updated 12/14/2004 10:38:16 AM ET 2004-12-14T15:38:16

Guests: Norman Schwarzkopf, Richard Holbrooke, Donald Trump, John Mintz, Russ Buettner, Michael Isikoff

CHRIS MATTHEWS, HOST:  On the first anniversary of the capture of Saddam Hussein, General Norman Schwarzkopf on the war in Iraq.  And did Bernard Kerik‘s colorful past sink his nomination as the next secretary of homeland security?  Plus, America‘s most popular billionaire, Donald Trump.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  One year ago, Saddam Hussein, one of the hunted men in the world, was captured.  Here‘s how Paul Bremer, then the top U.S. administrator in Iraq, told the world.

(BEGIN VIDEO CLIP)

PAUL BREMER, U.S. ADMINISTRATOR IN IRAQ:  Ladies and gentlemen, we got him.

(END VIDEO CLIP)

MATTHEWS:  One year later, Saddam Hussein remains in captivity and is awaiting trial.  How far have we come on the road to a peaceful Iraq? 

Here now is General Norman Schwarzkopf, commander of Operation Desert Storm.  General Schwarzkopf, are we on schedule in Iraq in winning this war? 

GEN. NORMAN SCHWARZKOPF, RET, U.S. ARMY:  I think, you know, in the final analysis, we are behind where we thought we would be at this time. 

MATTHEWS:  Why?

SCHWARZKOPF:  Well, I think that we felt that once Saddam Hussein was captured and the two sons were killed, that the loyalists would sort of fold their tent and creep away, and we‘d get about the business of rebuilding downtown Baghdad and some of the other places.  But just the opposite happened.  Plus, we hadn‘t counted on it turning into jihad.  And once it turned into jihad, you had all these foreign troops coming in from all over the place, the terrorists, and of course, they are the ones that are wreaking havoc these days. 

MATTHEWS:  Why did we not expect that the Iraqi people would resist occupation? 

SCHWARZKOPF:  Well, I think that there was, you know, from the very beginning of the campaign, there was an assumption that the Iraqi people were just waiting for us to get there.  Remember at one point, somebody said they would be strewing flowers in our path as we came into Baghdad.

MATTHEWS:  Right.

SCHWARZKOPF:  I mean, showed a total lack of understanding of the culture that we were dealing with. 

MATTHEWS:  Who is responsible for that misinformation for our troops and for our strategy?  Is it the Defense Department civilians? 

SCHWARZKOPF:  Yes.  I think that you have to put the blame there to begin with, and they, you know, obviously they were driving the train as far as intelligence apparatus and the information we were getting and that sort of thing. 

MATTHEWS:  Those intellectuals, those ideologues in the Department of Defense, Paul Wolfowitz, Doug Feith, et cetera, et cetera, have they learned their lesson?  Have they sent the message to the generals saying, you know what, we had this all wrong, it‘s actually our country against their country, it‘s not just simply us against Saddam Hussein? 

SCHWARZKOPF:  I‘ve got to tell you, my experience is, those people don‘t back down very much and take the blame themselves. 

MATTHEWS:  Well, has it informed—now that we know that we‘re facing something of an insurgency, whether it‘s fueled by outside agitators or it‘s fueled by nationalism, or it‘s fueled by the old regime that simply wants to resist the takeover by the democratic forces of the Shia, who will probably win the election, how have we changed our strategy as you know, as in terms of dealing with this unexpected resistance? 

SCHWARZKOPF:  Well, initially, of course, when the invasion took place, it was a classic military operation, and was very easy to handle.  But now that we‘re into the house-to-house fighting, fighting against an enemy that is very elusive, very, very hard to identify, and at the same time, you know, you‘re destroying families‘ homes and that sort of thing.  So it‘s a very—it‘s the toughest, as I‘ve said in the very beginning and I‘ve said over and over again, combat in cities is the toughest type of battle that you are going to fight.  You‘re going to take a lot of casualties, and unfortunately you‘re going to see a lot of civilian casualties also.  And when you couple that with the religious fanatics, then you‘ve really got a problem on your hands.

MATTHEWS:  Let‘s talk about equipment and weaponry and armor.  Back when you fought and won the Persian Gulf War in 1991, did you ever have a deficiency in your preparation in terms of equipment, armor, weaponry, whatever? 

SCHWARZKOPF:  Initially, initially when I said I needed—told people what I needed, they said, oh, no, you don‘t need that much, and there was a lot of second-guessing.  Finally, Colin Powell, I prevailed on Colin and Colin set the record straight as far as Washington, D.C. was concerned, and from that point forward I had everything that I needed to make sure that we had a great victory. 

MATTHEWS:  What do you make of the service people‘s complaints last week to the, especially that one fellow from Tennessee, to the secretary of defense, saying that the military, the Marines and the Army, are denied the armor protection they need on those vehicles? 

SCHWARZKOPF:  Well, you know, the humvee was never considered an armored vehicle to begin with.  So the system they‘ve come up with is a jerry-rigged system which really doesn‘t give you much protection when you‘re going against—you know, being blown from a bump—a mine on a side of a road or something of that sort.  

But they deserve every bit of protection that we can give them.  Absolutely.  And I was very, very disappointed—let me put it stronger, I was angry about the words of the secretary of defense when he laid it all on the Army.  I mean, as if he as the secretary of defense didn‘t have anything to do with the Army, if the Army was over there doing it themselves screwing up. 

