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updated 8/21/2009 1:14:46 PM ET 2009-08-21T17:14:46

Guests: Amanda Drury, Michael Smerconish, Rep. Jim Moran, Michael Isikoff, Melinda Henneberger, Roger Simon, Sam Allis, Neil Swidey

CHRIS MATTHEWS, HOST:  Bombshell.  Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in New York.  Leading off tonight:

Suspicions confirmed.  For a long time, critics of former president Bush suspected his that administration politicized our national security for political gain.  Now they have what appears to be proof.

Tom Ridge, who served as Bush‘s first secretary of homeland security, says in a new book that he was pressured by top Bush administration officials, including Secretary Donald Rumsfeld and John Ashcroft, to raise the terror threat level from yellow to orange the weekend before the 2004 reelection election—reelection to the presidency for President Bush, that is.  In other words, the Bush team tried to manipulate—hype, if you will—the terror alert level to incite panic and win votes right before his reelection Tuesday.  We‘ll get all that in tonight.

Also tonight, has President Obama gone to orange alert in his health care reform push?  Today‘s “Wall Street Journal” reports that the White House and Democrats are considering splitting the health care reform bill into two parts so they can ram through the public option part solely with Democratic votes.  Michael Smerconish did his radio talk show today with the president in the White House.  He joins us later.

A lot of President Obama‘s supporters are very unhappy with how he‘s handled the health care debate.  Our own Roger Simon said instead of drawing a line in the sand, Mr. Obama has drawn a squiggle in the mud.  We‘ll bring that up in the “Politics Fix.”

And Senator Ted Kennedy, who we all know is battling brain cancer right now, is trying to make sure that health care reform efforts aren‘t hurt by his absence from the Senate.  He sent a letter to the Massachusetts governor and state congressional leaders asking that his seat be temporarily filled, in the event that it‘s necessary, not by a special election but by appointment by the governor until that election is held.  Why wouldn‘t the governor do this for him?

And finally, what separates John Ensign‘s affair from Bill Clinton‘s? 

Ensign‘s got the answer for us.  That‘s in the HARDBALL “Sideshow” tonight.

We begin with the revelation by former homeland security secretary Tom Ridge that top Bush administration officials pushed him to raise the terror threat level in the weekend just before the 2004 presidential election.  Here was the scene that Friday before the election in 2004.  Members of the Bush administration‘s national security team assembled to weigh the U.S.  response to a new bin Laden videotape.

Here‘s how Ridge described the meeting.  Quote, “A vigorous, some might say dramatic, discussion ensued.  Ashcroft strongly urged an increase in the threat level and was supported by Rumsfeld.  There was absolutely no support for that position within our department”—that‘s Homeland Security—“none.  I wondered, Is this about security or politics?  Post-election analysis had demonstrated that a significant increase in the president‘s approval rating occurred in the days after we raised the threat level before.”  Ridge wrote, quote, “It seemed possible to me and to others around the table that something could be afoot other than simple concern about the country‘s safety.”

Well, the idea of raising the threat level was absolutely dropped ultimately, and Ridge said, quote, “I believe our strong interventions had pulled the ‘go up‘ advocates back from the brink.  But I consider that episode to be not only a dramatic moment in Washington‘s recent history, but another illustration of the intersection of politics, fear, credibility and security.  After that episode, I knew I had to follow through on my plans to leave the federal government.”

Wow!  It‘s all in this new book that‘s coming out in two weeks.  We got an advance copy.  I‘m looking at it right now.

Let‘s turn right now to Democratic congressman Jim Moran of Virginia and “Newsweek” investigative reporter Michael Isikoff.  Congressman Moran, you first.  What does this say to you, reading this new book by Tom Ridge?

REP. JIM MORAN (D), VIRGINIA:  I continue to be proud that I consider myself a good friend of Tom Ridge‘s.  He‘s a thoughtful, credible professional.  I don‘t think the Bush administration deserved to have him among their ranks.  And I do think that it was pretty obvious that they were politicizing these threat alert levels, as they were just about everything they did over the eight years.  It wasn‘t a matter of making the country particularly safer, it was a matter of improving Bush‘s poll numbers.  And eventually, they overreached and undid themselves.

MATTHEWS:  Mike Isikoff, you‘re an expert on conspiracies in this administration just past.  What do you make of these quotes?  I mean, they‘re amazing quotes.  And you know, when you write a book—as you know, you‘ve written a best-seller—you take great care when you make accusations like this against your colleagues.  Look at this.  “Is this about security or politics,” he asked himself, sitting around the table.  “It seemed possible to me and to others at the table that something could be afoot other than simple concern for the country‘s safety.”

He‘s accusing his colleagues, Rumsfeld and Ashcroft, et cetera, of trying to hype something to help the president get reelected and to keep their jobs.

MICHAEL ISIKOFF, “NEWSWEEK”:  Well, look, the question he‘s raising there, Was this about politics or security, was a question that everybody in the media and many people in government and politics were raising every time we went through the terror alerts during that period.

Just take a step back and you look at everything that was going on in 2004.  I had a top Bush strategist who worked on that campaign who told—who said last year, You know, that was a campaign we never should have won, an election we never should have won.

Iraq was going south, escalating casualties, the revelations about Abu Ghraib, the revelations in the Senate Intelligence Committee about how the administration had stretched the intelligence in the run-up to the war in Iraq, the 9/11 commission hearings showing how so many people inside the White House were asleep at the switch at the time that the president got the PDB “Bin Laden prepared (SIC) to strike the U.S.”

