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updated 1/3/2011 4:41:18 PM ET 2011-01-03T21:41:18

Guests: Lynn Sweet, David Corn, Aubrey Sarvis, Steve McMahon, Todd Harris, Ed Rendell, Joe Sestak

CHRIS MATTHEWS, HOST:  Mr. December.

Let‘s play HARDBALL.

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

Leading off tonight: The kid stays in the picture.  Maybe it‘s a bit early after all for Republicans to be measuring for drapes in the Oval Office.  Let‘s look at the last few weeks—The tax deal, “Don‘t ask, don‘t tell,” START.  Let‘s look at the first two years—health care, financial reform, GM and Chrysler rescues, the stimulus.  Add it all up, and you‘ve got, as President Obama himself, called it, the most productive two years that we‘ve had in generations.  It ain‘t bragging if it‘s true.

The question now is, can the president continue to deliver?  Can he peel away those moderate Republicans again who voted with him this time?  Can he find a coalition that combines the main force of Democrats with the Tea Party folk on issues like tax reform and long-term debt reduction, or will he get rolled by a united Republican front marching to the “No, no, no” pitch of Mitch?  That‘s one for the HARDBALL strategists.

And “Don‘t ask, don‘t tell”—don‘t stop.  President Obama signaled yesterday that now his position on gay marriage could evolve.  What his support could mean for the gay rights movement.

Also, Mama Grizzly gets stung by TV‘s queen bee.  That‘s in the “Sideshow.”

And speaking of queens, “Let Me Finish” tonight with a thought about my queen and why I‘m so lucky to have this Christmas coming up—in fact, Cathy (ph) all year ‘round.  I got to say that.

Anyway, let‘s start with President Obama‘s comeback.  Lynn Sweet is the Washington bureau chief for “The Chicago Sun-Times” and David Corn is the Washington bureau chief for “Mother Jones.”  Now, that‘s a liberal magazine, isn‘t it.

DAVID CORN, “MOTHER JONES”:  A little bit.

MATTHEWS:  OK, let‘s talk now about this year.  The president in his victory lap, his press conference last night—let‘s take a look here at the comments he‘s made over time.  Well, let‘s go to the press conference yesterday.  Here‘s yesterday.  Let‘s listen to the press conference.  Let‘s start with just yesterday.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I think it‘s fair to say that this has been a most productive post-election period we‘ve had in decades, and it comes on the heels of the most productive two years that we‘ve had in generations.

(END VIDEO CLIP)

MATTHEWS:  Well, it ain‘t so lame, was it.

LYNN SWEET, “CHICAGO SUN-TIMES”:  No, not at all.  He had a terrific lame duck legislative session.  And when you look at the two years of congressional achievements, he has done a lot.  He was entitled to brag, as you pointed out.

MATTHEWS:  What happened to the Republicans?  (INAUDIBLE) hit the goal line, and then dropped dead.  What—did they come in—was it hubris, the classic problem of life, thinking you‘re bigger than you are?

CORN:  Well, I think what happened, it was a good set of issues for the president.  It was after the election.  You had a couple of Republicans in the Senate who were leaving.  That helped.  And you had a few guys who I think might have gotten fed up with the “No, no, no” of the past two years.

Now, these were kind of veteran Republicans, by and large—

MATTHEWS:  Voinovich.

CORN:  -- you know, Voinovich, Lamar Alexander, people who actually used to be governors and used to care about legislation.

MATTHEWS:  Grown-ups.

CORN:  Yes, for the last two years—

MATTHEWS:  That‘s my favorite line—

(CROSSTALK)

MATTHEWS:  -- grown-ups.

CORN:  Grown-ups.

MATTHEWS:  In other words, they read the bills, they think.  They‘ve been there before.

CORN:  And they—

MATTHEWS:  They put it in context.

CORN:  And they believe they were sent to Washington to work on problems, not just say “No, no, no,” and then politically exploit it.  Now, they‘ll—you know, they will reap the benefits of the Mitch McConnell-John Boehner strategy that won the election for the Republicans in the House and gained seats in the Senate.  But I think some of them just wanted to do the job that they‘re supposed to do, which is legislate and work on issues.  And Obama found them in a sweet spot.

SWEET:  You also had the newly independent, it seems, Lisa Murkowski of Alaska, who threw in in a few of those key votes with the usual moderate coalition, and that now will be interesting to see what role she carves out for herself.

MATTHEWS:  You, a lady of the Midwest, have raised a very important geographic fact.  If you look at the votes the last couple days, actually, the Republicans west of, say, Tennessee, right across the country, with the exception of Alaska up there, all voted against START.  Are they out West, west of where you cover for Chicago, scared to dickens—time of year you can say that—scared to dickens of the Tea Partiers?  Is that why Orrin Hatch is off base all the time, reasonable people like Enzi, off the base all the time?  Is it because they‘re all afraid of getting licked like Bob Bennet and almost licked like Murkowski?

SWEET:  Well, maybe yes, maybe no.  Even though Dick Lugar‘s from Indiana, who is seen by most people as a conservative‘s conservative, he may have a threat from the Tea Party.  So I don‘t know.  I think it‘s situational right now—

MATTHEWS:  Well, why is everybody out West scared to death—

(CROSSTALK)

MATTHEWS:  -- scared to death out West.  They won‘t vote for anything but what Mitch tells them to vote for.

CORN:  I think—I think on the START treaty, that was not a Tea Party issue per se.

MATTHEWS:  Yes.

CORN:  The Tea Party people are not that concerned with foreign policy on their—at the top of their list.  As you get into next year, what are the big fights going to be?  The continuing resolution—up in March—raising the debt ceiling and Obama‘s budget, which will drop, I guess, sometime in February.  Those are issues where the Tea Party will again start feeling its oats—

MATTHEWS:  Can‘t wait to see State of the Union.  I can‘t wait to see how the president cuts it.  Let me suggest something to you.  America has among our population, including our leaders, some discerning individuals.  Remember how we all look at the Tea Party and laughed at some of the crazies in the Tea Party?

CORN:  Sure.  Still do.

