updated 12/31/2014 9:08:44 AM ET 2014-12-31T14:08:44

Show: HARDBALL
Date: December 30, 2014
Guest: J. Hogan Gidley, Michael Goldfarb, Seth Kaplan, Andrew Borene,
Charles Ellison, Paul Singer, Sabrina Siddiqui, Charles Ellison


MICHAEL STEELE, MSNBC GUEST HOST: Another GOP reboot?

Let`s play HARDBALL.

Good evening. I`m Michael Steele, in for Chris Matthews.

Can you survive? That`s the question hanging over majority whip Steve
Scalise after it was revealed he spoke to a group of white supremacists
back in 2002. The number three House Republican defended himself today,
saying he spoke to a variety of groups as a state representative at the
time, and he didn`t vet all of them. He said, in retrospect, it was a
mistake that he regrets. But should he have known? The group`s not so
subtle name is the European American Unity and Rights Organization. It was
founded by former Ku Klux Klan grand wizard David Duke.

Today, Speaker John Boehner stood by Scalise, saying he has his full
confidence to continue as whip. But will that support last?

Hogan Gidley is a Republican strategist and Ed Rendell is the former
governor of Pennsylvania and NBC News political analyst. Welcome to both
of you.

So Hogan, is Scalise on the hook here, or is this going to go by the boards
because it`s not a real political story?

J. HOGAN GIDLEY, REPUBLICAN STRATEGIST: Well, I don`t necessarily know
that it`s a real political story, but right now, racial tensions in this
country are at an all-time high. And so this is the news. When you head
into the new year, there`s not much going on and people glom onto stories
like this, not that there`s not something to talk about here.

But the real story to me is not whether he spoke to some group 12 years
ago. I mean, you`ve been a candidate. Governor Rendell`s been a
candidate. You know you go into places all the time where you have to look
down at an aide at the last second and say, Who am I speaking to? What am
I doing here? That`s just commonplace in politics.

The real story to me is, does he continue to talk with these groups? Does
he continue to ask for money from these groups? And if he doesn`t, it is
clear that he is not a racist. Just because he did something stupid
doesn`t necessarily make him a racist.

STEELE: But hold--

GIDLEY: And you have to look at the local level -- yes. Go ahead.

STEELE: No, but let me ask you this, though, Hogan. I mean, and Governor,
I want you to answer this question, as well. OK, so if I`m doing this --
and look, I`ve been a county chairman, I`ve been a state chairman, national
chairman, a candidate, as well as an elected official. You typically know
the groups that you`re going to go speak to.

Is it possible -- I mean, how believable is it that you can go before a
group like this and not know that this is the kind of group that it is,
Hogan?

GIDLEY: I wouldn`t say it`s necessarily 100 percent believable, Michael,
but listen, it does happen with these candidates. I mean, he`s given this
speech a bunch of times. It was a speech about lowering taxes. It was a
speech about a slush fund. He`d spoken to all kinds of groups he didn`t
agree with up until then, several women`s liberal organizations. So it
would stand to reason he`d go speak to whomever who would listen,
especially if he was trying to get something passed as it related to tax
change in Louisiana.

STEELE: So Governor Rendell, is that possible that you don`t know if
you`re speaking to a pro-Nazi, you know, Ku Klux Klan organization?

EUGENE ROBINSON, "WASHINGTON POST," MSNBC POLITICAL ANALYST: Well, I`d say
it`s less than 1 percent believable, Michael. I mean, you know who you`re
speaking before. You have a staff. Your staff vets it. You yourself just
-- reading the name of that group, that ought to have been a tip-off.
Knowing it was founded by David Duke, another tip-off.

And look, the congressman is either (ph) guilty of speaking before a group
of racists -- and it`s different -- we all do speak, as Hogan said, before
groups that we don`t agree with. I went on Fox News regularly when I was
governor. But we don`t go and speak to groups that think that we should
have a separate country for whites only. So that`s number one.

Number two, he`s got to go. And he`s got to go -- when you think of what
Trent Lott did -- Trent Lott made a joke about Strom Thurmond and the
country being better off if Strom Thurmond`s views had prevailed and he was
elected president. He legitimately and appropriately resigned from
leadership for that.

That`s nothing compared to what Representative Scalise did, and he should
do the right thing and resign--

STEELE: Well, Governor, I--

RENDELL: -- or Speaker Boehner should get rid of him.

STEELE: I want to -- I want to actually go back to that point in a moment.
But first, let`s take a closer look at Scalise`s explanation and the impact
that it`s having, that he didn`t know what the group was all about, and the
criticism that it has drawn from both the right and the left.

Conservative blogger Erick Erickson wrote today, "By 2002, everybody knew
Duke was still the man he had claimed not to be. Everybody. How the hell
does someone show up at a David Duke-organized event in 2002 and claim
ignorance?"

Mark Potok, a senior fellow at the Southern Poverty Law Center, wrote
today, as well, "Scalise`s claim of ignorance is almost impossible to
believe. He was a state representative and an aspiring national politician
at the time and EURO already was well known as a hate group led by
America`s most famous white supremacist."

