updated 2/2/2005 2:38:18 PM ET 2005-02-02T19:38:18

Guest: Amy Goodman, Deborah Orin, Bob Schieffer, George Pataki

CHRIS MATTHEWS, HOST:  Tonight, the buildup to the State of the Union.  Will President Bush seize the political advantage and capitalize on the successful election in Iraq?  And how will the Democrats, now on a hard search for a leader, respond? 

Let play HARDBALL.  

Good evening.  I‘m Chris Matthews. 

As President Bush prepares to deliver his fourth formal State of the Union, Iraqis continued to compile election results from around the country, while easing security. 

NBC‘s Michelle Caruso-Cabrera is in Baghdad. 

(BEGIN VIDEOTAPE)

MICHELLE CARUSO-CABRERA, NBC CORRESPONDENT:  The first round of ballot counting has been finished here in Iraq.  And we are awaiting preliminary results. 

Ballot counting is being done in two stages.  The first round happened at the 5,000-plus polling stations around the country.  And then all of the ballots were moved here to Baghdad, where they will be recounted and entered into a large computer data bank over in the Green Zone.  Those final results will be available, we are told, in seven to 10 days. 

Extreme security measures have been lifted.  The country‘s borders and airports have reopened.  And people are allowed to drive their cars again.  In the meantime, the president of Iraq‘s interim government, President Yawer, put a quick end to speculation that they would be asking American troops to leave any time soon, saying it would be—quote—“complete nonsense” to do so right now, while there is still such a power vacuum in the country and Iraqi security forces still aren‘t up to speed. 

And, in fact, there were a small number of attacks across the country today, nothing like we saw on Election Day, however.  But insurgents have vowed once again to continue their holy war here in Iraq, despite their failure to stop the elections and even though there was a stronger-than-expected turnout, which many interpret as a signal that they do not have widespread support among the Iraqi people. 

In Baghdad, Michelle Caruso-Cabrera, NBC News—back to you. 

(END VIDEOTAPE)

MATTHEWS:  Thank you, Michelle Caruso-Cabrera, in Baghdad.

President Bush is sure to hail this week‘s successful elections in Iraq when he goes before Congress and the country tomorrow night.  He‘s also expected to put some political muscle behind his plan to overhaul Social Security. 

New York Governor George Pataki campaigned for President Bush this past year and introduced him at the Republican National Convention.  He also attended the inauguration and was up on the platform when the president spoke.

Governor Pataki, let me ask you quick about your colleague from New York politics, Hillary Rodham Clinton.  Yesterday, when she had a fainting spell at that speech upstate, she got press treatment like she was a presidential candidate.  Do you believe she‘s running? 

GOV. GEORGE PATAKI ®, NEW YORK:  Well, I think she probably will.  I believe she is ambitious. And while she is a senator from New York, I think her ambitions go beyond that. 

But that‘s just speculation.  I‘m sure she‘ll make a decision and do the announcement when she feels it is appropriate.  But, if I were to guess, I would say, yes, she will run. 

MATTHEWS:  Won‘t the people of New York, who are politically shrewd, won‘t they demand that she say, if she wants a second term as senator, she has got to serve it? 

PATAKI:  I don‘t know that that is the case.  I think it is going to be more about what the senator has done or will do to help the people of New York.  And I think we‘re going to have plenty of issues out there in ‘06. 

This is not something where I think people should just take it for granted that, come ‘06, Hillary will have an easy reelection race.  It will be a legitimate race, as it should be. 

MATTHEWS:  On a scale of one to 10, how good a senator has she been? 

PATAKI:  I don‘t want to get into that.  My job is to work with all the senators and all the elected officials, regardless of party.  And I‘m going to continue to do that as the governor. 

You know, I‘m not a political pundit.  I‘m the governor of the state. 

MATTHEWS:  Yes, but is she easier to deal with than Schumer? 

PATAKI:  I work with all the elected officials. 

MATTHEWS:  OK, let‘s get serious.  I was having some fun. 

Let‘s talk about the president and the big challenge he faces tomorrow night, personally popular, above 50 percent.  But, still in the polls, all the polls, people say we‘re going in the wrong direction and people wonder about his Social Security—they‘re concerned about his Social Security proposition.  How does he deal with those conflicting numbers? 

PATAKI:  Well, I think he just meets them head on tomorrow night.

And I think you hit it in your opening on talking about the triumph of freedom in Iraq.  I think that‘s an incredible accomplishment for the president against all the naysayers, not just domestically, but globally, who said that there was no hope to achieve a democratic process in Iraq. 

And because of his leadership and the strength and courage of the Iraqi people, that has happened.  So, I think we have to continue to support the efforts to have a legitimate, stable, democratic Iraq.  And I think the president is right as well in looking to empower our young people with the ability to invest their own funds in Social Security. 

I think, Chris, when it comes to right direction/wrong direction, we have been through the most difficult three or four years economically literally since the Great Depression.  I just put my state budget together and we were looking at job totals, revenue totals.  But we‘re coming out of it.  And I think the president‘s mention should be that he‘s led us through extremely difficult times, domestically, internationally.  We‘re not out of the woods yet, but his policies are working and we just have to continue to show the strength that this president‘s leadership has provided. 

MATTHEWS:  You know, I see you on a lot of the TV commercials for Lower Manhattan development.  Now that you‘re in a more casual setting, how would you measure New York‘s comeback so far?  Are you back to 100 percent in Lower Manhattan?  Where are you?

PATAKI:  We‘re not back to 100 percent, Chris.  And it is going to take some time.  But we‘re making enormous progress in Lower Manhattan. 

