Guest: Jim Cramer, Jill Zuckman, Chris Cillizza, Michael Isikoff, Chris Dodd, Peter King
MIKE BARNICLE, GUEST HOST: Bail-out in Washington and rebound on Wall Street.
Let‘s play HARDBALL.
Good evening. I‘m Mike Barnicle, in tonight for Chris Matthews. Leading off tonight, the mother of all bail-outs. It has been a momentous day capping an unnerving week. The federal government began putting together a plan that could result in the biggest bail-out in United States history, all in an effort to restore confidence in the financial market. Wall Street reacted with enormous enthusiasm, the Dow gaining nearly 370 points at the close of business today. And the two presidential candidates talked about the crisis today and about each other.
(BEGIN VIDEO CLIP)
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL NOMINEE: I know these are difficult days, and I know there are a lot of families out there that are feeling anxiety about their jobs, about their homes, and about their retirement savings. But here‘s what I also know—this is not a time for fear. It‘s not a time for panic. It‘s a time for resolve and a time for leadership.
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: We‘ve heard a lot of words from Senator Obama over the course of this campaign, but maybe just this once he could spare us the lectures and admit to his own poor judgment in contributing to these problems. The crisis on Wall Street started in the Washington culture of lobbying and influence peddling, and he was right square in the middle of it.
(END VIDEO CLIP)
BARNICLE: Politics aside, what did this week tell us about what kind of president John McCain or Barack Obama might be? We‘ll talk to two members of Congress in a moment.
Also, there are so many questions left unanswered. How did we get into this mess? What exactly is being done about it? How much is it going to cost? Who‘s going to pay for it? And another great question: Who‘s to blame for all this? We‘ll try to get answers from CNBC‘s Erin Burnett.
And let‘s not forget the “troopergate” investigation in Alaska. We now know Sarah Palin‘s husband, Todd, the “first dude,” has said thanks but no thanks to a subpoena ordering him to testify. The thing is, he just might get away with it.
In the “Politics Fix,” we‘ve got have the latest poll numbers from some key Midwestern states. And we all know about the McCain/Palin ticket, but did we just hear Sarah Palin talk about the Palin/McCain ticket? The answer to that one on the HARDBALL “Sideshow.”
The latest polls out today, though, give Barack Obama a slight edge. He leads by 5 points in the Gallup tracking poll. Obama leads by 1 point in the “Hotline” tracking poll, and the Pollster.com average has Barack Obama leading by 2 points.
But we begin with the economic crisis. Senator Chris Dodd, Democrat of Connecticut, is the chairman of the Banking Committee. Senator, thanks for joining us.
SEN. CHRIS DODD (D-CT), BANKING COMMITTEE CHAIRMAN: Thank you, Michael.
BARNICLE: I would like to read to you a letter that appeared in “The New York Times” today, letters to the editor, from a woman in Wayland, Massachusetts, Christine Ridout. And she writes, “Why is it that when the wizards of Wall Street are making billions, they get to keep the money, making some of them fabulously wealthy, but when they are utterly incompetent and their enterprises collapse, the taxpayers pick up the tab? Where is the justice?”
Senator Dodd, where‘s the justice, if there is any, in this bail-out?
DODD: Well, there isn‘t any, and I‘m angry about it. Someone once described it, Mike, in even a briefer sentence. We‘ve reached a point where we seem to privatize wealth and socialize debt. And that‘s where we are, and I‘m not happy.
I gather today on your show, you‘re going to go back and review where this has all been. But let me just say that at this juncture, as chairman of this committee, I‘ve already met with my Banking Committee this morning, Democrats and Republicans, we‘ve got to come up with an answer here.
I can‘t even begin to describe to you adequately the mood last evening with the leadership of the House, the Senate, Democrats and Republicans, in a meeting with Ben Bernanke, the chairman of the Federal Reserve, and Hank Paulson, the secretary of the Treasury, Chris Cox, when they described what situation we‘re in not only here but globally. And if we fail to act in the coming days, the consequences for us here at home, as well as around the world—pension funds, 401(k)s, mutual funds, jobs, literally a meltdown of the financial system.
So we‘re at a crossroads here where we need to be talking how we respond to this. And clearly, that‘s what we‘re going to be doing all weekend, as I‘m hoping to get this plan from the Treasury Department either later today or tomorrow so we can respond to it.
BARNICLE: Well, I want to ask you about that, but first there‘s been a lot of people responding to the plan. One of them responding today was Senator John McCain, who took a shot at you, I think. Listen to this.
(BEGIN VIDEO CLIP)
MCCAIN: While Fannie and Freddie were working to keep Congress away from their house of cards, Senator Obama was taking their money. He got more, in fact, than any other member of Congress except for the Democratic chairman of the committee that oversees them.
(END VIDEO CLIP)
BARNICLE: Your friend, your colleague, taking a shot at you.
DODD: Yes.
BARNICLE: What do you think this says, you know, about the way we conduct business in this country, when people are losing their homes but in the course of a presidential campaign, you know, there are political shots going back and forth on a huge issue like this?
DODD: Well, it‘s a question of temperament. And when you don‘t have anything constructive to offer, I guess you do what John McCain did.
