'Hardball with Chris Matthews' for April 27

Guests: Saul Wisenberg, John Harwood, Howard Fineman, Bill Frist, Jim Wilkinson

NORAH O‘DONNELL, MSNBC HOST:  Tonight, gas prices are up and poll numbers are down.  Will bringing in a new press secretary pop the president‘s bubble, or will policy problems continue to plague Bush‘s second term?  Let‘s play HARDBALL.


O‘DONNELL:  Good evening.  I‘m Norah O‘Donnell, in tonight for Chris Matthews.  Welcome to HARDBALL.

Wednesday, the president‘s top adviser, Karl Rove, testified before the grand jury investigating the CIA leak case for the fifth time.  Today, a federal judge refused to dismiss the case against the vice-president‘s former chief of staff, Scooter Libby, and his case will in fact go forward. 

But what does it say to the American people when two of the most powerful people in America, the top advisers to the two most powerful men in the world, the president and the vice-president, live under this type of legal cloud?  Later we‘ll talk to the leader of the Senate, Bill Frist.

But first, HARDBALL‘s David Shuster has this report on new developments in the CIA leak case. 


DAVID SHUSTER, MSNBC CORRESPONDENT (voice-over):  While his supporters continue to put a good face on his lengthy grand jury testimony, other sources close to Karl Rove say the presidential adviser is now more worried, not less, that he‘s going to get indicted.  The sources say Rove was surprised by some of the questions he was asked, and by the fact the session stretched on for three and a half hours. 

Minutes after Rove left the grand jury, his legal team issued a written statement, saying prosecutors had, quote, “wanted to explore a matter raised since Mr. Rove‘s last appearance in October 2005.” 

But the grand jury, according to sources, also pressed Rove about his testimony in 2004, when he failed to reveal he spoke to “Time” magazine‘s Matt Cooper about Valerie Plame, the former CIA operative at the heart of the overall investigation. 


SCOTT FREDERICKSEN, FORMER IND. COUNSEL:  The grand jury‘s asking about why he didn‘t recall his conversation in the original grand jury means they‘re focusing on the charge itself.  Did he perjure himself?  And they‘re not yet convinced of his explanation.  That‘s why they‘re asking those questions.


SHUSTER:  Last October, just before Vice President Cheney‘s chief of staff, Scooter Libby, was indicted, Rove staved off charges when his lawyer told investigators he could prove Rove‘s early misstatements were not intentional.  Robert Luskin spoke of a conversation with “Time” reporter Viveca Novak and a temp about what her colleague, Matt Cooper, might testify to.  Luskin and Rove then searched for White House information to refresh Rove‘s memory and found an e-mail about the Rove-Cooper conversation.  Then, according to Luskin, Rove changed his testimony. 

The problem is that the time lapse from the Novak tip to the new Rove testimony was seven months, and from the date when Prosecutor Fitzgerald first ordered Matt Cooper to testify to when Rove changed his testimony was three days. 


FREDERICKSEN:  Mr. Fitzgerald is a straight shooter.  I have no doubt in my mind that he‘s told them very clearly why he has Mr. Rove in there.  It‘s because he wants to determine whether Mr. Rove was telling the truth when he first appeared before the grand jury. 


SHUSTER:  By all accounts, volunteering to testify to a grand jury is a risky proposition.  Lawyers say it is usually done when there is nothing else that may stop an indictment. 

And the signs for Rove have been ominous for months.  In the Libby indictment, Rove was referred to as “Official A.”  That‘s a designation prosecutors are required to give when they‘re revealing damaging information about a person not yet charged. 


FREDERICKSEN:  When your client is identified in that manner, it‘s a cause of great concern. 


SHUSTER:  And that‘s because prosecutors almost always end up indicting somebody identified as “Official A.”  And in looking through the record of Patrick Fitzgerald, his office has eventually indicted Official A in every case. 

(On camera):  Still, grand jury testimony can be difficult to judge.  The sessions, by their nature, are adversarial.  And even if Karl Rove felt that his appearance was hell, a Rove lawyer disputes that Rove has new reasons to be fearful. 

The ultimate authority, of course, belongs to Prosecutor Fitzgerald, whose grand jury is scheduled to meet again tomorrow. 

I‘m David Shuster for HARDBALL, in Washington. 

O‘DONNELL:  Thank you, David Shuster.

Saul Wisenberg was a deputy independent counsel and joins us now, live.

Saul, tomorrow the grand jury meets again.  Could this mean that Karl Rove is indicted tomorrow? 

SAUL WISENBERG, FMR DEP. INDEPENDENT COUNSEL:  Could be—anything is possible.  Three-and-a-half hours is a long time on your fifth trip to the grand jury, particularly—

O‘DONNELL:  I mean, how unusual is that, to go five times to the grand jury?

WISENBERG:  Oh, you‘re in Betty Curry country—she came five times. 

He‘s tied the record for political prosecution.

O‘DONNELL:  And just to refresh everybody‘s memory, Betty Curry was, of course, the personal secretary to Bill Clinton during the whole Monica Lewinsky scandal, who had to go back many times to the grand jury.

WISENBERG:  Right.  And she, of course, was never a target. 

