updated 12/16/2004 1:42:58 PM ET 2004-12-16T18:42:58

Guests: James Woolsey, Bill Nelson, Robert Reich, Stephen Moore Robert George, Susan Molinari, Hilary Rosen

CHRIS MATTHEWS, HOST:  Secretary of Defense Donald Rumsfeld takes on friendly fire as neoconservatives and their hawkish allies join the chorus of criticism on his wartime leadership. 

Plus, Bernard Kerik‘s colorful past turns technicolor as more controversies hit the front pages.  But the big question remains unanswered: Why did the White House fail to fully vet their candidate for Secretary of Homeland Security?  That‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Secretary of Defense Donald Rumsfeld is taking major heat from conservatives for failing to adequately protect their troops, our troops, in the line of fire in Iraq.  Senator John McCain said point blank, he has no confidence in Rumsfeld as secretary of defense. 

And in today‘s Washington Post, Bill Crystal wrote quote, “surely Don Rumsfeld is not the defense secretary George Bush should want to have for the remainder of his second term.  These soldiers deserve a better defense secretary than the one we have.”

Additionally, here‘s what General Norman Schwarzkopf told me when I asked him about Rumsfeld‘s response to a soldier‘s complaints about the lack of vehicle armor in Iraq. 

(BEGIN VIDEO CLIP)

GEN. NORMAN SCHWARZKOPF, (RET) U.S. ARMY:  You know, the Humvee was never considered an armored vehicle to begin with.  So, the system they‘ve come up with is a jury-rigged system which really doesn‘t give you much protection when you‘re going against being blown from a mine on the side of the road or something of that sort. 

But, you know, 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, that the Army was over there doing it themselves, screwing up.

(END VIDEO CLIP)

MATTHEWS: James Woolsey is the former director of Central Intelligence.  And Democratic Senator Bill Nelson from Florida serves on the Armed Services Committee. 

Mr. Woolsey, Mr. Director, it is not the doves, it‘s not the Barney Franks out there, or the Pat Buchanans from the right who are criticizing this defense secretary, it is the hawks, the people who really believe in this war effort. 

JAMES WOOLSEY, FRM. CIA DIRECTOR:  Not all of us.  I think he is a good secretary of defense.  Take—I take General Schwarzkopf‘s point, but  the secretary of the army went to this company in mid 03 right after the IED‘s started exploding.  And we started to realize we had a problem in the rear.  Because Humvees are not assault vehicles.  They‘re not supposed to be out front.  But they were, of course, responsible for soldiers getting badly injured and killed. 

And so the secretary of the army went to the company, according to the press reports, and said, look, how much can you increase this?  We can go from 150 to 450 a month.  Does that mean you‘re full up?  And they said, yes, we‘re full up.  Well, it turns out now, they could have added 100 a month if they had retooled the factory.  Somehow there was a miscommunication between the Army and the contractor. 

But that‘s not the kind of thing a secretary of defense is going to oversee.  Presumably, he said...

MATTHEWS:  Well, who does the procurement?  Who decides to go ahead and say ramp up, we need more. 

WOOLSEY:  I think the secretary of defense would say ramp up, we need more. 

But whether you‘re going to retool the factory or not and whether you ask that question properly or not is really something that the procurement people of the Army, in this case the secretary of the Army has talked about this publicly. 

So, I don‘t really think it is fair to hold Rumsfeld responsible for not going from 150 to 550 instead of 150 to 450 as the Army did. 

MATTHEWS:  Senator, let‘s try to get this straight.  I‘ve been out looking, as you‘ve probably done going out Walter Reed, we know the battle casualties.  It is not just the killed, it is the horribly wounded, the amputees.  What I heard out there from these guys who are extremely loyal, these are gung-ho G.I.‘s, who would like to get back to their units, if they could. 

They‘re saying, at least some of them are saying, the trouble with these vehicles is they‘re riding around over there in the country where there are mines, these IED‘s, these improvised explosive devices being planted everywhere.  They blow up inside obviously, you could have all kinds of sidearmor, but with the Humvee or the trucks or whatever, they‘re getting blown to hell on the inside.  So, is it the nature of the war that has gotten beyond our capability, or is it a screw up in terms of materiel? 

SEN. BILL NELSON, (D) FLORIDA:  It‘s a mess-up. 

It is also a war of insurgency.  And we should have planned for this, Chris. 

And I visited with a Marine this morning at Bethesda Naval Hospital who will never see for the rest of his life.  This company that does the armoring of the Humvees is a Florida company.  I know that they‘ve been capable of doing this.  If I know it as a member of the Senate Armed Services Committee, why did the Defense Department not know it?  Why did General Schoomaker tell us when he was confirmed that he will not let troops go to Iraq unless they have all of the up to date essential equipment.  And we‘re now in a situation where our troops have not. 

MATTHEWS:  OK.  Harry Truman said the buck stops here.  He was commander-in-chief.  He dropped the bomb, OK.  He created NATO.  He created the Marshall Plan.  We‘ve got a secretary of defense right now, what has he created and should he go?  Has Rumsfeld created a war we cannot win?  The war we don‘t have the right kind of vehicles, we don‘t have the right defense for our people to win a war of insurgency, a war of basically attrition now?  Are we not prepared to win this war?  And should he go? 

NELSON:  I pray that we can.  Because...

MATTHEWS:  How can we win a war where...

NELSON:  The alternative is awful. 

MATTHEWS:  Should the secretary go? 

NELSON:  Well, I‘m not going to go that far.  But I have serious disagreements with him and his leadership.  And I think McCain has a opponent.  When Senator McCain says that he‘s lost the confidence of a great deal, in the defense arena. 

MATTHEWS:  Let me ask you two big questions.  Do you think he‘s put enough troops in the field? 

NELSON:  Personally I do not. 

