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updated 2/2/2011 2:17:18 PM ET 2011-02-02T19:17:18

Guests: Ron Allen, Chuck Todd, Andrea Mitchell, Michelle Kosinski, Michelle Caruso-Cabrera, Abderrahim Foukara, Hisham Melhem, Jim Moran, Laura Richardson, John Feehery, Mark Penn

CHRIS MATTHEWS, HOST:  Friendly persuasion.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in New York.  This is HARDBALL. 

Leading off tonight: A defiant Mubarak.  Late this afternoon, President Hosni Mubarak of Egypt went on television and said he would not run for another term as president when elections are scheduled in September.  But Mubarak was defiant in saying he would not step down immediately but will serve out his term in office.

There‘s very little chance that Mubarak‘s pledge tonight will satisfy the protesters in the streets.  Thousands of anti-government protesters gathered in Cairo, and for an eighth straight day.  The crowds have been demanding that Mubarak get out and get out now, and they are not likely to be happy with Mubarak‘s half-steps.

Shortly before Mubarak spoke, President Obama effectively pulled American support.  That message was conveyed by an old Egypt hand, Frank Wisner, who told Mubarak that even if he wanted to stay in office, he can‘t hold on until September, when elections are scheduled.  We‘ve got this story covered from all the bases in Cairo, Washington, and here in New York.

Plus, the charge of judicial activism.  Conservatives go hoarse criticizing activist judges, what they called “liberals.”  But they can‘t get enough of yesterday‘s ruling against the health care law by a Florida judge appointed by Ronald Reagan.  We‘ll dig into that hot story.

But we begin with the latest on the crisis in Egypt.  Joining us right now in Cairo is NBC News correspondent Ron Allen.  Ron, I guess I‘m trying to figure this out.  Did we tell Mubarak he has to leave now, next week, two months from now?  What was our message through Frank Wisner, the old Egyptian hand, yesterday?

RON ALLEN, NBC CORRESPONDENT:  It‘s unclear to me, too, Chris.  I think there was a message that was pretty firm, that, Your time is up and we have to figure out how to end this.

I can tell you that the message out on the streets is also a bit muddled.  We just got back from Liberation Square, where there are still perhaps tens of thousands of people out there.  Some of them are vowing to camp out until the president resigns.  Some of them are vowing to pull together another million-person march for this coming Friday, after Friday prayers.

But on the other hand, you have a group of people who we saw who were leaving the square after the speech, who were saying things like, Well, the president said everything we wanted to hear, he‘s going to step aside, he‘s going change things, we have to give him time.

And I think what that shows is that all along, we‘ve been saying that the opposition to the president is somewhat fractured.  It‘s very diverse, is perhaps a better word.  There are people from all walks of life.  So I get the sense that people are beginning to weigh their own self-interest in how much more they can push.

Remember, this is very uncharted territory.  This country, this part of the world, has never seen anything like this before, I think it‘s fair to say.  So given what‘s happened, I think people are really trying to understand, Well, where do we go from here?  And the promise of another million people out on the streets on Friday may not be as easy as it perhaps sounds.  There was a lot of passion out there today, a lot of people who were first-time protesters, if you will.  We met families who brought their—parents who brought their children who wanted to be a part of history and see what was going on out in the streets.  Whether the opposition can muster that and keep this playing out for another few days remains to be seen.

Remember the old adage, divide and conquer.  And out in the square, in a quick snapshot after the speech, that‘s what I think was happening.  Some people were satisfied, some people weren‘t, and a lot of people were just trying to make up their minds, OK, what do we do now?  And I think for the government, after a day when it seemed that the government had been able to rope-a-dope this out a little longer, it seems that—well, that‘s where they are tonight.  It seems like they‘re able to extend this a little longer.  And for the government, that‘s good news.  That‘s a victory for them.  The protesters didn‘t get what they wanted.  The president is still in power.

MATTHEWS:  Well, I like the rope-a-dope analogy because it means let them wear themselves out.  And my question to you—they talk about being a steam in a teapot.  But you know, the army has to break.  And it looks to me like he‘s talking to the army in that speech today, Ron.  You read and heard what I said.  I heard the president of Egypt is saying, I‘m an army guy, identifying with the interests of the army.  Is there any sign there that the army is not behind him?

ALLEN:  No.  The army seems to be—it‘s very interesting.  On the street, there are tanks, there are soldiers out today.  And they were standing by.  They weren‘t—it was not aggressive.  There was not a lot of—there was not a lot of aggression between the protesters and the military.  And remember, a couple of nights ago, a government official went on camera—went on television and said to the protesters, We‘re not going shoot, we‘re not going to fire, saying things that suggested, We agree that you have the right to speak your opposition.  You have the right to be out there.  And there‘s no indication that they‘re clamping down on this again.

MATTHEWS:  Yes.

ALLEN:  But tonight, based on what Mubarak said, his patience may be running out.  He may try and clamp down.  Remember, this is a guy who‘s been in power for 30 years and this is how you stay in power for 30 years.  You know, you play your adversaries.  You do a little of this, a little of that.  And you know, I don‘t know that we can say for sure what the tactics will be going forward, if the opposition will be able to bring out hundreds of thousands of people back into the streets.  Mubarak obviously is getting a lot of diplomatic pressure from the United States and elsewhere, but he‘s still there.  He‘s still there to fight another day.