O‘DONNELL:  Right.  Let‘s talk specifically about Karl Rove.  His lawyer, Bob Luskin, put out a statement yesterday, said, “The reason he went back for the fifth time was to discuss a matter relating to what has came up since his fourth grand jury testimony,” which was in October 2005.  And that deals with specifically what David Shuster just laid out:  the conversation between the “Time” reporter, Viveca Novak, and Bob Luskin indicating, Well, Matt Cooper, at “Time” is pretty sure that Karl Rove was his source on that.  And that appeared to trigger the change in Karl Rove‘s testimony.

Does Patrick Fitzgerald think that this explanation smells, or stinks? 

WISENBERG:  If he was there three-and-a-half hours and he got questioned closely about that, somebody probably thinks that it stinks.  Somebody is skeptical.  But you know, people do forget things.  It‘s a big difference whether or not you commit perjury or you make an honest mistake. 

And Fitzgerald is a very careful prosecutor.  He probably wants to make sure, and he probably wants to give Karl Rove every chance he can.  And five appearances is certainly that.

O‘DONNELL:  And Karl Rove‘s people have made the case, Listen, he went back for this fifth time to tie up some loose ends.  That‘s all he was doing there.  Why shouldn‘t we believe that it was just an innocent, and that everyone is doing their due diligence and their homework? 

WISENBERG:  I can guarantee Luskin didn‘t phone up Patrick Fitzgerald and say, We‘d like to come back a fifth time.  It didn‘t happen like that.  He‘s got some explaining to do.  You can tell from the comments that he is certainly in subject category.  That‘s when they are deciding whether or not are you a target. 

O‘DONNELL:  I really want to break this down, because a lot of the buzz in Washington, what everyone is trying to find out today, the reporters like myself and others, is Karl Rove going to get indicted tomorrow.  Because Patrick Fitzgerald has been in town, the grand jury returns again tomorrow.

The key question is, could Patrick Fitzgerald return, or turn around an indictment as early as tomorrow?  One source that I spoke with today said it‘s probably unlikely, because usually after such a lengthy testimony on Wednesday, it would take days to turn around the transcript and get it to all the attorneys.  Is that true? 

WISENBERG:  What attorneys?  You don‘t have to get the transcript to any attorneys.  They may have the indictment already drawn up, and this might have been his last chance to come in there.  They‘re not required—the grand jurors are there, they‘re hearing the testimony.  They already have transcripts of the earlier testimony.  His attorneys don‘t get the transcripts until after an indictment. 

O‘DONNELL:  Do you think Karl Rove and his attorney would know, after spending three-and-a-half hours at the grand jury on Wednesday, when they walked out of there, got into the car, said, That was really tough—I think we‘re in for it.  Could you know that?  Could Bob Luskin know that after that testimony? 

WISENBERG:  There‘s no way that you can know that unless Fitzgerald has already told you, Look, you‘re very close to target status unless you can talk your way out of it, and if the grand jury seems unconvinced, to you.  But there‘s no way you could know it for sure. 

O‘DONNELL:  And so when Karl Rove‘s attorney and others says he has not been made aware that he is a target of an investigation, should that mean anything?  Or could the prosecutor not have to tell him that till the last minute? 

WISENBERG:  First of all, a prosecutor doesn‘t have to tell you you‘re a target, even though are you supposed to under the U.S. Attorney‘s manual.  But the way Fitzgerald operates, he‘ definitely tell Rove whether he‘s a target.  But it‘ll probably be very soon before an indictment. 

It‘s kind of like waiting for the results on a paternity test. 

O‘DONNELL:  You‘ve said it‘s very unusual to go back a fifth time, very unusual to spend three-and-a-half hours going over what appears to me “a matter,” the matter that has arisen since his last grand jury testimony.  If you had to bet money, do you think he gets indicted?

WISENBERG:  I don‘t think it‘s fair to speculate, but I can tell you this:  any time your client has been identified as a subject and has gone to the grand jury five times, and the last time is three-and-a-half hours, you have a lot to worry about. 

O‘DONNELL:  Had he been in there for only an hour, would you have said something very different, that it looks like, yes, that‘s more likely that he was just cleaning up some loose sends?

WISENBERG:  I wouldn‘t have said something very different, but that would be—three-and-a-half hours is something that you add into the mix.  I mean, somebody is being questioned.  If you are there to talk about basically one thing, three-and-a-half hours means you are being grilled very closely.

One thing nobody has talked about, is that both the prosecutor and the

grand jurors have to agree on an indictment, and you could have a situation

I‘m totally speculating here—where Fitzgerald has decided, you know, there‘s not enough to indict, but the grand jurors want to.  And he may be giving them their shot to really grill him.  That‘s conceivable as well. 

O‘DONNELL:  Interesting.  Well, of course, we‘re reading the tea

leaves, and I‘m told the Karl Rove, after his grand jury testimony, was

very upbeat.  There was a big party in Washington last night, and that he

was very upbeat at this party.  He said, Yes, it was some grilling

testimony, that he felt like he had gone to see the doctor for a couple

hours, but felt pretty good about it.  I don‘t know if that says anything -

WISENBERG:  Well, what is he going to say?  I feel terrible, I‘m about to get indited?

O‘DONNELL:  Right, so you think he could have been simply just putting on a great face.  All right, well, Sol Wisenberg, former deputy independent counsel, thank you very much. 

WISENBERG:  My pleasure. 

