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updated 1/3/2011 4:48:10 PM ET 2011-01-03T21:48:10

Guests: Michelle Bernard, Shartia Brantley, Richard Wolffe, Jonathan Alter, Steve Kornacki

CHRIS MATTHEWS, HOST:  2011.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews still up in New York. 

Leading off tonight: 2011.  What‘s the mission?  What‘s the danger?  It‘s our last show of 2010, and tonight we‘ve put together a terrific team to look ahead to 2011 and beyond, to the presidential election of 2012.

We begin with President Obama.  His party lost 63 seats and its majority in the House, plus six seats in the U.S. Senate.  How does he up his presidency and succeed against an emboldened Republican majority that wants just one thing, his defeat in 2012?  And what about those Republicans, like Boehner in the House and McConnell in the Senate?  In their zeal to smash a presidency, will they learn from the past or wind up like former Speaker Newt Gingrich and destroy themselves?

Then there are those Republicans lining up to take their chances against President Obama.  What an unusual GOP year, lots of hopefuls and no front-runner.  Palin, Romney, Huckabee—who could win the nomination?  Who could win the presidency?  And we‘ll talk about both political parties facing challenges from within their progressives—well, inside their ranks.  Will progressives find happiness with President Obama ever?  Will Tea Party zealots take down the Republican establishment?

Let‘s introduce our panelists, our team tonight.  From Washington, MSNBC political analysts Michelle Bernard and Richard Wolffe.  Here with me in New York, New York—Salon.com‘s Steve Kornacki and “Newsweek‘s” Jonathan Alter, whose new—well, his book is out again in paperback.  Now it‘s got a great new entry, or what do you call it, introduction, right?

JONATHAN ALTER, “NEWSWEEK,” MSNBC POLITICAL ANALYST:  Epilogue!

(LAUGHTER)

MATTHEWS:  Epilogue, and it‘s going to be fascinating.  We‘re going to talk about that because he‘s got one of our spark plug points tonight.

I want to start by a simple sort of a quiz show round robin, starting with Michelle down in Washington, whose politics I‘ve never quite figured out.

(LAUGHTER)

MATTHEWS:  And then I want to get to Richard, who I think I‘ve figured out your journalistic point of view, occasionally.  But in each case, I want you, as the only woman of the four tonight, to start off.

What is the halftime score that President Obama faces in the locker room right now?

MICHELLE BERNARD, MSNBC POLITICAL ANALYST:  You know what, Chris? 

Right now, I‘ve got Obama ahead 56 to 35.  Would you like to know why?

MATTHEWS:  Is this a football score?

(LAUGHTER)

MATTHEWS:  Jesus!

BERNARD:  This is a football score.  I‘ve got him ahead.  We‘ve been talking sports all week long.  Getting elected, first of all, health care reform, START, “Don‘t ask, don‘t tell,” the—you know, extending the Bush tax cuts, stimulus one, stimulus two, TARP, his treaty with South Korea.  I‘ve got him far ahead.  Despite the losses in the House, I‘ve got him far ahead.  I think with the lame duck Congress and everything that happened at the end of the year, Obama‘s presidency is looking really good, despite conventional wisdom.

MATTHEWS:  I am recalibrating your politics, my dear.

(LAUGHTER)

MATTHEWS:  I am very much recalibrating it this holiday season.

BERNARD:  Hey, the facts are the facts.

MATTHEWS:  You are much more disposed to this president than I had ever calculated before.  Let me go to Richard.  Richard Wolffe, you‘re an objective journalistic pick.  What is the score at halftime with this president?

RICHARD WOLFFE, MSNBC POLITICAL ANALYST:  You know, I have him ahead, but not by much.

MATTHEWS:  Well, what are the numbers?

WOLFFE:  So I give him—well, the math is going to hurt my head, but give him three touchdowns.  One for two—effectively, two Recovery Acts.  Another—

MATTHEWS:  Three touchdowns ahead of the other side?

WOLFFE:  And the other have—no, they only have two touchdowns.

MATTHEWS:  OK.

WOLFFE:  Because—I give them—the Republicans have—

MATTHEWS:  One touchdown- --

(CROSSTALK)

MATTHEWS:  21-14.

WOLFFE: -- message war—yes, assuming they get the conversions.  They got the—they won the message war.  They got back the House.  Two touchdowns for them.  For him, I‘m going to say health care, two—effectively two Recovery Acts, and all the other stuff put together counts as one for me.  So three to two touchdowns.  He‘s one ahead.

MATTHEWS:  OK.  God, that‘s pretty close.  Your thoughts, Steve?

STEVE KORNACKI, SALON.COM:  Well, I would say, look, his approval rating is just a shade under 50 percent, you know, 45, 46 percent.  So I‘d say he‘s down, I‘d say 13-10, if I‘ve got to pick a football score.  But I‘d say it‘s a different kind of 13 to 10.  This is the kind of, you know, first half in football, where a lot of things go wrong.  He had a couple turnovers, maybe a blocked punt—

MATTHEWS:  But he looks stronger than his numbers.

KORNACKI:  You get to the locker room and you say, You know what?  It‘s only 13-10.  We‘re healthy.  We‘re strong.  And I think that‘s the mood, if you ask Republicans now.  They—

MATTHEWS:  So it‘s 10-13.

KORNACKI: -- expect to come back in the second half.

MATTHEWS:  And Jon Alter, I‘m really interested to hear.

ALTER:  I‘m actually much more where these other guys are.  He has put a lot of points—

MATTHEWS:  Give me your numbers.

ALTER: -- on the board—I‘ve got it at 23 to 14.

MATTHEWS:  OK.

ALTER:  He‘s got two big touchdowns.  He prevented a Depression.  We keep forgetting about that.  We were headed for 20 percent unemployment in 2009.

MATTHEWS:  Right.

ALTER:  Health care is huge, the biggest piece of social legislation since 1965.  So those are two big touchdowns.  And I put all the other things in as field goals, really—

MATTHEWS:  OK, let‘s start—

ALTER: -- a bunch of small things.

MATTHEWS: -- with you right now—

MATTHEWS:  But then on the other side, the reason that the other team has two touchdowns is that—not just the mid-terms, they have controlled the politics of the last two years.  They are just much more disciplined about driving a message and maintaining political momentum.  And that‘s worth at least one touchdown—

MATTHEWS:  So they were able to say, Tax cuts are good for all economic groups and “Obama care” sucks.  Basically, they keep getting those messages out.

ALTER:  Yes, they‘re just much better.  And this is a huge problem for Obama moving forward.  He‘s got to develop a coherent message that sticks and that lingers in the minds of the American people.

