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updated 9/28/2010 4:49:11 PM ET 2010-09-28T20:49:11

Guests: Eugene Robinson, Charles Mahtesian, Debbie Wasserman Schultz, Michael McCaul, Byron Dorgan, David Corn, J.C. Watts, Brendon Steinhauser

CHRIS MATTHEWS, HOST:  Counterattack.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews up in New York.  Leading off tonight: The danger of strangers.  It‘s tough being an incumbent office holder in bad economic times.  That‘s the Democrats‘ problem.  A lot of Republicans have a different problem.  They‘re the strangers in town.  People are suspicious of strangers, so hit them where it hurts, define the Republicans before they can define themselves.  It‘s already begun with negative ads filling TV screens on everything from lawsuits to divorce proceedings.  Will the strategy work?  Will it throw the Republican Tea Partiers on the defensive?  That‘s our top story tonight.

What advantage the Democrats have is the county is with them on ending the tax cuts for the wealthy.  Tonight, I‘m going to ask a Republican what painful cuts his party‘s willing to make so the wealthiest 2 percent in this country can get a tax break.  Plus, call it revenge of the moderates.  Centrists like Republican strategist Mark McKinnon and New York mayor Michael Bloomberg are pushing back against what they see as a rising tide of extremism within the Republican Party.  Will this fight strengthen the party or tear it apart?

And the latest on the investigation into what caused that huge BP spill down in the gulf.  Now we discover that Republicans in the Senate are protecting BP from subpoena power and having their people be put under oath.  Why are they stopping a presidential commission from doing its job?  Are they taking oil money to protect them?

Finally, as promised, Bill Maher has dug into the Christine O‘Donnell files and come up with another gem.  “If evolution is real,” O‘Donnell wondered, “why don‘t we see monkeys evolving right now into humans right before our eyes?”  Talk about a “Sideshow” item.

All that‘s ahead, but right now, let‘s check the HARDBALL “Scoreboard” and the latest polls in the tight races around the country.  Let‘s start with a couple of races where Democrats may be gaining strength.  In Kentucky, Republican Rand Paul‘s lead over Jack Conway has shrunk to just 2 points in the newest poll from Survey USA.  It‘s a robopoll, which some pollsters don‘t like so much.  But it‘s a 13-point swing towards Conway, the Democrat, in just three weeks.  He is moving.  In Nevada, Harry Reid is up now 45 to 40 over Republican Sharron Angle.  That‘s a significant lead, especially considering the outfit that did the poll.  Public Opinion Strategists is a Republican pollster that has Harry Reid in a significant lead now.

Now to California, where a new “LA Times” USC poll has Senator Barbara Boxer building a comfortable lead over Carly Fiorina.  Look at that number, 51-43.  And Boxer now leads by 8 points and she‘s up over 50 percent, which is very significant for an incumbent.

In the Pennsylvania Senate race, Republican Pat Toomey again a 7-point lead over Democrat Joe Sestak, who is within striking distance.  Finally, to Florida, where Republican Marco Rubio is pulling away.  He‘s up by double digits now over both Crist and Kendrick Meek.

We‘ll continue to check the HARDBALL “Scorecard” all through these races coming right up through election day on November 2nd.

Now the Democrats‘ strategy.  Let‘s talk about this final strategy.  “The Washington Post‘s” Eugene Robinson is an MSNBC political analyst and Charles Mahtesian is with “The Politico,” which is the hot-charging news—news organ these days.

Well, here are clips from some of the ads that House Democrats are running, Ohio‘s Betty Sutton, Arizona‘s Harry Mitchell and Florida‘s Alan Grayson.  He‘s a bit of a wild character at times.  Well, let‘s listen to all three of them.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  You‘ve heard the old saying, “Buyer beware.”  So beware of dishonest used car salesman Tom Ganley.  Ganley‘s been sued over 400 times for fraud, discrimination, and more.

UNIDENTIFIED MALE:  Career politician David Schweikert.  As treasurer, he had ethics problems and a record of mismanaging our money.  Now he‘s a predatory real estate speculator.

UNIDENTIFIED FEMALE:  He wants to force raped women to bear the child.

UNIDENTIFIED MALE:  And submit to me.

UNIDENTIFIED FEMALE:  Taliban Dan Webster.  Hands off our bodies and our laws.

(END VIDEO CLIP)

MATTHEWS:  Submit to me?  I don‘t know—some interesting editing going on there.  He‘s obviously against abortion rights, even for victims of rape, apparently, according to that.  But then it says “Submit to me”?  What is this?  Is this madman talk?  Your thoughts, Gene, about these ads? 

Will these work at the last month?

EUGENE ROBINSON, “WASHINGTON POST,” MSNBC POLITICAL ANALYST:  Well, first of all, don‘t you love the creepy music in the background?

MATTHEWS:  Oh, it‘s always creepy.

ROBINSON:  They always have the creepy music.  It sounds as if it‘s—you know, they‘re coming to get you.

MATTHEWS:  Right.

ROBINSON:  Look, defining the opponent is a time-honored strategy. 

And what else are the Democrats going to do?  I think...

MATTHEWS:  Well, don‘t they have an advantage here...

ROBINSON:  ... you could certainly argue that...

MATTHEWS:  ... a particular—these guys are...

ROBINSON:  ... maybe some of that goes—goes over the top.  But you know, these are—these incumbents, in many cases, are fighting for their political lives, and they‘re—you know, they‘re—they‘re rightly asking questions about the Republicans and what they would do.  And you can quibble about the manner in which they‘re doing it.

MATTHEWS:  Well, the old argument, if the guy on the other side of the line is bigger than you, can knee him in the cojones.  What do you think about that, Charles Mahtesian, the old argument, if you‘re smaller than the other guy, you have a right to play a little rougher than him?  In this case, just being an incumbent is being smaller than the other guy, and they will probably argue, Hey, if they can just broad-brush us as the bad incumbents, the corrupt incumbents, we can go after their—well (INAUDIBLE) they are.

