updated 10/27/2005 1:13:56 PM ET 2005-10-27T17:13:56

Guests: David Boies, Brad Blakeman, Howard Fineman, Walter Pincus, Tucker Carlson, Bob Shrum, Jim Nichols, Mike Allen

CHRIS MATTHEWS, HOST:  Dragnet—the FBI closes in on the bad guys.  Agents hit Joe Wilson‘s neighborhood asking if the folks next door knew that Ms. Wilson was an undercover CIA agent—they didn‘t.  Even social friends living a few yards away had no idea their neighbor was a courageous spy for her country; no idea until, quote, “high administration officials,” closed quote, exposed her to America‘s enemies. 

That is the mystery which special prosecutor Patrick Fitzgerald has been charged to solve in a case that could crack open at any hour. 

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews. 

The federal grand jury investigating the CIA leak met with prosecutor Patrick Fitzgerald today and a public announcement could come as early as tomorrow or Friday. 

Will top White House advisers be indicted?  And will we know who will be charged in the case of the leak of Valerie Wilson‘s CIA identity?

In the 11th hour, the CIA leak investigation—it‘s getting deeper and deeper, and higher and higher. 

Hardball‘s David Shuster spent the day at the federal courthouse and has more information—David? 

DAVID SHUSTER, HARDBALL CORRESPONDENT:  Well, Chris, even as the waiting continues, there were indications today here at the federal courthouse that action or announcements could come at any time. 

(BEGIN VIDEOTAPE)

SHUSTER (voice-over):  Arriving at the federal courthouse carrying large legal briefcases, prosecutor Patrick Fitzgerald headed to the front door and walked straight to the grand jury. 

The panel was in session until mid-afternoon, hearing only from Fitzgerald and his top investigator—nobody else. 

SOL WISENBERG, FMR. DEPUTY INDEPENDENT COUNSEL:  There has been a lot of investigative activity even in the last week.  So it wouldn‘t be surprising at all to have an agent, an FBI agent, giving testimony to the grand jury summarizing those investigations. 

SHUSTER:  This week, mid-level staffers at the White House said they received calls from Fitzgerald‘s team asking about Karl Rove‘s contacts with reporters. 

“Roll Call” newspaper reported Fitzgerald was seen going into the office of Karl Rove‘s lawyer, Bob Luskin. 

And on Monday night, investigators showed up near the home of administration critic Joe Wilson and his wife. 

One neighbor in an interview on “The Situation” with Tucker Carlson said the main question was whether anybody knew Ms. Wilson worked at the CIA before it was revealed publicly. 

MARC LEFKOWITZ, VALERIE WILSON‘S NEIGHBOR:  I went outside and they asked me if I knew what Valerie did, and I said no.  I said, you know, we‘ve had dinner with them and as far as I knew, she was a consultant and she was a mother of two. 

SHUSTER:  The basic issue prosecutor Fitzgerald has been trying to resolve is whether any government officials broke any laws in how they handled classified information, and secondly, whether anybody tried to thwart the investigation. 

As the grand jury comes closer to possible decisions, fears are growing among Republicans about the fate of Karl Rove and Scooter Libby and the potential fallout for others. 

Libby‘s lawyer has acknowledged the vice president‘s chief of staff testified he learned about Valerie Plame from a reporter.  But the reporter denied that.  And notes revealed this week by the “New York Times” indicate Libby‘s source was actually Vice President Cheney. 

JONATHAN TURLEY, GEORGE WASHINGTON LAW SCHOOL:  If Libby engaged in a conspiracy to reveal the name of this operative, or if he engaged in obstruction to try to prevent the disclosure of the true facts, the vice president is in considerable jeopardy. 

SHUSTER:  Lawyers familiar with the case expect Prosecutor Fitzgerald to publicly announce his decisions no later than Friday, though they caution he could receive a grand jury extension. 

When prosecutors ask for an indictment, they will first read the charges to the grand jury before reading and explaining the relevant statute.  And then...

WISENBERG:  The prosecutor always leaves the grand jury room.  The deliberations are always involving just the grand jurors. 

SHUSTER:  In order to indict, out of the 23 people who are assigned to serve on a grand jury, 16 on the panel must be present.  And at least 12 of those present must agree to the charge by answering in the affirmative to this question. 

WISENBERG:  Is there probable cause to believe that a crime has been committed and that somebody has committed it? 

So it‘s not nearly the standard that you have at trial, beyond a reasonable doubt. 

SHUSTER:  At the D.C. federal courthouse, if the grand jury chooses to indict, the panel will move from the third floor grand jury room to a magistrate‘s courtroom on the first floor.  There, open to the public, the indictment will be received by a judge who may choose to read part of it out loud before the charges are filed with the clerk. 

(END VIDEOTAPE)

SHUSTER:  Late this afternoon, we confirmed through a courthouse source that prosecutor Patrick Fitzgerald did meet today for 45 minutes with the chief judge who oversees the grand jury. 

Assuming that this was more than just a courtesy call, former prosecutors say it means one of three things:  either that prosecutor Fitzgerald was seeking to file an indictment under seal—something he would need a judge‘s permission for—or that he wants to extend the life of the grand jury beyond Friday when it expires, or that he wants the grand jury to meet on a day it is not scheduled to, a day like tomorrow. 