MATTHEWS:  It‘s funny because you know, when you look at history, and you‘re an expert on military history, General, you look at the Germans and certainly the French before them under Napoleon, when they went into Russia, they had the wrong clothing, they didn‘t know they were going to be fighting a winter war.  Here, it seems like the Americans‘ troops weren‘t aware what kind of a battle they were going to be fighting, and that was a problem not of the troops, but of the leadership, isn‘t it? 

SCHWARZKOPF:  Well, I think in the initial battle, pretty well unfolded the way we considered it would be, and it was a classic military operation.  It was only after the fact that things have gone awry.  And I think we‘re there with a whole lot more equipment than we thought we‘d be there.  That equipment is really—you know, people think of sand, they think of a beach here, but it‘s not that way.  It‘s a very, very fine powder.  And it gets into everything, and particularly into motors and aircraft, and that sort of thing.  And it‘s very, very hard to put up with that just to begin with. 

MATTHEWS:  Let me ask you about troop morale.  You do keep contact, I know, because we‘ve talked to—and obviously you‘re a military man and your friendships are probably all kinds of networks that go through the military.  What do you hear about morale?  Let‘s go from the officer—officers on down, and up through the enlisted ranks.  What‘s the mood of the men fighting and women fighting that war over there right now in Iraq?  And we lost eight more people this weekend, I noticed. 

SCHWARZKOPF:  Yeah.  The mood is very professional among the regular Army, and the regular Air Force and the regular Navy.  I mean, they have got a job to do, they know how to do the job, and they‘re in the process of executing that.  They‘re taking casualties, and they never expected to do their job without casualties, but what they‘re trying to do is do their job and minimize the casualties at the same time.  So it‘s strictly sort of a professionalism that they knew what they signed up for when they came in, and when they stuck around, they knew what to expect.  And they‘re going to do their job and they‘re going to do it very, very well. 

Of course, the other side of the soldier is the reservist.  And that‘s a different story, because these are people who really are not adequately trained to go right into battle.  The concept has always been that you would activate the reserves, and then those units that needed additional training would get that additional training before they were thrown into the battle.

MATTHEWS:  What about the National Guard people and the reservists now?  According to numbers we‘re looking at, they suffer about a third more KIAs than the regular Army.  Is that a result of the fact they‘re not prepared, they‘re getting killed more frequently than the regular guys are?

SCHWARZKOPF:  Well, I think there‘s a couple of things.  Number one—

I think it‘s kind of premature to start comparing numbers against numbers at this time, the casualty county, although it is there, it‘s extremely small compared to what it could be.  So I think it‘s too early to make judgments along that way, but on the other hand, you know, I think that the concept has always been that they would train before they would go into battle, train as units, and that was expected to happen. 

So I think that it‘s sort of unfair to now be complaining about the fact that they are being thrown into the battlefield more so. 

The other thing is you‘ve got to consider the type of missions that they have.  You know, most of the transportation organizations over there are reserve component organizations, and they‘re the ones that are getting blown up along the side of the roads, so they have—they‘re facing a tough challenge that they haven‘t had to face before. 

MATTHEWS:  Do you think we‘re making proper use, or we‘re overusing or abusing the reservists in this war? 

SCHWARZKOPF:  Oh, I think we‘re making proper use.  I don‘t think we‘re overloading them.  I don‘t think we‘re abusing them, and I think you‘re going to—if you were over there, I‘d think you‘d find an awful lot of reserve component units who are very proud of what they‘re doing, and that, you know, that speaks well for them.

MATTHEWS:  Well, it‘s great to have you on.  Merry Christmas, General.

SCHWARZKOPF:  Thank you.

MATTHEWS:  General Norman Schwarzkopf, thank you for joining us.

Coming up, doctors for the top opposition candidate in the Ukraine say he was poisoned with dioxin.  Former ambassador to the United Nations, Richard Holbrooke, is just back from the Ukraine, and he‘ll be our guest when we return.

And later, Donald Trump.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  If this story sounds like the plot from a John (UNINTELLIGIBLE) novel, you‘re right except this is real.  A Ukrainian presidential candidate, the one not backed by Russia‘s leader Vladimir Putin was poisoned as he ran for president.  By whom we don‘t know but the intrigue grows by the day. 

Former U.S. ambassador to the U.N. Richard Holbrooke has just returned from Ukraine.  Do you think this man was actually poisoned, the opposition candidate?

RICHARD HOLBROOKE, FMR. AMBASSADOR TO THE U.N.:  There‘s no doubt.  Look at the photographs, Chris.  In July he was a Hollywood movie star handsome guy.  His face started falling apart.  He—it‘s pock-marked and gray now.  He was clearly poisoned.  The Viennese doctors failed to find it right away.  It‘s dioxin.  And the only question is whodunnit?

I was in Ukraine yesterday and I can tell you that the suspicions are running high that it somehow has something to do with the KGB and the Russians.  But there is no proof of that.

MATTHEWS:  The suspicion now runs—merely the suspicion that it comes from the Russians not from the preferred candidate of the incumbent president of Ukraine? 

