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updated 11/30/2011 9:48:17 AM ET 2011-11-30T14:48:17

Guests: Jim VandeHei, Dana Milbank, Susan Page, Ron Reagan, Joe Williams,
Robin Wright, Bob Baer

CHRIS MATTHEWS, HOST: President Cain? Nah. Citizen Cain.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews down in Washington again. Leading
off tonight: Is Cain still able? Yes, this might be the end for Herman
Cain. National Review Online broke the story that Cain told a campaign
conference call that he again denies unequivocally the claim by a woman
that they carried on a long-term affair, but Cain also said that he was
reassessing his campaign. When candidates say they`re reassessing, it
usually translates to "I`m out." And that`s our top story tonight.

If Cain does drop out, and it looks good he will, who stands to pick
up his support? It could be the current GOP poster boy, Newt Gingrich.
But with so many Republicans saying "Anyone but Mitt," isn`t Newt the
logical choice? So the Obama campaign right now is focusing its energy and
charges at Mitt Romney. It`s a win-win strategy for them -- help Newt
knock him out now or finish him off yourself in November. The DNC has put
out a second anti-Mitt video in just two days, this one taking Romney to
task for his dishonest ad last week.

And wait until you see Stephen Colbert`s takedown of that Romney ad.
It`s in the "Sideshow."

Finally, "Let Me Finish" tonight with this exit of Barney Frank and
this rise of Newt. Talk about bad tidings of the season.

We start with the possible end to the Herman Cain campaign. Dana
Milbank is a "Washington Post" columnist and satirist, and Jim VandeHei is
editor-in-chief for Politico.

It`s very hard -- let me go to the hard news reporter now for the
entire organ of Politico. Jim, thank you for joining us. You`ve got the
entire resources of Politico working this story, I assume.

Yesterday, Cain said he would not drop out of the race as long as his
wife remained behind him. But this morning in a conference call with his
staff, Herman Cain said he would be reassessing his campaign. Well,
according to National Review Online, Cain said, quote, "Now with this
latest one, we have to do an assessment as to whether or not this is going
to create too much of a cloud in some people`s minds as to whether or not
they would be able to support us going forth."

Well, that was well stated, but what a mess for him. Jim?

JIM VANDEHEI, POLITICO.COM: Yes, I mean, he`s got...

MATTHEWS: Is he out or -- is he out or what?

VANDEHEI: Don`t know. I think we should know probably if not in the
next 24 hours, by the end of the week. My understanding is he`ll be on Fox
tomorrow and is going to address some of this and probably address his
viability and willingness to stay into the race.

His biggest problem is, is you`ve got conservatives now who are openly
saying, Hey, enough. This is really problematic. You saw this from former
governor Huckabee, a presidential candidate last time around. You even saw
some backtracking from Sean Hannity last night and a lot of conservatives
today talking about how what a distraction this is, Jon Huntsman, one of
his fellow GOP competitors, saying, You know what? This might just be too
much and he has to come out and address this and maybe get out because it`s
such a distraction.

And that`s the big problem for him because until today, he`s been able
to survive, I think, much worse allegations. What we`re talking about here
is...

MATTHEWS: Oh, yes.

VANDEHEI: ... having an affair, a consensual affair. We`re not
talking about sexual harassment, which to me is a whole different category
and much more problematic and certainly troublesome for his campaign long-
term.

But for some reason, this woman coming public, saying that they had a
13-year consensual affair, seems to have pushed a lot of people over the
edge that were wobbly on whether or not they could be with him and could
suspend belief to believe him.

MATTHEWS: Yes. Of course, Dana, there are different standards and
differing occasions here. One is workplace behavior, which involves
inappropriate behavior as well as bad behavior. And people who are engaged
in the workplace think about those things. Human resource departments deal
with them all the time.

Here you have a case, though, that the wife has a role in. You find
out that somebody in your marriage has had -- well, the other person in the
marriage has had at least the charge of a 13-year affair, you go, Wait a
minute, what`s going on here?

DANA MILBANK, "WASHINGTON POST": Right. I mean...

MATTHEWS: This is a reassessment time for everybody.

MILBANK: Oh, goodness, yes. I mean, the joke out there is he`s going
to have to swap the 9-9-9 plan for a 911 plan right now because this thing
is going down in a hurry. And I mean, all indications are -- first of all,
this was over before the latest allegations came out...

MATTHEWS: But this seemed to have ended -- if you believe the woman,
and she seems credible, this thing, this affair ended just in time for the
campaign to begin. Like, Break a leg, Herman. You`re starting a
presidential campaign.

MILBANK: But it`s not any one of these things. It`s the cumulative
effect of him unable to answer all the questions of the sexual harassment,
of all this. I mean, he`s still talking about a cloud over him. This is a
typhoon!

MATTHEWS: Can I ask the question we all ask about politicians, what
was he thinking?

(LAUGHTER)

MATTHEWS: Back to you, VandeHei. He begins a campaign -- you usually
are told by your people, Hire an op to go in and look and do some
opposition on you, and that`s -- you pay the guy 50,000 bucks and say, Find
out everything you can about me because they will. He didn`t have to ask
anybody to do that. He was his own expert, right?

VANDEHEI: It beats the heck out of me. We scratch our head every
single time, thinking about the John Edwards episode, like, What in the
hell are they thinking, that they think they can get away with this kind of
stuff? And part of it is just hubris. TO run requires an enormous ego.
To think you should be president of the United States...

MATTHEWS: Yes. Don`t we wish we had...

VANDEHEI: ... you often think you`re bigger and better than others.
And it creates blinders. And clearly, in this case, he was told this stuff
was going to come out. He knew the sexual harassment charges were out
there swirling about from the past and they would become an issue.

MATTHEWS: Yes.

VANDEHEI: And he reassured staff, saying, Listen, it`s not a big
issue. It`s one thing. I -- you know, I...

MATTHEWS: And by the way, you said something...

