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'Hardball with Chris Matthews' for Wednesday, July 13, 2011

Read the transcript to the Wednesday show

Guests: Steve King, Jim McDermott, Robert Reich, Gabriel Sherman, Judd Legum, Jonathan Martin, Joan Walsh


Let‘s play HARDBALL.

Hi.  I‘m Chris Matthews down in Washington. 

Leading off tonight: Too big to fail?  Here are the two things you can take away from Mitch McConnell‘s offer to allow the debt ceiling to be raised.  One, we are no longer looking at Democrats versus Republicans or liberals versus conservatives.  This is now a fight between the leaders and the protesters, between people who are responsible for America‘s financial health and those who never have to worry about an election.

Second, money talks, BS walks.  When major financial groups told the GOP that default was not an option, they suddenly saw the light.  As Phil Gramm once said, Don‘t take a hostage unless you‘re prepared to shoot him.  Republican leaders are not prepared to shoot the U.S. economy.

The other thing we learned is that many on the right only pretend to

care about the debt.  What they really care about is shrinking government -

they want to do that—and lowering taxes.  They want to do that. 

Tonight, we‘re going to put a spotlight on the unsupported Republican claim that somewhat higher taxes for the better-off means fewer jobs for everyone.

Also, the Rupert Murdoch scandal has claimed another victim.  Murdoch has now dropped his bid to buy British Sky Broadcasting.  Tonight: Will the scandal cross the Atlantic Ocean and threaten Murdoch‘s holdings—and they are big—here in the States?

And the latest poll on Republicans may show that Mitt Romney is in more trouble than we think.  He‘s ahead all right, but Michele Bachmann is surging.  And the crowd up for grabs right now on the Republican side is Bachmann-friendly.

“Let Me Finish” tonight with the person who just may break the stranglehold that threatens to take down the U.S. economy.

We start with the fight for a debt ceiling deal.  U.S. Congressman Steve King‘s a Republican from Iowa.  Let me ask you—Congressman King, thank you for joining us.

REP. STEVE KING ®, IOWA:  Hi, Chris.

MATTHEWS:  Let me go over some highlights of the McConnell plan we‘ve been talking about.  It essentially frees the debt ceiling from the deficit fight, as you know.  If enacted, President Obama would be able to ask for $2.5 trillion over the next year in three installments, as long as he offers up spending cuts.  Congress could then vote against raising the debt limit, but Obama would have veto power, of course.

You‘re opposed to that.  Why, sir?

KING:  Well, I am because it passes the congressional responsibility -

in fact, that‘s in Article 1, Section 8.  It passes the congressional responsibility over to the president and it puts him in the position to veto the objections of Congress about raising the debt ceiling.

So it sets the scenario by which it requires a super-majority to say no to a debt ceiling.  Right now, it requires a simple majority to say no to debt ceiling, and that is our constitutional obligation.  We shouldn‘t pass it off to the president.


KING:  I‘ve said that puts the fox in the henhouse.

MATTHEWS:  OK, Republican congressman Joe Walsh of Illinois, a Tea Partier, went after the president today, calling him a liar in a video message today.  Let‘s watch what he had to say.


REP. JOE WALSH ®, ILLINOIS:  President Obama, quit lying!  You know darn well that if August 2nd comes and goes, there‘s plenty of money to pay off our debt and cover our—all of our Social Security obligations.  And you also know that you and only you have the discretion to make those payments.

But have you no shame, sir?  In three short years, you‘ve bankrupted this country and destroyed job creation.  You‘re either in over your head, you don‘t understand what makes this country great, or you‘re hell-bent in turning us into some European big government wasteland.


MATTHEWS:  European big government wasteland.  What does that mean, exactly, that kind of a charge, sir?

KING:  Well, I think that‘s a bold statement on the part of Joe, and it‘s all right for him to play a little hardball with the president.

MATTHEWS:  Well, what‘s “European wasteland”?  What are we talking about, European wasteland?  And by the way, do you agree with him that the government is not going to go into default in early August if you don‘t pass the debt ceiling?  Do you agree with him on that?

KING:  First, the wasteland part of this thing, I can—we can—we can see it across the states like Pennsylvania and Ohio and other states.  Michigan would be another.  We haven‘t kept our investment.  There‘s not the optimism for the capital investment.  Money is sitting on the sidelines.

So where I stand on this is—I think the president may well—and he did yesterday—implied the threat that senior citizens might not get their Social Security checks.  He said, Eat your peas and we can‘t guarantee our veterans‘ pension payments or our Social Security checks coming in.

I think what I‘ve done today with Michele Bachmann and Louis Gomert, introducing the Promises Act (INAUDIBLE) and it directs this, that we pay our military first.  They‘re in uniform.  Their lives are on the line and their families are living paycheck to military paycheck and they become a political pawn instead.  They should be guaranteed to be paid first for all time.

And we need to service our debt.  And that needs to also be guaranteed for all time.  That conserves right now about 15.2 percent of our revenue stream before you touch the part that we‘re borrowing.  So we can do this.  And Social Security needs to be paid, as does the military.  And so that‘s what we‘re trying to do is to lend—

MATTHEWS:  So wait a minute.  What‘s your—let me—

KING:  -- some confidence to the markets.

MATTHEWS:  Let me get you straight.  You don‘t believe we go into default.

KING:  No.

MATTHEWS:  You believe that Geithner is lying, the president‘s lying, McConnell‘s wrong.  Everybody in the country is worried about this, but you have some superior knowledge.  What basis do you have for your judgment?  Where do you get—

KING:  Yes, I do!

MATTHEWS:  -- the information from?

KING:  I do have superior knowledge.  Thanks for recognizing it.  I have watched this—

MATTHEWS:  Where have you got it from?

