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'Hardball with Chris Matthews' for Jan. 3, 5 p.m. ET

Read the transcript to the Thursday show

Guests: Jim Leach

CHRIS MATTHEWS, HOST:  Tonight, a pair of weddings and a bunch of funerals.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews.  Welcome to HARDBALL, from NBC News headquarters in New York.  Well, this is it, the Iowa caucuses.  It all happens tonight here.  It‘s been a long journey, but the 2008 race for the presidency kicks off now.  In just hours, we‘ll know the few winners and the many losers.  Stick with MSNBC all night tonight.  We‘ll have the latest news, the numbers, the candidates, the cheers, and when the time comes, the tears.

And let‘s start with the latest pre-caucus polling.  The Reuters/C-Span/Zogby poll shows Obama in the lead in Iowa with 31 percent.  That‘s Obama on top, followed by Edwards in second at 27 percent, Hillary Clinton down in third at 24 percent.  Will young voters show up so that Obama can actually win tonight and meet the standards of that poll?  Will he pull it off tonight?

Let‘s begin with our reporters, starting with the Obama campaign headquarters and NBC‘s Lee Cowan.  Can he meet the goal he set for himself to win tonight, Lee?

LEE COWAN, NBC CORRESPONDENT:  Well I think he‘s certainly going to try, obviously, I mean, and I think that you‘ve got it right, Chris.  I mean, what they‘re talking about are these young voters.  But even more than just young voters, they‘re talking about the first-time caucus goers, people that have never been before, people that are 35 and under.

And at all these rallies, Barack Obama asks the crowd how many people are going to caucus, and almost everybody raises their hands.  But when he asks how many are going to—are going to caucus for the very first time, it ranges.  It‘s between about a third of the crowd to about half the crowd.  And that‘s what they‘re counting on.  They‘re counting on sort of reshaping the kind of person that goes to these caucuses.  And they think that they can‘t help but be optimistic, really, given the kinds of crowds, the size of the crowds, the enthusiasm of the crowds that they‘ve seen over the last couple of days, Chris.

MATTHEWS:  Weren‘t there a lot of newcomers percentage-wise in the last caucuses out there in 2004?

COWAN:  There were.  I mean, they‘re thinking that this will be about the same as the mid-term elections or—and actually, about the same as 2004.  About 17 percent, they think, will be under the age of 35.  That‘s not more or less than last year but that‘s about what they‘re expecting, at least according to the “Des Moines Register” poll, and that‘s what most people are sort of counting on here, at least in terms of turnout.

MATTHEWS:  Am I reading it right that Obama, of all the candidates, seems to be the one who‘s willing to have us believe, us covering this campaign, believe that he‘s probably going to win tonight?  In other words, they‘re not trying to pull for second or third?

COWAN:  No, I think you‘re right.  I mean, he‘s never come out and specifically said, We‘re going to win.  I think he‘s characterizing it as not even necessarily confident but just serene.  He feels pretty good, they say, with the numbers recently.  He feels pretty good with the crowds.  He‘s certainly not underestimating his performance, but he‘s not going over the top and predicting a win, either.  He‘s been pretty careful about that.

MATTHEWS:  Right.  He looks like he thinks he‘ll be one (ph) tonight. 

Anyway, thank you, Lee Cowan at the headquarters of Barack Obama.

Now let‘s go to Hillary Clinton.  And can she afford a loss to Obama? 

And how will her campaign try to sell a loss, should it come to tonight?  Let‘s go to NBC‘s Andrea Mitchell, who‘s covering the Hillary Clinton campaign and joins from us Des Moines, Iowa.  Andrea, I‘m getting a kind of a mixed signal from people like Howard Wolfson of the campaign you‘re covering.  Yes, we‘re going to win, but if we don‘t, we shouldn‘t have never won out here because we never had a prayer out here in Iowa.  What is the message?

ANDREA MITCHELL, NBC CORRESPONDENT:  Right.  Well, that is the message.  That‘s the spin.  And let‘s face it, they have a point.  Iowa was never going to be easy for Hillary Clinton.  She had no track record here.  The Clintons didn‘t run here in 1992 because Tom Harkin, the favorite son, was there.  You know all of that, Chris.

But the bottom line is they think they will do no worse than second.


MITCHELL:  They don‘t think they‘ll come in third.  They think that Edwards is locked in at third block, if things turn out the way they expect.  Their own polling mirrors what the other polling shows, that if traditional Democrats turn out, they can still win.  If a lot of women come out, that‘s obviously in her favor.  But if there is a surge of new-time voters, independent voters, that favors Barack Obama.

If he doesn‘t win by too much, they still think from their overnights in New Hampshire, which shows her back up in New Hampshire, that she can recover there.  But if it‘s a big Obama win here, then they‘ve got a problem because then he gets a big bounce going into New Hampshire.  She‘s got trouble.  She still has room, they believe, to recover.  After most likely something (ph) in South Carolina, they think that she can recover on February 5, on Super Tuesday.

MATTHEWS:  Let‘s cut through the spin.  You know, Terry McAuliffe, who is out there, their campaign chairman, saying that she used to be in single digits...

MITCHELL:  He‘s very good at it, isn‘t he.

MATTHEWS:  ... in Iowa.  Wait a minute, she was never behind Obama.  If Obama wins tonight, she can‘t claim she‘s the comeback kid.  She can‘t claim that she beat expectations.  She was ahead of Obama for most of this year.

MITCHELL:  But she can say, in fairness, that Iowa was not really that hospitable to her.  But you‘re right.  I mean, there‘s no question that a loss is a loss.  The only question is by how much.  And already, as John Harwood was reporting earlier today, there are deals being cut.  It‘s been denied by all sides, but already Harwood says that Bill Richardson is throwing support or cutting deals with Obama in areas where Obama has an excess of people, doesn‘t need more delegates, cutting deals in those districts with Richardson.  That could really hurt.


