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updated 7/28/2011 11:00:40 AM ET 2011-07-28T15:00:40

Guests: Howard Fineman, Brian Sullivan, David Corn, Jeanne Shaheen, Bruce Bartlett, John Feehery, Mike Feldman, Michelle Goldberg

CHRIS MATTHEWS, HOST: Is rogue in vogue?
Let‘s play HARDBALL.
Good evening. I‘m Chris Matthews in Washington.

Leading off tonight: Republicans gone rogue. If this deficit crisis were a game of chicken, by now the Republicans would have tossed the steering wheel out the window, dumped a cinderblock on the accelerator and be yahooing like Sam Pickens riding the bomb at the end of “Dr. Strangelove.”
How do you negotiate with people who don‘t want to deal, who are happy to cut the baby in two, who are willing to see the economy destroyed as long as they get to hot dog it over the rubble? And that‘s where we are right now, with some Republicans bucking John Boehner because they think his—their leader‘s—plan, his “we win, you lose” offer, is too liberal. And that‘s our top story tonight, the predicament we‘re all in.
Also, who‘s to blame? Last night, we showed you this graphic on how revenues, the black line, have not kept up with spending in the past decade. What happened to the money? Well, three words, Bush tax cuts. The tax cuts that many Republicans insisted would magically bring in new revenue actually did the exact opposite. They cost us big revenue.
But none of this is helping President Obama. His numbers are slipping politically, especially with his core supporters and in battleground states like Michigan. We‘re going to look at the latest numbers and what they mean for 2012.
And while it may not be hot news when a politician does something totally hypocritical, Michele Bachmann may have set a new standard by borrowing—catch this—from the very government program, Fannie Mae, she said she wanted to destroy. Figure that one out.
Finally, “Let Me Finish” with why so many people right now look down on politicians. And by the way, this summer, the politicians are making it very easy to do that.
We start with the latest on the debt ceiling with my favorite expert, Howard Fineman. He‘s editorial director for the Huffington Post Media Group and an MSNBC political analyst.
Howard, you can do anything, and tonight is a great time to do a kind of an ESPN get-together with two political guys, you and me.
HOWARD FINEMAN, HUFFINGTONPOST.COM, MSNBC POLITICAL ANALYST: OK.
(LAUGHTER)
MATTHEWS: This is a strange situation. We had Jay Carney on the other night, who I‘ve worked with in many capacities, saying, You‘ve been through this a lot, Chris. No, I haven‘t. I‘ve never seen anything like this, where the government of the United States, which is the greatest institution in the history of man, basically, is tottering on the edge of some kind of default, and these crazy people, most of them on the Republican side—not all of them, but most of them over there not seeming to give a darn. And I‘m talking about the back benchers.
Howard, what do you see in that market dropping this afternoon? It‘s dropped about 100 for two days, then it dropped 200 today.
FINEMAN: Right.
MATTHEWS: Are we getting close to Niagara Falls here in terms of big number drops?
FINEMAN: Well, I‘m in New York today, Chris, and while I was here, I was talking to some business leaders. One of them I talked to is James Tisch (ph), who‘s the head of Lowe‘s Corporation—
MATTHEWS: Sure.
FINEMAN: -- somebody I‘ve known for a long time, very smart guy, a Republican. And, you know, he professed to be calm. But on the other hand, he said, You know, I think everybody underestimated the Tea Party. That means even the establishment Republicans like Jim Tisch and the Chamber of Commerce types and others who helped elect all these people—you know, maybe they were kidding themselves, the establishment Republicans.
They thought they could tame this crowd or this crowd would be practical. You know, what Jim told me is, you know, I would think, he said, that people who were idealists would also at some point be practical.
But of course, everybody‘s holding their breath to wait to see if that‘s going to be the case. I talked to one of John Boehner‘s staff people a little while ago. I said, What‘s going to happen? He said, you know, We‘re going to get the score we want, and we‘re going to pass the thing. But if you talk to the White House people, as I was also doing, they predict that the Boehner bill will never get out of the House.
MATTHEWS: Well, I think you should tell Mr. Tisch, your pal, your Republican friend, to go see “Last of the Mohicans.”
(LAUGHTER)
MATTHEWS: And he can identify with the French officers, their new allies out there taking scalps, because they may be the polished allies, but the other side guys—
FINEMAN: Right.
MATTHEWS: -- are out there playing it their way.
FINEMAN: Yes.
MATTHEWS: I‘m not sure these Tea Party people are that concerned about the establishment‘s concerns.
FINEMAN: No. No, they aren‘t. No, I don‘t think they are. And in a way, if you want to look at it this way, the business establishment played a dangerous game in all this, Chris. They bankrolled the Tea Party. They got behind the Tea Party candidates once they won the primaries, you know, last year in the congressional races. They crossed their fingers, held their breath, backed them to the hilt in order to win back the House.
But of course, as in politics as in life, be careful what you wish for. Now a lot of those people are worried, as they look at the stock market, as they look at what‘s happening around the world, to see whether these, quote, “idealists” are going to be practical.
MATTHEWS: Well, let‘s talk about the turkey—let‘s talk turkey about this deal. We have until next Tuesday, according to all the reports. Next Tuesday, we start losing borrowing authority. Anything can happen then in terms of the markets—
FINEMAN: Right.
MATTHEWS: -- the world markets. It seems to me the president‘s given away much of the store right now. He‘s given away—no revenues in this deal, no tax increase, even though we‘re going to get to that in a couple minutes on this show, that a lot of the trouble we‘re in is because of the Bush tax cuts. Going to keep them going, right?
What do we make of this? Number one, we‘re going to have no tax cut -
no tax increases, just spending cuts. So the Democrats have lost most of the arguments. The only thing the president‘s holding on for right now is to get this stuff over with this year, not to have to do this all over again next year.

Isn‘t that what it‘s come down to, that Boehner wants to have another fight next year?
