updated 10/31/2005 10:35:26 AM ET 2005-10-31T15:35:26

Guests: Kate O‘Beirne, Mike Allen, John Dickerson

CHRIS MATTHEWS, HOST:  Tonight, has the CIA leak indictment opened a can of worms?  Are we suddenly seeing the men and the method used to the U.S. invasion of Iraq?  Is the vice president‘s office, the hub CIA leak effort, now to face even harsher scrutiny? 

We already know how Scooter Libby, the defendant, used the media to manipulate the WMD case.  He stands accused now of lying about his efforts to punish Ambassador Joe Wilson to protect the WMD.  Thanks to Patrick Fitzgerald we may be on the road to the truth, the whole truth.

Can the president stand it?  Can we?  Let‘s play HARDBALL.

Good evening, I‘m Chris Matthews.  And this is a special Sunday night report of HARDBALL on the CIA leak investigation.  Tonight we‘ve gathered together four of Washington‘s top reporters to make sense of a very bad week for the Bush administration, one that included a failed Supreme Court nomination, refocused attention on the death toll in, Iraq and of course the indictment and resignation of senior White House adviser Scooter Libby, Vice President Cheney‘s now former chief of staff, on charges of perjury, false statement, and obstruction of justice in the leak probe.  And the special prosecutor says Karl Rove isn‘t in the clear yet. 

We‘ll discuss what it all means, whether this is a White House in crisis and where the president can go from here.  But first for the latest on the fallout of the leak case, here is HARDBALL‘s David Shuster. 

(BEGIN VIDEOTAPE)

DAVID SHUSTER, MSNBC CORRESPONDENT (voice-over):  The vice president‘s former chief of staff is now scheduled to be arraigned at the courthouse this week.  Scooter Libby stands charged of lying to the FBI and to a grand jury about leaks of classified information. 

PATRICK FITZGERALD, SPECIAL PROSECUTOR:  He was at the beginning of the chain of the phone calls, the first official to disclose this information outside of the government to a reporter, and that he lied about it afterwards, under oath and repeatedly. 

SHUSTER:  And Libby‘s actions have left questions hanging in the air about Vice President Cheney and others because, as Fitzgerald said, Libby would not tell the truth. 

FITZGERALD:  What we have when someone charges obstruction of justice, is the umpire gets sand thrown in his eyes.  He‘s trying to figure out what happened and somebody blocker their view.

SHUSTER:  The indictment says Vice President Cheney told Libby on June 23, 2003, that Joe Wilson‘s wife worked at the CIA, and three weeks later aboard Air Force Two, gave Libby guidance about what to say about that information to reporters.  That afternoon, according to the indictment, Libby spoke about Wilson and his wife to TIME magazine reporter Matt Cooper and then to The New York Times‘ Judy Miller. 

What was the vice president‘s role in all of this all of this? 

FITZGERALD:  I‘m not making allegations about anyone not charged in the indictment. 

SHUSTER:  Bu while there are no legal allegations the vice president did anything wrong, politically there are now some credibility issues.  In Mr. Cheney‘s first public statements about any of this in September, 2003, on “MEET THE PRESS.”

DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES OF AMERICA:  I don‘t know Joe Wilson.  I have never met Joe Wilson. 

SHUSTER:  The vice president left the impression he knew nothing about Wilson nor his trip to Niger. 

CHENEY:  And Joe Wilson, I don‘t know who sent Joe Wilson. 

SHUSTER:  But the indictment makes clear that Cheney knew about Wilson months earlier.  As for the president‘s top adviser, Karl Rove, Rove faces not just credibility questions but also legal ones because lawyers say Patrick Fitzgerald may still charge him. 

Rove‘s lawyer gave prosecutors information that at the 11th hour that according to The Washington Post stopped a planned Rove indictment.  And Rove‘s lawyer Bob Luskin acknowledges the president‘s top adviser remains under investigation. 

The Libby indictment refers to Rove as “Official A, who advised Libby of a conversation Official A has earlier in the week with columnist Robert Novak in which Wilson‘s wife was discussed as a CIA employee.”

Never mind the legal cloud still hanging over Rove, now there is the issue regarding a pledge from President Bush. 

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  I don‘t know of anybody in my administration who leaked classified information.  If somebody did leak classified information, I‘d like to know it, and we‘ll take the appropriate action. 

SHUSTER:  One day earlier, the president‘s press secretary flatly denied that either Rove or Libby had been involved. 

SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY:  I have made it very clear that it was a ridiculous suggestion in the first place.  I have said that it‘s not true.  And I have spoken with Karl Rove. 

SHUSTER:  In recent months, the White House response has been, no comment. 

(on camera):  So how will the White House respond this week?  We‘ll see.  In the meantime, what was it about the criticism of the administration‘s case for war that was so ghastly, so damaging, so explosive to the vice president that his chief of staff felt compelled to take actions that in the end led to criminal charges? 

I‘m David Shuster for HARDBALL in Washington. 

(END VIDEOTAPE)

MATTHEWS:  Thank you, David Shuster.  Let me introduce our panel tonight.  It‘s a top-flight group.  Katie O‘Beirne—Kate O‘Beirne writes for The National Review.  Mike Allen covered this story for TIME.  And John Dickerson writes for slate.com.  And we begin with one of our real stars, Andrea Mitchell, who is chief foreign affairs correspondent for NBC News. 

The toughest question, the biggest question, the one that delights me it‘s so big:  What was so important, so vital to the vice president‘s office that Scooter Libby took these risks that have now landed him an indictment? 

ANDREA MITCHELL, NBC CHIEF FOREIGN AFFAIRS CORRESPONDENT:  We don‘t have an answer to that.  One theory, of course, is that he was covering up for someone else, someone who could have included higher-ups in his own office, his boss.  There is no evidence of that, there is no reference to that in the indictment. 

