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updated 10/21/2011 10:58:55 AM ET 2011-10-21T14:58:55

Guests: John Heilemann, Todd Harris, Steve McMahon, Ron Reagan, Dana
Milbank, John Feehery

CHRIS MATTHEWS, HOST: Death of a dictator.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews up in New York.

Leading off tonight: The end of Gadhafi. The death of Moammar Gadhafi
was a validation of President Obama`s approach to war. Critics mocked the
president for, quote, "leading from behind." But in recent months, Osama
bin Laden was killed, Anwar al Awlaki was taken out, Tripoli fell, and now
Gadhafi is dead.

And all this happened without American casualties, and in many cases,
without American combat troops. Isn`t it time that people, including
Republicans, give President Obama credit for his war strategy?

Also, it`s not just business, it`s personal. Mitt Romney and Rick
Perry are putting a mud fight on the airwaves these days. They have lots
of money to spend to destroy each other. And guess who`s cheering them on?
President Obama.

Also, space invaders. The key moment of Tuesday`s debate was when
Mitt Romney put his hand on Perry`s shoulder when Perry interrupted him.
Romney is just the latest of the debate space invaders. Remember Al Gore?
Remember Rick Lazio going at Hillary Clinton? And it usually doesn`t work,
certainly not so well, for the aggressor.

And how much longer can Republicans talk about electrified border
fences with Mexico and crimes committed by illegal immigrants before they
squander their chance to win Latino votes, which may decide this election?

And "Let Me Finish" tonight with real leadership on national security
versus the showoff variety.

We start with the end of the Gadhafi regime. Ayman Mohyeldin is a
foreign correspondent for NBC News and John Heilemann is national affairs
editor for "New York" magazine.

Ayman, thank you so much. Just -- people need to be reminded and
clarified. Why did we get involved in the whole Gadhafi overthrow?

AYMAN MOHYELDIN, NBC CORRESPONDENT: Well, when the Libyan revolution
began or the uprising began back in February, the Gadhafi regime had seen
what happened in Tunisia and Egypt and decided it was not going out like
that. It unleashed its military forces on the people there, and it became
very bloody. Thousands had died by that point.

The Libyan people, the National Transitional Council, turned to the
international community for help. They asked the Arab League to get
involved. The Arab League asked for NATO involvement, or at least asked
for international involvement, which came by of the way of the U.N.. And
so the conflict internationalized. They made it an international conflict,
asking for NATO and the Western countries to get involved and prevent this
one lopsided military force from just wiping out all these people.

MATTHEWS: And this is a rare phenomenon, whereby a third world group
of countries, the Arab League, the Arab nations, said, Come in and
intervene in the internal affairs of one of our countries. And that`s
unique, I think, in the African experience, up and down Africa, the
continent.

MOHYELDIN: Absolutely. I mean, it`s a very unique opportunity in
which the Arab street is asking for international involvement on the
ground. Now, some will argue that the mandate of what the Arab League
asked for and what the United Nations asked for had been exceeded by NATO
military involvement.

But at the end of the day, what we saw was a convergence of interests
that we had never seen before. The people on the streets of Libya, the
people in the Arab world wanted to see the U.S. involved to prevent this
massacre from taking place.

MATTHEWS: Gadhafi`s gone. He`s been a big part of our life going
back to the `60s, right? And now, who -- is anybody in the world going to
say the United States did the wrong thing by getting involved?

MOHYELDIN: I think the outcome is still too premature. No, they are
not going to say that NATO`s involvement now was wrong. What`s going to
matter is how the U.S. takes it from here, what kind of soft power, what
kind of engagement the U.S. maintains with the National Transitional
Council, with the people of Libya.

MATTHEWS: OK.

MOHYELDIN: Are they going to turn their back on them and leave them
on their own and let situation descend, as we`ve seen in other countries,
Afghanistan and elsewhere? Or are they going to remain engaged and see
this through all the way until a democratic process is settled?

MATTHEWS: Let`s talk about the morality of U.S. interests. Let`s
talk about the reality of U.S. interests. Americans don`t like being
killed. We certainly don`t like our people being targeted, especially
people in military uniform. This guy Gadhafi, who died today, killed
Americans in a West Berlin disco on purpose, right? He supported
terrorists that went out and killed our people on purpose. He had a plane
blown up over Scotland with Americans, 189, aboard, on purpose. He is a
killer of Americans, right?

MOHYELDIN: Yes--

MATTHEWS: That`s who Gadhafi was, among other things.

MOHYELDIN: Among other things, absolutely. Was he implicated in the
killing of many of these Americans? Absolutely. Pan Am, Lockerbie, as
well as the Berlin disco. Even though the judge in the Berlin disco said
he wasn`t personally involved, there`s no doubt that since then, evidence
has emerged that the Libyan government sanctioned this attack. But keep in
mind, in recent years--

MATTHEWS: So he fingered us. He basically said, Kill Americans, at
some point in his reign.

MOHYELDIN: Well, in recent years, the American government actually
was willing to turn its back on it. Keep in mind Tony Blair--

MATTHEWS: Well, I didn`t! Let me -- let me just ask you -- so when
the American people watch this story tonight -- let`s look at it from a
totally American point of view. We watched the overthrow and killing of a
guy who devoted a part of his career to killing us. He was our enemy.

MOHYELDIN: There`s no doubt about it. And at the end of the day,
that`s why the American people will certainly welcome this news or
certainly should welcome this news. It came at a great cost for the Libyan
people.

But at the end of the day, it`s beginning a new chapter in Libya and
which the United States can benefit from, to have a country that is
democratic, a country with a traditional (ph) amount of resources, but more
importantly, one that can share the values of what Americans want, a
democratic country, a pluralistic one, and perhaps one that can spring more
democracies in the Middle East.

This one was not an invasion, as we saw in Iraq.

MATTHEWS: OK--

MOHYELDIN: It was an organic movement by the Libyan people.