MATTHEWS:  Do you think he‘s put the right vehicle protection out there for the guys? 

NELSON:  No. 

MATTHEWS:  What has he done right? 

NELSON:  They were not even using the total production of 550 a month. 

MATTHEWS:  What do you like about him?  What has Rumsfeld done right to justify anybody‘s continued confidence in him? 

NELSON:  Well, he had a brilliant military strategy that won first in Afghanistan.  And then the military part of Iraq.  But they did not plan...

MATTHEWS:  Brilliant?  He went there to catch Osama bin Laden and the Mullah Omar.  And we lost both of them. 

NELSON:  Well, maybe we should have kept our attention on Afghanistan and not Iraq.  But that‘s a policy decision that‘s higher than Rumsfeld. 

And you said, what do I like about him?  He had a brilliant military strategy that won the military part.  But he did not plan for the occupation. 

MATTHEWS:  How would you grade him?  You‘re an intelligence guy, Jim Woolsey.  You‘re the former—director of central intelligence.  What has been smart about this strategy in Iraq or in Afghanistan.  We did not catch the guy who went after Afghanistan.  And we based a war we me even foresaw of insurgency, in Iraq.  Where‘s the brain power here? 

WOOLSEY:  In Afghanistan, it is a lot better to have Osama bin Laden on the run and Afghans voting, including 40 percent of the voters being women.  And the aftermath of the Taliban regime, than what we had before. 

In Iraq, keep in mind, Rumsfeld‘s original concept was to have the 4th Infantry Division come through Turkey.  And they were going to be the anvil, essentially, which the other units crush the Baathists who are now in...

(CROSSTALK)

WOOLSEY:   Well, it was the Turks who decided not to let them through.  And the Turks didn‘t let them through, I think, because the State Department was insufficiently persuasive.  We only lost by three or four votes in the Turkish legislature. 

MATTHEWS:  But a lot of guys who were really pushing the war, like Wolfowitz, were also saying, we were going to have the Turkish opportunity.  We were going to be able to come there.  Well, wasn‘t that a political change in that government that caused us to have to face... 

WOOLSEY:  I don‘t think so.  I think the Islamists—we lost because a lot of the people who usually are supportive of the United States, I think, were responding to the Europeans, particularly the French who were saying, hey, don‘t let the American division through.  You aren‘t going to get into E.U. 

MATTHEWS:  I remember the beginning of the war, people pushing it to say we‘ll get Europeans.  Then they were saying, we were going to have Turks, we didn‘t get the turks.  Then they said there would be WMD when we got there, there wasn‘t any WMD.  Then the people would welcome us and help us rebuild the country.  They‘ve been shooting at us. 

According to a NBC News/Wall Street Journal poll, Secretary Rumsfeld‘s approval rating is down to 38 percent of the people have a negative view of him, only 33 percent approve of him now in the way it‘s going right now. 

WOOLSEY:  Well, happily secretaries of defense aren‘t elected.  It means that they can sometimes, I think, take tough decisions.  I think Don Rumsfeld has on the whole. 

MATTHEWS:  Are you surprised at the strong criticism from people who are very pro war on this particular campaign for Iraq?  John McCain, very much for this war, wants more troops there.  Bill Christol, very much for this war, wanted more troops over there.  Is this the chickens coming home to roost, the people that never liked the way that Rumsfeld didn‘t put enough troops in the field, hitting them now?

WOOLSEY:  Well, when very patriotic people like Senator Nelson and Senator McCain and Bill are critical, I think, yes, I listen very much.  But I think I have to say that with respect to this war that we‘re in now, we would have done a lot worse if they hadn‘t been so well prepared for some of the things that did not occur: massive oil field fires, massive movements of population, civil war between Shia and Sunni.  There were a lot of predictions of things that did not occur because the strategy was good. 

What happened with the insurgency, and these are Baathists trying to come back to power.  I wouldn‘t call them insurgents, I would call them fascists.  The Baathists are essentially fascists.  They‘re trying to come back to power.  And a lot more of them were left in place than we would have liked.  But part of that was because...

MATTHEWS:  Should we have graft that entire army and kept it in its units?

NELSON:  Yes.

MATTHEWS:  In other words, you guys who are in uniform.  You say show up tomorrow morning, you‘re a dead man, we got the rosters, we‘re find you.  Show up, we want your army. 

NELSON:  Well, that was a mistake in this Senator‘s judgment. 

MATTHEWS:  Do you agree with that?

WOOLSEY:  You could have kept most of the enlisted, because they were Shia.  You probably had to get rid of a large number of the officers, because they were Sunni Baathists.  Some of them were not Baathists with blood on their hands.   But you have to screen each and every officer, I think, Walt Slowcomb (ph) who was over there...

MATTHEWS:  Who‘s call was that?  We have people—you say it‘s the Ba‘athist out there, the remnants of the Saddam regime who are out killing our people.  A lot of people are arguing, in addition to them, they‘re just run-of-the-mill Iraqis who made they were broken into two or three ago and they‘re out planting mines to get even. 

WOOSLEY:  Other than Moqtada al-Sadr, whom they‘ve largely dealt with, for the time being, I think they‘re almost all Sunnis.  Almost from a feud like the Tikriti clan, and almost all former Ba‘athists.  This is a well organized effort to come back to power.  If the Germans who had been fighting, a few of them in the black forest in the aftermath of World War II, had kept going for years, this would be like that.  And we shouldn‘t call these people insurgency.  We ought to call them fascists. 

MATTHEWS:  Let me tell you, I went back and looked at the number, Jim. 

I looked.  We had very, very few casualties after Hitler was dead. 

WOOSLEY:  I know that.

MATTHEWS:  We didn‘t have any Germans shooting at us. 

WOOSLEY:  We had millions of troops, that‘s true.  The mistake that was made here, I think, was not principally, a failure of enough American troops.  I think it was not having enough Iraqi troops go in with us.  And they would have had to have been Shia and Kurds.  The Defense Department wanted to train them. It was the State Department who opposed it. 

