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updated 6/18/2010 11:57:24 AM ET 2010-06-18T15:57:24

Guests: Julia Boorstin, Diana DeGette, Bernard Charbonnet, John Hofmeister, Mike Papantonio, Ron Reagan, Clarence Page, Ron Reagan, Dennis Kucinich

CHRIS MATTHEWS, HOST:  Joe Barton and BP, a love story.

Let‘s play HARDBALL.

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

Who‘s sorry now?  BP CEO Tony Hayward testified on Capitol Hill today, but

perhaps the biggest news was made by Republican Joe Barton of Texas.  He

apologized to BP and said making a—establish a $20 billion escrow fund -

a “slush fund” he called it” amounted to a federal “shakedown.”

Although Barton would later retract all this when the heat rose too high, other Republicans are using the shame words, “shakedown” and “slush fund.”  Let‘s be clear what‘s happening here.  These are Republicans who hate the federal government so much, they prefer to attack the government than blame a universally despised oil company.

As for BP‘s Hayward, he did his best impression of the blundering Sergeant Schultz character from “Hogan‘s Heroes”—I know nothing, I see nothing.  What about the explosion?  Too early to reach conclusions.  Were there problems in drilling the well?  Never heard of any.  Was he stonewalling?  No, he simply wasn‘t involved in the decision making.  We‘ll get to Hayward essentially taking the 5th Amendment right at the top the show.

And see if this sounds familiar.  An overseas war, an end in sight—actually, no end in sight, congress getting cold feet, and military officials insisting we‘re making headway.  One of the Afghanistan‘s war‘s biggest critics, Dennis Kucinich, will be here on HARDBALL later.

Plus, faking it.  We now have more examples of Richard Blumenthal up in Connecticut and Mark Kirk out in Illinois doing just that, Blumenthal about his military history and Kirk about his very brief teaching career.  Don‘t these guys know they‘re going to get caught?

And “Let Me Finish” tonight with those Republicans who think their democratically elected government is worse than an oil company responsible for the worst—the worst environmental disaster in American history.

We start on Capitol Hill and U.S. congresswoman Diana DeGette of Colorado, who‘s a member of the Energy and Commerce Committee.  Congresswoman, you‘re on the most important committee in the world right now.  I want you to listen right now to your colleague on the Republican side of the isle.  This is Texas Joe Barton this morning at the hearing, in words that will never be forgotten.  Joe Barton, here he is.

(BEGIN VIDEO CLIP)

REP. JOE BARTON ®, ENERGY & COMMERCE COMMITTEE:  But I‘m ashamed of

what happened in the White House yesterday.  I think it is a tragedy of the

first proportion that a private corporation can be subjected to what I

would characterize as a shakedown—in this case, a $20 billion shakedown

with the attorney general of the United States, who is legitimately conducting a criminal investigation and has every right to do so to protect the interests of the American people, participating in what amounts to a $20 billion slush fund.  So I‘m only speaking for myself.  I‘m not speaking for anybody else.  But I apologize.

(END VIDEO CLIP)

MATTHEWS:  Wow!  Well, that was Joe Barton, the congressman from Texas.  Later on in the day, hours later, after a lot of heat can came down on him—including, to be fair, heat from his fellow Republican—in fact, the leaders of his party—he said this.  Whether we believe it or not, these are his words at the end of the day.  “I apologize for using the term ‘shakedown‘ with regard to yesterday‘s actions at the White House in my opening statement this morning.  And I retract my apology to BP.”  I guess the “slush fund” still holds.

Here‘s Rush Limbaugh, by the way.  They‘re all singing from the same cards here.  Here‘s Rush Limbaugh on the so-called “shakedown,” “slush fund,” whatever terms he is using now.  Let‘s listen.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  If Obama‘s past is prologue, and it is, then this is going to be used as a little miniature slush fund.  And that‘s why he‘s bragging about it being third party, independent, so forth and so on.

(END VIDEO CLIP)

MATTHEWS:  Congresswoman DeGette, is there a little carrier pigeon that goes around from Mark Levin to Rush Limbaugh to Michelle Bachmann to Joe Barton?  Who delivers these little pearls like “slush fund,” you know, and “shakedown”?  Where do these words come from?

REP. DIANA DEGETTE (D-CO), ENERGY & COMMERCE COMMITTEE:  They don‘t—they don‘t tell me where they got the words.  But I tell you what.  I was sitting right there when Joe Barton said that this morning, and later this afternoon when he came back and tried to retract what he said.  And everybody was shocked that he said that.

Here‘s why.  Number one, BP is responsible for the largest environmental history (SIC) in our nation‘s—in our nation.  And—and they—it was negligence on every level.  They went to the White House voluntarily yesterday.  They agreed with the president that they would set up this fund to compensate the victims in this environmental disaster on the gulf.  And now Congressman Barton comes in and apologizes to them?  And they all use this word “slush fund”?  Are they—it‘s real—it just really shows a complete lack of understanding of what happened here, or frankly, the suffering that the people on the gulf are going through right now.

MATTHEWS:  Yes, I wouldn‘t use the word “slush” in this environment...

DEGETTE:  No.

MATTHEWS:  ... with all that stuff coming up on the shore of the Gulf of Mexico.  I don‘t think that‘s a well advised word.

DEGETTE:  No.

MATTHEWS:  Let‘s take a look, Congresswoman—I want your reaction to this.  Let‘s hear what the CEO—if he had anything to say today.  It‘s not clear he did.

DEGETTE:  No, he didn‘t.

MATTHEWS:  Here‘s Republican congressman Tom Price putting out this statement—well, let‘s go to Tony Hayward.  He‘s the guy we‘ve been watching for days now, the British guy with the very nice accent.  Here he is.  Let‘s listen and see if he answers any questions.  The chairman of—the CEO of BP.