VANDEHEI: ... had one woman and she was as tall as my wife...

MATTHEWS: Jim, you tweaked something with me about this Fox thing.
Usually, if you`re a conservative -- and I`m not knocking Fox right now,
but you go over there generally for a somewhat softer landing on a tricky
day.

But tomorrow, I would expect that he`s going to get tough handling
over there because he`s now a problem for conservatives. He`s not their
champion anymore. He`s getting in the way of finding a champion. I
wouldn`t expect he`ll get any nicer treatment over there in this
environment than he`d get anywhere else, right? He`s going to get pounded
tomorrow afternoon.

VANDEHEI: I don`t think he`ll -- he`s going to get pounded no matter
where he goes tomorrow. And I think Dana was right before. This thing was
over before yesterday. If you look at how much his unfavorable numbers
shot up after our reporting and then others following up on these
allegations of sexual harassment, it was clear the dam was breaking before.
This one just sort of pushed it over...

MATTHEWS: Yes.

VANDEHEI: ... the edge. And it`s hard because he`s asking voters to
suspend belief in so many areas, to say that the woman yesterday was a
liar, that Sharon Bialek was a liar, that Ms. Kraushaar was a liar, that
reporters are liars, that Republicans going...

MATTHEWS: Everybody`s a liar.

VANDEHEI: ... on the record (ph) are liars. That`s a lot to ask.

MATTHEWS: That`s a lot to believe. Here, a number of Republican
candidates and advisers are piling on right now. Maybe they`re trying to
help their party. Republican strategist Ed Rollins told Reuters this week
that the new allegation was, quote, "the final nail in the coffin."

Here is, by the way, somebody who is on the religious right, the
Christian conservative movement, Michele Bachmann today on a conservative
radio show. And by the way, I do trust her on these issues. I think she
knows what she believes and she believes what`s right and wrong, from her
perspective. Let`s listen.

(BEGIN AUDIO CLIP)

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: When it came
out yesterday, everyone said, This is it. He`s done. And so people just
don`t see that there`s an ability for him to be able to come back after
that. And I think that now the field is narrowing considerably.

(END AUDIO CLIP)

MATTHEWS: Wow. And here`s Mike Huckabee on Fox News. By the way,
he`s a Protestant minister, Mike Huckabee. Let`s listen to him last night.
Let`s watch.

(BEGIN VIDEO CLIP)

MIKE HUCKABEE (R-AR), FMR. GOV., HOST, "HUCKABEE": It`s a serious
charge. The allegation is one that could upend his presidential campaign.
And I think the reaction that he`s had to it, when he said that unlike the
harassment charges, which he denied, he said this was a private matter. In
essence, he may have given an answer that will be very difficult for him to
work himself out of. I think this is the most damaging allegation that has
been made to date, no question about it.

(END VIDEO CLIP)

MATTHEWS: Well, Mike Huckabee just made it more damaging by saying he
said something he didn`t. It wasn`t he, Herman Cain, who said that it was
a private matter, it was his lawyer. He said it wasn`t a matter at all, it
didn`t happen. Anyway, he put the knife in.

MILBANK: Sure. And Mike Huckabee carries a lot of weight in...

MATTHEWS: With the Christian conservatives.

MILBANK: ... with the Christian conservatives and in Iowa. And you
have this cumulative effect. And whatever -- the few stragglers still
sticking around with Herman Cain are going to have doubts. And certainly,
you know, there may be ideological bias that might make Fox predisposed to
Herman Cain, but much more important than that is the combatative (ph)
bias. You know, there`s blood in the water now, and this is just not going
to stop until he ends it.

MATTHEWS: And Jim, let`s talk about this as journalists. Generally,
I don`t think journalists go looking around for somebody having an affair
if it has nothing to do with public business, if it has nothing to do with
your office, it`s not a lobbyist, it`s not a staffer, it`s not an HR issue.
I don`t think people go looking for that stuff. But once confronted with
it, it becomes a reality.

Now, we`re talking here about the Christian right. They do take this,
as most people in this country watching right (ph) take it very seriously.
We`re talking about an affair here of long standing. It seems to me that
now all eyes are on Mrs. Cain, right? She`s got to make a call here and...

VANDEHEI: Right, and remember, she`s...

MATTHEWS: And she`s going to say...

VANDEHEI: ... been very forceful...

MATTHEWS: ... I don`t want more of this stuff. And I may not want
more of you, buddy. I have no idea how the personal part of this breaks
out, but that has become now the theater that we`re watching right now,
unfortunately for the people involved.

VANDEHEI: And she offered a very, I thought, convincing and powerful
defense of Herman Cain during -- you know, a few weeks back, when she was
on Fox talking about these allegations and how she didn`t believe any of
them. And so there`s no doubt she factors more important than anyone else
in his calculation of how he responds to this.

There is an irony here, if you think about what you just played from
Mike Huckabee and from others, in that they`re lamenting the sexual affair,
the consensual affair. Well, that support in all likelihood is going to go
to Newt Gingrich, who himself has confessed to having affairs, including
with one woman who was a congressional staffer...

MATTHEWS: But not this week, Jim.

VANDEHEI: ... while he was a leader...

(LAUGHTER)

MATTHEWS: Jim, I don`t want to be too sarcastic, but not this week.

VANDEHEI: Right.

MATTHEWS: You know, there is a statue of limitations on these things.

(CROSSTALK)

VANDEHEI: ... and people -- and people -- and there`s no doubt that I
think most voters are forgiving voters and you can overcome it. And I
think Newt Gingrich probably can overcome it.

But there was an Iowa conservative who yesterday did this straw poll
of a small number in Iowa, and every single one of those conservatives said
that Newt Gingrich`s affairs in the past are a huge problem for him in the
state.

MATTHEWS: Yes.

VANDEHEI: So I don`t think you can dismiss it in the minds of
evangelical voters. It is an important element -- not a killer, not a deal
killer for Newt Gingrich, but undoubtedly something that sort of factors
into the equation when people are thinking...

