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updated 8/2/2011 1:31:14 PM ET 2011-08-02T17:31:14

Guest Host: Michael Smerconish
Guests: Chuck Todd, David Corn, Hampton Pearson, Simon Hobbs, Richard Wolffe, Eugene Robinson, Steve King, Steny Hoyer, Elliot Ackermann

MICHAEL SMERCONISH, GUEST HOST: The Tea Party gets its way for now.
Let‘s play some HARDBALL.
Good evening. I‘m Michael Smerconish, in for Chris Matthews.

Leading off tonight: If at first you don‘t succeed, add a balanced budget amendment. We may now have the clearest example of how dysfunctional Washington has become. John Boehner was embarrassed last night when he didn‘t have enough Republican votes to pass his debt ceiling bill. That bill was going to die in the Senate for lack of Democratic support.
So what happened today? Boehner added a balanced budget amendment, which is expected to win over enough Tea Party Republicans but is also a poison pill for Democrats. So now what? The House vote is expected soon, and we‘ll get the latest as the clock ticks down to Tuesday‘s deadline.
Plus: How far will Tea Party Republicans go get what they want? Is it really conservative to risk default? We‘ve got a Tea Partier here tonight.
Plus: Is anyone winning politically? President Obama is trying to position himself as the adult in the room, but if the economy tanks, don‘t his prospects tank with it?
And have you had enough? If people are fed up with Democrats and Republicans, is there a third way? A group called Americans Elect says yes, and it may have the money and the know-how to get a third party ticket on the ballot in all 50 states.
And finally, “Let Me Finish‘ with the solution to the debt crisis that‘s right in front of Congress‘s nose.
We start with the debt ceiling crisis. Chuck Todd is, of course, NBC‘s chief White House correspondent and political director. Chuck, it‘s been a volatile situation all day long. Where do we stand right now?
CHUCK TODD, NBC POLITICAL DIR./WHITE HOUSE CORRESPONDENT: Well, look, back-time (ph) it as far as the calendar is concerned. So at some point, Boehner‘s going to pass his bill. It does look like he‘s got the votes. That‘s what Kelly O‘Donnell, Luke Russert tell us. That‘s what their reporting says.
When they send that bill over to the Senate, Harry Reid wants to file something called cloture by midnight tonight. Why? Because he‘s trying to, at some point, get a bill passed and sent back to the House by Monday, giving the House about 24 hours to pass an amended version of whatever bill the Senate sends back to meet the August 2nd deadline. So that‘s the clock they‘re working with and the calendar they‘re working with.
So what does that mean? As soon as Boehner files this bill, there‘s going to be a serious amount of back-room negotiations between Reid and some Republicans. There‘s some sort of quiet negotiations now with some moderate Republicans, possibly people like Tennessee senator Bob Corker, Alaska senator Lisa Murkowski, some folks like that who have publicly said they‘re talking about working with Reid on some form of a compromise.
Right now, the Senate Republican leadership is not engaging in these talks. They want to wait to see what happens in the House, and until Boehner comes over. And this is very important, Mike, because the issue is, to get this clock moving, Reid‘s got to file his bill by midnight tonight, and whatever‘s in it is the bill. They‘re not going to have time to be doing amendments and they‘re going to need—because then it could get it all gummed up and (INAUDIBLE) for days. So in order to get this negotiated version of getting rid of a second trigger in debt ceiling, adding new triggers, this and that, Reid‘s got to get this negotiated version by midnight tonight.
SMERCONISH: Chuck, from the outside looking in—and I guess I was wrong. I thought this was a case of Speaker Boehner passing something, anything, as much for his personal survival as the House speaker as for the good of the country. In other words, he couldn‘t personally afford to have the day end without getting something passed.
If I‘m understanding what you‘re saying, it sounds like that which is beginning in the House really might get negotiated in the Senate and ultimately end up on the president‘s desk.
TODD: It depends on what you define as the Boehner bill. Look, there‘s a legislative clock issue here and calendar issue. If Harry Reid uses just the Boehner bill number and erases everything with Boehner and replaces it with him, then that saves a step and allows them to have this process that I described and get this possibly to—back to the House for another vote before it hits the president‘s desk by Monday.
SMERCONISH: Understood. But it may—
TODD: That‘s why they have to do it that way.
SMERCONISH: It may not even—it may not even resemble that which came out of the House—
TODD: Correct.
SMERCONISH: -- is what you‘re saying.
TODD: Other than the actual number itself that John Boehner has right now.
SMERCONISH: Now I understand.
TODD: That could be the only thing. But that is a way to—basically, you get to cut out a step. If Harry Reid has to do it with his bill first, that actually adds about a day—
SMERCONISH: Got it.
TODD: -- of legislative calendar chaos.
SMERCONISH: Great. Thank you, Chuck Todd. Thank you for that report.
TODD: All right, buddy.
SMERCONISH: All right, joining me now is CNBC‘s Simon Hobbs and “Mother Jones” magazine‘s David Corn, who‘s an MSNBC political analyst.
