn`t have the services that it normally
provides. And if he wants to shut down the government, then he has the
military and everything else to worry about.

Largely, if you ask me, this is wildly irresponsible on his part, and the
Republican Party needs to do something about mitigating what he`s doing to
their party and ultimately what he could do to this country and its
government.

MATTHEWS: Well, here he is. Cruz said Republicans need to turn the
argument around, he says, on President Obama, and he says, make him
responsible for the government shutdown through some weird logic there
because he insists on funding his health care law. In other words, it`s
the president`s fault he wants to carry out the law. He also said -- Cruz
said -- that the idea that the government shutdown was such a bad things in
the `90s was overblown.

Of course, let`s get this straight. He`s not just talking about a
government shutdown. He`s talking about default. He`s talking about going
to the Chinese and everybody else in the world who has our paper and
saying, Go ahead and for our money back, we`re finished.

TOMASKY: He`s talking about the whole thing. And this kind of rhetoric,
Chris, it just grows and grows and it builds like a snowball rolling down
the hill. You can`t stop it because it demands absolute --

MATTHEWS: Why do you think, Michael, it`s working? Why is it working with
the hard, nasty -- well, angry, nasty right?

TOMASKY: They demand absolute purity. They -- absolute purity. You know,
Lamar Alexander, pretty conservative guy, very conservative voting record.
But he voted or the immigration bill. He voted --

MATTHEWS: OK --

TOMASKY: -- to confirm a couple of these people, and boom, that`s it.
That`s all you need.

MATTHEWS: -- let`s hear the pitch. Here he is -- here is, Ted Cruz down
in Texas the other night.

(BEGIN VIDEO CLIP)

CRUZ: If President Obama decides that he`s going to force a partial
temporary government shutdown -- and it`s worth noting the last time that
happened, we saw, number one, the parade of horribles people like to talk
about on TV didn`t happen. What happened was a temporary suspension of
nonessential federal government spending.

(END VIDEO CLIP)

MATTHEWS: Well, that`s, of course, what happens if he does blink! Of
course -- what -- this is -- this is ridiculous! This is playing around
with this nuclear button for a while and see what happens, you know? Of
course, if you don`t do it, it doesn`t -- it doesn`t do it. But if both
sides take that point of view, what happens?

TOMASKY: Then we do have a shutdown.

MATTHEWS: And we have a default and it keeps going!

TOMASKY: Right. But I think Obama is going to stand this time. I mean,
he knows that he caved in 2011, so I think he`s going to stand a little
tougher. But I do think most people are going to blame the Republicans
because most people know the Republicans are up here saying no to
everything and causing more trouble.

MATTHEWS: OK. Jim you said something -- I mean, he`s -- he`s not the
oldest guy in the world. I`m older than him, obviously. But I was
thinking, Jim, does he have any history under his belt? I mean, he came
from an interesting background. And I`m with him and his family about
having, you know, his father`s country stolen from him by the communists in
Cuba. Having your country stolen from you isn`t something you forget for
three minutes any time in your life. I`m with him on that.

But does he -- and he has a sense of the blink because that`s old cold war
Cuban missile crisis lingo. I`m all with him on that in its place. Does
he have a sense of who Joe McCarthy was? Does he have a sense of how
tricky the Cuban missile crisis really ended up to be, how close it came?

And it took Khrushchev and Kennedy to work it out, people that did agree to
sort of agree under the table to agree with the Jupiter missiles in Turkey.
They found a way to work it out. That`s a story of compromise, not of
blowing up the world or brinksmanship. That`s how we got through the Cuban
missile crisis, not by either guy blinking but by both sides saying, Let`s
not blow up the world! That`s what it -- does he know that? Does this guy
know that?

MOORE: Well, I think -- I don`t know if he does. I think, though, that to
the extent that your parents` experience often informs your politics, we
get a twisted sort of thing with him. One is the Cuba thing. But on the
other hand, he comes into the -- he comes into the world, into a country
with socialized medicine, probably at a public system that he is now
denouncing this country having.

But if he has that kind of background, that kind of perspective, it`s been
closely held, Chris, because he was a solicitor general, a low-profile guy.
He sort of came out of nowhere. And I think his election ends up being an
anomaly simply because of the fact that if it weren`t for the runoff, if it
weren`t for a poorly run campaign by the lieutenant governor and a vote in
July and the Tea Party turnout, he would not have won.

MATTHEWS: Again, I want to make the point. If you make any reference to
blinking in American politics, anybody who knows the history of not
blinking, goes back to Dean Rusk, the secretary of state saying, I think
the other side blinked, with Khrushchev decided not to push it -- but he
decided not to he push it and stand up to his own right wing in his
country, to the military, because he was able to get a concession from
Kennedy. You pull your missiles out of Cuba, we`ll pull them out of
Turkey. It was under the table and it ended up working.