What saved the election for George W. Bush in 2004?  It was the threat of another terrorist attack and the continuous threat alerts.  Now, that is simply—that was the view of inside the Bush campaign itself.  It doesn‘t mean that there weren‘t genuine security fears during this time.  There were.  But because of the highly politicized atmosphere, because of the track record the Bush administration had demonstrated, particularly in the run-up to the war in Iraq, there were widespread suspicions as to whether or not these constant terror threat alerts were, indeed, genuine or whether they were influenced by politics.

MATTHEWS:  And as Secretary Ridge points out in this brand-new book—we‘ve got the advance copy—every time they pushed that panic button and code orange went up, they knew they got more poll voltage out there.

Let‘s look at the exit polls coming out of 2004 presidential election that makes your point, Michael Isikoff.  Nineteen percent of voters considered terrorism the most important issue.  And of them, 86 percent—this was a wipeout, this was a shutout, basically, for the president -- 86 to 14 percent on that issue.  So every time terror got into people‘s heads, it helped the president.

Congressman Moran, it seems to me—I even saw another poll, you probably saw it back then -- 49 percent of the country, just about half, said the only guy who could protect them was Bush.  So every time that panic button went orange or red even, they gained.

MORAN:  But doesn‘t it remind you of that old story, The boy who cried wolf?  There‘s only so many times you can do that, and then you lose your credibility.  And that was Tom‘s concern.  He wanted to maintain the credibility of his agency and of the professionals who were working in his agency, and he understood that as the White House politicized what they were doing, then when they do have a real alert, when it is an orange or red alert, then people are less likely to take it seriously.  The country is less likely to respond.

That was Tom‘s concern.  And unfortunately, it clearly wasn‘t the White House‘s concern.  Their concern was getting this guy reelected, regardless of the fact that they were undermining the credibility of the Department of Homeland Security and really threatening the real security of our nation.

MATTHEWS:  OK, let‘s take a look at this.  In August of 2004 -- that‘s several months earlier than the election—the terror threat level was raised for five financial institutions in New York, Washington, and Newark, New Jersey.  Here‘s what Tom Ridge said at the time when asked about—by skeptic about those who suspected that the threat level was being politicized.  Let‘s listen to Secretary Ridge back in August of 2004.

(BEGIN VIDEO CLIP)

TOM RIDGE, SECRETARY OF HOMELAND SECURITY:  I wish I could give them all top secret clearances and let them review the information that some of us have the responsibility to review.  We don‘t do politics in the Department of Homeland Security.

(END VIDEO CLIP)

MATTHEWS:  Mike Isikoff, We don‘t do it, but others in that Cabinet Room did.

ISIKOFF:  Well...

MATTHEWS:  Here we have a new book out.  I want you to give me a reading on this book.  When you pick it up and you find these words and you read in it where he says, let‘s say—“Is this about security or politics?”  Then he answers his own question, says, “I believe our strong intervention saved us from going ahead to this higher brink, but I consider this episode to be not only a dramatic moment in Washington‘s recent history but another illustration of the intersection of politics, fear, credibility and security.  After this episode, I knew I had to follow through on my plans to leave the federal government.”

ISIKOFF:  Well...

MATTHEWS:  Pretty strong language, I had to quit after I saw the games that were being played.

ISIKOFF:  It is, although I‘m glad you played that clip from August of ‘04 because I think a lot of us always thought that that orange terror alert, which Tom Ridge totally endorsed, actually did as much to change the momentum of the election as any other single event.  That came within days after the end of the Democratic convention.  It totally stopped John Kerry‘s bounce, crushed his bounce coming out of that convention and—you know, and turned an election that—Kerry at that point was ahead in the polls, was poised to win, and began the swing back towards Bush.

So Ridge, you know, doesn‘t—if you believe that these terror alerts were largely political or had too much politics in it, Ridge doesn‘t have clean hands here.  He was a part of it.  It‘s also worth, you know, pointing out in context that the threat alert that he says he resisted on the eve of the election came right after the release of a new Osama bin Laden tape and the release of another tape by Adam Gadahn, an American al Qaeda follower in—with al Qaeda in Afghanistan, who was warning about blood flowing in the streets.

So there was, in fact, stuff going on that had security people concerned during this time.  So I don‘t think we should completely dismiss...

MATTHEWS:  Yes, except in the book...

ISIKOFF:  ... everything that was going on.

MATTHEWS:  But in the book, Tom Ridge—and I talked to him this afternoon.  He stands by this book.  In the book, he says that those comments—the videotape by Osama bin Laden was the same old crap he‘d been coming out with for years.  There was nothing new in there.  His hatred of the West and of President Bush was not news, nor was it increasingly threatening.

Congressman Moran, let me read you another quote from this that‘s

grabbed me.  “It also seemed possible to me and to others around the table”

that was in the Situation Room when they were considering that tape—

“that something could be afoot other than simple concern about the country‘s safety.”  That‘s a very nice way of saying, I think politics...

(CROSSTALK)

MORAN:  ... being diplomatic, isn‘t he?

MATTHEWS:  Yes.

MORAN:  Well, he‘s trying to be diplomatic.  You know, I think he feels much the way that Colin Powell feels.  They were—anyone that had real credibility they were willing to use and abuse to the point that those people lost their credibility.  Colin Powell I think lost much of his, unfortunately.  He was manipulated by the administration, and it‘s clear that Tom was, as well.