O‘DONNELL:  And coming up, as Karl Rove testifies again in the CIA leak investigation and Tony Snow takes over as White House press secretary, President Bush hits another new low in the latest NBC News/”Wall Street Journal” poll.  We‘re going to talk to “Newsweek‘s” Howard Fineman and the “Wall Street Journal‘s” John Harwood.  They‘re going to dissect the numbers when we return. 

And later, Senate Majority Leader Bill Frist will be with us.  You‘re watching HARDBALL only on MSNBC.


O‘DONNELL:  Welcome back to HARDBALL.  With gas drying up, with leaks spilling out, and with polls falling down, Republicans face some tough times in Washington.  Here to dig into it all is “Newsweek‘s” chief political correspondent Howard Fineman, and CNBC‘s chief political correspondent, John Harwood. 

But let‘s begin with President Bush himself.  Sorry you guys are upstaged for a minute.  “NBC Nightly News” anchor Brian Williams got to ask the president today about his poll numbers during a trip to the Gulf Coast. 


BRIAN WILLIAMS, “NBC NIGHTLY NEWS” ANCHOR:  I‘d rather not go into a second term at 36 percent approval. 

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES:  Well, I‘m going to go into a second term and work my hardest.  And, you know, the American president has got—we‘ve got a chance to get a competitive initiative out, we have got a chance to make some of the tax—extend some of the tax cuts. 

We‘ve got a chance to do a lot of things and I look forward to working with Congress to get it done.  I‘ve been up in the polls, and I‘ve been down in the polls, but I‘m going to continue doing what I think is right for the country. 


O‘DONNELL:  All right, and you can see more of Brian Williams‘ exclusive interview with President Bush in New Orleans tonight on “NBC Nightly News.” 

Now, let‘s take a look at some of the NBC News/”Wall Street Journal” poll.  Sixty-seven percent believe the country is off to the wrong track.  Only 24 percent say it‘s headed in the right direction.  That‘s a reversal of 17 points since the beginning of the year.  Also the president‘s job approval rating is still low, 36 percent, down another point from last month. 

John, you wrote about this for the “Wall Street Journal.”  Can it get much worse for the president? 

JOHN HARWOOD, “WALL STREET JOURNAL”:  Well, I was going to say, Norah, the good news is, it could be worse.  Howard and I both covered the first President Bush—right direction, got into the teens, Congressional approval into the teens and the first President Bush got even lower than this one. 

But no, look, he‘s at rock bottom.  We‘re talking about a polarized country, and his base of support is now down to 36 percent.  And more—of greater concern is that the energized opposition is bigger than those people who are fervently with Bush.  It‘s a big problem. 

O‘DONNELL:  Where is the falloff among support?  Is it Republicans now, even his core base that no longer supports the president? 

HARWOOD:  Well, he long ago lost almost every Democrat.  Independents are now overwhelmingly against him, and what we‘re seeing now is that Republican base gets smaller and smaller, and a president who was in the 90s with Republicans is now down in the 70‘ with Republicans. 

O‘DONNELL:  You know, Howard, we also asked the question, what is the top concern for Americans?  And, of course, for a long time, it has been Iraq.  Well, now gas prices are at the top of the list for Americans. 

Is this going to continue to drag down the president‘s numbers until they come up with some sort of solution or at least Americans feel a little differently when they go to pump their gas? 

HOWARD FINEMAN, “NEWSWEEK”:  Well, it emphasizes, it magnifies his

problems.  It makes him seem powerless, unable to do anything about it, and

no president—“the American president,” as he referred to himself there -

no American president likes to admit that there‘s nothing he can do. 

Presidents are supposed to do things. 

Not only that, the steady stream of news about all the profits of the oil companies, the huge bonuses and so forth, exacerbates the sense of Republicans and the distance from the average American.  That‘s something George Bush has worked very hard to try to get over.  Now he‘s being drawn back into it. 

HARWOOD:  And Norah ...

O‘DONNELL:  Is this White House particularly vulnerable because there are two former oil men in the White House?  These are guys who know the business, they‘ve been in it themselves, that they can‘t come up with a solution? 

HARWOOD:  Yes, although when you look at our question, dominantly, voters blame the oil companies themselves, less so the oil-producing countries, and not so much President Bush.  It‘s really the number is quite small, 28 percent say President Bush is responsible.  Sixty percent say the oil companies are responsible, which is why we‘re getting all this talk about gouging and a look at the pay package of these CEOs. 

O‘DONNELL:  And just ...

FINEMAN:  I think what that means, by the way, is that the president could score some points here.  The public isn‘t against him on this, but I think they would like him to use his knowledge, his expertise, and his contacts to do something about that. 

HARWOOD:  And, Norah, on that point about helplessness that Howard mentioned, interesting analogies.  President Bush has now been under 40 percent longer than Jimmy Carter was, and you remember Jimmy Carter had the problem of looking helpless against forces. 

Now, this president isn‘t analogous in many ways.  He has got an image of strength, which is polarizing.  It has turned some people against him and made some Republicans love him but that‘s the dangerous kind of comparison to be getting into. 

O‘DONNELL:  So where is the Bolten bounce, as they‘re calling it in the White House?  Of course, Bolten, the new chief of staff, and they‘re all hoping in there that this new chief of staff and the changes that he‘s going to make and the refreshing and the reenergizing that they‘re going to do in the White House is going to start to turn around these numbers.  Can they do it? 

