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'Hardball with Chris Matthews' for Thursday, January 21st, 2010

Guests: Julia Boorstin, Dan Balz, John Harris, John Heilemann, Mark Halperin, Barney Frank,

David Bossie, Cynthia Tucker, Pat Buchanan

CHRIS MATTHEWS, HOST:  The Obama drama.  Act two begins.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in New York.  Leading off tonight:

Once more with feeling.  One year after Barack Obama was inaugurated on a wave of hope and optimism, how did we reach the point where the Democrats were so comatose they let a Republican win Massachusetts?  The answer may be that the Democrats misread the 2008 election and that the wave that swept Mr. Obama in could just as easily sweep Democrats out.

Did they believe, for example, that a vote for change meant a vote for a sharp shift in ideology, that the public, after eight years of Bush, was suddenly ready to trust government to do things big and do them right?  Can the Democrats now turn the general anger against big-shots against Republicans?  That‘s our top story tonight.

One area where the president may be able to capture the public attitude is by going after Wall Street and the big banks, to take the regular person‘s anger at Wall Street and the economic powers that be and use it against Republicans.  Today he proposed tough new limits on banks.  Can he get the public behind them?

And there‘s the “here we go again” embarrassment of John Edwards, who admitted today—he finally did—what everyone suspected, that he was the father of Rielle Hunter‘s child.  We also now know that Edwards lied when he said the child couldn‘t be his and when he said his affair occurred when Elizabeth Edwards‘s cancer was in remission.  Latest update, Edwards has landed in Haiti to do good.

Plus health care reform, the president suggesting he may take what he can get.  Will that sell with progressives?

And a big ruling from the Supreme Court today.  The government may not ban political spending by corporations for candidates.  Who do you think likes that decision?  Could it be the folks who just love the corporations and what corporations want?

Let‘s begin with the start of President Obama‘s second year.  With me now, Dan Balz of “The Washington Post” and “The Politico‘s” John Harris.  Gentlemen, it‘s an honor to have both of you here tonight.  And the big question is, what is the president‘s predicament, John Harris?  And the same question to Dan Balz.  What is his predicament now, as you size it up politically, John?

JOHN HARRIS, POLITICO.COM:  Well, his predicament was that a year ago, he said he was going to do big things, and he challenged in his inaugural address the cynics who said that big things couldn‘t happen.  He said the ground has shifted on them.  And a year later, we have to say that the ground has shifted on Obama.  He has not—the so-called big bang that he was going to come out with as his governing strategy in the first year has not come to fruition.

He‘s a year in office, and he doesn‘t have that sort of major policy achievement.  He‘s got some things he points to as successes, but he clearly has not executed the big bang.  And in the post-Massachusetts landscape, those things are going to be harder.  They‘re going to be more unattainable.  So what he‘s in need of is a political strategy, now that the old strategy has failed.

MATTHEWS:  Well, let me go to Dan on that.  Do you believe the fact—well, it seems it‘s manifest he hasn‘t done the big thing yet, at least not that anybody can see.  But do you believe that it‘s also true the public doesn‘t want the big thing right now in terms of liberal legislation?

DAN BALZ, “WASHINGTON POST”:  Chris, a year ago, I asked him the question about what the ‘08 election really meant.  Did it bring an end to the Reagan era?  He said not necessarily, that there was still a skepticism toward top-down command-and-control kind of government.  He thought that was a lasting legacy.  He said the challenge for him was to demonstrate smart and effective government, whether it was big or small.

I think that‘s still the question that he‘s trying to convince people that he‘s got an answer to.  And after a year of his administration, there is a great deal of skepticism on the public‘s part that he‘s found the right answer.

MATTHEWS:  Well, the big question, John, now, is how does he scale down or reset the button.  And the problem—I thought Claire McCaskill of Missouri, the senator from Missouri, handled it very well.  She said, You can‘t have just insurance reform, health care reform, like no preexisting conditions, without some sort of individual mandate that requires healthy young people to join and pay for part of the cost of insurance.  And you can‘t get that requirement, the individual mandate, unless you have some kind of subsidy.  She said nobody wanted a really big bill, but you‘re stuck with it.

Is there any way he can peel the onion here and get down to something that‘s hard and sellable, John Harris?

HARRIS:  I don‘t think, Chris, they have the answer to that question yet.  And that‘s why what you‘ve seen Robert Gibbs today saying, Look, we‘re just going to take a deep breath.  They‘re not even coming out with a timeline for when they‘re going to sort of unveil what their next step—option is.  I think they figure, if everybody—if Democrats can calm down from the first blush immediate reactions of Scott Brown winning Massachusetts, then they can get together and answer that question.  Well, is there something that would be not everything we want but that would be incremental and also saleable in both the Senate and the House?

MATTHEWS:  Well, maybe they should stay in the crisis mode.  I think they might get clearing thinking, myself.  Don‘t calm down too much, guys!  And women.

But let‘s take a look, Dan—I want Dan Balz to look at this first and respond to this.  Here‘s President Obama on ABC‘s George Stephanopoulos on the meaning of Scott Brown‘s victory.  Here‘s his political take.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  The same thing that swept Scott Brown into office swept me into office.  People are angry and they‘re frustrated.