(BEGIN VIDEO CLIP)

TONY HAYWARD, BP CEO:  I was not a part of that decision-making process.

I was not involved in that decision.

I can‘t possibly know the basis on which that decision was taken.

I‘m afraid I can‘t recall that.

And I don‘t recall that, either, I‘m afraid.

Again, I was not involved in the decision making.  It means I can‘t answer your question in that form.

I can‘t recall that number, I‘m afraid.

I can‘t answer that question because I wasn‘t there.

I‘m afraid I can‘t recall.

I‘m afraid I can‘t recall that, either.

That was a decision I was not party to.

I don‘t know.

(END VIDEO CLIP)

MATTHEWS:  I‘m thinking of Henry Higgins in “My Fair Lady”—they don‘t care what they say as long as they say it properly.  I mean, I don‘t know what he said there properly, anything?

DEGETTE:  Chris, what‘s really shocking is last week, the chairman sent him a very detailed memo about what we all intended to ask Mr. Hayward about.  And yet he showed up today—all he said is he felt bad, but then he disclaimed any knowledge for anything that happened.  He said he brought a technical expert.  But when I asked him to bring his technical expert up to the table and help answer questions, he declined to do that.  So it was really disappointing testimony, and it‘s still going on.  I‘m getting ready to go back myself and question him some more.  At least we‘ll have this on the record.

And I will also say this committee, the Oversight and Investigation Subcommittee, is not going to just stop today.  We‘re going to keep bringing the BP employees and their subcontractors in until we get answers to how this terrible tragedy occurred and how we can prevent it in the future, and how we‘re going to compensate the victims quickly.

MATTHEWS:  Well, you know, when a plane crashes or we have some other tragedy, we have a little black box we try to find in the water or somewhere, and we go through it and we try to figure out, looking at all the technology, and learn what happened.  Do you believe we‘re going to find out the management decisions that led to this catastrophe?  Will we find them out?

DEGETTE:  Chris, we already have a lot of the information in internal BP documents and Halliburton documents and Schlumberger and all of the other people working on this rig.  We already have a lot of the evidence.  And what it shows is that every step of the way—five different ways that they could have helped prevent this explosion—they took shortcuts.  They didn‘t do what the industry best practices were, and they tried to save money.

In the cementing, for example, they sent away the subcontractors who were going to do a key test in order to save about $116,000.  So we do have a lot of that information now.

MATTHEWS:  Yes.

DEGETTE:  And we‘re just going to keep probing until we get all of it.

MATTHEWS:  Penny wise and pound foolish.

DEGETTE:  Oh!

MATTHEWS:  To use a British expression.

DEGETTE:  In an unconceivable (SIC) way.

MATTHEWS:  Thank you very much.

DEGETTE:  Thank you, Chris.

MATTHEWS:  OK, thank you very much, Congresswoman Diana DeGette of Colorado.

Bernard Charbonnet has, of course, been on the program before.  He‘s the former chairman of the New Orleans Port Authority.  Mr. Charbonnet, thank you.  I know you were watching intently yesterday at the White House as the president and the BP chair came out and said $20 billion up front in an escrow account.  Is that a good start?

BERNARD CHARBONNET, FMR. NEW ORLEANS PORT AUTHORITY CHMN.:  That‘s a great start.  It was the necessary and right thing to do.  And the president‘s intervention was right on point, right on target.  This assures Wall Street of a sense of how to go ahead in terms of investing in BP.  It assures the victims, most importantly, that they have a pot to go to, a pot of gold, at the time when they make their claims.  And it‘ll be there and it‘s assured to be there.  That‘s the most important thing.  The victims have...

MATTHEWS:  You know that old song—you know that old song, “Short People Got Nobody”?  What did you make of the comment by the Dutch guy who said that—the little -- - what did he call it, the small people...

CHARBONNET:  The little people.  The little people.

MATTHEWS:  No, the small people.  I hate to tell you it was “small people” he said.

CHARBONNET:  Yes, small.  Well, Chris...

MATTHEWS:  What did you think of that?

CHARBONNET:  Chris, that means that everyone who lives along the coast, from the Texas border of Louisiana all the way to Florida, are small people.  This is the most insulting and insensitive company.  But I don‘t know why everybody is so surprised.  This is the same company whose CEO said four weeks ago that he wanted his life back.

MATTHEWS:  Yes.

CHARBONNET:  These guys are insensitive.  There was 11 deaths, and there are 7,500 oil rig workers who are not working right now, not to mention the fishermen and everyone else who‘s associated with the gulf.  I mean, the problem here is that this company is insulting and insensitive.

MATTHEWS:  You know, I‘m trying to figure out how this is going to work and who gets into the line first.  You could be a roughneck, and they‘re getting the $100 million if you work on the rigs.  You know, you‘re one of these guys who work in the oil industry, you‘re getting a special fund set up, apparently, yesterday.  They‘ve got a good shot at getting it, thanks to, I think, Ken Salazar‘s been worrying about that at Interior.

But then what about the person who runs the small store, the small snack bar along the Gulf Coast there, the “Redneck Riviera,” so-called?  What happens to that person?  How do you put in a bid?  How do you say, look, I usually sell—you know, I usually do $500 in business a day on my hot dog stand.  Today, I did $50 because nobody‘s coming here anymore because of this oil spill?  How do you figure out who gets that money?

CHARBONNET:  Well, he‘s got to quantify it.  Now, let‘s be clear.  The guy who‘s head of this fund has a deep-rooted experience in this.  He handled the 9/11 fund.  He handled the compensation commission for the bankers.  You know, I‘ve heard him speak one on one.  He‘s very knowledgeable and he knows how to do this.  That‘s number one.

MATTHEWS:  Yes.

