'Hardball with Chris Matthews' for Thursday, July 21, 2011

Guest Host: Michael Smerconish
Guests: Chris Cillizza Hampton Pearson, Alex Wagner, Steve Israel, Chrystia Freeland, Jay Powell, Clarence Page, Joby Warrick

MICHAEL SMERCONISH, GUEST HOST: So what‘s the deal?
Let‘s play some HARDBALL.

Good evening. I‘m Michael Smerconish, in tonight for Chris Matthews tonight.
Leading off: Deal or no deal? All day long, there‘s been word that a deal between President Obama and Speaker John Boehner is in the works to save the U.S. from default. But publicly, at least, both sides are denying it. It‘s clear that the adults on both sides are trying to avoid default. But here‘s a question. How do you get to an agreement when Tea Partiers are saying no to any deal with taxes and Democrats are saying no to any deal without them?
Plus, what happens if the country does default? The Tea Partiers insist the White House, Boehner, Mitch McConnell—that they‘re all just crying wolf. Really? We‘ve crunched numbers, and default would seem to affect almost every American home.
Also, those Michele Bachmann migraines. Is it fair to question her fitness to be president now that we hear she may be debilitated for days at time, or is this something that we would never have mentioned about a male candidate?
And how did an anti-American terrorist become so trusted by U.S. officials in Afghanistan that he was allowed close enough to kill seven CIA agents?
And finally, “Let Me Finish” tonight with a second look at the most memorable moment of the week, when Rupert Murdoch‘s wife, Wendi, supposedly saved him from a pie-throwing comedian. Call me skeptical, but I‘m calling it “pie-gate.”
We start with deal or no deal. Now, here‘s what “The New York Times” reported this afternoon. Quote, “The Obama administration has informed Democratic congressional leaders that the president and Speaker Boehner were starting to close in on a major budget deal that would enact substantial spending cuts and seek future revenues through a tax overhaul, congressional officials said Thursday. With the government staring at a potential default in less than two weeks, the official said the administration on Wednesday night notified top members of Congress that an agreement between the president and Mr. Boehner could be imminent.”
But White House spokesman Jay Carney was quick to knock down the story. Let‘s listen.
(BEGIN VIDEO CLIP)
JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The breaking news reports that you all have probably received is incorrect. There is no deal. We are not close to a deal. We are—obviously, the president is in discussions with all the leaders of Congress, as well as other members, and exploring the possibility of getting the biggest deal possible, which is the position he has held for a long time now, as you know. The fact is that there is no progress to report, but we continue to work on getting the most significant deficit reduction package possible.
(END VIDEO CLIP)
SMERCONISH: Now, likewise, Speaker Boehner‘s spokesman put out a statement saying, quote, “While we‘re keeping the lines of communication open, there is no deal and no progress to report. We‘re focused on the ‘cut, cap and balance‘ bill that passed the House with bipartisan support and hope the Senate will take it up as soon as possible.”
Democratic Congressman Steve Israel of New York is the chairman of the Democratic Congressional Campaign Committee. Surely he will know.
Congressman, is there a deal that‘s imminent?
REP. STEVE ISRAEL (D-NY), DCCC CHAIR: Well, there‘s no deal because we‘re having a hard time negotiating with one side. Look, you‘ve got—I like what you said, Michael, that there are adults who understand that we cannot default. And you have got the Gang of Six in the Senate that is seeking a compromise. McConnell‘s seeking a compromise. House Democrats are seeking a common sense compromise. The president seeking a common sense compromise.
And then you‘ve got this small group that is absolutely isolated, about 60 Republicans in the House, who have already signed a letter saying under no circumstances will they vote for an increase in the debt limit, no matter what is in it. And so they are isolated by themselves, obstructionists.
You cannot get to a deal unless you have some somebody to make a deal with, and right now, these extremist Republicans will not even get into a room and negotiate.
SMERCONISH: Congressman, one of the reports that was out today says that there was a $3 trillion proposal in the works that would be all cuts and no revenue enhancements, meaning no new taxes. Is there any truth to that rumor?
ISRAEL: You know, there are a variety of options that are circulating. And House Democrats agree with the president that at the end of the day, here‘s what we need. We need a balanced package. You cannot tax your way out of debt. You cannot cut your way out of debt. You need to grow your way out of debt. You need a balanced package that fairly increases revenues on people making over million dollars, that does involve some spending cuts and that promotes growth and doesn‘t hurt the middle class.
That‘s where House Democrats are insisting we end up with. And we do not balance the budget on the backs of seniors and veterans. If we can get that kind of balance without hurting the middle class, without ending Medicare, with fair revenue increases on the very wealthiest and some spending cuts, we can avoid this default.
SMERCONISH: Relative to those revenue increases, would expiration of the Bush tax cuts themselves be sufficient, in your view, to fit that piece of the puzzle?
ISRAEL: If you do not extend the Bush tax cuts just for people making over a million dollars, that creates very significant revenues. Not increasing—extending the Bush tax cuts for people making over $250,000 puts $700 billion on the table.
And again, Democrats have said that should be part of a deal. We‘re also willing to discuss common sense spending cuts. But at the end of the day, Michael, look, it is unfair to ask somebody in my district on Long Island, a middle class family, to bear the brunt of this. They may want to send their kids to college.
What these Republicans are saying is, You give up Pell grants, don‘t send your kid to college. But if you‘re making over million dollars, you get your $100,000 tax cut. That‘s not a deal that we can support.
