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updated 2/4/2010 11:38:05 AM ET 2010-02-04T16:38:05

Guests: Julia Boorstin, Mindy Finn, David Corn, Sen. Dianne Feinstein, Susan Collins,

Andrew Young, Steve McMahon, Todd Harris

CHRIS MATTHEWS, HOST:  Rules of engagement.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in snow-covered Washington.  Leading off tonight: This could be the start of something big.  That‘s right, President Obama‘s remarkable appearance before House Republicans on Friday has ignited something good in our democracy, a push to turn an American president‘s meeting with their political rivals and allies into a regular event.  A rump group of political thinkers from the anti-tax right to the blogging left is asking, If the prime minister can do it over in England, why can‘t our guy do it here?  Anything they can do, maybe we can do better.

Next topic tonight, the Republican criticism of how the Obama administration handled the Christmas Day bombing attempt.  More on that in the program.  We‘re going to have a lot more of that on the program tonight.  But mainly, the issue is going to be the question of whether the president should meet regularly with his political opponents in some formal manner.  Anyway, back to the Christmas Day bomber.  The question is, of course, whether it‘s being handled correctly with a criminal approach with Miranda rights, or whether you lose a lot of information that way.  A lot of questions there.  And a lot of questions about whether the Republicans are guilty, if that‘s the right word, of doing the exact same thing they‘re attacking the Democrats are doing.  As I say, if the shoe fits, wear it.

And Andrew Young, the man who once took the heat for being the father of John Edwards‘s love child, is certainly getting even with his former boss.  He‘s got a book, what else?  But does he have a story?  We‘ve got him tonight on HARDBALL.  Tighten your seatbelt, Mr. Young.

Plus, Colin Powell says it‘s time to drop “Don‘t ask, don‘t tell.”  Now, that‘s news.  He was the guy, the general, who instituted the whole charade.  Can the combination of Obama and Powell get it changed now?  We‘ll ask the HARDBALL strategists tonight.

Finally, did she or didn‘t she?  Sarah Palin says she congratulated Scott Brown after his win in Massachusetts.  Mr. Brown said he can‘t remember that ever happening.  He must have forgot.  Oh, yes, and then he remembered.  So what‘s happening here?  Is this guy becoming a politician even before he‘s actually a senator?  That‘s in the “Sideshow” tonight.

We start with the debate over “question time” in America.  David Corn is the Washington bureau chief for “Mother Jones” and Mindy Finn is a Republican blogger.  So the question, lady and gentleman, is—and I‘ll start with you, Mindy, you haven‘t been on the show—it‘s fascinating to me that you folks out there in the blogosphere and elsewhere—sideliners politically—are calling for a front-line regular back-and-forth between the president of the United States and his rivals on the other side of the aisle and also with his own people.  Tell me about what you want to see.

MINDY FINN, REPUBLICAN BLOGGER:  Well, I think that we see that both parties are tired of politics as usual.  You know, Scott Brown‘s win obviously was a rejection of the Democratic Party and their policies, but frankly, what voters are saying are the same things they said in 2006 and 2004, which is, Washington isn‘t listening to us and we‘re tired of politics as usual.

And so I think that what happened Friday, with the president going to speak to the Republican retreat, allowing Republican members to pose their questions and him to respond, and even more importantly, that it was televised publicly, is something that needs to happen more regularly.  We need a more civil...

MATTHEWS:  Yes, we carried it.  I don‘t think Fox carried it in its entirety.  (INAUDIBLE) we played it all over again a couple times.  We had a whole special, and we‘re very proud of that here.

David Corn...

DAVID CORN, “MOTHER JONES”:  You...

MATTHEWS:  ... the president of the United States exposed himself to his enemy.  The question is, Would any president, Democrat or Republican, agree to a regular format of possible mistakes, exposure?  Ever time you get on television, by the way, you and I know...

CORN:  Yes!

MATTHEWS:  ... you can make mistakes.

CORN:  I do know.  Yes.  And well, the president doesn‘t seem to be too scared of going on TV a lot, maybe more than other presidents...

MATTHEWS:  Yes, with a teleprompter!

(CROSSTALK)

MATTHEWS:  ... a group of people that are hostile to him?

CORN:  We have about three dozen people on the left and the right, bloggers, politicos, techie people, Internet advocates, who have formed this group.  It‘s Demandquestiontime.com.  There‘s a petition.  Thousands of people have signed it today.  And we all saw what happened on Friday, as you were watching, too, and realized there was something special and historic about it.  And we call on both Obama and the Republican leadership in Congress to do this on a regular basis.

And I—listen, it may not be what‘s best for the politicians.  It may be, though, what‘s best for the American public and to have a civil debate people can watch and decide for themselves.

MATTHEWS:  OK, I think it‘s a great idea.  I think it‘s great for America.  I‘m tired of each party talking only to itself in an echo chamber.

But here‘s what David Axelrod, who‘s the president‘s spokesman, said on Monday to “Politico” about the idea of regular question time, before your effort was announced.  Quote, “The thing that made Friday interesting was the spontaneity.”  That was this past Friday.  “If you slip into a kind of convention, then conventionality will overtake the freshness of that.”

I‘m afraid—Mindy, my fear is that either party, whosever in opposition, will have a choreography.  They‘ll come up with a set of questioners.  They‘ll have ringers.  They‘ll ask questions that embarrass the president, and it‘s just be one of these—another one of these tricky little numbers, inside-the-Beltway games that offend people even more about our democracy.  It won‘t be spontaneous.