CHARBONNET:  Number two, they‘re going to set up a claims form and

everyone submits a claim.  And if you‘re a person who owns a little store,

then you show last year at this time, I made X.  This year, I‘m not making

I‘m making zero.  So you substantiate.  You got to quantify your claim. 

But the money is in the pot, Chris.  That‘s the most important thing.  The money is in the pot.

MATTHEWS:  So first in, first dibs, right?

CHARBONNET:  That‘s it.  That‘s it.  But you know, the lawyers are going to have a say.  Us lawyers are going to have a say on how this is distributed.  But there‘s going to be a lot of judges are going to have a say.

But I do have to say this, Chris.  BP is so insensitive.  That‘s the very reason why they want this case heard in Houston.  That‘s why they‘ve had motions in Houston, Transocean and BP, to have this case heard in Houston.

MATTHEWS:  Why is that home cooking for them?

CHARBONNET:  Oh, that is home cooking.  That‘s why...

MATTHEWS:  Why?  I‘m asking you.  It‘s open question.  Why is it? 

You‘re suggesting it is.  Why, sir?  Why‘s Houston...

CHARBONNET:  Because...

MATTHEWS:  ... a better venue for them than somewhere along the gulf itself?

CHARBONNET:  Well, because, number one, look where all the federal judges were appointed.  This is pure and deep Bush country.  This is also their headquarters and the headquarters of oil for the world.

MATTHEWS:  So you think that‘s going to be preferential to the oil guys who are paying the money?

CHARBONNET:  Unquestionably.

MATTHEWS:  OK.

CHARBONNET:  Listen to Congressman Barton today.  He‘s from Texas.

MATTHEWS:  Well, I did get the drift.

(LAUGHTER)

MATTHEWS:  Thank you.  Thank you very much, Bernard Charbonnet.  It‘s great to have you on.

Coming up...

CHARBONNET:  Good to see you, Chris.

MATTHEWS:  You do have a broadcast voice, sir, by the way.

Coming up, much more on BP chairman Tony Hayward‘s grilling on Capitol Hill, how he does seem to have any real answers—doesn‘t seem to have any.  We saw that, that montage—no answers to the biggest environmental questions about the biggest environmental disaster in our country‘s history.  More on that next.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  The South Carolina Republican Party is split now over the candidate many see as a rising star in the Republican Party nationally.  Nikki Haley has the backing of major national party figures like Sarah Palin and Mitt Romney, who will be campaigning with her tomorrow.  But in South Carolina itself, many state party figures are lining up behind her runoff opponent, U.S. congressman Gresham Barrett.  Should be interesting, local against national.  That runoff is coming next Tuesday.  We‘ll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

HAYWARD:  I was not a part of that decision-making process.

I was not involved in that decision.

I can‘t possibly know the basis on which that decision was taken.

I‘m afraid I can‘t recall that.

And I don‘t recall that, either, I‘m afraid.

Again, I was not involved in the decision making.  It means I can‘t answer your question in that form.

I can‘t recall that number, I‘m afraid.

I can‘t answer that question because I wasn‘t there.

I‘m afraid I can‘t recall.

I‘m afraid I can‘t recall that, either.

That was a decision I was not party to.

I don‘t know.

I‘m afraid I don‘t know that, either.

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  That was, of course, the inimitable BP CEO Tony Hayward‘s testimony today, or at least part of it, when he appeared on Capitol Hill.  Clear answers were not easy to come by.

Joining us is John Hofmeister, the former CEO of Shell Oil and author of “Why We Hate the Oil Companies.”  I think we just learned the answer to the name of your book.  That guy spoke well, but he spoke nothing.  Is it possible that a CEO of a big company would know nothing about the decisions made by that company on what looks to be probably the most lucrative well they ever found?  I mean, I don‘t know much about oil wells, but this looks like it‘s got a lot of oil in it, this one.

JOHN HOFMEISTER, FMR. SHELL OIL CEO:  Well, I‘m sure it does have a lot of oil or they wouldn‘t have drilled it.  In these days, with these high costs, you need a good return on investment.

But Chris, here‘s a couple things to think about.  Every member of the committee knows that Tony Hayward has been briefed and counseled by his lawyers as to what he can and should or shouldn‘t do in the hearing.  And if he did not have direct knowledge and if he is coached to say the truth, well, he‘s saying the truth as he knows it.  Could it be possible that a CEO would be that detached from day-to-day operations of a rig?  I suggest, yes, it is possible because they have many, many rigs all over the world.  He may not have known.  But here‘s a bigger issue.  The big...

MATTHEWS:  But let me—let me stop you on this, John, because you‘re the expert, but this is something I think is commonsensical.  If something goes wrong in our business here, everybody from the top down, from the bottom, wants to know who did it, if there‘s a screw-up.  Wouldn‘t he, from the top down, immediately say, What happened to the drilling mud?  What happened to the cement?  And go through quickly a checklist right there with his people, between him and that well, and find out what happened?  Wouldn‘t he want to know before he even thought about lawyers?

HOFMEISTER:  Well, I certainly would, and I would certainly want to be fully briefed.  And under the circumstances, I think that the more transparency, the more openness, the more honesty would actually be in the best interests of everyone.  But he has a problem.  The problem is the criminal investigation in which anything you say can and will be held against you.  And so there is—you said few days ago there‘s a lawyering up that‘s been taking place.  And I think that lawyering up is preventing us from getting to what could otherwise be more open, honest testimony.

MATTHEWS:  I think they‘re picking some of the top -- (INAUDIBLE) some of the top lawyers—Jamie Gorelick, for example, former number two at the Justice Department under Clinton.  They‘re—these—they‘re getting the best lawyers in the country.  I mean, why wouldn‘t BP go for the best lawyers?  They‘ve got the biggest problem.  And they‘ve got the most money.  You get the best lawyers.  It‘s the way it works.

