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updated 9/21/2011 10:00:51 AM ET 2011-09-21T14:00:51

Guests: Bob Shrum, John Heilemann, Jonathan Martin, Stacy Vasquez, Aubrey
Sarvis, Joe McGinniss

CHRIS MATTHEWS, HOST: Campaign time.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington.

Leading off tonight: Let the campaign begin. Make no mistake,
President Obama`s speech yesterday was less about governing and more about
campaigning.

After spending three years trying to reach compromise with Republicans
and getting nothing in return, of hoping to win over independents and
failing completely, the president yesterday, in effect, called an election.
He`s taking it to the people. Let them decide whether Social Security and
Medicare get cut or the wealthy take the hit. The president`s betting that
he`s got the winning hand in this fight. Whether he`s right may determine
who wins next November.

Plus: Such chutzpah! Rick Perry`s accusing President Obama of a
policy of appeasement in the Middle East. Perry isn`t just working for
Jewish votes, he`s playing to Christian conservatives who can win for him
in Iowa and South Carolina and can defeat his rival, Romney.

Also, it`s official, "Don`t Ask, Don`t Tell" is a thing of the past as
of today. In the past 20 years, Americans` attitudes towards gay people
have changed faster than any other social issue. And let`s be glad for
that. We`ll talk to an Army sergeant who was outed and may now reenlist.

And author Joe McGinniss joins us tonight to talk about his new book
on Sarah Palin. It`s called "The Rogue." We`re going to ask him about
what he learned about Palin.

And "Let Me Finish" tonight with the line in the sand Obama just drew,
that line that could decide 2012.

We start with the launch of the Obama campaign yesterday, and it has
started. Jennifer Granholm is the former governor of Michigan. She`s now
an NBC contributor, and the author of a brand-new book, "A Governor`s
Story: The Fight for Jobs and America`s Economic Future." And Bob Shrum is
a Democratic strategist.

Bob, thank you for coming on. I want you to listen to this
particularly, Bob Shrum. Clinton strategist Mark Penn, who worked for the
Clintons, says, "Obama`s new tone won`t work." He writes in the Huffington
Post, quote, "Barack Obama is careening down the wrong path towards
reelection. He should be claiming the vital center, not abandoning it. He
should be holding down taxes rather than raising them. He should be
bringing the country together rather than dividing it through class
warfare."

That`s Mark Penn. He`s critiquing the president`s new move to divide
the country between those who want fair taxes and those who are rich, who
don`t. Your thoughts, Bob Shrum.

BOB SHRUM, DEMOCRATIC STRATEGIST: Well, you know, that`s -- Mark is
saying this kind of stuff all the time. Two reactions to it. First, it
was a remarkably fact-free and numbers-free piece from a guy who`s supposed
to be a pollster. He says, for example, that Gore lost -- I actually think
he won -- but that Gore lost because he was too populist. He talked about
the people, not the powerful.

In fact, during the period when he was really doing that, culminating
in that acceptance speech, you`ll remember, Chris, he gained about 12 to 18
points. So you know, you`ve got to look at the facts here.

Secondly, I think the president is on the right side here. He
recognizes that there has been 10 years of class warfare in this country.
It`s been class warfare against the middle class, class warfare against
working families, class warfare against ordinary, hard-working people.
He`s on the right side of the issue here.

And if you look at any poll, which is maybe why Mark didn`t mention
any of the polls, people support him on Medicare, they support him on
Social Security, they support him on the wealthy paying their fair share.

One last thing. You know, when Hillary Clinton was deciding to
concede in 2008, Mark Penn told her, Don`t concede, there`s no way Barack
Obama can win the general election.

MATTHEWS: OK --

SHRUM: So I suspect the White House takes his advice --

MATTHEWS: Well, you got that little point in there --

SHRUM: -- with a mountain of salt.

MATTHEWS: -- Bob. Good point at the last, a little coup de grace
there from Bob Shrum as we finish off Mark Penn.

(LAUGHTER)

MATTHEWS: I`m sure we`ll have Penn on to respond. But this is the
fundamental question. The president`s answered the question, Governor. He
wants to fight this election. He wants to take it to the people. The
Republicans say nobody gets their taxes raised. The unfair tax system we
have now is going to stay in place. Obama says, No, why should the
secretary pay a higher rate than the boss?

JENNIFER GRANHOLM, NBC CONTRIBUTOR: Game on. I mean, if elections
are about who`s on your side and who`s not, Obama is on the people`s side.
Bring it on. We went through phase one of this whole exercise. He was the
reasonable guy. He put compromise on the table. They didn`t take him up
on it. Not only did that, they fought him every step of the way. So come
out, take off the gloves, and let`s go swinging.

MATTHEWS: I don`t know. You`re in politics. I`ve never run for
statewide office. Why do Republicans -- I`ll get back to this. I`m just
going to throw this question out before we quote the president. It`s my
standard question. Most Republicans aren`t rich. They come up with almost
half the (INAUDIBLE) sometimes more votes than the Democrats nationwide.
They`re not rich people. Why do they defend the interests -- the economic
interests of the elite over and over and over again? Why?

GRANHOLM: You know, the frustrating --

MATTHEWS: Why do they do that?

GRANHOLM: I don`t know the answer. I do think that they are bowing
to this economic theory that if you -- if you cut taxes, then you`re going
to create jobs, that that zero-sum --

MATTHEWS: So the guy who makes a billion dollars a year pays 15
percent, and the guy who slogs himself to work, kills himself, is exhausted
Friday night, if not Wednesday night, or woman, that person`s paying 35 or
50 percent, if you count the local taxes. They think that`s fair?

