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updated 7/11/2011 12:56:35 PM ET 2011-07-11T16:56:35

Guests: Eugene Robinson, Sue Herera, Kerry Sanders, James Clyburn, Katrina Vanden Heuvel, Jeffrey Rosen, Ron Reagan, Josh Marshall, Susan Filan

CHRIS MATTHEWS, HOST:  Big casino.

Let‘s play HARDBALL.

Good evening.  I‘m Chris Matthews in Washington. 

Leading off tonight: Shooting the moon.  President Obama met today with congressional leaders to deal with the debt, and he may have called the Republicans‘ bluff.  The president is pushing a plan much bigger than before, with $4 trillion—that‘s trillion with a T—spending cuts.  Major changes to Medicare and to Social Security could be on the table, as well, provided Republicans agree to an increase in tax revenues.

We may be watching President Obama outmaneuvering his Republican opponents, positioning himself as an even bigger deficit hawk than those on the right.  It‘s a bold move, but will it work?

And what happens if no deal on the debt ceiling is reached?  Is President Obama‘s last best option to invoke the 14th Amendment, to bypass Congress and borrow beyond the debt limit?  Conservatives are usually quick to defend the Constitution, but Congressman Tim Scott of South Carolina says that move might be worthy of, believe it or not, impeachment.

Plus, how‘s this for a fight?  Fox is going after the media watchdog group Media Matters, saying it doesn‘t deserve its tax-exempt status because, they say, it‘s a partisan operation.  And that‘s the same charge, obviously, that Media Matters regularly and routinely makes against Fox, that it‘s partisan.

And after escaping a potential death penalty conviction, Casey Anthony is going free.  She‘ll be released from jail Wednesday.  And one of the jurors who acquitted her or murder says doing so may have made them sick to their stomachs.  In fact, she said it did—those on the jury.

Finally, President Obama proved that simple questions don‘t always elicit simple answers.  That‘s in the “Sideshow” tonight.

But we start with the debt ceiling, serious business, and the negotiations running through Sunday.  Democratic congressman Jim Clyburn—

James Clyburn of South Carolina is the assistant Democratic leader.

Mr. Clyburn, I always like having you on the show because you‘re sober-reminded—

(LAUGHTER)

MATTHEWS:  -- and you‘ve got some serious American history behind you, for better or worse, or both.

What do you make of this fact that the president of the United States is going big casino, he talking a $4 trillion cut over 10 years?  He‘s really putting the really dicey issues on the table like Social Security and Medicare, if—if—big if—big I-F—if the Republican leadership will back off its no tax position.  What do you make of that?

REP. JAMES CLYBURN (D-SC), ASST. MINORITY LEADER:  Well, thank you so much for having me, Chris, and you‘re so kind with your compliments.

Let me say this.  You know, when we first started the Biden talks, being in that room, $4 trillion was a number that we all talked about.  We did feel, though, that we couldn‘t get there, but that we should do something that would be a down payment on getting there, something between $1.4 and $2 trillion.  And so these discussions, we have had.

And I would say to those people who have gotten so nervous about the president putting things like Medicare on the table, to remind them that when Medicare Part D was done, we brought in to support Medicare that a lot of pharmaceuticals didn‘t have before.  They may have had (ph) Medicaid, but not Medicare.  So putting Medicare out there and then not allowing for negotiated rates, that‘s what‘s got the costs up.

So if we were to have negotiated rates for Medicare, the same thing as you do, say, for the VA, for veterans in the VA administration, that could see a tremendous cost savings.

So I am hopeful that that‘s the kind of thing that the president is talking about when he puts things like Medicare on the table, and not a cut in any benefits, but the kind of negotiated rates that you have for veterans.

MATTHEWS:  Let‘s talk about the people who are involved in this.  I‘ve never seen such a vivid staging, if you will, of the key people running this country.  I think I see our Constitution on display.  The president not a dictator.  He doesn‘t call the shots.  He‘s got to deal with the Republican speaker of the House now, John Boehner.  He‘s got to deal with Republican and House Democratic leadership.

I just—I‘m not going to ask you to do it.  I‘m going to—Gene Robinson‘s going to be on the show in a couple minutes.  I‘m going to go through the sort of baseball cards of leadership with him.  But a couple of them, I want to go over with you.

Do you think Speaker Boehner is really free to act according to his conscience, or is he being held back by maybe 60 to 80 Tea Party people, led by Eric Cantor, the number two man on the Republican side, who are basically terrorizing him and threatening him if he cuts a deal somewhere down the middle?

CLYBURN:  Well, I would say this about Speaker Boehner.  I‘ve known him for a long time.  We have interacted both on the floor together and we have done so socially.  I‘ve played golf with him.  I know him pretty well, I think.

And I do believe that he is in a box when it comes to this, this issue of the debt ceiling, because he has a number of people—I hope it‘s not 80.  I‘ve been saying between 40 and 50.  If it‘s up to 80, we really are in trouble.  And he is in trouble, as well.  But that‘s what‘s got him in a box.

He knows the art of compromise.  He know what it takes to get legislation done.  And for him to be in the position he‘s currently in, I really have a lot of compassion for where he is.

MATTHEWS:  OK, let‘s try to be balanced here and go to the liberal side of—the progressive side of the Democratic Party.  Within your caucus, and you‘re a leader of the whole caucus, you‘ve got people from California, from the Bay area, people from the Northeast, from the New York City area.  You‘ve got members of the Black Caucus.  You‘ve got people that are very liberal.

Will they go along with any kind of deal that questions Social Security, something like a means test for rich people, something that says after certain income level or something, you don‘t get a COLA?  Are they willing to tamper, if you will, with these sort of sacred texts, Social Security, or is that off the table completely to the liberal wing of your party?