FINEMAN:  Well, I think the thing that Josh Bolten brings above all is a sense of realism.  This is a guy who comes out of international finance.  He was with Goldman Sachs in London.  Numbers are what matter.  The bottom line is what matters, and Josh Bolten is a realist.  As one of his best friends told me, this is a guy who didn‘t drink the Kool-Aid, interesting theory there. 

And I think that‘s what he it bring and he‘s moving some pieces around and you see the president talking to Brian Williams here on a trip.  That‘s the kind of thing, simple though it is, that you wouldn‘t have seen out of an uptight, defensive White House, even a few weeks ago. 

HARWOOD:  And we also see some policy changes.  Look, this veto threat that the president has placed on the supplemental spending bill, saying if it‘s over the $92 billion I asked for, I‘m going to veto it—that‘s not a bad message for him to be sending out, especially to conservatives who are concerned about the budget deficit. 

There‘s also a pretty good prospect that we‘re going to get a deal on dividend and capital gains tax cuts.  Again, for that Republican base, that‘s not a bad thing to finally get over the finish line.

FINEMAN:  And they‘re getting optimistic about immigration too because one thing Bush has so show is he can get something—anything—done.  You know the old Naval thing, “don‘t just stand there, do something.” 

O‘DONNELL:  Put some notches on your belt, if you will.  Yes.

FINEMAN:  Something.

O‘DONNELL:  Well, there‘s less than 1,000 days left for this president and, of course, he has said, “I plan to sprint across the finish line.”  He‘s not going to limp like a lame duck across the finish line, and that‘s why he wants somebody like Josh Bolten to help him do that. 

The question is, what can he ring up in terms of successes?  You were indicated he might on immigration, but his Republican Party is not in favor of that.  They have the pressure with the midterm elections coming up, Social Security dead, gas prices, who knows if that‘s going to result?  I mean, where can he find a win in the next couple of days and does Tony Snow help by just being a new messenger, a new face for the White House?

FINEMAN:  He might help some.  And again, I don‘t want to go overboard on immigration but, I was with some prominent members of the administration, Republicans last night, who were suddenly optimistic about immigration because the president has basically said he‘ll accept the Senate‘s idea of this.  Which is yes, we‘ve got to get tough on the borders, but we‘ve got to find a way to allow lots of these people to stay here. 

O‘DONNELL:  But the Senate bill is not the problem, it‘s the House bill.

FINEMAN:  I understand that, but if they can get something through the

Senate, then they can talk and at least make incremental progress.  Norah

remember, a couple weeks ago, a lot of people were saying the whole thing

was dead for the year.  Maybe this is a willing suspension of disbelief I

was hearing last night, but they‘re trying to be optimistic, and you know -

let‘s see.

O‘DONNELL:  Let‘s talk about Tony Snow, who of course has his new nickname, Max Headroom.  But he is a man with a good head of hair and he is the first T.V. personality since Ron Nessen of NBC to be taking the podium at the White House.  Is the White House creating essentially like a television show up there on the podium?  I mean, they‘re putting out new statements early in the morning.  They‘ve got this very telegenic guy who is very well liked among the conservative base.  Could he help?

HARWOOD:  Well I‘d put it differently, Norah.  I would say they‘re accommodating themselves to the fact that it is a T.V. show.  You know, one of the things that Mike McCurry will tell you is that he made a mistake in opening the press briefing to television cameras, because everybody started showing off and it was basically something for cable television.

O‘DONNELL:  Too late now.

HARWOOD:  Well, exactly, it is too late.  But in Tony Snow, you‘ve got a guy who is very, very comfortable and experienced in that realm.  He‘s a funny guy.  That‘s not a bad thing to have as your press secretary.  So I think this is a step forward for the White House.

FINEMAN:  So he‘s going to stand up there at the podium and say, “OK, we have time for one more question before a hard break.  We‘ll be right back to the press room, after...”

HARWOOD:  ... Hey, this is a guy who played rock music during his Sunday television show.

FINEMAN:  We‘ll be right back to the press room after these messages, so stay with us.

O‘DONNELL:  And speaking of a hard break, we‘re going to take one right now.  But to our viewers, we are coming back with more of this.  Howard Fineman and John Harwood.  And later, Senate majority leader Bill Frist joins us here.  You‘re watching HARDBALL, only on MSNBC. 


O‘DONNELL:  We‘re back with “Newsweek‘s” Howard Fineman and John Harwood of CNBC and the “Wall Street Journal.”  Let‘s turn to the issue of Karl Rove, who of course testified for the fifth time on Wednesday before the grand jury.  The grand jury meets again on Friday.  Does Karl Rove have anything to be worried about, John?

HARWOOD:  Well, when you talk to sources close to Rove, they‘ll tell you he‘s very confident he‘s not going to be charged.  The problem is, we need some sources close to Fitzgerald.  He‘s not talking too much.

O‘DONNELL:  I need those sources too, actually.

HARWOOD:  This guy has been very disciplined in not leaking.  Anybody who goes back a fifth time before a grand jury, having believed for some time that he‘s in the clear, has got to be concerned.

But you know, we‘re going to have to wait to see what Fitzgerald does. 

But certainly the last thing that Josh Bolten and Tony Snow and George W.  Bush needs is a quasi perp walk outside of the courthouse with Karl Rove going in and out in the context of a perjury and a leak case.

