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updated 11/5/2010 10:35:47 AM ET 2010-11-05T14:35:47

Guests: Judd Gregg, Claire McCaskill, Mark Penn, Jim Moran, Michael Bennet, Major Garrett, Michael Crowley

               

CHRIS MATTHEWS, HOST:  Good grief!

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in Washington, back in Washington. 

Leading off tonight: McConnell doubles down.  Well, so much for

cooperation.  Senate Republican leader Mitch McConnell is making it clear -

again—he has one unambiguous goal, to defeat President Obama in 2012. 

Suppose President Obama, just to think about for a minute, had said, My number one goal is to defeat Mitch McConnell in his next reelection.  That would be really positive, wouldn‘t it?  Nice way to start a conversation. 

Anyway, that includes either trying to repeal or deny President Obama‘s funding for the new health care law, and let‘s face it, the GOP strategy right now is “Just say no.”  It worked brilliantly in the election this week.  Why stop now?  Of course, that would be a cynical view.

Plus, the question people in Washington are asking is, can Obama pull a Clinton?  In other words, from his point of view, can he turn his Tuesday shellacking, as he put it, into a political advantage, the way that Bill Clinton did after losing all those House seats in 1994.  Well, as John Heilemann said yesterday on HARDBALL, we‘ve all forgotten how hard it was for Clinton to do that, to be a Clinton, to pull a Clinton.  It may be harder this time for President Obama.

Also, one Democrat who was left dead a few months ago but then managed to pick himself up on Tuesday was appointed senator Michael Bennet of Colorado.  What did he have, what did he do, what did he say that other Democrats weren‘t able to do?  And how did he pull that big win in hostile country out there in Colorado?

And bring on the Republican circular firing squad.  Prominent Republicans are now pointing fingers at Tea Partiers for backing conservatives like the man Michael Bennet beat out there in Colorado, Ken Buck, and costing the GOP a Senate takeover.  Well, the Tea Partiers are points their fingers right back, as you might expect, at the Republican establishment.  So the knives are out.

Finally, “Let Me Finish” tonight with why the heart of this country, the industrial center of American, turned against the Democrats on Tuesday and what the president and the party have to do to win it back.

We begin with Mitch McConnell doubling down against President Obama.  Senator Judd Gregg‘s a Republican from New Hampshire.  Senator Claire McCaskill is a Democrat from Missouri.

I have to start with the Democrat on this question.  I‘ll get to the Republican, Mr. Judd Gregg.  Let me ask you this, Senator—I want you to watch this statement from Mitch McConnell.  It was at the Heritage Foundation and he made it today.  It‘s something he‘s been saying.  I wonder if you‘re troubled by it.  Let‘s listen.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER:  Some have said it was indelicate of me to suggest our top political priority over the next two years should be to deny President Obama a second term.  If our primary legislative goals are to repeal and replace the health spending bill, to end the bail-outs, cut spending and shrink the size and scope of government, the only way to do all of those things is to put someone in the White House who won‘t veto any of these things.

(END VIDEO CLIP)

MATTHEWS:  You know, Senator, one of the big car companies says that, Quality‘s our job number one, I think it is.  His number one job is to defeat his opponent.  Is that—is that a beginning for a positive conversation on how to fix this country‘s economic problem?

SEN. CLAIRE MCCASKILL (D), MISSOURI:  Well, obviously not.  It would be great if we could quit worrying about elections for 10 minutes and get to of those some serious policy questions.  And the problem is just saying no and not being willing to work with us and try to figure out how we extend some of these tax cuts to the hardest-working people in America means that the tax cuts won‘t remain in place.

So hopefully, the compromises will not be out of the question.  Hopefully, we‘ll be able to sit down and work together.  I know we‘re going to try very hard to work on serious policy and helping this economy prosper, as opposed to just trying to do political posturing over the next few months.

MATTHEWS:  Well, let me ask, Senator Gregg, is there a way for a fiscally conservative guy like Mitch McConnell—the Tea Partiers are now part of the equation to some extent—and a progressive president like Obama to cut a deal that would reduce the debt in a long run, create some kind of economic advantage to business especially in the short run?  Can you put it all together into one equation?

SEN. JUDD GREGG ®, NEW HAMPSHIRE:  Yes.  Yes, I think there is.

MATTHEWS:  Is there a deal there?

GREGG:  Absolutely.  I think there are a variety of places where that could be accomplished.  Number one, in energy.  We shift $300 billion a year overseas to buy oil and other forms of energy from people who don‘t like us.  We should take aggressive action to try to stop that and keep that money here, keep it invested here.

We should have major tax reform.  Ron Wyden, who‘s a pretty progressive guy and a liberal—I suspect he‘s been on your show—and myself have put together a major overhaul of the tax laws along the lines of what President Reagan and Senator Bradley did in 1986 --

MATTHEWS:  Yes.

GREGG:  -- which would bring all rates down, create a huge incentive.  I think that could be accomplished.  I think there‘s areas for cooperation on immigration reform so that we start bringing the best and brightest people from around the world to the United States to work instead of having them be job creators overseas.  That creates revenue because it creates economic activity.

So I think there are a lot of places where you can reach consensus here and where we can move this country forward in a positive way.  And we do have to address the issues the American people spoke out on rather definitively on Tuesday about, which is stop the spending, get the deficit under control and start to move this debt down so we pass down a more prosperous nation on to our children and not a nation that‘s totally riddled with the debt.

MATTHEWS:  Let‘s take a look at the Republican Senate leader.  Here‘s how he‘s taking about it.  Again, a bit more from him at the conservative Heritage Foundation today.  Let‘s listen.