MATTHEWS:  I don‘t know.  What do you think of that?  Is it the same thing?  I thought what swept him into office was dislike for the war in Iraq, dislike of President Bush, the desire for change.  But I‘m not sure what else.  But what‘s that got to do with this anger in Massachusetts we saw this week, that somehow focused itself, coalesced around this guy in a truck?  Somehow, a truck, a guy who would drive a truck suggested he‘s on our side.  Doesn‘t sound like Obama to me.  Your thoughts, Dan?

BALZ:  Chris, the—I mean, the anger is certainly of a different nature.  I mean, the anger in 2006 and 2007 and 2008 that we saw was an anger coming from the left in the grass roots aimed at, as you said, the Bush administration, and particularly its policies on Iraq.  There were other factors.  And as we got closer to the election, certainly, economic anxiety was part of this.

What we‘re seeing now is anger from the right.  It is a response to the conservatives‘ view that the Obama administration and the Democrats in Congress are trying to do too much government at once, and it is a revulsion against that that we‘ve seen.  Those in the center at this point have gone away from the Democrats, toward the Republicans.  They are the battle that we will watch get waged for the rest of this year.  But those types of angers are certainly different, and I think he was wrong to equate them as one and the same.

MATTHEWS:  Yes, let me go to—let me go to John Harris on that question.  If the president wants to retool, is there any clear indication he should retool toward the middle or toward the left?  Any clear indication or consensus in the White House you can report on that big question?

HARRIS:  Well, the first reaction is that they do—and we see it in their rhetoric—is that they do feel they need to stand up against corporate interests and strike a more populist note.  That‘s their way of responding to economic anxiety.  The most effective presidents, when they‘re at their most effective, manage to both unite their base and the middle.

And I think Dan had it exactly right.  What the middle is looking for is a clear sign of effectiveness, confidence in government.  That‘s what they want from this administration.  What the left wants is that, but they also want a clear sense that Obama stands with them and won‘t compromise on their top policies.  So that‘s a very difficult act to balance.

BALZ:  Chris, I would say one other thing related to that, and that is, certainly, John‘s right that the White House has decided that a more populist attack, a more populist message, is what they need to do partly to draw contrast with the Republicans and to try to identify themselves as being on the side of the public.

One of the things we‘re seeing, though, is that the public is certainly angry at the banks, but they‘re angry at the banks in part because they feel much more has been done for the banks...


BALZ:  ... and not enough for them.  So I think the question for the Obama administration is not simply how do you go after the banks, or the insurance companies, it‘s how do you deliver something to ordinary people that they feel is for them?

MATTHEWS:  Well, here‘s the question for both of you.  And I guess I‘m listening to both and I‘m hearing it both.  But here‘s the question.  Are the public people, the people that decide these elections in the middle, angrier at government for taxes, debt, too much in their face economically, too much burden on them, like through health care, or are they angry at the big shots on Wall Street?  John, who are they angriest at?

HARRIS:  I do think for the people in the middle, it‘s a free-floating range.  But their fear at the moment right now is that Washington is out of control, that they don‘t have a remedy to the serious problems, that they‘re spending too much to no effect.


HARRIS:  And if they‘re mad at Washington, that means for now, they‘re mad at Democrats in Congress and in—and President Obama.  That doesn‘t mean they like Republicans, but Democrats are the object of their anger.

MATTHEWS:  OK, let‘s look at the president.  Here he is again with George Stephanopoulos with his latest on his first year.  Let‘s listen.


OBAMA:  One thing that I regret this year is that we were so busy just getting stuff done and dealing with the immediate crises that were in front of us that I think we lost some of that sense of, you know, speaking directly to the American people about what their core values are and why we have to make sure those institutions are matching up with those values.  And that I do think is a mistake of mine.


MATTHEWS:  I don‘t know what that means, Dan Balz.  I don‘t know what they meant by that.  That left me cold.  What did he mean?

BALZ:  Well, Chris, I‘m not quite sure exactly what he meant.  One is

I—you know, I would say it gives too little credit to the American

people for being able to sort of watch and come to conclusions on their

own.  Certainly, we know that nobody has a—you know, a bigger megaphone

than the White House and the president of the United States and an ability

certainly, he has an ability to communicate very powerfully, as we saw during the campaign.

So I think there‘s a little bit of disconnect there.  I think it has more to do, certainly, with just the general economic conditions that people are facing, the struggles that people are going through if they‘ve lost a job or are worried about losing a job or they‘ve lost a home, and the question of what is being done for them, how soon is this going to turn around in a much more significant way.

MATTHEWS:  OK, It sounds like the president has a plan to go after the big shots on Wall Street.  We‘ll see if that turning of anger toward Wall Street and away from Washington will work for him.  Thank you very much.  I‘ve got real heavyweights here, Dan Balz of “The Washington Post” and John Harris, author of “The Survivor,” the great book on Bill Clinton that I think he really likes, right, John?

HARRIS:  I‘m told he‘s come to terms with it, yes!


MATTHEWS:  OK.  Thank you very much, John.

Coming up: For the first time, former presidential candidate John Edwards admits he‘s fathered a child out of wedlock with Rielle Hunter.  He‘s also off in Haiti, as I said, doing good.  We‘ve got the author of “Game Change” coming up next to tell us about Edwards‘s strange odyssey into despair, apparently.

You‘re watching HARDBALL, only on MSNBC.



JOHN EDWARDS (D-NC), FORMER PRESIDENTIAL CANDIDATE:  I know that it‘s not possible that this child could be mine because of the timing of events.  So I know it‘s not possible.  Happy to take a paternity test and would love to see it happen.


