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updated 12/17/2010 2:19:06 PM ET 2010-12-17T19:19:06

Guests: Melissa Francis, Jonathan Alter, Michael Capuano, Chaka Fattah, Jack Reed, Chris Coons, Jonathan Alter, David Corn, Matt Kibbe, Bob Walker

CHRIS MATTHEWS, HOST:  Deadline.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews down in Washington. 

Leading off tonight: Last harumph.  After all the “sturm und drang” over the tax plan, reluctant House Democrats are roaring their disapproval one last time before taking a deep breath and then probably voting for the bill.  Now, here‘s the irony.  The closer this gets to passage, the more it‘s the Republicans who are having second thoughts because—politics again—they think it‘s too good for President Obama.  Uh-oh!  He likes it!  The president likes it.  Must be trouble in there somewhere.  That‘s the Republican attitude now.

Plus, the reviews on Afghanistan are in, and they‘re not good.  Yes, we‘re making some progress in Afghanistan, but it‘s slow going.  And here‘s the killer.  Pakistan isn‘t helping enough.  And that‘s not to mention the corrupt Afghanistan government.  So even if we had to go into Afghanistan after 9/11, does the war still make sense today?  That‘s the hot issue that‘s getting hotter.

Plus, who‘s the Grinch?  Do Democrats hate Christmas?  That‘s the argument Republicans are seriously turning into an annual rite of the season.  This year, it‘s Jon Kyl and Jim DeMint attacking Harry Reid because they don‘t want to work past the holiday.  Do they know how many Americans are lucky enough to have a job and are working on Christmas Day?

And skunk at the Tea Party, a new stimulus bill.  The old GOP guard is running committees right now.  Too much compromising with Democrats, Tea Partiers say, and they‘re ready to quote Rod Stewart to Republican leaders, “I know I keep you amused, but I feel like I‘m being used.”

Finally: He won‘t admit it, but yet another Republican—let‘s call Mike Huckabee—was for something before he was against it.  Wow.  And we‘ve got the tape to prove Mike ain‘t telling the truth.

We start with two House Democrats on the tax cut deal, U.S.  Congressman Michael Capuano of Massachusetts—he joins us—and Congressman Chaka Fattah of Pennsylvania.  Thank you, gentlemen, for joining us, two of my favorite congressmen, but I think they disagree.

Mr. Capuano, who holds Tip O‘Neill‘s seat—the old 8th in Massachusetts once held by James Michael Curley, then Jack Kennedy, then Tip O‘Neill, and now you, sir—are you in that tradition of being the big liberal in the House?  Is that what this is about?

REP. MICHAEL CAPUANO (D), MASSACHUSETTS:  I don‘t know about that.  I mean, I think I‘m a pragmatic liberal.  I‘m a liberal because I believe government can and should make people‘s lives better.  But I‘m a fiscal conservative because I think we should pay our bills.

MATTHEWS:  Wow.  And you think what should happen tonight as the evening grows long—as we go past midnight tonight, what do you think the Democrats ought to do, finally relent, go with the president, or hang out a little more?

CAPUANO:  I‘ve always presumed that in the final analysis, the president will get what he wants, but he will not do it with my vote.  I think this bill is too big. I think it‘s too untargeted.  And I think adds to the deficit way too much for too little return.  There‘s some—obviously, some good things in there.  I like the unemployment issue.  But I just don‘t think that it‘s good for the country in the long run.

MATTHEWS:  If he was to go down politically this season because of your vote, would you still deny it to him?

CAPUANO:  I don‘t think that‘s the way it‘s going to happen.  Look, I was an early supporter of the president—

(CROSSTALK)

MATTHEWS:  I know.  I know.  You‘re hedging.  That‘s all right.  I know.  It‘s a cruel question—

CAPUANO:  I‘m not hedging, I just—

MATTHEWS:  -- at Christmastime.  But you don‘t think it—but I‘m asking you, speculate, if you were to vote deciding on the floor and you were corralled down there on the floor by Speaker Pelosi or Steny Hoyer, and you—they said, I need your vote, Mr. Capuano, we need you, Mike, we need you, we need you, we need you, we‘re not getting out of here until after Christmas, what would you say?

CAPUANO:  That will not be happening.  I‘m not the guy who hangs onto my vote.  They know how I‘m voting—

MATTHEWS:  OK—

CAPUANO:  -- and if they‘re going to do that, they‘re going to do it to somebody else.

MATTHEWS:  OK, let me go to a more reliable Democrat.  I‘m just kidding.  Let me go to Mr. Chaka Fattah of Philadelphia.  Sir, your view on this.  Should the Democrats go with the president?

REP. CHAKA FATTAH (D), PENNSYLVANIA:  Well, I issued a statement last week.  I‘m going to support the tax cut compromise.  I think football always works better then who you play with your quarterback and you—the Democrats—we have a president.  He‘s come to a compromise, a lot of which we all like.  And the Republican side of the compromise most of us don‘t like.  But that‘s the basis of a deal.  And you know, when Bill Clinton was in and we had Republicans to deal with, there were accommodations that had to—we had to come to.

Now, I agree we should pay our bills, and we need to have a debt and deficit reduction plan.  I‘ll be authoring my own in January about how we get out of debt.  But right now, 98 percent of the people in this country don‘t want their taxes going up, and we don‘t want their taxes to go up.

MATTHEWS:  OK—

FATTAH:  We disagree about the 2 percent and—but the Republican said, look, that‘s their side of the cake and they want the 2 percent of the wealthiest people to get a break.  And we‘ve made an accommodation in which everybody‘s going to get what they want.  We need to move forward and make sure that this recovery moves forward.  I disagree with my colleague, but I think he‘s a great congressman—

MATTHEWS:  Oh, here we go.

FATTAH:  -- from the commonwealth.