Chris, the betting is that it is one of the last two—he either wants to extend the grand jury or he wants them to come back early in part because even if he sought an indictment under seal, the grand jury would still have to physically go to the magistrate‘s court—you wouldn‘t know what they were doing, you would at least see them there—we had a producer there all day, the grand jury never did go to that room—Chris? 

MATTHEWS:  OK.  Thank you very much, David Shuster, who‘s at the courthouse. 

Howard Fineman is chief political correspondent for “Newsweek,” and Walter Pincus is national security reporter for the “Washington Post.”

I want to start with Howard, my friend.

What‘s the latest? 

HOWARD FINEMAN, “NEWSWEEK”:  Well, the latest is that it seems that the prosecutor is honing in on the thing that he started with, not the perjury charges or the obstruction charges but the question of the original statute; that statute passed in 1982 that makes it illegal to intentionally disclose the name of a cloak-covered agent.

Otherwise, people who are studying this carefully say, why would the investigators be asking people in the neighborhood about what Valerie Plame‘s reputation was there; was it known that she was an agent? 

And he‘s focusing also on the conversations between Scooter Libby and the vice president of the United States, because if there was an effort to go after Joe Wilson and his wife by disclosing her identity, it seems based on what we know now that that‘s where that effort began, somewhere in those conversations. 

And that is clearly one of the key things, if not the key thing that this prosecutor is looking at. 

MATTHEWS:  Let me go to Walter Pincus.

Walter, we know in the papers today that the FBI was out talking to

the neighbors of Valerie Wilson and they discovered, because one of the

neighbors went on television to say so, as well as in the newspapers, that

they had no idea that the person living next door—that woman right there

was in fact an agent, an undercover agent courageously serving her country. 

So part of the case has been made.  There has been apparently the aspect of a crime here because clearly she and her agency made an effort to conceal her identity—one of the prerequisites of a crime here.

How does this not go back directly to the vice president?  If the vice president got her identity, gave it to his chief of staff, the chief of staff gave it to Judy Miller, isn‘t the chain of custody complete? 

WALTER PINCUS, “WASHINGTON POST”:  Well, I think you have to know a little bit about those notes and what their origin was. 

You‘re hypothesizing they were dated the 12th, they were written the 12th—we don‘t know that. 

So I think, again, people have to wait. 

The fact they were talking to neighbors means they were checking the idea that at least neighbors were not informed as to whether she worked for the agency, and that would fit into the idea that there was an attempt to keep her identity classified at least with neighbors. 

So it‘s another piece of the puzzle. 

But I sort of felt it all the way along, this is a very astute prosecutor.  He‘s very careful.  I think you jeopardize yourself by making guesses, so we‘ve got to wait one more day. 

MATTHEWS:  But the fact that Howard made—the fact that—we all know the fact that the FBI was interviewing the neighbors to see if she was truly undercover, doesn‘t that indicate that he is still looking at the main charge of outing a CIA agent? 

PINCUS:  It could be outing a CIA agent or just that her identity was classified and, therefore, it was classified information. 

There are two different ways of looking at it. 

The identifying of an agent carries a lot of other baggage with it, that you have to prove how the person learned the information and to some degree, the intent was to damage the United States. 

If you‘re just looking at disclosure of classified information, which her name was, then you really don‘t need to have some of that attached to any charge you make. 

MATTHEWS:  Walter, what‘s new on the front with regard to any plea bargaining involving the top aides to the president, Scooter Libby, the chief of staff to the vice president, or Karl Rove, the president‘s top political kick?

Murmurs in this city this afternoon of a possible arrangement, a deal. 

PINCUS:  There are murmurs of a lot of things and I sort of hate going near that. 

I think the one thing you might think about, if there were an indictment of either one of them and if they decided to go to trial, this would be a really sort of firecracker trial to be taking place in the final years of the Bush administration because the focus would be looking inside, how the Bush administration worked. 

MATTHEWS:  Right. 

That gets to a couple of points. 

You know, when you go back and look at the record, it isn‘t just about a leak, this story; it‘s about the war in Iraq and how the case was made and the roles played and the method of operations of people like the vice president‘s chief of staff. 

And you realize that he was leaking to the “New York Times” for weekend use so that the stories would run on Sunday, so that the vice president, who was already scheduled to appear, would go on Sunday television and say, “Did you see that ‘New York Times‘ piece this morning?” to Tim Russert.  And of course he knew it was ready, because they had pitched the story to Judy Miller through his chief of staff.  This is a lot of information here about how we got into war.

HOWARD FINEMAN, “NEWSWEEK”:  Well, Chris, this Bush White House, this Bush campaign that preceded this Bush White House, was the best spin machine I have ever seen.  They took the Clinton thing, which was reactive, and made it proactive. 

MATTHEWS:  Forward-leaning. 

FINEMAN:  Forward-leaning.  And they had a schedule for everything.    This is the way Bush ran his campaigns, this is the way he ran his operation, this is the way they ran the sales job for the war in Iraq. 

You drop something here, you go on TV there, you unearth some information there.  This is how they sold it and how they defended it after they sold it.  And it‘s all of a piece.

But the interesting thing now is it was such a tightly run, scheduled spin operation that its strength is also its weakness.  Because if you pull a piece of it apart then you get everybody at the same time.  That‘s potentially what‘s happening here. 