Let`s take a look -- I want to go to something here that has bothered me
about this guy. It`s not his ideology. There are plenty of right-wingers
around. It`s the way he`s used the tricks of Joe McCarthy.

And I want to go back now to what he said about Chuck Hagel, who is a
centrist. Chuck Hagel is not a right-winger or a left-winger. He`s a
moderate Republican from Nebraska, not exactly the West Side of New York.
He`s a moderate.

Look at the language he used at him when he wanted to shoot this guy down.
And I`ve accused him of McCarthy tactics. I want you to show here why I`ve
done that. Here he was at the nomination hearing for Chuck Hagel back in
February this year, and here Cruz, the senator from Texas, relied on
innuendo and guilt by association.

Let`s watch him in action. This is McCarthy stuff.

(BEGIN VIDEO CLIP)

CRUZ: We saw with his nomination something truly extraordinary, which is
the government of Iran formally and publicly praising the nomination of a
defense secretary. I would suggest to you that to my knowledge, that is
unprecedented to see a foreign nation like Iran publicly celebrating a
nomination!

(END VIDEO CLIP)

MATTHEWS: Jim, he went on to say that the guy may have taken money from
North Korea, too. He may be working for them. This is Chuck Hagel, our
now secretary of defense. He may have been working for the North Korea.
He may have been an agent of the Iranians.

Doesn`t he know that kind of talk is not acceptable, that it is Joe
McCarthy?

MOORE: Let me put it --

MATTHEWS: Doesn`t he know this? You can`t talk like this in America? I
accept the fact decent American, born in Canada, but he`s an American, but
this kind of talk I don`t think is the way we talk in this country. Your
thoughts.

MOORE: We have some vile politics down here in Texas from time to time,
but this -- this kind of language has transcended even the things that you
see down here.

And as you know, Chris, the races down here can get about as nasty as they
ever get anywhere. And Senator Cruz has sort of taken this thing way out
to the edge and he`s made the middle very uncomfortable. And I`m talking
about Texas conservatives. I`m not talking about conservatives outside of
this state. He`s making people very uncomfortable in his home state.

TOMASKY: Chris, he knows what he`s doing. He knows exactly what he`s
doing. You should have seen the right wing on Twitter and on blogs a
couple of days after he said those things about Hagel. They adored him.
They fell in love with him then. He knows what he`s doing.

MATTHEWS: Well, so do we. Thank you, Michael Tomasky, and Jim Moore.
Thank you both for coming on for this smart look at this guy when it`s
still time to do something about him.

Coming up: The hard lurch to the right means the Republican Party`s over
for a growing number of actual Republicans. And now the co-chair Polk
County, Iowa, Republican Party -- that`s in Des Moines -- that includes Des
Moines -- has resigned because he says the GOP has veered too far right for
him and condones hateful speech, he says. He`s going to talk to us in just
a moment here.

Also, the scandal that never was and still isn`t, I think. We`re learning
more about progressive-sounding groups that were flagged by the IRS.

And if at first you don`t secede -- some Tea Partiers in northern Colorado,
of all places, want to carve out their own right-wing state in Colorado
because they`ve decided Colorado is too liberal.

Finally, pin the blame on the donkey. In other words, if you`re a
Republican, blame Obama for everything, even if it turns out it was
Hurricane Katrina that happened under W. Don`t you remember?

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: We`ve talked here a lot about how Congress`s automatic across-
the-board spending cuts are having real, very real, damaging effects on a
lot of people around the country. Well, we got some more evidence this
week of the extent of that damage.

Catch this. The Department of Health and Human Services reports that more
than 57,000 children have been forced out of Head Start through the funding
cuts to that program, one of the great programs, Head Start. Head Start
helps lower-income children, as you all know, under the age of 5 get a leg
up so they can start school with the other kids.

The budget cut slashed $400 million in the program, and that`s the biggest
hit in Head Start funding since the program even started back in `65.

And we`ll be right back. And that`s bad news.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. We just told you about the GOP`s
civil war going on, with Ted Cruz leading the attack. Now we`ll introduce
you to some fed-up Republicans who are actually leaving the party,
including one life-long Republican county chairman who resigned just
recently in disgust.

First there`s the former GOP staffer and cancer survivor who`s currently
without health insurance because, of all things, his sleep apnea was
considered a pre-existing condition. He says he will absolutely sign up
for the Affordable Care Act`s health insurance exchanges and says the GOP`s
fight against the health care law has left him too dismayed to call himself
a Republican.

Of the Republican theatrics, he says, "We have people treating government
like a Broadway play, like it`s some sort of entertainment."

And then in Virginia, a long-time Republican consultant has jumped the
party, endorsing Democrat Terry McAuliffe for governor and becoming a paid
adviser to the campaign.