MATTHEWS:  Lay it on.  Lay it on.  Let‘s go—

(CROSSTALK)

MATTHEWS:  Hey, I know somebody, Mr. Fattah, you disagree with.  That‘s Rush Limbaugh.  Let‘s watch Rush himself.  Here he comes.  And by the way, this time, he‘s right for all the wrong reasons.  But he‘s got it.  I think you guys are going to agree that he‘s right.  Here‘s Rush Limbaugh on the tax bill.  Let‘s listen.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  I now hope this deal fails.  I say it directly and officially.  Let the tax rates go up on January 1st.  Let them go up.  Wait for our cavalry to show up and deal with this the right way.

(END VIDEO CLIP)

MATTHEWS:  What do you make of that, Mr. Capuano?  You‘ve seen cowboy movies.  He wants to be the cavalry with the white hats coming in with the white horses and saying, Those damn Democrats let your taxes go up, here we are, January 15th, or whatever, and we‘re here to cut them for you.  He wants to be that guy.

CAPUANO:  Here‘s my problem.  He‘ll be the guy leading the charge next year to cut the programs that I think are so important, like Social Security and Medicare and senior housing and education and police and fire protection.  And I don‘t want to do that.  And I think that that‘s absolutely inevitable.  They‘re going to do it anyway, and to add another trillion dollars to the deficit is simply going to empower them to do it more.

MATTHEWS:  But is Rush right that if you guys don‘t deal with this tax issue before Christmas, the bad guys, as you see them, will come in after January 3rd and look like the heroes?  Aren‘t you thinking politically at all this, Mr. Capuano?  I‘m going to go to Mr. Fattah—

CAPUANO:  I‘m thinking very politically.  But I also think that I have to think philosophically, as well.

FATTAH:  Well, here‘s the deal—

MATTHEWS:  OK, Mr. Fattah, are you thinking politically?  Is Rush Limbaugh right?

FATTAH:  Look, Al Franken, Barbara Boxer voted for this in the Senate.  They‘re as liberal as they come in our party.  I‘m going to vote for it in the House.  I‘m part of the liberal left in the House.  There will be members who disagree, and on legitimate points they may disagree.  Anytime a deal is struck, some people are not going to like it.  There‘ll be enough votes to pass this.  We‘ll pass it out of the House.  We‘ll send it to the president for his signature.

And we‘re going to get a few more things done.  I think the Senate‘s going to pass “Don‘t ask, don‘t tell.”  We‘ve got to get the appropriations bill done.  And then these Republicans who want to celebrate Christmas, I guess, will get a chance to.  Like most Americans, they have to work up until Christmas.  Some have to work on Christmas Day.  But we‘ll get the work done.

MATTHEWS:  Well, some people are lucky to be working.  Let‘s take a look at this tax.  Here‘s the polling data.  I know Mr. Capuano‘s not a politician, so let‘s take a look at the poll data, you and me, Mr. Fattah.  We‘ll look at these numbers.  Fifty-four percent of Democrats support this deal right now.  That‘s in our poll.

Let‘s listen.  Well, I don‘t know why we‘re listening here.  Let‘s go on.  Here‘s—we‘re getting confused here.  Let‘s look at the latest—the latest Quinnipiac poll has 69 percent, 69 percent say they‘d go with the deal.  This is 72 percent of Republicans, 72 percent of independents.

Mr. Capuano, I got to go back to you -- 71 percent support this among union households, this deal.  What do you make of that?  Union households?

CAPUANO:  Who doesn‘t want a tax cut?  I mean, that‘s—that depends how you ask the question.  Do they want to lay it on their kids?  If they want to do that, why are they bothering to save money to send their kids to college and to help them go forward?  We‘re laying this on our children.  Everybody knows it.  And when you ask that question, you get a different answer.  If you simply ask for a tax cut, I‘m for that.  I‘ll get a good tax cut out of this bill.  But at the same time, my responsibility here is not just for the people who are here right now, it‘s also the future of this country.  And we will regret this vote in a few years if we don‘t deal with our deficit and our debt right now.

MATTHEWS:  Let me ask you, Mr. Fattah, what‘s it like in the cloakroom?  How‘s this division—what‘s the argument going on?  Is it like this between what Mr. Capuano calls the philosophical position and the political necessity of not letting the Republicans steal this issue from you come January?

FATTAH:  Well, there are a lot of different viewpoints, at least one for each member of the Democratic caucus.  But the bottom line here is that we have a situation in front of us where we have a timeline.  We‘re going to be in the majority for a few more weeks.  We need to get our work done.

I agree that the debt‘s a problem.  I‘m going to offer a bill to deal directly with the nation‘s debt, but I do think that we also have an economic recovery that‘s critically important.  And every economist that has looked at this, across the board, says this is going to add to our GDP, this is going to add at least a million-plus more jobs.

MATTHEWS:  Yes.

FATTAH:  We need to focus on building our economy because at the end of the day, that‘s how we‘re going to get out of debt.  We have to grow our way out of debt by adding more tax ratables (ph) to the bottom line.

MATTHEWS:  OK, let‘s take a look at Congressman DeFazio.  Last night, he described what he said were high-pressure phone calls from the president on this tax deal, though not saying he got one himself.  He said he heard from someone who did.  A White House spokesman, by the way, has denied the president is making any such apocalyptic phone calls.  Here‘s what the congressman said, however.  Let‘s listen to Mr. DeFazio.

(BEGIN VIDEO CLIP)

REP. PETER DEFAZIO (D), OREGON:  The White House is putting on tremendous pressure, making phone calls.  The president‘s making phone calls saying this is the end of his presidency if he doesn‘t get this bad deal.  You know, I don‘t feel that way.  I think this is potentially the end of his possibility of being reelected if he gets this deal.

And it‘s a trap.  It‘s a trap on Social Security and on progressivity in our tax system and attacks on huge cuts to programs we care about because this adds half a trillion bucks to the deficit next year.  And the next year, when the new Republicans come in, Whoa, we got to cut the heck out of everything because we have a $1.7 trillion Obama deficit.  They won‘t be talking about their role in creating that.