MATTHEWS: OK...

VANDEHEI: ... Can I go with him or can I not go with him?

MATTHEWS: We`re going to go to that that segment -- we call it a
segment (INAUDIBLE) Right after the break, we`re going to talk about who
wins here. But while you`re on the subject of Newt, it does seem
interesting. What they`re really looking for, the Republican Party right
now, is not some head of state, somebody to represent the American people
and our republic in the White House and make us proud to be Americans.

Right now, they have a particularly lethal goal. They want a hired
gun. They want somebody to go out there on that debate stage next summer
and fall and kill, basically, Obama rhetorically. They want somebody who
goes in there and is smarter than him, at least as smart as him, and takes
him apart. And they don`t think Romney necessarily has the goods to go in
there, the chops to do it on that stage.

MILBANK: Right. I think that...

MATTHEWS: Whereas Newt does.

MILBANK: Well, I mean, Romney has proven himself to be an excellent
debater. But I think that is what`s behind McQuaid and the New
Hampshire...

MATTHEWS: Fixed piece debater. Often fixed pieces.

MILBANK: Yes, he is. But you know, the other problem is Newt can get
in a debate and become the professor and pedantic. I mean, we all thought
Al Gore was a terrific debater until he actually got...

MATTHEWS: Yes.

MILBANK: ... on the presidential...

MATTHEWS: He beat Ross Perot.

MILBANK: Well...

MATTHEWS: On Larry King, he sure did. Anyway, that was a great
debate. He talked into the back of his head for about a half hour. It was
a great debate.

Hey, Jim VandeHei, thank you. We love Politico here.

VANDEHEI: Good to be here.

MATTHEWS: And thank you, Dana Milbank. We love "The Washington
Post."

Coming up: The big question, who gains and who loses if Herman Cain
drops out? We really like this politically. It`s our bread and butter.
Who wins right now? It looks like the Newtster because nobody likes the
other candidates. And it`s all about who can beat President Obama. And
they don`t seem to like Mitt Romney in the conservative world at all. The
dog doesn`t like the dog food.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Tonight I`m going to be speaking about my book, "Jack
Kennedy: Elusive Hero," at the legendary Politics and Prose book store here
in Washington, D.C. -- tomorrow. Tonight, I`m going to be speaking to a
big audience up in Boston at the John F. Kennedy Library itself. On
Thursday, I`ll be addressing a big public forum at Springfield,
Massachusetts. And on Friday, it`s on to Portsmouth, New Hampshire,
speaking at the "Writers on a New -- New England Stage." Then on Saturday,
I`ll be in Rhode Island at Barrington Books.

I got to tell you, I can`t think of anything more historic or
thrilling than a swing through New England talking about the president so
close to that part of the country`s heart.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. With Herman Cain on the ropes,
let`s take a look at what I call the Eastern and Western conferences of the
GOP presidential race. From the Western conference come the hard-right
social conservatives, plus the libertarian Ron Paul. At various times,
Michele Bachmann, Rick Perry and Cain have all been front-runners there.

In the Eastern conference are the more traditional Republican
conservatives, many of them more socially moderate. Two of them are
already gone. Tim Pawlenty has already dropped out and Chris Christie
never jumped into the race.

So if Herman Cain exits the race, where are his supporters likely to
go? Well, Chris Cillizza is an MSNBC contributor and managing editor of
Postpolitics.com. And Susan Page is Washington bureau chief for "USA
Today."

Chris Cillizza, I guess I have to ask you, quite simply, who wins if
Cain loses, if he has to drop out and become, for the rest of his life, as
we call him, citizen Cain, not President Cain?

(LAUGHTER)

CHRIS CILLIZZA, POSTPOLITICS.COM, MSNBC POLITICAL ANALYST: I think
the obvious and probably right answer, Chris, is Newt Gingrich because as
you point out, in your Western conference, there`s a lot of people over
there who are trying to get that vote. I would put Newt -- you have Newt
in the Eastern conference. I`d put him kind of in between because I think
he`s trying to get that social conservative Tea Party vote, too, though he
is clearly a member of the establishment.

He`s the momentum guy at the moment. He`s the next guy in line after
Donald Trump, Michele Bachmann, Rick Perry and Herman Cain, the kind of
anti-Romney conservative. So I think to the extent that there`s a momentum
candidate, conservatives are looking for someone who isn`t named Romney who
can win the nomination and be credible against Barack Obama, that`s
probably Newt Gingrich.

I would point out, though, Chris, just very quickly there was a Pew
poll conducted last week. Second -- people who named Herman Cain as their
first choice, their second choice split between Romney and Gingrich. So
it`s not as simple as that Gingrich gets all of the Herman Cain supporters.

MATTHEWS: Yes.

CILLIZZA: They probably go a lot of different places. But I think
these are people who jumped on the Cain train, pardon that terrible pun --
but jumped on because he was the candidate -- the momentum candidate, and
now Gingrich is that candidate. So it`s an easy transition for them.

MATTHEWS: Yes. I`d be a little more -- I`d be a lot less hesitant
than you. I think they`re heading towards the guy who`s the hot hand right
now.

MILBANK: Right.

MATTHEWS: Susan, I want you to respond now to Newt Gingrich today and
what he -- what he said may be the end of the line for Herman Cain. Boy,
is he handling this well.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R-GA), FMR. HOUSE SPEAKER, PRESIDENTIAL CANDIDATE: Let
me just say very briefly on Herman Cain, since all of you otherwise will
ask me, I think it`s a very difficult situation for he and his family. My
heart goes out to them. I hope that he reaches whatever is the right
decision for them. And beyond that, I`m not going to have any comment. I
think it`s his decision to make and he has to do what he thinks is best.

(END VIDEO CLIP)

MATTHEWS: Pure excellent politics, right, Susan?

