'Hardball with Chris Matthews' for Friday, July 8, 2011

Guests: Michael Steele, David Corn, Sue Herera, Steny Hoyer, Mark Warner, Joshua Green, Matt Kibbe, Toby Harnden


Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in Washington. 

Leading off tonight: You can just imagine the glee Republicans felt this morning when the terrible jobs numbers came out, the unemployment rate ticking up a tenth of a point and only 18,000 jobs created last month.  Tim Pawlenty, Romney, all them had to say this.  Here‘s Romney.  They all had their “I told you so” quotes ready.

And Orrin Hatch from Utah said yesterday it‘s time for the poor to, quote, “share some of the responsibility.”  Could that be the new Republican talking point, that the economy is struggling because the poor aren‘t paying enough in taxes?  The economy and the race for the White House is our top story tonight.

Also, is President Obama ready to give away too much in talks with Republicans?  Some Democrats worry that the president will give away the store on Medicare, Medicaid and even Social Security without getting much in return.  Are they right?  Could he get a better deal and still avoid default?

Plus: Right off the cliff.  Are Republicans so terrified of the Tea Party that they‘re willing to tank the economy in order to avoid a challenge from the right?  We‘ll debate that one.

And the “News of the World” scandal is a now political scandal in London.  A former senior aide to Britain‘s prime minister, David Cameron, has been arrested in a growing scandal involving phone hacking and corruption.

Finally, “Let Me Finish” with the space shuttle launch today and the wondrous pioneering that President Jack Kennedy once championed.

We start with the job numbers.  David Corn is MSNBC political analyst and “Mother Jones” Washington bureau chief.  And Michael Steele‘s the former chairman of the Republican National Committee, now an MSNBC political analyst.

Well, could you hear the glee, the giggles of delight on your side of the aisle?


MATTHEWS:  Come on.  I mean it.  Michele Bachmann said she hopes the bad numbers help her.

STEELE:  No, no.  I—you know, I—


MATTHEWS:  She said it.

STEELE:  I know what she said, but let‘s just get serious for a moment.  You had 18,000 jobs created last month.  The 54,000 for May was the revised down to 25,000.  The reality of it is, Americans are still hurting, and both the administration and members of Congress and the Republican leadership, in particular, because we campaigned specifically on job creation, need to get serious about this.  All the talk about the debt and all the dancing belies the—

MATTHEWS:  You think the debt isn‘t an important issue?

STEELE:  I think the debt is an important issue.  But in the context of job creation, it‘s has to work together.  You cannot do it in isolation.

MATTHEWS:  OK, let‘s take a look at—here‘s the aforementioned U.S.  congresswoman, Michele Bachmann, on CNBC today on the jobs numbers.  Let‘s listen to what she said and what Michael said she didn‘t say.  Let‘s listen.


UNIDENTIFIED MALE:  Does it strike you that as the unemployment rate goes up, your chances of winning office also go up?

REP. MICHELE BACHMANN (R-MN), PRES. CANDIDATE:  Well, that could be.  Again, I hope so.  My candidacy is one that I‘m presenting to be a job creator and to turn the economy around.


MATTHEWS:  Is that politically acceptable today, to say you hope you benefit from bad economic news, that people are thrown out of work?

STEELE:  That‘s not what she—

MATTHEWS:  Well, she just said, I hope—


STEELE:  I think she‘s—you can run it again.  I think what she‘s saying is she‘s hoping that her message about job creation is one that allows her the chance to compete and win the office.

MATTHEWS:  But he said—


MATTHEWS:  He said, Are you hoping—

STEELE:  It‘s no different than Barack Obama running around in 2008, talking about, you know, what he thought the opportunities—


MATTHEWS:  She said, I hope it does help me.

CORN:  There‘s a serious discussion to be had here.  A couple months ago, when the job numbers were good, what were the Republican leaders in Congress saying?  See?  You elect us, and the numbers go up.  Now they‘re blaming Barack Obama.  But what‘s happening is—and the president—

STEELE:  But the job numbers have not been good.

CORN:  No, no, no.  No, when they were better at the beginning of the year, the Republicans tried to take credit.  Now when they‘re bad, they‘re trying to—

MATTHEWS:  Because he went along with the Bush tax cuts.

CORN:  Listen, that‘s what they‘re talking about.  That‘s the only option they have.  I‘m happy to hear you talk about job creation because all we hear from the Republicans is reduce government spending and cut taxes.  Taxes are at a historic—


CORN:  They‘re at a historic—let me finish.


CORN:  They‘re at a historic low.  (INAUDIBLE) if you cut government spending, you end up contracting demand.  That‘s a job loser.  It doesn‘t create jobs.

STEELE:  It does create jobs!


STEELE:  It fundamentally creates jobs!

CORN:  No, it doesn‘t!  Most of the jobs lost are public jobs!


STEELE:  How the heck do you expect an employer to spend more money when you‘re taking more out of his pocket?

CORN:  But you‘re not taking more out of his pocket!

STEELE:  If you‘re raising his taxes, you are!

CORN:  Taxes are at a historic low!

STEELE:  If you‘re cutting his taxes—


MATTHEWS:  I think we‘ve just heard something—

CORN:  Taxes are low now!

MATTHEWS:  I got to get something straight here—

STEELE:  Taxes right now—


STEELE:  -- and they‘re going to 45 percent over the next 18 months based on what‘s in the health care plan—

CORN:  Marginal rates are—

STEELE:  -- right now!

CORN:  Marginal rates are 35 --

STEELE:  And they‘re going to 45 percent in 18 months!


MATTHEWS:  Well, let‘s talk about how business works.  You run a small shoe store and the customers start pouring in the door some weekend.  You go out and hire a couple people to help sell shoes, right?  It‘s about demand.  That‘s why people hire people.  The taxes go up 3 or 4 percent for the richest people in the country, you don‘t fire people.  It all about—depends on who‘s coming in the door to buy.  Isn‘t sales and consumer demand—

STEELE:  But it‘s not just—

MATTHEWS:  -- what drives the economy—

STEELE:  It‘s not—it‘s not—

MATTHEWS:  -- and drives the number of people hired?