(END VIDEO CLIP)

MATTHEWS:  This apocalyptic phone call that the president‘s going to lose the presidency if he doesn‘t get this bill—Mr. DeFazio, we found out from his office a few minutes ago, didn‘t get that call himself.  He reports that he got it—he heard another member got that call.

Mr. Capuano, is anybody you know getting calls from the president saying, If you don‘t give me this tax fight—vote, I‘m losing the job?  Anybody you know hearing that—

CAPUANO:  I have not heard that.

MATTHEWS:  OK.

CAPUANO:  I have not heard that.

MATTHEWS:  OK, thank you very much, Michael Capuano from the 8th

CAPUANO:  Thanks, Chris.

MATTHEWS:  -- in Massachusetts.  Great to have you on from that great district.  And Mr. Fattah, thank you.  And merry Christmas to both of you gentlemen as we get out of this season.

FATTAH:  Merry Christmas to you.

Thank you.

Coming up: President Obama says the war in Afghanistan is on track. 

Whoa, whoa, whoa!  And we‘re making significant progress.  I‘m not sure.  How can we say that with al Qaeda holed up on the Pakistan border, where we can‘t get at them?  That‘s the tough question.  OK, that‘s the question.  The other question is, what are we going to do with the corrupt Afghanistan government?  We got the polls.  Does the war make sense?  The people don‘t think so.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Well, a new NBC/””Wall Street Journal” poll shows President Obama doing well against potential Republican challengers in 2012.  If the election were held today, which it won‘t be, President Obama would top former governor Mitt Romney of Massachusetts by 7, 47-40.  In a match-up against South Dakota senator John Thune, who‘s a dark horse out there, Obama would beat him by 20, 47-27.  And if the president were to face former Alaska governor Sarah Palin, beats her by 18, 55-35 (SIC) -- actually, that‘s more, it‘s 22 votes.  We‘ll be right back.  These numbers really don‘t mean much right now, but they‘re fascinating.

We‘ll be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL.  President Obama‘s war review shows military gains against the Taliban in southern Afghanistan, but Pakistan‘s refusal to attack extremist havens in the border regions threatens to unravel any progress made in Afghanistan.  So how much longer should our troops fight in this nine-year war?

Democratic senator Jack Reed of Rhode Island is a member of the Armed Services Committee.  He‘s a combat veteran himself.  He‘s made 10 wartime trips to Afghanistan and eight to Pakistan.  He‘s a veteran of the United States Army‘s 82nd Airborne.

Thank you so much for joining us, Senator.

SEN. JACK REED (D-RI), ARMED SERVICES COMMITTEE:  Thanks, Chris.

MATTHEWS:  I‘ve got great respect for you.  My trick question—and it‘s a trick question because it‘s trick reality.  I don‘t know how many years we‘re going to stay over there, but how can we ever win if we stay 20 years without al Qaeda holed up in Pakistan?

REED:  Well, first I have to correct the record.  I‘m not a combat veteran.  I have great respect for combat veterans.

MATTHEWS:  OK.

REED:  I spent 12 years in the Army, but just for the record.  We have to make sure that the Pakistanis cooperate with us.  And frankly, one of the issues there is that they consider some of these extremist groups as strategic assets, not liabilities.  We have to convince them that they‘re liabilities to their own government.  But we have made some progress to get them to go into the tribal areas.

But I think the important point to emphasize and re-emphasize in the president‘s comments is that he is committed to a July 2011 transition point, where our troops begin to come out.  That is key.  He does not see a long-term significant U.S. presence in the region.  He sees a presence, but not the kind of combat presence we‘re seeing today.

MATTHEWS:  Why do we stay any more than (ph) we‘re there?  I mean, I keep asking to myself, if we have the al Qaeda elements across the border, and we‘re not going to win ultimately—because, ultimately, the Taliban will call the shots when we leave, won‘t they?  And al Qaeda will call the shots when we leave.  What influence can we have once we pull out in strength?

REED:  Well, I think this might be seen as transitioning to a mission of really counterterrorism directed at those Taliban elements that are still supportive and connected to al Qaeda, and the al Qaeda element.

MATTHEWS:  Yes.

REED:  We can‘t forget the fact that even though the Pakistanis are not taking as much action as we‘d like against these elements within Pakistan, we are continuing to use Predator attacks, drone attacks, to disrupt and to destroy al Qaeda elements.  We‘re still looking and putting a lot of pressure on them.  So we are not abandoning the field to al Qaeda, but we can do it, and I think we ultimately have to do it, with a much smaller footprint.  And the president, I think, believes that also.

MATTHEWS:  Well, speak now as if you‘re speaking to a progressive audience, to a group of anti-war Democrats.  What would you tell them it would look like a year or two from now over there in terms of our component?  What would we have fighting over there?  Would we have 50,000 troops, way less than we have now?  What would we have in the field?

REED:  Well, the first thing I would say is we are there because that‘s where al Qaeda mounted their attacks against the United States.  We have a real mission there.  It‘s continuing.

Second, we‘re going to begin withdrawal.  It‘s not going to be as, I think, robust as many would like, but the direction is going to be set and it‘s going to be firm.  The president has done the same thing in Iraq.  He said on the campaign trail, and he was—it was part of the debate, that he was going to start the withdrawal.  That withdrawal is well under way and headed in the right direction.

The question, I think, is in a year from now, I think we‘ll see that shift.  I think we‘ll see more activity by the Afghan national security forces.  I think you‘ll also see a continuing very robust counterterrorism effort by the United States.  And that‘ll be our special forces operations.

MATTHEWS:  Well, right now, we‘ve got a brand-new poll, Senator, a “Washington Post”/ABC poll, joining our other poll, that says 60 percent of Americans believe the war in Afghanistan—here‘s a tough assessment—is not worth fighting.  Fifty-four percent want troops to start withdrawing next July.  Twenty-seven percent want a drawdown even sooner than that.

