'Hardball with Chris Matthews' for Wednesday,October 9th, 2013

HARDBALL
October 9, 2013

Guest: Reid Ribble, Kurt Schrader

CHRIS MATTHEWS, MSNBC HOST: Fight on the right.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews out in Los Angeles.

"Let Me Start" tonight with this. Will they follow the money? The fat
cats are suddenly crying halt to the right-wing juggernaut that`s headed
toward debt default. Can the Koch brothers and the boys at Heritage divert
the Tea Party types and birthers from driving the Republican Party and the
country over a cliff? Will money talk sense to those that logic hasn`t?
Will budget chairman Paul Ryan divert the right-wing herd from its headlong
drive to the abyss?

Suddenly tonight, the Republican Party under or over John Boehner is
confronted with the old Jack Benny question, Your money or your life. Will
the Republican rank-and-file now line up behind the Koch brothers and
Heritage, or stick to the Lone Star battle cry of Texas senator Ted Cruz?
Will it do what it`s told by the money boys, or stick to its six-guns and
duke it out right past next week`s debt ceiling deadline? Tonight, it`s
anybody`s guess.

Howard Fineman`s editorial director for the HuffingtonPost Media Group,
David Corn is Washington bureau chief for "Mother Jones." Both are MSNBC
political analysts.

The conservative Koch brothers, billionaires who help bankroll the Tea
Party, are revolting against the GOP strategy right now to shut down the
government to kill the Affordable Care Act. In a letter to Congress, their
company says -- Koch brother industries writes, "Koch has not taken a
position on the legislative tactics of tying the continuing resolution to
defunding `Obama care.` Congress should focus on these efforts -- these
efforts -- balancing the budget, tightening and cutting government
spending, curbing cronyism and eliminating market-distorting subsidies and
mandates."

Well, the Koch brothers aren`t alone. In the HuffingtonPost, Howard
Fineman -- you report, Howard, that Michael Needham, CEO of the powerful
group Heritage Action, said that he opposed conditioning a crucial vote to
increase the government`s borrowing authority, the debt ceiling, on the
group`s main goal, defunding Obamacare.

The revolt comes as Republicans continue to shoulder the blame for a
shutdown. Catch this. A new a Gallup poll now shows that the public`s
view of the Republican Party is plummeting. The party is viewed favorably
by only 28 percent of Americans, down 10 points from 38 percent as recently
as September.

Catch this. It`s Gallup`s lowest favorable rating measured for either
party in history -- the lowest rating in history for a political party.

Well, of course, the Democrats aren`t great, but they score a much better
43 percent favorability rating.

Howard, when you hit rock bottom, that`s usually a time to reconsider your
strategy. They are going down -- if you don`t mind the phrase out there --
in the toilet, and they`re starting to gurgle. And we`re hearing the
gurgling sounds first -- first -- from the Koch brothers because money is
generally smart, and they see a problem ahead. Your thoughts about the
Koch brothers, Heritage, and of course, Paul Ryan, who`s also saying, Stop
trying to tie together something the president won`t give on, health care,
and the debt ceiling, which we all have to agree to.

HOWARD FINEMAN, HUFFINGTON POST MEDIA GROUP, MSNBC POLITICAL ANALYST: Yes.
They`re all related --

MATTHEWS: Your thoughts.

FINEMAN: They`re all related, Chris. And of course, the Koch brothers are
major funders of Heritage and Heritage Action, whose leader I quote in the
story today.

MATTHEWS: Yes. Tell us about it.

FINEMAN: Yes -- well, I think it`s significant because Mike Needham, who`s
the guy who runs it, said, You know, let`s not tie defunding Obamacare,
which we at Heritage really want, to the debt ceiling. So he said that on
the debt ceiling.

And basically, the Koch brothers are saying that in their letter as it
regards government shutdown.

MATTHEWS: Right.

FINEMAN: So right there, you have the Koch brothers basically pulling back
from the whole Ted Cruz Obamacare crusade, which they might not have been
with to begin with. Now, Heritage was a founding member of the, Let`s get
Obamacare -- Let`s get rid of Obamacare caucus.

However, they can read the numbers. They see the poll numbers. And more
important, I think, they worry about the global economic impact. Don`t
forget that the Republican Party, despite all the Tea Party talk and
despite the idea that the Chamber of Commerce as a lobby group doesn`t mean
anything -- the Republican Party and the people who are big in the
Republican Party care about business, care about profits. And you know,
they`re looking at their bottom line both in terms of polls and in terms of
profits.

MATTHEWS: David Corn, what`s the stronger impulse in the Republican
Congress, wealth or hatred? What`s a more powerful --

(LAUGHTER)

MATTHEWS: I`m serious here! We do know -- we do know that in many ways,
not in every way, the Republican Party has been backed by the fat cats. A
much larger percentage of the American industry, commerce, whatever, money,
banks, back Republicans. Some back Democrats, but it`s overwhelmingly pro-
Republican. And in the same way, their hatred of Obama, anything with his
name on it, anything that he`s wearing the jersey for is dead meat as far
as they`re concerned.

What`s the stronger drive, their love of money or their hatred of Obama?

DAVID CORN, "MOTHER JONES," MSNBC POLITICAL ANALYST: Well, you said --
yes, money or hatred of Obama. It`s like with Jack Benny, it was money or
your life. And he said, Wait a second. I`m thinking about it.

(LAUGHTER)

CORN: So --

MATTHEWS: Well, they`re thinking!

CORN: I think they`re thinking and I think they`re divided. Look what
happened with Paul Ryan. He had a Wall Street Journal piece that came out
today that talked about getting to a mid-size deal to avoid the default on
the debt ceiling.