SMERCONISH: I guess, Congressman, my question is, couldn‘t the GOP declare victory and go home if there were no revenue increases beyond allowing the Bush tax cuts to expire? They were apparently giving a green light to do so by Grover Norquist yesterday.
ISRAEL: Well, unfortunately, Grover Norquist has kind of back-pedaled from what he said just this morning. And that just gives you a sense of just how much disarray they are in. They tell us one thing and then they do another. Grover Norquist this morning said exactly what you had just suggested, and with hours, he debated himself. Grover Norquist can‘t even agree with himself! So how can these Republicans come to an agreement with us?
SMERCONISH: What I‘m taking away from you is that the sell (ph) is all on the GOP side of the aisle, and I‘m interpreting from that that you have your ducks a row. Is that a fair statement?
ISRAEL: We‘ve said from day one that we will produce the votes necessary to pass an extension of the debt ceiling so long as it is balanced, doesn‘t hurt seniors on Medicare, doesn‘t hurt the middle class, and involves the right balance of revenue adjustments and spending cuts. And we will provide those votes along those lines.
And the American people are with us. You look at every single poll, and it says the same thing. Republicans, Democrats, independents agree with our balanced approach.
SMERCONISH: I was going to say, Congressman, according to our latest NBC News/”Wall Street Journal” poll, 58 percent said they support the president‘s plan, which would include spending and Medicare cuts and an increase for the taxes on the wealthy, 36 percent side with Republicans in Congress and their proposal with just cuts to spending and no increase in taxes.
And I sense—you know, my day job is one of being talk radio host, and I sense there‘s been this shift just in the last three weeks as more people have come to the recognition that if there‘s skin in the game from all, then it‘s going to be a salable package. The final word from you on this.
ISRAEL: That is—skin in the game for all is exactly what we have called for. Protecting and defending tax loopholes for millionaires and big corporations is what the Republicans have called for. They need to meet us somewhere.
SMERCONISH: Thank you, Congressman Steve Israel.
ISRAEL: Thank you.
SMERCONISH: All right, joining me now is “The Washington Post‘s” Chris Cillizza, author of “The Fix” and managing editor of Postpolitics.com.
Hey, Chris, let‘s visit this Grover Norquist issue because I think it was on Tuesday, in this interview with Ruth Marcus and your “Washington Post” editorial board, Grover Norquist, the man famous for his anti-tax pledge, said that not renewing the Bush tax cuts would not violate his pledge. Listen to some of that audio that‘s been released.
CHRIS CILLIZZA, MSNBC POLITICAL ANALYST: Sure.
(BEGIN AUDIO CLIP)
GROVER NORQUIST, AMERICANS FOR TAX REFORM PRES.: Not continuing a tax cut is not technically a tax increase.
RUTH MARCUS, “WASHINGTON POST”: So it does not violate the pledge.
NORQUIST: We wouldn‘t hold it that way. It would be a very bad thing to do. It would raise taxes from where they are today. Would it technically violate the pledge? No.
(END AUDIO CLIP)
SMERCONISH: All right, tell those who don‘t follow all the inside baseball the way you and I eat, sleep and drink it, what is the significance of Grover Norquist saying that?
CILLIZZA: Well, look, for people who don‘t know, Grover Norquist is a guy who since 1985 has run a group called Americans for Tax Reform. This is a D.C.-based group that does a lot of things, but basically, its job is to hold the line on no tax increases for Republicans. Every time someone runs for office, Grover and his group get them to sign a pledge essentially saying they will not raise taxes or revenue increases at all.
The result of that is it‘s become a rite of passage. It‘s hard to win a Republican primary for House, Senate if you don‘t sign the pledge. Your opponent makes an issue out of it.
The end game there, though, Michael, is that you‘ve got 240 members of Congress, the vast majority, about 95 percent Republicans, who have signed a pledge saying, We will never vote to increase taxes or revenues.
It‘s hard to make a deal—look, this is the problem John Boehner‘s running into. It‘s hard to make a deal when you have that number of people on record as saying they won‘t do it.
SMERCONISH: Well, it turns—it turns this Bush tax cut extension into one of these, you know, it depends on the definition of “is” because let me show you—
CILLIZZA: Yes.
SMERCONISH: -- one more thing. Today on MSNBC, Grover backtracked.
Here he is in an interview with Chris Jansing from this morning.
(BEGIN VIDEO CLIP)
NORQUIST: It wouldn‘t pass the last test to go to the American people and tell them you that just allowed $4 trillion in higher taxes by allowing the 2001-2003 lower rates to lapse and tell people that‘s not a tax increase. It clearly would be a dramatic increase on taxes.
So I can be clear. Americans for Tax Reform would oppose any effort to weaken, reduce or not continue the 2001-2003 Bush tax cuts. And in fact, any changes of taxes should be kept separate from the budget deal.
(END VIDEO CLIP)
SMERCONISH: OK, so Chris, if I‘m a GOP member of the House, I‘m a freshman, I came in with Tea Party support, what am I able to do that I‘m not going to incur the wrath of Grover Norquist? How can I vote on this?
CILLIZZA: The question is, Michael, is, is he drawing a distinction with a difference or a distinction without a difference? What it seemed like he told Ruth Marcus and “The Post” is that it‘s not—that allowing the Bush tax cuts to expire is not technically a violation of the pledge, meaning they couldn‘t be attacked in a Republican primary, for example, of breaking their pledge on taxes.
