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updated 11/5/2009 10:35:02 AM ET 2009-11-05T15:35:02

HARDBALL

November 4, 2009

THIS IS A RUSH TRANSCRIPT.

THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

Guests: Steve Kornacki, Melinda Henneberger, Steve McMahon, Todd Harris, Michael Steele, Robert Gibbs

CHRIS MATTHEWS, HOST: Hangover.

Let's play HARDBALL.

Good evening. I'm Chris Matthews in New York, scene of the sixth game in the World Series. The Phillies will win tonight 3-to-2.

Leading off tonight: About last night. The voters spoke last night, and it wasn't a failure to communicate at all. The Republicans won both governors' races in Virginia and in New Jersey, and in a weird backlash, the darling of the right-wingers lost that congressional race in upstate New York and handed that usually Republican district, historically Republican district, to the Democrats for the first time since the 19th century. What's going on here? We've got the big names tonight, the White House's Robert Gibbs and the chairman of the Republican Party, Michael Steele, both here on HARDBALL tonight.

Plus, whatever happened to all those Obama voters who a year ago were fired up and ready to go? They didn't vote. And the Democrats paid the price. And ask yourself this. What moderate Democrat in, say, Louisiana, Alabama, Nebraska or Indiana is going to vote for health care public option now, if it means the end of their political career? We're going to break down the big lessons from last night with Charlie Cook.

And the spin game. Both sides claim their side won last night. How do the Dems spin New Jersey and Virginia, pretty tough one for them? And how do the Republicans spin New York, where they blew it? The HARDBALL strategists will be here with their best, we hope.

Plus: Who controls the Grand Old Party now? That's in the "Politics Fix." By the way, do the tea bag folks run it? And among the big winners last night, Vice President Biden and Mitt Romney. Among the big losers, Sarah Palin. We've got "The National Journal's" list in the HARDBALL "Sideshow" tonight.

Let's start with the chairman of Republican National Committee, Michael Steele. Mr. Steele, thank you for joining us.

MICHAEL STEELE, RNC CHAIRMAN: Hey, Chris.

MATTHEWS: I'm going to warm you up with some accolades, first of all. Two great candidates in terms of the way they ran their race, Virginia and New Jersey, positive candidates. They didn't run to the far right. They ran to the center right. They knew what they were doing. Their opponents ran negative campaigns, fearful campaigns. And your side won.

Will that be the mode for next year's elections? Are you going to run down the center right, rather than the hard right?

STEELE: Well, we're going to run, Chris, where our candidates find themselves. I mean, what you saw in Virginia and New Jersey are two candidates who translated throughout their state. They reflected the communities they come from. And it's the new frontier, really, for the RNC right now. As we embark upon the elections in 2010, we have an opportunity to run and win in areas that we haven't traditionally run or won, if we get candidates who come from those communities. And I think that's what you saw in those two instances. They're conservatives who translated the conservative principles and message in terms of the policies and the issues that they're going to encounter and deal with as governor. So you know, I was very happy last night. It was a great night.

MATTHEWS: Yes, except...

STEELE: Except what?

MATTHEWS: Upstate New York. Let me ask you about it...

STEELE: What was...

MATTHEWS: If Bernie Sanders, the socialist independent from Vermont, tried running in Utah, he'd get his butt handed to him. If these wingnuts start running around the country like this person who knocked off your candidate in upstate New York, in the 23rd, this Doug Hoffman-you start getting a lot of candidates like that coming out of the woodwork, you're going to lose a lot of elections, aren't you?

STEELE: Hey, Chris, what kind of hangover did you have last night, man?

MATTHEWS: Well, I'm asking you. You had Doug Hoffman. He beat your candidate, then got beaten by a Democrat in a district that's always voted Republican.

STEELE: Well, look, what you're looking at in...

MATTHEWS: You were smart. You picked the right candidate maybe.

STEELE: Well...

MATTHEWS: But you know, the other side...

STEELE: Well, wait a minute.

MATTHEWS: ... the right-wingers, blew it.

STEELE: Well, no. I-no, Chris, I'm not going to go there on that because let me tell you what the problem was in 23. It was a flawed process. You had individuals who hand-picked this candidate. She did not go through a process.

MATTHEWS: Well, you were part of the hand-picking. You endorsed her.

STEELE: No, I was not. No, that's-that, again, is a wonderful Democrat talking point.

MATTHEWS: Well, wait a minute. You didn't endorse the Republican candidate in the 23rd?

STEELE: Well, no, no, no. There is a difference between supporting the nominee of the party and hand-picking that nominee.

MATTHEWS: Oh, I see.

STEELE: All right? So...

MATTHEWS: Well, that's timing. In other words, once she was hand-picked, then you endorsed her.

STEELE: Well, I...

MATTHEWS: Come on! That's laughable!

STEELE: Chris...

MATTHEWS: You endorsed the hand-picked candidate.

STEELE: Chris-OK, Chris...

MATTHEWS: You mocked the system...

STEELE: Chris...

MATTHEWS: ... and then you supported it!

STEELE: Chris, do you understand how politics works in this country? People make their choices. Party bosses no longer do that, and this is an example of what happens...

MATTHEWS: But you're a party boss.

STEELE: ... when they try to do that. And we did not...

MATTHEWS: You're a party boss.

STEELE: Chris, I'm not a-I'm the chairman of the party.

MATTHEWS: You just endorsed the candidate backed by the bosses in upstate New York...

STEELE: OK...

MATTHEWS: ... and you got beaten.

STEELE: Chris, do you want to listen to what I'm telling you?

MATTHEWS: I'm trying to communicate with you.

