'Hardball with Chris Matthews' for Tuesday, May 8, 2012

Guests: Roger Cressey, Evan Kohlmann, Hampton Pearson, Ron Reagan, John Heilemann, Joe Conason, Dan Froomkin, Maggie Haberman, Willie Brown

CHRIS MATTHEWS, HOST: Biden rings the wedding bells.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington. Leading off tonight:
A time to spill? Should President Obama tell us what he really thinks?
Remember that great scene in "The Godfather" when Sonny`s killed, when Vito
Corleone tells Tom Hagen (ph), "I think you should tell me what everyone
seems to know."

Well, everyone seems to know or think they know that President Obama
supports gay marriage. Gay rights activists are saying, Stop saying your
position is evolving. Just come and say it already. But the president
knows this tricky issue could cost him votes in tough battleground states
like North Carolina. He may blame what Joe Biden said over the weekend for
this, but now he has to deal with it. What should the president do?

Plus, car fooling. Mitt Romney saved Detroit, or so he says. Never
mind this column, by the way, he wrote when the U.S. auto industry was on
its knees. Now Mitt is taking credit for a victory lap for President
Obama`s policy. Is this a case of Grand Theft Auto?

Also, spy games, the latest details on how the CIA foiled that plot to
blow up an airliner headed for the U.S.

And "Dirty, Angry Money." How can Karl Rove`s group, Crossroads GPS,
claim to be a non-profit devoted exclusively to promoting social welfare --
in other words, not supporting a political candidate -- when they run ads
like this one?


UNIDENTIFIED MALE: As Virginia governor, Tim Kaine`s Reckless
spending turned a budget surplus into a big deficit -- reckless spending,
massive debt. No wonder Tim Kaine applauds Obama.


MATTHEWS: A direct ad opposing a candidate and directly outside the
orbit of this kind of fund-raising. Anyway, how these groups game the
system in order to keep their contributors anonymous.

And "Let Me Finish" with my thoughts on our evolving president.

We begin with President Obama and gay marriage. Ron Reagan is with
us, along with former San Francisco mayor Willie Brown. Both are MSNBC
political analysts.

Look, among suburban voters -- we`ve checked this now -- who are
likely to decide this election, according to the experts, support for gay
marriage is just about down the middle, almost even. A recent NBC/"Wall
Street Journal" poll shows 45 percent of suburban voters approve of gay
marriage right now, 43 percent disapprove. That gap is obviously
completely narrowed from 2009, even, just three years ago, when just 37
percent of suburban voters approved of gay marriage and 54 percent

Well, I`m not quite sure where we`re headed here, so I want to go
right now to our people, our experts here. Ron Reagan, everybody in town
here and everybody in the country, not just gay activists or gay people or
liberals even, seem to think that the president, maybe because of what he
said way back when he was a state senator in Illinois, supports gay
marriage, he just won`t say it. Should he say it?

should. This whole "evolving" thing has really jumped the shark at this
point. I mean, he`s taking more time evolving on this issue than, you
know, humans took evolving from apes.

The problem is, you can make an argument that he`s making a -- well,
he is making a...

MATTHEWS: That would be hyperbole, wouldn`t it?

REAGAN: ... political calculation...

MATTHEWS: Wouldn`t that be a case of hyperbole?

REAGAN: That would be -- a little bit of hyperbole there, but just
to, you know, add a little to the thing. But listen, we all know he`s
making a political calculation, and we can argue as to whether the
political calculation is correct or incorrect, but the problem for him is
that it`s an obvious political calculation.

He is taking a civil rights issue and he`s trying to kind of, you
know, straddle the fence on it, and it`s unseemly. He`s beginning to look
ridiculous on this issue.


REAGAN: He needs to just get off the fence and just go where
everybody knows he really is in the first place.

MATTHEWS: OK, you read his mind, you read his heart, you find him
wanting in sincerity. Let`s go to Mayor Brown. Mayor Brown, what do you
think he should do politically? He has an election to win. He`s got six
months to win it. Your thoughts?

Above all else, Barack Obama is running for president. He`s running to be
reelected. He is going to do whatever it takes to get to the point where
the votes will accept him over his opponent. His comments on same-sex
marriage, his conduct on the question of equality in this area, clearly are
unparalleled. There`s been nobody before him who has done what he has done
to date.

I would cut him the slack as a great supporter of his and as one of
the people who at all times have been for same-sex marriage. I`m not
demanding that he step up at this moment and swing at that issue. After
all, it`s going to be voted on in North Carolina today. Why should Barack
Obama do anything any differently than he`s doing it?

He has told the Justice Department, Don`t you participate in any
effort to discredit the opportunity for people to have equality on the
same-sex side. He signed the measure knocking off the whole question of
"Don`t ask, don`t tell." And at every level of his appointments, they`ve
been reflective of people of all sexual orientations. I don`t know what
else should be required of him by those of us who support him.

MATTHEWS: Let me ask you a tough question, my friend, Ron. Suppose
you wake up the morning after this election, the president`s lost the
Electoral College because he`s lost Ohio and North Carolina. By the way,
they already lost Ohio back in 2004 on this issue, thanks to Don King and
Karl Rove and some of the black ministers up in Cuyahoga County because
they were all together on that thing. And they beat John Kerry there.

If he loses the election because of this and Mitt Romney walks into
the White House, a man who says he will not evolve, doesn`t evolve, for all
I know, doesn`t believe in evolution, period -- he walks into the White
House as a permanent, all his life opponent of this. Is that good for the

REAGAN: No, it`s...

