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updated 8/3/2010 12:28:10 PM ET 2010-08-03T16:28:10

Guests: Eugene Robinson, Brian Bilbray, Jim Moran, Chaka Fattah, Bill Richardson, Frank Gaffney

CHRIS MATTHEWS, HOST:  Don‘t tax you, don‘t tax me, tax that fellow behind the tree.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in Washington.  Leading off tonight, the battle over taxes.  The old trick of politics is to pay for government without getting too many voters mad at you.  The Republicans are determined to have nobody mad at them.  Their real purpose is to protect the tax cuts of those at the very top brackets.  But how do you keep giving tax cuts while complaining about the fact that government is spending more than it‘s taking in—in fact, a trillion-and-a-half dollars a year more than it‘s collecting?

The Republicans, once the party that championed fiscal responsibility, see no contradiction in all this.  It‘s out to extend the Bush tax cuts for the wealthiest Americans and to continue to purposely confuse us by suggesting the Democrats want to eliminate the Bush tax (SIC) for everyone, when in fact, the Democrats are quite clear in saying they want to eliminate them only for the top 2 or 3 percent of taxpayers.

Plus, first Charlie Rangel and now Maxine Waters are in trouble with the House Ethics Committee.  Some members of the Congressional Black Caucus, who are speaking anonymously, are raising questions whether black lawmakers face more scrutiny than white lawmakers.

And Pelosi versus the Pentagon.  Defense Secretary Robert Gates says next summer‘s drawdown in Afghanistan will be fairly limited.  The Speaker of the House is making it clear she expects to see a much faster withdrawal of troops from Afghanistan.  We‘re going to debate why we‘re in Afghanistan and whether we‘re doing any good there.

Also, momentum may be growing among Republicans to deny citizenship to U.S.-born children of illegal immigrants.  It looks like they want to make an issue of this for the fall campaign.

And Sarah Palin once again says, Talk to the hand, which in her case has a handy note written on it for use in TV interviews.  Can this go on?

Let‘s start with the debate over tax cuts.  U.S. congressman Jim Moran‘s a Democrat from Virginia and Congressman Brian Bilbray‘s a Republican from California.

Congressman Bilbray, you first.  Are you for—where are you on these Bush tax cuts, which are set to terminate for everyone this January?

REP. BRIAN BILBRAY ®, CALIFORNIA:  Well, Chris, I wasn‘t there when they were passed, but the fact is, I think it‘s the worst time to be talking about kicking in a new tax increase anywhere along the board.  And you know that.  It‘s a—basically, the biggest problem here is the fact that we can‘t take—continue to think that we‘re going to take money out of the economy and keep the economy strong.

And I‘m kind of I‘m interesting because I‘ve been listening for 10 years people saying that all the tax cuts of Bush were only for the wealthy.  And now I‘m starting to hear that, Oh, we‘re only—there was some of it or a large portion that might have been for the middle class and we won‘t touch that part.  It seems inconsistent with what I‘ve been hearing for the last 10 years, and you got to admit that.

MATTHEWS:  So you want to have—keep all the Bush tax cuts for the next 10 years, as you have for the last 10 years.

BILBRAY:  I think we darn well maintain it right now.  And I don‘t think we have a right to ask the voters or the public to pay more taxes when we‘ve already proven that we‘re mismanaging what we‘ve got across the board.  We ought to go back to the—what we did in the late ‘90s, and that‘s say, Look, let‘s rein in our expenditure, our spending problem is the real problem, and allow the economy to grow past and beyond the debt, like we did in the late ‘90s.

MATTHEWS:  Yes, everybody says that.  Everybody says that, Congressman.  We have a $1.4 trillion, $1.7 trillion range of debt—deficit this year right now, and nobody‘s talking about cutting out a deficit—government spending by $1.4 trillion.  I mean, everybody says, Let‘s get rid of spending.  You don‘t have a program to get rid of a trillion-and-a-half dollars in spending, do you?

BILBRAY:  We actually got this started back in the ‘90s by saying we set a standard that we‘re going to hit the threshold.  I mean, you start off with little things like, why are we giving away surplus government funds to local governments or different non-profits instead of spending it and putting it on the market?

MATTHEWS:  OK.

BILBRAY:  Ninety-eight billion—I mean, a billion dollars just in un

funds that are being given away in inappropriate funds that even the president talked about this last week.

MATTHEWS:  OK.  All right.  Well...

(CROSSTALK)

MATTHEWS:  Next time—I‘m waiting for somebody to give me—well, actually, Paul—Paul Ryan‘s giving me a list, but it‘s hard to come up with a list of actual spending cuts because nobody likes to be identified with those.

Congressman Moran...

BILBRAY:  (INAUDIBLE)

MATTHEWS:  Well, that‘s true.  I mean, it seems to be (ph) for tax cuts...

BILBRAY:  Well, start with...

(CROSSTALK)

MATTHEWS:  This doesn‘t take a lot of guts to be for tax cuts for everybody, is it?

BILBRAY:  How about—how about...

MATTHEWS:  Admit it‘s easy.  Admit it‘s easy, sir, to be for tax cuts.

BILBRAY:  Actually...

MATTHEWS:  It‘s easy.

BILBRAY:  It is—it is easy to do that.  It‘s tough to be for saying, No pay raises for the federal government through the next year.  Let‘s start with that.  Let‘s just start by saying—look, everybody‘s hurting, and those of us from the federal government are going to lead off on...

MATTHEWS:  Well, that‘s popular!  Screw the bureaucrats!  Everybody loves to do that.

BILBRAY:  Well, no, it‘s also...

MATTHEWS:  The easiest politics in America is to say, I‘m going to let the deficit stay real big.  And by the way, I‘m going to make it a little bigger by cutting taxes.

BILBRAY:  No, you‘re not—what you‘re doing is going to say the spending and the size of the federal government is the problem.  We‘re trying to spend our way out of this problem.

MATTHEWS:  OK.  OK.

BILBRAY:  And that‘s how we got into the problem!

MATTHEWS:  One last question.  Do you believe that we actually increase government revenues when we cut taxes?

BILBRAY:  Absolutely because when it—when it stimulates the economy and...