And what -- as soon as he put that piece out -- he seemed to be like the
adult in the room, or like the guy in all those World War II movies, or
World War I movies -- he lifts his head out of the foxhole to take a look
around, and all of a sudden, Boom, boom, boom, there`s firing, and it`s
coming from his own side. Conservatives are said, Hey --

MATTHEWS: OK, what --

(CROSSTALK)

CORN: -- Obamacare. And so --

MATTHEWS: Well, they still hate --

(CROSSTALK)

MATTHEWS: Your answer to my question. Your answer to my question.

CORN: I think that --

MATTHEWS: They hate Obama more than they follow business logic. Business
logic says --

CORN: Some of them -- some of them do --

MATTHEWS: -- debt ceiling crash is bad. Yes. Go ahead.

CORN: But we`ve moved -- we`ve moved into this position now where there
are two targets at the same time. One is the government shutdown and the
other is default. And it seems to me that the Koch industry letter was
very focused more on, like, Let`s not default, but you still have Mike
Needham of Heritage Action saying, I`m all for keeping the government shut
over Obamacare, but not defaulting over Obamacare.

So there`s a lot of juggling going on, all the different sides. It`s not a
circular firing squad. It`s sort of like a figure eight firing squad.

FINEMAN: Chris, let me -- let me -- let me --

MATTHEWS: Sure.

FINEMAN: -- give a one-cent answer here. I think they hate Obama more.
That`s my view.

MATTHEWS: I think that`s their piercing emotion there. They may overrun
their logic or their love of money.

FINEMAN: What that means, Chris, is that they want to -- they want to
create some further crisis here before there`s a deal. In other words,
they`re going to try to do both. They`re going to try -- I`m convinced
that they`re not going to be able to avoid some further catastrophe on the
17th. That`s my view of it. That`s my sense of it.

And then, having gotten that, then the regular order, so to speak, that
Paul Ryan represents will reassert itself.

MATTHEWS: I think they`re like the matador that wants to walk off the
arena with an ear or something from the bull, some piece of the guy, you
know what I mean?

(CROSSTALK)

FINEMAN: The question is, what can Obama -- what can the president give
them?

CORN: They have not said yes to anything.

FINEMAN: That`s right.

CORN: The Democrats gave them the budget --

FINEMAN: The lower budget number.

CORN: -- the budget numbers. And so, you know, he`s tried with a "grand
bargain." Boehner keeps saying again and again, I want a conversation.
Well, we had a conversation two years ago. It didn`t get a grand bargain.
They had the super-committee, which was nothing but a conversation, and
they couldn`t go forward there. And Boehner says, I want a conversation,
but I don`t want to talk about taxes. So --

MATTHEWS: Speaking of the conversation --

(CROSSTALK)

CORN: -- what can they say yes to?

MATTHEWS: Howard, your reporting up to date -- what`s this thing about the
president`s inviting all these big-shot Republicans from the House of
Representatives down to the White House, meeting their bluff -- Come on,
talk -- and now Boehner`s worried about there`s too many going.

FINEMAN: Yes.

MATTHEWS: He says it won`t be a good conversation? What`s that about?

(CROSSTALK)

FINEMAN: That was fascinating.

(CROSSTALK)

FINEMAN: The president invited them all. Just as interesting, by the way,
the president invited some conservative bloggers over yesterday. I thought
that was very significant and interesting.

But the president invited the whole Republican caucus from the House. And
of course, the reason he did so is that, as we`ve been reporting in the
HuffingtonPost and others have been reporting, there are at least 20
members, Republican members on record now saying that they would vote for a
so-called clean CR, a clean continuing resolution.

MATTHEWS: What good is --

(CROSSTALK)

FINEMAN: So the president -- well, the president wants to talk to -- that
would keep -- that would keep the current and low funding levels going --

(CROSSTALK)

MATTHEWS: Yes, but they`re not going to have a vote. But Howard, the
speaker controls whether there`s a vote or not. He`s not going to let --

FINEMAN: I know --

(CROSSTALK)

MATTHEWS: -- rabbit stew here. He`s not going to let 20 Republicans
join 180 Democrats.

FINEMAN: No. That`s why -- that`s why Boehner said, No, I`m not going to
bring the whole group. We`re just going to bring the leadership.

CORN: I think the president was smart here. He said, you know, Speaker
Boehner, you want a conversation? I`m happy to talk to you and I`m happy
to talk to the reasonable people within your caucus. I`ll even talk to the
crazies in your caucus. And let`s have a real conversation and then we can
put them all in front of the microphone afterwards.

FINEMAN: Well-

CORN: John Boehner wouldn`t like to see that happen.

FINEMAN: It was kind of a stunt on the -- I mean, it was a stunt
invitation on the White House`s part.

MATTHEWS: I know. Look -- look --

FINEMAN: It was. You know --

MATTHEWS: One thing you guys and I realize --

(CROSSTALK)

MATTHEWS: You guys realize, like I do, there`s always a good "Godfather"
scene to report to -- refer to. Remember the scene when they all meet with
the guy, trying to take him -- kill him, and Sonny speaks out of turn?
That`s what Obama`s hoping for, some Sonny --

(CROSSTALK)

MATTHEWS: -- on the other side will speak out of turn -- he said, Never
speak against the family in a room and never talk a different deal.

(CROSSTALK)

MATTHEWS: Anyway, take a look at this. Speaking of "The Godfather,"
here`s an op-ed from House Republican majority leader Eric Cantor, a big
hero of "House of Cards," by the way. He concedes that this fight isn`t
about the Affordable Care Act, nor is it about the debt limit.

Here`s what Cantor says. "For three years, Congress and the White House
have been building to this moment, not the debt limit or `Obama care`
specifically, but this clarifying moment of Washington dysfunction.
President Obama has led us here by continually thwarting the will of
Congress and dismissing its role in our constitutional republic. This must
end."

So Howard, here`s a reckoning. He carefully points out three years,
ignoring the fact that they passed Obamacare through the House, through the
Senate by 60 votes. He didn`t ignore the Congress, he`s obeying it. He`s
following the law that they passed. Your thoughts, Howard.