KING:  -- come out of the White House and I‘ve watched this transition.  I‘ve listened to the administration, the executives that are part of this administration.  Many of them will say what the president wants them to say.  You have to put that through a filter before you can figure out what the truth is.  That‘s not a mystery.  It‘s not unique knowledge, but it‘s common knowledge.

MATTHEWS:  So they‘re all—so Jack Lew, the OMB director, the treasury secretary, everyone around the president, the business community that‘s now scared to death, Tom Donohue, head of the U.S. Chamber, all those people are lying, and you‘ve got the truth.

KING:  Yes.

MATTHEWS:  You and Bachmann have the truth.

KING:  Here‘s what I‘ll tell you, is, that if you look at the Joint Chiefs of Staff, who shifted their position on “Don‘t ask, don‘t tell,” it‘s—you can‘t convince me that they actually changed their mind.  Their commander-in-chief changed their mind, just like he changes the mind of his cabinet.

So when you listen to the cabinet, read through the tea leaves and think about what‘s the process here.  If the president is going to decide who he‘s going to pay with the 58 percent of our current expenditures that‘s coming in in revenue stream—


KING:  -- if he won‘t take the oath that he‘ll pay the troops first and service our debt second, then he is using the threat of—


KING:  -- a financial calamity to try to get his debt ceiling increase.

MATTHEWS:  But I‘m just asking you, do you believe the United States goes into default if Congress doesn‘t act in the next week or so?

KING:  If they pass my bill, no.

MATTHEWS:  No, but do we go into default—

KING:  If the president honors the theme of my bill, no.

MATTHEWS:  So if the United States doesn‘t—if we don‘t pass the debt ceiling, you don‘t worry about that.

KING:  I think that we have plenty of money to service our debt.  But the message that‘s going out is creating unstable markets today because they‘re beginning to wonder—


KING:  -- if the president will or will not service the debt.  And it should not be his discretion.  Congress should put the bill on his desk.

MATTHEWS:  You have just compared, sir, the decision over policy, “Don‘t ask, don‘t tell,” with the president of the United States, who‘s also commander-in-chief under our Constitution, has made a policy judgment to get rid of it and he‘s supported by his cabinet and his Joint Chiefs.  You‘re comparing that to an objective statement that we face default if we don‘t pass the debt ceiling.  That‘s a screwy comparison!  One has to do with policy—

KING:  No, your listeners understand that, Chris!

MATTHEWS:  -- one has to do with information and knowledge.

KING:  Your listeners understand it, and so do the people I‘m dealing with.  They understand that.  They know that when you get—

MATTHEWS:  Who are the people you‘re dealing with?

KING:  The American citizens who will select the next president of the United States, who elected the majority in the United States House of Representatives—


KING:  -- that‘s who!

MATTHEWS:  So you‘re polling in your district to find out whether the United States goes into default or not at the end of this month.  It‘s your district that‘s telling you this information.  They know what‘s going to happen within the international economic situation.

KING:  Chris, here‘s another thing.  I know this is a revelation, but I have an independent judgment, as well.

MATTHEWS:  OK, tell me where it comes from.

KING:  (INAUDIBLE) independent judgment.  It comes from a long experience of dealing politically and in business and raising a family and being an American citizen, just like the independent judgment of my constituents.  The republican form of government—

MATTHEWS:  What does raising a family teach you about—

KING:  -- that‘s guaranteed by the Constitution-

MATTHEWS:  -- international finance?

KING:  -- requires me to use independent judgment!

MATTHEWS:  Where do you get a knowledge—where does knowledge about international finance derive from raising a family?  What‘s the connection?

KING:  That‘s not my only source of information is raising my children.  There are many other sources of information.  And I gather that, just like you do.  I mean, you seem to have an independent judgment—


KING:  -- to be my critic.  So you know, I could challenge you the same way.

MATTHEWS:  No, no.


MATTHEWS:  Do you trust “The Wall Street Journal”?

KING:  -- legitimate comparison.

MATTHEWS:  Do you trust “The Wall Street Journal”?  Do you trust “The New York Times”?

KING:  I read “The Wall Street Journal.”

MATTHEWS:  Do you trust—

KING:  I sometimes read “The New York Times.”  I don‘t really trust—

I don‘t trust the words of any source.  You‘ve got to put that all together and draw your own independent judgment.

MATTHEWS:  Do you trust the U.S. Chamber of Commerce?  Do you trust the major corporations when they say we‘re in trouble here if we don‘t pass the debt ceiling?  Do you trust any of these organizations or leaders?

KING:  I sit in my office day by day doing hours of meetings, challenging all of those entities that you‘re talking about in one way or another.

MATTHEWS:  All at once?

KING:  Not all at once, individually.  I‘ve got to put together my own independent prudential judgment—


KING:  -- as do all Americans.

MATTHEWS:  (INAUDIBLE) U.S. congressman and you have the authority to make this judgment.  Let me just ask you, cite one international expert that says we don‘t have a problem if we don‘t pass the debt ceiling.  Just cite one that you have trust in.

KING:  Listen, I have trusted—

MATTHEWS:  Just one you have trust in.

KING:  I don‘t need to go to an international expert.  We don‘t have an international law and we don‘t have an international financial institution here, it‘s just affected by international finances.  So my judgment is this—



MATTHEWS:  Give me one national expert, one U.S. citizen you trust on this issue who is an expert in international finance.

KING:  The bill that I introduced today is the bill that adds stability to our international financial markets.


KING:  And find one who will disagree with that!  That‘s what I challenge you to do.

MATTHEWS:  OK, so basically—

KING:  They‘d all agree that if we guarantee—


KING:  -- we‘re going to service our debt, it‘ll be more stability. 

And every international expert will tell you that.

MATTHEWS:  OK.  OK, thank you—

KING:  Thanks.

MATTHEWS:  Thank you, U.S. Congressman Steve King, for coming on


The Associated Press is reporting that Moody‘s has put the United States government debt on review for possible downgrade.  That‘s a fact.  And that just came out.