(BEGIN VIDEO CLIP)

MCCONNELL:  We will stop the liberal onslaught.  We will make the case for repeal of the health spending bill even as we vote to eliminate its worst parts.  We will work hard to ensure Democrats don‘t raise taxes on anybody.  We will scrutinize Democrat legislation and force them to defend it.  None of this is to say that Republicans have given up cooperating with the president.  But as I see it, the White House has a choice.  They can change course, or they can double down on a vision of government that the American people have roundly rejected.  If they choose the former, they‘ll find a partner in Republicans.  If they don‘t, we‘ll have more disagreements ahead.

(END VIDEO CLIP)

MATTHEWS:  You know, Senator McCaskill, years ago—it seems like forever ago, 30-something years ago—I worked for Tip O‘Neill when he was Speaker and they—coming out of a very difficult congressional mid-term in 1982, President Reagan met with Tip O‘Neill on the back lawn, I hear, of the White House.  and they basically agreed to disagree about how to do it, but they agreed basically on a compromise on how to save Social Security for 30 or 40 years.  And it involved some tax increases.  It involved some changes in funding and benefit levels and standards.

But this time around, it seems to me that the Republicans do have an advantage.  They have a right to sort of push their version of it and the other side has its right to sign on as junior partners.  If you do the same exact thing now after these elections that they did back then, Tip O‘Neill and Ronald Reagan, it seems to me you could cut a deal on long-term entitlement reform, with perhaps the advantage to the Republicans because they will get more benefit cuts and much less of a revenue adjustment because, basically, the Republicans have the high cards right now.

Is that your view of it, or do the Democrats have to get this 50/50 at this point?  I mean, where do you cut the cards?  Where do you agree now?  Who has a right to say, A little more my version than yours this time?

MCCASKILL:  Well, I think that there are a number of us, especially a lot of the moderates in the Democratic Party, that are willing to sit down and try to find that common ground.  And I think—I‘m open to compromise on a lot of different subjects.  What I‘m worried about—I mean, Judd‘s going home.  I hate it that he‘s going home because Judd is somebody who was willing to sit down and talk with common sense.  He and Kent Conrad have worked very closely together in a bipartisan way on the budget.

But what I worry about is that Mitch McConnell has had political success with secret holds, with “Just say no,” with blocking everything, and I‘m worried that that pace of success through obstructionism has taken root and we‘re not going to get any compromise or cooperation.  And that will be a problem.

MATTHEWS:  Do you think the bargaining position of your party, Senator Gregg, will be, yes, we can fix entitlements.  We can fix Social Security.  We can fix other programs that are going to perhaps break us over a long time, as people my age start to retire.  But we‘re not going to touch taxes.  If you go that route, not going to touch taxes, not going to touch taxation of benefits or anything that says tax or even looks like it, will there ever be a deal, if that‘s the party‘s position?

GREGG:  Well, you know, you can‘t fix Social Security or Medicare or even Medicaid, in my opinion, unless you have a consensus bipartisan position.  These are programs that are so huge and affect so many people that the American people won‘t accept as fair fixes that they see as being one party.  That was the problem with the health care bill.  The American people take a look at this and they said, This thing was just rammed through.  It was misdirected in lots of ways, including growing the government by such a huge amount.  And we don‘t trust it because we don‘t believe that it‘s going to work and we don‘t think it was fair.  I think we should have—

MATTHEWS:  Well, wait a minute—

GREGG:  -- learned something from that.

(CROSSTALK)

GREGG:  -- learn from that that the best way to approach this type of an issue is to put everybody in the room and see if you can‘t resolve it.  Now, Social Security is an extraordinarily fixable problem.  I mean, there are only four or five moving parts to Social Security, and we don‘t have to affect anybody who‘s on the system today to put it into a glide path to solvency over the long term, and we need to do that.

MATTHEWS:  OK.

GREGG:  And the simple fact is it‘s going to have to have both parties working on it.

MATTHEWS:  Well, the thing is about health care—I don‘t know where it broke down, but I was watching it, as you were as a member of Senate, and I was watching it from here, and Senator McCaskill was certainly involved.  And I was looking at what happened.  You had a lot of Republicans like Grassley and Orrin Hatch, and you had Enzi from Wyoming.  They were all aboard, discussing the bill in the Finance Committee.  We were all waiting for that.

GREGG:  I was in that room, actually.

MATTHEWS:  Right.  And the chairman of that committee is no lefty and yet—and he was trying to hold the horses so that the Republicans could get aboard the boat—the wagon, if you will, and everybody was sort of talking together.  Then all of a sudden, the Tea Partiers showed up.  Grassley was gone.  Orrin Hatch saw that Bennett was gone, or about to be gone, so he was gone.  I don‘t know what got Enzi to run scared.  I thought he was going to—he‘s a CPA.  I thought he was going to watch it and make the numbers better.  So your party fled the scene.

GREGG:  Oh, I—I—

MATTHEWS:  It wasn‘t like the—what happened to the—what happened in that committee?

GREGG:  Chris, I don‘t see a lot of use in us regurgitating that, but I would disagree 180 degrees from your assessment as to why we weren‘t, in the end, in the room.  But let‘s talk about going forward because that‘s what we really have to deal with.  We‘re facing—

MATTHEWS:  OK, I just don‘t want to have to—

GREGG:  -- a deficit and a debt—

MATTHEWS:  -- start with the idea that—

GREGG:  -- that‘s going to break this country.

MATTHEWS:  OK, let‘s go forward here.  Will the debt commission that comes out December 1st give enough cover to, A, the Tea Partiers, B, Democrats, C, Republicans who want to get reelected again next time—will it give them enough cover so you get 218 in the House and 51 in the Senate, or 60 or whatever it takes now?  Will it—you have enough—will it give you enough cover—you first, Senator Gregg.  Will it give you enough cover, members of the Congress, to vote for it if you have the president‘s commission saying, This is the right thing to do?

GREGG:  It should, if we can reach an agreement.  You got to remember, the people on this commission come from a very diverse group.  You got Tom Coburn, you got myself, and then you‘ve got folks on the other—

MATTHEWS:  Stern.

