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updated 9/10/2009 11:38:31 AM ET 2009-09-10T15:38:31

Guests: Ed Schultz, Julia Boorstin, Lawrence O‘Donnell, Chuck Todd, Howard Fineman, Pat Buchanan, Dee Dee Myers, Richard Durbin, David Axelrod, Howard Dean

LAWRENCE O‘DONNELL, GUEST HOST:  The president‘s big night.

Let‘s play HARDBALL.

Good evening.  I‘m Lawrence O‘Donnell, in for Chris Matthews in Washington.  Leading off tonight, President Obama‘s big night.  Yes, it‘s going too far to say Barack Obama‘s presidency rides on tonight‘s speech, but after a frenzied summer of raucous town halls, slipping poll numbers and general agreement that the president has lost control of the health care debate, tonight is the president‘s chance to set the reset button.

What should we look for tonight?  Who is the president‘s real audience?  How will we know the speech is a success?  We‘ll give you a smart viewer‘s guide to tonight‘s speech coming right up.

What will the president say about a public option?  Former DNC chairman Howard Dean will be here to tell us if liberals will draw a line in the sand and insist, No public option, no bill.

Getting to 60.  What kind of deal does President Obama have to make to win over a Republican or two in the Senate to get to that magic filibuster-proof 60 votes?  We‘ll hear that from a man at the center of the president‘s inner circle, David Axelrod, who will preview what we can expect from the president tonight.

And finally, we‘ll check what kind of last-minute negotiations are going on on Capitol Hill ahead of the president‘s address.  We‘ll be back with a live edition of HARDBALL at 7:00 Eastern.  Then at 8:00, please stay with us for live coverage of President Obama‘s speech and the Republican response.  After that it‘s “COUNTDOWN with Keith Olbermann at 9:00 and “THE RACHEL MADDOW SHOW” at 10:00 and “THE ED SHOW” with Ed Schultz will be at 11:00 tonight.

But first, we begin with the smart viewer‘s guide to what to watch for tonight.  NBC News chief White House correspondent Chuck Todd is NBC‘s political director and “Newsweek‘s” Howard Fineman is an MSNBC political analyst.

Chuck Todd, you‘ve got the best speech writers in the business been working away frantically for days now, along with the best speech giver in the business.  In my time working in the Senate, I never saw a speech save legislation.  Do these guys know something I don‘t about the power of speech making in the Congress?

CHUCK TODD, NBC WHITE HOUSE CORRESPONDENT, POLITICAL DIR.:  Well, I don‘t think they believe they have to save legislation.  I think that the goal of this speech, as far as that‘s concerned, is to create a little bit of political space.  I thought you set it up very well.  It‘s about retaking control of the debate.

You know, the president this morning in an interview on, as we say, another network admitted something that all of us had observed for quite some time, that he left too much ambiguity out there and left too much of the details to Congress.  And he seemed to—and he admitted that may have been a mistake.  Now, the White House won‘t say that‘s a mistake, but they will say, OK, now is the time to bring it all together and we‘re going to take control of this debate.  We‘re going to tell you what the Obama plan is, and more importantly, Joe and Jane in Kansas City are going to know what the Obama plan is.

And then after tonight, I think the goal—and this is what I‘m confused about, Lawrence, and in fact, it‘s a little bit of a question I have to you as somebody who‘s had experience up there.  After the speech tonight, then what is the sledgehammer to Congress to get it done, to say, OK, if this is the last 10 yards you‘re trying to go, the last 20 percent, what is the sledgehammer that the White House will have after tonight, after this big speech, to get it through and get a bill on his desk?

MATTHEWS:  Well, Chuck, I don‘t have an answer for you on that.  I mean, I haven‘t—I don‘t know a legislative strategy that gets you from here to the end, given all the dynamics that have been laid out there.

Howard Fineman, you know political history better than I do.  I was asleep in the ‘80s.  You were paying attention.

(LAUGHTER)

O‘DONNELL:  Is there a speech we can point to and say that speech to the Congress or to the country saved legislation in trouble?

HOWARD FINEMAN, “NEWSWEEK,” MSNBC POLITICAL ANALYST:  Well, the key word is saved, and I think the answer to that is no, Lawrence.  I think there have been speeches that helped revive presidencies.  I think that Bill Clinton gave one in the ‘90s.  In ‘98, when he was under assault for the Monica Lewinsky thing, I mean, he gave a speech that focused on the nuts and bolts of government.  That was his State of the Union speech.  We as pundits were all bored.  In fact, the public liked that.  So it is possible to speak over the heads of Washington and revive your political standing.

I think that‘s in part what this is about.  The president‘s poll numbers have been sagging.  His numbers on health care have been sagging.  He‘s going to be speaking not so much to legislators tonight but out to the country, to try to revive his numbers.

But Chuck is exactly right.  This is the kind of speech that you want to give just before the final votes, after the conference committee, after the legislation.  You‘ve watch this sausage being made.  He‘s giving the ultimate speech at what is really just the beginning of the process.  The committees haven‘t—these measures, first of all, haven‘t been voted out by all the committees.  They haven‘t been voted on by either the House or the Senate.  There hasn‘t been a conference committee to reconcile differences.  And there haven‘t been votes by either chamber.  So we‘re at the beginning.

You know, remember that—all those pamphlets of how a bill becomes a law?  We‘re still on page 2.  We haven‘t gotten to page 20 yet, and he‘s giving the big, dramatic, dramatic speech.