Joining me now is Democrat Jim McDermott of Washington.  I don‘t know where you stand, Congressman.  Are you with Mr. King that we can push off on this national debt question through this month into August and let this ride?  Or do we have to act on it now?

REP. JIM MCDERMOTT (D), WASHINGTON:  We absolutely have to act to it now, Chris.  I voted already for a clean raising of the debt limit several weeks ago because I think it is a real catastrophe for us to allow these people to play with the debt like it‘s dynamite.  These are little kids playing with sticks of dynamite.

MATTHEWS:  Well, you just heard—you just heard that kind of conversation going on.  My question to you, with all respect to people left, right and center who‘ve been elected to Congress, you‘re in the minority now, sir, Mr. McDermott.  You‘ve got people—the Tea Party-run Republican Party calling the shots on the Hill, and it looks like they‘re quite willing on the House side, especially among the back benchers, to let this thing go to catastrophe.

They don‘t want to cut a deal.  We have McConnell, the senator—I do respect his brain.  He said no Republican is going to vote for a debt ceiling increase the other day.  Actually, he said it today.  Aren‘t you worried that the Republican Party is willing to bring down this economy?

MCDERMOTT:  I am.  Senator McConnell said at the beginning of this session, My goal is to prevent President Obama from being reelected.  And they are willing to sacrifice everything, it seems, including the American economy, to take back the White House.  That seems to be the sole thing driving them.  It‘s bad politics.

I am very worried.  I went through a loss of debt—a loss of bond rating in the state of Washington.  I know what happens to your costs.  Every percent that Wall Street charges more in interest because of our downgrading will be a trillion dollars in debt.  That‘s a terrible price to pay for this foolishness that‘s going on right now!

MATTHEWS:  What‘s wrong with the McConnell plan in its crudest form, which is to separate the issue of debt ceiling extensions, which we have to do to save our economy this coming month, and the long-term fight between left and right over the deficit?  Why can‘t we separate the two?  I think that‘s what you want to do.  You said you want you said a clean bill.  Isn‘t this what McConnell‘s offering, in a sense?  He‘s letting these issues go in separate directions?

MCDERMOTT:  Well, he is to a certain extent, Chris.  But what he‘s really saying is, I want to have three votes in the next year-and-a-half before the election.  We want to play out this thing over and over again, where the Republicans will put a bill out, the president will veto it, then it will be brought back to the House and Senate.  And we won‘t be able to override, so the president will go ahead and do it anyway.

It is simply trying to shift all the problem onto the president and

refuse to take responsibility for their unwillingness to put the wars and

the tax cuts and all of what‘s gone on in the last 10 years on their watch

they want to put it all on the president.

MATTHEWS:  OK.  Congressman, what would you do if you were president right now?

MCDERMOTT:  I‘d call the president—

MATTHEWS:  Not a congressman from Seattle, but president of the United States.  What would you do?

MCDERMOTT:  I would call them in and say, Look, you know where my home is.  You know my phone number.  I‘ve put things on the table.  You have walked away from the table and gone out on the driveway of the White House and said, We‘re walking away.  I put something else on the table, you walk away and say that‘s not good enough.

They always want more.  So when you‘re ready to talk to me, you know my phone number, give me a call.

MATTHEWS:  What happens at the end of next week, when we don‘t have a debt ceiling bill?  What do you do then, when they don‘t call back?

MCDERMOTT:  Well, then they are going to take responsibility.  He has gone way farther than some of my colleagues want him to go in offering things to them as part of a $4 trillion cut.

MATTHEWS:  Look, your narrative is fine with me, sir, but the problem is, what happens at the end of the next week when we don‘t have a debt ceiling bill and you‘re president of the United States?  Don‘t you have to guarantee the good trust and faith and credit of the United States government and act and cut the deal you have to cut?  Or what do you do?  What do you actually do when all this back and forth and this tit for tat and the fight‘s over and everybody‘s worried—what do you do?

MCDERMOTT:  Mitch McConnell blinked today, and he will blink by the end of next week and we will have something put on the table by the end of next week.  The Republican—

MATTHEWS:  You might be right.

MCDERMOTT:  -- adults understand they cannot let this happen.


MCDERMOTT:  They know that.

MATTHEWS:  OK.  You know what the speaker said—

MCDERMOTT:  It‘s going to be a terrible week.

MATTHEWS:  Your speaker—and he is your speaker, even if you‘re a Democrat—you know what he said?  It‘s a crapshoot.  And I think you agree.  And that‘s the scary part of this, sir.

MCDERMOTT:  Yes, it is.

MATTHEWS:  But you may be right.  Maybe there is a blink coming from the other side, but it‘s very risky.  Thank you, sir.

MCDERMOTT:  Thank you.

MATTHEWS:  You‘re always welcome here, Congressman Jim McDermott of Washington state.

Coming up: Well, what about this Republican argument—you hear it over and over again—that lower taxes somehow mean more jobs, and even a slight increase in taxes for the better off means the end of jobs?  Has anybody ever questioned that simple, simple argument?  And I mean simple.  We‘re going to question it when we come back.  We got an expert coming here, Robert Reich.

You‘re watching HARDBALL, only on MSNBC.


MATTHEWS:  Well, Democrats in Wisconsin are a step closer to taking back control of the state senate out there and putting the brakes on Governor Scott Walker‘s anti-union agenda.  Six Democratic (INAUDIBLE) beat phony Democrats, Republicans posing as Democrats, in primaries yesterday.  And now those six will go on to face Republican incumbents in recall elections next month.  If those Democrats—if just three of them win races next month, they‘ll win control of the Wisconsin Senate.  Boy, that fight over labor.

We‘ll be right back.


