updated 1/20/2005 1:27:13 PM ET 2005-01-20T18:27:13

Guest: Larry Gatlin, Ron Reagan, Bob Shrum

CHRIS MATTHEWS, HOST:  On the eve of President George Bush‘s second inaugural, the celebrations are already in full swing, the concerts, the parties, the fireworks.

Live from MSNBC inaugural headquarters on the National Mall, let‘s play HARDBALL. 

(MUSIC)

MATTHEWS:  “America America” is right. 

Good evening.  I‘m Chris Matthews, broadcasting live from the MSNBC inaugural headquarters on the National Mall.  And, as you can see, the view is breathtaking at the U.S. Capitol right behind us.

(MUSIC)

MATTHEWS:  The music is courtesy of the United States Army Field Band.  And I want to thank all these fellows for being out here in what here in Washington is 20-degree temperatures. 

We Americans like to celebrate our democratic traditions.  And tonight, on a snowy inaugural eve, the nation‘s capital is one big political party, honoring the man millions of Americans voted back to office for a second term.  And from concerts and fireworks on the Mall, to intimate candlelit dinners, to his fellow Texans and their Black Tie and Boots Ball, MSNBC has this uniquely American event all covered. 

On this presidential edition of HARDBALL, General Electric chairman and CEO Jeff Immelt will join us, plus David Gregory‘s interview with top Bush strategist Karl Rove, the man many people call the architect, including the president.  He calls him that for getting him reelected. 

But, first my panel tonight, from NBC News, Campbell Brown, Republican adviser Ben Ginsberg and veteran, legendary guru Bob Shrum. 

The theme of this inaugural is celebrating freedom and honoring service. 

Now, I want to go to Campbell Brown, because I want a little preview of tomorrow morning. 

You spoke with the first lady.  How is the mood over there in the upstairs of the White House? 

CAMPBELL BROWN, NBC CORRESPONDENT:  Well, the mood they‘re trying to project is very positive, very hopeful, to try to sort of put an end or move beyond some of the bitterness left over from the campaign.  It was a very difficult few months.  You‘ve never heard anything close to bitterness ever coming from the first lady.  But that is the tone, I think, they‘re trying to strike in his address tomorrow and sort of with this inaugural celebration, as moving beyond that. 

And you‘re seeing that that bitterness had a lingering effect.  Bush very much wants to celebrate this moment.  He fought hard for it.  It was not an easy campaign.  And he wants to revel a little bit in that moment. 

MATTHEWS:  Let me go to Ben Ginsberg. 

You were what part of the victory effort by the president.  What does it feel like among your fellow cohorts, people that are all in town, that are all over town at all the hotels right now?  Is there a real sense of triumph, it was a close one, but we pulled it out or what?  How would you describe it?

BEN GINSBERG, MSNBC CONTRIBUTOR:  Well, there‘s a real feeling of achieving the goal, of giving this president a second term.  A second term is a rare gift in American politics, to get done an agenda. 

The president worked on a solid platform that he wanted and now is the time to put that in motion.  And this is the time to celebrate the ability to be able to do that. 

MATTHEWS:  Bob Shrum, it looks to me—we were talking beforehand about how it has become truly rare for this kind of moment.  If you start back when we were interested in politics, beginning in the early ‘60s, Kennedy was assassinated, didn‘t get a second term.  LBJ didn‘t get a second term because of Vietnam.  And it kept going like, didn‘t it, for a long time?

BOB SHRUM, FORMER KERRY CAMPAIGN SENIOR ADVISER:  Nixon got a second time. 

MATTHEWS:  And then.  Then he was booted.

SHRUM:  Reagan got a secretary term.  Clinton got a second term. 

Look, this president...

(CROSSTALK)

MATTHEWS:  But Gerald Ford only got his...

(CROSSTALK)

SHRUM:  But Gerald Ford didn‘t even get a first term. 

MATTHEWS:  And Jimmy Carter got one term. 

SHRUM:  Yes.  Gerald Ford got sort of a moment.

(CROSSTALK)

MATTHEWS:  I think Ben is right.  It has become relatively rare. 

SHRUM:  Oh, I think, actually, it is very difficult to beat an incumbent president, especially in a time of war. 

I think Jimmy Carter in 1980, as you know, Chris, had 20 percent inflation that he was dealing with and very high unemployment at the same time.  Look, I wish we were celebrating right now. 

MATTHEWS:  Right. 

SHRUM:  And you change 60,000 vote in Ohio and we would be celebrating and Ben would be explaining why we had no mandate. 

MATTHEWS:  Right. 

SHRUM:  So we ought to recognize this.  We ought to be good-spirited about it, but we also ought to stand up for what we believe.  This is a closely divided country where people have very strong views on both sides.  And if the president, Campbell, does what you said, which is appeal for unity, he did that in the last inaugural address and he pledged to govern in a way that would bring the parties together.  I hope he does it this time. 

MATTHEWS:  Let‘s go inside to the White House a bit, because I think there‘s really a poignant part of the piece. 

We‘ve had dynasties before.  John Adams only got one turn.  John Quincy Adams only got one term.  He was beaten by Andrew Jackson.  Here you have the president who is the son of a president who was only given one term.  Now he has a second term.  It does seem to me a positive note. 