MATTHEWS:  OK.  Back to you, Michelle.  Thoughtfulness here, mission statement for the president.  We‘ll get to his dangers facing him later, but what is his mission?  He‘s got two years left, really a year until he‘s in the thick of the campaign again, a year to really do something as leader of the country before he becomes a complete partisan figure.

BERNARD:  Absolutely.

MATTHEWS:  What should he try to do?

BERNARD:  I think going into 2011, what we‘re going to see from this president—in terms of all the big government legislation and all of the things that we saw happen going up through the lame duck Congress, I think that‘s over.  What we‘re going to see from this president is he‘s going to focus on the economy, on jobs, and giving the country back candidate Obama.  In terms of—you know, his tone is very, very important, his temperament, where he lost independents and independents decided that they‘re going to sort of hang out with conservatives and with the Republican Party for the next two years, he has a chance to win those people back.

But the only way he‘s going to do that is if he can remind the American public why they voted for him, and also make people feel that he can connect with the suffering that‘s going on economic-wise (ph) in this country.  So that‘s what we‘re going to see in 2011.  All of this big-time legislation, I think that‘s on hold until he gets reelected, if he‘s reelected.

MATTHEWS:  Let‘s take a break before we get to Richard.  A new NBC/”Wall Street Journal” poll has been asked to judge whether President Obama will be a successful president.  Forty-two percent said not ready to say.  I love that number, 42 percent waiting to think about it.  Twenty-eight percent think he‘s been successful, 29 not.  So it‘s basically even among the pros and cons, but a big, I think healthy, 40-some percent still waiting to see.

Your thoughts, Richard.  What do you think he has to do this year to bring those undecideds into his column?

WOLFFE:  Well, you‘ve got to explain why he‘s done what he‘s done because we all agree that he‘s done a lot, but there‘s no overarching theory or message or framework for it.  He‘s got a—he‘s got a story to tell now.  We‘ve been talking for the last two years about how they haven‘t said what they were trying to do with the economy.  But now GM is saved.  The stock market‘s up 70 percent plus from its low of March ‘09.  He has a story to tell.  He‘s got to say that he‘s the last, best hope out there for people who‘ve run out their savings, they need unemployment insurance for (ph) when (ph) GM fails or when Wall Street fails.

If he doesn‘t make that argument, then the other side is going to say, It‘s big government squelching out big business or small business, and that leaves him extremely vulnerable moving into 2012.  So he needs a framework.  He obviously needs to keep busy on the jobs front.  Let‘s face it, there‘s not going to be a whole lot that‘s done, but he‘s got to run—he‘s got to frame that record that he‘s got for the last two years.

MATTHEWS:  I love it.  He‘s not been scary, he‘s been necessary. 

Steve?

KORNACKI:  Yes, you know, but one thing that really strikes me is the mood and sort of expectations that surround the next year for Barack Obama.  I mean, listen to the scores you‘re getting from people here tonight.  I‘m the only one that has him down at halftime.  If you can think back to the last Democratic president at this stage in his presidency, Bill Clinton—he had a mid-term election just as disastrous as Obama‘s.  His approval rating was just where Obama‘s is now.

MATTHEWS:  Yes.

KORNACKI:  If you asked that same question 16 years ago, the consensus would been Clinton‘s down 38-0 at halftime.  Look at the mood of the political world right now, heading into Obama‘s third year.  Despite the electoral drubbing—

MATTHEWS:  Is that one reason why it‘s not down, we think that he can do what Bill did?

KORNACKI:  I think we learned from it.  And I think you saw a preview of it in this lame duck session.  Clinton would never have had—didn‘t have a lame duck session like Barack Obama—

MATTHEWS:  No, he came back very slowly.

KORNACKI: -- just did.  Right, it was—

MATTHEWS:  In fact, he wiped out his whole staff of—Carville and George and all those people were sort of pushed aside for months and he brought in Dick Morris and went to the right.  Remember?

KORNACKI:  There was total disarray within the White House and within the Democratic Party for months after the 1994 election.

MATTHEWS:  He was grieving.

KORNACKI:  They didn‘t even skip a beat after this election.

MATTHEWS:  And so he seemed to have had a better election night than anybody thought psychologically.  Why is that?  Why was it good mentally for him?

KORNACKI:  I think we‘ve—I think we‘ve learned from history. 

That‘d be the best thing I can think of.

MATTHEWS:  Using your head.  And Jon, your thoughts about the mission statement?  You‘ve been writing about it in the new epilogue to your book, “The Promise.”

ALTER:  He just doesn‘t have one yet.  It‘s not just telling a story, it‘s speaking in images and metaphors that stick with people, that they can get their hands on.  Americans are busy.  They get up and go to work.  They can‘t absorb all—

MATTHEWS:  The “New Foundation” didn‘t work?

ALTER:  The “New Foundation” didn‘t work, but they better come up with a few other things.  And this—

MATTHEWS:  Is he afraid of being caught using what we used to call highfalutin‘ language?  Is he afraid getting caught trying to float something like the New Deal, the New Frontier, the Great Society?

ALTER:  I think he thinks that part of that is about the phoniness of politics.  But he‘s—his basic problem, Chris, is he took Mario Cuomo‘s dictum that you campaign in poetry and govern in prose too much to heart.

MATTHEWS:  Too prosaic.

ALTER:  You have to govern in poetry, as well.

MATTHEWS:  I‘m so with you.

ALTER:  And another thi9ng is, Innovation nation.  That‘s—

MATTHEWS:  You know, I‘ve talked about—

(CROSSTALK)

MATTHEWS: -- he thrilled me physically, and I‘ll go back to the speeches and I go back and look at them because he talked about our country.  That‘s what thrilled me.  That‘s what got to me.  And you were in those rooms—

ALTER:  Yes!

MATTHEWS: -- those high school rooms and places.  He talked about America and what it could be for people like him who came from mixed no-great-breaks backgrounds, and everybody said, God, this guy‘s the symbol of what we want!

ALTER:  But you‘ve got to—he‘s got to have the music and the poetry to sell the math and science.

MATTHEWS:  OK.  Let‘s sell your book right now, the epilogue to “The Promise” by Jon Alter, out in paperback.  Quote, “How the president and his people would combat the Obama hate machine and the flight from facts would be one of the big stories of 2012 for a large segment of Americans far inland from the coasts.  Obama had become a scary face of a changing nation, the personification of all they found threatening.  He represented not too little change, but too much.  And yet a country dominated since its founding by older, white, straight Christians now had room for African-Americans, Latinos, gays and others once considered outside the mainstream.”

You say, basically, he‘s so much the face of change that he scares the middle, the old white core of the country, if you will, older white core, and that if anything breaks bad, like—not that it‘s inevitable, but we are in a dangerous world.  If something breaks against us in terms of a terrorist attack, you say the entire right-wing media machine led by Limbaugh and Fox and everybody else will say, yes, we warned you.