So with that as a background, how long does it take to determine whether or
not this is a good space for me to be in or a bad space for me to be in? I
just -- I think a lot of folks, Hogan, are having a hard time wrapping
their head around, particularly by 2002--

RENDELL: Right.

STEELE: -- in Louisiana -- David Duke is well known -- that you had no
idea that David Duke -- this was a David Duke organization?

GIDLEY: Right. The evidence is mounting. Not to mention the fact they`re
a Catholic hate group and Scalise is actually a Catholic. So he went and
spoke to the group. So there is some -- some good in that, that, in fact,
that he spoke to them and he knew they didn`t like him, I guess. I mean,
by his own admission, if he didn`t know they were a white supremacy-founded
group, then he wouldn`t know they hated Catholics, either.

But the point is, I would look at the local level. You have some African-
American legislators coming out in support of him, as well. There`s a man
named Representative Cedric Richmond (ph) who came out and said he`d worked
on countless pieces of legislation for African-Americans, for Jewish
people, for Hispanics in the state of Louisiana with Scalise and says he
knows his heart. He came out with a full-throated endorsement of
Representative Scalise.

So the fact is, I don`t know the man, but if the local people, African-
Americans included, say he`s not a racist, I`m not really sure what the
problem is, except for the fact he was stupid to go speak to this group in
the first place.

STEELE: OK, so -- the problem I have--

RENDELL: Michael, I think there`s a bigger point, though--

(CROSSTALK)

RENDELL: No one`s saying he should resign from the Congress itself. But
what I`m saying is he should get out of leadership. Someone who`s done
something like that -- if the Republican Party is serious, and we question
sometimes whether they are, about expanding their base to African-Americans
and Latinos and gays, they`ve got to stop having people like that in their
establishment, in their leadership.

He ought to get out for the good of the party. If he`s a Republican who
cares about the future of the party, he`ll step down from leadership.

STEELE: A spokesman for the Democratic National Committee said today in a
statement, somewhere along those lines, "Does Scalise not believe that
speaking to an anti-Semitic hate group legitimizes them and elevates their
racist and divisive existence? How abhorrent does a group have to be to
decline their invitation?"

RENDELL: That`s a very good point.

STEELE: "These questions are just the tip of the iceberg Representative
Scalise and all of Republican leadership need to start giving some real
answers to."

Today, in somewhat of a pushback on that, Speaker Boehner came out and
said, "More than a decade ago, Representative Scalise made an error in
judgment, and he was right to acknowledge it was wrong and inappropriate.
Like many of my colleagues on both sides of the aisle, I know Steve to be a
man of high integrity and good character."

And that`s a very important point to make. I know this -- I know this man.
know the congressman. I`ve had the privilege of working with him when I
was national chairman. He is not as some would like to paint him to be.
This is not about, Oh, is he a racist? It`s absolutely not. This is
really a question of judgment, don`t you think, gentlemen--

(CROSSTALK)

RENDELL: I would love to ask John Boehner if he thought Trent Lott should
have resigned from leadership. Trent Lott`s sin was nothing compared to
what Representative Scalise did. Trent Lott told a halfway-bad joke.

STEELE: Hogan?

GIDLEY: Yes, but Governor -- yes, but Governor, look, Senator Harry Reid
uses comments like Barack Obama sure is an articulate Negro. That doesn`t
make him racist. It makes him stupid for saying it. You guys had Robert
Byrd in the Senate, for heaven`s sakes--

RENDELL: Do you think Trent Lott--

GIDLEY: -- from West Virginia. He was a member of the KKK!

RENDELL: -- should have resigned from leadership?

GIDLEY: He -- he was a member of the KKK. So don`t pretend like this is
just all on our side, like we`ve got these -- these--

RENDELL: Well, no, I`m asking you a question.

GIDLEY: -- closet racists that are now out in the open--

(CROSSTALK)

RENDELL: Should Trent Lott have resigned from leadership?

GIDLEY: He`s not a racist! Look -- look, the bottom line is, if he`d been
continuing these conversations, these relationships with these groups,
absolutely get him out. But to make a mistake and make some comment or
just speak to a group trying to get them on your side -- you`re not going
there to get pitched by them. He was going there--

RENDELL: But Trent Lott--

GIDLEY: -- to try to change the tax code in Louisiana.

RENDELL: -- made a mistake, and his mistake was telling a joke. His
mistake was in legitimizing by his appearance -- as Michael said, when you
go before a group, you legitimize them because a person running for office
comes to their group. It gives them the stamp of legitimacy. What he did
was much worse than what Trent Lott did, and Trent Lott had the good sense
and cared about the Republican Party enough to resign.

STEELE: But that -- I think that`s an important distinction to make, and
it`s one that a lot of conservatives are a little bit piqued about, quite
frankly from Erick Erickson and others, who`ve noted the sort of soft-
handed approach to the Scalise matter, versus the very heavy-handed
approach by Trent -- by the folks towards Trent Lott.

Hogan, how do you reconcile that in the face of how conservatives feel that
this is really sort of the establishment sort of protecting Scalise when
someone like Trent Lott was thrown out for something far less egregious?

GIDLEY: Far less. It was more timely, though. I mean, this happened 12
years ago with Scalise, whereas something happened with Trent Lott and he
was excoriated almost the next day and then was forced to step down.
There`s a time that heals all wounds in this particular situation.