STEELE: OK. OK. So just chill for a second.

MATTHEWS: No, you...

STEELE: Let me explain to you...

MATTHEWS: I think you're trying to chill...

STEELE: ... what happened to...

MATTHEWS: ... the viewers out of knowledge here.

STEELE: No, I'm not! Let me tell you what happened.

MATTHEWS: OK.

STEELE: The local party selected her. They have their process. They didn't run the primary. They had their process. She became the nominee through that process that they chose.

MATTHEWS: And at the bottom end of that process, the Democrat won.

So what's wrong?

STEELE: It was a flawed process because she didn't reflect the community...

MATTHEWS: OK.

STEELE: ... in which she was running. And the people there spoke and you saw that primary played out.

MATTHEWS: OK.

STEELE: Will not happen when we take the seat back in 2010.

MATTHEWS: I'm not blaming you. It was hand-picking (INAUDIBLE) New York state system. But let me ask you this. If you have a lot of wingnuts coming in from the far right...

STEELE: Why do you keep calling...

MATTHEWS: ... knocking off establishment...

STEELE: ... my people wingnuts?

MATTHEWS: Doug Hoffman coming in from outside the district-you were the one that knocked people for coming in from outside a district.

STEELE: Excuse me. What about the left-wing nuts who won't let the president get his agenda through? What about all the left-wing nuts are the reason why we don't have health care right now? You've got 60 votes in the Senate. You've got a 78-seat majority in the House. And I don't see anyone talking about the left-wing nuts who are stifling the health care for my mother, my family and my community.

MATTHEWS: Wow!

STEELE: So don't give me the name calling here.

MATTHEWS: So-so...

STEELE: That was a political process. Now we're talking real things here, when you talk about the fact that...

MATTHEWS: Yes.

STEELE: ... in the Democratic Party, the division is real because we don't have health care. The division is real because we still have unemployment climbing.

(CROSSTALK)

MATTHEWS: ... is so interesting.

STEELE: ... because they're not solving the problems.

MATTHEWS: So the president would be better off if he didn't have a left and he could push a more moderate health care bill.

STEELE: I don't know. That's a choice...

MATTHEWS: That's what you're saying.

STEELE: ... the Democrats have to make.

MATTHEWS: Yes, but you're making it for them, aren't you.

STEELE: I'm embracing my-I'm embracing my party. I'm embracing...

MATTHEWS: No, and you're saying something really smart. You're saying that the president of the United States has to make a tough, discerning decision to find the kind of bill that will pass and pass it, instead of being hung up by his far left.

STEELE: And you've got-and that is the challenge for both parties in these times, is to bring within their own before they can reach out and bring others in, the consensus around certain value and core principles. What are the core principles and values of the Democratic Party when it comes to the agenda on health care, the economy and government involvement in my life and my business? Is it a left-wing agenda? Answer the question.

MATTHEWS: What about-OK, look, I accept the fact that the Democratic Party is hung up by people on the far left in many cases, especially in the health care. I can accept that. But in your party, since you're the party spokesman and leader, let me ask you, are you happy with what happened in upstate New York, where people came in like Sarah Palin and Dick Armey and Rick Santorum, came in from outside and got involved in the process? I understand you've been quoted as saying that was wrong.

STEELE: No, it is-it is-it is wrong if they get into the process before the nominee is selected. Once the nominee is selected, they have-they're free-they're Americans. It's still America, right? We can express our opinion. So if they have a view...

MATTHEWS: OK.

STEELE: ... or a point of view that, you know, is contrary to those in the community, people need to fully understand they don't live there.

(CROSSTALK)

MATTHEWS: Mr. Chairman, let's check in with what you said today about that 23rd district. Let's listen.

STEELE: Sure.

(BEGIN VIDEO CLIP)

STEELE: If you don't live in the district, you don't vote there, your opinion really doesn't matter much.

(END VIDEO CLIP)

MATTHEWS: "Your opinion doesn't really matter much."

STEELE: True!

MATTHEWS: You're saying-you just said you welcome them to come in after the nominee's been picked...

STEELE: Well, wait a minute. Wait a minute.

MATTHEWS: ... and now you're saying...

STEELE: Chris...

MATTHEWS: ... in that quote, you said, Drop dead, basically, for coming in.

STEELE: Wait a minute, Chris. It doesn't matter because you have no vote in the district. You can express your opinion. That's the freedom part that America and the Constitution allows you to do.

MATTHEWS: Right.

STEELE: So yes, if they have an opinion as political figures, as leaders, or whatever, that's fine. But it doesn't-it doesn't shape the process...

MATTHEWS: Yes.

STEELE: ... to the point where you're going to-the outcome determinative.

MATTHEWS: Is there room in the Republican Party for the far right, yes or no? Far right.

STEELE: There's room in the Republican Party for anyone who wants to be a part of the values that we espouse when it comes to the role of government, free enterprise, free markets.

MATTHEWS: OK.

STEELE: I-look, Chris, I'm in the business of multiplication and addition, not division and subtraction. So my job as the national chairman...

MATTHEWS: OK.

STEELE: ... is to make us a governing-to build us a governing majority with the leadership in the House and the Senate...

MATTHEWS: Big tent.

STEELE: ... and our Republican governors.

MATTHEWS: Big tent. Thank you very much, Michael Steele.

STEELE: You got it.

MATTHEWS: The big tent, sir. Thank you, chairman of the Republican National Committee. Thanks for joining us.

STEELE: All righty.