MATTHEWS:  We‘ll be back James Woosley, and Senator Bill Nelson of Florida.  And tomorrow‘s HARDBALL is a special you won‘t want to miss.  We‘ll be Walter Reed Medical Center for a soldier‘s journey home.  You‘ve got to watch it.  You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  We‘re back with Senator Bill Nelson of Florida and former CIA director James Woosley.  Here‘s what started the recent criticism, I believe, of Secretary of Defense Donald Rumsfeld.  Here he is in Kuwait responding to a soldier, who asked him, the secretary of defense, about the lack of vehicle armor in Iraq. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Why do we soldiers have to dig through local landfills for pieces of scrap metal and compromised ballistic glass to armor our vehicles and why don‘t we have those resources readily available to us? 

(APPLAUSE)  

DONALD RUMSFELD, SECRETARY OF DEFENSE:  It‘s a matter of production and capability of doing it.  As you know, you go to war with the army you have.  Not the army you might want or wish to have at a later time.  Since the Iraq conflict began, the army has been pressing ahead to produce the armor necessary...

(END VIDEO CLIP)

MATTHEWS:  Well, there you have it.  How did that strike you as a political figure, to hear a secretary of defense respond to a concern by a guardsman, a Tennessee guardsman, in this case, that he didn‘t have the right equipment.  And they says, well, you joined the army with its equipment in hand.  You‘re stuck with it. 

SEN. BILL NELSON (D), FLORIDA:  Well, thank goodness the soldier said that.  Which is what we‘ve been saying in the committee, because our troops from our states and their families have been telling this to us for some time.  As a matter of fact, it started off shortly after the war that they weren‘t getting the body armor.  And now we‘re talking about the armor for the Humvees.  And Chris, it is the responsibility of the secretary of defense to make sure that his troops have the essential equipment to successfully complete the mission and then to get them home as safely as possible. 

MATTHEWS:  Has he got the message? 

NELSON:  I‘m sure hope... 

MATTHEWS:  Does he get message with all this media chatter, and conservative chatter and the hawkish chatter? 

He‘s in the frying pan right now, does he know it? 

WOOSLEY:  I think he‘s been working hard all along, this was not his most deft answer.  But my reaction to this is that, I‘m really produce of the fact that we got probably the only country in the world were enlisted people in their army stand up on live television and query the secretary of defense. 

MATTHEWS:  You don‘t think Putin puts up with this, do you? 

WOOSLEY:  I don‘t think so.

MATTHEWS:  Or Saddam put up with it? 

WOOSLEY:  Hardly anybody else puts up with it. 

MATTHEWS:  The answer—but we have a higher standard here.  I know that‘s are wonderful standard.  But stand for us also is for our political leaders to be politic, and his answer was a bit cold.  It was almost shut up. 

WOOSLEY:  He normally gives very good answers.  This was sort of a b minus.  But it is not a crazy answer.  We did have Humvees, a few which of were armored because they were not going to be in the front lines. 

MATTHEWS:  (UNINTELLIGIBLE) Underneath. 

WOOSLEY:  The nature of war has produced the fact that the Humvees, every place is front lines. 

MATTHEWS:  But are they armored underneath? 

WOOSLEY:  Some of them are, many them are not. 

MATTHEWS:  You can do that, it works.

WOOSLEY:  I think some of them are, many of them are not. 

MATTHEWS:  You‘re capable of armoring from underneath to protect you from IED, from these explosive device.  OK.

(CROSSTALK) 

WOOSLEY: ... the IED doesn‘t blow up right underneath the vehicle, it will blow out the side.

MATTHEWS:  Remember the great old Kennedy expression, victor has a thousand fathers, and defeat is an orphan.  Is this attack on Secretary Rumsfeld really a growing disenchantment with the war, focusing on him and focusing the armor issue? 

Isn‘t it a bigger thing that‘s developing here, senator? 

You talked to your people in Florida. 

NELSON:  It is part of it, Chris. 

MATTHEWS:  Are your people in Florida less for this war now than they were a year ago? 

NELSON:  Yes.  But that‘s not the frustration that‘s boiling over about this is, that our troops ought to have the latest up to date equipment to protect their lives. 

MATTHEWS:  Are they getting it? 

NELSON:  No. 

MATTHEWS:  Whose fault is that? 

NELSON:  Well, it has to go to the top. 

MATTHEWS:  The president. 

NELSON:  Certainly, he as Harry Truman says, the buck stops there. 

MATTHEWS:  Jim? 

WOOSLEY:  I think...

MATTHEWS:  Are we hitting the wrong target here in going after Rumsfeld?   

WOOSLEY:  I think so. 

MATTHEWS:  Well, who should be responsible for out fitting our troops? 

WOOSLEY:  Well, certainly, the president, secretary of defense, and the army for the army, the Marine Corps for the Marine Corps and so forth.  It ought to be done perfectly.  It was done more slowly than it should have been.  The key thing here, I think, is putting down this Ba‘athist revolt and getting these elections held in late January. 

MATTHEWS:  Are we winning this war? 

WOOSLEY:  Too soon to tell.  I‘d say 51-49 maybe.  A few months ago, I would have probably said 60-40. 

MATTHEWS:  What does it take to win that we‘re not doing, more troops, more armor? 

WOOSLEY:  Election—I think training of Iraqi troops rapidly.  And I think probably some more U.S. forces, too.  But mainly training of Iraqis. 

MATTHEWS:  Sir, are we winning this war? 

NELSON:  We have to. 

MATTHEWS:  But you don‘t want to say if we are? 

NELSON:  Well, right now we are seeing the beginning of a guerrilla action that is very difficult.  And I agree with, Jim.  We‘ve got to get the Iraqi Army trained.  We should have never disbanded the Iraqi Army.  And by the way, the first administrator General Garner wanted to keep the Iraqi Army intact. 