FINN:  Well, it‘s certainly possible that that could happen, but I think that if political shenanigans go on and it‘s something that‘s publicized, televised and public, that the American people will reject that.  I think they‘ll protest that because that‘s going to look like more politics as usual, political shenanigans...

MATTHEWS:  Yes.

FINN:  ... and they‘ll reject whosever doing it, whether it‘s the Democratic Party or the Republican.

MATTHEWS:  Let‘s remind—excuse me.  Let‘s remind ourselves, Mindy and David, of what we saw last Friday because it was really a moment in American democracy at its best.  Let‘s listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  We‘ve got to close the gap a little bit between the rhetoric and the reality.

If you were to listen to the debate, and frankly, how some of you went after this bill, you‘d think that this thing was some Bolshevik plot.  No, I mean, that‘s how you guys—that‘s how you guys presented it.

(END VIDEO CLIP)

MATTHEWS:  Boy, there‘s the president out there sort of freelancing, using language that normally is tricky, making a joke about you being perceived as a Bolshevik.  I‘ve been through this myself.  You say something you think is clever, it‘s taken out of context.  The president admits he‘s a Bolshevik, next thing you know, somebody‘s saying.

CORN:  But you know, Mindy‘s right.  If anybody on either side tried some sleight of hand in this, it might backlash against them.  I thought each side in that debate on Friday was trying to do their best.  They were at their best.  Obama was at his best.  The Republicans were at their best in presenting their argument.  That‘s what made is so impressive.

MATTHEWS:  Yes, but the Republicans were caught off guard.  Here‘s my question.  The criticism from the Republican side afterwards—no real hard question about foreign policy and security.  Your thoughts, Mindy?  The questions were all about economics.  The president was ready on that.  It was somewhat—he could handle it.  Wouldn‘t it be tougher of him—for him if it was about security, about foreign policy?

FINN:  It would be.

MATTHEWS:  That‘s their argument.

FINN:  There should have been questions about foreign policy and security.  I think the important point is that during political campaigns, the candidates make time to have debates and regular debates.

MATTHEWS:  Well said.

FINN:  And then, once the campaigns are over...

MATTHEWS:  So well said!

FINN:  ... they don‘t have them.

(CROSSTALK)

MATTHEWS:  Let me tell you my problem.  I worked on the other side for many years.  I worked in party politics.  I worked on the Hill as an aide, top guy with the speaker.  And my job was try to get the Democrats to respond to Ronald Reagan every week.  Nobody wanted to do it!  They would have prepared speeches.  The president was on radio every Saturday.  They had an hour to respond.  Nobody wanted to use that hour to truly respond.

Every time there‘s a State of the Union address—and your party did it (INAUDIBLE) with Governor Donaldson—McDonnell, rather.  Nice speech.  It wasn‘t a response to the president.  Why didn‘t they use the time between the president‘s speech, when it gets released around 6:00 o‘clock at night, and actually read the speech and respond to it?  Governor McDonnell didn‘t do that.

CORN:  But Chris...

MATTHEWS:  Just a minute.  Mindy, you‘ve worked in politics.  You‘ve worked for (INAUDIBLE) candidates.  They hate spontaneity!

FINN:  You‘re right, they do, which is...

MATTHEWS:  They hate it!

FINN:  But there‘s also a reason that their approval ratings are abysmal, and it‘s for that reason.

MATTHEWS:  Why didn‘t Governor McDonnell respond to the president the other night at the State of the Union?  Why did he give his own speech?  Why did he give a speech that he‘d written weeks ahead of time?

FINN:  You‘d have to talk to Governor McDonnell about that.

MATTHEWS:  But you know why!  He doesn‘t want to respond.  They never do!

CORN:  But if he‘s...

MATTHEWS:  Who was that guy?  Who was that, Bobby Jindal, comes out with that speech that night.  That thing had been written weeks before.

CORN:  But Chris, if you had placed Bobby Jindal in a room with the president or other Democrats and said, Hey, let‘s see what you have to say...

MATTHEWS:  He would have done well.

CORN:  ... he would have done much better.  I mean, this would—this forces them to play at a higher level.

MATTHEWS:  OK, maybe the first thing we ought to do is the State of the Union, that people have to respond.  They can‘t have a script.  They have to come out and watch the speech with the American people, Brian Williams or anybody—me or somebody else has got to come out and grab them right there and say, What did you make of the president‘s speech?  What did you like about it?  What didn‘t you like about it?  And force them to respond in real time.  And if they can‘t do it, don‘t give them the time!

(CROSSTALK)

FINN:  I think that‘s a great...

MATTHEWS:  ... networks would do that?

FINN:  I think that‘s a great idea.

MATTHEWS:  Don‘t give them the time!

FINN:  Absolutely.  I think anything that advances our democracy, where people are discussing these issues in a more substantive basis, that the American people are actually benefiting from, rather than only benefiting the politicians, is a step forward.

CORN:  This puts both parties, the opposition party and the president, on a bit of a hot seat.

MATTHEWS:  Yes.

CORN:  They have to come out and perform very well.  They will be judged on the questions that are asked and...

MATTHEWS:  OK, let‘s...

CORN:  ... and on the answers given.

MATTHEWS:  ... get this—you guys all watch—I do watch—it‘s on C-Span.

CORN:  Yes.

MATTHEWS:  You get to see question period.  And you see Gordon Brown, the current prime minister...