FINEMAN: Yes, that is what it‘s coming down to, and I‘m not sure the president, having negotiated himself practically into oblivion, is going to even be able to get that. I don‘t think he‘s going to be able to escape this situation without creating the scenario where there will have to be another vote next year because, you know, maybe the Boehner bill won‘t get out of the House, which is what the White House people are saying. Maybe Harry Reid‘s bill in the Senate won‘t pass.
But if a shrunken version of the Boehner bill does pass and is signed, or if they go to an emergency extension for another couple months, whatever, the president‘s going to be right back in the same predicament he was in—he‘s in right now.
So I think a lot of the American people are very upset with the Republican Party here. They blame the Republicans more than the Democrats for the gamesmanship. But the fact is, the Republicans have also backed the president into a corner, even if they‘re doing it in a way that‘s not popular.
MATTHEWS: Well, a couple ways we could get out of this thing right now. I want you to analyze these two possibilities for a compromise.
One, the president could give away more of the store, more spending
cuts this year, maybe enough to get us through this debt ceiling increase -
in other words, cuts sufficient to match the increase in the debt ceiling this year and next year and do it all now, which would make the redhots happy, no tax increase at all.

The other possibility is to marry what Boehner wants right now with
the kind of thing McConnell was talking about next year, where next year,
the debt ceiling basically can get raised by the president, only facing a -
the House would have to come back and be a two thirds veto. So it seems to me there is a possibility for compromise. But the easiest thing is for the president to throw the whole ballgame—

FINEMAN: Yes.
MATTHEWS: -- let the redhots on the right have what they want, say, But you win this year, not next year.
FINEMAN: Yes. I don‘t think he can do that, Chris. Because when you get to a number that big, when you get to an increase in the debt ceiling that‘s that large, you‘re inevitably going to have to cut pretty deeply into Medicaid and Medicare and entitlement programs in a way that the president has sworn not to do.
He‘s already got enough problems with his own base. That‘s the reason why he won‘t go farther. That‘s the reason he was trying to add revenue in the big, grand discussions with Boehner, et cetera, et cetera. I don‘t think that‘s an option for him to go all the way in one tranche to a bill that takes—
MATTHEWS: OK.
FINEMAN: -- him beyond the—I don‘t think he can—
MATTHEWS: What about my second—
FINEMAN: -- do that.
MATTHEWS: -- idea, which is to basically go this year the way Boehner wants it—
FINEMAN: Right.
MATTHEWS: -- big cuts and programs but no revenue increase, next year, basically, allow the president to raise the debt ceiling, with the Congress having the ability to try to pass a measure against that—
FINEMAN: Yes.
MATTHEWS: -- but then they‘d have to get two thirds to override his veto.
FINEMAN: That—
MATTHEWS: Wouldn‘t that be a good compromise?
FINEMAN: Yes, that‘s a compromise, except then you lose the Tea Party people, who don‘t like that scenario.
MATTHEWS: Yes.
FINEMAN: You know, Mitch McConnell is an old-fashioned politician who said, OK, we got a problem. Let‘s give it to the president. Let‘s make it the president‘s responsibility to raise the debt ceiling. That‘s too clever by half by a lot of the Tea Party people. They want to be able to say right now to themselves and their constituents that they cast a vote to get control of spending. And they won‘t regard that compromise you‘re talking about as the way to do it.
What Boehner is saying behind the scenes, as I understand it, in the -
you know, to his members is, Look, if you don‘t do this, we‘re going to get blamed. The media‘s going to be against you. The national, you know, consensus is going to be against you. Don‘t forget 1996, you know, the way Newt Gingrich was blamed. We‘re going to get blamed. So just suck it up and do it. And Eric Cantor, his number two, is now saying the same thing.

The problem is, the way I see it, Eric Cantor is just looking for a way to avoid blame himself in case the whole thing goes down because Eric Cantor essentially has been spending weeks, if not months, trying to undercut John Boehner—
MATTHEWS: You know it.
FINEMAN: -- every step of the way. Now at the last minute, he‘s telling everybody in the caucus, you know, win one for the Gipper, when he‘s been undercutting the Gipper all the way along.
MATTHEWS: Yes, I think that‘s right. Let‘s think about—well, what about the crisis situation we face? What happens when “cut, cap and balance” becomes stall, crash and burn? And that could happen by next Tuesday afternoon. What do the redhots do, the people like Kelly from Eerie and these people that we‘ve never heard of until recently, the ones who were elected in the last election, who really only care about perhaps the next Tea Party meeting they have to go to?
What happens when the government really begins to face Greek-like hell, and somebody‘s going to—it‘ll be all over even their hometown newspapers that they were part of lighting the match?
FINEMAN: Well, what‘s so amazing about this, Chris, is that it is a self-created, self-inflicted crisis that really masks a much deeper problem, which is that we aren‘t dealing with taxes and we aren‘t dealing with entitlements. That‘s the real debate.
MATTHEWS: I know.
FINEMAN: I think if they pass a short-term extension, if it comes to that, then it‘s up to the establishment Republicans that I was mentioning at the beginning, the Chamber people, the manufacturers, all those lobbies, to say to these Tea Party people, Hey, we put you in and we can get you out. And then you have something approaching warfare within the Republican Party.
But again, they‘re reaping the whirlwind here. They‘re the ones who set up this situation to begin with.
MATTHEWS: You know, we‘re facing big deficits is a problem, and that‘s the international problem we‘re facing. Then it‘s got to be met from both ends—
FINEMAN: Yes.
MATTHEWS: -- both spending and taxes, if deficits are the problem. If it‘s just an ideological fight over the size of government, that‘s a totally different question than we‘re facing (INAUDIBLE) now.
FINEMAN: Well, I think it‘s both, but—and I don‘t think most serious observers would say—would deny we have a debt problem. We do. When the debt is approaching 100 percent of our gross domestic product every year—
MATTHEWS: Yes.
FINEMAN: -- that‘s a problem. And it‘s unsustainable, especially if you look at what the deficits are going to be, projected over the next several years. Everybody agrees we‘ve got a problem. It‘s a question of how we deal with it, and how we deal with it free of the ideological blinders that people on both sides, but I would say especially the Republicans right now, have put on.
