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'Hardball with Chris Matthews' for Tuesday, July 13th, 2010

Read the transcript to the Tuesday show

Guests: Bob Cavnar, Sen. Sherrod Brown, Sen. Judd Gregg, Karen Finney, Todd
Harris, Ben Jealous

CHRIS MATTHEWS, HOST:  Will it work?
Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in Washington.  Leading off tonight:
Can they fix it?  BP is testing a new cap that could either cut off the oil leak entirely or take the oil up into the ships.  And if this cap could actually seal off the leak until a relief well is drilled, why didn‘t BP offer (ph) this weeks ago?  Didn‘t they say they had technology to deal with this kind of catastrophe in the first place?
Plus, Democrats are set to pass financial reform later this week after winning over three Republican senators.  This gives them 60 votes.  But would it prevent really another financial crisis like we had at the end of 2008?
And it‘s one thing for Republicans to predict a House takeover in November, but it‘s another thing when it‘s the White House press secretary who says it could happen.  Our strategists will break down how each party could use Robert Gibbs‘s remarks to its advantage.
Plus, the NAACP versus the tea party.  NAACP president Ben Jealous calls out the tea party movement for harboring racist elements.  He‘ll be here to explain.
And “Let Me Finish” tonight with some thoughts about how the Republican Party has become welcoming to the yahoos.
Let‘s start with the latest on this new cap and BP‘s efforts to seal off the leak.  NBC‘s chief environmental affairs correspondent, Anne Thompson, is down in Venice, Louisiana.  Anne, you‘re smiling.  Is there any hope that this could be it, that this cap—I mean, we‘ve been watching this for 80-plus days.
MATTHEWS:  Do they have the technology to fix this problem, this hell?
THOMPSON:  I would tell you they were more optimistic when this day began.  They had hoped to actually start what they call the well integrity test, Chris, which is where they are going to slowly shut off the flow of oil.  If you‘re looking at the cap, you can see there‘s a big plume of black oil coming through the new sealing cap.  What they‘re going to do is slowly shut—close down all the valves and take pressure readings along the way to determine just how much pressure is coming out.
And when they figure out how much pressure is inside that cap, they say that will tell them what kind of shape the well itself is actually in.  If there‘s high pressure, that means the well is intact, all the oil is coming up through one pipe.  If there‘s low pressure, it could be going elsewhere.
But as I said, they hoped—this time line again has moved.  And we‘ve been down this road before.  First it was supposed to be this morning.  Then it was supposed to be noon.  They had the afternoon technical briefing.  The test still had not begun.  They say the reason the test hasn‘t begun is because they‘re doing some preliminary work, making sure everything is in place.  But it‘s the first sort of hiccup, if you will—and that even may be too strong—that we have seen in this process that began Saturday at noon.
MATTHEWS:  OK, bottom lining this, when they look at this pressure and they begin to tighten the screws and lower the—tighten all the pressure to the—and make it a very narrow flow out of there, could they continue to tighten it to the point of actually closing it off?
THOMPSON:  They could.  They could.  And that‘s one of the things—they hope to at least do that temporarily because that would give them the best reading of the pressure.  If the cap can withstand that, and if they do have that high pressure and it can withstand that pressure for 48 hours, then they will make a decision at that point whether they want to continue to have the cap shut off.
But it‘s—this is done incrementally.  It‘s a very complicated test, and it isn‘t you sort of shut one valve, and poof, you‘ve got the answer.  It‘s going to take them anywhere from 6 hours to 48 hours.
THOMPSON:  And the longer it goes, the better it is.
MATTHEWS:  Is there a chance that they could cap it off completely, or alternatively, take that oil that‘s coming out through that narrow cap now and pipe it right up to the ships?
THOMPSON:  They could.  And if they start to get pressure readings that give them concerns, they said they‘re going to open up the sealing cap.  And then they will, as you say, send it up to the surface.  There are already two systems hooked up, the Q4000 and the Helix Producer.  They have two other ships that they will hook up afterwards.  And then the oil could go to the surface.
The goal here is to keep all the oil from going into the gulf, whether they just seal the cap at this point or they send it up—
MATTHEWS:  Right.  Well, we get it.
THOMPSON: -- to the ship.  So a permanent—
MATTHEWS:  So it‘s good that—
THOMPSON: -- fix is the relief well.
MATTHEWS:  Right.  But it‘s possible in the short run, they could either divert it or cap it, but it could end the mess for a short term?
THOMPSON:  Yes.  Yes.
MATTHEWS:  Thank you.  This is good news, believe it or not.  From up here in Washington, it‘s the only good news we‘ve had in 80-plus days, so I‘m a little happy here.  Thank you, Anne—
THOMPSON:  You should be down here.
MATTHEWS:  OK.  Well, it‘s even hotter down there.
THOMPSON:  There‘s been no good news here.
MATTHEWS:  Anne, it‘s great to see you.  Thanks for coming in tonight on HARDBALL.
Bob Cavnar is an executive with the oil industry.  Bob, I want to ask you (INAUDIBLE) just confirm that.  It seems to me that, optimistically, they‘ll either cap it off with this new technology they‘ve applied today, or they‘ll be able to divert it up the to the ships and not spew any more oil into the gulf.  Is that the way you read it?
BOB CAVNAR, FORMER OIL INDUSTRY EXECUTIVE:  That‘s exactly right, Chris.  They have the two options of shutting the well in, which they have lot of concerns about just because of the condition of the old blowout preventer stack and the well itself.  But that‘s one option.  But obviously, the other option is to be able to contain all of the flow, all of the oil from this well.  And that‘s a good thing.
MATTHEWS:  PR question.  Why, after all these weeks and all these false starts, top kill, cut-and-cap, all the other stuff that‘s gone on and failed—with all the hype attached to it—this is going to happen in 10 days, this is going to happen in two hours, all that—this is the first time they‘ve done something that looks really like it might work and there‘s been no hype.  How do you explain that?  Why no PR on this?
CAVNAR:  You know, I‘ve been really confused about this whole process, Chris.  You know, this was—this cap, this containment cap that they worked on now, what they‘re calling the capping stack, has actually been one of their earliest ideas way back in April.  And I know they‘ve been working on this for quite some time.  I‘ve been confused why they didn‘t move forward with this several weeks ago.  I know there were storms in the gulf and all that, but I think this was early—already before those storms.  So I have been confused why it‘s taken so long to get this thing put on.