I guess—I guess the question that liberals and progressives will ask is, Is it going to a rapid withdrawal, a steep decline in our force level, or is it going to just drag on like—like—well, Vietnam did?

REED:  I don‘t think it‘s going to be as rapid, frankly, as people would like to see.  I‘ll be very candid.

MATTHEWS:  OK.

REED:  But I think once that direction is set, it will be in that direction.  It won‘t be equivocating.  And I think it will be based upon conditions, and many conditions.  But again, you know, the president inherited an operation that was under-resourced, mismanaged because of Iraq for many years.  I think he‘s got the right strategy, and it‘s going to be a difficult strategy to carry out, but it is the right strategy.

MATTHEWS:  Thank you so much, Senator Jack Reed of Rhode Island.

REED:  Thanks, Chris.

MATTHEWS:  Happy Christmas to you.

REED:  Merry Christmas.

MATTHEWS:  President Obama cited progress on his goal of disrupting, dismantling and defeating al Qaeda in Afghanistan and Pakistan.  Let‘s listen to the president.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  In pursuit of our core goal, we are seeing significant progress.  Today, al Qaeda‘s senior leadership in the border region of Afghanistan and Pakistan is under more pressure than at any point since they fled Afghanistan nine years ago.  Senior leaders have been killed.  It‘s harder for them to recruit.  It‘s harder for them to travel.  It‘s harder for them to train.  It‘s harder for them to plot and launch attacks. 

In short, al Qaeda is hunkered down.  It will take time to ultimately defeat al Qaeda, and it remains a ruthless and resilient enemy bent on attacking our country.  But make no mistake, we are going to remain relentless in disrupting and dismantling that terrorist organization.

(END VIDEO CLIP)

MATTHEWS:  Senator Chris Coons is a Democrat from Delaware.  He just took office.

Senator, do you share Senator—or Vice President Biden‘s skepticism about this war?  He‘s pretty clearly, in his nuanced statements, saying again and again he‘d like to see a fairly rapid withdrawal from that country starting next July . He says it‘s a real beginning of withdrawal, not just a few troops going out of there.  Are you with him?

SEN. CHRIS COONS (D), DELAWARE:  Well, Chris, thanks for a chance to be on. 

I think I share every American‘s concern that, if we‘re going to continue to stay in Afghanistan, it‘s got to be worth the investment of lives, of money, of resources.  And there‘s got to be a strategy that allows us to see a path forward towards a stable, secure, independent Afghanistan. 

MATTHEWS:  Have we got one? 

COONS:  I was encouraged—I was encouraged by what I heard today about the progress in Southern Afghanistan and the partnership with Pakistan, but I am gravely concerned about whether there is a path forward for a counterinsurgency strategy that can really work or not. 

MATTHEWS:  You know, if you were in the—and let‘s think politically.  You‘re sitting—these guys are as smart as we are.  Sometimes, they‘re cannier than we are on the other side.  They may be evil, but they‘re smart. 

You‘re in al Qaeda.  You‘re watching America.  You‘re reading the newspapers over here, watching CNN.  You‘re whatever.  You‘re keeping up with us.  You know we‘re talking withdrawal next July.  You know that they‘re allied with the Taliban, many elements of it.  Why don‘t they just keep things cool, wait for us to leave, and take over and have their base back? 

I just never understood this, we can wait them out, when they live there.  They will always wait us out.  They‘re from there.  We‘re from here. 

COONS:  Well, let‘s be clear about something, Chris.  I support the president‘s commitment to continuing a very tough fight against al Qaeda, wherever they are.  There are elements affiliated with al Qaeda that are in Yemen, that are in Somalia, that are in Pakistan, that are in Afghanistan. 

MATTHEWS:  I know.  Germany. 

(CROSSTALK)

MATTHEWS:  There are a lot of places.

COONS:  You‘re right.  I don‘t think we will ultimately be able to take our eye of the ball and stop a conflict with al Qaeda that may go on for many, many years. 

The real question is, are we going to be able to stand up a successful Afghan security force?  Are we going to be able to get a good and effective partner in the Karzai government?  Are we going to be able to persuade Pakistan under President Zardari to work with us to close down those parts in the border regions that the Taliban and al Qaeda are using?

(CROSSTALK)

MATTHEWS:  What‘s your answer to that?  You‘re the senator.  You think that the government, Zardari of Pakistan, has the stuff to go into those Northwest Territories, those unregulated areas, tribal areas, and really crush al Qaeda if bin Laden may be there?  Why haven‘t they done it in 10 years? 

COONS:  As you heard from Senator Reed, they just don‘t see that it‘s in their own interests to go aggressively after the Taliban and al Qaeda, particularly that are affiliated with Afghanistan.

MATTHEWS:  Right. 

COONS:  But they have stepped up their attacks against the elements of the Taliban that are in Pakistan. 

We have made some progress with them.  I‘m reserving judgment.  As you mentioned at the outset, I have been a senator for just a month.  I am looking forward very much to going to Afghanistan and making a visit on the ground. 

MATTHEWS:  OK. 

COONS:  I have friends and folks who I have known and served with in county government in Delaware who have done two and three tours in Afghanistan.

MATTHEWS:  Yes. 

COONS:  And I‘m gravely concerned about our making sure that we‘re finding a path forward that works for America. 

MATTHEWS:  Let‘s look at Secretary of Defense Gates and Secretary of State Hillary Clinton today responding to new polls that show dwindling public support for the Afghan war.  Let‘s listen.

(BEGIN VIDEO CLIP)

ROBERT GATES, U.S. SECRETARY OF DEFENSE:  I would just say that it‘s obviously the responsibility of leaders to pay attention to public opinion.  But, at the end of the day, their responsibility is to look out for the public interest. 

HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE:  I think it‘s understandable.  And I‘m very respectful of the feelings of the American people.

But the question I would ask is, how do you feel about a continuing American commitment that is aimed at protecting you and your family now and into the future? 

(END VIDEO CLIP)

MATTHEWS:  Well, here‘s something I would like you to check out, Senator, with all respect.  I got a sense we have no idea what‘s going on over there.  I think the ISA in Pakistan is in bed with the Taliban. 

They like the Taliban because they‘re on the same side against the Indians.  They don‘t like Karzai.  There are so many strange alliances over there that we can‘t even figure out, and yet we think we‘re fighting a war.  That‘s my worry.

Your thoughts on that as a last question, the murkiness of it.

COONS:  I think you‘re right.  It‘s a very complicated strategic picture.

I think where Pakistan and its leadership really is, is one of the critical questions for us.  And I think this war has become increasingly unpopular because the average American is convinced that it‘s not winnable in the long term. 

MATTHEWS:  Yes. 

COONS:  I‘m going to support the president‘s efforts in the next few month, but at this moment, I‘m looking forward to us making a tough strategic review and making responsible decisions by next summer. 

MATTHEWS:  Well, Congratulations, Senator Coons, and thank you for beating Christine O‘Donnell.  That was an important election, I think, for life on this planet. 

Anyway, up next:  Who‘s the Republican congressman who says getting rid of don‘t ask, don‘t tell marks the end of America‘s days as a great nation?  Check out this guy‘s commentary.

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

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

First up: Louie Gohmert straight out of the right field.  Yesterday, the Texas Republican congressman, you know, one of the birthers, urged his follow members to vote against the don‘t ask, don‘t tell repeal.

Why?  Because he says it threatens America‘s very existence.  See if you can follow this line of, well, reasoning. 

(BEGIN VIDEO CLIP)

REP. LOUIE GOHMERT ®, TEXAS:  To my friend who said history will judge us poorly, I would submit, if you will look thoroughly at history—and I‘m not saying it‘s cause and effect—but when militaries throughout history of the greatest nations in the world have adopted the policy that fine for homosexuality to be overt—if you can keep it private and control your hormones, fine—if you can‘t, that‘s fine, too—they‘re toward the end of their existence as a great nation. 

(END VIDEO CLIP)

MATTHEWS:  Well, we called Congressman Gohmert‘s office today for specific examples of such once great nations.  Well, they said they were fielding a lot of requests for that information and would get back to us.  Well, stay tuned here.

Next: Mike Huckabee‘s curious case of amnesia.  The once and likely future contender took issue with an article on the Web site—and I love this Web site—RealClearPolitics.

Quote: “In a recent Internet post, a contributor claims or makes the claim that I supported cap and trade in late 2007 while running for president.  To put it simply, that‘s just not true.”

Well, it‘s not true, Mr. Huckabee, that you supported cap and trade? 

Let‘s go back to the tape.  Here‘s Huck in April 2007. 

(BEGIN VIDEO CLIP)

MIKE HUCKABEE ®, FORMER ARKANSAS GOVERNOR:  I also support cap and trade of carbon emissions.  And I was disappointed that the Senate rejected a carbon counting—the Senate rejected a carbon counting system to measure the sources of emissions, because that would have been the first and the most important step toward implementing true cap and trade.

(END VIDEO CLIP)

MATTHEWS:  Well, that tape, it sounds to me like Mr. Huckabee is taking the temperature of the Republican primary electorate, most notably the Tea Partiers, and realized that it would be more convenient for him to now disavow his prior support of cap and trade.  Thankfully for us, there‘s videotape. 

Now to tonight‘s “Big Number.” 

Yesterday, Republican Senator John Thune issued something of a fatwa against the new spending bill. 

(BEGIN VIDEO CLIP)

SEN. JOHN THUNE ®, SOUTH DAKOTA:  The American people neither deserve nor want this bill that heaps more debt on to the backs of future generations.  The bill is loaded up with pork projects and it shouldn‘t get a vote. 

(END VIDEO CLIP)

MATTHEWS:  Wow.  But catch this.  How much in so-called pork projects does Senator Thune himself have in this spending bill?  According to Politico, he has $65 million in pork.  Talk about wanting your cake and eating it, too.

Senator Thune has $65 million in earmark requests in the new spending bill that he opposed.  He‘s campaigning against the very pork he‘s grabbing -- tonight‘s outrage-worthy “Big Number.”

Boy, these guys are unbelievable. 

Up next:  Senate Republicans say they‘re mad at Harry Reid for threatening to keep the Senate in session around Christmas.  They‘re saying Reid is disrespecting Christmas because he wants to hold a vote on the New START nuclear treaty before Christmas.  And Reid says the Republicans are just trying to run out the clock.  Let‘s get into that fight next.

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MELISSA FRANCIS, CNBC CORRESPONDENT:  I‘m Melissa Francis with your CNBC “Market Wrap.”

Stocks gaining ground on some upbeat economic reports and a bullish forecast from FedEx.  The Dow Jones industrials climbing 41 points, the S&P adding seven and the Nasdaq up 20 points. 

FedEx reporting disappointing earnings as it reinstates raises and benefit cuts during the recession, but investors were focusing on its bullish outlook predicting heavier-than-expected holiday volume in the short term and improved earnings over the long haul.

And a big day for motor home maker Winnebago, shares soaring more than 14 percent on better-than-expected earnings for the fifth straight quarter.  But credit card companies took a beating on news that the Federal Reserve is proposing a cap on debit card fees at 12 cents a transaction.

And two big names in tech reporting earnings just after the closing bell—software giant Oracle easily topping expectations, as did BlackBerry maker Research In Motion, both companies‘ shares moving sharply higher in after-hours trading. 

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

HARDBALL. 

MATTHEWS:  Back to HARDBALL.