SUSAN PAGE, "USA TODAY": And you know, Gingrich has been preparing
for this moment from the start. He has made a big point of being nice to
Herman Cain, deferential to Herman Cain. He did that debate with Herman
Cain, if you`ll remember, because he figured the day might well come when
he wanted if not Herman Cain`s endorsement, at least good feelings of
support...

MATTHEWS: Yes.

PAGE: ... of people who`d been drawn to Herman Cain.

MATTHEWS: He`s handled this so well. He`s all -- look at there -- I
mean, I`m not a complete cynic, but showing such empathy, such feeling.

PAGE: Well...

MATTHEWS: Newt Gingrich doesn`t have feeling and empathy!

PAGE: Well, I don`t know about that, but...

MATTHEWS: Oh!

PAGE: But you know, this -- this is a tricky area for him, as well,
because of course...

MATTHEWS: His background.

PAGE: ... he`s had marital infidelities, as well...

MATTHEWS: By the way, what a smart move. He not only shows empathy,
he shows a lack of moral superiority, which is appropriate in this case.

Here`s Michele Bachmann. She wasted no time trying to bury Cain.
Let`s listen to her because this is her territory, this Christian
conservative turf.

(BEGIN AUDIO CLIP)

UNIDENTIFIED MALE: If, in fact, Herman Cain exits, does that most
benefit you in this race?

BACHMANN: Well, I -- I think all of these do benefit me. I think
Rick Perry`s slide in the polls benefits me. I think that with Herman
Cain. And I think now we`re re-looking at Newt Gingrich because of -- more
information is coming out.

I think that those who are the commonsense conservative voters are
looking for their champion. I have been their champion. I`m their tested
champion. And now I think they will be coming home.

(END AUDIO CLIP)

MATTHEWS: Was that music for her to hurry up there? I`m not sure.

Let me go to Chris Cillizza.

(LAUGHTER)

MATTHEWS: I love the word "we." "We" is always used when you`re not
doing well in a campaign. It`s "I" if you win.

She clearly could benefit a couple points here. But let me get back
to this. I want you guys to look at these numbers, because if you look at
the numbers right now, it`s clear that in all the polls both nationally and
in the key races in Iowa and New Hampshire -- maybe not so much in New
Hampshire -- this guy Cain has about 15 to 16 points in just every one of
these polls, guys.

And we`re looking here at the national average there, about 15.
That`s a big chunk of change to throw to somebody. If you just throw that
over in Iowa or nationally and you just throw that 15 over to Gingrich, or
say you throw 10 of it or 12 of it over, he gets, Chris, a big chunk of a
lead on Mr. Romney.

CILLIZZA: You know, Chris, I think one of the things that`s been
overlooked as we have gone through this litany of conservative alternatives
that have risen and fallen is the fact that Mitt Romney`s greatest
strength/biggest weakness is the fact that in every single national
Republican primary poll that I have seen, he`s somewhere between 18 and 25.

He almost never goes above 25. You don`t win in a one-on-one or maybe
even a three-person race with 25 percent of the vote. That`s always been
his problem, is that...

(CROSSTALK)

MATTHEWS: OK. Go ahead, because here`s the math. I`m loving the
math, because we`re really getting logical here. If he can`t get above 25,
you throw a big chunk of Cain`s vote over to Gingrich, he starts going into
the mid-30s, Susan.

(CROSSTALK)

MATTHEWS: He starts...

(CROSSTALK)

MATTHEWS: ... way ahead. He starts getting a lap on Romney.

PAGE: Right, although, remember, if Cain withdraws entirely, some of
those voters will go to Romney. Some of those voters might go to Ron Paul,
kind of looking an iconoclast. We just think the lion`s share will go to
Gingrich.

MATTHEWS: Yes. Look what happens, though.

(CROSSTALK)

MATTHEWS: Gingrich starts with a base of low 20s. You throw 10 on
top of that, he`s mid-30s.

PAGE: Yes.

MATTHEWS: He`s already ahead of what Romney`s been able to do.

(CROSSTALK)

PAGE: And this has been Romney`s nightmare scenario, that there would
be one alternative, instead of four or three alternatives to him.

(CROSSTALK)

MATTHEWS: Exactly. A clean shot. He`s clearing the field.

So what Cain did was grab most of the right field and then throw it
away because of personal -- apparently personal problems here. And that
throwing it away has gone to the benefit of Newt Gingrich, right?

CILLIZZA: Yes, I think that that`s right.

(CROSSTALK)

CILLIZZA: Susan is 100 percent right. The Romney nightmare scenario
is a consolidated social conservative Tea Party vote behind a single
candidate, Newt Gingrich, Rick Perry, Michele Bachmann, whoever else.

Mitt Romney has to be hoping Herman Cain stays in the race. Don`t get
out of the race, stay in the race.

MATTHEWS: Oh, yes.

You wrote that today.

CILLIZZA: He has to hope Michele Bachmann gets more relevant, Rick
Perry gets more relevant, so that they can split the vote.

Look, Mitt Romney is not going to get 45 or 50 percent of the vote in
the Iowa caucuses, Chris. He probably can get 30 percent of the vote. He
needs a split conservative vote to win there.

(CROSSTALK)

MATTHEWS: You guys go to bed with this stuff like I do.

I don`t know if you, Susan, are as crazy as we are, but Cillizza and I
definitely go to bed thinking about this.

(LAUGHTER)

MATTHEWS: Somewhere in the middle of the night, we`re going to wake
up and say, my God, there`s one other possibility, a real Republican
Convention this summer.

Is it possible at the end of this summer...

(LAUGHTER)

MATTHEWS: Susan, you`re laughing -- they actually have a convention
and say, wait a minute, this stinks what we have been doing here, we have
been picking one loser after another; why don`t we have a big convention
and actually open up the vote and pick the best candidate?

PAGE: Hey, I`m for that, you`re for that. Chris, that`s not going to
happen.

(CROSSTALK)

MATTHEWS: OK.

Chris, any chance of a real convention like in the old days?

CILLIZZA: No, Susan is right.