I‘m sure Tom would wish that he had stood up, but if he had not said what he said, I don‘t think they would have included him.  They would have had the White House spokesperson say something, and they would have let him go.  You know, these guys were cutthroat.  They had one objective in mind, get the president elected.  Everything else was dispensable, including the most credible people in their administration.

MATTHEWS:  Mike Isikoff, how many hours do you think will pass before Dick Cheney comes out and dumps on this book?

ISIKOFF:  Well, I don‘t know.  Dick Cheney may have other things to—

that he wants to dump on right now.  We‘re getting on Monday the release of

the CIA inspector general report, which I‘m told is going to be devastating

going to have some devastating revelations in it about the interrogation program.  I think there‘s a lot that Dick Cheney is going to want to be rebutting over the next few days.  You know, I don‘t know how much the Ridge thing will factor into that.

But let me just make one more point on the Ridge stuff.  You know, just to underscore how heightened and politicized the atmosphere was during that period, I do remember there was actually even suggestions that—you know, because of the election year threats, there was a memo written that was forwarded to the Justice Department suggesting that the election—you know, there should be contingency plans for calling off the election in the event of a terrorist attack.  And you know, that does give you some idea of some of the thinking that was going on at that time.

MATTHEWS:  Well, sometimes I love it when things are what they look like.  Congressman Moran, thank you for coming on the show and giving us your reaction to this blockbuster new book by Tom Ridge, the former secretary of homeland security, wherein he argues that his colleagues were ready to hype up the threat to this country on the weekend before the 2004 election, which President Bush won by Ohio.  Congressman Jim Moran, thank you, sir.  Thank you, Mike Isikoff, as always.

Coming up: As his party plummets in the polls, President Obama takes to the airwaves to fight for his struggling health care reform plan.  He talked to Michael Smerconish‘s radio audience this afternoon.  We‘re going to have Michael on in a moment to talk about what the president said today.  Can he get back control of this debate?  We‘ve got Michael Smerconish coming up next.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I think early on, a decision was made by the Republican leadership that said, Look, let‘s not give them a victory.  Maybe we can have a replay of 1993-‘94, when Clinton came in.  He failed on health care, and then we won in the mid-term elections and we got the majority.  And I think there‘s some folks who are taking a page out of that playbook.

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  That‘s President Obama today talking to syndicated radio host and MSNBC contributor Michael Smerconish.  He joins us now.

Michael, we‘re going to look at some polls right now to show you how bad this thing is for the president right now.  It‘s a new Pew poll.  Among the two thirds of the country think that President Obama and Republican leaders are not working together—among those two thirds, 17 percent of them blame the president, that‘s compared to 7 percent back in February.  So he‘s losing ground there.  Republicans are holding it just under 30.

Now for party favorability.  Look at this.  The Democrats are down below 50 percent now for the first time, Republicans holding at 40 percent.  In other words, their slash-and-burn attacks on the president haven‘t hurt them an inch.  That would tell me, as a Republican—if I were a Republican activist, I‘d say, Keep on the fire, keep the flame thrower aimed directly at the White House.  We‘re not losing, he is.

MICHAEL SMERCONISH, RADIO TALK SHOW HOST, MSNBC CONTRIBUTOR:  Well, and what‘s amazing to me...

MATTHEWS:  Right?

SMERCONISH:  Yes.  What‘s amazing to me about those numbers, Chris, is that the Republicans are seeing that gain, or at least devaluing the president‘s numbers, without really offering an alternative.

MATTHEWS:  Right.

SMERCONISH:  In other words, it‘s not as if there‘s a GOP plan out there that‘s gaining favor.  It‘s that his is being torn down.

MATTHEWS:  So, Do only harm, is their oath.  Do only harm, and it seems to be working.

Here‘s more of the president today on your show—must have been quite an honor.  You and I are friends, and I know what an honor it is to meet with any president and to sit in the president‘s own presence there at the White House and spend that time with him.  You‘re smiling because you ought to be.  What a get it was for you.

But let‘s watch and listen to the president on your program today.

(BEGIN VIDEO CLIP)

OBAMA:  The press got a little excited and some folks on the left got a little excited about this.  Our position hasn‘t changed.  We think that the key is cost control, competition, making sure the people have good quality options.  If we‘re able to achieve that, that‘s the end that we‘re seeking.  And the means—you know, we can have some good arguments about what the best way to achieve it is, but we‘ve got to change because the status quo is unsustainable.

(END VIDEO CLIP)

MATTHEWS:  Will that calm talk work now, Michael?

SMERCONISH:  Well, that question—pardon me—that answer was in response, I think, Chris, to my first question, which was to say, Did Secretary Sebelius misspeak last weekend?  Is there some change now afoot relative to the position on the public option?  And that was the president explaining to me that he believes the media had made a mountain out of a molehill, that things that she said on Sunday were very consistent with what has been said and is still being said by the administration.

So he was very much trying to keep up at least the public posture that the public option is out there and alive.

MATTHEWS:  What‘s the public make of this, that the president‘s waffling?

SMERCONISH:  Well, I don‘t know that the public, respectfully, really understands the public option versus single payer versus a public co-op.  I think the public just has this perception—many that I hear from, and what I really wanted to convey to him today is that there‘s a perception among many, at least many talk radio listeners, that the government under his watch wants everything, wants involvement in the automotive industry, wants involvement in the banks and wants involvement in health care.

And what he then responded to me—because I said it to him in those terms—was to say, look, you know, this didn‘t happen on my watch.  The involvement with the banks started, the whole TARP program began on the watch of—of—of Bush 43.

So, he was trying to dissuade people from the view that he wants a piece of everything. 