BROWN:  Well, there‘s also the second-term jinx.  I mean, look what happened to in the second terms of Nixon and of Reagan and of Clinton.  They were dominated mostly by scandals. 

He had advantages going into this.  He is the first president, second-term president since Roosevelt to have both houses of Congress from his party.  So, that‘s a huge advantage going in.  He also has a huge agenda that he‘s put out there, a very bold vision, but also huge disadvantages.

MATTHEWS:  Right. 

BROWN:  Republicans are not marching lockstep any more by any means.  He has a whole new team coming in.  They‘re still getting used to their new jobs or will be.  And then Iraq overshadowing almost anything he does. 

MATTHEWS:  Well, we also pointed out last night when we were sitting at this very desk the power of winning a reelection with both houses of Congress with you, because your enemies—as you are the attorney here, your enemies do not possess subpoena power. 

(LAUGHTER)

MATTHEWS:  You control subpoena power, if there are going to be any investigations.  I remember Richard Nixon realizing in ‘72 at the moment of his greatest triumph, the other party once again had control of the subpoena power and they were going to come after him like bandits. 

(CROSSTALK)

SHRUM:  He also knew there was something to subpoena.  And that was part of his problem.

(CROSSTALK)

GINSBERG:  Which, of course, there is not here. 

I mean, this is a White House that are students of history.  They spent a lot of time trying to learn their lessons. 

MATTHEWS:  They know about the jinx. 

GINSBERG:  They know about the jinx.  They know about the necessity of

a clear vision in what the president wants to accomplish

MATTHEWS:  Run through a couple of things you‘ve seen your president, our president do to forestall these kinds of problems.  First of all, was getting rid of a lot of the Cabinet people, sort of tightening the ship, putting a lot of his Cabinet people up for—his staff people, Condoleezza Rice, Alberto Gonzales, tightening the ship around him, is that a strategy to keep control?

GINSBERG:  Well, I think part of it of course is what any president wants to do at any point, but especially at the start of a second term, is get people in the job who he is comfortable with, who know the direction that he wants, who—people do burn out in these jobs.  And it is important to infuse it with new blood. 

(CROSSTALK)

MATTHEWS:  Let‘s talk what happened today.  We thought watching these events—Campbell, you pick up here—that these two nominees for the big jobs, attorney general and secretary of state, were going to move swiftly to nomination and then to confirmation with very little opposition. 

Today, it is fairly clear we have got at least two votes against Condoleezza Rice, the man you worked for in the campaign, John Kerry, who was defeated as the Democratic nominee for president.  He is clearly voting against it on the floor.  He already did in committee, and, of course, Barbara Boxer, who has led the indictment of Condoleezza Rice.  And now Bobby Byrd, the senior man in the Senate, is calling for a full roll call vote, no voice vote, which will be next week.  So, are they putting the administration off track? 

BROWN:  I think they‘re trying to.  They‘re certainly trying to. 

And this is sort of the battle I think you‘re going to continue to see between Democrats and the administration.  What the administration would like is to get beyond the Iraqi elections on January 30, to have people—hopefully that that is not going to be a disaster, and have people‘s attention sort of shift back to their domestic agenda, so to Social Security reform and everything else he‘s laid out. 

What Democrats want is to keep the focus on what many believe is going to be the defining thing, legacy of this president, which is Iraq. 

(CROSSTALK)

MATTHEWS:  The Achilles heel.

BROWN:  Yes, absolutely, and that headed in the wrong direction.  And that‘s where they want the attention to be. 

MATTHEWS:  “Washington Post”/ABC poll came out yesterday, said that the No. 1 concern of the American people was not even terrorism in general.  It was Iraq in particular. 

Bob Shrum.

SHRUM:  Well, look, I think the delay on Condoleezza Rice really represents three things.  First, it‘s fairly reasonable for the Senate to debate this for nine hours. 

Second, and the fault of this lies with both parties.  There‘s been an escalating process over the years in which people have not gotten confirmed on the day the president gets inaugurated.  John Kennedy went in, signed the nominations for his Cabinet.  The Senate went into session, approved them all.  They were all sworn in the next day. 

MATTHEWS:  No hearings.

(CROSSTALK)

SHRUM:  That has not happened in a long time.  They had hearings before he signed the commissions.  That hasn‘t happened in a long in either party.

But, thirdly, and it goes back to what you said, Campbell.  I think Democrats want to send a message that there‘s no mandate here.  The 1936 example of Franklin Roosevelt and controlling both houses of Congress and gaining seats was used by Ken Mehlman the other day.  And I think he probably has forgotten what happened to Roosevelt in that second term. 

That second term, because of the proposal to pack the Supreme Court, became a domestic disaster for Roosevelt until the war came along.  And I think Democrats are sending a signal that the Social Security privatization, some of the other stuff the president wants to propose, he could overreach and he can get in big trouble. 

(CROSSTALK)

MATTHEWS:  Are you comparing a proposal to reform Social Security with trying to pack the Supreme Court? 

SHRUM:  I am, absolutely. 

(LAUGHTER)

SHRUM:  I believe Social Security is a—you asked the question.  Let me answer it. 

MATTHEWS:  I‘m allowed to laugh.

SHRUM:  Fundamental obligation.

(LAUGHTER)

SHRUM:  Fundamental obligation.

MATTHEWS:  OK.