MATTHEWS: If that happens.

REAGAN: ... not good for the -- it`s not good for the cause, although
the cause will continue and will prevail just because of demographics, if
nothing else.

Here`s the problem. I don`t disagree with what Mayor Brown is saying.
I understand what the calculation is. But I think the calculation is now
incorrect. You can only make this political calculation when people don`t
generally see it as a political calculation.

If people know that you`re not actually speaking your mind and your
heart, if you are inauthentic about this issue, and it is an important
issue to some people -- a lot of people -- then you`re doing yourself harm.
You`re actually harming your electrical prospects.


MATTHEWS: Everybody wants to get in the act here. Here`s -- I want
to bring this, Mayor, before we -- here`s Ed Rendell, the former governor
of Pennsylvania and former mayor of Philly. He`s also former DNC chair, as
you know. He today encouraged President Obama to publicly support gay
marriage. Let`s listen to Ed Rendell today on "JOE."


should man up and say, This is what I believe. And I think he doesn`t lose
any African-American votes. Jonathan is absolutely right. And the people
who vote solely on this issue, a single issue voter, gay marriage -- none
of them are voting for Barack Obama now and they`re not going to vote for
him whether he says he`s against it.


MATTHEWS: OK. Well, that`s the first time in my life I will disagree
with Ed Rendell. Mayor -- Mayor Brown, the trouble with that is I don`t
know -- Hillary Clinton hasn`t come out for this yet officially. She
hasn`t taken -- she doesn`t have to. She`s secretary of state right now.
She`s in a non-partisan political position.

But I`m not sure that`s good advice because I do believe there will be
people from North Carolina who will be opposed to same-sex marriage because
they`re of a certain age, but they like Barack Obama. He`s asking them,
according to Rendell, saying there`s nobody out there that`s going to vote
for you that isn`t going to be for same-sex marriage, or the other way

I think you`re increasing the simultaneous equation you`re asking
people to solve. Oh, yes, if you`re for me and you`re for same-sex
marriage, vote for me. How about just if you`re for me, as a better
question? Your thoughts.

BROWN: I think that`s the question that Barack Obama is, in fact,
dealing with. I also think, Chris -- I think Barack Obama has evolved. I
do not believe that when he was a state senator in the legislature in
Illinois, he was one of the people leading the charge for same-sex
marriages. I think he was part of a religious operation that preached
against that and spoke against it. I think he has grown tremendously...

MATTHEWS: But he did support it...

BROWN: ... in the last eight or nine years.

MATTHEWS: But Mayor, he did support same-sex marriage on the record
when he was state senator.

BROWN: Yes, he did. But from the standpoint, however, Chris, of his
becoming the guy who carries the torch...

MATTHEWS: I understand.

BROWN: ... he`s trying to walk...

MATTHEWS: (INAUDIBLE) fund-raiser.

BROWN: ... through the process of letting you know how he, as the
president, as the leader of this nation, wishes to bring the whole nation
along on this equality issue.

And I understand. And I think he`s -- it`s sincere. Unlike Ron, I
don`t think that he is being calculated as a person who`s simply doing
what`s politically appropriate.


BROWN: I think he`s walking through the process of saying all of
these reasons are why we should be where we are. And that`s why everybody
in his administration is saying very clearly, We`re for same-sex marriages,
whether we`re Joe Biden or David Axelrod or all the others, and we`re at
the same place where Barack Obama is.

We should not require him to simply step up and do the same thing.
Let him continue in the process of where he is, and he`ll arrive at the
right place at the right moment.


REAGAN: But the problem is, I think he`s already arrived there, and I
think most people think he`s already arrived there. He just doesn`t want
to admit it, and that is not a great quality to put forward. Lookit, he`s
got an opponent who`s evolving on all issues all the time. And that`s one
of the big knocks against Mitt Romney.

MATTHEWS: Well, that`s true...


REAGAN: You don`t want to imitate Romney!

MATTHEWS: Let`s look at Joe Biden, the guy who started this story
this weekend. Here he is speaking today at the Rabbinical Assembly
Convention. Biden made light, if that`s possible, of the gay marriage
firestorm his comments ignited on "MEET THE PRESS" Sunday. Let`s listen.


doubted I mean what I say. The problem is, I sometimes say all that I



MATTHEWS: Well, that`s for sure. Ron, was it smart for the vice
president to open this door to the argument you`re having with the mayor
right now and this country`s involved in? Was that good politics?

REAGAN: Well, I don`t know if he -- I don`t know if he intended to
spark that kind of argument, but he was speaking from the heart and he was
speaking his mind. You know, Barack Obama...

MATTHEWS: Which he does.

REAGAN: ... has put himself -- yes, he does. Barack Obama has put
himself in a difficult position here with his evolution kind of metaphor on
this issue. Again, nobody believes that. He`s too smart. He`s too young.
He`s too cosmopolitan to actually have trouble with the notion of marriage



MATTHEWS: ... because I`m with the mayor on this because I believe
it`s a moving target. I believe if we have this argument three years from
now, a year-and-a-half from now, there`ll be a different context. I think
Obama could get ahead of the crowd, but he may lose the presidential

They used to say, Don`t get so far ahead of the parade -- don`t get so
far ahead of the parade you can`t hear the music. And I think a big part
of being president is still hearing the music of the people.