MATTHEWS:  God, we should have a mentalist on television here!  I‘d love to have one of those lie detectors you could apply to these politicians sometimes.  That was John Edwards on ABC back in August of 2008, lying.  Today he released a statement that reads in part, “I am Quinn‘s father.  It was wrong for me ever to deny she was my daughter.  And hopefully, one day, she will understand and she‘ll forgive me.”  Well, that‘s personal.  Let‘s talk about the politics.

Why is he doing it now?  Joining me now is “New York” magazine‘s John Heilemann and “Time” magazine‘s Mark Halperin, author of the fabulous new book “Game Change.”

You talk a lot about in your book—and it‘s on the cover of your magazine this week—about this odyssey from hell this guy‘s been going through.  He got involved with a campaign worker, with this filmographer, Rielle Hunter, had a child with her, had to deny the whole thing in the midst of his wife, Elizabeth‘s, health challenges, to put it lightly.  He doesn‘t come off too well.  And now he‘s in Haiti doing good.


JOHN HEILEMANN, CO-AUTHOR, “GAME CHANGE”:  Hades or Haiti?  Which did you...

MATTHEWS:  Well, he‘s in Haiti doing good.  I mean, it looks like a PR move, but who knows.  And never question motives.

HEILEMANN:  You know, he—you know, obviously, he‘s—he has had a

hellish time, and most of it, he brought on himself.  You know, it‘s—we

at the end of—at the end of the book, when the last couple scenes that we have about Edwards—you know, you see him going through that interview, you know, where he‘s saying to his aides that he wants to do this interview, and they‘re saying to him, You have to tell the whole truth in this interview or else it‘s not going to accomplish what you set out to accomplish.

And he‘s still saying, No, I‘m just going to admit the one part, that she was my mistress.  I‘m not going to talk about the child because I might still end up able to keep my speaking slot at the Democratic convention.  I might still be able to end up in the Obama administration.  And they all look at him like he‘s got to be out of his mind, you know?


HEILEMANN:  But after that, he then goes through this very dark period.  You know, Edwards, after that point, gets very depressed.  He‘s socially ostracized in North Carolina.  Some of his aides start to worry that might kill himself.  I think he‘s had a really tough time over the course of the last year or so.  And you know, what‘s going on now—it‘s obviously too little, too late, in some sense.  But I think there—you know, among the many motivations, there could be some actual moral reckoning that he‘s finally come to with the truth of what he‘s done to wreck his family life and his career.

MATTHEWS:  Mark, what do you think is John Edwards‘s story here?  What is the story that you‘ve written about, if you had to do this as a morality play?  Is the lesson the old lesson, Be faithful to your spouse?  But that‘s not a new lesson.  Is the lesson, Don‘t be a fraud?  I mean, there he was at some sort of Habitat for Humanity house-building thing.  Here he is going to Haiti.  He‘s constantly aware of the optics, putting on a show of virtue.  He seems to know the PR aspect of politics, but it doesn‘t seem to square with the reality at all.

MARK HALPERIN, CO-AUTHOR “GAME CHANGE”:  Most of the people, Chris...

MATTHEWS:  Maybe that‘s true of some pols.

HALPERIN:  Most of the people who get as close to the White House as John Edwards did in 2004, when he was on the ticket, and in 2008, when he may well have been the Democratic nominee, are parts of national life for longer than John Edwards.  Barack Obama would be an exception.  From the time he entered national life, he was seen—in 1998 as a Senate candidate, first time he‘d run for office—he was seen as this incredibly nice guy.  And I think one lesson here is that the press and the political community in general accepted at face value what kind of guy he was and didn‘t really probe.

MATTHEWS:  I don‘t think we all did.  But let‘s take a look at former Edwards aide Andrew Young—not the famous ambassador to the U.N. or mayor of Atlanta, this Andrew Young, in an interview with ABC News.  Let‘s listen.


ANDREW YOUNG, FORMER EDWARDS AIDE:  He also asked me and Fred Baron to

arrange for a fake paternity test and he (INAUDIBLE) a fake paternity test

fake paternity—get a doctor to fake the DNA results.  And he asked me and Sherri (ph) to steal a diaper from the baby so that he could secretly do a DNA test to find out if it was, indeed, his child.


MATTHEWS:  How do you get under the radar?  Let‘s skip the morality and the sex play here because it‘s a little—we don‘t know anything about this stuff, really, except what you could imagine.  But let‘s start with you, Mark.  Sarah Palin is asked by Katie Couric, What do you read, and she came up cold.  She was asked to name the Founding Fathers by Glenn Beck, hardly an ideological adversary, came up cold, didn‘t know anything about it.

Elizabeth Edwards in your book, by your account in “Game Change,” a fascinating story, where she says, My husband doesn‘t read books.  My husband is almost—for all functional purposes, not literary.  He doesn‘t read anything, doesn‘t keep up with anything.

I on his campaign bus back in the campaign when he ran as VP back in 2004.  There‘s no newspapers, no briefing papers, no books.  He isn‘t a reader.  How do people get as far as Palin and Edwards with no—I don‘t mean intellectual life, I mean any kind of intellectual activity?

HALPERIN:  I remember once...

MATTHEWS:  How do they get that far?

HALPERIN:  I remember once, early on in his campaign for the nomination in 2007, where he was pushing a policy on national security.  And I asked him some very basic questions about it and was pretty taken aback by how little he knew about his own policy.