ALTER:  Yes, and it‘s his fault no matter what the facts are—

MATTHEWS:  Right.

ALTER: -- because we used to talk about a liberal media in this country, and there was a liberal media for much of the 20th century.

MATTHEWS:  Well, Cronkite.  Yes.  Yes.

ALTER:  Now we have a very powerful conservative media, and they are very, very effective at driving a political agenda.  They work hand-in-glove with the Republican Party, and they will make a lot of trouble for Barack Obama if he slips up.  So what he has to do is he has to appeal to independents—

MATTHEWS:  OK—

ALTER: -- by developing what I think of as “innovation nation,” whatever he wants to call it, where he says, I‘m on the side of small business.  I‘m the small business president.  I‘m looking out not just for my liberal constituents—

MATTHEWS:  Yes, it‘s hard to sell for a guy who comes from—from—

(CROSSTALK)

ALTER: -- for the job creators.

MATTHEWS: -- from a guy who comes from Saul Alinsky, all of a sudden he‘s a big burger and bourgeois president all of a sudden.

ALTER:  He‘s got to reconnect with—

MATTHEWS:  I‘m not sure they‘re going to buy that.

ALTER: -- the inventive American.  You talk about the core of the soul of this country, it‘s inventing and developing ideas.

MATTHEWS:  Yes, I know, but is he connectable?

ALTER:  He can do that, he just needs to find the right words.

MATTHEWS:  OK, I‘m going to get (INAUDIBLE) I want to know what kind of thinking is going on in Hawaii right now.

Our panel stays with us.  And when we come back, all those new Republicans in Congress—will they manage to destroy a president or destroy themselves trying?  Could they “Newt” themselves?  Remember what happened to him when he tried to blow up the government?  Well, he blew up himself.

You‘re watching HARDBALL, last show of 2010, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Where‘s the bounce?  The legislative accomplishments by the Democrats in the last couple of weeks appear to have had little effect on President Obama‘s approval rating, according to Gallup‘s latest tracking poll.  Right after Christmas, soon after Obama arrived in Hawaii for his vacation, the president‘s approval rating was 47 percent, 2 points lower than his rating from a week before.  He‘s averaged 46 percent since November, not much change at all.  Look at it, just vibrating there around 46.

HARDBALL will be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  Next week, John Boehner will become Speaker of the House and Mitch McConnell will have 47 Republicans in the Senate.  What‘s it mean for getting anything done in 2011, and what‘s it mean for President Obama?

We‘re back with our hotshot panel, Michelle Bernard, Richard Wolffe, Steve Kornacki and Jonathan Alter.

I want to start with Richard on this.  You know, Boehner‘s never been Mr. Excitement.  He seems like an OK guy.  He has regular emotions.  The crying doesn‘t bother me a bit, although I think he does overdo it and it‘s often about him.  But here‘s the question.  Does he have, as a regular Republican, a golfing, smoking regular Republican—does he have the juice to be with the leadership of the Republican Party has promised, which is they‘re going to cut the debt, they‘re going to cut taxes, they‘re going to eliminate health care.  Is he a leader in that kind of firebrand role?

WOLFFE:  Well, I don‘t think he‘s going to have a problem getting the votes up on the board and making a lot of symbolic statements, whether it‘s on health care or in some of these investigations.  He‘s promised to hand more power to those committee chairmen, so they‘re going to do their own thing, especially on the investigations, which is going to make it hard for that message discipline that we‘ve all been saying they‘ve had for the last couple of years.

But what happens is, of course, they‘re going to make those statements and then they‘re going to point to the Democrats in Senate and say, You‘re blocking this, you‘re the party of no.  Of course, the Senate‘s going to say the same.  So you‘ve got gridlock.  And at the same time, he‘s got all the Tea Party expectations, where these party are—these folks are coming in saying they can do something different with the federal government.  That‘s not going to happen because it‘s going to go nowhere.

MATTHEWS:  So if he gets Maoist and lets a thousand flowers bloom, Steve Kornacki—your suggestion, Richard, is that it‘s not going to keep the message that we want smaller government.  It‘ll just be sort of a red dog, as we say in football, of the opposition, just going after everything Obama‘s done without a message.  Your thoughts about that?

KORNACKI:  Well—

MATTHEWS:  Does it get too crazy out there?

KORNACKI:  My question is, there‘s got to be—there may be—and we‘ll find out if there is—a breaking point for the House Republicans.  The most extraordinary statistic I‘ve seen about the incoming Republicans in the House, there‘s going to be 242 of them total, by the sort of standard that—

MATTHEWS:  And they need 218 to do anything.

KORNACKI:  And by the standard definition that sort of that political science has developed, only 3 of those 242 can be considered moderate Republicans.  And there‘s one overriding lesson that the average House Republican took out of the 2010 election cycle, it‘s that if you‘re wrong on just one important vote, you are in grave danger of losing a primary.

So if the House passes, let‘s say, de-funding of health care or de-funding of Wall Street reform, one of these Tea Party items, and it gets stalled in the Senate, my question is, at what point do those Republicans in the House decide that they‘re going to compromise, that they‘re going to sign off on funding for one of these things, versus standing back and refusing to do it and prompting some kind of a shutdown?  I don‘t—I assume it will happen—

MATTHEWS:  You mean you‘re saying that the House will pass things that the Tea Partiers want, but at some point, they won‘t get it done because the Senate won‘t cooperate.

KORNACKI:  If you were to—

MATTHEWS:  So basically, hold up the Senate, say, We‘re doing a job action here.

KORNACKI:  I could see—the budget just got kicked down the road until March—I could see a scenario where, you know, it passes the House, it fails in the Senate, and they kick it down the road again until October.  But at a certain point, you know, there‘s going to have to be a decision made by the House, Do we want to fund the government, and if we want to fund the government, do we want to fund—

MATTHEWS:  You mean threaten to shut down the government if the Senate doesn‘t do what they do?

KORNACKI:  I—when—

MATTHEWS:  I‘ve never heard of that before.

KORNACKI:  When do these guys, when do these Tea Partiers who are in the House—when do they compromise?

MATTHEWS:  Do you ever see that happening, Jon, just shutting down the government, like Newt did, only saying, If you Republicans and Democrats in the Senate don‘t do what we want done, what Tea Parties want us to do, we‘re shutting this whole place down.

ALTER:  We haven‘t seen anything like this, honestly, if you look at history, since the last radical Republicans in the Reconstruction period, where compromise was literally a dirty word.  And the Republican leadership has tried to tell folks, Look, compromise isn‘t a dirty word.