MATTHEWS:  I‘m going to ask—Walter, I mean, you are one of the great journalists in this town, one of the great investigators.  What this does unearth is the possibility that we went to war on background, a case made for war by feeding the “New York Times” the case for war then having the vice president come on and say, “Did you read the times today?  We got to go to war.”

WALTER PINCUS, “THE WASHINGTON POST”:  There was one weekend, one Sunday in September of 2002 when they were on their way trying to get a vote from Congress and also a vote from the U.N., the story in the “Times” was picked up, picked up not just by the vice president but by the secretary of defense who appeared on another channel and by Condoleezza Rice who was on a third charge.  And all of them repeating what the “Times” had carried that morning. 

It was a powerful message.  But I think there were a lot of reasons why we went to war.  And to be truthful, there are a lot of newspaper reporters who wrote about the threat without any encouragement. 

MATTHEWS:  But what about—well, do you know, because you deal with what you know, do you know if the prosecutor is looking into not just how the case for the war was protected by hurting Joe Wilson and by hurting his wife but also how the war was sold in the beginning?  Do you know if the special prosecutor is going back into that history? 

PINCUS:  I have never heard that.  I think the only—I know it‘s as a fact, the only expansion he asked for beyond looking at the exposure of Valerie Wilson‘s name is within two months of taking over the investigation, in February of 2003, he asked for clarification that he could look into essentially interference with his investigation, obstruction of justice, intimidation of witnesses, destruction of evidence and perjury.  And he did that after looking at three months‘ worth of the FBI investigation that took place before he took over. 

MATTHEWS:  Howard, do we know if the vice president—or why the vice president was hesitant over months and months to tell the president that he knew about the Wilson couple, the role that the wife played in getting the husband the job?  Never talked about that to the president and let the president go out on public television again and again and say, “I don‘t know anything about this, I don‘t know who is involved in this leaking of this name.”

FINEMAN:  Well, a couple of things.  I think that Dick Cheney, all along, probably wanted to protect the president from some of the machinery of the sales effort that was being made on his behalf. 

So that‘s part of it.  And then secondly, I think the vice president and Scooter Libby, I‘m guessing here, but they probably knew that they were dealing with some pretty tough tactics here.  I don‘t think they necessarily knew anything was illegal but some tough tactics here . 

And I think they did not particularly want to share that with the world.  And Dick Cheney‘s attitude toward the press is, shall we say, a fairly dark one in general.  He has had friends in the press corps over the years.  But he basically thinks that you don‘t tell the press much of anything because if you do, they will either get it wrong by accident or on purpose. 

MATTHEWS:  OK.  We‘re going to know more about this tomorrow or the next day, right? 

FINEMAN:  I think so.  I think by the end of the week.

MATTHEWS:  Does the “Washington Post” know if it‘s going to be tomorrow, the next day or later? 

PINCUS:  I can‘t speak for the “Post.”  I don‘t know when it‘s coming. 

MATTHEWS:  Well, we‘ll read the paper at midnight tonight.

Thank you, Walter.  Thank you to the “Washington Post.”

Thank you, Howard Fineman of “Newsweek.”

Coming up, what indictments could Patrick Fitzgerald be planning, you know, perjury, obstruction or the main charge of outing an undercover agent maliciously?  We‘ll talk to attorneys from both sides of the aisle politically, Democrat and Republican.  You are watching HARDBALL only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  With the grand jury in the CIA leak probe set to expire in just two days, special prosecutor Patrick Fitzgerald has been busy securing last-minute interviews with former associates of Karl Rove and neighbors of Valerie Wilson. 

He also reportedly paid a visit to Rove‘s attorney, Robert Luskin on Tuesday—that‘s yesterday.  What kind of a case is he building?  This is going to call for legal skills from the best and brightest. 

David Boies was the lead attorney for Al Gore during the 2000 presidential recount.  He‘s the author of the book, “Courting Justice.”

Brad Blakeman served as deputy assistant to President Bush during 2001 and 2004.  He‘s also an attorney. 

David, thank you joining us.  We are at a very interesting time.  Like the 2000 recount, we‘re overwhelmed by lawyers.  And that‘s OK.  But we have to find out, if we can, what to expect when we get up tomorrow morning, say midmorning, when the grand jury perhaps meets again or Friday when they are scheduled to meet again. 

What do you make of the fact that the special prosecutor, Patrick Fitzgerald, has sent out FBI agents to the very neighbors of Valerie Wilson and asked them, did you know that she was a spook? 

DAVID BOIES, FMR. GORE 2000 LEAD COUNSEL:  I think what that indicates is that the special prosecutor is still proceeding along possible substantive lines.  That is you‘ve got five different types of things that he could indict for—two are substantive—outing a CIA agent, a covert agent or disseminating classified information. 

And then three procedural allegations—interference or sometimes called obstruction, lying to a federal official or lying to a grand jury. 

And what I think the neighbor interviews show is that the special prosecutor is at the very least still very seriously considering going after one of those two substantive claims. 

MATTHEWS:  Let me ask you, Brad—welcome to the show.  Why would you do that so late in the game?  Two years of prosecution, of investigation.  And you go at the very heart of the crime all these weeks, all these years after you began your investigation? 

BRAD BLAKEMAN, REPUBLICAN ATTORNEY:  I find it actually quite puzzling that he would do it so late—this is something I would think that goes to the underlying charge of who knew what she did?  When did they know it? 