But as it relates to the misstep, versus the misstep, if misstepping,
whether it`s Trent Lott making his comments or this guy actually going to
espouse conservative beliefs to a group that is founded by the KKK -- if
getting in front of either one of those groups or making the comments Trent
Lott said is the standard, then they both need to be gone. You can`t have
one without the other, in my opinion.

RENDELL: I agree.

STEELE: Well, a big part of this discussion, I think, hinges on that -- on
that aspect, certainly for a lot of conservatives. And as "The Washington
Post`s" Nia-Malika Henderson pointed out in a recent article, the news
could disrupt the narrative that the Republican leaders have been trying to
push about a more diverse party.

She writes, "The GOP will be hard-pressed to tout Mia Love and Tim Scott
and Will Hurd (ph) and also have Scalise out front as the face of the party
as it tries to broaden its base not just among blacks, but to also appeal
to moderate white voters."

How does this play out, gentlemen, for the Republican Party? What kind of
reboot do they do now, with Scalise as part of the national leadership,
when you`re going into a black community and there may be a question or
concern still lingering because of the rhetoric and the actions and the
forgetfulness, if you will, of some of its leaders? Governor?

RENDELL: I think it`s very hard, Michael. Hogan made a very good point.
This is happening at the worst possible time for the country when because
of what we`ve seen in Ferguson and New York, race relations are frayed in a
way they haven`t been in a long time in this country. And we don`t need
this. We don`t need it as a country, first and foremost.

Secondly, the Republican Party clearly doesn`t need it. If they`re serious
about cutting into the Democrats` margin among African-American, Hispanics,
gays, other minorities, they`ve got to move on this. They`ve got to move.

And again, no one`s saying that the representative should leave Congress.
The people who elected him can make that judgment the next time he stands
for election. But I think he shouldn`t be in leadership.

STEELE: Hogan, you get the final word, Hogan.

GIDLEY: Yes. Some of this is actually going to -- - some of this is going
to solve itself, too, when you go into -- starting to move into 2016, and
you look on our debate stage and you`re going to see people represented
from different races, different genders, different religions, different
ethnicities. That`s going to be something the GOP hasn`t seen in my
lifetime that I`ve been aware of. I mean, when you`re talking about
potentially an Indian governor running for president, Susana Martinez, a
woman potentially, also Ted Cruz, you know, people like Tim Scott, Mia
Love--

STEELE: Well, that`s--

RENDELL: -- as the governor mentioned, who represent our party. You put
those people out there compared to what the left is going to put out there
in the old -- and the old retreads like Hillary Clinton and Webb, it`s
going to be obvious that we`re making strides in those ways. It`s just got
to happen, and you got to get over humps like this one because this one
obviously hurts things at least for a day or two.

STEELE: Well, it`s going to be a big hump potentially, and there`s -- I`m
sure that there`s more -- there`s going to be more coming out on this. And
I thank both you, Hogan Gidley and Governor Ed Rendell, for having this
conversation on this. Thank you very much for being with us.

RENDELL: Thanks, Michael.

GIDLEY: Thanks.

STEELE: Coming up -- search crews in Indonesia find the wreckage of that
missing AirAsia jetliner. The latest on that recovery when we return.

(COMMERCIAL BREAK)

STEELE: Former president George Herbert Walker Bush is out of the
hospital. The 90-year-old Bush was released from Houston Methodist
Hospital today and is back at home. He went to the hospital two days
before Christmas complaining of shortness of breath. We wish him the very
best.

HARDBALL back after this.

(COMMERCIAL BREAK)

STEELE: Welcome back to HARDBALL. After three days of search and rescue
efforts, the bodies of several passengers, as well as debris from the
wreckage of AirAsia flight 8501, were pulled from a northern channel of the
Java Sea. Now officials are working to determine the cause of the crash.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Until we have the investigation, we cannot make any
assumptions as to what went wrong. All I can say is that the weather in
Southeast Asia is bad at the moment. And you know, the floods in Malaysia,
the floods in Thailand, there`s a lot of rain. So that is something that
we have to look at more carefully because the weather is changing.

(END VIDEO CLIP)

STEELE: The findings come as tragic news for the victims` families, who
were holding out hope that their loved ones might have survived. That
grief was compounded by the fact that the families first heard of the
devastating news on a live report on Indonesian television with no advance
warning.

The search teams have also located what they believe to be the plane`s
fuselage, where the bodies of the remaining victims might be found. The
United States is now assisting with the recovery effort.

Joining me now is Michael Goldfarb, former FAA chief of staff, and airline
expert Seth Kaplan of "Airline Weekly" magazine. Gentlemen, welcome.

And the one sign (ph) of relief that we have here is we found the plane and
we are beginning to recover bodies. What does this tell us about the rest
of this process going forward, Michael? How does this play itself out now?

MICHAEL GOLDFARB, FMR. FAA CHIEF OF STAFF: Well, certainly, it`s a
terribly tragic end to the year for the families and for aviation to have
this have happened, but -- and the fact is that we`re going to fairly
rapidly, I believe, find the black boxes, the key elements of the missing
piece of this.