But I would say, Chris, look, four months ago, if we were on talking
about the renaissance of Newt Gingrich, Newt Gingrich as the hot, young
thing in the Republican presidential race, we would have laughed a lot more
than a Republican Convention.

This is an unpredictable electorate in an unpredictable election
cycle. I agree 100 percent with Susan it`s not going to happen because the
Republican Party pooh-bahs won`t let it happen. But this is a very
unpredictable year .

MATTHEWS: Well, this is the scariest visage I have come across since
Ebenezer Scrooge spotted Jacob Marley on his doorknob.

Anyway, thank you, Chris Cillizza and thank you, Susan Page.

CILLIZZA: Thank you.

MATTHEWS: Please come back.

Up next, Mitt Romney`s campaign released an ad last week which clearly
took the president`s words out of context, in fact, I think totally
distorted them. And now Susan -- Susan -- I`m talking about you, Susan.

Stephen Colbert has taken his revenge. That`s coming up in the
"Sideshow." Colbert to destroy Mitt Romney.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

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

First up, the takedown. Last week, Mitt Romney`s campaign drew heat
for an ad which dishonestly distorts a portion of a 2008 speech by
President Obama. Need a refresher? Here`s part of the ad, followed by
what the president actually said.

(BEGIN VIDEO CLIP)

(CHEERING AND APPLAUSE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Thank you, New
Hampshire.

(CHEERING AND APPLAUSE)

OBAMA: How you all doing today?

I am confident that we can steer ourselves out of this crisis. It`s
going to take a new direction. If we keep talking about the economy, we`re
going to lose.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

OBAMA: Senator McCain`s campaign actually said -- and I quote -- "If
we keep talking about the economy, we`re going to lose."

(END VIDEO CLIP)

MATTHEWS: Well, in case that wasn`t convincing enough, let`s take a
look at the counterattack served up to the Romney camp courtesy of "The
Colbert Report" last night.

(BEGIN VIDEO CLIP, "THE COLBERT REPORT")

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": Mitt Romney...

(LAUGHTER)

COLBERT: ... who gets a tip of my hat for his new ad which nails
Barack Obama using Obama`s own words.

Of course, the Democrats are claiming that Obama`s "not talk about the
economy" quote from 2008 was taken out of context on the technicality that
it was.

(LAUGHTER)

COLBERT: He explained this out-of-context edit in one sentence.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: What`s sauce for the goose
is now sauce for the gander.

COLBERT: Yes.

(LAUGHTER)

COLBERT: Sauce for the goose is now sauce for the gander.

(LAUGHTER)

COLBERT: And it doesn`t matter if the gander that the goose is
talking about was quoting an old duck.

(LAUGHTER)

COLBERT: Those words came out of Obama`s face.

(LAUGHTER)

COLBERT: Now they`re his words.

(LAUGHTER)

COLBERT: I mean, just like some of my most famous quotes. Ask not
what your country can do for you, ask what you can do for your country.
Now mine.

(LAUGHTER)

COLBERT: Love thy neighbor as thyself. I own it.

(LAUGHTER)

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS: And I guess that`s all from the same rule book that the
Romney campaign used.

Anyway, next up, ignorance is bliss? Not exactly words you want your
governor to be living by, do you? Do you agree with that? Well,
unfortunately for Ohio residents, Governor John Kasich is not exactly a fan
of newspapers. Here`s what he said yesterday during a speech at the
Columbus College of Art and Design.

(BEGIN VIDEO CLIP)

GOV. JOHN KASICH (R), OHIO: You should know I don`t read newspapers
in the state of Ohio. Very rarely do I read a newspaper, because, just
like I think that presidents have done in the past, reading newspapers does
not give you an uplifting experience.

Time to time, people will send me articles and things I need to know
about. But I have found that my life`s a lot better if I don`t get
aggravated by what I read in the newspaper.

(END VIDEO CLIP)

MATTHEWS: Well, Kasich later said that he was drawn to the issue of
welfare fraud in the state, in Ohio, when he happened to walk past a
newspaper boasting a headline on the topic.

Is that really something to brag about, that the only way, Governor,
that you read the newspapers is you happen to catch a glimpse of one?

And, finally, oops. That`s right, another flub from GOP candidate
Rick Perry. What was it this time? Well, earlier today in an interview in
New Hampshire, Perry attempted to level with the younger generation of
voters, but, as it turns out, he wasn`t quite on target with just how young
we`re talking about.

Here, let`s listen.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: And the fact is,
those of you that are sitting in this -- in this hall who are going to
inherit this country are counting on us.

Those of you who that are -- will be 21 by November the 12th, I ask
for your support and your vote. Those of you who won`t be, just work hard,
because you`re going to inherit this. And you`re counting on us getting
this right.

(END VIDEO CLIP)

MATTHEWS: "Getting this right."

Anyway, the legal voting age, Governor, is what? Well, actually, it`s
18. How did you get that number wrong? How can you be so wrong? Wow.

Up next: The Obama campaign keeps going after Mitt Romney, so why is
the Romney -- the Romney campaign itself so happy about that, or are they?

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

JULIA BOORSTIN, CNBC CORRESPONDENT: I`m Julia Boorstin with your CNBC
"Market Wrap."

A mixed finish as techs struggle, the Dow Jones industrials climbing
32 points, the S&P 500 adding two-and-a-half, and the Nasdaq falling nearly
12 points. Of course, the big news on the Street today, American Airlines
parent company AMR filing for bankruptcy protection, after failing to reach
a labor agreement with pilots. Shares of AMR tanked nearly 84 percent.

But that was actually good news for its rivals. Look at JetBlue,
soaring more than 10 percent today. BlackBerry maker Research In Motion
jumped after announcing plans to release new mobile software that allows
corporate I.T. to manage passwords across a variety of platforms.

But Bank of America shares slid to a new low, now off more than 60
percent from the start of the year. It`s facing some steep challenges
related to its mortgage business and increasing pressure from shareholders
to start slimming down and selling assets.