GRANHOLM: But the kicker is, the people -- the one who`s paying 15
percent, he`s getting a benefit and he`s going to take that benefit and
he`s going to invest it. And he`s going to invest in a global economy.

MATTHEWS: Yes, I`ve seen those guys.

GRANHOLM: And those businesses --

MATTHEWS: They`re in the docks up in Nantucket.

GRANHOLM: Well, exactly. I mean --

MATTHEWS: They`re in the yachts.

GRANHOLM: Exactly. right.

MATTHEWS: Let`s take a look. Here`s President Obama. He lays down
the line he won`t cross, the budget -- the line he won`t cross -- I think
this is the line in the sand many progressives, liberals, if you will, have
been waiting for. Let`s listen to the president.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I will not support any
plan that puts all the burden for closing our deficit on ordinary
Americans. And I will veto any bill that changes benefits for those who
rely on Medicare but does not raise serious revenues by asking the
wealthiest Americans or biggest corporations to pay their fair share.

(END VIDEO CLIP)

MATTHEWS: This is a real change, Bob Shrum. The president,
apparently, according to the writing of Dana Milbank and others have
pointed out in "The Post" today -- "The Washington Post," the president was
heading down a different path for a while there. He was going to go after
Medicare. He was going to go after Social Security. He was going to have
higher co-pays for Medicare. He was going to push back the time of
retirement for Medicare.

Now he says -- well, here it is. Let me read it. Here`s what Dana
Milbank`s applauding here. He applauds the president`s new tone. He
writes, quote, "It was refreshing to see the president in the Rose Garden
on Monday delivering a speech that for once appealed to the heart, rather
than the cerebellum -- cerebrum"-- or whatever.

(LAUGHTER)

MATTHEWS: Let me ask you this, Bob. It`s too big a word! But let me
ask you -- you`re chuckling at my lower education, aren`t you, Bob. You
will pay for that.

(LAUGHTER)

MATTHEWS: You will -- by the way, it was lower education.

(CROSSTALK)

SHRUM: -- and Holy Cross, that`s all.

MATTHEWS: Yes, well, let me just -- thank you. Let me ask you this.
He is not only saying, I`m going after the people who are undertaxed who
are very wealthy, the people who aren`t even paying the rate their people
who work for them are, but he`s saying, I`m not going to go cut Social
Security again. I`m not going to raise the retirement age for Medicare
again. I`m not going to do those things as long as you guys on the other
side don`t put some pain, some hit on the rich.

SHRUM: Well, he has proposed, and I think will propose to do some
things on Medicare. But he`s never going to propose to cut benefits for
people who are on Medicare. And he`s not going to propose to raise the
retirement age at this point, and I think at any point, frankly.

Look, the Republicans had a game plan, and their game plan was to turn
this election into a referendum, to do everything they could to ruin the
economy as their road back to the White House. And the president just
decided this election was going to be a choice. And he`s against things
like the Ryan plan that would voucherize Medicare, cost seniors $6,500 more
a year to get it.

He`s going to fight to raise taxes on people who can afford to pay a
lot more in taxes, haven`t paid their fair share for at least 10 years.
And he`s with the public on those issues.

So I think the president is defining the landscape of this election,
much as, by the way, Newt Gingrich defined the landscape of the `96
election when he proposed $270 billion in Medicare cuts to finance massive
tax cuts for the rich. That was the point when it turned around for Bill
Clinton.

MATTHEWS: OK.

GRANHOLM: And he`s taking it to the people, and that`s the important
part, is he`s taking it to these districts. He`s in their face about it.
He`s convincing the constituents, hopefully, that they need to tell the
people who they hired that they`ve got to -- that they`ve got to come
around and be reasonable.

MATTHEWS: Did you do this when you got reelected?

GRANHOLM: Absolutely. Absolutely.

(CROSSTALK)

GRANHOLM: -- right to the people --

MATTHEWS: I was watching your campaign --

(CROSSTALK)

GRANHOLM: But you know, here`s the -- there`s so many parallels
between what`s happening now. My unemployment rate in Michigan -- the
unemployment rate in Michigan was highest in the country. We had lost all
of these jobs. I was underwater in the approval ratings. It was, like, a
28 percent "right track" number in Michigan.

And yet when we came out swinging and said, This is a choice, then
people said, She`s on my side and he`s not. The person I was running
against was a billionaire, a business guy, somebody who said he could turn
around the economy. Ultimately, people want to believe that you`re on
their side.

MATTHEWS: Yes. So you start talking like John Dingell, right?

GRANHOLM: Exactly!

(LAUGHTER)

(CROSSTALK)

GRANHOLM: Well, John Dingell`s got his own way --

MATTHEWS: -- in Michigan.

GRANHOLM: Those rascals!

MATTHEWS: Let`s take a look at President Obama criticizing John
Boehner directly. These guys play golf together, but they don`t agree on
how this country should be run. Let`s listen.

(BEGIN VIDEO CLIP)

OBAMA: So the speaker says, We can`t have it, My way or the highway,
and then basically says, My way or the highway. That`s not smart. It`s
not right. If we`re going to meet our responsibilities, we have to do it
together.

(END VIDEO CLIP)

MATTHEWS: Well, White House communications director Dan Pfeiffer
makes clear the days of compromise are over. He`s quoted in "The New York
Times" today saying, "We were in a position of legislative compromise by
necessity. That phase is behind us."

Bob Shrum, again starting with you, this question of a turn in the
road. Here we are. It`s September 20th. Yesterday was the 19th. I think
it will be March (ph) as the time the president decided that we`re beyond
politics, we`re all in this together, ain`t here yet, that there isn`t a
country that we can find here in Washington where Republicans and Democrats
will sit down the way Tip and Reagan did years ago and actually iron out
differences. Now you`ve got to take it to the people.

