updated 9/29/2005 11:39:38 AM ET 2005-09-29T15:39:38

Guests: Karen Tumulty, Michael Isikoff, Gene Taylor, Tom Davis, Christopher

Shays, Cragg Hines, Chris Bell, Mike Conaway

CHRIS MATTHEWS, HOST:  Republican House Leader Tom DeLay indicted in Texas and forced to quit his post.  A Democratic DA charges DeLay with laundering corporate campaign contributions.  How much will this hurt Republicans? 

Let‘s play HARDBALL.  

Good evening.  I‘m Chris Matthews. 

Today, a Texas grand jury indicted Congressman Tom DeLay for carrying out what it called a scheme to launder corporate money to Texas legislative races.  This afternoon, Congressman DeLay said he will step down as House majority leader, while calling the district attorney who won the indictment a partisan fanatic. 

(BEGIN VIDEO CLIP)

REP. TOM DELAY (R-TX), MAJORITY LEADER:  I have done nothing wrong.  I have violated no law.  I have violated no law, no regulation, no rule of the House.  I have done nothing unlawful, unethical or, I might add, unprecedented. 

(END VIDEO CLIP)

MATTHEWS:  Innocent until proven guilty.  But what does DeLay‘s indictment mean politically for his fellow Texan President Bush?  It‘s an embarrassment, of course, for the president already under fire for his administration‘s failure in dealing with Katrina.  It hurts the president‘s image of being an outsider to Washington‘s corruption. 

It came on the same day, by the way, that the SEC, the securities administration, opened a formal investigation into Senate Majority Leader Bill Frist‘s stock sale and coincides with questions surrounding insiders bidding, getting no-bid contracts on Katrina. 

Finally, the House of Representatives has been the engine of the Republican Party, which won control of the House back in 1994.  Will this scandal jeopardize the national standing of the Republican Party? 

We begin tonight with this report about Tom DeLay from HARDBALL correspondent David Shuster, who is in Houston. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  The majority leader is recognized.

DAVID SHUSTER, NBC CORRESPONDENT (voice-over):  He was a major force on every issue in Congress. 

DELAY:  But in order to protect some the world‘s most vulnerable people, consider it and pass it, we must. 

SHUSTER:  And he was just as ruthless with Republicans who crossed him as he was with the Democrats. 

DELAY:  It is a shame that Democrat anger at their loss of power has manifested itself in contemptible behavior. 

SHUSTER:  But now the contemptible behavior, according to a grand jury, belongs to Tom DeLay.  The accusations against DeLay stem from an investigation into three Texas associates previously indicted on charges of illegal fund-raising.  Their group, Texans for a Republican Majority, allegedly pumped in corporate money illegally during the 2002 legislative elections. 

DeLay and his associates have insisted the money was spent as the law allows, on committee overhead or issue advertising, not on campaign-related activities. 

DELAY:  It‘s a charge that cannot hold up even under the most glancing scrutiny.  

SHUSTER:  Separate from this investigation, however, there were other controversies in recent years that landed DeLay in trouble with the House Ethics Committee.  He was admonished for inviting energy lobbyists to a fund-raiser just before the energy bill was brought to the House floor.  He was admonished for muscling a fellow Republican during a Medicare debate by promising to help the lawmaker‘s son.  And DeLay was admonished for using the Federal Aviation Administration to round up missing Democrats in the Texas legislature. 

The legislature needed a quorum, so it could pass a controversial redistricting plan that helped Republicans.  DeLay‘s allies pushed back late last year by trying to gut House ethics rules for any lawmaker who gets indicted.  A few key Republican, though, balked.  And DeLay, the ultimate vote-counter, reversed course. 

CHARLIE COOK, EDITOR & PUBLISHER, “THE COOK POLITICAL REPORT”:  Is he a hard-charging, true-blue conservative?  Yes.  But Tom DeLay is a very pragmatic guy.  And I think he saw that, you know, there are limits to even what he can do. 

(END VIDEOTAPE)

MATTHEWS:  That was HARDBALL correspondent David Shuster down in Houston. 

Tom DeLay announced he is stepping down as House majority leader today.  And Roy Blunt of Missouri will temporarily replace him as majority leader of the Republican Party in the House. 

Democratic Congresswoman Sheila Jackson Lee canceled an appearance on our show tonight, but we‘re joined right now by Republican Congressman Mike Conaway of Texas and former Democratic Congressman Chris Bell, who lost his bid for reelection when his Texas district was redrawn in 2003.  He filed a formal ethics complaint against Tom DeLay back in June of 2004, and the House Ethics Committee admonished DeLay on two charges.  Former Congressman Bell is also running, we should say, for governor of Texas. 

Congressman Conaway, thank you very much. 

Is Tom DeLay a good guy?

REP. MIKE CONAWAY ®, TEXAS:  Yes. 

MATTHEWS:  Is he an honest guy? 

CONAWAY:  Yes. 

MATTHEWS:  Would he use corporate money to help a Texas legislative candidate?

CONAWAY:  No.  He knows that‘s illegal.

(CROSSTALK)

MATTHEWS:  What do you think this prosecutor is up to, this Ronnie Earle? 

CONAWAY:  You will have to ask Ronnie.  It is clearly political.  It‘s

he‘s using the justice system as a weapon.  None of us like that.  You are innocent in this country until proven guilty, except in your introduction in the various lines that are going on.  But Tom DeLay has done nothing wrong. 

MATTHEWS:  What do you mean in my introductions?

CONAWAY:  Well, the—everything that has been going on ahead of this time, it‘s assumed that—you said the president embarrassed, is...

MATTHEWS:  Isn‘t the president embarrassed by this, sir?

(CROSSTALK)

CONAWAY:  Tom DeLay has not been proven to have done anything wrong.

MATTHEWS:  Do you think the president was happy to hear that the leader of the Republicans...

(CROSSTALK)

CONAWAY:  No.  Nobody is happy with this.  Nobody is happy.

(CROSSTALK)

MATTHEWS:  Do you think it helps his public image? 

CONAWAY:  It doesn‘t help any of us.

(CROSSTALK)

MATTHEWS:  Well, that‘s what I‘m saying.  He‘s embarrassed by it.

(CROSSTALK)

CONAWAY:  There are over 200 DAs in Texas.  And Ronnie Earle is one of them.

(CROSSTALK)

MATTHEWS:  Tell me about—tell me about the charge.  What do you understand the charge to be? 

CONAWAY:  There‘s some sort of a conspiracy issue, that somehow Tom DeLay knew ahead of time that something illegal was going to happen.  And that‘s the basis of his charge, that—and Tom did not know ahead of time, didn‘t know the specifics about what was going on.

And the conspiracy theory is that somehow there was the—TRMPAC conspired to do something illegal and that Tom knew about it. 