I wish, Mike, you could have been in that room last evening not just to hear what Chairman Bernanke and Hank Paulson had to say. But I know how people generally feel about Congress, and it‘s not great. And I‘m sorry they weren‘t a witness to after Hank Paulson and Bernanke spoke. Democrats, Republicans, the speaker, the leader of our Senate, Harry Reid, sat there and said, This is too critical. We‘re putting politics aside. Even though in 45 days, we‘ll be witnessing the most important election in our lifetime, we need to put aside these differences and come together and do what‘s right for the country.
Where‘s John McCain today? I heard Barack Obama say he‘s willing to step up and support this idea if it makes sense for the country. What does John McCain do? He attacks Barack Obama. You ask yourself, what kind of a president do you want on January 20, an attacker like John McCain or someone who constructively is trying to bring together us as a people and lead this nation, not based on red states and blue states, but all of us. That‘s the leader I want. But let‘s talk about the plan.
BARNICLE: Well, first of all, what, if anything, did Secretary Paulson and Chairman Bernanke say to you that scared you, if they did scare you? What did they say?
DODD: Well, look, “scaring” is a little dramatic. I think—they said, Look, I mean, this is—we‘re at a moment here, not a matter of weeks away or months away or years away, we‘re a matter of hours or days away from the largest collapse of the financial markets in the history of this country, and the effect would be a global effect. And this was a very sobering moment. I‘ve listened to a lot of very important moments in a quarter of a century here, but I can‘t recall another moment as sobering as that one.
And I will tell you, Michael, what happened immediately thereafter was this five or ten seconds where the oxygen went out of the room. That‘s how dramatic it was. And obviously, these men don‘t use hyperbole. There was no press in the room. There was no one trying to score points politically. It took the breath away of everyone in that room.
BARNICLE: So are you people going to move expeditiously in Congress?
And can you define “expeditiously”?
DODD: Yes, I think we can. And look, we have to move on this. And I‘m waiting for the Treasury Department to come up and tell us what they specifically they want to do. And obviously, we‘ve got some ideas ourselves. Look, this can‘t just be about what they call “illiquid debt” -basically, a lot of bad mortgages or a lot of bad securitized debt that‘s out there. It also has to be about the cause of the problem.
Let me emphasize this again. And that is, Michael, you‘ve heard me talk about it for two years. And again, the secretary of the Treasury and the chairman, Bernanke, said it, as well. At the root cause of this is the housing foreclosure crisis. Still is today. So we can‘t just talk about what we do about the effects of this on Wall Street. We also need to talk about its cause.
And at this very hour, 9,000 to 10,000 people every day in the country are losing their homes. So part of this plan has to also affect people out there who are in danger of losing their residences, as well as their jobs, their retirement accounts, the 401(k)s. If it‘s just about Wall Street, then we‘ve got a problem. I‘m hopeful it will not be, and my intention is, over the weekend, to at least try and include some of these other pieces so that we can truly come together this week and get the job done.
BARNICLE: Where are we going to get the money for all this?
DODD: Well, that‘s—you know, we‘re not. I mean, that‘s the problem. We‘re going to have a debt with this problem. It‘s a taxpayer cost, at least I‘ve been told that, unless they‘re going to come up with something different here over the weekend.
The question and the answer is, not to be cute here, but gain, if we don‘t do anything, what are the costs? And if you have any credibility as a secretary of the Treasury and as chairman of the Federal Reserve Bank, they‘re there—what they described happening, Michael, would make whatever the cost of this program will be pale by comparison.
So I‘m not sure, at the end of the day, we have much of a choice. As angry as we may be about why we‘re here—and I have some strong views about why we‘re here, but I‘ll save that for another day.
BARNICLE: You know, you‘re going to be followed immediately by your friend, a great guy, Congressman Peter King, Republican from New York.
DODD: Right.
BARNICLE: And I‘m going to ask you the same question that I‘m going to ask him. Where has the president of the United States been in all of this? I saw him yesterday. He looked like a park ranger speaking in front of a bunch of trees for two minutes. I saw him again today. But it seems to me that the secretary of the Treasury is driving this and not the president. No?
DODD: Well, it is. And again, I don‘t want the to fall prey to the John McCain rhetoric of today, but it‘s been disappointing. In fact, I‘m told—and I‘m ready to be corrected on this—that the president‘s advisory group, economic advisory group, has not met since March.
In fact, last evening, the secretary of the Treasury came up to meet with the speaker in her offices. Why wasn‘t that meeting at the White House? I would have thought the president, at a moment like this, would have been inviting all of us down there as the leader of our country, saying what we need to be doing. I know he gave a speech, I guess in the Rose Garden, in this morning.
But candidly, it‘s moments like this that leadership is needed. And obviously, that‘s a decision that we‘ll be making on November 4 about the next administration. But I think it was glaring in many ways. And I say this respectfully. I‘m not interested in engaging in the acrimony at this moment. But it‘s been disappointing. And I have a lot of respect for Hank Paulson and Ben Bernanke.
BARNICLE: Senator Chris Dodd, thanks as always. We appreciate it.
New York City congressman Peter King joins us now. He sits on the Financial Services Committee. Congressman King, I think you probably heard that exchange I had with Senator Dodd.
REP. PETER KING (R-NY), FINANCIAL SERVICES COMMITTEE: Yes, I did.
BARNICLE: That question goes to you. I mean, where has the president of the United States been for the past two weeks? Obviously, he was on speaking to the nation today and he spoke to the nation briefly yesterday, but it seems that the secretary of the Treasury is driving this thing. Where‘s the president been?