MATTHEWS:  OK—

(CROSSTALK)

ALTER:  I don‘t think it is.

MATTHEWS:  Here‘s Boehner a couple weeks ago with Leslie Stahl on “60 Minutes” on this point.  Let‘s listen.

(BEGIN VIDEO CLIP)

LESLIE STAHL, “60 MINUTES”:  You‘re saying, I want common ground, but I‘m not going to compromise.  I don‘t understand that.  I really don‘t.

REP. JOHN BOEHNER (R-OH), MINORITY LEADER:  When you say the word “compromise,” a lot of Americans look up and go, Oh, they‘re going to sell me out.  And so finding common ground, I think, makes more sense.

STAHL:  Why won‘t you say—you‘re afraid of the word!

BOEHNER:  I reject the word.

(END VIDEO CLIP)

MATTHEWS:  Michelle Bernard, “reject the word.”

(LAUGHTER)

MATTHEWS:  In other words, why go to Congress?  Why—they don‘t recognize the legitimacy of the other party, basically.  If you say you don‘t compromise, you‘re saying the people who won seats in Democratic districts aren‘t really members of Congress; only we Republicans are members of Congress. 

Isn‘t that what you‘re saying?  No compromise. 

(CROSSTALK)

BERNARD:  I mean, well, he‘s saying no compromise.  And I would say it‘s probably pretty safe to say that most Democrats don‘t trust Republicans, and Republicans don‘t trust the Democrats. 

But here‘s the bottom line.  The American public, particularly independents, have shown that they really don‘t have any party allegiance right now.  They don‘t want gridlock.  They want members of Congress to do what they pay them to do, which is to effect—

MATTHEWS:  Well, what is that? 

BERNARD: -- which is to effect some—to effect change and do the things that are best for the country. 

And gridlock, threatening to shut down the government, won‘t work.  The Republican takeover, they have taken over the House, they have taken over the governorships.  They have taken over so many state seats across the country, it won‘t be enough to just blame something negative on a Democratic Senate.

(CROSSTALK)

MATTHEWS:  OK. I‘m getting a conflict between what you‘re saying, in terms of principle—you want to get something done—and what Jon and the others are saying is, wait a minute, these guys got elected to say no to everything.  That‘s what they‘re doing. 

(CROSSTALK)

MATTHEWS:  Here‘s Mitch McConnell, by the way, saying he‘s going to try to kill everything Obama stands for, including his presidency. 

Let‘s listen.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER:  Some have said it was indelicate of me to suggest that 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 bailouts, 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:  I still see a Republican brain out there.  And the brain says, no.  This guy Obama can be beaten.  We can just say no to him until he dies.  And I still think I‘m hearing that from these guys.

Jon.

ALTER:  Well, I think they‘re going to try that, but it might not work the way it did the last time, because when—as Michelle said, when you have power, you have responsibility, and the American people expect you to deliver it. 

Look how popular the lame-duck tax compromise was.  It was at 67 percent, I think.  So they are going to be under some pressure to get some things done.  The way I think it will play out initially, beyond your very good points about the budget, is that they will pass a repeal of health care in the House.  They‘re pledged to do that. 

And then, at that point, it‘s not going anywhere in the Senate, but if Obama has half-a-brain politically, which I think he will on this, he will bring out the seniors who right now are in the process of getting 50 percent reductions in their drug costs under health care reform if they‘re in the so-called doughnut hole. 

He will bring out all the kids between high school and age 26 who are suddenly getting insurance.  And he will start to build a constituency against repeal.  And he will make them pay a political price for having repealed this.  And I think that‘s very—

(CROSSTALK)

MATTHEWS:  Well, see, I see the big fight here on the Republican side.  We‘re going to get the Democrat fight, whether the Republicans fight on everything or deal on some things.

We will be right back with our panel. 

Christine O‘Donnell, by the way, says she‘s not being investigated because she did anything wrong, but just because a big-name Democrat, a very-big-name Democrat, happens to be in her state and is going after her. 

We are going to take a break from reality with O‘Donnell and the HARDBALL “Sideshow” and see which direction her wand is pointing tonight, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Wow. 

Back to HARDBALL.  Now for the “Sideshow.” 

First up, it‘s witchcraft and the probe—amid the probe into possible misuse of her campaign money, Christine O‘Donnell is now pointing her wand—quote—“Given that the king of the Delaware establishment just so happens to be the vice president of the most liberal presidential administration in U.S. history,” she says, “it‘s no surprise that misuse and abuse of the FBI would not be off the table.”

Well, come on, Tabitha.  Joe Biden‘s coming after you? 

Anyway, today on ABC, O‘Donnell doubled down on the conspiracy talk. 

Let‘s watch. 

(BEGIN VIDEO CLIP, ABC)

CHRISTINE O‘DONNELL ®, FORMER DELAWARE SENATORIAL CANDIDATE:  You have to look at this whole thug politic tactic for what it is. 

We were informed that the Delaware political establishment was going to use every resource available to them to—you know, including launching phony investigations, making false accusations, and tying me up with lawsuits to make sure that I can‘t move forward politically. 

(END VIDEO CLIP)

MATTHEWS:  Can‘t move forward politically. 

Well, hang on there.  O‘Donnell raised an incredible $7 million for her Senate race and still lost to Chris Coons by 17 points.  You don‘t need a conspiracy to stop Christine O‘Donnell‘s political career.  Voters have already done it.

Next:  The Wild West makes a comeback.  New Mexico Governor Bill Richardson has until tomorrow, his last day in office, to pardon Billy the Kid—yes, Billy the Kid, that one, the iconic outlaw who was convicted of murder back in 1878, but escaped prison soon after, only to be shot and killed by a local sheriff. 

Legend has it that then Governor Lew Wallace—that‘s right, he‘s the guy that wrote “Ben-Hur”—had promised to grant Billy a pardon in exchange for his testimony in another case.  Well, Governor Richardson has now set up a Web site on whether he should honor that deal, receiving over 800 responses so far.  The verdict so far on death or life for Billy, 430 argue for the pardon, 379 oppose it, kind of even-steven there. 

Finally, Jim DeMint, the senator from South Carolina, invokes a Republican hero.  The South Carolina senator has just placed 2012‘s mama grizzly on the highest of conservative pedestals, saying of Sarah Palin—quote—“I believe she‘s done more for the Republican Party than anyone since Ronald Reagan.”

Let‘s recap the perspective of that accomplishment.  Ronald Reagan served two terms as governor of California, two terms as president of the United States.  He also—small deal—helped to end the Cold War. 

Sarah Palin, well, she cut out halfway through her first term as governor.  Historical equivalence?  I doubt it. 

Anyway, despite the praise, Senator DeMint, who backed Romney in 2008, says he has still got an open mind about the 2012 race. 