GREGG:  -- end of the spectrum.  So you got a lot of people in this room who—if we come to agreement, my view is we should have an up or down vote on that without amendments.  And it‘s going to be bipartisan and it‘s going to—hopefully—it‘s not going to fix the whole problem.  It won‘t be a global fix, but at least say to the American people and the world, for that matter, that America‘s serious about fixing its debt and its deficit problems.  And it should be enough cover for everybody to take comfort with, if that‘s what they want to call it.  But in any event, it should be an effective action which actually gets us down the road towards addressing our fundamental problem in this nation, which is our deficit and our debt.

MATTHEWS:  Senator McCaskill, does it give enough cover to people running for reelection?

MCCASKILL:  The make-up of that—

MATTHEWS:  To go for a bipartisan presidential commission.

MCCASKILL:  Absolutely.  The make-up of that commission, if they reach an agreement, we should all fall on our knees and thank God because you do have from one end to the other.  And if they reach an agreement, then the American people are going to be the benefit of some people putting aside political advantage for the good and future of this nation.  And I‘m hoping that Judd Gregg uses his very best smile and persuasive ability to get his fellow Republicans, along with the Democrats on that commission, to come to a conclusion and a compromise that allows us to do something about long-term entitlement debt in this country.

MATTHEWS:  Well, maybe the best thing—

(CROSSTALK)

MATTHEWS:  Can you vote on it this year?  Can we vote on it this year instead of waiting until next year and more politics, Senator Gregg?

GREGG:  We should.  We absolutely should.  That was the understanding. 

That was the commitment.

MCCASKILL:  Right.

GREGG:  We should vote on it this year.  Now, the problem, of course, is going to be the House.  We never got a commitment out of Speaker Pelosi to vote on it this year.  We did get a commitment out of Majority Leader Reid that there‘d be an up or down vote without amendments in the Senate.  The House, of course, is going through this huge transition, change in parties.  It‘s going to—that just physically is a hugely time-consuming event.  But the best thing to do, if we get an agreement—now, I‘m not representing we‘re going to get an agreement, but certainly, everybody on this commission‘s working hard—

MATTHEWS:  OK—

GREGG:  -- and they‘re sincere, but—

(CROSSTALK)

MATTHEWS:  It could be the biggest thing in 10 years.  Thank you so much, Senator Judd Gregg.

GREGG:  Thank you.

MATTHEWS:  And thank you, Senator Claire McCaskill.

MCCASKILL:  Thank you.

MATTHEWS:  Coming up: President Obama‘s been talking about President Clinton‘s big mid-term losses back in 1994.  There he is yesterday.  Well, Clinton rebounded and came back strong, got reelected and was a very successful president, except for one little problem near the end.  But certainly, history looks very kindly on President Clinton, after all.  Can President Obama achieve the same historic mark?  We‘ll see.

You‘re watching HARDBALL, only on—well, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Well, we told you yesterday how well Republicans did winning governorships across the country.  They also did very well with state legislatures, and those victories could translate down the road into big Republican gains for years to come.

Get this.  Republicans will now be able to unilaterally draw the maps in 190 congressional districts.  That‘s 190 seats they could conceivably redistrict favorably to Republicans.  Democrats will only be able to do that alone in 70 districts at the most.  A lot of power from redistricting down the road.  Elections have consequences.

HARDBALL back after this.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I think it‘s clear that the voters sent a message, which is they want us to focus on the economy and jobs and moving this country forward.  They‘re concerned with making sure that taxpayer money is not wasted.  And they want a change of tone here in Washington.

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL. 

That was President Obama after meeting with his cabinet earlier today.  The president tried to create a positive storyline yesterday when he referenced Bill Clinton‘s own experience getting beat in those mid-terms in ‘94, then coming back strong.  But can he draw upon those lessons learned by Clinton?  Can he generate a backlash against Republicans and retake the high ground?

U.S. Democratic Congressman Jim Moran of Virginia vigorously supported the President Obama program all the way, including health care and the stimulus bill and Wall Street regulation, the whole works, and he got reelected with it.  And Mark Penn advised Bill Clinton in the wake of his party‘s devastating mid-term election.  So we got two great experts here.

I want you to go back (INAUDIBLE) You must be thinking what it was like to face a shell-shocked President Clinton after ‘94, after losing 52 seats, and coming to him with a—he did look around.  He did look to you.  He looked to some other people.  What was that like, and what value does it have today, that recognition—the president looks like he‘s been hit hard.

MARK PENN, DEMOCRATIC POLLSTER:  Well, I don‘t think that‘s really—really hit President Clinton (SIC) for some time.  So to look at him yesterday I don‘t think is right.  He‘s going to have to sort it out, as President Clinton did.  President Clinton was determined to move his administration back to the center, retake the White House, where he felt that he was isolated, change virtually anything that was necessary to move the country forward and show that he was the kind of president that people elected him for.  And that‘s what happened.  He improved the economy.  He balanced the budget.  He did Welfare reform.  By the end, everyone said the election was easy.

MATTHEWS:  How would he have been different if he had gotten a good return in ‘94, if he hadn‘t been hit hard?  Would he have been a different president, a better president, a worse president?

PENN:  Well, I don‘t think he would have retooled the White House.  I don‘t think he would have retooled the policies.  I think he would have then gotten an incredible shock—

MATTHEWS:  Yes.

PENN:  -- two years later.  Look, the truth of the matter is in this election, President Obama saw the truck coming for months and months here.  So why didn‘t they move out of the way of the truck that was coming?  Why didn‘t they take taxes off the table?  Why didn‘t they do something about the deficit?  Why don‘t they focus on Midwestern jobs?  That could have been done.  This was not a surprise.  For Bill Clinton, it was a surprise.