MATTHEWS:  OK.

BILBRAY:  Clinton proved—wait a minute.  Clinton proved...

MATTHEWS:  Well, then let‘s cut taxes...

BILBRAY:  ... it worked when he cut...

MATTHEWS:  ... down to 1 percent.

BILBRAY:  ... when he cut taxes...

MATTHEWS:  Let‘s get it down to 1 percent!  Let‘s get it down to 1 percent, we‘ll balance the budget in five minutes, by your theory.

BILBRAY:  Look at California.  We raised taxes, and look what we‘ve done.

MATTHEWS:  OK.  All right.

BILBRAY:  I mean, Chris, we‘re driving companies out...

MATTHEWS:  No, by your theory, the—why don‘t we just keep lowering taxes, sir, until we get them down to zero because by your theory, every time we lower taxes, we get more revenue coming in the door.  This is like the loaves and the fishes!

BILBRAY:  No, no, no, no!  There‘s obviously...

MATTHEWS:  This is the New Testament.

BILBRAY:  ... a balance, Chris.  Look, I was a mayor.  I was the chairman of a county.

MATTHEWS:  OK, OK.

BILBRAY:  There‘s a balance there.  The problem is...

MATTHEWS:  This is popular.

BILBRAY:  ... we‘re out of proportion.

MATTHEWS:  I know everything you‘re saying.  The voters out there, on the Republican side especially, are saying, Thank God for Congressman Bilbray...

BILBRAY:  No, no!

MATTHEWS:  ... because he‘s going to cut our taxes.  And just don‘t tell me it‘s courageous.

BILBRAY:  Chris, it‘s independents.  Listen to the independents!

MATTHEWS:  All right.

BILBRAY:  They‘re the people that are saying, Look...

MATTHEWS:  OK, OK.

BILBRAY:  ... they want a moderate approach here, but the attitude that we‘ve reached since—is that—spend, spend, spend.  They didn‘t like Bush spending.

MATTHEWS:  I know.

BILBRAY:  They didn‘t like the Republican spending.  And now you expect them to like the Democrats spending more?

MATTHEWS:  No, it‘s just that...

BILBRAY:  They‘re not going to do it!  The independents are...

MATTHEWS:  Your party used to be “pay as you go.”  Your party used to be balanced budge, pay as you—the Jerry Ford party, the Bob Dole, the Bob Taft party was, if you‘re going to spend a dollar, you‘re going to raise a dollar.  And you would always be honest about that.  Now you say, magically, just keep cutting taxes, and somehow the government will balance its books magically, when nothing else in American economic life works that way.

BILBRAY:  Well, first of all, Chris, there‘s nothing magic for those of us have been in local government.  The fact is, when the private sector has the funds...

MATTHEWS:  OK.

BILBRAY:  ... they generate the revenue...

(CROSSTALK)

MATTHEWS:  OK, let me get balance in our timing here.  Congressman Moran, you just heard the argument, cutting taxes increases receipts.  Somehow, the government increases the amount of money it collects by lowering taxes.  Just keep doing it, he says, it works.

REP. JIM MORAN (D), VIRGINIA:  Well, it‘s not the first time we‘ve heard that argument.  We‘ve been hearing it for decades.  The fact is, we need to do both.  George H.W. Bush, the 41st president, did it the right way.  He raised revenue and he cut spending.  And then Bill Clinton followed on his lead with a balanced budget and created a surplus.  Taxes went up.  In fact, 39.6 percent for the highest level.  But 23 million jobs were created.  And it was the most after-tax revenue ever generated during that eight-year period by the most wealthy people in the country.

The fact is that the 2001 and 2003 tax cuts generated 13 percent more revenue that came back to us, so 87 percent was unpaid for.  It‘s $2.3 trillion that has been added to our deficit.  It‘s the principal cause of the deficit.  Taxes...

MATTHEWS:  This is the Bush tax cuts.

MORAN:  Is the Bush tax cuts, George W. Bush tax cuts.  And what we need to do now is to do what Clinton and his father did to get us back into balance.  Today we have 14.8 percent of GDP...

(CROSSTALK)

MATTHEWS:  Why do you think the Clinton administration ended up with a surplus, when Ronald Reagan, as much as he‘s beloved these days, did not end up with a surplus?  He had a deficit every single year and growing.  Why do you say that this program of cutting taxes somehow yields a balanced budget or brings back fiscal sanity somehow?  Congressman Bilbray?

BILBRAY:  Chris, because Democrats and Republicans...

MATTHEWS:  And when does it happen?

BILBRAY:  Wait a minute.  Wait.  Democrats and Republicans, Clinton and the Republicans, finally got spending under control to the point to where the economy could catch up.  That‘s why it worked.  There was one time that you saw a Democratic president and a Republican Congress finally -- and it‘s (INAUDIBLE) Let‘s face it, it was a tough time, but we finally wrestled down the expansion of expenditures.  Right now, we‘re going just the opposite and...

MATTHEWS:  Who was the last Republican...

(CROSSTALK)

MATTHEWS:  Who was the last Republican president to balance the budget, now that you‘re the party of fiscal responsibility?  When‘s the last Republican president?  You had a Republican president under Bush, George W., you had it under Reagan.  You had at least half control of the Congress.  When‘s the last time a responsibility president has yielded a balanced budget?

BILBRAY:  You...

MATTHEWS:  Or a surplus?

BILBRAY:  You had a Republican...

MATTHEWS:  Just give me a year.

BILBRAY:  ... Congress that allowed a Democrat to do it, and that‘s a bipartisan kind of effort.  We may—no, Bush...

MORAN:  It was actually Dwight Eisenhower.

BILBRAY:  Bush went over the top after the war and used the war as an excuse to do domestic spending.  And the Republicans made that mistake, but it doesn‘t mean that the Democrats have any reason to do the other.  And that‘s why the independents are up-raising (SIC).  That‘s why this issue is going to be a real...

MATTHEWS:  Yes.

BILBRAY:  ... the top issue.  And independents are deciding this, Chris.  It‘s not Democrat/Republican partisanship...

(CROSSTALK)

BILBRAY:  ... it‘s nonpartisan are really mad about this.