MATTHEWS:  Well, let me ask you about this charge. 

Everybody watching this—Tom DeLay, the majority leader has been indicted today by an Austin district attorney, Ronnie Earle, a Democrat, on the charge that a lot of corporate money, about a hundred and, what, seventy thousand dollars was collected from corporate sources, given to the Republican National Committee.  Those corporate contributions are not legal to candidates in Texas in legislative races.

So, the money was basically laundered at the RNC.  Other money was sent down in the name of the Republican National Committee which was legal to give to these candidates, and that he supervised the whole matter.  Right?  That‘s the charge. 

CONAWAY:  Not that he supervised it, but that there was some sort of conspiracy, that he knew that was going to happen.  He was on the board. 

(CROSSTALK)

MATTHEWS:  He was involved in the scheme, as they put, the prosecutor. 

CONAWAY:  I‘m not sure that‘s what the charge is.  Says he knew about it. 

(CROSSTALK)

MATTHEWS:  Well, the prosecutor in his press release today—Ronnie Earle is putting out press releases.  He said it was a scheme. 

(CROSSTALK)

CONAWAY:  And he is going to try this case in the courts.  And that is he how he operates. 

(CROSSTALK)

MATTHEWS:  Well, doesn‘t this guy, Ronnie Earle, if it‘s pure politics, doesn‘t he win, because he knocks Tom DeLay out of action for like a year, right?  He can‘t get back in the saddle again until this trial is over. 

CONAWAY:  Well, it‘s unlikely that Ronnie Earle will pursue this vigorously and give Tom get a quick trial.  It doesn‘t feed into his agenda, to stretch this out as long as possible. 

MATTHEWS:  So, justice delayed is justice denied. 

CONAWAY:  Absolutely. 

MATTHEWS:  And you expect they will string this out to the election?

CONAWAY:  That would be my expectation, yes.

MATTHEWS:  And you believe he is innocent?

CONAWAY:  Yes. 

MATTHEWS:  Did you talk to him about it yet? 

CONAWAY:  Yes. 

MATTHEWS:  Let me go right now to Congressman Chris Bell for another view. 

Congressman Bell, what is your history with Tom DeLay in terms of your seat and how you lost it in the House? 

CHRIS BELL (D), FORMER U.S. CONGRESSMAN:  Well, I was what they referred to as collateral damage, Chris. 

Mine was actually redrawn to be a more African-American district here in the Houston area, and I lost in the primary in 2004.  Most of the seats were redrawn to favor Republicans, as you know. 

MATTHEWS:  Well, let me ask you this.  What do you think of Tom DeLay? 

Do you think he is a good guy or bad guy? 

BELL:  I think he is the most corrupt politician in America today.  And I have said so repeatedly since filing my ethics complaint.  I filed it for that reason, after looking at everything that he had engaged in. 

MATTHEWS:  What do you think of this charge?  I mean, I don‘t know.  I think it sounds like it‘s understandable.  It‘s a question of whether he is innocent or not or guilty or not.  I mean, everybody can understand what laundering is in politics.

You get corporate money you can‘t use in certain campaigns.  You give it to your chair, party committee.  Then it comes back in another form and nobody knows what happened.  Do you think that this prosecutor is sharp enough to have eyewitnesses that will be able to testify in open court that Congressman DeLay approved this conspiracy? 

BELL:  Well, let‘s clear something up that has been one of the mischaracterizations of Ronnie Earle.  He has actually prosecuted more Democrats over the decades that he served as Travis County district attorney than Republicans.  So, he has been very bipartisan in his approach to going after corruption. 

(CROSSTALK)

MATTHEWS:  But he has gone after some very big-name Republicans, Jim Mattox, the A.G. down there.

BELL:  Well, certainly.

MATTHEWS:  He went after Kay Bailey Hutchison, who was treasurer, about to be United States senator.  And now he has gone after the biggest enchilada of them all down there, next to the president.  So, he is notorious for going after big-name Republicans, isn‘t he?

BELL:  Well, he is also notorious for going after big-name Democrats. 

Jim Mattox, who you just mentioned, was actually a Democrat.  And he went after two Democratic speakers of the House, Billy Clayton and Gib Lewis were also prosecuted by Mr. Earle.  So, that‘s another smokescreen.  And it‘s right out of the DeLay handbook, accuse the accuser, shoot the messenger.  That‘s what he did to me after I filed the ethics complaint.

And that‘s what he is going to try to do with Mr. Earle. 

MATTHEWS:  Didn‘t Mattox become a Republican? 

BELL:  No, never.

MATTHEWS:  Didn‘t he?

(CROSSTALK)

MATTHEWS:  OK.  I‘m sorry.  I take that back.

MATTHEWS:  So he has gone after Kay Bailey Hutchison, a Republican.  And he is going after Tom DeLay, Republican.  Who was the third guy he went after who is a Republican? 

BELL:  I don‘t know.  The only other one I remember is Kay Bailey Hutchison.  And that of course ended in the charges being dismissed.  And that‘s the one they always point to. 

But they never point to all the Democrats that Mr. Earle has gone after.  And if you look at Mr. Earle‘s record, he has been a very outstanding district attorney.  They took a long process.  And what is also overlooked, Chris, is the fact that Mr. Earle can‘t bring these charges alone.  A grand jury has looked at these charges for months now and decided that Mr. DeLay should be held accountable for his actions.

And that‘s precisely what they said by returning today‘s indictment. 

MATTHEWS:  Is this an issue you are going to raise in your race for governor? 

BELL:  Well, ethics is going to be a big issue in Texas.  I reside in a state where—that‘s crying out for ethical reform.  We have unlimited campaign contributions being made to races in the governor‘s office. 

You basically have a resolving door of people going on to the retainers of state contractors and then on to the staff of governor.  And we basically have a cash-and-carry system here in Texas that needs to be cleaned up.  And, as I have said for a long time, this goes much further than just Tom DeLay when you‘re talking about Texas. 

MATTHEWS:  OK, let me go back to Congressman Conaway.

What do you think caused this to happen, just pure partisanship? 

(CROSSTALK)

MATTHEWS:  Your assessment is that somebody, a DA in Austin, simply cooked up a case, cooked it up out of nothing?

(CROSSTALK)

CONAWAY:  Well, whole cloth.  It took him three years to do it.  If it‘s such a straightforward, easy case, as Chris says, this indictment would have happened a long time ago.

MATTHEWS:  Are you sure of this matter? 

CONAWAY:  I am, yes.

MATTHEWS:  Will you resign if this turns out to be a conviction? 

CONAWAY:  That‘s not an issue, Chris. 

(CROSSTALK)

MATTHEWS:  No.  I mean, you say you‘re so sure of the case.  How do you know the facts? 

(CROSSTALK)

MATTHEWS:  How do you know the facts?