MATTHEWS:  I‘m going to talk tonight about Midwestern jobs. 

Congressman Moran, you‘re a progressive, moderate progressive, I guess.  And do you think that your part of the party would be happy if the president said, I‘m not going to fight like hell against tax cuts for the very rich, for example? 

REP. JIM MORAN (D), VIRGINIA:  Of course not.  Of course not, because we can‘t afford it.  Actually, truth be told—

MATTHEWS:  But you will fight—you will fight the good fight again, right? 

MORAN:  Yes.  I will support President Obama.

MATTHEWS:  OK.  He sounds like he‘s ready to compromise.  He sounds—he‘s saying what he really wants are those middle-class tax cuts, and he‘s willing to negotiate from there.  He isn‘t obsessed with denying people at the top their tax cuts.

MORAN:  You know, but we don‘t give them up.  What he could do is say, look, I‘m going to extend them for another two years, all of them, but then this is what we‘re going to do.  We‘re going to tax millionaires at a higher rate than people making $250,000.  We‘re going to gradually gain some revenue back. 

We‘re at 15 percent of GDP.  Just to run the government, it takes 20.5 percent.  So, we have got to get some revenue back.  But I think he also needs to propose more spending cuts.  And there are areas that we could do that without compromising our principles. 

MATTHEWS:  You say a smart move, just to look a couple weeks, if he had have said what Congressman Moran would not have agreed to, as a member of Congress from Virginia, which is, we should just give up on fighting this continuation of the Bush tax cuts for the very rich.  You said, you should have thrown in the towel on that, you‘re saying?

PENN:  He should have said, one-year extension of the tax cuts and then come back with a massive tax reform proposal. 

MATTHEWS:  I see, sort of like what Congressman Moran is saying, right?

PENN:  Redo how taxes work, take a look at the capital vs. labor taxes, how it works with wages.  You know, take a look, put everything on the table, simplify this, but agree to a one-year extension to get it out of the election.  That was a no-brainer.

MATTHEWS:  OK.  How does he take health care and make it a better sales pitch?  He‘s got health care.  It‘s done, basically.  It can be refined.  The Republicans were complaining about it being paperwork-onerous.  And everybody‘s afraid of that.  Obviously, nobody wants to have to hire an accountant for everything. 

But how could he have made health care a better prize politically for the Democrats?

PENN:  Well, he should have said, look, I know that we have to continue to refine it.  I‘m going to appoint a panel of experts.

He should have done on health care what he did on the deficit and said that report‘s going to come back, how to do health care phase two, how to lower costs, how to focus on quality, how to get in all the things that people think are missing from health care.

But he didn‘t budge.  He sat on his hands saying the bill was just fine.

MATTHEWS:  So he played defense completely?

PENN:  Well, 65 percent of the people voting opposed the bill. 

MATTHEWS:  OK.  Mark, it sounds like you‘re ready to say something. 

And I want to see what you say, Congressman. 

When he lost 52 seats, Bill Clinton, one of the—probably the greatest politician of our time, I would argue, he said, George Stephanopoulos, you‘re a great guy.  I‘m not listening to you for a while.  You know, Paul Begala, go back to Texas.  Carville, nice work—and brought in Dick Morris.  He brought in you. 

He basically said, I get a new team here, because this last team is sitting on their laurels.  They‘re still winning the election from last time.  I got to win the next election. 

Would you say he should be that tough this with his team, shake it up? 

PENN:  Oh, I don‘t—look, I can‘t speak—

(CROSSTALK)

MATTHEWS:  Well, don‘t chicken out here.  That‘s what you‘re saying.

PENN:  Yes, he‘s going to have to take a—look, he‘s going to have to take a look at it.  But his team has proved—

(CROSSTALK)

MATTHEWS:  What, did you just swallow those words?  He‘s going to have to take a look at it. 

Are you saying he needs a Cabinet shuffle?  He‘s got no Cabinet people speaking out for him.  This is the quietest Cabinet I have ever seen in my life.  There‘s nobody out there pitching his—are they the Hatch Act all of a sudden?  Are they not involved in politics? 

PENN:  He‘s going to have the strength in his economic team.  That‘s clear. 

(CROSSTALK)

MATTHEWS:  Geithner can‘t sell. 

PENN:  Yes. 

(CROSSTALK)

MATTHEWS:  Christina Romer says it would go down to 8 percent.  She killed him with that. 

(CROSSTALK)

PENN:  He‘s got to pull in some more economic firepower.  The president himself said it‘s about the economy.  If he can‘t create jobs, he won‘t get any votes. 

MATTHEWS:  Who in this Cabinet would you put out to speak for the president, get him—and carry Pennsylvania for Sestak?  Who could have gone out?  All he had was the vice president. 

PENN:  Look—

MATTHEWS:  He didn‘t have anybody.  Bill Clinton.

(CROSSTALK)

PENN:  Cabinets don‘t really sell things.  The president himself has to reconnect with the people.  Remember, President Clinton reconnected through Oklahoma. 

MATTHEWS:  Yes, because of the bombing down there.

PENN:  And the president right now, he seems removed.  And it wasn‘t until that speech that he re-clicked with the American public.  Obama needs a similar—

(CROSSTALK)

MATTHEWS:  You think words will work for President Obama at this point? 

PENN:  No.  He‘s got to get some results.  But words will work, I think, if he finds that right moment. 

(CROSSTALK)

MATTHEWS:  Congressman Moran, it comes down to—it seems to me, the bottom line is, the country gets mad because of unemployment.  Who wouldn‘t be mad?  They look around for who to blame.  The president of the United States is sitting there.  Who is sitting there?  The Democratic Congress.  Blame them.

That explains three-quarters of what happened this week, right? 

MORAN:  Yes.   

MATTHEWS:  So, what are we going to do about the economy between now and 2012 that‘s going to change it?  Isn‘t that the objective thing that has to be changed, not the PR, speeches?     