STEELE:  It‘s not just sales and consumer demand that‘s driving this.  You also—you have an entire network, if you will, of business opportunities out there that have not been—


STEELE:  -- a part of this discussion for the last—


MATTHEWS:  There‘s a difference in values here, obviously.  Let‘s take a look at Senator Orrin Hatch on Wednesday talking about shared sacrifice.  Here‘s a senator of the United States under pressure from the Tea Party, a guy who has always been a conservative but now fearful of the far right, the Tea Party people, afraid to say what he normally would say back when he was partners with Ted Kennedy.  Here he is saying something I don‘t think he would have ever said before.  Let‘s listen, Orrin Hatch.


SEN. ORRIN HATCH ®, UTAH:  I get a little tired of hearing the Obama approach towards shared sacrifice.

The top 1 percent of the so-called wealthy pay 38 percent of all income taxes.  The other side just spends and spends and spends!  And they want to tax and tax and tax so they can spend some more!

My gosh!  When are we going to wake up in this country and realize they‘re spending us into oblivion?  And I hear how they‘re so caring for the poor, and so forth.  The poor need jobs.  And they also need to share some of the responsibility.


MATTHEWS:  You know, the latest Republican carp out there is that Democrats don‘t tax the poor enough.  And they‘re saying that half the people don‘t pay tax.

STEELE:  No, that‘s not—

MATTHEWS:  Well, the fact is that 82 percent of the country—

STEELE:  That‘s not what Republicans—


STEELE:  -- they don‘t tax the poor enough.  What the—

MATTHEWS:  What‘s he talking about there?

STEELE:  What he‘s acknowledging is that, as just recently reported by the Joint Committee on Taxation, 51 percent of American households do not pay income tax right now.

MATTHEWS:  But they pay payroll tax.

STEELE:  So the fact of the matter is—but that—that‘s Social Security.  That‘s not enough!

CORN:  But when you say that—


STEELE:  Let me finish the point, then I will—


STEELE:  -- let you do your thing.  The reality of it is that 51 percent of American households, taxpayers, don‘t pay taxes.  What you‘re talking about is a shrinking number of people who are contributing to the overall investment through tax policy in this country.

CORN:  Chris—

STEELE:  You don‘t have that.  And so if you‘ve got 51 percent of taxpayers—

CORN:  But you‘re saying you want to—

STEELE:  -- don‘t pay, you‘re looking at a smaller and smaller number



MATTHEWS:  Let him finish!

STEELE:  What the senator is talking about is creating an environment in which the poor are empowered to get jobs so they can contribute—



MATTHEWS:  That‘s not what he said.

STEELE:  That is what he said!  That‘s what he meant.  I‘ve talked to the man.  I know exactly what he said.

MATTHEWS:  He just said they also need to share some of the responsibility.

STEELE:  That‘s right.  When they get those jobs—

CORN:  Oh!  Oh!


CORN:  Once they get jobs.  He didn‘t say—


STEELE:  This is the first part of what he said.  The poor need to get jobs.

CORN:  Michael—Michael—

MATTHEWS:  He said the poor need jobs and they also need to share—


STEELE:  Come on, people!

CORN:  But when you say that, you know, 51 percent don‘t pay income taxes, what is your suggestion, that we should put more income taxes on those people who are at the bottom rungs?

STEELE:  No.  It says—it says—

CORN:  That‘s the solution?


STEELE:  -- the tax system is upside-down.


MATTHEWS:  OK, let me ask you this.  Should we raise taxes on people at the bottom half of the country?

STEELE:  No.  No.  I don‘t think we should—


STEELE:  Let‘s look at the tax code as is constituted right now and fix those areas that need to be fixed that will allow more revenue to flow, as opposed to giving the tax breaks and the loopholes.

CORN:  What we hear from the Republicans again and again is, The economy is in trouble, let‘s cut taxes.

STEELE:  Right.  Absolutely.

CORN:  We did that during the Bush era—


MATTHEWS:  Let‘s stop yelling.  I want to—this program‘s about documenting.  First of all, Michele Bachmann, the congresswoman, really did say she hopes she does win—benefit from higher unemployment.  She said, I hope so.  I hope I benefit politically from—

STEELE:  I don‘t think that‘s—

MATTHEWS:  She‘s said it again and again.  I‘m not going to play it again and again.


MATTHEWS:  Let‘s play it again.  Let‘s watch it again.  Let‘s hear her speak for herself, Congresswoman Bachmann.


UNIDENTIFIED MALE:  Does it strike you as the unemployment rate goes up your chances of winning office also go up?

BACHMANN:  Well, that could be.  I—again, I hope so.  My candidacy is one that I‘m presenting to be a job creator and to turn the economy around.



STEELE:  And so—so everybody in this town has been asking—has been making the very—


STEELE:  No, everybody in this town is making the very obvious statement.  Oh, well, Barack Obama is in trouble if the unemployment rate stays at 9.2, if it doesn‘t get below a certain rate.  That‘s all that she‘s acknowledging—

CORN:  Well, she didn‘t—

STEELE:  -- is that at 9.2 percent—

MATTHEWS:  She hopes she benefits from bad economic news.

CORN:  She didn‘t say she hopes the economy gets better!

STEELE:  And you don‘t think Barack Obama didn‘t think he would benefit from—


MATTHEWS:  I never heard him say it.


MATTHEWS:  OK, let me ask you this—

STEELE:  Of course he did!


MATTHEWS:  And then, again, here‘s Orrin Hatch—

STEELE:  Come on!

MATTHEWS:  “I get a little tired of hearing the Obama approach toward shared sacrifice.”  He‘s complaining about the rich being blamed.  He is now saying—


STEELE:  -- being blamed, Chris.

MATTHEWS:  He‘s saying the poor also need to share some of the responsibility.