MATTHEWS: Well, said, Howard Fineman. I knew you‘d be good at this.
Thank you so much for joining us at the top of the show.
FINEMAN: Thank you, Chris.
MATTHEWS: Coming up: How did we get into this fiscal mess? Regardless of what most Republicans say, revenue hasn‘t kept up with spending since the Bush tax cuts. We‘re way down in revenue, way up in spending. Figure it out and figure out what Bush‘s tax cuts did to cause this. We‘re going to have the numbers for you when we come back.
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
MATTHEWS: Texas governor Rick Perry isn‘t in the presidential race yet, but already the bettors from Dublin-based Intrade say he‘s the favorite now to win the Republican nomination for president next year.
Perry‘s given a 34 percent chance of winning the nomination, a little bit better than 1 to 3 -- 1 in 3, rather—leapfrogging Mitt Romney already, who‘s at 29.
So he‘s the frontrunner in the betting odds. Michele Bachmann‘s a distant third at 9. She‘s bet the show here.
We‘ll be right back.
(COMMERCIAL BREAK)
MATTHEWS: Welcome back to HARDBALL.
Whether the Boehner bill passes tomorrow or fails in the House, the action next moves to the Senate. What‘s the frame of mind among U.S. senators now? Well, joining me now is Democratic senator Jeanne Shaheen of New Hampshire.
Senator, thank you so much for coming on tonight. I‘ve watched your career, I‘ve watched you work in politics and now in government. You worked at Harvard for a while at the Kennedy School and IOP, and you know the business of politics.
And I wonder, what is it like to stand there as a United States senator from New Hampshire, waiting for the president and Boehner and the crazy Tea Party people to cook up a deal, and then you‘ve got to decide on what to do with it? What is the mood now among the grown-up senators?
SEN. JEANNE SHAHEEN (D), NEW HAMPSHIRE: I think people are very frustrated. Look, you‘ve been talking about it. It is time now for us to act. We have the whole world watching. We have an economy in this country that it‘s going to have devastating consequences if we fail to raise the debt ceiling. We have middle-class families across this country who are going to be affected with their credit cards and their car payments and their mortgage payments.
And this is a manufactured crisis. It doesn‘t need to be there. It‘s time for people to put aside their partisan differences and come to the table and get this done.
MATTHEWS: What I don‘t understand is—well, I do understand, but I don‘t want to understand, this coming together of ideology and crisis management. We have a solvency problem in the federal government. We‘re spending more than we‘re bringing in. That‘s a practical problem with a practical solution. You bring up the revenues, you bring down the spending to some level like you can agree on, like 22 percent of GDP.
You can see it out there. Because of the aging population, it has to come up from 20. The Republican point of view is, OK, we‘re not bringing in any revenues. It‘s down to about 14 percent, but we‘re not going to do anything about it. That‘s the position.
SHAHEEN: Well, and look, we have a two-part problem. The first part is the debt ceiling. We‘ve got to raise the debt ceiling because of the catastrophic consequences of not doing that. It would force a downgrade in the government‘s bond rating. We have never in our country‘s history refused to pay our debts, and we can‘t do it now.
But the longer-term problem is we‘ve also got to deal with the country‘s debt and the deficits. And I think there have been good people on both sides of the aisle willing to come together. The “gang of six” has been working on a proposal to do that for months now. I don‘t agree with everything that‘s in it, but I think it‘s a good framework to move forward.
Harry Reid has a plan that he‘s talked about that would—that I don‘t like because it doesn‘t deal with revenues in the short term, but I think it would address our debt ceiling issues. It‘s got cuts in it that Republicans in the Senate and in the House have agreed to already in negotiations with the president.
MATTHEWS: Right.
SHAHEEN: And so I think it‘s a proposal that could get done now. It‘s a long-term proposal. It wouldn‘t result in affecting the federal government‘s rating. The rating agencies—
MATTHEWS: I got you.
SHAHEEN: -- have said it could go forward. So I think we need to get this done. We don‘t have—time is running out.
MATTHEWS: I hear your practicality.
Thank you very much, Senator Jeanne Shaheen of New Hampshire.
So how much of this deficit mess is the result of the Bush tax cuts? It‘s an old fight here. We want to get to it. Bruce Bartlett says plenty, who‘s former deputy assistant treasury secretary under the first George Bush and was a policy adviser to Ronald Reagan.
Let me ask you about this whole thing. Bottom line, we‘re looking at
let‘s look at the numbers right now. We‘ve got a chart coming up. This chart shows the Bush tax cuts were responsible for increasing the debt of the United States by about $3 trillion over the last decade.

Now, we have about a $14 trillion debt right now. Half of it came out
since the turn of the century, since Bush came into office, and almost 40 -
or more than 40 percent of that‘s from taxes, from tax cuts.

BRUCE BARTLETT, GEORGE H.W. BUSH DPTY. ASST. TREASURY SECY.: That‘s right. When Bush took office, we had a debt of about $6 trillion. And the projections from the CBO were that we were going to run a $6 trillion surplus. So by this point, if we had done nothing, we would have had—we would have paid off the dead debt.
But we added to that about $3 trillion of tax cuts. We lost about $3 trillion of revenue because of the slower economy. And then we added about $6 trillion of spending, largely due to two unfunded wars and a Medicare drug benefit and a lot of other things.
And so instead of getting—paying off the debt, we ended up with about a $12 trillion debt at the end of the administration.
MATTHEWS: Well, these people, some of them clowns, not all of them, running around saying Barack Obama is a socialist, Barack Obama drove up the national debt to $14 trillion, and then they dance around in a circle about that and congratulate each other. That‘s not true.
BARTLETT: No, I think the dirty secret is actually that Obama is a moderate conservative. And if I were a liberal Democrat, I would pretty upset.