MORAN:  Sure. 

(CROSSTALK)

MORAN:  And I can‘t imagine what the Republicans are going to be able to do of any substance to improve the economy. 

The problem is that, to be competitive, it has to be a knowledge-based economy, as you know, Chris.  Do you know, over the last decade, 39 nations gained ground against the United States in terms of economic competitiveness? 

You know where we place in terms of the quality of K-12 public education in math and science?  Forty-eighth.  And it gets worse every single year.

MATTHEWS:  Is that why we aren‘t selling in the world?

MORAN:  Yes, of course it is.  We‘re not as economically competitive. 

Our school system is 12th in the world. 

MATTHEWS:  So, can he win with—can the Democrats win with an education push? 

PENN:  I think he‘s got a great plan there.  Why isn‘t the president out on innovation, education, competitiveness, and open markets?  He needs a comprehensive economic strategy, not just stimulus.

MATTHEWS:  Are you in the door? 

PENN:  I‘m not in the door. 

(LAUGHTER)

MATTHEWS:  OK.  Thank you, guys.

(CROSSTALK)

MATTHEWS:  Thank you.  We got to go. 

Congressman Jim Moran, please come back again and again. 

Mark Penn, new member of our team here, as far as I‘m concerned. 

Up next:  Meg Whitman spent 140 million bucks of her own money, only to lose by—catch this -- 13 points to good old Jerry Brown in the California race.  Wait until you hear how many dollars she spent per vote.  The “Sideshow”‘s coming up next. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

First tonight: the face of defeat. 

Newspaper editors around the country picked the same exact image for this morning‘s lead photo, President Obama at yesterday‘s post-election news conference acknowledging that he had gotten beat and beaten badly.  It was, after all, the worst—after all, the worst drubbing for any party since 1948.

As a leader accused of being professorial and detached, President Obama showed yesterday, for the first time in recent memory, that he felt it. 

Next:  Meet the freshmen.  Republican Ben Quayle, son of the former infamous Vice President Dan Quayle, came out with perhaps the most laughable and hyperbolic campaign ad of 2010.  Let‘s remember it now.  Here it is. 

(BEGIN VIDEO CLIP, AD)

BEN QUAYLE ®, ARIZONA CONGRESSMAN-ELECT:  -- is the worst president in history.  Somebody has to go to Washington and knock the hell out of the place. 

(END VIDEO CLIP)

MATTHEWS:  God.  Is he under hypnosis?

Anyway, Quayle now gets his chance.  He won his Arizona House race by 12 points Tuesday night. 

Anyway, also riding the crazy train to Washington, Republican Renee Ellmers of North Carolina.  Amid the emotional and intense debate over that Islamic center near Ground Zero, Ellmers came out with this wonderful ad. 

(BEGIN VIDEO CLIP, AD)

NARRATOR:  After the Muslims conquered Jerusalem and Cordoba and Constantinople, they built victory mosques.  And now they want to build a mosque by Ground Zero. 

RENEE ELLMERS ®, NORTH CAROLINA CONGRESSWOMAN-ELECT:  The terrorists haven‘t won.  And we should tell them in plain English, no, there will never be a mosque at Ground Zero. 

(END VIDEO CLIP)

MATTHEWS:  Oh, my God. 

Anyway, Ellmers narrowly won her House race on Tuesday.  By the way, the congressman she beat, seven-termer and an impressive guy, Bob Etheridge, has been involved in a street incident in June where a young activist began interrogating him on the street. 

Well, a clip of the incident became a YouTube sensation.  Republican officials at the time claimed that they had nothing to do with it.  Well, surprise, surprise.  Nearly five months afterwards, and after the election, and when it can do no harm, that whole scuffle, which had a damaging effect on the incumbent, it turns out the strategists this week have finally admitted that they had instigated the whole thing.  Nice work. 

Now for the tonight‘s “Big Number.” 

Those are called dirty tricks. 

Election Day was a bad night for well-known self-financers in this election, people like Linda McMahon and Carly Fiorina and of course billionaire Meg Whitman.  Jerry Brown‘s campaign spent about $6 a vote for all the votes he got.  How much did Whitman spend to get each vote she got?  According to Politico, 47 bucks per vote.  And almost all that is her own money.  And that‘s a big state.  That‘s a lot of 47 dollars.

Meg Whitman loses by 13 points, having spent $47 per vote—tonight‘s “Money can‘t buy you love” “Big Number.”

Up next:  Senator Michael Bennet, who beat the odds and won a tight race over the Tea Party crowd out in Colorado, he‘s coming here tonight in just a minute. 

You‘re watching HARDBALL—we‘re going to greet the winner—only on

MSNBC. 

(COMMERCIAL BREAK)

TRISH REGAN, CNBC CORRESPONDENT:  Hi, everyone.  I‘m Trish Regan with your CNBC “Market Wrap.”

A huge day for the markets.  You had them hitting two-year highs, with the Dow soaring 219 points, S&P surging 23, the Nasdaq climbing 37 points.  Investors reacting today to Wednesday‘s news of a bigger-than-expected bond buy from the Fed.  That‘s because Asia and Europe bought in big overnight.  And Ben Bernanke delivered a reassuring op-ed in this morning‘s “Washington Post.”

Banks getting an additional boost from a report that the Fed will allow ones with—quote—“strong capital level” to increase dividends.  October retail sales, they came in mostly better than expected.  Take a look at teen retailer Zumiez soaring 13 percent today, 123 percent this year. 

And there‘s a flurry of big-name earnings coming out after the bell.  My favorite economic indicator, you can call it the latte indicator, Starbucks beating estimate—estimates, that is, on a record fourth quarter and raising its full-year outlook.  CBS, Kraft Foods both beating on earnings, but missing on revenue. 