MATTHEWS:  But how do you get this far?  To you, John Heilemann.  This is supposed to be a vetting process, all these campaigns.  The purpose of running for office is to see if you‘ve got the right stuff.  How do you get as far as these guys, like Palin and this guy Edwards, with no intellectual reality?  I mean, I‘ve learned—I mean, I like regular guys.  I can see the appeal of a Scott Brown in Massachusetts.  I can see the appeal of George Bush when he first came on the national scene.  Being a regular guy against the intellectuals is popular.

But when you‘re really being a nonintellectual, it‘s pretty scary.  Like, don‘t use your brain, don‘t read books, and you want to run this country, with its complicated reality of running America, without any intellectual reality.  I mean, isn‘t it scary? 

HEILEMANN:  Well, it is a little scary.

MATTHEWS:  How close he came?

HEILEMANN:  It is a little scary, I think. 

And, you know, the truth is, Chris, you know that, in politics, there‘s—all of those things, those qualities you just talked about are all things that we want our politicians to have, and we aspire for them to have.  But the truth is, the connection, the personal connection that these people have, the visceral connection from the stump—John Edwards was an enormously talented and charismatic figure for a period of time.  He made a connection with people. 

And the connection seems to trump everything else.  It also, I think, speaks to a critique of the press corps.  There aren‘t that many people covering the horse race who get in there and really dig into the policy questions with these guys. 

MATTHEWS:  Well, even simple things.  I wonder whether he knows the answers to simplest things.  It‘s almost like “Being There,” that Jerzy Kosinski movie, you know what I mean, where the guys knows nothing.

HALPERIN:  I think John Edwards is—I think you‘re over—may be overstating a little bit about John Edwards.  But...

MATTHEWS:  Oh, yes?  Oh, yes?  Well, Elizabeth doesn‘t agree with you, because, according to your book, he doesn‘t read. 

HALPERIN:  Well, that‘s true.  That is true.  That is true that that is her view. 

MATTHEWS:  But you don‘t have that view? 

HALPERIN:  Well, look, he was an accomplished trial lawyer.  And there‘s some intellect involved in that.

MATTHEWS:  Playing to rural juries.  Oh, come on.  Come on.  Give me -

I read the book, how he did it.  OK.  What kind of street smarts does that show?  The ability to seduce a jury, right? 


MATTHEWS:  And what does that tell you? 

HEILEMANN:  And the electorate.

HALPERIN:  It is true.  Something else we write about in the book that illustrates your point is uniformly amongst his colleagues in the Senate, after a time—in the beginning, they thought he was a superstar. 

By the time he was running for president on the ticket with Kerry, they thought of him as a phony and a fraud.  That‘s true. 

HEILEMANN:  And it‘s funny.  One of the things that was...


MATTHEWS:  Why don‘t you write your books before the election, so we can all read them?



MATTHEWS:  Wouldn‘t it be nice to know that a guy‘s wife thinks he doesn‘t read anything?  But we find this out at the election.  It‘s a little late, but I guess we found it out. 

HEILEMANN:  Well, there‘s an extraordinary...


MATTHEWS:  Maybe Todd—what‘s his name, Todd Palin is going to blow the whistle on Sarah one of these days.  “My wife doesn‘t read anything, Sarah.  Katie Couric was right.  She caught her red-handed.”

HALPERIN:  It turns out that Todd is the member of Mensa in that family, you think?


MATTHEWS:  Now, let‘s not get elitist.  Let‘s not go the other way.

Heilemann, Halperin, a great book.  Please read this book.  How much does it cost, $25? 


HALPERIN:  It depends where you buy it. 


MATTHEWS:  OK.  You can get it for $25, “Game Change.”

HEILEMANN:  Chris, we will get you a discount. 


MATTHEWS:  It could change your life.

Up next: a “Big Number” that shows President Obama may be in better shape than anyone thinks.  He is amazingly better shape, according to the polling, than the handwringers would suggest. 

You‘re watching HARDBALL, only on MSNBC.  


MATTHEWS:  Back to HARDBALL.  Time for the “Sideshow.” 

Here‘s Jon Stewart and Jay Leno with the lighter side of the Massachusetts Senate election this week. 


JON STEWART, HOST, “THE DAILY SHOW WITH JON STEWART”:  We at “The Daily Show” are going to call it.  Scott Brown is now apparently the 45th president of these United States of America.


STEWART:  Whew!  Yes, baby!  Welcome!

It has been a long, incredibly grueling couple of days since we first heard of this man. 


STEWART:  And now he‘s in charge of everything. 

Somebody‘s got to be able to look past this one election and see hope for the future. 

MARTHA COAKLEY (D), MASSACHUSETTS SENATORIAL CANDIDATE:  I wish we were here with other and better news tonight, but we are not.  And I can tell you there are at least two dogs who are very happy about tonight‘s results...


COAKLEY:  ... because we‘re going to be back with them. 

STEWART:  Hah, hah, hah, hah, hah.  Ahh.  Ahh! 


STEWART:  Ahhh!  Ahhhh!


STEWART:  I‘m sure the 30 million Americans who now go without health insurance because of your loss will be comforted to know your dogs will no longer suffer separation anxiety. 




JAY LENO, HOST, “THE JAY LENO SHOW”:  It‘s hard to believe President Obama has now been office a year.  Isn‘t that amazing.  It‘s a year.