O‘DONNELL:  Chuck Todd, floating around in these pages of legislation is a lengthening list of what would be broken Obama campaign promises.  You know, you‘ll remember that this was to be financed by simply allowing the top tax bracket to return to what it was under the Clinton administration.  In fact, the House of Representatives has passed three new top tax brackets on top of that.

Barack Obama campaigned eloquently, and I thought strategically brilliantly, against health care mandates.  Hillary Clinton was in favor of an individual mandate.  Barack Obama was opposed to any mandates.  These bills have an employer mandate and an individual mandate.  Has the White House begun to figure out how to deal with the looming possibility of some very real and serious breaks of campaign promises here?

TODD:  Well, I think, look, what we‘ve been told tonight—for

tonight, without being specific on which side he‘s going to come down—

he‘s going to be clearer on the mandate issue, talk about the

responsibility of employers and then the responsibility—I don‘t—this

idea of a fine, which is popping up, I think, in the Baucus bill—Senator

Max Baucus, chairman of the Finance Committee—I have a feeling you‘re

not going to hear that out of the president‘s mouth tonight.  I don‘t think

that‘s something that they want to go

But as far as talking about how to get everybody covered—and that is, by the way, I think how they want to try to assuage the left in the Democratic caucus, which is this.  Look, I‘m going to have—I‘m going to sign legislation that is going to make it so that we cover all Americans.  Now, you want to get into details?  Does that mean universal coverage?  You want to call it that?  Or universal access?  I mean, we can have—we can debate and parse that statement.

But the point is, he wants to sign legislation where he can look at the American public with a straight face and say, There‘s opportunity for health care coverage for everybody that‘s affordable, and if you can‘t afford it, here‘s a tax credit.  And that‘s what he thinks can be the pitch to the left in that Democratic—House Democratic caucus, who says, If you don‘t have the public option immediately, we‘re not going to—we‘re not going to vote for this thing.  He‘s hoping, Hey, if I‘m promising coverage of everybody, shouldn‘t that be the ultimate goal?

O‘DONNELL:  Well, one minor problem with that, Chuck, which a lot of people have lost sight of in a lot of these bills, is none of these bills actually reach universal coverage.  So he‘s not going to be able to say under any of the scenarios that are out there now that everybody‘s covered.

(CROSSTALK)

O‘DONNELL:  Go ahead, Howard.

FINEMAN:  He‘s going to be able to use the word “universal” as it applies to some mechanism by which people will be probably required to have coverage in some way or other.

But to answer your other question about those broken campaign promises

my sense of this White House and its political strategy is this.  They want to be able to say at the end of the day that they did something historic.  Now, it‘s going to have all kinds of asterisks and footnotes...

(LAUGHTER)

O‘DONNELL:  You bet!

FINEMAN:  OK, asterisks and footnotes, but they‘re going to say it‘s historic, and Barack Obama is a historic figure in and of himself.  His election was historic and he‘s going about doing historic things.  Pay no attention to those campaign promises over there.  They‘re minor details compared with the history that he made by extending coverage or the promise of coverage to everyone.  That‘s what their strategy is.

O‘DONNELL:  And the hot-button issue that everyone‘s been buzzing about is the public option.  Now, let‘s take a look about how the president will talk about the public option tonight.  He was in speaking to the labor groups on Labor Day weekend, and he just had one sentence about the public option, was kind of—pretty soft approach to it.  And Chuck, I mean, it doesn‘t take a mind reader to figure out that there‘s not going to be any veto threat over the public option.

So what can he say tonight about the public option that in any way affects the dynamics of the legislation?

TODD:  I think he wants to go on two fronts on this.  One, is he wants to try to—you know, and this is—I‘ve heard this from behind the scenes from the White House a while, which is—you know, the public option isn‘t directed at 90 percent of the country.  The public option is really about 10 percent of the country.  It‘s really about people that aren‘t getting coverage or people that are undercovered with insurance.  So he wants to try to put it, what he believes, in its proper context, which is, you know, it is, you know, 10 to 15 percent of what is being attempted as far as health care reform is concerned, not—it‘s not the be-all, end-all.  That‘s one.

Two is I do think you are going to hear some form of this—I mean,

when you have Olympia Snowe, the one Republican they‘re ready to just cut a

deal with and move on—Olympia Snowe, the Republican senator from Maine -

- her—herself saying, OK with the trigger—and to explain the trigger

that is, basically, the government says, We have a public option.  We‘re threatening the private insurance industry that we‘ll start this if they don‘t, you know, do X, Y and Z, we will have this hanging over your head as a possibility.

And I think he may talk about—talk about in that context, and that may be the way to save it.  Look, Olympia Snowe came on our air about an hour ago and said that if that‘s what it takes to get everybody together—

I mean, she seems to be—that‘s why she said—why she came out with the idea—and it seems to be getting more traction, at least as far as assuaging the left is concerned, than the co-op.

O‘DONNELL:  All right, thank you Chuck Todd and Howard Fineman.

Coming up: Will President Obama take a strong stand on whether he wants a public option?  What about his party?  Will progressive Democrats go for a plan if it does not include a public option?  Former DNC chairman Howard Dean will be with us next.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

O‘DONNELL:  Welcome back to HARDBALL.  When he speaks before Congress and the country tonight, will President Obama tip his hand on a public option?  Governor Howard Dean is the former chairman of the DNC and a former presidential candidate.  Pat Buchanan is an MSNBC political analyst and former presidential candidate and presidential speech writer himself.