MORAN:  You can identify cuts that total less than 1 percent of the budget and a small fraction of the deficit.  We‘re going to have to take a comprehensive approach.  And the first thing we need do is to get revenue back into a normal range.  Normally, it‘s 20 to 21 percent.  And that‘s basically what we‘re spending, 20.6 percent.  But today, with the stimulus, it‘s more than that.  But generally, that‘s about what it comes to.

You can‘t balance the budget, you can‘t treat your grandchildren fairly when you‘re only bringing in less than 15 percent of GDP and you‘re spending over 20 percent.  It‘s almost criminal what the Republican Party is willing to steal from their grandchildren and our grandchildren.

(CROSSTALK)

MORAN:  ... just because it‘s politically popular, Brian.

BILBRAY:  Let‘s go back to always (ph) spending.  Let‘s start by going back to a baseline that‘s defensible.  Let‘s talk about, take what‘s left of the stimulus and not spend it.  Let‘s take what‘s left of TARP and not spend it.

MATTHEWS:  OK.

BILBRAY:  Let‘s prove to the American people that we‘re willing to take the tough decisions!

MORAN:  Talk to Governor Schwarzenegger, who still has billions of dollars that are unspent but are designated...

BILBRAY:  And it‘s not helping California!

MORAN:  ... for road projects and infrastructure projects.

MATTHEWS:  Let‘s take a look at one of your leaders.  Here‘s one of your leaders, the majority whip—or actually, minority whip, Eric Cantor of Virginia.  Here he is on MSNBC with Savannah Guthrie on “The Daily Rundown” this morning.  Let‘s listen.

(BEGIN VIDEO CLIP)

SAVANNAH GUTHRIE, HOST:  Will you just simply acknowledge that passing these tax cuts worsens the budget deficit problem?  I mean, you can‘t deny that, right?

REP. ERIC CANTOR (R-VA), MINORITY WHIP:  Savannah, let‘s look at it through the prism of the working families who are seeking jobs and the small business people who are creating them.  It‘s not—it‘s not a tax cut they‘re looking for.  They don‘t want a tax hike!

GUTHRIE:  I was just wondering if you had—if you had any dispute with the notion that it does exacerbate the deficit picture.

CANTOR:  Well, I—what I—what I said in the beginning is if you have less revenues coming into the federal government and more expenditures, what does that add up to?  Certainly, you‘re going to dig the hole deeper.

(END VIDEO CLIP)

MATTHEWS:  Well, there he is, Congressman Bilbray, your leader.  Your whip is now admitting that if you cut taxes, you‘re increasing the deficit.  He just said it.  Do you want me to repeat it?  That‘s your leader.  Why would he say something like that that runs against your orthodoxy?

BILBRAY:  The fact is, look, Chris, you can‘t...

MATTHEWS:  Well, the fact is he just said that.  Why did he just say that cutting taxes at this point is going to yield a lower revenue, and therefore a bigger deficit?

BILBRAY:  Because we‘re not talking about...

MATTHEWS:  He just said a contradiction...

BILBRAY:  ... cutting...

MATTHEWS:  ... of what you just said.

BILBRAY:  We‘re not even talking about cutting taxes!  We‘re talking about not allowing an increase (INAUDIBLE)

MATTHEWS:  Continuing the Bush tax cuts is what we‘re talking about. 

And that‘s what he was talking about.

BILBRAY:  And that is maintaining the status quo...

MATTHEWS:  Are you in disagreement...

BILBRAY:  ... of what (INAUDIBLE)

MATTHEWS:  ... with Eric Cantor?  Just tell me you disagree with him, we‘ll be on the same page.

BILBRAY:  I am in disagreement...

MATTHEWS:  OK.

BILBRAY:  ... with anybody that thinks that we can get ourselves out of the mess by raising more taxes on the American people!

MATTHEWS:  OK.

BILBRAY:  We got—look, the federal government...

(CROSSTALK)

MATTHEWS:  OK, well, thank you.  This is an interesting debate, and I think the American people ought to be paying attention to it.  The Republican philosophy is supply-side, the belief that if you cut the tax rates, somehow, the overall amount of revenue will come up.  Somehow, we‘ll begin to balance the budget.  That‘s an argument that you can argue and argue and argue, and we‘ll always be looking for evidence of that.  Congressman...

MORAN:  And we know what works, and we know that hasn‘t worked.

MATTHEWS:  OK, thank you...

(CROSSTALK)

BILBRAY:  It worked in the ‘90s with...

MORAN:  ... children and grandchildren.

BILBRAY:  ... the Republicans and Democrats working together.  Yes, we saw bipartisanship...

MATTHEWS:  OK.

BILBRAY:  ... in the late ‘90s.

MATTHEWS:  It‘s also very good to look at history and which presidents have been successful.  Harry Truman and Bill Clinton I think are the ones that have balanced the budgets.

BILBRAY:  And they had...

MATTHEWS:  Thank you...

BILBRAY:  ... a Republican Congress to help them, that makes it possible.

MATTHEWS:  Well, Harry didn‘t.  Anyway, thank you, Congressman Jim Moran and Congressman Brian Bilbray.

Up next: Coming distractions.  Democrats could be facing not one but two ethics trials this fall as Congresswoman Maxine Waters, the veteran from California, and Congressman Charlie Rangel, the chairman of Ways and Means Committee, are both facing serious charges of ethics violations.  This is just what Democrats didn‘t need going into this tough election year.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Well, Virginia‘s lawsuit against President Obama‘s health care reform law has cleared its first legal hurdle.  A federal judge, a district judge in Richmond, ruled against dismissing the lawsuit.  Virginia‘s suit is the first of its kind to go before a judge.  More than a dozen other states have filed suit in Florida, for example, challenging the law.

But the law is gaining popularity among voters.  Catch this.  Things change.  A new poll by the Kaiser Family Foundation finds that 50 percent of Americans have a favorable opinion of Obama health care.  Only 35 percent have an unfavorable opinion.  Look at that change.  More like it than don‘t like it, the Obama health care bill.  What a change of circumstances.