What he said to Chris Jansing today is, This is bad. We don‘t think it should happen, and Americans for Tax Reform as group doesn‘t support it. The question is, is there a gray area there? Is not supporting it and thinking it‘s a bad thing the same thing as being in violation of the pledge?
That‘s what I think a lot of Republican members are worried about because, look, we know how campaigns work. Go back—George H.W. Bush, “Read my lips, no new taxes,” then he raised taxes.
SMERCONISH: Right.
CILLIZZA: We know how that turned out. All Republican members, House, Senate, even governors, I‘ll throw in there, worry about falling victim to that same thing. And that‘s why Grover Norquist retains the amount of power he does over the House Republican Conference.
SMERCONISH: Chris, reading the tea leaves from a distance, it seems to me that Boehner is more inclined to strike a deal than Eric Cantor. What‘s the dynamic, as you see it right now, between the two of them?
CILLIZZA: They insist publicly and their aides generally insist
privately that there is no space. But Michael, you and I—we both get
paid to pay attention to this stuff on a minute granular basis. If you
look at it, it certainly seems like John Boehner is the one who wants to do
something big. He wants to be involved in doing something big, whether he
thinks that it‘s important for the country, whether he think it‘s important
for his speakership, whether he thinks it‘s just the right thing to do. He
seems more inclined to do that
Eric Cantor has more held that Tea Party line that there cannot be tax
or revenue increases. It‘s just going to be hard. It doesn‘t mean a deal
can‘t happen if there are no revenue or tax increases, but I will tell you
you just heard Steve Israel—Nancy Pelosi, Chuck Schumer, Harry Reid, those people are going to howl if there is a deal made in which there are spending cuts, in which Medicare or possibly Social Security comes in for cuts—

SMERCONISH: Without tax increases.
CILLIZZA: -- and there are no significant—significant tax or revenue increases.
SMERCONISH: And when you say—
(CROSSTALK)
CILLIZZA: Maybe it‘s good for Barack Obama, but it‘s certainly not good if you‘re a Democrat running for the House or Senate.
SMERCONISH: When you say no significant tax increases, you‘re talking something beyond the expiration of the Bush tax cuts?
CILLIZZA: I think so, Michael. You know, what‘s hard about this—
SMERCONISH: Oh, now you‘re like Grover. Now you‘re hedging on this!
(LAUGHTER)
SMERCONISH: Hey, Chris, thank you—
CILLIZZA: I‘m a reporter. I live in the gray area!
(LAUGHTER)
SMERCONISH: Thank you for being here, Chris Cillizza.
CILLIZZA: Thanks, Michael.
SMERCONISH: Coming up: So what happens if the country goes into default? Tea Partiers want you to believe that it wouldn‘t be a big deal, that the president‘s crying wolf. But the reality is much different, and that lies just ahead.
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
SMERCONISH: More trouble for John Edwards. The Federal Election Commission has voted to force Edwards to pay back $2.3 million in federal matching funds. The FEC found that Edwards‘s 2008 presidential campaign exceeded the amounted of money that it was allowed to spend. It‘s the latest setback for Edwards, who was indicted last month over allegedly using campaign funds to cover up an extramarital affair.
We‘ll be right back.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
TIMOTHY GEITHNER, TREASURY SECRETARY: We have to write 80 million checks a month to the Americans people, Social Security beneficiaries, Medicare and Medicaid, veterans‘ benefits, ammunition for our troops fighting wars outside of the United States. There‘s no plausible way to run a country in a situation for an extended period of time we‘re not paying our obligations. It‘s not—it‘s not feasible.
(END VIDEO CLIP)
SMERCONISH: Welcome back to HARDBALL.
That was Treasury Secretary Tim Geithner on CNBC Monday, sounding the alarm bell that this country could be in real trouble if the debt ceiling has not been raised by August 2nd.
Here to talk about what that means for real Americans are Chrystia Freeland of Reuters and Jay Powell, the former undersecretary of the Treasury under President George W. Bush.
Mr. Secretary, I tend to be a knucklehead, so dumb it down for me. What would be the steps that you expect would transpire if they can‘t strike this accord?
JAY POWELL, FMR. UNDERSECRETARY OF THE TREASURY: So what‘ll happen is, after August 2nd, the government will wake up on the morning of the 3rd and it will have nowhere near enough cash to pay all the bills, and it‘ll have to—it‘ll have to leave approximately half of our non-debt-related bills unpaid.
Now, we believe that the debt, of course, will be paid. We don‘t think that there‘s an issue of a likely bond default. But many, many benefit payment checks and all kinds of important payments just simply won‘t be made because there won‘t be enough cash.
SMERCONISH: So behind closed doors right now, some prioritization is presumably being done so that there‘s a plan to know who gets does get paid and who doesn‘t get paid?
POWELL: So that‘s an issue. You know, everyone assumes that the administration will pick the winners and losers. They may actually decide that they don‘t have the legal authority to do that and allow the bills to be paid in the order in which they‘re due, and do it out of available cash flow. And that way, they don‘t have their hands on the decisions. We don‘t know.
SMERCONISH: In the doomsday—
POWELL: We don‘t know.
SMERCONISH: In the doomsday scenario, we‘ve been told the first step is that the U.S. credit would be downgraded. What does that mean?