SHRUM:  Fundamental promise we‘ve made.  And I think playing with it is a big mistake.  And Democrats are going to oppose him.

GINSBERG:  We‘re getting to the point where we‘re veering really into sour grapes territory.  I understand... 

(CROSSTALK)

SHRUM:  ... congratulate you.

MATTHEWS:  We‘re going to rectify this mood any moment.  I am for the celebration.

(CROSSTALK)

MATTHEWS:  We‘ll be right back with our panel and our loyal fans out here, by the way, braving the cold behind us.  As I said, it‘s in the low 20s out here.

(CHEERING AND APPLAUSE) 

MATTHEWS:  They‘re drinking coffee out of our HARDBALL mugs.  They‘re also with us tonight.

Anyway, great show of force out here.  It reminds me of the college tour.

Tomorrow morning on “Imus,” you don‘t want to miss Vice President Dick Cheney and his wife, Lynne.  They‘ll be getting warmed up for an appearance on this program at some time.  They‘re going to on at 7:29 Eastern.

You‘re watching HARDBALL‘s live coverage from the National Mall at this beautiful site out here below the Capitol on the eve of President Bush‘s second inaugural.

(COMMERCIAL BREAK)

MATTHEWS:  Coming up on the eve of the inauguration, we‘re going to talk about what to expect for the next four years with our panel and GE chairman and CEO Jeff Immelt. 

HARDBALL returns after this.

(COMMERCIAL BREAK)

(NEWS BREAK)

(CHEERING AND APPLAUSE) 

MATTHEWS:  Well, Washington comes to a grinding halt with just an inch of precipitation.  It‘s terrible traffic out there.  But these people are on foot, as you can see.  And they‘re out there cheering us as we speak to you right now from the Washington Mall.  And we‘re right below the Capitol Building.

I want to go to Campbell Brown. 

You spoke to the first lady.  It seemed to that they‘re very aware in the White House, among the first family, especially, that it is wartime.  And, at the same time we‘re having wartime, we‘re having all these festivities and they‘re trying to meld them together somewhat. 

BROWN:  Yes. 

I mean, I think there has been a lot of criticism, given the tsunami disaster and the war, how can we be spending all this money on parties?  I‘m sort of a pro-party person.  I think it is still OK to celebrate the transfer of power or a new president taking on a second term.  And I think they‘re going into it with that attitude, that, obviously, much of this has been dedicated to the military. 

They‘ve added an additional official ball to the roster that is just for service men and women.  They had a big event last night at the MCI Center, where the president spoke.  And how can you not ignore that when we‘re in the middle of all that‘s going on?  And, yes, I think they‘re trying to be sensitive to it.  And I think some of that criticism is a little bit unfounded.  What is fair game for the critics, I think, is the fact that you can make contributions to the inaugural festivities that are unlimited. 

You have people who are spending...

(CHEERING AND APPLAUSE) 

BROWN:  What?  What?  Go ahead. 

(CROSSTALK)

MATTHEWS:  Let me ask you.

(CROSSTALK)

BROWN:  You‘re buying lunch with the president and vice president.

MATTHEWS:  Why are there so many people that want to give so much money to an incoming president to pay for his inaugural? 

GINSBERG:  Look...

MATTHEWS:  Why do they want to throw their money at the president?

GINSBERG:  They want to throw it at the inauguration.

MATTHEWS:  Why?

GINSBERG:  And the institution it is. 

MATTHEWS:  Why? 

GINSBERG:  Because it is a triumph of America.

“The Washington Post,” an objective media company, part of the cabal, is sponsoring this because it is a tribute to the country. 

BROWN:  But they‘re also...

GINSBERG:  And if you look, if you look, the same companies contribute inauguration in and inauguration out.  And there is a cap.

(CROSSTALK)

BROWN:  They also get certain lunches. 

(CROSSTALK)

GINSBERG:  There‘s a cap of $250,000 on what anyone can give. 

MATTHEWS:  Well, it is the truth.  It‘s a phenomena of this city.  Whenever there is any kind of event, people want to contribute to it because it gets them in the door.  And getting them in the door is part of process of American right to petition your Congress. 

Anyway, the panel will be back with me later in the show. 

Chairman and CEO of General Electric, Jeffrey Immelt, is about to join to us talk about the business side of this new administration, especially the economic outlook.  And he is pretty sharp on that.  We ought to watch him, what to expect the next four years in terms of your pocketbook and how it‘s going to affect this new team in the White House. 

You‘re watching HARDBALL‘s live coverage from the National Mall on the eve of the inauguration only on MSNBC.

(CHEERING AND APPLAUSE) 

(COMMERCIAL BREAK)

(CHEERING AND APPLAUSE) 

MATTHEWS:  Welcome back to MSNBC‘s inaugural headquarters on the National Mall. 

Late today, I spoke with Jeff Immelt, who is the chairman and CEO of General Electric, the parent company of MSNBC.  I began by asking him to describe the state of the world‘s economy. 

(BEGIN VIDEOTAPE)

JEFF IMMELT, CHAIRMAN & CEO, GENERAL ELECTRIC:  Well, things are good.  It is the broadest strength, Chris, we‘ve seen since the first half of 2000.  U.S. growth is solid.  China continues to expand, Europe and Japan trailing.  But if you look across the mass of GE, it is the broadest we‘ve seen in four or five years. 