And, you know, it‘s incredible.  He took something that was in

terrible, terrible shape and he brought it back from the brink of disaster

the Republican Party.  Yes. 


LENO:  Wow.  Outstanding. 


MATTHEWS:  It‘s as funny as it hurts. 

Next: the war at home.  John and Cindy McCain disagree on same-sex marriage.  He opposes it.  She supports it.  This week, she went public by posing in a new ad for NoH8, the group that opposes Proposition 8, the California law that passed by popular initiative back in 2008 banning same-sex marriage.  John McCain put out a statement saying that, while he respects his wife‘s views, he remains opposed to same-sex marriage. 

Now for the “Big Number” tonight.

A new Public Strategies poll asks Americans whom they trust to run the country.  I love this question.  Forty-one percent say they trust Democrats to run the country.  Forty percent say Republicans.  They won by a nose.  How many say they trust President Obama?  Better than both parties, 54 percent. 

It‘s been a tough week, but the president‘s still got more political capital than either Democrats, his own party, or Republicans, the opposition.  Fifty-four percent of this country are keeping the faith with President Obama, despite all that‘s happened.  That‘s tonight‘s “Big Number.” 

Up next:  President Obama looks to harness popular rage by cracking down on Wall Street.  Can Obama, the president, win by beating up the banks?  House Financial Services Committee Chairman BARACK OBAMA:  joins us next. 

You‘re watching HARDBALL, only on MSNBC.  


JULIA BOORSTIN, CNBC CORRESPONDENT:  I‘m Julia Boorstin with your CNBC “Market Wrap.”

Stocks plunging today, led by financials, on President Obama‘s plans to crack down on risky trade practices, the Dow Jones industrials diving 213 points, or more than 2 percent, the S&P 500 falling 21 points, and the Nasdaq finishing 26 points lower. 

Bank of America and J.P. Morgan taking the hardest hits, both companies‘ shares plunging more than 6 percent, a similar drop for Goldman Sachs, but tempered by a stellar earnings report, a full $3-a-share higher than estimates.  Still, prices are down more than 4 percent. 

Two other big quarterly reports coming out after the closing bell, American Express beating expectations on both earnings and revenue.  Shares were down about 2 percent at the close, still sliding after-hours.  And Google handily beating expectations, with a jump in both sales and profits, but those numbers not enough to please investors.  Shares are up a fraction at the close, but are moving sharply lower after-hours. 

That‘s it from CNBC, first in business worldwide—now back to


MATTHEWS:  Welcome back to HARDBALL. 

President Obama sought to harness populist rage and anti-Wall Street sentiment today when he proposed tougher regulations for big banks.  He wants to prohibit commercial banks from owning or investing in hedge funds and from using depositors‘ money in proprietary trading. 

Today‘s announcement comes a week after the president proposed a tax on the largest financial firms to recover losses from the bailout. 

Here‘s the president today. 


BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  So if these folks want a fight, it‘s a fight I‘m ready to have. 

And my resolve is only strengthened when I see a return to old practices at some of the very firms fighting reform, and when I see soaring profits and obscene bonuses at some of the very firms claiming that they can‘t lend more to small businesses, they can‘t keep credit card rates low, they can‘t pay a fee to refund taxpayers for the bailout without passing on the cost to shareholders or customers.  That‘s the claims they‘re making.

It‘s exactly this kind of irresponsibility that makes clear reform is necessary. 


MATTHEWS:  So, will these reforms play well with angry populists and will they push Republicans back on their heels? 

Democratic Congressman Barney Frank of Massachusetts is the chairman of the Financial Services Committee. 

Congressman Frank, thank you so much. 

I don‘t understand high finance at all.  I don‘t understand it at all.  But I think the politics here are important to watch.  Is there something that you and Congress and the president can sign that will deal with this public disaffection with our banking industry? 


Well, I hope so, but that‘s not the main reason to do it. 

Look, here‘s the problem.  It was the irresponsibility of the financial community over the years, unchecked by a government which was run by people, as Alan Greenspan has admitted, who made the mistake of thinking no regulation was necessary, that the market would take care of itself.

Alan Greenspan, to his credit, has admitted that that was his mistake, and the mistake shared by others of that conservative philosophy.  We then were confronted—we have to go back to September of 2008, when the two top Bush administration appointees, the secretary of the treasury, Henry Paulson, the chairman of the Federal Reserve, Ben Bernanke, come to Congress and say, if you do not give us this fund of hundreds of billions of dollars, we‘re going to have a serious economic meltdown.  It will be a total collapse. 

Now, I think they were probably right.  Even if they weren‘t right, the fact that they said it publicly made it right. 

MATTHEWS:  Right. 

FRANK:  And we had no option, I believe, but to help them. 

Here‘s our problem.  It was kind of like de-Baathification in Iraq.  The only way to prevent a total meltdown of the economy and enormous greater hardship for all kinds of people in this country was to do some things that helped the banks, not because we loved them or wanted to help them or because we thought they were guiltless, but because that was the lifeline.  You needed credit.  So, there was no way to do that.

I analogize it to the mistake the Bush people made the other way, when they went into Iraq, fired everybody who had worked in the Baath Party, and then they had chaos for a year, because there was nobody left.


FRANK:  Sometimes, you have to work with the people you‘re not happy with to keep things going.  That kindled a great deal of anger. 