STEELE:  He‘s not—well, number one—


MATTHEWS:  Go ahead.

CORN:  When you talk about shared sacrifice, you look at what Republicans want to do in the Ryan budget, which is have $1 trillion in tax cuts while cutting Medicare, Medicaid, food safety, education, medical research—


STEELE:  Obama‘s already cut Medicare.

CORN:  -- environmental protection and all that.  No, he didn‘t.  He tried to—

STEELE:  By $500 billion.


STEELE:  We transferred funds.

CORN:  You guys—you guys—we gave them money—


MATTHEWS:  One at a time!


CORN:  Hey, can I finish?


STEELE:  Seriously.  A half a billion dollars.

CORN:  Can I finish one point?

STEELE:  Yes, you can.

CORN:  That money was used to plug the donut hole.

STEELE:  Oh, yes, donut hole.

CORN:  It came out in checks.  You want to make fun of that?

STEELE:  I‘m not.

CORN:  You probably don‘t need—


STEELE:  It‘s just that your Washington speak is not the reality for people out there.


MATTHEWS:  Just to make one point, I want to show a collage of all the Republican candidates for president now.  We‘re going to start now with—we showed Bachmann.  Let me quote you what the other people are saying.  Let‘s talk about the other—because I think they think they‘re gaining here.  This is about how they reacted.

First of all, we got Romney.  “Today‘s abysmal jobs report confirmed what we all know, that President Obama has failed to get the economy moving again.”  Jon Huntsman‘s statement reads, “The American people have been extraordinarily patient in waiting for the better and brighter times promised to them by this administration.  Their patience has rightly worn thin.”  And Tim Pawlenty‘s statement, “We will have continued anemic growth and disappointing job creation so long as Barack Obama is president.”

So your party clearly was ready to jump on this.

STEELE:  Absolutely!  That‘s the politics of running for president, Chris.  I mean, so don‘t act like this is something new and fantastic, and no Democrat has ever demagogued—

MATTHEWS:  Are you rooting for bad economic times?

STEELE:  No, I‘m not!  I want the American people—

MATTHEWS:  Are they?

STEELE:  -- to be employed!

MATTHEWS:  Are they rooting for bad economic times?

STEELE:  No, they‘re not.  No, they‘re not.  At the end of the day, Chris, they‘re not.  Come on!

MATTHEWS:  OK.  David, do you think—

STEELE:  You know they‘re not.

MATTHEWS:  -- the Democrats—the Republicans are hoping that this economy‘s going to tank really bad and they can walk into the White House?

CORN:  Well, I think—


CORN:  I think some are hoping for that.  I think some Tea Party members in Congress now are willing to play chicken with the economy—

MATTHEWS:  I think so, too.

CORN:  -- and blow it up.  And they don‘t care because you know what? 

If it happens—

MATTHEWS:  OK, fair enough.  You‘ve made a charge.

CORN:  -- they‘ll blame Barack Obama.

MATTHEWS:  Fair enough.  You made a charge.  Fair enough.  You made a charge that some Tea Party people would rather have the economy go to hell in a hand basket this August, with the world markets and interest rates spiking and the bond market dying and this country, in a joke (ph) world, just to make their point on taxes.  You say that.

CORN:  Yes.

MATTHEWS:  Are there any liberals on the left coast out in California, in the Bay area, or on the East Coast, the New York area, or the Black Caucus—do you think there‘s some of them that are so adamant about not giving up on Medicare and Medicaid or Social Security that they‘ll let it happen, that they‘ll let it happen rather than give on those issues?

CORN:  That they‘ll let it happen?

MATTHEWS:  That they won‘t cut a deal—


MATTHEWS:  No, they won‘t agree to a deal that stops default?

CORN:  I think—listen, I think those Democrats, every single one of them, would vote for a clean bill to raise the debt ceiling and not play chicken with the economy the way the Republicans are doing—


MATTHEWS:  Well, what about the other point?  What about the other point?

CORN:  I don‘t think you should have to give up Medicare to prevent a financial crisis from happening.


MATTHEWS:  Give up Medicare—nobody‘s saying to give up Medicare.


STEELE:  No one‘s said that.  And I—you know, I really appreciate -


CORN:  What do you mean?  You‘re tying the debt ceiling—


STEELE:  -- the nobility of the left.  But the reality of it is—

CORN:  Nobility of the left?

STEELE:  The reality of it is—


STEELE:  The Tea Party folks out there are saying—they‘re not saying—

MATTHEWS:  OK, stop—


STEELE:  -- we want to run the economy off the cliff.

MATTHEWS:  By the way—by the way—

STEELE:  They want—

MATTHEWS:  Can I say something—


MATTHEWS:  -- changes in the tax code this president is proposing are so modest, so marginal, and the changes down the road in Medicare and Social Security are going to be so modest that all this stuff is tempest in a teapot.  Thank you, Michael Steele.  Thank you, David Corn.  It‘s going to be way down the road and it‘s going to be the basic thing we have to do.

Coming up: Is President Obama giving away too much?  Well, we‘ll debate that one, too—in the debt ceiling negotiation.  We‘ll take David‘s point up here.  Maybe they‘re giving up too much.  Progressives are worried, David and others, me, too, sometimes, about any cuts to make, any Social Security adjustments.  Don‘t give up on nothing (ph).  Some people say that.  Let‘s see if they‘re right.

You‘re watching HARDBALL, only on MSNBC.


MATTHEWS:  Well, the Republican Party‘s losing ground with two key voting groups right now, senior citizens and Midwesterners.  According to NBC News/”Wall Street Journal” polling, so far this year, 44 percent say they‘re Democrats, versus just 35 percent who say they‘re Republicans.  That‘s 44-35, a 9-point spread for the Democrats.  Last year, the spread was only 2 points, and Republicans actually won the senior vote in the mid-terms.