It‘s hard to understand how a smart lawyer like Scooter Libby could have created this false story if is—as was alleged by the special prosecutor, if he, in fact, did, because there were so many ways that it would be contradicted.  It would be contradicted by the reporters. 

Well, presumably he felt that the reporters would never testify, not realizing they would lose their fight, lose the fight against the subpoenas, all the reporters.  And in fact, when he first gave his story to the FBI, it was before the waiver rule at the White House, before everyone at the White House was told to waive their confidentiality. 

So the theory is that possibly he thought that reporters would never be called and he would not be challenged.  It‘s though very hard to understand because there were at least seven people within the White House, including Dick Cheney, who talked to him about Valerie Wilson before all of this happened. 

MATTHEWS:  All determined by oath—by statements made under oath now. 

MITCHELL:  And for him to then say that he learned about it from Tim Russert after he had already spoken, according to this indictment, to seven people, it just defies understanding. 

MATTHEWS:  And these reporters, including Tim, were supposed to just sit there and take it and let their names be used in the case—to confuse a case if not to cover up one without any action by any of them?  I think he made a mistake there.  Because.

MITCHELL:  Well, they would not. 

MATTHEWS:  . it wasn‘t a question of keeping a confidential conversation.  It was keeping confidential what you were accused of saying to him, not his words under—you know, we know what the shield is.  You‘re not supposed to rat out a source. 

MITCHELL:  But they still would not have testified had they not lost in court.  We have been through this before where even if your source is lying.

MATTHEWS:  Even if they are quoting you? 

MITCHELL:  Even if they are quoting you, that‘s a big stretch. 

MATTHEWS:  That‘s what‘s going on here.  That‘s what‘s so queer about this case.  (INAUDIBLE) why was—let me go back to the toughest question in the world.  Forget what side different people take on the war in Iraq, and people changes sides occasionally, why was Scooter Libby, a smart guy, a big-time lawyer, willing to risk all to defend some secret about when he learned from his boss about Valerie Wilson, which is not criminal? 

KATE O‘BEIRNE, THE NATIONAL REVIEW:  The theory that there must be something big and dark and ominous.

MATTHEWS:  It‘s my theory.

O‘BEIRNE:  To get a very smart and veteran Washington aide like Scooter Libby to take these risks is, of course, a question everybody has.  Not only were there other people, CIA operatives, the undersecretary of state, others aware of the fact that and when Scooter Libby learned about Valerie Plame‘s appointment.

MATTHEWS:  Marc Grossman, too, called (ph) him.

O‘BEIRNE:  Exactly.  And reporters, he also waived all of his privileges, turned over all of his materials and executed releases for those journalists. 

MATTHEWS:  And gave a notebook out to the investigators which says the vice president just told me in June 23rd of 2003 about this guy. 

O‘BEIRNE:  So maybe what it demands of us who are so puzzled by these facts, maybe what it demands of us is the opposite theory or hypothesis from yours. 

MATTHEWS:  All right.

O‘BEIRNE:  Maybe Joe Wilson was so insignificant to him, they had bigger problems than Joe Wilson with the CIA.  This was an ongoing problem with the CIA undercutting the administration along with the State Department, with the CIA, as he complained in his first conversation with Judith Miller, leaking against them like mad, even though they did put out a comprehensive National Intelligence Estimate about their findings of weapons of mass destruction.  The vice president‘s office appeared to be spotting the fact that the CIA was going to try to distance themselves from it. 

Maybe Joe Wilson, even though he himself thinks the whole White House revolved around him, was such a small piece of their problem with the CIA that it is something Scooter Libby.

MATTHEWS:  OK.  Let me say something.

O‘BEIRNE:  . didn‘t pay all.

(CROSSTALK)

MATTHEWS:  . they were—I can tell you, by being on this program every night all those weeks, they were obsessed with Joe Wilson, they were obsessed, complaining relentlessly about anybody that even put him on the air.  Let me right now to Mike Allen from TIME. 

Mike, what is the big answer to the big question that anybody of else who has followed case wants to know?  The Perry Mason, the big denouement at the end of the tunnel, why in hell did this smart guy—admittedly an ideologue, why did he apparently lie? 

MIKE ALLEN, TIME:  Yes, Chris, I think it‘s much simpler than what you‘re suggesting.  And that is I think Mr. Libby concluded early the same thing that I and a lot of other people did, which was that no crime had been committed in the original transmission of this information. 

MATTHEWS:  Well then, why not.

ALLEN:  There was no original sin. 

MATTHEWS:  . tell the truth?

ALLEN:  For a long time, I have said that this was the Seinfeld case, the case about nothing, that the Espionage Act had so many elements that were not met by this set of facts that no one was going to go to jail for this. 

And I think he concluded that and then was sloppy and he did exactly what you and I warn our children about, which is you tell one lie, you‘re going to have to keep telling another.  He got on this bizarre.

MATTHEWS:  OK, what did the vice president.

ALLEN:  Practice saying this.

MATTHEWS:  Mike, what did the vice president expect him to do?  As they go to work together in the car each day and they compare notes about what they‘re doing, was the vice president saying to him what you‘re saying to—the parents tell their kids:  Now remember, Scooter, little man, you make sure you tell the truth to all these investigators, you make sure you never tell a fib; or is he telling him, is everything all right on that front, you got us covered on that thing?  What kind of lingo do you think went back and forth between those two guys?

ALLEN:  Well, it‘s obvious that he took a chance.  And of course it makes us wonder what other chances they are taking.  And that‘s the problem with this case, is that it calls a lot of people‘s credibility into question.  And that‘s why there is going to be so much scrutiny of the vice president that is in office right now.  Because even other people in the White House now are wondering, what was going on over there? 