What then happened was—and it turns out this recession that Barack Obama inherited from George Bush was worse than people had thought.  Unemployment has been deeper and longer.  So, you have people angry at an unemployment that was caused by financial institutions which generated the crisis, and they‘re getting some benefit.

Now, we did two things.  We did provide some benefit, because that was the only way to keep the country going.  At the same time, we began the process of putting restrictions on them.  Frankly, what the president is doing now, in terms of being tough on them, isn‘t a lot different than what we were doing earlier in the congressional session in the committee I chair. 

The problem was—and maybe this is a poor choice the Democratic leadership made—attention was on health care and cap and trade.  I have been fighting with the banks, fighting with the financial institutions, pushing restrictions on credit card abuses for several months. 

I think what‘s happened is, we have now finally got that as the focus of attention.  And, yes, I do think the public is going to respond appropriately, because we‘re doing the right thing. 

MATTHEWS:  You know, I—I‘m looking at a campaign in Massachusetts which blew me away.  I was watching it up there in Massachusetts this week.  And you‘re the expert up there.  You have got a great constituency.  A lot of those people voted for the Republican because he showed up in a truck, the optics of a guy up against, I guess, big government, against big taxes, against what.

What‘s the public that you talk to up there, what do they feel is their problem?  Is it big government?  Is it Wall Street?  Where‘s...

FRANK:  Well, that‘s—it‘s ironic.

MATTHEWS:  Where‘s their head at on this?

FRANK:  Ironic.  Somebody‘s big government—here‘s the irony.  I think it‘s a great triumph of the conservatives.  In fact, what we need is a government that has got sufficient heft to protect people...


FRANK:  ... so that, in the financial area, the problem was, the government wasn‘t there.  The government—the cop went off the beat when they were doing all these abuses, when they were making mortgage loans that shouldn‘t have been made.  And Democrats tried to stop it. 

And Alan Greenspan said, no, no, you know, you‘re interfering with the market.  And that was the Bush administration approach.  Here‘s the problem.  And then, of course, we had Katrina, where the government behaved abominably. 

The fact is that, under the conservatives, the government didn‘t do very much.  And people—now that we say, wait a minute, we want to have the government used to stop these abuses and do other things, they say, gee, we‘re pretty skeptical. 

In other words, the conservatives, by their years in power, so discredited the very idea of government, that they created an anti-government feeling...

MATTHEWS:  Right. 

FRANK:  ... ironically, by doing it badly.

And, yes, Democrats are seen as the party that believes that government can be used constructively, from Woodrow Wilson, and FDR, and John Kennedy, and Lyndon Johnson.  And the problem is that notion of coming together and using government to solve some of the problems that many were private-sector-caused is unpopular right now. 

MATTHEWS:  Well, one of great political phrases in Philadelphia is middling somebody.  Can you middle these guys, these Republicans, and force them to choose between their anti-big-shot rhetoric and their defense of big shots behind the scenes?  Can you force them to choose between their rhetoric and their ideology? 

FRANK:  I hope so.


FRANK:  I will—I will say, middling makes sense in the Philadelphia context.  In fact, middle is the last place you would find any of these Republicans today.  If they aren‘t over on the extreme, they get heartburn. 

It‘s already happened.  When we voted in the House in December on financial regulation, the final vote, as you know, is a motion to recommit that the minority, the Republicans, can offer.  They don‘t need anybody‘s permission as to how to shape it.  They can offer any motion they want. 


FRANK:  They offered a motion that would have killed literally every single type of financial reform we have proposed, no consumer protection agency, no restriction on derivatives, no restriction on excessive borrowing so you can be failing, no restriction on the Federal Reserve‘s power to lend money to anybody it wants and give money to anybody it wants.

The problem was, the country wasn‘t looking.  When we said we want to give the regulators the power to break at—break up a conglomerate that‘s gotten too big, they unanimously voted no.  When we set a consumer agency to protect people on credit cards and overdrafts and these other abuses, pay day lenders, they unanimously voted no.  Nobody was looking then.

So the answer is I don‘t think we have to do anything to position them.  That‘s where their ideology drives them.  And I hope now that this is the focus of attention, that will be the political response. 

MATTHEWS:  There aren‘t too many Teddy Roosevelts in the Republican party these days.  Thank you very much, Congressman Barney Frank, chairman of the Finance Services Committee in the House of Representatives.

Up next, the United States Supreme Court opens the floodgates to allow new campaign spending by corporations.  They can buy ads on TV now that says whatever they want to say politically.  This is HARDBALL, only on MSNBC.


MATTHEWS:  Welcome back.  The Supreme Court has ruled five to four today to allow corporations to spend money to pay for TV ads supporting or opposing political candidates.  The ruling will likely allow labor unions as well to do the same thing.  The case is called Citizens United versus the Federal Elections Commission.  David Bossie is president of Citizens United. 

David, let‘s take a look, before we go further, a bit of your documentary about Hillary Clinton that spawned this case.  Let‘s watch Hillary. 


UNIDENTIFIED FEMALE:  We know that Hillary is an insecure person. 

Secure people don‘t lie.  They don‘t lie inveterately the way she does. 

UNIDENTIFIED FEMALE:  What drives Hillary now is power.  She‘s very much interested in gaining power.  She considers herself to be a special person.  She‘s a lot of arrogance, a spirit of superiority about her.  This is the driving force in her life, is to gain and acquire and maintain power.  And her husband got to the top.  And she saw it.  She felt it.  And she wants there herself. 