We‘ll be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Democrats promised to drain the swamp in Congress when they gained control back in 2006.  Now the party faces two ethics trials for veteran House members.  Is this a problem for the mid-term elections?  Well, obviously, it is.

Democratic congressman Chaka Fattah of Pennsylvania‘s a member of the Appropriations Committee and he also chairs the Congressional Urban Congress.

Congressman Fattah, thank you for joining us.  This is a tricky topic, and I don‘t know anybody who wants to talk about it, least of all a lot of people who know Charlie Rangel and now these other members of Congress.  Nobody likes ethics issues, I don‘t think.

But here‘s the president—and I know you must have been stunned by this.  Here‘s President Obama, a member of Charlie Rangel‘s party, on CBS “Morning News” this Friday.  Let‘s listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I think Charlie Rangel served a very long time and served his constituents very well, but these allegations are very troubling.  And you know, he‘s somebody who‘s at the end of his career, 80 years old.  I‘m sure that what he wants is to be able to end his career with dignity, and my hope is that it happens.

(END VIDEO CLIP)

MATTHEWS:  Wow.  “My hope is that it happens.”  He‘s telling him to leave!  Now, maybe he‘s saying something out of school, Congressman, he‘s not supposed to say.  He sounds like he‘s saying that part of the deal for Rangel to avoid prosecution or any other ethics kind of punishment or sanction is to accept retirement, as well as a reprimand.  What‘s the president talking about, saying that Charlie Rangel, chairman of Ways and Means—he‘s got to go?

REP. CHAKA FATTAH (D), PENNSYLVANIA:  Well, I think when you take texts out of context, you can—you create a dilemma.  If the question is why is Charlie Rangel demanding that he have his day to clear his good name, and you then take the president‘s answer, which is that he is towards the end of his career, he wants to leave with dignity and have his good name, that‘s an absolute reasoning for Charlie Rangel to demand, as he has, that he has an opportunity to refute what he says are allegations that have no merit.  So you have to put the president‘s statement in context in order to understand it.

And what Charlie Rangel has done, as every American citizen, as you know, has a right to, is to say, If you have allegations, bring them forward.  I will take my opportunity to answer them.

MATTHEWS:  OK.

FATTAH:  He could have taken a reprimand, right, which one of the weakest of all punishments, and went on back to his normal work.  But he said, No, I have children and grandchildren and great-grandchildren, and I want to clear my good name.  And so therefore, bring your allegations in September.  I will answer them.  He‘s put forth a 32-page response in detail, which somehow the press has not focused a lot of attention on.  But I think that what Charlie Rangel is doing there is what every citizen has a right to do, which is to answer allegations that one might have brought against them.

MATTHEWS:  So the president in those words was not telling him to retire?

FATTAH:  Absolutely not.  What he said, if you follow it, is that he wants to be able to one day retire with his good name, and he hopes that he will have the opportunity to do so, which means he hopes that when...

MATTHEWS:  OK. 

FATTAH:  ... these allegations are heard, when he sees the response, he hopes that Charlie Rangel‘s good name will be intact. 

And I‘ll tell you what.  I bet you that Charlie Rangel‘s good name will be intact when this matter comes to a conclusion. 

MATTHEWS:  Well, that would be good, but I do think you‘re stretching the point, because the president said his career is at its end.  That‘s pretty cold language. 

FATTAH:  Well, that‘s not what he said.  What he said was that he‘s towards the end of his career.  He‘s 80.  He‘s served for 40 years.  He wants to leave with his good name intact.  He hopes that he will have the opportunity to do that. 

Well, how do you get to having your good name intact?  You get there because...

MATTHEWS:  OK. 

FATTAH:  ... allegations were made.

MATTHEWS:  OK.

FATTAH:  Rangel asked the Ethics Committee—wait a minute—the first member of Congress in the history of the Congress, he asked the Ethics Committee to investigate...

MATTHEWS:  OK. 

FATTAH:  ... investigate them, so he could clear his good name.  And he‘s now taken the step necessary to do that, which is to have a hearing. 

MATTHEWS:  Well, I hate to do biblical analysis.  I have been accused of looking up to the president pretty highly, but I think we‘re doing biblical analysis here, because the president actually said, “He‘s somebody who is at the end of his career,” not near or nearing it, but at the end.  That seemed to be pretty cold language. 

Let me ask you about the problem in the Democratic Party.  You‘re a senior member of the Democratic Congress.  You‘re getting a lot of seniority up there on the Hill.  Is this going to be a problem in holding the House to have this problem?

Then Maxine Waters, I don‘t know where that one came from out of nowhere last week, all of a sudden, another senior member of the Black Caucus getting brought before charges, charges brought up against her involving a conflict of interest claim here.  You know, they are different kinds of cases, but these are major figures in our lives for, what, 20, 30 years. 

I mean, the Republicans must be loving this. 

FATTAH:  Well, look, they—look...

MATTHEWS:  This is the swamp, as far as they‘re concerned, probably. 

FATTAH:  Well, look, if the Republicans want to love it, God bless them. 

Let me just tell you, in the same week, right, you had a criminal

investigation taking place with a U.S. senator, another senator

cooperating, turning over 1,200 pages—no coverage.  You had $8 billion -

$9 billion.

MATTHEWS:  Which Senator was that?  I‘m sorry.  Which senator?

FATTAH:  This was Senator Corbin (ph) turning over 1,200 pages in the incident investigation on the same day as the Charlie Rangel mess.  No attention. 

But we had the Pentagon admit that they lost $9 billion of cash in Iraq in $1 million (INAUDIBLE) over the course of the Iraq reconstruction - - no mention of that, because this is another distraction. 

First of all, I served six years on the Ethics Committee.  Complaints come.  You review them.  If there is a prima facie case, you make out the statement of alleged allegations.  The member gets a chance to answer. 

Maxine Waters says she wants an opportunity to answer. 

MATTHEWS:  OK. 

FATTAH:  I don‘t know why we would have jumped from the conclusion that members should take an allegation, admit it to it whole cloth, without a chance to rebut it.  And members should take that opportunity.

And I believe that when people look at the Rangel response, look at the Waters response, you will see that this is not as clear-cut as some of the loose language on TV suggesting that they‘re wrongdoing. 