MATTHEWS: Robert Gibbs is White House press secretary. Robert, every election result seems to have a certain odor, a smell even. Last night, I smelled populism, anti-elite, anti-Wall Street, the slow-small vote for Bloomberg in New York, the blowout of Corzine. People don't like Goldman Sachs. They don't like these bail-outs. Is that hurting the president?

ROBERT GIBBS WHITE HOUSE PRESS SECRETARY: Well, look, there's no doubt that there's discontent about our economy in this country. And I think if you asked the president if he was discontent about what's going on in this economy, he'd certainly say yes. The president is focused each and every day on trying to get this economy turned around and put people back to work. That's what he's focused on. That's what these elections showed, and that's what he'll continue to do.

MATTHEWS: But if you get hit from the independent voter the way you got hit yesterday, with 60 percent in Jersey, for example, voting for the Republican candidate, that's a weird thing. Why are Democrats being put in the position of being seen as the pro-Wall Street party? Why are you getting hit that direction and also getting hit from the people who don't like big government, don't like the push on health care? It seems like you're getting hit from the populists in both directions.

GIBBS: Well, look, obviously, you had some unique characteristics for certain candidates that you mentioned. But I got to tell you, the bottom line, Chris, is I don't see how you could read into what voters did in local elections like the New Jersey governor's race into how that impacts the president. The voters in New Jersey certainly didn't in the exit polls, and I don't know why anybody else would, either.

MATTHEWS: Well, let's talk about the voters who show up. It seems to me that the-you know, when I go to baseball parks lately, I'm kind of amazed it seems to become (ph) in terms of audience. It's very much a white sport in terms of the audience. I wonder whether the elections in off years are getting that way. What happened to the base vote of the Democratic Party, young people and minorities, yesterday?

GIBBS: Well, look, there's no doubt that an off-year election has a different electorate make-up than either a congressional election would or a national presidential election. I think you'll see that change a bit in 2010 because it'll be a big election about the direction of the president's agenda and it will talk about whether or not we're going to make progress on health care and energy and all the things that the president has talked about.

MATTHEWS: You're a communications expert. I'm just going to-I know it's tough to have to defend the White House and speak the complete truth, but let me try some things by you.

(LAUGHTER)

GIBBS: I'll try.

MATTHEWS: It seems like this president has had to go to a lot of fund-raisers lately. He's played a lot of golf lately. He's hung around with Geithner and Summers and the Paulson crowd, the whole New York rich guy scene. He's beginning to look like a Clinton. He looks like a typical Democrat now, hanging out, playing golf, going to rich people's parties, bringing people into the White House to go bowling. I mean, this whole thing begins to smell like the Clinton era. What happened to the change we believed in? I'm asking.

GIBBS: Chris, was that a question or a speech? I haven't-I don't...

MATTHEWS: It was a speech requiring a response.

GIBBS: I will look at the transcript sometime later to see where the question was. The president has been focused on the job that he has, which is to repair our image in the world...

MATTHEWS: Yes.

GIBBS: ... to get our economy moving again. I think if you look at any of those two measures, right, you look at our relationships with other countries in the world and the progress that's been made, you look at the financial disaster that we had the day we inherited office, tell me that we haven't changed things for the better...

MATTHEWS: OK.

GIBBS: ... on of those both accounts coming in. Does the president tend to play golf when the weather's nice on Sunday? Sure. I don't think that's indicative of a previous administration.

MATTHEWS: OK. You don't...

GIBBS: The president likes to play golf.

MATTHEWS: You don't see any problem with the imagery of hanging around all the fund-raisers, doing all the stuff that seems like a typical Clinton Democrat, just typical of the way things were before he got in.

GIBBS: Well, but again, understand, the president-look, the president has to raise money for the national party. That's what fund-raising is all about.

MATTHEWS: Yes.

GIBBS: Nobody likes it, but obviously, you can't buy commercials on MSNBC for nothing.

MATTHEWS: I know. He even went to Martha's Vineyard this summer. It just seems like the Clinton crowd.

(CROSSTALK)

GIBBS: Chris, hold on. Chris, hold on. The president was vacationing at Martha's Vineyard a long time before he became president of the United States.

MATTHEWS: OK.

GIBBS: That's just where he likes to go in the summer.

MATTHEWS: OK. OK. Now the serious question. Harry Reid is saying no deadlines for health care. We thought the president had a deadline. You folks had a deadline. Get it done this year, in the inaugural year.

Is that still your goal?

GIBBS: It's still our goal, and quite frankly, Chris, I think that's still the goal of the United States Senate. We've seen progress made on both sides of the aisle. We're waiting on some budget scores for the Senate bill. But we know the House is going to move pretty quickly on voting on this. This is going to get to the president's desk before the end of the year. And I tell you, if you want change you can believe in, it's going to be health care reform in 2009.

MATTHEWS: So we're going to get 60 votes in the Senate for change?

GIBBS: You're going to get-you're going to get health care reform. I don't know what the final vote will be, but you're going to get health care reform that does three things. It will cover-it will provide universal coverage for people in this country that haven't been able to afford insurance.

MATTHEWS: Right.

GIBBS: It's going to cut costs for the millions of people that have insurance but struggling with the high cost of rising premiums. And lastly, we're going to have some key insurance reforms that won't allow insurance companies to discriminate against people that have preexisting conditions or drop their coverage when they get sick. The Republicans plans, they don't offer anything to do anything about any of those issues, cost, coverage or insurance reforms.

MATTHEWS: Well, the imagery isn't so great, but the substance sounds great. Robert Gibbs, good luck with the program. Robert Gibbs, White House press secretary, thank you, sir.

GIBBS: Thanks, Chris.