UNIDENTIFIED MALE:  Over the past 16 years, Hillary Clinton has undoubtedly become one of the most divisive figures in America.  How this makes her suited to united the country as the next country is troubling to many. 


MATTHEWS:  That‘s an anti-Hillary documentary.  Fair enough.  That‘s free speech.  What did the court rule today that won for you, David? 

DAVID BOSSIE, CITIZENS UNITED:  We won a decisive victory at the Supreme Court today today, Chris.  We won on all accounts, pretty much.  We‘re ecstatic that the United States Supreme Court sided with the founding fathers, sided with the First Amendment, and decriminalized political speech today. 

MATTHEWS:  Well, did you make the movie like you would make a movie to take to Sundance or did you make the movie to make a case politically, as it seems to make?  Of course, it could have met both calls.  Did you make any money on the movie?  Was it a commercial property or political hit job, basically? 

BOSSIE:  We obviously sell the film.  We sell it today.  People can go—

MATTHEWS:  Was it profit making? 

BOSSIE:  The film last very—had a market share that was very small because she was out of the race very quickly after the film came out.  But we knew—then we made a film on Barack Obama, which is still available and doing very well. 

We make films—Citizens United Productions has now made 14 films over the last several years.  We make them with Fred Thompson, Newt Gingrich, Dick Morris.  You name it, on the conservative side, we make conservative films.  The Federal Election Commission told me that I couldn‘t air my films or show advertisements for them.  So they basically said I could make them, but not let anybody know they existed.  So I decided to take it to court. 

MATTHEWS:  What‘s the difference between your kind of a movie and a Michael Moore movie?  Would you put them in the same category, in terms of making a political point? 

BOSSIE:  I don‘t let the—Michael Moore never let the facts get in the way of a good story. 

But I thought today‘s ruling helps Michael Moore and filmmakers like Michael Moore just as much as me, just like it helps the ACLU.  It helps—who was on our side.  The ACLU sided with me.  The AFL-CIO sided with me.  The NRA sided with me. 

Everybody likes to talk in Washington about bipartisanship and nonpartisan.  This is the ultimate nonpartisan issue.  This is a free speech issue.  From across the political spectrum, organizations with us—

MATTHEWS:  But the court ruling was right over left.  The court ruled with the five conservatives against the four on the other side.  It was led by Scalia and Thomas.  It wasn‘t exactly a bipartisan court ruling. 

BOSSIE:  It certainly was.  Justice Kennedy, who is really not a conservative, is a leader on free speech issues.  And that‘s why he—and it was his decision.  He handed down the decision, not one of the other conservatives.  So it means a lot coming from Justice Kennedy. 

MATTHEWS:  I‘ll take that point.  Let me ask you this—here is what the president had to say.  I want you to react to this, “the Supreme Court has given a green light to a new stampede of special interest money in our politics.  It‘s a major victory for big oil, Wall Street banks, health insurance companies and other powerful interests that marshal their power every day in Washington to drown out the voices of every day Americans.  We‘re going to talk with bipartisan Congressional leaders to come up with a forceful response to this decision.  The public interest requires nothing less.”

Can he get remedial legislation to trump this court decision?  Can it be done, David? 

BOSSIE:  Look, I‘m not a constitutional scholar, but I don‘t think he can.  And here‘s why: the Supreme Court ruled.  They have now deemed criminalization of political speech to be unconstitutional.  And so they‘re going to have a hard time crafting new legislation that meets that standard.  And that‘s—look, we‘re going to be watching them very closely.  And I‘ll be back in court if they act irresponsibly again. 

MATTHEWS:  Thank you for coming on the show, David Bossie, who won the big case before the Supreme Court today five to four.

Up next, Mr. Brown comes to Washington.  Senator-elect Scott Brown is in town for the first time since his big win on Tuesday.  I actually saw him at the airport today.  What kind of Republican will he be, right, left or—well, probably right or center is probably the question.  You‘re watching HARDBALL, only on MSNBC. 



SEN. JOHN MCCAIN ®, ARIZONA:  Perhaps now that we have 41 votes, that the Democrats and the president will seriously sit down with us. 


MATTHEWS:  Well, as John Kennedy once said, “victory has 100 fathers; defeat is an orphan.”  Clearly, John McCain wants to be one of the daddies of this new Republican from Massachusetts, Scott Brown.  There he was earlier today celebrating Scott Brown‘s arrival, in fact, greeting him in his office.  What does it mean for Republicans?  What does it mean for health care? 

Pat Buchanan is an MSNBC political analyst and Cynthia Tucker is a Pulitzer-Prize-winning columnist for the “Atlanta Journal Constitution.”  Pat, are you thrilled?  Do you trust this guy as a conservative? 

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  I do, Chris.  I think he will do what he said.  Look, democracy really worked.  He said, if you elect me, I will run a stake right through health care.  And the day after he arrives in Washington, Nancy Pelosi said we don‘t have the votes to pass the Senate bill, and that bill is dead.  And they are going to have to work with Republicans. 

MATTHEWS:  Elections matter.  I love it.  That is one part I love about this whole thing.  It‘s the only part I like.  Elections matter.  Another example they do matter to those who don‘t vote.  Pay attention, they matter. 

Cynthia, your thoughts?  Is this guy going to be a real red-hot conservative on fiscal issues and other issues or not? 