MATTHEWS: Well, President Obama, of course, talked today at 2:00
o`clock Eastern about the victims in his comments today on Gadhafi`s death.
He did remind us of why we were there. Let`s watch.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: For us here in the
United States, we are reminded today of all of those Americans that we lost
at the hands of Gadhafi`s terror. Their families and friends are in our
thoughts and in our prayers. We recall their bright smiles, their
extraordinary lives, and their tragic deaths. We know that nothing can
close the wound of their loss, but we stand together as one nation by their
side.

(END VIDEO CLIP)

MATTHEWS: Well, let`s talk about the naysayers. John Heilemann, a
couple of the Republicans, not the most impressive Republicans running for
president, Bachmann and Gingrich -- let`s take a look at what they had to
say. Let`s take a look at Gingrich in March of this year, going after this
whole mission, which was accomplished today.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Do you think Moammar Gadhafi has to go as a result
of this military intervention?

NEWT GINGRICH (R-GA), FMR. HOUSE SPEAKER, PRESIDENTIAL CANDIDATE: I
would not have intervened. I think there were a lot of other ways to
affect Gadhafi. I think there were a lot of allies in the region that we
could have worked with. I would not have used American and European
forces.

(END VIDEO CLIP)

MATTHEWS: And here`s Michele Bachmann saying she thought the
president was wrong to get involved in Libya in any way. And here she is
back in March, as well, in Iowa. Let`s watch.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: Now he has us
engaged in yet another, third, Middle Eastern war. And so I think, talk
about "March madness," can anyone say Jimmy Carter?

(END VIDEO CLIP)

MATTHEWS: That is insane talk! I mean, the two wars she`s talking
about, one and two, were started by President George W. She supported
that, John, down the line, in every instance. There she is mocking
President Obama for getting involved in a war indirectly from behind.

JOHN HEILEMANN, "NEW YORK" MAGAZINE: Look, Chris, you correctly
pointed out that those are not necessarily two of the most impressive of
the Republican candidates. But there is an argument and there was an
argument at time, not just on the crazy right but in a lot of other places,
that you can make the case that this was a dangerous mission to have
undertaken, that the costs might have been proven to be too great.

We can`t argue backwards from the fact that it was successful to claim
that it was necessarily a good idea in the first place. There are people
who are going to say that American has imperial overstretch (ph). It`s
(INAUDIBLE) too many.

MATTHEWS: Right.

HEILEMANN: But we should be fighting fewer wars.

MATTHEWS: Sure.

HEILEMANN: That`s a principled position on non-interventionist
grounds, on financial grounds, on a lot of grounds. You can make that
argument. Now, that`s not an argument that necessarily one that--

MATTHEWS: Why do they begin to make the argument when it`s an Obama
campaign?

HEILEMANN: Well, yes. Of course. Of course, that there are many
Republicans who are inconsistent on this point and supported previous wars
by Republican presidents, and now want to attack Barack Obama.

I mean, I think the more interesting criticism is the one that you saw
around the time when this intervention started, when an Obama
administration official in "The New Yorker" made the comment about Obama
leading from behind. And so many Republicans jumped on that and claimed --
and it was absurd, the notion that you could lead from behind.

Well, we have seen now that Obama`s leadership from quote, "from
behind," meaning putting together alliances, putting together coalitions,
not doing stuff in a unilateral way -- that there are advantages to that.
And there are -- if the goal of this was to accomplish stopping the
slaughter in Benghazi and getting Gadhafi out, it was successful.

And so it would behoove a lot of Republicans who made fun of that
notion to stand up and at least acknowledge that in this case, it actually
worked.

MATTHEWS: And President Eisenhower, one of the most successful
foreign policy presidents we`ve had, did -- he had what he called "the
hidden hand." And he would get things done through indirection.

Ayman, let me ask you, just to finish up here about this -- this
campaign was difficult because the mission statement in the beginning was
prevent this man from slaughtering his own people in Benghazi. It did
grow. Tell me how that happened and how we got to go along with that. How
did President Obama decide to go along with the NATO expansion of the
mission to getting rid of Gadhafi?

MOHYELDIN: Well, it really began with the National Transitional
Council in Libya, with their contacts going through the Europeans, going
through the Arab League. They asked for public statements of support for
the National Transitional Council. The Arab League came out and issued it,
saying the international community, the United Nations, must do more--

MATTHEWS: Right.

MOHYELDIN: -- to get involved to prevent the slaughter. That`s what
happened. When that got to the level of being an international conflict,
the United States took the lead. The United Nations passed a resolution
that allowed or authorized the protection of civilians by any means
necessary.

And in this case, the only international organization that can do that
is NATO and the United States, and that`s what happened. That`s what led
the United States to get militarily involved in this operation.

MATTHEWS: Are we going to do anything in terms of Egyptian decision-
making with regard to Mubarak? Are we going to get involved? Will we let
them execute him? Will we stay out of that if it comes to that?

MOHYELDIN: Well, this is going to be very interesting to watch. The
United States has tremendous influence over Egypt because of the $2 billion
of U.S. taxpayer money--

MATTHEWS: Right.

MOHYELDIN: -- that goes to the military, and more importantly, because
of the relationship between the two militaries. The United States has to
exert more influence on the Egyptian military to allow a clear democratic
process to take place. So far, the Egyptian military has completely
derailed it, not to the extent that the Egyptian people want, so--

MATTHEWS: Back to pure politics here. My -- check me on this. I
don`t think a lot of these decisions the president makes with regard to
even catching bin Laden and killing him, bringing down Gadhafi, him having
been killed, getting al Awlaki -- I don`t think they have a lot of
immediate effect on the polling. But I think come the debates of next
fall, when the president gets in that pit, basically, with one of his
opponents, won`t it matter a lot that he`s been successful as a commander-
in-chief?