FINEMAN: This is more --

MATTHEWS: What`s he mean?

FINEMAN: This is a more a Clarabell moment than a clarifying moment.

(LAUGHTER)

FINEMAN: I`m sorry. I couldn`t help it. This is high -- this is sad,
tragic, high comedy right now. This isn`t a serious discussion going on.
And if -- and if -- and if Eric Cantor wanted a serious discussion and John
Boehner wanted a serious discussion, they were this close to really having
one last year and the year before.

This is -- this is -- this is made for TV, made for social media, made for
grass roots fund-raising, dramatic moment created essentially by the
Republicans.

(CROSSTALK)

MATTHEWS: Excuse me. I got to give you a conversation, a real
conversation, on the record, "60 Minutes." Speaking of John Boehner, he`s
made it clear for a long time he will not compromise. He doesn`t like the
word. Take a look at Boehner when he talked to the great Lesley Stahl
during an interview when he first became speaker. This is classic.

(BEGIN VIDEO CLIP)

LESLEY STAHL, "60 MINUTES": You`re saying, I want common ground, but I`m
not going to compromise. I don`t understand that. I really don`t.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: When you say the word
"compromise," a lot of Americans look up and go, Oh, oh, they`re going to
sell me out. And so finding common ground I think makes more sense.

STAHL (voice-over): I reminded him that his goal had been to get all the
Bush tax cuts made permanent.

(on camera): So you did compromise.

BOEHNER: I -- we found common ground.

STAHL: Why won`t you say -- you`re afraid of the word!

BOEHNER: I reject the word.

(END VIDEO CLIP)

MATTHEWS: David, "I reject the word" compromise. Then he makes this
ridiculous, love it to death (ph) thing, where he says, But I`m looking --
he`s not going to find common ground with Obama. He might find compromise.
And therefore, he rejects it -- I reject the world.

CORN: If you watched the dueling press conferences yesterday, Obama took
questions for almost an hour and he probably referred to the word
"compromise" a dozen or two times. You know, John Boehner took one or two
questions, skedaddled out of there, never said "compromise." If you look
at Cantor`s op-ed, this is -- you know, they realize they kind of lost --
lost the defunding Obamacare crusade. The public --

MATTHEWS: You think so? That`s a big development.

CORN: And they don`t -- and they don`t want to go through default. So now
they`re trying to change the issue yet again and say the -- say that what`s
really at take here is Obama not conversing with us.

FINEMAN: Well, and also --

CORN: I mean, that -- it`s just kind of ridiculous. They`re -- you know,
they`re going over the cliff, and they`re trying to hold onto that branch,
like a character in a movie, Johnny Depp in "Pirates of the Caribbean," and
try to, you know, climb back up over. And at the same time, they have
those 30, 40, members of the House who keep saying, We like the cliff.

MATTHEWS: You`re not kidding. It`s a strange time. I think they`re
cracking up, though. I think when money starts to walk away from ideology,
ideology gets angrier and angrier. I think, Howard, you`re right, hatred`s
a stronger impulse in today`s Republican Party, which was once the
establishment party, now it`s the renegade party.

Anyway, thank you, Howard Fineman. Thank you, David Corn.

Coming up: The Republican default deniers, the growing ranks of Republicans
who argue, one, that we can avoid default by paying some bills and not
others, two, that default is not a problem, or three, that default will
actually -- this is crazy -- actually stabilize world markets. Isn`t that
well said? How do you argue with flat earthers?

Also, universal outrage over the cutting off of death benefits for military
families because of the shutdown. And of course, the Tea Party used it
today to question the Democrats` patriotism.

And how would a hostage negotiator get us out of this mess? Republicans
have put us into one. "The Daily Show" has an idea on that, in the
"Sideshow," of course.

And finally, "Let Me Finish" with the story of where I came from
politically.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: President Obama has nominated Janet Yellen to head the Federal
Reserve. It`s the first time in history a woman has been tapped for this
big job. Yellen, currently the vice chair at the Fed under Ben Bernanke,
will need to be confirmed by the U.S. Senate. She became the president`s
top choice for the job last month, apparently, after it became clear that
Senate Democrats wouldn`t accept Larry Summers.

We`ll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. PAT TOOMEY (R), PENNSYLVANIA: There`s zero chance that the U.S.
government is going to default on its debt. It`s unfortunate that people
have conflated this idea of not raising the debt ceiling immediately on
October 17th with somehow defaulting on our debt. I haven`t heard any of
my Republican colleagues suggest that it might be OK to default on our
debt.

(END VIDEO CLIP)

MATTHEWS: Welcome back to HARDBALL. That`s Pennsylvania senator Pat
Toomey, a Republican, today on "MORNING JOE." And we`ve heard plenty of
Republicans play down or even deny the economic catastrophe that would
result from a default. And here are a few.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I think that all this talk about a default has been a
lot of -- a lot of demagoguery, a lot of false demagoguery.

UNIDENTIFIED MALE: There is no such thing as a debt ceiling in this
country.

UNIDENTIFIED MALE: I would dispel the rumor that is going around that you
hear on every newscast that if we don`t raise the debt ceiling, we will
default on our debt. We won`t.

(END VIDEO CLIP)

MATTHEWS: "False demagoguery"? Well, that`s a new one. Anyway, Florida
congressman Ted Yoho says it might actually help the economy, saying, "I
think, personally, it would bring stability to the world markets."

Well, here`s the current group of Republicans who say a government default
is not something to really worry about -- Representative Justin Amash, Mick
Mulvaney, Joe Barton, David Schweikert, Steve King -- you just heard him --
Ted Yoho, Paul Broun and Senators Mike Crapo, Tom Coburn, Pat Toomey --
just heard him -- Rand Paul, Orrin Hatch and Richard Burr.