MATTHEWS:  OK.  Mike, you don‘t have to guess, you‘ve covered the M.O.  over there, was he saying, squash this guy like a bug? 

O‘BEIRNE:  No. 

MATTHEWS:  Well, let me ask Mike. 

ALLEN:  I wish I had been in the car, but what is clear from the.

MATTHEWS:  No.  Kate says he would not have said that. 

O‘BEIRNE:  Well, if there is anybody in this White House who really doesn‘t much care what the media is saying, it‘s sort of a competition between the president and vice president, they focus on what they are doing.

MATTHEWS:  You‘re telling me right now to my face that Vice President Cheney did not care about Joe Wilson‘s charges? 

O‘BEIRNE:  I am saying.

MATTHEWS:  Come on.

O‘BEIRNE:  I am saying what.

MATTHEWS:  I know he did. 

O‘BEIRNE:  What contradicts your theory about a White House obsessed is what we learned from Patrick Fitzgerald.  What did we learn about this obsessed White House with Joe Wilson?  That there was, in fact, no conspiracy to out his wife, that there was no coordinated smear campaign. 

MATTHEWS:  Well, I don‘t think we learned that. 

MITCHELL:  Well, i don‘t think those two things are.

O‘BEIRNE:  I sure do think we learned that. 

MATTHEWS:  Let me go to John in here.  Let John Dickerson in here from Slate.

JOHN DICKERSON, WWW.SLATE.COM:  Well, what I would say, Chris, if you look at the indictment—just to kind of touch the other base here, if you look at the indictment, Fitzgerald suggests the situation in which Scooter Libby was marinating in the idea that Joe Wilson‘s wife worked at the CIA. 

I mean, he stacks up instance upon instance in which Scooter knew about this or affirmatively took the position where he asked aides about it and was seeking information about this.  So that he sets up a condition where it‘s impossible for Scooter to claim what he‘s now claiming, which is, you know, I just forgot, I was too busy. 

And here‘s another reason it may be—the answer to your question, Chris, may be that, in fact, he thought he might have broken some underlying law or knew, in fact, that he wasn‘t supposed to talk about Plame.  Think about the way they have handled this information all the way along the line. 

If you look at what Karl Rove did, he only called two reporters about this.  Now, all of us on this show know what it‘s like when Karl Rove wants to dial around information.  He handled this very, very carefully.  Ari Fleischer knew about Plame‘s job and never mentioned it at all.  Ari Fleischer, who was being blamed by everybody when this all started for—within the White House blamed, for getting this moving along, really would have benefited if he told a few reporters off the record or not for attribution, you know, this guy was sent by his wife, there is really nothing to his charges.  He never said anything about it. 

Libby himself, when he handled this information, used pot holders.  He only talked about, well, maybe she works at the CIA.  When Cooper talked to him, he said, oh yes, I had heard that, too.  So everybody was handling this information very, very gingerly and it suggests perhaps that they knew they shouldn‘t have been talking about it. 

O‘BEIRNE:  It also doesn‘t suggest a huge, coordinated smear campaign. 

(CROSSTALK)

MATTHEWS:  Well.

MITCHELL:  Well, you know, guys, wait.  I think there are two things that can—not necessarily contradict each other.  They were—and I was in the middle of it back then.  I was covering the 16 words in the Niger issue.  They were absolutely obsessed with this issue.  But that does not mean that they decided amongst themselves in some sort of conspiracy, which certainly was not in the indictment, we‘re going to damage this guy, undermine him by outing his wife.  Those two things can still be taken first.  They can have.

MATTHEWS:  I think they wanted to show that this was not a trip triggered by the vice president‘s inquiry. 

MITCHELL:  Exactly.

MATTHEWS:  It was triggered by somewhere in the belly of the beast over at Langley.  And they just wanted to separate the vice president at all costs from this. 

MITCHELL:  Exactly.

MATTHEWS:  And I still think that opens the question of how loyal was Scooter Libby?  Maybe his loyalty was total, which is not unusual in Washington, total loyalty to the point he wouldn‘t admit a single role taken by the vice president here, and that‘s what got him in trouble. 

We‘ll be right back.  We‘ll ask our panel of top journos (ph) more of these big questions.  But did the White House mislead America about the war?  Are we looking at an M.O. here that preceded the war, which is not telling the truth, using the media to manipulate us to a war?  We‘ll take that into question when we come back. 

(BEGIN VIDEO CLIP)

FITZGERALD:  The damage wasn‘t to one person.  It wasn‘t to Valerie Wilson.  It was done to all of us. 

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to this HARBALL special report on the CIA leak investigation.  We brought together a panel of top journalists who have been covering the leak probe and the White House: NBC chief foreign affairs correspondent Andrea Mitchell, Kate O‘Bierne of The National Review, Mike Allen of TIME, and John Dickerson of slate.com. 

We‘ll get to them in a moment, but first this morning, Democratic Senator Chris Dodd of Connecticut suggested Libby‘s indictment on Friday must be viewed in the broader context of how we went to war in Iraq. 

(BEGIN VIDEO CLIP)

SEN. CHRIS DODD (D), CONNECTICUT:  We were talking about whether or not a crime was committed, but to suggest somehow that this whole effort was just sort of gossip around a water cooler in the White House about Mr.  Wilson and the articles he was writing or the information he was giving about the alleged connection between Niger and Iraq, I think is to be terribly naive. 

People were born at night but not last night.  The vice president was the leader of the effort here to get us to this war in Iraq.  He was very disappointed, to put it mildly, with anyone who was critical of that.  In fact, there was an office we now know in the executive branch set up very specifically to go after people who were in any way questioning the motivations and the information that we were using to justify the invasion of Iraq. 

