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updated 7/6/2011 12:23:51 PM ET 2011-07-06T16:23:51

Guests: Sue Herera, Savannah Guthrie, Claire McCaskill, Joan Walsh, Susan Filan, John Heilemann, John Harris, Steve McMahon, John Feehery

CHRIS MATTHEWS, HOST:  Stunning verdict.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in Washington. 

Leading off tonight: Not guilty.  It‘s a case that has moved from a tabloid fascination to a mainstream obsession, Casey Anthony, accused of killing her own 2-year-old daughter, covering up the crime and then partying until the dead girl was found.

Well, shortly after 2:00 PM Eastern today, the world seemed to stop as people stared at cable news channels—they were all covering the verdict live—to hear the jury‘s decision, not guilty of murder or manslaughter.  NBC‘s Kerry Sanders called it “a stunned, jaw-dropping moment” since most observers thought the verdict would go the other way.

Also, is the Republican Party willing to risk economic Armageddon in the name of religion?  That is, the religion of no taxes.  Well, the GOP have become the Wahhabis of American government, willing to risk bringing down the whole country in the service of their anti-tax ideology.  This is no phony crisis.  If you‘re not careful—if we‘re not careful, the country risks becoming Greece.  Not ancient Greece, by the way, current Greece.

Also, does Mitt Romney even believe what he says?  He says—for months, he said President Obama made the economy worse.  Last week, he denied ever having said that.  Then yesterday, he said it again.  Well, the Republicans are still looking for Mr. or Ms. Right.  Romney is just Mr.  Right Now.

After President Obama took on the Republicans for defending tax breaks for Wall Street biggies, Republicans cried class warfare.  But who‘s playing class warfare when the GOP proposes trillions in spending cuts on programs that help regular people and not a penny in new taxes for the wealthy?

Finally, “Let Me Finish” with the people in Congress who are willing to hurt their own country—and I‘m serious about this—in order to destroy a presidency.

We start with the stunning not guilty verdict of Casey Anthony.  Susan Filan‘s a former prosecutor and criminal defense attorney.  Thank you for joining us, Susan.  It‘s great to you have back.  We always have you back at the strangest moments.  And this jury trial—you know, we all watched the O.J. case, and everybody in America seemed to have an opinion about whether he was guilty or not.  And maybe that was resolved in a different way out in Vegas months and years later.

But this case is so fresh in our minds and hearts.  People have watched the face and attitude of Casey Anthony now for weeks on this network and elsewhere—looking at the picture now.  And we looked what happened today, the incredible emotion of this young woman.

Were you surprised as an expert by the not guilty verdict on all the capital counts?

SUSAN FILAN, CRIMINAL DEFENSE ATTORNEY, FMR. PROSECUTOR:  I was shocked and I was stunned, and I stared at my television set in utter disbelief.  But I have to remember that my perception of this case is vastly different from these jurors and from members of the public at large.

People fall into three categories generally, Chris.  She did it, let her fry.  I don‘t know what happened, I‘m so confused.  And there‘s doubt all over the place, and it was an accident.  So people actually believed what the defense came up with, or they were just so confused and they had reasonable doubt.

But as an expert, I thought the case was proven and I was shocked and stunned by this verdict, Chris.

MATTHEWS:  My father, who sat in court for 30 years as the senior court stenographer, senior reporter in Philadelphia, told me once if you‘re innocent, have a judge decide the case.  The judge will be rational.  He will make or she will make a decision that makes some kind of sense.  If you‘re guilty, go with a jury.  You can never predict a jury.  You just can‘t predict them.

Is that your belief, or do you continue to hold faith that your own judgment outside the court will most of the time match the judgment of the people in the jury panel?

FILAN:  No.  And my judgment doesn‘t matter.  It‘s what the jurors—

MATTHEWS:  Well, that‘s right now.  Aren‘t you surprised at the fact that juries have once again shown us that they make decisions in that room that we‘re not really party to?

FILAN:  Well, here‘s what it shows.  It shows they were clearly sequestered.  There was no infiltration of that jury, or else they would have known not only was the world watching but most of the world had already convicted Casey Anthony.

MATTHEWS:  Yes.

FILAN:  The second thing it shows is they really decided on the evidence or lack thereof that was presented to them in that courtroom.  And they were unanimous.  I mean, you‘d think perhaps, along with your doubts (ph) theory, there‘d be a hung jury.  But nope, that was a unanimous, quick, speedy verdict.  And it sounds to me like they‘d made up their minds a long time ago that whatever the state was selling, they weren‘t buying it.

MATTHEWS:  Well, let me suggest a possible logical explanation before we hear from the jurors in the days and weeks ahead, when one or two will start to talk, I assume.  It seems to me that we saw on television—we learned a young girl, a baby really, was killed.  We know there was all kinds of horror about that, how it wasn‘t explained and wasn‘t even reported or anything for weeks and weeks and weeks and nobody seemed to take responsibility, especially the mother.

We also saw the attitude of this young woman in court, which I think we all made judgments about, the attitude.  She‘s angry.  She seemed to be antisocial.  Who knows what it was, but it was something we were looking at.

But there was this giant hole of information between that woman‘s face

we‘re looking at again here now—and the tragedy, and we could never find ourselves in our minds going step by step to how it happened.  Do you think that‘s what the jury found itself—and didn‘t buy this alternative theory that the father somehow had did something, but just couldn‘t bring itself step by step to the commission of this horror?

FILAN:  That‘s one theory, Chris, that there was reasonable doubt.  The state did not have a cause of death.  They didn‘t actually even have proof, actual proof of murder.  And if there was a murder, which wasn‘t exactly proven, it was a leap to link Casey to it, although there was circumstantial evidence.  Then the defense went with that “fantasy forensics” and they had the war of the experts.