The infrastructure is back in place to where it was.  But we have to build beyond that.  We‘ve got the planning process together for a tremendous resurgence.  But we haven‘t actually done the construction yet.  And that is under way now.

But I can tell that you the companies like Goldman Sachs are building a new headquarters in Lower Manhattan.  J.P. Morgan just announced jobs going to Lower Manhattan.  So I‘m optimistic, but we‘re not out of the woods.  We have to continue to be aggressive.

MATTHEWS:  Are you going to have a governor‘s office in Lower Manhattan? 

PATAKI:  Yes. 

(CROSSTALK)

MATTHEWS:  In a tall building, in the World Trade Center...

PATAKI:  In the Freedom Tower. 

MATTHEWS:  Right. 

PATAKI:  When that building came down, and we came up with this master concept, which is a brilliant plan and an emotional memorial as the centerpiece, but the 1,776-foot-tall Freedom Tower.  I said we‘re going to be the first tenants.  And the governor‘s office is going to be in the Freedom Tower.

MATTHEWS:  Let me ask you about the challenge of Social Security reform. 

You know, I worked on Capitol Hill for many years.  You know the politics of Social Security reform, being from a blue state, older population, especially, worried about this.  What can you say if you‘re President Bush tomorrow night that says to people approaching 65, past 65, in their 80s, who are always worried about that check not coming?

PATAKI:  Well, you know, Chris, that‘s I think the main reason why it is going to be difficult.  But I think the president will win on this.  It is because it is always easier to frighten people than inspire them. 

And I think the president has to do both.  First of all, he has to reassure our seniors and those approaching senior status that no Social Security check will be in jeopardy.  And I think everyone believes that to be the case.  It is easy to frighten people that they are not going to get check.  But no president, no American government is ever going to allow that to happen. 

So, yes, to reassure those who otherwise could be intimidated into opposing it.  And then, with our young voters, our young people, he has to tell them that he‘s giving them the opportunity to be a part of a growing America in the 21st century.  And would they rather have just dependency 30 years, 40 years later on a government check or do they want to have the assurance of that government check, but the option, the opportunity if they choose to invest in conservative, intelligent investments that will, in all likelihood, dramatically grow quicker than their Social Security investments?

So I think you have to do two things.  You have to reassure the older Americans that their checks will not be in jeopardy and inspire the young people that this is their opportunity to be a very real part of the American dream.  And this president can do that. 

MATTHEWS:  Are you worried that the president‘s plan apparently calls for withdrawing a third of the security trust fund revenue flow by putting it into private accounts?  Won‘t that worry older people, if you take a third of the revenue flow away and give to it private accounts? 

PATAKI:  Not if you guarantee that every senior citizen is going to get their check. 

And, as I said earlier, there‘s no American president, there‘s no American Congress, there‘s no American government who is ever going to, regardless of what it takes, say, I‘m sorry, Mrs. Jones.  You can‘t get your check this month.  They will always be there.  And the president just has to make sure that that‘s the case. 

And, Chris, yes, the Social Security trust fund, all the experts say there is a real problem with it now.  This is a way to deal with that problem, meet it head on, protect our seniors, and yet empower our young people.  And I think it‘s the right thing to do. 

MATTHEWS:  Let me ask you about the Democratic Party, then your party, the Republican Party.  Do you think the Democrats are smart in picking Howard Dean—it looks like they‘re going to do it—as their chairman?

PATAKI:  Well, you know, I think the Democrats saw from the last election that they have to be more appealing to middle America and to middle American ideals and values.  And I don‘t know that Governor Dean is the right person to make that case.  But we shall see as we go forward. 

MATTHEWS:  You‘ve been a governor with him contemporaneously, haven‘t you, at certain times? 

PATAKI:  Yes, we were.  We were governors...

(CROSSTALK)

MATTHEWS:  Well, is he stable, unstable, competent, incompetent?  How would you describe him?  Why should the country be worried about him as chairman? 

PATAKI:  We worked well together.  We had a couple of joint initiatives, particularly involving Lake Champlain, which is the border between Vermont and New York.  And they went very well. 

(CROSSTALK)

MATTHEWS:  Was he a good governor of Vermont? 

PATAKI:  You know, Chris, you have got the wrong guy if you want me to trash people. 

(CROSSTALK)

MATTHEWS:  I‘m just trying to—I want to you say he was a good governor of Vermont, which will cause trouble if you say that. 

PATAKI:  I wish him well. 

(CROSSTALK) 

PATAKI:  ... say that.

MATTHEWS:  So, if you say he‘s a good governor of Vermont—OK, let‘s try your party.  Christine Todd Whitman, the former governor of New Jersey, former EPA director, administrator, came on the other day on another program and said—on another network, rather—and she said people like Ridge, Tom Ridge, the homeland security, former governor of Pennsylvania, Giuliani, the former mayor of New York, Pataki, you, can‘t win the nomination of the Republican Party for president because you‘re too moderate, too Northeastern. 

PATAKI:  I just don‘t think that‘s the case.  I think we have a very open party.  And there are certain core principles that you have to believe in.  You have to believe in empowering the individual. 

And I think Social Security is a real test of that.  I think you have to believe in a lower tax structure.  And Republicans lose our base when we raise taxes.  And we‘re fighting very hard, even in difficult economic times, not to do that.  Republicans believe in a tough approach to violent crime. 

MATTHEWS:  Right. 