FINN:  Yes.

MATTHEWS:  ... he‘s down in the well.  The other guys are up in the hills overlooking down on the—this time, the president was in Baltimore, up at this ground podium, looking down on the little people.  The Republicans at sitting there at their breakfast tables with their families.  He had a physical advantage, right?

FINN:  Yes.

CORN:  Sure did.

MATTHEWS:  In the British politics, he‘s down there taking the flak from these guys.  Do you think a president would accept that kind of situation, where he‘s down in the well and the critics are up there cat-calling him?

FINN:  Well, you know, that‘s something that the British system—they‘re more used to.  I think that it‘s...

MATTHEWS:  They‘re good at it.

FINN:  And they‘re good at it.  Look, all we‘re asking right now is let‘s take the minimal step of a commitment to regular meetings between the president and the opposition party...

MATTHEWS:  OK...

FINN:  ... and the Senate...

MATTHEWS:  ... give me a formal look at what it would be like.  OK, it‘s Friday night.  It‘s 8:00 o‘clock.  What would it look like?

CORN:  Well, on MSNBC, of course...

(CROSSTALK)

CORN:  Listen, I think Friday—last Friday was a pretty good model. 

And if—you know, if they want to talk about how high the podium is—

you know, they do that in presidential debates all the time, the silliness

you know, it could get bogged down, but...

MATTHEWS:  So you see the president of either party addressing the Congress...

(CROSSTALK)

CORN:  Oh, it doesn‘t have to be in the body of the Congress.  It could be at a conference room.  You know, these are all things that could be talked about.  I think once both sides accept the principle—which the White House hasn‘t done—and we‘re waiting to hear back from the Republican leadership what they‘re going to say to demand...

MATTHEWS:  Well, we had Mike Pence on Friday night, and I asked him if he would go along with it.  He said they wouldn‘t—they wouldn‘t—wouldn‘t have a question period like that.

CORN:  Well, let‘s vote.  You know, he‘s not the only voice in the Republican leadership.  There are others out there, and we‘re waiting—and there‘s a petition...

MATTHEWS:  I think you guys deserve credit just for pushing this thing.  I think it‘s a bipartisan (INAUDIBLE) We‘re going to take a look at the president today.  Let‘s watch the president today.

(BEGIN VIDEO CLIP)

OBAMA:  Some of that transparency got lost, and I think we paid a price for it.  And so it‘s important, I think, to constantly have our cards out on the table and welcome challenges and welcome questions.  Now, if the Republicans say that they can insure every American for free, which is what was claimed the other day, at no cost, I‘d want to know.

(LAUGHTER)

OBAMA:  Because I told them, I said, Why would I—why would I want to get a bunch of lumps on my head doing the hard thing if you‘ve got the easy thing?

(END VIDEO CLIP)

MATTHEWS:  Well, there you have it.  Will we have a question period sometime in your lifetime where the president of the United States is forced to answer questions on a regular basis from the opposition in Congress?

FINN:  We‘re going to keep pushing for it, so yes.

CORN:  If you want that, Demandquestiontime.com.  I hope it happens.

MATTHEWS:  Well, that‘s what they could—it‘s called Demandquestion...

CORN:  ... time.com.  People can go and sign the petition...

(CROSSTALK)

MATTHEWS:  It‘s actually called, according to this script—it‘s called, quote, “Demandquestiontime.com.”  Anyway, thank you very—David Corn.  Thank you, Mindy Finn.  Here‘s our—their Web site, as I said.

And coming up, the Obama administration is being criticized for treating the Christmas Day bomber as if he was an ordinary criminal.  Now the administration is pushing back against the GOP critiques, saying the suspected terrorist would have been less cooperative had he faced an interrogation in a military uniform—an interrogator in a military uniform.  This is getting a little too inside here.  We don‘t know, really.  Well, we‘ll see.  It depends on, I would think, the suspect what you‘re going to get out of (INAUDIBLE) whether the guy‘s got a uniform or not.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

Welcome back to HARDBALL.  Republicans have been criticizing the Obama administration for being too soft on the Christmas Day plane bomber, for reading him his Miranda rights and for handling him to the regular justice system.  But now comes word that the terrorist suspect is giving useful information to his interrogators.  So can Republicans really go after the president for how he handled the Christmas Day plane bomber?

Senator Dianne Feinstein chairs the Senate Intelligence Committee.  Well, that‘s the question to you, Madam Chairman, Senator.  Is the case now up in the air again as to the best way to handle these terror suspects?

SEN. DIANNE FEINSTEIN (D-CA), SELECT INTELLIGENCE COMMITTEE CHAIR: 

Well, in my view, it is not up in the air.  I think what we‘ve seen is something very unique, which is politicizing it.  This is the same way that Bush 1, Bush 2, Clinton handled it, and every single terror suspect was handled this way in the eight years of George Bush‘s administration.  A couple were transferred into the military jurisdiction, but they were all initially charged when committing a crime in this country in an Article 3 court, essentially.

And it is just not true that the FBI cannot interrogate.  I think the best interrogation that I have seen in the eight years I have been on the Intelligence Committee and the 17 years I‘ve been in the Senate is actually performed by the FBI.

MATTHEWS:  We have reasons for interrogating people for criminal reasons.  We try to determine their guilt or innocence, try to understand the crime itself.  We also have intelligence reasons for interrogating people.  Can they be performed by the same prosecutor, the same interrogator, that function?