It‘s possible the jury just said, You know what?  I don‘t know who to believe, so I‘m going to throw it all out.  Or they actually bought the defense‘s theory of accident and that this child died accidentally, there was no murder, which is perhaps why they didn‘t go for one of the lesser includeds.

MATTHEWS:  Yes.

FILAN:  It wasn‘t that they didn‘t think she did premeditated murder, they didn‘t think this child was murdered at all, Chris.

MATTHEWS:  Just to finish out your thought there, watching the case, do you think in any way they bought the real defense case that somehow, the father, the grandfather in this case, somehow came along and made it look like a crime, even though it was an accident?

FILAN:  That‘s a little bit harder for me because I did think the prosecution was good when they said, Who makes an accident look like murder?

MATTHEWS:  Yes.

FILAN:  And I did think they were also effective when they said Casey Anthony points the finger at everybody but herself, when she‘s the proven liar in this case.

MATTHEWS:  Yes.

FILAN:  But it‘s really hard to tell.  It‘s either they thought it was an accident or they just weren‘t buying what the state was selling.  It just wasn‘t good enough for them to convict.  So it was either reasonable doubt or it was accident.

MATTHEWS:  OK, let‘s watch the action.  Here was that stunning moment everybody‘s going to remember, a least for a while.  Listen as the not guilty verdict was read.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  As to the charge of first degree murder, verdict as to count one, we the jury find the defendant not guilty.  As to the charge of aggravated child abuse, verdict as to count two, we the jury find the defendant not guilty.  As to the charge of aggravated manslaughter of a child, verdict as to count three, we the jury find the defendant not guilty.

(END VIDEO CLIP)

MATTHEWS:  Let‘s bring in NBC‘s chief legal analyst, Savannah Guthrie.  Savannah, so much—so good to have you because I know you so well and I know how well you understand these things as an attorney and as a correspondent at the big level.  He we are, one of those cases that has—it actually has fascinated a lot of people, including me.  What did you make—were you—can you even say, as a straight reporter, that you were stunned?  Or I don‘t even know what your parameters are these days.

SAVANNAH GUTHRIE, NBC CHIEF LEGAL ANALYST:  Yes, you know, I have to say I was surprised, and the reason I was surprised is how quickly the jurors came back with this verdict and the fact that it was just a wholesale rejection of the prosecution‘s case.

I mean, the jurors had an array of charges to consider, everything from the top charge of first degree death penalty-eligible murder all the way down to just a straight charge of child abuse.  And even though anyone watching this case could see the problems of proof that the prosecutors were dealt—the fact that we don‘t know when Caylee died, we don‘t know exactly how Caylee died, although prosecutors had theories, theories that were consistent with the evidence, but the evidence wasn‘t dispositive of those theories.

At the end of the day, I thought the jurors might get back there in the jury room and say, You know what?  Given her behavior- not reporting the child missing for 31 days, that stench of death emanating out of the trunk of the car—

MATTHEWS:  Yes.

GUTHRIE:  -- which multiple witness agreed to—she‘s got something to do with this, and we may not know what it is, but we can‘t let her walk free.  I thought the jurors might do something like that.

I should say what they did do—if they really didn‘t think prosecutors had proven this case beyond a reasonable doubt, what they did do was the right thing.  They looked at the law.  The obviously looked at those jury instructions and determined that the elements of these charges had not been met.  But I think a lot of people were very stunned.

MATTHEWS:  Well, do you think one of the things missing is—and we‘ve been looking just now, as you spoke, with these nice pictures of mother and child playing with each other very playfully and delightedly, to the enjoyment of both.  We don‘t have the case you have in spouse abuse cases, where some guy who‘s been threatening his wife for months and terrorizing her and being seen yelling at her in the streets and even hitting her finally kills her.  There‘s no preliminary event that anybody‘s pointed to—

GUTHRIE:  Yes.

MATTHEWS:  -- of abuse of this child.  Isn‘t that—well, that would seem to me, as a juror, would, Wait a minute.  I‘ve never seen they had anybody say he—she hit her daughter, yelled at her daughter, abused her in any way.

GUTHRIE:  I think you put your finger on it.  I mean, I have always thought, and I think I‘ve said it a few time, that the motive was always the weakest part of the prosecution case.

MATTHEWS:  Yes.

GUTHRIE:  Now, the prosecutors don‘t have to prove motive.  Motive is not an element of the crime.  They would not have seen motive on the jury sheet.  But as a practical matter, jurors want to know why someone would behave a certain way.

Prosecutors like to put on evidence of motive to try to explain why someone does the things they do.  And in this case, prosecutors did put on evidence of motive.  They said here‘s a young mother, somebody who was a parent too soon, who wanted to go out and party and live the good life.

The problem is, as you point out, it wasn‘t entirely consistent with the evidence.  Yes, there was evidence that she was carefree and wanted to go out and have a good time.  On the other hand, there were a lot of her contemporaries, friends who came in and said, Oh, we all knew about Caylee.  Oh, we all asked for Caylee.  There weren‘t any boyfriends who said, Oh, I didn‘t know she had a daughter.

She had a mother and a father, the grandparents of Caylee, who doted on this child, who loved to take care of her and play with her.  So presumably, Casey Anthony could have, you know, dumped the child on her parents at any time she wanted to, if she wanted to go out at night.  So there was always something about the motive—

MATTHEWS:  Yes.

GUTHRIE:  -- that the prosecutors offered that didn‘t quite add up to me, although I understand why they argued that as the motive because, to some extent, it was consistent with the facts they had.

MATTHEWS:  Susan, I want to get back to you on that question.  Do you think the absence of any evidence of abuse was a problem for the jury to condemn her?

FILAN:  You know, it‘s hard to say, Chris.  I see what you‘re saying, there‘s a link between these videos and what was presented at court.  But when she did the computer searches of chloroform, and the allegation was that she chloroformed her child, to me, that‘s aggravated child abuse.  So even if it was one instance during the time of the commission of the felony to get to first degree murder, I thought the prosecution did prove child abuse.