REAGAN: Band`s playing pretty loud, Chris!

MATTHEWS: Oh, well, but you are, sir, but you ain`t speaking for the
country yet, Ron Reagan!


MATTHEWS: Mayor Brown, last word quickly. Your thoughts? He`s smart
doing what he`s doing, you say.

BROWN: I think he`s playing the game the way he needs to play the
game in order to save the presidency. And I`ve said this not only to my
friends, who are the same-sex marriage advocates, but I`ve said it to my
friends on the black side.

Remember, he`s being criticized by some blacks for not...

MATTHEWS: I know he is.

BROWN: ... advocating on behalf of blacks in an aggressive manner.
This man is the president. I want him to stay the president, and I`m
willing to wait to have him satisfy me on his utterances when he`s taking
the oath of office for the second time.

MATTHEWS: Spoken by a man who`s never lost an election, Mayor Brown
of San Francisco. Thank you, sir, for joining us. I don`t think you`ve
ever lost one. Tell me some day if you have.


MATTHEWS: Coming up: Mitt Romney now says -- bye, Ron. Thank you --
now says he wants the credit -- talk about chutzpah! Let`s all say it
together, chutzpah. This guy says he saved the auto industry, the same
Mitt Romney who said let Detroit go bankrupt and the market will take care
of things. Is this guy for real or not? It`s unbelievable what he`s
saying today.



MATTHEWS: We`ve got brand-new polling from one of the biggest
battleground states on the map, Ohio. Let`s check the HARDBALL

According to a new PPP poll, President Obama`s up 7 over Mitt Romney
in the Buckeye state. Look at that number, pretty healthy, 50 to 43 in a
state Republicans need to win.

And take a look at this. What happens if Mitt Romney puts Ohio
senator Rob Portman on the ticket? Very little. Romney-Portman still
trails Obama-Biden by 5, 49-44. That`s important.

We`ll be right back.


MATTHEWS: Welcome back to HARDBALL. File this under the "You got to
be kidding me" column. You can give credit to Mitt Romney for the auto
industry coming back to life, at least according to Mitt Romney. He told a
Cleveland reporter just yesterday his ideas for saving Detroit are what led
to the resurgence GM and Chrysler.

Well, does Romney really expect us to forget that he called for a
managed bankruptcy of the auto companies and hoped the private sector would
then come to the rescue after the bankruptcy?

Well, John Heilemann is national affairs editor for "New York"
magazine and an MSNBC analyst, as well, of course. And Maggie Haberman is
senior political writer -- reporter for Politico.

Both of you, let`s go to the videotape, as Warner Wolf (ph) would say.
In an interview with Cleveland affiliate WEWS, Mitt Romney said he`s,
quote, "take a lot of credit" for the auto industry coming back. Listen to
his reasoning.


view, by the way, was that the auto companies needed to go through
bankruptcy before government help. And frankly, that`s finally what the
president did. He finally took them through bankruptcy. That was the
right course. I argued for it from the very beginning.

It was the UAW and the president that delayed the idea of bankruptcy.
I pushed the idea of a managed bankruptcy. And finally, when that was done
and help was given, the companies got back on their feet. So I`ll take a
lot of credit for the fact that this industry has come back.


MATTHEWS: And help was given. Like, mistakes were made, and help was
given. Guess who gave? The president, the United States government. We
did. We invested in those companies and brought them back, not Mitt
Romney. "Help was given." What a phrase!

And this from the same guy who penned a now infamous op-ed in "The New
York Times" which was headlined, "Let Detroit go bankrupt." Well, the
opening lines read, quote, "If General Motors, Ford and Chrysler get the
bail-out that their chief executives asked for yesterday, you can kiss the
American automotive industry goodbye. It won`t go overnight, but its
demise will virtually -- virtually guaranteed."

John Heilemann, my buddy, what do you make of this chutzpah here?
This guy comes back, doing a 180, saying if only they had let us go
bankrupt -- oh, by the way, it eventually did go bankrupt. What he fails
to point out is the American government, thanks to Barack Obama, invested
heavily, big-time in these auto companies, brought them back.

well, yes, as you say, Chris, help was given. And in the case of that op-
ed, mistakes were made. And I think that was a pretty big political
mistake on Mitt Romney`s part.

You know, what I think what it reflects as much as anything, certainly
some chutzpah, but it reflects as much as anything the narrowness of the
maps that are available to the Romney campaign to win.


HEILEMANN: It`s very hard for them to win without Ohio, and -- it`s
almost impossible to win without Ohio and it`s very hard to win without
putting a couple of other Obama states in play. Michigan, under normal
circumstances, because it`s Romney`s home state, might be prime for that
kind of a takeaway.

But I have to say that, you know, having covered the Republican
primary in Michigan when he ran against Rick Santorum a few months ago, the
memories of the auto bail-out, the positive fallout of that for the
president, and the fact that the president won Michigan by 16 points in
2008, and there is no way the people in Chicago are going to let Mitt
Romney take Michigan away from them without reminding people in Michigan
every day of "Let the auto companies go bankrupt."

MATTHEWS: And just to throw one more wrench into his campaign in
Ohio, I must remind the voters of Ohio who are watching, if you vote for
him in the Electoral College and give Ohio`s electoral votes to Mitt
Romney, you`re saying, Trash us again. We like it. We like people
trashing us.

Maggie, I mean, it`s just -- to me, it sends the wrong message to
politicians. If you dump on us, you betray it, you leave us out in the
cold, and then we vote for you, they`ll do it again and again under this
free market thinking.