CLYBURN:  Absolutely not off the table.  If you talk to the members of my party, they will tell you, it‘s across the board.  They believe we ought to look at something like lifting the caps off of Social Security.  We think it‘s a problem with people making $106,000 a year paying 100 percent of their—paying Social Security on 100 percent of their income, and a person making, say, $212,000 a year only paying Social Security on 50 percent of his or her income.  We need to take a look at that, and that raises money.

Means testing is something that needs to be looked at.  And I can tell you there is strong support in both wings, all seven caucuses in the Democratic caucus for taking that kind of a look at Social Security benefits.

MATTHEWS:  Right.  (INAUDIBLE)  What a big picture you‘re looking at now, Congressman.  Thank you.  Let‘s look now at Eric Cantor, who I think is the—definitely the whip on the right here, talking on “MORNING JOE” this morning.  Let‘s listen.

(BEGIN VIDEO CLIP)

REP. ERIC CANTOR (R-VA), MAJORITY LEADER:  The president wants to talk loopholes, fine.  We need offsetting tax cuts somewhere else because we‘re not for raising taxes.  That‘s not the right thing to do when you‘ve got a sputtering economy and so many people in America out of work.

(END VIDEO CLIP)

MATTHEWS:  You know, he reminds me of the young Dick Nixon.  I have to tell you, so many times I watch this guy, Cantor.  He is a fire eater on the right.  He seems to be cutting that herd off from the leadership, from Speaker Boehner, and rallying them.

Here he is saying, yes, we‘ll fix up the tax code a bit, but with no increase in taxes, when we have a government that‘s only taxing 16 percent of the GDP and spending 25 percent of it.  A deficit like that, and he won‘t even talk, bringing up the revenues to catch up to the spending?  He‘s an ideologue—and I don‘t think he is an ideologue.  I think he‘s a pure opportunistic politician.

I mean, seriously, here.  You don‘t have to go at him like that.  I‘m just doing this from television, you got to work with the guy.  But is this what we‘re facing here, opportunism on the right, playing leadership games with the Tea Party crowd?

CLYBURN:  Well, you know, once again, nobody in our meetings, nobody in our caucus is talking about raising rates.  We‘re talking about closing loopholes.  We‘re talking about getting rid of these subsidies for big oil.  These people don‘t need these subsidies.  They will tell you that they don‘t need them.  Getting rid of that stuff.  We‘re talking about stop giving tax cuts to people who send jobs overseas.

I think Eric Cantor knows that nobody is talking about raising taxes.  We are talking about getting rid of these subsidies, closing these loopholes, and really having an effective tax rate.  They keep talking about a 35 percent corporate rate, when we all know it‘s somewhere between 16 percent and 19 percent in terms of effectiveness because of all these loopholes.  If people were paying what the rate is, I don‘t mind dropping it to 25, 26 percent.  Just collect that much and get rid of the loopholes.

MATTHEWS:  OK.  Congressman James Clyburn, so much—one of the House leadership, thank so much for joining us.

Let‘s go now to Pulitzer Prize-winning columnist Eugene Robinson.  As I said, I want you to look at these leaders right here.  “The Washington Post,” of course, you‘re an MSNBC political analyst—and now it‘s time to analyze, OK?

(LAUGHTER)

MATTHEWS:  This is HARDBALL.  Let‘s look at the people who are acting right now in this big deal that‘s coming up perhaps Sunday.  They‘re going back again, and the president.  Let‘s take a look at the—hold those pictures up there.  I‘d like Gene to go through these names.  The president wants a deal, right?

EUGENE ROBINSON, “WASHINGTON POST,” MSNBC POLITICAL ANALYST:  Yes, the president wants a deal.

MATTHEWS:  And he‘s going to make concessions on the left with things like—

ROBINSON:  He‘s willing to make concessions in order to get a deal, and he—he kind of—he‘s put himself in a position to almost win either way because if he gets a deal, he‘s—you know, he‘s the guy who got it done.  He will have outmaneuvered—

MATTHEWS:  He‘s a leader.

ROBINSON:  He‘s a leader.  He‘s a compromiser.  And he will have moved the Republicans off the “no new revenue ever” position, which is not a tenable position.

MATTHEWS:  Let‘s look at the second person on that picture we started with.  Let‘s look at those big four again, the four faces long this—how about Speaker Boehner?  Does he want a deal?

ROBINSON:  He is in a box.  I think he does want a deal.  I‘ve heard

that he wants a deal.  He‘s had these secret meetings with Obama.  He would

I think he takes his constitutional responsibility seriously.

MATTHEWS:  Don‘t become a deadbeat country?

ROBINSON:  It‘s—don‘t become a deadbeat country.  You can‘t let the country default.

(CROSSTALK)

MATTHEWS:  -- two dealmakers there.  You know, I—you know, here we are, Mandela (ph) here.  Let‘s go—let‘s go to Steny Hoyer, House Democratic leader, number two man.  He wants a deal?

ROBINSON:  He wants a deal definitely.

MATTHEWS:  OK, Durbin is out there.  Durbin backed the bipartisan commission—

ROBINSON:  Yes.

MATTHEWS:  -- for the (INAUDIBLE) so we got—here are the four dealmakers.  Now let‘s go to the interesting guys and people.  Let‘s look at the other people, baseball cards.  Let‘s take a look at these three guys.  Eric Cantor—does he really want a deal, or does he want Armageddon?

ROBINSON:  I don‘t think he would.  He doesn‘t want to—want to a real—

MATTHEWS:  He wants to bring down Boehner probably.

ROBINSON:  Well, you know, that‘s the question, the dynamic between Boehner and Cantor.  I think Cantor does want to bring down Boehner, and I don‘t think he wants to give Boehner enough slack to make a deal.