FEINSTEIN:  Well, they can be trained by people who are trained in this kind of interrogation.  And the FBI‘s had a very good record.  I mean, an agent, Jack Klunnan (ph), back in 1993, the World Trade tower bombs, he interrogated the blind sheikh, others.  He got convictions and he also got people to turn on one another.  It was a very successful interrogation, and it was not done with any enhanced interrogation techniques.  So they know how to interrogate.

And I can tell you without going into detail because I have been briefed that the interrogation of Abdulmutallab has been handled well, it‘s been effective.  Operations have been put in play.  And I think it‘s been a very good experience.

Additionally, the attorney general today wrote a letter to the minority leader of the Senate, and I‘d really urge everybody to read that letter.  It very carefully outlines what his legal practice, what his past practice, what this attorney general and this administration is doing.  And I believe they are absolutely correct.

Secondly, I believe, though, that the administration should have flexibility in this issue and flexibility to determine whether the individual might be transferred toward military jurisdiction or not.  But the point is, these are crimes committed in this country, and therefore there are certain legal strictures that do apply.

MATTHEWS:  OK.  Senator Dianne Feinstein, who chairs the Senate Intelligence Committee.  thank you, Senator.

FEINSTEIN:  Thanks, Chris.

MATTHEWS:  And with us now is Republican senator Susan Collins of Maine, who‘s on Homeland Security.  Senator, thank you for joining us.  Attorney General Eric Holder wrote in a letter today to you and some other Republican senators, quote, “Since the September 11, 2000 (SIC), attacks, the practice of the U.S. government, followed by prior and current administrations without a single exception, has been to arrest and detain under federal criminal law all terrorist suspects who were apprehended inside the United States.  The prior administrations adopted policies expressly endorsing this approach.”

How can you deny that the—this administration is doing something wrong, if it is doing something exactly the way the previous one did?  Your thoughts, Senator?

SEN. SUSAN COLLINS ®, MAINE:  Well, Chris, first of all, that would imply that I agreed with the previous administration‘s handling of some of these terrorists. 

It is ironic, to say the least, to have the Obama administration now saying, “We‘re just following what the George Bush administration did,” when they have been saying that everything the previous administration has done was in error on most things. 

But here‘s my point.  I believe that, before a decision is made on whether to detain a captured foreign terrorist in a military system or in our civilian courts, there should be consultation with the intelligence community. 

And I know, from asking the question of the director of national intelligence, the secretary of homeland security, and the director of the National Counterterrorism Center, that they were not consulted before Abdulmutallab was told that he didn‘t have to answer further questions and given a lawyer, at our expense. 

That simply does not make sense, given how critical it is that we secure as much information to try to prevent future attacks. 

MATTHEWS:  Well, here, I have a letter—and you have seen it—from

from the attorney general to you. 

And he says—quote—“I made the decision to charge Mr.  Abdulmutallab with federal crimes and to seek his detention in connection with those charges with the knowledge of and with no objection from all other relevant departments of the government.”  He goes on to say he checked with all the intelligence community and he got no objections about his course of action. 

You say there was no consultation? 

COLLINS:  That is correct.  And I would draw a distinction that it is far different to inform someone of a decision that‘s already been made vs.  consulting with them. 

It is clear that Abdulmutallab had a great deal of information.  He had just come from Yemen.  We know that Yemen is a hotbed for al Qaeda.  We know that plots are being hatched against this country. 

And what we had was a very brief interrogation, followed by five to six weeks during which time al Qaeda is not just twiddling its thumbs in Yemen.  It is changing its plots.  It is moving around.  It is swapping out its communications equipment. 

That was valuable lost time.  And we could have learned information that might have been extremely valuable to helping to thwart future attacks. 

MATTHEWS:  OK.  OK.  I‘m open to your argument, as most Americans are.  We‘re in a quandary on this.  What is the best way to get information when we need it? 

What would you do with the Fort Hood situation, where you have an American involved with apparently being influenced somewhat by a lackey over there on the Internet and having some communication with a foreign enemy of the United States?

At what point does a person become a foreign agent?  Was Lee Harvey Oswald an agent of Castro, but he killed Kennedy because he love Castro?  Was Sirhan Sirhan working for a Middle East government or terrorist group when he killed Bobby Kennedy?

At what point do you deny a person his rights in this country because you believe they are under the leadership or influence of a foreign enemy?  Where do you decide?

COLLINS:  Well, first of all, anyone put into our civilian courts has the same rights as an American citizen. 

So, that is why that initial threshold decision is so important.  It is ironic, because, in the case of the Fort Hood massacre, Major Hasan is going to go through the military system, a military court-martial.  He‘s not going to be in a...

MATTHEWS:  Yes. 

COLLINS:  ... the civilian court system, because he‘s a member of the Army. 

It seems to me, if that is good enough for Major Hasan, it ought to have been good enough for Abdulmutallab. 

MATTHEWS:  Well, how do you decide that someone is an agent of a foreign power or an enemy combatant?  I mean, I went through the cases of our assassins in this country who were clearly operating out of loyalty to foreign masters, even if they didn‘t get direct orders.

I mean, everybody knows Lee Harvey Oswald was working for Castro—or was in love with Castro, that Sirhan Sirhan hated Bobby Kennedy‘s Middle East policy.  They were operating as agents, even if they weren‘t.

Where do you draw the line and say, that guy really is an agent, or that person really is not?  How do you know? 