HEILEMANN: Well, look, I think that presidential elections, as you
know, Chris, are about character as much as anything. And to the extent
that Americans have -- American voters have doubts about the president, I
think a lot of them have to do with their notion of whether he`s a strong
leader, whether he`s optimistic, whether he`s effective.

In all of these areas of foreign policy, he has been decisive, he`s
been effective, he`s won, he`s done things that others before him could not
accomplish. And so I think in terms of helping him on the character front,
making him appear to be a strong leader, yes, all these things are going to
help him in a general election, for sure, although I do not imagine that on
the specifics of foreign policy, Republicans are going to have much to work
with.

MATTHEWS: Yes.

HEILEMANN: I mean, there`s not going to be -- Republicans are going
to try to wage this campaign on the economy because that`s where the
president is vulnerable.

MATTHEWS: Sure.

HEILEMANN: But on the question of character, I do think these things
will redound to his benefit in the long run.

MATTHEWS: Yes, I think in the end, if it gets close -- just a
political assessment -- if it gets close and it`s 50/50, people will go,
You know, this guy running against Obama`s not that great, the economy`s
really bad, I can`t figure this -- but he has been a pretty good commander-
in-chief. I got to give him that. That kind of thing matters.

Thank you for coming on. It`s great to have you, Ayman Mohyeldin, and
thank you, John Heilemann.

Coming up, that fight between Mitt Romney and Rick Perry is getting
nasty, obviously, and it always was personal, we`re told. They`re spending
lots of money attacking each other, and President Obama must be loving
watching this from afar. What was Napoleon`s argument, Always stand back
and let your opponents kill each other.

Anyway, you`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: For the first time, actually, a majority of Americans give
some blame to President Obama for the country`s economic problems. A new
Gallup "USA Today" poll finds 53 percent, a majority, say the president
deserves either a great deal or a moderate amount of blame for the economy.
Not surprising.

But more Americans still blame former president George W. Bus -- 7 in
10 say Bush deserves blame for this economy nearly three years after he`s
left office. What a surprising bottom line.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. If you saw Tuesday`s
presidential debate, the Republican one, you know there`s no love lost
between Rick Perry and Mitt Romney. And the new attack ads out this week
from both campaigns continue the knock-down nature of the primary. Is that
bad news for Mitt Romney, who many people presume to be the likely nominee?
Is Rick Perry essentially doing the Obama team`s dirty work for them?

There`s another school of thought -- of course, there always is one --
that Romney is getting battle tested ahead of the general election, and a
drawn-out campaign against Perry could help him build organization in many
different states, something many said that helped Obama in 2008 during his
contest with now Secretary of State Hillary Clinton.

Well, that`s the first question we`re going to ask our strategists
tonight. Then we`re going to turn to the politics of taxes. Herman Cain
has his 9-9-9 plan, and Rick Perry said yesterday he`s going to unveil a
plan for a flat tax next week. Wow! Both taxes will disproportionately,
of course, help the wealthiest Americans. And the Republican Party is
already in trouble, looking like they can`t shake their image as the party
of the rich.

For that, we`re joined by two expert strategists. Steve McMahon`s a
Democrat, and Ted -- Todd Harris, of course, is a Republican.

Steve, let me hear you right now about this. First of all, can we all
look at this fight now? I think it`s fascinating. Let`s look at part of
the Rick Perry new ad campaign going after Mitt Romney. Perry ads are
good.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: People who were consulted by the Romney
administration were also being consulted by the Obama White House. All we
did was look at White House visitor logs.

MITT ROMNEY (R-MA), FMR. GOV., PRESIDENTIAL CANDIDATE: I haven`t
spent my life in politics.

I hate to lose.

I don`t think I`ve ever hired an illegal in my life.

We hired a lawn company to mow our lawn, and they had illegal
immigrants who were working there.

I`m running for office, for Pete`s sake. I can`t have illegals.

RICK SANTORUM (R-PA), FMR. SEN., PRESIDENTIAL CANDIDATE: You just
don`t have credibility, Mitt.

NEWT GINGRICH (R-GA), FMR. HOUSE SPEAKER, PRESIDENTIAL CANDIDATE:
(INAUDIBLE)

UNIDENTIFIED MALE: -- height of hypocrisy.

ROMNEY: There are a lot of reasons not to elect me.

(END VIDEO CLIP)

MATTHEWS: Here`s the other point of view. Here`s Mitt Romney`s
campaign releasing an attack ad of its own yesterday, going after Romney.
By the way, the video was later pulled at the request of CNN because much
of the footage came from their network. The Romney campaign stands by the
message of the ad, however, according to TalkingPointsMemo. Let`s watch
part of that ad.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: Was it was before he
was before the social programs from the standpoint of he was for--

UNIDENTIFIED FEMALE: Do or die for him.

PERRY: It`s not whether or not we`re going to have this policy or
that policy. We don`t need any plan.

UNIDENTIFIED MALE: Perry really did throw up all over himself in the
debate.

PERRY: The fact is, Americans understand faith.

UNIDENTIFIED FEMALE: Rick Perry plunging in the polls, rolling the
dice.

UNIDENTIFIED FEMALE: -- he would just calm down. He seemed very
agitated.

UNIDENTIFIED MALE: (INAUDIBLE) a benchmark so low at the last debate.

PERRY: I mean, we`ll wait until tomorrow and see--

UNIDENTIFIED FEMALE: He doesn`t have his economic plan yet.

UNIDENTIFIED MALE: All he had to do was show up and smile.

UNIDENTIFIED MALE: He`s just a shadow of his former self.

(END VIDEO CLIP)

MATTHEWS: Wow! Steve McMahon, are the Perry people -- I mean the
Romney people -- Romney people trying to defeat Perry or get him committed
to an insane asylum?

(LAUGHTER)

MATTHEWS: It looks like that ad makes him look so goofball that he
shouldn`t be allowed to walk the streets!