MATTHEWS:  I don‘t want to be argumentative, but I will.  In fact, I like being argumentative!  Let‘s be honest here.  They said when they got the permit to do this well that they had the capacity to deal with a catastrophe of exponential extent beyond what they have here now.  So if they had that capacity, why didn‘t they have this technology lined up, ready to go?  If their application permit was accurate, they had appropriate technology.  If they do have appropriate technology 80-some days later, why didn‘t they have it ready then?  And why aren‘t they honest in their application, I guess I‘m asking?
CAVNAR:  You know, the most amazing thing here is that none of this stack is new technology.  This stack is made up of components that are common to blowout preventers everywhere in the gulf.  There‘s no new components here.  There are new components in terms of the risers that they‘re building to take the oil to the surface, but still—
MATTHEWS:  What are risers?  What are risers?
THOMPSON:  Risers—the way they design this, Chris, is they have pipes that are actually buoyant and they float.  They‘re tied to the bottom and they float.  But they‘re below the surface of the water.  So they have a hose that goes from that riser to a ship.  So if a hurricane comes, they just unhook the hose and pull the ships off.  When they‘re tied to the well, they have to actually pull the pipe out before the ship can leave.
MATTHEWS:  What do you think—well, let‘s watch this the next couple days and see if they can either cap this thing or divert it to the ships.  Either way, it‘s good news as far as I‘m concerned because they‘re polluting North America here, and I would like it to stop, OK?  Thank you so much.  It‘s great to have you on.
Let‘s take a look, by the way—before we go, let‘s take a look at—we‘re going to look at BP‘s executive CEO, Tony Hayward.  Here he wrote in a memo to his employees last week, quote, “This accident has been a terrible exception to that safety record trend, and we must learn the lessons from it.  But at the same time, it does not invalidate all the hard work you‘ve put in to improve our safety standards around the world.  Safety is our first priority and remains”—is that an accurate statement about the BP safety record?
CAVNAR:  You know, I just don‘t think it is, Chris.  BP has had a continuous chain of either minor issues or catastrophic issues, like the Texas City refinery just a few years ago.  And this technology that they‘re using sub-scene now to drill is the exact same technology all the other deepwater rigs are using.  So it really concerns me that we don‘t have the technology developed to mitigate if something goes wrong, and that‘s the biggest problem.
MATTHEWS:  OK.  Thank you so much.  It‘s great to have an expert on, a man with passion on the subject.  Thank you, Bob Cavnar.
CAVNAR:  Thank you, Chris.
MATTHEWS:  Coming up: The Democrats get the 60 votes they needed to pass financial regulation for Wall Street.  Maybe it‘s Wall Street look out.  We‘ll see.  But is financial regulation tough enough to stop another crisis like we had at the end of 2008?  That is the big question.  Will it deal with the problem of Fannie Mae?  Will it deal with the problems over there or not?  Will it deal with the problem of people buying houses they can‘t afford and creating toxic assets when they‘re securitized?  Those are the big problems that got us into this mess.  Let‘s see if we‘re fixing them.
You‘re watching HARDBALL, only on MSNBC.
MATTHEWS:  We haven‘t heard much from Florida Republican Senate candidate Marco Rubio lately, but he‘s letting his fund-raising do the talking.  Rubio hauled in 4.5 million bucks in the second quarter this year, beating out rival Charlie Crist‘s first quarter take.  Well, Rubio essentially chased Crist out of the Republican Party, as you know, but despite his more robust fund-raising, Rubio now trails—look at this one, and I‘ve been predicting this for a while.  Look at this.  Charlie Crist is pulling up there, 7 points ahead of Rubio in the latest Reuters Ipsos poll.  Crist running as an independent may end up a Democrat.  Who knows.
We‘ll be right back—it looks like he has got some steam down there. 
We‘ll be back, as I say, after this.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I just want to note a breakthrough that we‘ve had on our efforts to pass the most comprehensive reform of Wall Street since the Great Depression.  Three Republican senators have put politics and partisanship aside to support this reform, and I‘m grateful for their decision.
MATTHEWS:  Welcome back to HARDBALL.  That was President Obama today praising three Republican senators who plan to vote with Democrats this Thursday for the financial regulation reform bill, or the Wall Street bill, the bill that‘s supposed to rein in the “too big to fail” banks.  But will the bill save us from future financial catastrophes?
Ohio Democratic senator Sherrod Brown is on the Banking Committee and Senator Judd Gregg of New Hampshire is the top Republican on the Budget Committee.  Gentlemen, I‘m going to keep this real simple.  It seems to me that the mess we got into began when the housing prices in this country went down.  People bought houses they couldn‘t afford.  When they saw (ph) the mortgage higher—the money they owed higher than the value of the house, they walked.  A lot of these mortgages were created into or built into securitized securities, if you will, bundled together as value.  They turned out to have no value because people were walking away from their mortgages.
Is this bill going to solve that problem, Senator Brown, the problem of money disappearing because people can‘t afford or don‘t want to pay off the mortgages they agreed to?
SEN. SHERROD BROWN (D-OH), BANKING COMMITTEE:  This isn‘t going to solve the housing problem, but it‘s going to make sure we don‘t go through again what happened because of deregulation, what happened because of Wall Street speculation, what happened because of an irresponsible federal government in the last decade, during the Bush years, when they weakened the whole regulatory system and Wall Street—the Wall Street bankers betrayed the country.  And this bill puts in everything from a—everything from a systemic risk council to other—a consumer protection agency and other things that will make sure that this doesn‘t happen again.
MATTHEWS:  Well, you know, for weeks on this program, months, in fact, we heard about “toxic assets” and the need for the federal government to bail out companies that owned too many toxic assets, meaning securitized mortgages that were worthless people were walking away from them.  Are we going to solve the basic problem with this bill again?
BROWN:  I think we are.  I think—
MATTHEWS:  Toxic assets.  Are we going to have more toxic assets or not?