CHARLES MAHTESIAN, POLITICO:  Well, I think the point here is that the hour is late and the polling is grim out there.  I mean, there‘s really not a lot that a lot of these candidates can do at this late hour.  I mean, if you‘re in, say, the South, a Democratic candidate in the South, maybe the mountain West, lots of regions of this country, your House Speaker‘s in a lot of trouble popularity-wise.  Your president‘s not that popular.  The health care reform plan‘s not that popular.  I mean, you‘ve got a big drag out there, and you really have to throw whatever you have out there.  Despite the success of the Democratic legislative agenda, it‘s not getting traction, so you have to throw something out there, and it‘s often a negative ad.

MATTHEWS:  Well, I‘m thinking, Gene, you know, the old song “Strangers in the Night,” by the way, which was, I think, the only number one song that Frank ever sang, but it was a hell of a song—you can build a case about a stranger you can‘t build about an Ike Skeleton, for example, or guy or woman who‘s been around for a while.  You can commit sort of infanticide, go after the person before anybody knows they‘re there.  For example, Christine O‘Donnell, all we know about her now is witchcraft, basically.  It seems like that‘s a pretty easy target.

ROBINSON:  Yes, that is an easy target, and I think—you know, I think in that race, in particular, you‘ll see numbers continue to move in the direction of Coons as Bill Maher rolls out these...

MATTHEWS:  Right.

ROBINSON:  ... these snippets every week.  You know, it‘s going to affect some—some races, like the “Scoreboard” you just did—I mean, I think it‘s going to help—this sort of thing is helping Harry Reid and probably is going to probably pull that out, I think.  I‘m not quite so sure.  It‘s very interesting that that race in Kentucky has—has tightened.  I‘m not sure that Conway‘s going to get over the top against Rand Paul.  And in Florida, it kind of looks like Marco Rubio...

MATTHEWS:  Yes.

ROBINSON:  ... is going to be the guy.  Clearly, Crist and Meek are going to split what would be the Democratic...

MATTHEWS:  OK.

ROBINSON:  ... and independent vote, and I think Rubio‘s got it.

MATTHEWS:  Well, let me open up this cantaloupe (ph) a little bit here.  Here‘s “Time” magazine‘s Mark Halperin writing, quote, “You wouldn‘t expect fat cats, Wall Streeters, free traders, Bushies and big business profiteers to fare much better than Democratic pols when proffered to an angry electorate, but Republican candidates with these career badges in many cases have opened up significant polling leads.”

Now, just to get back to somewhat fair game her, Charles, if somebody comes out of nowhere, and they‘re a self-financer or a Tea Partier and they come in with all that oomph behind them, isn‘t it fair game to simply tell people, Wait a minute, in normal circumstances, this bucko wouldn‘t be on your—would not be on your dance card?

MAHTESIAN:  Yes, I think it‘s fair game.  I wouldn‘t concede that a lot of these ads are fair.  I mean, is it really fair to call somebody a member of the Taliban?  I mean, no matter whether you like this person or hate them, is that fair?  I mean, some of these really push the edge of the envelope.  But when you talk about the Tea Party candidates and some of these other candidates, of course, they‘re very susceptible to this because they came out of nowhere.  They didn‘t come through the farm system of American politics.

MATTHEWS:  Right.

MAHTESIAN:  They didn‘t serve in the legislature or county council.  So I think they‘re particularly susceptible to these kind of tough comparison—comparative ads.

MATTHEWS:  Speaking of the new kids on the block and how vulnerable they are to attack ads if the Democrats air them, let‘s take a look at the new kids on the block.  Here‘s the president today talking to a rally of young people.  It‘s an audio, actually, of President Obama at a conference call—it‘s a conference call to college reporters around the country to get them gigged up.  Here he is, the president.

(BEGIN AUDIO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I just want to remind young people they‘ve got to get re-engaged in this process.  They‘re going to have to vote in these mid-term elections.  You‘ve got to take the time to find out where does your, you know, congressional candidate stands on various issues, where does your Senate candidate stand on various issues, and make an educated decision and participate in this process because, you know, democracy is never a “one and done” proposition.  It‘s something that requires sustained engagement and sustained involvement.  And I just want to remind everybody of that.

(END AUDIO CLIP)

MATTHEWS:  So Gene, why would he be doing a League of Women Voters ad like that?

(LAUGHTER)

MATTHEWS:  That was totally nonpartisan, Charles, as well.  that is the most non—that wasn‘t exactly a cris de guerre, you know, a Passionara speaking.  It was like, Well, you know, it would be good for you to read the records of all the candidates and get the issues.  I mean, is that because he knows that young people, if they do vote, will probably vote Dem?

ROBINSON:  Yes.  Yes.  He knows which way they‘re going to go if they vote.  The problem for Democrats is getting young people and especially those first-time Obama voters, those legions to come out for the mid-term elections, where they—you know, young people usually vote in lower numbers.  And there‘s a big question mark as to whether the new people—new voters that Obama energized and mobilized two years—you know, in the 2008 cycle, can be energized and mobilized in the weeks we have left to vote in this election.  But I think Democrats are pretty confident that if they can get them to the polls...

MATTHEWS:  Yes.

ROBINSON:  ... they‘re going to have most of their votes.

MATTHEWS:  You know what, Charles?  I don‘t know about you, but as a father, I have personal responsibility of getting my three kids to vote, you know?  And some are harder than others.  But I really do feel, as long as they‘re in their 20s and I‘m around, to hector them into voting.

MAHTESIAN:  Well, the good thing is, I don‘t have to worry about that. 

My kids aren‘t anywhere close to voting age.

MATTHEWS:  OK.

MAHTESIAN:  But you know, the issue here is, in this case, you know, that‘s the demographic—if you look at the 18 to 29-year-olds, they went 66 percent for the president in 2008.  You know, by every sign that we see, there‘s very little enthusiasm among that demographic.  And mid-terms, typically...

MATTHEWS:  Why is that?  Why is that, Charles?

MAHTESIAN:  Well, in mid-terms, typically, older folks are the ones who show up in greater numbers.  I think there are lots of folks that may be disillusioned or maybe don‘t have the same energy levels as in 2008.  So it‘s a very big concern that you hear from Democrats all the time, energizing the base.  Why else would the president talk to a bunch of reporters, college reporters?  He doesn‘t like reports to begin with, you know...

(LAUGHTER)

MAHTESIAN:  ... let alone sit around with a bunch of college reporters.