STEVE MCMAHON, DEMOCRATIC STRATEGIST: Well, I think they may be
trying to do both, but what they`re trying to do first, of course, is beat
him in the Republican primary. And they want to make sure that they knock
him out before he`s able to get back up off the mat. He`s had two really
bad -- three really bad weeks, a number of really bad debates, and he`s
hemorrhaging support right now.

And they want to knock him out because if he gets back up off the mat
and he`s able to start stringing some victories together, he may suddenly
look strong again.

MATTHEWS: OK, I didn`t think we`d go this way, but let`s go this way.
Todd Harris, is Perry getting beat up so much, it`s really -- he`s not in
the race? He`s down to single digits in, like, South Carolina. I think
he`s down to 6 down there. This was the guy that was the powerhouse.
These debates are killing him.

TODD HARRIS, REPUBLICAN STRATEGIST: There`s no question they`re
having a significant impact and they`re taking a toll. I always admonish
reporters never to pick winners and losers when you`re still months away
from voting, but there`s no question that it`s -- this is Romney`s to lose.
He is out front.

Yes, the race has taken on an increasingly negative tone, certainly
far more negative than it has been. But it`s going to get even more
negative because primary fights on both sides, Republican and Democrat --
ultimately, these are family feuds. And family fights are always nastier
and more personal even than Republicans fighting Democrats.

MATTHEWS: Let`s talk about something that has nothing to do with
party. It has to do with religion and whether religion should be off base
or not.

Steve McMahon, my friend, is it better for a candidate who has a
religious difference, say he`s from a minority religion like Mormonism, to
have that dustup early, like now, way before a general election, if you`re
going to be the nominee, get it over with, fight it out with crazy
ministers that shouldn`t be talking, and assume that by the time it gets to
next November, the voters have sort of hashed out in their head and they
have decided it`s not really important?

MCMAHON: Absolutely.

MATTHEWS: Would you rather have that or would you rather it hit and
flash next October?

MCMAHON: In a political campaign, what you want to do is you want to
get all the bad news out early, if there`s going to be bad news that comes
out anyway. And you want to kind of try to get it baked into the campaign
well before the decision point.

And I think from Mitt Romney`s perspective right now, and even from
Governor Perry, if he`s able to get through this, having the sort of crazy
preacher and the Mormonism discussed openly and sort of baked into the
value of the stock, if you will, is something that will benefit them later,
assuming that one of the -- when one of them is in the general election.

MATTHEWS: Todd, do you agree with that? It`s better to get the crap
over with now? Because this attack on his religion, there`s no way to
defend it, no way to attack it. It just is. You either -- it seems like
the voter has just got to make up his or her mind about it and say, does it
matter or doesn`t it matter?

HARRIS: Yes, I certainly agree, with one caveat, which is this. When
you`re talking to voters in a primary, you`re talking to a very specific
universe of people, and it`s really only that universe of voter that is
paying close attention.

MATTHEWS: OK.

HARRIS: So even with all this happening now, my guess is if Romney is
our nominee in the general election, he`s going to have to expand this
conversation to a whole lot of people that weren`t paying attention
earlier.

MATTHEWS: I see.

(CROSSTALK)

MATTHEWS: Go ahead.

MCMAHON: The Reverend Wright flare-up happened in the primary.
People were paying attention in the Democratic Party, but others heard
about it. And I think it made it -- John McCain did the principled thing
and didn`t raise it in the general, but I think it would have not been that
effective in the general anyway.

MATTHEWS: OK. Here`s Herman Cain on the issue of taxes, something we
talk about a lot. Here he is being cheered for standing by a previous
comment he made that protesters should stop blaming Wall Street and the big
banks about being poor and get out and get a job. Let`s watch.

This is an amazing statement.

(BEGIN VIDEO CLIP)

ANDERSON COOPER, CNN ANCHOR AND MODERATOR: Two weeks ago, you said:
"Don`t blame Wall Street, don`t blame the big banks. If you don`t have a
job, and you`re not rich, blame yourself."

That was two weeks ago. The movement has grown. Do you still say
that?

(CHEERING AND APPLAUSE)

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: Yes, I do still say that.
And here`s why.

(CHEERING AND APPLAUSE)

CAIN: I still stand by my statement, and here`s why.

They might be frustrated with Wall Street and the bankers, but they`re
directing their anger at the wrong place. They ought to be over in front
of the White House taking out their frustration.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: Let`s deal with the first part of~ that. Are the people
unemployed, it`s their fault, Todd, is that a good political argument for
any politician, blame the unemployed guy and woman for being unemployed?

HARRIS: Well, I think it`s a good argument, especially in the context
of the Republican Party, to talk about self-reliance.

But, look, if someone is unemployed, I don`t think that any voter
really cares who`s to blame and whose not. The problem is what do we need
to do in this country to create jobs? And as long as Republicans are
focused on--

MATTHEWS: Well, he says blame the unemployed. That`s what--

(CROSSTALK)

MATTHEWS: Get off your butt, go get a job. That`s what he is saying.

HARRIS: I understand what he said, and it`s a great applause line,
but ultimately in terms of a Republican winning in November, what the party
needs to be focused on is creating jobs. And, you know, all of the stuff
about who`s to blame, ultimately, it`s irrelevant.

MATTHEWS: That`s a nice answer. And you`re great, Todd, but it seems
like your party doesn`t like people on death row, execute the guys, let`s
get it over and have some celebrations. You want to let the guy die on the
gurney who`s comatose. If a guy`s a gay soldier, to hell with him.

Do you guys have sympathy for anybody, even a person who just got
fired? Do you feel sorry for any -- is it OK to be a compassionate
conservative anymore?

MCMAHON: They feel sorry for Wall Street people, Chris. Very, very
wealthy people, they feel sorry for, the Republicans. And they think if
you make a billion, yes, a billion with a B, dollars a year, then you need
a big tax cut.