MATTHEWS:  Welcome back to HARDBALL.  Joining me right now is former labor secretary Robert Reich, author of “Aftershock: The Next Economy and America‘s Future.”  Robert, thank you so much for joining us, Mr.  Secretary.  This is an important time—


MATTHEWS:  -- for you to come on.  We need expertise.  We‘ve just heard from a—let‘s call him a generalist congressman from the Midwest, who represents the thinking of common sense.  But I want something a little higher level than that.

Here‘s Moody‘s Investors Service just came out this moment.  It‘s placed the AAA bond rating of the government of the United States on review for a possible downgrade, given the rising possibility that the statutory debt limit will not be raised.  So tell me what that means.

REICH:  Well, it means that Wall Street and big business, Chris, are putting increasing political pressure on Congress, on Republicans and on Democrats.  And after all, Wall Street and big business, that‘s where the money is.  They are major contributors.  They‘re putting increasing pressure to make sure that there is absolutely no problem with raising the debt limit.

Obviously, if there is a problem and Moody‘s does downgrade that AAA rating, that means interest rates go up because all investors all over the world, including American lenders to the United States and foreign lenders to the United States—all of them get more nervous and demand higher interest rates as a condition for making the loans.

I don‘t think that is going to happen.  The fact that Moody‘s made this particular downgrade warning is itself a political act that is basically saying to the Republicans and Democrats, do what Mitch McConnell wants.  Do whatever you have to do, but get this done. 

MATTHEWS:  Sure, but what about the Tea Party crowd?

Robert, Robert, the Republican Party is not—as you know as well as I do, is not the party we grew up with.  This is not the Henry Cabot Lodge Republican Party.  This is not the Everett Dirksen party.  This is a party now that is populated at its grassroots by a lot of Tea Party people who don‘t give a rat‘s butt about these questions we‘re dealing with. 

They can say things like—the lady from Wasilla, the governor out there can say, well, my common sense teaches me, in raising my kids, I have learned.  And they don‘t have to know anything.  They just operate from this horse sense they talk about. 


MATTHEWS:  Go ahead.

REICH:  Well, Chris, the fact of the matter is the Republicans, and particularly Republican leadership—Boehner and McConnell know this.  They don‘t want to be blamed for a financial calamity.  And it would be a financial calamity if the debt ceiling is not raised. 

This is where McConnell‘s compromise is coming from. 

MATTHEWS:  Right. 

REICH:  McConnell is saying, let‘s separate the issue of the debt ceiling from the issue of the budget.  This is a major capitulation to common sense. 

MATTHEWS:  Let‘s go back to where they do win an argument, the Republicans, it seems to me, over and over again.  And I brought you on because I want you to talk about this. 

Here‘s Speaker John Boehner on the Republican talking point, the one they love, about the relationship, they argue, because taxes and jobs.  Here‘s their religious argument.  I want you to go through it as perhaps an agnostic on this one.  Let‘s this one.


REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE:  The American people understand that tax hikes destroy jobs.  And the last thing we should be doing right now at a time of 9.2 percent unemployment is enacting more government policies that will destroy jobs. 


MATTHEWS:  You know, Robert, when I learn I have got to pay more taxes out of my income—and I‘m not complaining much, because I have lived with it all my life—I say I have got to work harder. 

The Republicans claim that you work less hard when your taxes go up because you are making less money.  I would argue common sense says the less real money you‘re taking home, the harder you will work.  But tell me where this comes from, this argument they keep selling us.  If my taxes go from 39.6 down at the top down to 35, I‘m not going to work less.  I don‘t know who is.  Why do they keep saying that? 

REICH:  Oh, because it‘s part of almost an orthodoxy.  It comes from supply-side economics founded in—really in 1980. 

It was a basic platform of the Reagan administration.  It is Arthur Laffer and all of the Laffer Curve. 



REICH:  The reality, Chris, is that there‘s almost no empirical basis for the claim that raising taxes will reduce economic growth. 

In fact, most of the evidence we have historically is exactly the opposite.  Look what happened after George W. Bush lowered taxes on the rich. 


REICH:  Did we get an explosion of growth?  No.  Did we get a lot of new jobs?  In fact, we had about eight million jobs during the Bush administration, which is half what we typically get in a recovery. 

Under the Clinton administration—

MATTHEWS:  Mr. Secretary, let‘s look at the chart.  Let‘s show that chart.  We like to do graphs when you talk.  Here‘s the chart from “The Washington Post.”  It shows there was a 20 percent net job growth in this country in the ‘80s under Reagan, and in the ‘90s, there was another 20 percent growth under Clinton, who raised taxes somewhat.

And then you see zero growth under Bush, who cut them.  By the way, it seems like Republicans think tax cuts are an all-occasion greeting card.  If you have a surplus, like President Clinton left President Bush, as you know—you were a part of that—well, we have to cut taxes then.  If we have a recession threat, we have to cut taxes then.

They have to cut taxes all the time because it‘s always for their crowd.  Isn‘t that why they do it; they just don‘t want to pay taxes? 


REICH:  Yes, and, Chris, this is an important point.  It‘s not just cutting taxes.  It‘s cutting taxes on the rich. 

And, you know, if it just were simply a matter of cutting taxes, I don‘t think Democrats would be opposed to cutting taxes for average working people.  In fact, Democrats have advanced many proposals for cutting taxes on low-income and average working people.

No, what the Republicans continue to say is you must reduce taxes on the rich.  The fact of the matter is that before the mid-1970s, we in this country, between the end of World War II and the middle of the 1970s, it was—we never had a marginal tax rate on the highest-income people below 70 percent. 


REICH:  And yet the economy grew in those years faster than it has grown since. 

We have—there‘s no basis—there‘s no trickle down from trickle-down economics.  Look what‘s happened to wages.  Ever since Bush actually reduced taxes on the very wealthy, the median wage has actually declined.  We haven‘t seen anything like that in this country in a recovery, so-called recovery. 