KING: Mike, as I understand it, the president has made the decision that Hank Paulson has the most credibility with Wall Street. He has the most credibility with the financial markets. I was actually in a meeting yesterday with Tony Blair, and he was talking about the international respect there is for Hank Paulson.
So I think the president realizes, at this moment, to put Hank Paulson out front. He is the person who is going to drive it. But there‘s no doubt in my mind the president is totally engaged. The president is behind this. The president is working with it. But he genuinely believes that it‘s important for Hank Paulson and Ben Bernanke to be out there.
And for the president not to be getting—because it is a campaign year. And once President Bush would emerge on this, there‘d be the whole thing whether you‘re for Bush or anti-Bush and you get all that going. So I actually give him credit for having enough self-confidence to have Hank Paulson be the guy driving it. And so I—in a way, I think it‘s a little bit of a cheap shot, but listen, I understand that.
But also, you know, Chris mentioned the fact that the meeting was held on Capitol Hill. I actually thought that was a response to people such as Barney Frank and John Boehner saying that Congress was not enough involved. And by the administration coming to Capitol Hill, under the etiquette or protocol rules that we follow, that was really showing deference and respect to the congressional leaders, the fact that they came to the Speaker‘s office, rather than bringing them down to the White House.
So I think it‘s important to say right now—you know, the president
you know, when somebody in the administration makes a mistake or does something wrong, the president takes the blame and gets the rap. I think the fact that Hank Paulson and Ben Bernanke are doing, by all accounts, an excellent job right now, then the president should also get the credit, even though he‘s not looking for credit and I‘m not looking for any credit for the Republican Party right now.
BARNICLE: Philosophically and politically, do you agree with the idea of instituting a new form of the Resolution Trust Company from 15 years ago? DO you agree with what they‘re doing?
KING: Yes, but I don‘t think we have any alternative. And I again agree with a lot of what Chris said. I don‘t see the alternative to it right now because—listen, I don‘t like the idea either of the guys who are walking away with $30 million, $40 million, $50 million and taxpayers are stepping in. But the alternative to that—you know, it‘s the old thing about don‘t bite off your nose to spite your face—that we could have such an economic collapse that would cause millions of jobs to be lost and it would have a much worse impact on the taxpayer in the long run.
Also, and I‘m not betting on this, but I‘ve spoken to a number of economists who believe that, you know, many of these debts, while they don‘t have a value right now, they could well be worth something in the future under the, you know, new accounting rules we have of mark to market. We have to—because there was no actual value for them at this moment doesn‘t mean they‘re not going to be worth a lot in the future. So we could end up again selling these or the government could end up selling these securities for hundreds of billions of dollars in the future. So that‘s a bonus, if we get it.
But the main thing right now is to stabilize the markets, and it‘s only a first step. All this does is stabilize the market. It opens up lines of credit and it gives us the opportunity to try to correct the system so we can continue to compete in the 21st century. This is the first big step. The second big step, though, after that is to come up with a set of protocols and regulations where this won‘t happen again.
BARNICLE: You know, part of the system, it seems to me—and I don‘t understand it, certainly, as well as you do—but it seems to me that we‘ve been selling off debt to places like China and Saudi Arabia and other Middle Eastern countries, and now it seems, just anecdotally from reading the news accounts of what‘s happening, that many countries who formerly would buy some of this debt of ours are now looking at us like we‘re a pack of bust-outs and want no part of buying any of that debt. So what does that mean going down the road in terms of selling this paper that you‘re talking about?
KING: Well, if that continues, obviously, that‘s going to be a serious problem for us because we do rely, obviously, on you know, foreign money coming in and buying our paper. So at that‘s why I think having Hank Paulson there, having Ben Bernanke there, setting up this as quickly as we can next week, both quickly but also effectively, I think is going to restore confidence because with all of the imperfections, we still do have the strongest economy in the world and we still do have a very intact financial system, provided we can get this in place right now and open up the lines of credit.
That‘s why the next week or two is so important for a number of reasons, including what you just said, as we continue to get foreign investment because if they don‘t buy our paper, you know, we are going to have a real problem. I think we can, though. I have a lot of faith in Hank Paulson. I‘m looking upon him, if I can mix metaphors here, as you know, like, the General Petraeus of the financial recovery.
BARNICLE: Well, we‘ve got a surge going on today on Wall Street. Let‘s hope it continues. Congressman Peter King, thanks very much. We appreciate it.
Coming up: After the financial meltdown this week, who‘s paying for this bail-out? And are we out of the woods? We get a reality check on where things go from here from international superstar CNBC‘s Erin Burnett. She‘s coming up next.
You‘re watching HARDBALL, only on MSNBC.
(BEGIN VIDEO CLIP)
MCCAIN: There‘s only one candidate in this race who has a record of reaching across the aisle to work out the bipartisan solutions needed to move our country forward in times of crisis. I will bring that same spirit of bipartisan cooperation to the White House.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
OBAMA: We can‘t keep on having drivers who are going to drive us into a ditch. We‘ve got to have somebody who has a clear sense of direction about where we need to take the country. Now, this morning, Senator McCain gave a speech in which his big solution to this worldwide economic crisis was to blame me for it.
(END VIDEO CLIP)
BARNICLE: OK. Welcome back to HARDBALL. The U.S. financial system has just come through one of the most tumultuous weeks in generations, and a lot of people are probably still scratching their heads and saying, What happened? Joining us now, CNBC‘s Erin Burnett and—oh, Jim Cramer is there!