It‘s the most wonderful time of the year, unless you‘re a U.S. senator who may be working straight through Christmas, I guess. 

Republican Senators Jim DeMint and Jon Kyl have been protesting Democrats who want to vote on the New START nuclear treaty with Russia and other legislation in the next two weeks. 

Here‘s Senator Kyl on Tuesday.

(BEGIN VIDEO CLIP)

SEN. JON KYL (R-AZ), MINORITY WHIP:  It is impossible to do all of the things that the majority leader laid out without doing—frankly, without disrespecting the institution and without disrespecting one of the two holiest of holidays for Christians and the families of all of the Senate, not just the senators themselves, but all of the staff. 

(END VIDEO CLIP)

MATTHEWS:  Wow. 

And here‘s Senator DeMint and what he had to say in Politico in print:

“We shouldn‘t be jamming a major arms control treaty up against Christmas. 

It‘s sacrilegious and disrespectful.  What‘s going on here is just wrong.  This is the most sacred holiday for Christians.  They did the same thing last year.  They kept everybody here until Christmas Eve to force something down everybody‘s throat.  I think Americans are sick of this.”

For more on this war over Christmas, we‘re joined by “Newsweek”‘s Jon Alter and “Mother Jones”‘ David Corn, who is also a columnist for PoliticsDaily.com. 

I have got to go to my friend Jon Alter about this thing.

The sanctimony of this is almost too much to observe and even to report.  What do you make of it?  They have worked until late.  People work.  We‘re going to be here until right before Christmas.  A lot of normal Americans get Christmas Eve off.  They get Christmas Day off.  And they don‘t bellyache about it. 

JONATHAN ALTER, SENIOR EDITOR, “NEWSWEEK”:  I just love that these guys are playing the Christmas card. 

(LAUGHTER)

MATTHEWS:  Good pun. 

ALTER:  It‘s like—it reminds me of what FOX did.  Remember the war on Christmas?  They tried to stigmatize liberals by saying that they were anti-Christmas or something.

This is the last refuge of a senator who‘s out of arguments, which is where Jon Kyl is right now.  He‘s been trying, against the support of Republican secretaries of state—all the living Republican secretaries of state want to get on with this treaty.  It should have been ratified a long time ago.  The idea that it hasn‘t been fairly considered is just completely untrue.  They have held 18 hearings on the New START treaty.

So it‘s time to vote.  The blame for the reason that it hasn‘t been voted on yet rests with Senator Kyl, not with Senator Reid and the Democrats. 

MATTHEWS:  Yes. 

Wasn‘t it signed, David, in June by the president and Medvedev?  It‘s already signed.  They could have taken a look at it in the last five months.

DAVID CORN, WASHINGTON BUREAU CHIEF, “MOTHER JONES”:  Well, and Kyl and other Republicans are calling on them to read the treaty. 

MATTHEWS:  Out loud. 

CORN:  Out loud.

MATTHEWS:  To what effect?

(CROSSTALK)

CORN:  Well, for no effect, only to delay it, so they then can complain—

(CROSSTALK)

MATTHEWS:  I don‘t know.

(CROSSTALK)

MATTHEWS:  I want to observe Christmas.  And a lot of people do.

But I don‘t think it‘s disrespectful of the Christian holiday to say you would like to end nuclear war threats before Christmas. 

(LAUGHTER)

CORN:  Peace on Earth.

(CROSSTALK)

MATTHEWS:  It seems to be perfectly consistent with the Scriptures.

Here‘s President—or, rather, Senator Harry Reid responding to Kyl and that sort of sanctimony.  Let‘s listen. 

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER:  I don‘t need to hear the sanctimonious lectures of Senator Kyl and DeMint to remind me of what Christmas means. 

My question, Madam President, is where were their concerns about Christmas as they have had filibuster after filibuster on major pieces of legislation during this entire Congress?

(END VIDEO CLIP)

MATTHEWS:  Jon, you study these guys.  You study history.  Don‘t they have a gag in them that says, I can‘t say this; I can‘t say—

ALTER:  No.

(LAUGHTER)

MATTHEWS:  -- that fight here is over the holidays, that they‘re trying to—with some kind of sacrilege going on here?

How do they use these words?  They should be saved for at least special occasions. 

(LAUGHTER)

MATTHEWS:  Why are they bringing them up now? 

ALTER:  Well, it is a holiday, Chris.

MATTHEWS:  Blasphemy, sacrilege.  I mean, come on. 

ALTER:  There is no gag anymore.  That‘s the thing.  That‘s what seems to me to be changing, is that anything goes now.  You can use any ridiculous argument that you want.  You know, if can try this, appeal to the base or whatever they‘re doing or figure out some another way of getting a little bit of an edge, they‘ll use it.

It used to be there were these constraints, particularly in the Senate, where when they said, you know, my distinguished colleague, it wasn‘t just blather.  It was because they respected certain boundaries on the debate.

MATTHEWS:  Is there some living soul out there that‘s listening to DeMint or listening to Kyl who goes to vote in a church bus, who‘s so religiously driven by—in their voting that they actually hear truth when he says this stuff?  Did they really hear it?

CORN:  There may be some people who think that, you know, because of the fox that Jonathan mentioned earlier, that the Democrats and liberals are really out to get Christmas and final—

(CROSSTALK)

CORN: -- debating the START Treaty up to Christmas Eve.

MATTHEWS:  You know how people when they have hangovers, they have to put one foot on the ground when in their bed to try to find stability?  Well, this is to bring stability back to this discussion.

Here‘s the list of regular people who work after Christmas Eve.  I

mean, doctors, nurses, members of the military, they don‘t get a week off,

service industry employees, firefighters.  By the way, most normal people

to reiterate

(CROSSTALK)

MATTHEWS: -- most people like us get Christmas Eve off.

CORN:  I‘m looking forward to next year when they shut the Senate down for Ramadan, for the whole month.  I mean, we work you know, they worked during Hanukkah.  I mean, what‘s the problem here?

