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'Hardball with Chris Matthews' for Friday, July 2nd, 2010

Read the transcript to the Friday show

Guests: Tim Cahill, Lincoln Chafee, Chris Cillizza, Stu Rothenberg, James
Gordon Meek, Peter Baker,  Christina Romer, Liz Sidoti, Dan Balz, Jeff
CHUCK TODD, GUEST HOST:  Where are the jobs?
Let‘s play HARDBALL.
Good evening, I‘m Chuck Todd, in for Chris Matthews.  Leading off tonight: Jobs and the election.  If you talk to political experts, they will tell you that the June jobs report is the most significant of all in determining how the voters feel about the economy and perhaps how they vote in November during an election year.
If that‘s true, the Democrats just got some very bad news.  The private sector added just 83,000 jobs last month.  That does not even cover the monthly population growth.  And when you factor in the Census jobs that went away, overall, the nation lost 125,000 jobs.  The unemployment rate did dip two tenths of a point to 9.5 percent, but that‘s because a whole bunch of folks stopped looking.  We‘re going to put it all together and get into what this means for November right at the top of the show.
Plus, the hits keep coming for RNC chairman Michael Steele.  What was he thinking when he said the war in Afghanistan was a war of President Obama‘s choosing?  Now prominent Republican supporters are calling for him to step down.  Just the latest gaffe.
Also, on this Independence Day weekend, we note that it could be a banner year for independent candidates.  Two will be with us tonight.  Is America ready for a third party.
And remember this ad?
UNIDENTIFIED MALE:  Tom Campbell—is he what he tells, us or is he what he‘s become over the years, a F-C-I-N-O.
TODD:  That‘s right, any excuse for me to play demon sheep, the infamous demon sheep ad, one of the most interesting political ads so far of the year.  We‘re going to give you our top five through the first half of this year.
And finally, the spies who loved us.  What exactly did those Russian spies living next door hope to accomplish?
But we‘re going to start today with the new jobless numbers.  Late today, I spoke with White House economic adviser Christina Romer.
Dr. Romer, let me ask the simple question that a lot of people are asking.  Where are the jobs?
CHRISTINA ROMER, WHITE HOUSE ECONOMIC ADVISER:  Well, what we learned today is we created 83,000 of them in the month of June.  I thought the president was very clear that that was a step in the right direction but not nearly a big enough step.  And what we‘re focused on is how to make that number bigger.
TODD:  What is your level of concern on a double-dip recession?  It seems as if there‘s been a stalling in this growth, that the recovery was moving, and then maybe the Greek debt crisis—there‘s a lot of other outside factors.  What is your concern today of a double-dip recession?
ROMER:  You know, you are absolutely right that we‘ve been through a period of turbulence.  There‘s just no way around that—what you mentioned about Greece and what‘s going on in Europe.  Certainly, we‘ve gotten some mixed economic indicators over the last couple of weeks.
So you know, I think the important thing to keep in mind, this is how real recoveries happen.  I think we all want to believe they‘re a nice, steady return to normal, but in truth, there are faster and slower periods and we‘re definitely in one of those turbulent ones.
What we‘re going to be focusing on is, you know, do we come through to the other side and keep making good process?  I think the data that we‘ve seen, including today‘s report, are really signs of steadiness and that we are still on the right trajectory.  So I‘m not worried about a double dip, but I‘m worried that we need to do more to make sure that job growth is good and strong.
TODD:  When you say you‘re not worried, thought, is this a remote possibility in your mind, or is this something—you know, it‘s a concern, I don‘t think we‘re (SIC) going to happen, but it‘s a concern?
ROMER:  I‘ve watched economic statistics enough to know that economies bounce around.  So you know, I‘m always watching the data.  I get them before anybody else, so I worry about them longer than anybody else.  But certainly, I think it‘s a very remote possibility.  So what we‘re always doing is thinking about what more can we do to make sure that this recovery keeps gaining strength, and that‘s what we have to focus on.
TODD:  A month from now, we‘re going to get the estimate on how much the economy grew in the second quarter.  It had a huge growth in the first quarter, and that had to do with, basically, no inventories.  That was one of the reasons why for that.  What is your sense of what the second quarter growth, the GDP, the gross domestic product here for the country—what‘s your sense of what it‘s going to be?
ROMER:  Well, first, I think you meant to talk about the fourth quarter of 2009.  That‘s when we had the inventory...
TODD:  Excuse me.  Fourth quarter.  Right.
ROMER:  ... bump.  The first quarter, we just learned, was 2.7 percent growth.
TODD:  Right.
ROMER:  I think most of the estimates, and certainly our estimates, are in the 3 percent range for the second quarter.  And I think all of our analysis and today‘s employment report, together with the other data we have, is that‘s still the—you know, what we think is most likely.  And then we‘ll be seeing what we can do in the second half of the year because we‘d obviously like to see that number bigger.  I think the president at this town hall talked about he‘d love to see 4 or 5 percent growth...
TODD:  Sure.
ROMER:  ... because that‘s what you need to get the unemployment rate down fast.
TODD:  How soon will we have one of these months where we gain half a million jobs, where it‘s one of those big growth numbers?  Are we six months away from that, three months away, a year away?  You must have some sense of when you think that‘s going to happen.
ROMER:  No, I‘m dreaming of it at night.  So I think, you know, obviously, that is what we all want to see.  You know, I think it‘s just—it‘s hard to tell.  I mean, as I said, we‘ve seen how important confidence has been the last couple of weeks and how that can move around because of international developments.  I think that can work in the other direction.  The more we can get some growth, get some stability...
TODD:  Right.
ROMER:  ... that can have a virtuous cycle.  And we‘re just going to have to wait and see, but we‘ll celebrate together when we see one of those half-million job gains when they happen.
TODD:  All right, Christina Romer from the White House fro us this afternoon, thanks for joining us.