Simon, please speak to me about how markets are reacting to what‘s going on in Washington.
SIMON HOBBS, CNBC: Well, Michael, in their heart of hearts, I don‘t think the markets believe that there will be a default, that everybody would be that stupid to let it go that far. But the nervousness is absolutely palpable.
If you look at the Dow Jones Industrial Average, we‘ve lost the best part of 600 points over the last six sessions. That‘s more than 4.5 percent. There‘s a huge amount of activity behind the scenes, technical activity to deal with the process of a default, the 20 biggest Wall Street banks, with the Treasury today. Yesterday, there was a huge conference call about how you work through what would be a technical default.
But if there‘s one thing that I could leave you with, it is this. As the hours tick by, it becomes increasingly likely that the greatest nation in the world, the United States, will be stripped of its AAA credit rating by the rating agencies. In other words, it means that the rest of the world will say, You are more of a liability to lend money to than Singapore or Hong Kong or France or Germany or Britain, or indeed, Canada.
And I believe that when this episode is written, this historical episode is written, Michael, that they will lay the blame at that squarely on the part of the Republicans and personally on John Boehner, in particular.
Let me explain why. For 10 years on international markets, we‘ve known about the twin deficits, the public deficit, the government deficit, and the trade deficit. We knew it had to be sorted out, and were looking for a bipartisan approach on that, and you‘ve had various commissions in that regard.
What the Republicans decided to do was to up the ante, to accelerate things and have the fight now. And what, in effect, did they do? They said, We‘ll use the debt ceiling. That means they‘re saying to the rest of the world, You know that $14 trillion that we‘ve lent (SIC) to you and our own people? Well, from Tuesday, we may not pay any interest on it and we may not repay the principal. So they hold the rest of the world to ransom.
And what do they get in return for that? Remember here, the yardstick from S&P is about $4 trillion of spending cuts or revenue increases to start bending the curve down. And when Obama was talking to Boehner three weeks ago, we were getting towards that. Now we don‘t have anywhere near a $4 trillion move at all because Boehner couldn‘t sell the revenue increases to his own party. So we‘re not bending the curve down whilst we‘re holding the world to ransom.
And let me just say one more thing, Michael. And in that process, the blood (ph) or the politics are poisoned. The bipartisan approach has been lost. And there are more hurdles being set up along the way, such as the balanced budget amendment. AAA-rated countries don‘t—
SMERCONISH: Simon—
(CROSSTALK)
HOBBS: -- by those rules, Michael!
SMERCONISH: I‘m glad you brought this up because I have the president speaking earlier today on that threat to the nation‘s AAA credit rating. Let‘s all watch.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If we don‘t come to agreement, we could lose our AAA credit rating—not because we didn‘t have the capacity to pay our bills—we do—but because we didn‘t have a AAA political system to match our AAA credit rating.
(END VIDEO CLIP)
SMERCONISH: David, Simon is of the opinion that it falls squarely on Speaker John Boehner in a political context. I‘m not so sure that‘s how the American people are going to see this. What‘s your response?
DAVID CORN, “MOTHER JONES,” MSNBC POLITICAL ANALYST: Well, I think the mighty Simon Hobbs has it right. And I think the key point that he was driving at there is that the Republicans have politicized the debt ceiling fight, which was never politicized in the past.
We‘ve heard in the last few weeks again and again and again Democrats, Republicans, under Democratic presidents and Republican presidents, it was a one-page bill. Lawrence has been waving it around on his show day and day again that this was a routine matter.
What the Republicans have done now is not just shown that we‘re going to make this into a political circus today, we‘re prepared to do it six months from now. We‘re prepared do it eight months from now, every time it has to go up again. So everything that Simon just described is going to be the new reality, thanks to the Republicans. And who gets most of the blame for that is, indeed, John Boehner because he‘s letting the Tea Party tail wag the dog.
SMERCONISH: Well, it‘s not just—it‘s not just the issue of for how long we‘re going to raise the debt ceiling because my understanding is that the Boehner plan buys us six months and Harry Reid‘s plan puts it off beyond a year.
But men, here‘s what concerns me the most. What they have in common is that they both punt insofar as they don‘t address any tax issues or entitlements, but rather, they subject that to a committee review. Well, what prospect is there that if we can‘t agree right now that this committee several months in the future is going to agree?
And Simon, this is your bailiwick, not mine, but it seems to me that that portends instability which we can ill afford.
HOBBS: Yes. You could—and you can have the instability, just don‘t play with the people that have leant $14 trillion to the United States. That‘s the issue. It‘s they‘ve overloaded the mechanism with something that they should not be overloading it with. This should have been sorted out in a different way at a different time.
And as a result of actually putting those people who have—you know, lend money to the United States in good conscience, in good faith and actually putting them on the line. That‘s what they‘re risking. They‘re risking the reputation of the United States in international financial circles. It will be a huge milestone—
SMERCONISH: Do you see—
HOBBS: -- in the history of this country—
SMERCONISH: Do you see—
HOBBS: -- if they do that.
SMERCONISH: Simon—Simon, do you see—do you see indications of money having been moved out of the United States?