And if you don`t, then you need a flat tax that is a regressive tax--

MATTHEWS: Oh, here it is. OK.

MCMAHON: -- that will cause middle-class Americans to pay more.

MATTHEWS: OK. Here it is for you, Todd. Rick Perry previewed his
own economic plan which he will unveil next week, he says. It calls for a
flat tax, in other words, the same percentage for everybody to pay in
taxes, no matter if you make a billion or you make $100,000 a year or you
make $10,000 a year. Same percentage. Everybody pays the same percentage.

Let`s listen to him explain already.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: It starts with
scraping -- excuse me scrap -- well, you might want to scrape it, too, but
scrapping the three million words of the current tax code, starting over
with something simpler, a flat tax.

(APPLAUSE)

PERRY: I want to make the tax code so simple that even Timothy
Geithner can file his taxes on time.

(END VIDEO CLIP)

MATTHEWS: Well, I guess he`s got his notes in his pocket there that
are too complicated for him.

(LAUGHTER)

MATTHEWS: But, anyway, Todd Harris, is this a smart move to say you
want, say, a 15 percent or 20 percent tax for everybody, no matter how much
they make and not a progressive tax. Is that smart?

HARRIS: It might be smart primary politics. I don`t think,
ultimately, in a general election or certainly in the White House, I don`t
think it`s going to go anywhere. And one of the reasons is because a lot
of Republicans, not even a majority of Republicans agree with a single one-
rate tax system.

Now, most Republicans agree that the taxes -- our tax system needs to
be simpler and flatter than it currently is, but having one rate, not even
all Republicans are going to get on board with that.

MATTHEWS: By the way, you can have a simple tax system with different
rates. This idea it has to be the same -- I mean, people have brains. If
you say, OK, you make $50,000, you pay a certain percentage, if you make
$100,000, you pay a different percentage. People could handle that.

The complications in the tax system are not the rates. The
complications are -- Steve, pick it up here -- the loopholes to protect
interests.

MCMAHON: Well, that`s exactly right. Everybody wants to get rid of
the nine-million-word tax code and everybody wants to get rid of the
special interest tax breaks and all the things that the politicians attack.

But what America is based on is a sense of fundamental fairness. And
the tax code reflects that when it`s progressive. If you make a little
more, then you have probably made a little more because you live in America
and you can afford to pay a little more, and it`s fair and reasonable to
ask you to do that.

What the Republicans want to do is basically undo that and have the
hedge fund manager pay a lower percentage than his secretary, the Warren
Buffett conversation. But they also want everybody who makes a lot of
money to pay the same rate as people who don`t make very much money at all.
And that`s fundamentally unfair.

(CROSSTALK)

MATTHEWS: Some of these guys want--

(CROSSTALK)

MATTHEWS: -- to pay a 15 percent sales tax.

HARRIS: That`s also fundamentally untrue, what Steve just said. But
we will -- that`s OK.

(CROSSTALK)

MATTHEWS: No, you guys are really stepping in a lot of crap here with
this tax thing. I would stay out of it, myself, anyway.

Todd Harris, I know you`re not for a 15 percent sales tax in D.C., and
you`re not for a flat tax. You`re not a balloon head.

Up next: raising Cain in Afghanistan. Why is Hamid Karzai talking
about Herman Cain with Hillary Clinton? Has it gone completely viral over
there, they know about our most jughead ideas in Afghanistan? They know
our worst secrets of stupidity?

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL. Now to the "Sideshow."

First up, the world is watching. Secretary of State Hillary Clinton
spent the morning with Afghan President Hamid Karzai, and the talk wasn`t
all foreign policy. As it turns out, Karzai has been following, believe it
or not, the Republican presidential race here in the U.S. And there`s one
candidate who has sparked his curiosity. And that would be the result of
this.

(BEGIN VIDEO CLIP)

CAIN: I`m ready for the gotcha questions, and they are already
starting to come. And when they ask me who is the president of Ubeki-beki-
beki-beki-stan-stan, I`m going to say, you know, I don`t know. Do you
know?

(END VIDEO CLIP)

MATTHEWS: Well, you think Karzai missed that number? Not so.

Let`s watch his off-the-cuff exchange with our secretary of state.

(BEGIN VIDEO CLIP)

HILLARY RODHAM CLINTON, U.S. SECRETARY OF STATE: One of the
Republican candidates -- I think it was Herman Cain.

HAMID KARZAI, PRESIDENT OF AFGHANISTAN: Herman Cain, yes.

CLINTON: -- the former pizza company executive--

(CROSSTALK)

KARZAI: All right.

CLINTON: Yes. He started something called Godfather`s Pizza.

KARZAI: Yes.

(CROSSTALK)

CLINTON: But the president was saying he saw this news clip about how
Mr. Cain had said, I don`t even know the names of all these presidents of
all these countries, like, whatever.

(CROSSTALK)

KARZAI: All the stans, whatever.

CLINTON: All the stan places.

(LAUGHTER)

KARZAI: That wasn`t right. But, anyway, that`s how politics are.

CLINTON: Well, it is such a beautiful day here in Kabul.

(END VIDEO CLIP)

MATTHEWS: Well, that`s actually what Hillary Clinton`s like when you
meet her, a very nice look at her.

But there are few things I have to say I like less, few things I like
less than watching somebody overseas like Karzai chuckle at how stupid some
Americans are.

And finally this past weekend marked the dedication of the Martin
Luther King Jr. Monument here down in Washington. Think there are some
parallels between King`s civil rights protest and today`s Occupy Wall
Street movement? Well, plenty of people do see the parallels, and that`s
certainly not the case, unfortunately, for Florida Congressman Allen West.

Why should we take his word for it? Well, let`s hear his reasoning.