And in the Midwest, a similar trend.  This year, 42 percent of Midwestern voters say they‘re Democrats, versus just 31 who say they‘re Republicans.  That‘s a wide spread, about 11 points.  Last year, they had a 4-point spread, the Democrats.  So we‘ll see if both trends continue into next year‘s elections.

We‘ll be right back.



REP. NANCY PELOSI (D-CA), MINORITY LEADER:  We do not support cuts in benefits on Social Security and Medicare.  Any discussion of Medicare or Social Security should be on its own table.  Do not consider Social Security a piggy bank for giving tax cuts to the wealthiest people in our country.  We are not going to balance the budget on the backs of America‘s seniors, women, and people with disabilities.


MATTHEWS:  Welcome back to HARDBALL.  That was, of course, House Democratic leader Nancy Pelosi on Thursday.  Here‘s House speaker John Boehner today.  Let‘s listen.


REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE:  There is no agreement in private or in public.  And as the president said yesterday, we are this far apart.  It‘s not like there‘s some imminent deal about to happen.  There are serious disagreements about how to deal with this serious problem.


MATTHEWS:  So how far apart are they?  And are the Democrats worried that President Obama will give away too much to get a deal?

Maryland congressman Steny Hoyer‘s the House Democratic whip.  Mr.  Leader, you have got a tough job and I don‘t know how you‘re getting through this.


MATTHEWS:  And you‘re laughing—I mean, I really mean this.  I—you know, I‘ve heard a report today that there‘s going to be some kind of effort to look at changes down the road, that we can‘t cut taxes, or rather, raise taxes right now.  We can‘t cut benefits right now because of the economy being so precarious.

Does that mean we‘re going to have to push the big changes to deal with the deficit and debt—are going to have to go down the road a bit and to the long term, maybe more than 10 years?

REP. STENY HOYER (D-MD), MINORITY WHIP:  Well, Chris, I don‘t know about more than 10 years, but certainly, as you know, Simpson-Bowles—

Senator Simpson and former chief of staff Erskine Bowles, in their report, they posited that we needed to and they proposed making substantial cuts, raising revenues and dealing across the board with all items of expenditure.

But they said in the near term, meaning the next year or so, we needed to be very careful that we did not have the opposite effect by dampening down a struggling economy, obviously—


HOYER:  -- as we saw today, which will decrease revenues and make the problem worse, not better. 

So, in the short term, I agree with the—the Bowles-Simpson suggestion that we be very careful in the short term.  There‘s no doubt, however, that, in the White House yesterday—or Thursday—there was—yesterday—there was a clear agreement that this was a serious, serious challenge that confronted us, and it demanded that at all of us try to come together and reach an agreement whereby we will certainly over the next 10 years and 20 years bring this deficit town and bring the debt down, because it‘s not sustainable. 

MATTHEWS:  Do most of the members in your caucus agree that this is an urgent matter, that this is not a Kabuki dance, that this August 2 is a reality, that you cannot afford to have the world money markets think of the United States as a deadbeat?

HOYER:  Absolutely. 

I think that the entire caucus, to a person, believes that putting the United States of America in the position where it doesn‘t pay its bills will have ramifications to everybody in this country and around the world. 

As a matter of fact, I have told the speaker and I have told Mr.  Cantor, the Republican leader, that Democrats would come up with at least 150 votes to make sure that we extend the debt limit so we cannot default and pay the bills that we have already incurred, so that I think the answer is emphatically yes, Chris, we believe this is a very serious issue.

And Secretary Geithner made it very clear that, after August 2, there‘s no maneuvering room, we have will run out of ways to manage our cash flow that enables us to pay our bills, and that we will be in default.  That, we cannot let happen. 


MATTHEWS:  The president said the other day that Social Security, as well as Medicare, they‘re all on the table.  How‘s that selling with your caucus? 

HOYER:  Well, I think I have said many times everything needs to be on the table.  Leader Pelosi has said the same. 

We have also said that we must not touch the benefits Social Security recipients are receiving or that undermine Medicare benefits.  But we have not said that, therefore, they ought to be off the table.  I agree, though, with Leader Pelosi—and you just used her quote.  Social Security has not been part of the problem. 

And, as a matter of fact, Social Security up until this year has been, as you well know, Chris, providing surpluses, which we have used. 

MATTHEWS:  Oh, I know.

HOYER:  So, Social Security is not the problem, but we do need to strengthen and make Social Security sustainable over the long term.

But we need to consider Social Security on its own merits without adversely affecting those who are getting benefits.  The fact is that everything needs to be on the table, but not every facet of everything should be on the table. 

We don‘t think—I agree with Leader Pelosi.  We don‘t certainly want to look at reducing health care costs for people—or reducing Social Security benefits because we want to give large tax cuts to the wealthiest in America. 


HOYER:  That‘s not, I think, a policy that the American public thinks is either smart, or frankly, moral. 

MATTHEWS:  OK.  It‘s going to be a tough couple of days. 

Thank you so much, U.S. Congressman Steny Hoyer, House Democratic leader. 

HOYER:  Thank you, Chris. 

MATTHEWS:  Joining me now is Democratic Senator Mark Warner of Virginia.  He‘s on the Banking, Budget and the Commerce committees. 

Senator Warner, I was wondering, in the course of the—as we get closer and closer to the deadline for action on the debt ceiling legislation, why are we not hearing from big business?  Why are we not hearing from Tom Donohue of the U.S. Chamber of Commerce demanding action to avoid a default? 

SEN. MARK WARNER (D), VIRGINIA:  Well, Chris, as you know, and many of your viewers, I‘m probably one of the more pro-business Democrat out there. 

And I‘m pulling my hair out on that same reason.  We have seen the power of the business community to weigh in on issues.  There‘s not a business leader I have talked to—and I have talked to the Chamber, I have talked to BRT, I have talked to all—every business group I can get in front of, and many times with a Republican colleague, Saxby Chambliss, saying, it‘s got to be a balanced approach, it‘s got to be both sides of the balance sheet, revenues and cuts. 