But again, I wasn‘t on that jury and I didn‘t have the difficulty making the link from those videos to the child because to me, the circumstantial evidence was strong.  And if you step back, what other logical conclusion could you come to by the way the child—as Savannah points out, to the stench of death in the trunk, the mitochondrial DNA of the hair, the post-mortem root banding, the way she was disposed of in the swamp—all the things that belonged to her at the time she was found, that Casey was the only person that had access to.

If you add it all up and you stand back, and as the prosecution said, you look at the forest and you don‘t get lost in the trees, who else did it?  Now it‘s this mystery up there JonBenet Ramsey.  What did happened to Caylee?  Who did kill her?

MATTHEWS:  Well, here‘s—

FILAN:  Was she murdered?

MATTHEWS:  Susan‘s, here‘s one of Casey‘s defense attorney, Cheney Mason, following the verdict.  Here he is taking a whack at the media.  Here he is.

(BEGIN VIDEO CLIP)

CHENEY MASON, CASEY ANTHONY DEFENSE ATTORNEY:  This is a lesson to those of you having indulged in media assassination for three years, bias and prejudice and incompetent talking heads saying what would be and how to be.  I‘m disgusted by some of the lawyers that have done this.

And I can tell you that my colleagues from coast to coast and border to border have condemned this whole process of lawyers getting on television and talking about cases that they don‘t know a damn thing about and don‘t have the experience to back up their words or the law to do it.  Now you‘ve learned a lesson.

(END VIDEO CLIP)

MATTHEWS:  Well, Susan, that‘s rather righteous of him.  And I understand—I can only imagine what he would have said if his client had been convicted.  But the stories that they were throwing in front of that jury about the grandfather—it seems like you‘re an expert on defense attorneys.  They‘ll basically do what it takes to get their client off, won‘t they, including developing rather absurd, even, narratives?

GUTHRIE:  Well—

(CROSSTALK)

GUTHRIE:  I‘m sorry.  Go ahead, Susan.  I‘m sorry.

FILAN:  To me, I would—to that, I would say, Pot, kettle, black.  Yes, the prosecution has a job, which is to search for the truth in the courtroom and seek justice.  The defense‘s job is to get their client off at any cost, short of crossing an ethical line.  Savannah, sorry.

GUTHRIE:  No, no—

MATTHEWS:  I‘m sorry, Savannah.  Coming up with the idea that the grandfather somehow was involved in this cover-up to the point of making him look like the real—if not the villain here, something close to it—that seems to be what defense attorneys are capable of to win a case, and they succeeded.

GUTHRIE:  Well, yes, although because we haven‘t heard from the jurors, we don‘t know if this ultimately was persuasive to the jurors.  It may be, at the end of the day, that the jurors ultimately just thought the prosecutors failed to meet their burden of proof, and they may have rejected the defense theories just as much as they rejected the prosecution‘s theories.  Until we talk to the jurors, we really don‘t know.

I thought the prosecutors did a pretty good job of debunking the defense theories and saying why they didn‘t add up, why it didn‘t make any sense.  And frankly, this defense lawyer was criticized a lot by those pundits out there, who shall remain nameless, that there was no need for the defense to tell this elaborate story of George Anthony and a cover-up and the sexual allegations because, frankly, just picking at the prosecution‘s evidence and pointing out the weaknesses and flaws in the prosecution‘s evidence was sufficient to give jurors a reasonable doubt about these charges.

Until we hear from the jurors, though, we don‘t know whether they bought the defense theory or whether they just rejected the prosecution‘s evidence.

FILAN:  What I thought was interesting, Chris—

MATTHEWS:  Well, I‘m sure the defense attorneys look upon it as the ends justify the means.  They got their person off.  And we‘ll probably have that mystery for a while.  Anyway, my dad was right.  You can‘t predict a jury.  And that was after 30 years of experience.

Thank you very much.  Great having you on, Susan Filan.  And thank you, Savannah Guthrie.

Coming up: Back to politics, where we belong.  The Tea Party Republicans who are ready to bring down this country‘s economy in the name of ideology.  This is really getting serious, and I believe scary, what‘s really being perpetrated here, possibly the defaulting of United States government on our debt in the world.  The party‘s being driven by fanatics and they‘re determined to bounce America‘s savings bonds and have the United States begin to become like Greece.  And that‘s ahead.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  For all the talk about Republicans demanding ideological purity, a new poll finds Iowa Republicans prefer pragmatism over purity.  Six in ten say they want someone who could beat President Obama, versus only three in ten who want someone who is, quote, “closest to their views.”  As you might imagine, fiscal conservatives are more pragmatic than social conservatives.  But even a majority of social conservatives say it‘s more important to find a nominee who can win in November.

We‘ll be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL. 

On July 22nd, just 17 days from today, lawmakers need to start the machine, either raise the debt ceiling or we could be in an economic disaster.  Are Republicans willing to default on the United States debt because of intransigence on taxes?

Senator Claire McCaskill joins us from Capitol Hill.  Senator McCaskill, what I like about you is you‘re normal.  You‘re a moderate.  You‘re somewhere near the center.  You‘re where I would if I were lucky enough to have the power you do.  And I look around me with fanatics.  I see fanatics on—mostly on the right, some on the left.

It seems to me that they‘re quite willing, when I hear them talking—here‘s your own colleague, Senator Roy Blunt, dismissing the debt ceiling deadline, saying, quote, “The deadline is never really a deadline.  I don‘t think world markets are going to get roiled and I don‘t our creditors are not going to get paid.”

And here‘s someone from the far right, Michele Bachmann, dismissing the consequences of not raising the debt ceiling.  Let‘s listen to her now.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE:  Well, first of all, it isn‘t true that the government would default on its debt, because, very simply, the treasury secretary can pay the interest on the debt first and then, from there, we have to just prioritize our spending. 