MATTHEWS:  Is that true, he doesn‘t like reporters?

MAHTESIAN:  Well...

MATTHEWS:  You‘re ruing my day here!

MAHTESIAN:  ... I think that‘s an exaggeration.

MATTHEWS:  Let‘s take a look.  Here‘s Politico‘s new Battleground poll.  It shows President Obama with a 65 percent personal approval—now, that‘s sky-high, given the conditions of today -- 46 percent job approval, not so great, 38 percent saying he deserves reelection—that‘s not great at all -- 49 percent say Republicans in Congress have had a better job on the economy than the president would.  That‘s pretty hefty.  And 51 percent say Republicans in Congress would do a better job creating jobs.  That‘s hefty advantage over the 40 percent who say the president—so Gene, here we are back to the interesting gap between the president‘s popularity—people like his smile, they like his family manner, his wife, they like the kids, they like where he came from, I think, in most cases, or at least in the majority of cases.  They like this, we‘re watching here, him coming out, you know, spritely, a bit debonair, upbeat.  They don‘t like the record so far.

ROBINSON:  No.  There—there—some people don‘t like it.  Some people are disillusioned.  There are some people in those numbers who wish he had moved more quickly on his progressive agenda, so—but he remains personally popular, and that‘s why smart Republican strategists are saying, you know, Gee, we‘re looking pretty good in 2010, but don‘t anybody think this tells what‘s going to happen in 2012.  This is still a very popular guy.

MATTHEWS:  Yes.

ROBINSON:  Those legions of new voters, I think, can be remobilized to vote again for Barack Obama, or a whole lot of them.  But the immediate question—can they be gotten out to the polls in five weeks?

MATTHEWS:  You know, a great question, Charles, that wasn‘t on my list to ask, but I‘m going to ask you because you seem like a sophisticated guy of many parts.  Do you think business can sit on those billions and trillions of dollars for two more years after they screw Obama this time?  Are they going to keep sitting on their money so they don‘t invest and help the economy for two long years just to get Mr. Excitement, Mitt Romney, elected president?  Would they do that to the country?

MAHTESIAN:  Well, I won‘t touch the first question, Chris, but...

MATTHEWS:  That was all one question, bro!

MAHTESIAN:  Oh!  I prefer splitting the two.  I‘d say that I think

what you‘re going to see the business community do is really go whole hog

at this election right now because either way, you know, I think they can

envision a scenario in which they lose because, for example, number one, if

if the president has a Republican House, that‘s probably going to be a rough scenario for them anyway because that‘s what the White House wants if they want to get elected in 2012 -- re-elected.  So probably the best-case scenario for them.

MATTHEWS:  Yes.

MAHTESIAN:  So you know, either way, I mean, I think they—they weigh the equities, and you know, see it as a 50-50 endeavor.

MATTHEWS:  Anyway, I just hope business starts spending.  Anyway, thank you, Gene Robinson.  Thank you, Charles Mahtesian.

Coming up: Democrats think they have a winner in their hands.  They want to end the Bush tax cuts for the top 2 percent, and they‘re arguing it‘s the Republicans who are holding up that middle class tax cut for 98 percent of the country.  Is that going to be a winning argument come November 2nd, that it‘s the Republicans who stopped the average person and family from getting the tax cut?  Up next, I‘ll ask a Republican congressman what spending cuts he‘d make in order to pay for the top bracket to get their break.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Well, the electoral map for 2012 is changing as a result of this year‘s census.  A review of the census data shows that some reliably red states, meaning Republican states, will gain House seats and therefore crucial electoral votes in the next presidential election.  Texas is the big winner, adding four House seats.  Do you believe that?  Florida will pick up two.  These are pretty Republican states, except Florida went Democrat this time.  Arizona, Georgia, Nevada, South Carolina, Utah and Washington state will all gain a seat.  You can see them all on the map, the winners.

Notice the Northeast, the Midwest are all losing seats.  Look at that, the big losers, New York and Ohio likely to lose two seats apiece.  Illinois, Iowa, Louisiana, Massachusetts, Michigan, Missouri, New Jersey and Pennsylvania all lose one, evidence that as a country, we‘re beginning to migrate south and west.  It‘s all because of air-conditioning.

HARDBALL back after this.

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL.  Republicans pushing to extend the Bush tax cuts to the wealthy haven‘t said where they‘d cut spending to make up the difference.  Let‘s watch Republican congressman Mike Pence—he‘s one of the Republican leaders—on “MEET THE PRESS” yesterday.

(BEGIN VIDEO CLIP)

DAVID GREGORY, MODERATOR:  Where is the painful choice that you‘re prepared to make on spending?

REP. MIKE PENCE ®, INDIANA:  Now, look, I never thought you‘d ask. 

Look, cutting discretionary spending.

GREGORY:  On what?

(CROSSTALK)

PENCE:  We could reduce government employment back down to 2008 levels.  That‘s $35 billion over 10.  We could eliminate government programs like the Save America...

(CROSSTALK)

GREGORY:  What about entitlement spending?  Are you going to raise the retirement age, as John Boehner suggests might be a good idea on Social Security?

PENCE:  Look—well, you know, and the last time I was on this program, I told you we keep our promises to seniors and near-seniors.  But for Americans under the age of 40, we absolutely have to begin to reform Medicare and Social Security in ways that‘ll ensure its long-term fiscal solvency.  But let me assure you, the “Pledge to America” is not the end-all, be-all.  It‘s meant to be a good start.

(END VIDEO CLIP)

MATTHEWS:  Wow.  We‘re joined right now by two members of the U.S.  Congress, Florida Democrat Debbie Wasserman Schultz and Texas Republican Michael McCaul.

Let me start with Congressman McCaul.  Sir, do you think it‘d be good for the Congress, your House, a member of the House—shouldn‘t there be a vote right now, up or down, on both the Democratic plan on tax cuts and the Republican plan on tax cuts, both votes right away?

REP. MICHAEL MCCAUL ®, TEXAS:  Absolutely.  I think the American people need to know where their elected representatives stand on this issue.  And yet what the Democrats are trying to do is kick the can down the road until after the election, and then find out where they stand on this position.  I think we ought to vote on it now.