And we get a lot of attaboys, but we don‘t get the kind of meaningful involvement that I think will help convince some of our Republican colleagues and some of our reluctant Democratic colleagues that we‘re driving over the cliff and we can‘t let this happen to our country or our economy. 

MATTHEWS:  Well, let me ask about hearing back from them.  Does business at the highest level, the big-money people, do they know—do they talk to you about the consequences of the failure to meet this deadline? 

WARNER:  Well, I think they think the consequences are so dire that no responsible person wouldn‘t vote to extend the debt limit. 

They think this is, again, political Kabuki theater that we‘re going through.  And some of it is.  I will acknowledge that.  I wish we would all kind of put down the bartering and get to a real deal here.  But I have really been disappointed. 

I put up an op-ed in “The Washington Post” yesterday on this, saying, guys in the business community, we need you to step up right now, we need you in the halls of Congress, because an increase in interest rates, a factored-in higher credit risk for everyone does not do anything in terms of job creation. 

As a matter of fact, 10 percent mortgage rates, 13 percent car loans, the trickle down that would happen on every state bond, because those will be imperiled as well if we end up defaulting on our treasury notes.  This would hurt local government, state government as well. 

They need to be here, because this would be a knife to the heart of any meager recovery we have got. 

MATTHEWS:  Let me ask you about—you probably don‘t want to give away your bargaining position either, but what about issues like, down the road, Social Security, not now, of course?  We don‘t have the crisis right now in Social Security.  But we certainly can look at it arithmetically by just who‘s going to be retiring over the next 20 years. 

We know it‘s going to face a crunch and then go into default, into deficit.  We know Medicare is already on that road to real catastrophe.  We know these challenges are ahead.  Do you think the Democratic Party, of which you‘re a member, can compromise with the Republicans, if they‘re willing to compromise on taxes, real increases in taxes?


WARNER:  Not everyone, but I have got to tell you, I believe the numbers don‘t lie on this. 

We‘re spending too high, 25 percent of our GDP.  Our revenues are at an all-time or 60-year low at 15 percent.  It doesn‘t take a rocket scientist to realize you have got to move both up in revenues and down in spending.  And, yes, I‘m one of those Democrats that think entitlements have to be part of a discussion. 

If we‘re going to make sure that there is Social Security 50 years from now, if we‘re going to make sure that there is a Medicare program that does protect our seniors in terms of health care, we have got to make some changes on this.  It‘s not frankly either party‘s political fact.  It‘s just plain demographics. 

MATTHEWS:  Well, what‘s the other argument?  Can you voice it?  Is there an argument to go right into August, right into the jaws of defeat, really, for our economy, spiking interest rates, attacks on the bond market, vigilantes, everybody exploiting the situation, America being watched and degraded in the eyes of the world like we‘re Portugal or Ireland or Greece?  Does everybody—is there anybody who sits out there in the left or right and says, yes, let‘s do that? 

WARNER:  Well, Chris, I do hear from some of the guys say, well, I don‘t get what the problem would be if we had a short-term default. 

The thing that is so fundamentally just bizarre to me is we‘re not going to even have the chance to get to August 2.  We‘re going to see some time in the next two weeks, particularly when maybe there‘s a bad day in Europe, because let‘s face it, Europe is not getting their act together any better—

MATTHEWS:  Right. 

WARNER:  -- where some of those folks in New York are going to start saying, well, let‘s start going short.  Let‘s go ahead and start betting against America. 

And that could end up with a snowball effect.  And let‘s face it.  Unlike the crisis of two years ago, we don‘t have the ability for the Fed to kind of ratchet down interest rates anymore.  We don‘t have the ability of another financial bailout, another financial stimulus. 

We have got to take this problem on now head-on.  Candidly, I think it needs to be more than $4 trillion over a 10-year period.  I think that would do more to create jobs, get some of that $2 trillion in cash sitting on the balance sheets off the balance—off the sidelines, back reinvested in this country.  This is a real moment of truth for the whole country. 

MATTHEWS:  Well, it‘s great to have a Democrat who can talk to business. 

Thank you very much, Senator Mark Warner of Virginia.  Thank you, sir.

WARNER:  Thanks, Chris. 

MATTHEWS:  Well, that was impressive. 

Coming up: Tim Pawlenty‘s lame explanation about why he‘s failed to catch fire.  That‘s next in the “Sideshow.” 

You‘re watching it, HARDBALL, only on MSNBC.  


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

First up: great expectations.  Once seen as a front-runner, Tim Pawlenty has slipped to sixth place in Iowa, a must-win state for him.  What happened?  Well, Pawlenty told the editorial board of “The Des Moines Register” this—quote—“This week is the first time that I have campaigned in earnest in Iowa.”

Really?  According to “The Des Moines Register,” Pawlenty has campaigned in Iowa more than any other candidate besides Rick Santorum.  The real problem here is pizzazz, of course, or lack thereof. 

Speaking of Pawlenty, this week, one of his top advisers said that Michele Bachmann, one of his opponents—quote—“had sex appeal,” a comment he, Pawlenty, quickly apologized for. 

Bachmann‘s response? 


REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE:  Well, listen, I‘m 55 years old.  I have given birth to five kids and I have raised 22 foster kids.  So, that sounds like good news to me. 


MATTHEWS: “Good news.”  Well-handled. 

Now to tonight‘s “Big Number.”  Big cuts over at the White House, you could say.  White House, the 50-foot-tall iconic elm tree on the North Lawn was chopped down after being damaged in a thunderstorm this past Sunday.  How long had it stood at the White House driveway?  Twenty-nine years.  A teenage tree when it arrived at the White House, it was planted under Ronald Reagan back in ‘82, a big change in landscape there at the White House, 29 years of history coming down—tonight‘s “Big Number.” 

Up next: right off a cliff.  The anti-tax Tea Party right is pushing Republicans away from any deal on the debt.  Are Republicans willing to tank the economy to keep their base happy? 

You‘re watching HARDBALL, only on MSNBC.  