MATTHEWS:  Why did “Saturday Night Live” satirize the weakened dollar?  I know we talked before.  You saw that.  Here‘s this puny little dollar, this giant peso.

IMMELT:  Yes. 

MATTHEWS:  Not even to mention the franc and the pound.  Does that weak dollar carry any risks? 

IMMELT:  The dollar is weak right now.  But it has been in a trading range that it has been in the last 20 years, since I‘ve been working for GE. 

I would say the weak dollar is OK as long as we start exporting.  It doesn‘t exist in nature, a dollar that is this weak and trade deficits that are as high as we‘ve seen in the last... 

(CROSSTALK)

MATTHEWS:  Why is it not working?

IMMELT:  I think it is starting to work.  But this is something that is going to have to happen in 2005 and 2006, as the U.S. has to start becoming more of an exporter with this weak dollar.  So, it is in a range, but it is going to have to generate exports at some point in time. 

MATTHEWS:  OK.  Cheaper dollar means cheaper U.S. exports.

IMMELT:  Yes. 

MATTHEWS:  Which means a better market.  But doesn‘t it also carry the risk of a tipping point at which point those who lend us money, the creditors of the world, the Chinese, the Japanese, who are buying our bonds and dollars and keeping them?  They said, wait a minute.  Why am I investing in something that is getting less worth with time?

IMMELT:  Where are you going to go?  Where are you going to go?  This is the world‘s marketplace. 

U.S.—China can‘t achieve its goals with a weakened U.S. economy.  So, China needs to hang in there with us from the standpoint of where the dollar is and the U.S. exporting and having access to the U.S. market.  I think the biggest issue in 2005 is going to be whether or not China revalues the RMB.  And that‘s going to be something that you‘re going to see more and more pressure on as the year goes by.  But there‘s no place else to go. 

This is the world‘s market.  And so people have to play ball. 

MATTHEWS:  So you‘re a bull. 

IMMELT:  I see—I live day to day.  I see what‘s going on in the world.  I think the economy on balance is pretty strong. 

It doesn‘t mean it is without issues.  I‘m a competitiveness freak.  In other words, I look at this country and say, we have got to continue work on education.  We have to continue to work on things like tort reform.  We have got to do things that make our country more competitive.  So it is not that we‘re without issues.  But I think we‘re in a type of economy right now that any company can be successful and be competitive. 

MATTHEWS:  GE is probably one of the biggest employers of the world, next to the federal government.  Let me ask you about employee issues.  Social Security, do you think we‘re going to go to a personal account system that the president‘s advocating?

IMMELT:  You know, I think all the ideas the president has talked about right now are ideas that should be explored, in other words.  Indexing to real prices instead of some artificial inflationary index, I think that ought... 

(CROSSTALK)

MATTHEWS:  But that means lower benefits down the road, doesn‘t it? 

IMMELT:  It could be, but I think it is more reflective of what inflation really has been over the last 15, 20 years and what it is going to be in the future. 

And I think turning U.S. consumers into investors is not a bad thing.  I think these things should be explored.  I‘m glad the government is looking at Social Security.  I mean, we manage $45 billion of GE pensioner assets.  I think about it a lot in terms of how to manage it and how to make sure it .... 

(CROSSTALK)

IMMELT:  ... in the future.

MATTHEWS:  Let‘s talk about—let‘s talk about the world.  You deal with every world leader.  You have to deal with these big shots all around the world.  Is this war hurting us in terms of our business deals?  When you got out and sit face to face with somebody from Saudi Arabia or somebody from Paris, do they give you a hard time over the war?

IMMELT:  I think they differentiate between U.S. companies that are selling around the world and the policy of the administration.  I think so far, there‘s been a clear delineation between global companies and whether they may or may not agree with the policy of the United States. 

And our business around the world is booming right now.  It‘s never been better.  But there is a clear delineation that‘s made.  Now, look, I am who I am.  I‘m an American CEO of an American company.  So I don‘t run away from that fact.  But I think we‘re a very global company and we‘re respected as such.  So there‘s a differentiation.

MATTHEWS:  A HARDBALL question.  Security of all our employees, GE employees over there in Baghdad in Iraq, how does that look right now? 

IMMELT:  You know, again, it‘s something I think a lot about.  We have got people that are working on the power projects in Iraq.  Their safety comes first.  It‘s something we‘re working on each and every day.  And if I don‘t ever feel like we can protect them adequately, we‘ll take them out of there. 

MATTHEWS:  What is the firsthand reports from the people over there you‘ve got working there?  Can we rebuild Iraq?  Can we—economically, can we play that role...

(CROSSTALK)

IMMELT:  Chris, I think the sense is that we can.  The sense is that we can.

I think right now, there‘s a real challenge between how much effort is going to go toward security and how much is going to be placed against infrastructure.  But the people there will tell you that the infrastructure can work, that they can produce a lot of oil and that this can functioning economy.  And that‘s what our hope is. 

MATTHEWS:  Let me ask you about the biggest partisan fight on the economic front during the entire presidential campaign that just ended.  Of course, we‘re inaugurating a new president.  The free trade argument won implicitly.  But were you surprised and somewhat frustrated by the fact that the Democratic Party, which had gone to free trade under President Clinton, has retreated or regressed, if you will, to a very suspicious, if not antagonistic view towards free trade?