CONAWAY:  Because I looked Tom DeLay in the eye and he said—he told me he was innocent and that nothing he‘s done...

(LAUGHTER)

CONAWAY:  Yes, you can go ahead and laugh, Chris. 

But the truth of the matter is, he is an honorable man.  And I know him.  And, you know, the people in District 11 will decide whether or not I come back and forth to this place.  I‘m not going to...

(CROSSTALK)

MATTHEWS:  No, but, I mean, you‘re so sure of his innocence.  I just don‘t know how you know this. 

CONAWAY:  Well, will you quit?  Would you quit this job? 

MATTHEWS:  I‘m not charging him.  I‘m just...

(CROSSTALK)

CONAWAY:  Yes, well, I‘m not either.

(CROSSTALK)

MATTHEWS:  ... of a prosecution. 

(CROSSTALK)

CONAWAY:  So, you will quit this case if he is?  You will quit doing

HARDBALL? 

MATTHEWS:  No.  No. What I‘m asking you..

(CROSSTALK)

CONAWAY:  All right.  That‘s an honest answer.

MATTHEWS:  No.  You‘re sure he is innocent. 

CONAWAY:  Yes. 

MATTHEWS:  Because he looked you in the eye and said so?

CONAWAY:  That‘s right. 

MATTHEWS:  Has he not been helpful in your campaigns?  Don‘t you have a reason to believe in this guy for partisan reasons, like the other guy, Chris Bell, has reason to detest him?

(CROSSTALK)

CONAWAY:  I have got a reason to believe in him because we have had a very effective nine months.  His job is to move legislation through this Congress. 

MATTHEWS:  Right. 

CONAWAY:  And we have done that.  All 11 appropriations bills done before July the 4th break.  We have moved the transportation bill, energy bill, bankruptcy reform.  Just a host of legislation has gone through this House because of Tom DeLay‘s leadership.  He has done a great job in moving legislation. 

(CROSSTALK)

MATTHEWS:  Why do people like Chris Bell, the former congressman, detest this guy?  You can see it right now.

CONAWAY:  I don‘t know.  I don‘t know Chris Bell.  Never met him.

MATTHEWS:  What do you think of the word Hammer?  How did he get the nickname Hammer? 

CONAWAY:  You know, I don‘t know.  I have not seen it in action.  He doesn‘t deny it, so—but I have not seen it in action. 

MATTHEWS:  He‘s not a tough guy?  He is not the sort of guy that would threaten a guy, I‘m not going to back your son for office until you come forth on this bill with us? 

(CROSSTALK)

MATTHEWS:  You have never seen that kind of strong-arm tactics? 

CONAWAY:  No.  No. 

(CROSSTALK)

MATTHEWS:  There‘s such passion on this.

(CROSSTALK)

MATTHEWS:  You‘re wrong about me.  I don‘t have this—there‘s a lot of passion in this city about this guy that is incredible to watch.  I just see it with Chris Bell.

CONAWAY:  Sure.

(CROSSTALK)

MATTHEWS:  I read it with a lot of people I think to.  They seem to have this incredible passion for or against this guy.  What arouses this “I hate him or like him” attitude towards him?

CONAWAY:  From my standpoint, he‘s effective.  He is the majority leader and he‘s got an incredible amount done these last nine months of this House, the only time I have been here.  I‘m elected.  I‘m a freshman.  I‘m one of the beneficiaries of redistricting in Texas.  And I just got here.

(CROSSTALK)

MATTHEWS:  There‘s been so much action in the Ethics Committee, all these charges made about him all these years.  Do you think that‘s just smoke; it‘s not fire? 

(CROSSTALK)

CONAWAY:  I believe...

(CROSSTALK)

MATTHEWS:  It‘s all smoke? 

CONAWAY:  Well, they have admonished him and they have dealt with it. 

Let‘s move on. 

(CROSSTALK)

BELL:  Well, they haven‘t dealt with this particular count, Chris. 

(CROSSTALK)

CONAWAY:  Well, this count...

(CROSSTALK)

MATTHEWS:  This is new count and this is a local count down in Texas. 

This has nothing to do with the Jack Abramoff and all that stuff.

(CROSSTALK)

MATTHEWS:  Does that other series of questions raised bother you about Jack Abramoff, his former aide, and all that trips and everything.?

(CROSSTALK)

CONAWAY:  Yes, I don‘t know enough about those facts.  I know that Tom has wanted the Ethics Committee to deal with those, the trips.

MATTHEWS:  Yes. 

CONAWAY:  He has gotten all the information available to them, but the Democrats have delayed organizing the Ethics Committee and won‘t give him a fair hearing on that as well.  So...

MATTHEWS:  Do you think it‘s a good law that says that corporations should not be allowed to give money to the legislative races in Texas?  Is that a good law?

CONAWAY:  Yes.  It‘s a good law on the federal level.  It‘s a good law...

(CROSSTALK)

MATTHEWS:  Is it generally enforced or is this an exceptional case of selective enforcement, do you think ? 

(CROSSTALK)

CONAWAY:  No, I think...

(CROSSTALK)

MATTHEWS:  Do you think, in other words, the prosecutor found a case that normally happens and he decided to nail him?

(CROSSTALK)

CONAWAY:  I‘m confident it‘s enforced, and that this instance, where the money went from one political action committee to another political action committee, that is done all the time.  And that was within the rules within Texas, and that no corporations have been indicted.  No union has been indicted.  So...

(CROSSTALK)

MATTHEWS:  The people that watching this are trying to understand.  If a corporation is not allowed to help any candidate for either office in either—any legislative office in Texas and it‘s found out that they sent some money to Washington and it came back in another form, another check, identified and earmarked for these various candidates, you would consider that breaking the law, wouldn‘t you? 

CONAWAY:  It‘s bookkeeping.  And Tom DeLay didn‘t do the bookkeeping.  There are things that those political action committees can use the money for.  And there‘s—money in fungible.  It all goes in one bank account.

(CROSSTALK)

MATTHEWS:  If somebody ever taped him or said, the congressman said take that money to Washington, you can give to it them and they will give it back to us in hard money and use it for these three candidates and list those three, that would be breaking the law? 

CONAWAY:  I don‘t know the law...

(CROSSTALK)

MATTHEWS:  Would you that call that breaking the law?

CONAWAY:  I would call—certainly the spirit of the law.  I don‘t know if it actually breaks the law or not.  But...

(CROSSTALK)

MATTHEWS:  Well, why wouldn‘t it break the law if you clearly organized or...

(CROSSTALK)

CONAWAY:  I don‘t know that. 

(CROSSTALK)

MATTHEWS:  ... the scheme? 

CONAWAY:  I don‘t know that that scheme, as you call it...

