updated 10/1/2013 3:24:49 PM ET 2013-10-01T19:24:49

HARDBALL
September 30, 2013

Guesst: Jay Carney, A.B. Stoddard, Steve Rattner, Gerry Connolly

CHRIS MATTHEWS, HOST: Time to hold.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in New York.

"Let Me Start" tonight with this. There is a time to parlay and a time to
wait, hold your ground and wait for the other side to wilt. President
Obama could chat amiably with the Republican House members, and it`s my
prediction he would get nothing, nada, zilch, zero.

No, this is a time to wait for the Republican speaker of the House to come
to him and ask for a meeting. When will that be? It will be when the mail
from the folks back home begins to contain letters of stern, even angry
complaint that they can`t get government to do anything, can`t get them to
open the gates of the national parks, can`t get them to send their
paychecks, can`t get them to do what they, as citizens of this country,
have a right to demand they do.

It`s when those letters begin barking up against the congressman`s office
that the gentleman or gentlelady from wherever begins to wonder if this
shutting down of the government was as nifty an idea as Ted Cruz told them
it would be. It`s then that they will begin pulling the speaker aside and
asking if it might just be possible that the Tea Party hayride has had all
the fun it`s likely to have this fall and it`s time for it to head back to
the barn.

So stand tough, Mr. President. You`re already standing tall. There`s
nobody in the world who expects you to give in to this strange kidnapping,
where the perp in this case, instead of grabbing the baby and asking for
the money, has brazenly grabbed hold of the money and is now demanding your
baby. Don`t give it to them, Mr. President. It`s our baby, too.

Jay Carney is the White House press secretary. Jay, let`s start with this.
President Obama launched a political offensive tonight against the
Republicans. And just hours to go before a government shutdown, the
president spoke plainly and forcefully about the radical faction of
Republicans who have taken the government as their hostage.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: -- sometimes to the
consternation of my own party. But one faction of one party in one house
of Congress in one branch of government doesn`t get to shut down the entire
government just to re-fight the results of an election.

Keeping the people`s government open is not a concession to me. Keeping
vital services running and hundreds of thousands of Americans on the job is
not something you give to the other side. It`s our basic responsibility.

(END VIDEO CLIP)

MATTHEWS: President Obama also made it clear to Republicans that their
brand of extortion, is what he called it, won`t win them any concessions
from the White House or the American people when it comes to the
president`s health care law.

(BEGIN VIDEO CLIP)

OBAMA: You don`t get to extract a ransom for doing your job, for doing
what you`re supposed to be doing anyway, or just because there`s a law
there that you don`t like.

(END VIDEO CLIP)

MATTHEWS: Jay Carney, thank you for joining us. Sometimes I sense in the
president -- and you`re closer to him than we are in the press -- a sense
of confidence, of almost Zen-like calmness that he`s on the right side of
this fight and the other is on the wrong side. Is that the case?

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Well, Chris, thank you for having
me. He certainly believes in his heart that it is the right thing to do to
insist that Congress fund the government and not shut it down. It`s the
right thing to do to insist that Congress fulfill its responsibilities to
pay its bills and not let the United States default.

I mean, think about it this way. The president`s not asking for anything
in return for this, the way that the Republicans are adding demands to the
agreement to fulfill their essential responsibilities.

If the president were behaving the way Republicans were behaving, he would
say, You know what? I want to attach a background check bill. The public
supports it. I couldn`t get it through the Senate, but I`m going to attach
this. And I won`t sign a bill that funds the government unless Republicans
agree to that, or I won`t sign a bill that raises the debt ceiling unless
Republicans agree to some item of mine.

And he`s not saying that, and Democrats aren`t saying that. They`re simply
saying that Congress should pay our bills and Congress should ensure that
the government doesn`t shut down.

MATTHEWS: Is he talking to the speaker tonight? Has he spoken with him
yet tonight?

CARNEY: You know, I don`t have a conversation right now to sort of read
out to you, Chris. The president did say earlier today that he would be
speaking with the leaders today. So I expect that will happen.

But look, I think that the action right now is in Congress. The
opportunity right now is in the House. The House could act very easily to
pass what the Senate passed, which is a clean continuing resolution, a bill
that cleanly extends government funding so that the government doesn`t shut
down at midnight and does so for several weeks, so that there`s time to
negotiate over our priorities and how we fund the government and how we
ensure that the middle class is secure.

So the House can do that. And there are stories out there now about how
there is far and away a majority in the House that`s willing to do that if
only the speaker of the House would put that bill on the floor for a vote.

MATTHEWS: Well, my question to you is a tough one. How long can the
president hold out? Because I do believe that over time, the Tea Party
calls will begin to be overtaken by those excited negatively about the loss
of their government to them. How many weeks will it take -- I think it is
going to be weeks -- for them to -- on other side to get calls from their
district, people at home saying, Stop it already?

CARNEY: Well, the president hopes and we all here hope that it doesn`t
take any time at all, that -- common sense will prevail on Capitol Hill,
that the House will act appropriately, that Speaker Boehner will allow a
vote to come to pass that funds the government, and then in several weeks,
we don`t do this all over again with even higher stakes when it comes to --

MATTHEWS: Yes. Well, don`t you think --

CARNEY: -- making sure to pay our --

MATTHEWS: -- that`s where we`re headed? Does he think we`re --

CARNEY: Well, I hope not, Chris, because the impact of that would be
calamitous, as you know. The shutdown --

MATTHEWS: I know. But the indications are that the right wing in the
Republican Party, who seem to be running this train, are quite willing to
stop the government, and if you listen to them, quite willing to stop the
economy.

CARNEY: Well, I think that`s terrible. And I really think -- I know all
of the accurate analysis about how congressional districts are very, you
know, ideological now and that the Republicans we`re talking about
listening only to conservatives in their very conservative districts. I
get that.