MATTHEWS:  OK. 

Well, let me take a look.  Here‘s a Politico report today.  It‘s from a member of the Black Caucus, one of the members, one of the members—one of the members—let me just read this report. 

“‘There‘s a dual standard,” somebody is charging on the Black Caucus and the members, “One of the most—one of the—one—one for most members and one for African-Americans,‘ said a member of the Congressional Black Caucus, speaking on condition of anonymity.”

What do you make of that charge?

FATTAH:  I don‘t buy it.

MATTHEWS:  Dual standard.

FATTAH:  I don‘t buy it.  I know the members of the Ethics Committee, each of them.  I think they‘re doing their job. 

And I think that, you know, they have went through the two-year investigation that Rangel asked for, looking at all manners of allegations.  They come forth with essentially three, even though it‘s 13 different particulars. 

And when you dig into them, there‘s no there there.  There‘s not a dollar that he‘s alleged by anyone to have taken, no personal benefit.  There‘s a question about the use of stationary, whether it should have been personal or office.  I mean, there are some details that the hearing will bring out. 

But I don‘t believe that members, rather than...

MATTHEWS:  Well, there was a charge of—there was a charge of tax evasion—avoidance. 

FATTAH:  Absolutely not. 

(CROSSTALK)

MATTHEWS:  Wasn‘t there—what about the Dominican property?  I thought that was.

(CROSSTALK)

FATTAH:  Absolutely—absolutely—no, what Charlie Rangel—there was a news article two-plus years ago.  Rangel hired a forensic accountant, went through all of his tax records for 20 years, found that there were some payments were due on a Dominican Republic—paid them, paid the penalty, and then requested the House Ethics Committee to look into any and all charges.

MATTHEWS:  Yes. 

FATTAH:  This—so, the committee never even started their investigation until all taxes were paid.

MATTHEWS:  Is this good for the Democratic Party to have an open hearing?  We will be covering it live, probably, here on MSNBC.  If we have ethics hearings in public, with the charges being faced, with Charlie Rangel being—facing those charges, that will be live television.  You think that is a good thing for the party?

FATTAH:  I think sweeping things under the rugs is bad for our country. 

I think having American citizens, even if they happen to be members of Congress, actually stand up and say, look, if you have an allegation, let‘s air it in public, has to be good for our democracy.  To the contrary of all of this nonsense that somehow we‘re going to be harmed....

MATTHEWS:  OK.  Thank you. 

FATTAH:  ... members of Congress need a chance to deal with the cynicism that would created if there was a backroom deal. 

MATTHEWS:  OK.  Thank you, U.S. Congressman Chaka Fattah of Pennsylvania.  Thank you, sir, for joining us tonight.

FATTAH:  Thank you. 

MATTHEWS:  Up next: Sarah Palin‘s below-the-belt hit on President Obama, what story—that story in where it belongs, coming up in the “Sideshow.”

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

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

Talk about hitting below the belt.  On FOX yesterday, Sarah Palin kicked President Obama on illegal immigration.  Here she goes. 

(BEGIN VIDEO CLIP, FOX NEWS CHANNEL)

SARAH PALIN ®, FORMER ALASKA GOVERNOR:  Jan Brewer has the cojones that our president does not have to look out for all Americans, not just Arizonans, but all Americans, in this desire of ours to secure our borders and allow legal immigration to help build this country, as was the purpose of immigration laws.

If our own president will not enforce a federal law, more power to Jan Brewer and 44 other states who are in line to help support Jan Brewer in state laws, state efforts to do what our president won‘t do. 

(END VIDEO CLIP)

MATTHEWS:  Well, is this—that she would use a Spanish word, cojones, to knock immigrants from Mexico, is that some kind of double insult? 

By the way, I haven‘t heard Ms. Palin say that she supports a checkable worker I.D. check card to stop illegal hiring by businesses in this country.  If she is serious about it, she would say so.  Until then, she should be careful about kicking our president. 

Next: the perils of multitasking.  Last week, Republican Congressman Dan Lungren of California, a popular guest on this program, was pulled over for exceeding the speed limit while doing a radio interview. 

Take a listen.

(BEGIN AUDIO CLIP)

UNIDENTIFIED FEMALE:  We are talking specifically this morning about the passage of the international Megan‘s Law.  Can you tell folks about it? 

UNIDENTIFIED MALE:  Can you hang up the phone, sir? 

REP. DAN LUNGREN ®, CALIFORNIA:  I have to get off the phone just a moment here. 

Can I call you back in just a second?  I‘m sorry.  I‘m talking with a police officer here, sir. 

(CROSSTALK)

UNIDENTIFIED FEMALE:  Oh.  Yes. 

Let me ask you this.  Were you driving hands-free?

LUNGREN:  Yes.  I have got it sitting here on my lap.

(END AUDIO CLIP)

MATTHEWS:  So, the phone was sitting in his lap. 

Today, in a made-for-the-Internet stunt, Lungren‘s Democratic challenger, Dr. Ami Bera, headed over to the congressman‘s district office out in California to deliver, what else, a hands-free headset, a Bluetooth. 

Nice gimmick and about the right attitude, I would say, not too judgmental.

Now for the “Big Number.”

Remember billionaire Florida senator candidate Jeff Greene?  He‘s the one who couldn‘t tell me whether he voted for Ronald Reagan or not in ‘80 or ‘84.  Well, while he doesn‘t have much a political record or memory, it turns out he‘s earned quite the record as an employer, a tough one.

According to “The St. Petersburg Times,” since 2003, how many captains has he had for his luxury yacht these past seven years?  Well, at least 22.  That‘s about three a year.  By the way, captain number 21 quit after just a couple of hours.  Jeff Greene has gone through at least 22 captains for his luxury yacht—tonight‘s incredible “Big Number.” 

Up next, there‘s growing momentum among Republicans to end birthright citizenship, citizenship for any person born in the U.S.  Some conservatives say illegal immigrants are abusing it, coming here just to have kids.  Will debate it straight ahead.