MATTHEWS:  OK.  Let‘s to the greatness and the reasons you guys are really employed at their great level.

Jon, will we get a vote on probably the most important vote of the year?  It‘s not the taxes, which is politically hot fire, but this nuclear arms race.  We have all our lives worried about the nuclear war.  That the two sides, Russia and the United States, have ended the Cold War since 1991.  They were working closer and closer together, occasional friction, but they‘re really trying to reduce the number of nuclear weapons.

Every Republican with any brains, going back to Scowcroft, to Shultz, to Kissinger—Kissinger, Dr. Strangelove, they‘re all for this treaty.

ALTER:  Yes.

MATTHEWS:  All of them for it.  Are we going to get it signed—ratified by the Congress before they go to Christmas?

ALTER:  You know, I think we will and the reason is Iran.  This is had been enough of the point of discussion.  We need Russia in order to contain and isolate Iran.  And that‘s what ultimately this is about.  If this treaty doesn‘t go through, our relations with Russia go into crapper.  And we have a real problem—

MATTHEWS:  They‘ll wonder who‘s calling the shots over here, David.

CORN:  I‘m usually pessimistic about the Senate doing the right thing.

MATTHEWS:  Yes.

CORN:  But in this case, I think because of the overwhelming support, when you have the chairman of the Joint Chiefs of Staff, you have Bob Gates, Republican—

(CROSSTALK)

CORN: -- and everybody else who Jonathan has mentioned say that we must do this, for Kyl and DeMint to hold it up under the banner of protecting Christmas is about as absurd as it‘s gotten this year.  So, I‘m hoping that—

MATTHEWS:  OK.

CORN: -- that it will pass next week.

MATTHEWS:  On that positive note, we‘ll end the conversation.  Thank you and by the way, happy holidays to both of you guys, David Corn and Jonathan Alter.

Up next: well, that didn‘t take long, though.  Tea Party leaders are already angry with the Republican leadership in Congress.  Why they‘re mad and whether Republicans can sustain an attack from the right, next.

This is going to be fun as well, a lot of fighting on the left the last two weeks.  Let‘s look the—and perhaps enjoy the fight on the right.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Former White House chief of staff, Rahm Emanuel, spent a third day in Chicago, making the case that he lives in Chicago.  His opponents are trying to derail his campaign for mayor by challenging his residency.  It‘s a long shot, but it may be their only chance.  A new “Chicago Tribune”/WGN poll finds Rahm with a 23-point lead over his nearest rival in the mayor‘s race.  He‘s at 32 percent.  The rest of the field is in single digits.  But the vote is in February and keep in mind, Rahm needs to get 50 percent to get that threshold to avoid a run-off election.

HARDBALL will be right back.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.

And some Tea Partiers out there are mad about this trillion dollar budget bill with some pork in it.  Some others are mad about the tax deal which also adds $900 billion to the deficit.  And some others are mad that Republican leaders aren‘t rewarding some of their heroes, like Michele Bachmann with plum assignments.

Is there a brewing battle between the Tea Party people and establishment Republican Party?

Matt Kibbe is president of FreedomWorks and Bob Walker is a former Republican congressman from Pennsylvania.

Gentlemen, thank you.  Let the fight begin, perhaps.

What do you make of this—let‘s start with the tax cut proposal.

Matt, you‘ve been on this show.  We went (ph) to you all the time.  Give us a thought for the Tea Parties.  Do they like this big tax cut for everybody, Bush tax cuts all the way?  Extending jobless benefits and the whole works?  They like this package?

MATT KIBBE, FREEDOMWORKS:  Well, I‘ll tell you, it‘s kind of a mixed deal and there are some Tea Partiers that have anxiety, particularly about some of the junk in the bill.  The extension of unemployment benefits, the ethanol subsidies are pretty—it‘s bad stuff.

But we view it as dodging the executioner‘s bullet, getting past this massive automatic tax increase that‘s going to hit all Americans in January.  We have to get to rational tax policy.

But for this Congress, Nancy Pelosi, Harry Reid and President Barack Obama to extend the tax cuts, I think we should consider that a tactical victory.

MATTHEWS:  Bob Walker, do you think unemployment benefits are junk for the people that get them?  You just heard it.  Your colleague there on the right just said its junk.

BOB WALKER ®, FMR. U.S. CONGRESSMAN:  Well, I don‘t think they‘re junk, but I think they should be paid for.  And I think that‘s one of the things that Republicans had hope to do that have not been done thus far.  But I certainly agree that the tax bill should be passed because I would be afraid that if you start withdrawing billions of dollars from the private sector of the economy and bringing into the government early in January, that you really could undermine the whole economic performance for the rest of the year.

MATTHEWS:  Are the Tea Party folk out there, to the extent you can talk for them, Matt, and you can I think for a big chunk of them—do they worry about deficits or do they worry about spending?  I mean, what is it?  When they see the deficits are going to be added to by $900 billion—almost a trillion dollars of the big tax deal, do they get worried about debt and say, well, I‘d rather have the tax cut than worry about the deficit, I only worry about the deficit when it has to do with spending?  Is that the way a Tea Partier thinks of it?

KIBBE:  Well, I think they‘re worried about deficit spending, and I don‘t think that they have a problem with allowing Americans to keep some of the money that they‘ve earned.

MATTHEWS:  I know, I know, that‘s rhetoric.  But it does increase the deficit.

KIBBE:  Well, I‘m not so sure.  You have such a trouble with unemployment and economic stagnation right now, it‘s not at all clear to me that the numbers make any sense.  You‘re looking at raising taxes on everybody in January, and you can‘t possibly argue that that‘s going to have anything but a negative impact on growth and the revenue that growth produces.