SHRUM: Well, I think you have no choice because the fact is,
Republicans want a bad economy next year. They don`t want this economy to
get better.

MATTHEWS: How do you know that?

SHRUM: Oh, listen, first of all, they say their highest priority,
Mitch McConnell says, is to defeat the president. They then oppose
measures in the jobs bill, because he`s proposed them, that they, in fact,
have favored in the past, like the payroll tax holiday. They just don`t
want anything to help this economy.

You know, Jennifer Granholm did run a brilliant reelection campaign
and she ran a brilliant reelection campaign because she gave people a
choice. She made the choice clear. I think the president right now -- the
only hope he has of getting any legislation is to put a lot of pressure on
these Republicans -- maybe they`ll come to their senses and understand the
country`s going to figure out their game -- and then to go into 2012 and
present the people with that choice.

MATTHEWS: OK. Let`s talk about the current thing. The president`s
going into a very difficult November/December. All the focus is on the
Republican side, the battle between Perry and Romney. But he`s got a debt
reduction thing to deal with, the super-committee. Could it be possible
that he`s going to puncture their strategy by saying, OK, you guys are in
bed with the rich, looking out for their tax breaks, see how you like it,
that bed (ph), for a couple weeks. Is he trying to pressure them maybe to
come back and say, OK, we`ll deal?

GRANHOLM: At least his game, his strategic theory, his theory of how
you negotiate is a really solid one. He`s tried the other stuff. He`s not
pre-compromising. And that`s, I think, a really key thing. The point is,
you`ve got to come out strong, and you know you may move, but ultimately --

(CROSSTALK)

GRANHOLM: -- you can read it all in the book!

(CROSSTALK)

(LAUGHTER)

MATTHEWS: It always works! I show the book -- there it is. It`s a
very attractive book. There you are with your husband, a very attractive
couple there. But the most important thing is your message, which is?

GRANHOLM: Which is that America`s economy has changed. We have to
have active government, involved government, in partnership with business,
not big government, strategic, smart government --

MATTHEWS: OK.

GRANHOLM: -- because our economic competitors are eating us for lunch.

MATTHEWS: Former governor of Michigan, "A Governor`s Story," by
Jennifer Granholm. Thank you very much. Bob Shrum, as always, my friend,
and the governor.

Coming up: Republican front-runner Rick Perry is accusing President
Obama -- I don`t like this word -- of "appeasement" -- there`s a loaded
phrase from the 1930s -- in the Middle East. But is the president actually
the best friend Israel could have right now? That`s an open question and
we`re going to bring it to the table.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We told you yesterday about the White House pushing back
against that book, "Confidence Men," that portrays the White House as
dysfunctional and even hostile toward women. Well, today author Ron
Suskind told NBC News the book is solid as a rock.

And moreover, he allowed a "Washington Post" reporter to review
interview tapes themselves with former White House communications director
Anita Hill -- I`m sorry, Anita Dunn, who was quoted in the White House as
saying the White House would be in court for a hostile workplace. Well, on
tape, Dunn`s exact quote is, "If it weren`t for the president, this place
would be in court for a hostile workplace because it fits all the classic
legal requirements for a genuinely hostile workplace to women."

Well, earlier, Dunn had said her quote was taken out of context and
denied calling the White House a "hostile workplace." But the question you
have to ask is, why was then Anita Dunn telling Valerie Jarrett there was a
problem if there wasn`t a problem? You can figure that one out.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL.

Ahead of what could be a very dramatic vote at the United Nations on
the establishment of a Palestinian state, a move President Obama has vowed
to veto in the Security Council, Republican front-runner Rick Perry today
accused our president of following a policy of "appeasement" in the Middle
East. Here`s some of what Perry had to say earlier today.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: We`re equally
indignant of the Obama administration and their Middle East policy of
appeasement that has encouraged such an ominous act of bad faith. Simply
put, we would not be here today at this very precipice of such a dangerous
move if the Obama policy in the Middle East wasn`t naive and arrogant,
misguided and dangerous.

(END VIDEO CLIP)

MATTHEWS: I think words better suited to himself. Anyway, strong
words from Governor Perry. Mitt Romney also criticized Obama today for
repeated efforts over three years to throw Israel under the bus and
undermine its negotiating position.

Of course, we`re in campaign season right now. Do the Republicans
think they`ve found an effective attack line against President Obama, his
weakness on Israel among many voters?

Well, John Heilemann`s with the national affairs -- he`s national
affairs editor for "New York" magazine. His cover story this week calls
President Obama the best thing Israel has going for it right now. And
Jonathan Martin is a senior political reporter at Politico.

I want to find out why a guy, Rick Perry, is out there shouting this
stuff. It`s not his terrain, usually, foreign policy -- why he`s doing it.
My first hunch is, John Heilemann, he`s doing it because he`s running in
Iowa among the Christian right. He wants to win Iowa. He wants to do
well in New Hampshire, or well enough, and then go on and win in South
Carolina, among the Baptist voters down there.

This is aimed at the Christian right, the ones who believe that Israel
has a role to play in the end of days. It`s somewhat scary if you think
about what he really has -- the role in mind he has for Israel in the end
of days. It`s nothing to do with liking Jewish people or liking their
interests or caring about them. My thought. I admit I have an attitude
about this whole kind of politics. I think it`s exploitive and cheap shot
stuff. But that`s just my thought. Yours, John?

JOHN HEILEMANN, "NEW YORK" MAGAZINE: Well, I don`t know, Chris,
whether he -- what the depth or the genuinism (ph) of his feeling for the
Jewish people. I`m in Texas right now, and he has had a fair amount of
Jewish support down here in his governorships over the last decade or so.