ROMER:  Sure.  Thanks.
TODD:  All right, joining me now, “Newsweek‘s” Howard Fineman.  He‘s an MSNBC senior political analyst.  And Liz Sidoti is the national political writer for the Associated Press.
Howard, let me start with you.  You‘ve been through multiple mid-terms.  This is the one, right?  This sets the American psyche of where a voter in November is going to think what the economy is.
HOWARD FINEMAN, “NEWSWEEK,” MSNBC POLITICAL ANALYST:  Yes, because people are going to stew about it all summer.  You‘re sort of going into a frozen period of politics, and going into that time where you don‘t (ph) know where you‘re going to come out.
I‘ve been over at the White House talking to some of their economics people, and they are concerned.  The happy face that you saw there, the upbeat tone...
TODD:  She may have had an upbeat tone...
FINEMAN:  I know, but...
TODD:  ... she didn‘t have upbeat things to say.
FINEMAN:  ... behind the scenes, one very senior person told me they‘re more worried about deflation than inflation.  And to translate that in macroeconomic terms, what that means for politics is they‘re worried about a slowdown.  They‘re worried about too many goods and too few buyers, which means they‘re worried about a double dip.
TODD:  Liz, take a listen to what President Obama said today about these new numbers.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  Now, make no mistake, we are headed in the right direction.  But as I was reminded on a trip to Racine, Wisconsin, earlier this week, we‘re not headed there fast enough for a lot of Americans.  We‘re not headed there fast enough for me, either.  And to every American who is looking for work, I promise you we are going to keep on doing everything that we can.  I will do everything in my power to help our economy create jobs and opportunity for all people.
TODD:  One thing missing there, by the way, and one thing from Dr.  Romer that we didn‘t hear—they didn‘t talk about getting handed this economy anymore.  Is this a sense where they‘re now not trying that message anymore of saying, Well, we were handed this bad economy and we‘re doing the best we can?
LIZ SIDOTI, ASSOCIATED PRESS:  Look, this is a president who‘s 18 months into his—into his first term, and he owns this now.  They recognize that.  But I think what you‘re seeing is he has to walk a fine line between being realistic, or else Republicans are going to tag him as being out of touch—and so he‘s saying, You know, we have more work to do, but they‘re also trying to seize on some of the good news here and the fact that, you know, there‘s still a long way to go, the fact that there are signs of recovery.  And so you‘re going to start to hear that.  The closer we get to the mid-terms is them (ph) emphasizing the positive but also saying there‘s more work to do.
TODD:  What are they—what can they do in Congress over the next couple of months?  I mean, are they really going to have fights over the unemployment...
FINEMAN:  They are.
TODD:  ... aspect of this?
FINEMAN:  They still are.
TODD:  Is that—is that the one place that...
FINEMAN:  Well...
TODD:  ... they want to say, Hey, we‘re on the side of trying to keep this recovery...
FINEMAN:  There are a couple things.  The unemployment thing is—the lines have been drawn there.  The Republicans in the Senate are saying, We‘re not going to give that to you unless you cut spending somewhere else...
TODD:  Right.
FINEMAN:  ... because, I told you, the economics people inside the White House want more stimulus.
TODD:  Right.
FINEMAN:  They‘re worried about a slowdown, so they want more stimulus and they don‘t want to withdraw money from the federal budget.  So that‘s one argument.  I think the other thing the White House is trying to do is show they‘re rowing hard, OK, show that they‘re making an effort.  There‘s still a lot of stimulus money.  There‘s going to be a lot of stimulus projects out there...
TODD:  How much is left?  There isn‘t that much left...
FINEMAN:  ... they have a lot of projects in the pipeline this summer.  Two weeks ago, they unveiled something they‘re calling the “summer of recovery.”
TODD:  Right.
FINEMAN:  It sort of has a Woodstock, you know, tone to it.  And they‘re going to have events all over the country.  But the problem is going to be, if the surrounding economic news is so grim, then these projects, these stimulus projects, rather than making people feel good, are just going to beg the question of whether the stimulus approach was the right one to begin with.
TODD:  Liz, do you have any Republicans nervous that they are looking like they‘re obstructing on these unemployment benefits?
SIDOTI:  No because they recognize what the reality is out there.  People still don‘t have jobs.  And so, as you know, in politics, the perception of a problem is sometimes worse than the reality.  There is economic growth in key areas, in key districts, where there are competitive races.  But for the most part, people aren‘t—they don‘t have jobs.  They‘re not feeling that there‘s recovery.  And when you add this, you know, 9.5 percent, the overall unemployment number did go down, but that‘s not enough.
TODD:  It went down because people stopped looking.
SIDOTI:  Sure.
TODD:  The long-term unemployment thing keeps growing.
FINEMAN:  Here‘s the problem.  The economy is half steel and services and silicon and it‘s half psychology.  The psychology is turning here, or at least it‘s moderating.  The president did a good job, I think, even before he got elected, putting a bottom under the great recession.
TODD:  Right.
FINEMAN:  And he deserves a lot of credit for that.  But momentum is what counts here now and you got a situation in the Gallup poll where by a 2-to-1 margin, people think that the economy is getting worse...
TODD:  Right.
FINEMAN:  ... not better.  That‘s the key psychological number, not the unemployment number.  It‘s the psychological number that counts.
SIDOTI:  That‘s the perception problem.
TODD:  Right.
FINEMAN:  And you walk around this country and nobody has any sense that the economy is growing because they‘re still without jobs.  They‘re giving up on looking for work.
TODD:  You could feel the gloom in Dr. Romer‘s voice.
TODD:  Even though she had a cheeriness, she didn‘t have a lot to say, couldn‘t make a prediction on when we would see robust job growth, didn‘t want to talk about the double-dip recession concerns, but that is sitting out there.  You talk to some folks inside the White House and they will tell you it‘s not a 50-50, but it‘s not remote, either.