This is HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

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

A huge midday rally pushing stocks to their highest close in more than two months, the Dow Jones industrials kicking off August with a 208-point gain, the S&P 500 jumping 24 points, and the Nasdaq climbing 40 points. 

Energy and materials stocks leading the charging today on a better-than-expected reading on manufacturing and some strong bank earnings out of Europe.  U.S. banks got a boost after Europe‘s biggest bank, HSBC, and France‘s largest bank both beat earning expectations. 

Meanwhile, Ford shares are surging 3 percent after completing the sale of its Volvo unit to a Chinese firm for $1.8 billion.  Other automakers were mostly higher ahead of July sales results due out tomorrow.

BlackBerry maker Research In Motion skidding 1 percent in the middle of a dispute with Saudi Arabia and the UAE after encrypted—over encrypted messages. 

And in economic news, manufacturing slowed slightly in July, but not as much as analysts were expecting.

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

HARDBALL. 

MATTHEWS:  Back to HARDBALL. 

Related to the controversy surrounding Arizona‘s tough new immigration law is this issue of birthright citizenship.  Children born to illegal immigrants in the U.S. become American citizens, like anyone else. 

Yesterday, Republican Senator Jon Kyl of Arizona questioned that reading of the law.  Here he is on CBS‘ “Face the Nation.”

(BEGIN VIDEO CLIP, “FACE THE NATION”)

SEN. JON KYL (R-AZ), MINORITY WHIP:  There is a constitutional provision in the 14th Amendment that has been interpreted to provide that, if you are born in the United States, you are a citizen no matter what. 

The question is, if both parents are here illegally, should there be a reward for their illegal behavior? 

And what I suggested—my colleague Lindsey Graham from South Carolina suggested that we pursue that.  And what I suggested to him was that we should hold some hearings and hear first from the constitutional experts to at least tell us what the state of the law on that proposition is. 

(END VIDEO CLIP)

MATTHEWS:  Well, joining us right now is New Mexico Governor Bill Richardson. 

Mr.—Governor Richardson, it‘s great to have you on. 

You have a personal life that sort of reflects this reality. 

(LAUGHTER)

MATTHEWS:  You want to tell us how you got to be—Bill Richardson got to be an American? 

GOV. BILL RICHARDSON (D), NEW MEXICO:  Well, Chris, my mother is Mexican.  My father was an American.  I was raised in Mexico.  I‘m part of the American dream. 

I was born in Pasadena, California.  But this is an issue that really is emblematic of what we are as Americans.  This 14th Amendment was a civil rights measure for elected officials guaranteeing equal protection under the law. 

I mean, it—it shows how far and how badly this immigration debate is going, when we‘re questioning the 14th Amendment, which was basically put in at the time to protect those with African heritage.  It was already federal law.  Supporters of the constitutional amendment wanted to make sure that those with African heritage were protected equally under the law. 

Now, in this immigration debate, this anti-immigration rhetoric, they‘re raising the possible of ending this amendment.  I don‘t take it seriously, but it‘s part of a very strong anti-immigrant sentiment. 

MATTHEWS:  You know, Lindsey Graham, who is not anti-immigrant—he‘s been pretty positive over the years and sticking his neck out, in fact, as a Republican pushing for immigration reform—but let‘s listen to the language he used to talk about this issue.  I think it‘s pretty cold language, but he used it.  Here he is on FOX last week. 

(BEGIN VIDEO CLIP, “ON THE RECORD WITH GRETA VAN SUSTEREN”)

SEN. LINDSEY GRAHAM ®, SOUTH CAROLINA:  I may introduce a constitutional amendment that changes the rules if you have a child here.  Birthright citizenship I think is a mistake, that we should change our Constitution and say if you come here illegally and you have a child, that child‘s automatically not a citizen.

People come here to have babies.  They come here to drop a child.  It‘s called “drop and leave.”  To have a child in America, they cross the border, they go to the emergency room, have a child, and that child‘s automatically an American citizen.  That shouldn‘t be the case.  That attracts people here for all the wrong reasons.

(END VIDEO CLIP)

MATTHEWS:  Well, I don‘t know what you think of that language.  What do you think of that, drop a baby here?  What do you think of that, a pretty cold way of saying something, of...

RICHARDSON:  Well, and I agree with you. 

Lindsey Graham, Senator Graham, and Senator Kyl, too, recognize the problem that we have with undocumented workers.  We do need comprehensive immigration reform. 

But I‘m, frankly, surprised that he‘s saying this, because this is a provision, 14th Amendment, child born in America is an American.  And I don‘t think this effort will get very far. 

But it‘s part of an anti-immigrant sentiment that...

MATTHEWS:  OK. 

RICHARDSON:  ... I believe is very bad, unless we have comprehensive immigration reform, Chris. 

MATTHEWS:  Well, it seems to me there‘s a number of these cases this gets to.  First of all, if you‘re here on a student visa, two students from abroad, and they have a baby here, well, it is an American, darn it.  That‘s a fact.

If you‘re here on a tourist visa and you have a kid here, that‘s an American.  That‘s a fact.  If you‘re here on a green card, you‘re here, a legal—a resident, if you‘re not a citizen, that‘s a baby—that‘s an American baby.  These are all facts. 

I guess he‘s getting at something which is sort of weak underbelly of the law where somebody would come here just to create a baby here in the United States for that only purpose.  Come in, have the baby, get out again.  So you can say the baby is an American.

What do you think of that case?  Should that still be the law? 

Still honoring the 14th Amendment?

RICHARDSON:  Yes, we should honor the 14th Amendment.  The reality is that immigrants come in to America, undocumented workers, to improve their economic situation, to get jobs.  They‘re fleeing desperate situations in Mexico and Central America where there‘s no future.  And those immigrants many times become a strong part of our economy.

And the reality is, Chris, that, you know, this was done for a very good reason, to protect those from African heritage -- 

MATTHEWS:  I know.

RICHARDSON:  -- that many felt were going to be denied this ability to be Americans.

MATTHEWS:  Let me ask you about the politics of this, because

clearly, this is another example.  If I were Hispanic, if I were Latino, I

think I‘d hear some ethnic anger at me.  If I heard it somebody was talking

even like Lindsey Graham who‘s normally quite a decent guy.  In fact, he is a decent guy—talking like this.