But it`s certainly true that for a lot of conservatives, they have
been very critical of President Obama`s stances with respect to Israel and
the Palestinians over the course of his administration so far. And they
think that he has been all the things that Rick Perry says.

Now, Rick Perry today in New York stood up with a bunch of very hard-
line -- a couple of very hard-line Israeli politicians, some of whom don`t
really believe in the two-state solution.

MATTHEWS: Right.

HEILEMANN: I think there`s something else going on there. In
addition to catering to some Christian conservative votes, I think the
Republicans in general think that Israel is the weak link in Obama`s
foreign policy.

JONATHAN MARTIN, POLITICO.COM: Right.

HEILEMANN: It`s hard to attack him on a lot of other things, having
been the guy who got Osama bin Laden, having been successful in a lot of
other areas in foreign policy.

MARTIN: Right.

HEILEMANN: This is the one place where if you want to try to make
Obama look like a peacenik, look like a traditional leftist --

MARTIN: Right.

HEILEMANN: -- Democrat, you go after him on this.

MATTHEWS: Yes --

(CROSSTALK)

MATTHEWS: Jonathan, on the very eve of when he`s going to have to
stick his neck out and do something any American president would probably
have to do, veto the action in the Security Council with regard to creating
a Palestinian state -- he is going to be the -- he will be hanged in effigy
across the Islamic world. He will have to stand up for Israel as strong as
any American president`s ever had to do that.

Are they attacking him now for fear he will look strong for Israel in
the days ahead; they are just trying to preempt that and pull it out from
under him?

MARTIN: Any opportunity that they can get to soften up this president
on the national security front, they`re going to take advantage of it.

And John`s piece this week was so smart in making the point that
Israel`s really the only place they can go, because he`s been a hawk in a
lot of different other parts of the world. Politically, Chris, this is a
twofer. You get the Christian conservative folks that you mentioned in
places like Iowa and South Carolina, who biblically place a lot of value on
the Jewish state, but there`s also something else.

Look who`s in the background of that B-roll that you`re playing of
Perry`s appearance today. It`s Bob Turner, the new congressman from that
Anthony Weiner district.

MATTHEWS: Right.

MARTIN: This is also a play at a lot of the Jewish communities`
donors., some of the Hillary Clinton Democrats, some of the sort of softer
Republicans who maybe on cultural issues aren`t where Perry is, but on
Israel think that that Obama hasn`t been sufficiently supportive of the
Jewish state.

So I think there are two plays here. There is a grassroots play in
the Republican primary and a finance play as well with the money crowd,
Chris.

MATTHEWS: You know, the horrible story is, if you spend any time in
Israel, which I have been lucky to do over the years, and you recognize
that Israel, this debate is always fine, it`s a great debate. And the idea
of having a Palestinian state is generally recognized as a historic
necessity, or else you`re going to have a lot of Palestinians, Arabs living
in your country forever, who will eventually become a majority if you don`t
separate from the Palestinian community of the West Bank.

But here`s what, John, you wrote about the president and his Jewish
support in that big cover story for "New York" magazine this week. "The
truth is, the White House is worried, and worried they should be, for the
signs of Obama`s slippage among Jewish voters are unmistakable. Last week,
a new Gallup poll found that his approval rating in that cohort has fallen
to 55 percent, a whopping 28-point drop since his inauguration. And among
the high-dollar Jewish donors, who were essential to fueling the great
Obama money machine last time around, stories of dismay and disaffection
are legion. `There`s no question,` says one the president`s most prolific
fund-raisers, `we have a big-time Jewish problem.`"

I wonder how this is meshing. And I got to be careful here, but these
attacks on Wall Street, these attacks on investors, this whole thing he`s
involved with right now, it does put him in a kind of a -- I don`t know, is
he going after his donor base at the same time he`s trying to get
reelected?

John Heilemann?

HEILEMANN: Well, look, Chris, the president has had that problem
before. There is certainly overlap among the Wall Street titans, many of
whom supported Obama very generously in 2008, and the Jewish voter base.

MATTHEWS: Yes.

HEILEMANN: Jewish voters. There is overlap there. It`s undeniable.
And the president has had this problem. This is one of the reasons why
it`s hard to entangle -- to disentangle exactly what the problem is,
because there are a lot of Jewish donors who are upset with the president
on a number of fronts. One of them is Israel, but another is the way that
he went after Wall Street in the terms of Wall Street regulation.

Another is more broadly in terms of his handling of the economy. It`s
a bunch of problems. It`s not merely Israel that is a problem for him, but
it is a real problem, because people forget. Back in 2008, before the huge
Internet fund-raising bonanza that the Obama campaign eventually unleashed,
the core of his support among, I mean, the financial community, the core of
his support in terms of fund-raising was among Wall Street donors.

And this time around, President Obama`s trying to raise a billion
dollars. That`s a lot more money even than he raised last time. He can`t
afford to lose any major bundler support if he`s going to reach that goal.
And he thinks he needs to reach that goal in order to win a very close
election.

MATTHEWS: OK. OK. But, John -- Jonathan, it seems to me among
Jewish voters -- and I don`t speak for them, but I`m familiar with a lot of
the sensibilities about things.

The biggest fear among Jewish voters it seems to me is a sense of,
this is a great country, the greatest country in the world, the country of
their love. Of course, they love Israel, but this is the country of their
love and their home and the deep commitment to the idea of American
pluralism, the idea that we`re not going to become some kind of Christian
theocracy. We`re not going to have a lot of people like Sarah Palin and
Bachmann and Rick Perry running around making this a Christian state, this
dominionism. We will talk about it later with Joe McGinniss.

They don`t like that kind of talk, because it suggests they don`t
belong or they don`t want to belong. It`s a horrible thing that these
people are talking about.