FINEMAN:  And this has been true for a number of weeks now.  They‘ve been—they‘ve been seeing this over the horizon for a while and this is what they‘ve been worried about because they want to come back and argue for more stimulus, but they can‘t get it out of the Congress.
TODD:  Right.
FINEMAN:  And I don‘t know how much more the Fed can do.  There are other tricks the Fed can pull, but...
TODD:  We shall see.
FINEMAN:  ... that‘s tricky.
TODD:  All right.  Howard Fineman, Liz Sidoti, a very important day that, looking back, this could be one of those days where we say, Where did folks think the economy was when they were going into the ballot box?  Today‘s numbers will tell us.  Thank you both for coming up.
Coming up, enough gaffe from Republican chairman Michael Steele.  He called the war in Afghanistan, which began in 2001, a war of President Obama‘s “choosing.”  And now conservative leader Bill Kristol and a few others are calling on Steele to resign.  It‘s the latest in a string of these gaffes.  We‘re going to get to that next.
You‘re watching HARDBALL, only on MSNBC.
TODD:  Well, West Virginia today said goodbye to the late Senator Robert Byrd, a man of many talents.  Not only was he the longest-serving member of Congress, he was also a talented fiddle player, recording an album in 1978 and making appearances on the variety music show “Hee-Haw” in the late ‘70s, where I got to—first got to know him, which try as we might, we couldn‘t find clips of.  Who is hiding these “Hee-Haw” clips?  Today, President Obama, Vice President Biden and other friends and colleagues said goodbye to the storied senator from West Virginia.
Here‘s Vicki Kennedy paying tribute to Senator Byrd‘s legacy.
VICKI KENNEDY, WIDOW OF TED KENNEDY:  Someone will take Robert Byrd‘s seat, but no one will ever fill his place.
TODD:  Back to HARDBALL.  The hits keep coming from Michael Steele.  Yesterday, the Republican Party chairman was at a fund-raiser in Connecticut when he said Afghanistan was, quote, “a war of Obama‘s choosing.”  Here he is.
MICHAEL STEELE, RNC CHAIRMAN:  The McChrystal incident to me was very comical, and I think it‘s a reflection of the frustration that a lot of military leaders have with this administration and their prosecution of the war in Afghanistan.  Keep in mind, again, federal candidates, this was a war of Obama‘s choosing.  This is not something that the United States had actively prosecuted or wanted to engage in.
Well, if he‘s such a student of history, has he not understood that, you know, that‘s the one thing you don‘t do is engage in a land war in Afghanistan?
TODD:  Well, he might find a lot of support for that comment, just not inside the Republican Party.  The comment has lost him the support of conservative Bill Kristol, who called on Steele to resign today, writing, quote, “The war in Afghanistan was not a war of Obama‘s choosing.  It has been prosecuted by the United States under Presidents Bush and Obama.  There are, of course, those who think we should pull out of Afghanistan, and they‘re certainly entitled to make their case, but one of them shouldn‘t be chairman of the Republican Party.”
So here to talk more about the fallout on this, Jeff Zeleny of “The New York Times” and “The Washington Post‘s” Dan Balz.  Dan, let me start with you.  You know, at this point, how seriously should some—are some Republican leaders taking this latest Steele gaffe?  Are they just writing it off, Well, that‘s just Michael Steele being Michael Steele, or is this one—could this be the straw?
DAN BALZ, “WASHINGTON POST”:  Well, there‘s a practical problem that they face, which is how do you replace the Republican National Committee chairman this close to an election and when it has to be done at the behest of those members of the Republican National Committee who hold the votes?  I mean, he has been an embarrassment to the party for some time, and this is, in many ways, the worst thing he‘s had to say.  I mean, his facts on history are completely wrong.  And it goes entirely against Republican Party doctrine.
But nonetheless, there‘s a question of, will they simply try to make him go away, or ignore him and hope that they can work around him, which is what they‘ve been doing for many, many months.
TODD:  Now, a little damage control, Jeff.  Here‘s what Michael Steele in a release put out today—he says, quote, “As we‘ve learned throughout history, winning a war in Afghanistan is a difficult task.  We must also remember that after the tragedy of September 11, 2001, it is also a necessary one.  That is why I supported the decision to increase our troop force, and like the United States Senate, I support General Petraeus‘s confirmation.  The stakes are too high for us to accept anything but success in Afghanistan.”
Feels like somebody wrote that statement for him, given what he just said yesterday.  That‘s nowhere near what he is supposedly saying today in this press release.  Jeff, at what point do Republicans have to totally distance themselves from Michael Steele, or can they just—you know, just sort of grin and bear it until November?
JEFF ZELENY, “NEW YORK TIMES”:  Well, Chuck, I think Dan‘s right.  I mean, the biggest problem here is, he serves at the pleasure of the members of the RNC.  The one thing that Republican leaders and the party does not want right now is the fight that usually comes with electing a new chairman of the Republican Party.  You would have, you know, a bunch of different candidates spanning the ideology.
So the general thinking—only one person has called for his resignation, Bill Kristol.  No one else followed suit.  You know, the good thing for Chairman Steele, if there is a good thing about this, it‘s happening on a Friday right before a long weekend.
TODD:  Right.
ZELENY:  So they‘re hoping it goes away.  But I think what it—it definitely highlights a problem here, a practical problem.  Once the mid-term election campaigns get serious, where money allocations have to be made, et cetera, if the RNC has even more problematic fund-raising numbers and if the RNC is not able to step up to the plate, that becomes a real problem.  That‘s when he becomes, you know, really neutered, if you will, in the eyes of party leaders.