And, Chris, I don‘t think that it‘s the fringe element that has that concern.  I think that there are some Republicans and some independents with whom he‘s lost ground who are concerned that, uh-oh, this spending is really now taking on a—a quantum leap. 

MATTHEWS:  Why is radio right? 

SMERCONISH:  Well, it‘s a long—I have a long answer, but the short version is because I—I believe that conservatives didn‘t feel as if they were wanted and had a home in traditional media outlets.

And that explains the rush—the rise, pardon me, a decade-plus ago of Rush Limbaugh.  Today, you know, it‘s—it‘s hard, man.  It‘s hard for a guy like me, because I get branded a conservative.  You know I have never held myself out that way.  I have plenty of conservative views and plenty of liberal views, but I constantly feel like I‘m—I‘m—I‘m swimming upstream because the people who tune in, they expect that that‘s what they‘re going to get.

And—and, frankly, many of them are seeking that level of reassurance.  I‘m not there to offer you reassurance.  I‘m there to hopefully ask entertaining and probing questions...

MATTHEWS:  Yes. 

SMERCONISH:  ... and—and—and not to browbeat. 

MATTHEWS:  Let‘s take a look at some more of the president today on your program.  He‘s talking about misinformation.  I wonder if that‘s his problem, or his problem that people really do have a sense of what he‘s doing, and a lot of the people in the center-right, as well as the right, don‘t want him to do it, which is to increase the federal role in taking responsibility for ensuring people‘s health. 

I‘m not sure the right and the center-right are comfortable with that basic idea of taking national responsibility for the people who are uninsured right now. 

Here is the president talking about it. 

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  You mentioned illegal immigrants.  This—this has been an example of just pure misinformation out there.  None of the bills that have been voted on in Congress and none of the proposals coming out of the White House propose giving coverage to illegal immigrants, none of them.  That has never been on the table; nobody has discussed it. 

So everybody who‘s listening out there, when you start hearing that somehow this is all designed to provide health insurance to illegal immigrants, that is simply not true and has never been the case. 

(END VIDEO CLIP)

MATTHEWS:  But here is the point, Michael.  Why has it taken him until now to say that?  Because he doesn‘t want to offend people who are on the side of—quote—“illegal immigrants” or undocumented workers, as you might call them.

SMERCONISH:  Well...

MATTHEWS:  He doesn‘t want to offend that constituency.  There‘s no—no confusion here.  They‘re—he‘s on their side generally.  If he‘s not going to give them health care this time, well, that‘s the first time he hasn‘t been on the side of them. 

SMERCONISH:  Well, he, by the way, was responding to a radio caller, I think from Indiana, who raised that issue.  That‘s another of those constants that you hear about. 

Now, there‘s a shred of truth in this, though, Chris, because there‘s a 1986 law on the books—I don‘t know what becomes of that law—that says, if a person shows up in an E.R., they have got to be treated. 

MATTHEWS:  Well, that‘s all right, but that‘s not part of a health insurance program, going to an E.R. 

SMERCONISH:  No, it‘s not. 

And I—and I raised that with the president.  And the president—

the president said—and the tape will speak for itself—hey, look, what

are we going to do, turn away someone who is in a perilous condition?  You

you can‘t have that. 

But I think it‘s—it‘s healthy for him—let me say this.  He came on my program.  And he knows that, regardless of my views, the traditional caller is a conservative individual.  There were no ground rules.  The White House never said to me, keep him away from these questions. 

Their—you know, their attitude was, open those phone lines and—and let‘s have at it.  And I love the fact that he wants to be engaged in dialogue, get away from all that left-vs.-right shout-fest, which I think benefits no one. 

So, you know, what am I going home on the train thinking about today?  I‘m going home thinking that it was a fabulous experience.  I sat where FDR delivered fireside chats.

MATTHEWS:  Yes. 

SMERCONISH:  And there were no rules as to what I could ask the president of the United States. 

MATTHEWS:  Are you taking that table cloth home with you? 

SMERCONISH:  No, I took a few tablets.  And...

(LAUGHTER)

SMERCONISH:  ... Robert—Robert Gibbs...

MATTHEWS:  What is that tablecloth?  What was that paisley tablecloth you put out there on the table? 

SMERCONISH:  That...

MATTHEWS:  What is that thing?

SMERCONISH:  That‘s not me, pal. 

(LAUGHTER)

SMERCONISH:  I—I told—I told Robert Gibbs I was taking home a...

(LAUGHTER)

SMERCONISH:  I was taking home a robe.  If I saw a White House robe, I was taking it back to Philly. 

(LAUGHTER)

MATTHEWS:  I just couldn‘t—let‘s take a look. 

Here is some more of the president, seriously.  This is a serious discussion.  I can‘t resist.  But here he is talking about trying to do something really historic and how difficult it is. 

(BEGIN VIDEO CLIP)

OBAMA:  Passing a big bill like this is always messy.  It‘s—FDR was called a socialist when he passed Social Security.  JFK and Lyndon Johnson, they were both accused of a government takeover of health care when they passed Medicare. 

This is the process that we go through, because, understandably, the American people have a long tradition of being suspicious of government, until the government actually does something that helps them, and then they don‘t want anybody messing with whatever gets set up. 

(END VIDEO CLIP)

MATTHEWS:  Michael, you it seems—have got a lot of Republican listeners, I know that, and some middle-of-the-road people as well, and a few libs.