      

Does this strike at the heart of people—well, you—did you take it personal?  Did you say, “Wait a minute, this guy is getting a little ethnic here”?

RICHARDSON:  Well, it does.  I mean, it gets personal.  And a lot of this Arizona law, for a lot of Hispanics, gets personal because, obviously, there‘s going to be racial profiling.

Who are you going to go after?  Somebody that looks like me, somebody that looks Latino.  You‘re not going after a blond like Lindsey Graham who‘s a good man and who I like.

But the problem here is that failure to act on a comprehensive bill, the Congress failing to act—

MATTHEWS:  Yes.

RICHARDSON:  -- is causing all this hysteria—all the state that take actions on their own and these unfortunate comments.

MATTHEWS:  I wonder if they‘re serious, that‘s my question.  I wonder if anybody is going to go to three quarters of the states to try to amend the Constitution over a few thousand cases a year that are incidental like this.

Anyway, thank you, Governor.  It‘s great to have you on.  I‘m a big fan of Bill Richardson.  Thanks for coming on the show.

RICHARDSON:  Thanks.

MATTHEWS:  Up next: President Obama announces combat operations in Iraq will end at the end this month.  It‘s happening.  We‘re leaving Iraq.

And what about Afghanistan?  What are we fighting for over there?  And how much longer will that war last, that American war?  This is going be hot coming up here.

You‘re watching HARDBALL on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Former half-term Alaska governor, Sarah Palin, blames the media—who else—for her upside down approval rating among independents.  Palin says, “If I believed everything I read or heard in the media, I wouldn‘t like me either.”  She‘s 25 percent favorable, 39 percent unfavorable among independents in the latest NBC/”Wall Street Journal” poll.  And somehow, it‘s somebody else‘s fault in this case.

HARDBALL will be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL.

House Speaker Nancy Pelosi and Defense Secretary Robert Gates appear to be at odds over what next summer‘s deadline for withdrawal in Afghanistan actually means.  Secretary Gates cautions that we‘ll see a limited withdrawal next year.  Here he is.

(BEGIN VIDEO CLIP)

ROBERT GATES, SECRETARY OF DEFENSE:  I think we need to reemphasize the message that we are not leaving Afghanistan in July of 2011.  And if the Taliban are waiting for the 19th month, I welcome that because we will be there in the 19th month and we will be there with a lot of troops.  My personal opinion is that drawdowns early on will be of fairly limited numbers.

(END VIDEO CLIP)

MATTHEWS:  We are not leaving Afghanistan.

And here‘s Speaker Pelosi saying what she said when she said about the question of the very question of how many troops are leaving.  Here she is.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), SPEAKER OF THE HOUSE:  Well, I hope it is more than that.  I know it‘s not going to be “turn out the lights and let‘s all go home” on one day.  But I do think the American people expect it to be somewhere between that and a few thousand troops.

(END VIDEO CLIP)

MATTHEWS:  So, the difference there between not leaving Afghanistan and only leaving a few thousand troops.

So, what is the July 2011 withdrawal deadline really mean, and is the president‘s counterinsurgency strategy working over there?

Eugene Robinson is a Pulitzer Prize-winning “Washington Post” columnist and MSNBC political analyst, of course.  And Frank Gaffney is the founder and president of the Center for Security Policy.

Frank, I‘m curious about how you read these things.  I know you‘re tough and you‘re hawkish, and that‘s why you‘re here.  Fair enough.

But what is the administration—is it hawkish or dovish on Afghanistan?  Is it leaving, or is it staying?

FRANK GAFFNEY, CENTER FOR SECURITY POLICY:  I think you have to ask the administration.  I‘ll give you my sense, which I think actually is the sense of the Taliban, which is perhaps the most worrying, and that is we are leaving.  We are leaving, if not exactly, you know, a year from now, then shortly thereafter.  And we are leaving it in the hands, at least in part, of at least some of the Taliban.

And that, I think, is going to augur very badly for our interest, for the friends that we‘ve tried to cultivate there, and most especially, for the prospect that the president reiterated again in his speech today to the disabled veterans, namely, that we‘re not going to simply allow it to slide back into a safe haven—

MATTHEWS:  Yes.

GAFFNEY:  -- for the sort of terrorism we saw before.

MATTHEWS:  Well, Frank says we‘re leaving.  He doesn‘t like it, but he thinks that‘s the message.  What‘s your reading on Pelosi and Gates?

EUGENE ROBINSON, MSNBC POLITICAL ANALSYT:  We have extremely mixed messages here.  And it‘s not just Speaker Pelosi who is reflecting, I think, if not a consensus, the views of a growing number of her members in the House and a number of senators as well, versus Secretary Gates.

You also get mixed messages within the executive branch, within the administration.  You go over to the White House and you get a sense that: don‘t worry.  We were serious when we talked about July 2011.  You know, this was not some sort—some sort of charade.

MATTHEWS:  Yes.

ROBINSON:  You hear Gates.  You hear Mullen.  And you watch what‘s happening on the ground, and you get—you get a different sense.

MATTHEWS:  Well, let‘s—here‘s the chairman of the Joint Chiefs, Admiral Mullen.  Here he is talking about our presence in Afghanistan, giving another hawkish push to this.  Here he is.

(BEGIN VIDEO CLIP)

ADM. MIKE MULLEN, CHAIRMAN OF THE JOINT CHIEFS:  We left Afghanistan in the late in the late ‘80s.  We left Pakistan in the late ‘80s.  And we find ourselves back there now.  And certainly, the questions that are out there from the citizens in those countries are, are we going to stay this time or not?  And I believe that we‘ve got to stay.

(END VIDEO CLIP)

MATTHEWS:  Well, there you are, Frank.  That must make you feel good.  He says we‘ve got to stay.

You know, it reminds me a lot of the last days of Jack Kennedy‘s presidency before he was assassinated.  He was giving a lot of different messages.  Some people read his determination to withdraw some troops as a sign we were pulling out.  Others read it as a sign he was just getting Diem and the other generals over there later to get tougher by saying, if you don‘t fight, we‘re going to pull out of here.