O‘DONNELL:  Yes, but can‘t the White House sort of say, “Oh, this won‘t affect the White House because we already demoted Karl Rove and while he‘s still deputy chief-of-staff, he doesn‘t have the policy portfolio anymore, he‘s just handling politics.”  So there‘s been no real damage to the White House if he gets indicted.

FINEMAN:  They could say that, but nobody is going to believe it because anybody who‘s paid any attention to politics for the last six years knows that George Bush and Karl Rove built each other‘s careers together.

O‘DONNELL:  Right, built a very strong Republican Party.

FINEMAN:  They‘ve been Butch Cassidy and the Sundance Kid and that‘s the way they came in and that‘s the way they‘re going to go out. 

HARWOOD:  Anything bad for Karl Rove is bad for George W. Bush and back for the Republican Party in a midterm election year.

FINEMAN:  It would be catastrophic, because of how close Rove is to Bush, how central he‘s been to his whole political being.  I‘m told they‘re nervous over at the White House, having heard that Rove was going to be going back into the grand jury.

And I‘ve further been told the focus of Fitzgerald as David Shuster said earlier in his piece, is on that time period, between when we now know that Rove‘s lawyer might have first heard about the possibility that Matt Cooper was using Rove‘s name around the office and the sense of urgency that Rove finally developed to suddenly remember that he‘d talked to him.  And that‘s all about perjury.  This whole thing is about the possibility of perjury and that‘s why Rove has been before the grand jury.

O‘DONNELL:  Well this has all been—this story has always been about the case that the White House was making for the war in Iraq.  And then secondly, as if they were trying to discredit Joe Wilson by outing his wife, Valerie Plame, and then did they try and cover it up?

And of course, Patrick Fitzgerald indicted Scooter Libby on five counts for perjury and obstruction of justice, not the original charge of leaking the information.  So the question is, does the prosecutor think that Karl Rove engaged in perjury and obstruction of justice?  We know that Karl Rove changed his story.

FINEMAN:  Well from the legal experts I‘ve talked to who aren‘t on Patrick Fitzgerald‘s staff, but who know how this works, it is clearly the perjury that they‘re looking at, just as in the Libby case.

And if, if, if Rove is indicted, you‘re going to have a whole other drama between the press and the prosecutors and the defense attorneys over subpoenaing information, records, files, from news organizations all over again.

Because if Rove is indicted, his defense is going to be, “Wait a minute, let‘s see what else the people in the press community knew about what I was saying.  You can‘t prove that it came this way, it might have come other ways.”  And we‘ll have a whole another press confrontation once again.

HARWOOD:  And Norah, it‘s got to be perjury because by no reasonable interpretation of leaking, could the known facts suggest that Karl Rove was actually putting her name out there.  These were back-handed confirmations. 

It is obvious the White House was pushing back against Joe Wilson and that Valerie Plame ended up being part of that.  The question is, was there a cover up that Fitzgerald can make a charge out of?

O‘DONNELL:  All right, well thank you to Howard Fineman and John Harwood.  And we‘ll invite you back tomorrow if there‘s more news on Karl Rove.  Thank you very much.

And up next, what if anything, can Congress do about those rising gas prices?  Senate majority leader Bill Frist will be our guest when we return. 

And today in Washington, George Clooney and his father were in town to bring attention to the genocide in Darfur.  You can see Clooney‘s speech on our Web site at HARDBALL.MSNBC.com.  You‘re watching HARDBALL.



O‘DONNELL:  Welcome back to HARDBALL.  I‘m Norah O‘Donnell sitting in for Chris tonight. 

The outrage over gas prices is fueling a major fight on Capitol Hill.  Republicans are pitching rebates for consumers, and some Democrats are demanding limits on subsidies for oil companies.  Things got so intense today that there was even a filibuster for several hours. 

We‘re joined now by the Senate majority leader, Tennessee Republican Bill Frist.  Senator, thank you. 

SEN. BILL FRIST (R-TN), MAJORITY LEADER:  Norah, good to be with you. 

Thank you.

O‘DONNELL:  Good to be with you.  And tell me, what can Congress do to help bring down the price of gas? 

FRIST:  Norah, as most people understand, there is no silver bullet, but it is a matter of supply and demand and we‘re 60 percent dependent on foreign oil.  That can‘t be sustained.  We have people filling up their cars and it‘s costing them $40, $50, $60, $70.  People are filling up their tractors saying it‘s hardly worth pulling the tractor out for the price we‘re having to pay for fuel. 

What we need to do is focus on supply and demand issues.  On the supply side, we can slow down filling or pause the filling of the strategic petroleum reserve.  We have to go back and address our refinery capacity.  Right now, our refineries are down below Katrina level. 

On the demand side, we need to give the authority to the administration to be able to control and to regulate those fuel economy standards, and we need in the midterm to long-term focus on ethanol production, production from soy, biomass, alternative fuels, wind, solar. 

A lot we can do, and that‘s why the Republicans today put out an eight point plan to look at supply, demand, make sure there‘s no price gouging as well. 

O‘DONNELL:  Senator, there‘s a feeling out there among Americans, whether fair or unfair to the oil companies, that they are profiting off Americans‘ pain at the pump.  And today your colleague, Senator Ron Wyden, Democrat of Oregon—he held the floor for about four hours today saying that we should end—kill subsidies for oil companies.  Let‘s listen to what he said. 


