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updated 1/28/2010 11:56:38 AM ET 2010-01-28T16:56:38

Guests: Chuck Todd, Pat Buchanan, Michelle Bernard, Steve

McMahon, Todd Harris, Mark Halperin, Andrea Mitchell, Claire McCaskill, Willie Brown

CHRIS MATTHEWS, HOST:  Big night.  Let‘s play hardball.

Good evening.  I‘m Chris Matthews in Washington.  Leading off tonight, Obama meets the country tonight.  The president addresses a congested Congress and a frustrated country.  He need not tell us the state we‘re in everyone watching those dads.  He needs to tell us that he knows the state we‘re in, which I believe he knows full well.  More important, he needs to show people how all of us how his economic policies are actually working, how they avoided the great depression that loomed us when he talk that ought of office.  How that stimulus money is actually creating real, tangible jobs. 

He needs to replace faith-based politics with show-me-the-money politics.  Here is what we know, the president is expected to push Congress tonight to pass a major jobs bill and try once again for republicans to join him in fashioning a health care reform bill that gains the 60 votes necessary for passage in the U.S. senate.  The president will also call for an end to this so-called, don‘t ask don‘t tell ban on open service by gay people in the U.S. military.  The president met today with network anchors at a noon briefing at the white house. 

We begin our coverage tonight with Senator Clair McCaskill of Missouri and what she is a modern democrat would like to hear the president say tonight.  Senator McCaskill will be here in a moment.  The top three things I think, President Obama has to do to get the country believing in him and the power of government to work for them.  Plus, the president is going to ask the republicans to lend him them a hand tonight.  What will we do to get them to do it?  Will they be rational and do the right things if he proposes getting together or do they just wait to see him fail?

And finally, the latest on the alleged plot to tamper with Senator‘s Mary Landrieu‘s phone by that conservative activists group who did discrete theater against ACORN.  We start tonight with the State of the Union.

And with us Senator Claire McCaskill, Democrat of Missouri.  Senator McCaskill, I consider you the very center of this country politically, the very heartland of reasonable thinking in the middle.  So, I have to ask you right upfront, what do the people of Missouri, and of Missouri want to hear to hear tonight from their president?

SEN. CLAIRE MCCASKILL (D), MISSOURI:  Well, they want to hear that he gets it, that they continue to struggle, that they are worried about how out of control things seem in Washington.  They also, I think, want to hear about what he is going to do aside from just government programs, to help this economy get moving.  That‘s why I‘m going to be listening very carefully to what he says about small businesses.  So many small businesses across this country are ready to grow right now, but they can‘t get credit.  So, we‘ve got to figure out a way to allow those small businesses that have made it through the rough patch to begin to add jobs. 

MATTHEWS:  Let me ask you about health care before we get on to jobs again.  It seems to me that the president and his people have failed to get Republicans to join the Democrats in getting through something like a centrist health care plan.  Because you don‘t get 10 or so Republicans, you don‘t get three.  Because three are afraid to join you without 10.  They want the cover of a large group.  They want safety in numbers.  What can he possibly do in the next couple of weeks to get the Republicans to join him in numbers so they can get the core of his health care plan enacted?

MCCASKILL:  Well, I think what he‘s got to do is begin exposing what‘s going on to the American public more effectively.  You know, there were a lot of Republicans, Chris, that were up in the Oval Office over the last few months.  But most people in American think somehow they‘ve been shut out of the process.  There were hundreds of Republican amendments in the bills that we considered, but somehow America thought that they had been shut out of the process. 

So, the process is something that matters.  Not just transparency, not just staying away from cutting backroom deals with individual senators, but showing the American people that about three or four months ago, the Republicans decided it was in their best interest to walk away from the table.  Politically, it was in their best interest.  So, process and politics deep-sixed what we were doing, and we‘ve got to do a better job of communicating that by showing them how hard we‘re trying to open up the process.  

MATTHEWS:  You think there is any way that the president can invite the Republicans on to television with him, sit with a group of ten or so, dozen or so, Republican senators, your colleagues, make them the offer on television and have them have to accept if it‘s reasonable?  Is there any way to force people to be reasonable and transparent?  Is there any way to really make it work in other words, Senator?

MCCASKILL:  Well, I think this is about communicating effectively and realizing that not everybody out there understands the games that are being played in Washington.  I mean, look yesterday what happened, it was ridiculous.  You had six Republican senators that were co-sponsors of a fiscal task force to look at our deficit.  By the way, the Republicans have said this was their biggest priority or one of their biggest priorities.  Six of the co-sponsors walked away and voted no.  Now, gamesmanship is being played here, and we have got to start doing a better job—because the American people don‘t want that.  You know what the American people want?  They want us to compromise and get something done and quit being so focused on elections and more focused on them.  

MATTHEWS:  That would be swell.  I don‘t see it happening yet from the other side.  Here‘s what a portion of what the president is going to say tonight.  We‘ve got permission to release it right now, quote, “By the time I‘m finished speaking tonight, more Americans will have lost their health insurance.  Millions will lose it this year.  Our deficit will grow, premiums will go up, co-pays will go up, patients will be denied the care they need, small business owners will continue to drop coverage altogether.  I will not walk away from these Americans and neither should the people in this chamber.” Well, he‘s raising the heat. Do you think that‘s going to work with the Republican side?

MCCASKILL:  Well, I think that they‘re playing with nitroglycerine.  I think if you refuse to participate and help us get something done, then it‘s on your shoulders.  And you know, he‘s right.  Those health care bills are going to continue to go up and people are going to remember that we tried very hard to reform the system and were stymied.  So, I hope we find some things we can agree on and move forward.  I think there are some Republicans who are willing to do that.  And it doesn‘t take a lot of them. 