MATTHEWS:  Both alternatives.  Let me ask you, Congresswoman Wasserman Schultz, should the Congress vote now on either the Democratic plan, which is tax cuts for everybody below $250,000 a year or—and—or not for the ones above, and also a Republican alternative, which is tax cuts for everybody down the road?  Should they have that vote in the Congress?

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA:  Sure.  We would love to have that vote but...

MATTHEWS:  Well, why don‘t you have it?

WASSERMAN SCHULTZ:  Because the Republicans won‘t allow it in the Senate because they‘ve been...

MATTHEWS:  No, but why don‘t you have it—no, you‘re in the House.

WASSERMAN SCHULTZ:  Because they‘ve been holding the—because we‘re not going to—what we‘re focused on is making sure that we can extend the tax cuts for the middle class and working families, Chris.

If we know that the Republicans are going to hold those tax cuts hostage and hold out for the wealthiest—the tax cuts for the wealthiest Americans, then we have members all across this country that are in tough elections.  And the Republicans would like nothing more than to, you know, pounce on them and accuse them of raising taxes. 

(CROSSTALK)

MCCAUL:  Speaker Pelosi can hold this vote today or when we come back in session.  Speaker Pelosi can hold this week, before we adjourn, if she wanted to.  Her problem is, she knows that a lot of Democrats don‘t support this agenda.

(CROSSTALK)

WASSERMAN SCHULTZ:  No, the problem is, is that you all are refusing to support simply an extension of the middle-class tax cuts and holding those hostage in exchange for making sure that we can add $700 billion to the deficit to give the wealthiest Americans a tax break, which puts no... 

(CROSSTALK)

MATTHEWS:  Sure.

I want to ask you again, Congresswoman Schultz, Wasserman Schultz, if there were a vote on the Democratic plan, which is what you said, for the middle-class tax cuts up to $250,000 a year per family and there was an alternative vote, a vote to recommit, a Republican vote, to give it to everybody, would that be a fair way to look at this, to have both votes on the floor?  Would that be fair? 

WASSERMAN SCHULTZ:  That might be the fair way to do it, except—except that we all know that there would only be one chamber that would take that vote.  And it would leave a lot of members twisting in the wind, subject to ridiculous Republican accusations, when it‘s them, particularly Republicans in the Senate, who are refusing to allow for that full vote to take place. 

(CROSSTALK)

MCCAUL:  Yes, let the American people‘s voice be heard.  Let the American people‘s voice be heard. 

(CROSSTALK)

WASSERMAN SCHULTZ:  That‘s right. 

(CROSSTALK)

MCCAUL:  And let it be heard before we adjourn, before the break.

(CROSSTALK)

WASSERMAN SCHULTZ:  Let‘s make sure that we can stop holding middle-class tax breaks hostage.

MATTHEWS:  OK.

Let me ask you.  Congressman, you have got the floor here, and you‘re on the offensive here, and you‘re winning the argument, I think, because you want to have the vote.  But why doesn‘t the Republican Party in the Senate stop a filibuster and let there be a vote, so that the voters can see up-or-down before the election where the two parties stand?  Why is your party filibustering this in the Senate? 

MATTHEWS:  Well, I think they should. 

(CROSSTALK)

MATTHEWS:  Filibuster against having a vote? 

(CROSSTALK)

WASSERMAN SCHULTZ:  See.  There we go.

MCCAUL:  I think we should have the vote in the House.  I think Speaker Pelosi has a problem on her hands.  And that is...

(CROSSTALK)

MATTHEWS:  No, no.

(CROSSTALK)

MATTHEWS:  I let you win the first round. 

MCCAUL:  The conservative Democrats don‘t support it.

MATTHEWS:  I let you win the first round, Congressman McCaul.

Here‘s the second round.  Your leadership is filibustering this bill so it will never get to the president‘s desk.  So it‘s all academic because of your party, right?  Admit that. 

MCCAUL:  It‘s not my leadership in the House that‘s doing that.  And I think this needs to come to a vote.

(CROSSTALK)

MATTHEWS:  So you don‘t know this guy Mitch McConnell, huh, this guy.

(CROSSTALK)

MATTHEWS:  We should show a picture of Mitch McConnell, so you can recognize him.  No, really. 

If we could put a picture up of Mitch McConnell, so you can say, yes, I do know this guy.  He‘s the leader of the Senate Republicans, and I have never called him up and said, Mitch, or, Senator—I guess they like the title—why don‘t you let the vote over there so that we can get credit for cutting taxes for all Americans? 

MCCAUL:  What they are going to stand up against be a $3.8 trillion tax increase, the largest in American history, that would severely damage the economy at a time when we can least afford it. 

(CROSSTALK)

MCCAUL:  Hey, Debbie, I listened to you.  With all due respect, listen to what I have to say. 

(CROSSTALK)

MCCAUL:  And there was a president by the name of John F. Kennedy that said, let‘s cut taxes to get the economy moving again.  And it worked. 

And there was a president by the name of Reagan who did the same thing.  This is a—there‘s a bipartisan economic formula for success.  A $3.8 billion tax increase is the wrong way to go for this country.

(CROSSTALK)

MATTHEWS:  What kind of deficits did we get?  I remember it well.  We doubled the national debt under Ronald Reagan.  So why do you think that‘s a good record? 

(CROSSTALK)

WASSERMAN SCHULTZ:  And we sent our economy over a cliff.

(CROSSTALK)

MCCAUL:  Kennedy said tax increases will not get the deficit and debt down and it will not create jobs, because he knew that it kills jobs. 

And it seems to me that the party of Kennedy has gone far astray from his principles. 

(CROSSTALK)

WASSERMAN SCHULTZ:  We have already had an opportunity. 

(CROSSTALK)

MCCAUL:  I would ask that the conservative Democrats join the Republicans in what President Kennedy stood for and get these tax cuts made permanent. 

(CROSSTALK)

MATTHEWS:  OK.

Congresswoman Wasserman Schultz, I want to understand this.  So, basically, the Senate won‘t let there be a vote.  So this isn‘t going to go anywhere.  So, it‘s all academic is what you‘re arguing.