MATTHEWS:  Because if Boehner cuts a deal with the president of the United States with the party behind him, the Republican Party—

ROBINSON:  Then Cantor is—

MATTHEWS:  -- he‘s a leader.

(CROSSTALK)

ROBINSON:  -- and Cantor doesn‘t get to be Speaker of the House.

MATTHEWS:  And Eric Cantor‘s just another complainer.  Yes.  Let‘s take a look at a couple other people.  Who‘s the other person?  Let‘s look at other person who made it—let‘s look at Mitch McConnell.  Does he want a deal or does he want Armageddon?  You know where I‘m at on this one.

ROBINSON:  Well—

MATTHEWS:  Does he want—he said he wants to defeat President—

ROBINSON:  He said he wanted—

MATTHEWS:  -- Obama at all costs.

ROBINSON:  His number one priority is to make Obama a one-term president.  I think he wants to stand pat, you know?  He doesn‘t really want the country to default, but he doesn‘t really want a deal.

MATTHEWS:  Would it break his heart if Obama was a disaster this week?

ROBINSON:  It would then not break his heart.

MATTHEWS:  OK, let‘s take a look at Nancy Pelosi.  And I have to honestly play agnostic here.  I know she‘s a liberal progressive leader of the progressive faction in the Congress.  Does she want a deal that touches Social Security, that perhaps takes away the Democrat game on Medicare, to blame the Republicans?

ROBINSON:  Oh, it entirely depends on how it touches it Social Security, how it touches and Medicare.  You know, ideally, Democrats would not want a deal that has anything to do with Medicare because they‘ve got a great Medicare issue—

MATTHEWS:  They‘ve got Paul, yes.

ROBINSON:  -- to go after the Republicans on.  But if that‘s what it takes to get a deal, and if the Medicare cuts—

MATTHEWS:  OK—

ROBINSON:  -- are not draconian, they‘ll take it.

MATTHEWS:  Ladies and gentlemen, together, my very smart fellow here, analyst, has gone through the list and he agrees completely with me!

ROBINSON:  I do.

MATTHEWS:  The people who want a deal by sometime between now and August 2nd are the president of the United States, Democratic number two Steny Hoyer, Democrat number two in the Senate Dick Durbin, and of course, John Boehner, speaker of the House.

On the Republican side, the people who are going to be a problem are Mitch McConnell, certainly Eric Cantor, certainly—well, just leave it at that.  Perhaps Pelosi.  We just don‘t know.

ROBINSON:  Right.

MATTHEWS:  It‘s fascinating stuff.

Anyway, coming up: What are President Obama‘s options if he doesn‘t get a deal?  We‘re looking at about (ph) a deal perhaps a deal by August 2nd.  But what if he doesn‘t get a deal to raise the debt ceiling?  Can he bypass Congress under the 14th Amendment and keep the country from going (ph) simply by executive authority to enforce the power of the United States government to meet its bills?  We‘ve got Katrina Vanden Heuvel on, who‘s written a brilliant column about it.  We‘re going to hear what she says.  This is not radical, this is Constitutional.  Let‘s see what she has to say.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  Talk about strange bedfellows, South Carolina senator Jim DeMint, a leader of the Tea Party right, has teamed up with Maine moderate Olympia Snowe to call for a Constitutional amendment to balance the budget.  The two senators pushed for balanced budget amendment in an op-ed in today‘s “Wall Street Journal.”  Snowe‘s up for reelection next year, and teaming up with DeMint will no doubt help her fend off a primary challenge from the right.  Well, politics makes strange bedfellows.

We‘ll be right back.

(COMMERCIAL BREAK)

MATTHEWS:  Welcome back to HARDBALL.  What are President Obama‘s options in this debt ceiling fight?  In its starkest terms, it‘s defeat or default, obviously.  But a third option‘s being floated out there by no less than the Treasury secretary himself.

Could President Obama invoke the 14th Amendment to keep the United States from defaulting on our debt?

Katrina Vanden Heuvel‘s the editor of “The Nation” and Jeffrey Rose is a constitutional law professor at Georgetown (SIC) University.

Let me (INAUDIBLE) let me read the 14th Amendment section 4.  It reads in part, “The validity of the public debt of the United States authorized by law shall not be questioned.”

Now here‘s the secretary of the Treasury, Timothy Geithner, on the unconstitutionality of Congress not raising the debt ceiling.  Let‘s listen.

(BEGIN VIDEO CLIP)

TIMOTHY GEITHNER, TREASURY SECRETARY:  I think there are some people who either are pretending not to understand it, or think there‘s leverage for them in threatening a default.  I don‘t understand it as a negotiating position.  I mean, really, think about it.  You‘re going say that—can I read you the 14th Amendment?

UNIDENTIFIED MALE:  We‘ll stipulate to the 14th Amendment.

GEITHNER:  No, I want to read this one thing.

(LAUGHTER)

UNIDENTIFIED MALE:  It‘s paper-clipped in his—

GEITHNER:  “The validity of the public debt of the United States authorized by law, including debts incurred for the payments of pension and bounties for services in suppressing insurrection or rebellion”—this is the important thing—“shall not be questioned.”

(END VIDEO CLIP)

MATTHEWS:  Well, there you go.  Katrina Vanden Heuvel, thank you for joining us from “The Nation.”  You‘re the editor, and I read your op-ed in the paper the other day.  Powerful stuff.  Take a couple of minutes. 

Explain to people that don‘t know about this provision in the Constitution

--

KATRINA VANDEN HEUVEL, “THE NATION”:  Yes.

MATTHEWS:  -- about the president‘s authority in this situation?