And perhaps most telling of all, in the place on the U.S. map that`s ground
zero for presidential campaigns, and that`s Iowa, in Polk County, the GOP
co-chair there has resigned from the party, writing, in part, "I changed my
voter registration to independent today, severing all ties to the
Republican Party. I`m disappointed with the Republican Party at the
national level. I`m disappointed with the Republican Party at the state
level. I`m disappointed with the Republican Party at the countywide level.
I find it increasingly difficult to defend issues and statements made by
party leaders and officials from all three levels."

Well, the last straw for this former Republican, Iowa congressman Steve
King`s explanation for why he opposes immigration reform like the Dream
Act.

(BEGIN VIDEO CLIP)

REP. STEVE KING (R), IOWA: For everyone who`s a valedictorian, there`s
another 100 out there that they weigh 130 pounds and they`ve got calves the
size of cantaloupes because they`re hauling 75 pounds of marijuana across
the desert.

(END VIDEO CLIP)

MATTHEWS: The official Republican position on marijuana, immigration and
Hispanics.

Anyway, former Polk County Iowa GOP co-chair Chad Brown joins me now, along
with "Washington Post" political columnist, the great Dana Milbank.

Chad, you know, I -- when I look at -- I think this Steve King thing is so
fraught with stuff. Here`s a guy whose brain puts together this weird
simultaneous equation. People come across the border from Mexico or
somewhere else in Latin America, they`re all of a certain size, but they`re
that big, wide legs that he compares to, of all the fruits in the world,
cantaloupe, and they`re carrying 75 pounds of marijuana.

I was trying to figure out how much 75 pounds of marijuana would look like.
It`d be bigger than this whole room, 75 pounds! What -- how does he put
his head around all these negative, diabolic thoughts just to show how much
he has contempt for Latinos?

I think you`re smiling because I`m smiling, it`s so hideous. But it isn`t
bad political thinking, it`s weird. It`s weird. Your thoughts. Tell me
why you quit the party, by the way.

CHAD BROWN, FMR. CO-CHAIR, POLK CTY. IOWA GOP: Well, it was a decision
that was very personal for me. I spoke with several friends, family
members, a pastor. I felt uncomfortable with a lot of the hateful
rhetoric. And with these issues, the immigration issue, for example, it`s
the rhetoric and not just from Representative King but social media is
everywhere with -- with real -- with just rhetoric that`s hostile.

And it`s one thing to disagree with President Obama`s immigration plan. I
personally disagree with portions of it and -- but to go after the
children, to go after immigrants crossing the border, and, plus, more than
half the immigrants don`t even cross the border. They overstay their
visas.

So it is surprising and upsetting and it becomes increasingly difficult to
back a party that continues down this road.

MATTHEWS: When did it smack you?

(CROSSTALK)

MATTHEWS: Chad, when did it hit you in the head that the party has
shifted? I mean, was it the arrival of Obama that just people couldn`t
stand the idea he`s president?

What is it that made them flip in the direction that made you say I can`t
follow these guys anymore?

BROWN: Well, you know, I have been a lifelong Republican. I was very
happy to vote for Senator Dole, Senator McCain. I voted for Romney in 2012
because I felt that he was the right man for the job between the two.

But I will say that the Republican Party that used to espouse the big tent
of President Eisenhower, even President Reagan, has shifted so far to the
right now that -- that it`s disturbing really, too. I felt uncomfortable
at several meetings with other Republicans because of the rhetoric. And so
I decided to make the change.

I was looking into it for, oh, several months now.

MATTHEWS: Yes.

BROWN: But, in particular, the deafening silence of -- in response to
Republican Representative Steve King`s remarks, that was the last straw, I
would say.

MATTHEWS: You know, Dana, you`re pretty good at satire. But it`s hard to
beat the band with this stuff. I sometimes think what`s more embarrassing
to the GOP these days, not in history, but these days, the stuff they put
in their platform which they really try to believe -- they don`t really
want to believe anymore about abortion rights and gay rights? It`s so out
of date, a lot of it.

But the stuff they say in the back room when nobody is supposed to be
watching, the 47 percent stuff, the Obama hates white people, the Steve
King crazy stuff.

DANA MILBANK, NATIONAL POLITICAL REPORTER, "THE WASHINGTON POST": Right.

MATTHEWS: You wonder, is it impulsive stuff that just comes out of them or
the stuff that they actually type out and think about? What is worse?

MILBANK: It`s a combination. There always seems to be a tape recorder in
these rooms. And it`s usually going --

(CROSSTALK)

MATTHEWS: Well, it`s the bartender sometimes.

MILBANK: So, they might want to be wise to this.

But I think what`s happening here is, this is a reaction to something
that`s been going on for some time. And Chad and the others are sort of
data points here. The Republican Party has been crumbling for some period
of time. And it was analogous I think when the Democratic Party crumbled
in the South.

You didn`t realize how bad it was until all of a sudden things really
started to pick up like this. You have got a lot of people, main street
Republicans, Chamber of Commerce Republicans. The phrase I`m hearing all
the time is, "I`m a Republican, but."