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

MATTHEWS: Back to HARDBALL.

We`re talking about the Democrats now. For the second day in a row,
the Democratic National Committee is going after Mitt Romney, this time for
that ad distorting President Obama`s words. The DNC`s latest hit takes the
fight to the heart of Romney country, New Hampshire.

Let`s watch.

(BEGIN VIDEO CLIP, DEMOCRATIC NATIONAL COMMITTEE rMD-BO_AD)

NARRATOR: In a new ad, Mitt Romney uses Barack Obama`s own words
against him.

OBAMA: If we keep talking about the economy, we`re going to lose.

NARRATOR: But those 11 words spoken in Londonderry during campaign
2008 have now created a firestorm of controversy. Here`s why.

OBAMA: Senator McCain`s campaign actually said -- and I quote -- "If
we keep talking about the economy, we`re going to lose."

UNIDENTIFIED FEMALE: A bad taste in my mouth, you know?

UNIDENTIFIED FEMALE: I feel like it`s commercial fraud.

UNIDENTIFIED MALE: It`s a very poor practice.

UNIDENTIFIED FEMALE: First word that comes to mind is fraud.

(END VIDEO CLIP)

MATTHEWS: Wow. Well, this smells a lot like a win-win strategy for
Obama, knock Romney out of the race right now and get a weaker opponent or
soften him up for the general election. In other words, beat him now or
beat him later. How can they lose?

Joe Williams is a White House correspondent for Politico and Ron
Reagan is an author and political commentator.

Let me start with Joe.

It just seems to me that they have maybe lucked out here. They`re
going to have a tough campaign ahead, but here they are going after Mitt
Romney with the idea maybe we can help weaken him so Newt can overtake him.
We`d rather take on Newt in the fall. Or weaken him so much that even if
he beats Newt, Romney staggers into the general election a weakened
candidate.

Are they that smart, that lucky, or both, Joe?

JOE WILLIAMS, POLITICO: Well, it seems like it`s a combination of
both.

But, certainly, it reminds me of two boxers mixing it up before the
undercard is even finished. They`re already fighting outside of the ring
and we don`t even know which opponent President Obama`s going to face.

MATTHEWS: Yes.

WILLIAMS: Keep in mind, we also -- we have three debates between now
and the end of December, and another nine or 10 in the next calendar year
before the nomination even gets settled.

So I think the White House is trying to adopt a very proactive
strategy here, number one, to define Romney before Romney gets to define
him, and also, as you said, soften him up for the general election, maybe
hoping that Gingrich or a weaker candidate can get in the ring, instead of
Romney, who they have little problems matching up with. And so far, it
looks like it`s going to work, because Romney seems a bit distracted by
this.

MATTHEWS: Do you know, have you been able to report or can you report
now who they want to fight? Who does Obama`s team out in Chicago and in
the White House, who do they really want to take on next November?

WILLIAMS: Well, you ask them, and they say it doesn`t really matter.

But, obviously, looking at Romney`s record as a red governor in a blue
state, he presents some matchup challenges for the president in the general
election. His big problem is trying to make it from the primary to the
general election without having too many more flips on his flop that would
give them more ammunition to fire at him, if he becomes, in fact, the next
Republican nominee.

But, certainly, you talk to them, they do not care who they face, but,
obviously, the bottom seven, if you will, have a lot more weaknesses than
Romney, and they would probably rather face somebody that they can get a
tougher handle on who doesn`t present so many problems with moderate
voters.

MATTHEWS: So, Ron, why don`t you take a look at this? Here`s what
Romney had to say in response to the DNC`s Mitt vs. Mitt ad, which
portrayed Romney as a flip-flopper.

(BEGIN VIDEO CLIP)

ROMNEY: I don`t know what they`re afraid of. They don`t want to see
me as the nominee. That`s for sure.

UNIDENTIFIED MALE: Does that bother you?

ROMNEY: Oh, I mean, it shows -- it shows -- it shows that they`re
awfully afraid of facing me in the general election. They want to throw
the -- the primary process to anybody but me.

So bring it on. We`re ready for them.

(END VIDEO CLIP)

MATTHEWS: Well, there you have a little bad recording there, but
that`s the way we pick things up now. He`s saying, I don`t know what
they`re afraid of. They don`t want to see me as the nominee, so bring it
on. He`s using old W.`s line there. I don`t know why he went back to
that.

"Bring it on." That has a pretty bad experience, that line.

(LAUGHTER)

(CROSSTALK)

MATTHEWS: Ron, who do you think they`re scared of? Who are --
they`re going after Romney. They`re hoping to get him pretty early.

RON REAGAN, POLITICAL COMMENTATOR: Yes, I don`t think that the White
House is necessarily scared of Romney, but, as Joe`s pointed out, I think
they figure he`s the inevitable nominee because the other nominees are
fatally flawed.

Now, if you wanted to play devil`s advocate for this strategy, I suppose
that you could say that they`re taking a risk by seeming to anoint Romney
this early in the process, and that that could even affect the Republican
primaries, but I don`t know. I think that`s kind of a weak argument.

I think what they really want to do before the holidays start and
everybody, you know, goes away for a month and thinks of, you know,
mistletoe and things like that, they want to embed in the public`s mind
this narrative that Mitt Romney is a flip-flopper, so that at the end of
the day, whether he wins easily or wins in a difficult run for the
nomination, at the end of the day, people say, oh, the Republicans, they
nominated this guy that doesn`t stand for anything. Well, we can`t vote
for him.

MATTHEWS: But let me get back to Joe on this. Attacking him as a
flip-flopper, hurts him especially, not with the middle, who flip-flopped -
- most middle of the road people do flip-flop back and forth. They change
their mind, they fickle. They decide between Obama, for example, and
somebody besides Obama the next time. That`s the essence of a flip-
flopper. They wanted to flip-flop, change their mind on Obama.