MITCHELL:  And the Clinton people acknowledge that if it‘s true, that hurts.

MATTHEWS:  Why is Iowa inhospitable to Hillary Clinton, as per her people?

MITCHELL:  Well, first of all, there was no record there.  I mean, New Hampshire was really a place where the Clintons have gone, have gone repeatedly.  She‘d never gone to Iowa before.  She didn‘t know the process.  And I think, frankly, it‘s partly their own fault.  They did not have a good strategy for Iowa.


MITCHELL:  They approached it as though it were a primary state, not a caucus state.  They really didn‘t know the terrain very well.  But that said, they‘ve got Teresa Vilmain, an experienced Iowa hand.


MITCHELL:  They‘ve got a good ground operation.  They don‘t have the passion.  I went out last night and saw the excitement in the Obama rallies.  Everyone‘s getting big numbers.  People are turning out for Edwards, Obama and for Clinton.  But the question is, where is this turnout going to take place?  It‘s a very eccentric, peculiar process.  If you have a big pocket of support in one county—let‘s say Polk County here, around here—for Obama, doesn‘t help that much because you max out on delegates in a particular precinct.  It‘s complicated, but the basic—the bottom line is you need to distribute your strength around the state.


MITCHELL:  And that‘s another question.

MATTHEWS:  But all this complaining that belies the fact that Barack Obama‘s never run in the Iowa caucuses for president, either—he‘s the young guy on the team here, and he‘s done it.  It looks like he‘s done pretty well.  How are the Clinton people going to explain the fact, if it happens tonight, that after all the voting tonight among Democrats and independents and a few Republicans, that Hillary Clinton fails to get a third of the Democratic vote?  In other words, two-thirds of the people voting tonight may well vote against her, having known her for 20 years.

MITCHELL:  Well, it depends also on how some of those other candidates do because it may not be a clear-cut split among the three frontrunners.  So you don‘t yet know, going into this, exactly how that is going to...


MITCHELL:  ... how that is going to bear out.  But I think the question will be what the spread is.  If it‘s a very tightly-clustered finish, I think they can spin it.  If it‘s a big gap between Obama and Clinton, then she has a much harder time declaring that this is in any way a credible showing.  And of course, worst case would be if she were to come in third.  Their own polling indicates she won‘t, but that could always happen.  We don‘t know.

MATTHEWS:  Well, if anybody tries to spin me tonight, I think I‘ll smack them back.  But we‘ll see.


MATTHEWS:  Andrea Mitchell, thank you very much.  I meant rhetorically.  Anyway, thank you.

John Edwards needs a big win tonight.  Everyone agrees on that.  He‘s spent more time in Iowa than anyone.  Let‘s go to Edwards campaign headquarters and NBC‘s Kevin Corke.  Well, let me ask you a straight question because I know you‘ve got the answer.  Doesn‘t your guy, the one you‘re covering, Kevin, have to win—W-I-N—tonight?

KEVIN CORKE, NBC CORRESPONDENT:  Yes, they love to reject the notion of it.  It‘s been an “Iowa or bust” campaign, Chris.  But let‘s face it.  You‘ve got two major stars in Clinton and Obama.  You have—they have more money.  They have largest ground operations.

It doesn‘t get easier as you go along.  So if you don‘t win here tonight, if you‘re the Edwards campaign, if you don‘t win, or at the very, very least come into a very, very tight second place finish, it just doesn‘t look good for the Edwards camp moving forward.

Now, that said, of course, they love to say, Hey, look, Kevin, any win over a Clinton, any win over an Obama, given all the hype—I mean, look, I‘ve been at the White House all summer talking about the inevitability campaign of Hillary Clinton...


CORKE:  ... the surge over Barack Obama.  They say any win over that is a gigantic victory for them.  It defies the odds.  And they‘ll use that as a boost going into New Hampshire.  That‘s, again, given a second place or first place finish.  But they got to do that at the very least.  But I think they need to win, win here in Iowa, where they‘ve been on the ground, they‘ve had lots of time in the 99 counties, visited each of them twice, very popular and powerful ground game in the rural areas.  Got to get it done tonight, Chris.

MATTHEWS:  You know, I wonder what he‘ll do if he loses.  What‘s the strategy?  If he loses tonight, doesn‘t come in first, he goes to New Hampshire, where he again has to compete with Clinton and Obama, who are fighting it out up there.  He has then to wait around, I guess, until Nevada because he‘s not going to win in South Carolina, is he?

CORKE:  Well, here‘s how they‘re sort of spinning it, if you will.  They would say, Look, if you get a second here and maybe a second in New Hampshire, or in a worst case scenario, you get a second here and a third in New Hampshire, but you can eke out a second place finish in South Carolina, then you‘re looking at two seconds and a third.  He‘ll take their chances moving forward.

Anything short of that, I mean, forget about it because you‘re talking about the possibility of an Obama/Obama/Obama sweep.  If that happens, I think Clinton and Edwards are probably in deep trouble moving forward.  But I think Edwards would argue—his campaign staffers would certainly say, Look, get a second or first tonight, take your chances in New Hampshire.  They‘re up around 20 percent...


CORKE:  ... right now.  Figure out a way to get second there.  If that can happen, then they‘re looking good.  If you can‘t get second there and certainly second or first here, I just don‘t know how they get to Nevada and beyond.

MATTHEWS:  Right.  Just to make your point again, a win, win, win for Obama would be a win in Iowa tonight in the caucuses, win in New Hampshire next Tuesday, and then win in South Carolina later in the month, at the end of the month.  That would be one big hat trick, as they say in hockey.  Anyway, thank you, Kevin Corke.