You said maybe 10.  I think we can do it with two or three, and I would challenge our new senator from Massachusetts.  He‘s voted for a bill that is much more liberal than the bill that we considered in the Senate, that went much further than our bill went.  So, if he voted from that in Massachusetts, I‘m hoping that he will at least sit down with us and be part of a compromise get something done for all of those people out there that just want affordable health care.  

MATTHEWS:  OK, Senator Claire McCaskill, Democrat from Missouri.  Thank you for joining us tonight.  You‘ll be in the room tonight.  Let‘s bring in NBC Chief White House Correspondent Political Director Chuck Todd.  The politics of tonight, what is it?  Let‘s talk about pure politics.  

CHUCK TODD, NBC:  Well, it‘s simple.  You can look at it from 30,000 feet and say, that this is the day of the first attempt of starting to worry about his own re-election prospect because that‘s what democrats in that whole want to hear why?  Because they feel like he starts working on his own political issues, it will improve the entire party.  It is sort of lift up the whole party.  So, there‘s a lot of democrats in that room, congressional democrats and I think including Claire McCaskill, that hopes that maybe that‘s how this  speeches put together almost with an eye toward, he worrying about where he stands in three years because if he starts worrying about that then maybe things take care of themselves in 2010.  

MATTHEWS:  Well, presidents can do two things, they can affect the reality or the rhetoric. 

TODD:  Right.

MATTHEWS:  Can he affect reality?  Can he change the unemployment rate in the next year?

TODD:  No, that‘s the problem but he can give democrats what they want

to hear in that room.  Give democrats that sense that he knows the national

he knows the way to frame the message.  You know, look, you heard Senator McCaskill say, does he get it? That‘s what she says here, that he gets it.  So, they want to hear an economic message tonight, maybe it‘s a little populous, maybe it‘s not that they want to hear that he‘s going to be setting there and OK, we are going to try this, we are going to try this, we are going to try this. 

So, they want hear a lot about jobs even though, look, there‘s only so much one can do in job creation.  But what I find fascinating about how they put together this speech is that they believe that they have the right policies and they‘ve said all the right things in the past.  They just haven‘t done it very well.  The message there was—and I think some people may look at it and say, well, wait a minute.  No, no, no, no, it needs to be more than just improving your message.  You‘ve got to do this and you‘ve got to do that.  That‘s going to be adding the debate following this speech. 

MATTHEWS:  Well, there are so many conflicts in this guy‘s life right now.  Can he do something about jobs even though that means raising international debt?  Here he is addressing that very conundrum, here‘s another of president tonight stating his address, quote, “Rather than fight the same tired battles that have dominated Washington for decades, it‘s time for something new.  Let‘s try common sense, let‘s invest in out people without leaving them a mountain of debt.  Let‘s be responsibility to the people.” Well, there‘s the very heart of the horror.  In order to create jobs in the federal level, they going to spend money.

TODD:  That‘s right.

MATTHEWS:  And since, you can‘t raise taxes, you got to run a higher debts which means adding to the debt.  And that—it‘s a problem.  Well, it says, let‘s create jobs without adding to the debt, how do you do that? 

TODD:  Well, not if you‘re going to have government created jobs because if you‘re doing this, he‘s doing high speed well, now, part of this comes from this.  They believed, they‘ve got all the money they needed to spend from the government until right the stimulus package.  Last year, for instance, you know, they were able to obviously put nearly a trillion into the economy and they were going to use.  So, tomorrow he‘s going to Florida to talk about high speed rail.  He‘s using recovery act money.

MATTHEWS:  Yes.  How much.

(CROSSTALK)

TODD:  It‘s something about six billion which is.

MATTHEWS:  How many miles is that bill?

TODD:  Well, how many jobs does it creates, you know, that‘s the question, we don‘t know yet. 

MATTHEWS:  But he has another challenge, which is a real conflict.  How does he keep the left happy, the progressive side of people voted for a lot, all them in fact, and also cut a deal in the middle? 

TODD:  Well, look.

MATTHEWS:  Because, if you don‘t cut a deal, you don‘t get anything done.   

TODD:  This is where I think sometimes where we get into it here in Washington in this respect.  There‘s a divide, I think, sometimes between the base of the party that is with them.  They haven‘t left him.  

MATTHEWS:  Yes.

TODD:  They still approve of the job that he‘s doing.  And what I would call the progressive sort of elite.

MATTHEWS:  Yes.

TODD:  The intellectual, sort of the driving force of the left, they are disappointed but he hasn‘t lost the rank now of course, one can go with the other, he does always needs to mind this sort of intellectual progressive elite that he has to talk to and make sure that they don‘t leave him.  But the ranking file hasn‘t left him, who has left him is the middle.   That‘s the political reality here.  If you look at his job rating, you look at the Democratic Party‘s ratings, it‘s the middle that has left him.  So, I think, yes, he‘s got to be mindful of I think this progressive opinion elite.  But he‘s got to realize, hey, guys the middle is what . 

(CROSSTALK)

MATTHEWS:  But the people you hear on television are not who you hear the same people that, in other words people, the particular group that are always unhappy with him lately, right?  And you‘re saying that it means, the real working people, progressive people out there are with him.   

TODD:  Well, so far they have not abandoned, look, he was not losing, if he was losing his base, too, then they will.  