VANDEN HEUVEL:  Well, it‘s very interesting that Secretary Geithner is carrying that around.  I mean, this is a last resort.  But it is fourth section of the 14th Amendment, passed in the wake of the Civil War.  And it was enacted for many reasons, but in the public debt arena, it was that the Confederacy would not—debts would not be paid, but the public debts would be paid to the government.

But moving forward, Chris, what we have here is a very interesting moment in our time where if the president does a plain reading of the Constitution, he has both an option and an obligation to enforce this.  And it kind of throws it back at the Tea Party, in a sense, which has waved the Constitution as its document.

But it is a last resort.  And I wrote about it because I think we‘re facing—and it‘s interesting.  Today, the White House is talking about doomsday scenarios.  But we are facing real financial calamity at home and abroad.  And this is a tool, a bow in the president‘s toolkit, leverage in negotiation with a Republican Party that so far has refused to cooperate. 

And you have got to ask, will the Republican walk away from cuts?  If

if they—if the president has to, he needs to invoke this.  And he has not spoken about it, but I do think it would give him a leadership role to speak concretely at this point in these negotiations. 

MATTHEWS:  Well, let‘s take a look at one thing he did say along these lines.  Then I will go to the law professor.  I want to hear more about your thinking on this, Katrina.

Here‘s President Obama yesterday on this issue.  He was asked about the option of invoking the 14th Amendment at yesterday‘s Twitter town hall.  Let‘s listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I don‘t think we should even get to the constitutional issue.  Congress has a responsibility to make sure we pay our bills.  We‘ve always paid them in the past.  The notion that the U.S. is going to default on its debt is just irresponsible. 

(END VIDEO CLIP)

MATTHEWS:  Professor Rosen of Georgetown—Washington University.  I said Georgetown—two great universities in town here. 

Let me ask you about this, what Katrina Vanden Heuvel said.  Is that accurate?  Is that your reading of the Constitution as well? 

JEFFREY ROSEN, LAW PROFESSOR, GEORGE WASHINGTON UNIVERSITY:  It is.  I agree with Katrina that it‘s great that Geithner is waving the Constitution and putting pressure on the Tea Party on their own terms. 

And this is an uninterpreted provision.  As Katrina said, it was during the Civil War.  The south wanted the Union to repudiate its war debts and assume the Confederate debt.  The Constitution said that they cannot do that. 

There‘s only one Supreme Court case really interpreting this.  In the 1930s, during the New Deal, FDR went off the gold standard.  And the Supreme Court said, actually, that was a repudiation of the public debt, because it changed the values of these bonds.  But the person who was challenging the thing had no standing to bring case.

MATTHEWS:  I see.

ROSEN:  So that might mean that President Obama is on strong grounds here, but that if anyone were to challenge it, the Supreme Court might not want to get involved. 

MATTHEWS:  OK, let‘s—I—I can imagine they would skip out on this well. 

VANDEN HEUVEL:  But in terms of the challenge—

MATTHEWS:  Go ahead, Katrina. 

VANDEN HEUVEL:  In terms of the challenge, I mean, you would have a lawsuit, Jeffrey, correct me if I‘m wrong, but it would have to come from Congress, a joint resolution.  And I don‘t see that happening with a Democratic Senate. 

But more important is that the president, again, he‘s a constitutional lawyer.  Of course, there‘s troubling questions about executive overreach, but we have seen an unwillingness to negotiate.  And I think, as you said at the beginning, Chris, this is not radicalism.  This is constitutionalism and it is worth reminding Americans of what is in this document that could be used in this crisis, at a moment when we face true calamity. 

MATTHEWS:  You know, I have had—we have had a big debate here, Katrina.  You have had editorial meetings as well as “The Nation.”  We have them here all the time with our producers. 

There are some of the people I work with who are really—and maybe I‘m with them sometimes.  And maybe I am.  In fact, I think I am.  There are some people on right who will say, Michele Bachmann and a few others like her, who—who are lawyers and should know—they will say, well, it‘s not really going to be a catastrophe if they don‘t—if we don‘t pay our debts as a country. 

And I always say, well, wait a minute.  I‘m thinking, well, wait a minute.  Maybe that‘s the kind of risk they‘re quite willing to take, because if we have an Armageddon situation, we get into something like Greece is in right now or Portugal or Ireland—

VANDEN HEUVEL:  That‘s right. 

MATTHEWS:  -- that won‘t be so bad for the opposition, because then they can say, see how the Democrats messed it up? 

VANDEN HEUVEL:  Well, I think you raise a very important question, Chris. 

I do think—first of all, this country has gone through economic calamity and catastrophe in these last few years, but it could unwind and unravel at home and abroad, as I said.  But there is a legitimate question to be raised—witness how the Republicans have engaged in these negotiations—as to whether the Republicans are committed to tanking an economy in order to upend—

MATTHEWS:  Yes. 

VANDEN HEUVEL:  -- and overtake and take out—

MATTHEWS:  Do you think some have?

VANDEN HEUVEL:  -- and to defeat President Obama.  And I don‘t think that is the way this country should be governed.  I think there needs to be negotiations. 

MATTHEWS:  Do you think some—excuse me.  Do you think some of them are doing that?  Do you think some of them are tanking it?

VANDEN HEUVEL:  Absolutely.  I mean, you—you—well, you had a list of people up there before.

And Mitch McConnell—Mitch McConnell, Senator Mitch McConnell of Kentucky, what did he say, Chris?  He said his first priority—and this at a time of economic pain and catastrophe—was to defeat President Obama. 

MATTHEWS:  Right.

VANDEN HEUVEL:  But I think, again, it is important to understand that there is a constitutional option. 

The president—and, you know, you know this, Chris—is not a president who has been one to speak forcefully, to come into confrontation.  He is confrontation-averse. 

MATTHEWS:  That‘s true.