HOLBROOKE:  That‘s the suspicion but nobody knows.  The important thing is that on December 26 there will be another runoff.  Viktor Yushchenko, the poisoned man, the man whom Moscow opposes, is going to win.  It is a historic moment for Ukraine and Europe.  Ukraine as we all learned in high school and college, Ukraine and Russia were one single history.  It turns out the Ukrainians didn‘t see it that way.  They have always sought full independence.  They left the Soviet Union 12 years ago.  That was a sort of halfway house.  Now they‘re going to really break Moscow.  It‘s a dramatic and historic event.

MATTHEWS:  I went to school with a lot of Ukrainians in Philadelphia.  And since a lot of them were—frankly all of them were Roman Catholic, I got to know a lot of them.  Has this been a long-standing sentiment of the Ukrainian people to break from mother Russia? 

HOLBROOKE:  Yes, it has been but your Ukrainian high school friends knew something that we were not taught in college, which was there was a separate Ukrainian identity. 

By the way, Chris, I brought with me to show you two pieces of propaganda which I‘d like to show you which were put out by the government forces and which everyone in Moscow—every one in Kiev thought had been put out by the Russians. 

The first one is a photograph put out by the government forces showing President Bush and Viktor Yushchenko, the candidate who was poisoned.  This is obviously a combination of Bush‘s face and Yushchenko‘s face.  The Yushchenko part of the face before he was poisoned.  And this is to suggest to the Ukrainian people that he is an American puppet.  The second is Bush actually holding Yushchenko as a puppet.  And underneath it it says, “Here is our president.”  And they‘ve crossed out the “P”, you see the red mark over the “p” in president so that it says here is our resident.  And of course all people in the former Soviet Union know that resident means KGB  chief. 

So this is the kind of stuff that‘s been put out over the last few months.  But the really dramatic thing is that the streets of Kiev have been taken over by young idealistic demonstrators who are occupying the streets.  They have a tent city.  I visited them.  I sat with them in their tents.  The tents have been put up by the Ukrainian army.  The electricity and the heating in the tents because it‘s cold in Ukraine in winter is given by the mayor who defected from the government that appointed him and these kids are going to sit in the center of Ukraine right through December 26 and beyond until Yushchenko becomes president. 

The chance to do what the Chinese did at Tiananmen Square, crackdown has gone, the government can‘t use force.  The supreme irony to me was while the center of Kiev was occupied by these demonstrators, and MSNBC is show them very effectively in your news coverage, there was President Kuczma (ph), the virtual strongman controlling Ukraine, trapped in a villa on the suburbs of Kiev because he can‘t get into his regular office from which he ruled Ukraine for 10 years.  So what we‘re seeing, Chris, is one of the great events in the history of modern Europe.  Ukraine, after 1,000 years, is just days from a full, final declaration of independence from Russia.  It‘s quite something. 

MATTHEWS:  I‘m trying to put it in line with the other apocryphal events of the end of the Cold War.  One was the failure of the Warsaw Pact tanks to move when the government in Hungary basically opened up the Iron Curtain.  The other I guess was in 1991 when Yeltsin stood down the tanks of the Red Army. 

HOLBROOKE:  And the fall of the Berlin Wall. 

MATTHEWS:  Right.  That went in between.  And you put this one in that category of important events?

HOLBROOKE:  If as I believe will happen on December 26, Viktor Yushchenko will become the new president of the Ukraine.  It is a stunning event.  And the biggest loser here is Vladimir Putin.  He has had a terrible year, an anus horribleous (ph), to quote Queen Elizabeth in another context.

He lost Georgia in March.  He‘s had the Beslan school tragedy.  He‘s had this drama with (UNINTELLIGIBLE), he‘s cracked down on the press, he is losing his friends.  President Bush is going to have to re-evaluate the four-year love affair he had with Putin because he‘s gotten nothing from it and now Putin, as these things I showed show, the Russians are accusing Bush of running this election.  So I think what you‘re going to see here is a very dramatic set of events.  Putin is isolated, he‘s angry, he‘s lashing out at the west.  We‘re going to have to back Yushchenko.  My own personal view is we should encourage Ukraine to join NATO which would be something you and I could never have imagined a few years ago. 

MATTHEWS:  How would you gauge President Bush‘s performance?  Has he been too restrained or well advised to be restrained in terms of U.S.  participation in this Ukrainian fight for freedom? 

HOLBROOKE:  He‘s been criticized by the press but there is a method to what he‘s doing.  He is trying not to attack Putin directly, far less than the Canadian Prime Minister Paul Martin in that joint press conference.  Martin lashed out at Putin, Bush did not. 

But his missions, his embassy, Secretary Powell, have been very firm on this so I am not prepared to criticize President Bush right now.  The real test will come after Yushchenko takes over.  Are we going to invite him to Washington right away?  By the way, his wife is like your high school friends.  She‘s a Ukrainian-American from Chicago. 

Will Bush invite Yushchenko to Washington right away, will he address

the joint session of Congress, my guess is he will.  It will be very

dramatic.  And then finally will we encourage them to join NATO and will we

re-evaluate our relationship with Putin?  We don‘t want to have a new Cold

War.  I can‘t stress that highly enough.  And Ukraine has to get along well with Russia, its giant neighbor which controls a lot of its economy.  But on the other hand, Ukraine after 1,000 years in Russian airspace, wants to look to the west and we should encourage it. 

MATTHEWS:  Thanks very much.  Richard Holbrooke, former United States ambassador to the United Nations.