MATTHEWS:  It seems to me, based upon his statement on television—we‘re going to play it right now, but a couple of statements he made—one, The army is with me, I‘m with the army.  Number two, I‘m going to bring the police out.  The police are not going to keep standing by.  We‘re going to have investigations of this riot, this protest.

Let‘s take a look, Ron, together at Hosni Mubarak again and this very historic statement late today.

(BEGIN VIDEO CLIP)

HOSNI MUBARAK, EGYPTIAN PRESIDENT (through translator):  My top priority and responsibility now is to restore the security and stability of the nation, to ensure the peaceful transition of power in an atmosphere providing security and saving the people, safeguarding the people, to pave the way for this, who is to be elected by the people in the coming elections.  And I tell you in absolute veracity, regardless of the current circumstances, I did not intend to run for the coming presidency.  I have exhausted my life serving Egypt and its people.  However, I am totally keen on ending my career for the sake of the nation.

(END VIDEO CLIP)

MATTHEWS:  Ron, I‘m a political guy, I‘m not an Egyptian guy.  That guy looks strong.  Anybody would like to look like him at 82.  He doesn‘t look nervous, like he did a couple of days ago.  He ain‘t sweating.  And he‘s talking about having the army with him and talking about releasing the police to clean up the crowds.  He doesn‘t look like he‘s leaving.  My thought.  Yours?

ALLEN:  That sounds pretty ominous, to have the police clean up things, because the police, more so than the military in this country, are a dreaded force.  We were downtown at one point, and some of the only violence that we saw was a confrontation between a group of police who were in a pick-up truck with a covered back, and they went into an area where there were a lot of people sitting around in a sidewalk cafe.  The truck backed in, and the protesters pounced on it, throwing rocks and sticks at it and banging on the—on the—the driver—the police officer who was driving the truck backed out in a hurry and got out of there.

MATTHEWS:  Right.

ALLEN:  That was the only violence that we saw in being out there for many hours all day.  You know, I think a lot of people, certainly the opposition, who‘ve been so critical of the president, are not going to believe that any of these investigations are going to be worth the time or worth their weight, they‘re going to be rigged, like the elections, they would say.

And again, over the coming weeks and months—Mubarak‘s trying to buy time.  He‘s trying to play this out.  And the opposition, again, Mohammed ElBaradei and others who‘ve taken—who‘ve taken the lead on this, or at least have been visible in the lead of this—you know, there‘s some pressure on them now to see if they can really mobilize the people and have another surge of people power and keep a lot of attention and enthusiasm and energy in this.  It‘s a lot to sustain.

The other thing you have happening, Chris, of course, is that the country is crumbling.  Trains are not running.  Banks are not open.  People are not going to school or work.  It‘s taking its toll, and a lot of people who were certainly poor to begin with, want to get things back to normal, to their normal so that they can survive.  And that‘s another dynamic—

MATTHEWS:  OK.

ALLEN:  -- that‘s going on.  That‘s going to be a test in the coming days and weeks.

MATTHEWS:  OK, Ron, thank you very much for that report.  Ron Allen in Cairo.

Let‘s go right now to NBC News White House chief correspondent Chuck Todd.  Chuck, the president—we‘re hearing that Wisner went over there on the president‘s behalf and basically told this close ally of ours to leave.  Are we treating him the right way to get him to leave, or is he just showing defiance because we‘re not showing the right way to tell him to leave?

CHUCK TODD, NBC POLITICAL DIR./WHITE HOUSE CORRESPONDENT:  No, I think by sending Wisner, I think that tells you who has a personal relationship with Mubarak.  A lot of people in the American diplomatic and national security community do have pretty good relationships, personal relationships, with Mubarak, but Wisner closer than others.  So in many ways, that signal is a sign of respect to Mubarak in the hopes that he would listen to the message in full.

And I think that‘s the clear—that‘s what‘s unclear here, and that‘s what—what—there‘s been some fuzziness in the public statements coming out of the White House—

MATTHEWS:  Right.

TODD:  -- because yesterday, Chris, you know, they were trying to say, No, no, no, no, we‘re not trying to pick the next leader, we‘re not telling Mubarak when to go, when actually, it seems pretty clear they sent Wisner over there to explain to him how he must go.

MATTHEWS:  Well, the old political question about our president, Barack Obama, is whether he‘s a transactional guy or a relationship guy.  And of course, he‘s always accused of being a transactional guy.  And this question I got to ask, Is he being relationship enough with Mubarak?  Why doesn‘t he say anything good about him?  Why doesn‘t he ask him to leave quietly without making public—usually, if you want somebody to do something, you sort of love them to death.  You tell them how good a job you‘ve done for 30 years, you‘ve been a close ally, a peacekeeper.  We‘re not saying anything good about this ally of 30 years.  Why not?

TODD:  Well, look, I think this goes to a bigger geopolitical issue, which is the more—the more that is said, the more that could be implied of, it‘s too pro-American or we‘re picking sides—and I think that there‘s that fear.  You know, there was a lot of public hesitance—

MATTHEWS:  Yes.

TODD:  -- during the Iranian protests in the streets about 18 months ago because—and the fear that they had was and the reason they weren‘t so publicly forward on this, that if they picked a side, then that side would get the anti-American sentiment that‘s so easily spun up in the Muslim world—

MATTHEWS:  Yes.

TODD:  -- at a moment‘s notice could be used against—either for or against the opposition.  And I think that that‘s the line they‘ve been walking here.  This is less about Mubarak—I think behind the scenes, when you say send a guy like Wisner and you do the things that they‘ve been doing and—you‘re sending a signal that you do appreciate what kind of ally he‘s been for 30 years.