MATTHEWS:  They didn‘t get elected.  Most of them didn‘t get elected.  O‘Donnell didn‘t get elected up there in Delaware.  Angle didn‘t get elected out west.  Ken Buck got beaten out there.  There was one exception down there, the guy who won down in Florida.  But generally—Scott whatever his name was—Rick Scott.  But generally, they got blown away.  Most of the—no, the crazies got beaten.

SWEET:  But you still have people there—I think it‘ll be fascinating to watch what Rand Paul does once he‘s in the Senate.

MATTHEWS:  Well, he‘s not crazy, he‘s ideological.

SWEET:  No, right.  But he has other (INAUDIBLE)

MATTHEWS:  Yes.

SWEET:  But I think that most of the action—

MATTHEWS:  But the voters—

(CROSSTALK)

MATTHEWS:  -- the difference.

SWEET:  Chris—

MATTHEWS:  Between right wing and crazy.

SWEET:  Most of the action is going to be in the House.

CORN:  Yes.

MATTHEWS:  Yes.

SWEET:  That is the whole point.  That‘s—

CORN:  And that‘s where you‘re going to get—

SWEET:  -- where you have the repeal and defund crowd.  That‘s where you have—

MATTHEWS:  There‘s some loonies in there.

SWEET:  Well, you have people—

CORN:  The Tea Party—

SWEET:  -- who have to be elected in two years that don‘t have the ability to—

CORN:  The Tea Party did better in the House than the Senate.  You know, Michele Bachmann is going to have a big Tea Party—

MATTHEWS:  Did I say—

(CROSSTALK)

MATTHEWS:  Thirteen seconds, you said Michele Bachmann.

CORN:  Well, you can make the association, Chris.

(LAUGHTER)

CORN:  But she has—she leads the Tea Party Caucus, you know?  So there—and it‘s going to be a big caucus—

MATTHEWS:  She‘s an isotope!  The minute the—when the loonies arrived there from the Tea Party in the House—they did get by, some of them—they went right to her office, you know.  They went right to home base.

A new poll shows President Obama getting credit—and here‘s the voters‘ discernment—for the accomplishments achieved during the lame duck session.  Look at this number here.  After getting a shellacking, as he called it, in the election, 56 percent of the people across the country approve of the president‘s handling of issues during this post-election period.  But both Republicans and Democrats in the Congress, as members of Congress, got big—above-majority disapproval numbers.  In other words, the president‘s up at 56, but that‘s about where the negatives are for the Congress in both parties.

SWEET:  Yes, it also means that you can‘t look at this—you know, in the week-by-week way with often do with Obama.  He‘s up, he‘s down.  Now everybody‘s saying what a great year he‘s having, if you don‘t count the shellacking—

MATTHEWS:  No, actually, the public was asked, How‘d he do since the election.

SWEET:  Yes.  OK, but that‘s my point.  It‘s just every few weeks, they‘re going to take a—

(CROSSTALK)

MATTHEWS:  Well, he has done better.

SWEET:  But he—

(CROSSTALK)

MATTHEWS:  -- discernment.  The voters are watching!

(CROSSTALK)

SWEET:  But that‘s the whole point.  People are paying attention, but the numbers could change, depending on what happens and what happens (INAUDIBLE) he got stuff done.

CORN:  Let‘s go back to your favorite word, grown-up.  I believe Obama won largely because when the economy imploded in September 2008, he looked like the grown-up in the room and John McCain looked actually like the kid who didn‘t know what to do.

MATTHEWS:  Yes.

CORN:  I think in the last few weeks, in terms of governing, whether he was initiating the tax cut deal, getting START through, “Don‘t ask, don‘t tell,” he looks like he‘s here, working hard for you and being the grown-up.  Mitch McConnell has given interviews in the past few days in which he says, It‘s going to be no, he‘s going to have to come our way.  I think right now, Obama looks like he‘s the reasonable man in Washington getting results.  That may be hard to do once there‘s—

MATTHEWS:  OK—

CORN:  -- a Republican House.  But if he can continue to do that, it‘s good for him.

MATTHEWS:  Take your ideological hat off for a second.

CORN:  I just did, Chris!

MATTHEWS:  Just for a second.  And you never have one on.  What‘s John McCain‘s story right now?

SWEET:  Well, it‘s—

MATTHEWS:  He‘s like the Grinch.

SWEET:  He is—he‘s—he‘s grumpy.  He had a hard time in trying to fight off “Don‘t ask, don‘t tell.”  He couldn‘t get a group together to stop it.

MATTHEWS:  His wife‘s fighting him over this.

SWEET:  Well, he just isn‘t the John McCain of years past.  This is not a revelation.  I think the fight he had—

MATTHEWS:  With J.D. Hayworth.

SWEET:  -- in his Arizona primary just left him incredibly, indelibly, for the time, changing in course.

MATTHEWS:  Yes.

CORN:  You know what‘s odd about that is, yes, he moved far to the right to put off that primary challenge from J.D. Hayworth, but he won.  He has six years now to his next election, if he‘s even going to run again.  So you think he‘d have some more latitude to go back towards the John McCain that Washington used to love—

MATTHEWS:  Yes.

CORN:  -- which was really a long time ago, before the last campaign. 

And he just seems to be getting crankier and crankier.

MATTHEWS:  Yes.

CORN:  He‘s making Mr. Wilson in “Dennis the Menace”—

(CROSSTALK)

MATTHEWS:  Get off my lawn, Dennis!  It‘s like saying to Obama, Hey, kid, get off my lawn!

CORN:  Yes, that‘s my lawn!

(LAUGHTER)

SWEET:  It‘s especially (INAUDIBLE) because we just had a deal on two issues that he was identified with.  Remember just a few weeks ago on immigration, he was—

MATTHEWS:  OK—

SWEET:  -- the guy working with Ted Kennedy.

MATTHEWS:  OK—

SWEET:  And he was the guy who went—

MATTHEWS:  Last question.  We‘re going to have fun on this Thursday before the holiday.  Here it is.  A friend of mine in Florida, who‘s a smart guy, Mark Johnson (ph), calls me up.  He e-mails me.  We all have smart people that e-mail us.  And he said, Did you notice all this stuff is passing, all the success of the president, ever since Rahm Emanuel‘s gone.  I dare you.  Touch this!