PATAKI:  In a strong national defense and believe in this president‘s vision that the proper way to defend America is to make sure that democracy and freedom triumphs around the globe.  So, I think there‘s an overwhelming range of issues on which Republican agree, most of which we are different from with the Democrats, whether it is taxes, national security, empowering individuals. 

MATTHEWS:  Yes. 

PATAKI:  I think there are fundamental differences. 

And when we focus on those, we stay united and we win elections. 

MATTHEWS:  Well, I think that sounds great.  But wouldn‘t the shortcut to proving your bona fides with the Republican right be knocking off Hillary in 2006 in the Senate race? 

(LAUGHTER)

PATAKI:  Chris, I think you prove yourself by your actions day in and day out, not by one particular step that you may or may not take.

MATTHEWS:  But isn‘t that an appetizing notion, to go out there and take her on, beat her in the polls, beat her on Election Day, and come back before the Republican National Convention and say, I‘m the one that knocked Hillary out of this race; thank me? 

PATAKI:  You know, Chris, back in 2000, when Rudy Giuliani developed prostate cancer and couldn‘t run, a lot of people turned to me and said, you could win.  And I‘m not an expert, but I think I could have won. 

But you have to look at what you‘re doing and what you want to do. 

MATTHEWS:  Yes. 

PATAKI:  I enjoy being the governor of this state.  I‘m grateful to the people who have given me the opportunity. 

And I want to do everything I can to make this a better state.  Obviously, I want to be involved and have been involved in a national dialogue and a national political debate.  But I don‘t know that that is the right way to prove my, as you put it, bona fides. 

(LAUGHTER)

MATTHEWS:  Well, as some others might put it, you have obviously great bona fides.

(CROSSTALK)

MATTHEWS:  It‘s always great to have you.  HARDBALL loves George Pataki, governor of New York. 

Thank you for joining us, Governor.

PATAKI:  Thanks, Chris. 

MATTHEWS:  Coming up, we continue our preview of tomorrow night‘s State of the Union with veteran Washington journalist Bob Schieffer.  And, later, Senator John McCain on how the Republican Party can maintain its dominance.

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Coming up, Washington journalist Bob Schieffer tells us what President Bush needs to say in tomorrow‘s State of the Union when HARDBALL returns.

(COMMERCIAL BREAK)

(NEWS BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

Bob Schieffer is the chief Washington correspondent for CBS News.  He is the author of “Face the Nation: My Favorite Stories From the First 50 Years of the Award-Winning News Broadcast.”  Bob is the longtime host of that program, “Face the Nation.”  He joins us now from my studio in Washington. 

Bob, thank you very much.  I‘m up in New York. 

The president has to give a State of the Union every year.  And, surprisingly, even in this jaded country of ours watches it.  Why do you think? 

BOB SCHIEFFER, CBS NEWS:  Well, it is a time of year when people just sort of gather around the television set to see what the president has to say. 

And they have been surprisingly well received in recent years.  Bill Clinton would make these long, long speeches and then we would kick him around for talking so long and everything.  And then you would see the ratings come in and his approval ratings would always go up.  And the same is the case for President Bush.  I think he‘ll be very well received, because I think the elections in Iraq really get him off to a good start. 

MATTHEWS:  Is this like when you go around selling encyclopedias and the family says, well, come in and explain what you‘ve got? 

SCHIEFFER:  Yes. 

MATTHEWS:  It seems like people want details. 

SCHIEFFER:  Yes, they really do.  They really want to hear some details. 

And, you know, those of us who cover politics, sometimes, these speeches seem like a laundry list of things.  But, in fact, in recent years, all of the polls have shown and the television ratings have shown that‘s really what people want.  They want to sit down and have a serious discussion of what to expect and what to expect from their president.  So, I think we‘ll see him going into a lot of detail that he hasn‘t gone into on Social Security at this time. 

I think he‘ll also lay out some markers on foreign policy. 

MATTHEWS:  You know, a lot of people thought that the resistance to the American occupation in Iraq would overwhelm any democratic impulse on the part of the Iraqis.  It clearly did not.  They want to vote. 

What impact do you think the president‘s success on his policy to democratize Iraq will play tomorrow night? 

SCHIEFFER:  You know, I think that, as Iraq goes, so goes the rest of the Bush presidency and so goes President Bush‘s legacy. 

If, over the next nine months or so, it looks like Iraq really is on the road to democracy, if it looks like he‘s going to succeed in putting a democracy in a part of the world where they‘re not really used to democracies, I think George Bush is going to be remembered as a great president.  But, if he doesn‘t, if the violence continues at the same levels we‘ve seen recent months, if, at the end of six to nine months, it appears that it is not getting any better there, I think support for the war will evaporate. 

I think he has got to get this pretty much done or at least looking like they‘re on the road to real democracy by the end of the year.  Otherwise, I don‘t think he‘ll be able to maintain support in the Congress for it. 

MATTHEWS:  Well, this is a long-headed question, but what is going to prevail first, the natural body tissue rejection of any foreign occupation which comes sooner or later or the real lock-in by the Iraqi people to democracy?  And the reason I ask that is, we could leave in two years.  Everybody would think that would be too long. 

But we‘re out in two years.  Two years and a half from now or three years from now, there‘s a military coup over there.  And the people just take it and we lose the whole democracy Americans died for. 

SCHIEFFER:  Well, I think there‘s always the chance of that. 

But I think, for this president to stabilize this country by the end of the year is almost a must.  You know, Chris, Lyndon Johnson used to say, if you‘re going to get something done, you have to do it in the first year, because, the second year, the Congress starts thinking about itself. 

MATTHEWS:  Yes. 