President Obama spoke this weekend to the AFL-CIO I think about the public option.  I think we have tape of what he said.  Can we roll that now?

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  And I continue to believe that a public option within that basket of insurance choices will help improve quality and bring down costs.

(CHEERS, APPLAUSE)

(END VIDEO CLIP)

O‘DONNELL:  Governor, one sentence.  There was his chance to sell what you demand be in this legislation as the central piece of it.  That‘s got to be kind of disappointing.

HOWARD DEAN (VT), FORMER GOVERNOR, FORMER DNC CHAIR:  Well, it‘s not

that I demand that it be in it as a central piece, it‘s just—you can‘t -

there‘s no reform in this bill unless you do that.  There‘s insurance reform, which is fine.  The only health care reform is the public option.  And the public option is an option.  Most Americans prefer to have a public option.  Not that they would sign up for it, but they think they ought to have the choice.  And I think it‘ll be in the bill ultimately.  Without any Republican participation, and it doesn‘t look like there‘s going to be any...

O‘DONNELL:  Well, most Americans...

DEAN:  ... it‘ll have it.

O‘DONNELL:  The poll do indicate that most Americans prefer a public option.  We‘re not sure what that means to them when they say they do.

DEAN:  Right.

O‘DONNELL:  But they don‘t know that 90 percent of them—over 90 percent of them, it would be illegal for them to choose a public option.  This is an option that‘s only available to 10 percent of the population by law, at a maximum, so...

DEAN:  In the House bill.  That‘s right.  That‘s right.  And—but

the point of this is not to put the private insurance people out of

business, although some people would like to do that.  The point is to have

a system which doesn‘t throw people off their health care when they get

sick, which stays there whether they have a job or doesn‘t have, which is -

or don‘t have a job, which is portable no matter what happens, if they lose their job, if they move to another state, and so forth, to make the insurance companies behave themselves.

This is the—this is the—the only other way to do this is through regulation.  I think it‘s more efficient to have—make the insurance companies behave by giving them some competition and some pro-consumer competition than it is to regulate.

O‘DONNELL:  Just quickly—so if the public option falls out of the bill, you will still be pushing for what‘s left of health care reform?

DEAN:  No, I...

O‘DONNELL:  Or are you going to be opposed to the bill?

DEAN:  If the public option falls out of the bill, they got to strip all the money out because to put $60 billion into the private health insurance industry is insane.  These are the people that have been screwing up the system for the last 30 years.  It‘s why health care is so ridiculously expensive, is because of the private health insurance industry.  So to give them another $60 billion a year of taxpayers‘ money is nuts.

O‘DONNELL:  Before I get to Pat, who‘s been very patient, can I just get  a quick yes or no on will you support a bill that doesn‘t have a public option?

DEAN:  No.  Not if it puts $60 billion of taxpayers‘ money at risk.

O‘DONNELL:  There‘s a clear note.  Pat...

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  Let me—let me...

(CROSSTALK)

BUCHANAN:  Let me stand right with Dr. Dean.

O‘DONNELL:  OK...

BUCHANAN:  (INAUDIBLE) with the doctor.  Cut this thing down.

(LAUGHTER)

O‘DONNELL:  And you will oppose a bill with or without a public option, but Pat...

DEAN:  Yes!

(LAUGHTER)

O‘DONNELL:  Pat...

DEAN:  Good point.

O‘DONNELL:  ... this is my question of the day.  In the history of presidential speech making, I am not aware of a speech like this that saved legislation that was in trouble.

BUCHANAN:  Well, we used to do it from 1985 to ‘87 with Ronald Reagan every time on contra aid.  We would run a campaign, Lawrence, and everybody else would be out there, the cabinet officers, briefings, reporters, op-eds, and then we‘d save it for 36 to 72 hours before the vote in the House or something like that.  And the president of the United States would go on national television, and we could see some of these conservative bol weevils breaking in our favor.

O‘DONNELL:  But you wouldn‘t do it this way, right, in an address to the entire Congress like this?

BUCHANAN:  No, he would do it to the entire country.  I think Barack Obama is making a mistake.  This is their ace of trumps.  Here‘s what I think he ought to do.  I think he can get some kind of reform, not this option, but I think they can get a bill with 60 percent or 70 percent of what they want, get it through conference.  After it was through conference, that‘s the time I would have a dramatic announcement, the president‘s going to speak to both houses of Congress to try to get the votes in both houses and roll it through that way.  I think he‘s playing his trump card too early in the game.

O‘DONNELL:  Governor Dean, if—what we saw in 1994, when I was the chief of staff of the Senate Finance Committee, was the Republicans kept moving the goalposts.

DEAN:  Right.

O‘DONNELL:  Their target then was the employer mandate because that was the linchpin that would get universal coverage under the Clinton bill.  When they killed the employer mandate, you had a right to believe, Well, now there‘s a chance to legislate.

DEAN:  Right.

O‘DONNELL:  They weren‘t finished.

DEAN:  Not going to happen.

O‘DONNELL:  They went on to kill every other thing in the bill.

DEAN:  Not going to happen.

O‘DONNELL:  So I‘m predicting that when they kill the option, which it looks like is going to be dead sometime next week...

DEAN:  In the Finance Committee.