COLLINS:  That‘s why you can‘t have a unilateral decision made by the Department of Justice, which is what you had in this case. 

Clearly, the Justice Department is a critical player, but so is the director of national intelligence, Homeland Security, the Counterterrorism Center, the CIA, the secretary of defense. 

MATTHEWS:  Yes. 

COLLINS:  So, what you do is a consultation...

MATTHEWS:  Yes, I see.

COLLINS:  ... with all those parties, so you find out, what information do they have in intelligence files that might well affect the decision on where the person should be detained and questioned and also tried?

MATTHEWS:  OK.  Well, they are very good arguments.  And thank you very much for bringing them to us, Senator Susan Collins of Maine, a member of the Homeland Security Committee. 

Thank you so much.  I think your arguments are winning with a lot of people. 

Up next:  Former New York Governor Eliot Spitzer went on “The Colbert Report” last night, because, as Colbert pointed out, it‘s not right he really has to worry about being humiliated these days.  He‘s already been there.  This is fascinating to watch these two go at each other.  It‘s going to be on a minute.  That is next. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL.  And time for the “Sideshow.” 

Eliot Spitzer was on “Colbert” last night, for the first time since he was caught with a prostitute and had to resign from office.  Here he is with Colbert. 

(BEGIN VIDEO CLIP, “THE COLBERT REPORT”) 

STEPHEN COLBERT, HOST, “THE COLBERT REPORT”:  When I see you on TV now, I know that guy has got to be an honest broker, because you have got nothing to lose, right? 

ELIOT SPITZER (D), FORMER NEW YORK GOVERNOR:  That sums it up. 

COLBERT:  Yes. 

(LAUGHTER)

COLBERT:  I mean, you have got no public image to uphold.  It is better that you don‘t...

(LAUGHTER)

COLBERT:  ... uphold your public image at this point. 

SPITZER:  Well, there is a certain virtue to being able to tell the absolute truth and stick it to people, without worrying about repercussions.  That is true.

COLBERT:  Exactly.  There‘s nothing they have got on you. 

(LAUGHTER)

SPITZER:  That is—not anymore. 

(LAUGHTER)

COLBERT:  Ben Bernanke...

SPITZER:  Yes. 

COLBERT:  ... who oversaw the collapse of, not only the United States‘, but pretty much the entire world financial system...

SPITZER:  Right. 

COLBERT:  ... and brought our economy to its knees has been reappointed as head of the Fed. 

SPITZER:  Right. 

COLBERT:  Does this give you hope for being reelected governor of New York?

(LAUGHTER)

(CHEERING AND APPLAUSE) 

COLBERT:  Because...

(LAUGHTER)

COLBERT:  ... may I remind you, he screwed everybody.

(CHEERING AND APPLAUSE) 

(LAUGHTER)

COLBERT:  I just became a fan of Ben Bernanke. 

(END VIDEO CLIP)

MATTHEWS:  I love Colbert. 

Anyway, Spitzer is doing it right.  He quit, gave up the governorship, took the heat, and is showing the kind of humility, well-earned humility, that this country is willing to accept. 

Next up:  Sarah who?  Watch senator-elect Scott Brown dance away from Sarah Palin, saying he never even spoke to her. 

(BEGIN VIDEO CLIP, ABC)

BARBARA WALTERS, ABC NEWS:  Do you think that Sarah Palin is presidential material? 

SCOTT BROWN ®, MASSACHUSETTS SENATOR-ELECT:  Well, sure.  She has been a mayor and a governor and has a lot of national following. 

But I think, the more people in a presidential race, the better.  She has never contacted us and vice versa.

(END VIDEO CLIP)

MATTHEWS:  Wow.  Really?  She has never contacted you?  You have never talked?

Then how do you figure this statement from Palin‘s camp Massachusetts election night, two weeks ago?  Quote: “Governor Palin spoke with a very happy senator-elect Brown this evening and congratulated him on his most historic victory.”

Hmm. 

After being called out yesterday, the Brown camp said Palin‘s election night call had completely slipped his mind. 

It is interesting how we remember forever the moment we talk to one of our heroes, but find less significant chats just slipping from our minds.  Could he really have had a conversation with the Alaska governor and forgotten it?  You betcha. 

Now to the “Number.”

Remember that grab-your-pitchfork moment last year when word reached us about those big bonuses to AIG‘s Financial Products unit, the same unit that drove AIG into the ground?  Well, it is bonus time again today.  How much bonus money is being paid out to roughly 400 current and former AIG Financial Products employees?  One hundred million dollars.  That‘s a quarter-million apiece, $100 million in bonus money going to the guys who got AIG into the mess.  Tonight‘s grab-your-pitchfork “Big Number.” 

Up next:  Former John Edwards aide Andrew Young is throwing the book at his former boss.  And he will be here to play HARDBALL. 

You‘re watching it, HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

Stocks looking weak today on some disappointing earnings and lukewarm reports on jobs in the service sector, the Dow Jones industrials sliding 26 points, the S&P 500 dipping six points, and the Nasdaq up less than one point. 

Private payroll shed about 22,000 jobs in January.  That‘s less than expected and in line with projections that we could start to see job growth in February.  And the service sector grew for the first time since September last month, indicators on new orders and business activity also on the rise in January.

On the earnings front, drugmaker Pfizer missing expectations and giving a disappointing outlook for the rest of the year, sharing falling about three-and-a-quarter percent. 

Rival Merck shares also taking a hit, sliding more than 2 percent.