So look, I think one thing you got to understand about Barack Obama when it comes to foreign policy—and it was something you heard lot about during the campaign and it‘s something I feel I‘ve observed—is that he‘s a pragmatist, and he always has been a pragmatist.  He‘s got—he may have idealistic goals, but he‘s very pragmatic in trying to get there.  And that‘s why, just like every other American president, you develop the relationships you have to with—whether it‘s—

MATTHEWS:  Yes, it just seems very cold, Chuck.

TODD:  You know, and this was one of those.

MATTHEWS:  It looks very cold, the way we‘re treating this guy.  It seems to me, if you want him to leave, you say nice things about him.  If you want him to stay, you might ignore him.  But I‘m not talking about befriending him now.  I‘m being—I‘m saying we should acknowledge we‘ve been his friend and then tell him to leave.  Do we have any ties with anyone else in the military over there besides the president?  Are we working the military if the president‘s defiant?

TODD:  Well, one thing you got to remember, Chris, is on the day of the revolution, on the day it started, on January 25th in Egypt, one of the top defense—in the Egyptian defense—in the Egyptian army was meeting with Secretary Gates, doing sort of a regular—

MATTHEWS:  Yes.

TODD:  You know, so actually, our ties to the army as the United States government—very close.  A lot of high-level generals have spent a lot more time at West Point than they have in some of their own military bases.  So no, no, no.  The ties there are actually stronger.  I mean, I think if you look at it on a pure diplomatic sense, if the transition, if the army is used as a transition—and they seem to be the obvious short-term answer here, right?

MATTHEWS:  Right.

TODD:  The people respect the army because there‘s a lot of, you know, rank-and-file Egyptians that have to do a tour in the army, so that it‘s a very pro-people part of this, and at the same time, we as the United States government have a very good relationship with the Egyptian army.

MATTHEWS:  Great.  I‘m waiting to see if we develop a relationship with Suleiman as a transitional figure.  Anyway, thank you, Chuck Todd.  Great reporting from the White House.  And that‘s where a lot of this is happening.

Coming up, we‘re going to get reaction for Mubarak‘s address, well, from the streets of Cairo.  What are they saying about what he said?  We‘re going to get the question—and also the domino effect.  Could this contagion spread to other countries in the Arab world?  I‘m sure they‘re worried in a lot of those countries like Jordan and Saudi Arabia, and of course—and our friendship—zone (ph) of all friendships, Israel over there.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Normally, this would be a hot story.  The Democrats announced today they‘ll hold their national convention next summer in Charlotte, North Carolina.  Charlotte beat out St. Louis, Minneapolis and Cleveland for the honor.  President Obama surprisingly carried the Tarheel state in 2008, and the decision to convene in Charlotte is obviously a big sign the White House—this president wants to win North Carolina a second time.  The Republicans will hold their convention in Tampa.  Well, they‘re both going to be hot places in September of next year.  We‘ll be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  For more on how the Egyptian street over there in Cairo is reacting to Mubarak‘s address late this afternoon, let‘s turn to Abderrahim Foukara, the Washington bureau chief of Al Jazeera, and Hisham Melhem, who‘s Washington bureau chief of Al Arabiya.

Let me to go, first of all, to Abderrahim.  Your sense of the disconnect—let‘s start with the easy one in this country—the disconnect between our president and the president of Egypt right now.

ABDERRAHIM FOUKARA, AL JAZEERA:  Well, there‘s clearly a disconnect, but there‘s something else.  I think everyone involved in this situation is having a doublespeak, so to speak.  President Obama is saying that he wants Mubarak to go, but he‘s not saying it outright.  Mubarak is now saying, Yes, I do recognize the grievances, the legitimate grievances of the Egyptian people, but they are being manipulated by somebody else and I‘m not going to leave.

It seems to me that the only people who are actually saying one thing, the protesters in Cairo, interestingly, the protesters in Cairo and the Turkish prime minister, who today in parliament outright called on Mubarak to step down.

MATTHEWS:  Well, let me go to Hisham on this question, as well.  What do you see?  Just bring it home to America for a minute here.  As you watch it, Obama is trying to say, Leave.  What is Mubarak really saying?  Is he negotiating, or is this his fixed position?  Where‘s he at on this?

HISHAM MELHEM, AL ARABIYA:  I mean, if you listen to the speech in Arabic, Chris, what you get is a tone of indignation, petulance, as well as defiance.  This man who still lives in denial.  This is a man who still—if he sees a problem today, he sees it through the prism of security.  He doesn‘t believe that his very legitimacy is being questioned or has been questioned for many years, and now it‘s been totally rejected by the Egyptian people almost universally.

And he‘s clinging to power and he‘s telling us and he‘s telling his own people, I‘m not going to be another Bin Ali (ph).  I live here.  I fought for this country.  And I‘m going die here.  He‘s asking for another eight months, during which all sorts of things happen.  As we say in America, one month is an eternity in politics.  In Egypt, eight months is too much for these people.

So what you have now is a situation in which only probably in the foreseeable future, the army will ease him out because the army should realize that they cannot alienate the United States because they do depend on your tax money and my tax money and—

MATTHEWS:  What do you mean should?  Are you saying you want the army to push him out, or are you saying you think they will?