O‘DONNELL:  In the Finance Committee.

DEAN:  That‘s right.

O‘DONNELL:  They will then go to the employer mandate and they will then go to the taxes in the bill and they will go to the individual mandate...

DEAN:  Look, I thought...

O‘DONNELL:  ... and they will use...

DEAN:  Charles Grassley...

(CROSSTALK)

O‘DONNELL:  And they will use—the most effective tactic on all these things will be Barack Obama‘s own words during the campaign opposing the individual mandate, the employer mandate, and this new tax regimen that they‘re inventing for this legislation.

DEAN:  You can do this without an employer mandate.  You can‘t do this without an individual mandate.  You can‘t do this without a public option.  Look, here‘s what‘s going to happen.  It‘s very clear from Senator Grassley and Senator Enzi that that‘s exactly what they‘re going to do.

O‘DONNELL:  Right.

DEAN:  Here‘s why I think we end up with a public option in the bill. 

This is why I don‘t get nervous about this.  Because after...

O‘DONNELL:  He doesn‘t look nervous, does he.

DEAN:  ... after all as said and done...

O‘DONNELL:  He should be, but he doesn‘t look nervous.

(CROSSTALK)

DEAN:  Well, you can contradict me because you know a hell a lot more

about how this city works than I do.  But here‘s what happens.  So you‘ve

already cut all the Republicans out, with the possible exception of Olympia

Snowe and maybe Susan Collins, OK?  So who‘s going to write the bill?  You

now have to have a bill that is signed off on by the majority, the vast

majority, 2 to 1, or more than 2 to 1 in the Senate Democratic caucus and

more than 2 to 1 -- 3 to 1 in the Democratic House caucus.  So who do you -

what do you think is going to be in that bill, since the Republicans essentially have taken themselves out of the game?  We‘re going to have a health care bill...

BUCHANAN:  I think you can do it.

DEAN:  We‘re going to have a health care bill.

(CROSSTALK)

O‘DONNELL:  Let me get to the immediate response on this because tonight, after the president speaks, there‘s going to be a congressman no one has ever heard of, a Republican congressman who happens to be a cardiologist.  It seems like he was the one who lost the bet and has to go on and follow Obama on this.  What are they going to do in the next 48 hours of their communications strategy?  I mean, Sarah Palin‘s got an op-ed piece in “The Wall Street Journal” today.

BUCHANAN:  Here‘s what they‘re going to do...

O‘DONNELL:  Are they going to roll out before the weekend?

BUCHANAN:  I think the communications strategy I would adopt is—look, they‘ve done a tremendous job already attacking this.  Support is moving downward.  I think the AP says 52 percent or something oppose it.  What you do is you wait for them to get their package together.  Now, I think they can get a package through the Finance Committee if you get Snowe if you get the public option out of there.  I do not believe the progressive Democrats are going to kill a bill which would sink Barack Obama, sink themselves, when they get 60 percent of what they want.

So, I think they have got the numbers they didn‘t have.  And if they pull it all together, I think they can go through the Senate through reconciliation.  I think they can get something through the House, and they can get something Barack Obama would sign. 

What I would do with Republicans is wait for the final bill to come out, and then just a full artillery barrage on every vulnerable part of it, and hammer those Blue Dogs, because they are the key guys, and keep hammering them and hammering them and hammering them, so that they cannot go back home if they vote for it. 

O‘DONNELL:  All right.  We‘re going to have plenty more time for legislative strategy on this show in the next couple of weeks.

Thank you, Howard Dean and Pat Buchanan. 

DEAN:  Thank you. 

BUCHANAN:  Right. 

O‘DONNELL:  Up next:  Can President Obama unite Democrats in Congress tonight?  We will ask one of his closest confidants in the Senate, Senator Dick Durbin of Illinois. 

You are watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

O‘DONNELL:  Back to HARDBALL. 

Tonight, President Obama lays out of his framework for health care reform.  The big question remains, will he have the votes in Congress?

Joining us now, Senate Majority leader Whip Dick Durbin of Illinois.

Senator Durbin, the senior senator from Illinois, a week after that election in November, did you sit down with your then junior colleague Barack Obama and explain to him that the politics of governing are 1,000 times more complicated than the politics campaigning? 

SEN. RICHARD DURBIN (D), ILLINOIS:  Well, we did sit down and talk.

And, believe me, his experience in the Illinois State Senate prepared him for the rough-and-tumble of Congress and Capitol Hill.  But I think he has done a great job.  We have achieved a lot of things this year.  We have a lot more to do.  Certainly, health care leads the agenda.  And, tonight, the president will address it. 

O‘DONNELL:  You‘re the Senate whip.  How many votes do you have today for the public option in the United States Senate? 

DURBIN:  You know, that is a hard vote to—to really measure at this moment, because we don‘t know what it looks like and we don‘t know the context. 

I would tell you, I think the majority of people in the Senate want to make sure the health insurance companies are kept honest here, that we could have some competition, that people can have a chance to get affordable health insurance premiums.  That really is the bottom line.

I‘m for the public option.  Don‘t get me wrong.  But if there is a better way to do it or another way to do it, I am going to keep an open mind on it. 

O‘DONNELL:  Now, let‘s get a little procedural here. 

In 1994, the Senate looked so weak compared to the House on health care reform, that, as you remember—you were a member of the House at the time—the House asked the Senate to go first, to prove that the Senate could actually pass something, because the House didn‘t want to waste its energy making difficult votes on something that was never going to get to conference. 