MATTHEWS:  Well, certainly the numbers show the democrats are still with him.  Listen at the NBC News “Wall Street Journal” poll numbers.  They just show this, they show the voters who have a high interest in the midterm perform a republican control Congress.  Now, this is scary, 49-41.  That means the people, and we saw this in Massachusetts last week.  The first poll that came out and scared the democrats, they get a little late and getting scared—

TODD:  Right.

MATTHEWS: -- about Martha Coakley losing to Scott Brown, said the voters were most likely to vote are pretty much on the line there.  Pretty much close, right? 

TODD:  Right.

MATTHEWS:  And now we see a national poll like that.   

TODD:  Right.   

MATTHEWS:  Pretty scary.   

TODD:  What‘s funny is that we saw this in ‘06 and ‘08 but in the reverse.   Remember the primary season we saw, oh my God, look, 2-1 democrats were turned out to the polls and independents weren‘t given a choice of the ballot in 2008.  Remember they were picked, they were now seeing it in the reverse where it‘s republican primary turnout.  The special election. 

MATTHEWS:  Give me two bits of good news.  One, I love transit.  I want rail roads back in this country.  I think we need to go with that, creates a lot of job.  And number two, I‘d love to say that we have got it right.  If the president goes for the center tonight, he‘s going for the sweets spot.  The State of the Unions begins, thank you very much, Chuck Todd of the White House.  The State of the Union begins at 9:00 Eastern.   We are going to watch it here together on MSNBC, “The Place for Politics,” you know the context here.

Coming up, the three things that I think President Obama needs to state in the State of the Union Address.  You‘re watching it only on hardball only on MSNBC.      

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  So, what does President Obama need to say tonight?  Well, here‘s what I think we need to hear.  We all need to hear.  I have a few ideas.  Pat Buchanan to get my thoughts, he‘s on MSNBC Political Analyst.  Willie Brown, the Former Mayor of San Francisco, Former Speaker of California State has finally joins us.  Thank you, Mayor Brown, Speaker Brown.  Let me start this idea by you Mr. Brown.  First, President Obama must explain the abyss that faced us when he came into office.  Your thoughts?

WILLIE BROWN (D), FORMER SAN FRANCISCO MAYOR:  I think he will have to start with that and I think he will have to start with what he did to reach that challenge, period.  

MATTHEWS:  Pat, your thoughts.  If it was sitting out there—do you think it was sitting out there, first of all?

PAT BUCHANAN, MSNBC POLITICAL ANALYST:  Well, sure.  I think he inherited a horrible situation.  He has to say that, but I really think he should not get into Bush passion.  Everybody knows Bush failed very much on the economy at the end of that, he inherited a rough situation.  So, he keeps working that vein, people are going to say, look, he‘s got the job now.  Let‘s not hear about what they were like, what is he going to do?

MATTHEWS:  The reason I suggest that Mr. Brown, you know, I believe that unless he explains why we‘re running a $1.4 trillion deficit right now, he faces the music for that.  If he says, however, that he inherited a fiscal disaster, that this country was going to held in a hand basket, he needs to pump up federal spending and seems to be.  Unless he explains that dire reason, people will always hold that against him at the right and center right.   

BROWN:  And, Chris, he has to do it in very simple terms.  The people who want to listen and they want to hear what he has to say, they want to also understand it.  And let me tell you, to date Barack Obama has not done the job of explaining things in clear, precise English.  An English in which everyone else can walk away and debate it in the same fashion.  He has to do that with reference to what he inherited.  He doesn‘t have to do Bush bashing but he definitely has to say, this happened.  This is what you asked me to do.  And I‘m starting to do it but believe me it‘s harder than even I thought.   

BUCHANAN:  I think he‘s got to do that.  There‘s no question about it.  And we‘re going through a very tough time here but, Chris, you touched on a big problem.   Federal government is spending 27 percent of GDP, government spending 38 percent.  The deficit is at nine or ten percent of GDP.  It‘s the largest since World War II.  That‘s why he‘s really constricted in what he can do and that‘s why the liberal wing of the Democratic Party, which believes is more spending and getting more money out there to create the jobs.  He‘s going to have to be disappointed because politically, as Chuck Todd said, it is right in the center of those independents who shifted all the way from about 40-point shift in Massachusetts from Obama and the Democratic Party to Scott Brown.   That‘s what he‘s got to get back.   

MATTHEWS:  Let‘s take a look at the second thing, I think he needs to say tonight.  That is jobs, jobs, jobs.  And the reason I bring this jobs Mayor, is it seems to me that all he does to stay grief for what is called the bailout, the stimulus package.   And what you‘re hearing now from a lot of republicans and critics is that it didn‘t work.   Doesn‘t he have to come on tonight and begin to show almost word pictures of people working?  He says, he‘s put two million people to work or saved the jobs of two million people.  I can‘t visualize that.  Is there any way that he can?

BROWN:  He has to do what if believe would be a very smart thing and that is, he has to step up to the plate and say, tomorrow I am prepared to do what we did with “Cash for Clunkers.”  Every small business in this country that agrees and hires tomorrow, I will provide that small business with the appropriate subsidy to pay that salary for one year.   That small business has to make a commitment all whether that they pay for it for the second year.  My very being in the first year, you‘ll be able to generate a sufficient amount of interest, new interest in my business in order to get there.  If he does that, everybody on the block will understand that this man really does mean jobs.  

MATTHEWS:  Well, that would be a heck of a job stimulant, wouldn‘t it?

BUCHANAN:  Well, sure, if you‘re going to completely subsidize people. 

If you already had to hire somebody right away and how you guarantee. 

MATTHEWS:  Well, you subsidize AID, you subsidize AIG, you subsidize Morgan Stanley.  You subsidize all of those Wall Street guys.  What the hell is wrong with subsidizing people?