(CROSSTALK)

WASSERMAN SCHULTZ:  Excuse me, Mike.  My turn now, please. 

MCCAUL:  OK.  I will give you that. 

(CROSSTALK)

WASSERMAN SCHULTZ:  What we‘re arguing is that, A., the Republicans have already had their turn at this.  We have had these tax cuts in place since 2003.

And that‘s what took us from a record surplus under President Clinton to a record deficit under President Bush.  It sent our economy careening over a cliff, because on top of the record deficit spending, we also had Wall Street and almost no regulation run amuck, sent the banking and financial services system into the tank.

And now the Republicans are asking for the keys back.  The choice on November 2 is very clear.  Democrats are saying that we want to make sure that we focus on our... 

(CROSSTALK)

MCCAUL:  Yes.  Yes, right.  The choices are really clear. 

(CROSSTALK)

WASSERMAN SCHULTZ:  Excuse me, Mike.  Please let me finish.

(CROSSTALK)

WASSERMAN SCHULTZ:  It‘s OK for you to interrupt me.

(CROSSTALK)

MATTHEWS:  Congressman, we do have a poll that supports Congresswoman Wasserman Schultz‘s position. 

Overwhelmingly, the American people think tax fairness requires that the top 2 percent not get this tax cut beyond next year.

WASSERMAN SCHULTZ:  That‘s right. 

(CROSSTALK)

MATTHEWS:  Polling proves that.

MCCAUL:  It‘s a straw man because when you look at this $250,000 tax that they‘re talking about, over that income level, what you‘re really talking about is a tax on small business owners, the job creators.

(CROSSTALK)

WASSERMAN SCHULTZ:  Oh, no, no, no.

(CROSSTALK)

MCCAUL:  And you‘re penalizing those who create jobs.  And that‘s going to hurt the economy and the middle class.

(CROSSTALK)

WASSERMAN SCHULTZ:  ... with $26 billion in income.  The way they define small business...

(CROSSTALK)

MATTHEWS:  OK.  Thank you. 

(CROSSTALK)

MATTHEWS:  I think we know the situation right now. 

Thank you, Congresswoman Debbie Wasserman Schultz.

(CROSSTALK)

MCCAUL:  The issue is not revenue.  It‘s spending.  And we got to get spending under control.

WASSERMAN SCHULTZ:  We need to get out tax cut policy focused on the middle class.

(CROSSTALK)

MCCAUL:  We need to cut spending is what we need to do.

(CROSSTALK)

WASSERMAN SCHULTZ:  ... not the wealthiest Americans.

(CROSSTALK)

MATTHEWS:  Congressman, what‘s the biggest thing we should cut?

(CROSSTALK)

MATTHEWS:  Congressman, what‘s the biggest program we should eliminate, federal program we should eliminate? 

MCCAUL:  I think we should cancel all unspent stimulus, all unspent... 

(CROSSTALK)

MATTHEWS:  No, what programs?  What program that the federal government spends money on should we get...

(CROSSTALK)

MATTHEWS:  Name the program. 

(CROSSTALK)

MCCAUL:  Freeze discretionary spending. 

(CROSSTALK)

MATTHEWS:  Give me the name of the agency.

WASSERMAN SCHULTZ:  Ask him whether he wants to privatize Social Security.

(CROSSTALK)

MCCAUL:  If I can talk, “The Wall Street Journal” had a very good idea.  And that is tie spending to the inflation rate minus 1 percent.  If we did that, we could balance the budget in less than 10 years.  And I think that‘s a really good...

(CROSSTALK)

WASSERMAN SCHULTZ:  What are you going to do to Social Security?  What are you going to do to Medicare? 

(CROSSTALK)

MCCAUL:  Everything is on the table.

(CROSSTALK)

MATTHEWS:  OK, thank you, you guys.

(CROSSTALK)

MATTHEWS:  Thank you, Congressman McCaul.

Thank you, Congresswoman Wasserman Schultz.

WASSERMAN SCHULTZ:  Thank you. 

MATTHEWS:  We know the fight over taxes and where it stands.

Up next:  Bill Maher—by the way, Republicans will never tell you they eliminate any major federal program.  And until you—unless you do that, all this is talk.

You have got to get rid of what the president and the government is promising to do for people at some point, or else it never adds up to how much you spend and how much you bring in. 

Up next:  Bill Maher releases another old videotape of Christine O‘Donnell.  This is really the Chinese water torture for this candidate.  And it‘s pretty clear she doesn‘t believe in evolution now.

I don‘t know where she took biology.  Check out the “Sideshow.”  It‘s coming up.

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL.  Time for the “Sideshow.” 

First: a blast from the past.  Bill Maher on Friday unveiled yet another clip of Delaware Senate candidate Christine O‘Donnell, this one from his October 1998 show.  Watch as O‘Donnell casts doubt—I would say that—on the science behind evolution. 

(BEGIN VIDEO CLIP, “POLITICALLY INCORRECT”)

CHRISTINE O‘DONNELL, COMMENTATOR:  You know what?  Evolution—evolution is a myth.  And even Darwin himself...

BILL MAHER, HOST:  Evolution is a myth? 

O‘DONNELL:  Yes.  you know what? 

(CROSSTALK)

MAHER:  Have you ever looked at a monkey? 

(CROSSTALK)

O‘DONNELL:  Well, then why aren‘t they—why aren‘t monkeys still evolving into humans? 

(CROSSTALK)

UNIDENTIFIED MALE:  It takes a long time.

(END VIDEO CLIP)

MATTHEWS:  Well, the problem with that, what she said, is self-evident.  Belief in the Bible is a familiar, even comforting part of our American life.

Refusal to accept science on the other hand and see the evidence of natural history that sits right there in front of us, that‘s something else. 

We studied biology in high school.  What did Ms. O‘Donnell study?  It is a fair question. 

Finally, Colbert‘s report.  On Friday, comedian Stephen Colbert was invited to testify before the House Immigration Subcommittee by Democratic Congresswoman—or Chairwoman in this case Zoe Lofgren of California.  Why did Congress, already a laughingstock to so many people, turn itself into a comedy club?  Here‘s what happened.