(CROSSTALK)

MARTIN: Yes.

MATTHEWS: Now, they may be hickish and playing to the yahoo vote, and
they may have a whole game they`re playing, but it is offensive to talk
about this theocratic idea that Rick Perry -- he said, as a Christian, I`m
directed to support Israel.

What does that mean? As a Christian, I`m directed to? By who?

(CROSSTALK)

MARTIN: I was thinking about -- I was thinking about that when John
was talking about some of Obama`s problems with the Jewish donors. It`s
not just Israel. It`s also Wall Street. But I think that`s a smaller
subset of the Jewish vote.

The broader Jewish vote, I think, will, if Perry`s the nominee, I
think for a couple of reasons, have a hard time spurning Obama --

MATTHEWS: He`s like Palin.

MARTIN: -- spurning Obama for Palin.

For one thing, it`s what you mentioned; it`s the pluralistic ideal of
America, that America is not a Christian nation. But also keep in mind,
abortion rights very important issue for a lot of folks in the Jewish
community, especially women.

MATTHEWS: Well, let me tell you what I think about that, John. I`m
going to interrupt you there.

MARTIN: Please.

MATTHEWS: I think that, to me, is another one of those dog whistles
that says if the Christian right can set abortion policy, it`s running the
show.

MARTIN: Right.

MATTHEWS: And if I was a Jewish voter, I would say, more evidence of
this attempt to dominate, to seize dominion over this government and this
country.

John Heilemann, don`t you think that`s part of the signal?

HEILEMANN: Chris, I think it`s very simple.

I think that the Jewish vote, the broad Jewish vote, put aside the
donor class, the broad Jewish vote is overwhelmingly liberal and
overwhelmingly secular.

MATTHEWS: Yes, and tolerant.

(CROSSTALK)

HEILEMANN: And Rick Perry or Sarah Palin will scare a lot of that
vote right back into Barack Obama`s arms.

(CROSSTALK)

HEILEMANN: The greater concern -- the greater concern is that someone
like Mitt Romney, who could do well with the Jewish donor base, that Mitt
Romney gets the nomination, and then you have a difficult -- more difficult
problem.

They don`t have a problem in principle with Mitt Romney`s Mormonism.
And so you now have states like Florida and Pennsylvania, where the Jewish
vote is 5 --

MARTIN: Right.

MATTHEWS: I agree.

HEILEMANN: -- percent of the electorate, where if Barack Obama is
down 30 points with Jewish voters, that`s a big problem.

(CROSSTALK)

MATTHEWS: I agree. I think, John Heilemann -- I think, Heilemann, I
think you`re smart, as always. I think that Mitt Romney looks more like
John Anderson, somewhere in the vague middle and the establishment, and
therefore it`s much safer than these people on the yahoo right.

Anyway, thank you, John Heilemann.

Thank you, Jonathan Martin.

MARTIN: Thanks, Chris.

HEILEMANN: Thank you, Chris.

MATTHEWS: Up next, guess who crashed the party when Rick Perry came
to Harlem the other day? That`s coming up in the "Sideshow." A surprising
visitor there.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL. And now to the "Sideshow."

First up, taking it to extremes. Can`t say we didn`t see this like --
something like this coming after President Obama`s speech yesterday, called
wealthy Americans to pay their fair share of taxes.

Well, not long after the president`s speech, it was the very face of
all things anti-tax, Grover Norquist, who tweeted -- quote -- "Obama`s new
strategy to divide America: Get the Kulaks." Yes, that was a not-so-
subtle way of comparing President Obama to Joseph Stalin. Stalin used the
more well-off peasant class known as the Kulaks in the 1930s as a scapegoat
for all the economic turmoil happening under the Soviet regime.

Really? Well, here`s another far-right attempt to frame the president
as some type of foreigner who doesn`t really know America. Good old Grover
Norquist.

On a lighter note -- it couldn`t be hard to find a lighter note than
that -- party crasher. That`s what it seemed like when an unlikely guest
showed up at a fund-raiser up in New York, in New York City, for GOP
candidate Rick Perry the other day. It was Democratic Congressman Charlie
Rangel. Perry was on Rangel`s turf, of course.

He attracted some attention, Rangel did, on his way in. Let`s hear
what he said, what he had to say to the candidate and why he chose to make
that appearance as a party crasher.

(BEGIN VIDEO CLIP)

REP. CHARLES RANGEL (D), NEW YORK: I kind of think he`s the best
thing going for President Obama. But I`m a Democrat. Oh, I guess I`m here
for the same reason that all of you are here, figuring out why he`s here.

(LAUGHTER)

RANGEL: Isn`t that so?

(END VIDEO CLIP)

MATTHEWS: What a great New York accent. Anyway, fair enough. Rangel
had another chat with reporters as he left the event before it was over.
Why the early exit, he was asked.

(BEGIN VIDEO CLIP)

RANGEL: I don`t know how he`s going to conclude, but I got out before
they asked for money.

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS: He got out before he asked for money. Smart man.

And, finally, you ever heard of fact-checking? Well, it`s something
that South Carolina Governor Nikki Haley is treating as a new concept. For
the past few weeks, Haley has been pushing for reforms that would require
individuals looking to get unemployment benefits to undergo some sort of
drug testing. And why not? Haley insisted workers at South Carolina`s
nuclear sites are drug-tested and fail.

(BEGIN VIDEO CLIP)

GOV. NIKKI HALEY (R), SOUTH CAROLINA: When we sat down and talked
with them, they said, of everybody they interviewed, half of them failed a
drug test.

(END VIDEO CLIP)

MATTHEWS: Half failed. Well, quite a startling statistic. Only
problem, there`s no evidence to back it up.