But I think that, you know, Americans are Americans everywhere, and when it
comes to families who are affected by a government shutdown because a
family member is losing a paycheck, or they run a business that depends on
a national park being open, or they have a veteran in their family who
can`t call a veterans call center for help because it`s been shut down,
that they will begin to see that this is a nonsensical approach to getting
our business done in Washington.

We ought to be able to do it in a way that doesn`t affect people`s lives
negatively, the way that the Republicans are taking this.

MATTHEWS: If the speaker is able to take everything off of the bill, the
continuing resolution, make it pretty much clean except for maybe something
like the medical devices thing, something to give them a face saver, would
the president urge the minority leader, Nancy Pelosi, to bring enough
Democrats to help it carry, that kind of motion?

MATTHEWS: Well, you just had a big "if" there. This -- the issue about
the medical device tax is another effort to disrupt and derail, defund
"Obama care," and you know, to delay or affect the implementation --

MATTHEWS: OK.

CARNEY: -- of this important bill. Now -- and here`s the other irony.
Republicans used to claim they would engage in these showdowns because they
were so concerned about deficits and the debt. But you know, Chris -- you
know, that that has come to be --

MATTHEWS: I know. It`s going to be --

(CROSSTALK)

CARNEY: -- because eliminating that tax increases the deficit.

MATTHEWS: Like 29 (INAUDIBLE)

CARNEY: Delaying the implementation of the individual mandate
significantly increases the deficit. I mean, these are -- they`re not even
serious about this issue anymore because they know the president has
presided over a substantial reduction in the deficit since he took office,
and he`s committed to doing more as long as we do it in a responsible way.

MATTHEWS: Jay, thank so much -- Jay Carney, press secretary to President
Obama.

Democrats may be hoping that public outrage over the government shutdown
will knock some sense into House Republicans. Will reason prevail? A new
CNN/ORC poll shows that, yes, more Americans will blame Republicans in
Congress for a shutdown -- 36 percent say they`d blame President Obama
compared to 46 percent who`d blame GOP.

But Republicans get off scot-free among their own party members. A
supermajority of Republicans -- get this -- 66 percent, two thirds -- would
blame Obama for a government shutdown, compared to only 16 percent, 1 in 6,
who`d blame their own party.

And the Republicans won`t lose any standing with independents, either. And
this is bad news for Obama. Independents are evenly split now when it
comes to blaming either party -- 38 percent would blame President Obama
compared to 39 percent who would blame Republicans. No difference there.

So what political incentive is there for Republicans led by Speaker Boehner
to get in line and get the government moving again? Will it be the beating
from the dropping stock market we can expect to continue, the shutting down
of government itself?

Howard Fineman is the editorial director for the HuffingtonPost and an
MSNBC political analyst. Howard, my analysis of this is they`ve been
getting lots of mail for two weeks, thanks to Ted Cruz and Mike Lee and the
rest, saying, Fight the president.

At some point, the letters from the other side, which is, Enough already,
will begin, and my hunch is that by the time they overcome the other
letters, if they do, we`ll have negotiations under way. Your thoughts.

HOWARD FINEMAN, HUFFINGTON POST MEDIA GROUP, MSNBC POLITICAL ANALYST:
Chris, I`ve been on the Hill all day today, and I think that`s exactly
what`s happening right now. The Republicans got a big, fat letter from the
Chamber of Commerce today --

MATTHEWS: Right.

FINEMAN: -- which is equivalent in some ways to a lot of little letters
from a lot of people around the country, the Chamber leaning very hard on
the Republicans not to shut the government down, talking about the economic
consequences.

And don`t forget the Chamber of Commerce has become much more active and
conservative in recent years, Chris. They opposed "Obama care." You know,
they fought the president tooth and nail on budget policy. But here
they`re saying, Look, we can fight about "Obama care" some other time.
Don`t shut the government down.

And there`s late word tonight that as the speaker tries to bring forth yet
another condition-laden spending bill, a continuing resolution, that he`s
facing revolt on both sides. He`s facing a falling away of conservative
support, who no longer think what he`s trying to do is strong enough and
confrontational enough, and a falling away of support from moderate
Republicans who went along with the last one, sort of, but are real sick of
the thing now, especially now that the Chamber of Commerce have gotten
involved.

I think the president`s statement today was very forceful and politically
very effective. And I sense things shifting a little here.

The problem, though, is that Speaker Boehner has now completely lost it.
He`s a weak character to begin with -- completely lost control of the
caucus. It`s not clear where he can go from here if this current plan
fails, which means that the government will shut down tonight.

MATTHEWS: Well, they went from the speaker`s position was shut down "Obama
care" totally, then it was shut down funding it --

FINEMAN: For one year.

MATTHEWS: -- for one year. And now it`s something about the individual
mandate.

FINEMAN: Yes.

MATTHEWS: What`s his next --

FINEMAN: That`s not flying. It doesn`t sound like that`s flying.

MATTHEWS: It`s not flying. So he can`t find a consensus right, left and
center of his party.

FINEMAN: Right. I think that`s what`s happening. And he may be left in
the humiliating position he was in the other year, where if he wants to do
anything, he`s got to get Democratic support for it. That used to be a
good thing. That used to be called bipartisanship.

MATTHEWS: Yes, I know.

FINEMAN: That`s a bad thing in his universe right now. But that`s where
he may end up if he doesn`t want the Republican Party to get hammered as it
increasing will for shutting down the government.

MATTHEWS: What`s the end game here? Could it be some Generalized
commitment by both sides, the president and the speaker, to some kind of
near-term commission or action, or entitlement reform, something that gives
the Republicans something to go home with for maybe half their members to
be satisfied with?

FINEMAN: Right. Well, it`s interesting you mention that. I was speaking
with Senator Pat Leahy earlier today, a Democrat, very, you know,
experienced guy. He`s been around the block a million times.