IMMELT:  You know, Chris, I think free trade is one of those things that really does cut across party lines.  In other words, there‘s Republican that are against free trade.  There‘s Republicans that are for free trade. 

The Clinton wing of the Democratic Party is pro-free trade, the farther left.  So I think it is one that has got strange bedfellows. 

MATTHEWS:  Yes. 

IMMELT:  The fact of the matter is, there‘s no going back.  I mean, global resources fund our deficit right now.  The global economy is just immovable in the sense of its momentum.  And it is going to be a fact we all live with. 

MATTHEWS:  Jeff Immelt, CEO, GE, thank you very much. 

IMMELT:  Chris, good seeing you.  Thanks.  Take care.

MATTHEWS:  Thanks for coming on HARDBALL. 

(END VIDEOTAPE)

MATTHEWS:  NBC‘s David Gregory got to talk with the man credited with getting President Bush‘s second term, Karl Rove.  We‘ll have that for you when we come back on HARDBALL.

You‘re watching a presidential inaugural edition of HARDBALL, live from the National Mall in Washington, D.C. only on MSNBC.

(COMMERCIAL BREAK)

(NEWS BREAK)

(CHEERING AND APPLAUSE) 

MATTHEWS:  We‘re out here at this beautiful spot on the Washington mall.  Of course, if you ever come here as a tourist, it is usually warmer and sunnier.  We‘re covered with snow tonight in Washington. 

And, as all of you know, when Washington gets snow, it gets very congested.  But it is beautiful tonight.  There you are looking at the west front, where, tomorrow afternoon, the president is going to take his second oath as president of the United States.  It‘s a beautiful place.  That started with Ronald Reagan.  That was the first time we had an inauguration on the west front, facing west.

We‘re on the National Mall.  And tomorrow on those steps, it is all going to happen. 

Join me right now is a very interesting fellow, David Gregory, who covers the White House for NBC.  And he is especially interesting tonight because he spent some time today with the architect of President Bush‘s reelection campaign. 

And, by the way, the architect himself, Karl Rove, got his moniker from the president himself. 

David, what did you learn?

DAVID GREGORY, NBC WHITE HOUSE CORRESPONDENT:  He did.

Well, Chris, he is called the architect because, as you know, the president referred to him as such the day after the election.  Well, he is now back at work, one big victory under his belt, but still a lot more to do. 

And so I began by asking Karl Rove, the senior adviser to the president, how he defines the president‘s second term. 

(BEGIN VIDEOTAPE)

KARL ROVE, SENIOR ADVISER TO PRESIDENT BUSH:  I remember sitting in his living room in Crawford in January, early January of 2003, as he began to think about running for reelection.  He had other things on his mind. 

But one of the key things he said was, he said, I don‘t want this election to be about small things.  I want it to be about big—the things we think America needs to do, because, by doing so, we will both have a mandate from the American people, a clarity on our part about what we hope to do, will gain us a mandate from the American people to do those things and the energy and the focus for our second term.

GREGORY:  You called the victory not just a mandate, but a requirement.  Yet, last September, our polling indicated that 58 percent of Americans don‘t want a second Bush term like the first one.  They actually want some major changes.  How do you reconcile those two... 

(CROSSTALK)

ROVE:  The fact that this president was reelected in a time of deep political polarization, and he had been on the receiving end of literally hundreds of millions of dollars of negative advertising and a unified Democratic Party that spent two years beating him up, is a sign of how much confidence the American people have. 

GREGORY:  There are some Democrats who accuse you of campaigning on fear, whether it‘s Iraq and WMD, or arguing that there‘s a crisis concerning everything from Social Security to our legal system.  Is that fair?  Is that the tactic of this administration? 

ROVE:  No. 

GREGORY:  Are you overusing the word crisis to describe issues? 

ROVE:  No.  We use it when it is appropriate.  And there is a crisis looming in Social Security.  If you know that there‘s an iceberg out there and you‘ve got a big ship you‘re driving, and you know it is way out there in front of you, if you make a minor correction, minor changes, you can avoid it.  But if you wait until you‘re right on top of it, you‘re going to plow into it. 

GREGORY:  Do you think overtime benefits need to be cut as part of it? 

ROVE:  Overtime, we don‘t need to cut benefits.  But what we do need to be concerned about is this demographic collision of going from 16 workers supporting one retiree, to 3.3, as it is today, to two by two—less than two workers supporting each retiree by mid-century, with an escalator built into the benefits starting in 1978 that raises that benefit far more rapidly than inflation.  It is a moral question. 

GREGORY:  But why is it you think Republicans are in a position in a way that they haven‘t been for decades to win this politically?

ROVE:  Because I think the currents are changing and shifting, so that people are becoming more accepting of the idea.  They have more confidence in owning things.  They want to be part of it.  They don‘t want to be part of a big anonymous organization. 

They want to be in charge of something.  I understand there are people who are concerned about—on our side of the aisle who are concerned about engaging this, because they‘ve seen the demagoguery that has been unleashed on people who have advocated reform.  But here‘s the deal.  I think the American people are past it.  Think about it.

In the past election, every Republican candidate for Congress and the Senate who advocated Social Security modernization and received the advertising attacking them and the telephone calls attacking them and the mailers to seniors attacking them and the attacks from the unions on this, everyone one of them won.  This president has now won not once, but twice in a national election by advocating modernization of Social Security. 