And Toyota getting clobbered today on those recalls and new reports that the 2010 Prius may have brake problems as well—Toyota shares plunging 6 percent. 

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

HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL on sex, lies and videotape.

Last month, John Edwards admitted he had fathered a child by his former mistress Rielle Hunter.  Now Andrew Young, a former aide to John Edwards, has written a tell-all book about the scandal.  It‘s called “The Politician: An Insider‘s Account of John Edwards‘s Pursuit of the Presidency and the Scandal That Brought Him Down.”

Andrew Young, welcome to HARDBALL. 

Andrew Young, you are a kind of “Valachi Papers” kind of a guy.  You were in the mob and now you‘re ratting out—you‘re ratting out the mob. 

How do you feel about John Edwards right now, the guy, John Edwards? 

ANDREW YOUNG, FORMER AIDE TO JOHN EDWARDS:  Well, I mean, I would say that, first of all, loyalty runs two ways.  And, with John Edwards, it only ran one way. 

So, I don‘t—I loved John Edwards for as long as I possibly could.  I gave him more than two years.  When he initially asked me to do this, he promised me that he was going to come clean as soon as the election was over.  And I have waited as long as I possibly could to—to try to get this behind me. 

MATTHEWS:  He promised to come clean about his relationship with Rielle Hunter if he lost.  He wasn‘t going to come clean if he had won? 

YOUNG:  He promised, as soon as the election was over, and/or if Elizabeth died first, he promised he was going to come clean about the whole thing. 

MATTHEWS:  But, if he had won, would he have come clean?  Did he tell you? 

YOUNG:  Yes.  He—yes, told me he was going to come clean about the whole thing. 

MATTHEWS:  One thing that staggers me—and it‘s not in your book, but you can flesh this out.

YOUNG:  Sure.

MATTHEWS:  He seemed to be under a delusion—and maybe people reading your book will find the answer—tell me this—that he could leverage the fact that he was John Edwards, even after he got creamed up there in Iowa...

YOUNG:  Right. 

MATTHEWS:  ... even after he was facing the fact that he had fathered a child and the baby was going to be born, and he was going to be exposed.  He was still trying to leverage either the vice presidency or the attorney generalship, and even—even less than that, he was trying to get a speaking gig at the convention in prime time. 

What is it about John Edwards that led him to believe he could always get something out of nothing? 

YOUNG:  Well, Chris, you have been at this a lot longer than I have.  I mean, it is something that politicians, especially politicians that run for president, they feel like they are untouchable.  They feel like they can get away with almost anything. 

And it is not—not just politicians.  I mean, it is powerful people

in Los Angeles and in New York.  And John Edwards felt like that he could

use the delegates that he had retained to use that as influence to get a

V.P. or an attorney general spot with—with Obama and with Clinton—or

with—or with Clinton 

MATTHEWS:  Let me ask you about your role in this.  When you went on the lam, when you went out there in that sort of like High Sierra kind of hideout, where you and the baby and Rielle Hunter and your wife all went off and disappeared...

YOUNG:  Right. 

MATTHEWS:  ... who financed your getaway?  Was that Bunny Mellon?  Who was paying the tab for the hotels? 

YOUNG:  Fred Baron was.  Fred Baron was. 

I mean, the trial lawyer lobby, as you know, desperately wanted to have John Edwards in the attorney general spot because of tort reform. 

MATTHEWS:  Why?  because he would be their ringer?

YOUNG:  Well, he would be—tort reform was a huge issue.  And the trial lawyers across the country were laying off employees in mass numbers. 

MATTHEWS:  And they wanted to have John Edwards in there to protect their money?

YOUNG:  Desperately, yes. 

MATTHEWS:  And what was his view, that they had a right to make as much as they could?

YOUNG:  I don‘t know that I ever heard him say it that explicitly, but, yes, yes.          

MATTHEWS:  Is John Edwards worth the money he made all these years as a trial lawyer, or was he just clever in sort of schmoozing and even seducing those rural jurors down in North Carolina?  What was his game?

I read his book.  I didn‘t see any genius in it.  I guess, one or two cases, he showed some smarts.  How could he make a ton of money as a trial lawyer?  Have you ever figured that out, why that guy got to be senator, got bankrolled by the trial bench, and—and almost got to be president?  What was his secret? 

YOUNG: I have—first of all, I‘m a big fan.  I watch you ever day.  First of all, all of us down in North Carolina are not holding Tea Parties and burning crosses.  John Edwards—they are not all a bunch of rural bumpkins.  John Edwards was very successful and he rose to the top because he was very charismatic and a very hard worker.  I mean, he—within nine years, he was three times a viable VP pick, two times a viable presidential pick. 

MATTHEWS:  You are building him up again. 

YOUNG:  The truth of what I write in the book is the first several years that I worked for him—the first two years, it was immediately after their son Wade had passed.  John Edwards was a good man.  I want to tell you, I truly loved him and his family.  We got to be close.  We vacationed together.  We went to Final Four together.  You name it.  We were close. 

Somewhere along the lines of when—after Kerry lost, you know, he was no longer serving in the Senate.  For two or three years, he traveled the world, visiting with billionaires in Russia, going to—anyone with Tony Blair.  Everybody treated him like he was the future president in waiting.  Obama and Clinton at that point, for those years, were not seen as viable threats. 

MATTHEWS:  Yeah.  How long did you work for him, when he thought you were loyal to him, but you weren‘t?  How long did you convince him you were a loyalist but had given up on him morally? 