Joining me right now, my great colleague, Joe Scarborough, host of "MORNING
JOE," of course, and David Axelrod, MSNBC senior political analyst and
director of the University of Chicago`s brand-new Institute of Politics.

Gentlemen, you guys are so smart, so let`s work with this. What do you
make of this decision by people to speak out -- just the politics, Joe.
I`m being -- seriously. Tactically, why -- or what would be the motivation
at this point in this discussion to come out and say, Well, October 17th,
whatever Jack Lew at Treasury says, really doesn`t matter because they can
screw around with the money and somehow get by a few days or a few weeks.
It just gives them a little more time, but it does run risks, no matter how
look at it. There`s some risk there.

Why would somebody do this?

JOE SCARBOROUGH, CO-HOST, "MORNING JOE": I don`t know, for the same reason
that they would adopt Ted Cruz`s strategy to shut down the federal
government unless Obamacare was delayed for a year.

It doesn`t make any sense. I think here, though, Chris, you see the great
divide in the Republican Party, not between the Tea Partiers and the
establishment Republicans, but from Washington Republicans and Republicans
across the country, that, you know, won 60 percent of the governors` seats,
whether you`re talking about Chris Christie in New Jersey, whether you`re
talking about Scott Walker in Wisconsin, whether you`re talking about John
Kasich in Ohio, Susana Martinez in New Mexico.

These are all popular governors in their own state, states that Barack
Obama won, and governors that are concerned about their bond ratings.

I remember when I had Scott Walker on a couple of weeks ago. Off the air,
you know what he bragged to me about?

MATTHEWS: What?

SCARBOROUGH: Not about some fight with the unions, not about some fight
about an upcoming tax fight. He said, I`m in New York, and I`m here to
talk about how strong our state is and how our bond ratings are going to be
higher.

They`ve got to work with Democrats, and that`s exactly what they do. And
that`s -- you know, that`s the great divide right now. Republican
governors are doing pretty darn well across America because they`re not
caught in this ideological trap that leads to nowhere.

And I think that`s why you see Chris Christie up by 33 points in a state
that Barack Obama won by 18 points just last year.

MATTHEWS: And I just understand the math to be that if you could get your
bond rating up, that means it costs you less to borrow. And it`s a lot
easier to borrow if you have to.

Let me go to David Axelrod.

That`s pretty practical. And, by the way, without getting into trouble
with anybody around here, that list of governors he gave me, I`m impressed
with. I`m certainly impressed with Kasich. And Walker is a guy who
impressed me in sort of an amazing way, because he withstood attack from
people like Ed Schultz. He withstood it and survived a lot of attack from
labor.

He hung up there. And so I`m looking at a list of maybe that`s the
strength of the Republican Party, not the chief votes in the House. What
do you think, David, is the motive behind people who would say there is no
ghost outside, there is no scary person coming, there`s no specter coming,
forget about it, do what you feel like?

DAVID AXELROD, MSNBC POLITICAL ANALYST: Well, first of all, I want to give
them this credit. They`re not demagogues. They`re real demagogues. So,
let`s give them the credit they deserve.

But I also think that they have come -- now they have glimpsed what is
going on here and they realized -- the same day that you have a piece in
"The New York Times" that says -- with all these Republicans denying -- the
default deniers on one column, and in another column you have the world
bracing itself for an economic catastrophe if America moves forward down
this path.

And they recognize that this will go redound to their discredit if this
moves forward.

MATTHEWS: Well, what skin do they have in the game?

(CROSSTALK)

AXELROD: And your point, Chris, your point is such an important one,
because for all these guys who talk about deficits, all they`re doing is
raising the cost of government. It`s going to cost more to borrow money
for the government. Interest rates are already up.

It`s going to impact every business, every state. This is an economic
catastrophe. And suggesting that we can play some sort of shell game or
check kiting to delay the inevitable, it is like saying sure you have got
cancer, but it`s going to be months before you actually feel it.

MATTHEWS: Yes. I think you`re right, because I think about California
have a great bonding and states like Illinois have problems.

Joe, let me go back to this thing about skin in the game. Pat Toomey is a
smart guy. I don`t agree with him on much. But he`s smart. He`s Club for
Growth. He thinks about the economy in a lot. What skin does he have in
this game? If we do have a catastrophe October 17, 18, or 19 -- we don`t
know what day it is. What skin does he got? What does he then say? Oh,
Obama could have moved the money around, but he didn`t? He brought on the
catastrophe?

What`s their fallback?

SCARBOROUGH: I don`t know.

Pat Toomey is my kind of Republican. He`s been my kind of Republican. I`m
a Club for Growth Republican. I`m sure that will come back to haunt me on
Twitter sometime. But he`s a small-government Republican. He`s also a guy
that actually supported background checks at a time that it cost him a
great deal politically with the national Republican Party.

It doesn`t make sense, but I tell you this, Chris. I think this is the
point where the fever breaks, when you have "The Wall Street Journal,"
people like Bill Kristol on our show, the Koch brothers, and other business
owners. They step forward and say, guys, what the Congressional Budget
Office said, you may be able to play around with this for a week or two and
move money around for a week or two, but there will be a real default.

For people that have skin in the game, real skin in the game, money in the
game, you`re going to have the Republican Party face these business leaders
come, you know, the next week or so.

(CROSSTALK)

SCARBOROUGH: And they`re going to blink. There is no way they`re going --
there`s no way they`re going to be able to stand up to these business
leaders and say, you risk a second, you know, a greater recession over the
next two to three months according to studies if you don`t raise the debt
ceiling.

MATTHEWS: Well U.S. Congressman Paul Broun has his own unique take on the
crisis, as he does on a lot of things.

For Broun, Congressman Broun, he calls evolution, of course the Big Bang
theory, lies straight from the pit of hell. The Affordable Care Act is an
existential threat to our very survival, he says.

Here he is with CNN`s Wolf Blitzer.