MELHEM:  No, I think, eventually, they will.  Otherwise, this thing will prolong, and then you end up into a very messy situation where all sorts of variables could occur without nobody‘s anticipation.  The Islamists will reassert themselves.  You will have a chaotic situation.  And you don‘t have central control.  And now we have a leaderless—which is good, by the way—a leaderless, spontaneous outburst of anger and wrath against this corrupt pharaoh, in the eyes of these Egyptians.  But then, you know, when these variables occur, it will be extremely difficult to contain them.

MATTHEWS:  Let me go to Abderrahim.

It seems to me the United States has always had a different take on Egypt than Egypt has on itself, obviously.  When Anwar Sadat was assassinated, we had tremendous emotions in this country.  We loved this guy like he was almost like Winston Churchill or Lafayette, one of the few foreign leaders we ever loved.  And that was Anwar Sadat. 

And then there‘s something about his personality, his manner, and, of course, his behavior in terms much peacemaking that we loved about him.  And then we realized the Egyptian people were not that emotional when this guy was gone. 

Tell us about the disconnect between our view of Mubarak in the United States the last 30 years and the Egyptian sort of general view, without being too political, just the general view of Mubarak, who they see him as. 

FOUKARA:  Well, the Egyptians clearly—I mean, as these demonstrations have seen, there‘s a large, large, large segment of Egyptian society who see themselves as having put up with a lot of things from the Mubarak regime, socially, economically, and politically. 

I think the message has been loud and clear.  They want him to go.  But, obviously, for the Obama administration, because President Mubarak has been such an asset to the United States in so many different ways including in terms of relations with Israel, and in terms of mediation between the Israelis and the Palestinians, they are obviously having a tough time trying to push him or to ease him out. 

They also don‘t want to be seen by other leaders in the region as having—leaning too much on an ally—

MATTHEWS:  Right. 

FOUKARA: -- to pry him out of—out of his position. 

But let me just quickly go back to the army.  I was saying that everybody is having a double-speak.  It seems to me from what I have seen is that the Egyptian army now also seem to be having a double-speak. 

On the one hand, they say these are legitimate grievances by the

protesters.  We‘re not going to attack you.  But, at the same time, we see

pictures of President Mubarak surrounded by the generals.  And I think it -

it—it also reflects to a certain extent the difficult position in which the army finds itself now.  It wants him to go, but at the same time it doesn‘t want to move against the protesters. 

MATTHEWS:  Well, you do that, Hisham.  See if you can report intuitively on what the army is thinking.  How many days will they give him, for example? 

MELHEM:  I think it‘s a question of days, weeks at most, definitely not months.  We are not going to see a replay of what happened in Iran when the shah fell.  The United States cannot afford it.  2011 is—is different than the 1970s. 

And, by the way, you‘re—I don‘t think you are going to see a Tiananmen Square moment here.  This is not China.  China is a—China is a world unto itself.  Egypt depends on the outside world, particularly on the United States and the West.  And, therefore, I think the army knows from where its bread is buttered. 

Let‘s be blunt about this. 

MATTHEWS:  Yes. 

MELHEM:  And this is a—this is a two-way streak—street.  Mubarak when he fights al Qaeda, when he tries to stand up to Iran, he‘s not doing a service or a favor for America, Chris.  He‘s doing a service to himself. 

In fact, let me tell you something.  I think most of those people who are demonstrating against him, they‘re not only demonstrating because they want better opportunities and bread and butter and respect and they want to be treated without contempt.  They believe this man presided over the decline and the decay of Egypt, which was once the trendsetter in the Arab world. 

MATTHEWS:  Yes. 

MELHEM:  The—the country had created the art and the literature that I, as a young man growing up in Beirut, I used to enjoy.  Today, Egypt cannot even influence an event in tiny Gaza, which speaks volume about its diminishing stature.

MATTHEWS:  Yes. 

MELHEM:  And he became the personification of that decay and that decline. 

MATTHEWS:  Well, I remember it, too, sir, from the outside.  I remember Nasser.

Thank you very much, Abderrahim—Abderrahim Foukara and Hisham Melhem.  Thank you, gentlemen, for that great information. 

FOUKARA:  Thank you.

MATTHEWS:  Egypt has kept the peace with our ally Israel, we know, for three decades.  Will the next Egyptian leader play any role like that?

When we return: what the Israelis are thinking, what they are worrying about tonight. 

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Well, for three decades now, Egypt has been Israel‘s ally in the Arab—Arab world, as well as our own ally.  So, with Mubarak promising to step aside by the end of the year, what happens to the Egyptian-Israeli relationship now, and how worried are the Israelis? 

NBC‘s Michelle Kosinski is in Tel Aviv tonight.  And, in Washington, we have got the NBC chief foreign affairs correspondent, Andrea Mitchell, standing by. 

Michelle, do you have any idea what Bibi Netanyahu, the prime minister of Israel, is thinking tonight?

MICHELLE KOSINSKI, NBC CORRESPONDENT:  Not tonight.  In fact, it took days for him to say anything, with the Israeli press clamoring for some official statement on the situation, because it is so tenuous, it is so close.  Israelis have been watching this a border away. 

The older generation say—saying they are terrified of what could happen after this.  And they felt this sort of longing for Mubarak to stay in power.  Even though they didn‘t necessarily agree with the way he ran the country all of these years, they felt that he was at least a rock of stability in that peace relationship. 

The younger generation, though, feeling like, hey, you know what?  These are young people on the streets.  They are just like us.  All they want is freedom and more opportunities. 