(END VIDEO CLIP)

MATTHEWS:  This, to me, is scary.  What‘s your view?  That these people are willing to go right into Armageddon, not face the warning signs, go right off the cliff, and take this country into Greece, into the way the world watches us go down the hill. 

SEN. CLAIRE MCCASKILL (D), MISSOURI:  Yes, it‘s a real problem. 

Compromise has become a dirty word.

And, frankly, our country has been the greatest country on the planet because our democracy has learned the art of compromise.  And now compromise is something that the two ends of the spectrums don‘t want to see happen, and we‘re going to suffer for it. 

You know, the other thing that is frustrating about this, Chris, is that I think they are trying to tell the American people that, when we raise the debt limit, we‘re asking for permission to spend more money.  That‘s not true. 

MATTHEWS:  Right. 

MCCASKILL:  All we‘re doing is making good on the spending that‘s already occurred.  This would be like going out and buying a new car.  These guys all voted for this spending.  They all voted for the things that put us in this deficit position.  And now they‘re saying they don‘t want to pay the bill. 

It‘s like they bought a new car and they don‘t want to make payments.  It is defaulting.  And we will default on obligations our government has, whether it‘s the people who are getting a Social Security check or whether it‘s to our military pay or whether it‘s to our debt that we have to pay, and all of those things would have serious and significant consequences. 

People need to quit trying to win elections and start solving the problems. 

MATTHEWS:  What it seems to me, as paperboys, we were told buy savings bonds, because they‘re as good as you can get.  And now we‘re saying renege, default on savings bonds, the very thing we—it was like a religion to us as kids.  And now they have this new crazy religion.  You can‘t raise revenues even when you have higher expenses. 

MCCASKILL:  Well, and I think one of the things we are going to do this week which I think I hope will be helpful to people, which is we‘re going to debate a sense of the Senate, that, you know, the median income has gone down for most American families over the last several years, while, last year, the CEOs of the top Fortune 500 companies got a 20 percent pay raise, last year, a 20 percent pay raise. 

MATTHEWS:  Well—

MCCASKILL:  And all we‘re saying is, shouldn‘t the millionaires, the multimillionaires do a little bit to help out here?  Can‘t we compromise on both ends of the spectrum, do a little bit on revenue, look at some of the means-testing we can do in our entitlement programs, come up with a comprehensive package that represents a good compromise, and do what we should do for our kids and our grandkids, and that is, keep America the economic superpower that it‘s always been in the world?

MATTHEWS:  Well, you know, Senator, I heard this weekend at the Aspen Ideas Festival—all these big-idea people get together—and the point was made—I have never heard it put so bluntly.  And Ed Schultz, wait until he hears this.  Maybe he already knows it, my colleague—that the reason we‘re not suffering from inflation in this country with all the oil prices up is that the workers are getting squeezed. 

They‘re paying higher prices answers and they‘re not getting wages to catch up with them.  They‘re the ones, the middle-class working person, man and woman, are the ones paying for inflation by making less real income.  That‘s what‘s going on. 

MCCASKILL:  I mean, that‘s exactly what‘s going on. 

And, I mean, I was—I was fascinated by all these Republicans who wouldn‘t vote to take away paychecks from the oil companies, from taxpayers, taxpayer subsidies to the most wealthy and successful corporations in the history of the planet, and then they turn around the next week and say, well, subsidies to people who grow corn are terrible. 

I‘m like, really?  Really?  This makes no sense.

MATTHEWS:  Well, my problem—well, here‘s my—Senator, there‘s one thing we are going to hear from our friends on the left, and that is fight harder.  My question, does the president have any choice between default and defeat?  If he stands against the crazies and says we‘re going to have to have revenues, and they say no, and then we face default, that‘s—everybody pays for that in this country.  In history, we pay. 

Is there any alternatives to default or political defeat by handing the Republicans on the right exactly what they want, just spending cuts, no taxes? 

MCCASKILL:  I think—

(CROSSTALK)

MATTHEWS:  Is there any alternative?

MCCASKILL:  I think it‘s a big mistake if we don‘t do what‘s right.  And that is to do a little bit on the tax expenditure side, cleaning up the tax code, taking away some of the goodies from folks who are doing really well, and, at the same time, look at some of the means-testing that we should have put in place in the first place in Medicare Part D. 

MATTHEWS:  OK. 

MCCASKILL:  We shouldn‘t be buying Warren Buffett‘s prescription drugs, for God‘s sake.  We‘re broke. 

MATTHEWS:  Well, let‘s do it.

MCCASKILL:  We can‘t afford to buy rich people‘s prescription drugs. 

So, I‘m going to—I believe we should hold out for the compromise.  I hope the American people agree.  There‘s nothing wrong with being in the moderate middle, if it means you find some commonsense solutions. 

MATTHEWS:  I‘m with you, Senator. 

Thank you so much, Senator Claire McCaskill of the state of Missouri.

Let‘s go right now to Joan Walsh, who is editor of Salon.

Joan, this is a real tough one, because this isn‘t about metaphor or crazy talk.  This is not about Looney Tuned history we get from some of these people.  This is about America and what‘s happening in Greece.  And when you spend time with these economists, they scare the bedickens—the dickens out of you, because we look at countries that are going into default, that are really insolvent now.

JOAN WALSH, EDITOR IN CHIEF, SALON.COM:  Right.   

MATTHEWS:  And here we are willing to say to our debtors around the world, our creditors, we‘re not paying you.  The United States we grew up with is no longer good for its debt.  We‘re now a deadbeat country. 

WALSH:  This is a kind of economic hostage-taking, Chris.  You know it and I know it. 

And it actually does have something in common with what you and I have been talking about these last two years.  These people, the Tea Partiers and their friends and their enablers and their corporate friends like Dick Armey, they have created this shrieking on the right, and this sense of the country being ungovernable, and the sense that the majority of people feel this way, when you and I both know most people think the deficit is a much lower problem than jobs. 