ERIN BURNETT, CNBC: There he is!
BARNICLE: “Mad Money” himself is there. All right. Well, I‘m going to ask one question and then I can go get a cup of coffee and the two of you can continue. Off of what Barack Obama said, who is to blame, or why are people blaming everybody, rather than coming up with a rapid-fire solution? Maybe they are doing that.
BURNETT: Well, I know Jim has interesting ideas on who to blame, too.
I think the short answer to that is not short sellers, which some people would say today. But a little bit of everybody is the honest-to-God truth. And I think it comes down to a human thing called greed, and it comes down to some very lax or nonexistent regulation in the areas we might have needed it most.
So, I don‘t know what Jim would say to this, Mike, but it seems like what we needed was better, smarter regulation, not necessarily more regulation. But that‘s a big part of the problem.
BARNICLE: Jimmy, what do you say?
JIM CRAMER, HOST, “MAD MONEY”: Well, we didn‘t enforce regulations. We adopted a laissez-faire attitude, and felt that the market could never be wrong.
It was an ideological and ignorance combination that has made it so that we have paid out $900 billion so far for whatever. That hasn‘t worked. And maybe we will spend another $500 billion to get it right.
BARNICLE: So, let me ask the both of you—and start with you, Cramer—a question that doesn‘t come from, you know, any Wall Street wizards—and all of this is beyond me, except for this one question that I‘m going to ask you. Who is going to be paying for this? Is it going to be my kids and my grandchildren? Who is going to be paying for the cost of this?
CRAMER: No. Actually, this is the first one that you won‘t have to worry about. All the other seizures and everything else are probably never going to make us money, and cost us.
Here, if we are smart about it, if you get the right guy in, we will buy these mortgages maybe 20 cents on the dollar. We can hold them for 18 months, two years. Hardworking people do not default after they have been in their homes for three years. That tends to be the—the period that these people are sitting on their mortgages. This one won‘t cost us anything. This is the first one that Bernanke and Paulson have come up with that is not a disgrace.
BURNETT: Well, it depends, too.
I think, to Jim‘s point, it depends what price the government is going to be able to pay. They‘re going to use taxpayer money. So, there‘s a bill up front.
And, then, Jim, I hear what you‘re saying. You‘re saying it all depends at what price they get it. Then maybe we can make money for the taxpayer.
CRAMER: If they put me in charge of it, I will be able to—I will be able to get a couple hundred billion out of the—I‘m not kidding. I have been right on this thing. I‘m like fed up.
BURNETT: Yes.
CRAMER: But if they let me do the buy, of which I used to trade billions of bonds, at least I can give you a floor.
BURNETT: Yes. The question is, what‘s the price going to be?
BARNICLE: OK. So, explain this to me and to the people out there watching, in English, so that we can understand it, OK?
BURNETT: Mm-hmm.
BARNICLE: The subprime mortgage crisis that causes this collapse, or near total collapse, how does it work?
It used to be George Bailey, you would go to the bank. Jimmy Stewart would be behind the counter. You would get a mortgage. You would pay the mortgage every month, and he would own the mortgage. But that no longer happens, correct?
BURNETT: Right.
BARNICLE: What happens to the mortgage?
BURNETT: So, let‘s play a game here, Jim. Let‘s say Mike is trying to get a mortgage. And I‘m, let‘s say, a Wachovia guy, and you‘re an investor, all right, Jim?
CRAMER: Right.
BURNETT: You got it?
OK. So, Mike, you come to me and say, I want a loan, $200,000. I want to buy a house.
BARNICLE: Yes.
BURNETT: I say, all right, I will give you a loan. I will give you a loan at 5 percent.
And, then, what I do is, I give you the loan, and I immediately go and take that loan, and I sell it to Jim. And my ability to do that frees up my money. I‘m then not—if you don‘t pay your loan, Jim‘s sitting on the risk of you not paying the loan, in my view. So, then I can go lend to more people, and create more mortgages. And then I keep selling them to Jim.
BARNICLE: OK.
BURNETT: OK? So, that‘s—that‘s the simple way it works.
BARNICLE: So—so, Jim, when you have got my mortgage from Erin, do you hold it, or do you continue to sell pieces of it to other people?
CRAMER: I try to sell it, too, because I presume that you had no discipline, probably didn‘t do any work.
BARNICLE: That‘s true, yes.
CRAMER: Maybe it was a no-documented loan.
BURNETT: Mm-hmm.
CRAMER: And the last thing I want is the piece of paper you give me.
BURNETT: Right.
(CROSSTALK)
BURNETT: So, I would do everything I can to try to get it very quickly over to Dresden.
BURNETT: Exactly.
(LAUGHTER)
BURNETT: Because I‘m thinking—I‘m saying, hey, look, if I‘m not—why do I need to even verify what your income is? I know I can sell it to Jim.
BARNICLE: OK.
CRAMER: But, remember, Bernanke and Greenspan really pushed this stuff. They love these tease loans.
Now, these guys, I don‘t know whatever happened to Bernanke. He‘s the Fed chair. But he was really responsible for a lot of what I regard as being the notion that we should put octane in the system. He is a great Princeton professor. The Tigers are going to have a dynamite season. It‘s not too late to be on the pom-pom...
(CROSSTALK)
CRAMER: ... the sideline.
BARNICLE: All right.
(CROSSTALK)
CRAMER: How about that guy Cox?
BARNICLE: Let‘s pick up the loan. I‘m talking to George Bailey.