We know weather was a huge factor. We know the pilots` reaction maybe have
exacerbated that problem. Weather alone never brings a plane down. We
think it stalled. We think because it stalled, it came down intact. The
debris field seems to back that up.

So we`re going to get to the bottom of this and solve this one, but I think
we have other issues we need to talk about, about flying in that very, very
busy, congested airspace.

STEELE: I want to get to that because I think that`s -- that is a very
important aspect of this investigation that`s going to reveal a lot about
air safety in that region and the like.

But Seth, how long do you think this is going to play itself out? I mean,
what is the timeline, typically, once you`ve located the plane, to begin
the process of recovering not just the bodies but the key instruments that
are going to help us solve what happened?

SETH KAPLAN, "AIRLINE WEEKLY" MAGAZINE: Yes, and we`ll see how Indonesia
taking the lead, you know, handles this. But typically, it`s -- something
like this in the U.S., in a matter of weeks or months, we would have some
sort of preliminary report about what has happened, some sort of indication
of, "look, this is where we think things are going," but then usually,
years before there`s a final report.

In this case, you know, this is not MH370, where, you know -- where we just
don`t know what we`re working with. Here we are now, just days later, with
a debris field and certainly a lot of clues there, the black boxes, that
cockpit voice and data recorder, for example, likely still pinging. And,
anyway, we know roughly where in the world they are.

And so it will be a more standard process, not to say that these things are
ever easy or any less tragic for the families, even with that certainty
that they now have, but nothing like MH370, more like, if you could call
them this, more typical accidents.

STEELE: So, how -- in your estimation, Michael, how has this been handled
so far? Seth referenced the government sort of handling this and how they
proceed.

Clearly, there was a ball dropped here today or yesterday with the local
television. How is this going to play itself out, do you think, from that
standpoint for the families?

(CROSSTALK)

GOLDFARB: Well, I think the families -- the good news is that AirAsia has
taken lessons learned from Malaysia 370, so, that, clearly the CEO gets it.
They`re treating the families differently.

Whether I think -- as Seth said, whether the Indonesians step up
aggressively and bring in the authorities from around the world and move
quickly remains to be seen. There`s a lot of challenges on those aviation
authorities, both with the oversight of an air accident, as well as
regulating safety. So that part remains unanswered.

STEELE: Well, speaking about the CEO, Tony Fernandes has been the public
face for AirAsia since the plane went down over the weekend. And here`s
what he had to say about yesterday`s findings.

(BEGIN VIDEO CLIP)

TONY FERNANDES, CEO, AIRASIA GROUP: The only slight benefit is that, for
the people in there, there is some closure. This is a scar with me for the
rest of my life. It doesn`t change anything, and -- but very little.
There is at least some closure, as opposed to not knowing what has happened
and holding out hope.

(END VIDEO CLIP)

STEELE: Closure is one thing. Not knowing what happened is something
obviously very, very different.

And one of the aspects of the conversation I think that`s beginning to
bubble around is, this was a "budget" airline. And I put the term budget
in quotation marks. Is it time for an international NTSB sort of body that
-- because they come to the U.S. in our aviation recovery process and
systems.

And is it time to sort of look a little bit more closely at what`s
happening in other parts of the world with airline safety and the like?

GOLDFARB: Well, I think absolutely.

Budget, low-cost doesn`t necessarily mean unsafe. But Indonesia has a real
problem. AirAsia is one of the better ones. But Indonesia cannot fly in
Europe. The European Union has banned Indonesian airplanes. That`s a
function both of the oversight that they provide, as well as the safety.
Lots of stresses -- 71 percent of the busiest airspace in the world goes
through Southeast Asia.

At the same time, the infrastructure, the ground control, the radars, the
pilot training, the air traffic procedures, are not up to the task. So we
have going forward an issue. The international bodies are notoriously
lowest common denominator. They move like -- they move like molasses.

(LAUGHTER)

STEELE: Sound like government. Right?

GOLDFARB: It does. It is government.

(CROSSTALK)

STEELE: So, I just want to get, Seth, real quick your thought on that. Is
it time for an international body to sort of come in and help put a check
on some of these safety issues internationally?

KAPLAN: Yes, and it`s not a question of black or white in this case. You
have ICAO, which is a part of the United Nations, which is very involved in
aviation safety matters.

But, certainly, yes, you have sovereignty, and just a question of how much
of that nations are willing to give up and defer to others with perhaps
more expertise. And just to echo something that Michael said before, not a
question really of business model. Some of the very safest airlines in the
world, an airline like Southwest in this country and others like it around
the world are budget airlines.

And AirAsia, if anything, had to overcome something in its part of the
world, which is now taken for granted in places like the U.S. and Europe,
which is the idea that a budget airline is saving money on food and other
amenities, but not cutting corners on safety.

STEELE: But not on safety.

KAPLAN: And it had done a very good job of that until now -- now,
obviously, a blemish on that record.

STEELE: Well, we thank you, we thank you both, Michael Goldfarb and Seth
Kaplan, for coming in and shedding a little bit more light on this. Thank
you both.