BUCHANAN:  Well, nothing is wrong.  But I think, you‘re deficit is going to grow up to by 12 percent of GDP and I‘m not sure if got problems with debt, he got problems with potential default, he got problems with deficit, he got problems with confidence.  What he has to convey ideas, he understands the economic situation that he‘s on top of it and things are tough but we are coming through and moving up.  And as for job, Chris, look, unless and until they are created, there‘s no way you can say I saved all of these and the others are coming.  

MATTHEWS:  Yes, I agree with you guys.  So many else that they go, the mayor is right because I think the republicans are always saying, how about some job credit?  How about hiring people?  Some credit to hire people? 

BUCHANAN:  All right.

MATTHEWS:  Let‘s take a look at the final thought I had.  He has to say—I think he has to move to the center in terms of a freeze on spending and things like that.   But I really think—and you chance me on this, mayor, beat me, I think he needs to give his progressive wing, his liberal wing, his left wing, if you will, something tonight is getting rid of don‘t ask, don‘t tell in the military.  Is that something that can at least go home to the lunch table tomorrow, the gas station or wherever they are talking to people and say, at least we got something out of this president that we elected?

BROWN:  That‘s one of the things that he can do tonight in his speech and he should do it.  Because he‘s got to keep that enthusiastic aggressive constituency that helped elect him.  After all, that‘s the wing of the party that played such a great role in convincing the independents to be with him, to convincing the progressives to be with him.  And so, what he has to do, he has to say something to them.  Saying don‘t ask, don‘t tell.   

BUCHANAN:  I don‘t think letting, saying gays, come out of the closet and the barracks and going to be a big seller down at the gas station.  I‘ll be honest with you.   I mean, look, this is Middle America.  Do you want that headline, Chris?  That‘s coming out of his State of the Union.  

MATTHEWS:  Young people support gay rights.  

BUCHANAN:  Do it separately.  Do it separately not on your State of the Union.  

MATTHEWS:  Why not say it when people are listening?

BUCHANAN:  Thirty one states are voted against gay marriage overwhelmingly.   

MATTHEWS:  This is a gay marriage.  This is the right of people who are patriotic to serve their country without lying and taking the oath.  

(CROSSTALK0

MATTHEWS:  That‘s what it‘s about.  That‘s making people lie to serve the country.

BUCHANAN:  Then you get - it‘s not lying..

MATTHEWS:  You tell a person to say what they‘re not.

BUCHANAN:  Well, look.  Then you get all these military guys coming out the next day saying, this is ridiculous, it‘s ban for—and were on this big whole debate . 

(CROSSTALK)

MATTHEWS:  OK.  Mayor Brown, on this particular issue, is this too dangerous for him with the center?

BROWN:  No, it‘s not too dangerous for him with the center.  This man was and is the merchant of change.  He is the symbol of change and believe me when he takes the ball steps that reflect change that affects the lives of people directly, can be measured by the new voters, he‘s doing exactly what he needs to do and what this country needs to have him do.   

MATTHEWS:  OK.  Pat Buchanan, Mayor Willie Brown, Former Speaker of the Assembly.  Sir, thank you for joining us from San Francisco.  Pat, thank you, as always.  

Up next, the latest on that attempt to tamper with the phones in Senator Mary Landrieu‘s office in New Orleans.  We got new facts on that.  Motives are coming out of what that group was up to that are now facing ten years in federal prison for whatever they‘re up to.  You‘re watching hardball only on MSNBC.         

(COMMERCIAL BREAK)

MATTHEWS:  Welcome to “Hardball.”  Federal officials have now charged four conservative activists of entering Senator Mary Landrieu‘s office down in New Orleans on Monday in order to tamper with the phone system, Senator Landrieu put on her statement yesterday.  This is kind of quite, quote, “This is a very unusual situation and somewhat unsettling for me and my staff.  I am as interested as anyone—as everyone in fact, and also about their motives and purpose which I hope will become clear as the investigators move forward.”  Now, that is bland stuff for the senator.  

MSNBC‘s David Shuster is never bland.  David, he is here with the latest from New Orleans, David, what is—what do we know now about the motives of these hijinks crowd that now faces federal charges?

DAVID SHUSTER, MSNBC:  Well, Chris, according to the Law Enforcement Sources, the motive is now becoming a bit more clear and this was essentially according to Law Enforcement Sources, an effort to shame Senator Landrieu‘s office, to try to make a point about her willingness to take phone calls from people who were angry about her health care vote last month.  According to number of Law Enforcement Sources, even the criminal charges, the charging document, these guys Chris, did not have the equipment on them to actually tap the phones. 

Further more, the reporting about the listening device that one of the guys had in a van down the street, there‘s new indications that it was simply some sort of walkie-talkie, maybe even a cell phone that had a walkie-talkie function.  So, that he could communicate with the people up on the tenth floor of the office.  Further more Chris, these have indications that these guys are cooperating with the prosecutors.  So, again, the theories is now seems to be, that was not enough to tamper the phone, it was not enough to try to record the reaction of the receptionist and others in the office if that reception and others were presented with, hey, your phones aren‘t working.  You can‘t take any calls from your constituents.  

Would they laugh?  Would they essentially dismissed—that appears to be what these guys are looking for.  But here‘s the other thing Chris, there is a grand jury as there always is, available to essentially bringing super seeding indictment.  Should prosecutors feel that these guys are not cooperating or not telling the truth about either why they came up with this idea, who supported them?  So, that‘s always a possibility but right now every indication to just simply enough to try to shame Senator Landrieu‘s office but again, it‘s still a felony, still a felony to trespass on federal property the way that these guys are alleged to have done.   