That‘s you.
BURNETT: Right.
BARNICLE: You‘re from Wachovia. You‘re heavily regulated by the federal government, because you‘re a bank.
BURNETT: Right.
BARNICLE: Is Jim regulated?
BURNETT: No. Jim is not regulated. Jim can do whatever he wants, pretty much, Jim.
CRAMER: It‘s a great world. I‘m Potter.
BURNETT: Right.
BARNICLE: So, is this the crux of the issue here, the fact that you have my mortgage and are selling my mortgage, Jimmy, and you‘re not regulated, while Erin is regulated?
CRAMER: There‘s about 10 organizations and entities that regulate mortgages. And all of them decided the other guy would do it.
BURNETT: Right.
CRAMER: And there really was no discipline to the system. And you could also blame the people who took on too much debt.
But if the government says it‘s an ownership society, don‘t you want to be part of it, even if you don‘t have any money?
BARNICLE: OK. Yes, I do. I want to read this other letter to the editor from “The New York Times” today to both of you.
BURNETT: Mm-hmm.
BARNICLE: And this is from Nathan Kottke from Saint Paul.
Hi, Nathan. How is it going? We‘re reading your letter.
And it‘s addressed—instead of to “The New York Times,” it‘s addressed to “Dear Mr. Bernanke and Mr. Paulson. My student loans are too big, and it is hurting the economy. Can I have a bailout, please? I need $92,000. Thanks.”
What do you tell people like Nathan Kottke, who are—seem to be, at some extent, on the hook for this big bailout? And they can‘t pay their own bills?
BURNETT: Jim, go.
CRAMER: I would tell him that, Nathan, I‘m sorry, but I want to avoid Great Depression II, and there‘s going to be some casualties. You are not going to be able to get as good a deal as you would like, but Great Depression II must be taken off the table.
BURNETT: OK, wait, but that‘s Jim speaking.
I‘m—who am I now, Jim? I‘m Washington.
CRAMER: Oh, you‘re Donna Reed. I don‘t know who you are.
BURNETT: I say, come on. Bring me your poor, tired, huddled masses.
I have got a list here, Jim. Autos are sitting there waiting for $25 billion.
BARNICLE: Before you get to autos...
CRAMER: Oh, they got to get that. This—those are key states.
BURNETT: Right. Why not give it to the students?
BARNICLE: Well, before you get to autos in Ohio and Michigan, before you even get to the students, I mean, what about paying the people in Iraq and Afghanistan? What about those...
CRAMER: We give them $500 bill. I think we keep $500 bill over here, see if we do a little better job than they did with the Iraqis.
BARNICLE: Where is this money coming from?
(CROSSTALK)
BURNETT: You know what? This is a huge point, Mike. And Jim‘s been talking about this today, too.
But the reality of it is, is we don‘t have the money right now. And even if Jim is right—and his analysis on this has been spot-on—he‘s calling for a bailout like this for a while.
CRAMER: Thank you.
BURNETT: Even if we make money down the line, right now, money has to be put up. And we have put up—and some would argue, as Jim said, it could be $1.5 trillion when we‘re done.
CRAMER: Nine hundred billion. We have put up $900 billion.
BURNETT: OK. So, let‘s say, when we‘re done, $1.5 trillion. That money is being borrowed. That money is coming from somewhere. We are going to have to print that money.
And, down the line, that creates inflation and it creates an economy that will not be able to grow as—as quickly as a strong economy. The alternative, though, Mike—you heard what Christopher Dodd said he heard in that room—the alternative was economic Armageddon. It‘s a tough choice. It‘s a Hobson‘s choice.
CRAMER: Herbert Hoover was worried about the exact same thing.
BURNETT: Mm-hmm.
CRAMER: Now, you know, there are a lot of people now doing revisionist history, Mike.
I‘m hearing guys saying, you know, Hoover did the right thing. I have whole people in my family who say that that is the worst thing that ever happened.
(LAUGHTER)
CRAMER: I‘m not going to reopen whether Hoover was good or not.
(CROSSTALK)
BARNICLE: Oh, thank you.
BURNETT: Wow.
BARNICLE: Thank you very much. And thanks, both of you, for depressing me about the future.
(LAUGHTER)
BARNICLE: Erin Burnett and Jim Cramer.
“Mad Money” airs weeknights at 6:00 and 11:00.
Up next: Does Sarah Palin know what office she‘s running for? Listen closely to this.
(BEGIN VIDEO CLIP)
GOV. SARAH PALIN (R-AK), VICE PRESIDENTIAL NOMINEE: That‘s exactly what we‘re going to do in a Palin and McCain administration.
(END VIDEO CLIP)
BARNICLE: OK.
More on Palin‘s mixup next on the “Sideshow.”
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
BARNICLE: Back to HARDBALL.
And time for the “Sideshow.”
Heads will roll. Yesterday, John McCain said he would bring accountability to Washington by firing Chris Cox, chairman of the Securities and Exchange Commission, the SEC. Well, in his economic speech today, John McCain took on an interesting new target for the credit crisis.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL NOMINEE: My friends, that kind of accountability and responsibility is missing in Washington today. That‘s why I believe that the chairman of the FEC should resign and leave office and be replaced.
(END VIDEO CLIP)
BARNICLE: OK. FEC? That‘s the Federal Elections Commission, not what he meant, of course.