MATTHEWS: Coming up: The lessons of last night's elections from the Democrats inability to win the independent voters in New Jersey and Virginia to the ideological civil war that cost the Republicans an easy election in upstate New York. We've got the smart takeaway on what happened last night and what it means going forward, especially on the issue of health care reform, which could seriously be in trouble right now.

You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. So what did we learn from yesterday's vote? Here to talk about it-the four big lessons, you might say-from NBC News political analyst Charlie Cook, who's editor and publisher of "The Cook Record," and Melinda Henneberger, who's editor-in-chief of Politicsdaily.com.

Charlie, you first. Let's take a look at lesson number one, as we see it. Democrats lost the independent voter. Let's look at these numbers here. Among Obama, we've got back in '08 the Democrats did decently well, 51 to 47. In New Jersey this time -- 51 of the independents was last year. This year, it's 60 percent to 30 for the Republican. In Virginia, Obama won 49 percent of the independents last time. That's only a year ago. This time, Bob McDonnell rolled it up to 66 percent of the independents, a real switch around. Your thoughts why.

CHARLIE COOK, "COOK POLITICAL REPORT," NBC POLITICAL ANALYST: Well, independent voters, the swing voters in the middle, those are the-that's where the juice comes from. Austin Powers would say that's where he gets his mojo. And the thing is, that's the key group that swung. That's the group that makes all the difference in the world.

And while this election-I agree with the other assessments that this election wasn't, you know, a referendum up or down on President Obama personally, it really was more on-sort of-to a certain extent on the Democratic Party. But the thing is that it's-you saw the president's numbers in the national Gallup polls, for example, drop from the 50s down to the 40s among independents back around the middle part of the summer. And he had been 60s and 50s, and then down in the 40s. And the thing is, it's those independent voters. They've swung.

And in Virginia, which is I think the one race that legitimately, you can look at and make some conclusions over, you know, they had been going overwhelmingly in the last two governors-last two Senate rates, the last governor's race, for independents. And this time, they swung the other way. And I think it's something that Democrats ought to really, really worry about.

MATTHEWS: Melinda, I want you to look at age here, because, back in Virginia-just take one state that's sort of a purple state now which went for Barack Obama.

And one reason it went for Barack Obama-it may be the main reason -

is that most voters were under 44. He carried 52...

MELINDA HENNEBERGER, POLITICSDAILY.COM: Right.

MATTHEWS: Fifty-two percent of the voters were under 44. And that told me a lot. So, this time, around only 34 percent of the voters were under 44. That really hurt the Democratic candidate this time around.

HENNEBERGER: That finding was the thing that most jumped out at me from last night.

I think the takeaway for the Democrats should be, you know, these kids who turned out in force for Barack Obama, half of which turned out last night in Virginia and New Jersey, they didn't-you know, they didn't come out for Barack Obama because they were hoping for another negative campaign.

They didn't come out for Barack Obama saying, boy, we would sure love to get behind someone who makes fun of-of people who could stand to lose a few pounds. You know, the negative campaigns in both Virginia and New Jersey are huge turnoffs to independent voters and to young voters.

And I hope that the takeaway for the Democratic Party will be, you know, if we wanted to have a Rove-style campaign, if we want, you know, Rahm Emanuel to be our Karl Rove, we might just have been Republicans from the start, and these people are not going to turn out for that.

So, I think that there's a lot...

MATTHEWS: Charlie, do you agree with that?

COOK: No.

MATTHEWS: The negative-I watched in Philadelphia all that Jersey negative stuff by Corzine, nasty, nasty, nasty, over and over again. Does that drive down the younger voter?

COOK: Well, I don't think that is what happened.

I mean, first of all, midterm elections, off-year elections are always older. But the other thing is, these younger voters-I have got a 23-year-old daughter and a 20-year-old son that were absolutely in love with Barack Obama. And the thing is, it was a personal relationship. It doesn't convey to the Democratic Party or Democratic candidates for governor, or House or Senate or anything else.

MATTHEWS: Yes.

COOK: It's a personal relationship.

I think they will be back with him in 2012, probably.

MATTHEWS: OK.

COOK: But it is not a party deal.

MATTHEWS: Well, here's a thing that has nothing to do with party, but with power. We had three incumbents. Let's take a look at this number, three. They all-look at the incumbents. Bloomberg, with all his money and influence-and he's a pretty competent mayor by all standards, didn't get reelected with any mojo, as you would put it, Charlie.

And then Corzine lost big-time. It looked like people wanted to take a whack at Wall Street, at big shots and incumbents, period.

COOK: Well, or that they voted for change.

I mean, the thing about is people, these independent voters voted for change in 2008 and in 2006. And they are voting change in 2009, and they may very well vote for change in 2010. They are independent for a reason. They are not rooted for a party. And they typically-they typically are very, very fickle.

And they signed up for change, but they're not sure that the change they got is what they had in mind. I mean, it was more throw President Bush out, or throw Republicans out, throw anybody that had any connection to George Bush out, but they weren't specific about exactly what they wanted and they are not really sure this is what they wanted.

MATTHEWS: Melinda, let me take a look at-let's all take a look-and, Charlie, when you get a chance here, too-look at what happened in Upstate New York. The right wing came in. They knocked out the regular Republican candidate because they didn't like the way they were picked, they didn't like their point of view on gay rights, on economic issues or whatever, and then that candidate got whacked by the Democrat.

So, is this a message, Melinda, for Democrats? You have an opportunity to cherry-pick and to fish in troubled waters when Republicans go into civil war? Is that one of the messages?

HENNEBERGER: I mean, the Democrats, I would say, must be delighted with the outcome and with what happened to Sarah Palin yesterday in that one place.