SCHIEFFER:  And that‘s what is going to happen here. 

Congress is not going into an election in ‘06 trying to defend a war that still looks like no progress is being made there.  I think in fact, whatever success he has on the Social Security reform and his other domestic issues I think will pretty much—what happens in Iraq is going to impact on that. 

MATTHEWS:  OK. 

When we come back, we‘re going to talk about the future of the  Democratic Party and also about the immediate future of Bob Schieffer, CBS‘ chief correspondent in Washington. 

We‘ll be right back.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Bob Schieffer.

Bob, what do you make of the ascendancy, it looks like at this point in the week, of Howard Dean?  Probably going to win the Democratic Party chairmanship. 

SCHIEFFER:  Well, I do find it kind of interesting that so many people were saying about the Democratic Party that John Kerry was not a good candidate because he was just too liberal for the mood of the country right now.  And now Democrats seem to be settling on someone who I guess would be to John Kerry‘s left. 

I think the problem for the Democrats now, they have simply got to find a message that cuts through to people in the heartland of the country. 

MATTHEWS:  Right. 

SCHIEFFER:  I think one of the mistakes that was made by Democrats this time is, they never took the argument to the heartland.  John Kerry never went to those states. 

They conceded early on that Bush was going to win them.  And so, in many cases, as you just go down the middle of the country, those red states, the proposals that George Bush laid out never were answered, really.  And to the same extent, Bush never really took his case into the blue state areas, which he thought would be going for Kerry for sure. 

I think that‘s one reason you have this partisan divide.  In too many cases, in too many places, the argument was never joined.  So it will be interesting to see here where Howard Dean takes this party. 

MATTHEWS:  Right.       

Well, Bob, you‘re a serious fellow, but I have to ask you a sarcastic question.  You really believe that more exposure to John Kerry would have helped him in the Midwest? 

(LAUGHTER)

SCHIEFFER:  I think the Democrats need to find an argument that people will at least listen to in the Midwest.

MATTHEWS:  Oh, an argument, right.  But more exposure to the personality of John Kerry in, say, Ohio, would have won it for him?  Or do you think they had too much exposure to John Kerry? 

SCHIEFFER:  No.  I think they should have carried the fight to beyond the states where they did.  We did not have a national election, Chris.  That‘s my point. 

MATTHEWS:  Yes. 

SCHIEFFER:  We had an election in about nine states and the rest of the country just watched. 

MATTHEWS:  I just wondered why the Democrats didn‘t run on bread-and-butter issues like minimum wage and trade and jobs and keep talking about the average person‘s plight out there, not the very poor and the very rich, but the person making an average income of $30,000 to $40,000 a year, a moderate-income family and what they face every day. 

I never heard—the Democrats used to always talk about that, the struggling class in America.  You didn‘t hear a word from Kerry about that or Edwards. 

SCHIEFFER:  Well, that‘s usually a pretty good argument to make.  I think there was also a mistake in trying to refight the Vietnam War. 

MATTHEWS:  Yes. 

SCHIEFFER:  The question before the country, it seemed to me, was what to do about Iraq.  And I think it took them a while on the Democratic side this time to get to Iraq. 

MATTHEWS:  Speaking of refighting a war, are you going to be sitting in as “Evening News” anchor when Dan steps down? 

(LAUGHTER)

SCHIEFFER:  I don‘t know.  I‘m kind of like Vice President Cheney, Chris.  I do not aspire to higher office. 

(LAUGHTER)

MATTHEWS:  But you are qualified to take it if necessary. 

SCHIEFFER:  I‘m very happy to do whatever they need me to do.  But at this stage of my life, to be the anchor of “The CBS Evening News,” I think they‘ll find somebody else. 

(CROSSTALK)

SCHIEFFER:  If they want me to do it, you know, on a short-term basis, I‘ll do what I‘m asked to do. 

MATTHEWS:  Somebody should write a book about the great CBS correspondents and anchors who didn‘t get to anchor “The Evening News,” like you and Kuralt and Mudd.  The best in the business didn‘t get the chair.  But good luck.

SCHIEFFER:  Well, Ed Murrow did not either.  So there you are.

MATTHEWS:  That‘s true.

(LAUGHTER)

MATTHEWS:  Anyway, thank you, Bob Schieffer, chief White House correspondent—Washington correspondent for NBC—for CBS News, actually. 

SCHIEFFER:  CBS.

(LAUGHTER)

MATTHEWS:  Anyway, thank you. 

And his new book is “Face the Nation.”  And his other book coming out in the paper—paper—“This Just In.” 

Senator John McCain on the Republican Party‘s strategy to dominate the Democrats when we come back. 

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  This half-hour on HARDBALL, Senator John McCain on the Republicans‘ strategy to maintain dominance in national politics.  And “The New York Post”‘s Deborah Orin and Pacifica Radio‘s Amy Goodman go at it over tomorrow‘s State of the Union. 

But, first, let‘s check in with the MSNBC News Desk. 

(NEWS BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

We‘re joined right now by Senator John McCain, Republican of Arizona. 

There was an article in “The Washington Post” the other day, Senator, that would seem pretty smart about the Republican strategy.  I know you‘ll be shocked to hear this, but your party has a strategy. 

(LAUGHTER)

MATTHEWS:  Karl Rove has a strategy, turn Social Security into an investment program to some extent, thereby teaching young people that their future is not with government programs, but with the stock market. 

SEN. JOHN MCCAIN ®, ARIZONA:  I think that‘s part of it. 