(END VIDEO CLIP)

MATTHEWS:  Well, if it was a bodyguard of lies, as the prosecutor argues, what were they guarding?  And that gets back to the question of whether the M.O. we have seen here, the role in which Scooter Libby dealt with the press.  We also learned during the case here, during the investigation that Scooter Libby was pushing successfully the stories to The New York Times to build the case for war on background, preceding appearances by top administration officials, including the vice president on the Sunday talk shows. 

In fact, in one magic weekend, he managed to get a big story written on the front page of The New York Times about nuclear potential in the hands of Saddam Hussein, and then spread out three different administration officials on the Sunday talk shows to pull an alley-oop play and say, did you see the piece in The Times this morning?  Let me go Mike.

It is an amazing piece of—obnoxious, I think, use of the press as a pinball machine.  And I wonder whether there isn‘t something we ought to be paying a lot more attention to than one indictment.  Mike Allen. 

ALLEN:  Yes, of course, watching that M.O. is very important.  Now I just want to point out what Senator Dodd said is not right, that there was some office set up to run smear campaigns.  There was what they called the White House Iraq Group, the WHIG, as it was called.  It was not announced at the time, we didn‘t know it existed.  And it was formed to communicate the Iraq message as they built up to war. 

Now what it shows us is that they were focused on the marketing of this from the very beginning and that they recognized right away that this was a public relations issue. 

Now, what they say is that this was not a smear, but what this was was actually defensive.  That what they were doing was countering wrong information with accurate information about Wilson. 

And obviously it got out of hand and Andrea is right about this obsession.  You just look in the indictment.  You‘re thinking, wasn‘t there anything else going on in the world at the time that they were dealing with this issue? 

MATTHEWS:  But wasn‘t that the flip side of what they did to sell the war?  I mean, it‘s the same group that went out to protect the case for war, that promoted the case for war.  This isn‘t some extreme weird connection here or tangent.  This is the same crowd that built the case through use of the media.  They couldn‘t do it officially so they did it through back channels, through backgrounding of reporters.  They built the case there was a nuclear threat from Saddam Hussein, that there was some connection to 9/11. 

All—none of this, by the way, was ever confirmed by anybody‘s objective.  And yet they also came out and anybody who challenged it, like Joe Wilson, they tried to get him out of the picture, right? 

ALLEN:  Right.  And what you‘re going to see is that this is—even though the prosecutor was specific, that this is not an indictment of the case for war, not an indictment of the road to war, there is no question this will be used to put the war on trial. 

And why not?  From critics of the war who now are heavy in both parties, and I think people are going to look at the time line of what was said.  And I think there is going to be a lot of emphasis on the question of did they believe what they were saying or they were misinformed? 

And it‘s really hard to know what.

MATTHEWS:  And by the way, it‘s not a question about truth or untruth.  What they were saying about Joe Wilson I think is largely—most people think was largely true.  What they said about the build up to war, to sell the war, they believed.  It‘s not a question of lying or dark and black and white and all that stuff, it‘s a question of methodology. 

And let me go to John Dickerson.  It seems to me there was a constant stream here.  That stream sold the war.  And that stream tried to debunk the charges made by Joe Wilson against the case for war.  It isn‘t complicated, is it? 

DICKERSON:  That‘s right.  No, I think you‘re exactly.

MATTHEWS:  It‘s all done on background.  That‘s the part that‘s sneaky here.  Why do you background the case for war then background dumping on Joe Wilson?  Why don‘t you do it all on the record? 

DICKERSON:  Well, here‘s why you do it.  They would say, let‘s embrace the administration‘s view here which is essentially Wilson started it on background in The New York Times.

MATTHEWS:  With the Krugman column, yes. 

DICKERSON:  Well, the Kristof column.  And he started this fight.  But this whole fight is bigger because it was the—you have sort of three actors here.  You have the White House, you have the Cheney group, and then you have the CIA, all at various times at war with each other.  And so the CIA, Cheney‘s people believed, were leaking to the papers, so they had to leak back. 

And the Wilson thing—what‘s interesting about that.

MATTHEWS:  No, wait a minute, nobody was leaking that there wasn‘t a nuclear case before the war.  They were leaking that there was. 

DICKERSON:  Well, the Cheney people were leaking there was.  But the CIA was throwing water.

MATTHEWS:  Why?  Why did the Cheney people—go back to this original question which American people would like to know now that we passed the 2000 mark in deaths over there.  Why was the war sold on background? 

DICKERSON:  Here‘s why.

MATTHEWS:  Why didn‘t the president come out with this information? 

DICKERSON:  Well, because the Cheney people believed the people who were looking at the intelligence, the CIA, that they weren‘t doing a good job.  And this is why the nepotism charge fits into the larger narrative in the Cheney world. 

Because it was the idea that Plame sent Wilson, is not about the fact that he was a house husband who couldn‘t get a job.  It was that things were so sloppy over at the CIA that they just kind of look around and, oh, we‘ll send this guy.  And that this is the sort of—this is the kind of information we‘re getting out of the CIA. 

So it was pushed back against the CIA, but it also fit into that larger narrative of, we don‘t trust what‘s coming out of the CIA, here is what we think is really the case. 

MATTHEWS:  Well, let‘s get Andrea Mitchell and Kate O‘Beirne in this when we come back.  We have to take a break. 

And later, stay tuned for more on the CIA leak investigation.  Coming up, what‘s next for the Bush administration in this whole matter? 

You‘re watching HARDBALL on MSNBC. 