I'm not sure that that is a message to Republicans that these tea baggers going in and Sarah Palin leading the charge is going to be terribly effective.

But, back to what you were saying earlier, I think last night was a referendum in Obama, in that Obama going in for Corzine as many times as he did, I think that he came off as politics as usual.

MATTHEWS: Yes.

HENNEBERGER: He came in there bashing the Republicans in the same old way. And I don't think that plays with independents at all and-or the young people.

And I just think that they said, you know, you-you don't look like change I can believe in to me. And I want to...

MATTHEWS: Charlie-I'm sorry, Melinda.

HENNEBERGER: Sure.

MATTHEWS: Charlie, I only have a minute here. That's exactly the point I was making with Robert Gibbs a minute ago on the air.

You guys have let the president become through imagery, with the golf and the fund-raisers and hanging around with the Wall Street crowd, the Geithners, the Summers, the Paulsons, he begins to look like a Clinton.

He looks like another old Democrat who has been in there too long.

How did he get to be an incumbent so fast?

COOK: Well, I think part of what presidents have to do is they have -

part of the job-as Robert said, part of the job is raising money.

MATTHEWS: It stinks.

COOK: And it was whether you're a Democrat-well, it may stink, but that is part of the job description. It's like-you know, I mean, it is just part of the deal.

But back on to the New York 23, that was a case-I mean, Democrats got a great deal. They won a seat with less than half the votes.

MATTHEWS: Yes.

COOK: And the ironic thing is that a lot of-there are a lot of people in the Republican establishment that are breathing a sigh of relief that Doug Hoffman, the Conservative candidate, lost, because the reason they're doing that is not that they had any love lost for the Republican nominee, who ended up dropping out, but the reason was that they don't want ideological purges taking place and costing them the next election.

MATTHEWS: Yes.

HENNEBERGER: Mm-hmm.

COOK: And that is what would have been triggered had Doug Hoffman won.

So, the thing is, you shouldn't have parties picking nominees in a closed room with-by 11 county chairs.

MATTHEWS: Yes, I know.

COOK: That is how you get stupid decisions. And their selection was dumb. It should have never happened.

But this was such a bizarre race that it is not representative of anything I have seen in 37 years of watching politics.

MATTHEWS: Melinda, how many seats in the country do you think could be won by wing nuts?

HENNEBERGER: Not many. I don't think this was-this was a very strange race. But I'm not sure that this is the-the recipe for victory, that there is a lot of energy, but when it comes down to it, if you have to put together voters from across the spectrum, it is never going to work.

MATTHEWS: Charlie, how many wing nut seats are there out of the 535?

COOK: I think about half of the House members over there are wing nuts already...

MATTHEWS: Really?

(LAUGHTER)

COOK: ... I mean, whether they are right or left wing nuts, you know, these people that are elected in one-party districts.

But the thing is, you can nominate a moderate Republican, but one that is pro-choice, pro-gay-rights, pro-card check, and pro-Obama stimulus, she is probably representative of a half of 1 percent of the Republican elected officials in America.

MATTHEWS: Yes.

COOK: But it is style that counts. And in the Virginia governor's race, they nominated a staunch, principled conservative, but one that stylistically was moderate.

(CROSSTALK)

MATTHEWS: Got to go.

Charlie, it looks like they picked that candidate in Upstate New York by a card check method, if you think about it. They go around and they say, who-you know what I mean? It was almost like one of those card check votes, one-on-one.

Anyway, thank you, Charlie Cook.

Thank you, Melinda Henneberger.

Up next...

HENNEBERGER: Thanks.

MATTHEWS: ... more winners and losers from last night's election. We're going to run through quickly in the "Sideshow" "The National Journal"'s take of surprising winners and surprising losers in the eaves of this election result last night.

You are watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL. Time for the "Sideshow."

Who were the winners in yesterday's elections? Who were the losers?

Here is a rundown from "The National Journal."

Winners, Dede Scozzafava. OK, the party's boss' pick was pushed out of the New York race, that House race, by tea bag Republicans. But her late-hour endorsement helped win the night for Democrat Bill Owens.

Another winner, Joe Biden. While President Obama focused on Corzine in New Jersey, Biden hit the stump for that Democrat in New York's 23rd District, a race that looked at the time a lot tougher for Democrats. Anyway, the third winner, the independent voter. They again prove themselves to be the real power players in American politics, breaking heavily this time for Republicans in both Jersey and Virginia.

And for the losers, first, we have got Congressman Pete Sessions, chairman of the Republican Congressional Campaign Committee. Under his leadership, Republicans have lost two big East special elections now in New York's 23rd last night and New York's 20th, with Kirsten Gillibrand's going to the Democrat back in January.

Also a bad night for the right-wing club Club For Growth. The group had flexed its muscle in Upstate New York in that 23rd District, hoping a Hoffman win would embolden right-wingers around the country. Didn't work.

Loser number three, ex-Alaska Governor Sarah Palin. She helped nationalize that New York race up in Upstate New York two weeks ago by coming out big-time for Doug Hoffman, the conservative. Bottom line here, Palin has yet to prove any sort of broad-based appeal on Election Day.

So, there you have it, "The National Journal"'s scorecard of last night.

Now for the "Big Number."

It was a near upset last night in New York City. Mayor Mike Bloomberg

edged out Democratic challenger Bill Thompson by-who ran a heroic

campaign-by just five points, a race the mayor should have won by a much

larger majority, given all the money he spent. After all, Bloomberg poured

God-hundreds -- $100 million into his reelection campaign, making it the biggest self-financed campaign in American history, so much so, well-well, how much did Bloomberg spend per vote yesterday? About $180 per person. That's per vote, 180 bucks.