The fact he has a mind is news. 

Up next—I shouldn‘t say that—our panelists are back.  They‘re going to make their pick for who is likely to win the 2008 -- 2012 Republican nomination.  Could Sarah Palin really do it?  That‘s it.

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

SHARTIA BRANTLEY, CNBC CORRESPONDENT:  I‘m Shartia Brantley with your CNBC “Market Wrap.”

Stocks slipping just a bit today, despite some encouraging economic reports, the Dow Jones industrials falling 15 points, the S&P 500 dipping two points, and the Nasdaq losing four.  Volume still surprisingly low, even for a holiday week, but, overall, investors and analysts are optimistic about the year ahead, like a report today showing $335 million flowing into U.S. stock mutual funds last week, the first inflow in nearly three years. 

In economic news, pending home sales jumping more than expected, but still below the normal levels for this time of year.  The Chicago PMI reporting a big spike in Chicago area manufacturing boosted by gains in employment and new orders. 

And first-time jobless claims falling last week to their lowest level in more than two years.  And a quick look at the stock movers today.  We had United Continental surging 2.67 percent after service employees ratified a 30-month contract with the Teamsters union. 

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

HARDBALL. 

MATTHEWS:  Back to HARDBALL. 

For Republicans, 2011 is the warm-up for the presidential race of 2012.  By the way, they have to form their field this week.  Take a look and see some of the GOP‘s contenders here on your screen.  Will the party follow its tradition and go hard right after losing with a moderate like John McCain, or will it play it safe and try to win by reclaiming the center?

That‘s the fundamental question.

Our panel‘s back, MSNBC political analysts Michelle Bernard and Richard Wolffe down in Washington, as well as up here with me in New York Salon‘s Steve Kornacki and “Newsweek” and MSNBC‘s Jonathan Alter. 

By the way, Jon, I don‘t think the snowfall and the handling of it has been helpful to this third-party push for Michael Bloomberg. 

(LAUGHTER)

ALTER:  I wouldn‘t say so.

MATTHEWS:  I will leave you off the hook on that, but let‘s go back to the fundamental question. 

Michelle Bernard, I want you, as someone whose politics I still can‘t discern, answer the question. 

(LAUGHTER)

MATTHEWS:  What is the mission of Sarah Palin this January 1 forward? 

BERNARD:  Chris, I wish I had a crystal ball, so I could tell you.

MATTHEWS:  Well, you are my crystal ball. 

BERNARD:  I cannot figure out—you know, we honestly can‘t figure out, does Sarah Palin—is she enjoying the limelight and sort of teasing the American public with the possibility that she might run for president in order to, you know, keep her earnings skyrocketing, or is she really going to run for president come January? 

Is she enjoying being a sort of queen-maker for candidates in the Republican Party?  I think she is.  But whether or not that leads her to a very difficult, I predict, presidential run, should she decide to run, I really, honestly don‘t know.  She has a lot of support in the conservative base. 

People—the conservative base likes her, but that does not mean that people want her to be the next president of the United States.  And if she decides to go that way, she‘s going to have a very, very tough road to hoe.  People will always remember the infamous, infamous Katie Couric interview, “What do you read?” and you will see her stumbling. 

MATTHEWS:  Well, that—we know what that is.

BERNARD:  Yes. 

MATTHEWS:  Let me go to Richard on that, because it seems like there are some successful shows in American politics.  Carville and Matalin are a good show.  They‘re very smart.  They are a show, however.  They‘re not running for anything and much smarter I think than Sarah Palin.

But can she continue as a show? 

WOLFFE:  Sure, she can.  I haven‘t heard one credible reason from Republicans or Democrats why either she wouldn‘t want the nomination or why she couldn‘t win the nomination? 

She wants the limelight?  Well, she can continue with the limelight on a presidential run.  She can make more money after it than she could right now.  And, by the way, she‘s made so much money, she doesn‘t need to work again anyway. 

So, what‘s the downside here?  You‘ve got a party—the most reasonable argument is, the party looks at the numbers and says, she cannot win the general election. 

Was that a factor in Christine O‘Donnell?  No.  Was it a factor in any of the Tea Party candidates?  No.  They still nominated them.  So I see that she—the more the establishment tries to stop her, the more unstoppable she becomes. 

MATTHEWS:  So you see her mission as running for president? 

(CROSSTALK)

WOLFFE:  Yes, absolutely, and dominating the landscape, as she has the last few years. 

MATTHEWS:  Both you guys—

(CROSSTALK)

MATTHEWS:  I got a split decision up here. 

Before I come north here, Michelle, what‘s her mission, to make money as a political show, which she is, I guess a good one, or to run for president?  What‘s her mission right now? 

BERNARD:  Chris, you‘re talking to me? 

MATTHEWS:  Yes. 

BERNARD:  I‘m sorry.  Again, I—

MATTHEWS:  You don‘t know?  I don‘t know. 

BERNARD:  I honestly don‘t know. 

MATTHEWS:  I‘m being honest

BERNARD:  I think she‘s enjoying both.  I‘m sure she wants to make—

MATTHEWS:  OK. 

BERNARD: -- you know, earn as much money as possible.  That‘s why she left her governorship in Alaska two years early.  And I think she‘s enjoying being the queen-maker.  And I think she is enjoying the political spotlight.

MATTHEWS:  OK.  You say show.  Richard says run. 

WOLFFE:  It‘s not an either/or.  She could do both.

(CROSSTALK)

BERNARD:  She could do both.  She could do both. 

(CROSSTALK)

KORNACKI:  Here‘s the argument.  Here‘s the argument.  And I think it‘s a compelling one and it‘s getting more compelling by the week for her not to run. 

There is a poll that came out the other day that showed, in the past year, there‘s been a 20-point drop in the number of Republicans who say they are willing or likely to vote for Sarah Palin for president in 2012.  It‘s now under 50 percent. 

Mike Huckabee‘s number, by contrast, is up near 70 percent.

MATTHEWS:  She‘s down to 33 in Alaska. 

(CROSSTALK)

KORNACKI:  Here‘s the significant thing that has happened in the last year.  The sort of Republican information networks are starting to turn on Sarah Palin. 

It‘s not just Democrats mocking her.  It‘s people like Karl Rove saying, we don‘t think she can win.

MATTHEWS:  OK.  I‘m hearing a turn against her. 

Do you think she‘s showing—her mission is to run or to show up—just be a show? 

ALTER:  I think she‘s going to run. 

MATTHEWS:  OK. 

ALTER:  I mean, look, we‘re always wrong about these things, but—

(CROSSTALK)

(LAUGHTER)

MATTHEWS:  I love it.  We‘re always wrong about these things.  That‘s the quote of the week. 