BROWN:  I think we will solve this.  I think that—because—because there‘s a—there are protections built into this bill in terms of consumer protections with the consumer agency, that will make sure these kinds of things are less likely to happen.  We didn‘t replace Glass-Steagall, which—which perhaps we should have.  We went a long way towards doing it.  I think the bill could have been stronger by what we should have done to break up the largest banks.
I‘ve said on this show before, Chris, that 15 years ago, the largest six banks in this country, their total assets were 17 percent of GDP.  Today, they‘re 63 percent of GDP.  We tried an amendment on the floor with Senator Kaufman.  About half the Democrats voted no and almost all the Republicans voted no to that.  I mean, “too big to fail” is too big, as even Alan Greenspan said.  But I think we‘ve come 80, 90 percent of the way of doing the right thing to fix this issue.
MATTHEWS:  OK.  Let me go to Senator Gregg.  Senator Gregg, you haven‘t joined the fellow—fellow New England senators, Collins and Snowe and now Senator Brown from Massachusetts.  Why are you the odd man out in New England?
SEN. JUDD GREGG (R-NH), BUDGET COMMITTEE:  Because I agree almost 100 percent with what you said, Chris, as the predicate to what caused the problem and what we should been addressing in this bill.  And this bill does not address that.  The two drivers of this event were, one, the fact that loans were being made on property which couldn‘t equal the value of the loan, that it was assumed the property was going to appreciate.  It didn‘t.
Two—that tied with the fact that loans were being made to people who couldn‘t pay the loans back when the price of the loan reset.  That was poor underwriting, terrible underwriting.  And then those loans were sold into a securitized market which was driven almost entirely by Fannie Mae and Freddie Mac.
Now, this bill does nothing about reforming Fannie Mae and Freddie Mac.  It leaves the taxpayers of America with almost a $500 billion obligation there.  And it does nothing about significantly changing the underwriting standards so that loans are made to people who can pay them back on property that is worth the value of the loan being made.
So you‘ve hit the nail on the head.  Those are the two reforms which would have been—
GREGG: -- most substantive, and they‘re not in this bill.
MATTHEWS:  Well, let‘s look at—let‘s do an alternative view. 
Here‘s President Obama today.  Gentlemen, let‘s listen to him.
OBAMA:  It will prevent a financial crisis like this from happening again.  By protecting consumers against the unfair practices of credit card companies and mortgage lenders, it will ensure taxpayers are never on the hook for Wall Street‘s mistakes.  And it will end an era of irresponsibility that led to the loss of eight million jobs and trillions of dollars of wealth.
MATTHEWS:  I also want to throw in here something from Hank Paulson, who‘s basically the guy who told President Bush that we had a big problem that had to be dealt with.  Here he is, former secretary of treasury Hank Paulson talking to “The New York Times” today.  Quote, “We would have loved to have had something like this, this bill, for Lehman Brothers.  There is no doubt about it.”
Let me go to you, Senator Sherrod Brown, on that.  What do you make of the fact that I—if any Republican has a problem with this bill, I will remind them it was Hank Paulson who talked the—talked—most people who were worried about the market crashing and the whole economy crashing to do something like TARP.  Now the question, is he still reliable as a judge of what‘s good and bad?  Do you trust him as an arbiter of what‘s good and bad, Hank Paulson, Senator Brown?
BROWN:  I don‘t know that I trust him or don‘t trust him as an arbiter of what‘s good and bad.  I do think that—I believe what he says when he said if he had had resolution authority, as this bill provides, it would have been a very different situation in 2008.  In (ph) a systemic risk council, he said, particularly if he‘d had it in place as early as—when he become treasury secretary, appointed by President Bush in 2006 -- that systemic risk council would have been able to sniff out a lot of these problems.
At the same time—and so he thinks that would have been a very different roll-out of all these problems.  We wouldn‘t have lost this many millions of jobs if we had had this place (ph).  And this comes from a Republican treasury secretary.
I would add to that that the consumer protections will make sure that a lot of these underwriting issues won‘t be so damaging and dangerous and create all these toxic assets.  So on several different levels, this bill works.
But I think, Chris, you come back to this, that we see a pattern here of overwhelming numbers of Republicans voting no on issue after issue after issue.  And typically, they‘re protecting their benefactors.  Republicans are protecting Wall Street.  That‘s what they‘ve done on this bill by fighting against it, the same way they did with the insurance industry on health care, the same way they did five years ago on the energy bill when they gave BP and Exxon everything they wanted, tax breaks—
MATTHEWS:  Why did Russ Feingold—
MATTHEWS:  Why did Mr. Clean vote against this bill, is going to vote against it?  Russ Feingold of Wisconsin said he‘s going to vote against this bill.
BROWN:  Oh, I think—they think it‘s not strong enough.  They want things that I want.
I mean, they want some things in this bill that—that I would go further, but the Republicans stop all that.  This isn‘t too—this is too much regulation for Republicans. 
BROWN:  They don‘t like rules and regulations, whether it‘s mine safety, the Gulf of Mexico on oil companies or whether it‘s Wall Street.  Feingold wants to go further.  And, as I said, I would have, too, in terms of too big to fail on the size of the banks. 
I still think this is a good bill, not as good as it could have been. 
MATTHEWS:  Let me go to Senator Gregg here for more time on you. 
MATTHEWS:  You‘ve been shorthanded here.
GREGG:  Well, thank you.  I appreciate that.
MATTHEWS:  Let me ask you this.  If Fannie Mae—and I agree with this—we have to look at the problem of people buying houses they can‘t afford. 
MATTHEWS:  The whole thing.  But are you saying that the Wall Street end of this thing didn‘t need reform? 
GREGG:  No, not at all. 
In fact, I think—but I think Sherrod Brown is just wrong, just plain wrong.  I think Wall Street is probably reasonably happy with this bill, because it really doesn‘t go to the essence of some of the questions which were raised by people who were concerned about that. 
The one part of this bill that I do agree with that I think was done -
and, by the way, it was done in a bipartisan way—it was done through negotiation with Richard Shelby and Chris Dodd—is the resolution authority.  If that template for how that was negotiated had been done on other areas, like derivative reform and like the consumer products—consumer protection language, then you would have had a bipartisan bill. 