He said what they should have done is put together some kind of commission.
Yes, "Obama care`s" a huge endeavor and the public phase of it starts
tomorrow, not coincidentally.

MATTHEWS: Yes.

FINEMAN: And Leahy said, Let`s put together a commission, you know, get
the top people from each party, put them in a room. In other words, get
Ted Cruz -- if Ted Cruz is serious, get him in a room with some of the
proponents of "Obama care" and talk about what might need to be changed and
separate that from the question of keeping the government in action.

You know, the other thing that`s happened here, Chris, as you well know, it
used to be that Congress would pass individual spending bills, back when
you were with Tip O`Neill, and so forth.

MATTHEWS: Sure. They had appropriations bills.

FINEMAN: Now they have this continuing resolution, which is for the whole
government.

MATTHEWS: I know.

FINEMAN: And it`s too attractive a nuisance and too attractive a sort of
apocalyptic thing not to draw the Ted Cruz`s of the world into it. That`s
why we`ve got the situation we`ve got here right now.

MATTHEWS: And by the way, Cruz had a lot to do with it, by holding up and
preventing --

FINEMAN: Yes.

MATTHEWS: -- any conference committee between -- meeting between the
Senate and House Budget Committees --

FINEMAN: Yes.

MATTHEWS: -- which then would have set the guidelines for the
Appropriations Committee. By the way, we never really had a total
government shutdown, a U.S. government shutdown back in the `80s because we
had appropriations passed on time --

FINEMAN: Yes, you had different pieces of it.

(CROSSTALK)

MATTHEWS: -- it was partial. Howard Fineman, thank you. You`re an
expert.

Coming up, the man who`s leading Republican lemmings off the hill --
actually, off the cliff -- maybe both -- Ted Cruz. He`s creating anarchy,
and he may be the one guy who benefits the most. He`s getting famous.
Everybody else is getting hurt.

Also, the Democrats` opportunity. By shutting down the government,
Republicans may give the Democrats their main chance to win back the House
next year.

And for years, Republicans have told us it`s all about jobs, jobs, jobs, so
why would they deliberately do something guaranteed to hurt the American
economy? Unless there`s a point to it politically.

"Let Me Finish" tonight, by the way, with an upbeat story of American
politics for a sobering time.

And this is HARDBALL, the place for politics.

(BEGIN VIDEO CLIP)

OBAMA: Republicans have said that if we lock these Americans out of
affordable health care for one more year, if we sacrifice the health care
of millions of Americans, then they`ll fund the government for a couple of
more months. Does anybody truly believe that we won`t have this fight
again in a couple of more months, even at Christmas?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MATTHEWS: The House of Representatives is voting right now on what`s
called the rule vote. That`s Republicans what -- need to pass it in order
to take up their next continuing resolution proposal. And so for (ph)
several Republicans already voted against it. If it doesn`t pass, that
means the proposal wouldn`t be considered on the floor, which would be a
big deal. It has the votes, however.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. As you just saw, I was interrupted
with the news that the House did pass that preliminary vote to allow them
to take up the continuing resolution which Speaker Boehner is presenting to
the House floor. Looks like we`re going to have a government shutdown
tonight.

And welcome back to HARDBALL. Where would we be today if it weren`t for
Ted Cruz? Now, there`s a thought. Would the government be on the verge of
shutting down? Actually, no. Cruz spent the summer whipping up the
Republican base and making them think the goal of defunding the law was
actually achievable. And he spent the past few weeks whipping his fellow
Republicans in Congress, often at the expense of Speaker John Boehner and
his efforts to find a way out of the mess.

Cruz`s absolutist, all-or-nothing approach has earned him enemies in his
own party, of course, but in the power vacuum of Republican leadership
nationally, he`s all but become the de facto leader of the national
Republicans.

Yesterday on "MEET THE PRESS," David Gregory pointed out to Cruz that polls
show the majority of Americans want the Affordable Care Act upheld. It`s
the law, after all. And there are certainly no protests out there in the
streets to do away with the new law.

(BEGIN VIDEO CLIP)

SEN. TED CRUZ (R), TEXAS: The facts are becoming more and more clear that
"Obama care" isn`t working. Every day, that`s becoming more clear.
There`s a reason the unions are jumping ship. One union after another is
saying, Let me out.

Now, why is it that Harry Reid and the Senate Democrats are not willing to
listen to the millions of working men and women --

DAVID GREGORY, MODERATOR, "MEET THE PRESS": Well, wait a second.

(CROSSTALK)

GREGORY: You`re making an argument. I asked you a specific question based
on the facts on the ground. You`ve made all these arguments. My goodness,
you went and spoke for 21 hours to make these arguments. You haven`t moved
anyone.

CRUZ: Oh, look, the American people overwhelmingly reject "Obama care."
They understand it`s not working. The only people who aren`t listening to
the argument are the career politicians in Washington.

The great thing about the Constitution is that it creates a system of
checks and balances, and each branch has the ability to check another.

(END VIDEO CLIP)

MATTHEWS: Well, someone might tell Senator Cruz that the system of checks
and balances worked in this case. The law was passed by Congress, the
Affordable Care Act, the president did sign the Affordable Care Act, and
the Supreme Court weighed in and upheld the Affordable Care Act. The
president was reelected on the Affordable Care Act issue. So what is Cruz
actually talking about here?

David Corn is the Washington bureau chief for "Mother Jones" and Jonathan
Capehart is the opinion writer and columnist for "The Washington Post."
And both are MSNBC political analysts.

I want to start with Jonathan. This is a fascinating bit of leadership.
And I`m not praising it, I`m noting it. Here`s a guy that can come in, a
few months into the Congress, a few months as senator, he upsets his
favorite in the primary, and all of a sudden, he`s instructing the entire
country, at least right of center of the country, on this new look at the
American Constitution.