But here‘s a tip to Senator McCain. Watch your back. We know now that Governor Palin is the big draw of the Republican ticket out on the road. Check out what Governor Palin said yesterday at a rally in Iowa.
(BEGIN VIDEO CLIP)
PALIN: Our family knows that the best way to help small business is to take less from them and leave more for them, so that they can expand and jobs can then be created.
(CHEERING AND APPLAUSE)
PALIN: That‘s exactly what we‘re going to do in a Palin and McCain administration.
(END VIDEO CLIP)
BARNICLE: A Palin/McCain administration. She might be getting a little ahead of herself here.
But, next, when comes—when it comes to party loyalty, it turns out the answer might be in your DNA. A new study published in the journal “Science” found that people who react strongly to threatening images or loud sounds are more likely to hold conservative stances on issues, whereas people with a mellower response tend to have more liberal views.
You can bet political pollsters are going to have fun with that one.
Boo!
That‘s for you conservatives out there.
(LAUGHTER)
BARNICLE: Time now for tonight‘s “Big Number.”
Today, Treasury boss Hank Paulson said the bank bailout may cost taxpayers hundreds of billions. That‘s an incredible number. But get a load of this. “Politico” reports, congressional leaders say that figure could actually be much higher. According to those guys, it could end up being $1 trillion. That‘s 12 zeros, an unprecedented move, a trillion dollars—tonight‘s “Big Number.”
Up next: The so-called trooper-gate investigation continues to dog Governor Palin, with her husband now refusing to testify. Are the Palins stonewalling, or is this investigation all about partisan politics?
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
MARGARET BRENNAN, CNBC CORRESPONDENT: I am Margaret Brennan with your CNBC “Market Wrap.”
Stocks soared as the government announced plans to relieve financial institutions of bad debt and temporarily insure money market deposits. It also temporarily banned short selling on some financial stocks.
And, with all of that news, it ended up to a 368-point gain on the Dow Jones industrial average. After all of the turmoil that we have seen this week, the Dow was down just 34 points on the week.
The S&P 500 jumped 48 points today. The Nasdaq saw a nearly 75-point gain.
That‘s it from CNBC, first in business worldwide—now back to
HARDBALL.
BARNICLE: Welcome back to HARDBALL.
Sarah Palin‘s husband, Todd, is refusing to testify in the so-called trooper-gate investigation. But the Alaska state senator overseeing the probe said today it would be completed by early October, just the same.
It has all raised the political stakes in Alaska and for those voters who happen to be watching this nationwide.
HARDBALL‘s David Shuster has more.
(BEGIN VIDEOTAPE)
DAVID SHUSTER, NBC CORRESPONDENT (voice-over): Today, the Palins campaigned in Minnesota and gave no hint of the drama unfolding back in Alaska.
PALIN: Thank you, Minnesota!
SHUSTER: Last night, a lawyer for Todd Palin said he would not honor an order to testify in the abuse-of-power investigation. A Palin campaign spokesman claimed the probe is politically tainted and that the lead investigator is unfair.
MEG STAPLETON, FORMER AIDE TO GOVERNOR SARAH PALIN: His insistence on a continuing partisan inquiry in the middle of a presidential election leaves little doubt that politics are afoot.
SHUSTER: Democrats and a few Republicans in Alaska charge, however, it‘s the McCain/Palin campaign playing politics by stonewalling the investigation.
The case itself centers on Alaska‘s former public safety commissioner, Walt Monegan. He says the governor, her family and staff pressured him for over a year to fire state trooper Mike Wooten, who went through a nasty divorce and child custody battle with Governor Palin‘s sister.
(BEGIN AUDIO CLIP)
WALTER MONEGAN, FORMER ALASKA PUBLIC SAFETY COMMISSIONER: What they have said is things like, this man should not be a trooper. This man shouldn‘t represent the troopers. It was continual. It was a kind of recurring theme. If it wasn‘t—initially, it was the governor and her husband. But then it became other commissioners. And not only did they call me, but they called other members of my staff.
(END AUDIO CLIP)
SHUSTER: Monegan says he looked at Wooten‘s record and found no grounds to terminate him. In July, Governor Palin fired Monegan.
(BEGIN AUDIO CLIP)
MONEGAN: I mean, the very first night it happened, I walked away scratching my head. But, since then, watching how she jumped from one topic to another, it narrowed it down in my mind exactly why I was terminated.
(END AUDIO CLIP)
SHUSTER: At first, Palin praised Monegan and said she was simply transferring him to another department.
But, this week, Palin‘s new legal team said Monegan had been fired for insubordination. In any case, tape recordings emerged in July backing up allegations that Palin‘s family and staff pressured Monegan over Trooper Wooten. The state legislature then announced a bipartisan investigation into Palin‘s ethics. Back then, Governor Palin welcomed the move, saying, quote, hold me accountable.
But once Palin was chosen as John McCain‘s running mate, her position changed. She and her staff backed away from pledges to testify voluntarily. So Democratic and Republican lawmakers then voted to issue subpoenas to 13 people, including Palin‘s husband.
(on camera): By all accounts, the firing in Alaska of a state commissioner is small potatoes, especially compared to Alaska‘s history of big time corruption. But Sarah Palin is saying she‘s a reformer and the refusal of her family and staff to testify is itself making this case a big deal.
I‘m David Shuster for HARDBALL in Washington.
(END VIDEOTAPE)
BARNICLE: Thanks, David.