SUE HERERA, CNBC CORRESPONDENT:  I‘m Sue Herera with your CNBC “Market Wrap.”

Stops—stocks, rather, ending lower today on that dismal June jobs report, the Dow Jones industrials sliding 62 points.  And that‘s well off the worst levels of the day—the S&P 500 falling about nine and the Nasdaq giving up 12 points. 

Horribly disappointing and ridiculously bad, that is how one analyst described today‘s unemployment report from the Labor Department.  Employers added 18,000 jobs in June, well below expectations, and the unemployment rate ticked up to 9.2 percent.  And it was the private sector accounting for all of the jobs created, while, in the public sector, state and local governments continued their slow bleed. 

In stocks, casinos and resorts were among the few winners today, after J.P. Morgan raised its price targets for the Sands, Wynn, and MGM Grand. 

And investors are already looking ahead to the start of earnings season next week, hoping for a second consecutive quarter of double-digit earnings growth.  Alcoa kicks it off after the closing bell on Monday. 

That‘s it from CNBC.  We‘re first in business worldwide—and now back to HARDBALL and Chris.


RICK SANTELLI, CNBC:  This is America.  How many of you people want to pay for your neighbor‘s mortgage that has an extra bathroom and can‘t pay their bills?  Raise their hand. 


SANTELLI:  How about we all—President Obama, are you listening?  We‘re thinking of having a Chicago tea party in July.  All you capitalists that want to show up to Lake Michigan, I‘m going to start organizing. 


MATTHEWS:  That‘s, of course, Rick Santelli of CNBC, creating the name, at least, for the Tea Party.  He‘s now—that was, of course, the infamous battle cry back in 2009. 

And, since then, the Tea Party‘s effectively taken charge of a big chunk of the Republican Party. 

But could the Republicans‘ big engine blow up on them? 

Joshua Green has a piece in TheAtlantic.com called the Tea Party‘s murder-suicide pact, tough stuff. 

And Josh joins us right now, along with a familiar face here, Matt Kibbe, who is the president of FreedomWorks, one of the largest Tea Party organizations. 

Josh, make your charge. 

JOSHUA GREEN, SENIOR EDITOR, “THE ATLANTIC MONTHLY”:  Well, my charge in the column is that the Tea Party has actually won with a great victory already and that, if there‘s any kind of a deal, whether it‘s $4 trillion or $2 trillion, a lot of that owes largely to the effect of the Tea Party. 

We have got Democrats control most of Washington.  And here we are talking about exactly what hard-core conservative Tea Partiers want to be talking about, which is cutting federal spend. 

What I argue in the column is that, if Tea Party pressure forces Republicans to default on the debt, they‘re not only going to take down the economy, but they could take down the Republican Party with them. 

MATTHEWS:  Your reaction to that, Matt? 

MATT KIBBE, PRESIDENT, FREEDOMWORKS:  Well, I do think that the Tea Party has changed the conversation in Washington, D.C.  We wouldn‘t be talking about the debt, we wouldn‘t be talking about the spending problem if it wasn‘t for the Tea Party revolution of the last two years. 

I think the focus on the debt ceiling is a little wrongheaded, because the crisis is with the debt. 

MATTHEWS:  But wait a minute.  Wait a minute.  Wait a minute.  I want to ask you about a fact question.  Do you believe that the deadline for action on the debt ceiling is real? 

KIBBE:  Yes, I do. 

MATTHEWS:  You believe that, if we don‘t do it, there is going to be a real crisis in the world? 

KIBBE:  I do—there‘s some give.  Treasury does have some ability to move things around, but, eventually, we will have to raise the debt ceiling. 

MATTHEWS:  So, we have to have a deal? 

KIBBE:  We have to have a deal. 

MATTHEWS:  How far are you willing to go?  Are you willing to go as far as Josh is saying, with a death-suicide pact of saying, we will bring down this government if we don‘t get our way on taxes? 

KIBBE:  Well, understand, Washington won‘t fix this problem until they have exhausted every other conceivable possibility. 

They‘re posturing now.  They don‘t want to cut spending.  You know, this is all talk.  So, what—I think what the Tea Party is doing, it‘s a citizen army of pressure forcing politicians to do something they don‘t naturally want to do, which is cut the deficit and cut the debt.


KIBBE:  But if we don‘t do something big, if we don‘t do something bold and something real, unlike what happened with fiscal ‘11 debates, we will not get out of what looks like a real sovereign debt crisis for our country.

MATTHEWS:  How far you—I want to quote David Brooks here right now.  Quote, “Over the past few years”—this is David Brooks of “The New York Times—“the Republican Party has been infected by a faction that is more of a psychological protest than a practical governing alternative.  If you ask them to raise taxes by an inch in order to cut government spending by a foot, they‘ll say no.  To members of this movement, tax levels are everything.  Members of this tendency have taken a small piece of economic policy and turned it into a sacred fixation.”

Are you sacred about taxes to the point where if you were offered a three or four to one trade, spending cuts in exchange for revenue increases of some kind, would you say no because you don‘t want revenue increases?

KIBBE:  I would love to do tax reform.  I would love to cut all this garbage out of the tax code.  I hate the fact that we use it for social engineering.  Number four on the Contract from America, which is a Tea Party manifesto of sorts, is fundamental tax reform.

So, we‘re all for that, but this is a spending problem.  This is a -- 

MATTHEWS:  So, you would accept a very good deal?

KIBBE:  Why would you -- 

MATTHEWS:  Would you accept a deal?

KIBBE:  Why could you talk about revenue when we have a spending problem?

MATTHEWS:  No, would you accept a deal, with large amount of spending



KIBBE:  Is the question—

MATTHEWS:  No, in other words, are just being cute in saying, “We won‘t accept any revenue increase under any deal”?

KIBBE:  No, I‘m saying if they put real spending on the table then we can start talking.

MATTHEWS:  OK.  So, it sounds like he‘s not part of the suicide pact? 

He‘s willing to deal?