(BEGIN VIDEO CLIP)

FITZGERALD:  In July, 2003, the fact that Valerie Wilson was a CIA officer was classified.  Not only was it classified, but it was not widely known outside the intelligence community.  Valerie Wilson‘s friends, neighbors, college classmates, had no idea she had another life.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

FITZGERALD:  People who believe fervently in the war effort, people who oppose it, people who have mixed feelings about it should not look to this indictment for any resolution of how they feel. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back to this special edition of HARDBALL.  We‘re back with our panel right now.  Let me go right back to where we were picking up here. 

You had a thought. 

MITCHELL:  Well, the war between the CIA and the vice president‘s office was right at a fever pitch when all of this started.  So Joe Wilson was someone that they did want to discredit because they thought he was, as John Dickerson said, an example of the CIA screwing them.  That was basically their view.

MATTHEWS:  What was the fight between the vice president‘s office and the CIA, which is the backdrop for so much, was it about the war in Iraq and the CIA didn‘t believe in the war and the vice president‘s office did? 

MITCHELL:  And it was about Ahmed Chalabi who was the vice president‘s guy, and the CIA.

MATTHEWS:  The story being that the only in history to get his country from the vice president‘s office was Ahmed Chalabi. 

(LAUGHTER)

MITCHELL:  And you know, the CIA had discredited him and believed that he was not an honest broker.  I mean, they were absolutely on opposite sides of this whole Iraq issue.  And that is what was coming to a head over who was responsible for getting those 16 words in the State of the Union speech.  And that brings you directly to Joe Wilson. 

MATTHEWS:  Kate, take time.  You‘re very frustrated here.  I want to give you full time here. 

O‘BEIRNE:  Well, it just seems to me those of us who are—many of us of course already think Scooter Libby has a major problem based on what might be a faulty memory.  And we think how is that possible that you could have a faulty memory about such a thing? 

And yet I‘m seeing an awful lot of faulty memories on display.  Have people forgotten that the 16 words in the State of the Union were attributable to the British government?  “The British government has learned” that there was an attempt to buy uranium in Africa. 

MATTHEWS:  But that was so they could cover for their source, right? 

O‘BEIRNE:  The British government.

MATTHEWS:  That‘s why they kept—they kept saying the British government because they had a source for this of our own intelligence. 

MITCHELL:  The CIA actually did back (ph) off. 

O‘BEIRNE:  And the British government was also a source and the British government post-war had their own investigation of pre-war intelligence, because it was as controversial in Britain as it was here.

MITCHELL:  And still said it was true.

O‘BEIRNE:  And they still say it is true.  Now, Joe Wilson comes back from this trip and he starts lying about what he learned.  He says the attempt to buy uranium in Niger was a flat-out lie.  That was a flat-out lie.  So how were they supposed to counter it? 

MATTHEWS:  Yes, by the way, when we all come back, I want somebody to register a verdict on whether there ever was an attempt by Saddam Hussein to buy nuclear materials in Africa, factually. 

Up next, will President Bush admit mistakes were made here and how damaged is his relationship with Karl Rove?  I‘m not sure that‘s the biggest story here. 

This is HARDBALL special report only on MSNBC.

(COMMERCIAL BREAK) 

(NEWSBREAK)

MATTHEWS:  Like everybody, I think I‘m a bit confounded about President Bush and trying to understand how much book learning he focuses on every week, how much he follows his hunch, who he trusts, how he does business, is he really relaxing when he goes to the ranch in Crawford, is he really deep down studying and grinding, how does he read, how does he learn? 

I think the big question we all have to learn as citizens right now is how is he going to react to this tumultuous week where he lost his Supreme Court nominee, he lost a top aide in security matters, the vice president lost his top person, and there is a lot of embarrassment all around?  I want to go to John Dickerson. 

John, I saw the president at the lectern leaving—on the White House lawn leaving town on late Friday afternoon.  And he had that look of almost like, I‘m waiting to think about this.  I‘m not ready to commit.  I don‘t know who to trust right now.  How did you read that amazing look of the president as he delivered those rather careful remarks about the indictment? 

DICKERSON:  Well, it‘s always tough to try and read his mood, but I think you probably noticed what they are feeling, which is that—or what he‘s feeling, which is his gut has served him really well.  And he has always known what is sort of baloney and what really matters. 

And even his critics give him credit for kind of knowing his own mind and knowing his heart, and some things have gone south on him here that—and Harriett Miers really I would put in the first category there. 

This was a gut call on him.  Lots of other people are being blamed, Karl was distracted, it was Andy Card‘s fault.  This was the president‘s call and he made a gut level call about both her and also about what the politics could bear both within his own party and in the Senate, and he got it horribly wrong.  And so.

MATTHEWS:  Right.  This is the first time, by the way, he has had to react by checking his gut and allowing that nomination to be withdrawn.  In the past if he was questioned about big tax cuts or the war in Iraq or the war in Afghanistan, he has always said, I‘m right, I‘m sticking to my guns. 

This time he allowed himself to go into retreat.  Is that going to affect his confidence—self-confidence? 

DICKERSON:  It must, but where it really will affect him is—you know, people are calling for resignations and firings and for him to do a lot of symbolic things to right the ship.  And perhaps he will do them.  I think his course is really going to be to just try and focus on what‘s in front of him.

But his base is the one that really notices the sort of phony firing when they see it.  And they quite like his ability to kind of know his own mind and stick to it regardless of what the elites or the pundits say.  So he has to be careful now about doing anything that his base, with whom he has had issues of late, will see as a kind of phony capitulation. 

MATTHEWS:  Yes, I once recommended to one of his staff people, I said, you know, the president would be a lot more popular up in the blue states if just one weekend he brought Laura up to New York, saw a play or two, stayed at some hotel, and just acted like a regular American. 

He said.

MITCHELL:  He‘d hate it.

MATTHEWS:  . if you ever recommended that to this president, he would say, what committee cooked that idea up? 