POWELL: Well, the rating agencies put a label on us, and we are the best credit in the world. We‘re AAA. Every other credit in the world is inferior to ours. S&P, which is one of the three big rating agencies, has said that they‘re very likely to downgrade us if we don‘t come up with a terrific, you know, huge deficit reduction package, which doesn‘t seem that likely right now.
So—but there—there really aren‘t any obvious and tremendous near-term consequences from that. It‘s a really bad thing. It‘s a harbinger of worse things to come, if it happens.
SMERCONISH: Let me include Chrystia with the second step. We‘re told that the markets would then react. Chrystia, what would you expect that would mean for individuals?
CHRYSTIA FREELAND, THOMSON REUTERS: OK, well, there‘s a very big caveat (ph). We just don‘t know what would happen. And I think that that‘s part of the risk, right? I think if 2008 has taught us anything, it‘s that we live in a very volatile world, and one economic shock, like letting Lehman go bankrupt, can have devastating consequences.
I think that if—I think that Jay portrayed what would happen very well. I think you would—if you had the U.S. Government starting to default on its domestic obligations, I think you would have a downgrade of U.S. government debt. It has been the gold standard for the entire financial system.
And I think some of knock-on consequences would be, first of all, the entire financial system, mutual funds, banks, is based on the basis of U.S. treasuries being the equivalent of, you know, the very best credit you could have. If that stops being the case, you start having these financial institutions having to do crazy things to their portfolios.
SMERCONISH: Would not wouldn‘t another step be that the cost of borrowing would then go up? I‘m also trying to understand what this means to someone like me, just a random person who‘s trying to sort it out at home.
FREELAND: Well, but for you as a random person, if you have the financial system start to be knocked into disarray, then you have a Lehman-type situation, the potential of a real global financial crisis.
I mean, the borrowing cost issue I think the next big deal, and Jay talked about this in a great piece that he published today where he talked about the other big thing that has to happen in August is the U.S. has to roll over a lot of its debt.
Now, the question is, would the borrowing costs go up? Would creditors be willing to lend money to the U.S. government knowing that it‘s not paying all of its obligations? The answer is, probably yes, but probably at a higher cost, and, again, the consequences for the entire financial system, not just in the U.S. but in the whole global economy, are really unpredictable.
I do think that looking back to what happened with Lehman and the financial crisis and the global recession that that caused is not extreme.
SMERCONISH: Jay Powell, interest rates, presumably, they, too, would go up? That would be another part of the doomsday scenario? That would affect everybody.
POWELL: Yes. I think Chrystia said it very well. I think interest rates are likely to go up because some buyers are going to go away. Supply if fixed. Demands go down. The rates have to go up.
And those will play out. If it happens for any period of time, that will play out in the consumer rates, mortgage rates, and that sort of thing. I would add I think—in the absence of an actual bond default, I don‘t think you‘re not looking at Lehman. The real chaos will be in the economy. It will be in people who aren‘t getting their payments and a really significant negative shock to the economy, rather than in the markets.
FREELAND: The other thing, if I could add there, Jay, is what we don‘t know is the unknown unknowns.
So there are so many dominoes in the world economy that are connected to U.S. treasuries and that are built around a AAA rating for U.S. treasuries. And we just can‘t predict what link there is going to be in the global chain that could break if the U.S. defaults.
SMERCONISH: Should someone who‘s at home and watching this play itself out—the news is full of reports of what‘s going on behind closed doors, whether it‘s the government preparing, whether it‘s the ratings folks preparing, whether it‘s Wall Street preparing.
What about a typical American? Is there any level of preparation that they should be undertaking or is this completely out of their hands?
Jay, you start, and then, Chrystia, you can follow up.
POWELL: Nothing comes to mind. I wouldn‘t be changing my investment and things like that. The issue, if you‘re a beneficiary, then you may be getting your benefits late. They will be paid, but they may be paid a few days late.
So—and I think there‘s still a real hope. I talk a lot to people on the Hill. I think there‘s a lot of hope that this will get done in time to raise the debt ceiling in one form or another.
SMERCONISH: Chrystia, should we take money out of the mattress, anything at all that people at home should be doing?
FREELAND: Well, I can tell you what the smart guys on Wall Street are doing.
SMERCONISH: Tell me.
FREELAND: People are moving into cash and people are moving into other currencies that they think are more creditworthy.
Pimco, Bill Gross said that he right now has a lot of faith in the Canadian dollar, for example.
SMERCONISH: Secretary Powell, in the end, are the states going to get whacked with the trickle-down effect from all of this?
POWELL: Yes. If this happens for any period of time, then rates are going to go up, and that will affect the states significantly.
More importantly, though, the federal government won‘t be able to pay quite a lot of money. And one of the things that will get cut, could get cut is Medicaid, which is their single biggest expense now. So the states could be very much a victim of these spending cuts that will have to happen in August if we don‘t raise the debt ceiling.
SMERCONISH: Did you ever anticipate on your watch and while you were paying attention in the Bush years that there would be such a debate that would ensue about the raising of the debt ceiling?
POWELL: So, I had the job in ‘90-‘93 under Bush Sr. And we had some debt ceiling fights, but they were nothing like this. Ours were more like private behind-the-scenes hair-pulling, principally my hair that was pulled.
We didn‘t have anything like this. There have been sort of escalating episodes of this and it gets worse every time. This has all the earmarks of the worst one so far.
SMERCONISH: Thank you very much, Chrystia Freeland and Jay Powell.
Appreciate your being here.
FREELAND: Pleasure.
POWELL: Thank you.