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, HOST, “THE COLBERT REPORT”:  This is America.  I don‘t want a tomato picked by a Mexican.  I want it picked by an American, then sliced by a Guatemalan, and served by a Venezuelan in a spa, where a Chilean gives me a Brazilian. 

(LAUGHTER)

COLBERT:  Because my great-grandfather did not travel across 4,000 miles of the Atlantic Ocean to see this county overrun by immigrants.  He did it because he killed a man back in Ireland. 

(LAUGHTER)

COLBERT:  That‘s the rumor.  I don‘t know if that‘s true.  I would like to have that stricken from the record. 

(END VIDEO CLIP)

MATTHEWS:  Well, House Democratic Leader Steny Hoyer wasn‘t laughing. 

Here he is on FOX News on Sunday. 

(BEGIN VIDEO CLIP)

REP. STENY HOYER (D-MD), MAJORITY LEADER:  I think his testimony was not appropriate.  Now, I think it was an embarrassment for Mr. Colbert more than the House. 

CHRIS WALLACE, HOST, “FOX NEWS SUNDAY”:  And he should not have been called?

HOYER:  Well, I don‘t know about whether he was called.  But what he had to say, I think was not the way it should have been said. 

(END VIDEO CLIP)

MATTHEWS:  Well, Steny should have gone further.  You want your tooth pulled, you go to a dentist.  You want your leg pulled, you invite Steve Colbert.  They got what they asked for, and it didn‘t help.

Up next: the investigation into what caused the BP oil disaster.  Why are Republicans running interference for BP and keeping a presidential commission from getting subpoena power?

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. ROBERT MENENDEZ (D), NEW JERSEY:  We need to know the truth.  And the commission needs the power to get the truth.  So, who are you protecting?  And what are we hiding here? 

(END VIDEO CLIP)

MATTHEWS:  Who are you protecting?

Welcome back to HARDBALL.  That was Senator Robert Menendez of New Jersey on the president‘s oil spill commission, which met today, and the fact that Republicans blocked it from having subpoena power.  The commission‘s mandate is to find out what happened, but how can it do that without subpoena power, the ability to call people in the oil industry and put them under oath? 

Here‘s what happened when Senator Jeanne Shaheen of New Jersey tried to do just that.  Let‘s listen.

(BEGIN VIDEO CLIP)

SEN. JEANNE SHAHEEN (D), NEW HAMPSHIRE:  Madam President, I ask unanimous consent that the Judiciary Committee be discharged of S3462, a bill to provide subpoena power to the national commission on the British Petroleum oil spill on the Gulf of Mexico, and that the Senate then proceed to its consideration. 

UNIDENTIFIED FEMALE:  Is there objection?

UNIDENTIFIED MALE:  On behalf of other members of the Republican Conference, I object. 

(END VIDEO CLIP)

MATTHEWS:  Wow. 

Joining me, Senator Byron Dorgan of North Dakota.

I don‘t understand.  I do understand.  These guys are in bed with the oil industry.  Why would you protect the oil industry from answering questions under oath and being subpoenaed to answer those questions, sir? 

SEN. BYRON DORGAN (D), NORTH DAKOTA:  Well, it‘s a charade. 

I mean, in the list of outrages, which is pretty long, this ranks way up there.  Senator Jim DeMint came to the floor twice, both occasions, said:  I object to giving this commission subpoena power. 

Now, think of this, Three Mile Island commission, subpoena power.  The terrorist crisis, the financial crisis commissions, both of them had subpoena power.  And now the BP oil spill, we‘re going to say, well, whatever voluntary cooperation we get, good for you?  I mean, you have got to have subpoena power in order to do this right. 

MATTHEWS:  We have been watching this, of course, with Admiral Allen being the incident commander, and watching this on MSNBC—and other networks, to be fair.  For four or five months, we have watched this oil spill story.

And the American people kept asking themselves, how did it happen?  My brother was an oil pipeline guy for years.  He said, bottom line, it‘s always a management decision if there‘s a problem, because if there is a technical problem, they would have discovered it happened before.  They would have set up a protocol, and they would have obeyed it. 

And the fact that they didn‘t in this case is something you‘ve got to look into and see who made that decision.  We haven‘t gotten to the truth without subpoena power.  We haven‘t gotten to the truth without putting people under oath. 

Why would any Republican senator think we can do that now without the subpoena power and without putting people in the chair and having them swear to almighty God they‘re going to tell the truth? 

DORGAN:  Yes, I don‘t understand it at all. 

And let me just make the point that, at a hearing that I was at, we had Halliburton, Transocean, BP, all of whom were involved on this rig and in this drill.  And, you know, what They were doing is pointing at each other. 

Well, listen, the only way you‘re going get to the real truth, find out exactly what happened is to be able to subpoena all of them and say, look, you have got to produce all of your books and records, so that we can inspect them and understand what happened a mile under the ocean out there. 

MATTHEWS:  A friend of mine who is Congress tells me you can tell if a member in a subcommittee during a markup or whatever is in the tank, because of the way they behave. 

Can you tell that DeMint or any of these other guys are in the tank? 

I want to be blunt about it.  Why else would they protect the oil industry except that they were paid to do it by campaign contributions?  Why would they care if the guy goes under oath?  You guys have to take an oath.  Why shouldn‘t a witness have to take one?

SEN. BYRON DORGAN (D), NORTH DAKOTA:  Chris, I don‘t—I don‘t know that I should go on television and suggest someone might be or might not be in the tank.  But I will suggest that those who believe there should be a commission without subpoena power are protecting something other than the American interest here, and that position is just dumb in my judgment.

MATTHEWS:  Thank you, Senator Byron Dorgan.  It‘s great to have you on.  Thank you.  You‘re an expert witness from the inside.

DORGAN:  Thanks a lot.

MATTHEWS:  Let me go right now to David Corn—because, David, I think you know what‘s going on here.  It‘s pretty transparent.

DAVID CORN, MOTHER JONES:  Oh, it is.  I mean, it was a little Republican loving for the BP in the middle of the summertime.  And what they did was they really—you know, by stopping the bill then, they‘ve created months now in which this idea of getting subpoena power of the commission hasn‘t come into play.  And now, it‘s attached to an energy bill which is going nowhere fast in the Senate, again, because of Republican obstructionism.