Although it‘s kind of a stretch for a prosecutor, I believe, to go to neighbors.  Many of my neighbors didn‘t know I worked at the White House.  I was always brought up with the notion that high fences make good neighbors, so I don‘t think that in and of itself ... 

MATTHEWS:  No, but let me tell you, she is more social than you are. 

BLAKEMAN:  She is probably.

MATTHEWS:  I mean, these are people, they play canasta with or whatever people do when they go to the neighbors.

BLAKEMAN:  She probably is.

MATTHEWS:  And she hangs out with them, and one neighbors described her as very close friends.  Now, usually you know what your close friends do for a living. 

BLAKEMAN:  Unless you are lied to or misinformed. 

MATTHEWS:  Well, that makes the point.  There was an effort to conceal. 

BLAKEMAN:  Maybe there was, but there are thousands of employees at the CIA, a small group of which are covert.  So she may not want her neighbors to know what she did for social reasons, political reasons. 

MATTHEWS:  But it makes the point, does it, that she meets—that this case meets that standard, that there has to have been an effort by the agency to maintain your anonymity. 

BLAKEMAN:  Well, she had—she went in and out of covert status as I understand it over her career.  So she may have wanted her neighbors to believe that in case she went back into covert status at some time that she would not have outed herself. 

MATTHEWS:  Let me ask you what—let me suggest something here that might have lit up the special prosecutor‘s screen again as to the possibility of going after the original charge of outing an agent.  If he knows, and he probably knows from day one that we know he knows who told Bob Novak, the columnist, the identity of this person, Valerie Wilson, and he knew that person may not be—that he may not have built a case of guilt there. 

But then he finds out that the people in the White House—Scooter Libby, Karl Rove, the people mentioned in this case so often—did in fact talk to reporters about her identity.  And now he is following the possibility of a fresh trail here that connects the vice president who told the chief of staff to the vice president about Valerie Wilson‘s identity, and also advised him within a month as to how to handle the press with regard to that matter. 

And then we know that that chief of staff that was advised and informed, both advised as to how to handle the information and given the information about Valerie Wilson, to the chief of staff, he went on and talked to Judy Miller of the “New York Times” and gave her the information. 

You do have a pretty fresh and clear trail here, a chain of custody, if you will, of this information, because it goes right from the vice president, right to a reporter.  And maybe that could—could that be, David, why he is investigating the original question of whether this is an agent that‘s truly undercover? 

BOIES:  I think it could be.  And I think that also could explain why you see the prosecutor circling back to ask neighbors some of these questions when they weren‘t apparently asked earlier.  I think it does suggest that there is some kind of a fresh trail.  And I think the chain of custody that you set out there is certainly a plausible one. 

MATTHEWS:  Brad, what do you make of this lately?  You read the papers like I do. 

BLAKEMAN:  Sure, but I think you have to look at the timeline and look at people‘s intent, because a crime requires the act of the crime.  And also your mental state.  You know, the Wilson op-ed comes out in 2003.  July 6.  And then a week later, the Novak article comes out.  So there‘s hardly time for a cabal within the White House.  What I think the White House was upset about ...

MATTHEWS:  Unless they knew about it before. 

BLAKEMAN:  What the White House was most upset about and rightfully so is the misrepresentation by Wilson as to who sent him there, and the report itself which was discredited by the United States Senate in 2004.  Then you have to look at Wilson and his intent going to Niger, who sent him there.  His wife had a hand in sending him there. 

And then the fact that his support for the Kerry campaign, both financially, he sought to be an advisor.  So there is a whole lot to this story than just the investigation by Mr. Fitzgerald.  There is—it doesn‘t pass the smell test on behalf of ...

MATTHEWS:  Are you worried that we may have an incomplete report? 

BLAKEMAN:  Well, from what I understand, is Mr. Fitzgerald said he would not issue a report.  He would ...

MATTHEWS:  I mean an incomplete set—in other words, it doesn‘t illuminate the entire matter you‘re afraid? 

BLAKEMAN:  I don‘t think it does at this point.  I hope it will, because I think if you take the facts in their totality, Wilson is incapable of belief.  And I think he was set up by his wife on a trip where he had preconceived notions as to what he was going to find when he came back. 

MATTHEWS:  Let‘s not forget the irony, is that the inquiry by the vice president is what actually triggered that trip, even though apparently the vice president didn‘t know he had triggered a trip and didn‘t even get a report back.  We will be right back with David Boies and Brad Blakeman. 

And here‘s a look at some of the guests we have lined up for November. 

We‘re doing a little bragging here.  They‘re all coming here on HARDBALL. 

A great lineup of guests coming up in November right here on HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Attorney David Boies, who was lead counsel for Al Gore in the 2000 recount; and attorney Brad Blakeman, a former deputy assistant to President Bush. 

This special prosecutor—you‘ve worked with him.  David, you start.  To keep this totally objective, because you never worked with this guy apparently, let me ask you about Patrick Fitzgerald.  He seems to have two patterns to his prosecutions.  One, he doesn‘t mind going after a law that hasn‘t been enforced.  Like patronage is apparently illegal in Chicago. 

And number two, he gets the number two or number three or both men, and he squeezes them with the threat of serious prison time, to get the big guy.  Do you think he is up to that this time, in either regard? 