TODD:  You know, Dan, a lot of people inside the Beltway know that Steele‘s not really a player inside the Republican Party.  They know that the Senate Republican leaders and the House Republican leaders sort of—they—they already distanced themselves from him.  But does the average person in the—you know, is this a bad thing for the party?  Because he is officially the leader of the Republican Party, at least in title.  And if it‘s not him, who is the leader of the Republican Party?
BALZ:  Well, it‘s rare that the Republican National Committee chairman or the Democratic National Committee chairman is really seen as the face or the voice or the spokesperson for the party. 
I mean, he may be attracting a lot of attention, but I think most Americans don‘t know really who he is or what he does, and I don‘t think that they look to him to speak for the party itself. 
TODD:  Hey, Jeff, let me just put together a little bit of the Steele‘s—our producers put together Steele‘s greatest hits.  Take a look at some of them. 
UNIDENTIFIED MALE:  Like Rush Limbaugh, who is the de facto leader of the Republican Party. 
UNIDENTIFIED MALE:  Well, I‘ll tell you what. 
STEELE:  I‘m the de facto leader of the Republican Party. 
UNIDENTIFIED MALE:  Is there any professional jealousy? 
STEELE:  Not on my part.  What would I be jealous of? 
UNIDENTIFIED MALE:  He‘s the president of the United States. 
STEELE:  I‘m chairman of the RNC.  So, what‘s your point?
SEAN HANNITY, HOST, “HANNITY”:  Do you think you can take over the House?  You think Republicans...
STEELE:  Not this year.  And, Sean, I will say, honestly...
HANNITY:  You don‘t think so?
STEELE:  Well, I don‘t know yet, because I don‘t know who all the candidates—we still have some vacancies that need to get filled. 
GEORGE STEPHANOPOULOS, ABC ANCHOR:  Do you feel that, as an African-American chairman, you have a slimmer margin for error than another chairman would? 
STEELE:  The honest answer is yes. 
Neil, have you been reading my press lately?  I don‘t think—the last thing you could say about me is I‘m part of the establishment here.
NEIL CAVUTO, FOX NEWS:  Well, that‘s true, because they—everybody hates you. 
TODD:  Well, there you go.  Maybe that summed it up better than anything, Jeff.
But, in reality, he was elected—one of his pitches to the committee members, that he was going to be a good spokesperson on TV, and yet he‘s been gaffe after gaffe after gaffe. 
ZELENY:  He has been. 
And we actually really haven‘t heard much from the chairman recently.  I was just talking to someone on his staff the other day and basically asked, where has he been?  And he‘s spending a lot of his time in closed-press, closed-door fund-raisers. 
But what this shows once again, there‘s no such thing as a private moment.  This speech was recorded, it looked like by some type of a hidden camera. 
BALZ:  That‘s right. 
ZELENY:  And his audio was out there. 
So, at the end of the day, I think Dan is right.  No one looks to—certainly Republicans and average voters don‘t look to the chairman of the Republican National Committee to give them guidance for the election year. 
But one thing that really does matter is raise money.  Look why the Republican Governors Association is raising more money than before.  A lot of donors are defecting and that‘s a problem. 
TODD:  It‘s funny.  And, Dan, I was just going to ask you, the real winner here, Haley Barbour, chairman of the Republican Governors Association.  They just broke a record.  And a lot of people think it‘s simply because he is quietly telling donors:  Give it to me.  I know how to handle it. 
BALZ:  Well, I talked to John Boehner, the House minority leader, earlier this week, and at the end of the conversation, we talked about the prospects for November. 
And one of the things he raised was the problem of money and the difficulties they‘re having as a result of the RNC‘s inability to raise the kind of money that they have raised in the past.  And he said they‘re basically having to do a work-around to try to make up for that. 
And certainly the RGA under Governor Barbour has been a major beneficiary of that. 
TODD:  All right, Dan Balz and Jeff Zeleny, two men that help us all think about politics, put it in perspective very well, thanks very much. 
ZELENY:  Thank you. 
TODD:  Up next:  A candidate for office in Arizona has a unique way to deal with illegal immigrants: cut their power.  Stick around for the “Sideshow.”
You‘re watching HARDBALL on MSNBC.
TODD:  Well, back to HARDBALL and now for my favorite part of subbing, to doing the “Sideshow.”
Last night, Stephen Colbert had some fun with our favorite man these days with a tan, and that‘s Republican House Leader John Boehner. 
STEPHEN COLBERT, HOST, “THE COLBERT REPORT”:  There was another senseless personal attack on Boehner. 
MATT LAUER, CO-HOST, “THE TODAY SHOW”:  The so-called tanning tax, one of the provisions in the new federal health care law, goes into effect today. 
COLBERT:  A tanning tax.
COLBERT:  Boo!  No taxation with our radiation.
COLBERT:  And, clearly, John Boehner is going to be particularly hard-hit, because I believe his tanning bed is also his bed. 
COLBERT:  I have not seen legislation so specifically targeting one Republican since they passed a tax on turtle wax. 
TODD:  Well, you know, we‘re not sure he uses a tanning bed.  He does play a lot of golf. 
Anyway, next, talk about a power play.  Barry Wong, a candidate for Arizona‘s Corporate Commission, has proposed turning off utility service, things like electricity, water, natural gas, for those found to be in the country illegally.  It proved to be a little too much for even FOX News. 
Here‘s Wong yesterday with Stuart Varney. 
STUART VARNEY, FOX NEWS:  I suspect there‘s a little tongue in cheek here.  You don‘t really want to cut off the electricity to illegal immigrants, do you? 
BARRY WONG ®, CANDIDATE FOR ARIZONA CORPORATION COMMISSION:  No, I think that could be a reality.  But the thing we have to do, give proper thought and review and analysis, but that is a serious consideration. 
VARNEY:  I can‘t quite believe that, in America, we would allow that to happen. 
WONG:  Power companies today cut off people‘s powers for non-payment. 
So, that‘s an economic issue.  It‘s not an issue of...