HOBBS: No because at the end of the day, it is—the Treasuries are the great safe haven, and they may—everybody else may have to bend the rules in order that people stay in Treasuries. But that is not the point.
This is about the credibility of the United States internationally at a time when, today we discovered that the figures that we had for growth in the first quarter were wrong. The economy only grew 0.4 percent at an annualized rate. It only grew at 1.3 percent in the second quarter.
This economy is in a really, really bad state, and arguably, we should be attempting to stimulate our way out of this. And nobody is stepping up to the plate at a point when unemployment continues to rise to 9.2 percent.
SMERCONISH: David Corn, I want to show you Congressman Barney Frank during the debate just this afternoon. Take a watch and respond to this.
(BEGIN VIDEO CLIP)
REP. BARNEY FRANK (D), MASSACHUSETTS: I remember Speaker O‘Neill when I got here, and there‘s one thing he and Speaker Boehner seem to me to have in common. That‘s a theme song. Speaker O‘Neill‘s theme song was “I‘ll Be With You in Apple Blossom Time.” By now, Speaker Boehner is entitled to take as his theme song, “It‘s My Party and I‘ll Cry if I Want You.”
(END VIDEO CLIP)
SMERCONISH: Let me show you another. I‘ve got Democratic congressman Gerald Connolly of Virginia during the debate this afternoon, as well.
(BEGIN VIDEO CLIP)
REP. GERALD CONNOLLY (D), VIRGINIA: This bill is a blatant, cynical exercise in raw political muscle, and nothing more. To the House Republicans bent on turning our Founding Fathers into deadbeat dads, I would respond using Speaker Boehner‘s own words from last year. Hell, no, you can‘t.
(END VIDEO CLIP)
SMERCONISH: David, any winners in this process? The president reemerged earlier today, took some of the spotlight back. It‘s hard for me to identify those who are coming out of this politically gaining.
CORN: Yes, well, it‘s not John Boehner‘s party. He has not been able to do what he wanted. He was not in a position to negotiate a grand bargain, whether it was good, bad or indifferent. He‘s allowed the notion of deficit reduction to be attached to the deficit (SIC) issue, which as Simon pointed out, is really the core of the problem here.
And right now, the president has been trying to look reasonable. Here‘s the guy who comes out and says, Listen, I want a compromise. And I don‘t think there is any question that he has bent more, he has offered more, even going against some Democratic articles of faith, putting Social Security, Medicare on the table. I don‘t even like what I hear coming out of the White House in some ways, but I recognize that he‘s been trying to get a deal.
What‘s happened we‘ve seen just in the last 24 hours is that Republicans in the House, as we get closer to D-day, to the midnight hour, they are moving away from the middle position. They are making things more difficult to pass. And as Chuck described early on at the top of the show, they are fooling with this legislative calendar in which there really are only a couple of, you know, hours left to get things rolling.
So everyone‘s looking bad. And this is part of the problem. You have
basically, the Republicans created a tar pit and they dragged everybody into it. And the president is having trouble soaring above that. He‘s doing the best he can. But at the end of the day, if he can‘t make these people act reasonably, I think he will share part of the blame.

You said at the start of the show, Mike, that this is Washington dysfunction. I think it‘s Washington‘s dysfunction caused by a small band of people. That‘s where the real responsibility—
(CROSSTALK)
SMERCONISH: Men, I‘ve got to leave you both. Here‘s the sound bite that I imagine they‘re most concerned at, at the White House. Regardless of how much the president may have compromised, it‘s the reduction of a AAA rating on his watch. Simon, 10 seconds to respond and then I got to get out.
HOBBS: I just think it‘s really unfortunate. You‘ve got—you‘ve got to look at those Tea Party people. You‘ve got to understand the mandate that they came in on, which has veracity, which is justified. And the rest of the political establishment should have reached out to the Tea Party, found a way to—
CORN: Oh!
HOBBS: -- (INAUDIBLE) locking in the spending cuts, so they could guarantee—there should have been more done to bring the Tea Party into the fold, rather than—
CORN: Oh, Simon, I disagree—
(CROSSTALK)
SMERCONISH: I think it presupposes that there was room for compromise on their part, which I don‘t think exists. Anyway—
(CROSSTALK)
HOBBS: That‘s the political process we should have, far more inclusive, that includes everybody.
SMERCONISH: Thank you both. Thank you—thank you, Simon Hobbs.
David, unfortunately, I‘m out of time. Thank you, David Corn.
Coming up: How far will the Tea Party take this fight, default, economic chaos? I‘ll ask a Tea Party Republican member just how far he plans to go next.
You‘re watching HARDBALL, only on MSNBC.
(BEGIN VIDEO CLIP)
SMERCONISH: President Obama has taken to Twitter to pressure Republicans on a compromise to the debt deal. All day long, the Obama 2012 campaign has been pushing supporters across the country to tweet Republican members of Congress.