SMERCONISH: Up next, we have heard the debt fight talked about in terms of peas, Band-Aids, even Jell-O, but now the White House has a new analogy. Stick around for the “Sideshow.”
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
SMERCONISH: Welcome back to HARDBALL. Now for the “Sideshow.”
First up, what‘s with all the analogies? As the deadline to reach a deal on the debt ceiling gets closer, President Obama has offered comparisons to eating peas, ripping off the Band-Aid, and talking turkey. Speaker Boehner compared the whole situation with dealing with Jell-O.
Yesterday, Press Secretary Jay Carney, he tried a new one. Let‘s listen.
(BEGIN VIDEO CLIP)
CARNEY: We need to meet, talk, consult, narrow down what our options are and figure out in fairly short order, you know, which train we‘re riding into the station.
Right now there are multiple trains heading toward the station.
Several trains have left the station. It‘s a decision about which train we‘ll be riding when we get to the next station.
(END VIDEO CLIP)
SMERCONISH: I guess Jay figured the food analogies just weren‘t working out.
Next, former campaign manager for Barack Obama David Plouffe is caught dishing out words of wisdom to the other side. Nick Ayers, the campaign manager for Tim Pawlenty, recounts what happened when Plouffe and Ayers crossed paths recently. Let‘s all listen.
(BEGIN VIDEO CLIP)
NICK AYERS, PAWLENTY CAMPAIGN MANAGER: The most real assessment of what I would be dealing with came from David Plouffe, who pulled me aside at the White House Correspondents Dinner.
And he said, I wanted to congratulate you on your job. You did a good job in 2010. I can‘t wish you the best, but I can tell what you the next year or two of your life will be like. I said, OK, what‘s that? He said, well, a lot of people are going to tell you that you‘re going to have a blast.
He said, they‘re all lying to you. It‘s going to be the worst year of your life.
(END VIDEO CLIP)
SMERCONISH: I guess Plouffe is glad that he handed off the ropes to somebody else for this campaign.
And, finally, Julianne Moore, who will star as Sarah Palin in the upcoming adaptation of “Game Change,” which chronicles the 2008 presidential election campaign, claims that she has had a tough time mastering Palin‘s Alaskan accent.
Her solution, delete all the music from her iPod in favor of Palin‘s speeches.
(BEGIN VIDEO CLIP)
JULIANNE MOORE, ACTRESS: I would have to listen to it over and over again. That was all that was on my iPod. I erased all music. I don‘t even want it on there.
UNIDENTIFIED MALE: Just wall-to-wall Palin speeches?
MOORE: Just—exactly.
(LAUGHTER)
(END VIDEO CLIP)
SMERCONISH: If that doesn‘t work, there‘s always Tina Fey.
Up next: Michele Bachmann‘s migraines. Is it fair to question her fitness to the president, or is this something we would never have mentioned about a male candidate?
That‘s ahead.
And you‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
HAMPTON PEARSON, CNBC CORRESPONDENT: I‘m Hampton Pearson with your CNBC “Market Wrap.”
Solid gains across the board, the Dow Jones industrials soaring 152 points, the S&P 500 surging 17, the Nasdaq adding 20 points. Investors focusing on strong corporate earnings, an upbeat report on Mid-Atlantic manufacturing and signs of progress on U.S. and European debt deals.
Banks were big gainers for the second day in a row, as Washington inched closer to a deal on raising the debt ceiling and cutting the deficit. Meanwhile, overseas, European shares closed at a two-week high after Eurozone leaders unveiled a broad-based response to the sovereign debt crisis in Greece.
And Midwest Manufacturing bounced back in positive territory showing negative growth last month. On the earnings front, investors liked what they saw from AT&T, Morgan Stanley, Nokia, and Travelers, just to name a few. And Microsoft ended slightly higher, ahead of better-than-expected earnings and revenue delivered after the closing bell.
That‘s it from CNBC, first in business worldwide—now back to
HARDBALL.
SMERCONISH: Welcome back to HARDBALL.
Congresswoman Michele Bachmann is back in the headlines after it was reported earlier this week that she suffers from migraine headaches which at times incapacitated her for days. So is this a valid campaign issue or an instance of sexism?
Joining us to talk more about that and the nasty feud between Congresswoman Debbie Wasserman Schultz and Congressman Allen West are MSNBC contributor and Huffington Post reporter Alex Wagner and Clarence Page of “The Chicago Tribune.”
Clarence, I‘m trying to think of the analogous situation historically speaking for when the health of someone running for president has been questioned, and I can‘t quite find it. You know, it‘s not exactly Thomas Eagleton. That was a far more extreme set of circumstances. It doesn‘t feel quite like questions about Ronald Reagan‘s age either.
How do you see this in a historical context?
CLARENCE PAGE, COLUMNIST, “THE CHICAGO TRIBUNE”: Well, you‘re right that it‘s not as questionable as Tom Eagleton, because he was—it was revealed that he had taken shock treatment for depression. And in those days, that was very scary to many people in the public. They just didn‘t understand it. And that really resulted in his dropping out of the race, dropping off the ticket.
With Michele Bachmann, I think all of us have got somebody in the family, if not ourselves, who suffer from migraines. But that can work for her or against her, because many times people will have debilitating migraines that can be so severe that they can‘t work.
And questions will be raised as to whether she can handle the job just physiologically. I don‘t think it‘s fair. I think—but it is something she‘s going to have to campaign against.