There were a lot of us in the room negotiating right up until the White House decided unilaterally to walk away from negotiations and our Democratic colleagues on the other side of the aisle decided they wanted a political issue, they wanted to beat up on Wall Street. 
Well, what they came up with was a bill that doesn‘t accomplish the goal, which is to make the system safer and sounder, and it doesn‘t really do much that‘s going to really upset the Wall Street banking community.  In fact, I think most of the Wall Street banking community is probably for this bill right now. 
MATTHEWS:  Do you think—both of you, gentlemen, do you think we faced havoc at the end of the Bush administration?  Was it as bad a crisis as it appeared to President Bush, for example, and to President Obama before he had been elected—before he came into office?  Was it as bad as it looked? 
You first, Senator Brown.  Was it really bad?
BROWN:  Of course it was as bad as it looked. 
The first month of the Obama administration, we lost 700,000 jobs.  A direct outgrowth—it was a direct result of what was happening on Wall Street with credit, with the financial industry about to collapse, and 700,000 jobs lost that month. 
This past couple of months, we‘re starting to gain jobs.  We still have a long way to go.  But that‘s where—that‘s the problem that was inherited.  So, it was every bit as bad.  It was probably worse than it looked those first couple of months. 
MATTHEWS:  Well, Senator Gregg, same question to you.  Was it as bad as it looked back under President Bush‘s watch? 
GREGG:  I don‘t think people realize how bad it was.  We were facing a fiscal calamity of really proportions which we have never seen in this country since the Great Depression. 
I saw where you quoted Hank Paulson.  And his view was that unemployment would have gone to 25 percent.  You would have had an entire collapse of the financial system of this country followed by probably the collapse of the world financial system. 
GREGG:  So, it was extraordinarily bad.
The way I describe this is this way.  You come to a bridge.  You‘re driving over the bridge.  The bridge is about to fall in.  Somebody comes up and repairs the bridge.  You cross the bridge.  You don‘t even know they repaired the bridge, so you just keep going.  You think, maybe, well, everything was OK. 
It wasn‘t.  If that bridge had collapsed, it would have taken this entire economy down and it would have taken the country down financially. 
MATTHEWS:  But so many people in your party, on the far right—I don‘t mean the conservative mainstream—I mean the far right—are knocking off people like Bob Bennett out in Utah, going after people across the board in your party saying TARP was evil. 
GREGG:  Well, they‘re wrong.  And on the left, you‘re getting it also, people saying TARP is evil and the Fed is evil. 
The simple fact is that TARP did what it was supposed to do.  It basically saved the financial system on Main Street, on Main Street.  And not only did it save it, but it did it in a way that the American taxpayer have actually made money off the money that we put into the system to try to stabilize it.  We have made about $17 billion off of TARP.  We have gotten almost all the money back that we put into the financial system.  We haven‘t gotten it back from the auto industry.  We haven‘t gotten it back from AIG. 
But we have gotten almost all the money back that we put into the banking system.  We expect to get it all back.  And the American people are going to make money.  And at the same time, we stabilized the system and actually gave people a safer and sounder financial system. 
MATTHEWS:  OK.  Well, I‘m glad to hear a voice like yours. 
Thank you, Senator Sherrod Brown. 
BROWN:  Thank you. 
MATTHEWS:  Thank you, Senator Judd Gregg. 
MATTHEWS:  Up next:  So, what does Rod Blagojevich really think?  Wait until you hear what he was caught saying about the voters of Illinois when he got taped here.  That‘s coming up next, an interesting tape to listen to.
You‘re watching HARDBALL, only on MSNBC.  
MATTHEWS:  Back to HARDBALL.  And now to the “Sideshow.”
First: trying to out-crazy the crazy.  Remember last week, when ex-Congressman Tom Tancredo called President Obama—quote—“the greatest threat to our liberty?”  Well, he said that at a campaign rally for Republican Senate candidate Ken Buck of Colorado, who was quick to come out and distance himself from Tancredo‘s comments. 
But then Buck‘s primary opponent, Jane Norton, defended the crazy talk on her Facebook page—quote—“There was a real measure of truth to what Tancredo said.”
Well, after that, Ken Buck decided to up the right-wing rhetoric.  He told an ABC News reporter yesterday the greatest threat to our country wasn‘t just the president, isn‘t just the president.  It‘s actually all liberals. 
KEN BUCK ®, COLORADO SENATORIAL CANDIDATE:  I think the largest threat we really have is the progressive liberal movement.  I think if Barack Obama stepped down tomorrow, we would still have that threat. 
UNIDENTIFIED MALE:  So, but more of a threat than al Qaeda?  More of a threat than Iran, the threat of terrorism?  You say that the liberal progressive movement is the biggest threat facing the country? 
BUCK:  I believe that -- 
MATTHEWS:  Well, it reminds me of Professor Harold Hill in “The Music Man” warning about the dangers of having a pool table in River City.  Ooh, we have got trouble. 
Speaking of right-wing mania, Tea Partier Ed Martin is running for the Republican nomination in Missouri‘s 3rd Congressional District, and he‘s just thrown out of a hell of a charge the other day.  Yesterday, in a radio interview, he accused President Obama and incumbent Congressman Russ Carnahan of trying to keep Americans from finding God. 
Try following him in this baby. 
ED MARTIN, MISSOURI CONGRESSIONAL CANDIDATE:  When you take a government and you impose, and take away all your choices, one of the choices you take away is to find the lord and find your savior. 
And that‘s one of the things that‘s most destructive about the growth of government, is this taking away that freedom, the freedom, the ultimate freedom, to find your salvation, to get your salvation, and to find Christ, for me and you.
And I think that‘s one of the things that we have to be very, very aware of that the Obama administration and Congressman Carnahan are doing to us.
MATTHEWS:  I guess you can say anything.  More trouble in River City there.
More from the yahoos in my close tonight.
Finally, a General Motors from Rod Blagojevich‘s corruption trial.  In secretly taped conversations played in court, we found out that B-Rod, while governor of Illinois, wasn‘t all that happy with his falling poll numbers or his Illinois constituents. 