MATTHEWS:  And who challenged him?

NELSON:  Bremer.

MATTHEWS:  And he got the Medal of Freedom for getting it wrong. 

(UNINTELLIGIBLE) got the Medal of Freedom for getting everything wrong.

NELSON:  And the General Garner got canned. 

MATTHEWS:  What do we give the guys when they get it right? 

Is there some other medal for that.  I‘m serious.

NELSON:  I‘ll let you answer that.

MATTHEWS:  Jim Woosley, thank you.  Senator Bill Nelson. 

Up next Susan Molinari, Hilary Rosen, and Robert George, in the fall out over Bernard Kerik‘s aborted nomination of secretary of homeland security.  You‘re watching HARDBALL on MSNBC. 

MATTHEWS:  Welcome back to HARDBALL.  More revelations surfaced today on Bernard Kerik‘s personal life.  The “New York Times” reports that Kerik took personal possession of a Manhattan apartment overlooking Ground Zero just after 9/11.  The apartment was originally donated to service weary police and rescue teams who were working at the World Trade Center site.  According to the “New York Times,” Kerik used the apartment to carry on an extra-marital affair.  Robert George, editor of the “New York Post.”  Susan Molinari is a former New York City congresswoman and Hilary Rosen is a former head of the Recording Industry Association of America.  And more importantly, a Democratic activist which she is to this day.  Let me go right now to Robert George.  Your assessment of this latest little sugar plum here, this apartment that Kerik used for assignments. 

ROBERT GEORGE, “NEW YORK POST”:  Assignments or assignations. 

If you‘re in the tabloid world in New York City, this is the gift that keeps on giving right around the holidays. 

MATTHEWS:  You‘re right.  He is the pinada candidate.  As long as you keep banging him more candy keeps coming out. 

GEORGE:  The “Times” had their story about this apartment overlooking Ground Zero.  There‘s another story about exactly how did he afford to renovate his apartment in the Bronx in the late 90s when he was on his corrections commissioner salary?  There‘s a lot more going on.  It has become slightly more of a New York centric story as opposed to a national story since he stepped aside as head of D.H.S.  But it is a fascinating story.  Apparently more to come. 

MATTHEWS:  There‘s one quarter million dollar settlement he did.  He was involved with a construction company with syndicate ties, mob ties.  He has two simultaneous extra-marital affairs which I‘m not sure, I never know what is in or out.  Would you tell me what is in?  Two extra-marital affairs, he had a secret wife for 20 years nobody knew about.  I don‘t think it‘s evil to have a secret wife unless you have another one at the same time.

And the affair going on at the same time. 

MATTHEWS:  Is this—do you have a sense up there, Robert, that this is that second year jinx, that second term jinx that every president seems to face but has gotten a little leg up on this president?  It‘s coming in fast.  You have Rummy in trouble.  We‘ll talk about him in a minute.  Kerik gone now.  He was the prize bull of the second term.  Right?  He was going to be the star.  Susan, I‘ve been nice to you for the last 13 seconds. 

Why does this administration, after four years of thoroughness, gone whack job? 

SUSAN MOLINARI, FMR. MEMBER OF CONGRESS:  That‘s a gross exaggeration from the media.  The administration went to Bernie Kerik who a week ago, we all thought was an absolute hero and is a hero in so many aspects of his life.  A truly inspirational story obviously, with some problems.  But he pulled himself up by his boot straps.  This was a man who turned New York City corrections office around which no one thought he could do.  A job nobody wanted and he excelled in.  A terrific commissioner. 

MATTHEWS:  Why doesn‘t he fight it out? 

MOLINARI:  A week ago, everybody thought he would have been a great candidate for homeland security. 

MATTHEWS:  Do you think so? 

MOLINARI:  Absolutely.  I‘ve not heard anybody—I‘m not sure that he should have stayed.  This would go on forever.  The media would never let it go.  And the Bush administration would never get a chance to move on with its business.  I think you have to keep it in perspective and say, nobody has said anything that belies the Bush administration...

(CROSSTALK)

MATTHEWS:  You‘re a wonderful person but you‘re blaming the media for the fact that Bernie Kerik is going down?  In fact, the administration is very tough about this.  They‘re saying this guy lied to them. 

MOLINARI:  I‘m not blaming the media.  I‘m saying he stepped aside because even though—has anybody said he would not be qualified? 

MATTHEWS:  If there were no newspapers, no TV news divisions, if there was nobody to criticize this guy, do you think he should have gone in as secretary of homeland security? 

MOLINARI:  No.  Because he knew these aspects of his life.  He knows in the world in which we live, every mistake everyone of us has ever made...

MATTHEWS:  I‘m saying absent media criticism, was he the right person for the job?  What‘s the problem?  The media criticism or the man? 

MOLINARI:  The problem is what went on in his past.  It also, those—but other aspects of his life would have made him a good...

MATTHEWS:  Should they have disqualified him? 

MOLINARI:  Yes. 

MATTHEWS:  That‘s all I want to know.  In other words, it‘s not the media‘s fault, it‘s the president‘s fault and the candidate‘s fault?

MOLINARI:  Why is it the president‘s fault? 

MATTHEWS:  Because he picked him. 

MOLINARI:  How was he to know that? 

MATTHEWS:  Well, he says he can look into the soul of Putin and tell what kind of a soul he‘s got, how about looking into the eyes of Bernie Kerik and seeing what kind of soul he‘s got? 

MOLINARI:  The right questions were asked but the right answers weren‘t forthcoming, how can you blame the president of the United States? 