If money can't buy you love, I guess that was the statement for the three-term mayor of New York now. He spent about $180 per voter last day - - last night. That's tonight's "Big Number."

That is a lot of money per voter, 180 bucks per voter.

Up next: a big night for Republicans last night and a shaky night for Dems. Will Republicans read too much into last night's victories and get a little triumphalist? And how will Democrats seek to explain those big losses? Our strategists are coming here next.

You are watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SIMON HOBBS, CNBC CORRESPONDENT: Good evening. I'm Simon Hobbs with your CNBC "Market Wrap."

Stocks ending mixed again today, despite a relatively upbeat statement from the Fed-the Dow Jones industrials giving up big gains late in the day to finish 30 points higher, the S&P 500 up a point, the Nasdaq falling almost two.

The Federal Reserve noting signs of an economic recovery gaining momentum, but leaving some key language unchanged from its last report. The Fed is sticking to its guns on interest rates, promising they will remain near zero for-quote-"an extended period."

Shares in Cisco Systems are moving sharply higher after-hours, the networking giant beating Wall Street estimates on earnings and revenue, that report posting just after the closing bell.

And health care stocks seeing solid gains, led by Merck pharmaceuticals, Merck shares up almost 6.5 percent, after completing a $41 billion merger with rival Schering-Plough.

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

HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

Democrats lost two governor's races last night, Virginia and in New Jersey. That was the big one, in Jersey. So, how do they spin those defeats? Republicans lost a candidate up in the Upstate New York race they thought they had in the bag. So, both sides are spinning.

Let's bring in the strategists to see how they spin, Steve McMahon and Republican Todd Harris.

You are both good at it, so I don't know whether you are going to B.S. us or not, but let's start with you, Steve.

Was it a good night or a bad night for the Democrats?

TODD HARRIS, REPUBLICAN STRATEGIST: Chris will.

MATTHEWS: Steve McMahon.

STEVE MCMAHON, DEMOCRATIC STRATEGIST: It was a mixed night, Chris.

I think New York 23 was certainly a good night. They picked up a seat that Democrats haven't held since 1871. But there's no question that looking at what independents did in New Jersey and in Virginia is like a canary in the coal mine.

(CROSSTALK)

MATTHEWS: Yes, I think I read that you said that.

Let me ask you. A canary in the coal mine is when you send the bird in to see if there is any gas in the mine, so you don't go in and get gassed. Now, the question is, what should be the warning to Barack Obama and the Democrats out of last night?

MCMAHON: Well, I think the warning should be-Barack Obama knows already that the center decides elections. It is not the left and it's not the far right. It's the people in the middle.

And what happened last night were, the people in the middle, the independent voters went out and they cast their votes for Republicans, after casting their votes for Democrats in 2006 and in 2008.

That is a warning sign for Democrats. It doesn't mean independents are gone. It is not really a referendum on Obama, as much as it's a referendum on incumbency, because if you look at every single place where the elections were held last night, the incumbent party got rejected by the voters, and the independents went in cast their votes for Republicans.

The latter is a troubling sign for Democrats. The former is a troubling sign for any incumbent.

MATTHEWS: You know, I want to change the pattern here a little bit and go to you, Todd, on that.

I think the Democrats got into a poo storm last night, meaning they got hit from both the left and right, populist independent. The populist on the independent said, you know, wait a minute. I think they are in bed with Wall Street. I can't believe I'm saying this about Democrats, but Corzine, Bloomberg, and the bailouts, and hanging around with Geithner, hanging around with Paulson, hanging around with Summers, they're part of the big-business problem, as well as the big-government problem.

So, your party benefited. It looked like the Democrats were hit left and right from the populist feelings in this country.

HARRIS: Well, remember, Chris, just a couple weeks ago, we were talking about some of the new NBC polling that showed that, across the board, people were tired of the establishment. They were sick of big government. They were sick of anyone who was in power.

And this was a massive repudiation of anyone who was in power. As we talked about a few weeks ago, ultimately I think that helps Republicans heading into 2010, because Democrats hold all the levers of power.

MATTHEWS: While I have you enjoying my comment, let me give you one you won't like. Your wing nuts have screwed things up in upstate New York. Are you going to keep doing it around the country? Knock off Charlie Crist, put in Rubio, so he can't win the general. This is what the Republicans used to do back in the early '60s, bring in people who couldn't possibly win, and enjoy it, because you were right, even though you lost.

HARRIS: In the interest of full disclosure, I have to tell you, as much as you may be appalled by this, but I'm actually supporting Marco Rubio in Florida. He absolutely can win in a general election. If you look at guys like Marco Rubio, look at guys like McDonnell, look at guys like Chris Christie, these are not right wing wing nuts. These are mainstream conservatives who have a political profile that can fit their district.

MATTHEWS: OK, we'll see. Let me go to Steve on that one. What do you think it is? Do you think the Republican party is tilting too much starboard here?

MCMAHON: Well, the Republican party is becoming regressing to become a white male southern party. When you take a situation like New York 23, and you throw your Republican nominee out because they are too moderate, and then you nominate and support-I'm sorry, you support a conservative party candidate who is too conservative to win, then you are basically killing yourself.

I think you're absolutely right, Chris. Your observation that-we can call them wing nuts, I guess.

MATTHEWS: Give me a better word. Help me out.

MCMAHON: The far right of the Republican party has taken it over, and they're making the Republican party uncompetitive in a lot of parts of the country.

MATTHEWS: OK. Steve-

HARRIS: I have to tell you, it doesn't fit the storyline that Steve is trying to push right now. But either of those guys in Virginia or in New Jersey ran as Republicans. They both ran as centrist candidates.