VANDEN HEUVEL:  But this could be done in a way to elevate, to rally people to both a cause, to a need to focus on the economic issues and to the Constitution.  To retake the Constitution would not be a bad thing at a moment when I believe it has not been used well in these last years. 

MATTHEWS:  Well, let‘s—let me go to the professor for a last thought and big one. 

Do you think it is possible?  This is a political assessment.  Do you think possibly the secretary of the treasury has been given the job of floating this option, so that those on the other side know that, if it comes to a midnight situation and we‘re watching the world markets, the bond markets, the bond vigilantes out there ready to attack, and we see our country under danger, that, ultimately, like we when have these fights over war power, in the end, it‘s the commander in chief who has to fight for the country, not go back to the Congress again, if they don‘t want to fight with him? 

ROSEN:  Absolutely. 

I think it was a brilliant move to make clear this does have constitutional dimensions.  Obama may not raise them right now, but if things get serious, he‘s willing to.  No one has more standing to do this, as a professor of constitutional law.  And these are plausible, strong arguments that really could mobilize the country.

MATTHEWS:  OK.  That‘s great.  You‘re a great guy to have on. 

Thank you very much, Jeffrey Rosen of George Washington University and Katrina Vanden Heuvel of the great “Nation” magazine. 

VANDEN HEUVEL:  Thank you.

MATTHEWS:  Up next:  Tim Pawlenty has already got a snappy nickname. 

They call him T-Paw.  I call him Good and Pawlenty, sort of. 

But now he wants to know he‘s really down with the kids.  Catch his tag on Lady Gaga.  He‘s got—actually, he‘s sort of credible when he talks this stuff.  I was amazed. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

First up:  Stop the presses.  Today, the racy British tabloid “News of the World” announced that it will publish its final edition on Sunday.  That‘s this Sunday.  The Rupert Murdoch-owned publication was under fire for allegedly hacking into the voice-mails of people who had been murdered, believe it or not. 

The final straw may have been this indictment yesterday from Prime Minister David Cameron. 

(BEGIN VIDEO CLIP)

DAVID CAMERON, BRITISH PRIME MINISTER:  I feel so appalled by what has happened.  Murder victims, terrorist victims who have had their phones hacked is quite disgraceful. 

(END VIDEO CLIP)

MATTHEWS:  And that‘s the Conservative Party going after Murdoch. 

Wow. 

“News of the World” in print for 168 years and is currently Britain‘s biggest Sunday publication.  I say the end of that newspaper is no loss to humanity. 

Back stateside, Tim Pawlenty goes Gaga.  Here he is yesterday in an interview with pop culture bloggers in Iowa. 

(BEGIN VIDEO CLIP)

TIM PAWLENTY ®, PRESIDENTIAL CANDIDATE:  But I have a question for you guys. 

UNIDENTIFIED FEMALE:  OK.

PAWLENTY:  Are you ready? 

UNIDENTIFIED FEMALE:  We‘re ready. 

PAWLENTY:  What‘s your favorite Lady Gaga song? 

UNIDENTIFIED FEMALE:  That‘s easy. 

UNIDENTIFIED FEMALE:  “Glory.”  “Glory.” 

UNIDENTIFIED FEMALE:  No.

UNIDENTIFIED FEMALE: “Paparazzi.”

UNIDENTIFIED FEMALE:  Oh, yes.

(LAUGHTER)

PAWLENTY:  In terms of the beat, I like “Bad Romance.” 

UNIDENTIFIED FEMALE:  Oh.

PAWLENTY:  I have got to say, even though she‘s a little unusual, “Born This Way” has got some appeal.

Now, she‘s actually very talented.  If you go to the end of the HBO special, the Lady Gaga HBO special, and you watch her sing a cappella “Born This Way,” she can sing.  She can definitely sing.  She‘s talented. 

If you had to limit your artistic choices to just conservatives, we wouldn‘t have a lot of choices. 

(END VIDEO CLIP)

MATTHEWS:  Wow, a republican politician, any politician that knows the phrase a cappella impresses me. 

Anyway, that‘s most interesting thing I have heard Pawlenty say this entire campaign.  I call him Good and Pawlenty.  It actually sounds like a person speaking, not some staffer‘s idea of something for a politician to say, which he often sounds like. 

Now to the “Big Number.” 

Say this for President Obama.  He‘s a man of his words.  While the questions at yesterday‘s Twitter town hall were limited to 140 characters each, how many did the president use per each, per answer to respond? --

2,099 words on average -- 2,099 characters, that is, on average.  That‘s the equivalent of 15 Twitter messages -- 2,099 characters per answer, tonight‘s very “Big Number.” 

Up next:  It‘s an all-out war between FOX News and the watchdog group Media Matters.  That little tussle is coming up next. 

You‘re watching HARDBALL, only on MSNBC.  

(COMMERCIAL BREAK)

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

Stocks extending gains on a pair of upbeat job reports and some stronger-than-expected retail results.  The Dow Jones industrial average climbed 93 points, the S&P 500 up 14, and the Nasdaq jumped 38. 

The private sector added more jobs than expected in June, while fewer-than-expected people filed new jobless claims last week.  Those reports generating enthusiasm today ahead of tomorrow‘s June unemployment numbers from the Labor Department. 

And retailers benefited from better weather in June.  Demand was strong, especially for higher-end goods.  And analysts are predicting robust back-to-school spending as well. 

News Corp. share down just a fraction after it said it was shutting down the “News of the World” amid an e-mail hacking scandal. 

And Pfizer slumped after the drugmaker said it may sell or spin off its animal health and nutrition units to focus on pharmaceuticals.

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

MATTHEWS:  Welcome back to HARDBALL. 

Media Matters, we all know that, and FOX News are at war.  And we knew that, too.  The media watchdog group‘s main objective, of course—that‘s Media Matters—is to expose and challenge distortions made by the right-wing press. 