ROD BLAGOJEVICH (D), FORMER ILLINOIS GOVERNOR:  I fought every one of those (EXPLETIVE DELETED) including every special interest out there, who can make my life easier and better, because they want to raise taxes on you and I won‘t—I—I fight them and keep them from doing it. 
And what do I get for that?  Only 13 percent of you all out there think I‘m doing a good job.  So (EXPLETIVE DELETED) all of you. 
MATTHEWS:  Imagine what‘s behind those bleeps.  Anyway, no love for B-Rod out there. 
Anyway, time for tonight‘s “Big Number,” a blast from the past.
President Obama today announced that Jack Lew—what a great guy he is—will be his new budget director.  Lew, remember, did the job under President Clinton.  In fact, what was the budget surplus—Remember that word? -- surplus supposed in 2001, when Lew left the job of head of OMB? --
237 billion big ones.  And, yes, that‘s a surplus under Clinton, as in money saved, not spent. 
Jack Lew‘s $237 billion budget cred, tonight‘s seems-like-only-yesterday “Big Number.” 
Up next:  When White House Press Secretary Robert Gibbs said the Democrats could lose the House this year, he may have been sounding the alarm to his own party.  But it has Republicans feeling giddy.  Our strategists on how both sides are going to use what Gibbs said to rally support. 
That‘s coming up next here on HARDBALL.  You‘re watching it, only on
JULIA BOORSTIN, CNBC CORRESPONDENT:  I‘m Julia Boorstin with your CNBC “Market Wrap.”
The bulls were in charge for a sixth straight session, the Dow Jones industrial soaring 146 points, the S&P 500 adding 16 points, and the Nasdaq jumping 43. 
Some solid earnings outlooks easing fears of a double-dip recession.  You remember Alcoa and railroader CSX reported after the closing bell on Monday.  Those were both better than expected.  But it was their positive forecasts that kicked this rally into high gear. 
And now more earnings coming out after the closing bell today.  Bellwether Intel topping forecasts on earnings and revenue.  Shares are up 2 percent at the close, moving higher after-hours. 
And fast-food giant Yum! Brands beating expectations as well.  The owner of KFC, Pizza Hut, and Taco Bell said profits in China are up by 33 percent. 
Finally, GlaxoSmithKline shares are up about 2 percent, as the FDA meets to decide whether its diabetes drug Avandia should be taken off the market. 
That‘s it from CNBC, first in business worldwide—now back to
ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  I think there‘s no doubt there‘s enough seats in play that could cause Republicans to gain control.  There‘s no doubt about that.
MATTHEWS:  Well, we have done enough substance tonight on HARDBALL. 
We have done oil spills, which are a real horror.
MATTHEWS:  We have done financial regulation, which is a real necessity.
Let‘s talk sheer politics right now.
Welcome back to HARDBALL.
With those words you just heard from Gibbs, White House Press Secretary Robert Gibbs set off a tsunami of spin and some anxiety on the left.  How did this happen?  What is the—well, let‘s go to Karen Finney, Democratic strategist, and Todd Harris, Republican strategist.   
We know the issue here.  Why would the press secretary of the United States a Democrat, working for a Democratic president, say the Democrats could lose control of the House and with it subpoena power? 
MATTHEWS:  Darrell Issa is coming, the end of the world for your guy, the end of the world.
MATTHEWS:  Why would you say you‘re going to lose or could lose? 
FINNEY:  And to do so a week after a big story about how all the Republican right-wing groups are going to outspend the left, because it‘s all about doing two things at this point, one, lower expectations, so that anything you do is a success. 
MATTHEWS:  Oh, the old Bob Beckel trick.
MATTHEWS:  We‘re bound to lose.  If we don‘t win Georgia, we‘re dead. 
If we win Georgia, we won.  I know that trick. 
Bryant Gumbel fell for that one. 
FINNEY:  And the second trick is, look, Democrats do have a deficit on their side in terms of how motivated our base is.  But this is part of the way you fire up the base.  You paint the picture for people about -- 
MATTHEWS:  I think you had a copy of “Hardball” in your pocket somewhere about 20 years ago.  It‘s called lowballing, right?  Say yes.
FINNEY:  No, no, it‘s called lowballing, but it‘s also called painting a picture for people, like, oh, if they‘re in charge, here is what is going to happen. 
TODD HARRIS, REPUBLICAN STRATEGIST:  It‘s called music to my ears. 
FINNEY:  Oh, but your people are doing it, too.
MATTHEWS:  Lowballing is to say, gee, I don‘t think I can do it, but if I do it, I won. 
HARRIS:  That‘s right. 
MATTHEWS:  In other words, it‘s like criminals when they get acquitted.  And they‘re probably guilty anyway, but they beat the rap.  They say I‘m innocent because I was acquitted. 
No, you‘re not innocent, buddy.  You were just acquitted.  You‘re not innocent. 
HARRIS:  That‘s right. 
HARRIS:  The oldest adage in marketing is satisfaction is based upon expectation.  Everybody is trying to set the expectations game right now. 
The problem for the Democrats is you have—in December of ‘08, right after President Obama was—won the election, you had leadership in the Democratic Party actually coming out, talking about this could be another 1934, where the incumbent president in the first midterm election actually gains seats. 
MATTHEWS:  By the way, I know her strategy.
MATTHEWS:  Excuse me, Karen, you won the argument.  You won the first round, because I understand lowballing.  It‘s like saying, we‘re probably going to lose, and we could lose, but if we win, damn it, we won, even by one seat. 
What‘s the advantage of the Republican Party now that they have given you, if any? 
HARRIS:  We‘re taking that quote and similar quotes like it.  It‘s all over fund-raising mail.  It is all over fund-raising appeals. 
MATTHEWS:  And what‘s the—
HARRIS:  Basically, we‘re saying, look, even the White House is saying that the Democrats are likely to lose control of Congress.  It‘s time to get on board with the winning team.
MATTHEWS:  And that gets your people out to vote?
HARRIS:  Well, hold on, Karen.  It‘s time to get on board with the winning team.
MATTHEWS:  Hey, I say hold on.
MATTHEWS:  Only one guy gets to say hold on.