Up next, he‘s about to tell one you‘re fired and the other you‘re hired.  Donald Trump joins us.  You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

This Thursday, the season the season fine aisle of “The Apprentice” will air on NBC.  Donald Trump is the star of “The Apprentice” and he joins us now from New York.  Donald, thank you for joining us.  Good luck with Thursday night.

Let me ask you this, what do you think has been the impact of “The Apprentice” on this country?

DONALD TRUMP, “THE APPRENTICE”:  Well, people are starting to understand business a little bit better, they‘re liking business, they‘re even liking me better than they used to.  You know, I used to have this reputation which I think was a little bit incorrect.  They were actually thinking—I mean, it‘s pretty sad—I fire people all the time and people think I‘m a nicer person than I used to be.  But they really are getting business and they‘re learning something.  That‘s why, as you know, the ratings came out recently, and in the younger groups in particular we‘re no. 1.  And it‘s doing great all over the place, but from number I guess 18 to 35, we‘re the number one show on television.  So, it‘s really been amazing.

MATTHEWS:  You know, when I was growing up and I was college age, everybody was against making money.  Going to law school was like going to shop.  Nobody went to B-school.  Everybody wanted to major in psyche or political science or philosophy or something like that because it was the 60s. 

Are kids now openly interested in making loot, making big money? 

TRUMP:  Well, I think, that‘s be one of the advantages to “The Apprentice” and what‘s it‘s done even in terms of the economy and the society—you know, it‘s a good thing.  It‘s not a bad thing.  They want to do something.  They want to be productive.  And certainly the people on “The Apprentice” have been very productive.  And you know, who would have ever thought, Chris, when you and I first did our interview a year ago, before season one went on the air, who would have ever thought it would have turned out to be this big monster? 

Now, as you know on Thursday night, we have three hour grand finale.  And of all things, it‘s three hours live.  So, I‘m going to be doing live television for almost three hours, something I‘m not particularly looking forward to, but we‘ll give it a shot. 

MATTHEWS:  Well, is it because people like the crackling reality of winning and losing.

TRUMP:  Well, I think it‘s wining and losing.  I think it‘s business.  I think, for whatever reason, they probably like me or hate me or something.  It‘s like Howard Cosell, you loved him or you hated him, but you watched.  And certainly it‘s the city.  I mean, it‘s New York City.  It‘s a postcard to New York City.  It‘s a love letter to New York City.  The cinematography is amazing.  Mark Burnett‘s done a great and his people J.B. and Stock (ph) and everybody else.  It‘s just been an amazing thing that we‘re all involved with.  Who would have thought this would have happened.  When we were sitting with you, you remember I told you, “I‘m going to do it.  We‘re going to have some fun.”  Well, I did it.  WE had some fun and the show went to no. 1. 

So, who would have thought that Chris.

MATTHEWS:  So, this is HARDBALL Donald, so let me tell you.  I‘m going to ask you the question, what‘s the difference between you, and I think you are more popular than you were a year ago, and I think you‘ve always pretty much been a popular figure, but let me ask, what‘s the difference between you and Gordon Gecko, the character that Michael Douglas played in “Wall Street,” in that Oliver Stone movie all those years ago? 

Why is are you popular, and he was sorted of hated.

TRUMP:  Well, I think Michael used to say, and Michael is a good friend of mine, he‘s a golfing friend of mine.  He used to say that he studied me when he did Gordon Gecko.  And I wasn‘t sure, is that nice or that not so good.

MATTHEWS:  It didn‘t come out nice.

TRUMP:  No.  No.  It didn‘t come out.   Gordon Gecko wasn‘t the nicest of guys.  I think I‘m a nice guy.  I mean, I get along with people.  I have great relationships.  I have a lot of wonderful relationships.  And even in business, I have a lot of wonderful relationships. 

Gordon Gecko was not big into the world of relationships. 

MATTHEWS:  Is greed good? 

TRUMP:  No.  Greed is bad.  Greed is not good.  I do it for fun.  I love doing it.  I love what I‘m doing.  The expression they used in the movie, “greed is good,” was incredible expression.  It was great for purposes of a movie, but greed is certainly not good. 

MATTHEWS:  Let me ask you about Donald Trump the character that‘s coming up.  Because there is a character you play in “The Apprentice.” It‘s a tough guy.  It‘s no nonsense.  It‘s all business.  And there‘s also a kind of a crisp decisiveness where you sit there ago, sorry, buddy, I‘m the arbiter.  I‘m the judge in this court, there ain‘t no jury here. 

Is that how you are in business? 

TRUMP:  Well, I think so.  I think, it‘s very much a reflection of how I am and how business is.  How the real world is.  I mean, we see some of these people.  You watch for instance, the other night, Andy got fired.  and the wormed is.  you watch some of these people.  Andy got fired.  Andy when to Harvard, he was national debating champion, and yet two women beat the hell out of him in debating.  They just beat him up.  I don‘t know if you got to see that one, but he just got beaten up very badly.  And people are amazed.  I mean, you have this great debating champion, really smart guy, and two women just took him to the cleaners.  So you never know how it‘s going to come out.  But the fact is, it is a reflection on, not only me, but on business in general. 

MATTHEWS:  Somebody said the other day that the future is going to be dominated by people with MFA degrees in design, because so much of the business (UNINTELLIGIBLE), the mathematics of business is now calculated by computers.  Do you even see any sense of that, that people want original thinking, rather than the kind of old style business calculation. 