It started around noon Eastern with a message from the president himself, “The time for putting party first is over. If you want to see a bipartisan compromise, let Congress know. Call, e-mail, tweet.” And the tweets kept coming, state by state, urging followers to tweet their Republican members of Congress. This is what political arm twisting looks like in a digital world.
We‘ll be right back.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: There are a lot of crises in the world that we can‘t always predict or avoid—hurricane, earthquake, tornadoes, terrorist attacks. This isn‘t one of those crises. The power to solve this is in our hands, and on a day when we‘ve been reminded how fragile the economy already is, this is one burden we can lift ourselves. We can end it with a simple vote.
(END VIDEO CLIP)
SMERCONISH: Welcome back to HARDBALL. That was the president earlier this morning, appealing to Republicans in the House to take action and move quickly to raise the debt ceiling before Tuesday‘s deadline. But will they?
Joining us now, Republican congressman Steve King of Iowa. Congressman, thanks very much for being here. How will you vote on Speaker Boehner‘s proposal?
REP. STEVE KING ®, IOWA: In a few minutes, I‘ll go over and vote no on that proposal.
SMERCONISH: How come?
KING: Because it doesn‘t take us far enough, because it only—it only cuts the next year‘s appropriations by $7 billion, and the Ryan budget is a $31 billion cut. So we give up on the Ryan budget if we do that. It does have a balanced budget as the second tranche. That‘s down the road into February. Kicks the can down the road. It doesn‘t hold together our definition of a balanced budget, it just says a balanced budget amendment.
We need to do more. And the best that this proposal can do is lower the trajectory of the national debt‘s increase so that 10 years from now, we won‘t have a $25 trillion debt, we‘ll only have $24 trillion worth of debt.
SMERCONISH: Do you not buy—
KING: That‘s not good enough, and it‘s bad for our markets in the long run.
SMERCONISH: Congressman, do you believe this has all been hyped? I mean, are you not accepting of the fact that Tuesday, the government runs out of money?
KING: Well, we don‘t run out of money on Tuesday.
And I think this has been overhyped, but I wouldn‘t say that we aren‘t going to be in a position where this debt ceiling has to be increased.
It‘s the conditions over which and when we need to increase the debt ceiling that this discussion is about. The default language that has been used is overhyped. A default has been now defined to mean any time that the United States runs out of a borrowing authority, rather than we might not be servicing our debt.
SMERCONISH: Well, how—
(CROSSTALK)
KING: We will service our debt. We will pay our interest and principal on the day it‘s due. That will happen, and the president should guarantee that.
SMERCONISH: Congressman, how about—how about this concern? It was expressed by the president earlier today. I thought he made an important point about the country‘s credit rating. Let‘s all listen.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And make no mistake:
For those who say they oppose tax increases on anyone, a lower credit rating would result potentially in a tax increase on everyone in the form of higher interest rates on their mortgages, their car loans, their credit cards. And that‘s inexcusable.
(END VIDEO CLIP)
SMERCONISH: What has driven us to this standstill, it seems, is a refusal by some to raise taxes. Doesn‘t the president make a valid point when he says that if we lose the AAA bond rating that essentially taxes are going to go up on all of us?
KING: Well, he also said in just the previous clip that we can solve this with a simple vote. This is far more complicated.
This is about 75 years of accumulated overspending. It‘s about the acceleration in the overspending of this administration. A lot of it was driven by the Pelosi Congress in the last few years. We came within $160 billion of balancing this budget during the height of the Iraq war. Now the president offers a $1.6 trillion deficit spending for a single budget, 10 times what it was just a few years ago.
And now he says all we have to do is borrow the money and we will solve the problem. That does not solve the problem. It delays the immediate crisis. I want to see this come to a solution where we can actually dial down the trajectory of our deficit and be able to predict a balanced budget at some point. The president apparently doesn‘t want a balanced budget, or he would have accepted $2.4 trillion when we offered it with him—to him with Cut, Cap and Balance.
SMERCONISH: If next Friday we have experienced a drop in our AAA credit rating and interest rates are going up on everything automobile loans to home mortgages, will you have been wrong?
KING: That‘s way too soon to say. It‘s going to take months to look back on this and say. And some of it has to do with how this is messaged.
The president is messaging this to damage the markets, and I don‘t think there‘s been enough message out here on the top of—on all of our leadership to say that default is not what you say it is. We‘re not going to default. We could and should and the president should at this point now define what his priorities are.
If he doesn‘t get his debt ceiling increase, he should be telling the American markets where he‘s going to prioritize to put that money. I say pay the troops first, service the debt second. If the president has national security issues, put those in third. Then let‘s take care of our seniors, Social Security and Medicare and there‘s still money left over. There‘s is not a crisis that starts at midnight on August 2.
SMERCONISH: Congressman, many thanks for being here, Congressman Steve King.
Joining me now is Democratic House Whip Steny Hoyer.
A strong difference of opinion, I guess, among those who are on the Hill right now, Congressman. Maybe it‘s not as bad as we have been led to believe, or so I was just told.
REP. STENY HOYER (D-MD), HOUSE MINORITY WHIP: Well, I think there is a strong disagreement.