But let me ask you this.  Doesn‘t it seem clear to you that the Republican strategy now is scorched earth, destroy this guy‘s chances?  If he wins, they lose.  Therefore, they want him to lose.  If he doesn‘t get a health care bill through this year, the Republicans will have a good Christmas. 

SMERCONISH:  I don‘t know that the Republicans have a strategy.  I don‘t know that what‘s going on out there is necessarily being directed by the Republicans, as much as it‘s being stirred by folks who do what I do for a living. 

And, you know, what‘s a shame is that there—there are folks out there who are not birthers.  They‘re not on the fringe.  They are middle-of-the-road folks like me who have legitimate concerns.  And, you know, they get shouted down in this whole process or are cast with aspersions because of those who are on the fringe. 

I guess what I‘m trying to say is, there‘s—there‘s reason here for a good, healthy discussion and debate.  And I hope that we can have it free of some of the climate that‘s been going on, which I think is counterproductive for everybody. 

MATTHEWS:  Remember the French and Indian War, Michael?  If I were an Englishman fighting that war against the French and the Indians, I would blame the French if I get scalped by one of the Indians.  So, you can‘t deny your allies, buddy. 

If they‘re on your side, you have got to be—be responsible for them.  And there are a lot of crazies out there on the right right now, the birthers or the people carrying guns, and you can‘t act like they‘re not part of your allegiance or part of your coalition, Michael.  If they‘re on your side politically, they‘re your fault. 

SMERCONISH:  Well, listen, Chris, I remember, during the campaign, where you would—you would get these individuals who would make reference to president, now president, by referencing his middle name.  And I always knew that was a cheap shot.  And I always said the GOP should cut loose whoever that person was who thought they were going to stir up the crowd with that. 

(CROSSTALK)

SMERCONISH:  It‘s counterproductive.

And, in this case, you know, it may come back to haunt some folks as well.

MATTHEWS:  Well, when they‘re running around waving scalps in the air saying that they defeated the president, a lot of Republicans who make money being Republicans are going to be cheering, I will bet you. 

Anyway, Michael Smerconish, buddy, thank you.  Congratulations on the scoop today.  You got the president. 

SMERCONISH:  Thank you. 

MATTHEWS:  Up next:  Senator John Ensign says his affair is different from Bill Clinton‘s affair with Monica Lewinsky.  Talk about splitting hairs.  Well, his—we‘re going to give you his reasons in the “Sideshow,” where it belongs. 

You‘re watching HARDBALL.  There‘s always plenty of stuff in the “Sideshow”—coming up in a minute.

(COMMERCIAL BREAK)

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

First:  It was legal.  Senator John Ensign, the Republican from Nevada, says that his extramarital affair with a staffer‘s wife was on a higher plane than the one President Clinton had with his staffer in the White House. 

Here is the senator‘s case.  He didn‘t lie under oath about the matter.  President Clinton did—quote—“President Clinton stood right before the American people, and he lied to the American people.  You remember that famous day he lied to the American people, plus, the fact I thought he suborned perjury—suborned perjury.  That‘s why I voted for the articles of impeachment.”

Isn‘t it nice to have a standard you can always rise above?  It lends you a bit of moral authority in the clinch. 

And check this out.  Karl Rove has just been named to the

Scandinavian-American Hall of Fame.  Wow, is that the Nordic version of the

Ancient Order of Hibernians 

Time now for tonight‘s “Big Number.” 

I got that award. 

Yesterday afternoon, President Obama invited 17 current and retired NASCAR drivers to the White House to honor NASCAR champ Jimmie Johnson.  But, according to the Politico, this isn‘t the first time the drivers have dipped their toes in political waters. 

Since the ‘80s, those NASCAR invitees have given $113,000 to Republican candidates or campaign committees of the Republican Party.  How much do you think the NASCAR crowd gave to Democrats over those many years, 29 years.  Zero, zip, nada. 

When it comes to the Democrats, NASCAR don‘t have a nickel, nothing, to give the Democrats. 

That‘s tonight‘s “Big Number.” 

And be sure to stay up tonight.  I will be a guest on—I can‘t wait

“The Colbert Report,” pronounced C-O-L-B-E-R-silent T.

Up next:  Senator Ted Kennedy wants Massachusetts lawmakers to change the law to allow the governor of the state of the commonwealth to appoint his successor. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

AMANDA DRURY, CNBC CORRESPONDENT:  I‘m Amanda Drury with your CNBC “Market Wrap.”

Stock rose again today on a flood of economic data and a strong rebound in the Chinese markets.  The Dow Jones industrials added almost 71 points, the S&P 500 up nearly 11, and the Nasdaq gaining 20 points. 

Stocks opened lower on a surprise bump in new jobless claims.  And more people unemployed means more late payments.  Mortgage delinquencies hit a new record high in the second quarter. 

But investors liked the report from the Philadelphia Fed.  It said regional manufacturing activity jumped more than 11 points in July. 

And cash for clunkers is calling it quits.  The Department of Transportation says it will end the popular trade-in program at 8:00 p.m.  Eastern time Monday night.  Auto dealers have already made rebate deals worth almost $2 billion.  That leaves only about $1 billion more in funding in the tank. 

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

HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

Here—here is “The Boston Globe”‘s banner headline this morning—quote—“Kennedy, Looking Ahead, Urges That Senate Seat Be Filled Quickly.”

Well, the senator wants Massachusetts to have two votes in the Senate if he‘s unable to be one of the votes.  He sent a letter to the Massachusetts governor, to Governor Patrick—Deval Patrick, rather, and other state leaders urging them to—quote—“provide for a temporary gubernatorial appointment until the special election occurs.”