Maggie Haberman, again, the same question to you right up front.
What`s Romney up to here with this balderdash here?

MAGGIE HABERMAN, POLITICO.COM: I think what John said is exactly
right. I think this speaks to the path that he has and what a problem he
has, and the memory of this in Michigan. I think Mitt Romney actually has
a bunch of problems in Michigan. Theoretically, he has roots there, but
there hasn`t been a Romney in office there in -- forever. I think it`s a
tough state for him anyway.

This was a real problem for him in the primary. You had the
Republican governor actually saying, ultimately, the -- you know, not
echoing the negative sentiment that Mitt Romney said about the auto bail-
out. That sort of underscored where this goes.

I think, for Mitt Romney, the problem is, there`s a leap from saying,
look, I said all along there should be some kind of a managed bankruptcy to
saying I deserve credit. I think that`s the problem, where this goes a bit
off the rails for him. And I think it gives the Obama campaign a huge
opening to remind people, as John said, look what the president did. The
auto industry is still standing.


Let`s take a look at former Governor Ted Strickland of -- he`s a
Democrat, of course, of Ohio -- on a conference call for the Obama
campaign, here`s what he had to say. Let`s listen to him. This is fresh
news from the former governor of Ohio.


TED STRICKLAND (D), FORMER OHIO GOVERNOR: The entire country knows
what Mr. Romney`s approach was to the auto industry. And for him to come
back now and to try to lay claim to the credit is just -- it`s astounding.

But it`s not surprising. You know, it`s been said that he does not
seem to have a political core. And I know that`s a -- that`s kind of a
harsh thing to say, but regardless of what issue that we`re looking at or
thinking of, Mitt Romney has been on one or two or three sides of that


MATTHEWS: You know, guys, it seems to me one thing that somebody of a
business background like Romney -- and that`s where he spent his life,
making money -- should be very good at picking winners and testing business
character and who`s got it, who doesn`t have it.

Alan Mulally, the head of Ford now, has taken them to the number five
in the country as a profitable corporation. Ford is back as the number
five most profitable company in the country right now.

Again back to you, John, it seems to me that somebody should have paid
attention of Mulally having this kind of gift and ability to this kind of
thing. And he didn`t bet on him. Obama bet on him.


Well, it`s true, Chris, although, you know, just -- I mean, yes, I
mean, Obama made a big bet, as did Steve Rattner, the car czar, under Obama
that they identified the leadership of at least a couple of those companies
in Detroit as having been capable of survival and thriving if they just got
a little help from government.

To be fair to Mitt Romney, he didn`t want to see the car -- obviously
didn`t want to see the car industry district go away. He had a different
idea about what the best way to help it survive was. The notion of managed
bankruptcy is in theory one that some people might embrace. The problem,
as Steve Rattner and others have pointed out, is that you need to have
private capital around for that process to work.

MATTHEWS: Yes. But nobody wanted to do it, yes.

HEILEMANN: And no one wanted to do it at the time.

So it`s a -- it`s not an implausible theory. It just, in practice at
that moment, it would not have worked.

MATTHEWS: But as a Republican, he should have followed what Abraham
Lincoln said, that the government should do for the people what they can`t
do for themselves, Maggie.

And free market solutions are often the best solution, but here where
there was no free market money, the government had to be the investor
because there were no private sector investors. His whole theory was based
on ideology, not on reality.

HABERMAN: I think you just on what exactly it is. It`s ideology.

If you remember, prior to the 2008 race, Mitt Romney -- or at least
during the 2008 race -- Mitt Romney`s position was actually much more pro-
bailout than it ultimately became once the auto industry, one, was being
discussed and they were working out a framework.

And I think this is the problem, as John said, as you said. This was
-- this is a lovely theory of the case. And some people did subscribe to
it. But to say, look, I suggested a managed bankruptcy, yes, that is sort
of what happened, but it happened in a very specific way. And to then
claim that you were then the founder of this idea, it stretches credulity a

MATTHEWS: OK, do what you do best now, John. Give us a look at the
next six months. The UAW out there, the autoworkers in those states, the
ground game coming out of Chicago right now, the social networking, how are
they going to put together on the ground getting to the voting booth people
who care about the auto industry in those states like Michigan and Ohio to
turn this against the other side?

HEILEMANN: Well, I think, first of all, Chris, I think the question
is whether Michigan will in fact still be in play six months from now.

And what I see here is the Romney campaign kind of test-driving a
message. They`re trying to figure out a way if they can move some numbers
in the polling and that will make it worthwhile for them to then really
invest in Michigan.

My guess is that over the course of the next couple months, it`s going
to become pretty clear to the Romney campaign, because they are serious
data-driven people, that Michigan is not winnable for them. And so they
won`t actually end up playing there.

MATTHEWS: How about Ohio?

HEILEMANN: Ohio, they must play in, because there is really not a
plausible map, no plausible path for Romney to win to get to 270 electoral
votes without Ohio.

So they can play there, but there -- although it`s true the auto
industry is really important as a subsidiary employer in Ohio, it`s not the
same kind of bread and butter issue as it is in Michigan. They can
campaign on other things besides the auto bailout there.

MATTHEWS: Maggie, are you surprised at our poll that we just showed
that showed so little increments, so little advantage in picking Portman of
Ohio as his running mate?