Coming up, the Republicans.  Our NBC reporters are with those candidates.

You‘re watching HARDBALL tonight, only on MSNBC.


MITT ROMNEY (R-MA), PRESIDENTIAL CANDIDATE:  The polls show it‘s just neck and neck, down to razor wire.  Tensions are getting high, and comments are being made that are really quite questionable.  I saw just yesterday, the chairman of Governor Huckabee‘s campaign said that he‘d like to knock my teeth out.  My only comment on that is, Don‘t touch the hair.





MIKE HUCKABEE (R-AR), FMR GOVERNOR, PRESIDENTIAL CANDIDATE:  A lot of times, I‘m asked by the press why.  I told Jay Leno last night, I think sometimes that the reason that our campaign is catching fire is because people had rather elect a president who reminds them of the guy they work with, not the guy that laid them off.


MATTHEWS:  Welcome back to HARDBALL.  The latest Reuters/C-Span/Zogby polling has Huckabee leading Romney out in Iowa by 6 points, with Fred Thompson and John McCain at 11 points and 10 points respectively.  NBC‘s Kelly O‘Donnell‘s at the Huckabee headquarters in Iowa.  Is the confidence shown in that poll shown in that headquarters, Kelly?

KELLY O‘DONNELL, NBC CORRESPONDENT:  Oh, Chris, people here are using the phrase “quietly confident.”  They don‘t want to get too far out there, but you can really sense that there‘s an enthusiasm, there‘s a sense of sort of validation for all they‘ve been working on.  That‘s what we‘re hearing.

But there‘s also kind of a measure of how this campaign is maturing. 

Senior advisers are telling me they did their first polling last night.  They went into the field to sort of measure their favorables and unfavorables.  They claim they‘re ahead of Romney on favorables and have fewer unfavorables than the former governor of Massachusetts.

They also said they wanted to check to see how much the negative ads and some of the negative coverage weighed in.  And you know, advisers said a week ago, they were worried about that, thought it would really take the air out of the Huckabee candidacy.  Now they say that they think people have sort of gone through that and reviewed it, and they think that their base is fairly solid.  They had volunteers calling about 13,000 identified potential Huckabee supporters, trying to make sure they‘re going to get out and go to the caucuses tonight.

So there‘s a sense of excitement, and there‘s a lot on the line here for Mike Huckabee, Chris, as you well know.

MATTHEWS:  Do they believe that the mistakes of the last couple weeks, the comments about stopping Pakistanis at our border, as if it was a major threat to us, Pakistani illegal immigration, the failure to understand there was a National Intelligence Estimate that had just come out on Iran, the most dangerous country in the world, by many estimates, those kinds of mistakes—did they fall short of squirrelly-ness in terms of the polling, they didn‘t hurt him?

O‘DONNELL:  Well, and in talking to voters—I‘ve been wading into the crowds at his events, trying to get a sense of what is on their minds.  And two things come up that people have reservations about.  Could he be electable?  Is Mike Huckabee something more than sort of a darling of the media, an insurgent campaign that people have been excited about?  Is he somebody who could be elected?  That‘s a question.

And also, there were a number of voters who were troubled by the reports of the pardons he carried out while governor of Arkansas, unsettled by that in some cases.  The foreign affairs issues you mentioned, no voter has mentioned that to me.  I can tell you, advisers say they‘re doing more homework with the governor, trying to give him more material to brief and prep and be a little bit more disciplined when he talks about those sort of...


O‘DONNELL:  ... issues.  I think they also say that, you know, it‘s a case of as his confidence grows as a candidate, he needs to be a bit more disciplined.  But they think a lot of the negative stuff has sort of shaken out for voters.  Of course, the test comes tonight, if they can get there and if they can overcome the Romney organization.

MATTHEWS:  Maybe he just needs a newspaper boy, someone to give him a newspaper in the morning so he‘s up to date.


MATTHEWS:  Seriously, he ought to know a lot of these things.  He ought to know that Jay Leno‘s on strike, for example.  Anyway, thank you, Kelly O‘Donnell.  NBC...

O‘DONNELL:  Well, that—you know, we were there.  We were there with him on that, and we had to make that distinction for him because he asserted with such confidence that an agreement had been struck.  And my producer and I sort of looked at each other, like, Hmmm, boy, that‘s not the case.  And when we informed him that the deal that he was referring to was only Letterman‘s, not the show he was on last night, he seemed a little uneasy about that.

But we checked, would he cross the picket line?  And as you know, he chose to do so, and then came back as Republican saying to us, The writers are absolutely right in that case.  And he was really supportive.  So there you have it.

MATTHEWS:  It‘ll be interesting to track the jokes on the nighttime shows in the months ahead on Huckabee, since he crossed the line.  Anyway, Kelly O‘Donnell, thank you.

NBC‘s Ron Allen is at the Romney headquarters in Iowa.  I picked Romney to win this thing, so tell me what‘s happening.

RON ALLEN, NBC CORRESPONDENT:  Well, a lot of people picked him to win, and as you know, Chris, he has really pretty much bet the whole farm on Iowa and New Hampshire.  That‘s, in his mind, is how he‘s going to win the nomination, win here, win New Hampshire, neighboring state to Massachusetts, where he was governor.

But something has gone terribly wrong, of course, in the last few weeks or so.  He built a huge lead here through the summer.  He won the Ames straw poll, which is usually predictive of what‘s going to happen now.  But Mike Huckabee has come along and seems to have really siphoned off a lot of the very conservative support that Romney had been trying to cultivate for so long.