Let me ask you about some of these things here.  What do you make of the $20 billion?  There‘s been some skepticism about the $20 billion fund.  Can it mean faster payment under Feinberg, under Ken Feinberg, or can it just look like it‘s going to be faster?

HOFMEISTER:  Well, I think two things.  I think BP has zero bargaining leverage on any issue relating to the cleanup or the liabilities, so they really don‘t have much choice.  I think the fact that it is paid out over four years is good from an investor‘s standpoint, so people don‘t just completely give up on BP.  Where would they be if they went belly up?  All those people that need payments wouldn‘t get any payments if they were in bankruptcy court.  So I think setting it up with Ken Feinberg I think is a good move if they have a panel that can move rapidly.

The way I understand it, BP will pass on it first.  If they agree to pay, then they pay.  If they don‘t agree to pay, then it goes to the panel for a review.  I think that sounds like a fair way of a check-and-balance system to see, Can the right thing be done, and can it be done quickly?

MATTHEWS:  Let‘s talk about strategic retreat.  In military terms, it means you go back to higher ground if you‘re on weak ground.  If you know you‘re losing, you go back and fight another day. 

Is that what Tony Hayward and his people decided to do before they went to the White House yesterday to agree to the $20 billion? 

HOFMEISTER:  They have no bargaining leverage whatsoever.  They are in deep trouble. 

If they want to continue to be operators in America and make full use of all the resources that they have here, they had better be cooperative partners with the U.S. government, in terms of finding a resolution that everybody can hold their head up and say, we did the right thing.  I think that‘s what was behind yesterday‘s agreement.

MATTHEWS:  So, it was a smart move?  They‘re beginning to show that they‘re aware of the situation they‘re in politically? 

HOFMEISTER:  Absolutely. 

MATTHEWS:  Oh, OK.  It‘s great having you on.  Maybe they‘re listening to you. 

Sometimes, I—one last question.  I have been so impressed by your statement that we should be bringing in from around the world supertankers to come in and skim the Gulf of Mexico, so we can eliminate as much as we can the horrid environmental damage here.

When I brought that up with Carol Browner the other day, who I do respect, because of her value system, if nothing else—she has the greatest values—she said, well, we‘re looking at all that. 

When are they going to stop looking and start doing?  Of all people, Sarah Palin said the Dutch have the capacity, the technology to begin to do this kind of stuff.  We‘re hearing from Gene, Gene Robinson of “The Washington Post,” who has done some reporting on this. 

Why aren‘t we going around the world right now to all these other Nobel Prize winners and get some information and help from them? 

HOFMEISTER:  Well, the Saudis have proven the technology works as well.

Here‘s the issue.  And nobody wants to talk about it.  And I have no problem saying it.  The Jones Act, which prohibits the use of foreign-made tankers on domestic waters for domestic purposes, would need a waiver.  That means the White House or Congress would need to move to make a waiver happen to make use of foreign-made supertankers, because the U.S. doesn‘t build supertankers. 

MATTHEWS:  Well, of course they would get the waiver.  Politically, they would have to, wouldn‘t they? 

HOFMEISTER:  I would think so.  But somebody...

MATTHEWS:  I can‘t see the president saying, sorry, we can‘t do—we can‘t violate some law because we have got this horrible thing we have got to deal with here.  Anyway...

HOFMEISTER:  This is a labor—this was a labor-backed bill, the Jones Act.

MATTHEWS:  Yes, I know.  I know about the Jones Act.

HOFMEISTER:  And so they have to tackle that constituency. 

MATTHEWS:  Well, in this case, I think labor is smart enough to know they better move quickly. 

Thank you very much, John Hofmeister, as always.

HOFMEISTER:  Thank you. 

MATTHEWS:  Thanks for raising these questions. 

Mike Papantonio is an environmental lawyer who has been on lately with us.  He‘s very helpful to have.  He‘s got some residents down there he‘s representing down there.

Let me ask you.  Let me ask you about this whole question.  What do you think of the $20 billion slush fund?  I‘m sorry.  I‘m using the language of the right wing now?  The $20 billion fund, that Rush Limbaugh calls the slush fund, what do you think of this?

MIKE PAPANTONIO, FOUNDER, GOLEFT TV:  Chris, it would have taken—it would have taken decades to get that kind of money on the table. 

Here, Congress couldn‘t have done it.  The court system couldn‘t have done it.  Obama did it.  And the Republicans like Rush Limbaugh hate that.  But the truth is one of the most positive aspects of—qualities of this fund is the person they have in charge.  And that‘s one of the first things you look at here.

Ken Feinberg is highly respected as a mediator, as a negotiator.  He comes from a corporate defense background.  Interesting.  But I have been involved in very complex cases with Ken Feinberg.  He‘s always proven himself to be somebody who is fair.  That‘s the best we can hope for. 

It‘s almost a Solomon quality of fair.  I have seen it with pharmaceutical cases, with asbestos litigation, Dalkon Shield.  He‘s always lived up to that reputation of wanting to do the best he can for the claimants. 

As a matter of fact, in the 9/11 saga, Ken sat over personally I think 900 cases that he decided.  Another important issue is, look, you have taken $20 billion, what I call Obama‘s success game here, have taken $20 billion.  That‘s money that can‘t be lost in Chapter 11.  It can‘t be lost in the takeover...

MATTHEWS:  Right. 

PAPANTONIO:  ... or in corporate shell games that we see all the time. 

It‘s not 20 years from now.  It‘s right now. 

(CROSSTALK)

MATTHEWS:  OK.  No reorganization—no reorganization to hide the money, no more games. 

Well, let me ask you this.   In order of the payouts, who has got a better claim and a faster claim, the shrimpers, the people out in the boats who are losing the fish, the most immediate, I could say, victims of this?  Is it the people in the wetlands? 