People know the middle class is being squeezed.  The middle-class squeeze is actually making the deficit worse, because people cannot pay their taxes.  In fact, they are getting unemployment.  So, making the economy better is actually good for the deficit. 

The president‘s trying to say that.  You know, I—he can‘t cave now. 

He can‘t cave now.  And I know what you‘re saying.  You and I are both—

MATTHEWS:  Well, you -- 

(CROSSTALK)

MATTHEWS:  Why are the—what‘s the alternative then?  Here‘s the question. 

WALSH:  Well, I don‘t know. 

MATTHEWS:  Well, you have to know.  You have to come up with it.

WALSH:  But you know what?  If you and I sit here—if you and I—

MATTHEWS:  If it‘s just default or defeat—default or defeat, can that be the only two options?

WALSH:  Well, he loses with default.

(CROSSTALK)

WALSH:  They are—they‘re really—they are really willing to go to default, because, if the economy falls apart, it‘s on his shoulders.

But if he caves entirely on—and it‘s all spending cuts and it‘s no revenue, he‘s missed an opportunity to make a deal, and the economy gets worse.

MATTHEWS:  How does he do it? 

WALSH:  That is bad.

I—I don‘t know how it does it.  But you know what?  He doesn‘t do it by compromising right now.  And I don‘t do it by telling him to compromise.

MATTHEWS:  Well, I don‘t think he‘s doing that.

WALSH:  Democrats—I don‘t—and please don‘t put me on the far left, because I‘m not, but as long as people on the left are not sitting here saying, these are our principles, this is what we need to do for the economy, this is hurting the economy. 

And this tiny minority who does not represent the American people is forcing us to do this. 

MATTHEWS:  Yes. 

WALSH:  They raised the debt ceiling seven times under George W. Bush.  As Medicare Part D, as the—as the wars, as the tax cuts, as the deficits ballooned, not a word was said.

MATTHEWS:  I agree with you.  Look, by the way, Joan, you‘re dead right.  I‘m with you on this. 

By the way, if we‘re spending 25 percent of our GDP and we‘re only taxing about 16 percent, we can see where we have to hit.  We have got to raise revenues.  It‘s part of the solution. 

WALSH:  The lower tax rates in 15 years.

MATTHEWS:  There is no other way in the world.  But anybody who looks at those numbers, we can‘t tax people so little compared to what we‘re spending.  We can‘t. 

(CROSSTALK)

WALSH:  Right.  They‘re paying the lowest taxes in 50 years—in more than 50 years, more than my lifetime, and they are still complaining.  And some of them are not complaining.  There are good businesspeople who know this game of chicken in particular is deadly and it‘s wrong and it‘s hostage-taking. 

MATTHEWS:  I agree with you.

WALSH:  And you shouldn‘t negotiate with hostage-takers. 

MATTHEWS:  I agree with you.  I agree it‘s terrorism. 

Thank you very much, Joan Walsh.

Up next:  What happened when Republican rivals Mitt Romney and Jon Huntsman crossed paths on the Fourth of July parade up in New Hampshire?  Well, it wasn‘t that exciting.  Can you imagine?  How could it be with those two guys? 

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

MATTHEWS:  Back to HARDBALL.  And now to the “Sideshow.”

First up: the return of the Know-Nothings.  Foreign policy experience, who needs it?  Here‘s 2012 hopeful Herman Cain, who has never held elective office, yesterday on “The Today Show.” 

(BEGIN VIDEO CLIP, “THE TODAY SHOW”)

HERMAN CAIN ®, PRESIDENTIAL CANDIDATE;  I‘m already talking to national security people, former intelligence people, talking to former generals and people in the military to begin to develop ideas about how I would deal with those crises that we‘re in. 

You don‘t need foreign policy experience to know who your friends are and who your enemies are.  And you don‘t need foreign policy experience to know that you don‘t tell your enemy what your next move is. 

(END VIDEO CLIP)

MATTHEWS:  So, here it is, the argument.  You have heard, what you don‘t know won‘t hurt you.  Well, now we‘re getting, what I don‘t know won‘t hurt you. 

It‘s preposterous, but maybe in this environment mildly sellable. 

Remember, Sarah Palin sells a version of it, and millions are buying it. 

Next: when candidates collide.  Mitt Romney and Jon Huntsman yesterday crossed paths at a parade up in the Granite State.  Romney came over and said: “Welcome to New Hampshire.  It‘s not Beijing, but it‘s lovely.”

Ooh.

Huntsman response: “The air is breathable.”

How do—who are these people that talk like this?  Neither are geniuses, of course, in small talk, and spontaneity ain‘t their strong suits.  Let‘s roll in the teleprompters. 

Up next:  Mitt Romney‘s doubles down in his latest flip-flop about President Obama and the economy.  There he is again.  No wonder Republicans don‘t seem to be happy with the presidential candidates this time around. 

You‘re watching HARDBALL, only on MSNBC. 

(COMMERCIAL BREAK)

SUE HERERA, CNBC CORRESPONDENT:  I‘m Sue Herera with your CNBC “Market Wrap.”

Stocks stumbling to a mixed finish in light post-holiday trading—the Dow Jones industrial giving up almost 13 points, the S&P 500 down about a point, but the Nasdaq actually added nine points on the session. 

The bulls ran out of steam heading into the close, but there was a lot less profit-taking today than analysts expected after last week‘s impressive gain.  Take a look at the S&P 500 today.  Moody‘s downgraded Portugal‘s credit rating four notches right about 2:00.  But the economic problems there are no big secret, so you can see it bounced back quickly after a midday dip. 

Netflix soaring 8 percent on word it‘s expanding its video streaming service to 43 countries in Latin America and the Caribbean. 