MATTHEWS:  How come in the ‘30s, when we suffered a far worse economic decline, the rich were embarrassed?  They were embarrassed by what they had done.  People were jumping out of buildings.  People were—it was horrendous.  There was a real sense of shame, shame by the very rich. 

This time around, the response by the really better-off people is, give us more.  We blew it, we screwed it up, we destroyed our markets, we killed Wall Street, we have said we‘re too big to fail, now give us more. 

The reaction is totally different than it was.  There‘s no shame anymore about wealth abused. 


REICH:  I don‘t think there is any shame. 

Partly, Chris, I think it‘s because that shock to the American economy in 1929, 1930, ‘31, ‘32 was so deep and so widespread.  One out of four Americans was unemployed.


REICH:  But you had also a sense that the entire country was directly threatened. 

Now, although the shock is very, very high, and the economy is not growing by any appreciable amount, people do sense that somehow things are going to get a little bit better, the economy is not as threatened, and we‘re not all in the same boat. 

And I think that‘s the critical issue.  We‘re no longer in the same boat.  After World War II, there was enough social cohesion so that people at the very top, CEOs, people on Wall Street, did not—it was just unseemly to take huge salaries.  That‘s gone. 


MATTHEWS:  Yes.  Yes. 

I got to tell you, I‘m leaning more to you and Krugman.  I mean, Krugman is a bit further left perhaps.  But I lean more and more to the argument right now—your thought on this—we need to create jobs.  The government has got to stop talking about it and start creating it, public service jobs, public works jobs.

There are whole numbers of jobs in the EDA and in public works that are available to start, bridges.  I drive over roads in Washington that are terrible.  I see bridges that are rickety.  We know about this.  Why don‘t they fix them, stuff that‘s real now to do?  Why don‘t they do it, the Democrats?

REICH:  Well, Chris, we‘re going to have to. 

I think the president, if he wants to be reelected, is going to have to get behind a real jobs bill, even if he can‘t get it through Congress.  Let him run on it. 

MATTHEWS:  Me—me, too. 

REICH:  Let him say to the Republicans, what‘s your answer here?

But it‘s got to be, you know, a renewed WPA, a civilian conservation corps—


REICH: -- exempting the first $20,000 of income from payroll taxes. 


REICH:  I mean, you can go through—there are a lot of things that can be done and should be done and have to be done to put Americans back to work. 


We have got to go through every one of these right-wing congressmen, starting at Boehner at the top, and say, go through their bridges, find out how many bridges are below safety code with school buses going over them.  Let‘s go through the roads that are in lousy shape.  Let‘s go through the sewer systems in lousy shape in their own districts.  The Democrats should be targeting this stuff now and say you have got nothing to defend, buddy.  We need the work done. 

Anyway, thank you, Robert Reich.  That‘s my thought anyway. 


MATTHEWS:  You‘re the expert.  Thank you, sir, for coming on.

REICH:  Thanks, Chris. 

MATTHEWS:  Thanks for coming on from out there in Berkeley. 

Up next:  You can turn out the lights on a dim idea by Republicans.  They want to bring back those old light bulbs that wear out in about three weeks.  They like the old kind, the inefficient kind.  They don‘t like these new kind that don‘t burn out.  What is the matter with these people, these Reddy Kilowatts of the right? 

That‘s ahead in the “Sideshow.”  You‘re watching HARDBALL, only on



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

First up:  Reddy Kilowatt, remember him?  Well, remember Republican Joe Barton?  He‘s the congressman who apologized, believe it or not, to BP executives last year for the president‘s what he called shakedown as oil was still spilling into the Gulf of Mexico.

Well, Barton‘s latest cause celebre, he wants to repeal a law that requires incandescent bulbs, light bulbs, to be 30 percent more energy-efficient.  Barton‘s proposal last night failed to get the necessary two-thirds vote.  He vowed to keep up the fight—quote—“We can put it on an appropriations bill.  We can back it under a rule.  I can try and go to some of the Democrats who didn‘t vote for it and figure out a way to get them to consider voting for it in a little bit different format.”

Hmm.  All this to protect light bulbs that on average waste 90 percent

of the energy that they give off.  You remember the old-time light bulbs

that went out in a couple days?  What a clear-cut waste of time.  He wants

us to go back to those bulbs.  This is the new fight we used to have over -

remember fluoridation of water, how it was a communist plot to save our teeth?  Same old stuff.

Next up: out of right field.

Here‘s Republican Congressman Mo Brooks of Alabama in a local interview talking about illegal immigration. 


REP. MO BROOKS ®, ALABAMA:  As your congressman, on the House floor, I will do anything short of shooting them.  Anything that is lawful, it needs to be done, because illegal aliens need to quit taking jobs from American citizens. 


MATTHEWS:  You never know what to expect from these guys.  “Anything short of shooting them.”  What‘s with these people?  These are the elected people, Republicans.

Yesterday, the head of the Hispanic Caucus, Democratic Congressman Charles Gonzalez, called on Congressman Brooks to simply apologize and recognize—Is this obvious? -- that words have consequence.  You don‘t talk about shooting people. 

Up next:  The Rupert Murdoch scandal hits home here, as Senators Barbara Boxer, Jay Rockefeller, also Peter King are calling for an investigation to see if News Corp. broke some laws here or whether they have been into—is going into homes and phone numbers of people that were involved with 9/11 who were victims.  We‘re going to find out what this company is up to.  We‘re going to bring down—we‘re going to talk about this.

You‘re watching HARDBALL, only on MSNBC.


HAMPTON PEARSON, CNBC CORRESPONDENT:  I‘m Hampton Pearson with your CNBC “Market Wrap.”

Stocks snapping a three-day losing streak on the possibility of more stimulus from the Federal Reserve, the Dow Jones industrials climbing 44 points, the S&P 500 adding four, the Nasdaq tacking on 15 points. 