I mean, who is it that has the first—or is it the guy who runs the hot dog stand somewhere along the Gulf Coast for tourists?  Who gets the claims here?

PAPANTONIO:  Feinberg has the—Chris, Feinberg has the—has the opportunity to set up exactly that type of priority claimant payment. 

MATTHEWS:  The protocols, yes, OK.

(CROSSTALK)

PAPANTONIO:  He can set up any protocol he wants.  He‘s going to.  He‘s done it before.  And he‘s going to put things like municipalities, states, taxing authorities, he‘s going to put behind the—put them behind people who have to make payments and have to buy food for their family. 

MATTHEWS:  What if you‘re a Joe regular or a Jane regular and you just own a small shop, you‘re not in a union, you‘re not in a chain store, and you don‘t have a really top lawyer like you, to be advertising you for a second?  How do you make a buck out of this?  How do you get a buck you deserve? 

(CROSSTALK)

MATTHEWS:  How is it going to work for the guy who is not lawyered up?

(CROSSTALK)

PAPANTONIO:  Most people can make the exclaims.  Most—a lot of people don‘t need lawyers.  These lawyers that are out there advertising like you have got to have me, you don‘t have to have a lawyer all the time. 

Ken Feinberg is a good enough—he understands this well enough.  You‘re going to have complex cases, like things like banks and municipalities, big businesses, yes, you will need a lawyer. 

But I think Feinberg is trustworthy enough to where he‘s not going to run over small claimants.  And these lawyers, they are telling people, gee, you have got to hire me, and then taking a percentage, when they really shouldn‘t be doing that.  I think it‘s deplorable.  It‘s shameful.  And it shouldn‘t be happening in this country right now.

MATTHEWS:  Right. 

PAPANTONIO:  But the good news is, I think Feinberg is aware of all that.

You know, I got to tell you, can I—if I—if I might just comment about this.

MATTHEWS:  Go for it.

PAPANTONIO:  Rush Limbaugh—Rush Limbaugh‘s slush fund is infuriating.  He calls it a slush fund.

This is going to feed families who can‘t make house payments.  It‘s going to put food on the table for their children.  These are issues that this golden mike, silver spoon windbag has never had to experience. 

It‘s easy for him.  It‘s easy for him to be critical of money that‘s just going to victims, because he senses—this old, irrelevant, confused old man in his Florida resort with his child bride, who is so disconnected with reality that he even—he even makes Joe Barton looks like a genius. 

(CROSSTALK)

MATTHEWS:  Well, even though—I don‘t get personal like that.  But let me make a point that I do find true with you. 

Rush Limbaugh has always had a clientele out there, the person that works in the diner all day, the job that you can keep your mind free and listen to him while you‘re doing your job, the guy who drives the car and has to sell product. 

You would think he would be somewhat connected to that small person, if you will, as the big shots at BP call.  He‘s beginning to look at these guys like one of the big shots.  Maybe that‘s his problem now.

Anyway, thank you, Michael, for coming on. 

PAPANTONIO:  Thank you, Chris. 

MATTHEWS:  And it‘s always great to have you.  Up next—you are very articulate, sir, but, in this case, very personal.  We try to avoid that sometimes here. 

Up next:  That South Carolina lawmaker who used a racial slur—it was an ethnic slur, really—to describe Republican governor candidate Nikki Haley, he says he‘s not going to apologize for it.  In fact, he says he‘s a redneck and proud of it, as if that covers it over.

And, by the way, you‘re always allowed to make fun of your own crowd.  We‘re talking about knocking somebody else.  That‘s always the problem.  We have got to teach these lessons.  It‘s a “Sideshow” issue.  We will be right with it when we hit the “Sideshow.”

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

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL.  Now to the “Sideshow.”

First: a novel defense.  Republican state Senator Jake Knotts of South Carolina is refusing calls to resign by his county chairman after using an ethnic slur earlier this month to describe both his party‘s gubernatorial front-runner, Nikki Haley, and President Obama.  He called them both “rag heads.”

Knotts apologized for the comment, but said in his defense that he, too, had been called derogatory names like redneck, a term he said he now embraces. 

(BEGIN VIDEO CLIP)

JAKE KNOTTS ®, SOUTH CAROLINA STATE SENATOR:  I am proud to be stereotyped as a redneck, by the true meaning.  The true meaning, if any of you know, is a hardworking farmer that worked from dawn to dusk in the fields to support his family and got a red neck from the sun. 

If all of us rednecks leave the Republican Party, the party is going to have one hell of a void.  I‘m not going to resign under any circumstances.  That is out. 

(END VIDEO CLIP)

MATTHEWS:  Wow.  It reminds me of Willie Stark in the movie “All the King‘s Men” calling him a hick. 

Next—by the way, it worked for him.

Next: wedding bells in the governor‘s mansion.  New Mexico Governor Bill Richardson married actors Harrison Ford and Calista Flockhart at his mansion in Santa Fe, New Mexico.  Governor Richardson, a friend of the couple, is formally ordained, so a state supreme court justice attended to the ceremony to make it legal. 

Actually, I‘m a big Harrison Ford fan. 

Finally, a battle royal on the softball field.  Last night, female congressional members and staffers faced off against female reporters as part of the second annual congressional women‘s softball game.  Our own Andrea Mitchell did the play-by-play.  Nancy Pelosi, John Boehner, Sonia Sotomayor, and Harry Reid all watched from the stands. 

Among the stars out there, Senator Kirsten Gillibrand on the mound for the pols.  So, who won the night?  The reporters rallied from behind for a 13-7 win.  All proceeds from the game went to the Young Survival Coalition, a breast cancer advocacy group, a good cause. 

Well, proud to be an American. 

Anyway, we will be right back in a moment.