(CROSSTALK)

MATTHEWS:  OK.  You‘re selling books tonight?  We‘re always wrong?

Jon Alter, are you selling books tonight?  We‘re always wrong about these things?  That‘s a good title for a book, “We‘re Always Wrong About These Things.”

(CROSSTALK)

MATTHEWS:  Let‘s go to Peter Baker of “The New York Times.”  This fall, he said Obama‘s team is speculating the following, that Huckabee may wind up being their opponent.  He reported—that‘s Peter Baker‘s thinking and—his reporting, rather.

“Obama‘s aides doubt Sarah Palin will actually run and figure that Mitt Romney cannot get the Republican nomination for the simple fact that he enacted health care up in Mass. and he in no way is going to get past that.  Some in the White House say that Obama will find himself running against Mike Huckabee, the former Arkansas governor.”

So, let‘s go on to that one in a minute. 

But, basically, is Huckabee making a run? 

You think so, Steve.

KORNACKI:  Yes.  I -- 

MATTHEWS:  Are you behind his run?  Are you pushing him? 

KORNACKI:  I think he is.  And when I start to look at this field, and when I start to look at—my judgment is—who knows what‘s in Sarah Palin‘s mind?  I don‘t think she runs.  I think, if she does run, she fizzles badly.  And I think—

(CROSSTALK)

MATTHEWS:  Loses Iowa to him? 

KORNACKI:  Oh, yes.  I think that‘s why there‘s an opening for Mike Huckabee.  If you look at his poll numbers, it‘s amazing.

MATTHEWS:  He won last time.

KORNACKI:  In the last year, he‘s consistently—

(CROSSTALK)

MATTHEWS:  You‘re right.  If he knocks her off in Iowa, she‘s—he‘s in. 

KORNACKI:  Hey, I think Romney—I think Romney has serious problems. 

MATTHEWS:  Huckabee? 

ALTER:  He‘s not even sure he can knock her off.  He has said that, if she runs, she clears the field.  Now, this was before her recent drop in the polls, but Huckabee has always had trouble raising money.  He has to figure out—

(CROSSTALK)

MATTHEWS:  Do you need money in Iowa? 

ALTER:  Maybe not in Iowa, but if you‘re going to go the distance and you‘re going to outlast Mitt Romney and the rest of them, you‘ve got to build an effective—

MATTHEWS:  But doesn‘t he just have to knock her out once?  Isn‘t it all about that first round in Iowa for Huckabee?  If he knocks her out—

(CROSSTALK)

MATTHEWS:  It‘s the main chance.

ALTER:  Well, no.  But he still—it‘s going to be a gauntlet that he‘s going to have to run, because, look—

MATTHEWS:  Who‘s he have to beat after Iowa once he‘s beaten her? 

ALTER:  He has to beat Romney. 

MATTHEWS:  Oh.

ALTER:  Now, the idea of writing Romney off, it‘s easy to say, as Huckabee said of Romney, he said, he looks like the guy who laid you off, you know?

MATTHEWS:  Yes. 

ALTER:  That‘s a problem for him.  He‘s not very appealing.

But, in some ways, he also looks like the guy who might hire you, because he knows a lot about job creation.  He will convey a lot of that in the debates. 

(CROSSTALK)

MATTHEWS:  Did you see Huckabee‘s targeting Romney lately?  He‘s saying he voted against the didn‘t tax cut for the rich.

ALTER:  Yes, he is.  He thinks that he‘s going to be his main opponent.

KORNACKI:  Look at what Mitt Romney represents, likely, to the average Republican primary voter, and look at what the average Republican primary voter did in 2010. 

I can‘t think of a top-tier Republican prospect for 2012 who is more spectacularly ill-suited to the mood of today‘s Republican base than Mitt Romney.  So, I take Palin out.  I‘d say maybe Chris Christie—Chris Christie is sort of my dark horse and I say Huckabee.

ALTER:  No, here‘s what you‘re forgetting - the Republican primaries, these Tea Party primaries in off-year elections, it‘s a smaller group of conservatives.  When you get into a presidential primary, the Republican Party is a bigger tent—

MATTHEWS:  So, we all agree—

(CROSSTALK)

MATTHEWS:  I got to go—I got to go to Washington and check this out with Richard and Michelle.  Is this down to three people—Sarah, Romney and Huckabee?  Michelle?

BERNARD:  Chris, you know, I don‘t—I really don‘t think any of them, when we get to 2012, are going to be in the top slot.  I honestly believe that the advent of the Tea Party has completely changed Republican politics for the foreseeable future.  I think that the Republican Party, if it‘s going to survive, if people want to actually win and end up in the White House in the foreseeable future, I think all of these people‘s time has come and gone—and that the Republicans are going to be looking for a new face, someone like a Chris Christie with a different tone, a different temperament, someone who can appeal to independents, conservatives, and to people of color.

And you‘re not going to get that with any of these people that we saw two years ago.

ALTER:  I just heard something about Chris Christie that‘s a little bit of news from somebody very close to him.  Not all likely for 2012, very, very unlikely, but very likely for 2016.

MATTHEWS:  OK.  The panel is staying with us.

Next, progressives on the left and Tea Partiers to the right, that‘s the problem for both parties.  Will the center hold against the threats from right and left?  Who‘s going to end up?

I have a feeling the Tea Partiers want to take down the center as well.  I think Obama‘s in better shape with the left than the Republican regulars are with the right.

And we‘ll be right back on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Well, a small win for the Tea Party.  “The Washington Post” reporting that when the 112th Congress reopens next week, Republicans will do something apparently has never been done before in the history of Congress, they will read the Constitution aloud, and then they will require that every new bill contain a statement by the lawmaker who wrote it citing the constitutional authority to enact that proposed legislation.  Well, the reading of the Constitution will occur January 6th, one day after John Boehner is sworn in as speaker.

HARDBALL will be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back.

Starting next week, President Obama will be looking over his left shoulder at progressives, of course, while Mitch McConnell and John Boehner will be watching their right flank and the new Tea Party types.  Which party will be better off, better able to cope with its extreme elements, or more extreme elements, we should say?

We‘re back with our panel.

It‘s a great political question.  The governing parties, the governing aspects of each party as opposed to the critical aspects.

Michelle Bernard, Richard Wolffe, Steve Kornacki, Jonathan Alter.

I want to start with Richard.  In this on the left—I mean, you know the Netroots people, the progressives in the Congress, they‘re the ones that are left.  Let‘s be blunt.  They survived.  They come from inner cities—

WOLFFE:  Right.

MATTHEWS: -- and wealthier suburbs in the Bay Area and places like that.  Is there going to be—let‘s start with the left, because I would like to do that first.  It will take less time.  Is he going to face the kind of thing he faced on the public option, on the tax cuts for the wealthy?  Will there be a new sort of burr in his saddle going into this year from the left?