He has outspent everyone here.  He said today that he has had about 240 events here this year, so he spent a lot of time here.  He‘s really invested a lot.  The amount of money he spent is about $6 million on ads, which is probably as much as Mike Huckabee has raised over a long period of time.

But we went to an event today, and here‘s an example of what Romney‘s problem is.  He was before a group at a financial services company, which you would think would be his kind of crowd, but the campaign embed who has been with him for months said it was one of the worst performances he‘s ever had.  And this was a crowd that was not his supporters, it was a random group of employees.  And every one of his applause lines fell flat, and he seemed kind of flat and tired.  And that‘s his problem.

And then what happened next, the first question that was asked of him was about his negative campaign ads.  And someone asked, Are we going to have to hear more of that?  And of course, a lot of Iowans don‘t like that kind of stuff.  And his response was, Well, absolutely, these are contrast ads, not negative ads.  But you know, you have to wonder if that‘s really playing here well.

The bottom line, I think, is that, you know, he has really tried hard here, and if he loses here, he‘s going to be—it‘ll be—it‘ll be seen as him being rejected, and that‘s what might hurt him really badly if he...

MATTHEWS:  How much money...

ALLEN:  ... doesn‘t do very well here tonight.

MATTHEWS:  ... is he putting...


MATTHEWS:  Ron, how much money is he putting out on the street tonight?

ALLEN:  It‘s to know.  I really can‘t tell.  Let‘s just say, you know, there‘s a lot of it out there.  You know, it‘s “Spare no expense.”  During the Ames straw poll, he had, you know, busloads of people coming to the fairgrounds to support them.  I‘m sure tonight there are drivers out there waiting to take people to the polls.  He has a buddy system in place, where they‘re trying to get, you know, two people to go together.

I‘m sure that, you know, with his analytical CEO Bain Capital entrepreneur mind that he has figured out every bit of data to try and beat the odds and to try and make this thing happen.  And that‘s what Mike Huckabee faces because, indeed, Romney does have a machine here and he‘s hoping that that machine—Romney—is that machine can crank out a victory for him.  We‘ll see.

MATTHEWS:  That‘s what I hear.  Thank you very much, Ron Allen, who‘s at the Romney headquarters.

Let‘s go to Tucker Carlson, my colleague.  He is up in New Hampshire covering the McCain campaign, which is astounding all odds and moving back into the front lines. 

Tucker, McCain, I guess I picked—predicted last night he would get 18 points in Iowa tonight and surprise everybody.  What do you feel?  What do you smell? 

TUCKER CARLSON, HOST, “THE SITUATION WITH TUCKER CARLSON”:  If he does that, I will be impressed, but not entirely shocked. 

I just went through—I went through my notes from the 2000 campaign this afternoon, and found that McCain is staying in the exact same hotel in New Hampshire that he stayed in eight years ago in 2000, when he won the New Hampshire primary. 

He‘s a superstitious man, as are many former fighter pilots. 

He‘s really hoping for a remake of that.  I think, personally, that the environment changed in a way that is favorable to him, for this reason.  McCain is a reformer.  He ran in 2000, in some ways, against his own party, calling for reforms to the Republican Party. 

In 2000, Republicans didn‘t want their party to be reformed.  Now most Republicans recognize their party has gone astray.  McCain‘s message resonates with them, not as an attack, but as a sort of needed instruction on what went wrong. 

McCain is making the case explicitly, it‘s not Iraq that screwed us up.  It‘s overspending.  And I think most Republicans agree with that.  I think he‘s going to do very well here.  I would not be surprised, as I said, if he gets 18 points there. 

MATTHEWS:  Would he have taken us into Iraq, had he been elected last time? 

CARLSON:  I think he probably would have.  I think he would have.

And, you know, that‘s one of those hypotheticals that‘s sort of impossible to follow to its logical conclusion.  But I think McCain‘s philosophical underpinning on foreign policy is not so far from George W.  Bush‘s. 

I mean, they are both essentially neoconservatives.  The difference is, McCain‘s a hero.  And that is, of course, the—the centerpiece of his campaign.  I mean, you look at John McCain and you ask yourself, how would I feel if my son grew up to be John McCain?


CARLSON:  And you would feel proud.  I think most people would feel proud about than.  That‘s not something you can say about most candidates.

And that‘s always the edge McCain has over everybody, his years in prison, not just that he suffered, but that he laughed in the face of suffering.  I‘m not shilling for the guy.  That‘s just true.

And I think, you know, that‘s always who he is.  That is never out of the picture.  And that‘s always his great strength. 

MATTHEWS:  OK, thank you very much, Tucker Carlson, who is with the McCain campaign up in New Hampshire. 

Up next:  The candidates go late-night.  Plus, the HARDBALL “Big Number,” that‘s coming up.

You‘re watching HARDBALL, only on MSNBC.  


MATTHEWS:  Welcome back to HARDBALL. 

So, what else is new out there? 

Well, two candidates graced the late-night shows yesterday, Hillary on “Letterman,” Huckabee on “Leno.”

Here are the highlights. 


SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE:  Dave has been off the air for eight long weeks because of the writers strike.  Tonight, he‘s back.  Oh, well.  All good things come to an end. 



MATTHEWS:  If I were Hillary, I would lose that stuff about all good things coming to an end. 

Anyway, here‘s Huckabee with Jay. 





Thank you. 

LENO:  Well, this is what I find fascinating about American politics. 

I mean, I kind of follow this kind of stuff.

HUCKABEE:  Uh-huh.

LENO:  So, I have known who you are for a while.  But you have literally, in the last couple of months, come from nowhere, with—with hardly any money.  How—explain how this happened.  How...


HUCKABEE:  I‘m just trying to keep from going back to nowhere as fast as I got here. 


LENO:  Well, yes.  Well, yes.