Stocks soared early in the session after Fed Chief Ben Bernanke told Congress the Central Bank is considering another round of quantitative easing, but those gains were tempered after a member of the Fed‘s Policy Board said he wouldn‘t support more stimulus if the economy worsens. 

And after the closing bell, Moody‘s rating service announced it was putting the U.S. debt rating on review for a possible downgrade based on the lack of progress in raising the debt ceiling. 

In stocks, News Corp. gained after it said it‘s withdrawing its $12 billion bid for satellite broadcaster BSkyB.  And China Telecom said it will start selling Apple‘s iPhone in the largest mobile phone market by the end of the year. 

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



HUGH GRANT, ACTOR:  Rupert Murdoch does own an enormous amount of your media with FOX News and the FOX station and 20th Century Fox pictures, et cetera, and some of your newspapers.  And I think people need to ask themselves, you know, who is this man who owns such a large part of our media? 


MATTHEWS:  Well, that‘s Hugh Grant. 

Back to HARDBALL. 

That was of course British actor Hugh Grant, who says he was a victim himself of the widespread phone hacking scandal that has now engulfed Rupert Murdoch‘s media empire. 

Today, Murdoch faced his biggest blow so far.  News Corp. withdrew its long-planned bid to take over BSkyB, Britain‘s largest satellite broadcaster.  This is—this is big bad for him. 

Back stateside, Senators Jay Rockefeller and Barbara Boxer and U.S.  Congressman Peter King have called for investigations into whether News Corp. broke any U.S. laws. 

Where does this leave the Murdoch empire, especially here in the States?

Joining me right now is Judd Legum from the Center for American Progress, and Gabriel Sherman, who wrote this cover piece for “New York” magazine titled “FOX News made a circus of the Republican Party, and, boy, does Roger Ailes regret it now.”

Let me go to you, first of all, Gabriel, so much.  You have written about—I think about me at different times.  And so let‘s talk about you and the journalism involved here.  No harm done, I don‘t think, there. 

But let me ask you about this question. 


MATTHEWS:  The investigation that‘s going on right now, Peter King is a red-hot, going-after kind of guy, especially New York stuff involving the victims of 9/11. 

If it can be determined that Murdoch‘s people did here what they did there, gone in and hacked into people‘s e-mail, into people‘s telephone lines to find out information about the victims—victims—of 9/11, how hot is that? 

SHERMAN:  Well, gosh, Chris, I mean, that is the—you know, that is the big elephant in the room.

But I think it‘s important to point out that there‘s no evidence thus far that any of that hacking activity has occurred stateside. 


MATTHEWS:  Why would it not happen over here and it happened over in Britain?

SHERMAN:  Well, that‘s a great question.  And obviously the folks in Washington are going to try to find out.

But it‘s just important to point out that we have no evidence that it has happened here.  But the fact that it took place in Britain does raise questions.  And it‘s a relevant question to be asking. 


Let me go to Judd here—Legum—this whole question of his empire.

I was always fascinated by the speed, you might call it the fast-tracking, of this guy‘s American citizenship.  We argue about immigration, about it all the time in this country.  I know people who have become Americans.  It‘s a wonderful thing when you do it.  This guy did it in about 15 minutes. 

Who helped him?  How does this happen?  How does he get these licenses that you can only get if you‘re an American citizen?  Who is helping him here?

JUDD LEGUM, CENTER FOR AMERICAN PROGRESS:  Well, it was—it was very unusual circumstances, because it was in 1985, when he wanted to buy a whole host of television stations.  And you needed to be an American citizen to get it.

JUDD LEGUM, CENTER FOR AMERICAN PROGRESS:  Well, it was very unusual circumstances.  It was in 1995 when he wanted to buy a whole host of television stations.  And you needed to be an American citizen to get it.

MATTHEWS:  So, presto!

LEGUM:  And that‘s what he announced.  And he actually got the regulatory approval from the FCC prior to even getting citizenship.

MATTHEWS:  Did he become a citizen just like somebody who marries somebody to get in the country because they want a job, or because he discovered some love of America?  Is he literal—

LEGUM:  He had been living here for many years, but still be an Australian citizen.


LEGUM:  Then he wanted to buy these television stations.  The only way he was going to do it was to become a citizen.

MATTHEWS:  Gabriel, who are his agents, as he operates in this country?  How he gets control of newspapers and TV affiliates, network affiliates in the city?  He seems to break all the rules.  How does he do that?  How did he get his clout in this country, in government?

SHERMAN:  Well, I mean, obviously, Chris, you know, the Murdoch empire has been built largely in part on its close relationships with people in power.  Now, whether it‘s conservatives here in the United States or -- 

MATTHEWS:  He hires most of them, doesn‘t he?

SHERMAN:  -- or in Britain.  And, you know, he‘s used his media properties, whether it‘s the Harper Collins book imprint by giving lucrative book deals. You know, in the mid-‘90s, he gave Newt Gingrich more than $4 million to write his memoir that Harper Collins is going to publish.

Now, critics will say that he uses these media properties to advance his interests cultivating these relationships.

MATTHEWS:  Well, let‘s go to something more obvious.  He‘s hired Rudy Giuliani to represent him.  He‘s hired Gingrich to work at the station.  He‘s hired Palin, Governor Palin, to work for him.  He‘s got Huckabee working for him now.  He‘s had Santorum working for him.

He‘s got a better stable than the RNC of the Republican big shots.  They‘re on his payroll or have been, or will be again.  That‘s a lot of clout, isn‘t it?

SHERMAN:  Well, I think what the scandal has really shown is that, you know, that Murdoch uses his virtuous cycle of developing relationships that then end up pays business dividends when legislation is passed that is favorable to News Corp.  And I think these questions are being asked.  Obviously, the relevant questions are being asked in Washington.  And it‘s too early to know ultimately where the scandal is going to go.  But it‘s obviously the biggest existential crisis to face News Corp in probably its history.