GREEN:  Well, that‘s depends.  I mean, you know, there‘s going to be negotiations this Sunday.  They‘re going to come out with some deal.  And if you talk to any Democrat, that deal has to include revenue raisers.  And that‘s the brighten line the sand that lot of Tea Party folks won‘t agree to.

MATTHEWS:  OK, let‘s talk about something people are not going to deal, because it seems to me there are people who want to deal on the reasonable circumstances.  I mean, a reasonably good deal for the conservatives.  And some who wouldn‘t mind catastrophe.

One of them I believe is Eric Cantor who I believe wants to be speaker.  Here he is today.  Let‘s listen.


REP. ERIC CANTOR (R-VA), MAJORITY LEADER:  Look at these job numbers.  I mean, I asked the other side today, think now is the good time to raise taxes on small businesses and working families?  They‘ve got to be kidding if they think now is the time to raise taxes.

So, again, I‘m hopeful that on Sunday we can all get together and realize you can‘t raise taxes but get the spending cuts done that we can get done.  Let‘s go in and make the changes to the obligations this country‘s got out into the future so people can regain their confidence and know that we have a government that is responsible in the stewardship of taxpayer dollars.


MATTHEWS:  His posture is—tell me if it‘s true—is he part of the suicide pact, is he leading the Tea Party?  Eric Cantor, the number two Republican—is he saying, not no taxes in the short term—which I think is his posture, I don‘t think anybody wants short term taxes during this continued bad time.  But if he‘s against any revenues at any time in the next 10 years, I think he is part of a suicide pact.  Where are you on this?

GREEN:  Well, I think he‘s definitely trying to court the Tea Party movement and setting himself up in case Boehner failed.

MATTHEWS:  Is he part of this suicide pact?

GREEN:  I think he could be.  But I think he‘s also conflating to things here.  Nobody‘s talking about raising taxes.  They‘re talking about what Matt talked about, which is closed some o these loopholes.

MATTHEWS:  Revenues down the road.

GREEN:  Well, revenues down the road could be closing—you know, spending in the tax code, that sort of thing.  It isn‘t necessarily raising, you know, marginal income tax rates.

MATTHEWS:   Let me ask you about some of the people that are—I think they are recruits like St. Paul on the road to Damascus.  I would say they‘re converts of—well, dramatic change in their lives, not to knock St. Paul, one of my heroes.  Of course, all our Christian heroes I should say.

But Orrin Hatch, who‘s a classic, established conservative, has decided that he‘s a real Tea Party favorite right now.  Is he one of the guys now who‘s saying, no—tax the poor, stop taxing the rich—and what do you make of his latest conversion comments?

KIBBE:  Well, there‘s actually a six-year Orrin Hatch cycle where every fifth year he rediscovers his fiscally conservative roots.  So, you‘re just seeing a trend that we‘ve seen for 35 years.

I think that the bottom line is that neither Republicans or Democrats ever want to cut spending, and they respond to political incentives.

MATTHEWS:  Explain that to the public right now.  We have a politically astute audience on HARDBALL.

KIBBE:  Right.

MATTHEWS:  Why do people—I accept you‘re a man of the right.  I think you‘re authentic.  Why do people who are in public life hate to cut spending?  Anybody hates to cut it.

KIBBE:  Because that‘s how you buy votes, that‘s how you buy re-election, that‘s how you grow your power.  And there‘s constituencies all over America that represent every little piece of the federal budget.

So, we have to—

MATTHEWS:  So, you accept it‘s not waste and fraud?  You‘re not into one of those people, all you have to do is cut spending is get rid of waste and fraud.  You realize every check is made out to Mr. and Mrs. Somebody, that somebody is getting those checks.  That‘s why they don‘t want the spending cut.

KIBBE:  Well, there‘s a lot of special interest getting those checks.

MATTHEWS:  Yes, but there‘s checks written out to people and organization, they want the money.

KIBBE:  Right.  Well, everybody wants the money.

MATTHEWS:  Right.  This is a big development intellectually, you guys are admitting, that the checks are going somewhere.

KIBBE:  Sure they are.  But maybe they‘re going to defense contractors, maybe they‘re going to ethanol corporate magnates.  All these things need to be—

MATTHEWS:  You‘re the real thing.  You‘re the real thing, Matt.  You are.  Thank you for coming on.

Josh, thanks so much for this warning.  Thank you, Josh Green.

Thank you, Matt Kibbe.

MATTHEWS:  Up next—by the way, you got along in the green room.  I like that.

Up next, over in Britain, “News of the World,” that trash paper that comes out on Sunday that everybody buys about scandal, it‘s out of business.  And one reason is a former top aide to Prime Minister David Cameron, he used to work there, has been arrested.

So, how cozy are the Tories, that‘s the governor party in Britain right now, with Rupert Murdoch‘s empire which includes FOX television, and just recently, “The News of the World”?

This is HARDBALL, only on MSNBC.


MATTHEWS:  Well, Casey Anthony‘s release date from jail has been pushed back four days.  She‘s now set to go free next Sunday.  Jail officials in Florida say Anthony refused to see her mother who scheduled a jailhouse visit, refused to see her.

Anthony‘s stunning acquittal earlier this week has given momentum to online petitioning, calling for major changes to missing children laws in this country.  Supporters say Caylee‘s law, named for Anthony‘s 2-year-old daughter, would make it a federal crime if parents fail to notify authorities of a missing child within 24 hours or a child‘s death within one hour.

We‘ll be right back.



DAVID CAMERON, BRITISH PRIME MINISTER:  The truth is, to coin a phrase, we‘ve all been in this together.  The press, politicians and leaders of all parties—yes, including me.


MATTHEWS:  Well, we are back.

That was British Prime Minister David Cameron today as the scandal hit his own team.  His former top communications aide was arrested earlier today in connection with phone hacking and bribery by reporters for the Rupert Murdoch owned “News of the World” tabloid.

For more on this bombshell across the pond, let‘s bring in reporter Toby Harnden of “The London Daily.”