HUCKABEE:  I think a lot of it is, you know, people are looking for a presidential candidate who reminds them more of the guy they work with, rather than the guy that laid them off. 

LENO:  Right. 


HUCKABEE:  And I think that is part of what the—is going right now.


MATTHEWS:  A little warning notice here—for crossing the writers strike line last night, expect Huckabee to be the happy taunt of some unflattering late-night jokes in the months ahead.  Do you think? 

Speaking of Huckabee, he‘s taken heat for all the pardons and commutations during his tenure as governor, as someone just said, but, today, “The Boston Herald” targets Mitt Romney with a piece entitled—quote—“Mitt Let 118 Cons Go Early,” which talks about the 118 killers and rapists who were sprung early from prison when he was governor. 

How would you like to be in jail, by the way, when your governor is thinking of running for president?  He‘s not likely to let you out any day soon. 

Anyway, keep your eye on Fred Thompson tonight.  Today‘s “Politico” report that, if he doesn‘t do well today in Iowa, he could drop out of the race and endorse John McCain.  The two Republicans have a close personal friendship.  And don‘t forget that Thompson backed McCain back in 2000. 

And now it‘s time for the HARDBALL “Big Number” tonight.  By now, you have seen the candidates barnstorming Iowa in the last final hours, maximizing every last second of time out on the campaign trail. 

Well, there‘s a reason for all that, and it‘s tonight‘s “Big Number.” 

It‘s a wow.

Forty-one percent -- 41 -- that‘s the percentage of Iowans in 2004 the last time around who waited until the final three days to make up their mind.  Forty-one percent decide in the last three days, according to Associated Press entrance polling.  Think about that.  Four out of 10 voters probably made their decision some time between Tuesday and right now, this week. 

That‘s why every minute counts.  It‘s not nonsense.  These people are fickle.  They decide at the end. 

Forty-one percent, the people that decide in the last three days, that‘s tonight‘s “Big Number.” 

Up next:  The stakes couldn‘t be higher. And our HARDBALL panel has the insight. 

You‘re watching HARDBALL, only on MSNBC.  


RUDOLPH GIULIANI ®, PRESIDENTIAL CANDIDATE:  Something different is going to win this election.  We hope it‘s our different strategy that wins it.  And we‘re confident it will.



MATT NESTO, CNBC CORRESPONDENT:  I‘m Matt Nesto with your CNBC “Market Wrap.”

Stocks little changed today—the Dow industrials inched up 12 points, the S&P actually unchanged on the session.  The Nasdaq lost nearly seven points. 

Oil hit a record high, above $100 a barrel, for the second straight day, before closing in New York at $99.18.  That was down 44 cents for the session.  One hundred dollar oil has prompted predictions that gasoline could hit $4 a gallon by the spring. 

Factory order rose in November—November by the largest amount in orders in four months.  But the increase was driven by higher oil prices and isn‘t viewed as a sign of any newfound strength in manufacturing.

And final figures show Toyota passed Ford in 2007 to become the number-two auto seller in the U.S.  Toyota sold 48,000 more cars and trucks than Ford did. 

And first-time jobless claims dropped last week by a larger-than-expected 21,000.  The news provided some optimism ahead of tomorrow‘s December employment report. 

That‘s it from CNBC, America‘s business channel—now back to



CLINTON:  Dave has been off the air for eight long weeks because of the writers strike.  Tonight, he‘s back.  Oh, well.  All good things come to an end. 



MATTHEWS:  Welcome back to HARDBALL, just hours away now from the Iowa caucuses in Iowa. 

Let‘s go to the roundtable for our politics fix tonight. 

Former Iowa Republican Congressman Jim Leach is now director of Harvard‘s Institute of Politics.  He‘s in Iowa, alongside NBC News political director Chuck Todd.  Pat Buchanan is here with me.  He‘s an MSNBC political analyst.  He finished second, by the way, in the 1996 Iowa caucuses.  And MSNBC‘s Mike Barnicle is in New Hampshire, where Pat Buchanan won it all in 1996. 

Let me start.  And this is a simple question.  Nobody‘s too pure for this.  Nobody‘s a virgin.  I want to know your smell test.  What do you smell happening tonight before it happens, Chuck Todd? 

CHUCK TODD, NBC NEWS POLITICAL DIRECTOR:  Well, if you look at the body language—and I think that‘s what you‘re looking at and you want—probably wanted us to look at out here, Chris—you see that the Obama folks are awfully cocky, the Clinton folks are very nervous, and the Edwards folks don‘t know what to feel, frankly. 

You know, they think that they have the numbers that they were supposed to get when this—these caucuses were just going to be the quaint little Iowa caucuses from 2004.  What they have no idea about is what happens if—if turnout explodes. 

Republican side, the Huckabee folks are confident again, and the Romney folks are nervous.  So, you know, I don‘t—I don‘t want to go predictions, but I was just going by today‘s body language. 


TODD:  And that‘s what I saw.

MATTHEWS:  Let me go to Congressman Jim Leach.

You have been out there.  You have seen the changes in the politics in your party.  Start with the Republicans.  Huckabee or Romney, who wins? 

JIM LEACH ®, FORMER U.S. CONGRESSMAN:  I think it‘s going to be Mike Huckabee, with Romney second, a surge under way for John McCain, who will probably take third.  And I wouldn‘t doubt but that Ron Paul takes fourth. 


Let‘s go—let me go to Mike Barnicle up in Massachusetts—up in Massachusetts.

Mike, you‘re in New Hampshire right now.  What do you think is going to be the impact of those results?  Should it be Obama?  Does this mean he gets a twofer; he wins in New Hampshire as well? 