(CROSSTALK)

MATTHEWS:  NO, I‘m not.  The prosecutor calls it a scheme.

CONAWAY:  Well, I don‘t think it‘s—you‘re talking about a state election.

MATTHEWS:  Yes, a state election.

(CROSSTALK)

MATTHEWS:  You‘re not allowed to—in your state, you are not allowed to give a corporate dollar to a state legislative candidate. 

(CROSSTALK)

CONAWAY:  According to the lawyers on our side, the money that went from...

(CROSSTALK)

MATTHEWS:  Right.  Right. 

CONAWAY:  ... was done properly and within the rules in Texas.  And Ronnie Earle has said, because Tom DeLay knew about it ahead of time, which he didn‘t, according to Tom, that that is somehow a conspiracy. 

(CROSSTALK)

MATTHEWS:  Yes, the indictment reads very simply.  It‘s a very simple indictment.  I‘m not a lawyer, Congressman.

(CROSSTALK)

MATTHEWS:  All it says is that he got these guys to give the money to the RNC, the Republican National Committee.  Then he got the RNC to give it back to these legislative candidates.  And that constituted a scheme, a conspiracy, a crime. 

(CROSSTALK)

MATTHEWS:  That‘s what the prosecutor says.

CONAWAY:  Well, I think there was an interim step from—there were two PACs involved, as I understand it.  The money came in to one PAC, from that PAC to another PAC, from that PAC then to the candidates, is the way I understand it (INAUDIBLE) And we‘re told by the lawyers in Texas that is not against the law. 

MATTHEWS:  OK.

What do you think?  Congressman Bell, do you recognize this law that says you can‘t give corporate money to legislative candidates in Texas? 

BELL:  Well, everybody knows that.  And that‘s why they did it in the first place.  They didn‘t have enough money that had contributed by individuals and they wanted to influence the outcome of those statehouse races.  So the only way...

(CROSSTALK)

MATTHEWS:  You‘re speculating here, Congressman, right?  You don‘t know.

BELL:  No.  That‘s what the reports—and if you look at how things were filed, that‘s what they—they just didn‘t think anyone would ever follow the money trial because of the different reports that were being filed.  And everyone wants to make it very complex.  But, at the end of the day, it‘s not very difficult to connect the dots. 

(CROSSTALK)

MATTHEWS:  Do you think Republicans would be right to say you can‘t beat Tom DeLay at the game of politics and therefore you have to go find these prosecutors who are willing to bring him down? 

BELL:  No.  We just—all I was saying that enough is enough. 

If somebody beats me fair and square, that‘s fine, whether it‘s sports or politics.  I will accept it, grudgingly, but I will accept it.  But in this particular case, the bottom line is, Tom DeLay cheated in order win and now the grand jury has said he is going to be held accountable for his conduct. 

MATTHEWS:  And before that, he cut the heart out of your congressional district, right? 

BELL:  Well, he cut the heart out of a lot of congressional districts.  And that‘s big-boy politics.  And if he did that fairly and squarely, I think we would have all been willing to accept the result and move on down the road.  But that‘s not the way it came about.  He rigged the game before it started. 

MATTHEWS:  How did he break the law in knocking you out of Congress?

BELL:  He didn‘t break—I have never claimed that he broke the law in knocking me out of Congress. 

They engaged in an unprecedented redistricting effort, but this scheme was all part of that.  He wanted his legislature in place because he knew how unpopular mid-decade redistricting was going to be.  And that‘s why they needed to be infusing all of these campaigns with large amounts of money. 

MATTHEWS:  So, he was putting his ducks in line to get the redistricting done his way? 

BELL:  No question about it. 

MATTHEWS:  OK, thank you very much, Mike Conaway, who is—you‘re Mike Conaway.  Thank you. 

(CROSSTALK)

MATTHEWS:  Former Congressman Chris Bell, who is running for the governorship down there. 

Coming up, much more on Tom DeLay‘s indictment.  DeLay says the prosecutor in the case, Ronnie Earle, is a partisan fanatic.  We will take a closer look at Earle and the other cases he has prosecuted, most of them Democrats, actually—or most of them Republicans—most of them Democrats.

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Coming up, Tom DeLay says that prosecutor Ronnie Earle is a partisan zealot.  We will take a closer look at Earle and some of the other indictments he‘s brought when HARDBALL returns.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RONNIE EARLE, TRAVIS COUNTY  DISTRICT ATTORNEY:  Colyandro and Ellis have both previously been indicted for both conspiracy to violate the election code and money laundering.  The indictment charges DeLay with conspiring with Ellis and Colyandro to violate the Texas election code by contributing to corporate money to candidates for the Texas legislature.

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  That‘s Travis County District Attorney, DA, Ronnie Earle, a Democrat—let‘s point that out—announcing the indictment of House Republican Leader Tom DeLay, a Republican.  DeLay has called Earle a partisan fanatic.  He‘s had other words for him to use we will get to later.

For more on Earle‘s career, we‘re joined by Cragg Hines of “The Houston Chronicle,” who knows all about this. 

Cragg, this is so familiar to Texas politics, isn‘t it?

CRAGG HINES, “THE HOUSTON CHRONICLE”:  Yes. 

MATTHEWS:  A Democrat vs. Republican.  Everything is bitter partisanship, even the law.

HINES:  Well, in recent years, it used to be Democrat against Democrat, but now it‘s Democrat against Republican. 

MATTHEWS:  Are you surprised that the prosecutor in that case has been

it looks to me like he was bird-dogging this guy.  This is a hard case to come across accidentally. 

HINES:  Well, but it was at the center of how the Republicans operated, the allegation is.  So, it wasn‘t like he had to be looking very hard to find it. 

MATTHEWS:  This is part of the Republicans‘ successful effort of converting a longtime, 150-year Texas Democratic legislature into a Republican legislature, so that they could change the districts for Congress and get a much larger Republicans representation in Congress. 

HINES:  Yes, which was DeLay‘s purpose, because a lot of other leading Republicans didn‘t want to go back into redistricting in the middle of—between censuses. 

MATTHEWS:  Which is usually done every 10 years.

HINES:  Yes. 

MATTHEWS:  And it takes effect ended in a year that ends in a two, right, 1992, 2002?

HINES:  Yes. 

MATTHEWS:  And he said, no, let‘s not wait for the next turnaround of the government.  Let‘s go in and change that baby with lots of money in these campaigns. 

HINES:  Yes.  And he got his true believers in the legislature, House and Senate, to override basically the governor, lieutenant governor. 

MATTHEWS:  Pretend you‘re in the press box, which you are in a political sense, Cragg.  How good is Ronnie Earle as getting indictments, at getting prosecutions successful to conviction? 

HINES:  Little fish, he‘s fine.  He has a good record.  Big fish, Kay Bailey Hutchison, Jim Mattox, a Republican, a Democrat, not too good. 