MATTHEWS: Yes. That's what I think.

HARRIS: Doug Hoffman was no more conservative than now Army Secretary, former Congressman McHugh. If you look at their ideological profile, they are almost identical. It is ridiculous to say that a guy that was way too conservative to win in New York 23 got the nomination.

(CROSS TALK)

MATTHEWS: Steve, let's go back to basics here. Do you think any Democrat or Republican again will make fun of his opponent or her opponent for being fat? Do you think that may be the last time that is done in New Jersey? I hope we can show that while we're talking here. Clearly focused on all that white shirt of Chris Christie, who is now going to be governor of New Jersey, all of him, by the way, making fun of his girth. Is that going to stop, that crap-excuse me-that bad stuff?

HARRIS: I don't think it was Governor Corzine's proudest or strongest moment in the campaign. But frankly, I don't think it had much to do with why he lost. This were a lot of issues going on there, property taxes, insurance rates, and other things that he promised to do something about and was unable to tackle as governor. So I think his problems stem from his performance more than from any comments he made, however ill-mannered.

MATTHEWS: You know what I liked? I like McDonnell's commercials. Maybe because of my background; I'm Catholic. But I just thought it was a nice way he did it. He said, here is my daughter. She graduated from Notre Dame. And everybody in my religion is sort of an alumni of Notre Dame. We're very impressed. Then she went off and became a ROTC officer. She fought in Iraq, as a service person.

I thought that was a positive way to run for office, and maybe it was too obvious, but, Todd, it worked for me. I think that is why he beat the other guy by 18 points, the Democrat.

HARRIS: McDonnell was able to make a personal connection with voters in Virginia, which is so critical when you are running, especially statewide, where voters want to get a sense of who you are. If you are going be their governor, they want to know who you are and they want to be able to like you. He was really able to make that personal connection with them.

MATTHEWS: Steve, it didn't matter that he wrote a right wing term paper 20 or 30 years ago? That didn't turn out to help the Dem much.

MCMAHON: I think it mattered. But I think what happened in the campaign was-for the Deeds campaign, that was the only thing that mattered. And for voters, it was maybe one of five or ten things that mattered.

What McDonnell did that was so compelling was he talked about the issues that are on voters minds. He talked about jobs, the economy, transportation, which is a big issue here in northern Virginia. And he talked about taxes. He didn't talk much about cultural issues.

I got to tell you, I voted for Creigh Deeds. I supported him. I wanted him to win. I cannot tell you a single thing about Creigh Deeds, or what he wanted to do for the state of Virginia. That is a real problem, because I pay attention to politics.

MATTHEWS: I think negative campaigning did not have a good year, thank god. I think both negative campaigns failed. I love to see that. I'm so tired of watching television the weekend before an election, and see people accuse the other candidate of being criminals. I can't stand it.

Thank you, Steve McMahon. Thank you, Todd Harris.

Up next, what are the moderate Democrats, like Mary Landrieu and Evan Bayh, to make of these results? If Democrats can't win in New Jersey, can they win in Arkansas? Can they win in Louisiana and Nebraska if they get their butt handed to them in upstate-well, they got their butt handed to them in Jersey and Virginia. That is pretty scary for a Democrat, I would think. Let's find out from Chuck Todd when we come back. This is HARDBALL. What is the message from the White House of yesterday's hangover? MSNBC back in a minute.

(COMMERCIAL BREAK)

MATTHEWS: We're back with the politics fix, with NBC News political director Chuck Todd-he's also White House correspondent-chief White House correspondent for NBC News-and Steve Kornacki of the "New York Observer," a fine newspaper.

Chuck, I want you to start with this: if you are a moderate Democrat, somebody fighting for re-election next year-let's say Evan Bayh in Indiana, which is a conservative state, or Blanche Lincoln down in Arkansas, which went heavily for John McCain just last November-are you more worried about your re-election chances after reading the returns this morning.

CHUCK TODD, NBC NEWS POLITICAL DIRECTOR: You are because you saw not only-I always say look at how Jon Corzine lost. He had all the money in the world. He had a weak Republican challenger, or a flawed Republican challenger. Weak is unfair, but he had a flawed Republican challenger. He had a popular-he was in a state where the president was popular. He had all the help he could ask for from the White House. And he still couldn't get over the finish line. He even had a third party candidate taking votes away from the Republican challenger.

So everything you could possibly have in a bad environment-and Corzine was in his own bad environment. He had it all going for him and he still came up short. That what would be what would concern me as a Democratic lawmaker sitting in a swing district.

Now, I asked the exact question you asked me to David Axelrod, the chief political adviser here in the White House. And he immediately said, hey, look at the special election. That's a Democrat who embraced the president.

And you know what? The 2010 elections are going to get nationalized. They will be a referendum on this White House. And that will excite voters. And we'll take the lead. We'll play more offense. I think they're in the sense of sort of, like, bring it on. It's almost like a page from the Bush playbook of 2002, Chris.

MATTHEWS: Steve, that's the question. If you're somebody who's on the line and has to vote for health care, which can be perceived in conservative states as being too much big government, too much tax heavy, too much influence in your life-is this, what happened yesterday, make it even harder to vote for health care, if you're Blanche Lincoln in Arkansas?

STEVE KORNACKI, "THE NEW YORK OBSERVER": Again, it depends what example you're going to look at. You could look up at the 23rd district in New York and you could see a Democratic candidate who endorsed the basic idea of the public option, the most controversial aspect of health care reform, and he won in a district that-

MATTHEWS: Chuck Schumer is going to vote for health care. I'm not worried about him. I'm worried about people in states that are not that blue.