HILARY ROSEN, DEMOCRATIC STRATEGIST:  This is not an unknown to the president or the White House.  This is a guy that they sent to Iraq for three months.  There are even a lot of questions about how he handled himself in Iraq.  This is really as much about Rudolph Giuliani as it is about Bernie Kerik.  Rudolph Giuliani is Bernie Kerik‘s business partner.  His political mentor.  And he was going to deliver the great Mr. Security, Mr. 9/11 to the Bush administration. 

MATTHEWS:  Are you saying that Rudolph Giuliani would not have passed muster if he had been nominated? 

Would he have passed muster? 

ROSEN:  I think so.  But I think he has had the public scrutiny already that Bernie Kerik hasn‘t. 

GEORGE:  I think Rudy has his own messy personal life as well.  It‘s all been out on the front pages of the “New York Post” and other papers.  And he would have sailed through regardless. 

MATTHEWS:  He hasn‘t kept anything secret.  More with Susan Molinari, Hilary Rosen, and Robert George when we come back.  When we come back by the way the latest polls on the war in Iraq.  And tomorrow a special edition of HARDBALL, a soldier‘s journey home.  Please don‘t miss this show.  I spent the last couple of days over at Walter Reed Hospital.  We all should.  Some of America‘s bravest men and women who were wounded in Iraq and recovering and putting their lives back together.  Also the people wounded in Afghanistan.

(COMMERCIAL BREAK)  

(NEWS BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

We‘re back with former U.S. Congresswoman Susan Molinari, Democratic advocate—I love that word—Hilary Rosen, and “The New York Post”‘s Robert George. 

Well, we have got to escalate the fighting here, Robert.  And you‘re on remote, but you can start.

This Rummy thing, he‘s not getting hit by the left, by the skeptics of the war, including me, I guess.  He‘s not being hit by the doves.  He‘s getting whacked by Schwarzkopf, America‘s probably greatest military hero.  He‘s getting whacked by the neoconservatives, so-called, the real supporters of the war, like Bill Kristol.  He‘s getting hit by John McCain, who, in many ways, sometimes mirrors the thinking of the neocons. 

What‘s going on?  Why are they looking for somebody to blame now? 

GEORGE:  Well, I don‘t know if it is just necessarily somebody to blame.  I think Rumsfeld—I think Rumsfeld screwed up.  I mean, he made a comment that was not as well advised as he could have when he talked about the armor issue.  And I think...

(CROSSTALK)

MATTHEWS:  Are you from the State Department?  You are being so careful, Robert.  Isn‘t this one of those situations where something is going wrong and somebody has to be blamed? 

GEORGE:  The something that‘s going wrong here, the specific thing that they‘re talking about is Rumsfeld‘s answer on the armor question. 

MATTHEWS:  Right. 

GEORGE:  And if he had said the comment that he made, what he said about you go to war with the Army you have, as opposed to the Army you want...

MATTHEWS:  Right. 

GEORGE:  If he had said that a year or so ago, somebody might have said, well, he could have said it better. 

(CROSSTALK)

MATTHEWS:  Right.  That‘s my point. 

(CROSSTALK)

MATTHEWS:  The backdrop is, we‘re getting hurt over there.

(CROSSTALK)

GEORGE:  We‘re getting hurt over there.  But it‘s also—it‘s a year and a half, nearly two years, since the invasion started. 

And for him to make what—seeming like a flip remark to a member of the service, he‘s not talking to a Democratic congressman or something like that. 

MATTHEWS:  Right. 

GEORGE:  It just seemed—I think people are starting to wonder whether Rumsfeld has the appropriate temperament to answer some of these questions. 

MATTHEWS:  Let‘s take a look at the latest polling.  This is the NBC/”Wall Street Journal” poll, a pretty reliable poll.

It shows that still a majority of the people, 52 percent, believe President Bush has a mandate to keep troops in Iraq until a stable democracy exists; 48 percent are less confident the war in Iraq will lead to that conclusion.

Hilary Rosen, it‘s amazing.  With all the criticism about, of course, the secretary‘s the response to that Guardsman, concern about the armor, concern about the continued casualties lists we keep seeing, he still has the confidence of the country. 

ROSEN:  Well, what he has, I think that stat is accurate. 

And what people are saying is, look, you brought us into this war.  And we trust you to bring us out and to do the right thing.  But I don‘t think the president should take that as an affirmation that people think everything is going well.  That same poll said that people actually don‘t think it is going well.  And the president is as responsible for the armor vehicle problems as Don Rumsfeld is. 

This is a war that people have gone into unprepared.  They‘ve consistently underestimated the resources needed.  And the president and Don Rumsfeld have yet to stand up and say, we‘ve made a mistake and we‘re going to change our strategy. 

So, instead, they have got Bill Kristol out there complaining that he didn‘t answer a question right.  It wasn‘t about how he answered the question. 

(CROSSTALK)

ROSEN:  It was about how he is conducting a war and the president‘s continued support of it.

(CROSSTALK)

MATTHEWS:  Robert.

GEORGE:  Chris, I think you would also have to keep note that the president was asked about Rumsfeld‘s response, too.  And normally, he usually stays very close to Rumsfeld.  He usually agrees with him. 

But he said—he basically said, well, you know, if I was a member—if I was in the service, I would want to know the answer to that question as well, which suggests that he may not have been exactly pleased with the response either. 

MATTHEWS:  One of the great strengths of this administration, as you know, Susan, has been its unity, its loyalty.  And here you have people in a crossfire.  Bill Kristol has been one of the biggest, if not the biggest supporter of this war ideologically.  And now he‘s going after him.  John McCain is saying the same thing.  This is like a circular firing squad.  What‘s going on here? 

MOLINARI:  Well, I think—and maybe I‘m being a little cynical.  But I think part of what happened, too, is now we‘re post-election. 

And a lot of the, if you will excuse the expression, good soldiers who may have had some misgivings and concerns waited until the election was over.  So I don‘t think it is surprising or maybe thought the rumors were rampant here that Rumsfeld... 