FINNEY:  Your guys last week were saying, well, gee, if we don‘t take back the House and the Senate, as they were predicting earlier this year, it‘s Michael Steele‘s fault because, gee, he‘s not really doing enough to raise enough money.  And, gee, that‘s why—
HARRIS: -- has already come out and said he thinks that we will take control of the House. 
FINNEY:  Your folks have said both, Todd, is my point.  Both parties are playing the same game.  And you know it.
MATTHEWS:  I notice one other thing the president is doing now.  He‘s starting to identify your guys by name.  He‘s talking about Boehner.  He‘s talking about—what‘s that guy‘s name? 
FINNEY:  Barbour.
MATTHEWS:  No, Barton—Barton.
HARRIS:  Barton. 
FINNEY:  Barton.
MATTHEWS:  Joe Barton, the guy that is BP‘s best friend.  He‘s talking about Roy Blunt in Missouri.  He hasn‘t gotten to, what‘s her name, yet, Michele Bachmann yet.  They‘re all B‘s, by the way, the B-team, you can call them.
He‘s doing that for a purpose.  And here it is.  The latest “Washington Post” poll just out today points that only 26 percent of the people, one in four, has confidence that the Republican Congress will make the right decisions for America. 
So, your party is on the verge of grabbing control in a country that doesn‘t trust your party to do it.  Explain. 
HARRIS:  Well—
MATTHEWS:  Explain why that is working.
HARRIS:  Because there are two different factors at play. 
One is a governing calculation.  And the other is a political calculation.  The fact is, the public wants to throw all the bums out.  The problem for the Democrats is that they have got more bums in Washington to throw out than we do. 
FINNEY:  Just straight numbers, Todd.
HARRIS:  In—the same poll showed that voters who are the most likely to turn out and vote on election day by a 15 point margin want Republicans to take control of Congress.  That is going to be a very, very tough—
MATTHEWS:  Do you accept that?
Do they have the strategy?
And their strategy is to give them confidence they can win.  So their strategy is to say they can win.  Your strategy is to say yes—
FINNEY:  Here‘s what we‘re—
MATTHEWS: -- they can win.
FINNEY:  Our strategy is to say—
MATTHEWS:  So you have the same strategy.
FINNEY: -- here‘s what would happen if they did win, so that people get mobilized and start raising the money.  We want to make it—make sure people understand what‘s at—what‘s at stake in this race—
FINNEY: -- if these guys take charge.
MATTHEWS:  OK, so basically (INAUDIBLE) notes that we‘re talking about right now is your party, led by your press secretary at the White House, thinks that somehow—
FINNEY:  I‘m sorry, led (INAUDIBLE) the president—
MATTHEWS: -- when—
MATTHEWS: -- advantage to spread the word that Republicans are coming, one if by land, two if by sea.
HARRIS:  There you go—
MATTHEWS:  I get that your party needs a little oomph, a little help.
Let‘s look at something very strange happening in Nevada, the gambling capital.  It seems like Harry Reid has decided—here‘s Harry Reid on President Obama.  Let‘s listen to this.  It‘s interesting.  I think before we watch this, I want to suggest two things that he‘s doing here.  One, he‘s showing that he‘s tougher than Obama—more liberal, for the progressive based, to get them jet (INAUDIBLE) -- your crowd up, you know, to get out there—you know, the people—
MATTHEWS: -- out there.  And—and the other side is to seem a little distanced from the president—
HARRIS:  Right.
MATTHEWS: -- for the middle of the road voter.
Can he do both at the same time, be tougher than Obama, but softer in his distance from Obama with one move?
Here he is trying to be finesseful.
This is Harry Reid.
SEN. HARRY REID (D-NV), MAJORITY LEADER:  I think that he is, on many occasions—I shouldn‘t say many occasions—on a few occasions I think he should have been more firm with those on the other side of the aisle.  He is a—he is a person who doesn‘t like confrontation.  He‘s a peacemaker.  And sometimes I think you have to be a little more forceful.  And sometimes I don‘t think he is enough with the Republicans.
UNIDENTIFIED MALE:  Give me an example.
REID:  Oh, health care.
MATTHEWS:  God.  It sounds like a sex for life commercial.
MATTHEWS:  Boy, what is that all about?
Just a thought.
What is that about?
FINNEY:  Well, you know—
MATTHEWS:  You‘ve got to be firmer and more forceful.  And he‘s not—you know, here‘s Harry Reid talking, by the way.
MATTHEWS:  Not exactly Mr. Excitement.
But that‘s all right, because a lot of people know that Harry is very tough.  He‘s just quiet.
FINNEY:  He is.
FINNEY:  Howard Dean used to call him—
MATTHEWS:  So here‘s the point—why is he—
FINNEY: -- the spine of steel.
MATTHEWS:  Why does he have the president come out there and campaign for him and then say, you know, he‘s not exactly as tough or firm or as forceful as he ought to be?
FINNEY:  Well, but you know what?
actually, the—this, to me, is an example of sort of Media Training 101.  The question that he was asked was what‘s something you disagree with on the president?
So Harry Reid said, OK, I wish he was a little bit tougher and forceful.
MATTHEWS:  OK.  Who is he working for—
FINNEY:  At the—
MATTHEWS: -- with that answer?
FINNEY:  At the—at the end—
MATTHEWS:  He‘s a pro.
Why is he talking like that?
FINNEY:  Exactly.  I agree with what you said.
FINNEY:  He‘s trying to send—
HARRIS:  He knew exactly what he was doing.
FINNEY:  He‘s trying to send the signal that I think we need to be tougher on the Republicans.
UNIDENTIFIED MALE:  It helps him with progressives.
FINNEY:  I‘m a little bit different than Obama.
UNIDENTIFIED MALE:  I‘m a little more progressive, but I‘m also a little less—
FINNEY:  Exactly.
FINNEY:  But at the same time he did—
FINNEY: -- he did come back around at the end of his answer and say—
HARRIS:  He knew—hew knew exactly what he was doing.  The fact that

MATTHEWS:  What was he doing?
HARRIS:  He‘s trying to distance himself from President Obama—
MATTHEWS:  For who?
To get which votes?
HARRIS:  For himself, in—in order to get Independent voters (INAUDIBLE) --
MATTHEWS:  But at the same time, he‘s saying, I wish he were tougher.