Since being consistently pressed to back up that statement about half
the nuclear factory workers having drug problems, Haley finally responded
in an interview with the Associated Press -- quote -- "I have never felt
like I had to back up what people tell me. You assume that you`re given
good information. And now I`m learning through you guys that I have to be
careful before I say something."

Well, it sounds like the governor`s borrowing lines from Michele
Bachmann. Last year, Bachmann backed off her statement that the HPV
vaccine can cause mental retardation by blaming the line on someone she had
just talked to. She said she was just passing it along. So how do we know
what words are hers and which are just being passed along?

Up next, Don`t Ask, Don`t Tell is history, thank God. The military
ended the policy today. We are going to talk to an Army sergeant who was
kicked out for being gay and may now actually reenlist into the Army.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SUE HERERA, CNBC CORRESPONDENT: I`m Sue Herera with your CNBC "Market
Wrap."

Stocks in a bit of a holding pattern today, the Dow Jones industrials
edging up seven points. The S&P slipped two. The Nasdaq tumbled 22. And
pretty thin volume as investors wait on developments in the Greek debt
crisis, and, of course, the outcome of the two-day meeting of the Federal
Reserve.

Over in Greece, finance ministers are reporting good progress in talks
with Eurozone debt inspectors. The lead inspector will be in Athens early
next week to resume that review. And the Fed could announce a move known
as Operation Twist. It`s aimed at encouraging market activity and pushing
long-term interest rates even lower than they are now.

In stocks, Carnival cruised to the top of the S&P on better-than-
expected earnings driven by strong demand, despite the dismal economy. And
two big names in tech reporting earnings after the closing bell. Oracle
beat on the top and the bottom line thanks to a surge in software licensing
revenue. And Adobe topped estimates and forecast a strong end to the year.

That`s it from CNBC. We are first in business worldwide -- and now
back to Chris and HARDBALL.

MATTHEWS: What a day. Welcome back to HARDBALL.

A new era in the American military began at 12:01 noon today, when the
Pentagon -- actually, 12:01 this morning, when the Pentagon stopped
enforcing the Don`t Ask, Don`t Tell law, which said gays and lesbians could
serve only if they did not reveal their sexual orientation.

President Obama issued a statement this morning that read in part --
quote -- "As of today, patriotic Americans in uniform will no longer have
to lie about who they are in order to serve the country they love. As of
today, our armed forces will no longer lose the extraordinary skills and
combat experience of so many gay and lesbian service members. And today,
as commander in chief, I want those who were discharged under this law to
know that your country deeply values your service."

Stacy Vasquez was an Army sergeant 1st class who was discharged after
being outed, if you will, and Aubrey Sarvis also served in the United
States Army, now is the executive director of the Servicemembers Legal
Defense Fund, a great organization that has been working to end Don`t Ask,
Don`t Tell.

Well, this is a great day for America, I think. And what I find
interesting is how little rebellion there is against this, right, left, or
center, right now, Stacy. Aren`t you amazed, after all these years of
enforcing what was basically a Clinton-era compromise, now people are
willing to move on?

STACY VASQUEZ, DISCHARGED UNDER DON`T ASK, DON`T TELL: I think the
service members were ready. They were ready for this to happen. And,
today, gay and lesbian and bisexual service members showed up for work.
They were still the same doctors. They were still the same linguists.
They were still --

(CROSSTALK)

MATTHEWS: Did anybody do anything in terms of just making a statement
today that you heard about, we`re going to probably hear about in the days
ahead?

VASQUEZ: I haven`t heard any negative statements.

MATTHEWS: No, negative -- by people who had been closeted, if you
will, who have just said, well, today, I can -- I don`t have to do that
anymore.

VASQUEZ: Absolutely. People have come out today, and they have said
that they are gay, and in fact they have even told their parents today.

MATTHEWS: No? That`s pretty emotional. That`s something, isn`t it?

What do you make of that? They now have the law on their side, so
they can tell mom and dad.

(LAUGHTER)

AUBREY SARVIS, EXECUTIVE DIRECTOR, SERVICEMEMBERS LEGAL DEFENSE
NETWORK: Well --

MATTHEWS: That`s sort of different.

SARVIS: I think what`s really important, here, Chris, is that these
service members came out today who elected to do so, but there was no
penalty. They did so without any risk of being fired because they spoke to
their sexual orientation. Some service members elected not to come out
today.

MATTHEWS: That`s very interesting.

SARVIS: Some may come out next week or next year. But the important
thing is, they no longer have to lie about who they are.

And what`s truly important is that we got rid of a very discriminatory
law. And for that, we owe a great deal of gratitude to the chairman of the
Joint Chiefs, Admiral Mullen, to Secretary Gates, the defense secretary,
and to President Obama. Had it not been for those three individuals, we
would not be celebrating the repeal of "Don`t Ask, Don`t Tell" today.

MATTHEWS: What must be interesting is the -- well, you`ve been in
this society. Are you going to re-up?

VASQUEZ: I am. I`m actually in the process. I`m taking my physical
next week.

MATTHEWS: How about you, Aubrey? You going back in?

(LAUGHTER)

SARVIS: Chris, I don`t think I meet the current age requirement.

MATTHEWS: What is -- what is phenomenal, and people watch this show -
- we have gay people obviously watch this show, I certainly hope we have a
big chunk of them, but it seems to me what`s fascinating is the society
now. People who go to the board room with their fellow officers, people
that are down in the mess hall, people that are going out this weekend and
talking about their last weekend.

Now, other people can go up to them and say, what are you doing this
weekend? You can actually ask a fellow member that you think might be gay,
and you can say, what are you doing this weekend, dammit? I tell you what
I`m doing.