(CROSSTALK)

MATTHEWS:  Do you think the president was handing out medals yesterday to try to reduce the number of attacks on him?  Were these hush medals that were given out the other day? 

MOLINARI:  No. 

MATTHEWS:  What did George Tenet do to deserve a medal? 

(CROSSTALK)

MATTHEWS:  I‘m sorry. 

GEORGE:  That‘s a good question.

(CROSSTALK)

MATTHEWS:  Go ahead, Robert.  You do it, because if he had gotten the intel right that got us into this war, you could give him a medal.  He got it wrong.

(CROSSTALK)

MATTHEWS:  What did Bremer do over there?  He looks good in a suit.  But what did he do over there?  He was sent home.  Why do you give medals to people who fail in their mission?

(CROSSTALK)

MATTHEWS:  I can see Tommy Franks.  He‘s a hero.  He‘s a soldier.  But these other two look to me like, stop dumping on me, guys.  Here‘s a medal. 

ROSEN:  He did it to burnish his own image.  There‘s no question about it.

MATTHEWS:  And also to give himself a reward for the war.

MOLINARI:  Wait a second.  Wait a second.

ROSEN:  And I think the reason why people are starting to dump on Rumsfeld is because these folks have a broader agenda. 

MATTHEWS:  Right. 

ROSEN:  And they don‘t want Rumsfeld to screw it up. 

MATTHEWS:  OK.  I‘ll tell you what will happen.  Rumsfeld will be bounced and get a medal.  That‘s what this administration does, isn‘t it, Susan? 

MOLINARI:  Well, first of all, look, I think there‘s a big difference between—Paul Bremer, whether we think he was successful or not, lived in Iraq under very dangerous conditions and took on a very difficult job that no one sitting around this table would have said yes to.  So, to a very large extent, I think maybe...

(CROSSTALK)

ROSEN:  But he made a strategic mistake we‘ve never recovered from when he disbanded the Iraqi army. 

(CROSSTALK)

MOLINARI:  He didn‘t make that decision by himself, however, though. 

(CROSSTALK)

MATTHEWS:  So you think he deserved it, that these guys deserved all these medals?

MOLINARI:  I think he represents the civilian side of the war. 

MATTHEWS:  OK.  So you say they deserve the medals.

MOLINARI:  I think Tommy Franks deserves the medals.  I‘m not sure about George Tenet.

GEORGE:  I think, with the exception of—with the exception of the decision to disband the army, I think Bremer gets some pretty good—gets some pretty good marks, though giving Tenet the medal seems like a—well, as decisions go, it wasn‘t a slam dunk.  Let‘s say that.

(LAUGHTER)

MATTHEWS:  Was that hushabye time?  Hushabye, here‘s a medal; stop trashing me?

(CROSSTALK)

GEORGE:  Well, it is interesting that he‘s negotiating, what, a $5 or $6 million book deal?  So maybe...

(CROSSTALK)

GEORGE:  Maybe the medal...

(CROSSTALK)

MOLINARI:  President Bush has supported George Tenet from the start.

MATTHEWS:  I just thought it was a little too decorous. 

We‘ll be right back with Susan Molinari, Hilary Rosen, and Robert George. 

And when we return, more from the NBC News poll.  Do Americans give President Bush a mandate to change Social Security and his issues on abortion and gay marriage?

And tomorrow, join me for a very special edition of HARDBALL from the Walter Reed Medical Center, “A Soldier‘s Journey Home.”  You‘ll meet some of the brave men and women—I saw some amputated women as well—who have been injured in Iraq and Afghanistan.  They‘re putting their lives back together right now.  That‘s “A Soldier‘s Journey Home” tomorrow here at HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS:  Coming up, how much of a mandate are Americans giving President Bush?  We‘ll be back with former U.S. Congresswoman Susan Molinari, Democratic advocate Hilary Rosen, and “The New York Post”‘s Robert George when HARDBALL returns.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with former U.S. Congresswoman Susan Molinari, Democratic advocate—I love that word—Hilary Rosen, and “The New York Post”‘s Robert George. 

Robert, you‘re the new kid on the block here.  You‘ve been on the show tonight.  And you are starring.  And I must ask you the big question.  Does President Bush have the juice to push through Social Security reform this fall, this spring? 

GEORGE:  If he doesn‘t do it this spring, I don‘t think it will ever happen.  He right now is at the height of his popularity and his flexibility, and if he does it, he may—I think he has good shot at it, but if not now, never. 

MATTHEWS:  Well, does he have enough marbles in his can to win this fight, to win this gamble or not?  He‘s going to have to give away a lot, because he‘s got to get the Congress to borrow $2 trillion over the next 10 years to pay the short-term losses that the system is not going to get from people paying into it. 

(CROSSTALK)

MATTHEWS:  Because they‘ll be putting their money into their private investment accounts. 

GEORGE:  I think he is going to have problems with people like, well, the ubiquitous John McCain, people like Lindsey Graham.

I mean, you know, $2 trillion is a heck of a lot to swallow on a—basically borrowing it.  And given the huge deficits we have already and the real debate is going to be between the different part of the Republican conference. 

MATTHEWS:  Let me ask you, Susan, will the real ideologues in the who like economic change, who are willing to go from a bit of a welfare society like we have now to a complete every man for—woman—for himself kind of society, do you think they will win this argument for the president?  Or will they hide from it?

MOLINARI:  It‘s difficult to say at this point, because the president has not—you talked about marbles in a can.  I think it is a bigger story than that.  It is not his mandate over Congress.  It‘s whether he can...

MATTHEWS:  I was thinking back to my youth when we had these big cans with marbles in them.

(CROSSTALK)

MATTHEWS:  And you would start these—you would start playing marbles with somebody and you‘d better have a big can to win the fight.  Anyway, that‘s an old story. 