TRUMP:  Well, old style will never change, and I really think you need them both.  And it‘s very interesting to see what.  You know, as an example, we had over a million people apply to be on “The Apprentice” for the second season, which is a record on television history.  So, over a million people came in.  And I‘m telling you Chris, once they get there, they all want to be businessmen.  But once they get there, they want to be movie stores.  So, it‘s sort of interesting. 

MATTHEWS:  When you look at the best business schools in the country, the best B-schools, Wharton, Harvard, et cetera.  Do you think they‘re better—turning out better people, than the colleges of hard knocks, the people coming from the schools that aren‘t so highly prized, but have better moxie? 

What do you see out there?  Do the big B-schools still attract and produce the best people.

TRUMP:  Well, I went to Wharton.  And if you go to Wharton or Harvard or Stanford or any of the great ones you, it means you have a good brain to start off with.  And you know, it‘s something.  But honestly I‘m not sure there‘s a huge advantage.  I‘ve seen, and on “The Apprentice” we show this.  And in fact, as you know, we showed those with education, really great education and those without.  And frankly the people without the education in some cases do better. 

MATTHEWS:  Yes, that‘s why...

TRUMP:  But I‘m a big believer in education, I want to stress that.  But in many cases, on many tasks, the young, very ambitious and also very successful—because the deal was you could either be highly educated or you had to highly successful without the education.  And some of these people without the education have done very, very well. 

MATTHEWS:  I want ask you when we come back, first question.  I‘m going to ask you a lot of politics.  But I want to ask you first question, does the wild kid, the sort of the out of the box kid, more attractive to the business manager like yourself today, than the straight-arrow student who did everything right in business school.  

I‘ll be right back with more with Donald Trump and his wisdom.  You‘re watching HARDBALL. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We‘re back with Donald Trump.  And “The Apprentice” has its season finale this Thursday night.  And it‘s all live.  And Donald Trump is excited about that.

Let me ask you, sir, about, if you had to choose between—in general, speaking between a kind of a geek, a real wild, far-out sort of computer guy that is one of today‘s kind of people, or a straight business school type who did everything right and got high grades, who would you like? 

TRUMP:  I think I would be inclined to go with the business school type that got good high grades with a great education.  That‘s my bias.  That doesn‘t mean you can‘t have be successful the other way. 

If you look at “The Apprentice,” Troy, as an example, last season was not highly educated, but he was a very smart guy.  He was a very cunning guy.

MATTHEWS:  Right. 

TRUMP:  But my natural bias is to go for education.  I‘m a big believer in education.

MATTHEWS:  Speaking of executive recruitment, what do you think of the Bernie Kerik situation?  What do you think went wrong there in picking the secretary of homeland security? 

TRUMP:  Well, Bernie‘s a friend of mine.  He‘s a great guy.  He‘s really a good guy.

And it‘s very unfortunate.  The problem is, you‘ll get some white-toast guy in a position like that.  And you need somebody like Bernie that understands the ropes a little bit in order to solve the problem of terrorism.  I‘m not sure that a normal, nicely educated, soft-spoken, wonderful guy is going to necessarily be in there and do the job that you need.  Bernie Kerik is a good guy.  It‘s really a shame and it‘s a shame for the country. 

MATTHEWS:  Do you think the president should have stuck behind him? 

TRUMP:  No, I think they did the right thing, and Bernie understood that. 

Bernie was in charge of the sort of thing that he did the violation on.  But Bernie understood that.  Bernie never put the president in that position and he did a good thing by not doing so. 

MATTHEWS:  Let‘s talk about the economy.  I want to ask you.  I‘ve only got a couple minutes left here, Donald.  I want to ask you about the three big concerns I have as one of the many Americans worried about the economy. 

The dollar, are you worried about them letting it go too low in the world market? 

TRUMP:  Well, the dollar is keeping the economy good in a sense, because people are coming to New York.  As an example, they‘re buying apartments in New York.  They‘re using the hotels.  The dollar—it‘s a horrible word when they say the low dollar, the cheap dollar.  It‘s a terrible word to use.  But the fact is, it happens to bring a lot of business into this country. 

MATTHEWS:  But it‘s great to travel in this country.  It‘s a terrible situation to travel overseas with, right? 

TRUMP:  Well, that‘s right, but it keeps people here.  So I‘m not sure that is so bad. 

MATTHEWS:  You are not worried that there will come a time when the people who are lending us money from the Far East, China and Japan, will simply say I don‘t like the value of the dollar anymore; I‘m getting out?  And then we‘re in big trouble with a bank run basically on U.S. paper. 

TRUMP:  I don‘t see it happening.  This is one country that it‘s just not going to happen to.

Having the dollar where it‘s a reduced value a little bit, it sounds terrible and you hate to say it, but the fact is, it brings business and it is actually good in terms of what we all do. 

MATTHEWS:  So you expect they will keep this policy? 

TRUMP:  I think they‘re going to keep the policy.  I think the dollar is probably going to inch up a little bit.  And that is not so bad.

But the worst times we‘ve had is when you had a very strong dollar. 

Nothing came in at all. 

(CROSSTALK)

TRUMP:  And having a strong dollar, it turned out to be—it sounds good.  That one sounds great, but nothing happens good for the country. 