VARNEY:  That‘s very different.  Non-payment is very different from your immigration status. 
WONG:  But, again, we‘re not targeting somebody because of their skin color.
WONG:  It‘s their status in America. 
TODD:  While the proposal is clearly a campaign gimmick, you never know how this stuff plays come Election Day. 
Now time for the “Big Number.” 
Say this for the New York Knicks.  They know how to make a pitch.  They team recently commissioned their own marketing study how much bask star LeBron James, currently a free agent, would earn if he joined various NBA teams. 
The estimates; $600 million in salaries and endorsements if he joins the Miami Heat, no taxes, by the way; $690 million with the Chicago Bulls;
$700 million if he stays in Cleveland.  But here‘s the real showstopper, because, if he can make it there, he can make it anywhere.  If he joins the Knicks, they say he can make $2 billion. 
It‘s hard to compete with that, if it‘s true.  But consider the source.  A $2 billion payday would be waiting for LeBron, they claim, at Madison Square Garden.  That‘s tonight‘s hard-to-refuse “Big Number,” as big as you can come up. 
Up next: Independence Day.  Charlie Crist, Tim Cahill, Lincoln Chafee, three high-profile candidates hoping to win elections without the support of a major political party.  Cahill and Chafee join us next.
You‘re watching HARDBALL, only on MSNBC.  
MARY THOMPSON, CNBC CORRESPONDENT:  I‘m Mary Thompson with your CNBC “Market Wrap.”
A late rally reversing course just minutes before the close, the Dow Jones industrial average sliding 46 points, the S&P 500 falling nearly five, and the Nasdaq slipping 9.5. 
Stocks were lower right out of the gate on those disappointing jobs numbers, but some investors were actually relieved, thinking they could have been a lot worse. 
Adding to concerns today, a big drop in factory orders after nine straight months of gains.  You saw the effects of those two reports in a broad-based sell-off, regional banks, retailers, homebuilders, health care all feeling the effects.
Electric car startup Tesla Motors having another down day in its first week in the market, but still trading above its offering price.
And all the major airlines moving sharply lower for the second week in a row on sluggish revenue, despite the busy holiday weekend. 
That‘s it from CNBC, first in business worldwide—now back to
TODD:  Welcome back to HARDBALL. 
And on our Independence Day, we wanted to look at the political independent.  The time could be right.  In the May NBC/”Wall Street Journal” poll, nearly a third said the two-party system was seriously broken and even said that the country needs a third party.  And in our most recent poll, nearly half said it‘s—they‘re enthusiastic or very comfortable with a candidate that is running as an independent. 
Lincoln Chafee is a former Republican senator from Rhode Island.  He‘s now running as an independent for governor.  And Massachusetts State Treasurer Tim Cahill went from Democrat to independent to run for governor there.  They both join us now. 
Happy Independence Day. 
TODD:  Senator Chafee, I‘m going to start with you. 
What is it that—you sort of left your party even before you officially left your party.  It‘s easy to run as an independent these days, but what are your fears about governing as one, considering you‘re going to have a very Democratic state legislature to work with when you‘re in Rhode Island?
LINCOLN CHAFEE (I), RHODE ISLAND GUBERNATORIAL CANDIDATE:  Well, one of my previous offices before senator was as mayor of my city, and then I was a Republican.  But I did have an overwhelmingly Democratic city council. 
So, I have already had that experience of working with the other party.  So, I‘m looking forward—of course, as you said, here in Rhode Island, we do have a very, very Democratic general assembly, so I look forward as an independent to working with them and moving our state forward, getting our people back to work. 
TODD:  Mr. Cahill, I want to ask you, you just got reelected as a Democrat in 2006.  You were a Democrat in 2002, basically a Democrat for 20 years.  Why did you decide—did you—first of all, did you support Governor Patrick in 2006? 
CAHILL:  Go ahead.
TODD:  What is it that makes him fireable now? 
CAHILL:  He has not dealt with the recession at all.  He‘s raised taxes in a down economy, and this state is flatlining. 
And I think he‘s mismanaged our health care system, so that it‘s bankrupting our state.  He just hasn‘t dealt with the crisis.  I don‘t think it‘s him personally.  It‘s really the party.  And the party system, as Lincoln said, is broken.  It‘s not working.  We have a one-party state here, too, in Massachusetts. 
But the party really works for itself and not for the people.  And I think people are hungry, as your poll shows, for someone from outside the two-party system to make both sides get together and work to move our state here in Massachusetts forward, not left or right. 
TODD:  Who did you—Mr. Cahill, I want to stay with you.  Who did you support, Martha Coakley or Scott Brown? 
CAHILL:  I stayed out of that race. 
TODD:  Did you vote? 
CAHILL:  And I voted for Scott Brown in the final—oh, yes.  Oh, yes.  No, I didn‘t endorse anyone, but I voted for Scott Brown in the final election. 
TODD:  And what is it—are you concerned—right now your candidacy looks like it‘s benefiting Deval Patrick, the person that you‘re concentrating your campaign on.  If that is the ultimate result, then will you believe your campaign has been a failure? 
CAHILL:  Well, it won‘t be a success if I don‘t win.  I‘m here to win. 
I have won two statewide races before. 
There was a tremendous amount of dissatisfaction with the incumbent and with the two-party system.  So I think I have a real chance.  I have just been unloaded on by the Republican Governors Association because I do have a real chance to win, and they‘re concerned about me, so they ran these attack ads in the month of May to try to bring my poll numbers down.  And now they‘re coming back up. 
So, I think I have a real good chance to beat both the Democrat and the Republican in this race, because Massachusetts residents are looking for independents.  They‘re looking for an independent voice, and they want to move this state forward. 
TODD:  Senator Chafee, when—of your former party, who is the leader of the Republican Party these days when you look around, and who do you—seems to have the most influence in the Republican Party? 