BOIES:  I‘m not sure about the latter.  I think what we know about him is he is a very careful, thorough prosecutor.  I think what everybody who has worked with him says is that he‘s somebody who is very reliable, very steady.  He‘s not going to get deterred.  And he‘s going to build his case one step at a time.  And I think you‘ve seen that. 

I think you‘ve seen that to some extent in how leak proof this investigation has been until the very last week.  I mean, think of all the other special prosecutors. 

MATTHEWS:  Think of Washington.  I‘ve never heard of a leak proof vessel. 

BOIES:  Exactly.  It‘s been amazing, and I think that‘s a tribute to the way he has—the professionalism to which he has approached this. 

MATTHEWS:  Would you like to be against him, David? 

BOIES:  Well, I have been against him.  And he‘s a tough opponent. 

He‘s very ...

MATTHEWS:  Who won? 

BOIES:  Well, that‘s still going on. 

MATTHEWS:  OK, let me go to our new kid on the block here.  Brad, you‘ve worked with him a bit, if you want to share a little bit about his MO.  You were telling me during the break he is a straight arrow, obviously.  What else? 

BLAKEMAN:  Well, he‘s tough.  He‘s fair.  He‘s thorough.  And Patrick Fitzgerald strikes me as the type of person who I know personally to be somebody who will do his job to the letter of the law.  And I think he will be very fair and very thorough and I think he will sleep well at night no matter what he does.

MATTHEWS:  Does he have the stuff to at the last minute say, “I can‘t dot that I”? 

BLAKEMAN:  Absolutely.

MATTHEWS:  “I don‘t care if this is the last day of a two-year investigation and I have to close up shop.” 

BLAKEMAN:  Well, I think one of the great things he said is the fact that he‘s not going to issue a report.  He‘s going to either issue an indictment...

(CROSSTALK)

BLAKEMAN:  Absolutely.

And, you know, that‘s what prosecutors should do; they shouldn‘t editorialize, they should bring their case before a grand jury and let the grand jury determine charges without a prosecutor‘s editorial comment. 

MATTHEWS:  So the case can only be closed with indictments? 

There is no clearing of the air, ending of the mystery, solving of the whole story without a set of indictments? 

BLAKEMAN:  There is. 

And that is Patrick if, in fact, the grand jury doesn‘t indict, by issuing a very terse statement:  “I conclude my investigation.  I find no criminal wrongdoing on the part of X, Y, Z.” 

MATTHEWS:  What‘s your philosophy—excuse me, David, we only have a second. 

What‘s your philosophy about whether prosecutors in these independent prosecutor cases, where they are studying, you know, civil corruption—do you think they should be allowed the option of issuing some sort of scathing report if they don‘t indict? 

BOIES:  I really don‘t. 

I really agree with Brad that this is a situation in which the prosecutor is there to enforce the law. 

There are a lot of things that go on in politics that we may or may not agree with, but it‘s really not the job of a special prosecutor to go in and criticize one point of view or another. 

He is a prosecutor.  He‘s there to enforce the law.  If a law has been broken, he‘s there to bring an indictment.  If a law has not been broken, he is there to say, “I find no criminal wrongdoing,” and leave it to the political realm. 

MATTHEWS:  I think I agree with both of you guys. 

Anyway, thank you, David Boies.  Thank you, Brad Blakeman.

Up next, much more on the political fallout from this leak investigation.  What would indictments mean for the president‘s second-term agenda?  That‘s not too hard to figure out. 

You‘re watching HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

(NEWS BREAK)

MATTHEWS:  Welcome back to HARDBALL.

The 2,000th casualty of the Iraqi war, possible ethical breaches in his inner circle, national disaster response disasters—what is President Bush‘s exit strategy from all this bad news?  And what does he need to do to salvage his second term? 

For answers, let‘s go to political analyst Bob Shrum up in New York—he‘s worked for Democrats—and the host of MSNBC‘s “The Situation With Tucker Carlson”—knows the other point of view.

Tucker, good evening.  Thank you.

TUCKER CARLSON, HOST, “THE SITUATION WITH TUCKER CARLSON”:  Good evening.  Thanks. 

MATTHEWS:  If you were chief of staff to this president—and that would be a wonderful position for any of us to get...

(LAUGHTER)

MATTHEWS:  ... to be able to save an administration—Bob, you laugh, but I‘m dead serious here.

As Americans, I don‘t know how you do not want an effective president for three years.  You don‘t want him hobbled. 

CARLSON:  No, it‘s bad for the world. 

MATTHEWS:  It‘s bad for our leadership of the world.

Let me ask you this:  What do you do to clean house if you‘re him; assuming there is a couple of indictments or there are not a couple of indictments, either way? 

CARLSON:  I‘m not sure it‘s the chief of staff‘s role to recommend this, but you tie up Iraq, you fix Iraq. 

Iraq is the original sin from which almost all of these troubles flow.  And so you announce that you are handing over Iraq to the Iraqis and possibly some third party to keep the country stable, and you announce that we‘ve won. 

And you convince the American people that we‘re now getting out, that it‘s not endless, that this nightmare is coming to a close. 

That‘s what you do.  He has to do that at some point.  That problem has to be solved and I think that is the root problem. 

MATTHEWS:  Is Iraq the name for his pain and not all these other issues, Bob? 

BOB SHRUM, NEW YORK UNIVERSITY:  Well, sure. 