MATTHEWS:  Thank you David Shuster.  Those are felony, those are the facts that charges entering federal property under false pretenses with the intent of committing a felony.  Michelle Bernard, you are an attorney, proceed.   

MICHELLE BERNARD, MSNBC POLITICAL ANALYST:  I am.  And this is a serious problem, you know, particularly for the child—and I‘m going to call them children, there man, everybody is 18.

MATTHEWS:  All in 20s.

BERNARD: .all in their 20s but these guys have gone from people who virtually almost brought ACORN to its knees to have Congress wanting to defend ACORN.  So, they look like to be right of center, investigative journalists to little boys playing a trick on senator Mary Landrieu, that turns out to be illegal whether or not they thought what they were doing was going to be a joke, it would be funny to see the reaction of Senator Landrieu‘s staff, they broke the law and regardless of whether or not that was their intent, they are in very, very serious trouble.  One of these guys is the son of a federal prosecutor.  Can you imagine the conversation that went on in his house last night?  Or tonight?  It‘s a very serious problem. 

MATTHEWS:  Thank you very much, Michelle Bernard.  These people—do you think they‘re going to walk or serve? 

BERNARD:  They‘re going to pay a fine and maybe serve a little bit of time. 

MATTHEWS:  OK.  Up next, back to the State of the Union.  President Obama will likely ask Republicans—I‘m sure he will—give him a hand tonight.  He needs help.  But do Republicans in Congress want to help him? 

This is the problem in Washington.  The Republicans think they‘ve got the president where they want him, where he can‘t anything done.  That‘s where they want him.  And he‘s hoping to get something done. 

Who are you with?  The guy who wants to get something done or the guy who doesn‘t want anything to get done?  I don‘t think that‘s a complicated one.  Are you with the fire brigade or the fire? 

You‘re watching HARDBALL only on MSNBC. 

(COMMERCIAL BREAK)

(NEWSBREAK)

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

What can the president do tonight to get his message back on track and how can Republicans beat the post-Massachusetts momentum should they choose to do so? 

It‘s time now for our “Strategists,” left and right.  Steve McMahon is a Democratic strategist.  Todd Harris is a Republican strategist. 

I want to start with the positive here.  Steve McMahon, the president tonight, how does he win tonight?  How does people—let‘s make it simple.  How does he succeed tonight? 

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  He—by communicating to Americans that he feels their pain and he understands what they‘re going through.  I think the first year of his administration really is a story of the 401(k). 

People can look at their statement, look at where it was a year ago and they can see that great progress has been made because their stock portfolio has improved considerably and their retirement security is better than it was. 

But it‘s not all the way there yet.  The president needs to lay out the case for taking the next step on the economy, creating new jobs, and he needs to lay out some things that are going to be hard for the Republicans to say no to, like small business tax credits and incentives to create jobs. 

They are going to have to say no to those things.  I think their strategy is, to say no to those things—and I think it‘s is a bad strategy that will blow up on them later. 

MATTHEWS:  Let me go to Todd.  Todd, by the way, before we hear of your strategy, why has the economy—rather the stock market been going up?  Under your guy Bush it was dying.  It dropped about, what, how many points?  Down to 6,000 from 1,300 -- 13,000. 

Really, the Dow almost went in half under Republicans‘ supposedly trove business management.  And then under a Democratic president—a moderate to liberal president, it has gone up 2,000 points.  Explain. 

Well. 

(CROSSTALK)

TODD HARRIS, REPUBLICAN STRATEGIST:  I don‘t know?  Why are we losing so many jobs under a Democrat?  You know?  That‘s. 

MATTHEWS:  You didn‘t answer my question. 

(CROSSTALK)

MATTHEWS:  Because we started with the recession. 

HARRIS:  If you don‘t have a job, you‘re probably not all that thrilled about the 401(k) going up or the Dow going up. 

MATTHEWS:  OK.  All right.  I‘ll say. 

MCMAHON:  Todd.  Come on, Todd. 

MATTHEWS:  OK, Todd, I obviously made a mistake by asking you a tough question you changed the question.  Let me ask you.  What do you think the president should do tonight, a political pro, regardless of party affiliation?  What should be doing tonight?  What should your party be doing? 

I‘m sorry, you‘ve got a governor tonight, he‘s going to be speaking in Richmond to the assembly—state assembly in Richmond of Virginia and he‘s going to be trying to act like a little president down there. 

Is that smart to try to reconstruct the State of the Union when you‘re not the president? 

HARRIS:  Well, they‘re not reconstructing the State of the Union. 

They‘re giving. 

MATTHEWS:  Well, they are.  They‘re trying to snoopy, trying to play the red dragon.  I mean give me a break.  How do you go on national television tonight‘s State of the Union speaking to an assembly like it‘s a Congress, pretending that you‘re president when you‘re not? 

HARRIS:  Well, he‘s going to be speaking from outside of Washington, where frankly, you know, the majority of Americans live.  The values that he‘s going to be representing the values that got him elected in Virginia, the state that Barack Obama won, which then turned against the Democrats. 

Those are the values that Governor McDonnell is going to be talking about tonight.  If the president wants to—if the president wants to appeal to the kind of voters that Democrats have been losing, he‘s going to have to show that he learned the lesson of Massachusetts. 

He‘s going to have to move to the center.  Republicans are more than willing to work with this administration.  But whether it‘s been the stimulus, whether it‘s spending, whether it‘s health care, the Democrats have said this is the way that it‘s going to be. 

It‘s our way or the highway and you could either sign or to a liberal bill or if you don‘t we‘re going to say that you‘re the party of no. 