You have to wonder at some point, you know, whether the Republicans make a calculation that it looks just awful.  When they‘re apologizing to BP, as Congressman Barton did, whether they‘re complaining about Obama being too tough on BP, which Rand Paul and Sharron Angle have done, and then giving them sort of a “get out of committee hearing with subpoena” free card—I mean, it‘s staggering.

MATTHEWS:  Well, I‘m staggered by the media‘s inattention to this.  I got to tell you, I got a grip to the story this weekend, and I‘m going to keep on it because it seems that after months and months of covering this oil spill and understanding there was a human behavior management decision that led to it, it wasn‘t some act of God, they were drilling a hole down there and they are drilling it wrong and they were putting in sea water when they should have been putting in drilling mud and all kinds of other decisions which were probably very economical from a point of view of an oil company executive and management down the line, but not too economical in terms of our natural resource this beloved continent of ours.  They weren‘t looking out for our continent, were they?

CORN:  No.  And there‘s a lot else to look at, not just what went wrong on this particular rig, but looking at the whole regulatory apparatus and the revolving door and who‘s making decisions for years.  Not just, you know, in the last two, but during the Bush years and even the Clinton years before that.  I‘d like to see people brought in and say, OK, were you talking to safety expert, are you talking to lobbyists from these oil companies who you hope to get jobs with later on?

So, I mean, there‘s a lot that really needs to be looked at.  But if you look at, say, you know, the Republican “Pledge to America,” 42 pages long, not one word about the environment, about alternative energy, about corporate responsibility.  This is really just not in the Republican—not in a playbook.  It‘s not in their universe.

MATTHEWS:  OK.  I use the word “well” here.  It‘s a metaphor. 

They‘re “tanked”—it‘s an oil issue, they‘re tanked.

Thank you very much, David Corn, for joining us—someone from “Mother Jones”—it‘s great to have you.

Up next, the Tea Party racked up a string of victories over establishment Republican candidates all through this year.  And now, some Republicans in the middle are pushing back so much—well, so, which side‘s going to win this fight over the Republican Party?  The Tea Parties are winning right now.  Let‘s see if the game is going to change.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘ve shown you the shocking polls in New York State where Republican Carl Paladino is catching up to Democratic candidate Andrew Cuomo in the governor‘s race.  Today, Paladino got another boost from former Republican Congressman Rick Lazio pulled out as a third party candidate.  Paladino beat Lazio for the Republican nomination, but Lazio says he doesn‘t want to hurt the chance of his one-time rival.  It sounds like the right is gearing up for this when Democrats hoped Lazio would have siphoned off votes from Paladino and helped Cuomo.  This is going to be tough for Cuomo.

HARDBALL will be right back.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.

New York Mayor Michael Bloomberg and Republican strategist Mark McKinnon are pushing back on Tea Party activism.  In an effort to pull politics back to the middle, Bloomberg is throwing his weight behind national mainstream candidates who are willing to reach across the aisle.  And Mark McKinnon is backing the creation of a new group called “No Labels,” which is designed to promote bipartisanship.  Will their efforts strengthen or weaken the Republican Party?

J.C. Watts, the former Republican congressman from Oklahoma, and Brendan Steinhauser is director of campaigns for FreedomWorks, a conservative group headed by Dick Armey, that‘s organized many Tea Party events.

Let me go right now to J.C. Watts.

I haven‘t seen you, Congressman, in a while.  What‘s your view of this sort of open—they‘re going to be backing people I guess you‘d call the mainstream candidates.  I mean to say that McKinnon group is backing Harry Reid, Meg Whitman, Lincoln Chafee, Michael Bennet, Mark Kirk, and Joe Sestak, that‘s the Bloomberg group—it‘s McKinnon‘s No Labels group and Bloomberg groups.

J.C. WATTS ®, FMR. U.S. CONGRESSMAN:  Chris, I don‘t have any problem with that.  I think they are utilizing the American political system.  They are utilizing a process, trying to influence it the way that they would like to see it go.  I think the Tea Party folks are doing the same thing.

And, Chris, I think the Tea Party folks—we‘re putting them in too small of a box.  I don‘t think it‘s just ramped up or just ignited here in the last 18 to 20 months.  I think you probably would have to go up—or I can make a strong argument that you would have to go back to 1992 with Ross Perot, then 2004 with Howard Dean, although it was ignited on the left as opposed to the right.  And then you know, here about 18 -- 16 to 18 months ago, it ignited again.

And I don‘t even think it started then because of President Obama.  I think the last two and a half, three years of the Bush administration, I saw this around the county and I wrote about it for columns for sometime and saying that this was going to happen.  And I think the intensity is at a pitch, at a fever pitch level—

MATTHEWS:  Yes.

WATTS:  -- and it‘s going to be interesting for November.

MATTHEWS:  What do you make, Brendon, of the fact that they‘re starting to move from the center and backing the mainstream candidates against the Tea Party people?

BRENDON STEINHAUSER, FREEDOMWORKS:  Well, that list included Senator Bennett, I think.  I mean, those are the types of candidates that we‘ve already defeated.  We‘ve defeated them in the Republican primary and I think we‘ll defeat them in the general election.

MATTHEWS:  No.  No.  Michael Bennet.  Michael Bennett.

STEINHAUSER:  Oh, Michael Bennet.  Sorry.

MATTHEWS:  He‘s the Democratic candidate and the incumbent in Colorado.  Also, people, like Mark Kirk, who won the Republican nomination for the Senate in Illinois and Meg Whitman who won the nomination for governor in California.  I mean, these are all winners.  Lincoln Chafee is the only one running as an independent.  The rest are all people who‘ve won primaries.

My question to you is: are you worried that the center may hold here?

STEINHAUSER:  Well, I think we‘ve got the center.  I think that our message of fiscal responsibility is the center of American politics.  And I think that the polls show that.  That‘s why Charlie Crist will be beaten by Marco Rubio in Florida, for example.

MATTHEWS:  Wait a minute.  These candidates don‘t call themselves centrists.  Joe Miller is a conservative, if not a very conservative guy.  Sharron Angle is very, very conservative.  I think it‘s not fair to call them centrists.

STEINHAUSER:  I think that we are conservative as a movement.