SMERCONISH: Alex, to Clarence‘s point, yesterday on my radio program, I said—I solicited calls only from those who have suffered from migraines and then asked, how much of an issue do you think this is?
Well, the telephone lines melted down, but they were divided. Some said, I have them or someone in my family has them, and, frankly they are debilitating and it‘s a real issue for her. And others said, I have them, but she can deal with it.
How legitimate an issue do you find this to be?
ALEX WAGNER, MSNBC POLITICAL ANALYST: I mean, I‘m going to say that I think it is a legitimate issue.
I think it‘s different than let‘s say Roosevelt with his paralysis. This is a neurological condition. And I think one of the things that is not serving Michele Bachmann well right now is that she isn‘t being forthcoming with information. So we‘re left to rely on the accounts of former staffers who say she had missed a series of votes, she was out for weeks at a time—weeks and days at a time, I mean, really curbing her ability to serve as an elected member of Congress.
Now, the presidency, we have done a great job of denigrating the importance of it over the course of the last few years, but it is—she is the person picking up the phone, the red phone in the middle of the night. And I think there is legitimate concern about her—her ability to serve if she were to be elected.
And neurological conditions, there‘s a lot of mystery around them and I think sometimes unduly so. But, in this case, I think being more transparent about it would be in—it would behoove her.
SMERCONISH: You know, on the issue how this get handled politically, Clarence, yesterday in Iowa, Tim Pawlenty had this to say about Michele Bachmann‘s migraines.
(BEGIN VIDEO CLIP)
TIM PAWLENTY ®, PRESIDENTIAL CANDIDATE: I don‘t know enough about her particular medical situation to comment. I just don‘t have enough facts on that and certainly would defer to the judgment of the medical professionals.
But setting that aside, all of the candidates I think are going to have to be able to demonstrate they can do all of the job all of the time.
(END VIDEO CLIP)
SMERCONISH: All of the job all of the time. And then on FOX News, he walked it back slightly. Here it is.
(BEGIN VIDEO CLIP, “ON THE RECORD WITH GRETA VAN SUSTEREN”)
PAWLENTY: I think it‘s mostly a sideshow, Greta. I have observed Congresswoman Bachmann. I have never seen her have a medical condition or impairment that would seem to be a concern.
(END VIDEO CLIP)
SMERCONISH: This is not something raised by political opponents—well, exterior political opponents, then—and not by the media. These are former staffers who brought this up. And I‘m wondering if that somehow legitimizes it, Clarence.
PAGE: Well, whoever brings it up, it is a legitimate issue. It is one that people would naturally be concerned about.
I‘m thinking about John Kennedy. We have learned that he was doped up most of the time that he was president. But the word didn‘t get out. That was a different day. Nowadays, you can‘t keep secrets like you used to be able to.
There—and so I think—well, Pawlenty, his second response was smarter than the first one. Let‘s put it that way. Other candidates are wise just to stand back and not even give a hint of trying to get some political advantage out of this.
SMERCONISH: Alex, I don‘t know that we yet know the full story of what happened with Brian Ross. I thought by now that video would have gained some circulation.
(LAUGHTER)
WAGNER: They‘re just holding on to that to release it when the ratings—the idea that there was sort of a physical kerfuffle—is that the word? I don‘t know.
(CROSSTALK)
SMERCONISH: Kerfuffle.
WAGNER: Kerfuffle, a kerfuffle.
You know, it‘s shades of Sharron Angle, this kind of pursuit by the press of a candidate, them not wanting to deal with it, and sort of brusquely, if not physically, putting the reporter in his place.
You know, again, I don‘t think this is the tactic that you want to use. She shouldn‘t be on the defensive about this. This is something where I think she wants to get ahead of the media cycle.
SMERCONISH: Here‘s the letter from the attending physician of Congress, which the Bachmann campaign released in response to the charges.
“You are overall in good general health. Your migraines occur infrequently and have known trigger factors of which you are aware and know how to avoid. You have not needed medical attention from me regarding your migraines with the use of the above-mentioned commonly used therapies.”
I guess, Clarence, what caused me to think this was an issue when I found she had three different occasions that were sufficient to put her on her back, so to speak, which necessitated medical treatment. Despite what that physician is saying, it seems like it has been a real issue?
PAGE: It seems like that, and, you know, like Alex was saying earlier, this can be scary to a lot of people wondering what happens in some critical time when we need the president to make a decision and that kind of red telephone scenario is something she‘s got to deal with, but all candidates have to deal with it. I have a feeling that if she doesn‘t get the nomination or if doesn‘t—if she gets the nomination and doesn‘t get elected, I think it‘s going to be for reasons other than that migraines.
SMERCONISH: Some are saying sexism relative to Michele Bachmann. And similarly, sexism is being charged relative to a different brouhaha, this one involves Congressman Allen West and Debbie Wasserman Schultz. You know the background on this by now.
Alex, how do you this? Is sexism an appropriate charge in this case?
WAGNER: I mean, Allen West I think took it there calling into question Debbie Wasserman Schultz‘ ladyship. I think it bears basically nothing on the argument here. I mean, from what I understand, Wasserman Schultz‘s remarks were just—your partisan tit-for-tat over, you know, the Republican position on entitle reform. And the way he volleyed back, you know, accusing her of being a vile member of Congress, it seemed really unnecessary, and if we‘re talking about the general tenor in Congress right now, the last thing we need is people ratcheting up the rhetoric.