(COMMERCIAL BREAK)

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

A bit of a roller-coaster for stocks today on some unsettling economic reports, the Dow Jones industrials finishing 24 points higher, the S&P and the Nasdaq both adding a little bit more than a point. 

New jobless claims rising by 12,000 last week, after three straight weeks of declines.  A separate report showed Mid-Atlantic manufacturing tumbling to its slowest pace in 10 months. 

But inflation is still in check, with consumer prices falling last month, led by a 5 percent drop in gas prices. 

And the trade deficit rose to its highest point in more than a year. 

Rising imports a sign of rebounding economy. 

In stocks, Aetna sharing jumping 4.5 percent on a rosy second-quarter forecast, but Ford shares dipping slightly, despite J.D. Power ranking U.S.  automakers higher than imports in terms of initial quality for the first time in history. 

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

HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

Well, the hits keep on coming from Senate candidate Richard Blumenthal and Mark Kirk.  Today‘s “New York Times” has more on their truth-telling troubles.  The Connecticut headline reads, “Blumenthal Comments Stir New Questions on Military Service.”

He‘s quoted saying—that‘s the candidate—“I did realize Reservists could be called up, and that is—that it was something that I wanted to do.”  But the “Times” reports military experts said there was no expectations that Reserve units would be activated at the time Mr.  Blumenthal enlisted in the Reserves.

And here we go with the Illinois headline that reads in that Illinois race, “A Teaching Career Is Questioned.”  “The Times” reports that while Kirk—that‘s Mark Kirk—may refer to himself as a former teacher, he doesn‘t talk about the brevity of his experience, a year in a London private school and part-time at a nursery school in as part of a senior year work study program in college. 

You have got to wonder what these guys are up to and their whoppers.

Clarence Page is a syndicated columnist with “The Chicago Tribune,” and Ron Reagan is an author and political analyst.

Ron, let‘s start with you out there.  We have been stunned by this Blumenthal character.  He has got a resume to beat the band.  He was in the Reserves during the Vietnam War, no problem there.  He was in uniform.  He did his duty.  He served in uniform.  He never went to Vietnam.  And he went into a unit that probably would—in fact, never would have been called up. 

And yet he‘s confused here.  He‘s out telling people he joined the Reserves sort of so he could serve in combat.  It doesn‘t make any sense, what he‘s been saying. 

RON REAGAN, POLITICAL COMMENTATOR:  Well, I‘m going to say something that‘s going to shock you here, Chris.  I‘m glad you‘re sitting down.

But you might have noticed that politicians very often say things that aren‘t true.  And once they can get away with a few big lies—and they do get away with them—I‘m talking about death panels and Obama maybe not being born in the United States, that sort of thing—well, after that, a few little lies, a few—you know, a little resume padding doesn‘t seem like such a big deal. 

And, when they get used to that, and the little lies start to be passed over, well, then the big lies get easier, too.  Sort of a vicious cycle. 

MATTHEWS:  Yes. 

Well, let‘s go to an expert here, somebody who was drafted...

(LAUGHTER)

CLARENCE PAGE, COLUMNIST, “THE CHICAGO TRIBUNE”:  Yes. 

(LAUGHTER)

(CROSSTALK)

MATTHEWS:  ... who was in my age group, in fact, my age regiment, as they say in anthropology.

PAGE:  That‘s right.  That‘s right. 

MATTHEWS:  You were drafted.  You know how it works. 

PAGE:  Yes. 

MATTHEWS:  If you had decided or had some connections to join the reserves in Chicago or somewhere, and you managed to get—we always think somebody—we—the phrase we used was managed to get in the Reserves. 

PAGE:  That‘s right. 

MATTHEWS:  And we knew what it meant.  It meant you spent your six months in training.  You put up with boot camp and some D.I. kicking you around, but then you came home. 

PAGE:  Well, you don‘t need an expert to tell you that your chances of being—of going to Vietnam in the Reserves then were about nil. 

I, in fact, was drafted about the same time that Dan Quayle entered the National Guard.  You remember what a big flap that was.  People were saying, well, he used his connections to get into the Guard so he wouldn‘t go to Vietnam.

MATTHEWS:  Yes. 

PAGE:  A similar kind of controversy erupted around George W. Bush. 

This is so surprising to me, that he would make a statement like that when so many people—I mean, those of us of our generation, this was our defining moment.

MATTHEWS:  Why is he—why do you think, having studied politicians, you take this, Ron.  Let‘s start with—why would a guy who‘s had deep trouble here, keep picking at this scab?

I mean, why would he go back to it?  Why would he say, look, I‘ve taken a hit, guys of that era like us who know all about it have sensitivities about it, and know what B.S. is in this regard, are not going to vote for me if they have a real position, now this, although the real Democrats will vote for me anyway?  Why bring it up again and hedge his bets again and say, yes, if you want to believe I want to serve in Vietnam, here‘s another fat fish story for you, yes, it was something I wanted to do, I wanted to get called up?

Why did he do it again?  Or is that a rhetorical question?

Ron?

RON REAGAN, POLITICAL COMMENTATOR:  Oh, I‘m sorry.  I thought you were asking Clarence.

MATTHEWS:  No.  Ron.

REAGAN:  I don‘t know why—I don‘t know why you would repeat that, but these people seem to think that they sort of get away with that stuff.  But, you know—I mean, these lies keep coming.  Not just from these two, but as I said from the political class in general.  And people generally speaking let them go on this.

You remember Rudy Giuliani.  On a weekend chat show not long ago, claiming that there have been no terrorist attacks under George W. Bush.  And the person who got the most flak for that was George Stephanopoulos who didn‘t call him on it.

MATTHEWS:  Yes.

REAGAN:  So, you know—so is it any wonder—

(CROSSTALK)

MATTHEWS:  They forgot that one.

(CROSSTALK)

MATTHEWS:  Let‘s go to Illinois.  Let‘s go to Illinois.  Let‘s go to Mark Kirk who‘s still ahead in the polls.