We pass a law through both Houses of Congress, they reconcile their
differences, out comes the conference report signed by both houses, signed
by the president, reviewed by the Supreme Court, and in this case, the
president gets reelected on that issue against an opponent who`s very much
against it. Case closed.

Oh, no. There`s this new procedure, whereby just as a law`s about to go
into effect -- call it "Cruz control" -- at the last minute, there`s a new
vote, which can make not like sudden death but a complete replay of the
whole game.


reviewed by the Supreme Court. And, in this case, the president gets
reelected on that issue against an opponent who is very much against it.
Case closed.

Oh, no. There`s this new procedure whereby, just as the law is about to go
into effect, call it "Cruz control," at the last minute, there`s a new
vote, which can make not like sudden death, but a complete replay of the
whole game. Everything can go down with one vote. Everything that has
been accomplished can go down with one vote, because he says so.

Now, you have to be scared when somebody like George W. Bush with his
limited abilities, rhetorical and otherwise, was able to take us into war.
Here`s a guy with a brain, obviously, able to take us into a new version of
the Constitution that he has just written on the fly.

JONATHAN CAPEHART, MSNBC CONTRIBUTOR: Right.

And look at this it way, Chris. Here`s a man who is able to fill this
vacuum. He`s able -- he`s been able to rise to the prominence that he`s
been able to rise to because there`s no grownup within the Republican Party
who`s, one, willing to stand up to him, and, two, willing to stand up to
the --

MATTHEWS: Well, who are those people wearing the badges?

(CROSSTALK)

MATTHEWS: OK. Who`s Eric Cantor? Who`s Kevin McCarthy?

CAPEHART: Exactly.

MATTHEWS: Who`s Speaker Boehner? Are they just standing there like
student council presidents? Do they have a real job? Or are they just --
are they cookie pushes?

CAPEHART: Well, they have a real job on paper, it would seem.

MATTHEWS: Well, it doesn`t seem like they`re effective.

(CROSSTALK)

MATTHEWS: Let me go to David on this.

David, I don`t know what to say expect that this guy comes from nowhere and
starts issuing new battle orders and in fact creates a new war to fight and
defines the enemy and seems to be winning with it.

(CROSSTALK)

DAVID CORN, MSNBC POLITICAL ANALYST: Listen, this is not wizardry here.
He`s not hypnotizing the GOP.

The reason he`s getting away with this, Chris, is because he has the base
of the party in his arms. He`s representing where the party has moved.
John Boehner and -- rode into speakership because of the Tea Party. And
he`s been kowtowing to it ever since.

Now this is the energy out there in the party that the party leaders can`t
deny. Today, actually, two, three hours ago, I ran into Trent Lott.
Remember Trent Lott?

MATTHEWS: Sure do.

CORN: We used to think that he was a pretty arch-conservative representing
the conservative wing of the party. I said, how are all your old friends
in the Senate -- he was the majority leader there -- handling what is going
on there?

He said, listen, they`re not happy. One thing they have to do is -- these
are his words -- they have to cut Ted Cruz`s legs out from under him. He
knows there`s a battle here for the heart and soul of the party. It`s just
that Ted Cruz is winning at the moment. And people like Lindsey Graham and
John McCain are in the dust.

MATTHEWS: What is this Rudolph Valentino or this horse whisperer, whatever
you want to call him, what magic words is he whispering into the ears of
House Republicans to have them all, all of them follow him, Jonathan?

CAPEHART: Well, I think David hit on it. And that is Ted Cruz has the
base of the party, the Tea Party base now of the Republican Party wrapped
in his arms.

MATTHEWS: How?

CAPEHART: He`s -- you know, Chris, I`m mystified -- I`m mystified by it.

(LAUGHTER)

CAPEHART: And I`m also mystified by the fact that you could have a senator
whipping votes in the House to defy the speaker.

MATTHEWS: Yes.

CAPEHART: That gets to the big question here, which is, if Speaker Boehner
were really speaker, this would never happen. You think this would happen
when Nancy Pelosi was speaker?

MATTHEWS: No, not when I was there, not when I was there either.

CAPEHART: Not a chance.

(CROSSTALK)

MATTHEWS: Let me tell you, this is wonderful condescension, by the way,
for a senator to come over and chat with his colleagues.

(CROSSTALK)

MATTHEWS: Anyway, "The National Review" -- "The National Review" reported
on something truly remarkable this Friday. After Speaker Boehner tried to
sell his conference on a plan to focus on the debt ceiling coming up
instead of a fight to fund the government right now, Senator Cruz
personally lobbied House Republicans to simply oppose their speaker.

According to "The National Review" -- quote -- "On a Thursday conference
call, a group of House conservatives consulted with Senator Ted Cruz of
Texas about how to respond to the leadership`s fiscal strategy. Sources
who were on the call say Cruz strongly advised them to oppose it and hours
later Speaker John Boehner`s plan fizzled."

He has the power, David Corn, to break the leadership.

CORN: And what`s remarkable here is that reports today are that there
might be up to 175 House Republicans who would vote for a clean C.R. that
would continue this -- the government spending, and that there really are
30 to 60 House Republicans saying no, and maybe as few as 30.

And so John Boehner cannot control a quarter of his party that are
listening more to Ted Cruz than they are to him. And you, having worked
for Tipper -- for Tip, excuse me, back -- back in the `80s, you know what
it takes to be a speaker. Sometimes, you have to be able to control people
and make them do what you don`t want to do.

But John Boehner has had no disciplined. We may see actually a revolt of
the moderates, the so-called moderates tonight or in the next coming days.
This is not over yet, but up to now, Ted Cruz has been whipsawing John
Boehner, who can`t put at bay those 30 hard-core Republicans led by people
like Michele Bachmann.