(LAUGHTER)

MITCHELL:  He may have an opportunity soon.  There are reports that if the treasury secretary leaves next month, that Andy Card might move over to Treasury.  And that meant.

MATTHEWS:  Where he wants to go, by the way.

MITCHELL:  That could mean bringing some new blood in.  But then, of course, how much will he feel he has to pay lip service to the base, whom would he bring in, would that person shake the place up?  How much is this president.

MATTHEWS:  Kate, you‘re a conservative, let me ask you.  Who would—it seems to me it‘s the same question of the Supreme Court nomination.  I sense he‘s going to upgrade next time, more Ivy League to answer those critics, the neocons who criticized his nomination of Harriet Miers, and a bit to the right—a little bit to the right of her, clearly, so up and right. 

But also if he wants to re-up a better staff, he wants to recruit more staff, does he go back to Don Evans, former commerce secretary, a sound guy but not an ideologue? 

O‘BEIRNE:  Good choice.

MATTHEWS:  Does he bring back Nick Calio if he can, the top lobbyist for the administration?  What would make you happy?  What would impress you or do you think he should do nothing? 

O‘BEIRNE:  I think you might be coming up with a diagnosis that he hasn‘t come up with.  Things were looking up for him by Friday.  Friday was not a bad day in a bad week.  It would have been worse if Harriet Miers hadn‘t been withdrawn.  That would have been terrible. 

I think he recognized it was a political blunder.  What might he have learned because he did go with his gut on that one?  There was some voices in the White House advising against it and he ignored them.  So maybe he learned a little something there. 

MITCHELL:  I don‘t know what you would call a bad day. 

O‘BEIRNE:  No, Friday was a much better day.  What if Harriet Miers hadn‘t withdrawn?  What if she hadn‘t withdrawn and she was.

MITCHELL:  She had no choice. 

MATTHEWS:  She had to withdraw.

O‘BEIRNE:  Well, nobody—who was predicting that until she all of a sudden did?  Everybody was saying, there is no way he will let that happen.  Even if she wants to, people were saying.

MATTHEWS:  That‘s our point.  He let it happen. 

O‘BEIRNE:  Exactly—no, no, he permitted her to withdraw.  He can correct a mistake, is what I‘m saying here. 

MITCHELL:  No, I think on Chris‘ Sunday show a week or two ago.

O‘BEIRNE:  And come Friday.

MITCHELL:  . we all predicted that he was going to let her withdraw. 

O‘BEIRNE:  He corrected his mistake and come Friday, we didn‘t have five White House staffers indicted.  We had a single one. 

MATTHEWS:  So you basically say—you say stick with his hand. 

O‘BEIRNE:  Yes. 

MATTHEWS:  OK, let me go to Mike.  I haven‘t heard from you in a while.  Mike, the president of the United States does have a challenge.  He has lost Scooter Libby on the security front.  I guess they will bring in Addington, I‘ve heard that rumor today, another guy who is part of that bunch on the vice president‘s staff who were all involved in trying to deal with the Joe Wilson threat. 

I‘m not sure that‘s a solution.  What other changes do you think he is going to pull? 

ALLEN:  Well, first of all, I agree with Kate that Friday not having Mr. Rove indicted is a huge thing and don‘t buy these stories that says he‘s still in jeopardy.  His friends feel clearly that he has been cleared.  He is being careful not to be ebullient, not to gloat because he doesn‘t want to taunt the prosecutor.  But his team feels very good. 

I agree completely with Kate that it‘s a good thing for the president that Harriet Miers stepped aside.  He was bleeding.  That decision was always going to diminish him.  Now he has a chance to make a decision that will excite people, that will show his range, that will show that he can think bigger, that he can put someone on the court who will last longer and be a better part of his legacy. 

So people in the White House are excited about that turnaround.  They also are excited about the fact that there may not be an impetus for the president to listen to other people. 

As you know, Chris, one of the biggest weaknesses in this system is there is no devil‘s advocate around that table.  A friend of mine has the expression “breathing each other‘s fumes.”  And that has always been this White House‘s problems. 

And so people in there who have been worried about that think that this is the chance to do something different.  So if you get an exciting core pick, the president is doing his international travel.  He is doing a little foreshadowing of a January agenda.

And in January, they are hoping to start clean, as one of them put it to my colleague, Karen Tumulty, press the reset button on the presidency, make good use of the three years ahead. 

MATTHEWS:  God, you sound like Tony Robbins.  I feel better already. 

Anyway, when we return, President Bush promised to restore integrity to the White House, how much of a credibility hit was that indictment last week? 

This is HARDBALL, a special report this Sunday night only on MSNBC. 

(BEGIN VIDEO CLIP)

FITZGERALD:  This is a very serious matter.  And compromising national security information is a very serious matter.  But the need to get to the bottom of what happened and whether national security was compromised by inadvertence, by recklessness, by maliciousness is extremely important.  We need to know the truth.  And anyone who would go into a grand jury and lie, obstruct and impede the investigation has committed a serious crime.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

MCCLELLAN:  I said that as part of helping the investigators move forward on the investigation, we‘re not going to get into commenting on it.  That was something I stated back near that time as well. 

DAVID GREGORY, NBC CHIEF WHITE HOUSE CORRESPONDENT:  Scott, I mean, just—I mean, this is ridiculous.  Do you stand by your remarks from that podium or not? 

MCCLELLAN:  David, there will be a time to talk about this, but now is not the time to talk about it. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  That was White House press secretary Scott McClellan and NBC‘s chief White House correspondent David Gregory duking it out a bit in the briefing room this summer.  We‘re back with our all-star panel of Mike Allen, John Dickerson, Kate O‘Bierne, and Andrea Mitchell. 

Andrea, how do you believe Scott McClellan now?  He was the guy covering for all these guys, saying they nothing to do with it, nothing to do with it.  One thing we know, they all had something to do with it.  There was only one indictment.  But everybody was talking about this guy. 