(LAUGHTER)

MATTHEWS:  The next mayor of Chicago.  Has Pete Rouse done a really good job replacing Rahm the last couple months, perhaps even better than Rahm could have done with his edginess and his toughness?

SWEET:  I think the results speak for themselves that Rouse has done a good job.

MATTHEWS:  What about Rahm?  Are we better off without him?

(LAUGHTER)

MATTHEWS:  You guys (INAUDIBLE) You‘re so afraid!  He‘s going to be mayor of your city.  Come on!

(CROSSTALK)

MATTHEWS:  I‘m just asking.

SWEET:  Here‘s the thing.  The point is that no one is indispensable, including Rahm.  The Obama administration—

(CROSSTALK)

MATTHEWS:  OK, I‘m putting the ball in your court now.  Rahm—was he better off moving to Chicago?  Looks like he‘s going to get that job.  He‘s in place.  He‘s been accepted—

CORN:  You know—

MATTHEWS:  -- as a Chicagoan.  He‘s on the ballot.  Nobody really facing him can beat him.

CORN:  Remember when he left, there was all this talk about how he was abandoning Obama in his moment of need?  Well, it turns out maybe Obama needed him to go.  I mean, Pete Rouse I think has done a bang-up job.

MATTHEWS:  Yes.

CORN:  They talked about this being a temporary—a possibly temporary employment.

SWEET:  I think—

CORN:  It looks like he‘s—it looks like he‘s earned his wings the past couple of weeks.

MATTHEWS:  What was it, was it De Gaulle, the greatest man in French history, said, “L‘apre moi, le deluge.”

CORN:  Yes.  Yes.

(LAUGHTER)

MATTHEWS:  There‘s no deluge—except in California right now.  What do you make of it?  Is it—see, you guys—last point.  Is he better off without Rahm?

SWEET:  Probably because Rahm wanted to go, and Rahm not being where he didn‘t want to be—

CORN:  He‘s doing much better now.

(CROSSTALK)

MATTHEWS:  -- because Rahm wanted to go.  Go ahead.

CORN:  No, I‘m saying—

(CROSSTALK)

MATTHEWS:  Look, I‘m not taking any—I think Rahm‘s going to be a great mayor of Chicago.

SWEET:  He still has some—

(CROSSTALK)

MATTHEWS:  -- Lynn Sweet, thank you, David Corn.  Have a happy holiday.

Coming up—you‘ve been great all year.  And coming up: “Don‘t ask, don‘t tell” now a part of history.  What‘s the next political move for the gay rights movement?  They are feeling their oats, and we‘re going to have Aubrey Sarvis, one of the real leaders and heroes, I think, of this whole fight to get rid of “Don‘t ask, don‘t tell.”  He‘s coming here, a military guy who‘s been through it all.  Let‘s see what he wants to do now with the momentum they‘ve got.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Run, Rahm, run.  The Chicago Board of Election commissioners voted today to keep former White House chief of staff Rahm Emanuel on the ballot for the February 2011 election for mayor.  The vote was unanimous.  A hearing officer stated that Emanuel never formed an intention to terminate his residence in Chicago, nor establish his residence in Washington.  A recent poll, by the way, shows Emanuel as the clear front-runner, as I said a minute ago, in the race to replace Dick—

Richard Daley, the son of Dick Daley.

We‘ll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(BEGIN VIDEO CLIP)

OBAMA:  No longer will tens of thousands of Americans in uniform be asked to live a lie or look over their shoulder in order to serve the country that they love.

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL.  That was, of course, President Obama just yesterday signing the repeal of “Don‘t ask, don‘t tell.”  What does the victory mean for the greater gay rights movement in this country?  And what will be the next battle, over gay marriage?

Aubrey Sarvis is the executive director of the Servicemembers Legal Defense Network.  Aubrey, thank you for coming on the show.  All these weeks and months, you‘ve been leading this fight.  Tell us—I want you to just give us—because I‘m not going to rush you.   Three things I want out of you.  Your military experience as a gay man, what it was like?  What do you think it will be like in the future?  What was this fight like?  How‘d it go?  And how‘d it win?

AUBREY SARVIS, SERVICEMEMBERS LEGAL DEFENSE FUND:  Well, Chris, I served in the early ‘60s.  I was a rifleman.  I pulled guard duty on the DMZ in South Korea, a mile from the border with the North.  At that time, gays and lesbians were excluded from military service by regulation.  There was no statute, it was a regulation.

I remember, going in, you were given a form, and one of the questions on that form was, Do you have homosexual tendencies or have you ever?

MATTHEWS:  Yes.

SARVIS:  If you checked yes, you were sent to the psychiatrist to see if you were being truthful or if you were one of those guys who didn‘t want to go to Vietnam.

MATTHEWS:  Wow!  What did that feel like to be subjected to that kind of questioning?

SARVIS:  I have to tell you—

MATTHEWS:  Being gay, not using it as a (INAUDIBLE)

SARVIS:  Well, at that time, I really hadn‘t acknowledged my sexuality.

MATTHEWS:  I see.

SARVIS:  And so—

MATTHEWS:  You could say no.

SARVIS:  I said no, and—truthfully.  But it did stick with me and I never forgot that.  And even at that moment, I knew there was an element of dishonesty in me in checking no, even though I hadn‘t acknowledged it to myself.

MATTHEWS:  Yes.

SARVIS:  And I also knew that it wasn‘t fair, and that was something that never went away.

MATTHEWS:  It wasn‘t fair to make you lie.

SARVIS:  No.  It‘s never fair to make someone lie, basically, about who they are.  And I think President Clinton tried to change that.  He wanted to change it.  Frankly, I don‘t think he laid the right foundation to do it.  And so that‘s why I think things went awry when he tried.  The support was not there in the military, certainly not there with General Colin Powell, chairman of the Joint Chiefs at that time.

And you have to remember that this was Clinton, that many called a draft dodger.  He came to Washington to cut the Defense Department budget.  So a lot of folks in the Pentagon were waiting for him.  But basically, he hadn‘t laid the preparation.  The best of intentions—

MATTHEWS:  In fact, he dropped it—George Stephanopoulos, I remember when he was working for president, was asked a question (INAUDIBLE) like the number one priority, and nobody had really thought about making it the number one priority.