PAGE:  Right.

MATTHEWS:  Mark Kirk talks about himself as being an old like public school teacher in the toughest neighborhoods in Chicago.

PAGE:  Yes.

MATTHEWS:  He talks about how kids that could have turned out to be bad, very bad.  It turns out all he ever did was teaching in a nursery school.  And he‘s talking about kids that could have been packing heat.  I mean, the descriptions are unbelievable of what he‘s talking about here.

PAGE:  It must have been a tough nursery school.

(CROSSTALK)

MATTHEWS:  What do we make of this?  What do we make of this?  Is that going to hurt him out there?

PAGE:  You know, what hurts you is not just one fib or resume enhancement.  It‘s if there‘s a pattern of lying and fabrication that‘s established.  We haven‘t seen that yet.  But we have seen a series of exaggerations for which he‘s had to answer.  He had a little grueling question and answer session with the editorial at my newspaper.  And we‘ve seen it in “The New York Times.”

(CROSSTALK)

MATTHEWS:  He taught in nursery school, briefly—

PAGE:  Yes.

MATTHEWS:  -- as a part of program—a work study program.

PAGE:  Right.

MATTHEWS:  Here he said, “I also remember those in school who bore scrutiny as people who might bring a gun to class.”  Nursery school, not even kindergarten.

PAGE:  Tough crowd.

(CROSSTALK)

MATTHEWS:  Let‘s go there.  Both are leading in the polls just to keep up with the politics in this situation.  In Connecticut, Pollster.com‘s trend line as well, I don‘t know where that came from.

Take a look at this right now, here it is.  We see Blumenthal is up dramatically.  And the other guy is up as well.  What do you guys make of that?

PAGE:  Well, Blumenthal is popular with veterans among others in his home state.  And I think he‘s done a good job of going around to collect any IOUs, if you will, from veterans groups and others who have endorsed him and said, hey, he‘s a good guy.  He‘s been good on our issues.

This is the kind of thing that has enabled him to keep this fire tamped down—at least so far.

MATTHEWS:  You know, Ron, sometimes I think it simply comes down to:

you only get two choices in politics.  So, if you don‘t like Linda McMahon, you‘re going with Blumenthal.  You‘re going to hold your nose and say, you know, I guess everybody has a psychological or whatever problems.

REAGAN:  Yes.

MATTHEWS:  Same thing with Mark Kirk.  If you think he‘s got these banking problems behind him, you‘re going to go—well, it‘s time for a Republican from Illinois.  You know, you only get that one little flip of the coin situation there.

REAGAN:  Yes.  I think Blumenthal really benefits from running against McMahon, the (INAUDIBLE) of world wrestling.

You know, the Mark Kirk thing and correct me if I‘m wrong here, guys, you may know more know about this than I am, I think he also misdated his military record in terms of flying intelligence missions over Iraq and taking fire.  Now, you know, if that didn‘t happen, that‘s not the sort of thing you forget.  You don‘t imagine that you were under fire from the enemy if it didn‘t happen—shades of Hillary Clinton ducking sniper fire, you know?

(LAUGHTER)

MATTHEWS:  Tell us about that.  How close is he under fire?

PAGE:  Well, he also claimed a military award which was actually a unit award.  It was the entire unit who won it.

MATTHEWS:  You know, there‘s nothing wrong with being Earnest Hemingway if you put it in the form of a novel.

PAGE:  Right.  Right.

(LAUGHTER)

MATTHEWS:  But when you say it actually happened, it‘s great.

Ron, by the way, is the first person I‘ve ever heard on this show and, what, 20 years of doing this off and on, that‘s ever said, I may be wrong.  Check me on this.  Thank you for that humility.  I‘ve never heard that before on HARDBALL.

Thank you, Clarence.

I never said it anyway.  I may be wrong.  Check me on this.

Anyway, Clarence Page, Ron Reagan, thank you both.

Up next, President Obama is facing growing frustrations for members of his own party over the progress or lack of it that we‘re making—are we making progress in Afghanistan?  Boy, that‘s the question.  Are we getting in trouble deeper and deeper?  How much longer will America‘s longest war go on?

This is HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Republicans frequently cite Chris Christie‘s victory as governor of New Jersey as a sign their party can win anywhere.  But what do people of New Jersey think of their governor?  Well, get this: according to a new Quinnipiac poll, an equal number of Jersey voters consider Governor Christie a bully as they do a leader.  And the poll shows ¾ of New Jersey voters are dissatisfied with life in the Garden State.  That‘s the state‘s worst satisfaction rating ever.

HARDBALL will be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIPS)

GEN. DAVID PETRAEUS, U.S. CENTRAL COMMAND:  It‘s important that July 2011 be seen for what it is, the date when a process begins based on conditions.  Not the date when the U.S. heads for the exits.

ROBERT GATES, DEFENSE SECRETARY:  I think, frankly, that the narrative has been too negative.  I think that we are regaining the initiative.  I think we are making headway.

(END VIDEO CLIPS)

MATTHEWS:  We‘re back.

Turning to Afghanistan where American soldiers continue to die.  The count for this month stands at 30 dead.  And some Democrats now challenge these Pentagon assertions that progress is picking up in Afghanistan.

One of the critics is Ohio Democrat Congressman Dennis Kucinich.

Congressman, I want to review these numbers with you.  I‘m sure you‘re familiar with them.  Here‘s a comparison of the KIAs, our men and women getting killed over there.  Last year in April, May and June—you can see how the numbers have gone up in each case, and each month, the last three months of this year, all higher than the last—the parallel numbers last year.

Does that tell you we‘re being more aggressive on the ground or does it mean our position is deteriorating?

REP. DENNIS KUCINICH (D), OHIO:  Well, there‘s more troops in there. 