WOLFFE:  I don‘t think so, because the cycle started earlier.  It‘s a bit like the economic recession started early enough that people could get through it.  They obviously are feeling a little more encouraged after that lame-duck session.

And remember, he‘ll be sparring with Republicans more as well.  So a lot of the frustration will find its channel, its vent there.  You know, where they may—where they find reassurance, I think, will be seeing the Afghan—first Afghan troop withdrawals come down at the start—at the middle of the summer of next year.  On the other hand, they‘re not going to get Guantanamo Bay, but folks in Congress have themselves to blame.  Democrats, remember, voted against it, as well as Republicans.

So, there‘s still going to be that lingering resentment and question mark as he moves to the center.  But he‘s not going to be doing the big things like health care.  So, they can‘t say that their expectations are sky-high anymore.

MATTHEWS:  But the defense of health care will be a united of center/left operation, right, Steve?

KORNACKI:  Yes, exactly.  I mean, I think the story of the first two years of the Obama administration was they were sort of in expansion mode.  The story of the second two years is going to be they‘re sort of defending. 

They‘re going to defend the progress.

MATTHEWS:  So, it will be common front on the—

KORNACKI:   Defend the health care, defend Wall Street reform, defend the social safety net.  And I hate to continue to draw comparisons to Bill Clinton, but you remember, you know, Bill Clinton was never really seen as the candidate of his party‘s base.  He was always the centrist new Democrat.

MATTHEWS:  Can you—you know this (INAUDIBLE) -- can you energize the Netroots if you support the president again?  Is it possible you can get contributors and supporters and people to pay attention to your Web site if you move closer to him, or you have to always be as they‘ve been for the last year or so?

KORNACKI:  Well, I think the whole idea that Barack Obama has a big problem on his left or has a burgeoning problem on his left I think is totally overstated and totally misunderstood.  The most striking statistic to me—

MATTHEWS:  Do you watch this network?

KORNACKI:  That‘s it.  This is not like—

MATTHEWS:  I hear it all the time on this network.

(LAUGHTER)

KORNACKI:  You hear it, but we‘ll take a look at the polls.

MATTHEWS:  Yes?

KORNACKI:  When the sort of on the right, when right-wing commentators move on a conservative politician, that guy or that woman‘s poll numbers drop like crazy.  You‘ll get Barack Obama‘s approval rating among liberal Democrats, for all these flare ups—

MATTHEWS:  Oh, I know all that!

KORNACKI:  It‘s still on 80 percent.

MATTHEWS:  Excuse me, I work here.  I‘ve gone through a season of withering attacks.  Jon, that‘s what I‘m talking about.  I‘m sort of on the center-left on a lot of issues.  A withering attack on things like public option, and then on this tax cut deal—

KORNACKI:  Doesn‘t trickle down, though.  It doesn‘t trickle down to the—

MATTHEWS:  Jon, how do you see it?  Is he going to find common ground with his left, or will he have to flight off that left-wing flank, if you will?

ALTER:  I think Steve is absolutely right, and also a repeal of “don‘t

ask, don‘t tell” helps

MATTHEWS:  Yes.

ALTER: -- because he delivered on a key issue for the left.  The next big one, which I think he‘s also going to try to deliver on is the DREAM Act.  And there‘s a moral imperative there to—

MATTHEWS:  Can he do that?

ALTER: -- not penalizing the children of immigrants.  And it‘s very important to the left.

MATTHEWS:  Well, he feels—he feels left on that, if you will.

ALTER:  He does.  And he said at his last press conference, it was the biggest disappointment that he‘s had lately.  He can find common ground with them on that.  I think if they can pick off some Republican senators who want expansion of what they call H1B—

MATTHEWS:  The highly-educated people.

ALTER: -- the highly-educated immigrants—

MATTHEWS:  Right.

ALTER: -- they might actually be able to get a bill through the Senate.

MATTHEWS:  I‘ve got to go around the table.  Richard and then Michelle.  I want to know how he‘s doing.  Richard on the left.

Michelle, your thoughts.  Will there be common ground left of center next year, this year?

BERNARD:  I think there‘ll be some common ground.  I think issues like education reform, maybe something on immigration, something dealing with lowering the corporate tax rate—I think those are areas where we‘re going to the see some coalition building and people working and finding true areas of common ground.  I absolutely foresee that.

MATTHEWS:  Richard, is there going to be a right-wing assault on Boehner and on the issue of like debt ceiling, stupid things from their perspective, from the Tea Party?

WOLFFE:  Yes, budget, debt ceiling, absolutely.  They have—they have way too high expectations about shrinking government and stymieing the president.  He‘s going to be able to pick off Republican senators on energy, on some of the small ball stuff, on the economy, and it‘ll be frustrating for them.  They will be in rebellion mode, because that‘s what they were born to do.

MATTHEWS:  Somebody said only there‘s only two moderate—who said it tonight?  There‘s only two moderates.

ALTER:  Steve, yes.

MATTHEWS:  Steve, there‘s two moderates.

KORNACKI:  Yes.

MATTHEWS:  Two moderates—are those people the only ones endangered or the other House members be targeted by the right?

KORNACKI:  Well, that‘s what the next two years are sort going to define, that‘s why I‘m looking at these fights that are coming up, like on the budget, on spending, on appropriations for health care.  I‘m saying if it comes to an issue where, you know, to kind of keep the government going, you got to go along with Obamacare and you‘re the Republican who votes to fund that in one of these votes, then you‘re vulnerable in the primary.  You voted for Obamacare funding.

MATTHEWS:  Just to take somebody I love on this show because we argue

what would Michele Bachmann vote on debt ceiling expansion?  How could she vote for it?

           

KORNACKI:  I imagine she‘ll always be against it.

MATTHEWS:  Will she target people that the leadership say you got to come forward and vote for this darn thing?

KORNACKI:  That‘s what I‘m worried about.

(CROSSTALK)

MATTHEWS:  Bachmann is at war with Boehner.  That‘s the big fight.

KORNACKI:  That‘s why I—to me, Boehner looks like a pretty weak speaker coming in.  He‘s a guy who happened to be in the job.  For the last two years, his job was just to say no to everything.  And for the next two years, it‘s to keep the Tea Party.

MATTHEWS:  Not that they‘re the same job, but you and I study history and you‘re great at it.  Joe McCarthy, I‘m not putting Bachmann in the same category because it causes too much trouble—but when you have somebody who‘s very good at attacking Democrats and then they get in the power, the Republicans, and they keep on attacking.  I‘ve been reading about them.

McCarthy didn‘t stop attacking.