In a statement today, the governor responded: “It‘s typical of Ted Kennedy to be thinking ahead and about the people of Massachusetts, when the rest of us are thinking about him.”

Well, with us now is columnist Sam Allis and reporter Neil Swidey of “The Boston Globe,” both of whom helped write “The Last Lion: The Fall and Rise of Ted Kennedy.”

Sam, my friend, I have to ask you this question.  What is it about Massachusetts law that‘s so strange that you don‘t have a simple appointment to fill the spot, like there was back in the 1960s when Jack Kennedy was elected president, followed by a—the election at the regular time in November of the next cycle?

Why not just do it the regular way? 

SAM ALLIS, “THE BOSTON GLOBE”:  Why would you expect something simple out of Massachusetts politics...

(LAUGHTER)

ALLIS:  ... this yeasty world of politics?

I mean, in order to protect the two votes, what Senator Kennedy is essentially doing, with some desperation, is an attempted end-run around the law that was passed in 2004, rammed through by the Democrats here, that would have—that changed precisely what he wants now, to a governor to appoint somebody, and make it a five-month-later election, special election. 

And, so, this is coming around to bite the Democrats.  He is haunted by what happened last time.  And he‘s trying to change it.  And most Democrats, I think, are hiding under their beds.  They don‘t want to touch this one.  It‘s already got a gamey history.  And—and you hear these anodyne comments, and none of them have touched the substance of what Senator Kennedy is asking for. 

MATTHEWS:  Well, Neil, you get in this.  What happens if Senator Kennedy has to resign or he passes away—he‘s in bad health—something happens, and that seat is vacant?  Does that mean that the Democrats in Washington will be with 59 votes, instead of 60, right through the entire debate and final discussion and voting on health care? 

Looks like it. 

NEIL SWIDEY, “THE BOSTON GLOBE”:  Well, that law—that law that Sam referred to provides that, within five months, there has to be a new election called.  So, there would be no one in place, unless that‘s changed. 

MATTHEWS:  So, what do they—what are the Democrats actually saying when you go out and report this story?  How can they justify not fixing this baby? 

SWIDEY:  Well, I think they‘re...

MATTHEWS:  Why don‘t they just fix it and say, we made a mistake?  It was because Mitt Romney was in office, and we didn‘t him making the appointment.  Now we have got a Democratic governor, and we want him to make the appointment.  Just admit you‘re political.

(CROSSTALK)

MATTHEWS:  Sam, you take this one on. 

SWIDEY:  They can‘t...

(CROSSTALK)

MATTHEWS:  You can handle this.  You‘re a columnist.  Why don‘t they just admit, hey, we‘re politicians, OK? 

ALLIS:  Because they looked so gamey last time, Chris, that they don‘t want to look even worse today. 

MATTHEWS:  Well, won‘t they look worse if something happens to Ted Kennedy, and you find yourself with Massachusetts with one vote, instead of two?  Won‘t that look worse?  Nobody even knows about this thing now.  Now they are all going to know about it, if you blow it. 

ALLIS:  Yes, but I—no matter how much they love Ted Kennedy—and they do adore him—I think people are drawing a line at once again helping—passing legislation to help one individual. 

I think that sits badly right now, no matter how much they would like to do it. 

MATTHEWS:  Let me ask you about—what is the word on the—the senator‘s health?  It‘s not too good, is it? 

ALLIS:  No.

MATTHEWS:  Sam.

ALLIS:  No, but it varies hugely. 

One day, we hear he‘s on a morphine drip and slipping fast.  The next day, we see he‘s being taken out for a sail.  He‘s in horrible shape.  We all know that.  And, beyond that, I don‘t think anybody knows the details, except the family. 

MATTHEWS:  OK.  Your report—any reporting on that, Neil, that‘s going to come out?  Nothing new, right?  They‘ve been just very protective.  By the way, I‘m impressed by the Kennedy family‘s ability to protect him from us, from press coverage.  He has had a measure of privacy, I think, these last couple months. 

SWIDEY:  He has.  As Sam said, there are conflicting reports.  But it is—the inner circle is really tight right now, and they‘re keeping that message tight.

I just want to get back to one thing you had said before about the 1960s, because this temporary appointment, a seat warmer appointment that Ted Kennedy is asking for, is really kind of what paved the way for his entry into the Senate, as you know, back in the ‘60s. 

MATTHEWS:  I know.  Gentlemen, thanks for coming on.  Sam Allis, my friend, thank you for this.  It‘s always great to hear from Massachusetts and how bad the politicians are up there.  By the way, isn‘t it ironic, gentlemen, that the greatest senator of our time, in fact the greatest senator in 30 or 40 years, can‘t vote on the most important legislative issue since the Civil Rights Bill?  It‘s pretty sad.  It‘s pretty sad.  Thank you.  That‘s a bipartisan assessment, by the way. 

Well, you have seen the advertisements on this network for next Thursday‘ premiere of our documentary on the Kennedy brothers.  It‘s an hour I want you all watching right now to watch.  It‘s history.  It‘s taken us a good deal of time, research, and study to produce what I think is a stunning look at those historic brothers, Joseph Kennedy, Jr., John F.  Kennedy, Robert F. Kennedy, and Ted Kennedy, all of whom, at one point in their lives, sought the American presidency. 

Here is a look at the role of the youngest of the Kennedy brothers. 

This will be in the documentary next Thursday night. 