CHAFEE:  Well, of course, I came out of the Senate, so Mitch McConnell is the minority leader.  And for me, I still listen to what Senator McConnell says. 
TODD:  You believe he‘s been a good leader of the Republican Party?  When you say that—that‘s what I mean.  It‘s like, overall, do you—so you view him as sort of he is the leader of the Republican Party, the face of the party? 
CHAFEE:  Yes.  I heard in the earlier segment talking about Michael Steele.  I‘m sure he‘s a factor, as chairman of the Republican National Committee. 
But I‘m just looking at my race and not worrying about what the Republicans are doing.  We have tremendous challenges here in Rhode Island, high unemployment and a big budget deficit.  So, that‘s where I‘m putting my focus, getting our people back to work, solving the budget deficit.  I‘m not worrying about what the Republicans are doing. 
TODD:  I want to actually—both of you are running for governor, and there‘s a lot of strain being put on state budgets. 
Mr. Cahill, are you prepared to lay off state workers if you become governor, even in this economic climate? 
CAHILL:  Absolutely.  I think we have to.  We have to rein in state spending, as Senator Chafee said.  We have got to make government smaller and it has to work for the people, not for the parties. 
TODD:  Where?  Where are you going to make it smaller? 
CAHILL:  Everywhere.  We have got to tackle our health care problem. 
CAHILL:  We have got to pare down our transportation expenditures.  We have probably got to put more money back to cities and towns right now until we grow our economy.
So much of our revenue is dependent on employment.  And until we put people back to work, we‘re not going to be able to spend as much money as we have in the past or even meet our obligations. 
TODD:  Senator Chafee, same question to you.  Are you prepared to lay people off from the state if you can‘t—if that‘s the only way to balance your budget and the federal government can‘t give you more stimulus? 
CHAFEE:  Well, as I said earlier, I‘m a former mayor, and what‘s happening here in Rhode Island now is the legislature and the governor keep taking the state problems and pushing them down to the cities and towns and forcing the mayors and town managers to raise property taxes, which I consider the worst tax of all. 
So, my proposal is actually to broaden our sales tax here in Rhode Island.  We have 80 exempt items and have a very low percent on those exempt items.  I‘m proposing 1 percent.  So, we save those cities and towns from having to raise their property taxes or make drastic cuts such as cutting sports in schools.  That just happened in one of our communities here in Rhode Island.  All sports were cut in one of our communities...
TODD:  All right. 
CHAFEE:  ... as a result of passing down the state problems to the cities and towns. 
CHAFEE:  So, I‘m opposed to that.
TODD:  Senator Chafee, former Republican-turned-independent, Treasurer Cahill, former Democrat-turned-independent, we will be following your races very closely up there in New England.  Thank you for joining us. 
CAHILL:  Happy Fourth of July, Chuck.
TODD:  You too, happy Independence Day.  All right.
CAHILL:  Go independence.
TODD:  Up next, from “demon sheep” to “gather your armies,” we‘ve seen a slew of creative and some might say bizarre political ads this cycle.  We‘re going to count down the best of the bunch when we return.  This is HARDBALL, only on MSNBC.
TODD:  So Siena College has come out with its list of the best presidents of all time.  Conservatives are not going to be pleased with this one.  After a year-and-half in office, they‘re already ranking President Obama at number 15, three slots ahead of Ronald Reagan.  Bill Clinton is even higher up this list at number 13.  George W. Bush, way down at number 39. 
So who are the top five presidents of all time?  According to Siena survey?  Thomas Jefferson at five.  George Washington at four.  Abraham Lincoln at three.  Teddy Roosevelt and two.  And number one, Franklin Roosevelt.
Keep in mind, Pew surveyed presidential scholars, academics.  And that may help explain why some of the Democrats did so well.  We‘ll be right back. 
UNIDENTIFIED MALE:  On the school board, Byrne supported teaching evolution.  Said “evolution best explains the origin of life”?  Even recently said the Bible is only partially true.
UNIDENTIFIED FEMALE:  Sharron Angle sponsored a bill that would have
used tax dollars to give massages to prisoners.  Angle‘s plan was developed
by the Church of Scientology.

CANDIDATE:  Who on earth would support such a dummy and why?  We‘re Republicans, we should be better than that.
RICK BARBER (R-AL), CONGRESSIONAL CANDIDATE:  A tea tax.  Now look at us.  Are you with me?
UNIDENTIFIED MALE:  Gather your armies.
TODD:  Thank God for the state of Alabama, apparently.  2010 has already proven to be a great year of political ads.  So joining us to talk about the top five—or at least our top five, the editor of The Rothenberg Political Report, Stu Rothenberg; and The Washington Post‘s—what are you, managing editor of Post Politics?  Is that...
CHRIS CILLIZZA, MANAGING EDITOR, “POST POLITICS”:  That‘s what the bosses tell me it is.
TODD:  Is that what it is? 
CILLIZZA:  Thank you, Chuck.
TODD:  Chris Cillizza. 
CILLIZZA:  Though I still prefer “The Fix.”
CILLIZZA:  I‘m having that built into the name.
TODD:  All right.  We‘re going to get right to these ads and I‘m going to start with Florida.  Congressman Alan Grayson with an ad that is not afraid to take on the GOP.  Take a listen.
KEITH OLBERMANN, HOST, “COUNTDOWN”:  What‘s the Democratic defense play on that?
REP. ALAN GRAYSON (D), FLORIDA:  Tell the Republicans, stop lying.
ED SCHULTZ, HOST, “THE ED SHOW”:  This guy is what it‘s all about!
GRAYSON:  I‘m Congressman Alan Grayson and I approve this message.
TODD:  All right.  What‘s interesting about Grayson, Stu, is he‘s in a swing district.  This is a district that is—shoot, it probably leans Republican, and he has decided to embrace his image.