MATTHEWS: Well, the point is—it gets back to the numbers. A $14 trillion debt, half of it is from Bush, and almost half of that is from the tax cut. Another portion is from the prescription drug bill. And the whole rest of that really is from a lousy economy under Bush and these two wars he came up with.
BARTLETT: Well, that‘s right.
We—the Republicans keep saying that tax cuts are the key to prosperity. Well, the 2000s is evidence that that is not true. And also we raised taxes in 1982. They said it would be a recession. We raised taxes again in 1993. They said it would be a recession. We had booming economies in the 1980s and ‘90s.
I think if we went back to the taxes we had the ‘80s and ‘90s, we would be a lot better off.
MATTHEWS: What is the argument against the kind of tax policy—well, let‘s just say it again. It seems to me we had a heck of a great economy in the ‘90s, with a tax rate for people in the higher brackets of about 39.6, as opposed to 35, right?
BARTLETT: Right.
MATTHEWS: And that‘s the ones that the rich bitch about, to use a crude term. And yet that didn‘t hurt the economy and it helped balance the budget.
BARTLETT: Well, that‘s right. And don‘t forget also that Ronald Reagan raised the capital gains tax rate to 28 percent in 1986. And now it‘s only 15 percent, and, of course, the wealthier you are, the more of your income comes from capital gains.
MATTHEWS: Yes. Last night, we showed the 400 richest people in the country, whose average income is $270 million a year, pay about the same as a poor person pays. They pay about 18 percent.
BARTLETT: That‘s right, of income taxes, that‘s right.
MATTHEWS: Whereas the middle class and the upper middle class, who think they are the majority of the country, and they actually are, they‘re paying a higher rate.
BARTLETT: That‘s right. I don‘t see there is any question that we would have positive economic effects if we went back to the Clinton era tax rates.
MATTHEWS: Why don‘t economists say this that you‘re just saying? How come I need to drag you on the show? Well, we read your column.
But the fact is, just as simple math, to reiterate, we have a $14 trillion debt right now. Half of it came from the Bush era. Almost half of that came from the tax cuts Bush pushed through in a partisan way. And the rest came from his prescription drug bill, which wasn‘t funded, and with a terrible economy and the two wars that he promulgated. That‘s simple math there.
(CROSSTALK)
BARTLETT: That‘s right. But in the Republican playbook, of course, the deficit is never caused by tax cuts.
MATTHEWS: Or wars.
BARTLETT: Or wars. As you know, they go around saying the Bush tax cuts did not lose any revenue.
A number of prominent officials, Mitch McConnell included, have said this. And it‘s just mathematically ridiculous.
MATTHEWS: And if a Republican gets behind a social program like prescription drugs, it‘s not socialism, but if a Democrat says you can‘t go into the E.R. anymore for free, you have got to kick in something, which is to me pretty conservative—Bush—the Obama health care basically makes everybody pay something, which sounds pretty Republican in the old days. Republicans call it socialism. They would rather you go to the E.R. and get treated free. Well, that‘s what‘s going on now.
BARTLETT: Well, as you know the Obama plan, the Affordable Health Care Act, was essentially the same thing as the Republicans themselves had been pushing only a few years earlier.
MATTHEWS: Richard Nixon pushed an employer mandate, not just an individual. He wanted the individual not to have to pay any health care costs. All bosses had to pay all the health care costs. That would have been the Nixon rule.
BARTLETT: Yes. Well, the Heritage Foundation, much more recently
than that, proposed an individual mandate. And now all of a sudden that‘s
--

MATTHEWS: I feel like sanity has just walked into the door here.
Bruce Bartlett, it‘s so great of you to come on the show. Bottom line, now that I realize you‘re smart and you have all the numbers, give me two seconds. Any way to solve this kerfuffle we‘re in right now, this debt ceiling thing?
BARTLETT: I think, at this point, there‘s nothing that can pass the House of Representatives. I think the Boehner plan—
MATTHEWS: Because it‘s too much of a zoo?
BARTLETT: Yes. I think that a good chunk of the Republican Caucus is either stupid, crazy, ignorant, or craven cowards that are desperately afraid of the Tea Party people, and rightly so.
MATTHEWS: I love it. Thank you. I can‘t add to that, Bruce Bartlett.
But you use tougher words than I usually use. I just say a zoo.
(LAUGHTER)
MATTHEWS: Up next: The Republican leadership has turned to a movie about violent bank robbers—actually a good movie, “The Town”—to help rally the rank and file for John Boehner‘s debt plan. Let‘s find out what Ben Affleck thinks of his movie being used this way next in the “Sideshow.”
You‘re watching HARDBALL on MSNBC.
(COMMERCIAL BREAK)
MATTHEWS: Back to HARDBALL. Now for the “Sideshow” tonight.
First up, Herman Cain is once again attracting attention for his stance on the Muslim community in America, but this one is surprising. Now he says he plans to sit down for a discussion on politics and religion with Muslim leaders in the United States. Think they will be thrilled by the invite?
Take a look back at how Cain expressed his intimate feelings toward Muslims the past couple of months.
(BEGIN VIDEO CLIP)
QUESTION: Would you be comfortable appointing a Muslim either in your Cabinet or as a federal judge?
HERMAN CAIN ®, PRESIDENTIAL CANDIDATE: No, I will not.
(END VIDEO CLIP)
(BEGIN AUDIO CLIP)
CAIN: I have not found a Muslim that has said that they will denounce Sharia law, you know, in order to support the Constitution of the United States.
(END AUDIO CLIP)
(BEGIN VIDEO CLIP, “FOX NEWS SUNDAY”)
CHRIS WALLACE, HOST, “FOX NEWS SUNDAY”: So you‘re saying any community, if they want to ban a mosque—
CAIN: Yes, they have the right to do that.
(END VIDEO CLIP)
MATTHEWS: Wow. The guest list for next week‘s get-together is yet to be announced, but save the date.
Up next: Republican Senator Pat Roberts of Kansas came up with an innovative strategy to get his ideas to President Obama, a hypothetical basketball game. While speaking on the Senate floor yesterday, the senator imagined both what he would say to the president as well as how the game would go. Let‘s listen.