HARRIS:  Well—well, sure.  And that will—that will appeal to voters that he already has.
FINNEY:  But it‘s not the first time—
MATTHEWS:  Can he speak one line and get both sides to think they—
FINNEY:  Of course.
MATTHEWS: -- like a Santa Claus mask.
HARRIS:  Sure.  Sure.  He‘s a nice guy.
MATTHEWS:  He‘s looking at me.
MATTHEWS: -- like a Santa Claus mask.
HARRIS:  It happens all the time.
MATTHEWS:  He‘s always looking at you.
Do you think he can sell (INAUDIBLE)?
HARRIS:  It happens all the time.
FINNEY:  Which, by the way—
HARRIS:  But the fact is, President—
FINNEY: -- this isn‘t the first time he said it.
HARRIS:  President Obama, despite his popularity, has zero track record—
MATTHEWS:  I don‘t like the way you said that.
HARRIS: -- in—in converting votes for other people other than himself.  And so there is—
MATTHEWS:  No coattails?
HARRIS:  There‘s—there are no coattails, especially in a mid-term.  You‘re going to be seeing Democrats all across the country putting some distance between themselves and the White House.
MATTHEWS:  Why is Bill Kristol and Gary Bauer ganging up on Sestak in Pennsylvania?
What‘s that about?
MATTHEWS:  No really.  It‘s a very pro-Israeli argument, but I had never heard Sestak say a world against Israel.
What‘s that about?
HARRIS:  I don‘t know.  I hadn‘t read it—
MATTHEWS:  It‘s a—
MATTHEWS: -- they‘re running ads in—
HARRIS:  I hadn‘t read what they said but—
MATTHEWS: -- and the Phillies‘ commercials—
HARRIS: -- I‘m thrilled.
MATTHEWS:  They‘re doing all this stuff.  And I just wonder what—what Sestak did to offend.  I mean I don‘t—
HARRIS:  I‘ve never seen the ad, but I‘m sure I agree with it.
MATTHEWS:  For all the wrong reasons.
Well, anyway, thank you guys.
You‘re obviously very happy with Robert Gibbs, both of you, for some reason.  And both happy with Harry Reid for some reason.
FINNEY:  Absolutely.
MATTHEWS:  Anyway, thank you, Karen Finney.
Thank you, Todd Harris.
My last reference ever to sex for life.
Anyway, up next, the NAACP takes on the Tea Partiers, saying the movement harbors racist elements.  Look at these pictures.  They‘ve got a point.  Look at these pictures showing up at all the rallies.
We‘re going to have the NAACP President Benjamin Jealous join us to talk about what he‘s seeing at these rallies that he doesn‘t like and shouldn‘t like.
MATTHEWS:  Well, here‘s good news for those Democrats looking to oust U.S. Congresswoman Michelle Bachmann from her seat.  A new poll shows her race is surprisingly competitive.  In fact, Congressman Bachman is under 50 percent—a bad sign for an incumbent—with just a 9 point lead over Democratic challenger, Terrell Clark (ph).  It‘s the first significant poll in the race this year and it shows the Democrat, Clark, within striking distance against an incumbent.
And more bad news for Bachmann.  Late today, Politico reported that her chief of staff and campaign finance director have both quit their jobs.
We‘ll be right back.
Today at the NAACP convention in Kansas City, the organization is expected to vote on a resolution to condemn supporters of the Tea Party.  Parts of the proposed resolution include a call for, quote, “the leadership and members of the Tea Party to recognize the historic and present racist factions within it and to repudiate those factions.”
Earlier today, Sarah Palin Tweeted the following:  “I‘m busy today, so notify me ASAP when NAACP renders verdict.  Are liberty loving equality respecting patriots racist?  Bated breath waiting.”
And there she‘s mocking it.
Benjamin Jealous is president and CEO of the NAACP.
Why do you think that Governor Palin is making fun of the NAACP here?
What do you think?
BEN JEALOUS, NAACP PRESIDENT & CEO:  Look, you know, I—I—really don‘t know what to say about Sarah Palin.  But what‘s real is that, you know, we aren‘t taking issue with the Tea Party itself.  What we‘re taking issue with is the perpetual tolerance for racist and—you know, and racist statements by their own folks.  And they, you know, they need to just come out and say once and for all there‘s no place for bigots or—bigotry in our ranks and then back that up.
MATTHEWS:  What do you make of those signs—and I know we‘re going to show them in a minute now.  We‘ve been showing them tonight.  And I—we‘ve all seen them.  We showed them in our doc when we did it on the rise of the right.
They always seem to show up with those signs.  I mean, not everybody has got one, but they‘re there.  And they‘re—they‘re obvious—pictures of—distorted—there—there‘s one.  It has sort of a white faced version of Barack Obama painted up like a minstrel or something.  And then you‘ve got this other one with Hitler.  You‘ve got all the Hitler references, the racist sort of ethnic stuff, games being played with pictures.
It really does get tribal and it gets weird.
Why would you call Barack Obama a Nazi?
He‘s a man—let‘s face it—of the left.
JEALOUS:  Right.
MATTHEWS:  Just to be blunt about it.
Why do they keep identi—what is this all about?
He‘s a man of the right and he‘s a socialist and he‘s a rightist.
What is he, they‘re saying?
And he‘s black, obviously.  But they‘re making that into a negative.
What do you think is really going on in the heart of the Tea Party people?
JEALOUS:  Well, you know, I think—I think the heart is very mixed up and that they really need to get clear.  I don‘t think Dick Army is a racist.  My problem with Dick, you know, and the leaders of the other big factions is that they have tolerance for racists.  You know, they don‘t—they don‘t care.  And either you‘ve got to repudiate them and get them out or you‘ve got to take full responsibility for them.
We‘re tired of seeing you guys send folks to Congress (INAUDIBLE) civil rights heroes like John Lewis the “N” word and civil rights heroes like Barney Frank the F word and then act like you—
JEALOUS: -- you bear no responsibility.