SARVIS:  Well, he said it would be the number one priority, as a matter of fact, on the campaign trail in California.

MATTHEWS:  Oh, he did?

SARVIS:  He said, This will be one of my first initiatives—

MATTHEWS:  Wow.

SARVIS:  -- when I am president.  But it takes a lot of preparation to pull that off, and he came up with the best that he could at that time.

MATTHEWS:  Who are the heroes of this change in history, now that it‘s off the books, that now you can—potentially, within the next several months or a year, you‘ll be able to walk in the door and sign that form.  There won‘t be that form, of course.

SARVIS:  Right.

MATTHEWS:  But you‘d be able to write, by the way, I‘m gay, Sergeant. 

Any problem with that?  And he‘ll say no.

SARVIS:  Well, I have to say, we have to start with the president.  He said before he was sworn in, he wanted to get rid of “Don‘t ask, don‘t tell.”  Now, as you know, there were some bumpy moments there on this trail with the president.  I didn‘t think it was going fast enough.  I was impatient.  But that‘s my job, to be impatient.

MATTHEWS:  Yes.

SARVIS:  But at the end of the day, the president—his mission as he saw it was to have that preparation that I talked about before.  And he saw the best way to get that was buy-it from the top people at the Pentagon, buy-in from Secretary Gates, buy-in from Admiral Mullen, buy-in from the chiefs.  And to get that, he saw that he would have to give them the opportunity, the opportunity for them to frame how this should happen.

MATTHEWS:  Wow.

SARVIS:  So he went to them and he did get that buy-in.

MATTHEWS:  Talk about Harry Reid, a member of the LDS church, which is very much for straight marriage only, obviously, and also about Mike Mullen.  I‘m very impressed with Mike Mullen, the chairman of the Joint Chiefs.

SARVIS:  Well, first, Senator Reid.  You and I have known Senator Reid for over 30 years.  He was there—

MATTHEWS:  Capital cop.

SARVIS:  Like you.

MATTHEWS:  He was a capital cop, like I was.  He had—

(CROSSTALK)

SARVIS:  And I met Senator Reid, actually, when he was lieutenant governor, and I never had any doubt that Senator Reid wanted to get this done.  He worked with Senator Levin.  He worked with Senator Lieberman.  He was working with Senator Collins.  But the moment where Senator Reid really showed his leadership and his tenacity was in the last 45 days.  It was Senator Reid, working with his counterparts in the House, Speaker Pelosi, and especially Steny Hoyer, to find a way—

MATTHEWS:  Yes. 

SARVIS: -- we had had two cloture votes that had failed.

The second one, Senator Reid called that vote.  And there were many who felt that was a mistake.  I did not.  What Senator Reid did, he flushed folks out.  And you saw that the Republicans were indeed united in not allowing this to come forward until they had the tax bill that they wanted. 

Once we saw that, there was a quick pivot by Senator Reid, Senator Lieberman, Senator Collins, Senator Gillibrand, and Steny Hoyer, and President Obama and his team. 

MATTHEWS:  To go to the freestanding bill.

SARVIS:  That resulted in Steny Hoyer and the speaker reintroducing a stand-alone bill—

MATTHEWS:  Right. 

SARVIS: -- passing it in the House, sending it to Reid immediately.

And, as you will recall, that was a privileged matter, because it had passed before in a different form. 

MATTHEWS:  Wow.

SARVIS:  And that allowed the majority leader to proceed immediately, to lay it down without a cloture vote. 

MATTHEWS:  Well, let‘s take a look at the president here.  Here he is speaking about his position on another issue affecting gay rights: marriage.  Let‘s listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  My feelings about this are constantly evolving.  I struggle with this. 

I have friends, I have people who work for me who are in powerful, strong, long-lasting gay or lesbian unions, and they are extraordinary people, and this is something that means a lot to them and they care deeply about. 

At this point, what I have said is, is that my baseline is a strong civil union that provides them the protections and the legal rights that married couples have.  And I think—and I think that‘s the right thing to do. 

But I recognize that, from their perspective, it is not enough.  And I think this is something that we‘re going to continue to debate and I personally am going to continue to wrestle with going forward. 

(END VIDEO CLIP)

MATTHEWS:  What do you think‘s going to be faster, the Ted Olson effort with David Boies to try to knock out Prop 8, which seems to be moving out in the Ninth Circuit, or the Congress -- 

SARVIS:  I‘m not sure. 

MATTHEWS: -- or the Constitution, of whatever?

SARVIS:  I‘m not sure.  It may well be the courts first. 

I would hope that the president and the Congress can build upon the victory that we had this past week.  For President Obama, I believe that this was his Lyndon Johnson moment.  This was his signature defining civil rights initiative. 

MATTHEWS:  Wow.

SARVIS:  You and I were around in ‘64 and ‘68, but for President Obama and his generation, this is it.  This is the defining civil rights legislation. 

MATTHEWS:  And they look at it the same way? 

SARVIS:  They do indeed.

(CROSSTALK)

MATTHEWS: -- civil rights.  They don‘t see it as a controversy. 

SARVIS:  No, they don‘t.  And I hope the president will evolve on marriage.  I will say this, Chris. 

MATTHEWS:  Well, the country‘s certainly evolving on open service.  It has.  And that‘s the reason the Congress acted.  I think the president there is being more political than he admits.  I don‘t think it‘s his conscience.  I think he‘s for gay marriage, same-sex marriage.  I think he‘s waiting to see if the wheel is turning enough nationally for him to say yes. 

SARVIS:  Right. 

MATTHEWS:  Don‘t you? 

SARVIS:  Absolutely.  Can we go back to—you asked me about Admiral Mullen, chairman of the Joint Chiefs. 

MATTHEWS:  Mike Mullen.

(CROSSTALK)

SARVIS:  When he testified in February with Secretary Gates before the Senate Armed Services Committee—

MATTHEWS:  Right. 

SARVIS: -- and he talked about integrity, the integrity of the individual, and the integrity of the institution—

MATTHEWS:  Right. 

SARVIS: -- that was the defining moment.  That changed the debate. 