STU ROTHENBERG, EDITOR, THE ROTHENBERG REPORT:  That‘s who he is.  He‘s inflammatory, intemperate, and in your face, and as was that ad, that‘s who Alan Grayson is.  He‘s trying to make lemonade out of a lemon in a sense.  His personality, his reputation as a guy who is a bit coarse and overly aggressive.  He says it‘s an asset. 
TODD:  Do you write him off?
CILLIZZA:  I don‘t write him off, because being all of those things Stu just said, and embracing it, has helped him raise lots and lots and lots of money from national groups, national liberals.  So he has got a ton of money, but...
TODD:  He has got his own money, let‘s remember, he‘s a trial lawyer.
CILLIZZA:  But the thing that I think that—the danger in that district, he won because Ric Keller, the Republican nominee, was a congressman deeply flawed and almost lost the primary.  Republican Party was not with him.  Sometimes these members lose—gain the wrong lesson or learn the wrong lesson from winning.  Grayson may be a case of that.
ROTHENBERG:  But the Republicans do have a primary and Grayson is hoping that a third-party candidate, a tea party candidate will attractive some support.
TODD:  All right.  Next ad, Arizona, McCain changes his mind a bit on immigration.  Watch.
SEN. JOHN MCCAIN ®, ARIZONA:  Drug and human smuggling, home invasions, murder.
UNIDENTIFIED MALE:  We‘re out-manned.  Of all the illegals in America, more than half come through Arizona.
MCCAIN:  Have we got the right plan?
UNIDENTIFIED MALE:  The plan is perfect.  You bring troops, state, county, and local law enforcement together. 
UNIDENTIFIED MALE:  And complete the dang fence.
UNIDENTIFIED MALE:  It will work this time.  Senator, you‘re one of us.
TODD:  I‘m going to be fast about this.  So I want (INAUDIBLE) McCain, then go on this McCain ad.  The “dang fence,” it sort of set the tone for what he‘s trying to send a message in the primary.
ROTHENBERG:  He‘s trying to reposition himself as a conservative.  Make sure J.D. Hayworth can‘t get to his right, even though J.D. will get to his right.  But this is John McCain, the serious conservative, who is concerned about immigration.  What a contrast to the previous ad, huh, Chuck?  The other one had music, and loud, in your face.  No music in this one.
TODD:  Right.  Interesting.  That is a good point.  On to Illinois, one of the most contentious Senate battles has hit the airwaves.  Watch Mark Kirk attack Alexi Giannoulias.  And then watch him respond.
UNIDENTIFIED FEMALE:  Alexi Giannoulias is only 34 years old.  Oh, but what a 34 years it has been.  At his father‘s bank, Alexi made tens of millions in risky loans to convicted mobsters.  Then the bank collapsed.  Now running for Senate, Alexi supports higher taxes to fund billions more in spending.  Alexi Giannoulias, trust him with your money?
UNIDENTIFIED MALE:  Mark Kirk is caught in a lie. 
REP. MARK KIRK (R-IL), SENATE CANDIDATE:  I was the Navy‘s “intelligence officer of the year.”
UNIDENTIFIED FEMALE:  He claimed a military award he actually never won.
UNIDENTIFIED MALE:  We‘re starting to see one lie after another after another.  What is it that makes people people think that they can get away with lying about their record?
TODD:  All right.  Chris, this is the general election already.  It‘s June 30th those ads went up.  That means there are more to come.  You said this was going to be the nastiest race maybe ever.
CILLIZZA:  I think that this will go down—I think people like the three of us will be talking about this race for years to come.  I wrote down 120 days.  That‘s roughly the time between now and the November 2 election.  If they‘re coming out with this now, “Mark Kirk is a liar,” “Alexi Giannoulias cavorts with mobsters,” do they have more?  You know, typically...
TODD:  The winner will...
CILLIZZA:  ... you keep those back, but golly.
TODD:  The winner will be automatically unpopular.  Remember, this is to replace Barack Obama‘s Senate seat.
CILLIZZA:  This is to replace Barack Obama.  Roland Burris has it now.  I mean, right, both of them are heading toward much lower favorable than unfavorable numbers by the time this is over.  They‘ll be happy they have six years to serve in the Senate before they have to run again.
TODD:  All right.  My favorite ad, the one—it actually has never aired on broadcast television.  Take a look at Carly Fiorina‘s infamous “demon sheep,” a Fred Davis special.
UNIDENTIFIED MALE:  Tom Campbell.  Is he what he tells us?  Or is he what he has become over the years, a FCINO, fiscal conservative in name only?  A wolf in sheep‘s clothing.  The man who literally helped put the state of California on the path to bankruptcy and higher taxes.  Fiscal conservative? 
SHEEP:  Baaaah!
UNIDENTIFIED MALE:  Or just another same old tale of tax and spend, authored by a career politician who helped guide us into this fiscal mess in the first place.
TODD:  That wolf.  Now, Stu, we put this out there.  Look, Carly Fiorina won.  She was able to move Tom Campbell and call him a phony conservative and all of that stuff.  Viral video now is no longer just cute, it actually seems to have an impact.
ROTHENBERG:  Well, I think you‘re right.  I think it can in certain circumstances.  And you‘re showing it.  It was shown earlier when it was on.  But let‘s be clear, this is not a campaign ad.  This is a three-minute video.  This is Fred Davis, who has done some wonderful ads and funny ads.  This is...
TODD:  Really creative.
ROTHENBERG:  This is—absolutely.  This is Fred Davis having fun, one having fun. 
CILLIZZA:  One we didn‘t show, but in the same vein of that Web video, he did an ad in which Barbara Boxer, the senator that Carly Fiorina is running against, the Democrat, head blows up until she becomes a blimp, not kidding, a blimp that floats over California. 
TODD:  Right.