For more on this investigation, let‘s turn to “Newsweek” investigative correspondent Mike Isikoff and MSNBC senior campaign correspondent, Tucker Carlson. Mike, in that piece, it indicated that Todd Palin said that he was going to ignore the subpoena. So what happens to him, if anything, if he chooses to ignore a subpoena?
MICHAEL ISIKOFF, “NEWSWEEK”: Well, it‘s not clear anything is going to happen to him. It‘s not clear how these subpoenas are going to be enforce—could be enforced. But I think David in that piece did point out that there is some political danger here for the McCain/Palin campaign. You know, they have been spending a lot of time and energy and resources discrediting or trying to discredit the legislative investigation, depicting it as tainted and politicized and biassed. And, therefore, sort of bucking up a position by which non-cooperation can fly.
The problem is that Hollis French, the guy in charge indicated today that the report will be issued regardless, that the special council has gathered—has had cooperation from some witnesses, has taken depositions, has gotten e-mails, has gotten memos. He could come out with a very damning report or at least embarrassing report for Governor Palin in a few weeks, and in some ways the efforts by the McCain/Palin campaign of non-cooperation could make it worse, because he could show enough leg to show there was something there or something untoward going on, and then say, but I couldn‘t get the full story because key witnesses wouldn‘t cooperate.
BARNICLE: Tucker, two-part question. Mike Isikoff, jump in on this after Tucker‘s answer. The first part of the question is, like, who cares? Do you think anybody cares about this? And the second part of the question is, do you figure this was a case of the McCain campaign not fully vetting the candidate, or is it a case of them vetting the candidate and underestimating this as a potential issue?
TUCKER CARLSON, MSNBC SENIOR CAMPAIGN CORRESPONDENT: Well, there are a lot of ways you can go after McCain‘s choice of Sarah Palin as his running mate. You could say her resume doesn‘t justify the position she‘s been handed. There are a lot of things you can say about Sarah Palin, but this story is ludicrous. If you get right to the bottom of it—the report that preceded this conversation for some reason never mentioned why apparently the Palins were against Trooper Wooten.
But this is a guy who admitted tasering a child, who was caught drinking a beer in his trooper car, in a state vehicle, and who threatened to murder his father-in-law. Do you want that guy as a state trooper? That‘s the core question here. If you were the governor and you knew that a state trooper had done those things, wouldn‘t you do everything you could to make certain he was no longer a state trooper? Of course you would. Any reasonable person would.
Palin is denying that had anything to do with it. That‘s her problem. I‘m just saying, if you come right down to the facts of the case, she should have removed this guy. You don‘t want someone like that running around with a gun and license to shoot people. You‘ve got to be kidding me. The McCain people will never be that straight forward about it. I think they should be. I think this is silly and made-up story.
ISIKOFF: Can I provide some context here?
CARLSON: I don‘t know what else you need. Those are the facts.
ISIKOFF: Look, the—some of what Tucker just said about threatening the—Sarah Palin‘s father, that‘s been denied and there‘s been no hard evidence one way or the other.
CARLSON: There are three witnesses to it. So that‘s evidence.
ISIKOFF: But, you know, look, the first point to make—I‘m not disputing anything else that Tucker just said. But that‘s not what the investigation is all about. That‘s not why the legislature voted 14 to nothing, on a bipartisan basis, to conduct this investigation. The allegations against Wooten which arose in the context of the messy divorce that Trooper Wooten had with his wife all came out—I mean, all came out after the divorce began, not during the time. And then Trooper Wooten—that was looked at by a state personnel system, and he was disciplined. They made an evaluation of just what the appropriate discipline was.
CARLSON: That doesn‘t mean anything.
ISIKOFF: There‘s a process, you know.
CARLSON: There is a process, but—
ISIKOFF: Allegations are made against you, and, you know, somebody—an impartial arbiter looks at it and reaches a judgment.
(CROSS TALK)
ISIKOFF: I‘m not defending Wooten here, and I‘m not taking sides on this. I‘m just saying the reason this thing arose was because there was a process; a discipline was determined. And then after the fact, Palin comes in and says to Monegan, I don‘t think that was just. I think this guy should be fired.
CARLSON: Mike Barnicle, let me ask you a question. If this guy Wooten was married to your sister and you knew all this and this had come out and he admitted it, and you were governor of Massachusetts, would you have this guy canned? Immediately? Of course you would.
BARNICLE: Oh, yesterday.
CARLSON: Who wouldn‘t?
BARNICLE: Yesterday. He‘d be gone.
CARLSON: Exactly.
BARNICLE: Mike Isikoff, Tucker Carlson, sorry we‘re out of time.
This is a good one, but we‘ve got to go.
Up next, will the renewed focus on the economy help Barack Obama in key battleground states like Michigan, Ohio and Pennsylvania? The politics fix is next. This is HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
BARNICLE: Welcome back to HARDBALL and the politics fix. Tonight‘s round table, Jill Zuckman of the “Chicago Tribune” and Chris Cillizza of the “Washington Post.” I want to play what Senator Barack Obama said this morning. Here‘s Barack Obama and why he is holding off—listen to this, the both of you—on announcing his own economic recovery plan.
(BEGIN VIDEO CLIP)
OBAMA: Given the gravity of this situation, and based on conversations I‘ve had with both Secretary Paulson and Chairman Bernanke, I will refrain from presenting a more detailed blueprint about how an immediate plan might be structured until I can fully review the details of the plan proposed by the Treasury and the Federal Reserve. I think it is critical at this point that the markets and the public have confidence that their work will be unimpeded by partisan wrangling and that leaders in both parties work in concert to solve the problem at hand.