But I think Netanyahu put it best when he said yesterday, we know that this motivation in Tunisia first and then in Egypt didn‘t come from religious fundamentalism.  It came from those same things that the young people are talking about very optimistically.

But this is exactly the type of situation where that harder line can take hold.  Now, it seems everybody is looking at this with an inevitability, that there is going to be a role of the Muslim Brotherhood in this.  The big unknown is how much. 

You know, Chris, today, we sat down with the top leader of Hamas.  And he told us he feels that the Muslim Brotherhood has never wanted to play the top role in Egypt.  They just want to play a role.  And Palestinians are celebrating this—

MATTHEWS:  Right. 

KOSINSKI: -- still, you know, without the end in sight exactly.

Israelis, though, knowing that there‘s going to be a change, they feel like, at least initially, it is going to be bad for that relationship. 

MATTHEWS:  OK.  Thank you, Michelle Kosinski over in Tel Aviv.

Let‘s go to our expert here in Washington, Andrea Mitchell. 

We always rely on you.  I guess you have been thinking through this 24/7 since it began, because it‘s always in your head and heart, this whole question of peace in the Middle East.  Is this only bad news? 

ANDREA MITCHELL, NBC CHIEF FOREIGN AFFAIRS CORRESPONDENT:  Not necessarily, but most likely. 

And it was very interesting to see that Netanyahu‘s initial reactions earlier this week were very critical.  He was critical of the U.S. for really pulling out the rug on Friday from Mubarak, because Mubarak was a strongman and a reliable partner for Israel and was critical to, of course, securing whatever security there is in Gaza on that border. 

So, Israel was not happy and was very slow to move to recognize that what had happened in the streets, what is happening in the streets is inevitable.  U.S. officials now are also really in—in a very difficult situation. 

At this hour, as you know, the U.S. trying to figure out how to respond.  The National Security Council meeting with the president, and people telling me that their dilemma is, how do you respond to something, when it‘s not enough, when he was told by Frank Wisner that your time is up, and he did not take the message?  He‘s clinging—

MATTHEWS:  Yes. 

MITCHELL: -- by saying that he is going to stay on.  And, Chris, that is simply not going to work.  The people have moved beyond this. 

MATTHEWS:  Let‘s talk about American politics now.

I—I think most politicians at the front line have tried to avoid politicizing this.  But—

MITCHELL:  Yes. 

MATTHEWS: -- Mike Huckabee said something today I think does make sense, and it‘s along the lines of what Bibi Netanyahu said.  He is saying, we‘re not showing any sense of alliance with Mubarak in this very difficult situation. 

Why are we not saying good things about him as we urge him to leave? 

MITCHELL:  Well, the—the problem is that the administration is trying to negotiate this very difficult balance.  They don‘t want the people of Egypt to feel that—first of all, that we‘re trying to dictate some choice, because that would immediately backfire.  Nor do they want to get behind the curve on history.  Some said that they were last week. 

And so they have to be sympathetic and with the people on the street, because that‘s clearly where the power now lies, and with the military, and so you know that there have been a lot of conversations with the army.  They are very much impressed by the Egyptian army, that it has been—it has shown itself to be a professional army, in that it is aligning itself with the constitution and with the state, not with a specific—specific leader, not with Mubarak. 

So it‘s showing that it has responded to the people.  It has said, we‘re not going to take action against the people.  And the army really can become the core of work with opposition groups.

MATTHEWS:  OK. 

MITCHELL:  But for the first time, significantly, a top official said it‘s clear the Muslim Brotherhood has to be a part of this equation. 

And that‘s what Israel doesn‘t want. 

MATTHEWS:  Well, I don‘t have to remind you of the American character you and I share.  And we do not like seeing people treat their friends badly. 

MITCHELL:  Sure.

We treated Diem terribly.  We let get killed, butchered, then killed, in Vietnam, even though he was our ally for all those years.  We watched the shah become, as Henry Kissinger called him, a Flying Dutchman before he died. 

MATTHEWS:  And Americans do sense when we‘re being right with people.  And my only last question to you is, do you think we‘re being right with Mubarak? 

MITCHELL:  At this point, yes, because this is the reality.  He‘s a strongman, and now he can no longer be a strongman.

And we have to acknowledge that he was the first Arab leader to recognize the new Iraq.  That was a very important step from a U.S.  perspective.

MATTHEWS:  Yes. 

MITCHELL:  But he‘s got to recognize that we have no choice. 

MATTHEWS:  OK.  Thank you very much. 

Sharp reporting, Andrea Mitchell, and analysis. 

Up next:  Here at home, Republicans are celebrating.  Now, they don‘t usually like judges, but they like this fellow down in Florida because he has ruled against the health care reform.  He‘s called it unconstitutional, a second federal judge to do that, and, by the way, the second Republican appointee to do that. 

So, let‘s talk about judicial activism when we come back, from a different perspective than usual.

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MICHELLE CARUSO-CABRERA, CNBC CORRESPONDENT:  I‘m Michelle Caruso-Cabrera with your CNBC “Market Wrap.”

We had a second day of very solid gains.  And that easily erased Friday‘s big sell-off.  The Dow Jones industrial average surged 148 points to close above 12000 for the first time since June of 2008.  The S&P 500 climbed 21 points, and the Nasdaq jumped 51.