MATTHEWS:  Here is a sampling for your review.  I know you know these cases of past prosecutions brought by this guy, Ronnie Earle, who has just indicted Tom DeLay.

In 1994, Republican Senator Kay Bailey Hutchison was acquitted of official misconduct and records tampering after Earle dropped the case he had brought.  Former State Representatives Betty and Lane Denton, both Democrats, were convicted in 1995, Betty for false campaign finance reports and Lane for theft and improperly funneling money to a Denton company. 

In 1992, Texas House Speaker Gib Lewis, a Democrat from Fort Worth, pled no contest to failing to disclose a business investment.  He retired that year.  In 1985, Democratic Attorney General Jim Mattox was acquitted on felony bribery charges.  State Representative Mike Martin, a Republican, pled guilty in 1982 to perjury after he lied in denying that he shot himself to gain publicity.  You got a lot of color down there in Texas. 

State Treasurer Warren Harding—there‘s a name—a Democrat in this case, pled no contest to official misconduct and gave up his reelection bid in 1982.  And Texas Supreme Court Justice  Don Yarbrough, another famous Texas name, a Democrat, was sentenced to five years for lying to a grand jury and forgery.  He gave up his seat.

It seems like, a lot of these cases, they don‘t end up in conviction by a jury.  They end up the guy giving up or quitting or saying, I can‘t take it anymore. 

HINES:  Well, That‘s how it works.  I mean, you know that.

And you have to remember that DeLay and Earle are both driven by what they think to be this moral sort of righteousness almost, coming from different places, of course.  But that‘s what sort of motivates them both. 

(CROSSTALK)

MATTHEWS:  What are your betting—can you bet now as a straight journalist on this simple question? 

(CROSSTALK)

HINES:  I‘m a columnist.  I have opinions. 

MATTHEWS:  Oh, you can have opinions.

MATTHEWS:  Will this go to trial or will Earle drop it because DeLay is giving uppercuts, or will he go all the way to a jury, this case?  That would be the fair thing to happen.

(CROSSTALK)

HINES:  I would think it would get to trial.  Whether it gets to beyond that, I don‘t know. 

MATTHEWS:  You don‘t think it could just be something to pressure him in? 

HINES:  Could be. 

MATTHEWS:  He won‘t quit though, will he, Tom DeLay?  He will never quit.

HINES:  I don‘t see that. 

MATTHEWS:  He is staying in House?  Will get reelected?  Will this affect his reelection? 

HINES:  It could, because, I mean, he‘s at, what, 55 percent. 

MATTHEWS:  Yes, it‘s close. 

(CROSSTALK)

MATTHEWS:  It‘s only 10 points.

HINES:  So, a 5.1 turnaround. 

MATTHEWS:  This could cost him five points maybe. 

HINES:  We have to see. 

MATTHEWS:  Or it could toughen up the Republicans.  But in the sixth year of a Republican...

(CROSSTALK)

HINES:  He is playing close attention to his district right now. 

MATTHEWS:  So, you would expect that Tom DeLay‘s way of responding to this is get lawyered up and spend his time at home? 

HINES:  Absolutely. 

MATTHEWS:  All right, Cragg Hines, you‘re right.  Thank you, “The Houston Chronicle,” a former colleague of mine.  Thank you. 

When we return, White House reaction to Tom DeLay‘s indictment today. 

What does it mean for President Bush? 

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Now let‘s get reaction from the White House to Tom DeLay‘s indictment today on charges of criminal conspiracy. 

MSNBC‘s chief Washington correspondent, Norah O‘Donnell, is with us. 

Norah, he has been charged with money laundering involving a Texas—a set of Texas legislative races down there.  He had to quit his leadership post today.  And he will probably be out of action for a year perhaps in terms of leadership. 

What does it mean to the White House? 

NORAH O‘DONNELL, NBC CHIEF WASHINGTON CORRESPONDENT:  Well, today, the White House said that the president still considers Tom DeLay a friend and an effective leader in Congress, even though Tom DeLay won‘t be maintaining any of his leadership roles. 

Scott McClellan also saying that DeLay is a good ally, a leader who we have worked with closely in the past who can get things done for the American people.  So, for now, the White House is standing by Tom DeLay.  But, certainly, today at the White House briefing, the president‘s press secretary, Scott McClellan, got some tough questions. 

In particular, one reporter asked Scott McClellan whether the president is concerned about a stink of corruption surrounding the Republican Party, specifically referring to the investigation into the sale of stock of HCA by the Senate majority leader, Bill Frist, questions about Jack Abramoff, a Republican lobbyist with close ties to Tom DeLay, and other charges. 

The White House said no and sort of rejected that.  But, clearly, there are many political analysts and other observers who are saying this is an issue for the president, who is facing the lowest approval ratings of his presidency and needs to get a Congress and a Republican Party to move forward on his agenda, when there‘s a lot on the plate. 

MATTHEWS:  Yes.  It‘s a question, Norah, I think you probably have to ponder as you cover up there, as well as everywhere else, whether a man without a gavel has a hammer. 

(LAUGHTER)

O‘DONNELL:  And the man without his two whips in his office, yes.

I don‘t—listen, DeLay may be down, but he is certainly not out.  And today when he emerged from the Republican caucus with many other Republicans, the word from the speaker of House and on down was, this is temporary, the people that are taking his spot, including Roy Blunt, who will become the new House majority leader.  He says, this is temporary.  We expect Tom DeLay to be back. 

So, they‘re trying to close ranks behind this and say, he will be back.  He will beat this, Tom DeLay calling it a political witch-hunt, saying that the charges are outrageous and untrue and that he has nothing to hide. 

Nevertheless, it does become a problem for the Republican Party, and they lose the man that is so good at rallying them together and arm-twisting and pushing them on very difficult votes.  I mean, it‘s probably a good thing that Social Security won‘t happen this year.  They would have needed Tom DeLay in order to get it done. 

MATTHEWS:  Well thought.  He also has to face that Abramoff case that keeps percolating outside there, too, involving his former aide.  That one could get dicey as well. 

Anyway, thank you very much, Norah O‘Donnell, our chief correspondent in Washington for MSNBC. 

When we return, we are going to get reaction from Capitol Hill and talk to Republican Congressman Tom Davis, Chris Shays, who is a Republican, and Democratic Congressman Gene Taylor.  He‘s a conservative Democrat.

And you‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

(NEWS BREAK)

MATTHEWS:  Welcome back to HARDBALL.

We‘re continuing to discuss the indictment of House Majority Leader Tom DeLay.  Republican Congressman Chris Shays of Connecticut is a member of both the Government Reform Committee and Homeland Security Committee. 

And Republican Congressman Tom Davis of Virginia is chairman of the Government Reform Committee.  That‘s the big job.