HABERMAN: A little bit, but not hugely. I think Portman is a bit
overstated in terms of a commodity and in terms of someone who has some
known identity. This is a problem with being described as bland, is you do
not have some huge brand as being known for exciting or interesting.


HABERMAN: I don`t think he is hugely known to his state. That may
change by the time we get much closer to the election.

But I think, listen, there is a reason why people often say that the
V.P. pick does not win you a state. And I think you`re looking at it right

MATTHEWS: You know, I have never been called bland. I guess I`m
ahead in this race.


MATTHEWS: Anyway, that`s the one thing I have avoided.

Hey, John Heilemann, I hope you know how much we love you. I
sometimes think you don`t know how much we love you here and how much we
need on you this program.


MATTHEWS: Maggie, too, but...

HEILEMANN: I feel the love, Chris. I feel the love.




MATTHEWS: I feel -- I feel like I`m Jack Kennedy talking to Lyndon
Johnson sometimes.


MATTHEWS: I have got to make sure you know how much I need you.


MATTHEWS: John Heilemann...


MATTHEWS: ... much more essential to us than LBJ was to the new
frontier, I can assure you.


MATTHEWS: Thanks, Maggie.


MATTHEWS: Up next -- I`m obviously reading Caro`s book every minute.

Anyway, up next: Rick Santorum finally endorses Mitt Romney. Boy,
this is a middle-of-the-night decision. That`s in the "Sideshow."

You`re watching HARDBALL.


MATTHEWS: Back to HARDBALL and now to the "Sideshow."

Want to see Hollywood`s idea of a political ad?

Then catch "The Campaign" starring Will Ferrell and Zach Galifianakis.

They play opponents in a Southern congressional race. Here`s one of
their ads.


UNIDENTIFIED ACTOR: If you love America, if you love freedom, if you
love your family, then you will love Cam Brady.

WILL FERRELL, ACTOR: Education is our future because schools is this
nation`s backbone.

UNIDENTIFIED ACTOR: When it comes to his opponent, he won`t back down
from a fight.

FERRELL: I have seen a mustache like that before, and you know who
wore it? Saddam Hussein.

And I believe we never caught two of sons, Uday and Falafel.

UNIDENTIFIED ACTOR: He`s not afraid to work it.

What does Marty Huggins stand for?

ZACH GALIFIANAKIS, ACTOR: And Marty Huggins and I...

FERRELL: A communist.

That`s a real shame.

I`m Cam Brady, and I approve this message.

UNIDENTIFIED ACTOR: Paid for by Yes We Cam `012.


MATTHEWS: And if that didn`t get your vote, try this one.


UNIDENTIFIED ACTOR: What do these men have in common? Marty Huggins
has read about these leaders and said, I can do better. He`s a visionary.

GALIFIANAKIS: Let`s get rid of daylight savings time. Right?
Because I hate when it gets dark early.

UNIDENTIFIED ACTOR: He`s multicultural.

GALIFIANAKIS: I`m glad to be here. It`s the first time I have worn a

UNIDENTIFIED ACTOR: Isn`t it time to give Washington a Huggins?

GALIFIANAKIS: Things are a mess. It`s a mess.

UNIDENTIFIED ACTOR: Paid for by Americans United in Unity.


MATTHEWS: Now, there`s a subtle movie. The movie hits the theaters
this August, when the real ad wars will be in full swing.

And you have seen those lukewarm Romney endorsements. Well, until
now, the winner of them was probably George Pataki telling us that Romney
has -- quote -- "a number of problems."

But now it`s finally here, the stamp of approval from Rick Santorum.
Wondering how you missed it? Easy. The big announcement came last night
around 11:00 Eastern via e-mail.

And here`s part of Santorum`s breathless endorsement -- quote -- "The
primary campaign certainly made it clear that Governor Romney and I have
some differences. While I had concerns about Governor Romney making a case
as a candidate about fighting against Medicare -- I mean Obamacare -- I
have no doubt if elected, he will work with a Republican Congress to repeal
it. My conversation with Governor Romney was very productive, but I intend
to keep lines of communications open with him and his campaign."

That sounds to me like Rick Santorum is planning to apply conservative
litmus tests throughout this campaign and could at any moment not be
endorsing Romney.

Up next, dirty, angry money -- how can Karl Rove`s group, Crossroads
GPS, claim even to be a non-profit devoted to promoting social welfare when
it runs ads that are blatantly political and aimed against Democrats by
name? That`s ahead.

You`re watching HARDBALL..


CNBC "Market Wrap."

The Dow ends off session lows, but declines 76 points, the S&P down
six. The Nasdaq sheds 11. Renewed worries about Greece sank stocks.
Conservatives failed to form a coalition, raising the prospect of another
round of elections. But welcome news for job-seekers. Employers posted
3.74 million positions in March, the most since July 2008. And Disney
shares are higher after-hours, following a better-than-expected earnings

That`s it from CNBC, first in business worldwide -- now back to

MATTHEWS: Welcome back to HARDBALL.

We have been tracking the dirty, angry money out there that`s
infesting our political system this year especially, and here`s a perfect
example, a $10 million contribution to Karl Rove`s group Crossroads GPS.
Think about it. However, unlike most political contributions, the group is
under no obligation to disclose who gave that $10 million, or even if it
was a single individual or some corporation who gave it. It doesn`t have
to say.

That`s because Crossroads GPS calls itself a social welfare
organization, unlike its sister group, American Crossroads, also run by
Karl Rove, which is a super PAC. But here`s the wrinkle.