You know, Chris, I was listening to your conversation earlier.  President Obama‘s biggest problem is not with the Republicans, it‘s with people like Nancy Pelosi, who just today, the president came out and said he wants a spending freeze.  Pelosi has already come out against his spending freeze. 

So before people start pointing fingers at the Republicans for things not getting done in Washington, the Democrats ought to take a look at their own house. 

MCMAHON:  Todd, Todd, what you just described is Barack Obama governing from the center.  Not every liberal has been happy with everything that the president and his administration has done. 

There was a little uprising (ph)  this week about Ben Bernanke.  There are a lot of liberals who didn‘t like these spending freeze.  There are a lot of liberals who didn‘t like where the president ended up on health care reform. 

He is trying to govern from the center, Todd, and from the center out.  And he‘s inviting the Republicans to join him, which he‘s going to do again tonight.  And every time the president extends his hands to the Republicans, the Republicans smack it. 

I understand that‘s an electoral strategy that they‘re pursing.  I

don‘t think it‘s smart.  If you look at the polls, 93 percent of Americans

93 percent of Americans think there‘s too much partisanship and there‘s not enough cooperation in Washington. 

And so when the president extends his hand and the Republicans swat it, when they don‘t produce a single vote for a health care reform bill or an (INAUDIBLE) three for an economic stimulus package that saved this country from the depression. 

The voters are going to figure that out eventually and they‘re not going to reward the Republicans for it.  They‘re going to punish them. 

MATTHEWS:  OK.  Let me ask Todd. 

(CROSSTALK)

MATTHEWS:  What is the—what was the message from Massachusetts?  I mean, define it really sharply.  Not just right wing.  Because Massachusetts is not a right-wing state. 

What is it that they were saying when they voted for a guy in a truck?  What was that all about?  The guy with the truck wearing the barn coat who‘s a lawyer, lives out of town, didn‘t have much political experience.  What were they voting for with that guy? 

HARRIS:  They were voting for someone who speaks for them and who listens to them.  They were voting for an outsider, someone who is going to go to Washington and be a check and a balance on the Obama Democratic agenda. 

They do not—they were not voting for a rubber stamp.  If you look at the polling, in Massachusetts, and you ask people, who do you think is more likely to be an independent voice for Massachusetts, Scott Brown won that question by a 2-1 margin. 

Coakley‘s problem was that she had the entire Democratic establishment tied around her neck and in a year, as we‘ve talked about before on this show, when the outsider reins supreme, you do not want the entire establishment tied around your neck. 

That‘s going to be the Democratic Party‘s biggest problem this November. 

MCMAHON:  Todd has actually finally stated something that is true and accurate.  And that is, that there was a big outsider vote that propelled Scott Brown to victory in Massachusetts. 

The voters are angry.  They want Washington to do it differently.  The president so far hasn‘t been able to change the tone.  He hasn‘t been able to reduce the partisanship because the Republicans refuse to cooperate. 

But the American people expect it and by a 2-1 margin, according to the NBC poll recently, they are voting—I‘m sorry, they are blaming Republicans for the obstruction and for saying no by 2-1 over President Obama. 

This is not an ideological vote.  This is an “I‘m mad as hell” vote.  And if you don‘t hear me now, you‘ll hear me in November.  And everybody who doesn‘t understand that it‘s not ideological, it‘s not left-right, it‘s inside-outside. 

If you‘re an insider, you‘re toast in this environment. 

MATTHEWS:  OK.  I agree with you.  Anyway. 

MCMAHON:  If you‘re an outsider. 

MATTHEWS:  I think the fact is the president would like to cut a deal with some moderate Republicans right now, maybe 10 senators, and find something in the middle.  Even if he has to deal with tort reform. 

Anyway, thank you, Steve McMahon and Todd Harris. 

Up next, what President Obama will say tonight in the State of the Union.  This is HARDBALL only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

Joining me now is NBC chief foreign affairs correspondent Andrea Mitchell, who also hosts MSNBC‘s “ANDREA MITCHELL REPORTS,” and “TIME” magazine‘s Mark Halperin, whose new book is “Game Change: Obama and the Clintons, McCain and Palin, and the Race of a Lifetime.” 

So I have to start with the obvious question.  How does he change the game tonight, Mark? 

MARK HALPERIN, CO-AUTHOR, “GAME CHANGE”:  Well, I have great respect for the president and for David Axelrod, for Rahm Emanuel and Robert Gibbs. 

I confess, I come here telling you, I have no idea what they‘re doing.  Based on the way they‘ve set this up, based on the excerpts that have been released, if they have a strategy here to change the game effectively I cannot discern it. 

MATTHEWS:  Andrea, can you find a pivot point here tonight in the

speech that will change the mood of this country from a kind of desultory

gee whiz, why can‘t you get something done—I‘m blaming both parties, too

maybe these guys can get their act together? 

ANDREA MITCHELL, NBC NEWS:  I‘m suspending my disbelief because from these excerpts, this is a Barack Obama as Ronald Reagan.  He‘s on the side of the middle class family and he‘s saying, you know, let‘s inject decency and commonsense. 

He‘s the fighter—the fighter for the American people out there.  He‘s putting himself on the side of the people who are disgusted with Washington, disgusted with the lobbyists and the lack of transparency.  And he‘s basically saying, we‘ve got to change the game.  And I‘m going to fight for you and we‘ve got to take things and that the American people are decent and they are not quitters and I‘m not going to quite either. 

I‘m not sure that this doesn‘t work. 