MATTHEWS: Let`s talk about what could happen here. Jonathan, you first,
as a student, as we all are, of this process, it seems to me, according to
the parliamentarians and other people I have talked to, it`s not hard to
get rid of a speaker if you`re willing to go on the floor and offer up a
privilege motion, basically make a call, get the leadership to get it
scheduled, if the guy breaks with the party.

If he breaks with the party, now, if Boehner says I`m going with the
majority in the House and stop with this Hastert rule and a majority of
Republicans, we`re going to get this government working again. It`s my
job. I took an oath to keep the government working. I`m going to carry
out the oath. I don`t care what the right wing says.

If he does that, will he be challenged or will he be knocked off in fact as
speaker? Do you see that happening?

CAPEHART: I do see that happening.

He would lose his speakership, I think, almost guaranteed. But if he were
to say exactly what you just said, Chris, John Boehner would be a hero.

MATTHEWS: To who?

CAPEHART: Because finally -- well, to the American people, because for
once he is saying he`s staring down the radicals within his party. He`s
being a leader. And he`s -- if it were to happen, preventing the
government from shutting down. Now, he might not be -- he might not be --
he might not be -- wait -- he might not be able to do it now --

(CROSSTALK)

MATTHEWS: To use an infelicitous reference, when is his Sister Souljah
moment when he says you guy are ruining our reputation?

(CROSSTALK)

CAPEHART: Chris, I think it gets -- well, it might not -- it might be too
late to prevent a government shutdown, but it has to be before October 17.
It has to be before the United States crashes through the debt ceiling.

(CROSSTALK)

CORN: John Boehner could get away with it if he thought that Eric Cantor,
Kevin McCarthy and others would not stab him in the back doing so.

We`re talking about maybe 30 members who`d put up a fuss against him, who
might want him out.

MATTHEWS: Well, that`s a fascinating analysis.

(CROSSTALK)

MATTHEWS: Do you think Cantor and the other guy and McCarthy would
undercut him?

(CROSSTALK)

CORN: If Newt Gingrich was able to put down a rebellion, as he did, John
Boehner could with the right leadership skills. Maybe he should read
Chris` book, "Hardball."

(CROSSTALK)

MATTHEWS: No. I think we should read -- I think it`s time to read "Julius
Caesar." I think this is much more appropriate.

CAPEHART: He`s been dying a death by 1,000 cuts for a long time with those
two deputies of his.

CORN: Yes.

MATTHEWS: I know. I know. I know. I don`t know who to trust.

Anyway, thank you.

I don`t know who he trusts. Anyway, I like Boehner. He seems like a guy -
- but he seems like a guy in the old Jack Lemmon movie, "Save the Tiger" or
something.

CAPEHART: Oh, boy, yes.

MATTHEWS: He`s just under assault, this guy.

Anyway, thank you, David Corn. Thank you, Jonathan Capehart.

CAPEHART: Thanks, Chris.

MATTHEWS: Up next, a look back at what happened last time the Republicans
in Congress shut down the government back in `95, under Newt Gingrich, who
started all this.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP, "REAL TIME WITH BILL MAHER")

BILL MAHER, HOST, "REAL TIME WITH BILL MAHER": New rule. Stop asking how
Ted Cruz managed to speak on the Senate floor for 21 hours without taking a
bathroom break. It`s obvious. Who needs a bathroom when you have got that
much crap coming out of your mouth?

(LAUGHTER)

(CHEERING AND APPLAUSE)

MAHER: Since binge-watching is in and filibusters are in, John Boehner
must make a series for Netflix in which he replaces Obama. And of course
it`s called "Orange is the New Black."

(LAUGHTER)

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS: Welcome --

(LAUGHTER)

MATTHEWS: Welcome back to HARDBALL. He can say anything, that guy.

Welcome back to HARDBALL and time for the "Sideshow."

That was Bill Maher on the political theater on Capitol Hill last week.
Well, this week, all eyes are on Congress again as we approach a government
shutdown. It`s worth noting that we have seen this movie before back in
1995 and early `96. That shutdown went on for a total of 28 days, lasting
through the Christmas holidays and into the new year.

We went to the archives and assembled some scenes from back then. And as
you will see, this is one trip down memory lane we certainly are not
looking forward to.

(BEGIN VIDEO CLIP)

TOM BROKAW, NBC NEWS: Tonight, much of the government remains shut down.

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: The government is
partially shutting down.

UNIDENTIFIED FEMALE: Many of Americans` favorite parks and monuments are
closed.

UNIDENTIFIED MALE: Uncollected garbage in the District offers pungent
testimony to the cutbacks in service.

CLINTON: Almost half of the federal government employees are idle.

NEWT GINGRICH (R), FORMER SPEAKER OF THE HOUSE: We will give you the money
to bring back the furloughed employees. You sign on the line.

UNIDENTIFIED MALE: It`s unreal.

UNIDENTIFIED MALE: They`re acting like schoolchildren.

UNIDENTIFIED MALE: It was the biggest one-day decline in more than four
years.

UNIDENTIFIED MALE: I think it`s disgusting. I think it`s pitiful and
sick.

CLINTON: It is wrong for the Congress to shut the government down just to
make a political point the week before Christmas.

UNIDENTIFIED MALE: The only thing working are the political games.

UNIDENTIFIED MALE: They would like to kick out the whole damn bunch of
them now.

UNIDENTIFIED MALE: Cynicism about politics in Washington only deepens.

(END VIDEO CLIP)

MATTHEWS: Do you believe how young Clinton and Newt Gingrich looked in
those pictures?

Anyway, if you think that was bad, just remember the sequel is never as
good as the original.

Up next, the Republican crack-up. Could Democrats actually win back the
House of Representatives next year if the government gets shut down for
real and for long?

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MILISSA REHBERGER, MSNBC CORRESPONDENT: I`m Milissa Rehberger.