Let me go to Tom Davis fist.

You are a member of the leadership, in effect.  Is the leadership going to stand behind Tom DeLay? 

REP. TOM DAVIS ®, VIRGINIA:  Well, I mean the courts will make the ultimate call on this, but he has taken a leave of absence as the majority leader.  He‘s been replaced on an interim basis by Roy Blunt.  And we will have to wait to see what happens in Texas. 

MATTHEWS:  Is this a real charge or a Mickey Mouse charge? 

DAVIS:  I think that remains to be seen.

Obviously, Ronnie Earle, the prosecutor down there, indicted Kay Bailey Hutchison before and dropped the charges before trial.  So, that really remains to be seen at this point.  It‘s a charge that is not illegal in a lot of states, in terms of the way the money went.  But, under Texas law, if they can prove it, they‘re going to have a case, but a long way to go on this. 

MATTHEWS:  Tom, you were chairman of your campaign committee for your party.  And you know the law.  Here is a case where a guy, your leader, Tom DeLay, was charged with encouraging corporations in Texas to give to the RNC, the Republican National Committee, corporate transactions, which are illegal to give directly to Texas legislative candidates.

And then, as part of this sort of scheme, the prosecutor called it, the RNC, the Republican National Committee, then funneled the same amount of money directly to three candidates for the legislature at the direct behest and order of Tom DeLay.  Is that a crime? 

DAVIS:  It just depends if you can prove intent. 

You have got to remember, the RNC had the ability to do whatever they wanted to with that money under the law.  He is entitled to make a recommendation.  So, it will really be up to a jury sitting there to decide if there‘s a direct tie-in or if these were in fact independent transactions.  Tom is entitled...

MATTHEWS:  You know, he is allowed to say, I have cooked up—I have got almost $200,000 from my corporate folks down here in Texas, say to the RNC, OK, give the money back to these people down there running for office at the state level?  As long as that is advice, it‘s legal? 

DAVIS:  Well, Chris, I can ask the RNC to give to anybody I want as well.  And I can raise money for the RNC.  They don‘t have to pay attention.  You are going to have to show dates and everything else. 

So, it‘s a tougher case to prove at this point, because, under the law, the RNC could do whatever they wanted to with that money.  They were not beholden to Tom DeLay.  The fact that they took his advice is not necessarily a crime. 

MATTHEWS:  So, the evidence could be exactly the same as the prosecutor presents it, but it is not a crime because what?

DAVIS:  You have got to show that the intent there was to funnel it, or they could be in fact independent transactions in there.  You have mixed cases on this.

MATTHEWS:  Let me go to Chris Shays up from Connecticut. 

Chris Shays, Congressman, you were very tough yesterday on Michael Brown.  This is not a good week for the Republican Party, to have this and then to have Senator Frist being probed right now for a stock sale.  What is going on? 

REP. CHRISTOPHER SHAYS ®, CONNECTICUT:  Well, better now than a year from now, I guess. 

You know, what is going on is that people need to make sure they play by the rules, that, when they get close to the edge, they give people excuses and maybe very legitimate ones to be critical of them.  So, time will sort this out.  But the important thing, I think, is, our rules are clear.  If you‘re an indicted leader, you need to step down from your leadership post.  Tom did what our rules require him to do. 

MATTHEWS:  Is there something you know about Tom DeLay that we don‘t?  His press is not great.  He is called the Hammer.  He is called a tough guy.  He pushes people around to get his way to keep the House Republican caucus together.  Is that the sum of him?  Is that what he is or is he nicer than that or better than that or different than that? 

SHAYS:  Who are you asking? 

MATTHEWS:  You, Congressman Chris Shays. 

SHAYS:  I think Tom—if I ever had a knife in me, it would be in my belly and not my back. 

MATTHEWS:  So, he is direct about it? 

SHAYS:  He is direct, absolutely. 

MATTHEWS:  Let me go to Congressman Tom Davis. 

The Republican Party has enjoyed majority rule on Capitol Hill since the big revolution of 1994.  Is it in jeopardy because of this case? 

DAVIS:  No, not because of this case.  It would take a series of things. 

I think the thing that, at this point, puts most of our—that would put seats in play, if anything, is the six-year itch, the fact this is the sixth year of a president‘s term.  In midterms, the party in power traditionally loses.

MATTHEWS:  That‘s true.

DAVIS:  You have gas prices.  You have got a war in Iraq.

I think that plays more than the corruption issues, but these clearly don‘t help. 

MATTHEWS:  The war in Iraq, is it for—is it helping or not helping the Republican majority in Congress right now? 

DAVIS:  It doesn‘t help.  I think an incumbency doesn‘t help anybody at this point. 

Even in most governors, whether they are Republicans or Democrats, you will find a lot of them will—what we call their numbers upside-down, higher unfavorable than favorable. 

MATTHEWS:  Right. 

(CROSSTALK)

DAVIS:  This is not a pretty political environment for incumbents. 

MATTHEWS:  Was the president‘s and the administration‘s handling of Katrina, from top to bottom, helpful or not helpful to the Republicans keeping power? 

DAVIS:  Well, it was not helpful at all. 

Usually, when you‘re in power and you get a storm or something like that, you have an opportunity to have your Giuliani moment.  That certainly didn‘t happen here.  If anything, it went the other way. 

It‘s one of the reasons we‘re looking at all of the things that went wrong in the initial response to Katrina.  Now, there‘s a long way to go on this issue, to play it out.

But, clearly, in the early hours, this was—it turned out very badly for everybody involved. 

MATTHEWS:  Thank you, Congressman. 

Stay with us.  We are going to look right now.

Both of you, Congressmen, Congressman Davis and Congressman Shays, took part in a hearing yesterday with former FEMA Director Michael Brown. 

Here is a very heated exchange between Mr. Brown and Congressman Shays.  Let‘s take a look.

(BEGIN VIDEO CLIP)

SHAYS:  If someone like Rudy Giuliani had been in your position instead of you, I think he would have done things differently and I think his answers to us would have been very different. 

MICHAEL BROWN, FORMER FEDERAL EMERGENCY MANAGEMENT AGENCY DIRECTOR:  I

never thought I‘d sit here and be berated because I‘m not Rudy Giuliani.

SHAYS:  I want to know how you coordinated the evacuation. 

BROWN:  By urging the governor and the mayor to order the mandatory evacuation. 

SHAYS:  And that‘s coordinating? 

BROWN:  What would you like for me to do, Congressman? 

SHAYS:  And that‘s why I‘m happy you left, because that kind of, you know, look in the lights like a deer tells me that you weren‘t capable to do the job.

BROWN:  I guess you want me to be this superhero that is going to step in there and suddenly take everybody out of New Orleans. 

SHAYS:  No, what I wanted you to do was do your job of coordinating. 