Is that the way it‘s going to play out this time?  Have you been asked by Nancy Pelosi to go first in the Senate? 

DURBIN:  No. 

At this point we, believe the House is preparing to move forward and may precede us.  But we‘re going to keep on our own schedule.  I believe that we are going to see a bill laid down next week for public scrutiny for a full week before it is taken up by the Senate Finance Committee. 

And, then, of course, if we are successful bringing a bill out of that committee, blend it from the earlier bill from the House Education and Labor Committee, and then move it to the floor.  So, we hope to, by the early part of October, we will have this measure on the floor.  I don‘t know if the House‘s scheduled is any sooner.

O‘DONNELL:  Now, again, procedural—and this is something people have been talking about a lot lately—reconciliation, do you think this bill can pass—or any reasonable version of this bill can pass—in a reconciliation process? 

DURBIN:  No. 

I think what you could pass in a reconciliation process are some important elements.  But a comprehensive health care reform bill requires the regular procedure and the regular business of the Senate.  If we can‘t get 60 votes, which is the threshold vote for the regular procedure, then of course we have to consider reconciliation. 

O‘DONNELL:  So, this speech tonight is many things.  It is a speech to the nation where the president‘s poll numbers are down.  Fifty-two percent are opposed to this president‘s handling of—of health care reform. 

It is a speech to that body, both the House, the Blue Dogs, the liberals in the House.  It‘s a speech, as you know, to your—your colleagues in the Senate.  But if there is an isolated camera to hold on one senator all night, it would be Olympia Snowe. 

In many ways, this is unlike any speech we have seen before.  It is a speech to an audience of one, to Olympia Snowe.  Have you been working with her directly yourself, or have you all left that just to Max Baucus, the chairman of her Finance Committee.

DURBIN:  I can tell you that Max Baucus and—as well as the others, Conrad and Senator Bingaman, have been working with her and other Republicans for a long time.  For weeks, they continue to.

She has shown extraordinary courage and leadership.  She has told us what the bottom line is.  And they are working with her.  No commitments have been made, understand.  But, keep in mind, we think, at the end of the day we, there will be more than one Republican senator joining us.  We certainly hope so. 

This should be a bipartisan effort.  We have given the Republicans every effort for months to work with us on crafting this bill.  We want to get it done on a bipartisan basis. 

O‘DONNELL:  Now, Senator, one thing that has happened this year, with all the focus on Republican opposition to the public option and other elements, is, it has masked, in effect, how difficult your job as whip is in getting over 50 Democrats to vote for any version of this thing. 

I mean, the truth of it is, you have got some Democrats in your caucus who are not ready to go to the public option and are probably not ready to go to the employer mandate, probably not ready to go to some of these new taxation elements that were invented by the Ways and Means Committee and now the Finance Committee. 

When the focus becomes how is Dick Durbin doing on whipping up a majority of Democratic votes, what are you going to have to show us? 

DURBIN:  Well, listen, 59 Democratic senators—of course, with the death of Ted Kennedy, we are down to 59 -- all happen to be taken—have to be taken seriously.  We have to sit down with them and go through the bill, because, for each and every one of us, this is a critically important bill back in our home states. 

Most of the focus has been on a gang of six, six senators in the Senate Finance Committee, but this is going to be moving to the floor.  And, as it moves to the floor, each and every senator is going to have to have that moment when they take into consideration things that are critically important at home.  We don‘t assume a vote, but we‘re going to work to win every vote. 

O‘DONNELL:  Well, after this speech, your job is just going to get more difficult by the day. 

DURBIN:  It will.

O‘DONNELL:  Thank you, Senator Dick Durbin...

DURBIN:  All right. 

O‘DONNELL:  ... Senate whip, for joining us today. 

DURBIN:  Thanks.  Good to be with you.

O‘DONNELL:  Up next:  How big a night is this for President Obama? 

Senior White House adviser David Axelrod will be with us when we return. 

You are watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

JULIA BOORSTIN, CNBC CORRESPONDENT:  I‘m Julia Boorstin with your CNBC “Market Wrap.”

A wobbly day for stocks, as investors reacted to the latest economic snapshot from the Fed.  The Dow Jones industrials are up almost 50 points.  The S&P 500 added eight points.  The Nasdaq jumped more than 22 points. 

The Federal Reserve‘s Beige Book took a cautiously positive view of the economy.  The Fed said the recession is definitely coming to an end, but unemployment will continue to be a big drag on recovery, along with the struggling auto industry and weakening commercial real estate market.

Apple‘s Steve Jobs took the stage at a launch event in California.  It was his first public appearance after a six-month medical leave of absence.  Apple shares finishes slightly lower on the day. 

But a huge day for the drug company Vivus.  Their shares soared more than 70 percent after reporting promising results in trials of their new obesity drug, Qnexa.

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

HARDBALL. 

O‘DONNELL:  Welcome back to HARDBALL. 

With us tonight to preview tonight‘s presidential address to Congress, White House senior adviser David Axelrod. 

Welcome, David Axelrod. 

DAVID AXELROD, SENIOR WHITE HOUSE ADVISER:  Thanks, Lawrence. 

O‘DONNELL:  As you have learned in the last nine months, the politics of governing is about—oh, I don‘t know -- 100 times more difficult than the politics of campaigning. 