But I think the major part of it is that President Bush is looking to a legacy, as every president does, in his second term.  And what could be a better way than to ensure some form of security, financial security for future generations of Americans?  But I think it would have the added benefit that you describe, more...

MATTHEWS:  Teach young people to be market-oriented. 

MCCAIN:  I think so. 

MATTHEWS:  Let me ask you about another...

MCCAIN:  I think that‘s been true in Chile.  With their social security system, they have a private savings account. 

MATTHEWS:  And it works?

MCCAIN:  Yes.  And workers are very interested in what‘s going on in the stock market. 

(LAUGHTER)

MATTHEWS:  Let me ask you about trial lawyers.  The Republican Party, as a party, especially the president, has been trying to deal with capping some of these settlements, these charges against people because of malpractice or whatever, thereby using tort reform to try to reduce the number of dollars that go into the hands of trial lawyers, which eventually finds its way into the Democratic Party. 

He thinks—Tom Edsall of “The Washington Post,” a brilliant guy, he said that this is what the Republicans are doing.  They‘re killing the flow of money to the Democratic candidates which comes from the trial lawyer by cutting off the amount of money they‘re making. 

MCCAIN:  You know, again, I think that‘s probably one of the benefits of it.  But I don‘t think that that‘s...

MATTHEWS:  I like the way say it. 

MCCAIN:  But I don‘t—I think the primary objective is here, you take any poll.

MATTHEWS:  Yes. 

MCCAIN:  And the overwhelming majority of Americans will say that we need to reform.  And also, when you look—talk to any physician, they‘ll tell you that, at least in some parts of the country, that malpractice insurance is driving them out of certain states, etcetera. 

This is a big problem.  And I think both of the issues that we discussed have overwhelming approval.  And that‘s why you‘re going to get Democrat votes for probably—certainly the second one. 

MATTHEWS:  And the third thing he said was—this is in “The Washington Post” by Tom Edsall—he says that by making a lot of these jobs created in national defense, in homeland security non-union jobs, you‘re killing the army, the Democratic—well-paid army of government employees that all vote Democrat and kick into the Democratic Party. 

MCCAIN:  I think that most people who have observed the way that civil service works agree that efficiencies are needed. 

Whether this is exactly the right solution to that I think can be debated.  But you‘ve got to award—reward efficiency and you‘ve got to reward excellence in performance.  And we‘re talking about life-or-death situations here.  But, you know, I don‘t—I think that the average American is more concerned about education and health care probably more than any other of those that we just discussed.  But health care, obviously, gets into malpractice. 

MATTHEWS:  But the old argument is, good government needs good politics, that, in other words...

MCCAIN:  Absolutely.

MATTHEWS:  All these programs, one which will privatize this, personalize, to some extent, Social Security. 

MCCAIN:  Sure.

MATTHEWS:  The other is to try to reduce the amount of money that goes to lawyers. 

(CROSSTALK)

MATTHEWS:  And the other one is to try to reduce the amount of money and personnel that go to unions.  All help the Republican Party, in effect. 

MCCAIN:  When the nation was in the Great Depression, Franklin Delano Roosevelt came to office and we did many of the things you‘re talking about that were good for the overwhelming majority of Americans, work programs, etcetera, etcetera.

Those had the benefit of giving the Democratic Party the majority for 20 or 30 years, whatever it was.  But I don‘t think that was Franklin Delano Roosevelt‘s primary objective.  I think he wanted to lift this nation out of one of the darkest periods in our history.  I think that the object of many of these policies are because they‘re good for America.  If they have a beneficial side effect, then more power to them. 

MATTHEWS:  Which way is the wind blowing on this?

MCCAIN:  People will judge parties by their performance.

MATTHEWS:  Well, let‘s follow this through.  We all grew up in a country that was largely Democrat.  In fact, half the country was Democratic.  People forget this.  And the other half was split between Republicans and something called independents, who were really ex-Republicans. 

Now the pendulum is shifting.  Do you see the Republican Party becoming the dominant party of the country or is it already? 

MCCAIN:  I think it is very likely that it will. 

And, in 1979, if you and I had been sitting here, I would have said there‘s no chance the Democrats will ever get the—will ever lose their majority in the United States Senate.

MATTHEWS:  Right.  Permanent majority.

MCCAIN:  There‘s no such thing in American politics, thank God.  Thank God, because the strength of America is when you have a clash of ideals and ideas in a robust two-party system. 

But, right now, I think the Republicans have to be judged in very, very good shape. 

MATTHEWS:  Do you think a party can hold the White House now more than eight years? 

MCCAIN:  I think it is very tough.  I think it is very, very tough, because there‘s always kind of a desire in America for a fresh face.  But I think...

(CROSSTALK)

MATTHEWS:  How about a maverick to come in after eight years of a Bush administration?  Do you think that might be likely? 

(LAUGHTER)

MCCAIN:  I don‘t think so. 

But I think it comes down to two things, one, the quality of the candidate.

MATTHEWS:  Yes. 

MCCAIN:  And, second, the conduct of the campaign. 

I think we would all agree that the Bush campaign was near perfect and the Kerry campaign was not good.  I mean, Kerry said that on Sunday.  So, I mean—so campaigns and candidates do matter. 

MATTHEWS:  Will the security issue still be the paramount issue four or eight years from now?  Will it continue to be the issue that dominates American politics, security against terrorism? 

MCCAIN:  I think it will for a long time.  And I think it depends on what kind of progress we make in the war on terrorism.  But given the fundamentals of what breeds terrorists, I think the war on terrorism is going to be with us a long, long time. 