MATTHEWS:  Well, what about when you compound the situation by a long

·         a big long-term borrowing situation in addition to the couple billion—we‘re borrowing about $600 billion a year now.  What happens when you add to that the big money we‘re going to have to borrow to carry Social Security into this new form of individual accounts?  That big short-term deficits for the federal budget.  Does that take us over the tipping point with regard to the value of the dollar, all that borrowing? 

TRUMP:  Well, we‘ve had the deficits before, and we‘re going to have them again and we‘re going to have them for a while, and the war is certainly costing a tremendous amount of money, far more than anyone ever thought. 

The key is as long as interest rates stay low, Chris.  If interest rates are low, we‘re going to be fine.  If interest rates go up and the dollar goes up, that is a really devastating combination. 

MATTHEWS:  Well, how do you avoid rising interest rates if you double the borrowing with the new Social Security plan? 

TRUMP:  Well, it is really amazing, because I‘ve been asking that for the last year or so.  And the fact is that rates are still very low.  They continue to be low and I‘m very happy about it, because I can tell you, the real estate industry, the entire—so many different industries, if rates go up, they‘re going to collapse and it‘s not going to be good. 

So, if we can keep the dollar pretty much where it is, even a little bit higher is fine, and interest rates keep low, we‘re going to be in good shape. 

MATTHEWS:  You‘re not afraid this isn‘t just another bubble situation, where it doesn‘t go wrong until it does go wrong and then it‘s really bad? 

TRUMP:  Well, Chris, don‘t forget, at some point, it always goes wrong.  No matter where, no matter when, it always goes wrong.  We‘ve been riding something very good and very strong for a long period of time.  At some point, things will happen and they won‘t be pleasant.  And you know what?  We‘ll get out of them and it will be all right. 

MATTHEWS:  If you were the president of the United States, would you push individual retirement accounts for Social Security? 

TRUMP:  I sort of think I would.  Something has to be done.  Social Security is a huge problem right now, funding it.  And something‘s going to have to be done and it‘s going to have to be done very quickly, actually.  I think they‘re moving on different methods.  But something is going to have to be done rather quickly. 

MATTHEWS:  OK.  It‘s great having you on. 

TRUMP:  Thank you. 

MATTHEWS:  Good luck with the show Thursday night.  Good luck with your wedding coming up.  It‘s fabulous.  Everybody is going to want to see that.

Anyway, thank you very much, Donald Trump, for coming on HARDBALL. 

TRUMP:  Thank you, Chris. 

MATTHEWS:  When we return, who are the leading candidates to be President Bush‘s nominee now for homeland security secretary, now that Bernard Kerik has withdrawn? 

And on Thursday, a very special edition of HARDBALL.  We‘ve been out there talking to people already on that.  We‘re taking the show to Walter Reed Hospital with a story about a soldier‘s journey home.  I had a chance to talk to one of them earlier.  Here‘s a preview.

(BEGIN VIDEO CLIP)

MATTHEWS:  Do you want to go back over to Afghanistan or Iraq? 

UNIDENTIFIED MALE:  If I had the opportunity I would. 

MATTHEWS:  Why? 

UNIDENTIFIED MALE:  It‘s what I want.  It‘s—I‘m not trying to sound brainwashed or anything like that, but...

MATTHEWS:  You don‘t. 

UNIDENTIFIED MALE:  I‘m a soldier.  My place to be is—I am hired to fight wars for this country.  That‘s my place.  That‘s where I should be. 

(END VIDEO CLIP)

MATTHEWS:  Some story, “A Soldier‘s Journey Home,” right here on HARDBALL this Thursday night at our regular time, 7:00 Eastern.

(COMMERCIAL BREAK)

MATTHEWS:  Coming up, “Newsweek”‘s Michael Isikoff, “The Washington Post”‘s John Mintz, and Russ Buettner of “The New York Daily News” on Bernard Kerik‘s withdrawal as President Bush‘s nominee for homeland security secretary.  More HARDBALL, real HARDBALL, after this.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

In the wake of Bernard Kerik‘s abrupt withdrawal as nominee-designate for homeland security secretary, “Newsweek” magazine reports that, in 1998, the state of New Jersey issued a warrant for his arrest.  That‘s Bernard Kerik‘s arrest.  “The Washington Post” reported that Kerik was involved in some unsavory investigation work as head of security for a Saudi Arabian hospital back in the 1980s.  And, finally, “The New York Daily News” today reported on connections Kerik had with a firm allegedly tied to the mob. 

Kerik commented on the matter earlier today.

(BEGIN VIDEO CLIP)

BERNARD KERIK, FORMER NEW YORK CITY POLICE COMMISSIONER: I apologize to anybody that‘s been brought into this unnecessarily, particularly the mayor, the president and his administration, Judith Regan and Pinero.  My withdrawal is my fault.  What happened between me and the White House is my fault.  It‘s nobody else‘s and I‘ll deal with it. 

(END VIDEO CLIP)

MATTHEWS:  “Newsweek” magazine‘s Michael Isikoff is an investigation reporter.  John Mintz is a staff write for “The Washington Post.”  And Russ Buettner wrote the cover story in today‘s “New York Daily News.”

Let me go, first of all, to Michael Isikoff.

The fallout here.  What‘s the damage politically to the president‘s relationship with Rudy Giuliani out of this? 

MICHAEL ISIKOFF, “NEWSWEEK”:  Well, it‘s clearly a momentary embarrassment for the president, for Giuliani, who pressed the president to nominate Kerik. 