And, for me, I was sure we were going to get it.  And the one thing I would

--

(CROSSTALK)

MATTHEWS:  Thank you. 

(CROSSTALK)

MATTHEWS:  We‘re going to be playing that tape for years, because that was one of the moments.  I agree.  When Mike Mullen, this big, tough guy comes out there and says, this is integrity issue, it‘s not gay liberation or anything like it, it‘s important to the country—we have got to go, Aubrey.

SARVIS:  OK, Chris. 

MATTHEWS:  But thank you, sir. 

SARVIS:  OK.  Thank you. 

MATTHEWS:  Congratulations.  You‘re one of the leaders in this thing, along with Mullen. 

Up next:  This powerful woman took a whack at Sarah Palin.  How so? 

Well, stick around.  The queen bee has got a stinger. 

You‘re watching HARDBALL. 

I‘m talking about Oprah Winfrey. 

Stay back for more of MSNBC in a minute.

(COMMERCIAL BREAK)

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

First: Bush-whacked.  Last night in suburban Dallas, a car veered off the road into a gate and crashed on to the lawn of former President George W. Bush.  It wasn‘t just any car, by the way.  It was a muscle car, a Plymouth Barracuda, a classic.  Mr. and Mrs. Bush were inside the home, but unharmed and officials say never in danger.

But the driver was released from Secret Service custody only today.  His explanation, he was showing off the car to neighbors when the gas pedal got stuck, he says.

Next up: the power of Oprah.  In an interview with “Parade” magazine, TV‘s queen bee gave a very subtle, but oh-so-effective sting to Sarah Palin.  Asked whether she thought the—whether the thought of Palin‘s running for office scares her, Oprah—Oprah said, “It doesn‘t scare me because I believe in the intelligence of the American public.”

Isn‘t it incredible how Oprah can deliver a zinger like that while, in the same sentence, offering such an uplifting portrait of us? 

Speaking of 2012, in case there was any doubt that Mitt Romney is making the big run, look no further than his family Christmas card.  It shows the ex-governor and wife captured—there they are—with their 14 grandchildren.  Below, the message reads at the bottom, “Guess which grandchild heard that papa might run again?”  What, papa bear? 

By the way, it turns out President Obama and Mitt Romney already have something in common.  They‘re both vacationing in Hawaii this month. 

Finally, guess who wants to go light on pot smokers?  Pat Robertson.  Yes, that Pat Robertson.  I should call him “Pot” Robertson, the televangelist who concurred with the late Jerry Falwell that pagans, feminists and gays were to blame for September 11 and who said that Hurricane Katrina was God‘s way of punishing America for abortions.

Well, here‘s Robertson pushing to minimize the penalties for marijuana last week on his show.

(BEGIN VIDEO CLIP, “THE 700 CLUB WITH PAT ROBERTSON”)

PAT ROBERTSON, HOST, “THE 700 CLUB”:  I‘m not exactly for the use of drugs, don‘t get me wrong, but I just believe that criminalizing marijuana, criminalizing the possession of a few ounces of—of pot and that kind of thing, I mean, it‘s just—it‘s costing us a fortune, and it‘s ruining young people. 

(END VIDEO CLIP)

MATTHEWS:  Well, they put the spin on it afterwards. 

A spokesman later said that Robertson wasn‘t for pot legalization, although he said he wants to decriminalize it, but simply against the harsh penalties.  “Pot” Robertson, we should call him now.

Up next:  Can President Obama drive a wedge between mainstream Republicans and Tea Party zealots?  We will ask our strategists.  This is going to be interesting.  We have got the two pros coming here.

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

AMANDA DRURY, CNBC CORRESPONDENT:  I‘m Amanda Drury with your CNBC “Market Wrap.”

Stocks ending mixed in light pre-holiday trading, the Dow climbing 14 points, the S&P 500 down two, and the Nasdaq slipping nearly six points.  A flurry of economic reports showing small improvements in consumer sentiments and spending and the jobs market, but financials were lagging as investors locked in profits from a month-long rally, the KBW Bank Index up nearly 17 percent this month alone. 

Bed Bath & Beyond bouncing nearly 6 percent on better-than-expected profits and a stocking full of analyst upgrades.  Tesla Motors shares, however, tumbling almost 8 percent from a sell rating from CapStone Investments.  Semiconductor firm Micron dipping almost 4 percent after reporting sluggish sales and a 24 percent drop in profits. 

And Crocs shoes skidding 5 percent after its CFO announced his resignation effective December the 31st.  Office Depot, however, still riding high on takeover rumors after filing change-of-control paperwork with the SEC.

And that is it from CNBC, first in business worldwide.  It‘s now back to HARDBALL. 

MATTHEWS:  Back to HARDBALL.

The incredibly productive lame-duck session managed to get its work done, mostly in spite of Mitch McConnell‘s best efforts to deny President Obama any victories.

Can President Obama peel away Republican moderates and squash McConnell‘s just-say-no tactics? 

We have got two experts here, as I said.  Steve McMahon is a Democratic strategist.  He‘s out in Omaha, where he lives with his family, where he visits with his family.  And Todd Harris, who recently became head of his own firm, is a Republican strategist somewhere out West, where Republicans like to go in the summer and in the winter.

Thank you, Todd. 

(LAUGHTER)

MATTHEWS:  Let me ask you. Let‘s go.  Gentlemen, I want you to—by the way, merry Christmas to both of you.  Let‘s go to a—and happy holidays. 

Let‘s go to a couple—a list here that is really important to look at. 

(CROSSTALK)

MATTHEWS:  These are the Republicans senators is voted with the president on the big nuclear arms deal with the Russians the other day, despite the opposition of Jon Kyl and Mitch McConnell, the leaders.  Thirteen Republicans broke ranks.

Let‘s look at the names.  Eight Republicans senators broke ranks and voted for repeal of don‘t ask, don‘t tell.  But look at the 13 up there, all these names up there.  Here they are: Lugar, Isakson, Corker, Bob Bennett, Voinovich, Judd Gregg, Murkowski, Snowe, Brown, Collins, Alexander, Cochran, and Johanns. 