And Congressman King does not reflect the views of his leadership on either the Senate side or the House side, where they all believe that not meeting our obligations on Tuesday will have great adverse ramifications for every American family, and it will be immediate.
American families have already lost as a result of the what I would say game-playing, the politicization of this issue, have already lost $400 billion in net worth since Mr. Boehner walked out of the hearing, out of the agreement with President Obama, and would not pursue those, obviously because he couldn‘t get his party to agree, which we have seen over the last full 36 hours.
SMERCONISH: So, Congressman, I just saw Speaker Boehner walk behind you, perhaps going to initiate this vote.
Where are we headed? What‘s—tell the American people what is about to unfold in the next 48, 72 hours.
HOYER: Well, hopefully, over the next 48 and 72 hours, we‘re going to get real. Unfortunately, the vote to which we are now going is not a real vote and they know it.
What‘s happened is that Mr. King says, no, they didn‘t move far enough towards the far right for him, but they did move towards the right. They made no opportunity—no effort for compromise, no effort to try to bring the Congress together and get a solution which would ensure that this gun to America‘s credit‘s head not go off, that America‘s trustworthiness, creditworthiness and respect around the world would remain intact.
The rest of the world and every American, I‘m sure, is outraged and angered by the fact that the Congress is not addressing this in an adult way, as the speaker suggested we ought to.
SMERCONISH: Thank you. Thank you. Thank you, Congressman Steny Hoyer.
Up next: Texas Governor Rick Perry flip-flops on same-sex marriage. Last week, he said he supported New York‘s right to allow it. Then he remembered that state rights only apply to issues that conservatives like. That‘s ahead in the “Sideshow.”
You are watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
SMERCONISH: Welcome back to HARDBALL. Time now for the “Sideshow.”
First up, Governor Rick Perry shocked many of us last week, voicing support for New York‘s right to pass a law allowing gay marriage. Let‘s listen.
(BEGIN VIDEO CLIP)
GOV. RICK PERRY ®, TEXAS: That‘s New York, and that‘s their business, and that‘s fine with me. That is their call. If you believe in the 10th Amendment, stay out of their business if you live in some other state, or particularly in you‘re the federal government.
(END VIDEO CLIP)
SMERCONISH: No surprise that didn‘t sit well with Perry‘s supporters.
So how about a clarification?
(BEGIN AUDIO CLIP)
PERRY: It‘s a small group of—of activists judges, and, frankly, a small handful, if you will, of states and these liberal special interest groups that are intent on a redefinition, if you will, of marriage on the nation, on—for all of us. To not pass the federal marriage amendment would impinge on Texas—
UNIDENTIFIED MALE: Exactly.
PERRY: -- and other states‘ right not to the have marriage forced upon them by these activist judges and these special interest groups.
(END AUDIO CLIP)
SMERCONISH: It sounds like more of a 180 to me. State rights are fundamental to the integrity of the United States, unless, of course, Texas doesn‘t approve.
Up next: Yesterday, I spoke with Senator Alan Simpson, who co-chaired last year‘s White House deficit reduction committee, on my radio program.
He was not pleased, to say the least, with the idea presented by some of his former colleagues that the urgency of raising the debt ceiling is majorly overblown.
Listen to this.
(BEGIN AUDIO CLIP)
SMERCONISH: Final question, if I might, for Senator Simpson.
What‘s the response to those who out there and are saying—Michele Bachmann included—we don‘t want to raise the debt ceiling and that frankly, you know, this is a whole Chicken Little thing that has been created; it‘s really not going to be as bad as they say it will be?
ALAN SIMPSON, FORMER CO-CHAIRMAN, NATIONAL COMMISSION ON FISCAL
RESPONSIBILITY AND REFORM: Well, it will be a different—different definition of chicken, but the last word won‘t be little.
(END AUDIO CLIP)
(LAUGHTER)
SMERCONISH: Subtle? No, it‘s pretty clear what he was getting at.
Next up: Looks like President Obama had dual reasons for speaking about fuel-efficient vehicles in Washington this morning. He‘s already thinking ahead to his daughter getting behind the wheel. Let‘s listen.
(BEGIN VIDEO CLIP)
OBAMA: As some of you may know, it‘s only a matter of time until Malia gets her learner‘s permit—
(LAUGHTER)
OBAMA: -- so I‘m hoping to see one of those models that gets a top speed of 15 miles an hour—
(LAUGHTER)
OBAMA: -- the ejector seat any time boys are in the car.
(LAUGHTER)
OBAMA: So, hopefully, you guys have some of those in the pipeline.
(LAUGHTER)
(END VIDEO CLIP)
SMERCONISH: There‘s some motivation for all the dads out there to get behind this cause.
Up next: Is anybody winning this fight? Republicans and Democrats are hitting the airwaves hard. We‘re going to look at the brand-new ads from each side and see who‘s winning the message war.
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
HAMPTON PEARSON, CNBC CORRESPONDENT: I‘m Hampton Pearson with your CNBC “Market Wrap.”