(BEGIN VIDEO CLIP)

WOLF BLITZER, CNN HOST: America is going to be destroyed, you say, by
Obamacare? America, this United States of America is going to be destroyed
if this law is fully implemented? Is that what I hear you saying?

REP. PAUL BROUN (R), GEORGIA: Well, it`s going to take us off the edge
economically. It`s going to destroy our economy and it`s going to push us
into a total economic collapse of America. And that`s exactly what I mean
by it`s going to destroy America.

(END VIDEO CLIP)

MATTHEWS: Well, then the question of course -- back to you, David Axelrod.

You know politics. Are the Republicans scared of the following in which
order? Are they scared of a real default because it`s going to kill
American -- the American economy in the world, we will lose what we always
have had for hundreds of years, the belief that we always pay our debts?

We always -- whatever our condition, we have made good on our payments.
And you know those people that are like that in our own lives and people
who aren`t like that. Certainly, people who keep credit ratings keep track
of that stuff. That`s one thing.


Are they more afraid of the reality or more afraid of the perception by the
public that it`s mainly the Republicans` fault? Twenty-eight percent,
lowest positive approval rating they have had in the history of polling for
either party.

What scares them more, their disreputation, their bad reputation, the
disreputability they`re getting into here with this terrible rating, or is
it the reality of the economic crisis we face?

AXELROD: Chris, let me just -- let me just take on the premise of your
question for a second, because the assumption is that they`re scared.

And the problem is that there is a core of these Republicans, not the
people who Joe described, not people like Joe, but there are a core of
these Republicans who are getting affirmation in their districts which are
very conservative, homogeneous, where all they worry about is a challenge
from the right. These are not small-government Republicans. These are no-
government Republicans.

And they are not feeling the heat. They are not afraid right now. I have
heard Joe say before that he was heartened by "The Wall Street Journal" and
all these other folks coming on. I don`t think these people give a hang
about "The Wall Street Journal."

What they`re hearing back home is just take Obamacare out. We don`t
really, you know -- take the -- don`t raise the debt ceiling. And, by the
way, on this issue, there`s an interesting point. I have raised it before.
If you say to people, let`s raise the debt ceiling, they say, no, that
sounds irresponsible, because they don`t understand it to be what it is.

MATTHEWS: Yes.

AXELROD: If you say to them, however, we`re not going to pay our bills,
we`re going to default on our bills, they`re even more opposed to that.

And when Americans understand that what`s being proposed here is that the
United States default on its obligations, the full faith and credit of the
United States, I think there will be a change in attitude, but maybe not in
those districts.

(CROSSTALK)

MATTHEWS: I think it would be great if the president of the United States
went on television Sunday night, didn`t mention the other party, didn`t
mention the politics or ideology, and gave us a 20-minute or so explanation
of the debt ceiling in a totally analytic way, so we understand the stakes.

Take it away from politics. Get it into our heads. What are we talking
about here? I think that would work.

Joe, my morning bookend, thank you so much. It`s great to have on here
today. I love it when you dress out for our program, too.

(LAUGHTER)

MATTHEWS: You`re really well-turned out today.

SCARBOROUGH: You believe that?

MATTHEWS: I`m serious.

SCARBOROUGH: I`m a slob -- I`m a slob on my own program.

MATTHEWS: No. In the morning, you`re a slob. No, you aren`t a slob. But
you dress casually at times, and I can never predict it.

SCARBOROUGH: It`s awfully early.

MATTHEWS: But you look great tonight.

(LAUGHTER)

SCARBOROUGH: Yes.

I got to say, really, if I can just finish by saying --

MATTHEWS: Yes.

SCARBOROUGH: -- it`s not -- it`s not the minority of the minority party
or the majority party in the House that matters.

MATTHEWS: Right.

SCARBOROUGH: This all comes down to John Boehner. And John Boehner does
care what "The Wall Street Journal" says and Bill Kristol, what he says --

MATTHEWS: What would you tell him to do?

SCARBOROUGH: -- and what the Koch brothers say.

MATTHEWS: What would you tell him to do?

SCARBOROUGH: Well, you know what? He`s got to -- he`s got to open it up
at some point and have a -- follow through on what he promised before. And
that is --

MATTHEWS: Majority rule.

SCARBOROUGH: -- to make sure that America doesn`t default and open it up
for a clean vote.

And there will be more than a majority of Republicans and Democrats
together passing it. It will go to the Senate, and America won`t default
on its debt.

MATTHEWS: Thank you.

SCARBOROUGH: And the Republican Party won`t drop even lower than 28
percent, devastating for Senate candidates in 2014 and possibly
presidential candidates in 2016.

AXELROD: I agree with you on all of that, Joe.

MATTHEWS: I can hear the speech. I can hear the speech.

AXELROD: I agree with all of that.

MATTHEWS: Sometimes -- sometimes, party loyalty asks too much, as Kennedy
once said.

Anyway, up -- thank you, gentlemen.

We will be right back.

AXELROD: Good to be with you.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL, and time for the "Sideshow."

The government shutdown has rattled the nation, and yet many Republicans
are intent on going further, putting our nation`s credit at risk. Their
high-stakes gamble has led many to describe the GOP`s tactics as hostage-
taking. First they took the government and now they want the economy.

Well, last night, "The Daily Show" took a cue from that rhetoric and used a
real hostage negotiator to help their correspondent deal with a GOP
strategist on the shutdown. Here`s how that played out.

(BEGIN VIDEO CLIP, "THE DAILY SHOW WITH JON STEWART")

UNIDENTIFIED MALE: Keeping the hostage-taker talking is crucial, no matter
what is coming out of their mouth.

UNIDENTIFIED FEMALE: Obamacare is going to be one of the worst things, one
of the worst things in American history.

UNIDENTIFIED MALE: One of the worst things in American history, huh?

(LAUGHTER)

UNIDENTIFIED MALE: Do you remember (EXPLETIVE DELETED) slavery?