You know, we‘re tired—and one of the things that concerns us the most is, you know—you know, Chris, that whole thing about, you know, they‘re—you know, like, for instance, day one of the Tea Party‘s Tweeted, “we‘re not racist, we are anti-communist.” That‘s like an exact quote from the John Birch Society.  And—
JEALOUS: -- you know, and you see those old themes and then you go to the Web site of the Council of Conservative Citizens, which is a—which is (INAUDIBLE) --
MATTHEWS:  Well, that is an old—that‘s an Dixie crowd, obviously. 
JEALOUS:  I mean straight up.  They say that black people are not genetically equipped to participate in democracy.
MATTHEWS:  But that—but that group isn‘t associated with the Tea Party.  That‘s the old like—
JEALOUS:  Yes, they are.  No, no.  Yes they are.
MATTHEWS:  I thought that was the old White Citizens Council with a new name.
JEALOUS:  Exactly.  And you go online and—and they celebrate their participation in the Tea Party.
MATTHEWS:  Let‘s get to some—
JEALOUS: -- is the—the same thing, by the way.
MATTHEWS:  Let‘s get to some elected officials here.  There‘s a bunch of elected officials—we‘ve counted them up here.  It‘s some—well, let‘s take a look at David Vitter.  He‘s a United States senator.  He‘s had a few problems, obviously.  But he‘s a United States senator.  Here he is at an event this Sunday.  This is real time, an elected official, high level, U.S. senator.
Here he is talking about the birther thing.
Let‘s listen.
UNIDENTIFIED MALE:  I‘d like to ask you, Senator Vitter, what you personally know about this and what you personally will do about it, if anything—that is, Mr. Obama‘s refusal to produce a valid birth certificate?
SEN. DAVID VITTER ®, LOUISIANA:  I know all the information I‘ve been able to get my hands on through the media.  But obviously, with the mainstream media as the filter, that‘s not a whole lot.  I personally don‘t have standing to bring litigation in court, but I would support conservative legal organizations and others who would bring that to court.  I think that is the valid and most possibly effective grounds to do it.
MATTHEWS:  You know, I don‘t know what they are up to, but I hear amazing statistics, Mr. Jealous—and you‘ve seen them, too, of—
MATTHEWS: -- of up to a third of Republicans, not just Tea Partiers, who believe that this president—or wonder whether he‘s from some other country.  And I can‘t figure out—they always go back to Kenya, I guess, an African country and sort of assume he‘s from there, even though we have a birth announcement in a local Hawaii paper.  I didn‘t have a birth announcement when I was born, in the newspaper.  I don‘t know if you did or not.
MATTHEWS:  That‘s pretty prominent.  And that‘s not enough for them.
MATTHEWS:  You‘ve got the certificate out of the state.  That‘s not enough for them—
JEALOUS:  And his mom is from Kansas, right?
His mom is from Kansas.
MATTHEWS:  So why are they bringing that—well, that‘s right.  He‘s a—yes—
MATTHEWS:  Well, that would suggest that he‘s an American right there.
But why do they keep going back to this if it isn‘t race?
I‘m putting words in your mouth, maybe, but why are they doing this?
JEALOUS:  Well, you know, it‘s deeply disturbing.  And—and they use this rhetoric, take back our country, as if—
JEALOUS: -- nobody else belongs to the—to the country.  And, you know, and—and that‘s the concerning part.  I mean they question the nationality of people of color from the president all the way down.  And it‘s deeply, deeply disturbing.  You know, you don‘t feel you—
MATTHEWS:  You know, that‘s ironic because most black people in this country have a lot deeper roots in this country than most white people.
JEALOUS:  That‘s right.
MATTHEWS:  I‘ll bet if you did a little study on that, genetically, your—most ancestors go way back to, what, 1620 --
JEALOUS:  Exactly.
MATTHEWS: -- a lot of African-Americans go way back.  A lot of us got here in the 19th century, our families.
MATTHEWS:  I‘m sure somebody else has noticed that besides me.
MATTHEWS:  (INAUDIBLE) -- that‘s a fact.
JEALOUS:  No, that‘s right.  I mean my—like my 93-year-old grandmother who, you know, growing up, would say, look, if they ask you what you are, just tell them that you‘re from here.  You know—
JEALOUS: -- her folks came right up the—the James River, were on James River plantations.  And that‘s what you heard.  You know, look, we have old soldiers in the ranks of the NAACP who had their—
JEALOUS: -- their nationality questioned.  To see them do this to the commander-in-chief is simply unconscionable.
MATTHEWS:  You‘re great to do this.
Thanks for coming.
Good luck with your resolution.
JEALOUS:  Thank you.
MATTHEWS:  I hope it clears things up.
Ben Jealous of the NAACP.
When we return, let me finish with some thoughts about the Republican Party, that‘s made room for these yahoos and birthers.  They don‘t need them.  They‘ll probably do well this November without them.  I don‘t know why they‘re asking them to join the band.
You‘re watching HARDBALL only on MSNBC.
MATTHEWS:  Let me finish tonight with a word about the yahoos.  I think the Republican Party is making a happy home for these folks.  Senator David Vitter is the most recent to swing wide the gate.  He was asked where he stands on whether President Obama should be sued for not being an American.
He said that such a suit would be valid and possibly effective.
Question—why would a United States Senator support brining a case -
a suit that the president of the United States isn‘t one of us, isn‘t an American?

Why would he say for all to hear that bringing such a case in U.S.  courts could be an effective way of exposing the president of the United States as an undocumented alien?
So Vitter backs birthers.  Well, that‘s bad enough.
But there‘s a dozen other Republican members of Congress who have backed the birther movement.  This know-nothingism is catchy.
During the last presidential campaign, a trio of Republican candidates for president—Tancredo, no surprise there; Huckabee joined the club; and Sam Brownback—all said they didn‘t believe in evolution.  The beat goes on.
No matter how much information is accumulated on climate change, it‘s OK, in the Republican Party, to simply deny it.  This despite the fact that the Nixon Library just released a memorandum from Daniel Patrick Moynihan from 1969 warning of the impact of climate change.  Four decades of science is simply rejected.  Not a single Republican senator is now ready to take action on climate change.
Sarah Palin likes to talk about being a common sense conservative.
Where‘s the common sense in all this refusing to use your brain?
That‘s HARDBALL for now.
Thanks for being with us.
Right now, it‘s time for “THE ED SHOW” with Ed Schultz.

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