(END VIDEO CLIP)
BARNICLE: Now the both of you have lived when this seemingly endless campaign for months and months and months. Jill, you especially with John McCain. My question to you is one of observation. Is it your observation that John McCain and his campaign may have been knocked back off the plate a little by this economic collapse and the Democratic response to it?
JILL ZUCKMAN, “THE CHICAGO TRIBUNE”: Well, I don‘t know if he is knocked off the plate. I think maybe he is still trying to find just the right tone in which to address this. I think the campaign has always known that the candidate that finds the way to persuade voters that they understand what is going on with the economy, that they have a plan to fix it, and they feel the struggles that they‘re going through, that that is the person who is going to win.
Right now, I‘m not sure that either McCain or Obama has really found just the right note yet.
BARNICLE: Chris, what do you think?
CHRIS CILLIZZA, “THE WASHINGTON POST”: I think Jill is right. I think when you get down to it, most people don‘t understand. I‘ll be totally honest with you, I don‘t understand all the intricacies of exactly what is going on right now. But I think what people feel is this unsettled, this unease that they have that‘s grown over time as it relates to the economy, as it relates to their economic future.
I think the key here is twofold. One is as Jill said, make it clear that you‘re in touch, that you understand their problems, you understand that they‘re struggling and you want to do something about it. And two is be a leader. Again, I don‘t think Barack Obama or John McCain is going to offer specific proposals. We know nothing is going to happen until they get into office, no matter they offer right now.
You want to lead on this issue. You want to show that you have knowledge, that you understand what people are worried about and you are the person who is uniquely set up to lead the country out of the economic doldrums that they‘re in right now.
BARNICLE: You don‘t have to be a genius to figure out that from coast to coast, most American families are very anxious, feeling a great deal of anxiety about what has happened this week on Wall Street. I would like to take a look at three specific states, and the polls off three specific states, all of them filled with people, Michigan, Pennsylvania, and Ohio. We‘ve got the Marist Poll up from Michigan, Obama now 50 percent to John McCain‘s 41 percent in Michigan.
Do we have another one coming up? There is Ohio. Barack Obama 44, John McCain 44, dead heat. And the third state, Pennsylvania, Barack Obama up by three, 45-42, over Senator McCain. So clearly, Jill, the ball game, much of it is going to be in these three states. The economy, a huge factor. How is this playing out for both campaigns right now?
ZUCKMAN: Well, there‘s a reason I just got back from traveling with McCain and Palin and we were in Ohio and Michigan. Every trip, you‘ll be hitting Ohio, Michigan, and Pennsylvania at some point, if not every other day. I think right now that Michigan number seems a little bit off to me. My feeling is, from all the polls that I‘ve seen, that it really is neck and neck between these two candidates.
I don‘t really put too much stock into any one poll, but these are the states that hold the key to winning the whole shebang in November.
BARNICLE: Chris, hold on to your answer. You can take notes and even make a smarter answer.
CILLIZZA: I‘ll try to remember what I was going to say.
BARNICLE: Write it down. We‘re coming right back with Jill Zuckman and Chris Cillizza for more of the politics fix. Don‘t forget, we‘re one week away from the first presidential debate between Barack Obama and John McCain next Friday night at the University of Mississippi. You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
BARNICLE: We‘re back with Jill Zuckman and Chris Cillizza for more of the politics fix. Chris‘ powerful brain has been thinking about this answer now for a minute and a half.
CILLIZZA: I just repeated myself over and over again so I wouldn‘t forget. I know we don‘t have a lot of time. Jill mentioned Michigan and you mentioned the Marist poll. My theory right now is that Michigan is Ohio in 2004 or Florida in 2000. This is going to be the epicenter of the race. Ultimately, it is going to come down to that state. If there is any state where economic woes have been felt the hardest, it is Michigan.
I think Jill is exactly right. I think that poll over states Obama in the state. I think even the Obama people would tell you that privately. So keep an eye on Michigan. I think it is going to be the state we‘re going to be spending the most time on and in in the next few weeks.
BARNICLE: Why do you think the poll overstates Obama‘s strength?
CILLIZZA: Because I do think—I think any one poll, you have to be careful drawing conclusions. I wouldn‘t doubt that Obama is ahead in the state. But my sense is it‘s a lot closer. I‘ve seen other polling out of the state that suggests it is closer than that, that it is within the margin of error. Obama ahead a few points, maybe McCain ahead a few points.
I just think, from all the time being spent there by the four candidates, the money being spent there by the campaigns, it doesn‘t seem to me like they think it is a nine-point lead.
BARNICLE: Jill, off anecdotal evidence—I‘m not asking you for anything specific here—when you‘re out in places like Michigan and Ohio, the Sarah Palin effect; does it resonate still with working women or has the economy helped stump that?
ZUCKMAN: Voters are so excited to see Sarah Palin. They are chanting her name. The crowds are bigger. There‘s incredible enthusiasm for her. It is kind of an amazing thing to see.
BARNICLE: OK. I‘ve been chanting your name, Jill. Jill Zuckman, Chris Cillizza, thanks very much. Chris Matthews will be back Monday night at 5:00 and 7:00 Eastern for more HARDBALL. Right now, it is time for “RACE FOR THE WHITE HOUSE” with David Gregory.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
END
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