Tell the American people watching right now who aren‘t up on this, what is the scandal involving—hacking and cell phones and whatever—that really caused this scandal to explode?

TOBY HARNDEN, THE DAILY TELEGRAPH:  Well, just an incredible story.  People in Britain are talking about nothing else.  It goes back to 2006 when a royal correspondent for the “News of the World” was arrested, accused of tapping phones of Prince William and other members of the royal family, pleaded guilty.  An investigators pleaded guilty as well, went to jail for short periods.

And in that time, it was sort of contained and the police said it was just a rogue reporter and “News of the World” said it was a rogue reporter.  Two years ago, “The Guardian” newspaper in particular, followed by “The New York Times” really started to investigate this.  And it became more and more clear that there were more and more people involved and talk of up about 4,000 people‘s phones being hacked.

Now, the thing that really changed this week was on Monday when it went beyond just being sort of politicians and celebrities and footballers.  And it turned out that victims of terrorism, the relatives of soldiers who had been killed and the phone of a missing 13-year-old girl who subsequently turned up to be murdered, they were all hacked.  And then there was—there was just really public outrage over this.

And the whole thing—

MATTHEWS:  And the horrible wrinkle in this is that people thought this young girl was still alive because her phone messages were being taken off by somebody.


MATTHEWS:  It was the newspaper.

HARNDEN:  Yes.  I mean, absolutely.  It wasn‘t just the sort of morality of it.  But the practical implication of the police thinking, you know, the girl is accessing her own phone.  She is deleting messages.  Maybe she‘s still alive and the anguish obviously that that caused the family.

MATTHEWS:  And how is this connected to the British government right now, the Tory government?

HARNDEN:  Well, I mean, it‘s not just the Tory government.  I mean, governments going back for one, two decades, have caught it, Rupert Murdoch, the News International, and believe that they couldn‘t get to existing power without Murdoch‘s support, really and the support of big newspapers like—

MATTHEWS:  Is Murdoch hated in Britain?  What‘s the image of the guy over here?  Here he is sort of polarizing, the right wing like him -- 

HARNDEN:  Yes, it‘s the same in Britain.  And he has taken a big dive this week.

MATTHEWS:  He‘s closed down the smutty newspaper, “The News of the World,” as of this week.

HARNDEN:  Yes, but it could just be a tactical move.

MATTHEWS:  To allow “The Sun,” this other paper, to get -- 

HARNDEN:  To allow “The Sun” to publish on the seventh day, to close down a toxic brand and to sort of cut off the limbs -- 


MATTHEWS:  Well, here we is, Prime Minister Cameron speaking today about his former aid, Andy Coulson, who was arrested today.  Let‘s listen.


CAMERON:  First, Andy Coulson who worked for four years as my director of communications, he resigned from “The News of the World” because of the things that happened on his watch.  I decided to give him a second chance.  And no one has ever raised serious concerns about how he did his job for me.  But the second chance didn‘t work out.  And he had to resign all over again.  The decision to hire him was my mine and mine alone, and I take full responsibility for it.


MATTHEWS:  What do you mean it didn‘t work out if you give this guy a second chance?

HARNDEN:  Well, either Coulson lied to Cameron or Cameron knew as much more to it.

Now, the problem with this is, Cameron was warned repeatedly by many people that phone hacking scandal was much bigger than what Coulson said.

MATTHEWS:  Quick, bottom line, will this hurt the government?  Bring it down?

HARNDEN:  I don‘t think it will bring it down, but this story has a long, long way to run and Cameron is in really deep trouble.

MATTHEWS:  Toby, thanks for coming in.  Toby Harnden, coming in, for “The Telegraph.”

When we return, “Let Me Finish” with today‘s final takeoff of the space shuttle, and whether we still have the spirit of adventure that Kennedy had back in the ‘60s.

You‘re watching HARDBALL.


MATTHEWS:  “Let Me Finish” tonight with today‘s take off—the last take off of the U.S. space shuttle.

A million people were there at Cape Canaveral, to watch it—this 135th shuttle mission, the beginning of a long dry spell in American space travel.  How fitting or faithful that the Atlantis shuttle took off from the same launching pad as the Apollo astronauts once did.

Let‘s listen to the president who did the launching back then.  Here is Jack Kennedy at Rice University back in ‘62.


JOHN F. KENNEDY, FORMER U.S. PRESIDENT:  The exploration of space will go ahead, whether we join in it or not.  And it is one of the great adventures of all time.  And no nation, which expects to be the leader of other nation, can expect to stay behind in this race for space.


MATTHEWS:  And here he is offering up that same “go for it” spirit that he and America once personified.


KENNEDY:  But why, some say, the moon, why choose this as our goal?  And they may well ask, why climb the highest mountain?  Why 35 years ago fly the Atlantic?  Why does Rice play Texas?

We choose to go to the moon.  We choose to go to the moon.


KENNEDY:  We choose to go to the moon in this decade and do the other things, not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we‘re willing to accept, one we are unwilling to postpone and one we intend to win and the others, too.


MATTHEWS:  Well, the question, is it yours, is whether this country is still fueled by that same pioneer spirit that Lindbergh used to cross the Atlantic, the great John Glenn did in orbiting the earth and that Jack Kennedy had in taking us to the moon?  And do you still have that pioneer spirit?  Great question.

And that‘s HARDBALL for now.  Thanks for being with us.

And we want to say goodnight tonight and good luck, rather, to our longtime producer, Brooke Brower, who‘s moving on to be a senior producer at the “DAILY RUNDOWN” on this network with Chuck Todd.  Congratulations, Brooke, and thanks.

Have a great weekend, everybody.

More politics ahead with Al Sharpton.



Copyright 2011 CQ-Roll Call, Inc.  All materials herein are protected by

United States copyright law and may not be reproduced, distributed,

transmitted, displayed, published or broadcast without the prior written

permission of CQ-Roll Call. You may not alter or remove any trademark,

copyright or other notice from copies of the content.>