Was there anyone in the White House in January who warned the president that it could be this difficult to get health care passed? 

AXELROD:  Oh, I think there was a vigorous discussion about this, Lawrence. 

And, at the end of the day, the president felt this was a—a—such a pressing problem for the country and for families and businesses around the country, for the government, ultimately, because of the costs, that—that we had to do something. 

And he understood there was political risk involved with it.  And his attitude is he is not here to hoard his political capital; he‘s here to solve problems.  And—and that is what he is trying to do. 

O‘DONNELL:  Let‘s listen to what the president had to say on “Good Morning America” this morning.  He acknowledged making some mistakes along the way.

(BEGIN VIDEO CLIP, “GOOD MORNING AMERICA”)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I, out of an effort to give Congress the ability to do their thing, and not step—step on their toes, probably left too much ambiguity out there, which allowed, then, opponents of reform to come in and to fill up the airwaves with a lot of nonsense. 

(END VIDEO CLIP)

O‘DONNELL:  David Axelrod, has your playbook in effect been, whatever the Clintons did, let‘s do the opposite?  They wrote a very specific bill, sent it up to the Hill.  It didn‘t get where it needed to go.  And, so, you just took the opposite tack of, let‘s make it clear that the legislation will be written in the committees?

AXELROD:  Well, look, if you look at where we are today, we are farther than anybody has ever been. 

Four of the five committees have passed health reform bills.  The fifth committee of jurisdiction, the committee where you once worked, Lawrence, the Finance Committee in the Senate, said today that they are going to—they are going to pass something next week.  And then we will be able to go to the floor and move this process along. 

So, I think that we have done the right thing.  The president wanted to let the debate go on.  He felt this was a serious issue.  It warranted that kind of debate.  Get all the ideas out on the table and then come back in fall and bring those strands together and get the job done. 

I think we are in a position to do that. 

O‘DONNELL:  Now, is the president going to make it clear what he can‘t live with tonight in—because there‘s a bunch of proposals out there already in the various committees that violate Obama campaign promises.  He has not said that it is OK to violate those promises, and he has not said that it is not OK to violate those promises. 

I don‘t quite get where he is on that.  Is he going to make that clear tonight? 

AXELROD:  He will be—it will be very clear what he thinks the—the major components of this plan are, Lawrence.  And he will make the case for them.  And there are some things on which he has become persuaded that he was opposed to as a candidate.  There are others that he still feels very, very strongly about. 

But what has never changed is the goal.  The goal is to bring stability and security to the people who have insurance, so that they have strong consumer protections, out-of-pocket costs, prohibition against a ban on people with preexisting conditions, so you can‘t get thrown off your insurance if you get sick, and a marketplace where people can go if they don‘t have insurance, small businesses and the uninsured, where they can get it for a price they can—they can afford, all in the context of trying to bring the overall cost down of health care. 

And I—I think we are close to achieving that, and—and the president will speak to that tonight. 

O‘DONNELL:  David, you know, when I worked on the Finance Committee in ‘94, what we found was, when the Republicans gained an advantage, when they managed to knocked one piece out of the bill, they didn‘t stop there.  And they went on to the next thing. 

They‘re on the public option now.  They seem on the verge of succeeding, of that knocking that out of the health care bill.  The next thing standing after that is the employer mandate, which Republicans oppose, and the individual mandate. 

And the—during the Democratic primaries, the only difference between Barack Obama and Hillary Clinton, in terms of governing going forward, was that the Obama candidacy was opposed to mandates in health care, and Hillary was in favor of mandates in health care.

It seems to me, all the Republicans need to do to knock out the mandates is use Barack Obama‘s eloquent arguments against mandates in the campaign.  Are you expecting that next? 

AXELROD:  Well, first of all, I wouldn‘t make your assumption. 

I—the president is going to make the case for a public option within this health insurance exchange tonight, in other words, that pool that is being created for uninsured workers and small businesses, so that there is a guarantee of competition and choice within these—within that exchange. 

There are markets in this country, states in this country where one insurance company has 90 percent of the business.  That is not healthy for consumers.  I wouldn‘t assume that some form of that public option will not be in the final legislation.  And he will speak to that tonight. 

On—in terms of the mandate, he has come to believe that everyone has to have a responsibility within the health care system.  We pay $1,000 more per person because of what we have to pay to cover the uninsured who go and get care and don‘t have insurance to cover it.  So, if we make insurance affordable for people, they have a responsibility to take advantage of it. 

O‘DONNELL:  Now, Chairman Baucus on the Finance Committee has released an 18-page outline of what will probably be the legislation he introduces next week. 

And one of the components of that involves a 35 percent tax on health insurance plans that are valued at over $8,000 per year.  Now, you guys have been very quick to say that, if you like your plan, you can keep it.  But that tax will tax my plan or someone who has a plan over $8,000, it will—it will tax that plan 35 percent, which means it will immediately cut the benefits of that plan by 35 percent. 

So people‘s plans will not be what they were before this legislation went through, with a provision like that.  How do you square a provision like that with the idea that if you like your plan, you can keep it? 

AXELROD:  Lawrence, I could probably pick provisions out of every single one of these committee plans that the president would not find to his liking.  He‘ll have his own proposal on this.  And he‘ll speak to it tonight. 

This is one committee of five.  And you know the legislative process better than anyone else.  They will pass their bill.  There will be a meeting of the minds in the Senate.  There will be a bill passed out of the House.  There will be a meeting of the minds there.  And then they‘ll bring the two bills together.  We‘ll see where we wind up.