And there`s like, they`re not Democrats. You don`t hear this man becoming
a Democrat. But they`re saying I don`t belong in this party anymore and
they don`t know the quite what to do. They don`t seem to have the ability
to change it.

MATTHEWS: You know, Chad, back in the 1950s, a lot of people where I grew
up in Pennsylvania, especially near the suburbs, we grew up in the city,
but near the suburbs, a lot of people switched the registration from right-
wing Republican to independent. They were still Eisenhower Republicans,
but they felt there was just too much right-wing action out there.

And tell me why you went independent, not Democrat. That`s interesting.

BROWN: Well, I`m still looking, but with the independents, I -- I`m still
conservative. I would consider myself conservative by 1980s standards or
1970s standards.

MATTHEWS: OK, suppose Chris Christie got -- suppose Chris Christie got the
nomination. Let me test you, Chad. You`re on HARDBALL here.

Suppose Chad -- not Chad, but Chris Christie got the nomination of your
party.

BROWN: Sure.

MATTHEWS: I don`t think he`s going to get it. I think the party`s way too
right-wing for him.

BROWN: Yes. That never --

MATTHEWS: But if he does and he comes out as -- suppose he won the
nomination. Would you be a Republican again?

BROWN: I would have to see who the Democrats would nominate.

MATTHEWS: OK.

BROWN: Chris Christie, I just -- that would be impossible. He will never
get the nomination, at least not in Iowa at the caucuses. There`s just no
chance, no support at all for him.

MATTHEWS: Oh, not in Iowa, not in your state. Forget that. How about if
he wins because of New Hampshire and some other states that are a little
more centrist?

BROWN: Sure.

MATTHEWS: How about if it`s Hillary Rodham Clinton against Chris Christie?
Where are you? Are you a Republican, a Democrat or an independent? What
are you? Come on.

BROWN: When I was -- when I was growing up, it was more about the economy
and taxes. And now it`s my -- now that I have a child, I look at
education. That`s very important.

I look at the gun issue, the gun lobby, for example. I would have to look
at Hillary Clinton.

MATTHEWS: Yes. She`s better on guns. There you got it.

Is that the party? That`s what you`re seeing out there.

MILBANK: It`s extraordinary.

And I think Chad is trying to say he`s not a Democrat. He`s not changed to
some liberal. He`s the same conservative he always was. But it`s -- even
a conservative Republican is finding it very difficult to be Republican.

MATTHEWS: OK. Let me tell you what I just heard there. Hillary Clinton
will appeal to the middle. I think she will. I think she`s more hawkish
than Obama, now a hawk, but more hawkish, tough on foreign policy.

And I think she`s more with the constituency of the Democratic Party than
Obama is. I think the Clintons have held -- held strong here in these last
five years.

(LAUGHTER)

MATTHEWS: Anyway, Chad Brown, thank you, sir. Good luck in your party
picking.

And Dana -- and your independence.

And Dana Milbank, as always, with your sarcasm.

A very important programming note. Couldn`t be more important. Starting
this coming Monday, just like five days from now, you can watch HARDBALL,
but only at 7:00 Eastern, not 5:00 anymore. Don`t go on and watch 5:00.
There`s another show on, on there, Ed Schultz. But we`re on at 7:00. So,
please change your viewing habits.

I`m going to talk more about why that is important at the end of the show,
because it really is important that you give us a shot and give us a 7:00
watch. We`re going to start all next week.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL and time for our big "Sideshow" tonight.

The Nixon Library released the final batch of White House tapes today, over
3,000 hours of recordings that cover Vietnam, China, and, of course,
Watergate. Well, historians will be combing through the recordings for a
long time to come. We have found an Oval Office conversation already that
took place between President Nixon and a young can George Herbert Walker
Bush, the senior Bush, who was the chairman of the Republican National
Committee at the time.

Listen to how Chairman Bush broaches the delicate subject of dirty tricks,
asking President Nixon whether he should divulge the information he has,
that Bush has, directly to the president or if he should go to Henry
Petersen, who was investigating Watergate for the Justice Department. Take
a listen.

(BEGIN AUDIO CLIP)

GEORGE H.W. BUSH, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: Would you
rather not know details if I told you something or would you rather I tell
Petersen something that I know?

RICHARD NIXON, PRESIDENT OF THE UNITED STATES: No, you tell me. I can
tell Petersen.

BUSH: This guy Ken Reitz is involved.

NIXON: How is he involved?

BUSH: He is involved because he was in the dirty tricks department.

(END AUDIO CLIP)

MATTHEWS: Wow. Well, the conversation continues as Bush continues to
report on the activities of Ken Reitz, who was a former youth director for
the 1972 campaign, but who worked at the National Committee at the time of
this conversation.