GREGORY:  Is he every bit the political tactician that you are? 

ROVE:  He‘s got very good—he‘s got the best political instincts of anybody I‘ve ever seen.  And he has a very intuitive grasp of sort of tactics. 

But he is also—he‘s a leader.  And a leader sets the vision, sets the strategy, empowers people to develop a plan to fulfill that strategy, the tactics to reach the goal, and then holds people accountable for results. 

GREGORY:  Will George Bush, like a figure that you pay a lot of attention to, President McKinley, realign American politics? 

ROVE:  I think so.  But we won‘t know for some time. 

In McKinley‘s lifetime, as you recall, he was assassinated and was succeeded by Theodore Roosevelt, whose office, incidentally, was two doors down from when he was assistant secretary of the Navy.  They didn‘t know until after, long after, that he had helped bring about a realignment of American politics.  And neither will we. 

GREGORY:  Why are people so obsessed with you? 

ROVE:  I don‘t know.  I‘m not—first of all, I‘m not certain that many people are obsessed.  I think there may be a small number of political actors who need to have a myth to explain this presidency.  So, they have to explain his success as president by in essence holding others responsible for it, “Bush‘s Brain,” for example. 

This is one of the most intellectually gifted presidents we‘ve had.  And yet, his critics on the—some of them on the very far left try to diminished him in a way that makes them look petty and small, I think.

GREGORY:  The president and former President Clinton seem to have struck up something of a warm relationship of late.  Do you think that they‘re similar politicians? 

ROVE:  Well, I think they have—I think they‘re different in many ways.  I think they do—though, they‘re very—both of them are very personable.  They have different personalities, but each one is very personable. 

Both of them are very interested in the intricacies of policy, one of them visibly so, one of them less visibly so, but equally passionate about the pursuit of policy.  And they‘re also—they‘re people-people.  They like people.  You can just see it.  I mean, I sat next to President Clinton at a meeting in Andy Card‘s office a few days ago.  And, I mean, he didn‘t know the people in the room and yet he made everybody feel so much at ease.  And he was warm and personable and conversational and asked people their opinions. 

It was pretty remarkable how quickly the room warmed to him. 

GREGORY:  Would you have liked to have run a campaign against him? 

ROVE:  I played a role in the ‘92 and ‘96 campaigns.  And so, in a way, I did, so didn‘t—didn‘t succeed very well. 

GREGORY:  Where is Karl Rove election night 2008? 

ROVE:  I‘m hopefully sitting in the private quarters of the White House handing the phone to the president of the United States to—for him to congratulate his Republican successor. 

GREGORY:  Will you work for another candidate? 

ROVE:  No, not for president. 

GREGORY:  No way, no how.  You‘re ruling it out.

(CROSSTALK)

ROVE:  I‘ve been told not to, but...

(LAUGHTER)

GREGORY:  You don‘t want to. 

ROVE:  I don‘t—I‘m a Bush person.  I‘m for George W. Bush. 

And I understand what kind of a—you have to have an energy and an enthusiasm that I had because of my long association with him and my great respect for him.  But I‘m not certain.  And, look, I‘m focused on his agenda in 2005 and his agenda in 2006 and his agenda in 2007.  And then we‘ll see what 2008 brings. 

GREGORY:  Has the president or will the president begin to groom a successor? 

ROVE:  That‘s a question only he can answer.  I haven‘t seen it.  And I think he is, again, focused on his agenda. 

GREGORY:  Who is the Democrat you fear most right now? 

ROVE:  I‘m focused on the president‘s agenda in 2005, 2006, 2007; 2008 is going to take care of itself.  And, in politics, it is really a long way off. 

(END VIDEOTAPE)

GREGORY:  A long way off, 2008, Karl Rove in our conversation at the White House. 

Chris, one of the things that I was struck by is that Karl Rove is a guy who has got big goals and now a big test.  The big goal, of course, the permanent Republican majority that I asked him about and that he believes and most—that President McKinley ushered in.  The big test now is not winning reelection, but what he does with the debate now over Social Security and other issues that are going to be very difficult within his own party to carry off, for Republicans to keep that momentum alive. 

MATTHEWS:  so the campaign continues on issues. 

GREGORY:  Absolutely. 

(CROSSTALK)

MATTHEWS:  You know, it is funny, because when I said he was a genius at a party recently, he said, if I had lost Ohio, I wouldn‘t be. 

GREGORY:  Yes, exactly.

MATTHEWS:  I think he knows the situation. 

(CROSSTALK)

MATTHEWS:  Anyway, thank you, David Gregory for that interview. 

David will be back with us and the rest of our panel in just a moment. 

And Ron Reagan is going to be joining us from the hottest ticket in town—I love this stuff—the Black Tie and Boots Stuff.  That‘s where he‘s going to be tonight.

And if you want more information on President Bush‘s inaugural tomorrow, go to our Web site, HARDBALL.MSNBC.com.

You‘re watching HARDBALL‘s live coverage from the National Mall, as you can see, a beautiful spot to be, on this eve of the inauguration only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Coming up, Ron Reagan joins us from the Black Tie and Boots Stuff.  That‘s going on tonight. 