SMERCONISH: Well, here‘s an excerpt of Congressman Allen West‘s e-mail to Congresswoman Debbie Wasserman Schultz which set off the war of words between these two members of Congress. “You‘re the most vile,” as you just referenced, “unprofessional and despicable member of the U.S. House of Representatives. If you have something to say to me, stop being a coward and say it to my face. Otherwise, shut the heck up.”
And somehow, my view is, in the first draft, heck was not the word placed there.
Clarence, doesn‘t it speak to the whole incivility that has become so part and parcel of what goes on in Congress, R‘s and D‘s, liberals and conservatives?
PAGE: We got the other party, too, beside the R‘s and D‘s, there‘s T.P., the Tea Party, and Allen West is a hero of that movement. He is beloved because he is so outspoken and so brash and he‘s got that manner of an Army officer who‘s not accustomed to being confronted, even verbally.
And this is—we‘ve become co-dependent. I think the system has made us all codependents of this kind of behavior because like “The Washington Post” wrote recently about money blurts. Every time certain politicians say something outrageous like this, they get a million dollars or two in the mail the next couple of days.
SMERCONISH: Joe Wilson was rewarded—
WAGNER: Exactly.
SMERCONISH: -- for shouting “You lie” and Alan Grayson when he said Republicans want you to die. It was the same kind of a scenario.
PAGE: Right.
SMERCONISH: That‘s another problem with what we‘ve got.
WAGNER: Exactly.
PAGE: Right. Michele Bachmann, too.
WAGNER: I was going to say, Allen West is someone who‘s sort of built his city on this kind of inflammatory rhetoric. If you look back, you know, there are a host of videos you can watch on YouTube. I mean, he has no problems making outrageous statements about how America is at war with Islam, you know, questioning the genetic capabilities of people who are Obama supporters. I mean, he‘s just out there on this.
So, on a certain level, it‘s not surprising. It‘s part and parcel of who he is.
SMERCONISH: Unfortunately, I think it sums up where we are.
Well, thank you, Clarence Page. And thank you, Alex Wagner.
Appreciate both of you being here.
WAGNER: Thanks, Michael.
PAGE: Thank you, Michael.
SMERCONISH: Up next, how did an al Qaeda terrorist in Afghanistan, a triple agent, if you will, manage to infiltrate the CIA and kill seven operatives? We‘re going to talk to the author of a hit new book that takes us inside the 2009 attack. That‘s next.
And this is HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
SMERCONISH: So, the federal government‘s investment in Chrysler is over. Chrysler‘s new parent company, the Italian automaker Fiat, bought the U.S. government‘s remaining shares in the company. And that means the government‘s $12.5 billion bailout of Chrysler ended up costing taxpayers $1.3 billion.
We‘ll be right back.
(COMMERCIAL BREAK)
SMERCONISH: Welcome back to HARDBALL.
It‘s been more than two months since U.S. Special Forces shot and killed Osama bin Laden. In the wake of that success, it‘s easy to forget the long, hard road to get there.
Back in December of 2009, the CIA thought they had the ultimate double agent who would lead them to the top echelon of al Qaeda, but it turned out to be a triple agent. And he buried so deeply into the CIA that when he detonated the bomb he was wearing, he killed seven CIA agents as well as himself.
“Washington Post” national correspondent Joby Warrick writes about that incident and how the CIA was duped in his new book. It‘s called “The Triple Threat: The al Qaeda Mole who Infiltrated the CIA.”
Joby, I‘ve told you before. The book is terrific and I‘m glad that you wrote it. It reads like a summer spy novel. The sad part is it really happened.
JOBY WARRICK, THE WASHINGTON POST: Yes. And I don‘t think Hollywood could have scripted a more improbable character than our triple agent or a more unlikely journey. Here‘s a guy who was—he was just a plain doctor working in a refugee clinic just two eye years ago. And he had this dangerous hobby on his side, which he was a blogger for these jihadist Web sites. He was inciting young people to take up arms against the West and do dangerous things.
So, in a very short period ended up being discovered, arrested, interrogated and then flipped, we thought, into becoming an asset for the West. And the next thing we know, he‘s in Pakistan helping us with bomb damage assessments on drone strikes.
SMERCONISH: And his initial reports are accurate? He‘s talking, as you say, about damage done by the drones. Then he sends a piece of video that shows him in the company of a top al Qaeda. Somebody that we‘ve been looking for for a long time.
And then the mother lode of information, he claims he‘s now rendered medical services to Ayman al-Zawahiri, correct?
WARRICK: That‘s correct. And this shows partly how clever this man was, and he‘s so weaving in between these two worlds of the CIA and al Qaeda and convincing everyone that he‘s on their side.
But ultimately, as we discover later, he‘s actually on al Qaeda‘s side in this elaborate plot, this incredible lure that was set out to draw in the CIA was set up by al Qaeda, using their own video equipment, using their own—some knowledge of how the CIA works, to create something so attractive that the CIA just couldn‘t possibly say no to.
SMERCONISH: The reason the CIA found him credible albeit through the Jordanians is that he knew the medical history of Zawahiri and it matched the information that we had from his Egyptian files. And now, the objective becomes—well, let‘s bring him in. We Americans need to set eyes on him and allow him to lead us to the al Qaeda leadership.
And that‘s where things got lax.
WARRICK: Exactly. Remarkably, if you think about this, we‘re getting this incredible evidence, this is the most exciting thing that‘s happened in the search for bin Laden and his deputies since 9/11 and yet it occurs to everyone we‘ve never even met this guy. How do we know—he could be a con artist. There are doubts and questions raised.