And Chinese search engine Baidu is teaming up with Microsoft to deliver Bing results on Baidu‘s search page.  There‘s no compensation involved, but the companies see it as a win-win proposition. 

And that‘s it from CNBC.  We are first in business worldwide—and now back to Chris and HARDBALL. 

MATTHEWS:  Welcome back to HARDBALL. 

The Republican Party is known for resting much of its power in governors.  And they pride themselves in picking a presidential candidate early, as they did with George W. back in 2000.  So, why aren‘t we seeing GOP leaders coalescing around a candidate?  Why don‘t they seem to be happy with the candidate list that is making the rounds right now? 

Well, John Harris is editor in chief of Politico.  And John Heilemann is with “New York” magazine.  He‘s been covering the Romney campaign for what it is up in New Hampshire. 

I want to start with John Harris. 

And jump in there right away, John Heilemann.

It seems to me that you—let‘s look at Romney in action here.  There ain‘t much to watch, but here he is, and then we will judge him.  Does Romney really know where he stands when it comes to even fundamental questions as to how the economy‘s doing and how the president is doing?  Here‘s Romney hitting President Obama on the recession over the past month. 

See if you can find a consistent thought.  Let‘s listen.

(BEGIN VIDEO CLIP)

MITT ROMNEY ®, PRESIDENTIAL CANDIDATE:  When he took office, the economy was in recession, and he made it worse. 

What this president has done has slowed the economy.  He didn‘t create the recession, but he made it worse and longer. 

And the president‘s failed.  He didn‘t cause this recession, but he made it worse. 

(END VIDEO CLIP)

MATTHEWS:  But last week, when an NBC producer asked him if the economy was really worse than it was in 2009, Romney walked back those statements. 

(BEGIN VIDEO CLIP)

ROMNEY:  I didn‘t say that things were worse.  What I said was that the economy hasn‘t turned around. 

(END VIDEO CLIP)

MATTHEWS:  Well he did, of course, say they were worse.  We taped him three times.  And after getting hammered for backtracking, Romney reverted again to his original charge against the president yesterday.  Let‘s listen to the latest. 

(BEGIN VIDEO CLIP)

ROMNEY:  President Obama didn‘t cause the downturn, but he made the recession deeper and longer than it needed to be, and he has made the recovery anemic. 

(END VIDEO CLIP)

MATTHEWS:  Well, John Harris, maybe that‘s one of the reasons why Republican big shots, like the governors across the country, the boys club, if you will, and some women as well, are wondering at the top why they don‘t have a strong candidate when they have a strong opportunity? 

What‘s the feeling about Romney?  Can he perform?  Does he have the right stuff to simply do the job of winning a fairly winnable campaign against this president, given economic conditions? 

JOHN HARRIS, EDITOR IN CHIEF, POLITICO.COM:  Well, the reason the Republican establishment and in particular the people you mentioned, the Republican governors, are not in love or necessarily even in like with Mitt Romney is encapsulated in that. 

It comes down to doubts about his candidate skills.  Is he somebody that is going to be effective in taking the fight to President Obama in the fall of 2012?  As you say, it‘s a great opportunity in some ways.  And, in other ways, they recognize that President Obama‘s going to be a formidable opponent.  Is Romney up to it? 

Bill Clinton, out in Aspen this weekend, he was at the so-called Ideas Festival.  He said Romney‘s candidate skills are getting way better.  He‘s a much improved candidate versus 2008.  But that series of clips showed, either that‘s really grading on a curve.

MATTHEWS:  Well, you think they might be sandbagging the guy?

HARRIS:  I mean, look, he‘s had good days and not so good days and he a run of not so good days and it really raises—it reminds people anew why they‘re somewhat skeptical of him.  He‘s clearly the front-runner but he‘s among the weaker front runners we‘ve seen in Republican politics in some time.

MATTHEWS:  John Heilemann, it looks to me like he‘s sandbagging the guy, saying what a great job Romney is doing when he isn‘t doing a great job.  But that‘s building the guy up, play him like a big, you know, Christmas turkey.  Let‘s blow him up so he looks big and fat so we can eat him?

JOHN HEILEMANN, NEW YORK MAGAZINE:  Well -- 

MATTHEWS:  Is Clinton that strategic?

HEILEMANN:  That‘s strategic times ten.  I wouldn‘t put anything past Bill Clinton in that area.

I do think there is a meme, there is a notion, that Romney is better on the stump.  But I can say, I‘ve seen him a couple times today and yesterday, that I think it‘s generally true.  He is more comfortable speaking in front of groups.  He is more comfortable taking questions from people.  He is more natural and more fluid and easier on his feet.

But he still does have that tendency sometimes to put his foot in his mouth.

And the problem for him, as John Harris kind of alluded to, is that because he has this reputation from 2008 as having been a flip-flopper, everyone‘s antennas are on high alert to try to catch him.  And that‘s not true just for the press, it‘s true for a lot of the Republican establishment and some extent, for some Republican primary voters.  They think that‘s a big problem for him and so, they‘re very much on the lookout probably giving him more scrutiny in that area than they would to some other candidates.

MATTHEWS:  So, is he Mr. Right or Mr. Right Now, John Heilemann?

HEILEMANN:  Well, he‘s certainly Mr. Right Now.  And, you know, look, Chris, you cited George W. Bush, who was a front-runner around whom people coalesced early in 2000.  It wasn‘t the case in 2008.  John McCain, of course, was a frontrunner who then collapsed in the summer of 2007, and then managed to resurrect himself.

Back in 1996, there was not a lot of notable enthusiasm for Bob Dole.  And yet in the end, faced with a weak opposition, he was able to win the nomination pretty easily.  So, you don‘t need to have early coalescence in order to emerge the victor in the end and that maybe the case for Romney this time.