(BEGIN VIDEO CLIP)
SEN. PAT ROBERTS ®, KANSAS: Perhaps he could actually invite me down, maybe later. Everybody knows the president is a very good basketball player. I would emphasize to the president bounce—bouncing the ball to him on just a bounce pass and say, your ball, Mr. President.
He would probably go the left corner and sink a three at about that time.
I would probably by dribbling a lot.
By that time, the president has scored a couple of layups and two more jump shots and I‘m hustling to try to keep up. Maybe just sort of nudge him a little bit when I got underneath the bucket. And he‘s now asking me to quit talking and start shooting.
(END VIDEO CLIP)
MATTHEWS: Not a lot of bounce passes these days, Senator.
Anyway, I guess it‘s clear the senator planned to come up short on the old scoreboard in that game. Lots of air, I guess, no baskets.
Speaking of new strategies, how about a visual aid? In an effort to rev up his House Republican cohorts, Majority Whip Kevin McCarthy played this clip from 2010 movie “The Town” during a meeting yesterday.
(BEGIN VIDEO CLIP, “THE TOWN”)
BEN AFFLECK, ACTOR: I need your help. I can‘t tell you what it is, you can never ask me about it later, and we‘re going to hurt some people.
JEREMY RENNER, ACTOR: Whose car are we going to take?
(END VIDEO CLIP)
MATTHEWS: What was Ben Affleck‘s reaction to the Republicans‘ use of that clip?
“I don‘t know if this a compliment or the ultimate repudiation.”
Wow. Ben of course was a huge Obama supporter back in 2008.
Up next: The debt fight isn‘t helping President Obama. His numbers are dropping, by the way, in some key battleground states. And that could mean trouble for him in 2012. Wait until you catch these numbers, especially in Michigan.
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
BRIAN SULLIVAN, CNBC CORRESPONDENT: I‘m Brian Sullivan with your CNBC “Market Wrap.”
A broad-based sell-off today impacting every corner of the stock market. The Dow was down 198 points, the S&P 500 off 27. The Nasdaq was hit particularly hard, down 75 points.
Concern about the debt ceiling debate taking its toll on stocks, but there‘s growing concern about a slowing global recovery. Emerson Electric, kind of the poster child for what had the Street so spooked today, it filed a regulatory warning, saying it‘s seeing—quote—“a definite weakening of general business activity in June and July.”
On top of that, the Fed‘s Beige Book report showing slower economic growth in much of the U.S. And durable goods fell 2 percent in June. In other words, much of the data suggesting we are slowing down, not speeding up. The market weakness spreading to Dow Chemical, Aetna, WellPoint and ConocoPhillips. Those stocks all fell even as their earnings rose.
Boeing and Amazon, though, were one of the rare ones to buck the trend, finishing higher on better-than-expected earnings.
And that is it from CNBC, first in business worldwide—now back to
HARDBALL.
MATTHEWS: Well, here‘s a big story. We‘re back.
President Obama‘s job approval numbers may be holding nationally, but a few battleground state polls may give the president and his team cause for concern as they gear up for the reelection campaign next year.
Joining me right now to discuss these latest poll numbers are Democratic strategist Michael Feldman and Republican strategist John Feehery.
Gentlemen, let‘s be analysts here. I guess we can argue. We all argue. And I like argument. But let‘s take a look at these numbers first of all and see what they actually mean and do they surprise. Obama won the state of Michigan, by the way, last time around in his election to the presidency 57-40.
But according to the latest EPIC-MRA poll right now, he would lose a general matchup with Romney 42-46.
So, John Feehery, this is amazing. And I think it does show the residue of support for Romney in the state in which he‘s best known, of course. His father was governor. His mother ran for some high office. Was it Lenore Romney who ran for something out there?
What are your thoughts about this?
JOHN FEEHERY, REPUBLICAN STRATEGIST: Well, Chris, I think he‘s lost the Reagan Democrats that swung with him the last time. He‘s in big trouble with white ethnics, and that really shows itself in Michigan, and Ohio, and a lot of the Rust Belt states. And he‘s got to figure out a way.
His message over the last several weeks has been we need to raise the debt limit and we need to raise taxes in order to do it. And that message is just not selling with people. They don‘t want to raise the debt limit. They don‘t want to raise taxes.
And I know it‘s raising taxes on the wealthy. I get that. But as you said before on your show, when Democrats are talking taxes, people immediately assume they‘re talking about their taxes. And this is hurting Obama. He‘s off his message on jobs. He‘s not said anything jobs in the last several weeks. And I think it‘s really hurting him.
MATTHEWS: OK. OK. We were talking about Michigan in particular, but John took it away. That‘s fine, though.
(CROSSTALK)
MATTHEWS: Now, I understand what is going on, because Michigan is part of the country, but there‘s an advantage in the Midwest for him.
Let‘s take a look at these—I want you to get into this whole question—let‘s take a look at Iowa right now. Romney is ahead in Iowa by three points. And I wonder about that one, because that is a state that everybody looks like because it has got all the action in the beginning.
MIKE FELDMAN, DEMOCRATIC STRATEGIST: Well, it‘s also a state where Republican primary contestants are running around every day bashing the president uncontested over and over again in key media markets. So it‘s not surprise—it‘s not surprising to me that the president would take a hit there.
I think he‘s going to be very competitive in Iowa. To take a step back in Michigan—
MATTHEWS: But isn‘t it kind of scary that the president of the United States, any president of the United States is within five points of Michele Bachmann? She‘s at 42 right now. Obama is at 47. I mean, people—a lot of people, whatever their politics, think she may be too wild to win a general election. But there she is competitive with the president in Iowa.
Your thoughts.
FELDMAN: We‘re 16 months out. There isn‘t a Republican nominee yet.
And there will be.
(CROSSTALK)
MATTHEWS: It doesn‘t shock—it doesn‘t shock you?