Your thoughts, first of all, Todd.  You‘re right Republican here.  Does this auger that there might be a deal down the road on things like tax reform, on things like long-term debt reduction, where you might find odd coalitions involving, say, even Tea Party Republicans and Obama? 

TODD HARRIS, REPUBLICAN STRATEGIST:  I think you could see some odd coalitions with the Tea Party, with Obama, but I think it would be with Mitch McConnell as well, if they are related to issues—fiscal issues, deficit reduction, spending cuts. 

You know, specifically in the case of the START treaty and don‘t ask, don‘t tell repeal, there was bipartisan sponsorship of both of those measures before and there was bipartisan support of both of them after.  So I‘m not really sure that there‘s any reflection on Mitch McConnell‘s grip on his conference, which I think is every bit as strong as it‘s ever been. 

If you look at the conference walking in lockstep to defeat the omnibus bill, to say to the Democrats, we are not doing a single thing in this Senate until we pass a continuation of the tax cut bill, every Republican in lockstep.

(CROSSTALK)

MATTHEWS:  But that‘s the past.  If all you want to do is defeat things, you‘re right.

(CROSSTALK)

HARRIS:  Well, OK.

(CROSSTALK)

MATTHEWS:  No.  If all you want to do is defeat things, right.

(CROSSTALK)

MATTHEWS:  But we‘re talking about, will McConnell be able to get anything passed that he wants passed? 

Let me put it another way, same question, different way of putting it.  If he wants anything done with debt reduction or tax reform or anything, if he wants anything he wants done, won‘t he need the president, because he can‘t do it with 47 members?

HARRIS:  Well, he does need the president, but the president didn‘t get his tax cut bill passed without Mitch McConnell‘s support.

MATTHEWS:  Right. 

HARRIS:  So it‘s not like he was a bystander in all this. 

MATTHEWS:  You‘re still chuckling from November 8. 

Let me go back to Steve McMahon. 

(CROSSTALK)

HARRIS:  No.

(CROSSTALK)

HARRIS:  No, wait.  Well, hold on.  Wait.  Hold on.

I just—I think it‘s absurd.  You‘re saying, oh, the president, he is so bipartisan, gets all these plaudits.  And the—his partner in being bipartisan was Mitch McConnell.  And you‘re saying, oh, well, he‘s losing his grip on his majority.  He gets no credit. 

(CROSSTALK)

MATTHEWS:  No.  I‘m just saying that all the history-making legislation of this lame-duck session was passed despite the opposition of Mitch McConnell.  Don‘t ask, don‘t tell is going into the history books. 

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  That‘s right.  That‘s right. 

MATTHEWS:  This history-making treaty with the Soviets over nuclear arms is getting ratified—it was the other day—without Mitch McConnell, is what I‘m saying.  These are historic facts.  I know they‘re not all about taxes, which is all you guys want to talk about, but they are important. 

Steve McMahon.

MCMAHON:  Well, I think you‘re absolutely right, Chris.  These things happened because President Obama came to the table and basically said, here‘s what‘s important to me, and this is what it‘s going take to get it done. 

Mitch McConnell doesn‘t have the votes to stop the Democrats,

particularly in the lame-duck session, as you saw with both tax reform and

or the extension of the tax cuts, but also with don‘t ask, don‘t tell and the START treaty. 

Mitch McConnell, as you point out correctly, was against it.  And eight members of his party on one and 13 members of his party on the other went the other way. 

And I think that Todd raises a point about the Republicans basically standing together on fiscal issues.  And I think that‘s probably going to be right, but they‘re going to need the president.  It‘s going to be interesting to see, though, on issues where there is a big, wide middle that has a different view, on gay rights, on civil rights, on immigration reform, and some of the other issues, how Mitch McConnell is going to control his caucus then, because those issues used to be bipartisan. 

In some measure, you just saw, on don‘t ask, don‘t tell, there is still a bipartisan nature to aspects of it.  And I think, going forward, the Tea Partiers care about balancing the budget and stopping government spending and making government smaller.  I don‘t know if they care as much about the things that the cultural conservatives care about.

MATTHEWS:  OK. 

MCMAHON:  And for Mitch McConnell to have to keep that faction together is going to be interesting. 

MATTHEWS:  Well, let me talk down the road, the big stuff, because we all know, gentlemen, that this country has a $13 trillion debt facing it. 

And we can talk about economic growth.  And we all economic growth, but, sometimes, it doesn‘t grow, the economy.  Some years, it‘s just not going to grow.  There‘s always going to be a business cycle and there‘s always going to be downturns, maybe not as bad as this one.

So, my question to you—Todd, here‘s the question.  We saw what came out of that bipartisan deficit commission just a few weeks ago.  We saw the immediate knee-jerk reaction of Nancy Pelosi.  We saw the knee-jerk reaction of some Republican members in the House. 

The president did get 14 of the 18 members on that commission.  Is there a potential that he could cut deals with Coburn, who‘s much respected on issues like fiscal policy, maybe bringing in some leading Democrats as well, recognizing that the appropriators won‘t like it, that Pelosi and the unions won‘t like it?  But he‘s going to have to get past those people or he will get nothing done on the fiscal area.  If the president waits for the unions, if he waits for the usual interest groups to say yes on debt reduction, it will never get done.  He has to form a coalition—I‘m asking you—around them, doesn‘t he?

HARRIS:  You‘re absolutely right and I think the best way to do that would be to include some significant entitlement reform as a part of that package, because there‘s really no way to talk seriously about the deficit without doing it.  And, you know, but until people in Washington are ready to have an adult conversation about entitlements, all of this talk about spending and the deficits, you know, it‘s all a bunch of noise because, as we all know, that‘s where the money‘s going.

MATTHEWS:  Your thoughts on this, Steve.

MCMAHON:  Well, I think you‘re absolutely right.  And I think that for the president, this year, coming up, getting out there and basically saying that we‘ve had some major accomplishments in the last two years and now, we‘ve got to focus on the future and on the deficit and on bringing government spending under control and working with Republicans on that, just like he worked with many Republicans on these three measures he just passed, he‘ll benefit politically and the country will benefit over the long term because we can‘t afford to continue on the path we‘re on.  And it does seem to be case that serious people both on the left and right are recognizing the importance of compromise and the deficit commission had plenty in there for everybody to not like.