CILLIZZA:  You know, is it—it‘s consumed by the political class, but...
TODD:  There‘s so much noise you almost need this creativity these days.
ROTHENBERG:  There is message in there, but there is also attention. 
I think that‘s...
TODD:  All right.  Stu Rothenberg, Chris Cillizza, we don‘t have enough time.  We were going to have our...
CILLIZZA:  Some of the good ones.
TODD:  ... the one running for Congress in Arizona who was showing off her shooting credentials.  We‘ll have to save that for another time.
All right.  Coming up, what did Russia hope to accomplish in this country by putting so-called spies in suburban neighborhoods, living next door to Stu Rothenberg? 
TODD:  The latest on the Russian spy case when we return. 
TODD:  Welcome back to HARDBALL.  We‘re not previewing beach reading.  We‘re actually doing the Russian spy story, which feels like a beach read novel.  Who were those suspected spies and what were their aim and what was their mission?  Peter Baker is with The New York Times, spent a lot of years reporting in Russia.  And James Gordon Meek is the national security correspondent for The New York Daily News.
James, I want to start with you because you just came from the courthouse today.  What did you learn in about sort of what they were—what have they admitted and who was it that admitted—and it was at the Alexandria Federal Courthouse, correct?
NEWS:  Alexandria Federal Courthouse.  There are three defendants, there of this—there are 10 people who have been arrested as part of this Russian spy ring.  Three of them were operating at least for a period of time in the D.C. area.  In Arlington, Virginia. 
And so they collared them and so they brought them into federal court in Alexandria.  And what we learned today is that they have somewhat spilled their guts.  And, of course, the Russian government has admitted that some of these—or I think all of these folks are Russian...
TODD:  Right, agents.
MEEK:  ... citizens. 
TODD:  Yes.
MEEK:  So they‘ve admitted—a couple of them, the couple that they appeared to be a married couple but they really weren‘t, and they even had children, which is one of the more bizarre aspects of this, they appeared in court today.  And apparently they‘ve admitted who they are.  They‘ve admitted being Russian.  They‘ve admitted their true names—their true Russian names.
A lot of these people seem to have taken identities of deceased persons either from the United States or Canada or some other country.  And they are now negotiating with the government to try to try to send their children back to Mother Russia to relatives. 
TODD:  That‘s going to be a whole side story, is this custody battle, because these kids were born here in America?  Do we know that?
MEEK:  They were.  And—you know, I believe they were.  And as U.S.-born, they have rights.  But it‘s a bizarre...
TODD:  So do the parents.
MEEK:  So do the parents, but it‘s a little different there because, again, it‘s—with some of these folks, it‘s not certain who they are.
TODD:  Peter, what is with the Russian government‘s obsession even today with this personal sort of Cold War-like intelligence escapades?
PETER BAKER, THE NEW YORK TIMES:  Right.  Well, most of these people, you remember, were put here, sent here in the 1990s back when there was still this sense that we weren‘t sure where the relationship was going.  The Cold War was not that distant a memory.  And they kept on going basically.
During the ‘90s, there wasn‘t a lot of leadership from the top on a lot of these agencies that did foreign intelligence.  And they kept on doing the things they were noted for doing.  You know, remember the movie “No Way Out,” these guys were planned to be here for a long time, to integrate into society, to be ready for missions that could come up years down the road or never.  So, you know, this was just sort of a vestige of the old way of thinking. 
But keep in mind, we‘re still spying on them, too.  This is not exactly a one-way street.
TODD:  And it‘s funny you bring that up.  Peter, you were saying -- 15 years ago, I remember you and I were talking about this a couple of days ago, it would have been easy for the Russians to just round up a bunch of American citizens living in Moscow.  We haven‘t seen that.  Do you think we will?
BAKER:  No, I think we won‘t.  I think both sides at this point are very intent on making this case, you know, go away, at least in terms of the big geopolitical picture.  They don‘t want to escalate it into a big confrontation at a time when President Obama‘s reset relationship seems to be, you know, taking some progress here. 
I mean, you see that even from Vladimir Putin, the former KGB colonel, has said, well, your guys kind of got carried away in arresting these people, but these things happen and, you know, we‘re not going to let it bother the relationship.
TODD:  What—James, what did they learn?  Do we know what they learned?  Did they—have they admitted—in these court documents, have they admitted what they learned?
MEEK:  Well, they weren‘t really sent here to get classified stuff, they were sent here to learn about U.S. policy.  I mean, at times you read the court papers and it reads more like Borat than Bond.  There‘s a goofy element to it.
And the strangest part of this is you have these people who were...
BAKER:  I‘m going to steal that line.
TODD:  Yes.
MEEK:  You may.  I give it to The Times.
MEEK:  The weirdest part of this is you have people who are not married, they‘re not in love, they have no loving relationship.  They‘re professional partners, spies, and they had children here purely to deepen what they called their “legend” or their cover story to seem more credible. 
And that‘s—I think that‘s hard for a lot of Americans to wrap their minds around. 
TODD:  Because they didn‘t have any, like, fancy jobs, right?  That they were in the government.
MEEK:  No.  No, I mean...
TODD:  These folks here, these three, did any of them work in the government?
MEEK:  A couple of people got—well, the one guy in the D.C. area had been working, I think, at a computer firm in Seattle.  Not sure what he was doing.  But they were digging up money in New York, and, you know, buried in the ground. 
There‘s a lot of money here too, which raises a question of like what was the real...
TODD:  What were they really doing? 
Well, we are running out of time.  James Gordon Meek with some tremendous reporting for The New York Daily News.  Peter Baker, who knows more about Russia than anybody I know, from The New York Times.  Thanks very much. 
That‘s HARDBALL for now.  Thanks for being with us.  Have a happy and safe Fourth of July.  Right now, it‘s time for “THE ED SHOW” with Ed Schultz.
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