(BEGIN AUDIO CLIP)

BUSH: He said that he was involved in handling large sums of money, which
gets him on the fence with GAO and cash money. He says that he was
involved in doing some espionage on Muskie and stuff like that. And he
said that --

(CROSSTALK)

NIXON: Well, what did he do on Muskie?

BUSH: Well, I didn`t go into it.

(CROSSTALK)

BUSH: I didn`t go into it.

(CROSSTALK)

NIXON: I talked to Petersen about all that. And he said espionage is --
there`s no problem on that, because everybody spies on everybody else, as
long as you don`t use electronic devices.

BUSH: I didn`t -- I don`t know whether he did or not. But all I know is
that when I said --

NIXON: Did he use any bugging? That`s what I want to know.

BUSH: I don`t know, sir.

(END AUDIO CLIP)

MATTHEWS: Bugging. There`s Nixon talking about bugging and electronic
snooping.

Anyway, "The New York Times" reported later today that that month in 1973,
that Reitz had been the paymaster for a $450-a-month spy operation that had
infiltrated opposition groups. He resigned just four days after that
conversation. Wow. This keeps coming, the Nixon stuff.

Up next, new information about the reported IRS scandal, remember that, the
reputed IRS scandal.

You`re watching HARDBALL, the place for politics.

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

(BEGIN VIDEO CLIP)

REP. DARRELL ISSA (R-CA), OVERSIGHT AND GOVERNMENT REFORM COMMITTEE
CHAIRMAN: How dare the administration imply that they`re going to get to
the bottom of it? This was the targeting of the president`s political
enemies effectively and lies about it during the election year so that it
wasn`t discovered until afterwards.

For years, the president bashed the Tea Party groups. He was very public
against these groups. And on his behalf, perhaps not on his request, on
his behalf, the IRS executed a delaying tactic against the very groups that
he talked about.

(END VIDEO CLIP)

MATTHEWS: Anyway, welcome back to HARDBALL.

That was Republican Darrell Issa, of course, head of the House Oversight
Committee. As you saw there, Issa has repeatedly tried to link -- tried to
link the IRS` targeting of conservative groups to the White House. And
he`s failed to do it every single time.

But, to this point, his witch-hunt has found no witches, not in the White
House, of course. In fact, the entire narrative of this so-called scandal,
this reputed scandal, has gotten pretty hard to follow. In fact, is it a
scandal?

Well, yesterday, House Democrats released new evidence that the IRS was
also targeting liberal groups in addition to flagging groups with names
like progressive. They also flagged applicants using terms like emerge and
of course ACORN, a group on the left, which were associated with liberal
causes. Issa`s camp have dismissed those reports, of course, which could
be evidence that he`s using the issue to score political points instead of
actually trying to solve whatever problems there are at the IRS.

U.S. Congressman Chris Van Hollen, who is my congressman, my wife`s
congressman, is on the issue today. He announced he`s filing a lawsuit
against the IRS which would attempt to the clarify the murky tax law which
actually led to this brouhaha in the first place. Van Hollen is arguing
the law, as it was originally written, says that tax-exempt groups must be
exclusively involved in social warfare, in other words, no politics.

Translation: If you want to be a tax-exempt 501(c)(4) organization, you
can`t do anything political. Problem solved.

U.S. Congressman Van Hollen is a Democrat from member. He`s the ranking
member on the Budget Committee and he joins us right now.

Congressman, thank you so much for joining me.

REP. CHRIS VAN HOLLEN (D), MARYLAND: Good to be with you.

MATTHEWS: I got you this morning. I watching you on Chuck`s show, on
"POLITICAL RUNDOWN." And I thought that was the answer, just stop giving
any of these tax bennies to people if they`re involved in politics.

Treat them like 501(c)(3)s. You can`t do it.

VAN HOLLEN: Well, and the law has been very clear.

Look, Darrell Issa is operating in a totally fact-free zone. What we know
now is the IRS was looking at political groups both on the right and the
left. Now, why is the IRS trying to determine if you as an organization
are involved mostly in social welfare activities or political activities?

Because they have a regulation that says that if your primary purpose is
social welfare, then you could also do some politics. But that regulation,
as you just said, is totally inconsistent with the way the law itself is
written.

MATTHEWS: Yes.

VAN HOLLEN: The law is clear. If you want to be involved as a 501(c)(4),
you`re exclusively involved in social welfare activities, no politics.

Now, why has this become to matter -- this is an old regulation. It`s come
to matter more since the Citizens United case, Supreme Court case, because
what they said was that corporations, including nonprofits, could all of a
sudden dump millions of dollars into campaigns. So if they allowed some of
this political activity, they could dump millions of dollars.

MATTHEWS: Why don`t they keep it simple? One of the nice things about
having my job, Congressman -- and you may resent it -- some people do -- I
can`t give a political contribution of five bucks. I can`t give a nickel.