Feehery, aren‘t you surprised that Michele Bachmann—I don‘t think she‘s your candidate—is doing well against a president who has got proven executive ability, at least, whether you like him or not?
Your thoughts.
FEEHERY: Well, if you‘re part of the Obama campaign, this must terrify you. You have done all you can. The media on the left wing, everyone has demonized Michele Bachmann. And she‘s made it easy on them, frankly.
(CROSSTALK)
MATTHEWS: No, no, they haven‘t demonized her.
(CROSSTALK)
MATTHEWS: No, no. Whatever she has gotten, her—
(CROSSTALK)
FEEHERY: And she‘s still within five points.
MATTHEWS: But before you become the super-chivalrous person I know you are, the bottom line is all her words are her words. Nothing—there are no adjectives used against her.
FEEHERY: I said she made it easy on herself—on you to do that.
MATTHEWS: No. No. And I will go further than you, since you have been very tough right now, John Feehery. All her problems are self-made.
FELDMAN: By the way, I think actually she‘s been very impressive.
MATTHEWS: Oh, here we go.
FELDMAN: I‘m looking forward to the caucuses. I‘m looking forward to Michele Bachmann.
MATTHEWS: Here‘s—this is what is called the—this is called sandbagging.
FELDMAN: No, no, no.
MATTHEWS: Please nominate her. Please put her out front.
(LAUGHTER)
(CROSSTALK)
FELDMAN: I have been surprised by her as a candidate.
MATTHEWS: This is the sandbag, ladies and gentlemen.
FELDMAN: I have been surprised by her as a candidate. I think she‘s very impressive. I look forward to seeing Mitt Romney, Tim Pawlenty, and Michele Bachmann.
(CROSSTALK)
MATTHEWS: Did you ever go into a schoolyard? I don‘t know about your schoolyard, but my schoolyard, you would talk to something. Meanwhile, their buddy would go behind them, and lean down, so when they pushed you over, you would fall down. Remember that one?
FELDMAN: Yes.
(LAUGHTER)
MATTHEWS: That‘s what you were just doing to her.
MATTHEWS: Let‘s take a look at the Quinnipiac poll, the approval rating in Ohio.
And here‘s a state I really do believe for soul reasons—the—non-racial soul reasons—the Democrats have to win. Obama right out there right now, he is losing 50 percent in approval. That‘s his disapproval number to 46 percent.
That‘s a tough one, right, John? That one you guys win, you probably win the ball game.
FEEHERY: Well, I think that‘s right. I think Ohio and Florida are the two big ones for Republicans. If Republicans can win Ohio, they‘re going to win the election.
And I think that, you know, other states like North Carolina, Virginia, and Indiana, the Obama campaign has already given up on Indiana. So I think if you‘re part of the Obama campaign, you‘re thinking to yourself, how do I win this thing? I hope Michele Bachmann gets nominated, because that‘s about the only way.
MATTHEWS: Are you saying a Democrat can‘t win the presidency without Ohio?
FEEHERY: Well, I think that Ohio and Florida—
MATTHEWS: Do you want to go down history lane here? Want to take a trip down history lane with me? Name a Democrat who won the presidency, rather dramatically, rather overwhelmingly in the Electoral College, but lost Ohio. Who would his name be? Somebody who is Irish? Try to think about the Irish presidents we have had, the Irish-Catholic presidents. Can you think of one?
(LAUGHTER)
FELDMAN: Somebody has been studying on that recently.
MATTHEWS: I can think of one. I think his name is John Kennedy, lost Ohio and won the presidency rather well.
Your thoughts.
FELDMAN: But let‘s talk about Florida for a second. John raised Florida. Governor Scott in Florida is not doing the Republican Party any favors down there.
(CROSSTALK)
MATTHEWS: He‘s a knucklehead. Isn‘t he a knucklehead? Is that a fair description?
FELDMAN: I don‘t want to disparage him personally, but I will say he‘s giving Republicans a lot—
(CROSSTALK)
MATTHEWS: No, but professionally a knucklehead.
FELDMAN: Professionally, he‘s very unpopular.
MATTHEWS: Yes.
FELDMAN: That‘s clear from the polls.
MATTHEWS: Yes.
FELDMAN: That makes Florida in play.
You look about the change in the electorate. You look about Hispanic voters make states like New Mexico in reach certainly for Democrats and not for Republicans.
MATTHEWS: OK. Let‘s go to a state we all love. We love politics.
And I think we all love this state, New Hampshire.
I used to always—when my kids were young, we always took them up there every four years to cover the campaign.
I‘m sure Feehery, you‘ll get to do this, bring the kids along for the weekends. Here he is, New Hampshire, voters in New Hampshire, also seen to be down the president right now, his disapproval is at 49, his approval is at 46.
That‘s not good, is it, John Feehery?
FEEHERY: Well, no.
MATTHEWS: That‘s the state that is most like America, as far as I‘m concerned—at least in terms of the primary season. I always love it up there.
FEEHERY: It‘s more like America in your world than it is—than I would be in the Republican nomination process.
But I would say that, you know, this is going to be a tough one for the president to win. And I think that Republicans are going to do very well.
And his disapproval ratings are extraordinarily high, if he thinks he‘s going to have an easy walk—which I don‘t think he‘s going to have an easy one at all.
MATTHEWS: So, that‘s pretty much competitive, 49-46, which tells me among normal voters, when you don‘t have to go to yahoo or loony land, the president is doing OK. I mean, he‘s OK.
I think what these numbers tell me is, it‘s going to be one brutal election if he gets elected. One brutal election if he loses for the Republicans. I just think we‘re looking at a rumble.
FELDMAN: He is extraordinarily popular right now among Democrats.
Let‘s not forget about Democrats.
MATTHEWS: OK.
FELDMAN: Gallup came out last week. He‘s got the highest approval rating --
MATTHEWS: Then, why is he down in approval generally then?
FELDMAN: Well, everything is suppressed right now. The wrong track number is driving everybody‘s numbers down. This economic anxiety is driving numbers down.