UNIDENTIFIED MALE: No. No. Don`t attack.

UNIDENTIFIED MALE: Sorry. I`m sorry.

(CROSSTALK)

UNIDENTIFIED MALE: It`s just -- I`m not going to call her on slavery or
even --

UNIDENTIFIED MALE: Yes, I know. I realize that what she just said is
utterly ridiculous, and it ignores the entire history of the United States,
but that`s her perspective.

(LAUGHTER)

UNIDENTIFIED FEMALE: Looks like we win.

UNIDENTIFIED MALE: No one wins in this case.

UNIDENTIFIED FEMALE: The GOP does.

UNIDENTIFIED MALE: It`s not a (EXPLETIVE DELETED) game.

(LAUGHTER)

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS: And we will be right back after this.

(COMMERCIAL BREAK)

VERONICA DE LA CRUZ, MSNBC CORRESPONDENT: Hey there. I`m Veronica De La
Cruz. Here`s what`s happening.

The U.S. is withholding millions of dollars in military aid to Egypt until
more progress is made in establishing a Democratic government. The cuts
include large-scale military equipment and funding.

Police in West Virginia shot and killed a man after he fired more than a
dozen shots at the federal courthouse in Wheeling.

And take a look at this. A train slams into a stalled truck in Texas,
sending pipes flying. Amazingly, no one was hurt. The truck driver
escaped before the train hit.

I`m Veronica De La Cruz. Let`s get you back to HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

One particularly devastating consequence of our government shutdown, of
course, it`s been -- it`s caused anger around the country, because it
should, because it affects deceased American soldiers. The government has
withheld the usual $100,000 death gratuity normally paid to soldiers`
families, as well as other benefits.

Well, since the shutdown of the government, 26 American soldiers have died
in combat, most of them in combat. Today, in a solemn and emotional
ceremony at Dover Air Force Base in Dover, Delaware, the bodies of four of
them returned home.

Well, Secretary of Defense Chuck Hagel, a Vietnam vet himself, greeted the
caskets and the soldiers. The four soldiers, Private 1st Class Cody
Patterson, Sergeant Patrick Hawkins, 1st Lieutenant Jennifer Moreno, and
special agent Joseph Peters, were killed by an improvised explosive device
in Afghanistan on Sunday.

NBC News reported on the controversy earlier this week, and it sparked
outrage in Washington.

(BEGIN VIDEO CLIP)

SEN. RICHARD DURBIN (D-IL), MAJORITY WHIP: Enough is enough. It isn`t
just a matter of these families losing that loving son, that husband, that
brother. It`s a matter that our government that asked them to risk their
lives for this great nation will not stand by them in this moment of grief.

SEN. JOHN MCCAIN (R), ARIZONA: Shouldn`t we, as a body, Republican,
Democrat, no matter who we are, shouldn`t we be embarrassed about this?
Shouldn`t we be ashamed?

(END VIDEO CLIP)

MATTHEWS: Well, there`s two good men on that issue. And they were both
right to say what they did.

The only consoling news here to report is this afternoon the House
unanimously passed a bill to restore death benefits to the family.
Separately, the Pentagon announced a deal with the military charity, a
military charity, that`s Fisher House, the provide those payments. The
Fisher House Foundation will pay those families. And after the shutdown,
the Pentagon will reimburse them.

Desperate situation here.

Patrick Murphy is a former U.S. congressman from Pennsylvania. He`s also a
veteran of the Iraq War. Goldie Taylor is a former U.S. Marine. Both are
MSNBC contributors.

First of all, Goldie, your feelings and thoughts about this, because it`s
come down now that to the U.S. government has to rely on a charitable
organization, a great charitable organization. But, nonetheless, the
responsibility to our soldiers, especially when they have given all, and to
their families is clear. And it`s not being met.

GOLDIE TAYLOR, MSNBC CONTRIBUTOR: It`s absolutely clear.

Fisher House has a long legacy of stepping up on behalf of service men and
women around the globe, and so I certainly applaud that they`re stepping up
in this hour. The fact of the matter is, 18-, 19-, 20-year-olds, children
like yours and mine, that`s who out on the front line.

And those are the young people who are dying. And so the very notion that
their parents, their loved ones back home -- and some of them were even
married -- and I was married at that age -- that they could not immediately
receive that death benefit, they call it a gratuity, but it`s $100,000.

And they also support the burial and travel for family. And so the notion
that they could not receive that money, I think, is really objectionable to
me. The fact of the matter is, Congress was briefed about this flaw. They
were briefed on September 27 by the Pentagon comptroller, who said, if you
go through with this shutdown, we will not be able to pay out these death
benefits.

And then, on top of that, this Congress went and passed a piece of
legislation, the Pay Our Soldiers Now Act, and they left a fatal legal flaw
that still didn`t close the loophole for these soldiers and these men and
women who serve, you know, to be paid as benefit.

MATTHEWS: OK.

TAYLOR: So, I don`t know what it is about this, but you can`t read and
write during the middle of a shutdown? I don`t understand.

MATTHEWS: Pat, you`ve been on both sides as a serviceman and also as U.S
congressman. It seems to me the Legislative Councils Office would have
written the language, according to requirements and determination of the
House. They got what they wanted. They didn`t get a mistake here. They
got what they wanted.

And apparently knowingly excluded these death benefits in what they were
continuing when the government was shutdown.

PATRICK MURPHY, FORMER CONGRESSMAN AND IRAQ VETERAN: Well, Chris, I`m not
sure if they knowingly did it. The problem is, is that, you know,
optically they`re saying we`re going to keep our paychecks and we want to
make sure that the military keeps their paychecks, even though 800,000
other folks didn`t get their paychecks and still haven`t, which is an
absolute shame, except for those now just within the Department of Defense.