FOX News has been one of their primary targets—I would say primary targets.  And now the right-wing cable channel, FOX, is taking direct aim at Media Matters, and calling for it to be stripped of its tax-exempt status. 

For more on this war, let‘s turn to political commentator Ron Reagan. 

Ron, thank you for joining us. 

RON REAGAN, POLITICAL COMMENTATOR:  Sure.

MATTHEWS:  Josh Marshall is editor of Talking Points Memo.

Ron, it seems to me that the law is fairly clear.  You get tax-exempt status unless you‘re an actual partisan organization that prevents—that promotes candidates, gets people elected, even—but if you‘re just an ideological organization—I think it‘s fair to call Media Matters progressive in its orientation—

REAGAN:  Sure.

MATTHEWS:  -- you‘re entitled to your 501©(3), whatever. 

Your thoughts? 

REAGAN:  Yes, that‘s absolutely right.  They haven‘t violated the law. 

They‘re not—they‘re not promoting specific political candidates.  They‘re not training people in their media training organization to run for office as Republicans or work for Republican candidates. 

They‘re unabashed about their progressive leaning.  But, as you say, you can be ideological and be tax-exempt.  You simply can‘t be political, and they‘re not. 

MATTHEWS:  Josh Marshall, there‘s some group over in Virginia I have been familiar with years ago that does train people to win right-wing elections.  I don‘t know what their tax status is. 

But your understanding of this fight.  Let‘s talk about the fight a bit, Josh, which is more interesting than a tax status.  FOX is conservative.  I mean, let‘s take a look, by the way, at this discussion between—here‘s David Brock‘s, by the way, 2010 planning memo.

It says: “Criticizing FOX News has nothing to do with criticizing the press.  FOX News is not a news organization.  It is the de facto leader of the GOP.  And it‘s long past time it is treated as such by the media, elected officials and the public.”

Fair assessment, Josh? 

JOSHUA MICAH MARSHALL, FOUNDER AND EDITOR, TALKING POINTS MEMO:  

Pretty much.

FOX has come up with this great thing for them, where they have got a

they have made a great business model out of being a propaganda operation. 

I know some people who work at FOX that I think are trying to be good journalists, but the institution itself operates as a wing of the Republican Party.  There‘s just no getting around that.  And I think the issue for FOX is that, you know, that‘s no secret, and they have had critics over the year, they have even had watchdog organizations, but Media Matters packs a bigger punch.  And they‘re well-funded, and they‘re smart, and they do a good job. 

MATTHEWS:  No, they are tough. 

MARSHALL:  And they have landed a few punches. 

MATTHEWS:  They have been after me on occasions, so I know how tough they are. 

REAGAN:  And—

MATTHEWS:  Let‘s take a look here at—Ron, I want you to take a look at a conversation.  I think it‘s very important in the history of the media.

It‘s between Jon Stewart of Comedy Central, of course, and Chris Wallace.  I think Chris Wallace laid down a very interesting line here on what FOX is all about, I think it‘s fair to say, what he says now in this perhaps unrehearsed comment here than has ever been said by the advertising of FOX, when they called themselves fair and balanced. 

Let‘s listen to Chris Wallace. 

(BEGIN VIDEO CLIP, “FOX NEWS SUNDAY”)

JON STEWART, HOST, “THE DAILY SHOW WITH JON STEWART”:  Do you believe that Fox News is exactly the ideological equivalent of NBC News? 

CHRIS WALLACE, HOST, “FOX NEWS SUNDAY”:  I think we‘re the counterweight.  I think we‘re the counterweight. 

STEWART:  You believe that? 

WALLACE:  I think that they have a liberal agenda, and I think we tell the other side of the story. 

STEWART:  Right. 

(END VIDEO CLIP)

MATTHEWS:  Well, there‘s an admission by, Chris—I mean, Ron and then Josh.  He‘s not saying they‘re fair and balanced.  He‘s saying they‘re a balancing act to what they perceive to be the point of view of the major broadcast networks and I guess us.

(CROSSTALK)

REAGAN:  That‘s right, ABC, NBC, CBS, “The New York Times,” everybody else in the media is part of a liberal conspiracy, and poor, lonely little FOX is out there all on their own counterbalancing this. 

But, of course, he did admit, in saying that, that they are, in fact, a conservative voice, a right-ring voice in the media.

MATTHEWS:  Yes. 

REAGAN:  And the difference between FOX and, let‘s say, MSNBC, which I think we can say as probably the more progressive point of view of any of the networks out there, is that you and your fellow hosts and those people actually do stick to the facts.  You don‘t go out and make things up.  FOX makes things up.

MATTHEWS:  OK.  Let me go to Josh Marshall for that.

Agreement or not agreement with that strong assessment, indictment, I‘d call it, from Ron Reagan?

MARSHALL:  I think it‘s -- 

MATTHEWS:  Is it true that FOX makes things up, that it has a propaganda feature?

MARSHALL:  They don‘t have the same journalistic standards of most legitimate media.  That doesn‘t mean all their stuff is off, but it is—I mean, there‘s a difference between coming from a point of view and not being honest with your viewers or your readers.  And I think  that is a line that FOX consistently crosses.

MATTHEWS:  If you only watch FOX and there‘s some people who do, and I think they‘re really in trouble personally, I think you‘d be in trouble personally if you only watched to be honest, any network.

MARSHALL:  Yes.

MATTHEWS:  Let me go back to Ron.  You and I grew up, we made our own decisions.  I don‘t have the same politics as my parents, you don‘t.  I think you got to put your own stew together.  You got launch a little of this, a little of that.

REAGAN:  Absolutely.

MATTHEWS:  You got to read certain magazines here.  How do you do it?