MIKE BARNICLE, NBC ANALYST:  Well, Hillary Clinton is still pretty strong in New Hampshire, Chris, but I don‘t think any of us can measure the wave that would occur if Obama wins in Iowa tonight by a fairly substantial margin, or even a slim margin.

And it leads my response to the question you initially asked, is that there‘s so much going on in this election, both in Iowa, but especially in New Hampshire as well, I think, that we don‘t yet get.  This is, in the minds of a lot of voters, at least a lot of voters I have spoken to, an epic moment in American history.

And, as far as Mrs. Clinton goes, you get the sense that the age, the era of entitlement that the Clintons come to politics with, that this is her time, she‘s owed this, that is over. 

MATTHEWS:  Yes.  It‘s not a—it‘s not a Walter Mondale moment, in other words? 


BARNICLE:  Right.  Yes, exactly. 

MATTHEWS:  Let me go—let me go to Pat Buchanan here.

Let‘s talk about your—your—are you still a Republican or not?  I can‘t tell sometimes. 


MATTHEWS:  Are you a libertarian... 


PAT BUCHANAN, NBC POLITICAL ANALYST:  Independent conservative...


BUCHANAN:  ... who votes Republican, Chris.   

MATTHEWS:  So, you‘re sort of like a Joe Lieberman Republican, right? 


MATTHEWS:  Let me...


MATTHEWS:  I knew you would like that reference. 

What do you make of tonight on the Republican side?  Do you think Huckabee‘s got it?


MATTHEWS:  Or is this squirreliness of the last couple of weeks going to hurt him? 

BUCHANAN:  Well, I think that and the Romney ads have been hurting. 

But the fact that he‘s holding up so well in the polls, it‘s not that he‘s ahead by one or two, but he‘s ahead by five or seven.  I would have to guess that Huckabee is probably going to win.  I think it‘s going to be close.  I agree with Jim Leach.  You ought to keep an eye on Ron Paul moving up and beating two out of the three former leaders, Thompson, and Rudy Giuliani, if not McCain. 

MATTHEWS:  Congressman Leach, is there a chance for Romney to pay for a victory tonight, to get a good get-out-the-vote effort paid for in the streets tonight, and win this thing, despite the trends? 

LEACH:  I don‘t—I don‘t think there‘s any payment that—that can work in that regard. 

I would say that—that Governor Romney has a lot of respect out here.  People haven‘t agreed with everything he‘s stood for, but he still has a lot of respect. 

Mike Huckabee has come over as a candidate with the most personal charm, kind of a combination of Pat Robertson and Bill Clinton.  And he‘s shown some compassion and a little bit of humor.  And I think, as a personality, he has really at least attracted a lot of people that are considering themselves Republican. 

The great issue is how small the turnout is in both parties relative to the population at large.  I think there is going to be a record Democratic turnout, but, still, 70 percent of Iowans are not going to participate.


LEACH:  And that, to me, is—is a very significant factor. 


BUCHANAN:  Well, one of the most important things about the turnout is, the Democratic turnout could be almost double the Republican turnout...

MATTHEWS:  Right. 

BUCHANAN:  ... which tells me that Iowa is going Democratic. 

MATTHEWS:  In the general? 

BUCHANAN:  In the general, which is bad news for Republicans...


MATTHEWS:  Because it went Republican in 2004. 

BUCHANAN:  Well, Iowa is a good swing state, like Minnesota right there and Wisconsin.  Those are swing states.  They‘re important states.  And if there‘s twice the turnout among the Democrats as Republicans, it‘s bad news for the party in November, no matter who is nominated. 

MATTHEWS:  I get the feeling, Chuck Todd, that the Republican caucus-goers—in fact, the people that don‘t go are probably more telling—would like to see another slate of candidates.  They‘re not as impressed with the candidates on the Republican side as the Democrats seem to be with the choice among Hillary, Edwards and Obama. 

TODD:  You know, it‘s interesting.

I have been wishing that the Republicans had a similar system as the Democrats, and you might see this rash of uncommitteds suddenly showing up on the Republican sideline.  I mean, we‘re not going to have that.  They will have their—their version of a straw sort of primary vote of some sort.  And we will get a sense.  But you absolutely—you know, Pat said 2-1.  I was talking to former RNC Chair Ken Mehlman.  He‘s worried it could be as much as 3-1. 

And just what an impact—think about this, Chris.  It‘s not just the fact that Democrats are more enthusiastic.  It‘s if—what if the Democratic turnout is boosted by independents, who decide not only do they want to start voting Democrat in general elections, like they did in ‘06, but now they actually want to go out and register to vote as a Democrat...

MATTHEWS:  Right. 

TODD:  ... to participate in a Democratic caucus here?

That‘s the type of movement from the middle, away from the Republicans, that just has people like Ken Mehlman very scared that ‘08 could make ‘06 seem like a cakewalk. 

MATTHEWS:  Mike Barnicle, that amazes me.  One thing you here about the spin that‘s about to go on tonight is some of the Hillary people are apparently going to put out the word, if they lose tonight, we only lost because independents showed up and some Republicans.  It seems to me, that‘s a damning thing to say about your campaign, that the other guy is more attractive to the middle and to the right. 

BARNICLE:  It‘s pretty tough thing to have any credibility in saying that either, because she‘s been ahead for fully a year out there.  Again you get back to the entitlement aspect of her candidacy.  She‘s entitled to the presidency.  It‘s going to be an automatic.  She‘s going to roll over everyone in Iowa. 

It‘s not happening.  It‘s not happening here in New Hampshire.  She had a very big lead just as recently as a couple of months ago.  That lead has shrunk.  She‘s still, I think, ahead here. 