That‘s it from CNBC.  We‘re first in business worldwide—now back to

HARDBALL. 

(BEGIN VIDEO CLIP)

SEN. MICHAEL BENNET (D), COLORADO:  This election was about fixing Washington and rebuilding our politics, so that it‘s worthy of the aspirations that we all share. 

It was about and it is about making sure that our generation lives up to the promise of America, that we will leave more, not less, to those who come after us.  That‘s not a Democratic idea or a Republican idea.  That is an American idea. 

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL. 

That was, of course, Senator Michael Bennet of Colorado giving his victory speech out there.  Yesterday, NBC News declared Bennet the apparent winner after he beat Tea Party candidate Ken Buck in one of the closest races of this election.  Only about 16,000 votes separate the candidates at this point. 

Senator Michael Bennet joins us now. 

Congratulations, Senator.  It‘s great to have you on today. 

BENNET:  Thank you. 

(CROSSTALK)

BENNET:  Thanks, Chris.  It‘s great to be here. 

MATTHEWS:  Well, I‘m sure you‘re relaxed and you‘re thinking about what you‘re going to be able to do.  You seem to be—how would you describe your—you seem to—I know you‘re a public policy guy.  I know you‘re in education.  You came up through that route.  I know you come from a background of foreign service and public service. 

What is it that distinguishes you I guess from everybody in the business right now? 

BENNET:  I think one of the main—major things is that I have spent my entire life outside of politics, although the first thing one of my daughters said after I got elected was, well, I guess you‘re now a career politician. 

But I do think that—

(LAUGHTER)

BENNET:  -- having spent a lot of time in business and a lot of time working on the tough challenges of our public education system, it kind of gives you a perspective that says maybe we ought to take some time to actually diagnose the nature of the problems we‘re trying to solve, rather than leap to the policy conclusions, which, it seems to me, is what people do in Washington all too often. 

MATTHEWS:  Well, that gets to the heart of—we had Congressman Jim Moran, who I went to school with, and I know him pretty well.  And he was talking about—a few minutes ago about the fact, if we‘re going to be able to compete in the world and create jobs, we have got to be smarter than the people we‘re competing with.  And that means better-educated.  And we‘re slipping. 

Is that a too much a long-term solution for the average voter out there to say, yes, we‘re going to get our act together, and then some day we‘re going to be able to compete with the Japanese, the Indians, the Russians, and everybody else?  Or do you need something more of a quicker fix than that in terms of this unemployment rate? 

BENNET:  I think we need a quicker fix than that. 

And we obviously need to get credit flowing to small business.  But I think one of the things that people that watch Washington don‘t—don‘t quite understand is how much it is protecting incumbent economic interests, instead of lifting up the innovators in our economy, the people that are actually going to invent the new things in the 21st century. 

And we have got a lot of backward-looking policies.  You think about our tax code, our regulatory code, what doesn‘t spring to mind is the idea that we‘re innovating.  And we have been the most innovative economy in the world, but we need to do it again. 

And then we also need a system of education that‘s going to support our young people, so that they can actually compete with the rest of the world.  If you are a child living in poverty in this country right now, whether you‘re urban or rural—it doesn‘t matter—your chances of graduating with a four-year college degree are roughly nine in a hundred. 

I mean, that‘s a disgrace.  And there‘s no way our democracy or our economy is going to be able to be sustained as long as that‘s true. 

MATTHEWS:  Are we ever going to bring back our industrial base? 

Are we ever going to be a country where you can come out of high school—back in my generation, you could.  When I was coming out of high school, there were kids that actually chose to buy a car rather than get tuition money and they would go work at a factory and they could provide for a whole family.  This is the ‘60s.  You could do that.

Will you ever be able to do that again, be able to raise a family without an advanced degree of some kind?

BENNET:  I think it‘s going to be very challenging.  The last time we were creating jobs in this country, 5 million of them were for people with a four-year college degree and we lost jobs for folks who were high school dropouts, created none for people who were high school graduates.  And I think that‘s the story of 21st century economy, which is demanding more and more in the way of knowledge economy, and more and more in the way of innovation.

So, the answer then is, I think, not to give up.  It is to compete and it‘s to decide that we are actually going to start building things here in this country again.  You know, our single largest export from the United States are aircraft.  We export $35 billion a year and no one can compete with us on that.

This year, the Chinese are going to export $15 billion worth of solar panels.  They didn‘t seven years ago and we invented the technology in the 1970s.

So, I‘m open to anybody‘s ideas about how we change those outcomes.

MATTHEWS:  Wow.

BENNET:  But I don‘t think it‘s acceptable for us to sit here and say, we‘re going to allow other countries to outcompete us on clean energy or the other innovations we‘re going to see in the 21st century.

MATTHEWS:  You know, you‘re state of the art on all these issues.  You come from an education background.  You‘re well-educated  and then I look at these debates to go in politics that we cover every night.

Mitch McConnell—and I‘m not going to say he‘s stupid because he‘s not.  He‘s smart.  He is a politician fighting to keep his seat.  He‘s not the coolest guy in the world.  He‘s there because he‘s tough.

And it seems that people make it in politics today by saying, no, no, no to the other side until they brought them down.  The Republican strategy of the last two years has been to force Obama to the left so that he could only pass left wing or center-left legislation without the grace of a bipartisan support.

They won.  They made him into a lefty.  That‘s what they wanted him to do.

How do you teach them that they better not do that again?  How do you make Republicans, as an institution, not as voters, but as institution to say, you cannot win by screwing the other side and by making it into a worse cartoon of itself?

BENNET:  And right, I wish they hadn‘t done what they did.  But, politically, you‘re right.  I mean, they were successful with what they did.

You know, Chris, one of the things I learned when I was superintendent of schools is that when you‘re doing hard things—I‘m not talking about easy things, easy things are easy to do.  When you‘re doing hard things, the burden, whether it‘s fair or unfair, lies on the shoulders of the reformer, and if you do not work to establish a shared and understanding of the facts as possible, you will fail, you know?