The IRS says social welfare groups must be operated exclusively to
promote social welfare and cannot make political activity its primary
focus. Well, that`s a tough argument for Crossroads GPS to make, since the
vast majority of its ads are attacks by name on Democratic candidates.

Here`s one that goes after President Obama by name.


NARRATOR: Typical Washington. Obama says spend more and promises
jobs. Obama donors and insiders line up for handouts.

economic growth will always be companies like Solyndra.

NARRATOR: Mr. President, we need jobs, not more Washington insider


MATTHEWS: Well, Crossroads GPS would call that an issue ad, but who
exactly believes that?

Dan Froomkin is senior correspondent for The Huffington Post and does
a great job. And Joe Conason is editor in chief at NationalMemo.com.

I want to start with Dan, who has got us into this issue.

I just looked at the law, and it clearly says if you spend this money
on advertising in a campaign, in opposition to any candidate, and here`s
Rove out there spending his GPS money against people like Tim Kaine, Bill
Nelson, all these names in all these ads, directly in violation of the tax
classification of these so-called non-profits. How is he getting away with

DAN FROOMKIN, THE HUFFINGTON POST: Well, what they`re -- they`re
trying to sort of define what they`re doing by the FEC`s rules. The FEC
The Federal Election Commission has these notoriously hair-splitting rules
about what`s a political ad and what isn`t.

And by FEC rules, you actually have to use one of the magic words,
elect or vote or don`t elect and don`t vote.


MATTHEWS: You mean dumping all over a candidate isn`t opposing them?

FROOMKIN: As long as the end, you say something like call them and
tell them to stop eating live puppies, or tell them to stop supporting
Obamacare, by FEC rules, it is not technical a campaign ad.

Now, that`s a definition that only an FEC lawyer could love.

MATTHEWS: What about the IRS? Aren`t they tougher?

FROOMKIN: The IRS theoretically has a more commonsense approach and
looks at something with what they call facts and circumstances. And their
rules seem very clear. But the question is whether they will do anything
about that.

MATTHEWS: You know, let me go -- let`s go over to Joe Conason.

Joe, your view about this generally, because you think about this as
much as I do, about our democracy and keeping it somewhat democratic,
lowercase D, where people actually count more than the big-money people.


Look, anybody who looks at this understands that the FEC has failed to
enforce any reasonable standard for -- for these rules for many, many
years. It`s a political operation. It`s staffed -- and the commissioners
are Democrats and Republicans. And the Democrats protect Democrats, the
Republicans protect Republicans, and it`s the easy because of the nature of
the commission to have a stalemated vote.

So they never really investigate anything with any vigor. The IRS is
a different story. And I find it hard to believe, frankly, Chris, that the
IRS is going to fall for Karl Rove`s story that this is a social welfare
organization. And hopefully they will decide that they ought to audit his
group and see where they`re actually spending the money, not take their
word for it, and what that money is going for, and then see whether it
falls within the rules, because I suspect it won`t.

And I suspect that if they do find that, then the donors who gave a
$10 million contribution anonymously are going to find that Rove`s promises
that their names would never be revealed may in fact be wrong.

MATTHEWS: Well, also, it would seem to me that, without going into
sort of mind-reading, that he`s telling these people if you give -- these
are right-wing people, businesspeople -- if you give this money, you will
defeat Democrats.


MATTHEWS: That`s why they`re giving the money.

FROOMKIN: Well, sure. And he`s also promising that...

CONASON: Of course.

FROOMKIN: ... they if you give them money, they won`t -- that nobody
will ever know who they are.

MATTHEWS: Well, that`s number two.

Let`s take a look at some of these ads from Crossroads GPS. It`s the
Karl Rove operation, going after Democrats, in this case, Tim Kaine is
running for Senate, Ben Nelson -- this guy stopped running. He was going
to run for reelection from Nebraska. And Jon Tester is still running for
reelection from Montana as a senator. Let`s watch.


AD NARRATOR: Tim Kaine has been part of Obama`s partisan
cheerleader, applauding every idea.

critically important to put people back to work.

AD NARRATOR: As Virginia governor, Tim Kaine`s reckless spending
turned a budget surplus into big deficit. Reckless spending, massive debt,
no wonder Tim Kaine applauds Obama.

AD NARRATOR: What`s wrong with Washington? Look at the damage he
did. Higher taxes, cutting medical spending, embarrassing Nebraska. Ben
Nelson sold out to Obama when it counted most. Senator, it`s time to make
it right.

AD NARRATOR: Remember this from Jon Tester?

SEN. JON TESTER (D), MONTANA: Washington has lost its way. And we
need to set it right.

AD NARRATOR: But in Washington, Tester`s way is Obama`s way. Tester
voted with President Obama 97 percent of the time.

Tell Jon Tester, Obama`s way is the wrong way for Montana. Tell him
to say no to Obama`s proposed trillion dollar deficit.


MATTHEWS: Is there a place in hell for people who make those ads,
Joe? Is there someplace like a Superman movie where they go spinning off
into space in the space screen and you never tell them again, at least not
until the sequel?

JOE CONASON, NATIONALMEMO.COM: You know, the most we can probably
hope for, Chris, is civil penalties and leave the rest of it to the
Almighty. But I think --

MATTHEWS: Do you any of those voice guys, they always have a grim
voice. You know, "yes, this is about to die here," and then they have the
black and white and the same newspaper clippings. It`s the same old M.O.