And because I can`t, it keeps it simple. People call me and say, can you
help? I say, no, you can`t. I can`t even attend. I don`t want people
thinking I have given money. I think tax laws should be written that way.

VAN HOLLEN: Yes.

And you know what? The law itself was. The law says -- if you look up
your statute, the law stays it you want to be a 501(c)(4) organization, you
can only, only, exclusively engage in social welfare activities.

Somehow, when the regulators back in 1959 wrote the regulations, they
totally murdered the plain meaning of the law. And they said exclusive
doesn`t mean exclusive. It means primary.

MATTHEWS: OK. Let`s get to the --

VAN HOLLEN: That`s the root of the problem.

MATTHEWS: OK. Let`s get to the moral issue.

VAN HOLLEN: Yes.

MATTHEWS: People that drive a truck or work hard for a living --

VAN HOLLEN: Yes.

MATTHEWS: -- work with their hands, they have got to pay taxes.

VAN HOLLEN: That`s right.

MATTHEWS: So, why should a group that is out there playing politics not
pay taxes?

It seems to me, if you have got a political agenda, pay for it, damn it.
Don`t ask the government to pay for it.

VAN HOLLEN: Well --

(CROSSTALK)

MATTHEWS: And that gets to the question of the way we always -- you can
give all the money you want, if you`re wealthy, to a politician, but you
can`t get any tax break for it.

VAN HOLLEN: That`s right.

MATTHEWS: There`s a principle involved.

VAN HOLLEN: That`s right.

MATTHEWS: The government doesn`t subsidize elections.

Now, why did we get into -- why did it creep into the woodwork here that
some organizations, whatever they were called, the Tea Party Express -- I
don`t know -- I don`t want to get into the names -- but what organizations
got the idea, you know what, we got an opening here, we got a loophole
here, and we can start doing politics, promoting issues, promoting
candidates, and not pay taxes?

VAN HOLLEN: Well, I mean, the regulation, this loophole left the door open
to groups whether you`re on the right or the left to do actually that. And
the reason they use this one, Chris, is because you can do it secretly
without telling the public who is funding the campaign.

Now, if you want to engage in politics, you can spend as much money as you
want. File under Section 527. That`s also tax-exempt. That organization
--

(CROSSTALK)

MATTHEWS: Could the president do this? I hate to sound like a real lefty
here, but sometimes the real lefties are right. Is this something the
president could do by executive order? Just call the IRS and stop giving
tax-exempt status to anybody playing politics.

VAN HOLLEN: Well --

MATTHEWS: That`s what the law says. I want to enforce.

VAN HOLLEN: Certainly, the IRS --

MATTHEWS: Why can`t the attorney general do this?

VAN HOLLEN: Well, the IRS could certainly, on its own initiative, take
review the regulations and say, we want to conform the regulation. In
fact, we petition the IRS, a group -- some groups did two years ago to do
exactly that. They haven`t done it yet, which is why you need a lawsuit.
Just conform with the law.

MATTHEWS: Thank you very much, U.S. Congressman Chris Van Hollen.

VAN HOLLEN: Thanks, Chris.

MATTHEWS: For more, I`m joined right now by the great Nia-Malika Henderson
of "The Washington Post." Nobody covers politics and elections better --
and government better than "The Washington Post."

NIA-MALIKA HENDERSON, THE WASHINGTON POST: Thank you, Chris.

MATTHEWS: I`m looking at these numbers right now. It just seems to me
that as right as the congressman was on the facts, I believe that the
public knowledge is so murky and so confused, if you will, there`s been so
much nonsense thrown.

Look at this, in June of this year, 47 percent blame the White House. Back
in May, a month before, it was only 37 percent. Increasingly in this fog
of political war, the White House is getting blamed for something they
probably had nothing to do with.

HENDERSON: That`s right. And you`ve had Republicans run a very effective
campaign on this issue of the IRS and sort of essentially saying that the
White House culture of corruption led to this whole scandal at the IRS. It
turns out not to be much of a scandal and I think in dribs and drabs, the
whole idea that the IRS was targeting not only Tea Party groups but
progressive groups started to come out in the summer.

MATTHEWS: Yes.

HENDERSON: But in some ways, you feel also that the White House was in
some ways caught off guard by this. They came out very slow in some ways
to respond to this. You remember President Obama had the press conference.
He said he learned about the whole thing in the paper.

There`s sort of legal reasons why he couldn`t comment or know about this
early on. But I think Republicans have just been very effective and now,
they are doing something else with this, and linking the IRS to Obamacare
and saying that, you know, the IRS is going to have access to all of this
personal information as they implement Obamacare, not true. But it doesn`t
prevent them from using the whole idea of the IRS as sort of propaganda.

MATTHEWS: OK, a tough question. You saw the movie "The War Room," about
the `92 campaign.

HENDERSON: I didn`t see it, but you tell me that.