But, Chris, to go to Goldie`s point, they did a horrible job taking care of
our troops at the darkest moment of these families who are heartbroken
because their loved ones aren`t going home. That`s Sergeant Pat Hawkins,
Chris. As you know, he`s from Carlisle, Pennsylvania, army ranger. The
fact is, is that our country there during their time of time of need.

Yes, thank God for the Fisher House. But what did John McCain say? He
said shouldn`t we be embarrassed? Shouldn`t we as a body be embarrassed?

The problem is, the House Republicans and John Boehner and Ted Cruz,
they`re not embarrassed. And shame on them.

MATTHEWS: Well, Republicans who are responsible for the shutdown, of
course, blamed the president. Here is Congressman Joe Wilson, you know,
the guy who said "You lie", and, of course, he didn`t tell the truth. Here
is his quote, "This decision confirms that the administration is trying to
inflict as much pain as possible on the nation`s most vulnerable people
during the shutdown." That`s if you believe Joe Wilson on anything.

And Congressman Buck McKeon, the chair of the House Armed Services, these
guys call themselves by their nickname, said, quote, "It is outrageous that
the president has temporarily halted death benefits for fallen Americans
who have given the ultimate sacrifice." Of course, he`s an expert on
authorizations and appropriations, Mr. McKeon, why he didn`t know this when
he signed this and he voted for the thing is not explainable by his current
tone.

Well, the Pentagon did warn Congress before the shutdown that this would be
one of the consequences. Here was the Pentagon comptroller Robert Hale on
September 27, briefing reporters. This is on the record. And let`s watch.

(BEGIN VIDEO CLIP)

ROBERT HALE, PENTAGON COMPTROLLER: We would also be required to do some
other bad things to our people. Just some examples, we couldn`t
immediately pay death gratuities who those who die on active duty during
the lapse.

(END VIDEO CLIP)

MATTHEWS: Goldie, there were have it. I mean, the statements came out.
Nobody -- unless you`re part of the wacko caucus who said we found million
year old bones and everything else, and Obama was some plot by his mother
to marry a Kenyan so she could have a president some day and have him born
over in Kenya.

If you believe they`re crazy cockamamie conspiracy theories, here`s
something thrown at them, recently, a few weeks ago, on the record, taped,
thank God. Are they going to deny that?

TAYLOR: You know, I keep hearing over recent hours, recent days, that
Republicans are blaming this administration for trying to inflict as they
say, the most amount of harm. You know, Republicans really did want to
inflict harm. That was their objective. That was their leverage, that if
they could shut down this government, that if they could get employees,
federal government employees furloughed across the country, then maybe they
could strip this country of Obamacare, maybe they could defund it, maybe
they could delay it -- you know, I don`t know what they want today.

But, you know, it`s a little bit ironic that you find House members who are
complaining now because maybe they won`t get hot water in the House gym.

You know, there are young people, there are older Americans out there
working, cleaning federal office buildings -- well, they`re not doing those
jobs today because they`re home and waiting for a paycheck. And they`re
going to suffer irreparable financial harm from this because they don`t
have a paycheck today.

MATTHEWS: Well, well, I think Goldie and Pat, I think they`re the party
that should be called the party without consequences. Because they`re the
same party who started every war saying there won`t be that many
casualties. It would be a cake walk. They don`t pay for itself.

That`s the way they talk. They never confront reality. They don`t have
their skin in the game. They never really are invested. It`s just talk.
Talk.

TAYLOR: That`s right.

MATTHEWS: We thank you, Patrick Murphy, sir, for your service.

And thank you, Goldie Taylor, for bringing this up again and again.

Coming up, two members of the United States Congress who hope to find a way
of this morass.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: I`m out here in Los Angeles. And tonight, I have the honor of
presenting my new book "Tip and The Gipper: When Politics Worked" at the
Ronald Reagan Presidential Library.

Tomorrow night, I`ll be on Jay Leno. I`ll be one of his guests on "The
Tonight Show."

And then on Friday, I`ll be on the wild HBO, "Real Time with Bill Maher."

I`m thrilled to be able to tell my personal story of watching these two
leaders who didn`t get -- let politics or ideologies stand in the way of
actually getting things done. Remember that, getting things done? They
could use some of that "we`re in it together" spirit today, don`t you
think?

We`ll be right back after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CHRIS HAYES, MSNBC HOST: Your colleague, Congressman Yoho, said that
actually breaching the debt ceiling would, quote, "bring stability to
financial markets." Do you agree with him?

REP. REID RIBBLE (R), WISCONSIN: No, not at all. I think that`s just
crazy talk.

(END VIDEO CLIP)

MATTHEWS: Crazy talk.

We`re back.

That was Republican Congressman Reid Ribble on MSNBC`s "ALL IN WITH CHRIS
HAYES" this week, rejecting the idea that not raising the debt that it
would bring stability to financial markets worldwide.

But beside the crazy talk out there we`re hearing in Washington these days,
there are actually some members of Congress on both sides who want to solve
these problems, 86 Republicans, Democrats and independents in Congress are
affiliated with the group called No Labels, which is committed, they say,
to problem-solving over partisanship. They gather twice a month, for
regular across the aisle meetings and will gather again tomorrow morning on
Capitol Hill.

Joining me right now are two of its members of No Labels: Republican
Congressman Reid Ribble of Wisconsin, and Democratic Congressman Kurt
Schrader of Oregon, who will both be addressing their colleagues tomorrow.

Well, Mr. Ribble, Congressman, you`re from the state where Republicans
began (INAUDIBLE). So, let`s talk about what you`re thinking. Do you
think health care should be in or out of a debt ceiling deal? In or out?

RIBBLE: I think right now the health care issue has kind of been settled
at this point/

My personal take if the health care law is not going to function correctly,
let`s let it stand or fall on its own. And then it will live or fail based
on that. And the American people will respond based on its success or
failure. That`s where I`m at.