MATTHEWS:  Wednesday night this week, the president gives a State of the Union address.  Let‘s start with the basics.  This has been a pretty good two weeks for the president.  What did you make of his rather grand inaugural address for his second inaugural? 

MCCAIN:  I loved it.  I think it is a vision for America.  I think it‘s authenticated.  It has just been authenticated. 

I think what happened in the Ukraine and Georgia is exactly what he was talking about.  I think that the aspect of it, where people say that means we are going to invade everybody, I don‘t...

MATTHEWS:  What happened in Georgia? 

MCCAIN:  The Rose Revolution.

MATTHEWS:  OK.

MCCAIN:  When Saakashvili became the president of Georgia and they got rid of Shevardnadze and a very corrupt regime.  There‘s two countries.

(CROSSTALK) 

MATTHEWS:  So we‘ve got the orange movement in Ukraine.  We‘ve got that.  You‘ve got the Afghanistan elections, the West Bank elections and now yesterday, Iraqi elections. 

MCCAIN:  And there‘s a golden opportunity, which the president appreciates, for the Palestinian-Israeli issue. 

Mr. Abbas is as different from Arafat as Sadat was from Nasser.  We have a tremendous opportunity there.  And if you can solve that one or at least make significant progress, that changes against things in the Middle East, because you know every despot and every religious extremist in the Middle East, when they have got a problem domestically, they point at the Israelis as the source of the problem. 

We solve that issue and I will tell you, it‘s—and, by the way, we made a step in the right direction because now we have proven in the Middle East that people have the same yearnings and desires as people do throughout the world.  A chill went down the spine of the mullahs in Tehran and Mr. Assad in Syria and all the other despots, and maybe Mubarak in Egypt, as well as the Saudis. 

(CROSSTALK)

MATTHEWS:  Will this soften up Sharon in Israel for a deal?  Do you think Sharpton is—he‘s the toughest guy in Israeli politics.  Do you think he might be the guy to be the de Gaulle, the Nixon, the great surprise? 

(CROSSTALK)

MCCAIN:  I think he is the only guy that can do it, because I think that he has the right-wing, hard-liner, military credentials that he‘s.... 

(CROSSTALK)

MATTHEWS:  And he has the Labor Party now.

MCCAIN:  He might be loathed by some, but he is respected by... 

MATTHEWS:  And he has the Labor Party behind him. 

MCCAIN:  Exactly. 

MATTHEWS:  That‘s pretty good politics, isn‘t it?  Like yourself, you have a lot of Democratic supporters and a lot of Republican supporters. 

(LAUGHTER)

MATTHEWS:  I love teasing you, because you will run in 2008. 

Anyway, it is great to have you. 

So, you gave a very—I thought it was very interesting, everything you said tonight, by the way.

MCCAIN:  Thank you. 

MATTHEWS:  And I think that that kind of thinking is pretty profound. 

Thank you very much, Senator John McCain.

MCCAIN:  Thank you. 

MATTHEWS:  When we come back, a brisk fight between “The New York Post”‘s Deborah Orin and Amy Goodman of Pacifica Radio about the future of Iraq and what we‘re going to hear from President Bush in tomorrow‘s State of the Union. 

And don‘t forget, sign up for HARDBALL‘s daily e-mail briefing.  Just log on to our Web site, HARDBALL.MSNBC.com.

(COMMERCIAL BREAK)

MATTHEWS:  Coming up, “The New York Post”‘s Deborah Orin and Pacifica Radio‘s Amy Goodman debate the future of Iraq.

HARDBALL returns after this.

(COMMERCIAL BREAK)

(NEWS BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

We‘ve got a firefight coming here over the president‘s speech.  Deborah Orin is Washington bureau chief for “The New York Post.”  And Amy Goodman is the host of Pacifica Radio‘s “Democracy Now” and co-author of “The Exception to the Rulers: Exposing Oily Politicians, War Profiteers, and the Media That Love Them.”

Let me ask you, Deborah, is the president on a role after the elections in Iraq on Sunday? 

DEBORAH ORIN, WASHINGTON BUREAU CHIEF, “THE NEW YORK POST”:  Yes. 

I mean, but it‘s not just—it‘s not even so much the president is on a roll.  I think that what the elections on Sunday did was make a lot of American have a second thought about what is going on in Iraq.  There was an interesting column in “The Sun-Times” today by somebody—“The Chicago Sun-Times”—by somebody who opposed the war, saying, whoops.  Maybe those of us who oppose the war need to stop, take a think, and consider at least the possibility that maybe Bush was right about Iraq. 

I mean, there is no way to look at the joy on the faces of those people as they held up their ink-stained fingers and not feel a sense of joy yourself. 

MATTHEWS:  Is that the way you reacted, Amy? 

AMY GOODMAN, HOST, “DEMOCRACY NOW”:  I think the real issue is the occupation of Iraq.  People will do anything to be able to determine their own futures.  And that‘s what they saw, risking their lives, going out and voting during the election. 

But there were only certain populations who did that.  And they came out in very big numbers, the Shia population, the Kurds.  Sunnis overall did not come out.  And that‘s going to be a very significant problem that must be addressed.  But the overall issue that was before the election and right now is the occupation of Iraq.  And across the political spectrum in Iraq, people want the U.S. out. 

MATTHEWS:  Well, will the elections encourage a faster departure of U.S. forces, Amy? 

GOODMAN:  Right now, what a new government will ask for remains to be seen.  What Iyad Allawi, the unelected former CIA asset, the prime minister now, is saying is that they can‘t afford to have the U.S. leave. 