But off of what your question to Chuck and what Chuck just said, on the Republican side, the McCain card is being played here now, and it‘s really interesting to watch, Chris, because I think people up here have looked at the field of candidates for many, many months.  McCain was declared politically dead as recently as August and September. They‘ve now come back to look at his candidacy, and he has an authenticity about him that is playing very, very well here in that field. 

MATTHEWS:  It would be an amazing general election to see that man, John McCain, taking on Hillary Clinton.  What an amazing election that will be.  We‘ll be right back with the panel to talk about the stakes tonight for each of the candidates.  For most of them, they‘ve got to win or they‘re going to lose.  We‘ll be right back. 


EDWARDS:  Two campaigns believe that they‘re money would make them inevitable.  But tonight, Iowa caucus-goers are going to prove that our campaign, to stand up for the middle class, and to stop corporate greed in America, is unstoppable. 



MATTHEWS:  We‘re back with the panel.  Let‘s see about the stakes tonight.  Let‘s start with the stakes with regard to Barack Obama, who many people believe will win tonight.  Pat, run through it, on the Democratic side, the stakes issue. 

BUCHANAN:  Edwards has got to win tonight or it‘s all over.  Obama has to win tonight or he will never catch Hillary. 

MATTHEWS:  Let‘s start with Obama.  What does he have to do tonight? 

Does very to win tonight? 

BUCHANAN:  I think he‘s got to win, because I think if Edwards wins, and Edwards will rise in New Hampshire, and he‘ll get tremendous attention.  And I think Obama will be caught between horses, as it were.  And I think she wins the nomination.  I think Edwards has to win.  Obama has to win.   And, frankly, Huckabee has to win. 

MATTHEWS:  OK, let‘s start with Obama, with you Chuck Todd; Obama tonight, it seems to me that he might win tonight.  If he doesn‘t, I‘m not sure if he‘s finished as well as Edwards would be finished.  Let‘s talk about Obama. 

TODD:  I tell you, he‘s a movement candidate.  And to me, movement candidacy, they need victories more than resources.  They need victories more than money.  We saw that a little bit with Howard Dean.  He can take a victory out of here and roll and probably run three or four in a row, probably sweep the January ones, and then suddenly be set up in a great shape February 5th

But I agree with Pat.  I think if he doesn‘t come out of here with a victory, he‘s caught in the middle.  Then he has to win New Hampshire.  He can‘t go 0 for two in Iowa and New Hampshire.  There were no two easier states for Barack Obama to figure out how to beat her early than in Iowa and New Hampshire.  So he better figure out how to beat her in one or both.  Look backwards, Chris, if Barack Obama is the nominee, that means he won Iowa.  There‘s no scenario in my head that he‘s the nominee without winning Iowa. 

MATTHEWS:  Congressman Leach, do you buy that on the Democratic side, that Obama, with all of the excitement about him here in Iowa, has to win this thing? 

LEACH:  I don‘t think he absolutely has to, but it would be an enormous boost.  Barack has really enthralled the state.  He has shown that an African-American can appeal in a state with very few minorities.  He‘s also generated the kind of enthusiasm that one visualizes that John F.  Kennedy once started.  I think he is the remarkable candidate of the year. 

Obviously, only time will tell whether it‘s sustaining.  And that will be up to other states, other peoples.  But he is off to a rocket start here in Iowa. 

MATTHEWS:  Let‘s talk about Hillary‘s stakes tonight, start with Mike Barnicle.  Mike, if she loses in Iowa, does that mean she lose in New Hampshire and has a real slippage problem throughout January? 

BARNICLE:  It depends on who she loses to in Iowa.  If she loses to John Edwards, I think she‘s still in very good shape in New Hampshire.  If she loses to Barack Obama, Chris—and I would submit that makes the New Hampshire primary as pivotal and as important as any New Hampshire primary since 1968, because of Barack Obama, and because of the fact that if he wins Iowa, tomorrow morning in Cairo, in Ankara, throughout the Middle East, throughout the Far East, he is the story of American politics.  And it would be an enormous, enormous wave for him here. 

MATTHEWS:  Well, that‘s what I believe.  I think I always say Rangoon will be the newspaper that runs the headline.  I think they all will.  It‘s the biggest story out of America because it‘s a complete 180 rejection of President Bush.  It‘s Lexington and Concord, only in this time we‘re fighting it King George, the president.  So it‘s quite interesting. 

Let me ask you about—let‘s go back to Edwards tonight.  I think this will be an easy one.  Let‘s start with Pat.  If Edwards loses tonight he just loses, right? 

BUCHANAN:  If he loses tonight, he‘s not going to win New Hampshire or South Carolina.  Where is he going to win?  He‘s not.  He doesn‘t have the resources to go on if he loses tonight. 

MATTHEWS:  Congressman Leach, do you look at it the same way with regard to Edwards? 

LEACH:  Not as skeptically as Pat.  Edwards has tapped into the rhetoric of Teddy Roosevelt and that is the rhetoric of the middle class, the rhetoric of the small business-person.  I don‘t know if he particularly stands for that on his legislative background; but in terms of rhetoric, he is saying what every Republican candidate should have been saying, and it is bizarre how narrow the rhetoric of the Republican party has become. 

This is a state that is going to go enormously Democratic in these caucuses, because the Republicans have crafted their rhetoric to a very small number of Iowans. 

MATTHEWS:  Chuck Todd, it seems everybody figures Hillary has enough horses nationally—she‘s 20 points ahead around the country—she can survive a loss in Iowa.  Perhaps Obama can, although I doubt it.  Edwards, do you agree that he‘s cooked if he loses here? 

TODD:  He is and, you know, he‘s unfortunately—he can‘t even really finish in a tie and somehow get a victory out of here.  That‘s kind of tough.  I think that he was always sort of the favorite going in.  You know, the early polls had him ahead double digits early on, before even Clinton and Obama got into this thing. 