It‘s also I think raising some serious questions about the White House vetting operation, overseen by the White House Counsel‘s office, headed by Alberto Gonzales, the nominee to be attorney general.  I think there‘s a lot of questions to be raised there. 

One thing that was clear from the stories over the last week is, there was just a wealth of allegations that swirled around Kerik that were uncovered by reporters since he—immediately after he was nominated, yet somehow a lot of these were just simply not addressed in the vetting process.  So you‘ve got to wonder, where were the vetters?  How tough were the questions asked of Kerik?

(CROSSTALK)

MATTHEWS:  Let me go to John Mintz on that.

Was it possible that Bernard Kerik got a bye in vetting process because of the endorsement he got from Rudy? 

JOHN MINTZ, “THE WASHINGTON POST”:  I believe that‘s so.  I gather that—I was told by an administration official that Rudy Giuliani called up the president and said, Mr. President, you know that I have not asked you for favors in the past, but I am asking you today to name my friend Bernard Kerik as the head of the Homeland Security Department.  And I‘m told that that played a big role in Kerik being named. 

MATTHEWS:  Is that why we got word in your paper today.  Well, I don‘t

·         I‘ll say maybe—could I come to believe that‘s the reason we heard in your paper today, or yesterday, actually, very strong condemnations of Bernard Kerik for having been forewarned that, if he lied about domestic servants or not paying taxes on illegal immigrants, that that would be a humiliation on him, on his family and on the president? 

MINTZ:  It‘s unclear to us exactly what went on in these discussions between White House officials and Kerik, but clearly he had been put on warning by the White House officials, you‘ve got to be straight with us.  This is really important.  When we ask you about nannies and immigration status, since you are to be the one who is overseeing immigration matters for the United States government, you‘ve got to be straight with us.

And apparently Kerik came back to them later and said, oops, I just discovered there were some problems with this nanny, but she‘s left anyway. 

MATTHEWS:  Yes.  She left—it‘s like she hid her out of the country.

Let me ask you again, John, this question of a conflict between the vetting operation, which I assume has been pretty good before, and this contest to try to win the heart of Rudy Giuliani.  Do you think they went into conflict with each other to the point where the president has to broker this thing in the end and say, wait a minute; I‘ve heard all the bad stuff about Kerik, but Rudy wants him and I‘m going to go with him? 

MINTZ:  I‘m not clear on whether the White House or the president had heard anything bad about Kerik before he was named.  I think that the president probably was not informed about this controversial stuff. 

These controversial matters, as Mike Isikoff said, they‘re like low-hanging fruit. 

MATTHEWS:  Right. 

MINTZ:  You just have to go call people in New York and New Jersey and you‘ll find out. 

MATTHEWS:  Well, let‘s give Russ a little more credit than going for the low-hanging fruit. 

Russ, when you reported this story today, it seemed like you got a lot of—it was whole pile of stuff you got on this guy today.  Why do you think you guys could get it and the White House couldn‘t? 

RUSS BUETTNER, “NEW YORK DAILY NEWS”:  Well, it didn‘t come to us overnight. 

Our interest in this story began two years ago when we started uncovering a corruption scandal within the correction department that really had its roots in Mr. Kerik‘s time there.  And this is actually an extension of that.  I‘ve been working on these stories for six months, looking into...

(CROSSTALK)

MATTHEWS:  When did begin to print—send them to publication? 

BUETTNER:  We notified Mr. Kerik around noon on December 2, the day before he was nominated, that we were about to publish this round of stories. 

MATTHEWS:  What is the relationship as you know it between Rudy Giuliani and Bernard Kerik?  Why does Rudy have such devotion to this man‘s career? 

BUETTNER:  The Giuliani administration, above all else, valued loyalty.  That was the mantra that you heard over and over again.  And Bernie was absolutely the most loyal lieutenant that Rudy had within the administration.  And most people believe that‘s the reason that he has stayed closest to Mr. Giuliani since he has left office. 

MATTHEWS:  Did Giuliani know about that mob problem with Kerik? 

MINTZ:  That‘s not clear.  It‘s very difficult to tell what was said and what wasn‘t said.  Mr. Kerik‘s had a lot of interesting interactions in his outside life, and some of that has overlapped into his professional life, but it‘s not clear the nature of the exchange between Mr. Giuliani and Mr. Kerik. 

MATTHEWS:  Well, wouldn‘t this warrant for his arrest in New Jersey have been picked up on any kind of full-field FBI check?  And did Rudy never run a check on his own man? 

BUETTNER:  That‘s a very good question.  And there‘s a lot of people who are wondering just those kinds of things.  And some people have the perception that‘s what the loyalty was all about, that, if you were loyal, other things were ignored and you were helped along, regardless of what there might be. 

(CROSSTALK)

MATTHEWS:  Michael Isikoff, you can run a check on somebody and ask them if they‘ve ever been arrested or ever been under suspicion in almost any category of law problems.  Why didn‘t Rudy know about this, about Bernard Kerik, before he pushed him so hard? 

ISIKOFF:  No, I don‘t know. 

And my colleague Mark Hosenball uncovered that arrest warrant sitting at his computer working for a few minutes.  But one question on the loyalty issue.  It‘s certainly true that Kerik and Rudy Giuliani worked together when Rudy was mayor and Kerik was the police commissioner and that they‘re close personal friends.  But it‘s also worth remembering that they‘re also business partners, have been business partners for the last few years.  And that—you know, that‘s a factor in considering why Giuliani pushed so hard to get Kerik the job. 