So I‘m not going to comment on individual items in any of these bills at this juncture.  I will let the president speak for himself tonight. 

O‘DONNELL:  David, you lead the best speech writing team, I think, in the history of that building behind you.  Are you using any models in previous presidencies of where a speech saved legislation? 

AXELROD:  Well, I don‘t think we‘re—I would dispute the premise of your question.  I don‘t believe we are in a place where we have to save anything.  I think we have made great progress today with the announcement of the Senate Finance Committee.  We have more progress.  And we‘re on the doorstep of getting this done. 

What is needed now is to tie this together, so that we get the final ten yards.  There I think a speech would be valuable, because I think it will give a clear sense of direction to members of Congress and a clear sense to the country about the plan the president supports, not individual committees, but the president‘s plan for moving forward. 

By the way, I would say one other thing.  We do have a great speech writing team, but we are working for the best speechwriter who has been in that office for many, many moons.  He‘s worked on this himself.

O‘DONNELL:  I agree.  You have the best speech writing team and the best speech giver.  But I can‘t think of an instance where a speech saved legislation that was in trouble.  You‘re going to have to agree; this legislation that is currently in trouble. 

AXELROD:  I don‘t agree with that, Lawrence.  We‘ll see.  At the end of the day, we‘ll get together and have a beer, and figure out who was right and who was wrong? 

O‘DONNELL:  Can‘t wait.  Thank you very much, David Axelrod. 

AXELROD:  Thank you.

O‘DONNELL:  When we return, what lessons can President Obama learn from President Clinton, who tried and failed to reform health care?  The moderator of “Meet the Press,” David Gregory, will be with us, along with former Clinton Press Secretary Dee Dee Myers. 

This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

O‘DONNELL:  We are back.  Time now for the politics fix, with moderator of “Meet the Press,” David Gregory, and former Clinton Press Secretary Dee Dee Myers. 

David Gregory, you have been pulling teeth at the White House all day.  What are they telling you?  Any leaks about what we‘re going to get tonight? 

DAVID GREGORY, MODERATOR, “MEET THE PRESS”:  Well, I do think I have a handle, Lawrence, on what we can expect.  First of all, in terms of general tone, I think you‘ll hear the president try to direct this message directly to the American people, to clear up confusion, misinformation.  There‘s a recognition that he has to regain control of the debate, really answer that question, what is in it for me, and what are the consequences of inaction. 

Secondly, a lot of talk about the public plan.  The president will be for it.  He will say he is for it tonight.  He will make this point, that it is not the entirety of health care reform.  It shouldn‘t define health care reform.  That is very much—as you know, will be a message to his own base in the Democratic party. 

Lastly, there are ideas, I‘m told, in this speech tonight that are Republican ideas, that have been advocated over time, going back to the 2008 race and before, that the president will use to say to Republicans, look, if you are for these things, they are in this plan.  You have to come to the table and do business. 

O‘DONNELL:  Dee Dee Myers, my question of the day, for you who have worked in the White House and prepared these kinds of speeches and worked the roll outs of them, can we think of a speech that saved legislation in trouble? 

DEE DEE MYERS, FMR. WHITE HOUSE PRESS SECRETARY:  I don‘t know if that is the goal of tonight‘s speech.  I‘m sure if we wept back in history, we could find some that had a significant impact, and maybe made the difference between success and failure.  I think what the president has to do, as David said, is regain control of the conversation and remind people what is in it for them. 

The president has several things going for him that we didn‘t have 15 years ago.  One of them is, in ‘93 and ‘94, people believed that if we did nothing, that was just fine.  The health care system was just fine.  They were better off, by god.  Don‘t do anything. 

People no longer believe that.  The president also has a much larger coalition of stake holders in this, that are already signed on to parts of the policy.  The AMA, American Medical Association, came out and endorsed the bill.  The insurers, nurses, other people who were dead set against the Clinton plan are for reform now.  I think that is a huge difference. 

I think tonight, his goal is to rally people, remind them what is at stake, draw some brighter lines, not totally bright, but brighter lines in the sand, and get this process moving forward. 

GREGORY:  Lawrence, I also—I was going to say, that big question you raised with David Axelrod I think is so important.  But they do view it slightly differently.  To pick up on Dee Dee‘s point, they say, look, both we in the White House, as Democrats, and Democratic leaders on the Hill, what we have learned from the Clinton experience is that the consequences of not doing something are tremendous, are huge to the Democratic party. 

It‘s something that Bill Clinton has talked about here in the recent weeks.  They‘ve got the benefit of that experience.  Their confidence right now resolves around the idea that they can get something done.  Defining the parameters of that, of course, will be what the next several weeks, at least, will be about. 

MYERS:  Those are two separate lessons.  The public has one lesson, which is, if we do nothing, our health care costs are going to double every couple of years.  More people are going to be refuse care when they get sick or unable to get insurance at all.  And the members of Congress, how many seats did we lose in 1994 when the president failed? 

O‘DONNELL:  There is another theory.  There is the theory that the reason the Democrats lost is that they spent a year scaring people that they were going do something terrible about health care, and maybe if they had stopped scaring people soon enough—

MYERS:  You‘re talking about 1994? 

O‘DONNELL:  Yes. 