MATTHEWS:  You know, Judd, what I‘m impressed by is David Cameron—I don‘t have strong views about either way.  He‘s attempting something on the conservative side that might work in Britain.  Let‘s see if it works.

But the fact that he went out and broke with this guy, you know, bloodily basically on the other day and said, we‘re going after this guy—that was quite a break.

LEGUM:  I think that‘s a huge break in his influence, because as influential as he is in the United States, and you ticked through some of the politicians that he has very close relations -- 

MATTHEWS:  Well, he‘s hired them.

LEGUM:  I mean, he is—he is a monster in the U.K.  And to lose all his support, such that this major acquisition of BSkyB which he had been working on for years and years and years, he totally had to abandon it, and then we see in “The Wall Street Journal” ironically enough today, that he‘s considering getting rid of all of his U.K. newspapers just to try to stop this contamination of his empire.  It really shows he‘s on the ropes, I think.

MATTHEWS:  Well, Senator Jay Rockefeller and Barbara Boxer have asked Attorney General Eric Holder and SEC Chairman Mary Schapiro for an investigation into whether News Corp broke a U.S. law that bans payments to influence foreign officials.  Interesting, we have a law that you can‘t bribe overseas.  “The reported allegations against News Corp are very serious”—that‘s the quote coming out of them.  “It indicates potential thousands of victims in a pattern of illegal activity.  It‘s important to ensure that no United States laws were brown and no United States citizens were victimized.”

Also, Congressman Peter King asked FBI Director Robert Mueller for an investigation to whether “News of the World” reporters, that‘s the newspaper he ran, illegally obtained phone records of U.S. 9/11 victims.  I said that.

You know, let me go over to Gabriel.

You know, we have different rules in this country.  And I‘m not saying we‘re cleaner all the time, but we have certain rules.  We‘re a bit pristine.  You‘re not allowed to bribe foreign officials in this country, even if you‘re an American multinational.


Isn‘t that interesting that might be a way to get at this guy, by people who think he‘s just too powerful?  Your thoughts?

SHERMAN:  Well, I mean, that‘s—you know, obviously, they‘re going to investigate.  And, obviously, if there was criminal activity, that will be explored.  I think the interesting point. Chris, is that, right now, the most vulnerable member of the Murdoch empire seems to be his son James Murdoch, who ran “News International” as the head -- 


SHERMAN:  -- as the head of the U.K. properties, and he was the—directly involved with some of thinks out-of-court settlement with early hacking victims.  And then that raises the question, what did he know and when did he know it?

And if you can establish that a family member had direct knowledge or at least partial knowledge of the hacking, then it extends up to Rupert.  And then you want to know, did Rupert Murdoch personally know about some of this behavior, and then the scandal engulfs the whole family.

MATTHEWS:  Wow.  Let‘s see how this develops.  This is an amazing story.

Gabriel Sherman, thank you for joining us, from New York Magazine.

LEGUM:  Thanks, Chris.

MATTHEWS:  Thank you, Judd Legum of the Center for American Progress.

Up next: the 2012 race—we‘re going back to sheer politics now.  Michele Bachmann is soaring in the race.  The right is taking over the Republican Party.  In a new national poll, she is moving on up.  And she may go a lot higher before she stops.

When you see the numbers, the non-candidates Palin are getting and Rick Perry are getting, you can where her—she‘s got a virgin forest out there she could be conquering.  All of that‘s action on the right, which means Mitt Romney, only at 25 percent and not gaining may be the one quarter of the Republican Party, three quarters which is to his right.

This is HARDBALL, only on MSNBC.


MATTHEWS:  Well, Philadelphia lost a really good politician today and a really good guy with the death of Mike Stack.  Stack was a longtime ward leader in northeast Philadelphia where I grew up.  He‘s a classic Irish-American pal, a novelist and real stalwart for the Democratic Party up there.  And politics run in this guy‘s blood.  His father was a two-term U.S. congressman.  His son is a state senator in Pennsylvania right now.

We‘ll be right back.  What a great guy.


MATTHEWS:  Welcome back to HARDBALL.

The excitement is all on stage right on the GOP presidential field.  Take a look at a new poll shows Tea Party favorites are collectively running well ahead of Mitt Romney.  If they line up behind one candidate eventually, which probably will happen, like Michele Bachmann—look out, Mitt.

Jonathan Martin is a senior political reporter at “Politico” and Joan Walsh is editor-in-large for “Salon.”

Let me both of you join me in this.  Let‘s take a look at this new poll.  We love Quinnipiac.

The new Quinnipiac poll shows that just 25 percent of Republicans right now are for the so-called front-runner Mitt Romney, but the numbers that really tell us something are the other numbers.  Bachmann at 14, Palin is at 12 and Rick Perry is at 10.  But none of those people are necessarily running except for Bachman Bachmann.  That is 36 percent potentially.

Joan, jump in here.

It seems to me that—I don‘t think the former governor from Wasilla, Alaska, is running for president.  She would have shown something by now.  I have no idea whether Rick Perry is running or not.  But if he‘s not, it looks to me there‘s an awful lot of virgin timber out there for Bachmann to chop down and take away from Mr. Romney, who is still vaguely over there on the, quote, “moderate side.”

JOAN WALSH, SALON.COM:  Well, right.  I mean, I think we‘ve talked about there being kind of two Republican primaries right now, Chris.  There‘s the kind of moderate GOP establishment primary—and Mitt Romney I think has won that.  People like Jon Huntsman.  He is not taking off.

Then, on the other side, right.  You got the Tea Party primary.  And, right now, Palin is probably not running.  But I look at these numbers and I think, Palin has to be looking at them.  She‘s a narcissist and think, wow, maybe I can do this.  Why am I going to let this pale substitute, Michele Bachmann, take this story that -- 

MATTHEWS:  Wait a minute.  Maybe you‘re against me, maybe you disagree with me, maybe you think she is possibly running and it won‘t all go to Bachmann.