MATTHEWS:  You mean having him on the inside might have meant some contracts flowing in his direction? 

ISIKOFF:  Well, we certainly do know enough about Giuliani & Associates to know that they make their business in the security world and offering security assessments and security advice to governments and private contractors. 

So I‘m sure, if you‘re in that line of work, having your business partner as the secretary of homeland security is not unhelpful. 

MATTHEWS:  OK, Michael and everybody and Russ and John, hold on for a second.  We‘re going to right back for a short break—after a short break.

Coming up, more on the political fallout of Bernard Kerik‘s withdrawal when we return. 

And don‘t forget to check out Hardblogger, our political blog Web site.  Just go to HARDBALL.MSNBC.com.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back for more with “Newsweek”‘s Michael Isikoff, “The Washington Post”‘s John Mintz and Russ Buettner of “The New York Daily News.” 

Russ, you gave us kind of an interesting little tidbit right before we went to break.  You said that you called up Bernard Kerik before he was announced for secretary of homeland security with your concerns, the stories you were reporting at the time.  What was his reaction? 

BUETTNER:  Actually, I never got a call back, Chris.  I left a long voice-mail about the categories of things we were looking into with his office, and I never received a call back.  There were some people who were attached to him who tried to lobby our newspaper to keep us from publishing that story, but I never heard back. 

MATTHEWS:  Who were those people? 

BUETTNER:  I can‘t say. 

MATTHEWS:  Why not? 

(LAUGHTER)

BUETTNER:  Some of those conversations are held in confidence and it‘s not...

MATTHEWS:  Well, how about the ones that are not held in confidence? 

(LAUGHTER)

MATTHEWS:  Who were the people that called up and told you kill the story, to spike it? 

(LAUGHTER)

BUETTNER:  I wasn‘t privy to those conversations. 

MATTHEWS:  Was there any muscle involved, any threats? 

(LAUGHTER)

BUETTNER:  Not that I‘m aware of, no.

MATTHEWS:  OK.  Not that I‘m aware of?  You sound like Alger Hiss. 

Let me ask you, Michael Isikoff, in your dealings with Bernard Kerik, did you get any—any feedback from him, or did he stonewall you? 

ISIKOFF:  We talked to his people.  We didn‘t talk directly to him.

I don‘t think he was—my understanding is he wasn‘t talking directly to reporters.  That‘s generally the case when somebody gets nominated for a position.  They‘re kept away from the press. 

MATTHEWS:  So you didn‘t get any...

John Mintz, your experience in reporting this story?

MINTZ:  I was unable to reach Bernard Kerik for the reasons Mike Isikoff just mentioned.  Instead, his advocates to me in the story I did about his experience in Saudi Arabia, it was people in the Bush administration who called back and pleaded his case. 

MATTHEWS:  Did anybody call you and try to spike your story, try to warn you off? 

MINTZ:  They tried to warn me off and say that it was a bunch of bunkum, but they didn‘t offer any threats at all.  It wasn‘t like that.

MATTHEWS:  Bunkum?  Was it Charles Dickens that called you? 

(LAUGHTER)

MATTHEWS:  Where did they get that word from? 

Anyway, let me ask you—start with you, John—in all seriousness, what do you—as the Washington guy here, along with Michael, what do you think is the impact here between the president and Rudy Giuliani?  Because he was Giuliani‘s candidate. 

MINTZ:  Well, I think that Rudy Giuliani is going to be very embarrassed in his dealings with the White House and with President Bush.  He pressed a guy onto President Bush and onto the nation onto, a guy who it turned out after just a few days, his nomination crumpled. 

And I‘m not sure how truly close these two men are, but they clearly do have an alliance and a kind of friendship.  And we‘ll just have to see if Rudy Giuliani is still welcome at this White House. 

MATTHEWS:  I guess one careful bet we could make here is that Bernard Kerik will not be his proposed running mate if he runs for president.

MINTZ:  I think we can bet on that, yes, Chris. 

MATTHEWS:  Let me ask Michael Isikoff.

You‘re good at this intrigue.  What is this going to say to the White House?  Are they going to start putting down Rudy Giuliani now?  Is this their opportunity, their permission slip to remove him as a potential presidential candidate? 

ISIKOFF:  Oh, we‘re like at least three or so years away from that, but I think what he will really say to the White House—Kerik was a deviation from the norm in one way.  He was a colorful, independent guy.

And I‘ve got to say, at least some of us in the press are a little sorry he didn‘t go further.

MATTHEWS:  Right. 

ISIKOFF:  Because he would have been great copy. 

But what I fear is what we‘re going to get is somebody just in the mold of the rest of the Cabinet nominees, on message, bland, simply echoing the White House line.

MATTHEWS:  Somebody else, Michael, from the White House secretarial pool.

ISIKOFF:  Yes. 

MATTHEWS:  For the next Cabinet post.

Anyway, thank you very much, Michael Isikoff, Russ Buettner, and John Mintz.

Join us again tomorrow at 7:00 Eastern for more HARDBALL.  And on Thursday, don‘t forget our special from Walter Reed Hospital, “A Soldier‘s Journey Home.”

Right now, it‘s time for the “COUNTDOWN” with Keith.

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

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