MOLINARI:  OK, but you‘re a little older than I am. 

MATTHEWS:  Well, I am old, too old, yes.

(LAUGHTER)

MOLINARI:  But what it is going to take is some persuasive powers.

He‘s got to get the United States, the people in the United States to say to their congressmen, regardless of their tilt on the ideological spectrum, we want you to make this change because we‘re concerned about what it means for the younger people. 

MATTHEWS:  Well, do your conservative buddies want this fight or do they think it‘s worth the fight, that they can get the system changed, so, instead of your grandmother getting money from your working dollars, you‘re getting money that you‘ve saved in investment when you retire?

MOLINARI:  My conservative buddies don‘t know what which way the public is going to go on this yet.

President Bush, and he does have the political capital of any president in the United States recently to mount the challenge, mount the argument.  The American people are going to listen.  And if they buy into what he‘s going to say, which would be the logical, practical thing to do, then Congress will go along. 

MATTHEWS:  Wouldn‘t it be a great thing to have, if you‘re a working person, a regular working person, no big money, some money at the end of your life to give to your kids?  And you don‘t have any if you only get Social Security checks, because they dry up when you die.

ROSEN:  It would be if that is what you were sure you‘re going to have. 

But I think, right now, they have no way to say that that is what they‘re surely going to have.  And I don‘t think the president is going to be able to do this.  This is—his credibility and his issues are getting chipped, chipped, chipped away.  This war is going to be a big issue this spring.  This is going to be a distraction for him for a while. 

MATTHEWS:  Well, won‘t he get credit for having guts?

MOLINARI:  Absolutely.

MATTHEWS:  And not hiding like everybody else hides from...

(CROSSTALK)

ROSEN:  History is not on the side of people who have guts on Social Security.

(CROSSTALK)

MATTHEWS:  I think he might have guts.  He might get lasting credit for people under 35 today, who say, you know, I know the system is not going to be there for me, but it might be if this guy succeeds.  What do you think, Robert? 

GEORGE:  I think that‘s a good idea. 

But the real thing we have to keep in mind here, it‘s not just Social Security.  It is also—it is also tax reform and it is also the fact that this war, I mean, we‘re looking at another supplemental of about—another close to $100 billion. 

(CROSSTALK)

GEORGE:  Eventually, you have to start looking at all of this money in the aggregate and try and figure out what you‘re going to do with it.  And that‘s the big problem that is facing him. 

MATTHEWS:  Yes, we talked about that before.  What happens if you double the deficit?  What happens if we keep borrowing money from abroad and our debtors out there, our creditors say enough already and they‘re going to run on the dollar?

(CROSSTALK)

ROSEN:  And members of Congress are not going to take this risk. 

MATTHEWS:  Well, we‘ll see.  They‘ve been pretty lenient with him before. 

(LAUGHTER)

MATTHEWS:  Anyway, thank you, Susan Molinari.  Thank you, advocate Hillary Rosen.

(LAUGHTER)

MATTHEWS:  And thank you, columnist Robert George of “The New York Post.”

MOLINARI:  I want to be the advocate next time.

GEORGE:  Thank you. 

(CROSSTALK)

MATTHEWS:  When we come back, the White House tackles economic problems.  Robert Reich—remember him? -- former secretary of labor, he is now up at Brandeis.  And Stephen Moore of the Club For Growth—they are the real conservatives.

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

(COMMERCIAL BREAK)

MATTHEWS:  President Bush kicked off a two-day economic summit today.  The country‘s top economic minds gathered to discuss tax cuts, Social Security and how to shape economic policy in Bush‘s second term. 

Two top economic minds are with me here, Stephen Moore, president of the Club For Growth, a conservative political action committee, and Robert Reich, labor secretary in the Clinton administration and now professor of social and economic policy at Brandeis. 

Let me go right now to Stephen Moore.

There‘s an old expression.  If it ain‘t broke, don‘t fix it.  What‘s broke in the American economy?

STEPHEN MOORE, PRESIDENT, CLUB FOR GROWTH:  Well, nothing.

The economy is doing well.  If you‘re George Bush, you‘ve got to be smiling about the trends just in the last couple months.  I‘m in Chicago today.  The headlines in “The Chicago Tribune” was about how the economy is booming.  You‘ve got the stock market on a roll, up to 10600, 4 percent, 4 to 5 percent growth.  So Bush has a lot to celebrate. 

But that‘s not say there aren‘t things to fix in terms of the Social Security and tax codes. 

MATTHEWS:  OK, let‘s go back to Robert Reich.

Robert, Professor, let me ask you this.  What‘s your assessment?  Is it as benign as Steve Moore‘s just was? 

ROBERT REICH, FORMER LABOR SECRETARY:  No, Chris.  The economy is awash in debt, budget deficits, $420 billion, as far as the eye can see.  Remember David Stockman‘s phrase?  But also personal debt.  In fact, the dollar has been dropping 35 percent against the euro.  And the dollar, it looks like, although the dropping has stopped for a couple of days, I think the dollar is still on a long-term decline. 

That means interest rates go up.  That means inflation goes up.  That means George Bush is in trouble or at least Republicans in mid-term elections are in trouble. 

MATTHEWS:  Let me go back to Steve Moore.  Let‘s talk about the thing you mentioned before, Social Security reform.  Why is that system broke?  Why does that have to be fixed? 

MOORE:  Well, it‘s the Titanic headed to the iceberg, Chris. 

We‘ve got a situation where every independent study that‘s been done for the last 10 years, whether the General Accounting Office or even the Social Security actuaries themselves, all say that there‘s a $10 trillion hole in this system.  That is, the taxes that are going to be collected are not going to be able to cover $10 trillion in unfunded liabilities in the system. 