MYERS:  They spent seven months—we spent seven months behind closed doors drafting a plan that everybody could find something not to like about.  This has been an ugly process, but an open process.  We‘ve all been through what‘s in there.  There‘s no surprises.  We‘ve been through it.  This is like a house that went through a hurricane in August.  And during the hurricane, the shutters were flying off and the windows were breaking.  People go, oh my god, it‘s going to collapse. 

The hurricane has kind of passed and the house hasn‘t collapsed.  In fact, it‘s sturdy in a lot of ways. 

O‘DONNELL:  David, by the weekend, I hope by the time you go on the air with “Meet the Press,” there will be some polling reaction that we can look at to say how successful this was with the public.  Barack Obama is polling -- 52 percent disapprove in the latest poll -- 52 percent disapprove of his handling of health care reform.  What do those numbers have to look at by Sunday or by next week, when the full effect of this speech has played out? 

GREGORY:  You know, this won‘t surprise you that there are some within the White House who are parsing those numbers very carefully and also making a distinction between the job approval on the issue of health care and how people actually feel about the health care plan that he‘s proposing.  That‘s what they‘ll be focused on, because one could follow the other. 

If he takes more control of this, if he recaptures the debate, if he‘s driving the process, maybe that restores some confidence in his leadership overall.  But it‘s overall support for the plan; that‘s what the White House says is so critically important, so that it makes the job of those in Congress easier to cast what could be a difficult vote. 

The key piece here, Lawrence, as you know well, the president now has a crisis of confidence among some of the very people who propelled him to the White House, those independent voters around the country, who know that health care‘s too expensive, but they also know that the government getting involved in this is a really expensive proposition at a time when we‘re bailing out GM and bailing banks and passing the stimulus plan.  That‘s who he‘s got to direct his message to tonight. 

O‘DONNELL:  All right, we‘ll be back with David Gregory and Dee Dee Myers for more of the politics fix.  You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

O‘DONNELL:  We‘re back with David Gregory and Dee Dee Myers for more of the politics fix on HARDBALL.  The White House has released part of what the president will say tonight.  This is going to be one of the passages:

“But know this, I will not waste time with those who have made the calculation that it‘s better politics to kill this plan than improve it.  I will not stand by while the special interests use the same old tactics to keep things exactly the way they are.  If you misrepresent what‘s in the plan, we will call you out.  And I will not accept the status quo as a solution, not this time, not now.” 

Dee Dee Myers, you and I were there in 1994 when President Clinton gave his speech.  He waived a veto pen—

MYERS:  That was later.

O‘DONNELL:  OK.  Said he would veto it if they didn‘t give him universal coverage.  He held up a health security card that we were all supposed to have a copy of.  I got one of the precious few.  It doesn‘t work, Dee Dee.  It doesn‘t work.  I still have to use my Writer‘s Guild health insurance card to get health insurance. 

This doesn‘t sound nearly as strong as President Clinton was when he faced that same audience. 

MYERS:  Right.  Again, the process was very different.  President Clinton, under the leadership of Mrs. Clinton, drafted a 1,300 plus page bill, which he introduced, in his speech, to the joint session of Congress. 

As the legislative process went forward and it was clear there was a lot of resistance to some of the provisions in that bill, including an employer mandate, the president, at his State of the Union, a few months later, held up the pen and drew a bright line in the sand.  And the legislative process fell apart after that. 

President Obama has taken a very different tact.  He is not saying, you know, take these provisions or I will veto the bill.  He‘s saying work with me.  You know, you say you want health reform, you just don‘t like this reform, bring me your ideas.  That‘s what‘s in the speech tonight.  It‘s a pretty interesting tactic.  He‘s obviously trying to keep this a bipartisan bill. 

O‘DONNELL:  David Gregory, calling you out if you‘re a Republican and you say something about death panels is one thing.  But what do you do when a Republican stands up and says we‘re in a recession; the employer mandate imposes an eight percent new payroll tax on companies; this economy cannot sustain that.  It has three new top brackets for individuals.  I, as a Republican, am opposed to that kind of taxation. 

There are plenty of substantive arguments against every argument in this bill.  When the Republicans get to that part of the argument, what does the president do then? 

GREGORY:  Well, let me add, it‘s not just Republicans.  There are moderate members of the president‘s own party who will make those very same arguments.  And I think it‘s something the White House has to take on and the president has to take it on personally.  That‘s why this speech is the beginning of something, not the end of something.  If it‘s the beginning of rehabilitation of this health care reform, it then means the president has to get in and really work this. 

What‘s striking to me about the language you just read from the speech, it reflects what people on the left have been telling him.  Advisers inside and outside the White House who have said to this president, you‘ve got to get tougher; you‘ve got to start fighting this thing out.  There are elements of that language that goes back to the speech he gave at the end of Iowa, at the J.J. Dinner.  Other elements, talking about special interest that were a big part of his campaign. 

It reflects the fact that a lot of people in his party do not feel that the president has been strong enough or fast enough in trying to deal with misinformation about this plan.  It‘s why August went the way it did. 

O‘DONNELL:  We‘ll see how strong the audience thinks he is tonight on this.  Thank you, David Gregory and Dee Dee Myers.  Join us again in one hour, at 7:00 Eastern, for a live edition of HARDBALL.  And then stay with MSNBC for the president‘s address to Congress at 8:00 p.m. 

Right now, it‘s time for “THE ED SHOW” with Ed Schultz. 

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

END   

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