Up next: a new development in that Sony hack. A security firm that is
investigating says the hack was done by a disgruntled ex-Sony employee and
not North Korea, but the FBI is standing by its story. That twist when we
return.

(COMMERCIAL BREAK)

STEELE: Welcome back to HARDBALL.

The Sony hacking scandal takes a new twist. Politico reports that
representatives of a cyber-intelligence company conducting their own
investigation into the Sony hack shared an alternate theory with the FBI
yesterday. And their data shows -- or rather says some combination of a
disgruntled employee and hackers for privacy groups is at fault.

Hmm.

The FBI stands by its original assessment that North Korea is responsible
for the Sony breach and that there is no credible information to indicate
that the other individual is responsible for the cyber-incident.

While the Sony hacking investigation continues, one thing is clear. This
security breach has shone a bright light on the vulnerabilities we all face
with regard to our online data.

Andrew Borene is a cyber-security expert who was a former associate deputy
general counsel at the U.S. Department of Defense a former Marine
intelligence officer.

Welcome. It`s good to see you again.

ANDREW BORENE, CYBER-SECURITY EXPERT: Thanks for having me.

STEELE: So, what the heck is going on? OK, let`s set the movie aside. I
mean, the real drama is the subtext of the story that`s now evolving that
maybe this is not just North Korea, but possibly some third-party hackers
out there. What`s your take on this?

BORENE: I just think it`s much too premature to start laying any blanket
assertion of where the fault lies from anyone in the private sector.

Right now, the FBI has access to human intelligence reporting from CIA.
They have access to technical intelligence, signals intelligence from the
National Security Agency, information that certainly they`re not going to
share with private sector investigators.

STEELE: Right.

BORENE: So they have a much broader picture, and I would be remiss if I
thought that director Jim Comey was getting out ahead of the curve and not
looking at a very robust investigative picture when he made an assertion
that North Korea was involved.

STEELE: So -- but here you have now this third-party group that`s sort of
talking to the hacking community, watching, reading, following chatter on -
- in chat rooms, putting together sort of its own paper trail of events,
and have come up with a different scenario.

So is there any possibility or plausibility that maybe, for example, this
is contract work by the North Koreans, that they, in fact, sort of tapped
into this network of, you know, hackers out here, tapped one of them and
here we are?

BORENE: Yes, absolutely it`s possible. And we frequently see that, the
use of--

STEELE: So this could possibly not just be North Korea, which I get to the
point that the U.S. government came out there and emphatically said, ah,
it`s just North Korea.

BORENE: Well, I don`t think they said it was just North Korea.

STEELE: Yes.

BORENE: They said North Korea was behind this and there was attribution.
North Korea made racist statements about our president.

STEELE: Yes.

BORENE: North Korea came out and made threats on individual Americans`
safety if they went to a movie, made threats on the American homeland,
called us the cesspool of terrorism if we did not collaborate with North
Korean investigators to disprove North Korean involvement.

So I think we have to look at the robust picture, even in the public
sphere.

STEELE: So this isn`t Snowden?

BORENE: It is -- I believe, for the private sector, the damage done to
Sony, the deletion of their data as an attack, vandalism, if you will, in
conjunction with the theft of their information, their intellectual
property, I think this puts this on a scale for the private sector of what
Snowden was for a U.S. government wakeup call for insider threats and
cyber-threats.

STEELE: Wow.

A lot to think about. Thank you, Andrew. I really appreciate you coming
and sharing with us.

BORENE: Thanks a lot for having me, Michael.

STEELE: Really appreciate it.

Coming up: Now that the economy is improving, who should get the credit
for it? Democrats or Republicans? That`s next with the roundtable.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MILISSA REHBERGER, MSNBC CORRESPONDENT: I`m Milissa Rehberger. Here`s
what`s happening.

The White House is offering condolences to the family and loved ones of
those who were lost on AirAsia Flight 8501. It says the U.S. stands ready
to deploy another ship to help in the search-and-rescue effort if needed.

A woman is dead after being shot at an Idaho Wal-Mart. The woman`s 2-year-
old child reached into her purse and accidentally fired a gun that was
concealed inside.

And a statement from the officer of New York City Mayor Bill de Blasio says
today`s meeting with police unions focused on building productive dialogue.
The mayor has been criticized by police after two officers were fatally
shot on December 20 -- back to HARDBALL.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Over a 57-month streak, our
businesses have created nearly 11 million new jobs. In a hopeful sign for
middle-class families, wages are on the rise again. America is now the
number one producer of oil, the number one producer of natural gas.

We`re saving drivers about 70 cents a gallon at the pump over last
Christmas. We have created about half-a-million new jobs in the auto
industry alone. The steps that we took early on rescue our economy and
rebuild it on a new foundation helped make 2014 the strongest year for job
growth since the 1990s.

(END VIDEO CLIP)

STEELE: Welcome back to HARDBALL.

That was President Obama speaking at his year-end press conference earlier
this month where he touted the success of his economic record. Since then,
the economic news has gotten even better. The Dow has crossed 18000, the
economy is growing at its fastest pace in more than a decade.

But some conservatives say Republicans deserve the credit for the rebound,
not President Obama. Democrats ran away from the Obama economy in the
midterms and Republicans have consistently called this economy a failure.