Another batch of upbeat earnings not enough to offset some dismal economic numbers and lingering fears about the debt debacle. The Dow Jones industrials tumbling 96 points, the S&P 500 giving up eight, the Nasdaq shedding nine points.
Absolutely dangerous, that‘s how one investor described the atmosphere on Wall Street today. He tells CNBC the problem is the market reacts to two things, greed and fear. Right now, there‘s no greed in the air, only fear, a lot of that fear based on the ongoing debate in Washington over raising the debt ceiling and cutting the deficit.
But we also had this anemic reading on GDP growth, second-quarter growth coming in at a weaker-than-expected 1.3 percent, while first-quarter numbers were revised to lower to a paltry 0.4 percent. Overall, a really rough week for the markets, all the major indices giving up between 3.5 and 4.5 percent.
That‘s it from CNBC, first in business worldwide—now back to
HARDBALL.
SMERCONISH: Welcome back to HARDBALL.
We have been watching the battle on Capitol Hill these past few weeks, but outside interest groups have also been eager to throw stones at their opponents in this debt fight. Millions of dollars have been spent on ad buys attacking the president and members of Congress.
But if the country does default and the economy suffers, don‘t the president‘s reelection chances suffer as well?
Richard Wolffe is an MSNBC political analyst. And Eugene Robinson is an associate editor and columnist at “The Washington Post,” as well as an MSNBC analyst.
Gentlemen, I want to show you previews of coming attractions.
Actually, House Speaker John Boehner is set to speak from Capitol Hill. So, stay right where you are.
And we‘re going to take the speaker‘s remarks.
(JOINED IN PROGRESS)
REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: -- here rather quickly.
Today‘s report on the economy reminds us that our economy is still not creating enough jobs. Americans are worried about finding work. They‘re worried about our economy, and they‘re worried about the mountain of debt that‘s facing them and their children.
Today, we have a chance to end this debt limit crisis. With this bill, I think we‘re keeping our promise to the American people that we will cut spending by more than the increase in the debt limit. The Congressional Budget Office has certified this commonsense standard. And it‘s been backed by more than 150 distinguished economists from across the country.
We‘re also imposing caps to restrain future spending, so that we can stop the expansion of government, while giving our economy a chance to grow and to create jobs. And we‘re advancing the great cause of a balanced budget amendment to the Constitution.
(CHEERING AND APPLAUSE)
BOEHNER: What this bill now says is that, before the president can request an additional increase in the debt limit, two things have to happen. A joint committee of the Congress must produce spending cuts larger than the increase in the debt limit, and both houses of the Congress must send to the states a balanced budget amendment.
Listen, a balanced budget amendment, it is—it‘s time for this to happen. It enjoys support in both houses of this Congress, and it enjoys bipartisan and widespread support across our country. The bill also ends this crisis without raising taxes, which would cripple our economy.
And there‘s no gimmicks. There‘s no smokescreens here that represent the old ways of doing things. Now, the bill before us still isn‘t perfect. No member would argue that it is. It‘s imperfect because it reflects an honest and sincere effort to end this crisis by sending a bill over to the Senate that at one time was agreed to by the bipartisan leadership of the United States Senate.
And to my colleagues in the Senate if they were here, I would say this. If this bill passes, this House has sent you not one, but two different bills to cut spending by trillions of dollars over the next decade, and—while providing an immediate increase in the debt ceiling.
And to the American people, I would say, we have tried our level best. We have done everything we can to find a commonsense solution that could pass both houses of Congress and end this crisis. We have tried to do the right thing by our country. But some people continue to say no.
My colleagues, I have worked since the first week of this session, when we were sworn in, in January, to avoid being where we are right this moment. But two days after we were sworn in, the treasury secretary sent us a letter asking us to increase the debt ceiling.
I immediately responded by saying we would not increase the debt ceiling without serious cuts in spending and serious reforms to the way we spend the people‘s money.
(CHEERING AND APPLAUSE)
BOEHNER: We passed a budget.
The other body spent over 800 days, and still no budget. No plan. This will be the second bill we‘ve sent over to the Senate, and yet not one piece of legislation out of the Senate has passed that deals with this crisis.
Now, my colleagues, I can tell you that I have worked with the president and the administration since the beginning of this year to avoid being in this spot. I have offered ideas. I have negotiated. Not one time, not one time did the administration ever put any plan on the table.
All they would do was criticize what I put out there. I stuck my neck out a mile to try to get an agreement with the president of the United States. I stuck my neck out a mile and I put revenues on the table in order to try to come to an agreement to avert us being where we are.
Well, a lot of people in this town can never say yes. A lot of people can never say yes. This House has acted.
And it is time for the administration and time for our colleagues across the aisle to put something on the table. Tell us where you are.
(APPLAUSE)
BOEHNER: Thank you.
And, yes, people can be critical of what we‘ve done, but where are the other ideas? At this point in time, the House is going to act to bring an act again. But it is time for our colleagues across the aisle to tell us what they‘re for. Tell us how we can end this crisis.