And the fact is that if this story disappeared—the story of Rove and Libby and the leak—Iraq would be dominating the front page and it would be inflicting great pain on the president. 

By the way, Chris, I was laughing at the idea that I would be chief of staff to the president or to any president. 

I actually think the other route, the other original sin here is taking someone like Karl Rove, who is a political operative, giving him that much power in the White House because in this case, Bush‘s brain was stupid and he may have been felonious. 

MATTHEWS:  But some very smart political operatives—James Baker, I can think of a few, Sherman Adams until he got into trouble—were pretty good in the White House for a long time. 

(CROSSTALK)

SHRUM:  I don‘t think—I actually don‘t think that Jim Baker was a brilliant political operative, especially when he was separated from Lee Atwater.  I think he was a very, very capable White House chief of staff and a very capable secretary of state. 

I just don‘t—look, what happened here was that the tactics of the political campaign were moved into the governing process to help mislead the country into war. 

I don‘t know whether it‘s going to be indictable in a court of law— we‘re going to know that in a day or two.  But it will be indicted in the high court of history. 

CARLSON:  I don‘t think that‘s entirely fair. 

I think it‘s fair to say that Karl Rove has been far too political in the appointment process.  He‘s deeply, and has been since day one, involved in who gets appointed to what.  And that‘s probably a bad thing, and I‘ve seen example after example that I think doesn‘t serve the public very well. 

But you have to concede, simply because it‘s true, that Rove wasn‘t in charge of selling the Iraq war.  In fact, he actually has been on the other side of that divide. 

It‘s, I think, more the vice president‘s office that was involved in planning the war and in explaining it and selling it to the American people. 

So I don‘t think Rove—I mean, this is one thing you can‘t say about Rove, that Iraq is his fault.  I don‘t think it is. 

(CROSSTALK)

MATTHEWS:  Can the president of the United States escape from his current difficulties involving Iraq and the leaking of the identity of this CIA agent if he stays in partnership with Dick Cheney? 

Doesn‘t he have to cut him loose and make him a more formal vice president, less of a partner at this point? 

(CROSSTALK)

MATTHEWS:  ... really.  This is a serious question. 

CARLSON:  Yes, it is a serious question. 

But the extent of their partnership is not, I don‘t think, public.  I mean, there is almost nothing we really know about the way the president and the vice president interact.  It‘s all shrouded in secrecy. 

So if he were to cut the vice president loose, as you suggested, would we even know what happened? 

I mean, there has been a lot of whispering in Washington about when—you know, Harriet Miers‘ nomination—Scott McClellan got up there and made a point of telling the press—unasked, he volunteered—that the vice president had learned from Andy Card—I think you brought it up on your show—and that is taken as some sign that the vice president is being isolated.

But I‘ve talked to people over there who say that‘s not true at all.

I think the president needs the vice president.  The vice president, you know, has obviously made some mistakes, but I think he knows what he‘s doing generally.

MATTHEWS:  But he certainly couldn‘t pull out of Iraq without the vice president agreeing, right?  At this point? 

CARLSON:  Well, he‘s still the president.  He can do, I guess, pretty much whatever he wants with foreign policy.  But I think they need to revisit the “stay the course” strategy.  Because it‘s not being bought by the public.  In the democracy, you have to bring public along with you, or it just doesn‘t work. 

MATTHEWS:  Let me go to the question—and somebody criticized me for saying it.  And maybe you will right now, Bob, but there are occasions where this president has shown the glitter of nobility. 

He‘s done just the right thing at just the right time and right opportunity. He picked a superb nominee for Supreme Court chief justice.  I mean, you didn‘t hear from the accolades from the Democratic left because a lot of them are running for president and they have to be pro-choice and all that, but what a splendid appointment.

And then he picks this guy for Federal Reserve chairman the other day, The Economist magazine of London had picked him as their favorite to get the job.  He was the best man for the job, the best person.  This president is capable of grand, grand gestures and grand moments.  I guess I‘m asking, can he get on a winning streak again and how does he do it? 

BOB SHRUM, HARDBALL POLITICAL ANALYST:  Well, look—he led the country in such a brilliant way in those weeks after 9/11.  And I think Democrats and Republicans united and people were ready to stand with him.  I think Tucker‘s right.  The root here, the original sin, the difficulty is Iraq. 

Where I disagree with Tucker is—I don‘t think the president will get out.  Look, presidents always have mid-term problems, or second-term problems.  Roosevelt had it—changed policy.  Eisenhower had it—changed personnel. 

I don‘t think this president is very willing to change personnel.  Certainly not willing to reach out to someone like Jim Baker.  And I don‘t think he‘ll change policy.  He reminds me more of Lyndon Johnson.  He‘s waist-deep in the big money and he doesn‘t know how to get out. 

(CROSSTALK)

MATTHEWS:  (INAUDIBLE) incapable of a dramatic shift in loyalty, a dramatic shift from the old hands. Somebody said to me, the other night—

Machiavelli said, have a few advisers and listen to them. Don‘t have a lot

but he said you have to keep changing every four or five years. You‘ve got to keep changing your top advisers. You can‘t always stick with them same.

CARLSON:  I don‘t see that. To me, it all goes back to the New Hampshire primary of 2000.  When his advisers the night before told him, you may lose, but by a small margin.  He loses by 19 points—he fires no one.  Really, there may be some precedent in campaign politics for that.  But I‘m not aware of it.  That was an amazing display of something. 