(BEGIN VIDEO CLIP)

REP. ALLEN WEST (R), FLORIDA: I was born and raised in the same
neighborhood that Martin Luther King Jr. grew up in. Martin Luther King
Jr. wouldn`t have backed these type of protesters. First of all, Martin
Luther King Jr. had a focus, he had a message, and he was divinely
inspired. I don`t know what the inspiration is for these individuals.

(END VIDEO CLIP)

MATTHEWS: Well, it`s always dangerous to say what somebody thinks
when they`re no longer with us, Congressman.

Up next, when Mitt Romney grabbed Rick Perry`s shoulder in Tuesday`s
debate, he became the latest in a long list of debate space invaders.
Remember when Rick Lazio did it to Hillary Clinton or remember Al Gore`s
awkward confrontation with George W.? It never works well for the
aggressor.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

HAMPTON PEARSON, CNBC CORRESPONDENT: I`m Hampton Pearson with your
CNBC "Market Wrap."

Stocks lurching to a mixed finish, the Dow Jones industrials adding 37
points, the S&P 500 gaining five, the Nasdaq falling five points.
Investors sifting through a bucket full of earnings and headlines today.
In economic news, we had weekly jobless claims falling more than expected,
a surprise jump in Mid-Atlantic factory activity in October, and leading
indicators climbing for their fifth straight month, pointing to a modest
economic growth pattern ahead.

In Europe, officials shot down rumors of a second postponement of that
upcoming economic summit in Brussels. And amid ongoing protests, the Greek
Parliament approved more wage cuts and tax hikes.

In earnings news, AT&T`s revenue came in lighter than expected with
slower subscriber growth. Drugmaker Eli Lilly delivered lower profits, but
an improved outlook. And Microsoft reporting after the closing bell,
turning in better-than-expected revenue and earnings in line with
expectations.

That`s it from CNBC, first in business worldwide -- now back to
HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

It was the moment from Tuesday`s debate that ended up being the photo
on the front of nearly every national newspaper, when Mitt Romney actually
put his hand on Rick Perry during a heated exchange over immigration.
Let`s take a look again.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Rick, I don`t think I have
ever hired an illegal in my life. And so I`m afraid -- I`m looking forward
to finding your facts on that, because that just doesn`t--

PERRY: Well, I will tell you what the facts are.

ROMNEY: Rick, again -- Rick, I`m speaking.

PERRY: You had the -- your newspaper -- the newspaper--

ROMNEY: I`m speaking. I`m speaking. I`m speaking.

PERRY: It`s time for you to tell the truth. It`s time for you to
tell the truth, Mitt.

(CROSSTALK)

ROMNEY: You get 30 seconds. This is -- the way the rules work here
is that I get 60 seconds, and then you get 30 seconds to respond, right?

PERRY: No, but the American people want the truth. And they want to
hear--

ROMNEY: Anderson?

(END VIDEO CLIP)

MATTHEWS: Ah. Anderson, help me!

Anyway, "The Washington Post""s Ann Gerhart today said Romney violated
what she called the unwritten rules of debate -- no hands. She writes:
"The debate stage has its own set of rigid rules of engagement, the most
important being keep your hands to yourself. You can shake hands before
and clap a rival on the back after, and even kiss Representative Michele
Bachmann on the cheek, but never, ever make a move on the other guy. And
this is because history seems to favor the candidate whose space is
invaded."

MSNBC political analyst Alex Wagner and political commentator and
author Ron Reagan join me now to examine this and other moments of
physicality when invading personal space has turned awkward in the debate
stakes.

Ron, I have seen it before. Look, mom, no hands. That`s the right
way to do a debate. Your thoughts?

RON REAGAN, POLITICAL COMMENTATOR: Yes, it`s true that, generally
speaking, you don`t want to reach out and touch anybody in one of these
debates.

I have to say, though, in watching that clip -- and I have watched it
several times now, and just again a moment ago, it seemed pretty natural on
Romney`s part. He wasn`t -- he hadn`t planned to do that. Lots of us
reach out and touch somebody when we`re right next to them and we`re
talking to them and we want to make a point.

You put a hand on a shoulder briefly or something like that. It`s not
what you do so much as how you do it, I think. And I think in this
exchange -- and we can get into this a little more later -- I think Romney
actually came off better, despite his whining for Anderson to bail him out
and all of that.

(LAUGHTER)

REAGAN: But he actually came off better, because he didn`t seem like
the angry guy.

MATTHEWS: Yes.

REAGAN: Perry looked like he wanted to take a swing at Romney, and
that doesn`t play well on camera.

MATTHEWS: Yes. It was a little bit like Rocky yelling, "Adrian!"

(LAUGHTER)

MATTHEWS: Anyway, just a thought.

(LAUGHTER)

ALEX WAGNER, MSNBC POLITICAL ANALYST: "Attica"!

MATTHEWS: One of my favorite moments -- or "Attica!" in "Dog Day
Afternoon."

Let me get this straight. Physicality, he does reach across the line.
He moved in, like, you know, he didn`t just reach out. He went at him and
put his hand up there. I think it was a clinch. I think he was saying,
"Shut up."

WAGNER: Of courses -- yes, he wanted Perry to stop interrupting him.
But keep in mind, Chris, this is at the beginning of a litany of
condescending things that Mitt Romney didn`t said to Rick Perry. I mean,
remember after the hand of the shoulder -- if you want to be the president
of the United States, you`ve got to let people talk, I know you`ve had a
rough couple of debates.

I mean, I am surprised that Rick Perry didn`t just reach back out and
slap him. I mean, this was really antagonistic.

MATTHEWS: What he really meant was I`m an aristocratic guy, a
country club guy. You`ve had a rough life.

Let`s take a look at one of the most awkward debate moment ever. This
is from the third presidential debate between Al Gore and George W. Bush
back in 2000.

(BEGIN VIDEO CLIP)

MODERATOR: Governor Bush, you may answer that if you`d like, but also
I would look to know how you see the differences between the two of you and
we need to move on.