MATTHEWS:  Yes.

MCMAHON:  But there‘s also a path to fiscal sanity again.  And I think that there are a lot of people who are going to try to move that forward.  You‘ve got Senator Corker and Senator Mark Warner working right now in a bipartisan fashion to try to do something in the Senate and I think you‘re going to see people like that, who come from the business world into politics, and who understand finance and understand the implications of what we‘re doing, coming together to deal with some of these things.

MATTHEWS:  Corker is one.

Let‘s take a look at the census and how it‘s going to change politics, you guys are experts.  So, let‘s look at—looking particularly at the Hispanic vote, which is the big, new population growth in our country.  All our growth is Hispanic right now because of immigration and family size.

Let‘s look at this—Arizona picked up a congressional seat.  Florida picked up two; Georgia, one; Nevada, one; South Carolina, one; Texas, four;

Utah, one; and Washington state.  Now, we saw the pattern there, almost always in the southwestern south.

Now, look at these states that lost.  The northeastern type of states, the western states—the old part of the country, if you will.  Look at them in the gray there, New York lost two; Ohio, two; Illinois, one; Iowa, one; Louisiana, one—Massachusetts, Iowa, Louisiana, Massachusetts, Michigan, Missouri, one.  New Jersey, Pennsylvania all lost one.

So, you can see the strong pattern.

Todd, is the fact that the Hispanic populated part of the country is growing mean that the Republican Party has got to get this monkey off its back?  This issue of the inability to deal with the fact that people who are living in this country by the tens of millions who do not have documentation or who are not here legally and something has to be done with them one way or the other.

If you‘re going get thrown out, which I don‘t think is ever going to happen—is that a realistic possibility?  And if not, what are we going to do to legalize those people?  Your thoughts.

HARRIS:  I think, first and foremost, the first thing that the Republican Party needs to do is to completely re-orientate itself and stop being the party—the anti-illegal immigrant party and start being the pro-legal immigration party.  It doesn‘t even mean that you have to change the substance of what you believe in, but so much of the rhetoric on the right has so completely turned off a huge number of Hispanic voters that Republicans continue to pay for it.  But look at a state like Florida, where you had both Rick Scott, the incoming governor and Marco Rubio winning the majority of the Hispanic vote.

MATTHEWS:  Yes.

HARRIS:  You have—look at a state like New Mexico with a new female Republican Hispanic governor.  Nevada has a new Hispanic Republican governor.  Even in Texas, Republicans tend to get about 40 percent of the Hispanic vote.

So, there is a real path who are for Republicans, but a lot of this has to do with the rhetoric.

MATTHEWS:  I think it‘s worse than that.  But we‘ll talk about that.  I think they only wanted people to be kicked out of the country who have been 20 and 30 year, and I think they‘re insane.

I am very tough on immigration.  I want it legalized.  I want to have ID cards and everything else.

But your party still looks like the party like Sharron Angle, that wants to boot them out of the country, thinks they‘re all a bunch of drug fiends and criminals.  And I think, as long as you portray them that way, your rhetoric ain‘t going to help you anyway.

Steve—we‘ve got to go.  We‘ve got to go.  Steve, we‘ve got to go. 

We got Ed Rendell coming on.

(CROSSTALK)

HARRIS:  OK.

MATTHEWS:  OK.  Todd Harris, thank you, gentlemen.  Congratulations, Todd, on Rubio, not so much Scott.

HARRIS:  Merry Christmas.

MATTHEWS:  I like Rubio a lot better.

Anyway, next, meet the governor of Pennsylvania.  He‘s got a Beach Boys concert coming to honor him and also Joe Sestak.  We‘ve got couple of Democrats in Pennsylvania coming on right now.

HARDBALL, back on in a minute.

(COMMERCIAL BREAK)

MATTHEWS:  How important are those new census figures to the 2012 presidential election?  Well, we know that based on the new numbers, if President Obama wins exactly the same states he won back in 2008, he would still take home six fewer electoral votes that he got last time.

But Nate Silver of FiveThirtyEight.com, who we watch all the time, has pointed out that even if you apply the new numbers to every election in the past century, 20th century, not one result would change.  So, changing the populations around, the numbers hasn‘t changed anything.  Some elections would be closer.  Some turnout would have turned out to be blowouts.  But the results, who won, who lost, are exactly the same.

I guess that‘s comforting to people who like tradition.

HARDBALL will be right back.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.

The midterm elections are over.  The 111th Congress has adjourned.  It‘s going out of town here.  Now, for some year-ender or end of the year, time with two somewhat different Pennsylvania politicians—please welcome Governor Ed Rendell and then we‘re going to have Congressman Joe Sestak for their HARDBALL exit interviews for the year.

The 45th governor of Pennsylvania, Ed Rendell—we‘re all wondering what‘s next.  Why the Beach Boys in Philly?  A big city guy like you.

GOV. ED RENDELL (D), PENNSYLVANIA:  Well, first of all, we wanted to do something for all my volunteers and all my donors, all the way down to people who give me $5.  I wanted to say thanks.  So, we‘re having a farewell party.

I grew up on the Beach Boys, Chris.  In the early ‘60s, I was in college when they came on the scene.  My wife and I, our first song was the song called “Darlin‘”; and then when I was mayor of Philadelphia, July 4th, I got the Beach Boys one day and we became friends.

They played to three-quarters of a million people on the parkway.  We became friends.  They played all over Pennsylvania during my time as governor and it‘s a pretty good fitting way to go out there.  They‘re my friends, and everyone still loves them.  It‘s unbelievable.

Mike Love sounds exactly as he did 40 years ago, and Bruce Johnson. 

And they‘re a great—

MATTHEWS:  Yes, they are amazing.  So, East Coast girls are, what?

RENDELL:  Are hip.

MATTHEWS:  That‘s right and you dig those—

RENDELL:  And those clothes they wear, right.

MATTHEWS:  Styles they wear.  Thank you.

And what‘s your greatest accomplishment as governor of Pennsylvania for two terms, mayor for two terms of Philadelphia?  The greatest accomplishment?