MATTHEWS: Mr. Schrader, same question, should health care be in or out of
any deal on the debt ceiling?

REP. KURT SCHRADER (D), OREGON: I think Reid hit the nail on the head.
It`s not part of the discussion anymore. I think we`ve moved on.
Leadership on both sides have moved on. Bigger fish to fry, beyond even
the C.R., beyond even the debt ceiling, it`s how do we deal with our long
term debt and deficits to get this economy going again. That`s what you`re
going to see talked about this next week.

MATTHEWS: Well, there was an old argument about religion, someone once
said, we don`t know if there is a heaven or hell, but don`t take any
chances. I`m going to ask in the same regard. I want -- I`m dead serious
here, I`m asking the same question about the debt ceiling cliff. Do you
think October 17th or a date nearby that is important that we don`t past in
terms of passing -- exceeding the debt ceiling? Mr. Ribble?

RIBBLE: I absolutely do. I think it is a very serious matter, you can`t
go beyond the debt limit. I mean, the country`s revenue sources are going
to drop down to about $2 billion, according to Secretary Lew. At that
point, there will not be the cash flow with which to pay the bills. My
personal contention is, while you might see a structural default, it`s only
on interest, the reality is, there are tens of thousands, hundreds of
thousands of federal contracts out there with small and medium size
businesses. If you don`t pay those contracts, you`ve defaulted on that
debt.

And we wouldn`t have a $700 billion deficit if there was adequate cash flow
to pay the bills.

MATTHEWS: Same question to you, Mr. Schrader, about the deadline, is it
real, October 17th? Jack Lew says it is.

SCHRADER: I think it is very real. It`s catastrophic. I talked to folks
on Wall Street, talk to my banking community, talked to folks around my
state, and they`re very nervous about this. I don`t think you mess around
with the full faith and credit of the United States of America, the blow to
our prestige, the long term damage to our credit worthiness and how the
rest of the world views us.

MATTHEWS: Yes.

SCHRADER: I think that`s irreparable.

MATTHEWS: Well, now that you both passed the saliva test, I have to ask
you about what your solutions are.

Mr. Ribble, what do you think in terms of an exit strategy that gets us at
least to Christmas and the holidays where we don`t have really economically
horrible happening?

RIBBLE: You know, Chris, I actually have met with the speaker and I`ve had
a good conversations with him. My own plan would be, of course, to
actually address what are the true drivers of our long-term fiscal
condition, which would be entitlements. I think that there`s relatively
broad agreement on some of the reforms necessary to actually reform Social
Security.

My encouragement to the speaker is that we actually look at that one,
completely drill right into it and craft the policy and reforms necessary
to take that $9.6 trillion or $10 trillion of unfounded obligation and
secure and save Social Security for the next 75 years.

It can be done. This is a perfect time to do it because we`ve got divided
government. And so, one side will not be forcing a fix on the other side.

MATTHEWS: Well, let me ask Mr. Schrader that question, would the Democrats
be willing to go after entitlement reform, something that secures Social
Security for a long-term commitment if they don`t something in return?
Because the president says, I`ll look at it but I want something in return,
he keeps suggesting, something on revenue increasing somewhere, and it
doesn`t seem like he is just willing to sit down and just fix the
entitlements, if you will.

SCHRADER: Well, and I think -- I don`t think Congressman Reid or a lot of
colleagues on the other side of the aisle expect it to be my way or the
highway. That`s the beauty of the rank and file discussions that are now
going on. We`re talking about listening to each other, for a change,
entitlement reforms includes not only dealing with reforms at the system
that was developed before the baby boomers became a reality or concern, but
the revenue sources, also, were developed before for baby boomers, became a
reality concern.

So I think we have to have revenue as part of the discussion that has been
thrown away or discounted in the past. The president is willing to talk.
I think Republican leadership is willing to talk, there`s just -- the
extremes of both ends are controlling the dialogue. And that`s the
problem.

Great news, maybe great media, but not good for this country.

MATTHEWS: Well, that`s what I have been worrying about, too.

Thank you so much, U.S. Congressman Reid Ribble of Wisconsin and
Congressman Kurt Schrader of Oregon.

RIBBLE: Thanks, Chris.

MATTHEWS: And we`ll be right back after this.

SCHRADER: Thank you.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this:

I have written a book, I just did, that explains a hell of a lot about me
politically. What you hear me say here each night, the heat you feel from
in this show, the reason I insist on getting answers -- questions getting
answered without all the B.S. out there. And all the fans out there who I
love meeting and getting to know a little in airports and other places as
I`ve traveled around the country in this book tour can now get "Tip and The
Gipper" -- my political memoir really that covers everything from my time
in Africa, with the Peace Corps and my work in the U.S. Senate, my wild
time as a presidential speechwriter, and then full throttle (ph) on my
feisty half dozen years in the backroom battles between that great
progressive Speaker Tip O`Neill, against that the conservative president
and the icon, Ronald Reagan.

I`m asking everybody who watches HARDBALL, all the loyalists to me and this
program, to go out and get this book now. You`ll see in my -- it`s got my
personal experiences in their politically, with that lightning fight
between O`Neill and Reagan, battles like this that we`re having right now.
The people who have read it told me it`s the best book I`ve written, I like
that. It`s actually the best guide I can give you right now on how
politics works when it does work.

Most important to me, it`s a colorful, exuberant look inside my political
coming of age. So go get a copy on Amazon or a nearby bookstore. I will
say one thing: it will charge up your passion for politics and give you
along with everything else, a wild, enjoyable pick-me-up from the stuff
going on now.

"Tip and The Gipper: When Politics Worked."

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

Copyright 2013 CQ-Roll Call, Inc. All materials herein are protected by
United States copyright law and may not be reproduced, distributed,
transmitted, displayed, published or broadcast without the prior written
permission of CQ-Roll Call. You may not alter or remove any trademark,
copyright or other notice from copies of the content.>