GEORGE W. BUSH, THEN-PRESIDENTIAL CANDIDATE: The difference is that I
can get it done, that I can get something positive done on behalf of the
people. That`s what the question in this campaign is about. It`s not only
what`s your philosophy, and what`s your position on issues, but can you get
things done? And I believe I can.

MODERATOR: All right.

AL GORE, THEN-PRESIDENTIAL CANDIDATE: What about the Dingell-Norwood
bill?

(END VIDEO CLIP)

MATTHEWS: Yes, Ron Reagan, what about the Dingell-Norwood bill? I
wanted to bring that up.

When he came up there, I don`t know if this is the invasion of the
body snatchers or what, this guy comes up, all of a sudden he walks right
up to Bush, and then Bush gives him that -- I mean, maybe it`s the smartest
thing Bush ever did besides putting his arm around that firefighter on the
day, the Friday after 9/11.

What a moment! He looked down at the moment, and says, what I can`t
use the word, what a d-bag. What kind of a guy are you? I mean, that look
he gave the guy -- so here it is -- oh, so good! So good!

REAGAN: That moment didn`t work for Gore because it looked contrived.
It looks like he was trying to goad Bush into some overreaction there by
walking up to him like that, like, what are you doing, Al?

But, again, the Romney thing just seemed like a natural thing to do,
you know, physically, to somebody who`s interrupting you.

MATTHEWS: OK. I want to give you another one. Here`s a male/female
one. Here`s a moment when many people saw Rick Lazio give up any hope of
beating Hillary Clinton in the Senate race by just, again, going in to her
space, a little too close.

(BEGIN VIDEO CLIP)

RICK LAZIO: Mrs. Clinton, do you want to respond?

HILLARY CLINTON, THEN-NEW YORK SENATORIAL CANDIDATE: Yes, I certainly
do. You know, I admire that, that was a wonderful performance, and --

LAZIO: Why don`t you sign it? I`m not asking you to admire it, I`m
asking you to sign it.

CLINTON: Well, I would be happy too. When you give me a signed
letter.

LAZIO: Right here. Right here. Sign it right now.

CLINTON: Well, we`ll shake on this.

LAZIO: I want your signature because I think everybody wants to see
you signing something that you would say you`re for. I`m for it. I
haven`t done it. You`ve been violating tit. Why don`t you stand up and do
something important for America? While America is looking at New York, why
don`t you show some leadership, because it goes to trust and character?

CLINTON: And this new radio ad from the Republican Party using soft
money is not part of your campaign?

(END VIDEO CLIP)

MATTHEWS: He looked like a process server there.

WAGNER: I mean, it was such a gimmick. It`s like Rick Lazio failed,
that is not OK. And clearly --

MATTHEWS: OK, male/female, can a guy exercise particular restraint in
entering her space.

WAGNER: Yes. I mean, I think it`s all almost oxymoronic. Women in
politics are held to different standard, they`re scrutinized on the level
to haircuts, emotive qualities, but get on stage and you have an aggressive
attitude towards a woman, I don`t think the American audience likes that or
thinks highly of that kind of behavior.

MATTHEWS: Ron Reagan?

REAGAN: Yes, that just absolutely doesn`t read well, as it wouldn`t
in life. If two men are out in the street and one is poking his finger
into the other man`s chest, that reads a certain way. If one of those
people is a woman and a man is poking his finger into the woman`s chest,
that reads an entirely different way and it doesn`t quite well --

MATTHEWS: I think it`s called assault.

REAGAN: Yes, well, exactly

MATTHEWS: Nixon used to be a specialist. He`d go up when the cameras
were on and he walked up to Jack Kennedy and put his finger and he`d say,
you were really good in that Ohio setting out there. You really did a good
job, and Kennedy would say, what are you doing here, getting a picture
taken.

Thank you, Alex Wagner. We all sort of agree. Ron Reagan, you`re
always right.

Up next, how much longer can Republicans talk about illegal
immigration before they alienate all Latino voters in this country, and
they will probably decide a close election? That`s ahead.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Well, that standoff between the New Hampshire and the
Nevada people may be coming to an end. After two days of negotiations with
the Republican National Committee in Las Vegas, Nevada`s Republicans are
holding a vote this Saturday that will likely move the state`s caucus date
to February 4th.

Nevada had ruffled New Hampshire`s feathers by setting its caucus date
for January 14th. New Hampshire was threatening to move its "first in the
nation" primary into December of this year.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL.

This week, Republican presidential candidates made clear where they
stand on immigration, I`ll say. Let`s look at some of the lowlights, you
might call them.

(BEGIN VIDEO CLIPS)

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: We`ll have a real fence, 20
feet high, with barbed wire, electrified, with a sign on the other side
that says, "It can kill you."

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: And, Mitt, you lose
all of your standing, from my perspective, because you hired illegals in
your home and you knew for it -- about it for a year.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: So we went to the company
and we said, look, you can`t have any illegals working on our property.
That`s -- I`m running for office, for Pete`s sake.

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: I think the
problem who really has a problem with illegal immigration in the country is
President Obama. It`s his uncle and his aunt who are illegal aliens who
have been allowed to stay in this country.

(END VIDEO CLIPS)

MATTHEWS: Does the Republican Party risk losing all Latino support by
taking such a hard line?

Dana Milbank is a "Washington Post" columnist and John Feehery is a
Republican strategist.

Gentlemen, this is tricky business.

You first, Dana. What is going on here? Have the Republicans -- I
mean, just talking in political terms, not legal terms, we need reform.
Why have they given up on getting any Hispanic votes?

DANA MILBANK, WASHINGTON POST: You know, Chris, it sort of seems like
a death wish to me, you know? Not only do you have Herman Cain, not only
do you have everybody trying to outdo each other on being tough on illegal
immigration, I went to a hearing on the Hill just yesterday where you had
the Republicans just pounding on Janet Napolitano for not being tough
enough on immigration.