MATTHEWS:  Hey, Reagan won and fired Sears.

CARLSON:  That‘s exactly right, exactly right. He fires no one. When they deserve to be fired. So, is he going to—I mean, he is, whatever one things about Bush. You have to concede, he‘s a very loyal person, for good or ill. It‘s just who he is. And I sort of agree with Bob. It is hard to imagine him going back.

MATTHEWS:  I don‘t mean to sound like the Pope here or somebody, but I think his first loyalty is to the presidency to which he‘s been elected, and not to some pals.  

CARLSON:  Well, sure, but I think there‘s a lot of evidence that he takes criticism from people like you or me or Bob, or really anybody who‘s not working at the White House as so much chatter, and he rebels again ist.

MATTHEWS:  I sort of like him a lot of times and I‘m mixed on his policies, obviously.  I think the war is still, I think, at the heart of the souls. The 2,000 people dead now and so many thousands. I‘ll talk talk about it later in the show—who have really had their lives changed by deformity and amputation. 

And all the women out there, and lovers and parents, who don‘t have that kid home now.  That bed‘s empty, that room‘s empty—that‘s real. 

Anyway, Bob Shrum, Tucker Carlson, thank you. Tucker‘s show, of course, is “The Situation,” it airs tonight at 11 eastern. How do you stay up so late on MSNBC?

When we return, Vice President Cheney may have been Scooter Libby‘s source about Joe Wilson‘s wife, but did the vice president cross the line and do anything illegal?  I find that interesting. 

Bob Shrum, thank you buddy.  This is HARDBALL on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. Mike Allen, a reporter for TIME and John Nichols is a reporter for The Nation, also the author of a book called, I‘m sure this is very nice about the vice president, “Dick, the man who is president.” This was very kindly put, I‘m sure. Let me get to you in minute, however, John.

Let me get to this, Mike. Just give me a minute. What‘s going on?  rMD+IT_rMDNM_If you could figure out this thing, and you‘ve obviously gone a good way in doing it, the role of the vice president, the role of the vice president‘s top guy, and whatever crimes are committed here? 

MIKE ALLEN, REPORTER, TIME MAGAZINE:  Well, Chris, there‘s a lot of dead horses being beaten here.  But there is a lot of activity happening that we‘re not seeing.  What a likely scenario for what happened today is Patrick Fitzgerald got some indictments from this grand jury.  He now is able to go to...

MATTHEWS:  Oh, you think they‘re sealed right now? 

ALLEN:  It‘s very possible.  What I‘m told is typically in a case like this, he could get the indictments and now he can go to the targets and say, you can plead to these or I‘ll go back Friday and get more.  You have 12-to-24 hours to think about it. 

MATTHEWS:  I think you get a little Whitman‘s sampler of suggestions like you can plead to the process charge of obstruction or perjury.  Or—

ALLEN:  Or I can add a bunch of counts.  You can take a couple of counts, we can do a bunch more. 

MATTHEWS:  Or I can say, distributing of classified material, it‘s almost like having too many lunches from the same lobbyist, right? 

ALLEN:  The idea of the prosecutor, Patrick Fitzgerald, going to the offices of Patton Boggs, of Mr. Rove‘s lawyer, he knew he would be seen.  He knew what the effect of that—clearly there is some public games being played here. 

MATTHEWS:  What do you believe to be the administration or the legal strategy of the defendants in these cases or the possible targets? Are they willing, do you believe, to cut a deal?

ALLEN:  I don‘t know the answer to that.

MATTHEWS:  That requires an administration admission because they are part of the administration. So do they have to check with the president before they say, I‘m going to plead guilty to any charge because that puts the president in the position of having a black mark against his White House. 

ALLEN:  You can‘t read their mind, but going into this, I know that their strategy was to fight the charges, to contend that they have not done anything, that this was political gossip, that they were receiving information from reporters. Now, there‘s information that‘s come out that‘s hurt that.  And, of course, the big game in Washington is where did the leak come from that said that the vice president was the one that told his chief of staff, Mr. Libby, about it? 

MATTHEWS:  Right.  Who put that out two days ago? 

ALLEN:  And...

MATTHEWS:  By the way, to the newspaper that was most embarrassed by this whole thing. 

ALLEN:  We‘re told by Republicans who are familiar with data in the case that that was a way to show that Mr. Libby was protecting the vice president.  And that it wasn‘t for base personal motives that he did whatever he may be accused of...

MATTHEWS:  So you think his lawyer put that out. 

(CROSSTALK)

MATTHEWS:  Do you think his lawyer put that out?

(CROSSTALK)

MATTHEWS:  Tell me, do you think his Philadelphia lawyer put that out?

ALLEN:  He‘s the number one suspect.  There‘s no question about that. 

MATTHEWS:  OK.  Let me ask you, let me ask you—thanks for joining us, John. 

Let me ask you—you know, we know some things on the record.  Because the “New York Times” reported this Monday morning in a bombshell, top of the fold, right-hand side, main column of the newspaper that the vice president was the one that told his chief of staff about the identity of the CIA agent, Mrs. Wilson. 

We then know that he told his chief of staff, Scooter Libby, and we know that Scooter Libby told Judy Miller of the “New York Times.”  At least, he told that one reporter.  What‘s missing in the chain of guilt and responsibility?  Why is this a mystery?  The vice president tells his chief, his chief tells the reporter.  That‘s the chain of custody of the information.  It‘s at least part of the possibility of a crime here. 