MATTHEWS:  Yes.

BENNET:  In my context, closing schools, no one ever came up and pat me in the back and said, that‘s a great idea, until they understood we‘re wasting money on empty space instead of spending it on kids.  We didn‘t do a good enough job, I think, of laying out on health care for example, which is one of the reasons why people could just make stuff up, you know, death panels and all that other stuff.

MATTHEWS:  I‘m with you on that.  I think the president had to—did something historic but he didn‘t sell out as history.  He never explained why it was better to have it than not have it.  He let the guys in the back hall—in the back of the room heckle him instead of teaching the people in the room who came to learn.

Hey, it‘s great.  Congratulations.  You‘re really a role model for a lot of people running today.  You found a way to win positively and you have a policy perspective, which is so heartwarming.  Somebody people out there running for office who don‘t even read the newspaper.  Thank you very much, Senator Bennet, and you know who they are.

BENNET:  Thank you, Chris.

MATTHEWS:  Thank you very much for joining us.

BENNET:  Thank you.

MATTHEWS:  Up next, the fight within the Republican Party—speaking of which, some Republicans are blaming the Tea Party for costing them control of the Senate.  And, by the way, you can point to three or four races where they put up jokers who, the middle of the road voters as angry as they are couldn‘t vote for these clowns.  And we know their names.  I don‘t need to mention them, but I will.

We‘ll be right back with this newly powered insurgency, what it‘s going to do once it gets in there, the ones that did get in.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Well, the 2010 election is in the books.  It‘s never too soon to look ahead to presidential race in 2012.  And right now, polls show two Republicans leading President Obama in the hypothetical matches.  Mike Huckabee, up 52-44 over the president in a new CNN/Opinion Research poll taken after Tuesday‘s election.  And Mitt Romney leads the president, look at this, pretty healthy, 50-45.

How did Sarah Palin stack up against the president?  Not as well. 

Palin loses 52-44, but she‘s in the running.

HARDBALL will be right back.  And if she runs, she‘ll be in the running.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER:  If we do these things well over the next two years, I believe the voters will be pleased with what they did on Tuesday, and Republicans will be in a much better position to reverse the worst excesses of the past two years and lay the groundwork with the kind of change we want and need.  And Tea Party activists will continue to energize our party and challenge us to follow through on our commitments.

(END VIDEO CLIP)

MATTHEWS:  Well, there‘s Mr. Excitement.  He‘s so thrilled to have these Tea Partiers join him.

Anyway, welcome back to HARDBALL.  That was the Senate establishmentarian, Republican Leader Mitch McConnell, this morning, paying respect or tribute to the Tea Party.  How much power will they have inside the Congress?  He‘s obviously that with them.  And is there simmering sentiment within the Republicans that they cost control of the Senate by pushing wackos to the primary process?

We‘re joined right now by “TIME” magazine‘s Michael Crowley and the “National Journal‘s” Major Garrett, who both have big pieces on the Republicans coming to power.

So, I guess that‘s the first cutting question.  Will the history read, Major, first, that people like O‘Donnell win the nominations and Sharron Angle knocking off Sue Lowden, and these kinds of races.  Did they blow their chances of picking up 51 seats?

MAJOR GARRETT, NATIONAL JOURNAL:  Well, look, I think you have to separate Nevada.  I‘m not sure Sue Lowden—

MATTHEWS:  Delaware, too.

GARRETT:  I‘m not sure Sue Lowden could have beaten Harry Reid.

MATTHEWS:  She might have lost.

GARRETT:  I think she would.  I think that‘s—when you look at Harry Reid‘s get out the vote operation, you have to consider him the favorite no matter who the Republicans put up.

Delaware is clearly an example of where the Tea Party fouled that up.  But there‘s also a history in the Delaware Republican Party feeling like they never had a voice, the conservatives never got their skin in the game after 20 years, and they finally got their skin in the game, and they nominated someone who simply could not compete statewide.  So, that‘s not just a Tea Party problem, that‘s a Delaware Republican problem.

Some of these things—

(CROSSTALK)

MATTHEWS:  So, the Tea Party, I‘m listening to you, the pattern is that they have helped the party.

GARRETT:  They have helped the party, unquestionably.  The energy that brought 60-plus seats to the House and a few more seats to the Senate did not exist two years ago.  Absent that, Republicans don‘t make the big gains.

MATTHEWS:  Lindsey Graham, who‘s used to be on the show a lot and we hope to get him back after things cool off for a while here, told “Politico” it was a good night for Republicans but it could had been a better one.  We left some on the table.

I‘m not sure what he‘s saying there.  Michael, can you discern what Lindsey—is he mad at the Tea Party or is he saying something else altogether different here?

MICHAEL CROWLEY, TIME:  No, it sounds to me like he‘s mad at the Tea Party and he thinks that they—I think that he also said in that interview or somewhere else that candidates matter.  And I think he feels like they didn‘t have the best of crop of candidates out there, Chris.  And, you know, I think it‘s—

MATTHEWS:  Who‘s fault is that?  That the Republicans didn‘t exploit this terrible economic time to win everything?  I mean, when you have a 10 percent unemployment rate basically that‘s persisted for a whole year, you have a president who‘s done controversial but historically important things that bother some people in the middle—why didn‘t they win anything?

CROWLEY:  Well, right.  Well, look, you‘ve seen a total breakdown of authority in the party.  I mean, there‘s kind of a larger story here about the party‘s failure to be able to tell its base what is best for them because I think the base clearly doesn‘t trust them anymore.  They saw how they went about controlling Congress in the Bush era, when they passed the Medicare prescription drug program expansion and earmarks ran wild.