You know, Ronald Reagan, it‘s been quoted over the last few weeks. And Ronald R would probably be flattered, I‘m sure, if he were here. But Ronald Reagan on his desk had a little placard and that little placard was real simple. It says—it said, “It can be done.” I have a replica of that placard on my desk.
And let me tell you, members of this House it can be done. It must be done and it will be done if we have the courage to do the right thing.
So, for the sake of our economy, for the sake of our future, I‘m going to ask each of you as representatives of the people of the United States to support this bill, to support this process, and end this crisis now.
(APPLAUSE)
MICHAEL SMERCONISH, GUEST HOST: That was House Speaker John Boehner.
Let me go back to my guest, Richard Wolffe and Eugene Robinson.
Richard, I‘m listening and taking notes, when there was blowback from the house chamber, it seemed extemporaneously, the speaker said, hey, I put revenues on the table. There are no revenues in that which is about to get passed by the House. I wonder if he‘s going to regret having offered that to his colleagues.
RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Well, I think we have multiple personalities of John Boehner on show right there.
First of all, the guy who wants to talk about jobs, but knows that he‘s not actually talking about jobs. That was his opening.
Secondly, he knows he‘s going to have to take a very different bill to the same House in just a matter of days, which will be what comes out of the Senate. Either that or he‘s going to be in real trouble where whatever he thinks the American people want to hear is going to be completely overtaken by talks of a shutdown, Social Security checks not being paid and a financial markets that are truly spooked.
And thirdly, where was the John Boehner was offering revenues and how come now we‘re talking about a balanced budget amendment?
I mean, there are multiple characters, multiple politics being played out right there in that one little speech.
SMERCONISH: Gene Robinson, he needs something, anything, right? I mean, this was his future was very much on the line, or is very much on the line as the House speaker, to the extent he can‘t get anything out. He can‘t personally survive in that role.

EUGENE ROBINSON, MSNBC POLITICAL ANALYST: Absolutely, Smerc. Look, last night, he couldn‘t get a bill through. He had to add this balanced budget amendment provision, which is, you know, if there weren‘t already enough poison pills in the bill to make it a non-starter in the Senate, that certainly doesn‘t. So, no, that‘s not going to happen.
You know, I‘ve heard him trying to do two things there. Number one, keep the base in line, because after all, they haven‘t voted yet. And so, he‘s still trying to appeal to those recalcitrant Tea Party members whose votes he needs in a few minutes. At the same time, this—you know, I stuck my neck out a mile. There‘s obviously perception that President Obama has done better at this sort of reasonable man, public relations part of this negotiation. He has seemed more reasonable, willing to compromise.
And so, I think Boehner was trying to say, to a larger audience, look, you know, I tried to compromise, too.
SMERCONISH: Richard, what of the criticism that the administration has never put anything on the table? I continually hear this from radio callers who will say the administration put nothing in writing?
WOLFFE: You know, I find it a very weird rallying cry. You know, that was obviously the moment when everyone vented out there in the House chamber and they all cheered. But, really, is that the biggest blow you can land then you‘ve lost the debate, because it‘s a processing criticism. It‘s all about tactics, it‘s not about the actual message or the underlying problems or whatever you‘re trying to say to the American people.
It‘s just that we don‘t like the way you‘re doing business. That seems to me incoherent rage at this president, and frustration at the way this has played out.
We‘ve heard multiple times what the president thinks about various pieces of this debate. They want everything in triplicate or they want his numbers to shoot down. That‘s not the way it works. In any case, we know where the president stands.
SMERCONISH: A week ago—a week ago at this hour, he walked out extemporaneously. I was on the air. He spoke for 35 or 40 minutes about the intricacies of the negotiations. Men, stay right where you are because e we‘ve all got more we want to say about this.
Richard Wolffe and Eugene Robinson are staying with us as we await the House vote on the Boehner bill.
Hey, if you want to follow me on Twitter, all you need to do is figure out how to thousand spell Smerconish, @Smerconish.
This is HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
SMERCONISH: Hey, take a look at Sarah Palin‘s warning to first-term House Republicans who are thinking about voting for Speaker Boehner‘s debt plan which she opposes. On her Facebook page, she asks members of Congress to stick to their principles and wrote, “All my best to you, GOP freshmen, from up here from the last frontier, sincerely, Sarah Palin. And P.S., everyone I talk to still believes in contested primaries.”
We know where she stands.
(COMMERCIAL BREAK)
SMERCONISH: We‘re waiting to vote on the House of Representatives on Speaker Boehner‘s debt plan. And we‘re joined by MSNBC political analysts Richard Wolffe and Eugene Robinson, who‘s a “Washington Post” columnist.
Richard, the line about the balanced budget amendment also drew a round of applause from the House chamber. But that‘s probably one of the things that makes this dead-on-arrival when it gets to the Senate.
WOLFFE: It‘s dead-on-arrival. Whatever that would be, zombie—it‘s a zombie on arrival. This is—this is never going to move. They know it.
This is—we don‘t have the time for this kind of posturing but they are going about it anyway. I find it curious that after manufacturing this crisis, what we have now is House Republicans talking about themselves.