CYNTHIA TUCKER, “ATLANTA JOURNAL CONSTITUTION”:  I think he will absolutely be a conservative, because if he‘s moderately conservative now, he will be pushed further to the right by his party. 

And there will not be any bipartisan health care bill either.  That‘s nonsense.  One of the reasons Democrats are in such trouble is that they wasted so much time trying to negotiate in good faith with Republicans, who are not interested in negotiating at all. 

So Scott Brown, no matter what he says now—and he appears a nice guy.  He is charismatic.  He is good looking.  He has a sort of awe shucks, man of the people attitude about him. But no matter what he says now, he is not going to be anymore bipartisan than any of the rest of the Republicans. 

MATTHEWS:  I don‘t know.  Here he is.  Pat, let‘s let him talk for himself, then analyze.  Here Pat is—Scott Brown today.  Let listen. 


BROWN:  People want big government.  They want transparency.  They want us here.  And now that I‘ll be here soon—they want us to solve problems.  We have got al Qaeda trying to kill us.  We have got very serious tax and spend problems.  We have got some real fiscal issues and job questions.  And we are not solving them.  We are talking about things that are really irrelevant. 


MATTHEWS:  Pragmatic problem solver, he says, Pat.  Do you believe it or is he an ideologue like you? 

BUCHANAN:  I think he‘s a pragmatic fellow, which means he is going to move to the right, for this reason, Chris: Scott Brown is probably, with the possible exception of Sarah Palin, the hottest property in the entire Republican party today.  He is going to be in demand on the speaking circuit.  He is a real possibility for a future national ticket.  And if he wants to be there, I think he will take a look at his position and be much more consistent with the center right mainstream of the Republican party than, say, with the gals up in Maine. 

I think this fellow has a future.  He‘s a smart guy.  I think he is going to move to the right. 

MATTHEWS:  Who do you think would be a stronger Republican candidate next time out, him or Palin? 

BUCHANAN:  You mean—

MATTHEWS:  Next time out? 

BUCHANAN:  Who—right now?  As of right now, I would think he would, but he has got to go through the same hurdle she has got to go through if he wants to be a national candidate, Chris.  And that‘s a year in Iowa and New Hampshire.  Then you find out who is really strong. 

MATTHEWS:  Cynthia, who would be a stronger Republican, from your perspective, him or Palin?  I‘m serious.  They need a candidate.  They don‘t have one.

TUCKER:  Well, so far, I haven‘t heard him say any of the nutty things that Sarah Palin was known for.  On the other hand, she has a very strong base of activists in her party.  So we will see. 

But what is interesting—what is most interesting so far about Scott Brown‘s big win is that not only has it cheered the Republicans, it has left the Democrats in utter disarray.  They are quaking in their boots over the election of one man from Massachusetts. 

MATTHEWS:  Well, there‘s more than that.  Pat, here‘s what I want you to analyze.  You are a good man on optics.  Cynthia, you quite get it as well, optics, what things look like.  Ronald Reagan back in ‘80 -- I will never forget it—went to the Statue of Liberty, that great labor day speech, stood there in Jersey in that flat, and took back the Statue of Liberty from the Democrats.  He became the iconic American hero that day.  It was frightening to behold.  I got to tell you, from the other side.

This guy‘s grabbed the pickup truck.  He comes in there with a truck with 200,000 miles on it.  He says, I‘m the guy that drives the truck.  What is in that imagery that grabbed people in Barney Frank‘s district, people all across Massachusetts, people who have been voting Democrat for years, voted for that guy because he rode in a truck?  What does that say to the voter that worked?  Pat Buchanan? 

BUCHANAN:  Chris, I did an analysis today.  What is happening to the Democratic party—they are holding their African-American vote completely as their share of the vote in Virginia, New Jersey, Mass.  White voters are moving en masse.  They did it in Virginia.  They did it in New Jersey.  They did it in Massachusetts. 

He has got the pickup truck.  He is Boston Red Sox.  He is Fenway Park.  What he is reaching out to is not the educated white folks, say the Harvard graduates and the others, who have moved toward the Democratic party.  He has moved toward those Reagan Democrats.  He is identifying culturally and socially with them.  Just the way, quite frankly, Palin does. 

You remember, again, after Palin was picked, two weeks later, McCain had shot up 12 points.  Those folks moved en masse to Republican tickets.  Then they abandon it when the Republicans went long with the bailout of the banks.  That is what he‘s tap nothing right now. 

Chris, this is national.  And the Republicans seem to have it moving toward them.  And they can bring those two together if they handle it right. 

MATTHEWS:  What do you think of his comment the other night about his daughters?  I thought it was fascinating.  He was like, Mrs. Brown, you‘ve got a lovely daughter.  It was an amazing scene here.  He is chatting about his daughters being available.  Of course, it was odd and a bit off-the-cuff.  But there is something charming about this guy, Cynthia.  I‘m sorry. 

TUCKER:  No, I agree completely, Chris.  I mean, he‘s charming guy.  He is charismatic on the stump.  And one reason his pickup truck went over so well with voters was because it stood in stark contrast to Martha Coakley.  Here was a guy who was willing to get out there and do old-fashioned retail politics, work for every vote. 

MATTHEWS:  Thank you very much, Pat Buchanan, Cynthia Tucker.  We agree, smart politics.  See what it means later on.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.  Right now it is time for “THE ED SHOW” with Ed Schultz.



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