Everybody was talking to the press about it. 

MITCHELL:  Scott McClellan was lied to.  And.

MATTHEWS:  And the vice president never told him that he knew all about the Valerie Wilson thing. 

MITCHELL:  No.  David Gregory has said, and other White House correspondents are saying that Scott is going to have to come to them and acknowledge that he was wrong, that he has a credibility issue, he knows it, and it‘s a very painful time.  Any press secretary who has been lied to, Dee Dee Myers went through this with Bill Clinton, they have all gone through this experience, but this was very, very... 

(CROSSTALK)

MATTHEWS:  Well, here is the role of White House credibility, Kate.  The White House press secretary is not a top position in this administration.  It‘s a middle to welterweight position.  Your job is to take the stuff you‘re given and go out and sell it.  Do you think he ever honestly was able to walk into the room and say to Scooter Libby, did you or did you not have anything-to-do with this leak, and demand an answer from the guy?  The guy says, put the official position out, we had nothing to do with it, boy, and get out of here.  Is that—that‘s the protocol over there, he can‘t demand an honest answer from Karl Rove.  He‘s scared to death of the guy. 

O‘BEIRNE:  You know, everybody was told to fully cooperate, though.  And this White House does get points from the prosecutor for fully cooperating.                 I mean, this really has to be said.  The president not only doesn‘t trash this prosecutor, he actually praises Pat Fitzgerald, unlike.

MATTHEWS:  But why didn‘t he get his staff to honestly talk to him? 

O‘BEIRNE:  Unlike the predecessor—well.

MATTHEWS:  Why didn‘t he tell his staff to be honest with him?

O‘BEIRNE:  His staff waived all privileges.

MATTHEWS:  But why didn‘t he tell the truth?

O‘BEIRNE:  . the staff gave up all documentation.  We don‘t know yet, Scott McClellan clearly has explaining to do, we don‘t know yet what exactly they were asked. 

MATTHEWS:  Well, why didn‘t Karl and all those guys.

O‘BEIRNE:  . and what exactly they told him.

MATTHEWS:  . come clean two years ago?  Why did it take two years to squeeze the truth out of this crowd and still have a problem getting it out of Scooter?  Why is it so hard for people to tell the truth if the president tells them to tell the truth? 

O‘BEIRNE:  Because they may have told themselves that the underlying question was who outed a covert CIA agent?  Maybe they are telling themselves, I didn‘t out a covert CIA agent. 

MATTHEWS:  Well, I just told the press about it as many times as I could do it. 

O‘BEIRNE:  I‘m assuming that‘s what they‘re telling themselves, Chris. 

MATTHEWS:  Let me go to—I‘m sorry, let Mike in here.  Mike Allen, go ahead, explain what you have said, you have challenged—I‘m saying a press secretary is fairly low in the food chain at the White House.  He goes around asks these big shots, did you leak this stuff, did you talk to the press?  They say, tell him I didn‘t do it.  And that‘s the end of the conversation, isn‘t it? 

ALLEN:  Yes.  No, I just want to point out, Scott McClellan is not scared of Karl Rove.  Scott is from the Texas crowd.  They are very close.  He is considered part of family.  But you‘re right that this is not an administration that uses the press secretary to go out and drive a message. 

He‘s there essentially to put out white noise, to repeat what‘s been said and to sort of like push back the people who were asking the questions.  Now Kate O‘Beirne.

MATTHEWS:  He‘s Ron Ziegler.  He‘s Ron Ziegler, you‘re saying, from Watergate.  A (INAUDIBLE) clock figure that comes out every once in a while and goes cuckoo, cuckoo, and goes back in.  He doesn‘t tell the truth.

ALLEN:  No, I do not agree with that.  I do not agree with that. 

MATTHEWS:  OK.  You tell me—OK.

(CROSSTALK)

ALLEN:  Kate was talking about faulty memories.  And I just want to remind you that both the president and Scott used extremely legalistic language in talking about this.  They said again and again that no one was involved in leaking classified information.  And it‘s clear that that formulation was cooked up because they knew that there was more to it than what they were saying.  And that was obvious for all to see.

MATTHEWS:  Like, “I did not have sexual relations with that woman.” Like, I did not have—that was always an odd phrase.  I‘ve never heard anybody say, you know, my girlfriend and I had sexual relations last night.  I‘ve never heard anybody talk like that—or my wife.  I hear it—when you hear odd English, you should pay attention, right? 

MITCHELL:  You know, this is not the first time we have seen this kind of thing happen.  Remember when Grenada was invaded, Larry Speaks goes into National Security Adviser John Poindexter‘s office and says, there is a report—some of these reporters are calling and saying we‘re invading Grenada.  And Poindexter says, tell them, preposterous.  And Speaks of course came in and told all of us, preposterous. 

MATTHEWS:  Oh, they can‘t stand the truth.

When we come back, we‘re going to return, can President Bush bounce back?  He‘s done it before. 

And a reminder, the political debate never stops on Hardblogger, our political blog Web site.  And now you can download podcasts of HARDBALL.  Just go to our Web site, hardball.msnbc.com. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BUSH:  We‘re all saddened by today‘s news.  We remain wholly focused on the many issues and opportunities facing this country.  I have got a job to do and so do the people that work in the White House. 

(END VIDEO CLIP)

MATTHEWS:  That was President Bush Friday with his remarks on the indictment and resignation of Scooter Libby.  There he was on the White House lawn.  It was a standup gesture by the president in a week where he took a lot of political punches.  He certainly did. 

Let me ask about this question to everybody here.  We have only got a couple of minutes.  One each, I think it comes down to.  And you see everybody in the box there.  I‘m going to start at the bottom there with Dickerson, work my way to the left to Mike Allen, and then moving up to the top. 