(BEGIN VIDEO CLIP)

MATTHEWS:  Of the four Kennedy brothers, Ted, the youngest, was the most connected to the others.  In 1946, the family gathered in Hyannisport to celebrate Jack‘s 29th birthday.  When Teddy rose to speak, the 14-year-old raised his glass and said, I‘d like to drink a toast to the brother who isn‘t here.  He stunned the room into silence. 

ROBERT SHRUM, TED KENNEDY ADVISER:  I think the three of them were not only a kind of band of brothers all their own in mythology, but in reality. 

(END VIDEO CLIP)

MATTHEWS:  Whatever your politics, I think it‘s unimaginable to have lived in this country the last 40 years without the Kennedys.  They made their impact.  They were tough and they made an difference.  In fact, they took our breath away.  We‘re going to talk about the Kennedys next Thursday night here on MSNBC.  I hope you‘ll watch it next Thursday and Friday night at 7:00 Eastern. 

Up next, Tom Ridge‘s disclosure that he was pushed to raise the terror threat, you know, from yellow to orange on the very weekend of the 2004 re-election of President Bush.  Who in that White House was pushing for that?  Which cabinet members?  We‘ll talk about that.  Well, they certainly include Rumsfeld and Ashcroft.  No surprise there.  They were pushing for the code red rise, apparently, according to Tom Ridge, to get the guy reelected. 

We have the politics fix coming up right now.  This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Time for the politics fix.  Joining us now, “Politico‘s” Roger Simon and PoliticsDaily.com‘s Melinda Henneberger, back by popular demand, I must say.  Melinda, you were quite a hit the last time you were on. 

Here is the question for you, of course starting with Roger, the old hand here.  Roger, this Ridge book, when you actually look at it in the book, not reading it on some press release, and you figure the guy, the former secretary of Homeland Security, a member of the Bush team right up through the election, the re-election 2004, actually put his hand to this, and basically said it was politics at work as they were deciding what code to put the country on alert at right the weekend before the election, with that Osama bin Laden tape facing us in the face.  It‘s pretty stunning. 

ROGER SIMON, “POLITICO”:  It is stunning, in that it confirms what

many of us believed at the time, that the one theme that Bush had for his

re-election was vote for me or die.  That was his message—

MATTHEWS:  Yes. 

SIMON:  -- the convention on.  You know, John Kerry is not a bad man.  He‘s just a naive man.  He can‘t deal with the terrorists, you know.  A vote for him and you‘re going to wake up and you‘ll be killed.  The terrorists will invade.  And it was carried out even to the extent of apparently seriously discussing raising the national threat level. 

MATTHEWS:  And they‘re reaching for the joy buzzer every two seconds, it looks like, in this crowd.  You know, something to zing you with.  You know, nice to meet you, zing.  We‘re going up to code red tonight.  Melinda, it‘s amazing.  He said—listen to this quote in here—I‘ve underlined it, obviously.  I always do that.  “It seemed possible to me and others around the table”  -- this is in the situation room at the White House, going over what to do to save the country from Osama bin Laden—

“that something could be afoot other than simple concern for the country‘s safety.”

And this showed that there was an intersection of politics in all this business.  It‘s right in the book.  It‘s coming out in two weeks.  Melinda? 

MELINDA HENNEBERGER, POLITICSDAILY.COM:  This is what a lot of people, of course, said at the time was going on.  So it confirm what a lot of us did think.  But I don‘t think he really covers himself with glory in saying this now.  It is very much like Colin Powell, you know.  If he felt like maybe he should have stepped down at the time, maybe that would have been the right decision.  I don‘t know how interested people are at this point in Tom Ridge‘s dark night of the soul.

And I don‘t know that there‘s political fallout because what he‘s talking about happened five years ago, even though you certainly could argue, well, they were playing politics of fear then, and they‘re doing it again now with health care.  But I‘m not sure those dots will be connected. 

MATTHEWS:  Isn‘t this going to add to the American people‘s general

cynicism about politics, Roger?  My own uncle, who is a plumber, uncle Joe

no matter what happened that went bad, somebody left their wife or something, or somebody stole some money—he always said the same thing.  It‘s like everything else.  It‘s like everything else.  It seemed to cover all the bases back then, Roger.  And the people are going to hear this and say, Ridge says they were playing games with national security on that alert system, and somebody is probably going to say somewhere, it‘s like everything else.  These guys. 

SIMON:  If you can add to the level of cynicism about politics, this will add to it.  I also have to say, as bad as this was, I think Tom Ridge was the only person in America who actually cared about the alert system.  I mean, we never knew what to do when it was yellow.  We never knew what to do when it was orange.  Then you would turn on the radio and hear there was an amber alert.  You would be confused even more. 

MATTHEWS:  There it is.  We‘re looking at it.  Melinda, how did you change your weekend lifestyle when told it was going to be yellow instead of orange that weekend before the election?  I mean, do you wear brown?  What do do you?  Do you wear less flashy colors that day?

HENNEBERGER:  The plan was duck tape and bottled water, as I recall, wasn‘t it?  Remember the duck tape? 

MATTHEWS:  I love the duck tape.  When they said, if it succeeded, you suffocated.  I like that one.  If you actually got a successful duck tape in your house, there would be no air coming in, and you would die. 

HENNEBERGER:  It‘s like if the witch was guilty, she sank.  Right. 

MATTHEWS:  I always liked that one.  Anyway, we‘ll be right back to talk about health care, which also seems to be in code red right now, with Roger Simon and Melinda Henneberger, again back by popular demand on the politics fix.  You‘re watching only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  I‘m back with Roger and Melinda.  We just got this report in from Charlie Cook, who is about the best political reporter around town.  He‘s the guy that studies elections and how they‘re going to come out.  He‘s predicting now a big loss by the Democrats come the next election because of the way things are going this summer.  He said things are completely out of control for both the president and the Congressional Democrats. 