Rescue crews are trying to reach five people buried under a rock slide near
Nathrop, Colorado. A 13-year-old girl was already pulled from the rocks
and rushed to the hospital.

President Obama met with Israeli Prime Minister Benjamin Netanyahu in the
Oval Office. He told Netanyahu the U.S. will still consider all options to
keep Iran from developing nuclear weapons.

And Amanda Knox`s third trial for the murder of her former roommate began
in Italy. Knox will not attend -- back to HARDBALL.

(BEGIN VIDEO CLIP)

JON HUNTSMAN, FORMER UNITED STATES AMBASSADOR TO CHINA: Republicans know
this is a loser for them. So Republicans are going to have to learn the
lessons of this whole episode. And that will be, you can`t have an-all-or-
nothing approach.

REP. RAUL LABRADOR (R), IDAHO: But the reality is, the Democrats think
that this is a loser for us. I think everybody agrees that this is a loser
for us if the government shuts down.

(END VIDEO CLIP)

MATTHEWS: Welcome back to HARDBALL.

That was former Republican Governor Jon Huntsman of Utah and Republican
Congressman Raul Labrador of Idaho on "Meet the Press" yesterday with me
acknowledging that a shutdown would be bad politics for their party. Both
said that.

And, as we reported earlier today, today`s CNN/ORC poll shows that 46
percent of Americans would blame Republicans for a shutdown, compared to 36
percent who would blame the president and 13 percent would blame both
sides.

But as we look ahead to the next national referendum, of course the
midterms of 2014, that election coming in that November of next year, the
Republicans may have given the Democrats their only window of hope to take
back Congress. Democrats hold a three-point average in the generic ballot
right now, meaning 3 percent more people say they would vote for a Democrat
next time in those elections prior to the shutdown.

But with the shutdown imminent right now, Democrats are quietly hoping they
can leverage anger at the Republicans in the votes next November.

Joining me right now are MSNBC Joy Reid, who is managing editor of TheGrio,
and A.B. Stoddard, associate editor of "The Hill."

Joy, it`s interesting. I was looking at some math we got courtesy of
Charles Cook, the great election expert, that for Democrats to win the
House next time, they not only have to buck the normal six-year trend, the
second midterm of a presidency, a two-term presidency, which always goes
against the president, dramatically so. They have to buck another trend,
which is Democrats have to carry something like 53.4 percent of the
electorate in the national election across the board in order to win the
House because of the way of gerrymandering and also the way of segregated
housing in this country and neighborhoods.

We know how it works. Big cities tend to be heavily Democrat and
overweight themselves in their own districts, whereas Republicans can skim
by in a suburban district with 53 percent. It just works that way.

Do you think there`s something in this sort of grand betrayal, I would say,
of their jobs which Republicans are engaged in right now, not doing their
duty of keeping the government open, which is their job, not to play
politics? Is this going to hurt them enough to lose the House?

JOY REID, MSNBC CONTRIBUTOR: Well, Chris, the key in that really is going
to be older voters, because the advantage that Republicans normally carry
into midterm elections is the undervoting, the under-representation of
minority voters, younger voters, single women.

Those three cohorts tend not to come out in strong numbers in midterms.
You`re going to have a lot of more anger in a lot of those groups if you
have Head Start shutting down because of this government shutdown --

MATTHEWS: Yes.

REID: -- if you have Women, Infants and Children. That could motivate
single women. It could motivate young moms and mothers. It could motivate
suburban voters.

But what Republicans have is that lock on the older voter, who tend to be
pro-shutdown, at least before it actually kicks in.

MATTHEWS: And then?

REID: If you start seeing pain among military members, you start seeing
pain among in Virginia, in parts of Pennsylvania, where you have got that
older voter, who get disgusted with Republicans, if they stay home in
larger numbers than they normally do in a midterm, that`s the only shot for
Democrats. They have to have disgust with this process by the older,
whiter voter who typically votes Republican.

MATTHEWS: Yes.

And you know one of the small things, A.B., that may not seem normal to
most people, one of the joys of getting older in this country -- and there
are joys -- you get to travel and you get to take time off and go visit our
beautiful sites in the West. They`re all going to be closed.

Imagine getting out there and finding out that your trip to Wyoming, which
is actually a perfect state, except for a couple people that live there,
like the Cheneys, it`s a great state -- just kidding, sort of.

(LAUGHTER)

MATTHEWS: But it`s a beautiful part of the country.

You get a little badge at the age of 65. I got to tell you guys, you will
look forward to this over the next 30 years. It`s a little badge that for
10 bucks you can visit any national park as long as you live. It`s just
one time, $10.

Those won`t work now. And these little things are going to really bug
people now in the next couple weeks, I think, A.B.

A.B. STODDARD, ASSOCIATE EDITOR, "THE HILL": I really do think the
government is going to shut down tonight, Chris. I don`t think it will be
very long-lasting. I don`t think the Republican Party is going to embrace a
long shutdown. And I think that they`re going to take care of this
quickly.

But I do think they`re going to let it happen.

MATTHEWS: How are they going to get out of the Chinese handcuffs they`re
in. They put themselves in?

STODDARD: Well, it`s very simple. You`ve seen moderate Republicans
working tonight. They are the same mind as Senate Republicans give for the
-- you know, save for the four people with Ted Cruz, they want to clean
C.R. They don`t want to shut down the government and they want to move on.

So, this is -- you know, I think there`s support and John Boehner knows
that eventually at some point, he`s going to pass something with 175
Republicans and a bunch of Democrats and he`s going to say I tried it your
way. He might even say we shut down the government. But I don`t think
it`s going to be long lasting.

I think when you look forward to the midterm elections, Joy is right.
Charlie Cook is right. You`ll see an older male -- whiter electorate. And
the Obama coalition tends to not come out. This is a problem with
Obamacare unless it is an immediate overnight success story and we see high
popularity for it next summer, it has not adversely affected consumer
demand or the greater economy at large.