And I think what‘s so interesting actually is not only to look at how this is going to affect what happens on the Hill in the next couple of years, but the 2012 primaries, and essentially, will the party poobahs be able to choose the kind of nominee that they want or, you know, are you going to have someone like Sarah Palin who is clearly not the favorite the Washington Republican establishment crowd, basically ride this same energy, possibly to the same effect in a general election?

MATTHEWS:  Here‘s someone to make your point.  Here‘s Lisa Murkowski, who is a regular Republican, coming back probably winning with the write-in vote.  We haven‘t gotten the count yet, but here she is talking about Sarah Palin, her bete noir, her nemesis up there.

Let‘s listen.

(BEGIN VIDEO CLIP)

SEN. LISA MURKOWSKI ®, ALASKA: Palin gave her endorsement of Miller, and that didn‘t get Miller where he wanted to be.  I think—I think it‘s important to perhaps look at the influence that Sarah Palin has and I think we‘re seeing that it may stop at the state line here in Alaska.

(END VIDEO CLIP)

MATTHEWS:  Well there‘s somebody who‘s not intimidated by Sarah Palin.

GARRETT:  Look, there are some rivalries here.

MATTHEWS:  Yes.

GARRETT:  Lisa Murkowski and Sarah Palin have a rivalry.

(CROSSTALK)

GARRETT:  Jim DeMint and Lindsey Graham have a rivalry.  Jim DeMint and Mitch McConnell have a rivalry within the party.  That‘s some of the stuff playing out.  And, look, parties go through this, Chris.

MATTHEWS:  So, this is personal within the locality.

GARRETT:  Some of it, yes.  And parties go through this.  Remember, the Democrats in the ‘70s went through an enormous convulsive change within the Congress and the way committees were allocated.  And the way they established their delegate process presidentially.  Democrats went through a bottom-up revolution against the party bosses.

These things happen.  And at the grassroots level, there are Republicans who don‘t trust the establishmentarians and that‘s message that they sent in this election.  They intend to keep sending it.

MATTHEWS:  You know, I keep thinking of the French and Indian war, where you have the English on one side and the French and the Indians on the other, Michael, and you had the well-perfumed and poofed up Britty or French officers, and then you had the wild Indians, (INAUDIBLE) living out in the country, you know, taking scalps.  They have different ways of approaching the battle, but they were both on the same side.

Can they get together?  Can the war-hooping Tea Partiers get along with these war, button-down Republican leaders who like the club?  My question, Michael—can they deal with each other, and both win the same fight?

CROWLEY:  Well, Chris, you know, it‘s a punt but it remains to be seen.  But I‘ll say to you that the tests are going to come early.  For instance, early next year, there‘s going to be a confrontation over whether to raise the ceiling on the federal debt.  A lot of those Tea Partiers who went in there campaigned on an end to debt, on an end to borrowing, were running the country into the ground we can‘t do this anymore.

MATTHEWS:  I got you.

CROWLEY:  It‘s going to be a vote like TARP.  I mean, these guys are just not going to be able to cast this vote, but we can‘t default on the debt.  So, can the two meet somewhere.

MATTHEWS:  OK, I got you.  I love these pressure points.  Thanks for warning us about that one.  That‘s coming up.  They‘re going to have to vote in or out.  Are you a member of the Congress or are you a protester?

CROWLEY:  Yes.

MATTHEWS:  Major Garrett, Michael Crowley, thank you.

When we return, let me finish tonight with some thoughts about what it means for President Obama.  The Republicans won so many races from Pennsylvania to Wisconsin, that Scranton, Oshkosh, Carter, right across the industrial heart of this country, every race that they won.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Let me finish tonight with the heart of America, the part of this country that built this country since the days of the Pennsylvania rifle.  I‘m talking about the industrial center of this country from eastern Pennsylvania through Ohio and Indiana and Illinois and on to Wisconsin, from Scranton to Oshkosh, if you will.  It‘s part of the country where guys root for the Bears and the Packers, the Eagles, the Steelers, and the Browns.

All of that American heart voted against the Democrats this week and all those Senate and governor‘s races, all of those heartbreakers that caused Democrats their seat in the Congress.  A lot of good guys, like Iraq vet Patrick Murphy and Chris Carney, another warrior for his country, and gutsy Joe Sestak, who was an admiral of the Navy, and young Alexi Giannoulias.

Why did they lose?  Because the manufacturing heart has been cut out of this country.  We use to build trains and subways and airplanes for the world.  Now, we read about trains running 300 miles an hour in France and China and we pity along ourselves on Amtrak, like we‘re on the back board.  Why can‘t we build railroads anymore, rapid railroads to unite this country, instead of making the vast continent between New York to L.A.  flyover country from the bicoastal elite to look down from?

Why don‘t we build America anymore?  Would we be building the subway systems for our country today?  Would we be building the Empire State Building or the Golden Gate Bridge today?  Would we be building this beautiful capital of Washington today?

No.  We wouldn‘t be building it today and you know the answer.  We don‘t build—because we have neither the money nor the courage to do it.  Republicans don‘t believe in public investment, not even real capital investment that builds the economy.  They think tax cuts are the one and only way to promote economic progress and Democrats are afraid to challenge them.

And while we worry about it today, China never stops thinking about tomorrow, investing and spending and creating the jobs that we should have right here.

Yes, Lincoln spoke well, Mr. President, but he also built the Intercontinental Railroads.  I couldn‘t speak as well as you, Mr.  President, but he did build the Intercontinental Highway System.

Kennedy spoke well.  But he also got us to the moon.

What are you going to leave as your monument?  Health care is great, but we need jobs to pay for health care.  There‘s still time to get started, Mr. President.  You have to explain to the country why creating things matters.  We need to build.

That‘s HARDBALL for now.  Thanks for being with us.  Right now, it‘s time for “THE ED SHOW” with the great Ed Schultz.

               

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