Melinda, is that your—do you see it this way, this bad right now? 

HENNEBERGER:  It‘s pretty amazing how quickly things have changed, when only recently we thought, you know, this was going to be a really great year for the Democrats.  But I am just so astonished most of all that this health care debate has gotten away from Obama the way it has.  I mean, this should be his greatest moment.  This should be a no brainer. 

I mean, as a cancer survivor, I can tell you that people in waiting rooms do not sit around bragging about their health care coverage and saying, boy, that‘s something they sure don‘t have to worry about.  I mean, it‘s nothing but complaints about coverage being dropped or, you know, something that‘s not covered at all, or they‘ll allow 75 dollars for your radiation.

And so he hasn‘t made the moral argument.  He didn‘t start to make that until yesterday on this call with some on the religious left.  And that‘s the argument he really ought to have been making, I think, from the beginning, what a moral imperative this is.  It certainly is a vindication for Hillary Clinton, when we said she could have sold it if only she had consulted with people a little more, if only she‘d been a little more flexible.  Now it looks like the same thing is happening all over again. 

MATTHEWS:  Isn‘t the problem, Roger, that the president wants to extend health care coverage to people that don‘t have it, and that‘s his main reason for doing this?  It may not be reform like we‘d like to think it is, like Melinda is saying, fix up what‘s broken.  It‘s to try to give it to people that don‘t have it.  And he can‘t say that because it doesn‘t work with the polling. 

SIMON:  I think the problem is he‘s doing a lot of things all at one time.  He‘s not explaining any of it very clearly.  He wants to extend it to everyone, while at the same time he has to make the whole process cheaper.  That‘s difficult.  I mean, he could just say, I want to extend it to everyone.  It‘s going to cost 1.1 trillion dollars, which is about the cost of the Iraq war.  And nobody cared how much we spent on that.  And I‘d much rather spend your tax dollars in the future on health care than on F-22s.  But instead, he‘s got to make the argument that it‘s actually going to bring costs down. 

The other side is very clear in what it‘s saying.  You know, he‘s Hitler.  It‘s death panels.  You know, it‘s socialism.  He, on the other hand, has got to make a case where—first of all, he has to tell us what he wants.  Is it co-ops?  Is it a public option?  Is he willing to trade both of those for the rest of the package? 

Second, he has to tell us how he‘s going to pay for it.  Is he going to be like Max Baucus and want to tax benefits?  Is he going to be like Nancy Pelosi and only tax people making over a million dollars a year?  Is it going to be over 250,000 dollars a year? 

Thirdly, he‘s going to have to tell us how far is he willing to go? 

Is he going to go with just 50 votes to get it through the Senate?  Is he

going to hold out for 60 votes?  I mean, he‘s really got to clarify what he

wants.  This should not be difficult.  He‘s one of the best communicators -

political communicators of modern times.  He can do it.  He‘s just unwilling to do it so far, because he doesn‘t want to close off the options of the members of Congress.  I think that‘s a mistake. 

MATTHEWS:  Melinda, the polling still shows that the majority of the American people want what he says he wants to give us, which is a system which will protect us with preexisting conditions, allow us to change jobs or lose jobs and still have health care, which will allow people that don‘t have health care now to get some kind of break in getting it, which will get young people involved in the system, and not just hoping they‘ll stay young and healthy forever. 

It sounds good, but he seems to be losing the battle. 

HENNEBERGER:  Well, he still has some time.  And, you know, I have every confidence that he‘ll close the deal, because at bottom that is what people want.  And yet he does need to do what Roger said.  He can‘t go out there with this vague, diffuse message, when the other side really does, once again, have just a few words: government takeover, death panels.  We know what that is.  And you listen to Obama for an hour, and you‘re still not sure exactly what the take away is, exactly what the bottom line is. 

MATTHEWS:  Could this be the choice he has to make in the next couple weeks?  Go with something about reform, in other words do something on preexisting conditions; do something on the system we have right now; and hold off on extending health care to the poor people and the working people later.  Roger, does he have to decide to cut bait right now, or go for whole hog and maybe jam it through the Senate? 

SIMON:  That‘s a non-starter with the Democratic party.  Universal health care is one of the pillars of what the Democratic party stands for.  A large part of the party, you know, just isn‘t going to allow it. 

MATTHEWS:  OK, Roger Simon, Melinda Henneberger, thank you.  Right now it‘s time for “THE ED SHOW” with Ed Schultz.

ED SCHULTZ, MSNBC ANCHOR:  I‘m Ed Schultz.  This is “THE ED SHOW.”

Good evening, Americans.  Live from 30 Rock in New York, it‘s “THE ED SHOW” on MSNBC. 

Wow.  Democrats are starting to get it.  They‘re finally figuring out they can do this thing alone on health care reform.  They need to cut ties with these bipartisan phonies and pretenders and get this thing done.  Congresswoman Maxine Waters, she‘ll give us some straight talk tonight. 

She‘s on that page. 

Mr. President, don‘t mean to be rude, but, buddy, you need to snap out of it, and stop allowing the political terrorists to hijack the debate and reform.  I think the president knows he‘s on thin ice with the grass roots.  That‘s why he made a plea to the base today.  The founder of the “Huffington Post” will join me at the bottom of the hour.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

END   

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