MATTHEWS: Well, it`s good. It`s about James Carville and George
Stephanopoulos back in his political days.

HENDERSON: OK.

MATTHEWS: And they knew how to take care of a candidate. Something
happened within the news cycle, back again.

(CROSSTALK)

MATTHEWS: Does the White House have a war room?

HENDERSON: You know, it doesn`t seem like they have much of a war room.
You`ve talked about this, Chris -- the whole idea of this president sort of
not really being up for the kind of political engagement that you saw --

MATTHEWS: Yes.

HENDERSON: -- for instance, from Clinton. He doesn`t like the politics
part of it.

And politics is a tough game. It ain`t bean bag. And, oftentimes, you
feel like this is a White House that is slow to punch back. And I think in
this case with the IRS, when you are Republicans.

MATTHEWS: Way too slow. They should have jumped on it and said, we`re the
good guys. That`s the bad guy, the edgy reporter. We`re going to act on
it. We`re going to move on this thing.

By the way, if Hillary Clinton gets in there, there will be a war room.

HENDERSON: Yes, there will be, yes.

MATTHEWS: Anyway, thank you, Nia-Malika, very much for having you as
always.

HENDERSON: Thank you.

MATTHEWS: Up next, secession fever. Some Tea Partiers in Colorado want to
break away and form their own right wing state.

And please remember, starting next Monday, by the way, we totally out of
(INAUDIBLE). We`re not seceding. We`re going to 7:00 Eastern. I know
that means adjusting your evening ritual. I`m asking you to make the move
with me. So, tune in at 7:00 Eastern for the real thing, HARDBALL.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: You`re not going to believe this one. Republicans in Louisiana
want to blame President Obama for the government`s inept response to
Hurricane Katrina down there. Three years before he took office it
occurred.

Well, a new PPP poll of Louisiana Republicans finds that 29 percent of the
Republicans in Louisiana say President Obama was more responsible for the
poor response to Katrina. While 28 percent, one less, in the blame on
George W. Bush, who was actually president at the time.

Another 44 percent to show the murkiness down there in the Big Easy say
they`re not sure who to blame. Think about it, the worst thing that`s
happened down there, they can`t remember which president to blame. They
should blame W.

Anyway, Barack Obama, of course, was a freshman United States senator in
2005 when Katrina blew down the doors of New Orleans. While President Bush
praised his FEMA chief Michael Brown, "You`re doing a heck of a job,
Brownie."

Anyway, remember -- we remember and everybody down there does.

We`ll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEAN CONWAY, WELD CO. COMMISSIONER: I think we`re trying to make a
statement to the legislature and the governor who have been extremely tone-
deaf to the concerns of my constituents, in particularly Weld County, but
throughout northeastern Colorado.

And I will tell you this -- everybody views this as a partisan exercise.
Many of those commissioners are Democrats.

(END VIDEO CLIP)

MATTHEWS: Hmm.

We`re back.

That was Weld County, Colorado board commissioner Mike Freeman explaining
why his county in Colorado is making plans, or trying to, anyway, to secede
from the state of Colorado and form the 51st state. On Monday, Freeman`s
Weld County board of commissioners voted unanimously to put secession on
the countywide ballot this coming November. That`s this fall.

Weld County is one of several rural counties in northeastern Colorado, you
see there on the map, considering secession. County officials say the
progressive legislation passed by Democrats who control the governorship
and state legislature down in Denver, things like gun safety and renewable
energy measures, ignores the interests of their communities.

But seceding from the state of Colorado would require more than just a vote
by the citizen of the county, obviously. Both Colorado`s state
legislature, and most importantly, the United States Congress, the Senate
and the House, would need to approve the partition proposal. Bottom line,
secession is not likely to happen anytime.

Benjy Sarlin is the HARDBALL reporter for MSNBC.com. He`s been covering
the secession movement in Colorado and told me about it. And Katy Atkinson
is a Republican consultant in Colorado.

Benjy, thank you. You`ve been enthusing me with this strange story.

I heard Weld say this is a statement. Is it a statement like Jefferson
Davis, a statement, which was real? Or is it a statement simply to poke
politically at the people in Denver? What`s he up to?

BENJY SARLIN, MSNBC.COM REPORTER: Well, as you said, this isn`t coming
true any time soon. OK? It`s fun to come up with the names for it, the
flag.

MATTHEWS: Let`s just say anytime.

SARLIN: All right. OK. At least not soon, all right? It`s going to be
awhile.

The context here is that the Republican Party in Colorado is basically
ghost of Christmas future for the national GOP. They`ve been bleeding
support from women, from Latinos, from young voters. And what`s happened
is they`ve essentially imploded.

Democrats have complete control of state government right now for pretty
much the first time in generations. And they`re using it to pass a really
robust progressive agenda that includes bills on just this year, gun
control, renewable energy that`s really ticked off the rural areas, civil
unions. It`s a long list.