Go ahead. Your thoughts, Joe.

CONASON: Well, look, nothing is going to change about this until
people rise up and decide that the politicians need to reform this system.
And, you know, luckily, there is a sign that finally they`re going too far,
and that this year, after the Republican campaign, with all the super PAC
spending in the primaries, that people are disgusted at long last.

You and I both know, Chris, that for years now, most voters have paid
very little attention to these reform issues. It just hasn`t been on the
radar for them, either war or economy, something else. But this year,
there seems to be some suggestion that people are paying attention now.
There is a new poll that`s going to come out tomorrow from Democracy Corps
and the Public Campaign Fund, and it`s going to show that this is a salient
issue for a lot of voters this year.

MATTHEWS: I heard it`s coming.

According to this, Crossroads GPS` tax returns, just under 100 donors
gave a total of $77 million between June 2010 and December 2011. That
includes two donations that there were around $10 million. There were four
other donations between $4 million and $5 million. According to the "L.A.
York Times," by the way, two dozen donors gave at least $1 million.

And this is the question, Dan, I don`t know what your views are, but
philosophically expound on them right now.

If you can run a series of ads and say, a state like North Carolina,
which is going to be closer to Ohio, and you can just pound the air waves
all the way through October, and you had the money to do that without even
having your name show up, you`ve got a lot more power than a couple hundred
voters, probably have a lot more power than several thousand voters.

DAN FROOMKIN, THE HUFFINGTON POST: Yes. At the congressional level,
the money is going to be astonishingly effective, in terms of defining the
candidate in terms of creating a public mode, in terms of -- and with
secret money comes the chance for a corruption.

MATTHEWS: Payoffs.

FROOMKIN: It`s a big slush fund, basically.

MATTHEWS: You mean they might get in to see the winning candidate if
they`ve given 10 million bucks.

FROOMKIN: Well, you know, it`s going to be secret to you and me,
it`s not going to be a secret to the candidate who they gave money to.

MATTHEWS: That`s so right.

FROOMKIN: Bu, you know, Karl Rove always look like a genius until he
doesn`t. You know, thing -- he tends to look really smart until everything
collapses and disastrous --

MATTHEWS: You mean W. isn`t still seen as a successful president?


MATTHEWS: I thought he was. He was the architect. Anyway, he`s
fair game.

Anyway, Dan Froomkin, thank you very much. And Joe Conason.

Up next, the latest on how the CIA foil that plot to blow a U.S.-
bound airline. This is fascinating stuff. And here again, the good guys

And this is HARDBALL.


MATTHEWS: Marco Rubio tops the list of potential Mitt Romney running
mates right now. At least according to new PPP poll.

Take a look at this. The Florida senator was named by 25 percent of
Republicans, the best V.P. candidate for Romney. Way up there, New Jersey
Governor Chris Christie is down at second at 19 percent. Jeb Bush at 16
percent, he`s down in third place now. Paul Ryan at eight.

But look at Rubio, he`s getting a lot of dance time with Mitt Romney.
Boy, they are developing a big interest in this guy.

We`ll be right back.


MATTHEWS: We`re back.

We`ve got great new details about that terror plot the U.S.
intelligence disrupted within al Qaeda and the Arabian Peninsula`s base in
Yemen. Today, we learned the intelligence source was the would-be suicide
bomber himself.

NBC terrorism analyst Roger Cressey and Evan Kohlmann join us now
with the latest.

Roger, tell us about this. It`s amazing to have the guy, if you
will, that was going to put on the underwear, who was going to blow up the
plane, according to people who were working with him who ratted out this
whole thing.

story. In some respects, Chris, it`s what we expect the CIA to do, which
is to get a source inside early on in any type of development of a
terrorist plot. So, they were in so soon, that as John Brennan said, there
was never a point where this became a credible threat because they knew
what was going to happen and they could have disrupted it at any --

MATTHEWS: Will we ever as good at this, as Edgar Hoover was in
getting FBI agents into the American communist party, where were there more
agents at the meeting than there were real commies? There were more agents
at the meetings?

CRESSEY: I think that`s what we want to achieve at some point.

MATTHEWS: OK. I`m a -- a little humor doesn`t hurt here.

Evan Kohlmann, your belief -- how would score the success of the
asset himself being the guy who was going to blow up the plane being our

change from December of 2009 when the CIA thought that they had recruited
someone that would lead us to the highest ranking members of al Qaeda, and
the a double agent and he killed seven CIA agents.

MATTHEWS: I thought that was horrible. It was there on the frontier
there, yes.

KOHLMANN: And, you know, there`s a similar incident happened in
Yemen and Saudi Arabia. A high ranking Saudi al Qaeda member pretended
that he wanted to surrender to the Saudis, he went there and he was
carrying a bomb in his underwear. He nearly killed the deputy interior

So, it really is a remarkable change. I think it`s a sign of
progress. Let`s just hope that we`re able to keep recruiting these
individuals from within al Qaeda`s ranks, because even al Qaeda has
acknowledged, this is the way in which we will defeat them. And that`s not
just al Qaeda generally -- al Qaeda in Yemen has acknowledged that very
specific fact.

MATTHEWS: OK. Tell us the story of how this happened.