RENDELL:  Well, in terms of Philadelphia, it was getting the city to believe in itself again.  No state, no city, can ever come back and Philadelphia was in the doldrums, unless it believes in itself.  And I think that we imbued the city and the citizens with the belief that we could be a special place again and if you‘ve been to Philadelphia recently, you know that‘s true.

MATTHEWS:  OK.

RENDELL:  In the state, I think it‘s what we did for education.  Pennsylvania eighth graders in the national test just scored number one out of 50 states in reading.  That‘s an incredible achievement and it‘s happened because we invested money in the right places.

MATTHEWS:  OK, you did for Philly—you overtook what Gene Mauch did to the Phillies back in ‘64 --

RENDELL:  Absolutely.

MATTHEWS: -- when they blew it with two games to go and they lost 10 in a row.

Anyway, thank you so much.  You‘re my favorite mayor in the history of Philadelphia.

RENDELL:  Thanks, Chris.

MATTHEWS:  You can‘t do a better job than that.

RENDELL:  Happy holidays.

MATTHEWS:  And you brought back the spirit of the city, the can-do spirit in Philadelphia.

RENDELL:  And you have two Pennsylvania politicians: one who has no future in elective politics and one who you‘re going to hear from again, I am certain.

MATTHEWS:  Oh, here he is, bringing him.  That‘s what you call an up-up man.  Governor Rendell as the up-up man for Joe Sestak.

Now, Joe, he‘s just committed to campaigning statewide for you if you want to run again I think.  So, what do you make of that?

REP. JOE SESTAK (D), PENNSYLVANIA:  A class-act as always, that‘s Ed.  No, I actually modeled my campaign style on him.  You know 6:00 a.m. in the morning at a train station and then go to a Wawa.  Chris, you know Wawas.

MATTHEWS:  I love Wawas.

SESTAK:  And to a hoagie shop at noon and V.A. or even a bar at night to shake hands.  It was a great way he campaigned, trying to get to know the people that he knew them.

MATTHEWS:  You know, I got to hand it to you, because you had a lot of opposition.  You fought it, a very tough year—Pennsylvania in a normal year, you‘d be the senator.  It was an abnormal year, a recession year, an angry year.  Did you get that feeling that you were up—that you were sailing against the wind, basically?

SESTAK:  Without a question, it was a tough environment.  But, you know, just like we talked about, 6:00 a.m. the next morning, I went down to west Philadelphia, African-American neighborhood, very pretty tough area, started shaking hands to say “thanks.”  I‘ve now been to 49 of the 67 counties to say thanks, because as I said, if we can do this well in such a tough environment when tsunamis are sweeping people overboard, it means that voices of reason can break through.

And, you know, it‘s just like I said, I think people in this election didn‘t want to know who the politicians were.  They wanted to know if they knew them.  Did you know what I went through?

MATTHEWS:  OK.

SESTAK:  And how can we begin to trust you.  And I think that‘s the important message to take out of this.

MATTHEWS:  OK.  HARDBALL question: how do the Democratic Party nationally win back Democrats, and I mean win them back, because they‘re going right now, like the ones who live in Westmoreland County, the ones who live out near in Pittsburgh and those tough neighborhoods which are hard hit economically.

How do you win them back?

SESTAK:  You know, Westmoreland or Washington, will become more like the T, the center of Pennsylvania.  And what happened this past few weeks, with the Hatfields and McCoys at least began to talk to one another is the first step.

The second step, Chris, is, the Democrats show they‘re willing not just to beat up on the other side but take tough positions and willing to lose your job over doing what‘s right, even working with the other side, taking some—some real hat from your base.  I think that‘s the way to do it in Pennsylvania, I really do.

MATTHEWS:  OK.  Admiral Sestak, thank you for your service—both as a congressman and as a member of the United States Armed Forces.  Sir, I‘ll see you again soon on this show talking politics.  Thanks for coming on tonight.  Have a happy holiday.

SESTAK:  Thanks, Chris.  Happy holidays.

MATTHEWS:  Merry Christmas to you, buddy.

When we return, let me finish with my queen.  I don‘t talk about her enough.  I mention her occasionally.  It‘s Christmastime.  We‘re going to do it tonight.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Let me finish tonight with Christmas.

Here‘s a picture of the queen, executive vice president of Marriott International.  It‘s my wife, of course, Kathleen.  She travels the world, China, India, the Amazon, doing big things, worrying all of the time about our three wonderful children, trying to figure me out occasionally.

And here‘s the point tonight—when you‘re grown up, you‘re a beneficiary of Christmas.  Our parents took us downtown to see Santa Claus, the real Santa Claus, of course, in Philly are always wanna-makers.  We took the bus to school where there were Christmas pageants and we all had our parts to play.  Some of us got to hold guitars we‘ve made out of cardboard.  We had songs to sing, hymns to sing in Christmas.

We went to the Knights of Columbus Hall for the big Christmas party there where Mr. Cocosa (ph) played Santa Claus, my dad‘s best friend.  Mr.  Shields (ph) did a complete head over heels‘ body flip before he yelled “Santa Claus is coming” and then we got to see, of course, “A Christmas Carol,” the movie about Scrooge and the ghost that came to haunt but also to warn him for his own good.

We waited up at night and one time we could actually see Santa‘s sleigh in our bedroom window and we got up to see our presents, even it was already it was still dark when we got up.  And then we went to church where everything was decorated for Christmas.  And then afterwards, a couple of days later, we go to grandma and grandpops, and get all the presents there, that people gave my Aunt Eleanor and my Aunt Agnes because they were in the convent and they gave us all the presents they have been given.  We were nephew.

And there were so many Christmases growing up.  There was Christmas on television with all of the commercials.  And there was Christmas at the stores and at school and at church and everywhere that we went, there were presents and everyone‘s making Christmas for us.

But when you get older, you realize it‘s people like you who make Christmas and the grown-ups who have the best Christmases are the ones who do the most to the make it Christmas.  And I‘m so lucky because my queen makes a great Christmas, for Michael, Thomas, Caroline, Sarah and me: Merry Christmas tonight to everybody who watches HARDBALL.

And that‘s HARDBALL for tonight.  Thanks for being with us.

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

           

           

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