MITCHELL:  We look like “Hollywood Squares.”

MATTHEWS:  “Hollywood Squares”.

O‘BEIRNE:  We‘re “The Brady Bunch.”

MATTHEWS:  Look, let me start with the same question for everybody.  Imagine that you‘re with the smartest people in the world, you‘re sitting next to the president of the United States, and you‘re trying to get his car out of the ditch after losing his Supreme Court nominee, more bad news coming out of Iraq, including the bad grim figure of 2,000 dead now and something like 7,000, really, for life hurt, suffering amputations, horrible stories. 

And they are all the reality in every American‘s home right now that suffers from this.  And of course we have got this weird thing with huge oil profits, reports coming out on top of high gas prices.  And heating oil expenses rising as the winter comes on.  It will probably be a bad winter.  All this facing you.  We don‘t know what the market is going to do.  What does the president need in terms of personnel, in terms of hunch right now?  John Dickerson? 

DICKERSON:  I think he needs—well, the two problems you talked about are going to continue to bedevil them.  Because there is not much that a president can do.  I mean, he‘s not going to withdraw troops.  There‘s nit much he can do on the gas question.  But what he needs is people around him he can trust, which means really the team he has got.  He doesn‘t need the smartest people in the world.  He is suspicious of those kind of people.  And he needs people who can help.

MATTHEWS:  I mean, street smart. 

DICKERSON:  That‘s right.  He thinks the people around him have that.  And he needs to focus on the two steps in front of him, deal with this nomination, speak about avian flu on Tuesday, and just do the simple tasks that show he is working, as he talked about on Friday.  You know, he has got to get to doing his job, just show he is working and try and build up these tiny little successes.  They know it‘s a steep hill ahead of him. 

MATTHEWS:  Mike Allen. 

ALLEN:  Yes, Chris, someone very close to the president told me Friday that the two things he needs to do are reconnect with the American people and take command.  That latter is at the root of a lot of these problems you will see.  And so what you are going to see is the president using the tools of the office. 

They point out to me, even when you‘re down, when you‘re president of the United States, you have the bully pulpit, you can control the agenda.  So you‘re going to see the president out talking about issues, not being a prisoner of the White House. 

I saw earlier today on “HEADLINERS & LEGENDS,” at the depths of Jimmy Carter‘s presidency, he was at 37 percent.  There was an ABC poll today with the president at 39 percent.  There was no one inside that can argue they don‘t have a problem. 

MATTHEWS:  Well, I love that because I think Mike Allen‘s analysis is my own.  I think the president has always benefited from three things: his ability to connect as a regular person, despite his wealth and background with most people, you can see it every time he campaigns; his family, which is still his greatest strength, he seems to have a regular family, he seems to be a good husband and a good father; and third is his decisiveness. 

I mean, how many guys would have said, we‘re going to Iraq?  I mean, a lot of us think it was a big mistake, but, you know, it was a decision.  And how many presidents go—so he says—Mike says there—let‘s pick up on this, he said, connect with the people again. 

Does that mean—and then also be decisive.  Should he come out and speak to the American people and say, let me tell you what is going on here?  We made a case for war.  Some of the things we were wrong about.  But I still think that the predominance of opinion and all the facts say we should have gone to war. 

We had some challenge to that and we went overboard, some of the people in defending the war, but I don‘t believe in it.  What should he say?  He has to come clean, doesn‘t he?

MITCHELL:  I think he should.  I think he should separate himself from this whole mess.  That may mean cutting loose Karl Rove, as much as he would hate to do that, whether or not he‘s indicted.  And I still think that you are not going to accomplish this with just optics and speech alone and public relations. 

He couldn‘t sell Social Security with the best PR around.  I think he needs Kim Baker, Ken Duberstein, Don Evans, I mean, you name the player, Vin Webber.  There are a lot of smart people.

MATTHEWS:  No.  They will look like training wheels.  He will never go along with those guys. 

MITCHELL:  I‘m not saying he would.  I‘m just saying that he should. 

MATTHEWS:  I agree with you, he needs somebody like that.  Grownups. 

O‘BEIRNE:  He has got smart enough people around him.  He‘s smart.

MATTHEWS:  Who?  Who are these people you keep talking about?

O‘BEIRNE:  He‘s smart enough himself. 

MATTHEWS:  Do you think the vice president has been smart through all of this? 

O‘BEIRNE:  I think the vice president is an enormous asset in this administration. 

MATTHEWS:  Has he been smart through all of this? 

O‘BEIRNE:  Look, he got elected in 2000 with a lot of these same people.  He got re-elected in a really tough campaign in 2004.

MATTHEWS:  He won by one state against a weak candidate.

O‘BEIRNE:  . with a lot of these same—during an unpopular war with a lot of these same people.  I will tell you what he has to do.  Two problems have been hubris, maybe some of that has been helped this week, which every White House faces.  And insularity.  And that might be because for five years.

(CROSSTALK)

O‘BEIRNE:  Exactly, they have been so under the gun, they don‘t need to replace personnel.  They can just reach out. 

MATTHEWS:  OK.  How about this?  Win by the sword, lose by the sword.  They destroyed John McCain in South Carolina with tough tactics, hardball tactics by Karl Rove.  They knocked out John Kerry with hardball tactics, the swiftboat stuff.  Sometimes the hardball tactics are legal and sometimes they are illegal. 

Thank you, Andrea Mitchell, Kate O‘Beirne, John Dickerson, and Mike Allen. 

Stay tuned for “MEET THE PRESS,” and HARDBALL will be back tomorrow at 5:00 and 7:00 with new developments in the CIA leak investigation. 

I‘m Chris Matthews, good evening. 

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