But I think the violence is targeted at the occupation.  And as long as the soldiers are there, the violence is going to continue. 

MATTHEWS:  Should we leave now? 

GOODMAN:  Absolutely. 

MATTHEWS:  Let me...

ORIN:  You see, Chris...

MATTHEWS:  Yes, go ahead, Deborah.

ORIN:  Chris, it‘s sort of sad to me to hear Amy talk, because she is speaking for such a defeatist, depressive, anti really essentially democratic view.  Everything the United States does is wrong. 

Sunday was a day of joy.  It wasn‘t simply, as she would like to present it, a day of anti-occupation.  The Iraqi people were dancing with American soldiers.  They were celebrating with American soldiers.  The people who did not vote, some of them are thugs.  And others of them are intimidated. 

But to suggest that this was a vote, an anti-American vote, is just—it reflects a fringe, negative, defeatist view.  And I think most Americans on Sunday looked at that election and they will listen to what Amy said and say, that‘s nuts. 

(CROSSTALK)

MATTHEWS:  Let me ask you a question, Amy, a little more sophisticated, because I‘ve thought about this a lot.  I‘m not usually perhaps this fine-tuned in my thinking. 

I‘ve been listening to Wolfowitz for about three years now.  And unlike some of the other neocons—and I don‘t mind that phrase—he seemed to have been focused very much not on Middle East hard-line politics, but on the idea that the Islamic world, based upon his experience in Jakarta as ambassador to Indonesia years ago, are ready and willing and in fact have an appetite for democracy. 

Did he not prove his case on Sunday with the tremendous turnout in Iraq? 

GOODMAN:  Well, I think that democracy...

MATTHEWS:  Did he not prove that argument, that people want to vote?  They don‘t want clerics.  They don‘t necessarily—well, they may not mind clerics.  They want to be able to go to a ballot box and participate in their government, that Arabs want to do that and they‘ve never been given a chance. 

GOODMAN:  I think elections are important, but I also think it is absolutely critical that these people have the right to determine their own future.  And that is not going to involve U.S. troops there. 

But I do have to respond, Chris, when you talk about Paul Wolfowitz, yes, the former U.S. ambassador to Indonesia.  It brings up a whole other issue, but that it‘s also absolutely critical, is, Wolfowitz returned from the tsunami-struck area of Indonesia, Aceh.  And he said that the U.S.  should restore military aid to the brutal Indonesian regime.  I don‘t think he‘s concerned about democracy in Iraq. 

And I certainly think it is clear that he is not concerned about the well-being of the people in Aceh, because to call for the support of the Indonesian troops, which have been cut off for years because of their brutality in Timor, exposes exactly who Paul Wolfowitz is. 

MATTHEWS:  Well, let me ask you, I‘m just concerned about elections and his belief in elections.  I want to ask you this both.

Let‘s go to—let‘s go to Deborah.  If we have another election, which we hope to have in December, for the permanent government of Iraq, and these people campaign—and some will campaign for keeping troops in for a year or two.  Some will campaign rather unclear on that point.  Some will say let‘s get them out immediately. 

The people of Iraq will get to choose what kind of a leader they want, won‘t they?  And they‘ll get to choose whether they want to us leave or not.  Isn‘t that the ultimate democratic test? 

ORIN:  Absolutely. 

And I think, in the end, what the Iraqi people want and what the American people want is the same thing.  We all want our troops out of Iraq and we want the Iraqis to defend their own country.  The question is, when will they be ready?  I mean, you had the interim president of Iraq, who is a Sunni Muslim himself, today saying it would be nonsense to talk about pulling troops out right now because the Iraqis aren‘t ready. 

And I think, with a lot of the interviews that you saw on Sunday from people as they were going to vote, they would like to run their own country.  But they also want to be safe doing it.  And so, I think you can start to see the light at the end of the tunnel. 

But I want to go back to what you said before about Paul Wolfowitz and the faith in democracy, because I think that what he believed, what he said was validated.  Everybody laughed when Wolfowitz and some others had predicted the Iraqi people would greet us with flowers and sweet meats.  And that happened to some extent in Kurdish areas, but not in the rest of Iraq. 

But this was the equivalent.  This was sheer joy at the ability to vote, people bringing their children to watch them vote. 

MATTHEWS:  Yes. 

ORIN:  People posting on Web sites:  I did it.  I voted.  I had the courage to do it. 

MATTHEWS:  Yes, well, it could also be read...

ORIN:  It‘s an amazing celebration. 

MATTHEWS:  It also could be read that those people want to get control of their country again and they want us out.  That‘s not the same as welcoming us with open arms and saying, now it is time for you guys to begin to move and we want to take over.  That could be read, couldn‘t it? 

ORIN:  It could, except that if you saw their attitude toward the American soldiers and if you saw the way they celebrated, that wasn‘t what that vote was about.  It just wasn‘t. 

(CROSSTALK)

ORIN:  It would be a perversion to say it was. 

MATTHEWS:  OK, let‘s come back to talk to Amy and also to Deborah Orin of “The New York Post” when we come back about Howard Dean.  It looks like he‘s beating—in fact, he‘s smacking the soft fat middle of the Democratic Party, it looks like, in this fight for party chair. 

We‘ll be right back to talk about the ascendancy of Howard Dean.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with “The New York Post”‘s Deborah Orin and Amy Goodman of Pacifica Radio‘s “Democracy Now.” 

Amy, what do you make of Howard Dean as the new chairman of the Democratic Party?  It looks like it‘s on the way to happening.