MATTHEWS:  Well, you know, Ronald Reagan was a Houdini.  He was able to be both the California guy who happened to work in Washington a few days a week and also president of the United States.  And so he could always talk about—he went to rallies for balancing the budget.  But he didn‘t balance the budget.  But he‘d be there at the rally.  We got to balance the budget, meanwhile the guy in the White House was him. 

I‘m not sure everybody has that talent. 

HALPERIN:  I see what Andrea means, that the Reagan stuff in here.  I see as much Michael Dukakis in these excerpts. 

MATTHEWS:  You are being mean. 

(CROSSTALK)

MITCHELL:  That is so cruel. 

MATTHEWS:  That is capital punishment.  That is capital punishment. 

HALPERIN:  This debate about whether he‘s a liberal or conservative. 

MATTHEWS:  Oh OK, OK. 

HALPERIN:  He‘s a technocrat.  He is a technocrat. 

MATTHEWS:  Mark, Mark, you are vicious.  Let‘s take a look.  Putting him in the tank here, literally. 

Let‘s take a look at the excerpts from president‘s State of the Union.  We have the early excerpt here, quote—this is tonight.  “We face a deficit of trust, deep and corrosive doubts about how Washington works and have been growing for years.  To close that credibility gap we must take action on both ends of Pennsylvania Avenue.  To end the outside influence of lobbyists.  To do our work openly and to give our people the government they deserve.” 

That‘s profound stuff a year in.  Andrea, he‘s operating now as a critic, a Ralph Nader, a guy—a person who doesn‘t like the way Washington works but he is chief executive. 

MITCHELL:  He is CEO.  But this is a guy who took on the banks, who has correctly determined that he is no associated more with Wall Street than with Main Street and he is trying to fix that, to correct that balance. 

MATTHEWS:  Gotcha. 

MITCHELL:  He does have to decide whether he is a populist or a centrist.  He wants to be a centrist.  That‘s his instinct.  The instinct is to be bipartisan, is to get things done and that has to be in the middle.  But the rhetoric that he needs to exploit now, if you will, is populism. 

MATTHEWS:  So—but he‘s not a screamer.  He says he‘s not an angry man.  He doesn‘t seem like one.  He does see the other side‘s point of view, unlike a lot of people I know.  He actually can understand why somebody might disagree with him even though he disagrees with them. 

He doesn‘t think the other side is evil.  He just disagrees with them. 

A man of that—a person of that temperament, can they be a rebel rouser? 

HALPERIN:  I don‘t think they can.  Again, I think he‘s—that, other than the series of adjectives and attributes you described, I think that is what‘s putting him more than anything else in this position.  He does not have the temperament to go after his own party and Sister Souljah them.  He does not have the temperament to figure out a way to reach out to these Republicans in a way and risk what the risk would be involved. 

I think—again, based on these excerpts and the way they‘ve set this up, I don‘t see their theory of how this speech and the budget change the game the way it. 

MATTHEWS:  So you‘re predicting a clinker tonight? 

HALPERIN:  I. 

MATTHEWS:  You are. 

HALPERIN:  Maybe they are holding stuff back but based on all the briefings they did and what they‘d put out, I don‘t see how this solves the myriad of problems he has with the left, with the right, with independents.  I just—to me, it‘s still too much of a hodgepodge. 

MATTHEWS:  Andrea, he has to fight a two-front war.  He has to fight a war to win back the center and the center right.  Because a lot of people in the center right gave him a chance.  They were disillusioned with Republican raw and they gave him a shot, some people. 

Then he has to keep the noisy left at the same time.  More votes are in the center.  More noise is on the left.  Who‘s he have to deal with first?  Who‘s his biggest front he has to fight on tonight to regain? 

MITCHELL:  I think he has to regain the center.  He can deal with the left.  I mean it is a problem and the progressives—I interviewed Bernie Sanders today on our show, and these people are not happy.  They‘re looking to Nancy Pelosi now. 

Take a look at who is in the speaker‘s box tonight.  It is filled with labor leaders.  She is playing to her base and to the very people who brought you the House health care version, the House stimulus bill.  So he does have to deal with that. 

Those are the leaders of, you know, half of Congress in the House of Representatives and all of them who are running this year.  They are very unhappy with the leadership from the White House right now. 

At the same time, the broader public out there, and that‘s his audience tonight, they‘re in the center, as you‘ve correctly said, Chris.  And those independents have to be brought back in, have to give Barack Obama a second chance. 

I don‘t think it‘s too late because certainly in our NBC News/”Wall Street Journal” poll, he was not only up to 50 percent, but the anger that people are feeling, 50 -- 48 percent directed at congressional Republicans.  

MATTHEWS:  Yes. 

MITCHELL:  . 41 percent directed at congressional Democrats.  Only 27 percent of that anger directed against him. 

MATTHEWS:  This is like—this is very much like France, this country.  It‘s a Buchwald country.  It is not a left-wing or a right-wing country.  It rarely goes for the guy that‘s a moderate or liberal.  It rarely goes McGovern or Goldwater.  It doesn‘t go that way. 

We‘re not crazy.  We‘re like the French.  We basically stay down the middle.  And how can he do anything but that?  He has to keep the progressives by doing some progressive things.  But he can‘t act like one, can he? 

HALPERIN:  He needs to do what Ronald Reagan did in reverse.  Reagan had Reagan Democrats, core issues that he believed in that had natural appeal to the more moderate members of the other party. 

MATTHEWS:  Yes. 

HALPERIN:  I thought. 

MATTHEWS:  Like tax cuts. 

HALPERIN:  Like tax cuts. 

MATTHEWS:  Which are easier to sell. 

HALPERIN:  Strong on national security.  Welfare. 