YOUNG:  I would like to say I was loyal to him—

MATTHEWS:  No, but how long did you stay with him after you stopped being loyal to him? 

YOUNG:  Probably a year. 

MATTHEWS:  A year you were basically an undercover guy working for a guy who thought you were loyal to him, but you weren‘t? 

YOUNG:  We—and I‘m not trying to make excuses for anything we did. 

We were wrong. 

MATTHEWS:  No you.  Not we.  You. 

YOUNG:  I‘m including my family in that. 

MATTHEWS:  You worked for a guy who you were pretending to be a loyal to.  You were pretending to be a loyal aide to John Edwards for a year when you really weren‘t.  You were working either against him or you didn‘t like the guy anymore. 

YOUNG:  I don‘t know that I was working against him.  I was on Fred Baron‘s payroll.  I was not on John Edwards‘ payroll. 

MATTHEWS:  He thought you were an Edwards guy? 

YOUNG:  Definitely.  Definitely

MATTHEWS:  How do you feel about that, being basically a rat fink.  I mean, working for a guy—I can‘t imagine being in politics working for a guy I had given up on.  It seems to me you ought to get out.  Find a way and get out, get another job, get out.  Don‘t work for somebody you think is a louse (ph).  You did for a year. 

YOUNG:  Let me finish.  If you recall, once the lie was told that I was the paternal father, the Edwards and the campaign went everywhere they could claiming that I was a thief; I was an ineffective employee; I was just somebody who did the laundry. 

MATTHEWS:  At that point, you had to get out.  Did you get out at that point? 

YOUNG:  No.  No, I didn‘t.  And I raised millions of dollars for these guys.  When this went forward to the end, there was no place for me to go to get a job.  I have three kids, two with health issues.  Is what you‘re saying right?  Was it morally right for what we did?  Absolutely not.  You‘re right.  At the same time, I had responsibilities. 

MATTHEWS:  I hear you.  Let me ask you this, would we be in trouble now if he had become—let‘s say would the Democratic party have been in trouble if he had become the nominee for president or vice president?  Would this have gotten out and destroyed the party‘s chances. 

YOUNG:  My personal opinion, yes. 

MATTHEWS:  Would it be bad for America to have him as VP or president of the United States?  Would it have been bad for America?  I‘m using those words particularly.

YOUNG:  Absolutely. 

MATTHEWS:  Why? 

YOUNG:  John Edwards had all the attributes you look for in a president, except for one.  He had all the leadership skills.  He had—he was incredibly intelligent.  Elizabeth was incredibly intelligent.  He was charismatic, when he was on.  There were times he came across as a used car salesman. 

The one attribute that he didn‘t have was ethics.  There was a cold, calculated, almost Jekyll and Hyde personality to him that would be unbelievably scary. 

I want to say, when I first started in politics, it used to be that you had to be a vetted Democratic or Republican that had worked their way up through the ranks and people knew everything about you.  You had to be a military leader. You had to be a business leader.  As it is now, if you can do a 30-second sound bite, if you can raise money, and if you can have a lobby like the trial lawyers behind you, you can be president of the United States. 

MATTHEWS:  The thing that scared me about him, Andrew—I don‘t mean you at all.  The thing that scared me about John Edwards—he was attractive.  I suppose he could win people over in a small room.  I‘ve seen him do it.  He is very effective.  I get the feeling he never read a book.  I don‘t think he ever read the newspaper.  I think he had a total lack of intellectual interest in the presidency.  I don‘t know why he was pursuing it, except out of some sort of grand egotism.  Did you get a sense he had an intellectual reason to be president? 

YOUNG:  Well, I think he was inspired initially—his son, you know, this was one of his son‘s dream for him to run for office.  You know Elizabeth Edwards very well.  She is one of the smartest people on the planet.  Very early on, going back to law school, they had almost a partnership, going through when they practiced. 

She was the brains.  She ran the campaign.  She wrote all the papers, the speeches.  He was the spokesperson. 

MATTHEWS:  Yeah.  I always thought she was great and he was a lightweight.  But that‘s just from my instinct with dealing with these people.  An absolute lightweight, had no intellectual content at all, all sail and no cargo. 

Whereas I think of Elizabeth—whatever you know about her that I don‘t‘ know, I have always liked her.  So, c‘est la vie.  You have a book out.  It‘s called “The Politician.”  What is the real worth in reading this book, besides just expose? 

YOUNG:  I think a couple of things.  It talks about the seduction of

politics.  It talks about how people like myself get roped into believing -

you know, just like Reggie Love and other people like that, you can take a short track from being just a common campaign laborer to working at some of the highest levels in the White House. 

MATTHEWS:  I know. 

YOUNG:  But it also shows betrayal.  John Edwards—here is the truth.  John Edwards was one of my best friends, and I took a bullet because I believed in him, and he backed over me with a semi truck. 

MATTHEWS:  OK, thanks. 

YOUNG:  I‘m sorry.  Go ahead. 

MATTHEWS:  We‘ve got to go.  Andrew Young, your book is called “The Politician.”  Thanks for joining us on HARDBALL.

YOUNG:  Thank you for having me.