Then, we`re going to see the six-year pattern which is that Republicans are
going to hold their gerrymander seat quite easily. They`ve nearly shut
down the government before. They`ve nearly defaulted before. They
partially shut down the FAA. None of that bothered anybody. They won
their seats back in 2012.

So, I see this as a problem for them building a national coalition for the
White House in 2016. That`s what the party is worried about. I don`t see
this as a midterm issue.

MATTHEWS: Do you think the president should offer to debate Ted Cruz on
national television, Joy?

JOY REID, MSNBC CONTRIBUTOR: No. I don`t think he -- I don`t think the
president needs to elevate Ted Cruz. Ted Cruz`s constituency, his audience
are dido head audience who are listening to talk radio all day and thinking
--

MATTHEWS: They`re shutting down the U.S. government.

REID: And they believe their sort of strange ideology that this is what --
this is what it means to fight. You have this sense among the Republican
base, believe it or not, that their party doesn`t fight, that they let
Obama win. And they want to see themselves win even if it means shutting
down the government.

And I have to disagree with two things that A.B. just said. Number one,
the people who are mostly likely uninsured are minorities, are single
women, are younger people. The estimate of 7 million people, by and large,
getting Obamacare in the first -- if you don`t have insurance at all and
you get it and you finally experience being able to have that card and go
to the doctor, that is going to open you up I think to a message by the
Obama folks who are going to try to really work hard to get out that non-
traditional midterm vote. That`s number one.

Then I think the other issue is, with older voters, despite the fact that,
yes, they are tending to be more conservative. They do lean GOP -- I think
what you said, Chris, does matter. People at a certain point are going to
be disgusted with the gridlock, disgusted with the idea that we can`t have
this move forward.

I think there`s a chance older voters say, you know what, enough of this,
it`s crazy. And I don`t think Republicans are going to learn the right
lesson. They`re going to come out of this feeling more powerful and
they`re going to take the fight to the debt limit which is even worse.

MATTHEWS: I think Ted Cruz is a roman candle. And he`s bright, shiny,
exciting for a short, short period of time.

Thank you, Joy Reid and A.B. Stoddard.

Up next, Republicans like to talk about jobs, who doesn`t? But how many
jobs will be lost if the government shuts down tonight and stays shut down?
A lot of them.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Which states could be most affected by a government shutdown?
Believe it or not -- the red states, the states with the highest percentage
of government employees at every level tend to lean Republican.

Look at this. Here are the five states with the highest percentage of
government employees. Number five, Oklahoma; number four, Mississippi;
number three, New Mexico; number two, Alaska. And the state with the
highest percentage of government employees, Wyoming. I just mentioned it.

Apart from New Mexico, they`re all red states. And red is hell in some
cases.

And 12 states with the lowest percentage of government employees are blue.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL.

If Republicans care about jobs and the economy so much, why are they
marching towards a government shutdown tonight that the Chamber of Commerce
of this country and leading CEO say would hurt jobs and the economy?

As Howard Fineman reported earlier, a letter to Congress put out by the
Chamber of Commerce nationally and signed by 251 organizations in a wide
range of industries cautioned against a shutdown. Quote, "It is not in the
best interest of the employers, employees, or the American people to risk a
government shutdown. It will be economically disruptive and create even
more uncertainties for the U.S. economy.

And half of the CEOs at a Business Roundtable survey said the partisan
budget fights are having a negative impact on their plans for hiring
additional employees over the next six months. See all those red down
arrows, of course. There they are.

That means Wall Street doesn`t like a shutdown either. The Dow today
dropped almost a full percentage point. Nice going by the party that likes
to consider itself pro-business. That`s the Republicans.

Steve Rattner is a former economic adviser to President Obama, of course,
and U.S. Congressman Gerry Connolly represents Northern Virginia, where
residents would take a big economic hit in the government shutdown.

Congressman, thank you for coming on. I`ll get to Steve in a second.

REP. GERRY CONNOLLY (D), VIRGINIA: My pleasure.

MATTHEWS: Just in terms of all politics as local as Tip used to say, what
is it going to mean? I just find it hard to believe that Republicans,
after hearing all their negative letters coming in from the Tea Party types
will now be getting a lot of letters over the next days or weeks perhaps
from people who don`t get to visit national parks, don`t get services,
don`t get phones answered. They`ll be beginning -- I think they`ll begin
to say I think this wasn`t such a nifty idea, to kill the government for a
while.

CONNOLLY: Yes, you`re absolutely right, Chris, and you know, frankly, it`s
going to affect the ordinary lives of ordinary Americans in very big ways
over time, you know? It`s going to affect sign-up for Social Security,
sign-up for Medicare, sign-up for veterans benefits. It`s going to affect
services we take for granted, keeping food safe, drugs safe, water clean.

It`s not just going to be the national parks closing down, because
remember, one difference between this shutdown and the last one is this is
comprehensive. It affects the entire federal government, because we
haven`t passed any appropriations bills.

MATTHEWS: I know. It`s unlike the `80s when I worked up there when we
passed a lot of appropriations, and by October 1st, there were just a few
left over. You didn`t have a government shutdown. You had agency
shutdown.

CONNOLLY: That`s right.

MATTHEWS: Let me go to Steve Rattner. What businesses have shutdowns?
I`m just curious. Do businesses ever just shut down for a while for their
health?

STEVE RATTNER, CNBC CONTRIBUTOR Look, Chris, no business would run its
business the way the federal government runs its business, not just the
shutdowns, but planning two months at a time with no budget. As you say,
not a single appropriations bill passed. No business operates that way.