Investors finding plenty of reasons to buy today despite the ongoing unrest in Egypt, like a virtual blizzard of better-than-expected profits from big names like Pfizer, UPS, farming giant Archer Daniels Midland, and also Chinese search engine Baidu. 

U.S. auto sales jumping by about 18 percent in January.  And that was led by even bigger gains for GM and Chrysler.  On top of that, another very good month for U.S. manufacturing in January.  In fact, the ISM index climbed more than expected.  However, component prices are on the rise as well.  That news combining with a weaker dollar pushing commodities sharply higher. 

Finally, energy stocks still in the spotlight on lingering concerns about the stability of the Suez Canal. 

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

HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

A Reagan-appointed judge ruled today—the other day that the entire Obama health care law is unconstitutional.  He did it yesterday.  A White House adviser called it an example of—it being an example of judicial activism.

So, now we got two federal judges appointed—upholding the law, and we have got two appointed by Republican presidents opposing it.  So, we have got a partisan split in the court and it looks like the Supreme Court is going to have to decide this just in time, guess what, for next year‘s presidential election. 

Joining me right now is Virginia Congressman Jim Moran and California Congresswoman Laura Richardson. 

Congresswoman, I want to start with you on this.

You know, the American people have a hard time believing we have an independent judiciary, when you have got this even split.  Hey, guess what?  The two Democratic-appointed judges are with the president.  Guess what? 

The two Republican-appointed judges are against him. 

Is this partisan judicial behavior on all sides? 

REP. LAURA RICHARDSON (D), CALIFORNIA:  Well, Chris, first of all, thanks for having me.

And the fact that you mentioned it‘s lo and behold right in Florida causes us to have question.  Not only is this judicial activism.  It‘s overreaching, and it doesn‘t even meet the mainstream test.  Not to follow precedents by Supreme Court law and not to do a true analysis, to cut out an entire bill based upon one provision is way out of bounds, even for Republicans. 

MATTHEWS:  What did you make of the charge that you can‘t use the interstate Commerce Clause to cover all activity and non-activity; you can‘t punish a person with taxation for not buying health insurance, when there‘s no commerce there; the person is not buying anything?  How can you say that they are included in commerce?

What do you think of that argument by the judge? 

RICHARDSON:  Well, I think it‘s pretty weak. 

All you have to look at is, in 2009 alone, $43 billion, it cost many taxpayers to pay for people who hadn‘t paid for the insurance themselves.  If that‘s not what commerce is, I don‘t know what you would call it. 

We have a longstanding history of being able to utilize legislation based upon the Commerce Clause.  And this is no exception.  Come to my hospitals.  We have got hospitals open—

MATTHEWS:  I agree.

RICHARDSON: -- having to care for people because they haven‘t done the preventative care themselves. 

MATTHEWS:  Well, you have sold me. 

I want to go back to Congressman Moran on that same question. 

It seems to me, if a person is willing to walk around with a sign that says, if I‘m in a traffic accident, and if I have a heart attack, if I have an appendicitis attack, leave me alone and let me die because I don‘t want to be part of interstate commerce—I mean, I know that‘s ludicrous.  But what about her—what‘s your argument for why this is constitutional, if you have one? 

REP. JIM MORAN (D), VIRGINIA:  Well, clearly, we have determined that we‘re going to provide health care when needed, even to people who don‘t have insurance coverage.  That means that all of us have to pay it, those of us who have insurance coverage.  It‘s reflected in hospital bills, it‘s reflected in insurance premium, it‘s reflected in property taxes because many localities pick it up.

This is a conservative even partisan interpretation of an issue, and the proponents of repeal knew once they got Judge Hudson and once they got Judge Vinson what the outcome of their ruling was going to be.  The problem, though, is the Supreme Court, because that‘s where it will be decided.  And we‘ve known since they appointed George Bush over Al Gore, despite the trend of the Florida vote counting that that at least four members of this Supreme Court are activist, conservative, even partisan.

Here you‘ll have Clarence Thomas‘ wife, one of the founders and leaders of the Tea Party movement.  Judge Scalia is in conference with Michelle Obama, talking about the Tea Party movement.

MATTHEWS:  Michele Bachmann.

MORAN:  You got Judge Alito publicly disputing the president at the State of the Union.  Even Judge Roberts has shown himself to be a conservative activist in many of his decisions.

It‘s going to be decided in a court that is divided and the only vote that really matters is Judge Kennedy‘s now.

MATTHEWS:  Isn‘t that strange?

Congresswoman Laura Richardson of California, you‘re a member of the Congress now for a couple of terms now.  Doesn‘t it appall the American people that once again, we‘re going to have a Supreme Court decision which seems like the only independent vote is that of Judge Kennedy?

RICHARDSON:  Well, it‘s unfortunate because we would have all thought we have come much further.  But I‘m going to actually hold out for a little better hope.  If you look at even President Reagan‘s solicitor general, Mr.  Fried, had said that there was no hope of really basing his decision on any constitutional argument.

So, I think they are way off-base this time.  We‘re going to hold true to Kennedy.  He‘s going to look at the key points of what Supreme Court justices view, precedence and analysis.  In this test, it doesn‘t hit on either bounds.

MATTHEWS:  Well, I have a little faith as an observer like you two, I‘m citizen observer.  But I have a faith of—Judge Scalia has said in my presence he likes law.  He does respect decisions made by Congress.  He doesn‘t—he has a hard time with finding rights in the Constitution like the right of a woman to choose.  But he doesn‘t have a problem with Congress having the right to pass law.  So, maybe you have a chance here.