Let`s face it, folks. Both parties find themselves awkwardly positioned to
brag about an economic boom.

So what`s it all about? And what does it mean for the next year and going
into 2016?

The roundtable tonight, "USA Today" politics editor Paul Singer, Huffington
Post reporter Sabrina Siddiqui, and TheRoot.com politics contributor
Charles Ellison.

So, folks, who gets the credit?

PAUL SINGER, "USA TODAY": Well, everyone takes credit.

(LAUGHTER)

We can give as much credit as we want. No, I think it`s those -- no, those
guys. But they will all take credit. They will all stand out there and
say, no, no, no, it was us. It was -- we did it, we did it.

If the economy gets better and people feel it, particularly as prices at
the pump are going down and job wages look like they`re going up, people
will say, that`s a good thing. If they feel better, that works to the
president`s advantage always, always, always. But everyone will claim
credit for it.

STEELE: Sabrina?

SABRINA SIDDIQUI, HUFFINGTON POST: I think absolutely the president will
most likely take credit if the progress continues into the new year.

If you look at the trends in the past, it`s not as though people ascribed
credit to a GOP Congress under Clinton for what we refer to as the Clinton
economic recovery, the same way when the final collapse happened, people
blamed President George W. Bush. They didn`t blame President -- they
didn`t blame Democrats who were in Congress at the time.

A lot of it does depend, though, on whether or not Americans feel better
off. And one of the problems for the White House that they`re aware of is
that a majority of Americans, according to a new Huff Post poll we have
today, 51 percent do not feel as though their personal conditions have
improved.

STEELE: Interesting.

CHARLES ELLISON, "THE PHILADELPHIA TRIBUNE": Yes, I think it`s really
complicated.

It depends on who seizes the moment, who articulates it better. So, it`s
like the conventional narrative right now is that the president can seize
that, that he could be the one to basically say he helped this economy
recover.

However, you know, there are some openings there for Republicans because
they`re tapping into sort of this raw visceral sentiment that things are --
even though gas prices are going down, even though maybe things feel a
little bit cheaper, there`s still a lot of inequality out there. And
there`s this kind of populist appeal. So, you got to ask, which Democrat
can take advantage of that, which Republican can take advantage of that?

STEELE: So, but this is what I don`t get. Where was all that swagger that
we just saw at the top of this segment from the president, all the -- the
bragging about what his economy has done, what he has done in this economy,
where was that president for Democrats in this past midterm?

And you have already touched on it. Republicans themselves didn`t run on,
gee, these are the things we`re going to do to fix this poor, failing
economy. So how do these two parties, players, come to this table now and
say, hey, look at what we did?

SINGER: But Obama, he was talking about this stuff during the election,
but nobody wanted to be seen with him standing on stage. There was not a
Democrat -- not a Democrat who wanted--

(CROSSTALK)

STEELE: I did not see -- I did not see Obama do that litany that he did at
that press conference.

The president did not lay out, not on oil, on jobs, on the economy--

SINGER: But those numbers were really good in the past few weeks just
before that press conference, too. I mean, he got--

(CROSSTALK)

STEELE: Well, they were really good, but they were better. Right?

SINGER: Right.

STEELE: All right?

So where -- so where was this guy? Why now? What is it about now that
gives the president the room to go out into the public space to make these
claims?

SIDDIQUI: Well, some of it is that recent reports have suggested a much
larger trend in terms of the economic outlook, the fastest GDP growth in
nearly a decade. That`s a report that just came out in the last few weeks,
as well as the Dow breaking 18000.

And there`s a case to be made that Democrats really didn`t want to be seen
standing side by side with Obama. They didn`t have the same cohesive
message around the economy that they had in 2012--

STEELE: Right.

SIDDIQUI: -- which had played so well for them.

STEELE: Right.

SIDDIQUI: And the party gets some of the blame for that. But you made a
point about Republicans that`s worth pointing out, and that`s why they`ll
struggle to get credit.

Republicans in Congress opposed the few deals which are now being credited
with the economic success that we have seen, whether it was a fiscal cliff
deal, whether it was sequestration, whether it was the Murray-Ryan budget,
GOP leaders --

STEELE: The GOP has a plan for that, trust me. We always have a backup
plan. And the backup plan, it goes something like this. So when the
economy was in the dumps, many conservatives blamed the president for it.
But now that it`s growing again, they want to take some credit.

Conservative anti-tax advocate Grover Norquist tweets that the recovery is
all due to the Republicans` agenda to slash government spending. He notes
that federal spending as a share of GDP has fallen. He also tweets that
the economy grew because we stopped doing stimulus and did sequester
instead.

So, it was the sequester, stupid, not anything that the Obama
administration had done. Is there legitimacy to their arguments, Charles?

CHARLES ELLISON, PHILADELPHA TRIBUNE: That`s clever. You know, you got
Republicans sort of playing both sides. So, on one side, they`re tapping
into this raw sort of resentment against government, or low confidence in
government where it`s like, well, you know, government shouldn`t be raising
your taxes, you have to cut back on spending. It`s too much government
overreach.