There‘s a surge that‘s been going on.

But it also raises questions about whether a military solution is possible in Afghanistan.  And I think that is what Congress eventually is going to have to decide, whether we give another $30 billion to keep this war going on and on and on, or whether we finally say, look, there is no military solution, we have to do this another way.

MATTHEWS:  What would be an alternative policy?

KUCINICH:  Well, we have to first recognize that, you know, Afghanistan has never had a western-style democracy and it‘s not going to.  It‘s an Islamic country.  We need to prepare for an Islamic government in Afghanistan.  We cannot impose our way of life on the people there.

We need to see that there should be a U.N. panel that would oversee the safe disposition of Afghan mineral resources which now are being talked about being in excess of $1 trillion.  We‘re going to eventually have to get out of there, and we need to make sure that the people of Afghanistan who live in abject poverty are going to have an opportunity to enjoy the fruits of their own resources and not continue to be exploited as happens so often in nations that are under occupation.

MATTHEWS:  Let‘s talk about the politics over there, because as you‘re suggesting, it‘s more important than the battle front.  You know, back in ‘63, when we started to get in real trouble in Vietnam, the Kennedy administration began to suspect that Diem, our ally over there, the president of South Vietnam, he wasn‘t elected but he was the president, was engaged in secret talks through the French with the North Vietnamese to possibly cut a separate peace.  That may have had something to do with our decision to support a coup over there which eventually overthrew him and killed him.

Now the question is: what‘s our relationship with Karzai?  We‘re getting words in our major press now, Congressman, that Karzai is thinking of a separate peace with the Taliban.  What‘s that tell you about where we‘re headed?

KUCINICH:  Well, it‘s very interesting when you see how Karzai was so celebrated in the United States a month ago, that he actually was brought to the floor of the United States Senate, almost unprecedented—at the same time that we learn of these vast mineral deposits and now it‘s being talked about.  Karzai is capable of cutting a separate deal with the Taliban.

But the question is, what does the Taliban need him for?  The fact of the matter is that the Karzai family has been excelling at theft, stealing from the people of Afghanistan, building—he and his cronies, not President Karzai personally but President Karzai‘s family members and their cronies building in Dubai, taking the wealth of the nation out of there, all the while the war is going on.

Look, I don‘t think there‘s any confidence that Karzai is going to be able to deliver a western style democracy, anywhere in the United States Congress, and I don‘t think the confidence is likely to be in Afghanistan.  I think that the Taliban eventually are going to have to be dealt with and the sooner we understand that, the better we‘re going to be.

MATTHEWS:  Well, the scary thing is we‘re in there alone.  We don‘t really trust Karzai.  The Pakistani apparently, the people of Pakistan—whatever the government thinks—the people of Pakistan like the Taliban, right?  They‘re all together.  They suspect Karzai is an Indian agent and then we‘re sitting in there trying to defend the guy they think, the Pakistanis and the Pashtuns all think is an Indian agent, right?  It‘s so strange the situation for our soldiers.

KUCINICH:  Our troops are meeting enemies on all sides.  Let me tell you how bad it is, Chris.  There‘s an investigation going on right now about whether or not contractors are hiring insurgents to either attack or not attack our troops as would best befit the interests of those contractors.  This is an untenable situation, intolerable situation—

MATTHEWS:  Yes.

KUCINICH:  -- for the men and women who wear the U.S. uniform who are doing everything they can to defend this country‘s interests.  But why aren‘t we defending them, why aren‘t we looking at this situation and saying, look, there is no military solution, let‘s plan an exit right now?

MATTHEWS:  OK.  Your voice—let‘s see—thanks for coming on—I think we needed to hear it.

Congressman Dennis Kucinich of Ohio—

KUCINICH:  Thank you.

MATTHEWS:  -- a man who thinks we‘ve got to get out of Afghanistan.

When we return, let me finish with some thoughts about these Republicans who are defending BP, the company responsible for the biggest environmental disaster in our country‘s history.

You‘re watching HARDBALL only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Let me finish tonight on this strange decision by the political right to attack BP‘s decision to create a $20 billion escrow account to pay those damaged by the oil spill.  Rush Limbaugh calls it a slush fund.  Michele Bachmann calls it redistribution of wealth, placing her in full agreement with radio talk show host, Mark Levin.

Texas Republican Congressman Joe Barton today called it a shakedown.  He says he was ashamed at yesterday‘s announcement that BP was going to make the $20 billion, that it creates a terrible precedent.  He said all this only to retract it all later.

Well, oil has its friends in Congress, always has, and its friends have always been there to protect it from hands-on safety regulation and from paying its share of taxes.  Remember the oil depletion allowance?

Those who say that death and taxes are unavoidable are only half right when it comes to the oil business.  And now, they‘re speaking out.  These folks who identify more with the huge petroleum company and not with its victims, the small people the BP chairman calls them—these people in the Gulf who have seen their lives shattered.

Could this be a time in the Obama administration when the loudest voices on the political right have bet on the wrong pony?  Do they truly wish to end up at the end of all this as the guys rooting for the perpetrator of this iconic catastrophe?  Do they really want the independent voter to see them, the Republicans, as the BP party?  Do they really want to imply that if their party were in the White House, they would be rooting for BP to somehow avoid paying for this sea of troubles that have bequeathed us?

Finally, Congressman Joe Barton did take back his comments several hours later.  But something tells me that the on-the-record sight of a Republican member of Congress apologizing to BP is something many other Republicans will be branded with between now and November.

Apparently, you can run out of the Republican Party for a hug, if run out for hugging President Obama for bringing money to your state—as the governor of Florida learned the hard way.  But it‘s down right Republican apparently to get down on your knees before BP.  Hmm.

That‘s HARDBALL for now.  Thanks for being with us.

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

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

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