HARDBALL returns live from the National Mall after this.

(COMMERCIAL BREAK) 

(NEWS BREAK)

MATTHEWS:  Welcome back to the National Mall on the eve of President Bush‘s inauguration.  We‘re back with our panel, MSNBC‘s Campbell Brown, MSNBC‘s David Gregory, Democratic strategist Bob Shrum and Republican adviser Ben Ginsberg. 

Let‘s start with Campbell.

We were talking during the break about our thoughts and hopes and perhaps fears of what the president might talk about tomorrow.  What‘s your sense he‘s going to say tomorrow?

BROWN:  Well, I think, thematically, they have tried to encompass two big things, Iraq and their domestic agenda, by talking about freedom at home and abroad.  That‘s kind of been the theme you‘re hearing over and over again.  With Iraq...

MATTHEWS:  Free elections. 

BROWN:  Yes, but going beyond Iraq, talking about using Iraq as a catalyst to spread freedom throughout the region, to try to build on what is pretty shaky at the moment.  But this is about more than just getting through these elections.  It is long term.  And then freedom with Social Security reform as freedom from...

MATTHEWS:  OK.

BROWN:  Freedom in terms of having...

MATTHEWS:  Self-reliance. 

BROWN:  Exactly. 

MATTHEWS:  All right, David, this might scare a few people if you start talking about too many of these freedom campaigns in the Mideast.

GREGORY:  I think the president has to really inspire.  This is his last great shot to become the uniter and not the divider.  And he has got a divided country and he has got a difficult war and postwar period. 

I think he has got to inspire people to have some commitment toward what the United States is trying to do, a very activist foreign policy.  And he has got to begin to say to the rest of the world, we‘ve had some really tough times.  It is time for a little consolidation. 

MATTHEWS:  David—I mean, Ben.

GINSBERG:  This is a chance for the president to lay out the peace through liberty theme, both internationally and domestically. 

But this is really an extraordinary chance for a conservative president to lay out what the conservative opportunity society will look like.  You‘ll see that internationally and domestically. 

MATTHEWS:  Quick thought.

SHRUM:  I agree with David, but I want to put it in a larger context. 

I believe a lot of greatness in the American presidency is determined by how you contribute to America‘s idea of itself.  The inaugural address is probably the greatest opportunity a president has to do it.  Very few succeed.  I hope the president doesn‘t give a policy speech tomorrow.  I hope he gives a speech that speaks to the ideals of the country. 

MATTHEWS:  OK, thank you all.

I want to thank you all, Campbell Brown, David Gregory, Bob Shrum, and Ben Ginsberg.  We‘ll see you all of you tomorrow. 

This inaugural has something for everyone, last night, a salute to the military and youth, a youth ball, tonight, fireworks and a concert on the Mall, candlelit dinners and the hottest event in town, the Texas State Society‘s Black Tie and Boots Ball. 

MSNBC‘s Ron Reagan is there. 

But, first, MSNBC‘s Natalie Allen covered the Celebration of Freedom tonight on the Ellipse. 

Natalie, was the weather a factor there, Natalie? 

NATALIE ALLEN, NBC CORRESPONDENT:  It was definitely a factor, Chris. 

In fact, the show started one hour late and then it was pared down to just one hour from two.  But I have got to tell you, the crowd, the folks that toughed out this cold, cold weather and came out here were about as upbeat as people who were freezing to death can be.  They did get to see some celebrities, some entertainment, Patti LaBelle, Ruben from “American Idol,” and the Gatlin Brothers, and, of course, the crowning moment, when they got to hear from Vice President Dick Cheney and then the president.

The president got them all to their feet and got the loudest cheer of the evening when he said, thank you for coming out in the cold.  It is never too cold to celebrate freedom.  That got everyone to their feet.  Of course, they had fireworks over the Washington Monument.  And that made it all worthwhile for a lot of people here tonight, Chris. 

MATTHEWS:  OK, thank you very much, Natalie.

Now to Ronald Reagan at the Black Tie and Boots Ball. 

Ron, I love saying that, obviously, lots of alliteration in that. 

Ron Reagan.

RON REAGAN, NBC POLITICAL ANALYST:  Hey, howdy there, Chris. 

Yes, this is the A ticket, the Black Tie and Boots Ball.  There‘s a lot of hooting.  There‘s a lot of hooting hollering.  Why, there‘s even a little do-si-do-ing going on here, as the guests prove that white people can indeed dance, after a fashion. 

It is a real red state affair here.  We have got 2,500 pounds of red rare beef.  We have got 90 cases of red, white and blue tortilla chips and 300 pounds of Velveeta cheese.  Now, yummy.  That‘s good eating.  Tickets cost $125.  But they‘re being scalped for $1,400 a pair on eBay.  The president gets here at about 10:00 p.m., probably won‘t stay very long because it‘s past his bedtime. 

But we have noticed one thing here.  There is a decided absence of big hair.  Not sure what that signifies, but we‘ve all noticed it. 

MATTHEWS:  OK, Ron Reagan, thanks for that anthropological look at the Republican pastime.

(LAUGHTER)

MATTHEWS:  And when we return, we‘ll go out there with our great crowd and we‘ll be joined by one of President Bush‘s favorite entertainers, Larry Gatlin of the Gatlin Brothers. 