CRESSEY: Well, what we know so far, there is a lot we don`t know, is
that there is early penetration within the al Qaeda in the Arabian
Peninsula network. An individual, we still know his nationality, we think
there may have been other nations like the British intelligence involved in
supporting this. And they were basically able to identify where this plot
was going to go. They would be able to work with the individual who
ultimately was going to build the bomb. This is Ibrahim al-Asiri, to
identify what type of device it was going to be and how it was going to be

So, at every point in the process, based on what we know, we had far
better visibility than what was going to happen here than was otherwise the
case. It is directly related to the fact we had a person on the ground,
penetration of the network early on. And so the threat was never going to
be that significant.

MATTHEWS: Evan, tell us about the bomb, the underwear bomb, what it
is, consist of how it works, how it gets through the TSA equivalent in
other countries.

KOHLMANN: Well, al Qaeda in the Arabian Peninsula, al Qaeda in
Yemen, put a lot of time and effort into developing this. They actually
said that after Umar Abdulmutallab, they really spent a lot of time
thinking about how they could bring down commercial aircraft. The devices
seem to revolve generally speaking around PETN. It`s an explosive
component and it`s delivered in liquid form.

But the key element here is the detonator. Rather than using a metal
detonator which is usually what you see in these kind of explosive devices,
AQAP has developed to five different detonators that have no metal in them,
which means that x-ray detectors, metal detectors, they don`t do any good.
As for as what AQAP --

MATTHEWS: What is the material that is used for the conductor or
whatever to detonate? If it`s not metal?

KOHLMANN: Well, they haven`t said. They said it is an organic
material. It`s a nonmetal, and apparently it neither sets off x-ray
detectors nor is it detectible on human body scanners. In fact, they
developed it specifically because of that. They wrote a whole long treaty
about how they hope to launch a series of a thousand cuts targeting
America. Instead of big operations like 9/11, they`re going to launch
successive operations over a shorter period of time to bleed the American
economy. That`s the objective here.

MATTHEWS: OK. You mean, they expect to have a lot of explosions?

KOHLMANN: They are hoping for that. The idea is to keep the tempo
up -- to keep the number of operations up, and those eventually to make it
through our security.

MATTHEWS: Roger, if you`re really attentive TSA operator, you`re
watching the scanner right now -- would you be able to see one of these,
the underwear?

CRESSEY: It depends, is the quick answer.

Here`s what`s going to happen, Chris. This device is now in
Quantico, in the FBI lab. They`re going to tear it apart, analyze it,
they`re going to run it through it, several of the AITs, these body
scanners, to see what part of it might show and what not.

And then you`re going to get guidance -- guidance from the bureau is
going to be given to TSA.

MATTHEW: Stricter than normal.

CRESSEY: It could -- I mean, who knows? But whatever the evidence
is, that we -- and conclusions that we draw from the lab analysis, you`re
going to will see that with TSA. It may require new measures that we`re
going to see as we go into airports. But again it depends on what the FBI
determines after its analysis.

MATTHEWS: And last question quickly to Evan, are we going to have
more of these people carrying the bombs inside them? Surgically implanted?

KOHLMANN: Look, I mean, surgically implanted, probably not.
Concealed within clothing, definitely. I think you have take al Qaeda at
its word. And after Umar Abdulmutallab, they said expect us to send more
people like this. Expect this to happen again.

And the problem is that there are other al Qaeda affiliates out now
that all want to be the next latest and greatest in the world of terrorism.
And you can be sure they are watching this right now and saying, let`s
emulate this. Let`s do this ourselves and next time, we`ll grab the
headline, we`ll grab the focus and we`ll get the notoriety out of it.

MATTHEWS: Yes, thank you so much for the bad news.

Evan Kohlmann, thank you.

KOHLMANN: Thank you.

MATTHEWS: Roger Cressey -- whenever you guys show up, I have a bad
night. Anyway, when we return -- just kidding. It`s great to have this
kind of reporting.

When we return, "Let Me Finish" with my thoughts about our evolving
president. You`re watching HARDBALL.


MATTHEWS: "Let Me Finish" tonight with this:

My problem with two-party politics is that you are inevitably drawn
into saying things in public than you would normally prefer not to. If
you`re a Democrat, for example, you are supposed to be down the line for
the labor positions, down the line for women`s groups, down the line for
immigration advocates, oh, yes, down the line for the latest bipartisan
push for war.

For this reason, I`d rather be a commentator and pick my fights.
Look, I`ve been fairly positive about all the causes of gay people in this
country. I think the president is clearly with those causes. It`s about
saying the right thing when it will achieve the right purpose.

Would it achieve the purpose of marriage equality for the president
to back it now? Would is t advance to have a year or two ahead of its
current phase of acceptance? Or would it simply incur casualties in the
cause? The loss of several more culturally conservative states, including
North Carolina or Ohio or cost Obama even a surprising state, like

Would that advance the cause or would it solidify the Republican
opposition because they would owe it big time? Would it put Mitt Romney in
the White House? Someone who just said he would never give up his
opposition to same-sex marriage?

I believe that president: (a), knows more about his political
challenges than the rest of us and, (b), is basically liberal on such
matters. I can`t read his mind or heart but I can judge him as a person,
and he is not the sort to condemn people for how they were born and to how
the love they know and the love they know because of who they are.

The statement that he is evolving places the president in sync with
many Americans. If he is at a further stage or at a further stage of
evolution than he is willing to admit, that is not a point on which to
decide against him. It`s a far stronger reason to vote against his
opponent whose evolution, as he just declared, is not existent.

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

"POLITICS NATIION" with Al Sharpton starts right now.


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