I mean, most people put things together intelligently.  They don‘t have some daddy to come along or mommy to come along and tell them what to think.  You don‘t ask Roger Ailes to tell you what to think.

REAGAN:  No.  Absolutely.  You sample a variety of media and look for things that make sense to you.  You may not be an expert in various policy areas, but you have common sense, and ask yourself, does this pass the smell test?  I‘m listening to FOX, and they‘re talking about Obama is a racist and global warming is a giant, you know, hoax perpetrated by thousands of scientists around the world.

Does that make sense to you or not?  If it doesn‘t, you have to ask yourself about who‘s purveying that information.

MATTHEWS:  But, unfortunately, Josh, back to that question, I think some people want to be intellectually led.  They walk around and say, I am a ditto head after listening to Limbaugh.  Why would anybody want to be a ditto anything?  A ditto husband, a ditto wife, a ditto anything?

You want to be somewhat original, don‘t you?  Something that‘s self-determined.  Not something that‘s a derivative of what Rush Limbaugh was thinking or saying, let‘s put it that way, the other afternoon?

MARSHALL:  I think both the left and right have their own, you know, built-in categorical shortcomings and I think on the right, there is kind of an authoritarian mentality which I think does prefer in some ways liking to be led and kind of get the sort of authoritative line, but, again, I think -- 

MATTHEWS:  They like goose-stepping?  What do you me, authoritarian? 

That‘s pretty scary.  You mean, they actually do like being given orders?

MARSHALL:  Yes.  I think even—look I think it is widely recognized that maybe not this cycle, but in the past, the Republican Party much more often nominates the front-runner than the Democratic Party does.

MATTHEWS:  Yes.

MARSHALL:  That has to do with, that‘s a kind of a follow the leader me mentality.  That‘s not about goose-stepping or, you know, leadership principles, stuff like that.  It‘s a different way of thinking about political action.

(CROSSTALK)

MATTHEWS:  And how does that fit into watching FOX?

MARSHALL:  What‘s that?

MATTHEWS:  How does that fit in with watching FOX, as a habit?

MARSHALL:  I think that there is a greater willingness to -- 

MATTHEWS:  Be told what to think?

MARSHALL:  Yes.  To be told what to think to have the kind of a single line of opinion that you follow.

But I want to come back to this basic point.  There is a basic difference between reporting with a viewpoint and being and not being honest with your viewers.  I think there‘s a lot of stuff that FOX reports that the people reporting it know it‘s not really true.

MATTHEWS:  By the way, you mentioned a couple people over there you rely on.  I do think Shepard Smith.  I think there are some people over there that are journalists.

MARSHALL:  Yes.  Look, and there‘s people—there‘s not just the people in front of the camera.  There‘s people there as grips and cameramen and all sorts of stuff.

But, again, the leadership of the organization, the bake tone and strategy, the indictment that Brock is making at FOX, in most cases, I think is pretty accurate.

(CROSSTALK)

MATTHEWS:  I‘ll get around to that—

REAGAN:  Masquerade as a news organization.

MATTHEWS:  Ron Reagan, it‘s great to have you on.  Thanks, Ron.  Thank you, Josh Marshall.  Gentlemen, we agree. It didn‘t surprise me that we did, but we did and we‘re thinking about it, by the way.

Up next, Casey Anthony is going to free.  She‘s going to be released next Wednesday.

Watch her face in these hearings.  They are fascinating.  She reacts immediately to her current circumstances.  This is a very in the moment human being here.  I don‘t want to go further.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  President Bush‘s political guru, Karl Rove, says the 2012 Republican field isn‘t set yet.  Hmm.  Rove says he expects Texas Governor Rick Perry will get into the race.  Perry, who succeeded Bush in the Lone Star State, has been flirting with a run for weeks now and conservative activists will welcome his candidacy, of course.

Rove says the fact that Perry is governor of one of the biggest states in the country makes him a formidable candidate and fund-raiser.  I‘m not sure the Bush people like this guy.

We‘ll be right back.

(COMMERCIAL BREAK)

MATTHEWS:  We‘re back.

Casey Anthony found not guilty of murder earlier in the week was sentenced today for four years and fine $4,000 for lying to investigators in the search for her daughter Caylee, but was credit for a the already time served.  She‘d be out of jail next Wednesday, that‘s July 13.  She‘ll be free.

For more o the case, let‘s bring in NBC News correspondent Kerry Sanders, who‘s covered this story actually from the beginning, and former prosecutor, Susan Filan.

Kerry, you‘ve had an amazing—I don‘t know if you could write a book about this.  But you must be so flabbergasted by everything that‘s happened, and I guess—Kerry, let me ask you about this case here.  You‘re smiling, but I don‘t know.  What do you make of it at this point? 

She‘s out next Wednesday?

KERRY SANDERS, NBC NEWS CORRESPONDENT:  It‘s—it‘s a remarkable story.  The journey is a book, and you‘re right.  I have written a book.  That‘s why I was smiling and I‘ll hopefully have it available as early as next week.  I‘m just waiting for the final chapter to be written.

You know that Wednesday date, it‘s a moving target.  Even though they‘ve done these calculations it‘s not set in stone.  She may leave earlier.

I think they‘re doing a lot of that simply because it‘s possible that her departure from the jail could become a spectacle and they‘re concerned about even her safety.  Just having her leave the jail and return to the jail today was very difficult.  The jail guards and the officials there, corrections officials, brought in their SRU, which is like a SWAT team.

And they were treating this with high extreme security, because the concern is there is so much anger in this community that somebody will act out—because so many people believed—you know, in this community here in the Orlando area, they‘ve lived with this for three years.  This hasn‘t been a month-plus long trial.  This has been almost every day in their community, on local television, in the newspaper, on the webs, and a lot of people talking about it, almost daily, you know, over breakfast at the table.