The effect of all of this, of course, is to give legal immigrants and
American citizens of Latino descent -- particularly voters -- the
impression that Republicans just don`t like them. I don`t think this is
necessarily a problem right now in the 2012 election, but this is the
fastest growing and arguably the most important voting bloc that`s going to
be deciding politics for decades to come. Why they want to antagonize
them, it`s like a form of ritual suicide.

MATTHEWS: When do you, John, it become just an ethnic slur? I mean,
I`m trying to proper. Some people say undocumented workers. That`s very
pro, I would think, the person here illegally.

Some people say illegal aliens which is pretty strong language. That
sort of doubles it down. They`re already illegal, let`s call them aliens.

The others just call them not even people. Call them illegals.

I watched that debate the other night and I thought they`re just
trying to put these people down. Illegals. That`s not even a person.

JOHN FEEHERY, REPUBLICAN STRATEGIST: Well, you know

MATTHEWS: How about illegal people at least? Go ahead.

FEEHERY: First, I agree with Dana in one sense. This is a very
important voting bloc and it becomes even more important in the years to
come. So, Republicans have to get this messaging right.

I think Mitt Romney got to it during the debate when he said, I am for
legal immigration. I want to make that perfectly clear.

And believe me, Republicans, especially the top echelons of the
Republican Party. They understand how important this voting bloc is. And
they are doing everything they can to appeal to legal Hispanic voters which
are many and are going to be more to come and that`s extraordinarily
important voting bloc in the years to come. You`re right, Dana.

MATTHEWS: Well, let me ask you about this one fact before we get to
Alabama, which is just a whole big roll of how tough they`re getting.
What`s wrong with giving a kid whose parents come here illegally? When
they`re three or four years old, they go to school, they get good enough
grades to get into university, Dana, and applicant is accepted, and they
get the same in-state tuition as everybody else who lives in the state.

They`re residents of the states. Their parents came in illegally.
They don`t have official papers, but they live there. What`s wrong with
giving them in-state tuition? Why are all the Republicans jumping on that?

MILBANK: Well, I think most Americans and certainly independent
centrist voters who say there`s nothing wrong with that -- George W. Bush
certainly would have said there`s nothing wrong with that and that`s why
Rick Perry was taking what had been a very central position in the
Republican Party.

But there`s a very angry wing of conservatism right now that Herman
Cain is appealing to. I mean, now, the border movement is down with Obama.
They`re going after Marco Rubio. They`re going after Bobby Jindal saying
these guys are --

MATTHEWS: Well, we got story on that. Here`s a Rubio flash just
came across. "The Washington Post" is reporting that the parents of
Florida Senator Marco Rubio who often talk about how the family fled
Castro`s Cuba when they came to this country actually came to America 2 1/2
years before Castro came to power in Cuba. Rubio is a rising star in
Republican parties, often talked about as a possible V.P. candidate.

He says he based his bio on his family`s oral history and not a review
of passports and documents. This is a strange story, John Feehery, and
this is jumping us right. He`s always associated himself, I believe, with
the anti-Castro community of little Havana and New Jersey and elsewhere in
this country and I`m always been with them. But it turns out that his
family came here before Castro came to power which means they came here
during Batista.

Can he now claim to be part of that community politically? And he`s
been giving the complete story of his life accurately?

FEEHERY: Well, Chris, I don`t know all of the intricacies of the
story. I do think, though, that Marco Rubio has a very compelling life
story and I do think that he`s not only going to be a rising star --

MATTHEWS: But is he the son of exiles as he said all along or isn`t
he?

FEEHERY: I don`t know --

MATTHEWS: I think he`s not the son of exiles. That`s not true. It
turns out they came here before Castro came to power, according to "The
Washington Post."

FEEHERY: I didn`t read that story. I don`t know the intricacies.
You`d have to ask Rubio`s office. My -- I can tell is you he understands
the immigrant experience. He`s one of the best spokesmen for the
possibilities of America. And I think whatever the story says, he is going
to be and continues to be a star in the Republican Party.

MATTHEWS: OK. Well, thank you very much. We`re going to get to that
story. A lot more tomorrow night -- Dana Milbank and John Feehery.

When we return, "Let Me Finish" with calm, businesslike leadership --
President Obama is showing that in his number one duty, actually,
protecting the country.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: "Let Me Finish" tonight with this: if the number one duty
of an American president is to protect the country, Barack Obama is meeting
his duty calmly, resolutely, businesslike.

Consider the way he`s going about it. He`s accomplished the mission
that took us into Iraq. Bin Laden is gone. He`s removed the operational
leader of al Qaeda, Anwar al-Awlaki. He has persisted to his conclusion,
his decision to keep Moammar Gadhafi from slaughtering his people. Gadhafi
who threatened to kill the people of Benghazi by the thousands ended up
hiding in a sewer pipe.

The difference between Democrats and Republicans clearly the
difference between George W. and Barack Obama is that one knows how to hot
dog in the end zone, knows how to run up the "mission accomplished"
banners, knows how to strut. The other, Obama, makes a crisp statement in
the Rose Garden and goes back to work. You decide which is the most
presidential.

On that point, have you ever noticed how the least impressive
dictators in the world wear the most impressive uniforms? I think of the
South American junta leaders flashing their epilates, the same upper booth
(ph) costuming the late Mr. Gadhafi favored. They love their military
uniforms, love them, be as colorful as their weirdness would allow, love
acting the part of military men when they`ve never been in a war, certainly
not one they`ve won.

The lesson today`s denouement in Libya is that the un-fancy, non-
strutting leader is the one to put your money on in the long run. It`s the
clown, the show-off, the one who you have loves to adorn himself in
colorful uniforms and the peppery of fascism that you can safely predict
will end his days as humiliated and scorned, as a fellow named Benito
Mussolini who ended his days hanging upside down.

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

"POLITICS NATION" with Al Sharpton starts right now.

END

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