MATTHEWS:  I just get a sense there‘s no excitement about these candidates.  I got a feeling—this is a weak field of candidates in what could be a good year for Republicans.  This election this next year, I think, gentlemen, we all agree, it‘s a 50/50 -- it‘s at best, it‘s a toss-up, right?

HEILEMANN:  Agree.

MATTHEWS:  John Harris, you agree it‘s a toss-up?

HARRIS:  I agree.

MATTHEWS:  Well, it‘s a toss-up—you got to have a taller person jumping for the vote (ph).

Here‘s Michele Bachmann on “Face the Nation” saying there‘s no danger of defaulting on the debt.  I don‘t think this is a responsible statement for somebody who is one of the front-runners, but let‘s listen to her.

(BEGIN VIDEO CLIP)

BACHMANN:  First of all, it isn‘t true that the government would default on its debt, because very simply, the treasury secretary can pay the interest on the debt first and then from there, we have to just prioritize our spending.

The interest on the debt isn‘t any more than 10 percent at what we‘re taking in.  In fact, it‘s less than that.  And so, the treasury secretary can very simply pay the interest on the debt first, then we‘re not in default.

(END VIDEO CLIP)

MATTHEWS:  She sounds like somebody who has just been talked to by somebody selling a house to her, like it‘s a balloon loan.  No, you don‘t have to pay anything but the interest.

I‘m sorry, Michele Bachmann sounds like somebody that‘s not a responsible leader if they‘re saying we don‘t see it‘s a default problem coming up in August, when everybody—John Harris, this is Tea Party talk.  Is it American leadership talk?  Is it somebody who cares about the country who‘s talking here?

HARRIS:  Well, look, Michele Bachmann has a great year for the Republican conversation.  It‘s not her making that point.  We‘re hearing a lot of from Republicans in Congress, such that Tim Geithner, the treasury secretary, has had to push back against this line of reasoning, makes the point, we‘ll try this at home, try skipping out on your electric bill and water bill and see if that effects your ability to get a mortgage.

MATTHEWS:  Yes.  But it just sounds like—John, last thought, John Heilemann, sounds like she‘s talking like a person who doesn‘t want to face up to the realities of governing, simply the realities of right wing politics.

HEILEMANN:  I think she‘s talking like a person who understands what the constituency that likes her wants to hear.  And, you know, it was interesting.  Today, I heard on the radio, the former Reagan budget director, David Stockman, making the same point, but making point because he wants to see credit crisis because he believes the only way for there to be real long-term reform in our fiscal priorities and our fiscal planning is for there to be a huge crisis in the bond market.

So, there are some people out there talking about it, but they‘re not generally talking about it unless they‘re trying to provoke a crisis or unless they don‘t know what they‘re talking about.

MATTHEWS:  Just remember, Stockton was the guy who got us into this mess back in the ‘80s.  He‘s the guy that had the magic asterisk, that someday we‘re going to deal with the deficit.  Someday, we‘re going to deal with spending cuts.  He got us on this path to insanity.

David Stockman—I don‘t think he‘s paid his student loans, either, by the way.  Anyway, just a thought.  That was a problem way back when for him.  I think it was Pat Moynihan that blew the whistle on him, his tenant (ph) back them.  He‘s probably paid by now.  Thank you both for joining us.

Anyway, thank you, John Harris.  Thank you, John Heilemann.

Up next, Republicans and Democrats continue to fight over raising the debt ceiling.  Is that a boat side to make a deal without looking like a loser?  We‘ll ask the strategists.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Senator Kirsten Gillibrand of New York wants to see more women in politics.  The senator launched a campaign called Off the Sidelines, to encourage women to run for elected office.  After the 2012 election, a number of women in Congress actually went down.  It‘s the first time that‘s happened in 30 years.

We‘ll be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.

As we head back towards the deficit deadline of August 2nd, does either party benefit if America defaults?  It seems like the Republicans think the other side could be blamed?  So, which party will get its way?

Let‘s ask the HARDBALL strategists: Democrat Steve McMahon right now.

And Republican John Feehery is right in front of me.

Who wins if we have disaster?  I mean real disaster.  Not missing a deadline.  I‘m talking about default, when we‘re watching the world headlines and the world newspapers and they‘re all saying the United States is screwing around.  They‘re not even paying their bills for the first time in history?

JOHN FEEHERY, REPUBLICAN STRATEGIST:  Short sellers.  No incumbent wins if the economy collapses.  All incumbents lose.  That‘s why I think you‘re going to get a deal.  It‘s not going to be deal that President Obama wants.

MATTHEWS:  When?  Will we get in time to avoid catastrophe?

FEEHERY:  Of course, we will.

MATTHEWS:  In July?

FEEHERY:  We won‘t get in July.

MATTHEWS:  When are we going to get it?

FEEHERY:  Middle of August.

MATTHEWS:  Middle—that is exactly the trouble.  I‘m sorry.  I‘m going to raise my voice here, Steve McMahon.  This is exactly the Tea Party message—don‘t take seriously the problem, wait until we reach and, in fact, go into catastrophe and the world headlines and spiking of interest rates and the default on a loan, and then—oh then at 4:00 on Sunday morning, actually do something, because the Tea Party has given Boehner permission to act like he‘s a leader for once.

Your thoughts.  This is—I didn‘t expect it from you, Feehery, because this is something I expect from the Tea Party crowd.

FEEHERY:  It‘s not going to be a catastrophe.

MATTHEWS:  OK.  Keep going, let‘s go.

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  Listen, John is absolutely right, there‘s not an incumbent out there who benefits from the government shutting down and America defaulting on its debts.  And I don‘t even think there‘s a presidential candidate, Michele Bachmann notwithstanding, who will benefit from it, because everybody will get tarred with the same brush.

When the stock market goes down 800 points, the Republican caucus is going to tremble, because they‘re going to understand finally what it is their brinksmanship has done.  And they‘re also going to appreciate a bit more in the next couple of the weeks, the bully pulpit that President Obama has, because at the end of the day, this thing probably is going to get resolved.  It won‘t get resolved as quickly as it should, but the president is looking like the reasonable party here, and the Tea Party Republicans are the ones liking unreasonable.