(END VIDEO CLIP)

MATTHEWS:  Congressman Shays, was that—do you think you were fair to that fellow, to Michael Brown? 

SHAYS:  Well, first off, he can‘t be the scapegoat.  I made it very clear in my questioning that I believe that 80 to 90 percent of the job is local—they‘re—and state.  They are the first-responders. 

I made it very clear, I thought the mayor and the governor were totally incompetent.  But what I didn‘t like hearing from my FEMA director was, when he saw that everything had fallen apart, he did nothing.  He basically felt he didn‘t have the power and he chose not to exercise power. 

MATTHEWS:  Right. 

SHAYS:  He needed to step in.  He needed to take action.  He needed to free those people from the Superdome.  He needed to free those folks in Charity Hospital and University Hospital.  He did a terrible job. 

MATTHEWS:  But don‘t we have a system of government in this country, which is a federal system, which leaves most of the authority at the local and the state level?  Governor Blanco did not ask for the big aid she needed from the federal government in terms of troops, federal, the National Guard, in terms of the real effort to rescue people. 

She asked for a few things, like counseling and some of this after-the-matter sorts of things.  She didn‘t really come through and make the direct request for the kind of aid that the FEMA people were capable of giving.  Isn‘t it more her fault than Michael Brown? 

(CROSSTALK)

SHAYS:  Well, when she comes before us, we will be asking those questions.  I think her performance was pathetic. 

And when you had the mayor basically say—they asked, what would you do differently, he said he would have yelled louder.  No, what he should have done is make sure people weren‘t sent to the Superdome without food, without water, without police protection and without a way to evacuate. 

MATTHEWS:  Are you going to call the president up and ask and decide how well he did his job? 

SHAYS:  Well, I think we are going to know a lot about the president and his people by the time we are done.

Tom Davis is doing a super job in running this hearing. 

MATTHEWS:  Right. 

SHAYS:  He is not being partisan.  He is going where the facts lead us.  And, in the end, whether or not the Democrats participate, we are going to get some very good answers. 

And, let me just say, it‘s all out in the open.  There‘s no closed hearings here.  People can see what we‘re doing. 

MATTHEWS:  Congressman Davis, I want to ask you just to follow up on that. 

DAVIS:  Chris...

(CROSSTALK)

MATTHEWS:  We‘re always concerned about Katrina and the aftermath here.  We covered a lot of it, like everyone else on television.  Do you think we are ever going to get a complete report on what happened and how things seem to be delayed in getting things done by all parties? 

DAVIS:  That is our goal. 

And I think you will find that there‘s blame, you know, to go around. 

But what you have to remember is, this was the most serious storm ever to hit the Gulf Coast. 

MATTHEWS:  Right. 

DAVIS:  You could not expect the state and local governments to have the resources to respond. 

The federal government, you could see by the size of this storm we were going to have to be heavily involved.  And we sat back and waited.  And, you know, in this case, time cost lives.  It caused a lot of damage. 

And there‘s a huge federal culpability in this. 

MATTHEWS:  You know, the federal government seems to be taking most of the heat.  Do you think it should have in the future most of the power? 

DAVIS:  I think it is going to depend on...

MATTHEWS:  Congressman Davis.

DAVIS:  It‘s going to depend on the storm. 

I think you always go with local officials where you can.  But the size of this storm was so overwhelming that, even if everything had gone right, it would have still been messy.  But it didn‘t go right. 

MATTHEWS:  Yes. 

DAVIS:  A lot of things went wrong. 

And the federal government had an opportunity to step in earlier than they did, and we did not. 

MATTHEWS:  You know who looked good?  The Coast Guard looked great.  They were—is that because they didn‘t have to work with any government level?  They just did their job? 

Congressmen, both of you. 

(CROSSTALK)

DAVIS:  The weather bureau—the Weather Service looked great, too. 

They hit this one right on. 

MATTHEWS:  Yes. 

DAVIS:  But everybody else, I think, as you look at this, are going to find mistakes were made across the line. 

MATTHEWS:  OK. 

DAVIS:  Some of them are systematic.  Some of them were just human errors. 

MATTHEWS:  OK, Congressman Davis, thank you very much.

Congressman Chris Shays of Connecticut as well. 

When we return, we will go back to Tom DeLay, the indictment question, and talk about the political fallout—it could be big—from Tom DeLay‘s indictment today with “Newsweek”‘s investigative reporter Michael Isikoff and “TIME” magazine‘s Karen Tumulty.

This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Coming up, Tom DeLay says he will temporarily step aside as House majority leader following his indictment on conspiracy charges.  Is this the end of his political career?

HARDBALL returns after this.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

Today, Republican leader Tom DeLay stood firm in the face of an indictment for criminal conspiracy.  He called the district attorney who brought the charges, Ronnie Earle, a party fanatic and denied the charges against him.  So, who is the district attorney who brought the charges and what is the political fallout of this indictment, guilty or innocent? 

I‘m with “TIME” magazine national political correspondent Michael Isikoff and he‘s—and “Newsweek”‘s—he‘s “Newsweek”‘s investigative reporter.  I‘m also with Karen Tumulty.

Thank you, dear.  Thank you. 

Michael, whatever happens here, this jury will finally be seated, probably a year from now.  Tom DeLay has been indicted an a criminal conspiracy matter involving a felony charge of laundering money, taking money from corporations in Texas, so he can take it through the RNC back to these candidates he preferred in state legislative races.  Does it matter whether he is innocent or guilty politically right now? 

MICHAEL ISIKOFF, “NEWSWEEK”:  Well, in the short term, politically, he has had to resign his position as majority leader.  Of course, it is going to matter a huge amount whether he keeps a seat in Congress and can come back as majority leader.

MATTHEWS:  Can he get a trial by jury before the next election, so he could prove his innocence, in effect?

(CROSSTALK)

MATTHEWS:  Escape guilt here?

ISIKOFF:  Hard—there‘s no sure thing.  He probably can get a jury trial before next year‘s election, right?

Now, then he also—whether he is going to be able to get that before he has to make a decision or Republicans in Texas make a decision whether he should run for reelection or not is another question. 

MATTHEWS:  Right. 

ISIKOFF:  I mean, does he want to run for reelection, this hanging over him, with a trial upcoming.  That‘s big question. 

MATTHEWS:  Yes. 

Karen, you know that, just because you‘re a leader in Congress doesn‘t mean you have an easy seat.  A lot of guys had tough seats.  Sam Rayburn had a tough seat.  Tom Foley lost his seat.  It‘s quite easy to lose a seat; 55-45, is that too close a margin for Tom DeLay to have something like this hit him?