But among independents, he‘s actually doing pretty well. In Pennsylvania he‘s beating Romney among independents, according to Quinnipiac.
MATTHEWS: Let‘s go back to what John‘s point.
John, you started off with a really good point, even though I didn‘t ask you about it. You were smart to put the knife in right away. White working class. Now, the way they used to do this with polling, you wouldn‘t have to get to class, if you haven‘t finished four years of college, you‘re working scholars. It‘s a crude measure, that‘s the way they do it.
I think—intuitively, I think he‘s in trouble with those people, with regular people in this country—white working class, if you will, regular American people who aren‘t rich don‘t see the president as their hero yet.
FELDMAN: That‘s why this debt debate that‘s going on is so important. Take a step back and look at that in the long view. Right now, you have the president desperately trying to save the economy, desperately trying to revive the economy for the working people, and you have the Republican Party trying to budget the backs on budget on the backs of American people.
FEEHERY: Mike, Mike!
(CROSSTALK)
MATTHEWS: I want to ask you a partisan question, Feehery. Why would you want to cut Medicare, which is really for people who are old, 80 year old people, 90 year old people, who really need Medicare, they‘re not going to be able to buy insurance, let‘s be honest, and make sure that people who make $270 million a year only paying 18 percent in taxes.
How do you justify that?
FEEHERY: Chris, what I‘d like to do—what I‘d like to do is make sure Medicare doesn‘t take over the whole budget so we can afford to pay for our Defense Department. And if you don‘t reform Medicare and slow down the rate of growth from 7 percent or 8 percent to 2 percent, you‘re going to a financial calamity.
MATTHEWS: What about the rate of growth of people that make $270 million who only pay 18 percent in taxes? What do you make of that?
FEEHERY: I think they should pay more in taxes.
MATTHEWS: OK. Good. You‘re not a real Republican.
FEEHERY: I think they should pay 35 percent in taxes.
MATTHEWS: You‘re not a real Republican.
(CROSSTALK)
MATTHEWS: Would that pass the Republican House?
FEEHERY: I think if you ask most people who make $247 million, they‘d say the same thing.
MATTHEWS: Would that pass the Republican House?
FEEHERY: Not right now, no. I do think you have to get rid of loopholes. I think if you have tax reform, you can get there.
FELDMAN: Probably not.
MATTHEWS: OK. What are living right now.
Anyway, thank you, John Feehery. Thank you, Michael Feldman—a spirited discussion that reflected the views of the both right and left.
Coming up, just weeks before Michele Bachmann called for the destruction of Fannie Mae. Guess who was getting money from Fannie Mae and Max? She took out a family-subsidized home loan backed by Fannie and Freddie. Will Bachmann‘s hypocrisy catch up to her?
This is HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
MATTHEWS: Well, the Republican presidential fight is a long way from being over, but Mitt Romney may be acting like he‘s got it wrapped up. At a fund-raiser in Virginia this Monday, Romney talked about the short list for vice president already. He named Senator Marco Rubio, New Jersey Governor Chris Christie and Virginia Governor Bob McDonnell. So, he‘s looking for a V.P. already.
A source familiar with the event later told “Politico” that Romney wasn‘t actually revealing his own list, but listing the obvious contenders for any Republican nominee. Yes, right.
We‘ll be right back.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: I want my candidacy for the presidency of the United States to stand for a moment when we, the people, stand once again for the independence from a government that has gotten too big and spends too much and has taken away too much of our liberties. Government thinks it knows better how to spend our money. Government thinks they know better how to make a better life for us. They think they create jobs. They even think they can make us healthier—but that‘s not the case.
(END VIDEO CLIP)
MATTHEWS: Wow, remember those words.
Welcome back to HARDBALL.
That was Michele Bachmann announcing her presidential run and her philosophy while criticized government per se. She neglected to mention that she was—had some firsthand experience with the federally subsidized Fannie Mae and Freddie Mac programs.
Today, “The Washington Post” reported that, quote, “Just a few weeks before Bachmann called for dismantling Fannie Mae and Freddie Mac during a House Financial Services Committee hearing, she herself and her husband signed for a $417,000 home loan to help finance their move to a 5,200-square-foot golf-course home.”
Will Bachmann‘s hypocrisy catch up with her?
David Corn is, of course, Washington bureau chief for “Mother Jones” and MSNBC political analyst. We‘re also joined by “The Daily Beast‘s” Michelle Goldberg, who‘s also a “Newsweek” contributor.
I want to start with Michelle on this point. I mean, this is one of the clear-cut cases where you get points from the public for saying you want to be independent of government, and it turns out you‘re very much dependent on government by your own decision-making, you‘re borrowing based on federally-backed money.
MICHELLE GOLDBERG, THE DAILY BEAST: I mean, on the one hand, I‘m not sure that most people will blame anyone for taking advantage of a government program that they oppose, right? I mean, I think that the mortgage --
MATTHEWS: Calling for its destruction?
GOLDBERG: Well, I think that the point is, in her case, the problem I think is that it‘s cumulative. It‘s that time and time again she, while kind of lambasting government, her entire career, her entire financial well-being, seems to be based in many ways on suckling from the government teat. I mean, she‘s—it‘s not that just she‘s getting subsidized—it‘s not just that she has loans backed by Fannie and Freddie. It‘s that she‘s also getting subsidies for her farm, her husband is getting Medicare for her Christian counseling service. She came from the IRS.
I mean, she‘s had a career and an economic life that‘s really been based on government. And she refuses to admit that government has ever helped her or really that government can ever help anybody.
MATTHEWS: How does this cognitive dissonance occur? I mean, people come up—I mean, a dull joke a couple years ago was just on a general basis, let‘s get the government out of Medicare.
DAVID CORN, MOTHER JONES: Yes. Get your hands off my Medicare, people would say.
Listen, Michele Bachmann seems to be a teetotaler who likes the sauce.
MATTHEWS: Yes.
CORN: You know? And she‘s having the—
MATTHEWS: You mean, a temperance with a flask in her pocket.