You‘re watching HARDBALL‘s live coverage from the National Mall—you can hear the crowd—on the eve of the inauguration of a president, only on MSNBC.

CROWD:  HARDBALL!  HARDBALL!  HARDBALL!  HARDBALL!  HARDBALL!  HARDBALL! 

(COMMERCIAL BREAK)

MATTHEWS:  I‘m back here with Larry Gatlin and Master Sergeant Gabbard, right?

MASTER SERGEANT GABBARD, U.S. ARMY FIELD BAND:  Good to see you.

(CROSSTALK)

MATTHEWS:  And you‘re part of the U.S. Army Band, Army Field Band.

GABBARD:  The Army Field Band.

MATTHEWS:  It is great you guys—is it hard to pucker up on those brass instruments when it‘s 20 degrees out? 

GABBARD:  Oh, boy, it‘s great.  We‘re hoping for mid-30s weather tomorrow. 

(LAUGHTER)

MATTHEWS:  I heard it is a getting a little warmer.

So what‘s the mood here?  You‘re a real—you‘re a real Bush guy, aren‘t you? 

LARRY GATLIN, MUSICIAN:  I‘m a Bush guy.  And I want to make this very clear.

(BOOING)

(CHEERING AND APPLAUSE) 

(CROSSTALK)

GATLIN:  Wonderful—the wonderful piece with David Gregory, I told Karl to say all of that. 

MATTHEWS:  Right. 

GATLIN:  So he‘s kind of the mad genius behind...

MATTHEWS:  So you‘re really the architect behind the architect. 

GATLIN:  I‘m the guy.  I told Karl to do all that.  I said, that‘s what I want you to say.  And he did it really well. 

MATTHEWS:  Well, that was sneaky of you to lose a couple of debates and then went the presidential election.  How did you figure that...

(CROSSTALK)

GATLIN:  Well, hey, America loves the underdogs.  So, lay low the first couple, then hit him with your best shot. 

MATTHEWS:  So that was the strategy.  Spot him a few yards and then beat him. 

GATLIN:  There you go, then go for the long ball. 

MATTHEWS:  Let me ask you, Sergeant, about this—about your—tell us about how you pick your men.  I know—and people for your band.  I know it is tough to get into your band. 

GABBARD:  Very competitive.  And all the military bands here in the national capital region, the competition is fierce.  We look for fine, fine, fine musicians of the highest caliber. 

MATTHEWS:  What do you do to the guys that don‘t make it? 

(LAUGHTER)

MATTHEWS:  Do you throw them in as grunts?  They go out to the front lines if they can‘t play in the band? 

GABBARD:  Oh, my.

GATLIN:  They‘re in the Washington Redskins band, aren‘t they? 

GABBARD:  Whoa.  Whoa.  Whoa.

GATLIN:  Oh, I‘m sorry. 

GABBARD:  You said it.  I didn‘t. 

(LAUGHTER)

MATTHEWS:  So, is everybody in country a Republican?  I had Vince Gill the other night.  I couldn‘t figure him out.  He was very nice to me.  He‘s a HARDBALL fan, which puts him on my team.  What do you think about it?  If you had to go to Nashville and test everybody politically, would they be Bush people or Democrats? 

GATLIN:  I think it would be 90-10, maybe.

Vince is an old and good friend of him.  He can‘t play golf nearly as well as he thinks he can.  I‘d like to play him for his dreams.  But he‘s a great guy, a wonderful singer, wonderful musician.  And 90-10, I think.  I don‘t live in Nashville anymore.  I live in Texas.  So I know we‘re more than 90-10 down there.  But...

MATTHEWS:  So it is the opposite of the State Department. 

(LAUGHTER)

MATTHEWS:  The State Department, we found out the other day, is all Democrats. 

So, anyway, congratulations, Sergeant.  And thank you for the country.

GABBARD:  Thank you very much.  It‘s a great honor to...

(CROSSTALK)

(CHEERING AND APPLAUSE) 

MATTHEWS:  And it‘s a great honor to have you on. 

Larry Gatlin...

(CROSSTALK)

GATLIN:  Good to see you Chris.  Thank you, buddy.

MATTHEWS:  I keep bumping into you at the best places, I have to tell you.

GATLIN:  Well, we did the convention and another—you know, a few places around.  It is always good to see you.  I watch your show a lot.

MATTHEWS:  Well, up at Herald Square, we had people jumping in after us with hoods on and Zell Miller attacking me, wanting to duel.  Brings back the old times. 

(CROSSTALK)

GATLIN:  Wait.  Who attacked who? 

(LAUGHTER)

(CHEERING AND APPLAUSE) 

MATTHEWS:  Anyway...

GATLIN:  That wasn‘t HARDBALL.  That was bean ball. 

MATTHEWS:  OK.

We‘re going to be back here tomorrow for all-day parade coverage, the inaugural itself, tomorrow night.  We‘ll be here all day right now.

Join us again for HARDBALL‘s coverage of the Bush second inaugural.

(CHEERING AND APPLAUSE) 

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

END   

Copy: Content and programming copyright 2005 MSNBC.  ALL RIGHTS RESERVED.  Transcription Copyright 2005 Voxant,Inc. ALL RIGHTS  RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user‘s personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon MSNBC and Voxant, Inc.‘s copyright or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.

Discuss:

Discussion comments

,