What did you make of the “Newsweek” cover on Palin?  You think that indicated she is still in the running or just likes the celebrity?  What did it tell you?  It‘s a very strong picture of her.

WALSH:  Right.  She likes the celebrity.  And she may not give it up.  But she‘s also—narcissist is a strong word.  But, you know, she is into herself.  She likes herself.  She has high self-esteem.  And I think she could look at this at this set of numbers and think, why am I not in there.  Rick Perry, the same thing.

So, I could flip it around on you a little bit and say, Mitt Romney is sitting pretty with this base right now.  You could have two or three people who wind up fighting each other and splitting that vote.  I don‘t know.  That is where the energy is.

MATTHEWS:  OK.  Back to my initial premise which may be shattered already by my friend, Joan.  Maybe you‘re right.  Maybe we‘re going to have Rick Perry running, too.

I don‘t understand Rick Perry.  I don‘t know him like I know other politicians.

What do you think, Jon?  Do you think—you think we see in these polls—if we look at these numbers, Romney is at 25, Bachmann at 14, Palin 12, Perry 10.  That if you add up what Joan has called the Tea Party primary candidates—


MATTHEWS:  -- that adds up to a hell of a lot more than 25.

MARTIN:  It shows a still very unsettled field.  And it does show that if you have multiple candidates on the right, that could present and opportunity for Romney to win in a plurality scenario like McCain did four years ago.  Now, McCain in primaries never got to 50 percent.  But he didn‘t have to be, because again, running in a multicandidate field.

The key here I think is what does Rick Perry do?  He could step in here -- 

MATTHEWS:  What‘s your bet?  Is he in or out?

MARTIN:  You talk to folks, Chris, the past two days, across the board

they all think he‘s running in the party establishment.  They‘re convinced.



MARTIN:  His folks, though, say not a done deal yet and he is in no rush.

Here‘s the key about Perry, Chris.  He could be the hybrid candidate.  The establishment and Tea Party coral could both rally around him.  Not like Bachmann and Romney who I think draw from very distinct pools.  He could draw from both polls.

I don‘t see any other candidate in the race right now who has that kind of potential.

MATTHEWS:  He could grab from both sides.

MARTIN:  Exactly.

MATTHEWS:  What do you think of that, Joan, do you think watching—and I know you‘re on the progressive side of things.  When you look across the aisle there and you look at Perry, is he for real?  I guess I‘m not really delved into what he is as a figure, as a character yet.

WALSH:  He has a lot of baggage, Chris.  I mean, you know, I agree with Jonathan.  He can look like a hybrid candidate.  And I think that‘s an interesting strategy.

But I think when push comes to shove in a campaign—he‘s not a hybrid candidate.  He‘s a far right candidate.  He presents well and he could be a George W. Bush candidate.  That‘s another strike against him.

MATTHEWS:  Bush doesn‘t like him apparently.

MARTIN:  Right.

WALSH:  I know, I know.  But, you know, he‘s got the experience of 10 years as governor.  But, you know, he‘s been close to the Confederate groups.  He can talked about -- 

MATTHEWS:  He‘s got a marginal character.  He‘s got this evangelical thing.  It doesn‘t work with me, but I guess it works with some people over there.

WALSH:  It does.

MATTHEWS:  We know this about secession and all this nonsense.  How can you take seriously a guy running for president of the United States who‘s talking about secession from the Union?

WALSH:  Well, because—

MATTHEWS:  I‘m sorry.  Call me old fashioned.  I keep thinking the Union is pretty good.

Anyway, thank you, Joan, for your theories.


MATTHEWS:  I know, I think it‘s over.

MARTIN:  He was governor for 10 years of one of the biggest states in the country.  That alone will make him appeal to some establishment folks in the party.

MATTHEWS:  OK.  When we continue, “Let Me Finish” with a salute to one of the real grown-ups in the Congress.  I think I‘m giving him the day right now—Mitch McConnell, because he looks like he wants it save this republic right now from financial catastrophe.

You‘re watching HARDBALL, only on MSNBC.


MATTHEWS:  “Let Me Finish” tonight with a salute to a leader.

It took someone to break this crazed stranglehold on America‘s economy

someone to say it is time to release the hostage, time to move on. 

Senator Mitch McConnell came out yesterday and did it.  He offered up a basic proposal, separate the fight we‘re having in this country over spending and taxation, a fight that obviously we‘ll be settled in next year‘s election from the fight over whether we allow the debt ceiling rise, a basic requirement of sound accounting.

When I worked in politics, I learned that political leaders in the Congress think about—actually think after somewhat different perspective than journalists do.  Journalists think about the day‘s story.  It‘s what the word journalism means.  When you write about it, it‘s what‘s happening today.

Well, political leaders think on two horizons.  One is next week.  The other is the next election.

Senator McConnell‘s thing about what could happen if Congress doesn‘t deal with the debt ceiling by the end of next week.  What they failed will mean to the next election.  No matter what the protesters say, by the way, this is the right truth and it is the truth.  Failure to act on the debt ceiling will create a horror for our country, a horror we‘ve never seen before.

Suddenly, one day, we‘ll find ourselves like Greece or Ireland or Portugal, one of the countries at the periphery of destroying economies.  Germany, China and India suddenly will be one of those countries that the strong world looks at with disdain—looks down on, really.  We‘ll become objects of pity—pity not for what was done to us like on 9/11 but for the pathetic sight of what we‘ve been done to ourselves.

So, put me down with Senator McConnell and Senator Reid, and the people President Obama trusts here, those that care most about the country, then about their parties, then about themselves.  I hope that‘s the order in which leaders make decisions.  I hope that‘s the way people we trust to run our country approach their days, especially days like now—days of reckoning.

That‘s HARDBALL for now.  Thanks for being with us.

More politics ahead with Al Sharpton.




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