SEN. RON WYDEN (D), OREGON:  I would stay here all night, I would stay here until they literally had to take me off the floor because I couldn‘t stay here any longer, to save taxpayers billions and billions of dollars, on what amounts to the biggest giveaway—the biggest giveaway—to the oil industry. 


O‘DONNELL:  Senator, why are we—why is there this big giveaway, billions of dollars, to oil companies?  Why not vote on Senator Wyden‘s proposal? 

FRIST:  Well, Norah, the whole issue of whether the oil companies are excessively reaping profits—and we know that the profits are very, very high—or whether it takes making profits at a point in time in order to invest to increase the supply, which is the real issue that we have today, is one that we‘re going to continue to debate. 

Right now, we will be repealing in this—what we call Tax Increase Prevention Bill that we‘re working out—a separate bill that‘s not on the floor.  The bill that‘s on the floor is a spending bill that looks at supporting our troops overseas, supporting the victims of Katrina.

But in another bill, a bill called the Tax Reconciliation Bill, we will be repealing some of those tax credits, tax incentives that historically had been given and were given in the Energy Bill two years ago to oil companies.  The purpose of those was initially to increase supply.  it is clear that the oil companies don‘t need those now, and we will be repealing a number of those. 

And, of course, one of the things that the Republicans proposed today, you guys are proposing a $100 gas rebate for millions of Americans.  You‘ve attached it, however, to the very controversial drilling in the Arctic Wildlife.  Let me ask you though, is $100 really going to help Americans? 

FRIST:  Well, you know, Norah, right now to a lot of Americans, it will actually be a huge help and the whole idea is to get that relief to the American consumer today who really unexpectedly, again, has been hit by these skyrocketing gas prices. 

Does it change supply and demand?  No.  And that‘s why it is important to increase exploration and domestic production in this country.  We know that China is growing, India is growing, their use of energy is increasing.  We‘re 60 percent dependent on foreign sources of oil, those sources being in unstable parts of the world right now—Nigeria, the region of the Middle East, Iran, Saudi Arabia. 

We have to increase the supply here.  The supply is here.  We can drill for it, explore it in an environmentally-friendly way, and that‘s why we are so convinced that we need to look at things like ANWR or the Alaska Wildlife Refuge. 

O‘DONNELL:  Those are certainly, Senator, the very big issues that need to be tackled about supply and demand as you mentioned, and certainly our dependence on foreign oil.  But, of course, Americans are worried about today and tomorrow and about the really high price of gas. 

What about—many people forget that there‘s, of course, huge taxes on our gasoline, not only state, but federal.  Why not suspend the federal gas tax, which is about 18 cents a gallon?  That would help.

FRIST:  Well, there was a debate, and the idea of having this gas holiday rebate where you get a check for $100 today or lowering that cost of gas was debated.  There was generally a feeling that those taxes that come off gasoline do go to supporting our infrastructure, our roads.  And as we look at our economy and the creation of jobs, it‘s important to keep investing in that infrastructure so that businesses, large and small, will continue to grow.

Thus, we did tie those receipts for that $100 rebate to you and to the American people, did tie that rebate to new income coming from that drilling in ANWR.  And some adjustment in accounting procedures, so that there‘s no new net cost and you‘re not taking away from our very important transportation infrastructure.

O‘DONNELL:  Let me ask you about Exxon profits, because we learned today they‘re up seven percent this quarter, that Exxon has made in terms of income, $8.4 billion in the past three months.  Of course the former head of ExxonMobil just got a $400 million compensation package.  Is that right? 

FRIST:  Well, first of all, it does require these companies, who we are totally dependent on in terms of increasing that supply, it does require them to make profits in certain years and in other years lose money because of exploration.  You don‘t know if you‘re going to hit a well.  You don‘t know if you‘re going to hit a reserve or not.

And that is going to require some understanding on all of our part.  The one thing that we can have no tolerance for and the reason that Speaker Hastert and I wrote a letter to the president is that we need to make sure that the markets are fully transparent for supply and demand, market pricing to work.  That there can be absolutely no price gouging, either at the retail level or at that wholesale level and that the futures market, which ultimately determines that price and demand is not being manipulated in any way.

O‘DONNELL:  But Senator, you didn‘t say whether you thought it was right or wrong.  Is it right or wrong to be awarded $400 million in compensation? 

FRIST:  Well the compensation I think is wrong.  To allow right now in the marketplace, for companies to make a profit I think is very good, because if they don‘t make a profit, they‘re not going to be able to invest, increase the supply. 

The important thing is that market is transparent.  It has to be fully justified by the investments that they will be making.  If they say they‘re going to be out there exploring, we have to make sure that those profits are invested in that exploration.

O‘DONNELL:  Senator, there are a lot of pieces to this puzzle and I know certainly Congress is taking a lot of the heat on the issue about gas prices.  And I was interested about what you said the other day on “Good Morning America.”  Let‘s play that clip.


FRIST:  And Americans are ready to step up, if they slow down their driving a little bit less than 60 miles-an-hour, if they tune-up their car engines, if they replace their air filters, you can improve that driving efficiency, fuel efficiency by anywhere from 15-to-20 percent.


O‘DONNELL:  Now I know you‘re talking about conservation there, but that‘s not something you can legislate, right?