(CROSSTALK)

KAREN TUMULTY, NATIONAL POLITICAL CORRESPONDENT, “TIME”:  That was the margin he won by last time.  And it shocked people how close that margin was in Texas, where Republicans routinely win with well over 60 percent, and especially Republicans as powerful and with the sort of resources that Tom DeLay has, for both marshaling powerful political interest groups and raising a lot of money. 

(CROSSTALK)

MATTHEWS:  Mike, why are the Democrats hiding today?  They‘re nowhere. 

It‘s very hard to get anybody to come on the show tonight.

(CROSSTALK)

MATTHEWS:  Have they gotten orders to cool it and let the Republicans kill themselves?

ISIKOFF:  I just think let the charges speak for themselves.  You don‘t need Democratic members piling on at this point.  You have got headlines, DeLay indicted.  That will be the headline in the papers tomorrow.

MATTHEWS:  And they want it to look like it‘s a pure judicial event.

ISIKOFF:  Well, sure.  Yes.  Yes. 

MATTHEWS:  They don‘t want Ronnie Earle surrounded by a team of Democrats saying, go on.  Keep going.  Right on.

(CROSSTALK)

TUMULTY:  Right. 

(CROSSTALK)

TUMULTY:  Especially when Tom DeLay, the first thing he did coming out of the box, was to come out and call Ronnie Earle a partisan hack.  So, they want to take as much of this tinge of partisanship...  

MATTHEWS:  Who called who a partisan hack?

TUMULTY:  Tom DeLay came right and essentially said this was purely partisan motivation.

MATTHEWS:  Is there anybody independent in Texas that is not a partisan bitter Democrat or partisan bitter Republican? 

(LAUGHTER)

(CROSSTALK)

TUMULTY:  Well, hey, Ronnie Earle has prosecuted 15 public officials in Texas; 12 of them were Democrats. 

MATTHEWS:  So, he is not partisan? 

TUMULTY:  Well, he is certainly a Democrat and a staunch Democrat.  But, again, his record isn‘t as partisan as the Republicans would like to make out. 

(CROSSTALK)

MATTHEWS:  We are going to back and talk about that bigger case, that big 800-pound gorilla sitting out there, the Abramoff case that is floating down the tracks here.

ISIKOFF:  Yes.  Right. 

MATTHEWS:  I‘m mixing my metaphors, but doesn‘t that pose a much bigger threat, perhaps, to the leadership? 

We will be right back with Mike Isikoff of “Newsweek” and Katrina of

“TIME.”

And a reminder, the political debate is ongoing on Hardblogger, our political blog Web site.  Follow all the action on the hottest political stories each day.  Just go to our Web site, HARDBALL.MSNBC.com. 

HARDBALL will be right back. 

(COMMERCIAL BREAK)

MATTHEWS:  We are back with Mike Isikoff from “Newsweek” and Karen Tumulty of “TIME” magazine.

Macy‘s is talking to Gimbels here tonight. 

And I want to ask if you sense that this is a—on the Category 5 scale.

Mike.

ISIKOFF:  The DeLay indictment?

MATTHEWS:  Yes. 

ISIKOFF:  It‘s pretty big, somewhere between a high three and a four, I would think.

MATTHEWS:  In hurricane language. 

Karen.

(CROSSTALK)

TUMULTY:  I think it‘s Katrina.  It‘s the one that people weren‘t preparing for.  This is the one that everybody thought was going to blow over, and it didn‘t. 

MATTHEWS:  The question of money-laundering and that. 

What about the Abramoff case, the one involving his very big-time lobbyist former aide?

ISIKOFF:  Well, that one seems to be moving along at a rather rapid pace and widening. 

I mean, we had the extraordinary development last week of the arrest of a senior OMB official, White House aide David Safavian. 

MATTHEWS:  From the executive office of the president.

ISIKOFF:  Yes.  Yes, who was arrested by the FBI.

MATTHEWS:  What for?

ISIKOFF:  For lying to the FBI about his dealings with Abramoff, actually.  Abramoff was using him.  At the time, he was at the General Services Administration.  Abramoff was trying to lease property from the General Services Administration.  He invites Safavian on this big golfing junket to Scotland, a $100,000 thing.

MATTHEWS:  What would be the big charge against a former aide to Tom DeLay that might bring some action, legal action against Tom DeLay himself? 

(CROSSTALK)

MATTHEWS:  Where is he exposed?

ISIKOFF:  There‘s no—there‘s no direct exposure in the stuff we have seen about Abramoff. 

I think the threat is that, if Abramoff and/or his former associate Michael Scanlon—Scanlon was DeLay‘s press secretary.  And he‘s highly exposed in this.  If either one of them flips, tries to cut a deal to save themselves, who is the first person they might give up?  And Tom DeLay is the big fish out there. 

(CROSSTALK)

MATTHEWS:  You know Scanlon, don‘t you?

ISIKOFF:  I know—yes, I have had dealings with him.

MATTHEWS:  He was a source for you, wasn‘t he? 

ISIKOFF:  Actually, no.  He was not.  No.  But I do know him. 

(CROSSTALK)

MATTHEWS:  He was a source for me.

(LAUGHTER)

(CROSSTALK)

ISIKOFF:  Yes, right.

TUMULTY:  There are a number of...

(CROSSTALK)

MATTHEWS:  He‘s a press guy. 

(CROSSTALK)

TUMULTY:  But there are a number of Tom DeLay aides who, upon leaving, had very close relationships with Abramoff when they worked for Tom DeLay, upon leaving the office, went the into business arrangements with Jack Abramoff. 

And if there‘s going to be any connection, I think that that‘s where the hottest speculation is. 

MATTHEWS:  Are the House members who are rallying behind Tom DeLay right now aware of these other pending problems for him? 

TUMULTY:  Tom DeLay has been going around and spent much of the summer privately reassuring everyone that this was all going to go away.

And I know I talked to a number of Republican members who were feeling a lot better about this in August.  They‘re not feeling that way right now.  And this is the middle of candidate recruitment season.  And a lot people may be thinking about running against these Republicans.

MATTHEWS:  Is this as bad as the House bank scandal, which really wasn‘t criminal, but it looked bad? 

Mike. 

(CROSSTALK)

ISIKOFF:  It certainly has the potential to get a lot worse.  I mean, the Abramoff investigation, it goes off on so many tentacles.  You have all these golfing...

(CROSSTALK)

MATTHEWS:  OK. 

ISIKOFF:  ... for other members of Congress. 

MATTHEWS:  Well, more are coming, maybe.

ISIKOFF:  And they all could get nicked by this, yes.

MATTHEWS:  Anyway, thank you, Mike Isikoff of “Newsweek” and Karen Tumulty of “TIME.” 

Join us again tomorrow night at 5:00 and 7:00 Eastern for more

HARDBALL.

Right now, it‘s time for “THE ABRAMS REPORT” with Dan Abrams—Dan. 

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