Is there any ambiguity here on purpose?  Or did you just think it‘s

what do you think is going on, Frank?  What is the message purpose here?

      

GAFFNEY:  I think what‘s going on is that you have people in senior positions responsible not only for the lives of our military personnel but also for the success of the strategy upon which President Obama has embarked saying, we can‘t leave.  We mustn‘t give the signal that I fear is being sent.

MATTHEWS:  OK.

GAFFNEY:  And I think, on the other hand, you‘ve got a lot of political folks, particularly, who think it‘s imperative that we leave.  And in the middle, you have this signal being sent to the Taliban that I fear is unmistakable to them: we‘re going down.

MATTHEWS:  Well, here‘s the president.  I guess he‘s the one they‘re most listening to, here is talking about what our mission is over there.  I agree, we can‘t send one message to the Taliban: we‘re staying forever.  And we‘re telling the liberals from the Bay Area we‘re getting out.  I mean, somebody is hearing everything.  In fact, they‘re all hearing everything.

Here he is, the president on why we‘re there.  Let‘s listen.

(BEGIN VIDEO CLIP)

OBAMA:  And if Afghanistan were to be engulfed by an even wider insurgency, al Qaeda and its terrorist affiliates would have even more space to plan their next attack.  And as president of the United States, I refuse to let that happen.

(APPLAUSE AND CHEERS)

OBAMA:  We will continue to face huge challenges in Afghanistan.  But it‘s important that the American people know that we are making progress and we are focused on goals that are clear and achievable.

(END VIDEO CLIP)

MATTHEWS:  Tough question to you: Would he give the same speech to the Bay Area Democratic club?

ROBINSON:  You know, I think he would.

MATTHEWS:  Would he?  That‘s a hawkish speech to the veterans.

ROBINSON:  You know, he said from the beginning and throughout the campaign, Afghanistan was the right war, Iraq was the wrong war.

MATTHEWS:  So, you think he‘s a hawk on Afghanistan.

ROBINSON:  You know, I think—I think basically he is.  I think he doesn‘t—and he has said publicly, he doesn‘t intend to be drawn into some sort of open-ended, protracted occupation, but here‘s the question.  I think Speaker Pelosi actually was onto the right question.  Nobody thinks we‘re going to turn out the lights, but do we have a light footprint left in Afghanistan?

MATTHEWS:  Are we going to be weaker each week than the week before militarily?  Weaker each week and therefore, the Taliban sees us getting weaker and weaker and they decide, “We got a little, let‘s take a break.  We‘ll be ready to strike in six months when they‘re really weaker.”  I would do that if I were Taliban.

(CROSSTALK)

ROBINSON:  What do you mean by weaker or stronger?  You could—you could pursue a counterterrorism strategy—

MATTHEWS:  Right, that‘s more limited.

ROBINSON:  -- with a lot fewer troops.

MATTHEWS:   That‘s not fighting the Taliban.  How do we fight the Taliban?

Frank, what‘s your—what do you think we should be doing?  I‘m going to give you a chance to make your case.  What should we do as opposed to what the president seems to be doing?

GAFFNEY:  Well, I think we got to do a couple of things, Chris.  One is, I think we have to stop saying we‘re going to negotiate with the Taliban, albeit the moderate Taliban.  I don‘t think there is such a thing as moderate Taliban.

The signal that is sending on the one hand to the Afghan government and to the Pakistanis is, you guys are going to be left high and dry unless you carve this thing up, which as we saw the last time as Mike Mullen said, we bail out of this theater, meant that the Pakistanis helped install and prop up the Taliban.  I think that‘s a terrible mistake.

At the same time, we‘re seeing the Pakistanis playing this double game.  I think they have to be held accountable for that.  One option for increasing pressure on them is I think enhancing our relationship with India.  But most especially, we need to be saying to the Afghan people, we‘re not bailing out on you.

MATTHEWS:  OK.

GAFFNEY:  We don‘t intend to relinquish your fate to the same miserable people who imposed Sharia on you the last time.

MATTHEWS:  You made your case.  Thanks, Frank—Frank Gaffney, for coming on.

Thank you, Eugene Robinson.

This is the one.  This may be the toughest.

When we return, the same people who lied to us about the war in Iraq are at it again, this time about President Obama and what he wants do with that Bush tax cuts.  Get ready for some more B.S. from the same crowd.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Let me finish tonight with a verbal trick of purposely confusing two different things.

Remember how the country got sold on the war in Iraq because we had to get even with those who attacked us on 9/11, that the Iraq war was some kind of payback?  That‘s how it was sold certainly.  Remember how you felt?  That was the line.

Remember how bad 9/11 was?  Let‘s go to war with Iraq.  We‘ll show ‘em.

So, we went to war with Iraq in 2003, even though no Iraqis had attack us on 9/11, because polls showed a huge chunk of Americans believed that Iraqis were on those planes that hit New York and the Pentagon—

Iraqis.  They believed it because the propaganda machine kept spewing it out.  That was the brilliant big lie that sold enough Americans to get us into war, conflating 9/11 with Iraq.

Now they‘re at it again.  President Obama wants to end the Bush tax cuts for people in the very top income levels, the few percent who make over $200,000 as individuals or $250,000 in joint returns.  But Republicans are saying that Obama wants to end the tax cuts for everyone—largest tax increase in history they boom again and again as they list the size of the whole Bush tax cut.

It was Sarah Palin‘s line this weekend.  She had the number written on her hand of how much the tax cuts are worth over 10 years if you keep them or cut them for everyone.

So, listen to the Republicans push the line that the Democrats want to eliminate Bush tax cuts for everyone.  Listen as they continue to cite the amount of money involved, not for the top 2 or 3 percent—which are the cuts President Obama is talking about eliminating, but for the 100 percent of us.

There‘s one reason why they‘re doing this and only one.  The only reason someone would purposely confuse the truth is because the simple truth doesn‘t serve their purpose.

So, remember, when you hear the same people who pushed the Iraq war on behalf of George Bush push to need to keep the Bush tax cuts, what they‘re really doing is defending the tax cuts for the very richest among us.

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

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

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