FRIST:  Well no, we can legislate parts.  First thing what‘s amazing to me, Norah, as I‘ve traveled around the country—the American people recognize there‘s a problem at the gas pump. 

Some are blaming the oil companies, some the markets, some what‘s going on in Iran and Iraq today and Nigeria.  But also on the conservation side, there‘s a lot that we can do.  You‘re right, the things that I mentioned, tuning up your car, driving less, that‘s up to the individual consumer and that‘s something that they‘re willing to do. 

They‘re ready for that call to action.  We can legislate on that demand side as well, on that consumption side, things like the use of hybrid cars.  Make sure that that cap on the number of hybrid cars out there for tax credit is increased over time.

The things that the administration can do and that‘s why in our bill, we give them the authority to regulate those so-called CAFE standards or fuel economic standards for our cars.  The administration needs to look at that and move it up, move it down, but do what‘s appropriate.  The American consumer is ready to step up, is ready to sacrifice for what they know is a national problem.

O‘DONNELL:  Senate majority leader Bill Frist, quick question.  Any trips planned to Iowa or New Hampshire any time soon?

FRIST:  Well no, not right now.  I‘m focused right here, as you can tell looking at gas prices, securing America‘s freedom, securing America‘s prosperity, making these tax relief packages out there, extending them for another two years, I‘ve got my hands full right here.

O‘DONNELL:  You do have your hands full, your final year up there in the Senate.  Thank you very much, Senate majority leader Bill Frist.

FRIST:  Thank you, Norah.  Great to be with you, thank you.

O‘DONNELL:  Great to talk to you.  And when we return, much more on the fuel fight on Capitol Hill.  This is HARDBALL only on MSNBC. 


O‘DONNELL:  Welcome back to HARDBALL.  A special treat tonight, NBC News congressional producer Mike Viqueira has been watching the fuel fight closely on Capitol Hill and he joins us now with the very latest.  Mike, let‘s explain to the public sort of this absurdity, if you will, that‘s going on up on Capitol Hill.  They‘re talking about gas prices and the way to bring it down, but they‘re doing a lot of photo ops in front of gas stations, aren‘t they?

MIKE VIQUEIRA, NBC NEWS:  Well you know, Congress was gone for the previous two weeks.  They just got back to town on Tuesday and since then they have beaten the path to the doorstep of local gas stations all around Capitol Hill.

Yesterday, Senate Democrats appeared just around the corner here decrying Republican policies that they say have led to the high $3 a gallon gas.  Today it was House Republicans who went down the street, held a press conference espousing their views.

O‘DONNELL:  Same gas station?

VIQUEIRA:  No, this was a different one.  I think these gas station owners are getting a little sick of people blocking traffic in and around their gas stations to tell you the truth.  But everybody is one upping each other to see who can be portrayed as the person doing the most legislatively. 

And of course there‘s a big question of how much they can actually do.  Of course we heard Senator Frist in his drive a car, get a check proposal, back by many top Senate Republicans. 

In the House, they have a whole slew of things they want to do, starting with conservation, with tax breaks, they‘re even talking about repealing tax credits that were given to the oil and gas industry, something we thought we would never hear from Republicans anytime soon.

O‘DONNELL:  NBC News/”Wall Street Journal” poll showed that their approval rating is at 22 percent.  That is lower than the Democrats in 1994 when they lost the House of Representatives.  Are they worried?

VIQUEIRA:  I think that they are very worried.  There‘s a big lobby reform built.  It‘s being debated at this moment on the House floor, as a matter of fact.  And for a long period today, it appeared that the Republican leadership was going to lose that.  Many had said it was significantly weakened from what it was all around the lobbying disclosure rules, when lobbyists have to report and what they have to report about their contacts with lawmakers.

They have just squeaked that out or they‘re apparently squeaking that out at this moment.  But it seems as though people are really—the wheels might be coming off the wagon, particularly on the House side, where the House—control of the House is in jeopardy. 

O‘DONNELL:  All right.  Well, thank you, Mike Viqueira. 

VIQUEIRA:  Certainly.

O‘DONNELL:  And we‘ll be right back.  This is HARDBALL, only on MSNBC. 


O‘DONNELL:  Secretary of State Rice and Defense Secretary Rumsfeld made a surprise visit to Baghdad, and earlier today I asked senior State Department adviser Jim Wilkinson why they teamed up to make the trip.


JIM WILKINSON, SR. ADVISER TO SECRETARY RICE:  The two secretaries came here for two reasons.  First, they wanted to hear from these new leaders who will form a government very soon, to hear what their needs were, to hear what their priorities are, and to assess their plans for the days and weeks and months ahead. 

The second reason they came here was to make sure that we, as the United States government, were organized.  As you know, we have quite a large civil military cooperation between our embassy and the—our military men and women in uniform out here in Iraq, and they both wanted to make sure that we are organized properly, because this new government, in its first days and weeks, are—represent a unique opportunity that the Iraqis must seize to lead on behalf of their people.  The Iraqis must do that.  But the United States government must also organize itself to make sure we can do everything we can to support them. 

O‘DONNELL:  Jim, what does it say about the stability of Iraq three years after the invasion, that both Secretaries Rice and Rumsfeld have to make a top secret trip to Baghdad? 

WILKINSON:  It says that there‘s still security problems here.  We spent some number of hours yesterday with the new prime minister-designate, Mr. al-Maliki, and he talked about one of his first key priorities, which is going to be to go out and take on this security issue. 