ALTER:  Yes.

MATTHEWS:  When Eisenhower came in, he kept attacking and playing the communist in the Army and everywhere else.

Will she keep attacking from the right in the Republican Caucus?

ALTER:  I think she will and the question is whether they‘ll start to eat their own, and whether you‘re going to have a situation that when there are some adults and Boehner and something like the debt ceiling—

MATTHEWS:  Well, he says grown-up stuff, he‘s actually saying grownups.

ALTER:  Right.  He‘s using the word “grown up,” that‘s their talking point now, is “let‘s have an adult conversation,” quote-unquote.

MATTHEWS:  Is the Tea Party movement an adult operation?

ALTER:  I don‘t think it.  And I think when they—when they get a load of some of these compromises are just part of doing business in Washington, they‘re going to rebel and you‘re going to have real dissension, maybe even civil war on the Republicans.

           

MATTHEWS:  Michelle, the whole idea that the Tea Party is a kind of a purist, almost a puritan thing.  We don‘t know anything about dirty Washington.  We don‘t know anything about pork barrel or earmarks or the dirty stuff or people who get elected to things and had jobs in Washington, we‘re cleaner than that.

Is there something basically antiseptic with the Tea Party that can never bridge the gap with the regulars?

BERNARD:  Well, I think they‘re going to learn a very hard lesson when they come to Washington, which is that people who believe in ideological purity might have some sort of, you know, moral obligation to move forward with a lot of things that they‘ve talked about, all of which for the most part, make sense—deficit reduction, cutting spending, cutting taxes.  All of that makes sense, but governing is very different than rhetoric.

And I think the very interesting question is exactly of what Jonathan just raised.  We‘ve talked about splintering within the Republican Party two years ago.  I don‘t think we‘ve seen anything yet.

MATTHEWS:  OK.

BERNARD:  January is going to be amazing, how John Boehner is going to manage this new crop of people within the Republican Party will be more interesting I think than watching the Republicans fight President Obama.

MATTHEWS:  When we come back—

ALTER:  Chris, they‘re going to be cursing a lot.

MATTHEWS:  I know.

When we come back, my question to all four people on the team here, what unemployment rate do we have to have in this country for Barack Obama to get re-elected?  I want a number—a number.

We‘ll be right back with your thoughts.

You‘re watching the last edition of HARDBALL for 2010, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back with the team.

Michelle and Richard first.  The toughest question for any politician

what does the unemployment, the jobless rate, have to be down to in the month before the presidential election of 2012 for Barack Obama to have a good chance of re-election?

           

BERNARD:  Chris, I‘m going to say—I‘m going to answer that with two prongs.  One, I think, nationwide, it needs to be at about 8 percent.  But I think one of the most important things that the president‘s going to have to really focus on is making sure he gets the unemployment rate down—not only across country, but find a way to focus on people of color within the African-American community.

MATTHEWS:  OK.

BERNARD:  Their unemployment rate 17 percent and it‘s that high within the Hispanic community as well.

MATTHEWS:  I got you.

BERNARD:  And he needs those people on your side.

MATTHEWS:  He actually wants to (INAUDIBLE) I guess.

Your thoughts, Richard.

WOLFFE:  Well, it needs to be heading down firmly and—

MATTHEWS:  OK, what does it have to be down to?

WOLFFE:  Hey, let me answer, under 8 percent.

MATTHEWS:  OK.

WOLFFE:  It was 7.6 -- it was 7.6 when he came into office.  Ideally, it needs to be at least that.

MATTHEWS:  Thank you.  Well said.  Thank you.  I‘m sorry for being pushy.

WOLFFE:  Hey, all well.

ALTER:  I don‘t have anything to add to that.

MATTHEWS:  Under eight.

ALTER:  It really does have to be almost certainly be under 8 percent, because otherwise—

MATTHEWS:  You know that I‘m holding you to this, writing this down, guys.

ALTER:  He‘s starting to get swamped by the—by the impression that you‘ve been there four years—

MATTHEWS:  You know why I‘m saying under eight?  Because that‘s what he promised by end of, what, the first or the second year?

ALTER:  Well, they had projections—

MATTHEWS:  Christine Roemer said 8 percent.

ALTER:  Yes.  But they were basing those on third quarter GDP, 2008. 

And in the fourth quarter, it fell off of the table.

MATTHEWS:  That‘s right.  You know what the voters are going to say to that?

UNIDENTIFIED MALE:  I know.

MATTHEWS:  Malarkey.

KORNACKI:  Here‘s the one thing to keep in mind.

MATTHEWS:  By the way, before you give me the thought in mind, what do you think it‘s going to be?

KORNACKI:  What‘s the number?  I think it‘s well—I think it could be 8.5 percent and lower.

MATTHEWS:  Eight and a half?

KORNACKI:  Here‘s—

MATTHEWS:  You are the odd man out here.

KORNACKI:  When Ronald Reagan is reelected in 1984, the unemployment rate was higher than it had been on -- 

(CROSSTALK)

MATTHEWS:  But it was down to about seven.

KORNACKI:  But it was starting to come down and people were feeling good again.

MATTHEWS:  It had come from 11 to seven.  Give him a break.

KORNACKI:  Well, seven points.  But I think—I think there‘s an appreciation of people that this is sort of extreme circumstance.

MATTHEWS:  And looks like morning when it‘s that dark at midnight, you know?

I‘m sorry, anyway, guys—so that‘s the one point.  The other point that I was going to ask you is: is Obama getting re-elected?  Richard?  Richard, is Obama getting reelected?

WOLFFE:  Incumbent presidents are incredibly hard to unseat.  If I was a betting man, I‘d say yes.

MATTHEWS:  Michelle?

BERNARD:  Right now, I‘d say yes.

MATTHEWS:  OK.  Jon Alter?  (INAUDIBLE)

ALTER:  I‘m going to say it‘s wimpy, but I‘m going to say maybe.  I think there‘s a lot of ways to lose, too.

MATTHEWS:  OK, great.

KORNACKI:  I‘ll put my money on it.  I‘ll say yes.

MATTHEWS:  Three out of four.  Three out of four.  I have no comment. 

I‘m simply the moderator of a very brilliant team.

It‘s going to be great to have us all next year with HARDBALL, and next year is going to be wild because we‘re going to know who‘s going to run against Barack Obama in a matter of months.  And the big question: will it be Sarah or will she become a show and not a presidential candidate?

Michelle Bernard, Richard Wolffe, Steve Kornacki, and Jonathan Alter.

That‘s HARDBALL for now.  Thanks for being with us.  Happy New Year from all of us here at HARDBALL and a lot of people put this show on every night and I thank them all for a great year, here in New York and down in Washington.  Thank you, all.

           

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