And so, everybody thought they knew what was going to happen.  And when the jury came back and acquitted her on the main charges here, the felony charges, the murder charges, there was just—as we have all seen, those jaws that dropped, Chris, because people thought they knew something different.

MATTHEWS:  Well, here last night, juror number three, Jennifer Ford, spoke out on ABC News, and questioned what she called a lack of evidence in the case.  Let‘s listen to that.

(BEGIN VIDEO CLIP)

JENNIFER FORD, JUROR #3:  It doesn‘t feel good.  It was a horrible decision to have to make, but I had to do it based on the law.  There wasn‘t enough evidence—there wasn‘t anything strong enough to say exactly—I don‘t think anyone in America can tell us exactly how she died.

Even if you put just the 12 jurors in one room with a piece of paper and write down how Caylee died, nobody knows.  We‘d all be guessing.  We have no idea.

(END VIDEO CLIP)

MADDOW:  So, what do we say about justice in America, Susan, when the jurors say the prosecutors didn‘t make their case?  They didn‘t see the connection between the person they may think is a killer but they can‘t see the evidence of them killing—and yet nobody‘s ever going to be punished for this.  What does that say about our system if no one is ever going to be punished for the killing of this baby?  It‘s just going to be something that happened.

SUSAN FILAN, FMR. PROSECUTOR:  What it says is that the rule of law lives in this country.  We don‘t have vigilante justice.  We don‘t have mob justice.

And while it‘s not the verdict that I wouldn‘t reach, I was shock and stun by, and I disagree with it—I respect it.  I respect that the jury in that courtroom everyday and decided the case on evidence presented before it—not on emotion, and not on television.  That‘s what you or I would want, if God forbid, it was we, in that defendant spot.

MATTHEWS:  Well, what did they think it was, if it wasn‘t the murder by her of her daughter—what other possible reality occurred here that explain her not reporting this for 30 days and all of the other circumstantial evidence?  What other conclusion could they have drawn about reality here three years ago?

FILAN:  What they said is we don‘t know.  We think but we‘d be speculating.  And the medical examiner made a homicide determination based on an inference because of the way the remains were found.  Casey Anthony got the benefit of this being a decomp case with just skeletal remains.

But when you have an inference of homicide and then circumstantial case built on that, this jury was not comfortable that that was a sufficient sift evidence, that state met its burden of proof.  And I have to respect them for that.

And again, it‘s not the verdict that I would have reached.  I didn‘t have any problem connecting the dots, and I could stand back and look at the picture, and say the same thing that you said, Chris—what other reasonable conclusion could you draw?

But that‘s not how this jury saw it.  And you‘ve got to respect that they didn‘t decide this just on either hating her or calling her a liar.  They looked at this problem in the case.  It‘s there, no matter how you slice it—nobody really knows for sure how Casey died.

And if you don‘t know that, you can‘t be sure it was homicide.  If it wasn‘t homicide, it may have been an accident.  That‘s how they came down on it.

MATTHEWS:  OK.  Let‘s go to the reporting.  Kerry, as they look ahead, what‘s going to happen to her?  Are they going to sneak her off to somewhere else?  How are they going to avoid more calamity here?

SANDERS:  Well, I think they will have to sneak her out.  And there‘s

really no choice because of the anger in the community.  And it‘s unclear,

but she likely will be able to go anywhere she wants in the United States -

Puerto Rico, you don‘t need a passport to go to Puerto Rico.

           

Of course, remember, this is a woman who was really no income at all, then was arrested.  And through this process, hired private attorneys, initially part of their funds were funded by ABC News, that paid them $200,000.  That money dried up.

She was declared indigent, which normally somebody in Florida who is indigent would get a public defender.  But Attorney Jose Baez and later, Cheney Mason, was so deep in this case it didn‘t make sense to change, you know, forces  amid stream here.  And so, what they wound up doing was they decided that the judge would approve all of the expenses associated with it.  She would maintain with these attorneys.

And now, Jose Baez is, I think, going to be with Casey Anthony in some sort of perhaps financial relationship going forward.

MATTHEWS: OK.

KERRY:  We‘re trying to follow up on a story today that we haven‘t confirmed yet, that the two of them signed with an agent because there may be some value.

But, you know, she has no money.  She has $300-some-odd dollars in a commissary in jail, and that‘s it, Chris.

MATTHEWS:  Kerry, we‘re going to read your book.  Come on HARDBALL to talk about it.  Kerry Sanders, who‘s got the book of the century coming up here.

And, Susan Filan, who believes in the law.

FILAN:  You bet.

MATTHEWS:  When we return, “Let Me Finish” with the critical situation the country is in right now, in terms of our finances and why we need leaders to take action.

You‘re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS:  “Let Me Finish” tonight with a short statement about the situation this country faces.

We can act or not act.  We can meet our responsibilities to pay the bills or we can go into default.  We can be a great country or we can conduct ourselves as something less, much less—something like those countries we have long and fairly looked upon as less than serious, less than accountable before the world.

America needs to be accountable.  We take on too many duties in this world to be held up to scorn, to be out there as a country that can do what she is promised to do, make good on her financial commitments.

Simply put: we can‘t afford to be seen as a dead beat.

There are politicians on the stump right new who say we don‘t have to pay our bills.  They say it.  Who knows what they actually believe or if they have sat down and gotten in touch with the reality of the situation.

But people in the leadership do know.  John Boehner knows—so do other leaders in the Congress.  They know the facts, the risks and the consequences.  And they have no choice—knowing them—what they must do, how they must conduct themselves in the days ahead.

So, it‘s one of those times to act—to push people to act out there and to ask and, yes, to judge those who do not.

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

More politics ahead with Al Sharpton.

           

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