JOHN NICHOLS, “THE NATION”:  Absolutely.  And I think that‘s why this is such an interesting moment.  We don‘t know exactly what Patrick Fitzgerald is going to do.  But we do know that he is looking at the possibility of expanding this investigation. 

He met for 45 minutes today after the grand jury went out of the room with Chief Judge Tom Hogan from the D.C. Circuit Court of Appeals.  Hogan is the man who has to give the permission to keep the grand jury impaneled and to take this investigation further. 

And I think there is simply no question that at this point, with what we‘ve learned about Scooter Libby and his communications with Dick Cheney and what we know about Dick Cheney, the sort of man that he is, his intense fascination with having all the information, being at the center of strategy, a guy who constantly follows the news, it would be comic to suggest that Cheney wasn‘t involved in this.  And it would be comic or disturbing for a special prosecutor not to at least examine that thread and take it as far as it can go. 

MATTHEWS:  Can you imagine the vice president standing aside and letting Scooper Libby, his chief of staff, manage this whole Wilson threat to him? 

NICHOLS:  It is beyond comprehension.  Not because—and I‘m not here to indict the vice president.  That‘s something for Patrick Fitzgerald to do.

MATTHEWS:  Oh, come on. 

NICHOLS:  No, seriously.  If you know how Dick Cheney works, if you know what this man is famous for, which is as Mary Madeleine (ph) once told me, getting all the information that‘s available, getting every single shred of information and then getting into the center of the policy discourse about how to use that information, also a man who is very vindictive and willing to go after his enemies.  The idea that he wouldn‘t be involved in these conversations is, again, it‘s comic.  It is beyond belief. 

MATTHEWS:  Right.  Is he coming after you? 

NICHOLS:  Me?  No, I‘m just a reporter for “The Nation.”

MATTHEWS:  OK.  Sounds like he is dangerous to anybody who criticizes him. 

You wrote a book called, “Dick, The Man Who Was President.”

Anyway, thank you, John Nichols.  We‘d like to have you back.  We like your style.

Mike Allen, as always...

ALLEN:  Just to correct—they‘ve said that the vice president is in no legal jeopardy.  He made some reference to indicting the vice president.  There is no information about that at all. 

NICHOLS:  I think that is true at this point. 

MATTHEWS:  Also, we don‘t know what‘s going on. 

When we return, a sobering milestone in Iraq, what would have been the biggest story in the country this week as the 2,000th American is killed in the war.

(COMMERCIAL BREAK)

MATTHEWS:  For all its importance, I think the intrigue of the CIA leak story has had a negative effect of crowding out a daunting story of American courage, service and sacrifice.  This is not a story about politics.  Young men and women who join up in the military are not asked which country or which war they want to fight.  They are trained not to make such fateful decisions but to carry them out.

The commander-in-chief elects to invade a country—Iraq, for example.  He orders our fighting forces to do it, period.  That‘s it.  You get in there and accomplish the mission.  That‘s your job.  You do your duty as you promised to do your duty. 

There are improvised explosive devices out in those highways in Iraq. 

You go out there and ride it.

There are snipers in that town.  You go over there and take their shots.  That‘s what you signed up to do.  And, boy, do they do it and, boy, do they know it. 

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE:  (inaudible)

UNIDENTIFIED MALE:  From Texas, received a Purple Heart when we hit a couple of land mines back in April. 

MATTHEWS:  OK.  You‘re all right? 

UNIDENTIFIED MALE:  I‘m fine.

MATTHEWS:  Good.  Thank you, sir.  Thank you all for your service.  I mean it for everybody here, too.

(END VIDEOTAPE)

MATTHEWS:  Even when they get cut down in combat and hurt for life, they are rearing to get back into it.  They can‘t wait to get back to their units.  We‘ve got to pay attention to these courageous young Americans.  They‘re soldiers, not politicians.  Once they enlist, they give up their right to decide when, if and where our country fights.

That‘s for the civilians, especially the civilian commander-in-chief, as I said, to choose.

Something else.  The obvious gung-ho spirit and patriotism of our young people is easily made into a political football by both those who think it was smart to go into Iraq and those who don‘t. 

Rosemary Palmer and Paul Schroeder talked about their son Edward who was killed in Iraq about his view of being a Marine.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  He did not have a motivation to fight.  He had a motivation to do his duty to the Marine Corps and to be part of the Marines.  His entire life was devoted to doing what he promised he would do. 

(END VIDEO CLIP)

MATTHEWS:  Those who think it was smart to go to Iraq say the commitment of the troops to the mission justifies the mission.  If they believe in what they‘re doing, we should. 

They go further.  They say that the losses families have suffered and are suffering make up a justification for the policy of invading Iraq in the first place. 

The other side has said the losses are a case against the Bush policy of going into that country.

Let me offer a separate case.  The more loyal our troops, the more courageous they are in facing any mission put before them, their unwavering determination to do what they‘re asked to do makes it all the more vital morally that our civilian leaders, the president, the vice president, the secretary of defense and all their important deputies use their time in office to treasure the lives of our troops, to honor their readiness to serve all of us and sacrifice all of themselves.

I‘m Chris Matthews.  The “ABRAMS REPORT” is next.

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

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

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