GOODMAN:  Well, I think it is very significant.  First of all, it shows money talks.  He was very successful in raising money for his presidential campaign, especially using the Internet and getting new voters.  And I think that is what is really speaking. 

And I also think it is very significant that he represents the Democratic wing of the Democratic Party, as opposed to the direction that the Democratic Party has gone, which is very much vying with the Republicans.  And this could signal a change, although, of course, it remains to be seen what happens if one individual can do that. 

MATTHEWS:  Do you believe that John Kerry would have won the election for president had he offered a clear alternative to President Bush‘s foreign policy? 

GOODMAN:  I think that John Kerry tried to out-Bush Bush.  And it was a fatal miscalculation. 

I mean, that point, when he was asked the question when he was in the Grand Canyon, if you knew then what you know now, would you make the same move, would you vote to authorize the invasion, when he said yes, he opened himself to ridicule by the Republicans in what are you complaining about and by the Democrats, a lot of scratching of heads. 

And I think, ultimately, that led to a lot less mobilization of new voters who were truly opposed to war and looking for a real alternative opposition.  That‘s what the two parties should be, oppositional to each other. 

MATTHEWS:  Yes.  I think a lot of people are still scratching their head over that decision to say he would have gone to war over a case of WMD even if he‘d found out there was no WMD. 

Let me go to—because that was the argument for the war in the beginning.

Let me go right now to Deborah Orin.

What do you make—looking at politics today and the two parties and signals being sent here?  What do you make of the smoke signal that Democrats like Dean now?

ORIN:  Well, I think it is interesting.  It is a total change. 

Remember, right after the election, the Democrats were saying, we need to move more to the center.  We‘ve gone too far to the left.  We have to talk to moderate voters.  We have to talk to red states.  And we have to talk more about moral values.  Now we‘ve got Howard Dean almost certainly going to be the new chairman.  And he says moral values are code word for right-wing fringe. 

So, the idea of the moving to the center has been thrown overboard.  And we‘re going to find out whether or not it is a good idea.  An awful lot of Democrats have told me that they think, if Howard Dean had been the candidate, they would have lost 49 states. 

MATTHEWS:  Yes. 

ORIN:  Now, we‘ll never know because it never happened.  But I do think it is going to make a big difference. 

I mean, just for example, Howard Dean the other day on the Sunday shows came out against the confirmation of Condi Rice as secretary of state.  Now, that is a fringe position in the Democratic Party.  There are 45 Democratic senators and only 13 of them took that position.  The only black in the Senate, Barak Obama, didn‘t think that position.  Hillary didn‘t. 

And so, to me, that suggests that, for all Howard Dean says that he has become kind of a born-again centrist, that he‘s actually pretty much far over on the left.  And we‘ll find out whether Amy is right and that there are oodles of voters waiting to come out and vote.  I think this is going to be a disaster for the Democratic Party. 

MATTHEWS:  Let me ask Amy to speak for herself, to some extent.

Amy, just think right now.  I know this is freeform thinking and it‘s right on the spot.  But think of who you think of right now as having the true voice of the hearts and minds of the Democratic Party.  List a couple of people you think are the true voice of the heart and mind of the Democratic Party right now in 2005 in February. 

GOODMAN:  Well, I don‘t think it is so much about individuals.  I think it is about positions.  It is about people taking strong stands. 

MATTHEWS:  No, who?  Well, give me an example of somebody you think speaks for the Democratic Party right now.

(CROSSTALK)

GOODMAN:  Like against Alberto Gonzales, like against Condoleezza Rice. 

MATTHEWS:  But who?  Who do you trust now?  Who has the true voice of the Democratic heart and mind right now?  Who is it?  Who do you recognize?  Give me three or four names of people you think are true Democrats.

GOODMAN:  Well, I‘m not going to give names.  I would talk about positions. 

MATTHEWS:  Why not? 

GOODMAN:  Because I think it is positions that matter.  And we shouldn‘t focus on personality. 

(CROSSTALK)

MATTHEWS:  If you can‘t say who your leaders are, how can you call yourself a political party?  I mean, what are the Democrats if they don‘t have a leader? 

(CROSSTALK)

GOODMAN:  I think it is about—I think the Democratic Party...

MATTHEWS:  Who speaks for progressive America? 

GOODMAN:  I think the Democratic Party, what we should be talking about is positions that have to do with preserving Social Security, that have to do with being against torture.

MATTHEWS:  Yes.  Well, that‘s why you‘re losing.  Why you‘re losing.  now is, you can‘t even point to your leaders. 

At least George Bush is the leader of the Republican Party.

GOODMAN:  It‘s not about my leaders.  It‘s about...

MATTHEWS:  Name a leader.  Name a leader that you trust. 

GOODMAN:  It is not about my position.  It is about not my thoughts about people. 

MATTHEWS:  OK.

GOODMAN:  It is about positions.  And I think that‘s what counts. 

(CROSSTALK)

MATTHEWS:  Well, that‘s the problem.  If the Democratic Party is tongue-tied about who their leaders are, that‘s the beginning of the problem. 

Thank you very much, Amy Goodman, for coming on.  Please come back. 

Deborah Orin of “The New York Post,” thank you.

Tomorrow, join me for HARDBALL at 7:00 Eastern, and then our live coverage of the State of the Union begins at 9:00 tomorrow night Eastern time. 

And later this week on HARDBALL, our guests include Senator John McCain, retired General Wesley Clark, talk show host Bill Maher, and Kinky Friedman, a fellow Peace Corps retiree who has announced he‘s running for governor of Texas.

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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