So we need to fix it.  We need to move towards a modern system with these private investment accounts.  For young workers, it‘s a fabulous deal.  They are going to get a much better deal if they can control some of this money themselves than what they‘re going to get out of a failed, even insolvent Social Security system. 

MATTHEWS:  Do you accept that prognosis, Robert? 

REICH:  No.

Chris, the Social Security trust fund is not in great shape.  But compared to Medicare, it is in terrific shape. 

MOORE:  That‘s true.

REICH:  And the real problem here is, yes, over the long term, Social Security does need to be reformed.  I‘m going to say some things that no politicians dare say.  And that is, you probably have to raise retirement age.  You may have to means test Social Security to a larger extent than it is today.

There are a lot of things that can be done, but you don‘t want to divert, that is, take money away from the Social Security system by allowing young people, in fact forcing young people to take money and put it into private investment accounts.  That could mean a $2 trillion hole in a $10 trillion hole in addition.  That just makes no sense at all. 

MATTHEWS:  Well, because—let me go back to Steve Moore.

In other words, what Robert is saying is that, of course, over the short term of maybe 10 years at least, you‘re going to be getting less benefits paid for by the taxpayer earning his living or her living, because a lot of that money is going into these new accounts, not into the system.  How do you explain—how do you deal with that big gap of perhaps $2 trillion over 10 years?  Where do you get that money from? 

MOORE:  Well, any company—first of all, if any company were running a pension fund that were anything like Social Security, we‘d throw these guys in jail, the CEOs in jail, because we‘ve stolen about $600 billion—that‘s billion with a B—from this supposed trust fund.  Young people...

(CROSSTALK)

MATTHEWS:  How did we do that?  How did the government do that?

MOORE:  What happened was, as the payroll dollars were coming in, Chris, both Republicans and Democrats—they both share the blame—took that payroll tax money that was supposed to be for Social Security and guess what?  They spent it on other programs.  They spent it on missile systems.  They spent it on Lawrence Welk museums.  They spent it on road projects.

(CROSSTALK)

MATTHEWS:  But didn‘t they pay—didn‘t they borrow the money from the system and that went back into the system?

MOORE:  Yes, but you go to the bank vault, Chris, and all you see when you open up the bank fault is a bunch of IOUs.  Where‘s the money going to come from? 

But let me make a more important point.  It‘s not just that system is insolvent.  For young workers, the point is that Social Security is a lousy deal.  You get a terrible rate of return on Social Security.  We‘ve found with some of our studies at the Cato institute that the average young worker is only going to get a 1 or 2 percent return on their Social Security money.  If you put that money in a private account, even if it‘s a purely safe account, you can 4 or 5 percent rate of return on it.  So why would anybody want to put their money into Social Security? 

MATTHEWS:  Well, I‘ve been paying into Social Security, Robert, since I was a stock boy in a drug store in my very early teens.  Am I getting a good return? 

MOORE:  No.

REICH:  Well, you‘re not getting any return on your money.

And Steve Moore is absolutely right.  The Republicans and Democrats both have been using Social Security.  Remember, we used to talk about the lockbox?  Remember that in the year 2000? 

(CROSSTALK)

REICH:  Well, there isn‘t any lockbox.  All that money‘s been used by the government, basically. 

MATTHEWS:  But don‘t they owe the money back? 

REICH:  Well, they do pay the money back.

And, indeed, according to the Social Security laws, the average person who is a recipient of Social Security, retiree, takes out about four times more than he or she ever put in.  So it‘s a pretty good deal in that respect.

But there is undoubtedly a long-term problem.  Look, I don‘t think the stock market is such a terrific deal.  In fact, look at the last four years.  If you put a lot of money in the stock market and expected the stock market was going to be your nest egg, you might not be so happy right now. 

(CROSSTALK)

MATTHEWS:  OK, let me—let me—Robert, I want to jump ahead of an argument I‘ve heard before.  And I want to raise it with Steve.

You know, it‘s one thing to say we‘re going to borrow another $2

trillion, in addition to the big deficits we‘re running right now.  But

what happens if you add those deficits to existing deficit and the

government is running a—sending out like $600 billion here in $800

billion in hot checks every year?  Don‘t the Chinese and the Japanese, who

are lending us the money right now to run our deficit, get a little nervous

by that proposition?

MOORE:  No, because the thing you‘re not understanding about this equation, Chris, is that there‘s no—the effect is that the government borrows $2 trillion more, but American citizens, you and me and Robert Reich and every American who has these individual accounts, is actually adding to their savings.

MATTHEWS:  That‘s right.

MOORE:  Because the money goes into these savings accounts.  So the net impact on borrowing and the economy is zero.  It just means that we‘re moving over from a government-run system that‘s going bankrupt to try to save it by letting every individual American have their own private account that they have to use the money for saving and they have to use it for retirement. 

It‘s happening all over the world.  You‘ve got now two dozen countries all over the world that are moving towards fully funded privatized system. 

MATTHEWS:  OK.  So it‘s going to be private saving, not government saving.

(CROSSTALK)

MATTHEWS:  Yes. 

REICH:  Chris, there‘s a much better idea here.  And it is to take the Social Security surplus.  There should be a Social Security surplus.  Don‘t let the government use that.  Put that into a mixed portfolio, a diversified portfolio of stocks and bonds.  And, yes, and the Social Security trust fund would be growing by about 7 percent a year, just like the stock market.  And that would be good.  That would be good for anybody. 

MATTHEWS:  Shared risk for everybody, yes.

REICH:  Yes.  But why—but don‘t do it out of personalized...

MATTHEWS:  OK, Robert Reich, former secretary of labor.  Thank you, Robert Reich and Stephen Moore. 

Join us again tomorrow night for a special edition of HARDBALL from the Walter Reed Medical Center, “A Soldier‘s Journey Home.”  Don‘t miss it.  I‘ll introduce you to some of the brave troops who were seriously injured in Iraq and in Afghanistan.

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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