So, at its heart, this is a political dispute here. It`s a very jarring
situation for some of these voters. The district attorney in Weld County
is Kent Buck who ran as the Tea Partier in 2010 and blew the election
comparing homosexuality to alcoholism.

(CROSSTALK)

SARLIN: Right.

And now, you have this. They`re passing civil unions all of a sudden, just
a few years later. But at its heart, one way to approach this is they
could say, well, we just need to win back those seats and just run a bunch
of moderate Republicans who could win back those unaffiliated voters.
Instead, they`re basically declaring electoral bankruptcy.

Now, we give up, it`s not going to happen. So, let`s just leave.

MATTHEWS: Let me go to Katy Atkinson on this one.

You know, I`ve always found Colorado a hard state to get a fix on. You had
a period of liberalism. You had moderate liberalism with people like Gary
Hart out there. And then it went to the right a bit occasionally.

What is -- what is Colorado`s politics? Is it Gary Hart? Is it hip
liberal? What is it? Is it Michael Bennett, a little more sophisticated
or more moderate? What is it?

KATY ATKINSON, REPUBLICAN CONSULTANT: It swings. I mean, Colorado voters,
if there`s anything Colorado voters hate, it`s an extremist. So, if they
think you`re extreme on the left or extreme on the right, they won`t vote
for you. And they`re convinced -- you know, they`ve been convinced lately
that the Republican candidates they`ve been presented with were extreme on
the right and they`ve gone to the left.

MATTHEWS: So, if Ken Buck had not won that election, Michael Bennett
wouldn`t be the senator from out there. In other words, a moderate
Republican or more centrist Republican would have won? That`s your
thinking?

ATKINSON: Right. The woman who ran in the primary against him, I think
probably could have won that. She was incredibly conservative. I mean,
the fact they painted her as a moderate really makes you chuckle. Very
conservative woman.

But, you know, she might very well have won that race. I -- unfortunately,
my crystal ball wasn`t working at the time so I can`t guarantee it. But --

MATTHEWS: You know, the Democrats make these mistakes now and then, too.
You know, they`ll run somebody way too liberal in North Carolina and you
get Jesse Helms for 24 years or 36 years, right?

SARLIN: Right. Something very similar --

MATTHEWS: They swing too far.

SARLIN: Right. And that`s one of the interesting things here is that they
really have given Republicans an opening in Colorado. John Hickenlooper,
the governor, his approval rating has been dropping. There are some signs
that people are upset with this rapid pace. But unless you win over those
swing voters and convince them that it`s safe to come back to the
Republican Party --

MATTHEWS: You know what smart politicians do? Bill Clinton went too far
when he first got into Little Rock. And then he moved back to the center.
Hillary called herself Mrs. Clinton, made some adjustments, changed her
classes, did things like that, adjusted to the culture.

You`re thoughts, Katy, it`s about that. It`s connecting to the center.

ATKINSON: Absolutely. And here`s what we`re seeing in Colorado. Probably
the worst time to be governor is when both houses of the legislature are
under the control of your party. I think a lot of what we`ve been seeing
happen at the legislative level is not particularly something the governor
wanted to see. The governor`s had a difficult time trying to manage the
legislature.

MATTHEWS: And went too far.

ATKINSON: Yes.

MATTHEWS: We`ll have you back on that, Katy.

Thank you so much, Katy Atkinson --

ATKINSON: You bet.

MATTHEWS: -- and my colleague here -- colleague -- Benjy Sarlin.

We`ll be right back after this.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this:

It`s hard to find political sanity these days. Some balanced view of thing
that also points to what`s best in this country, what is not good in this
country, and what we can do to make things better for the future.

On this program, HARDBALL, I`ve tried to do that. I`ve tried to support
America`s interest in the world, especially our own security while
realizing the limits on what any good government can do when it comes to
our privacy and civil liberties.

I`ve tried to support a woman`s constitutional right but also expressed my
belief that the best most successful way to reduce the number of abortions
in this country -- which is always a matter of true moral contention -- is
to reduce the number of unplanned pregnancies and put the focus there, on
the responsibilities of those who are in so many cases the people most
responsible for unplanned pregnancies, for unprotected sex -- men.

I believe the pro-life people should spend more time acting on the takeoff
and not just the landing. As much time thinking about the men responsible
as they do putting the heat on the woman less responsible.

I try to be balanced in this matter of stop and frisk. Respecting the
danger of good police work and our desire -- especially those of us who
live in tough neighborhoods -- to have police doing their job, which
includes respecting the people they take the responsibility to protect.

We do it a little different here on HARDBALL and that`s why I want you out
there watching when we go exclusively next week to 7:00 Eastern. This is
important stuff. It`s not easy. I need you with me.

That`s HARDBALL for now. Thanks for being with us.

"POLITICS NATION" with Al Sharpton starts right now.


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