But the right-wing hates flip-flopper. If you -- if you nail Obama -
- I mean, nail Romney between now and the first primaries and the caucus on
the third of January in Iowa and in the New Hampshire primary the week
later, Joe, you have nailed him as something the right wing hates more
anybody. You know, a weak sister, an old phrase, a flip-flopper. You
don`t like the guy who`s a little too noodle like when it comes to making
up his mind.

JOE WILLIAMS, POLITICO: Well, and that helps

MATTHEWS: They hate it!

WILLIAMS: Well, and that helps explain a lot of why Herman Cain has
had his turn in the spotlight, why Gingrich is having his turn in the
spotlight, despite his voluminous baggage, that they like the fact that
these guys stand -- they come from the gut.

MATTHEWS: Yes.

WILLIAMS: They don`t come from the head.

And Mitt Romney is coming off as a kind of intellectual. And where
to moderate voters being the governor, the red governor of a blue state
would be a positive attribute, but to the base, it`s an anathema because
they like people who can stand rock and rib, that`s the image that
Republicans have of themselves. And they want someone to reflect that
image.

That`s why they also keep saying, send us somebody to love. We want
somebody who`s got that core conviction, who cannot only take on the
president, but present that image of a very strong Republican candidate
without a lot of extraneous baggage, without scandals popping up every five
minutes, without reports that he`s not really, get with the program.

REAGAN: And Gingrich oddly enough doesn`t really fit that bill, even
though he`s the front-runner right now, taking his turn as the not-Mitt.
Gingrich does not really fit that bill.

MATTHEWS: Yes, because you know so much, ron. You know too much!
Yes!

(LAUGHTER)

MATTHEWS: But everybody knows this --

REAGAN: But people will find out.

WILLIAMS: But in this instance, image matters. And what you have in
Newt Gingrich is somebody who will make a bold statement and say something
that is complete --

MATTHEWS: He`ll go on the attack, too.

(CROSSTALK)

REAGAN: And then the next week, he`ll come out and say something
completely different, of course.

MATTHEWS: I know. But they want an attack guy.

Anyway, thank you, Joe Williams. Thank you, Ron Reagan.

Coming up, how serious is the Iranian situation ahead of the 2012
election? Boy, we`re talking about the nuclear threat from Iran, now we
have these so-called students. Who knows whether the thugs from the
government, who they are, probably working with the government, connivance.
Doesn`t that look familiar to the 1979?

Here they are storming the British embassy in Tehran, burning the
British, American, and Israeli flag. Same old, same old. Iran however
could be the big sleeper in next year`s election. This fear about them
having a nuclear weapon.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: With just about one month left for U.S. troops before they
leave Iraq, today, they got a surprise visit. Vice President Joe Biden
arrived there to witness American troops pulling out first hand. During
his two-day trip, Biden`s expected to hold hearings or, actually, meetings
with Iraqi officials over what the future U.S./Iraqi relationship is going
to look like. About 14,000 U.S. troops are still in country, down from a
high of 170,000. All those 14,000 troops will be out of Iraq by January.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: We`re back.

It was a scene reminiscent of 1979 when hard-line so-called students
stormed the American embassy in Tehran and set off a hostage crisis that
last 440 days back then.

Well, today, a group of Iranian stormed the British embassy and
diplomatic residents in orchestrated attacks. They burned British,
American and, of course, Israeli flags, and shouted "Death to England."
This time, thankfully, there were no hostages, but the incident adds to the
tension between Iran and the West.

The United States, European Union, and U.N. Security Council were all
have all condemned the attack itself. The incident occurred a week after
strong new sanctions, economic sanctions were imposed on Iran by the U.K.

Well, it underscores how serious the situation is ahead of the 2012
election here and how much it could dominate the foreign policy agenda in
the coming years. Many of the Republican presidential contenders have gone
after President Obama`s approach to Iran. What do they advocate? Well,
that`s less clear.

We`ll get into all of this with Robin Wright, a scholar with the
Woodrow Wilson International Center for scholars. Also, the author of "Rock
the Casbah: Rage and Rebellion Across the Islamic World."

And Bob Baer, a former CIA officer in the Middle East. He writes a
column for "Time."

Thank you both for joining us.

First of all, do we know who those people are, Robin, who grabbed the
British embassy today in Tehran?

ROBIN WRIGHT, WOODROW WILSON CENTER: I don`t think anybody knows for
sure, but the British certainly suspect that this was a part of the
revolutionary guard called the basij. These are paramilitary thugs, a kind
of militia that works for the government, because there`s no way this could
have happened without government approval or sanction.

MATTHEWS: And, by the way, how many students on campus are sitting
around thinking about economic sanctions? Usually that`s the sort of thing
that the government ministries are focused on, right?

WRIGHT: Oh, absolutely.

MATTHEWS: Bob, do you have any other views on that, disparate or the
same about whether these are not -- I mean, we had to put up with the word
students for a year there. I always wonder what that meant over there. Is
that grad students still hanging around Berkeley a year or two later or
what? Are these guys students or thugs?

BOB BAER, FMR. CIA FIELD OFFICER: They`re hired by the government.
They were sent by the government. You can see the way the police reacted.
They didn`t try to really stop them.

This was a government-sponsored demonstration. I`ve even heard that
people have identified intelligence officers in the crowd.

MATTHEWS: OK. Let`s talk about strategic concerns now. We`ve been
talking a long time about the Iranian effort to develop a nuclear weapon.
It looks like they are headed that direction, according to International
Atomic Energy Commission.

It looks like they are going that direction. The question is when,
and can they achieve it with all the Israeli intelligence, and actually
Israeli finagling in this whole thing -- their ability to screw them up
basically behind the scenes.

Robin, you`re smiling because we always have confidence in the
Israeli advantage, but Israel is worried. If they live in a country where
people, young people, have to build their lives knowing that nearby is a
country of zealots that has talked about destroying Israel and has a
nuclear weapon, it`s a different Israel than we have today. They may not
want to live there. That may kill the hopes of people who want to build
their lives there.