FEEHERY:  Steve.

(CROSSTALK)

MCMAHON:  Corporate tax breaks, big jet tax breaks, it doesn‘t look right to the American people.

MATTHEWS:  I‘m sorry, Steve.  The world‘s watching Greece last week, and the parliament probably got attacked together and pushed through a serious budget.  All of a sudden, the world was at ease, and with a serious sense of relief.

You don‘t think they‘re going to be watching the most important country in the world, us, when we start decking around with this stuff and we don‘t get it done.  You don‘t think they‘re not going to notice we‘re not getting it done?  It is 4:00 in the morning and it‘s August 3rd, or August 5th or August 9th, and we still haven‘t gotten it done—you don‘t think there‘s going to be a world watching this and saying, they‘re blowing it?  There‘s something wrong with America today?

FEEHERY:  Right now, I mean, with the president—this nonsense about corporate jets, that‘s not going to close any budget gaps.

MATTHEWS:  Don‘t get off on a tangent.

(CROSSTALK)

FEEHERY:  This is all political play—political games, and it always happens before a big deal happens.  And if there‘s going to be a deal that happens and everybody knows it, it‘s not going to include tax increases that—

(CROSSTALK)

MCMAHON:  John, John -- 

MATTHEWS:  Republicans, are you willing to have the United States not pay its debts?

(CROSSTALK)

FEEHERY:  Everybody knows.  This hasn‘t have be to be August 2nd.  It could be a couple of days later.  They‘re going to pay their debts—I‘ve been through this before debts—this happened in ‘96, ‘97.  I lived through this.

(CROSSTALK)

MCMAHON:  John, John.

MATTHEWS:  It‘s not going to be the same because you got Tea Party people out there.

FEEHERY:  You know what?  The president—to Steve McMahon—it‘s nonsense.  The president doesn‘t look presidential.  That press conference today was ridiculous.

MCMAHON:  No, it wasn‘t, John, John.

FEEHERY:  The press conference last week, it was amateurish, including one MSNBC performer said it was amateurish.

MCMAHON:  John, slow down, hold on a second.  The president today did what people expect the president of the United States to do.

FEEHERY:  Ooh.

MCMAHON:  He invited—excuse me, John—he invited the Republican and Democratic leaders of both houses of Congress to the White House to sit down.  I think he should invite the C-Span cameras.  Could I just finish, John?

(CROSSTALK)

FEEHERY:  He wouldn‘t do it.  Steve, you‘re spouting nonsense.

MCMAHON:  John, can I just finish a sentence, please?  I think he should invite the C-Span cameras in and the Republicans can sit there and they can explain why it‘s so important—

MATTHEWS:  What scares me is this is what‘s happening.

MCMAHON:  -- that we‘re going to shut down the government, to protect special interest tax breaks and corporate jets, the deductibility, because that‘s what the Republicans are saying, John.

FEEHERY:  Six months ago, the Democrats had control of everything, they could have done all this stuff on taxes.  Instead they extended the Bush taxes, you know why?  Because the economy was slowing down.  The economy hasn‘t gotten any better.  Steve, that‘s complete nonsense.

MATTHEWS:  Feehery, I‘m afraid the Tea Party has taken over the Republican Party.

Thank you, Steve McMahon.  Thank you, John Feehery.

It‘s not funny.  It is ludicrous.

“Let Me Finish” with the dead beats on the right who want America to shirk its responsibilities.  You just heard it.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  “Let Me Finish” tonight with some words I have for the screaming fanatics we hear seriously talking about the United States government refusing to pay what it owes—deadbeats.  That‘s the word we call them.  Deadbeats—people who buy things and don‘t pay for them, people who make bets and don‘t cover them.  Deadbeats.

How about this?  You‘ve got people out there telling the American public that we don‘t have to be as good as our word.  We don‘t have to honor the pledge the U.S. government has made since I was delivering newspapers as a kid, being told and believing it that there‘s nothing on earth as solid as a U.S. savings bond.

Now, we have these people out there who have taken an oath to defend this government saying the government doesn‘t have to be what we‘ve been taught to look up as good as its word.  Congresswoman Bachmann, for example, out there saying we don‘t have to pay what the government owes.  We only have to pay the interest.  Great!

She‘s pushing the same line that got us into this financial mess.  She‘s selling the national debt as some kind of balloon loan that we can make low interest payments on and hope that somehow things will turn out swimmingly that we really don‘t have to pay what we owe, that borrowing doesn‘t really carry a real-life price tag that we can wish away responsibility.

Well, we the American people have a challenge to ensure that our government doesn‘t refuse to pay what it owes.  We have from now July 5th, to July 22nd, two and a half weeks to get a bill passed in Congress.  And if that doesn‘t happen, we can expect the world to begin talking up, talking up that the United States—yes, the United States is on the verge of joining Greece on becoming a government that has solvency problem.

We‘ll hear the deathwatch.  It will be from friend and enemy alike. 

We will hear the roar grow louder.  We will see the markets start to fall. 

The rates of interest charged rise higher.

And when this happens, America will suffer a loss of reputation that will be real, will matter and will not be erased by time, because once you have a reason to doubt a country‘s commitment to meet its debts, the borrower that deal (ph) in currencies, will always know that there‘s comes times when the United States is not really there, is not really sure to its commitments, because it‘s happened before.  It happened in 2011, when the U.S. Congress refused to do its job, when American business refused to raise the alarm, when you American people sat and watched as the phrase, “As good as the U.S. government became something not so good at all.”

At that point, the only winners will be those abroad who don‘t like this country and those here willing to hurt even their own country in order to hurt this president.

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

More politics ahead with Cenk Uygur.

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