Let me read Judge Vinson‘s ruling to both of you, starting with Congressman Moran.  This suggests a political intent here.  It is difficult to imagine—let read this.  “It is difficult to imagine that a nation which began, at least in part, as the result of opposition to a British mandate giving the East India Company a monopoly and imposing a nominal tax on all tea sold in America would have set out to create a government with the power to force information buy tea in the first place.”

Well, he‘s certainly touching a hot rail there, Mr. Moran?  Tea?

MORAN:  Yes.  I mean, that‘s subtle.  It‘s clearly a nod to the Tea Party movement.  That‘s what he attended.

The fascinating thing, though, is that if you were to throw out the individual mandate and keep the required coverage for pre-existing conditions, it will in effect become a public option, because you can‘t have one without the other.  I don‘t know why they don‘t fully understand that.

What people will do is drop their coverage knowing that if they get sick or have an accident, insurance companies have to give them coverage.  Well, every insurance company will go out of business just as every car insurance company would go out of business.  And you‘ll have government financed health care.

So, you either got to throw out the whole bill or you have to tell them you can‘t have coverage for pre-existing conditions if we‘re going to reject the concept of an individual mandate.

MATTHEWS:  Well, for the right-wing point of view, that would be a revolting development.

Thank you very much, Congressman Jim Moran of Virginia, Congresswoman Laura Richardson.

RICHARDSON:  Thank you for having me.

MATTHEWS:  Up next: the Tea Party has all the excitement on the right and mainstream Republicans are getting scared because the Tea Party is out for scalps.  They‘re going around—well, I‘m making a reference to the Boston Tea Party that they were just pretending.

They‘re going around apparently to unseat three long time Republican senators.  Catch these names: Snowe of Maine, Lugar of Indiana, Hatch of Utah.  Look out, they are coming to get you.  That‘s ahead.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Well, the Democrats will be defending 23 of the 33 Senate seats up for grabs next year and for the fight of one of those seats arguably just has gotten a little tougher.  That‘s because Montana Republican Congressman Denny Rehberg will announce he‘ll challenge first term Senator Jon Tester.  What a race.

Tester won that state in 2006 with just 49 percent of the vote, and Rehberg is a popular figure statewide.  He won his seat last November with 61 percent.  That‘s a statewide seat.

Republicans only need four pickups to within control of the Senate to join control of the House.  They are on a roll perhaps tonight on that one.

HARDBALL will be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

“The New York Times” reported over the weekend that Senators Olympia Snowe of Maine, Orrin Hatch of Utah and Richard Lugar of Indiana may all be challenged by the right, by the Tea Party right.  Should the establishment GOP be afraid?

Well, John Feehery is a Republican consultant and was communications director for former speaker, Denny Hastert.  And Mark Penn is a Democratic consultant who advised Bill and Hillary Clinton.

Gentlemen, thank you.

I‘m looking at this strange behavior by Sal Russo.  He was pretty strange on this show trying to defend Michele Bachmann which he couldn‘t do on her—well, lack of knowledge history which is pretty scary.

But here he is.  He was interviewed by “The National Review Online” about whether the Tea Party would go after Orrin Hatch of Utah.  He‘s a pretty conservative guy.  Russo responded, “Yes.  You know, Orrin is a Reagan conservative.  As far as I‘m concerned, that‘s as good as it gets.”

But hours later, Sal Russo‘s boss, Amy Kramer, the chairman of the Tea Party Express e-mail “National Review,” quote—to clarify, saying, quote, “What Mr. Russo was getting at is that we will continue to approach each race with a sense of the greater perspective and understand the Reagan principle that our 20 percent enemy is still 80 percent our friend.  There is great excitement and energy amongst Utah Tea Party activists about the prospects for a constitutional conservative candidate to step forward and offer an alternative to Senator Hatch in 2012.  If and when that should happen, we here at the Tea Party Express will evaluate those candidates.”

Well, that‘s a step back from Orrin‘s OK from Sal Russo.

Is your party jittery to the point of doing sort of hot-footing this issue, John Feehery?  Like in the old cowboy movies, are they dancing while they shoot at their feet here?

JOHN FEEHERY, REPUBLICAN STRATEGIST:  I think anybody who‘s been in the Senate for quite a while ought to make sure that they get home and listen to their constituents, and listen to all aspects of the party.

MATTHEWS:  Why are you treating Orrin Hatch like Mubarak?

FEEHERY:  Well, I think that Orrin Hatch is a great senator.  I think he‘s been here in Washington for a while.  I think he‘s going to get reelected.  I think he‘s going to win the primary.

But I think, like any good senator, he gets the wake-up call from the last election.  He‘s going back and talking to his constituents.

I think Dick Lugar is doing the same thing.  And Olympia Snowe is doing the same thing.

You‘re going to get back home and talk to your constituents and make sure that you are hearing what they‘re saying and make sure that your messages work with them.

MATTHEWS:  So, the Muslim Brotherhood has a parallel role here with the Tea Party.  They are the one that keep you honest and decide whether you‘ve stayed too long, that you‘ve got a “sell-by” date looming.

FEEHERY:  You know, Chris, you were in Congress for a long time.  I served in Congress for a while.  I‘ve seen as many times when members of Congress lose touch with their constituents.

MATTHEWS:  So, the Tea Party is the constituency?  That‘s the new constituency.