Now, the Edwards people will say, look even if they win by a delegate, they‘ll have beaten two celebrity candidates, two candidates who spent 100 million dollars.  But, boy, it‘s tough.  Where do they go from here?  New Hampshire is a tough state for southerners, when you‘ve had—most of the southerners we‘ve seen have not succeed in actually winning New Hampshire primary. 

MATTHEWS:  So it looks to me like our consensus, the only person that can take a real thumping out here and possibly win the nomination of the party is Hillary Clinton.  We‘ll be right back with the round table.  We‘re going to talk about the stakes for the Republicans and see if we can be as crystal clear on that side.  You‘re watching HARDBALL, only on MSNBC. 


MATTHEWS:  We‘re back with the round table.  Let‘s go to Jim Leach out in Iowa, the former Congressman.  It seems to me Huckabee has so much riding on this, Congressman.  Does he have to win to be credible as a nominee? 

LEACH:  I think Huckabee has presented himself in such a way that he is an overwhelming likelihood for the vice presidential nomination, and with at least a one in three chance of the presidential.  Clearly, to get the presidential, he probably needs to win here.  But he has made a national mark in a shorter period of time than anyone I have seen in politics.  He‘s got a deft sense of people.  He seems to have a compassion for people in some difficulty.  He seems to have a little bit of a sense of humor, all of which are attributes that some of the Republicans aren‘t reflecting very well.

And so Mike Huckabee is the Republican candidate of the year.  Whether he can turn that into a presidential nomination, only time will tell. 

MATTHEWS:  Chuck, do you buy that, that he‘s already got himself a good shot to the VP job, and already one-third shot at the general, the presidential nomination, even if he doesn‘t win tonight? 

TODD:  Chris, I‘m worried he‘s going to become a colleague.  That‘s where—you know, he‘s already proven himself to be just very good communicator, and that he‘s already, you know—in his head, he‘s already won.  I think that‘s, to me—the only thing I question with Huckabee is does he really—did he really think he was going to get this nomination?  Did he get into this thing to get the nomination, or did he get into this thing to get relevant? 

Now, he‘s clearly become relevant.  And as the Congressman said, and I agree, he makes an obvious short list VP candidate, particularly for a John McCain or a Rudy Giuliani, who would both need some sort of southern conservative to balance themselves off.  So, you know, that is what I wonder, you know, will he go for the jugular?  Let‘s say he does win here, Chris; will he do whatever it takes to get this thing?  Or do you say to yourself, you know what, there are two candidates in this race that will do whatever it takes on the Republican side to win, and that‘s Romney and McCain.  They‘re sort of proving it in different ways. 

MATTHEWS:  Mike Barnicle, are you part of this love-fest here or not on Huckabee?  I have to tell you, I missed the flavor of this pudding.  But are you part of this, that believes this guy is really a sensation? 

BARNICLE:  Well, he is a minor-league sensation based upon, you know, based upon the evidence of seeing him in theater, talking to people.  As Congressman Leach pointed out, he has an enormous charm about him, and a sense of humor.  Congressman Leach used an interesting phrase in talking about the Republican candidates, in that they have a very, very narrow language barrier that they use, that they appeal to their voters with. 

Huckabee has a little broader language barrier, as does McCain.  And when you hear them—and I‘m not saying that Huckabee is going to go further and he‘s going to get the nomination.  But when you hear them, you can hear the kind of candidate that can appeal to people in the fall.  This country lives in the middle.  And people aren‘t going to vote for a president, at least people I speak to—they‘re not going to vote for a president based upon feelings of resentment or anger. 

Some of the other Republican candidates, that‘s their appeal.  Not Huckabee, not McCain.  Two interesting guys. 

MATTHEWS:  Let‘s talk about the appeal of Mitt Romney, another candidate whose appeal has eluded me over the years.  I‘ve never understood how he won the governorship of Massachusetts, except that he ran against Shannon O‘Brien, who wanted to give people --  What was the issue up there, Mike, that Tim caught her on, on abortion rights at the age of three or something?  I don‘t know what it was. 

BARNICLE:  Yes.  It was a—it was a—you can get an abortion when you‘re seven, and you don‘t have to tell your parents.  And by the way, it‘s a great idea to have a tattoo; look at mine.  Yes. 

MATTHEWS:  That explains the popularity of the Mitt Romney.  But in the world that --- where most people live, what is his appeal? 

BARNICLE:  His appeal, I think, is as a business person.  You know, the government is a problem.  The issues of government are business problems.  He‘s got a model to solve every problem.  Romney‘s problem up here, increasingly, is that when he‘s  matched against a personality, someone who can think on his feet, someone like McCain, who talks about the problem of illegal immigration, but says, we‘ve got to remember, they‘re all God‘s children; people hear that.  They don‘t really view it as a bureaucratic issue, solely as a bureaucratic issue. 

MATTHEWS:  Pat, the only people I know who are hot on Romney are people who are either incredibly wealthy or incredibly good-looking.  It doesn‘t—he doesn‘t seem to have that common appeal that the Clintons have had, the Roosevelts have had, the Kennedys have had. 

BUCHANAN:  I think Governor Romney‘s weakness is he has not bonded emotionally with people at all to a degree that Huckabee has.  But he does have organization.  He does have tremendous talent.  Let me say this, Huckabee has got to win in Iowa.  But if he does win in Iowa, I think he is almost even money for the nomination. 

MATTHEWS:  Wow, you heard it here.  Pat Buchanan, Mike Barnicle, Chuck Todd, Congressman Jim Leach, join us again in one hour and then again tonight for complete coverage of the Iowa caucuses.  It‘s happening tonight.  Right now it‘s time for “TUCKER.”



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