But it becomes imperative to meet him. Somehow they have to get into a place where they can look at him, poke and prod him, look him in the eye and decide if he‘s real or not. And so, this decision was made to set up a meeting, bring the guy into the secret CIA base, and confront him and see what he was all about.
SMERCONISH: And when he comes in Khost, he was waved through three security checkpoint at this uber secret location. And when he gets out of the car, he detonates the vest and kills seven members of the CIA.
WARRICK: Yes, the great irony of all this was lots of planning and preparation went into keeping this guy safe, making sure he wasn‘t discovered on the way in, making sure no Taliban soldiers saw him so he could be outed to the Taliban. And instead his intent all along was to kill people.
So, he seemed too good to be true in some ways, and in fact he was.
SMERCONISH: Joby, I always wondered in the interim between the events of September 11th or more specifically, Tora Bora, the battle in December ‘01 and take down in Abbottabad, did we have a line on bin Laden or al-Zawahiri. The answer is we didn‘t and it was the coldness—you correct me if I‘m wrong because you‘re the expert from this book—but it was the coldness of the trail allowed our guard to be dropped, because we were so desperate for all the right reasons to get either of them that we wanted to believe this guy was legitimate.
WARRICK: Yes. And if you think about it, there are many people that claim that, oh, yes, we know where Osama bin Laden was hiding. In fact, his trail gone ice cold, had been so for years. And this was a real opportunity, it seemed, to get very close to him, or at least to his deputy, you know, perhaps days way from a really important strike.
So yes, everybody was excited and the excitement was not just to the CIA but all the way to the White House. And there was, as we look back, quite a rush to meet this guy and to see what he had to say.
SMERCONISH: You started out—the book is titled “The Triple Agent.” He started out blogging as a hater of all things Western and wanting blood on his own hands of us. Comes over to our side or so we think, ends up back on their side.
Here‘s my question for Joby Warrick, was this all of malice of forethought? Did this man, Balawi, always know, as he was blocking, that he was seeking to do was suck us in so that he could play this triple routine?
WARRICK: I think the most important clues to that come from the man‘s own writing. When he was writing on the Internet as a secret pundit for al Qaeda back before his arrest, he was beginning to say things, like when will my words taste my blood? When am I going it take action myself?
He was looking for way to become more active, become involved. He thought about going to Iraq and become a soldier. He was kind of too puny to do that.
And so, when he was arrested and then offered to become an informant for our side, it‘s pretty clear now on hindsight that all along, he planned to do some damage to the West in any way he could. Maybe not as a suicide bomber but he was intending to strike hard and as often as he could.
So, yes, in that sense, I think he was a triple agent from the very beginning.
SMERCONISH: What‘s impressive about the book, “Triple Agent,” is that, Joby Warrick, you were able to get cooperation from all sides in this case.
Congratulations on the book. And I hope it does well because it deserves to.
WARRICK: Thank you. So happy to be here.
SMERCONISH: All right. When we return, “Let Me Finish” with another look at Rupert Murdoch‘s pie-gate and why I‘m a bit skeptical.
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
SMERCONISH: Allow me to share a lingering thought that what happened in the U.K. with the Tuesday testimony of Rupert and James Murdoch. I‘m a bit of a cynic. I‘m not a conspiracy guy. I think Oswald killed Kennedy and acted alone. I abhor those who float the notion that 9/11 was an inside job. And I lamented the closing of a chapter today in our space program because I know man has walked on the moon.
Having said this, I‘m having some doubts about the heroic efforts of Rupert Murdoch‘s wife to thwart the pie thrower. Now, think about it, the whole hearing concerned media manipulation. Parliamentarians were gathered to learn what the Murdochs knew about the hacking and when they knew it.
And the testimony didn‘t go so well. Both Rupert and James Murdoch, they apologized repeatedly but steadfastly refused it take the blame. But the story making the most news, it‘s the pie and the woman who stopped its delivery.
Instead of questions about the veracity of the Murdoch‘s testimony, there‘s endless chatter about how a man with a checkered shirt approached a Murdoch with a foam pie to slam into his face only to have Murdoch‘s wife lunged toward the attacker and thwarted his attempt to harm his husband.
I keep seeing headline like “Crouching Tiger, Flying Murdoch,‘ and what‘s the accompanying narrative? Don‘t mess with Wendi Deng, Murdoch‘s 43-year-old Chinese-born wife.
So, what should have been a post-mortem analysis of the testimony of two media moguls has now been obscured by laudatory coverage of Mrs. Murdoch.
And what do we know of the pie-thrower? Well, his name is Johnny Marbles. Johnny Marbles? I may have lost mine. But come on, this activist and comedian whose real name whose Jonathan May-Bowles was somehow able to evade the security of parliament with his pie and then get within inches of Murdoch?
Let me remind you that “News of the World” wants set up Formula 1 president Max Mosley with prostitutes on their payroll leading to that unforgettable headline, “F1 Boss has sick Nazi orgy with five hookers.”
What‘s the foam pie compared to five prostitutes with cameras in their bras?
So, now, the attention is all on the pie and especially on Murdoch‘s half his age wife Wendi Deng. I‘m calling it pie-gate. I‘m wondering what did Wendi Deng know and when did she know it.
That‘s HARDBALL for now. Thanks for being with us. More politics are ahead with al Sharpton.



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