On the other side of this, they`re trying to say we`re also the ones who
are cutting back on stimulus, cutting back on basically Obama and his
regime, or his junta. And also trying to tap into this populist rage as
well, a little bit of what Elizabeth Warren is doing --

STEELE: How much juice does GOP have with that?

PAUL SINGER, USA TODAY: Well, they get some juice, out if it, but I don`t
think anybody in America is going to say like, oh, sequester helped any of
us, that was sequester is. And I think for Republicans there`s a challenge
going forward as we are again ramping up military activity in Iraq, you
know, how do you explain cutting defense spending and continuing to cut
defense spending to a Republican Congress? If they want to flood money
back to the Defense Department, well, then, Grover is going to have to
explain how government spending is good government spending.

STEELE: Well, speaking of trying to get some juice out of this economy,
Hillary Clinton hasn`t exactly been praising the Obama economy either.
Take a look at what she had to say.

(BEGIN VIDEO CLIP)

HILLARY CLINTON, FORMER SECRETARY OF STATE: Middle class incomes have been
declining now for more than a decade. And poverty has increased as almost
all the benefits of economic growth have gone to those at the very top.

The share of income and wealth going to those at the very top, not just at
the 1 percent, but the .1 percent or the .01 percent of the population has
risen sharply over the last generation. Some are calling it a throwback to
the gilded age of the rubber barons.

And we`ve got to do a better job of getting our economy growing again and
producing results and renewing the American dream so that Americans feel
they have a stake in the future and that the economy and the political
system is not stacked against them.


Don`t let anybody tell you that, you know, it`s corporations and businesses
that create jobs.

(END VIDEO CLIPS)

STEELE: Oops. Clinton`s camp said she misspoke to that last one.

ELLISON: You think?

STEELE: As she meant to say tax breaks for corporations don`t create jobs.
I`d love to get into that discussion.

But, Sabrina, whose economy is she going to run on the Obama economy, she`s
going to run on her husband`s economy, or is she going to run an economy
that she hopes to create?

SIDDIQUI: Well, I think a lot of it will be on an economy she hopes to
create. But it hinges on what we were talking about earlier. Can the
Obama administration do enough next year to improve the standards of living
for those Americans who feel left out of this recovery? That poll I
mentioned earlier, showed 18 percent of Americans feel they`re better off
today than a year ago, 29 percent feel like they`re worse off.

So, that is a significant problem for whoever the Democratic nominee for
president is in 2016, because it really dictates whether the Obama economy
will be a plus or a political liability.

STEELE: So, Charles, how do Republicans run against Clinton if she`s
running against the Obama economy?

ELLISON: I mean, they`re going to call her out, they`re going to see that
she`s trying to have it both ways and she`s trying to create a hybrid
economy. You know, another thing is she feels Elizabeth Warren kind of
nipping at her heels a bit. You know, another thing she said, she`s
feeling a little bit of Rand Paul. It`s because of sentiments out there
where people see the Dow going up, but still a lot of unemployment, still a
lot of low wages, growing income inequality gap.

You know, she`s trying to tap into that, seems a bit scripted and a little
bit staged.

STEELE: She`s going to be doing a whole lot of tap dancing.

ELLISON: And that`s what people got to call her out on that when it
happens and she`s providing them opportunities for them to do it.

STEELE: Well, we`ll see how much they call her out. Like I said, she`s
got a whole lot of tap dance she`s going to do.

The roundtable is staying with us, and when we return, Congressman Michael
Grimm`s resignation caps a year of scandal. What does it say about our
leaders, and what does it say about us, the voters, who picked them?

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

STEELE: President Obama`s ending 2014 on a bit of a high note. The latest
Gallup poll shows the president with a 43 percent approval rating. That`s
not great, but it`s six points higher than where former president George
Bush was at the end of his sixth year in office.

And recent polling shows Obama on an upswing, no doubt a result of
Americans` growing confidence in the economy.

We`ll be right back.

(COMMERCIAL BREAK)

STEELE: We are back.

It began with bridgegate, and it ends with a tax evasion. In between, we
saw a former governor convicted of fraud, a congressman ousted for cocaine
and so much, much more. It was a year of scandal and even some sleaze in
American politics.

So, it`s only appropriate that today, Republican Congressman Michael Grimm
of New York announced he will resign after pleading guilty last week to tax
fraud. Despite facing a 20-count indictment, Grimm won re-election to the
House this November.

What does this say about our leaders? More importantly, what does it say
about how we, the voters, choose them?

We`re back with the roundtable. Paul, Sabrina and Charles.

What does it say? How can you be indicted, run for election, win, be
convicted and go oh, I guess I should resign. How does that happen?

SINGER: I think it`s funny when you say it`s been a year of sleaze and
politics. What year has not been a year of sleaze and politics? I mean,
you know, the fact of the matter is, we have an entire industry built to
make people forget about the bad things about, you would remember the
things that they want to like about you.

SIDDIQUI: And to be fair, when Congressman Grimm was running for re-
election, he maintained his innocence throughout his campaign. And only
now he`s pleading guilty. So, he wasn`t offending (ph) voters.