MATTHEWS: Well, what do you think will be the impact on the market?
Looking forward to October 17th, Jack Lew, who is an honest man. Whatever
you think of his ideology, philosophy, Jack`s an honest guy. When he says
October 17th is the day we better be worried about not having the debt
ceiling extended, you better worry about it? What do you think about the
next two weeks, Steve?

RATTER: The October 17th date is a real date. You and I have known Jack a
long time and as you say, he`s a very honest guy. We`ve had shutdowns
before. We had a lot of shutdowns, maybe not as bad this one for the
reasons you said a second ago.

But what we`ve never had in the whole entire history of this country is a
default on our debt, a default on our payments to Social Security
recipients to Medicare recipients -- every single person who receives money
or business that receives money from the federal government. That is
really unchartered waters, and I think if you talk to any businessman or
any Wall Street person, they will tell you that it is magnitude scarier
than even a shutdown is.

MATTHEWS: Congressman, Tom Donohue of the U.S. Chamber and, of course,
"The Wall Street Journal" editorial page, I don`t often cite positively,
but look at the drum roll we`ve been getting from those guys, saying,
"Don`t do this". And yet, the Republican members, your colleagues on the
other side of the aisle seem to be more responding to the Tea Party noise
from people who don`t know what the economy`s going to look like in a week
or two.

CONNOLLY: Absolutely. And, you know, the irony of that, Chris, is, for a
crowd that says we ought to run the government more like a business -- what
business would trash its workforce, shut down its own operations and
threaten or refuse to pay its bills? How would that fair on Wall Street?
How would that fair in the public marketplace?

I mean, this is craziness. And sadly, my colleagues on the other side of
the aisle seem to have been captured by some kind of mass psychosis that`s
obsessed with Obamacare at any cost --

MATTHEWS: Yes.

CONNOLLY: -- and they don`t care who it hurts.

MATTHEWS: You think any -- you think anybody could have been this Peter
Pan character, Ted Cruz? Anybody could have flown in the window and
started talking about the evils of Obamacare and they`d be just as good as
this guy. Is it about Obamacare or the charisma of the sort of the guy
we`re looking at right now, Ted Cruz? Which is it?

CONNOLLY: I tend to think underlying this has been this deep-seeded hatred
of this president. It`s irrational. And they`ve glommed onto his
signature legislation and they`re willing to take down the government and
everything with it, including the people we serve in that cost.

MATTHEWS: Steve, you`re calling that. I mean, you`re not a politician.
You`re a former journalist. You`re a business guy. You understand
thinking.

Is it about the guy? I notice there`s a new poll that shows if you call it
Obamacare, it got a lot worse treatment from the public l than if you call
it the Affordable Care Act.

RATTNER: I`m sure some of it is about the guy, but I think a lot of it is
about the program for two reasons. First, because we have never, I don`t
believe in the history of our country, ever repealed a new entitlement
program of this sort. And Republicans I think view this as their last
chance. If this goes into effect tomorrow, then more significantly on
January 1st, there will be no turning back.

And the irony, of course, about this is that the Republicans say that
Obamacare`s a disaster, it would destroy the country, it would ruin
people`s lives, and yet, they`re afraid to let people try it, because I
think deep down inside, they now that Obamacare actually would be a huge
positive for 30 million Americans, plus many, many more.

MATTHEWS: You know, the Reagan guys campaign heavily -- Congressman, you
probably know this -- he campaigned heavily against Medicare back in the
`60s. He talked about making Social Security voluntary. And yet, as the
years passed, he began to be an almost disciple of those two programs,
Congressman.

CONNOLLY: That`s absolutely right.

MATTHEWS: He didn`t say a word against Medicare and Social Security. He
helped save Social Security with Tip in `83.

CONNOLLY: I read your book, Chris, and you documented it well and I was on
the Hill back then and Ronald Reagan was willing to compromise on taxes, as
you document in the book, and on Social Security.

And, you know, he understood that at the end of the day, we had to keep the
enterprise running for the American people.

MATTHEWS: Thank you on two counts, the book and the truth.

Anyway, thank you, Steve Rattner.

CONNOLLY: Thanks.

MATTHEWS: And thank you, U.S. Congressman Gerry Connolly.

When we return, let me finish with a hopeful political story for a very
sobering time in American politics.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with a message I`ll be delivering from
early tomorrow morning right through the evening.

It turns out, it deals with how to follow the rules in politics. Tomorrow,
Simon and Shuster releases my new book "Tip and The Gipper: When Politics
Worked."

It`s a big book with a optimistic punch. It`s a story about a liberal, my
boss, Tip O`Neill, the Democratic speaker of the House, and a conservative
president, Ronald Reagan, and how they dealt with each other, and that
includes in the back room when no one was watching.

It`s a true, upbeat, rich story of how two political heavyweights fought it
out again and again and again and somehow got the job done for America,
found a space for compromise, found the common ground, find a way -- each
of them, actually -- to use the other to get done what they needed to get
done.

It will make you smile. That`s if, like me, you more than anything want
this country to succeed.

And best of all, it`s all true based on the diary kept by President Reagan,
the transcripts of Speaker O`Neill`s daily press conferences and the
journal, here it is, that I managed to keep during the entire and actually
the most intense of the episodes. And it certainly was uplifting.

I`ll be on the "Today" show tomorrow at 7:00 to 10:00 Eastern, and the
morning show at 8:00, with Alex Wagner on MSNBC at noon, and then back on
HARDBALL, of course, tomorrow night, topping off the night with Lawrence
O`Donnell`s great show "LAST WORD." I`ll also be speaking tomorrow night
up here in New York at Cooper Union, where Abraham Lincoln once spoke.

I can`t think of a better time to be coming out with a book and a story
about when politics actually worked when at a time when we need hope, we
need trust, and we really do in this form of government we have, not only
to survive, but actually, thank God, to prevail.

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

"ALL IN WITH CHRIS HAYES" starts right now.

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

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