MATTHEWS:  They‘re not centrist.

STEINHAUSER:  I think our message is centrist in the sense that it attracts conservatives, independent swing voters, even conservative Democrats.  And that‘s a pretty big winning coalition for November.  And that‘s what I think our message will be November.

MATTHEWS:  Well, I‘m sorry.  Let‘s get our terms straight.  Is Sharron Angle a conservative or a centrist?

STEINHAUSER:  I think Sharron Angle is a conservative that has a centrist message when she‘s talking about fiscal responsibility, unemployment in Nevada—

MATTHEWS:  Oh, yes.  You go with that stuff.  But what about Second Amendment remedies?  If you don‘t like the way Congress voted, you should take firearms and use them against Congress if you don‘t like the way they voted?  She said that.  Is that a centrist position?

STEINHAUSER:  I don‘t think that position is centrist, but I think that our message—

(CROSSTALK)

MATTHEWS:  I hope not.

STEINHAUSER:  -- when you look at fiscal responsibility, when you look at limited government, when you‘re looking at types of messages that we have, we‘re knocking on doors, making phone calls.  This movement and the candidates that we‘re supporting, when they focus on those issues we‘re going to win in November.  And I think that‘s what‘s clear.

MATTHEWS:  Yes.  Well, you‘re trying to get them to be sound centrists but when they‘re not.

J.C. Watts, Congressman, you are a centrist, I guess.  You‘re a mainstream Republican.  Do you honestly think that there‘s not a difference between you and the people on the far right who are running this election?  Joe Miller up in Alaska who knocked off Senator Murkowski, or Sharron Angle who knocked off Sue Lowden in Nevada?  Or Mike Castle who was defeated by this O‘Donnell—Christine O‘Donnell?  These people are from the right and they‘ve knocked off people from the center right.

WATTS:  Chris, I am an Eufaula, Oklahoma, conservative that rural America, you know, community of 2, 500 people that thought more about using common sense to solve problems.  And I think we‘re getting—in politics today, I heard a pastor friend of mine say once, he said, you know, everybody‘s concerned about the right wing and the left wing, and the poor bird is dying.

And I think, you know, this movement that you see, Chris, I really think it‘s kind of—it‘s benefiting the right, but I think there‘s Republicans, Democrats, moderates, conservatives out there who have rallied around, I think, you know, excessive spending, you know, high taxes, some constitutional issues that they‘re concerned about.  And again, this didn‘t just happen in—

MATTHEWS:  OK, look—

WATTS:  -- pop up in the last 16 to 18 months.

MATTHEWS:  I want—I want to go over to Brendon on this, because, clearly, there‘s been rebellions against the federal government since George Washington had to put down the Whiskey Rebellion.  I mean, I had the Whiskey Rebellion flag in my office.  I know all about the history.

Where was all this activity in the streets or in the Washington Mall under George W.?  I didn‘t see crowds of Glenn Beck types waving flags and showing up in the summer raising hell under Bush.  I saw a president who never vetoed a single spending bill and a Congress obsessed with earmarks and lots of pork, and you guys didn‘t whimper.

STEINHAUSER:  That‘s not true at all.  FreedomWorks actually fought very hard against the bailouts under Bush, the spending.  And a lot of this people—

MATTHEWS:  Where did you do this?  Where was this done and what was the reaction?  How come it was invisible?

STEINHAUSER:  Sure.

MATTHEWS:  I had to go over—I like Dick Armey.  I went over to the headquarters of your organization to interview him.  But there wasn‘t any rallies on the Mall.

STEINHAUSER:  Well, we weren‘t able to do that yet.  We were able to

--

      

MATTHEWS:  Why not?

STEINHAUSER:  -- encourage opposition.  We had to build the movement.  We had to use the technology to organize this opposition that started under President Bush.  By the time we did that, we got our feet under us in the fall of 2008, we had a petition where 80,000 people opposed the Wall Street bailout and we pounded Republicans on that.  And it wasn‘t until we were able to get our feet under us to organize so that we can do Tea Parties in 2009.

MATTHEWS:  Who did the Wall Street bailout, Republican or Democrat?

STEINHAUSER:  Well, it was—it was the Hank Paulson and George Bush wing of the Republican Party—the very wing that‘s losing right now, by the way.

MATTHEWS:  Well, that‘s the fight that‘s on right now.

Mr. Watts, we have to go.  I‘m sorry, sir.  Please come back.

WATTS:  OK.

MATTHEWS:  Congressman J.C. Watts of Oklahoma, he mentioned his home state again and again.  Brendon Steinhauser, thank you for joining us.

When we return, let me finish with some thoughts about—I think you‘re going to like what I have to say here, Brendon, about public schools.  We invented them in this country.  But now, we got to fix ‘em.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Let me finish tonight with how America became a great country this past century.

We did it because we took everyone at a young age and educated them.  We created something called public school.  They had nothing like it in the country so many of our families came from, had nothing like it here before.  It was the basis of a true democracy, where everyone gets a chance to learn, to grow, to become a full share in the accumulative knowledge of mankind.

Well, we have a problem today.  Washington is sitting where the Congress meets where the federal government is set, now produces young people who are not able to compete in our society.  The numbers of those below level in math, just to take an example, is 92 percent in eighth grade.  Just 8 percent of our eighth graders are up to the national level.

Why do we put up with this?  Why do teachers get passing grades for their teaching when their students get failing grades in what they‘re expected to have been taught?  That‘s the question.

The Democrats protect the unions, the unions protect the teachers.  Republicans hate standards.  They hate having anything done on a national basis.

So, the localities that are lousy in educating children get to keep their lousiness secret, they think.  But everyone knows where the slow parts of the county are.  And who protects the students?

I don‘t want to make fun of hardworking committed public school teachers.  Some of them should be canonized.  And I understand the desire of people to make local decisions locally.

But think of your kid—your kid.  Would you like him or her condemned to a life of mediocre education, to a life afterwards of low ability to compete, low achievement, low hope?

Once upon a time, people would write home to Europe, with stories of the wonders of this country, how every young person could go free of charge to a first rate local school right in their neighborhood.  What a wonder.  It‘s what made us great.  What a country.  And we can have it again.

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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