So, it`s going to work both ways. There isn`t going to be this fear
of apprehending people, right, or scaring people or intimidating them.
Now, what I`m going to do this weekend, I`m going out with Joe this
weekend, or Mary. And you can actually say it now and quickly respond and
it clears the air.

VASQUEZ: It`s really a weight lifted off of servicemembers that
didn`t need to be there. I`m so happy that they will feel safe and secure
and be able to go out and do their job and serve our country.

SARVIS: And to our point, it builds even greater trust and
camaraderie that you can be honest every day about who you are. You no
longer have to lie about a very important part of your life.

MATTHEWS: Yes. Well, let me ask you about the military`s reaction
from viewers saying -- well, let me go to Aubrey, because you`ve been
having to lobby this thing and fight it.

SARVIS: With Stacy, and with many, many --

MATTHEWS: Well, let me tell you, because I`ve known you forever. Let
me ask you about the opposition in the Marine Corps. Now, that was at the
high, at the top, the Marine chief of staff.

SARVIS: You`re talking about then General Pace.

MATTHEWS: Yes. And fair enough, this is what his position was,
that`s his honest position, or opposition to this. Does that remain at the
high level? Is there some people who say at the top, we shouldn`t be doing
this?

SARVIS: No, absolutely not. What we saw when the certification, and
by that I mean, the chairman of the Joint Chiefs, the secretary of the
defense, and commander-in-chief certified to Congress that the services
were ready for this change. Admiral Mullen made that certification in
consultation with all of his colleagues, all the other chiefs.

And they went up to testify on Capitol Hill and the chief said they
had surveyed the troops, they had done the education, the training, and the
force was ready for this change.

MATTHEWS: And, Stacy, your sense is that that was a fair review?
That they really did check it out with the troops in the officer corps?

VASQUEZ: I think it was the most thorough review they could do, and I
think that the training they did was very effective. And I think that
young servicemembers have changed their minds. And they`ve helped bring
other people along --

MATTHEWS: The argument -- excuse me, the argument has been the young
kid, the young 17-year-old recruit from a rural background that doesn`t get
exposed to a lot of conversations like we`re having here, fair enough,
that`s the background. That he would be intimidated, that he would be
stopped from being a good soldier.

SARVIS: The reality is, Chris, these kids came from the civilian
sector. And all the polling that we`ve seen, we know that the American
people have changed since "Don`t Ask, Don`t Tell" became a law 18 years
ago. At that time, only 50 percent of Americans supported open service for
gays and lesbians. Today, that figure is 80 percent.

MATTHEWS: OK.

SARVIS: So our country has changed, our military is stronger, and we
are better for the repeal of "Don`t Ask, Don`t Tell."

MATTHEWS: Congratulations, buddy.

SARVIS: Thank you, Chris.

MATTHEWS: This guy. This guy. How long has he made this fight?

Thank you, Stacy. And you, back in uniform. Congratulations.

VASQUEZ: Thank you very much.

MATTHEWS: Thank you, Stacy Vazquez. What`s your rank and will you be
getting a promotion out of this?

VASQUEZ: I don`t know if I`m getting a promotion out of this.

MATTHEWS: Maybe get commission out of this. Anyway, thank you, Stacy
Vazquez -- about to rejoin the military.

(LAUGHTER)

MATTHEWS: Up next, what did author Joe McGinniss learn by moving in
next door to Sarah Palin? I`ve been so curious about this for months.

I`ve always looked up to Joe McGinniss. I want to know what he
actually learned about this woman, who almost, had conditions been
different a couple of years ago, our vice president. Let`s find out.

The name of the book he wrote, "The Rogue." It`s coming up next.
There she is, the former governor of Alaska.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Well, here`s a serious update on that death row case down
in Georgia. The state pardons board rejected clemency for death row inmate
Troy Davis. Davis was convicted of killing an off-duty police officer way
back in 1989. Since then, seven of nine witnesses have recanted their
testimony and some high-profile figures, including former President Jimmy
Carter, former FBI Director William Sessions, and our own Al Sharpton, have
taken up Davis` case and his cause.

Davis is set to be executed tomorrow evening at 7:00 Eastern by lethal
injection.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: We`re back.

The latest book on Sarah Palin has everyone buzzing. It`s sparked a
lot of noise out there. Author Joe McGinniss moved next door to Sarah
Palin back in May of 2010 to begin researching the book. He`s come away
with some revelations about the darling of the Tea Party.

Joining me right now is the man himself, Joe McGinniss, the author of
"The Rogue: Searching for the Real Sarah Palin."

Joe, thank you so much. You`re one of the world`s -- I think you`ve
been a great journalist all these years. You`re a great crime reporter. I
guess I`m asking you to do something I`ve not been able to figure out.

What is the reason why we talk about Sarah Palin? What gives her that
on-stage, I guess they call it sparkle, pizzazz, charisma? What is that
thing in her that gets people interested in her?

JOE MCGINNISS, AUTHOR, "THE ROGUE": Well, she`s a natural-born
entertainer, Chris. You know, she has -- she has charisma. She can
deliver a great speech to the proper audience, as long as someone writes it
for her, and she`s capable of saying just about anything at any time.

So, this unpredictability -- we watch her as if we watch someone
walking across a tightrope, wondering if they`re ever going to get to the
other side.

MATTHEWS: Well, you caught several people in the book, throughout the
book, as saying, that Palins push -- they push hard to get what they want.
In fact, you write Palin learned this from her father, Chuck Heath.

Quote, "They were bullies. Essentially, that`s what Sarah and her
cohorts are today. She learned from her father.

If someone disagrees with you or does something you don`t like,
annihilate first, ask questions later. Like Chuck, she`s all about
intimidation and fear, veiled threats, verbal violence, complete disregard
for the welfare of victims -- these all came from Chuck." That`s her
father. "And they are all inherent in the current persona."