People of Iraq deserve to have streets they can walk in, they deserve to have a Ministry of Defense and a Ministry of Interior they can trust, police forces they can trust.  But make no mistake, Iraq still has violence in it.  As the president and others have said, there will be more violence in the future as the terrorist elements and others get more and more desperate at this new government.  But it just says that there‘s still a lot of work to do here. 

O‘DONNELL:  But Jim, why isn‘t it that the security situation hasn‘t improved?  I know that you sat at dinner last night next to one of Iraq‘s vice presidents, the Sunni leader, Tariq al-Hashimi.  Today, we got the news that his sister was shot dead.  Two weeks ago, his brother was shot dead.  What does that mean?  How do you feel about that, after having sat next to him at dinner? 

WILKINSON:  Well, first off, it‘s a tragedy, and everyone feels bad for him.  What it means to me after sitting next to a man last night who is a Sunni, who has now lost his brother and his sister, it means that there are courageous Iraqis who represent this first new generation of leaders, who want to take these tough steps to look ahead. 

Prime minister-designate Maliki talked at length to Secretaries Rice and Rumsfeld about the cause of the violence.  And what the cause of the violence is very simply are feelings of mistrust among different parts of the Iraqi society.  He talked about the importance of reconciliation.  One of his first key priorities is going to be to try to bring some reconciliation, try to heal these divisions of mistrust. 

But make no mistake, there are lots of divisions in this country, and they are going to have to work hard to fix it.  Very tough work ahead for him.  He‘s a serious man, who‘s a plain-spoken man, and Mr. Hashimi‘s sister and others just show how much work there is to do. 

But what we must do as the United States government and as an international community is be rallied behind him. 

O‘DONNELL:  Jim, a majority of Americans have said that they want troops to come home.  And they want troops to come home as soon as possible.  General Casey said that he is going to wait until the government is in place in Iraq before he makes his next recommendation to the president about when those troops should come home.  When is that going to happen? 

WILKINSON:  We talked at length, Secretary Rice and Rumsfeld did, with these new leaders about the future of Iraq. 

One issue that didn‘t come up was the Iraqis never asked for the United States to reduce forces.  What they want to know is that the United States and the international community are committed to the future of Iraq. 

As the president and others have said, the troops will come home when this job is finished and Iraq is on a path to a stable democracy. 

You know, more than 2,300 men and women in uniform have died trying to bring freedom and hope to this part of the world.  And you sit out here and you look at these men and women in uniform, and you say thank God for them.  Thank you for their service.  And we remember every mother and father who has lost a son or daughter. 

But we must continue this job, and as we do so, we must remember every diplomat, every soldier, every sailor and others who have lost their lives to make this happen.  And we must finish this job. 

But it‘s an important reason why Secretary Rice and Secretary Rumsfeld came, because we as a government must make sure we are organized to support this new Iraqi government, as they go out and try to lead on behalf of the Iraqi people. 

O‘DONNELL:  Jim, I was interested to read in “The Washington Post” today that there appeared to be some tension apparently between Secretary Rice and Secretary Rumsfeld.  This, of course, follows Secretary Rice‘s comments recently that she said of Iraq, quote, “we‘ve made some tactical errors, thousands of them, I‘m sure,” to which Secretary Rumsfeld responded that he didn‘t—that “those type of comments come from someone who doesn‘t understand warfare.” 

I understand each have now clarified their comments on that matter. 

But is there tension between Secretary Rice and Rumsfeld? 

WILKINSON:  I think people who say there‘s tension between those two just don‘t know what they‘re talking about.  I like to say that the relations between the State Department and the Pentagon are better in reality—are better in reality than they are in theory.  There are a lot of people who wake up and try to draw divisions. 

I was in these meetings.  I saw this joint civil/military team and the warmth between Secretary Rice and Secretary Rumsfeld as they met with these Iraqis. 

Last night, I just can‘t tell you how inspiring it was to sit there with Kurds and Shia and Sunni, and Secretary Rice and Secretary Rumsfeld, and be a fly on the wall to watch them hammer through the first key priorities. 

But I think people who talk about divisions just don‘t know what they‘re talking about.  The American people want to know that their Pentagon and their State Department are working together.  Because, as I say, we have given our treasure, both in our men and women‘s lives and in precious taxpayer resources.  They want to know this team is working together, and they are.  So people who make those comments just don‘t know what they‘re talking about.

O‘DONNELL:  All right, Jim Wilkinson, senior adviser to Secretary Condoleezza Rice, thank you very much.

WILKINSON:  Thank you.


O‘DONNELL:  Tomorrow on HARDBALL, I‘ll interview DNC Chairman Howard Dean.  “THE ABRAMS REPORT” starts now.



Copy: Content and programming copyright 2006 MSNBC.  ALL RIGHTS RESERVED.  Transcription Copyright 2006 Voxant, Inc. (www.voxant.com) ALL RIGHTS  RESERVED. No license is granted to the user of this material other than for research. User may not reproduce or redistribute the material except for user‘s personal or internal use and, in such case, only one copy may be printed, nor shall user use any material for commercial purposes or in any fashion that may infringe upon MSNBC and Voxant, Inc.‘s copyright or other proprietary rights or interests in the material. This is not a legal transcript for purposes of litigation.