WRIGHT: Well, look, Israel has legitimate concerns about the Iranian
intentions, but the reality is also that the International Atomic Energy
Agency, the U.N. nuclear watchdog, hasn`t been able to nail Iran for
exactly what it`s doing right at this moment. We know what it was doing up
through 2003. There are suspicions about what it`s done since 2003. It
clearly has --

MATTHEWS: Did they ever say we`ve got a nuclear weapon and we have
it ready to shoot?

WRIGHT: Well, the big issue is they develop a capacity like the
Japan model and not actually build the weapon that. So, gives them a short
order window.

MATTHEWS: That`s a compromise, isn`t it?

WRIGHT: That`s a compromise and that`s the kind of thing that gives
them a sense of security or power in the region, but it would make it much
more difficult to attack because they want to test a weapon if they
actually --

MATTHEWS: When we pull out of Iraq, bob, interesting little overlap
here in what we`re talking about, the president -- the vice president
visiting Iraq today. Once we pull out of Iraq, it seems they control their
airspace completely. If the Iraqi government over there decides not to
give Israeli planes the right to fly over there and attack Iran to go after
those missile sites, how do they do it?

BAER: They go through Saudi Arabia. I think it`s fairly clear at
this point the Saudis will allow over flights of the Israeli airports. The
Saudis are terrified where Iran is going. The influence it`s going to have
in Iraq, what it`s doing in Bahrain and even in Kuwait, and, of course,
Lebanon which is controlled by Hezbollah.

So I think, you know, under the right circumstances, Saudi Arabia
would let them come over, and it would be happening very quickly. There`s
not much that this administration could do about it once they decide to do
it.

MATTHEWS: Do we need to play any role, any instrumental role in
this?

BAER: We`re going to play a role in this no matter what because --

MATTHEWS: No, do we play an instrumental role? Do we have to play
any role in terms of logistics, flyover rights, any -- refueling? Could we
become completely hands clear of this thing, clean of this thing?

BAER: No. We`re going -- the point is we`re going -- we`re going to
get held responsible by the Iranians, and the Iranians will respond. They
will respond in Iraq and in the Gulf, and they will rocket Israel from
Lebanon.

You know, the problem is nobody is intending to turn this into a
general war. It`s just -- it`s the risk of escalation which should scare
everybody.

MATTHEWS: OK. Robin?

WRIGHT: I don`t think actually we`ll have before the election next
year an Israeli strike or a U.S. strike or military action by --

MATTHEWS: But Bibi is a hawk, and Ehud is a hawk -- his defense
minister, Ehud Barak. And I always like that guy. Bibi, I have problems
with.

But suppose they just decide to do it before next year`s election.

WRIGHT: I don`t think they will. I just think the elements are in
place. I think there will be enormous restraints -- desire by the Obama
administration to pull them back. And I think that -- in terms of trying
to justify or prove that Iran is a point where it is an existential threat
to Israel won`t be there either. It may happen down the road. During the
election campaign, Iran is going to be a huge issue, along with the future
of the Arab world.

MATTHEWS: Yes, OK.

WRIGHT: As well as economic crisis, but I don`t see a strike.

MATTHEWS: What everybody has to think about is consequences. That`s
what Kennedy is good at. Consequences, are they ready to face Israel and
here the consequences?

BAER: She`s absolutely right. It`s not going to happen.

MATTHEWS: OK, thank you, gentlemen. Well, thank you, gentlemen.
That makes me feel happier.

Anyway, Robin Wright, thank you. Bob Baer, for your expertise.

When we return, "Let Me Finish" with the poor state of this country
where Barney Frank -- think about this -- is leaving and Newt Gingrich is
thriving. What a country.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: "Let Me Finish" tonight with this. There is nothing I can
say about the state of this country`s political health as telling as the
fact that Barney Frank is leaving and Newt Gingrich is thriving.

Barney has brains, wit, conscience and a pretty good sense of
proportion. He can argue his case but still see the other guy`s,
especially if it`s a good argument.

Gingrich is still mad he was made by Bill Clinton to enter Air Force
One from the rear.

Barney calls Newt the thinnest-skinned character assassin he ever
met. It`s a serious charge, and it hits home to those of us who remember
how Newt came to power in the House. It was over the bodies of Democratic
leaders charged with corruption over a Democratic Party he accused of
treason. It`s how Gingrich gets what he wants.

Now, he wants the Republican nomination for president, and he has a
chance to get it. Republican conservatives have a basic goal for the
coming year. Win the White House. That means running Obama out of there.

Newt would be the man to do the job. He could be. He would go into
debates with the president wielding whatever broken beer bottle his mind
can manage to grasp, whether on the way into the ring or already there.
Where Romney will enter with a Sunday punch, something on the order of
"With all due respect, Mr. President, you had your chance" and then
dramatic well-rehearsed pause and "you blew it." In other words, a line
Obama will be ready to parry most likely with his own well-rehearsed
retort.

But Newt in the ring could be more dangerous, harder to defend
against, harder to predict. Newt would unleash whatever charge will force
his rival, President Obama, on defense. Character assassin is Barney
Frank`s tag for him, but it`s wise to consider it. Newt will say what
works to hurt Obama, even if the weapon kicks back at him. He`ll take a
great deal of scar tissue to land all of the more of it on the president.

One thing I know about Newt Gingrich. Ever since he arrived on the
national scene, politics has been nastier, more feral, too often uglier.
There`s something about this figure that darkens the atmosphere and lessens
the spirit. The haters of liberal democracy will cheer his every assault,
his every rise in the polls, his every advance towards Tampa where the
scene of him, Newt Gingrich, being nominated by a major political party for
the American presidency promises a grotesquery to make even the harden of
us avert our glance in embarrassment and sadness for our republic.

And that`s HARDBALL for now. Thanks for being with us.

"POLITICS NATION" with Al Sharpton starts right now.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

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