FEEHERY:  No, no, no.  I think you‘ve got to make sure you have a majority coalition.  It‘s not just about the Tea Party.  It‘s about the Republican Party.

MATTHEWS:  OK.

FEEHERY:  I really believe that.

MATTHEWS:  Mark, let me talk about these guys who are out there speaking for the people.  They don‘t get elected.  They are guys like Sal Russo and Glenn Beck, and these guys are out there saying they speak for the people.  And I‘m looking at this strange behavior by Bachmann lately, saying that the Founding Fathers got rid of—got rid of slavery.

Boy, a lot of African-American people come out to me and said, well, I was surprised by that news, very surprised.  There‘s some craziness out there on the right and the fact that the war-hooping nut bags, some of them, are deciding who the senators should be, should make the Democrats feel happy like yourself, centrist Democrats, feel pretty because you‘re trying to groom the Democratic Party to the center, while the Republican Party is flaming off to the right.

MARK PENN, DEMOCRATIC STRATEGIST:  Well, I think that‘s right.  I mean, I think the Tea Party did significant damage.  They can do significant damage to the Republican Party, particularly in small states like Utah, where an organizing difference could—organizing effort could make a huge difference in the outcome of a low turnout situation.  I think that‘s what you saw in Delaware.

So, look, it could well happen.  I think the bad news is that if the country is looking for bipartisanship, if it‘s looking for compromise, the Tea Party and their impact on the primaries may well hold back Republicans from doing the right thing—

MATTHEWS:  Yes.

PENN:  -- and make the country more divided.  And that would be an unfortunate effect.  But the electoral effect for Democrats long term is quite good, because the Tea Party represents only a minority of the country.

MATTHEWS:  What do you—how does your party square this thing?  I mean, John, you hang around with these people.  Is—are people like Michele Bachmann and Glenn Beck, these people, are they—are they deciding who‘s kosher and who isn‘t?  I‘m looking at Bachmann going after - - who was, Bachmann went after Chaffetz, you know?  Chaffetz went Bachmann because she went after somebody else.

FEEHERY:  You know, Chris, there‘s always going to be discussions within the Republican Party.  You always have folks who are a little bit more controversial than other folks.  I do believe, though, that the Republicans are all moving in the right direction, which is they want to cut spending, and getting the fiscal house back in order.  And no matter where you are in the caucus, everybody agrees on that.

I was up in Eric Cantor‘s office the other day, his top priority is cut spending, create jobs.  So, I think that‘s where all the Republicans are.  He‘ll have some folks say some things that are, you know, kind of cookie every once in a while, but you have that on the left, you have it on the right.

And I don‘t think—if you look at the Tea Party class, you know, there are 55 members who had previous political experience.  These are really smart members of Congress and they‘re going to kind of do a good job for their constituents.

MATTHEWS:  Do you think Sarah Palin would make a great president?

FEEHERY:  No.

MATTHEWS:  Well, you know, you‘re the only—I remember now, you‘re not elected, because all the elected Republicans are scared to say that.

FEEHERY:  Well, I don‘t think she would make a great president.  I wouldn‘t support her.

MATTHEWS:  OK.  Mark, isn‘t it a problem for these guys.  You ask them a simple question like that, the elected Republicans.  And they‘re all petrified of this woman.  They‘re petrified of this former governor of Alaska.

What kind of situation is that for a political party?

PENN:  Well, I think most Republicans kind of dance around the subject, so it was refreshing to hear somebody to say he wouldn‘t support her for president.  Exactly, as you said, look, the Republicans fear the Tea Party in the primaries, because in the primaries, they can be destructive to even their long-term elected officials.  And in the general election, last time, you saw the Republicans close ranks and support the Tea Party full tilt.

MATTHEWS:  Mark, you‘re getting real smart or else I‘m starting to agree with you on things.  I‘ve been reading you today.  You‘re really good.  Thank you, Mark Penn.

PENN:  Thank you.

MATTHEWS:  Moving the Democrats to where they have to be to win.

John Feehery trying to defend the indefensible.

When we return—

(CROSSTALK)

MATTHEWS:  I‘m just kidding.  John, you‘re a good guy.  I know you don‘t really think Palin is worth anything.  Anyway, thank you.

Finish with why President Obama is doing the right thing over there with this Egyptian crisis.  I‘m going to show a little warmth towards Mubarak on the way out the door, though, here on MSNBC, we‘ll be right back.

(COMMERCIAL BREAK)

MATTHEWS:  “Let Me Finish” tonight with America and what we stand for.  We Americans began with a universal declaration that all men are created equal.  They are endowed by our creator with certain inalienable rights.

Do we think the people of Egypt deserve at least a shot at forming a democratic republic which respects human rights?  Yes, that‘s the right answer.  Do we have a role to play here?  Yes, we give Egypt a couple billions a year, money that the current government needs and a new government might want.

We have other leverage to influence the actions of the Egyptian government, both that of President Mubarak and that of those who would succeed him.  So, if we believe that the words of the Declaration of Independence mean what they say, we should certainly do what we can within reasonable limits to apply them to Egypt.  That means telling Mubarak that 30 years of rule is a good run.

But if he wants our support in the transition, he should allow a transition to occur now and say so.  It seems to me that President Obama is doing just the right thing here in peaceably protecting the people of Egypt on their desired road to democracy.

That‘s HARDBALL for now.  Thanks for being with us.

More on politics ahead with Cenk Uyghur.

           

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