MATTHEWS:  But is there anything a liberal or a progressive can sell that‘s as easy to sell as a tax cut?  Is there anything they have to sell? 

HALPERIN:  I think there are some issues around education.  Perhaps, again, he‘ll make that a big part of his agenda this year.  But I think he needs to find things he believes in his gut are really important.  Maybe it is tort reform, you mentioned that before.  Maybe it‘s some kind of tax cuts that are targeted towards small business.  There is some of that there. 

But there have to be things that are centrist policies he believes in where he‘s willing to risk votes on the left. 

MATTHEWS:  OK.  I believe—Andrea, I believe he‘d sit in the room right now with 10 or 20 Republicans, and try to cut a deal with 10 of them.  Try to—he‘d do tort reform, throw a lot on the table to get a major change in health care reform. 

I don‘t know why.  I guess the challenge is to get people in the room with him and make them cut a deal.  Table stakes.  You‘ve got to bet what you‘ve got. 

We‘ll be right back with Andrea. 

Andrea, we‘ll start with you when we come back. 

Andrea Mitchell coming up back with Mark Halperin, the best seller of “Game Change.”  You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with Andrea Mitchell and “TIME” magazine‘s Mark Halperin, author of “Game Change.” 

Andrea, you and I have watched a lot of these and we wonder whether there can be a mood change in the country tonight.  And can the president say something tonight that will make people think, you know, he does get it?  He does know how bad things are and he is doing things to fix the problem? 

MITCHELL:  Well, I think that what he can do, and we—I‘d like to believe that two-thirds, as much as two-thirds of the speech will be about jobs and about the economic hardships on Americans, middle class Americans. 

If he can persuade people that his bonus depreciation proposals, his other tax cut proposals really will help small businesses hire again.  If he can get that job momentum going, and also at the same time, you know that he‘s going to beat up on lobbyists, he‘s going to go against congressional earmarks, and speak about deficit reduction on this commission, which won‘t be congressionally mandated, because they defeated that yesterday, but at least presidentially appointed. 

Those are things that could be bridging the gap between the left and the center wings of the party. 

MATTHEWS:  Is the jobs credit—do you believe the headline in “The New York Times” tomorrow—will that be the top front of the fold headline tomorrow of this speech, the jobs credit? 

MITCHELL:  Yes.  I think it‘s all about jobs.  Jobs, jobs, jobs.  It almost sounds like Jim Baker talking to Tariq Aziz back before the first Gulf War.  It‘s all about jobs. 

MATTHEWS:  Well, Jim Baker told the truth, didn‘t he? 

(LAUGHTER)

MATTHEWS:  He was a realist, as you say, in foreign policy. 

MITCHELL:  That‘s another story. 

MATTHEWS:  He was no theorist.  Your thoughts, Mark.  Is this the headline if he says he wants to give tax deductions, tax credits, tax write-offs? 

HALPERIN:  I think. 

MATTHEWS:  For hiring people. 

HALPERIN:  Just because of the amount. 

MATTHEWS:  Plane equipment. 

HALPERIN:  Just because the amount of the speech is about jobs, I think the press narrative in the “Times” and elsewhere will be Obama pivots off of health care and everything else, and recognizes both politically and substantively this has to be it. 

And when the history of this administration is written, some may say he wasted his first year by not doing this. He let the country. 

(CROSSTALK)

MATTHEWS:  Does he get any credit—you first, then Andrea—for not hiring lobbyists?  Does the public really believe him? 

HALPERIN:  I think. 

(CROSSTALK)

MATTHEWS:  I think that‘s one of the stupidest things he‘s ever done. 

HALPERIN:  A secondary or tertiary issue.  The public cares about maybe didn‘t directly the effect of lobbyists. 

MATTHEWS:  Yes. 

HALPERIN:  But they don‘t care about that. 

MATTHEWS:  You know, to keep him squeaky clean, Andrea, he‘s made a point of not hiring anybody who‘s worked as government representatives, as a lobbyist.  No matter how clean they are, no matter how good the cause, has that hurt him in terms of talent? 

MITCHELL:  Sure. 

MATTHEWS:  Winning the country. 

MITCHELL:  It cost him not only Tom Daschle, it cost him a—you know, really effective human rights advocate.  Some lobbyists for the kinds of interests that they needed at the State Department and elsewhere and it‘s really slow down putting people --- important people in place in the treasury. 

MATTHEWS:  Doesn‘t he know when he‘s talking to senators, he‘s talking to future lobbyists? 

(LAUGHTER)

MATTHEWS:  Anyway, here‘s something—I‘m just being cynical.  Here‘s what the president is going to say—anyway, thank you, we‘re out of time.  But it‘s coming up, the speech itself. 

Here‘s something the president will say tonight, by the way.  “By the time I‘m finished speaking tonight, more Americans will have lost their health insurance.  Millions will lose it this year.  Our deficit will grow.  Premiums will go up.  Co-pays will go up.  Patients will be denied the care they need.  Small business owners will continue to drop coverage altogether. 

“I will not walk away from these Americans and neither should the people in this chamber.” 

Mark, what does that mean?  “I will not walk away from health care.” 

Does he mean that? 

HALPERIN:  I think that‘s mostly for the inside audience of the Democrat particularly in the House saying you guys keep going, I have your back. 

MATTHEWS:  Andrea Mitchell, thank you so much for joining us tonight. 

Thank you, Mark Halperin. 

President Obama‘s State of the Union will begin here at 9:00 Eastern, the place for politics, on MSNBC. 

“COUNTDOWN” with Keith Olbermann starts right now. 

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

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