Now, you talk about her husband Todd. What did he say to you that day
that gave you the sense he was threatening you?

MCGINNISS: He said when he walked across my lawn to ask me who I was
and what I was doing there, and I told them that I was renting the house
that he had formerly rented. He had moved out -- the Palins rented that
house until a few months before I moved in. Then they vacate it had so the
woman who owned it rent it had to me.

He didn`t feel I had a right to be there, and he said, we will just
see how long you stay here, and he shook his finger in my face, and he
walked back across the lawn. And two hours later, Sarah had a post on
Facebook in which she made hysterical accusations about me.

You know, I learned a lot about Sarah Palin from living next door to
her, not from what I learned directly but from her reaction to my being
there. I learned that she has no control over her powerful negative
emotions. I learned that she will tell malicious lies about people, as she
did about me. I learned that she has a remarkable capacity to incite
hatred on the part of her followers, and I learned that she will do
anything to get her way.

MATTHEWS: Well, what is this when she said in that posting you
mentioned there? She said, she accused you of overlooking her daughter`s
bedroom, of being a creepy sort of stalker. She accused you of looking
into her little garden, she describes it, as if sort of placed there, and
then my family`s swimming hole.

What -- she`s making you look like some creep who is almost dangerous,
and do you think she was inciting people to hurt you or what?

MCGINNISS: Yes. This is what I mean by the malicious lies.

My house didn`t overlook anybody`s bedroom, and she doesn`t have a
garden, and they don`t have a swimming hole, but she will just say anything
when she`s on one of her temperamental tears, and I happened to be on the
receiving end.

Todd, her husband, is the same way. He`ll say anything. He came out
with a statement about my book last week that was -- he said that I was
obsessed with his wife.

It`s really hard for me to believe that these people actually think
that themselves, but they don`t hesitate to say it, and that stirs up a lot
of the unstable extreme right wing followers. Now, Sarah Palin was not
directly tied to Gabrielle Giffords. We all know that, and I`m certainly
not trying to paint a connection there.

But what I -- some of the e-mails that I got last summer after Sarah
made these preposterous accusations about me were so filled with hate, so
filled with threats of violence, that it was -- it was a very educational
experience. I could see what that anger can do when it`s expressed by
people on the right wing, most of whom have guns, and believe Americans
have the right to use this.

MATTHEWS: What do you make of her after this? You must have a sense
of her. Does she believe all this right wing religion of hers, does she
believe that Christians should have dominion over America, some sort of
theocracy?

MCGINNISS: Yes.

MATTHEWS: Does she buy into that or is that show business or what?

MCGINNISS: That`s at the heart of her whole political career. That`s
what got here into politics in Wasilla in the first place. She was in a
prayer group led by a woman named Mary Glazier, just as a house wife in
Wasilla.

And Mary said that, one day, the Lord came to the prayer group and
selected Sarah for political office. She was mantled. She was anointed.

She moved on from there and has consistently advocated the extreme
right wing religious agenda, diminutive Christianity.

Sarah Palin believes that --

MATTHEWS: OK.

MCGINNISS: -- the separation of church and said should end.

MATTHEWS: The name of the book is called "The Rogue: Searching for
the Real Sarah Palin."

By the way, Joe, what I think she is up to, she won`t run, she`ll try
to be the king-maker behind Rick Perry, the key moment. And she`ll try to
run the country through Perry. I think she matters.

Good luck with this book.

MCGINNISS: Thank you, Chris.

MATTHEWS: "The Rogue" may matter in the end, more than we want her
to.

When we return, let me finish with President Obama`s new line in the
sand. This guy is getting real. The real choice he`s going to give us for
the next year`s election. He`s giving it to us. You decide.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this: campaigns for president
are long -- we all know that. But this one is going to be longer.

President Obama began his 2012 campaign yesterday in the Rose Garden.
He made the issue simple. Do the American people believe that people who
make a ton of money should get off with a lower tax rate than people who
make just enough to get by? That`s a fair question, isn`t it?

It`s not whether people have a right to get rich in this country.
That`s a fact. It`s not whether people get rich should have to pay more of
their income in taxes than other people. The progressive tax system is
meant to make sure they do.

It`s whether some people, those who make most of their money off of
money, should pay a lesser rate, a smaller share of their income than
people who show up 9:00 to 5:00 or 8:00 to 6:00 or 7:00 to 7:00, or
whatever your workday is? That`s the Buffett Rule, and that`s the Obama
rule now.

Nobody gets a special deal because they`ve got a deal under the tax
code now. You make a lot. You pay at least, at minimum, the share of your
income that the man or woman busting hump does, the worker bee who comes
home still sweating and exhausted.

Is this class warfare? Is this socialism? Is this whatever the
latest dirty word the right has got on its red hot branding iron?

I don`t think so. Do you?

And so, the games begin. From here on out, the battle line is drawn.
Yes, it`s going to be about jobs. Yes, it`s going to end up being whether
Obama can get the unemployment number down. Yes, it`s about the economy.
It always is.

But it`s also now going to be about how we deal with the economy, how
we pay for those jobs. We have to create. How we get the debt under
control, how we end the American habit of borrowing to pay for the cost of
our government and society.

Obama now has a position and so does the other side. Obama says he
will veto any debt deal this November that cuts programs for regular
people, Social Security and Medicare, that does not guarantee a tax code
that he requires the rich to pay at least the same share of their income as
regular people do. He has now forced the other side to make the case
against him.

My hunch is: this will take a very good argument on their side.

That`s HARDBALL. Thanks for being with us.

"POLITICS NATION" with Al Sharpton starts right now.


END

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