KORNACKI: But the profile of the district where the Democrat won is very Republican. Not since 1870 whatever has a Democrat won there. But the other thing is there's an inevitability, also, to what happened yesterday that was sort of set in motion when Barack Obama won last year. We can talk about the New Jersey example and its significance nationally.

I don't think it was the best possible environment for Jon Corzine, given the bad economic conditions and all that. The best possible environment for Jon Corzine would have been in John McCain won last year, because Democrats in a state like in New Jersey, and all the blue states, have been insulated for the last decade and a half by the Republicans in Washington being in power.

It's uncanny, if you look at New Jersey, for the last decade in a half, the ceiling Republican candidates have had there.

MATTHEWS: Let me give you a perfect example, Chuck. Creigh Deeds is the most conservative of the Democrats running for that gubernatorial race, more conservative than Brian Moran, more conservative than Terry McAuliffe.

TODD: More conservative than Mark Warner, Tim Kaine, right down the line.

MATTHEWS: And he gets his butt handed to him by 18 points. If I'm a southern Democrat, I'm saying, wait a minute, Creigh Deeds is me. Eighteen points he gets blasted away by McDonnell, who is not that strong a candidate. I'm telling you-I'm asking you, isn't that a threat to Blanche Lincoln, to Mark Pryor, to Mary Landrieu, to Ben Nelson, to Evan Bayh?

TODD: Well, look, the guys on the ballot in '10, Blanche Lincoln,

Evan Bayh, you know, they're actually on ballot. Let's use those two

examples. When you lock at that Virginia turnout, what should scare them -

it's sort of like, OK, boy, when Obama is not on the ballot, that coalition of young voters, African-Americans, Hispanics, they don't show up. We've now got a couple of examples.

Look, it's anecdotal. We had that Georgia Senate runoff in late 2008, when the president's name disappeared from the ballot. So did his vote. Now we had Virginia; president's name disappeared from the ballot.

Now, look, extenuating circumstances. Creigh Deeds turned out to run an awful campaign. He never said what he was for, never said who he was. But the White House acknowledged-Axelrod acknowledged to me, look, that turnout was a concern, and they believe that when the president is at the forefront-if they nationalize the elections in 2010, if he's on the road, that will get African-Americans out. That will get young voters out.

That's what I'm guessing he's going to be telling Blanche Lincoln behind the scenes; hey, look, I'm going to fight. I'm going to get all this done. Nancy Pelosi is going to say, look what I did in that upstate New York district.

MATTHEWS: OK, we'll be right back to talk about how the far right looked last night. It looked to me like they got their block handed to them up in upstate New York. Interesting things; the country may be moving a bit to the right. I don't think they like the far right. Steve Kornacki, Chuck Todd will be right back to talk about the wing nuts and whether they have any power at the polls. You're watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We're back with NBC's Chuck Todd and Steve Kornacki of the "New York Observer." Chuck, what is the silver lining? You were alluding to it coming out of the White House from Axelrod. What are they looking at positively from last night?

TODD: Oh, I don't think they're looking at-they're trying to make New York 23 a positive. That's a tough thing to say. I'll say this. I think they can now go to a blue dog and say, look, if you're in a tough fight, you can at least know we have a good campaign operation; look at what we were able to do in that New York 23. I think they have a fair argument on that front.

I think if you look at the silver lining, if you're a Democrat on the outside of this White House, and you're seeing how they're reacting today, they made the decision to own the election. They're saying they're not. But notice that they put Robert Gibbs on your program. Axelrod is doing all it. They made the decision, you know what, they do have to own this.

It was almost as if they woke up and said, yes, yes, you're right; we're the head of the Democratic party. On a night like this, we can't pretend these races didn't matter.

MATTHEWS: Nobody votes for a rabbit.

TODD: That's right.

MATTHEWS: You have a stand up. Steve, I think that stand up thing is a good move for them. Just take it on the chin this time and come back. What do you think about the silver lining? Is there one for the D's?

KORNACKI: I think you look at the long view. If you take the long view on this, and you're not thinking about right now, and you're even not necessarily thinking about 2010, and you accept the reality of you control the White House, you control the House, you control the Senate-and unemployment is going to hit 10 percent any day now. If you accept that reality, then you're going to lose in 2009 and you're going to lose seats in 2010.

But if you take the long view, there's such a thing, as you look at the Republicans, as losing by winning. The Republicans are going to have this success. You're starting to see it today. You'll see it next year when the Republicans pick up seats-of reading too much and reading the wrong lessons into basically a position where they just sat back and let inevitability take its course.

Have they changed themselves at all since the 2006 and 2008 elections in terms of their image? No. So what happens when the economy comes roaring back, if it does? That's the assumption the Democrats are making. I think then Obama and the Democrats are sitting in a very good position, because the Republicans didn't take advantage of this opportunity to redefine themselves as a party.

MATTHEWS: Kornacki, you drink my coffee, sir. That was fascinating. Chuck, is health care on its way up this year? Does it still have a chance this year?

TODD: It has to happen this year. I think if this thing delays next year, it's dead. I think they can't afford to let it go. It is one of those things-it's-that's why I think you saw Harry Reid walk back that comment when it got leaked out. I think health care's dead if it doesn't go-

MATTHEWS: It's now or never. Thank you, Chuck Todd. Thank you, Steve Kornacki. Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL. Right now, it's time for "THE ED SHOW." Tonight, the Phillies will beat the New York Yankees, I think three to two. Pedro will be great tonight. Here's Ed Schultz.

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

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