MATTHEWS:  OK.  So, you believe, you seem to be saying, Matt, here, that cutting the taxes or allowing the tax cut to continue for people who make over $250,000 a year is going to pay for itself in new government revenues.  In other words, it‘s going to be one of these things where you lower the rates or keep the rates low, but more revenue comes in than otherwise would come in—you believe in that process?  You just said so.

KIBBE:  No, I‘m—I‘m arguing that this is a spending problem.  We‘ve been spending our way into massive debt.

MATTHEWS:  OK.  So, the taxing doesn‘t bother you adding to the deficit?

KIBBE:  I will say that if we don‘t—if we don‘t fix this problem with this automatic tax increase, you‘re going to see further economic problems and less employment, which does nothing to fix our revenue problem.

MATTHEWS:  Well, here‘s the cofounder of Tea Party said about Michele Bachmann not getting a slot on the ways and means.  Quote, “I think she has the background necessary to be on ways and means.  It shows leadership doesn‘t particularly support her.”

Congressman Walker, you know the inside and how it works.  Does fame on the outside help you get a big job on the inside?

She‘s got a lot of fame or notoriety, if you will, and she‘s very well-known.  We love having her on this show when she comes on.  I love sparring with her.  She‘s a great partner to spar with, but that doesn‘t seem to be helping her with the inside guys.

WALKER:  Well, it‘s more than simply being a spokesman on the outside that works inside the process that determines what you do on committees.  And the steering committee has to weigh a number of things.  And I think in picking the people that they did for the ways and means committee, they did a pretty good job.  They pick people who are going to stand up for lower taxes, for more dynamic economy, for economic growth.  And that‘s what we have to have on the ways and means committee.

MATTHEWS:  Is she is a show horse, not a workhorse?

WALKER:  No, I wouldn‘t say that.  I think she‘s—

MATTHEWS:  I thought that you were saying that, Bob.  You were saying that—

WALKER:  No, no.

MATTHEWS: -- because you‘re saying that there are workhorses that you can put on that committee, not her, whereas she doesn‘t meet standard.  You just said it, basically.

WALKER:  No, no, that‘s not what I did say.  I just said that I think that she‘s been a very effective spokesman for the party.  But I think that the steering committee probably had some more senior people that were in-line to be in the committee that they thought deserved their shot having been effective in the work that they had done in the Congress previously.  And I think that Michele Bachmann wants to be on the ways and means committee, at some point, she‘ll probably get there.

MATTHEWS:  What do you make of these porkers, Matt?  I know that you‘re for real because you don‘t want spending to go up.  I know that you‘re not big on the tax side.  You don‘t want that to go down, obviously.

But what about these porkers out there?  All of the guys who seem to love your votes, Thune, Cornyn, McConnell—McConnell is out there with earmarks—every one of these guys have their Santa Claus bag packed with goodies to go home with.  What do you think of that?

KIBBE:  I think that we‘ve got strip all the earmarks out of this ominous bill.  It‘s an outrage.  There are 6,600-plus earmarks in there and it‘s both the Republican and the Democratic problem.  I think we should do a short-term continuum resolution, get all of that garbage out of there, and deal with real spending reform come January.

MATTHEWS:  Well, why doesn‘t McConnell do that?  You‘re pushing these guys around, you‘re the new juice.  Why don‘t you make these Republicans do what you guys sell, Matt?

KIBBE:  That‘s exactly what we‘ve done.  The House Republicans have already embraced that.

MATTHEWS:  You haven‘t done with these guys—you have not done that, Matt.  All of these fat cat Republicans, every one of them, is pushing porks so they get reelected.  They‘re all doing and they‘re laughing at you guys.

KIBBE:  And Senator McConnell is leading the charge against this omnibus pork bill.

MATTHEWS:  And getting his pork while he‘s doing it.

KIBBE:  Not, if we kill the bill.

MATTHEWS:  Oh, OK.  OK.  Thank you.  You‘re going around the corner on me.

Thank you, Matt Kibbe, for joining us.  FreedomWorks, great organization for you guys.

And, Bob Walker, it‘s always great to have you on.

WALKER:  Thanks.

MATTHEWS:  When we return, “Let Me Finish” with a tribute to Larry King, who‘s 25-year run as a TV talk show host is coming to an end tonight.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  “Let Me Finish” tonight with a gentleman of immense curiosity.  That‘s I guess you can only guess about these things the secret to the Mr. Larry King.  How‘s to explain the success, the popularity, the durability of this phenom?  He‘s done interviews on radio and this media for more than half a century, 50,000 of them, all in that rich-smoky New York accent that somehow appeals to everyone.

My late grandmother-in-law, a proud member of the daughters of the American Revolution, would go to bed at night with her husband next to her, but with Larry King in her earphones.  There she would perch into the night listening to this liberal big-city Democrat interview some character from somewhere, famous or not, as if for the personal benefit of this flinty conservative lady from Colorado.

So, you watch yourself in the movies, how about the nude scenes?  Are they a problem for you?

Talk about getting to the common denominator.  This guy was born in it, and never strayed.  He knows what guy in the corner back in Brooklyn would like to know, the retiree sitting on the park bench in Miami will remember the next day when he sits kibitzing with his pals.

What Larry knows is that knowing the right question to ask isn‘t exactly a secret.  It‘s knowing because you never stop being one of them with the guy or woman out there listening would like to ask.  If they the chutzpah to ask it.

Larry once said that his secret is that when he‘s worrying about whether to ask a question, that‘s the question he asks.  How‘s that for a winning formula?  When in doubt, leave it in.

I love the old movie moguls with cigars who made those great films of the ‘30s and ‘40s.  They know what stories would work, what stars would work because they never forgot that movies are about making dreams.

If those stories and those stars work for these guys of little formal education, they knew in their gut they would fill the theater.  Well, Larry King‘s just like that, that‘s his talent, that‘s his career—that will someday be his legacy.  He asked the right question, because he, the every man of talk, wants to know the answer.

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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MAY BE UPDATED.

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