And I think one of the things that this speaks to, though, is just how
polarized this is at this moment, as well as the impact of gerrymandering
when you look at House seats, because this seat is extremely Republican.
So, when faced with a scandal-ridden, congressman or a Democrat, voters in
that district are still going to choose the scandal-ridden congressman.
And that goes for Trey Radel too in a special election. They picked a
Democrat over -- I mean, they picked a Republican over the Democrat. That
was the congressman who was found purchasing cocaine.

STEELE: One of the frustrations in all of this, though, it`s not just, you
know, the big stuff, like, the federal investigation and tax fraud and all
of that. But it`s also the little stuff like small states in Virginia,
where we saw former Governor Bob McDonnell and his wife were convicted in
September on corruption charges for accepted more than $165,000 in gifts
and loans while in office, including one very photogenic Rolex watch.

A jury found them guilty of taking those bribes in exchange for political
favors. Again, it goes to what I was saying about, it`s not just about,
you know, what we see happening at the federal level. This was a problem
that we dealt with at the state level with our state official.

What`s going on in our politics when our political leadership feel they can
do these things, engage in these behaviors and it`s OK.

ELLISON: I mean, you got sort of three trends going on here. I mean, the
first trend is really troubling how you have this precipitous drop in
government, whether state or local level or federal level and you`ve been
seeing that trend, especially it`s been very pronounced in the past like,
what, 30 years.

So, got that trend going on. You`ve also got this trend of politicians
trying to be the anti-politicians. So they know that voters have very
short attention spans and aren`t paying attention to kind of the nuance,
and all the details and all the scandals and stuff about their character.
So, they feel, like, yes, I`m going to Washington, I`m going to the state
house to fix it. So voters eat into that. You know, they feed into that
and they sort of feed into.

And then the sort of third trend that`s going on there, also, as well, is,
you know, voters just sort of feeling attracted to authentic types of
politicians or authentic types of candidates. People who see --

(CROSSTALK)

STEELE: But even when they draw themselves, Paul, not to be authentic, as
in the case of --

(CROSSTALK)

STEELE: -- they re-elect them anyway.

SINGER: Yes. But, see, my argument is part of the problem is money, is
the fact of the matter is there are billions of dollars being spent in
campaigns and in politics. And every member of Congress, every member of
elected office has to go around asking folks for a lot of money. That
invites corruption.

It doesn`t mean that everybody is corrupt. It means it invites corruption,
because if you come to me with a check in your hand and you come to me
without a check in your hand, I have to pay more attention to you.

STEELE: Wait a minute, these guys were getting checks and they were still
taking Rolex watches and they were still doing the whole tax evasion. So,
how does --

(CROSSTALK)

SINGER: -- I`m entitled to the Rolex.

STEEL: I don`t know if a donor writing me a check to walk away feeling
entitled to get a Rolex from another donor.

ELLISON: You could argument that money has been in politics forever. It`s
been in there --

STEELE: It`s nothing new.

ELLISON: It`s nothing new. It`s something that`s known.

STEELE: It`s nothing new, but what is new is what`s happening to our
political leaders. And what is more disturbing to me is how accepting the
voters get of it.

Yes, we get -- you know, we feign outrage and we get indignant at time, but
as you said earlier, Paul, you know, this whole system is designed to help
us forget. So we can, then, go on and ignore that bad behavior and get
ready for the next level of bad behavior.

SINGER: There`s no other candidate in some of these races.

SIDDIQUI: It does come back to the fact that, at the end of the someday, a
district is either so heavily red or so heavily blue. Even if you are
looking at the state level, Democrats had a pad year across the country in
2014. So, you had for example -- even if there wasn`t a scandal in a
governor`s race like Maryland, you still saw a Democrat lose for the first
time in decades.

STEELE: Which was a great race, by the way. Congratulations to Larry
Hogan and keeping it clean.

Thank you, Paul Singer, Sabrina Siddiqui, and Charles Ellison.

We`ll be right back right after this.

(COMMERCIAL BREAK)

STEELE: Let me finish tonight with this:

One reality that must not change about America and the free enterprise
economy is that the root of America`s success has always sprung out of the
hard labor of its middle class entrepreneurs, the men and women who risk it
all in a dream.

Government doesn`t do that, folks. Government can`t do that. When a small
business owner creates a job, they make an investment in people in a way
that the government can`t match, which is why the current jockeying by
Democrats and Republicans over who gets credit for the good news in the
economy makes most Americans just yawn. We don`t believe either one of
them.

Despite President Obama`s boastful sound bytes about his new and improving
economic data, a subject he barely broached during the fall elections, and
some GOP claims that sequestration, the budget wars and their efforts to
rein in government spending was the fix, we didn`t hear much about that,
either, over their drum beat to repeal Obamacare -- the public remains
extraordinarily skeptical politicians and their politics.

So, pronouncements of victory by the party probably won`t be embraced as
fact by anyone other than the politicians themselves and their think tank
and issue group supporters.

Yet, we should all brace for a healthy round of victory speeches from both
sides of the aisle, each asserting validation of opposing sets of economic
policies and ideals they never passed into law.

The truth is, as an economist will tell you, the real credit for the
potential prosperity we`re now beginning to feel goes to you, the risk
takers -- those who still fight for the American dream every morning when
they open for business.

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

"ALL IN WITH CHRIS HAYES" right now.

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