John Boehner‘s speech was almost entirely about himself here. It‘s about—it‘s very inward looking about the principles they care about, not about what can actually get out of Congress. And it‘s about how John Boehner stuck his neck out and now, I guess, he‘s sticking it back in.
It‘s not actually about them anymore. It‘s the about the economy.
It‘s about the world economy.
So, time to stop thinking about your own future and your own politics
--

SMERCONISH: Eugene
WOLFFE: -- what go through Congress.
SMERCONISH: Eugene, the balanced budget amendment intuitively makes sense to me. You know, don‘t we all balance our budgets at home. But then I think and I say, wait, I balance my budget at home but I‘ve got a mortgage and I‘ve got car loan. Isn‘t that proper analogy to be using?
ROBINSON: Well, here‘s the analogy. You know, it sounds great if you think of a country‘s budget like a household budget. But, in fact, nations are not like households. They aren‘t. They are sovereign, number one.
Number two, they print money. They—and control the money supply in ways that are—that should be the simulator calm down the economy, whatever. It‘s called economics.
And it is simply not a good analogy to say, well, if, you know, we have to balance our budget at home every month, the country should have to could do that and be locked in by a balanced budget amendment.
It is certainly true there are dangerous levels of accumulative debt for nations to run and we‘re getting there. We need to get a handle on the stat and the deficits we‘ve been running. It can‘t be run indefinitely.
But you can‘t make that comparison. It just doesn‘t work.
SMERCONISH: It would seem—it would seem that regardless of what comes out of the House and Senate and goes to the president‘s desk that we‘re headed for a congressional committee, something akin to Simpson-Bowles, but not Simpson-Bowles, and I come back to the point and say if Simpson-Bowles couldn‘t get through, how in the world in this climate is anything going to get through, Richard?
WOLFFE: Well, maybe that‘s the silver lining here. I mean, if people are serious about this stuff, then the politics of Simpson-Bowles, remember, it was a Republican idea which Republicans voted against, Democrats voted against it, too. The president had to put it into action himself and then he backed off.
It maybe the politics of all this will change. On the other hand, it‘s an election year, maybe nothing will change.
SMERCONISH: Eugene, what do you see in the future, in the next 48 hours?
ROBINSON: Oh! Thanks, Smerc.
(LAUGHTER)
ROBINSON: In the next 48 hours—well, in the next four or five hours, I see—assuming that Boehner gets the bill through right now, I see Harry Reid figuring out what mechanism he‘s going to use to get a bill ready by tonight that he can have cloture on so he can get the ball rolling tomorrow, and maybe they can make a Tuesday deadline. If you think that U.S. Senate can move that fast, even in your dreams.
SMERCONISH: We need those who intervene in the NFL situation. I think to come to Washington and square this away.
ROBINSON: We need Captain America, is what we need.
SMERCONISH: Thank you, both. Thank you, Richard Wolffe. Thank you, Eugene, Robinson.
When we return, allow me to finish with the debt solution to the debt crisis, right before Congress‘ eyes.
You‘re watching HARDBALL, only on MSNBC.
(COMMERCIAL BREAK)
SMERCONISH: “Let Me Finish” tonight with a word of caution. Few things are certain in the fiscal debate but John Boehner and Harris Reid seem to agree on one thing. The plan they settle on will call for a congressional panel to do some heavy lifting by recommending future government savings.
However, neither Boehner nor Reid can guarantee that there will be an agreement within that committee, much less congressional approval of its recommendations. And no plan under consideration right now seems to provide guidance regarding savings that might be found in Medicare, Medicaid or Social Security which together account for more than 40 percent of federal spending.
Does it sound familiar? It should because we‘ve already been down the committee route with Simpson-Bowles and their commission. And guess what? The committee did its works. Congress didn‘t follow through.
The formal name was the National Commission on Fiscal Responsibility and Reform. The president, the House and the Senate all had a hand in selecting it. Republican Alan Simpson, Democrat Erskine Bowles, they chaired it. Eighteen members, 10 Ds, eight Rs, they comprised it.
What they produced, a blueprint for doing something that makes members of Congress wince, touching political third rails.
This really was shared sacrifice. Nothing and no one was off limits.
Not entitlements, not the military, not the wealthy.
As Alan Simpson told me just yesterday, unless you punch a hole in every sacred cow, they‘re just going to wander the fields forever. And so, what happened, the report garnered 11 of 18 votes of support, short of the 14 necessary to trigger congressional action.
If Simpson-Bowles couldn‘t get committee approval what makes us think Boehner-Reid will? Here is my idea. While Congress stands around waiting for its leaders to negotiate deals, most of which are dead on arrival, why doesn‘t someone ring the bell in Washington and call for the vote we never had? Make members of Congress vote on Simpson-Bowles. At least then the American people would know who was really ready to see the country take the balance necessary steps to put us on path toward fiscal responsibility.
That‘s HARDBALL for now. Thanks for being with us. Chris Matthews will be back on Monday. More politics are ahead with Al Sharpton.


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