MATTHEWS:  Up next, the strategists will be here to debate Don‘t Ask Don‘t Tell.  This is a hot one.  I think it is moving towards getting rid of that, because Colin Powell, who could be the decider on this, has now said h e thinks Don‘t Ask Don‘t Tell is wrong.  He wants open service in the military, as does the chairman of the Joint Chiefs, who personally endorsed it.  This is a big development in American social thinking.  This is HARDBALL, coming up on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.  Former Secretary of State and retired General Colin Powell weighed in on the fight over ending the military‘s Don‘t Ask Don‘t Tell policy today.  Here‘s his powerful statement: quote, “in the almost 17 years since the Don‘t Ask Don‘t Tell legislation was passed, attitudes and circumstances have changed.”  Wow. 

Let‘s bring in the strategists, Democrat Steve McMahon and Republican Todd Harris.  I‘m amazed.  People don‘t change their minds.  When he changes his mind, it‘s a big deal, on top of Mike Mullen, the chairman of the Joint Chiefs, saying he personally thinks we got to get rid of it.  Open service seems to be the call these days. 

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  Colin Powell coming out and doing this is an absolute game changer.  It‘s interesting because there is a generational split.  You‘ve pointed it out on the show before.  Younger people think that gay and lesbian Americans are just like—

MATTHEWS:  They think we‘re crazy at my age to have this debate.

MCMAHON:  they don‘t have a problem with gay marriage.  One of the reasons the Republicans are having a problem with young people is because they are on the wrong side of so many social issues.  This is just another example of that.

MATTHEWS:  A key question, Todd—it‘s not the only question.  But a key question is whether young service people, those who volunteer to risk their lives, to give their careers to military service, how they adjust to it.  I think that‘s part of the answer.  They don‘t have the right to veto it, but what does that question answer?  How does that answer?  Your thoughts? 

TODD HARRIS, REPUBLICAN STRATEGIST:  It would be answered in a real-time lab experiment, if they actually overturned the ruling.  I think—I have to say, I think this is not great politics for President Obama.  Even if you put aside what people think about this policy, there are basically three groups of opinions about this.  There are people who are going to hate it.  There are people who are going to love it. 

And then there are people in the middle who think, largely, that this administration is trying to tackle too much right now.  Overwhelmingly, when you look at polling data, and you say what should the focus of the Obama administration be, it‘s jobs and the economy.  The more there are issues like Don‘t Ask Don‘t Tell, Cap and Trade that look like this administration is taking their eye off the ball, it‘s bad politics for Democrats.

MATTHEWS:  OK, when would you say would be a good time to bring up the issue of Don‘t Ask Don‘t Tell?  Give me a year.  For 17 years now, we‘ve been putting it off. 

HARRIS:  We haven‘t been in two wars in 17 years with the unemployment rate where it is today.  So I would say, for most people, they would say this is not the right time. 

MATTHEWS:  I don‘t think it‘s ever the right time, by that standard.  I got to go.  Steve, we got to come back.  We‘re short on time.  We‘ve got a hell of a show tonight.  We‘ll be right back with HARDBALL, and this debate.  We‘ll pick up on it, right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ADM. MIKE MULLEN, CHAIRMAN, JOINT CHIEFS OF STAFF:  Speaking for myself, and myself only, it is my personal belief that allowing gays and lesbians to serve openly would be the right thing to do.  No matter how I look at this issue, I cannot escape being troubled by the fact that we have in place a policy which forces young men and women to lie about who they are in order to defend their fellow citizens. 

(END VIDEO CLIP)

MATTHEWS:  Wow, that was Admiral Mike Mullen, speaking for himself, he said, on Tuesday.  We‘re back with the strategists, Democrat Steve McMahon and Republican Todd Harris.  Your thoughts?  You want to change this law.  Is the Democratic party for it? 

MCMAHON:  Absolutely.  It‘s very powerful.  I‘m told that the commanding officers of the military were telling President Obama privately that it was only a matter of time that the policy was going to change anyway, and the president said, it‘s time to do it now.

I disagree with Todd.  I think it‘s good politics because the people who hat this are never going to vote for the president anyway.  The people who love it are going to give him a lot of credit.  And the people in the middle are very, very tolerant, and are voting Democratic on these kinds of issues.  Maybe not right now on economic issues, but on these kinds of issues.

MATTHEWS:  Todd, I don‘t know the Kinsey (ph) numbers, or what you go by, but there are a lot of gay people voting in this country.  Aren‘t they going to be thrilled by the fact the president has taken up this cause publicly again? 

HARRIS:  I‘m sure that they will be.  But to Steve‘s point, they are largely voting for President Obama anyway.  The issue—I don‘t think when it comes to independent voters that this is a gay rights issue, where people who are—

MCMAHON:  It‘s an equality issue. 

HARRIS:  Hold on.  My point in bringing this up is that there are a

lot of people right now who are hurting economically, and if they feel like

regardless of how they feel about this issue, if they feel like the administration is not focused on jobs and the economy, I think it‘s going to hurt. 

MATTHEWS:  Quick question, Todd, are you for opening it up to open service yourself, personally? 

HARRIS:  I‘m not running for office, so my personal opinion doesn‘t matter.

MATTHEWS:  I want to know—I‘m curious right now, are you for this policy of open service or not? 

HARRIS:  Look, I‘m a Libertarian.  I don‘t really care about most of these issues.  I‘m for small government. 

MATTHEWS:  In other words, you‘re for open service, but you‘re here speaking for the neibobs (ph) who don‘t agree with you.  I love the way you patronize your party.  Any way, thank you, Steve McMahon and Todd Harris.  Join us again tomorrow night at 5:00 and 7:00 Eastern for more HARDBALL.

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

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