CORN: Exactly right.
MATTHEWS: Yes.
CORN: Now, I don‘t think this is going to hurt her politically in the short run.
MATTHEWS: Because the right knows the hypocrisy comes with the territory or what?
CORN: No. Because the people she is speaking to are basing their approach on denying reality. They believe that if you cut government spending, actually, the economy expands. They believe that there‘s nothing wrong with voting not to raise the debt ceiling, that it‘s going to happen with the default.
Again and again and again, they believe articles of faith rather than reality.
So, if she is out there pitching as we just saw on the sound bite, the grand vision that they have, you know, all everything else said, oh, this is just “The Washington Post” nitpicking her. This is the media attacking her.
MATTHEWS: Well, let‘s go to Michelle on this because she seems to be fair-minded on this. If you go, Michelle, where would she be in her own household if her husband wasn‘t picking up this Medicaid money, or if she wasn‘t getting some kind of federal backing for a mortgage to get that golf-course house—how would she be living differently if she wasn‘t depending on Uncle Sam?
GOLDBERG: Well, we know that she makes, you know, a good salary in the House of Representatives.
MATTHEWS: From the government.
GOLDBERG: Yes, from the government. And according to their tax returns, her husband‘s clinic doesn‘t turn a profit but he does kind of pay himself apparently a good salary since they are moving into a very, you know, kind of lavish and expensive home on a golf course.
And we know that his clinic is heavily subsidized also by the federal government.
So, you know—so, and furthermore, we know that. Jobs in that clinic --
MATTHEWS: Let‘s go to a salary health care and some of their income -
they get all of their income from the government. They get—it seems to me they are government wards almost.

GOLDBERG: And she has never had, accept for—she has never had a nongovernmental job. She was working at the IRS before she got into politics.
MATTHEWS: That‘s kind of spooky because she runs against the government and IRS and everything else, she is almost a complete hypocrite.
CORN: She was a lawyer for the IRS, which means she prosecuted people who the IRS targeted for not paying their taxes—which is probably a good thing to do but a lot of right wingers out there hate the IRS and they want to defund it.
MATTHEWS: She was going both ways on the road to Damascus. Wasn‘t she at the same time?
CORN: Now, at the same time, too, she has great health care insurance through her job at the Congress and very generous federal pension. I mean, she supports the Ryan plan which wants to end the Medicare guarantee which she lived by those same terms herself in terms of her own healthcare. I doubt she would.
MATTHEWS: Let me go back to you, Michelle. If you have idea before -
so, Michelle, give me a sense of where she stands. I don‘t want to go after beat a dead horse—these are very bad metaphor here. But let‘s go to this, Romney is at 30 right now. Bachmann is in 16. Perry is in 11.

You know, everybody‘s talking like in the crazy world I live in, which is completely political—Perry is going to come into this race and knock her out of second.
Does that look credible? Or because she‘s the only woman in a field of all these men that she still has that advantage besides being a better politician than most of the other men?
GOLDBERG: Well, I think one reason Perry looks so great right now is because people are so frustrated with the rest the field and so, they are putting a lot of—you know, they‘re putting a lot of their hopes on to him and projecting on to him all of the qualities they want to see in candidate.
But he is pretty unpopular in his own state, and so, there‘s a lot of people, I think in Texas, who believe once he gets on the national stage, there‘s no reason to think that he‘ll immediately surpass Michele Bachmann.
Also, when some of these other candidates start dropping out, Herman Cain, Newt Gingrich, I think it‘s likely that she is going to pick up more of their votes than Romney, who‘s really hated by a lot of the base of the Republican Party.
MATTHEWS: I‘m a long believer into Michele Bachmann‘s political abilities. I don‘t know anything about Rick Perry. Except—I just wonder if we want another Texan—anyway, another Texan of that kind.
Anyway, thank you, David Corn. Thank you, Michelle Goldberg.
When we return, “Let Me Finish” with why so many Americans look down on politicians right now. I‘m not one of them. But lately, it‘s been tough to defend them.
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
MATTHEWS: “Let Me Finish” tonight with why so many people look down on politicians.
It‘s this—the skirmishing, this pie-eating contest, this sack race, this absurd picnic atmosphere of one side against the other—the waste of a beautiful summer afternoon with dank arguments in the basement.
This isn‘t why I love politics—why I have loved it all my life. This is the Florida recount. This is Al Gore picking out which counties he wants recounted thinking that‘s the way to win. This is W. finding a way to get to the Supreme Court to get himself chosen president rather than elected by popular demand.
This is baseball—not by Babe Ruth but by bunt. This is tennis, not aces but little flea-flickers across the net when your opponent is back at the line. This is chicken crap.
Look, we either have a solvency problem as a country or we don‘t. If we do, this effort to cut deficit is real. If we really do have a problem of spending more than we‘re bringing in, we need to solve it by bringing up revenues as we rein in spending. If it‘s real, then we need to take it in real way, pulling up the 14 percent of taxes and pulling down that 25 percent of spending so they meet some around 22 percent—which seems about right with the aging population.
It ain‘t complicated. We‘ve got a number system to do it. There‘s no other way to do the math. If you want the government to send 22 percent in the economy, cough up the 22 percent in taxes to pay for it, or stop talking and get out of way.
If the Democrats want to say government should be larger, say so themselves. If the Republicans want to say government should be down at 14 percent of the economy, let them say so and tell us what programs they want to kill.
I love politics because it is about big ideas, about big reasons about the kind of country you want to live in, the role you want America to play in the world. It‘s not about debt ceilings or whether we pay for things we‘ve already bought This isn‘t a return counter.
It‘s a beautiful country and a beautiful summer. We ought to get outside and debate the big picture, blue sky stuff, what kind of country you want to live, what kind of country you want this to be. And that‘s why I like politics. The Roosevelt, Kennedy, Reagan stuff. The stuff that even young kids me like cared a lot about.
And that‘s HARDBALL for now. Thanks for being with us.
More politics ahead with Al Sharpton.

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