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updated 12/22/2011 10:11:27 AM ET 2011-12-22T15:11:27

Guests: Charles Schumer, Shira Toeplitz, Kenneth Vogel, Tom Ridge

MICHAEL SMERCONISH, GUEST HOST: Note to Republicans. Stop digging.

Let`s play some HARDBALL.

Good evening. I`m Michael Smerconish, filling in for Chris Matthews,
who`s taking some time off after his tour for his book, "Jack Kennedy:
Elusive Hero." Chris will be back tomorrow night.

Leading off tonight: Tangled up in blue. When the very conservative
"Wall Street Journal" editorial page tells Republicans it`s time to raise
the white flag, it`s time to raise the white flag. House Republicans are
not only losing on the substance of the payroll tax debate, they`re losing
the politics, too. They`re getting clobbered by Democrats, the press, even
fellow Republicans. This could be the Democrats` big moment, if they don`t
blow it.

Plus, ad nauseam. There`s something comically ironic about Newt
Gingrich, who practically invented the modern politics of personal
destruction, complaining about all the ads a pro-Romney PAC is airing in
Iowa. Gingrich is being badly outspent, and it shows -- in his poll
numbers and in his frustration. We`ll look at the ads that are taking down
Newt.

Also, former New Mexico governor Gary Johnson is dropping out of the
presidential race to run as a Libertarian. Now, you might have forgotten
that Johnson was running, but this year, a third party run by a more
serious candidate could make a huge difference in the election results.
And tonight, we have new poll numbers to show who might benefit.

And Barney Frank`s advice to the colleagues he`s leaving behind.
That`s in the "Sideshow."

Finally, "Let Me Finish" tonight with how the Republican Party`s
obsession with opposing President Obama at any cost may be costing them way
too much.

We start with Senator Charles Schumer, a Democrat from the great state
of New York. Senator Schumer, thanks for being here. What`s the exit
strategy? How might this flap over the payroll tax end? House blinks,
Senate blinks, or does it expire?

SEN. CHARLES SCHUMER (D), NEW YORK: Well, I don`t think it`ll expire.
I think that, basically, there is so much pressure on Speaker Boehner --
he`s basically standing alone -- that the House is going to have to do what
the American people want and what many of us have been asking, which is
very simply to pass the two-month extension, then we`ll negotiate for the
rest of the year.

Speaker Boehner had a very bad day. It started out with the "Wall
Street Journal" editorial, which you mentioned. In the course of the day,
Senator McCain tweeted the "Wall Street Journal" editorial to thousands of
Republicans and said he agreed with it. Later in the day, both Newt
Gingrich and Karl Rove, two leading Republican strategists, said that
Boehner ought to just go along here.

So he`s sort of out on a limb. And I think he knows the right thing
to do, but he`s got a caucus that contains 80 to 100 very, very hard-right
people, and he`s been following them through the course of the year, they
haven`t been following him.

But at the end of the day, I don`t think he`ll have much choice. And
my guess would be that within the next few days, a number of the mainstream
Republicans in the House will go to Speaker Boehner and say, You cannot
persist in this, and he`ll be forced to pass the bipartisan bill that was
passed by Senator Reid and Senator McConnell 89 to 10 in the Senate that
extends the payroll tax, unemployment insurance and the so-called "doc fix"
for two months

SMERCONISH: I know that earlier today, Senator, you said, Look, if
it`s a one-year deal that you want, we`ll be the first ones to get back on
the plane. Did you realistically mean that the Senate could reconvene and
something could get done before?

SCHUMER: Well, what I said was this. It`s very hard to believe that
these folks are for a one-year deal if they won`t ratify a two-month deal.
These are the very same people who were against any deal at all a week-and-
a-half ago. In fact, all eight of the people who Speaker Boehner appointed
to be his so-called negotiators were against any payroll tax extension for
the middle class two weeks ago.

So what we said is, ratify the two-month deal first and then the
Senate leadership -- I`m amongst them -- will get on a plane and negotiate
a -- an extension for the year. But we`re not going to fall for this idea
that is endemic in Washington. When you want to kill something and you
don`t want your fingerprints on it, you say, Send it to a committee.

Speaker Boehner has time and time again moved the goal posts back. He
said, Get rid of the millionaires` tax, and maybe he would pass it. He
didn`t. He said, Lower the percentage from 3.1 to 2 and maybe it would
pass. And then he clearly wanted the oil pipeline in there. We swallowed
hard, put it in, and he still couldn`t deliver that.

So you can`t negotiate -- negotiating with Speaker Boehner is like
nailing Jell-o to the wall. We need him to pass this two-month deal, and
that`ll give us some degree of assurance that either he or his -- both he
and his caucus are really for giving the middle class a tax cut.

SMERCONISH: Senator...

SCHUMER: We think, secretly, they`re not.

SMERCONISH: A critic might say that the Senate should not have
adjourned with this matter still open. As a matter of fact, Newt Gingrich,
among others, is one who said that he thought that it was against the best
interests of both the House and Senate for the Senate to have left -- I
think he said something along the lines, of abdicating its responsibility.

SCHUMER: Well, that`s -- you know, the Senate has met its
responsibility. What more could we do? To pass a bill 89 to 10, a bill
that Speaker Boehner said was a good bill after it passed and to send it
over to the House -- I think you`ve got to look at who`s abdicating their
responsibility.

When Speaker Boehner refused to put the Senate bill on the floor --
the day it passed, he said he would put it on the floor. He now refuses to
put it on the floor because he knows it has the votes to pass. That`s
where the abdication of responsibility is, and I don`t think it`s even a
close question.

SMERCONISH: Here`s the comment to which I referred. It`s Newt
Gingrich blasting you and your fellow Senate colleagues for playing games.
Let`s watch.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R-GA), FMR. HOUSE SPEAKER, PRESIDENTIAL CANDIDATE: So
I think this is an example of why people are sick of Washington and sick of
politics. You know, they can`t -- they can`t figure out how to pass a one-
year extension, so the Senate leaves town? I mean, it is -- it is an
absurd dereliction of duty. And it`s game-playing. Obama is so inept as a
president and the Congress is so dysfunctional as an institution that we
are lurching from failure to failure to failure in a way that I think the
American people find very, very disheartening.

(END VIDEO CLIP)

SMERCONISH: I think you`ve already responded. You obviously don`t
think that the Senate abdicated its responsibility...

SCHUMER: No.

SMERCONISH: ... by going home for the year.

SCHUMER: Who`s passed a bill that will extend the middle class tax
cut? The Senate. The House has not.

SMERCONISH: Right, but respectively, if the thing`s not resolved,
then perhaps the Senate should have stayed in business for the year until
there was resolution.

SCHUMER: Well, hey, Michael, look at what happened. We started out
with 3.1 percent for employers and employees. We then got rid of the
employer part. We then further negotiated and moved it down to 2. We
tried to do a one-year deal, but they put in things that they knew were
killers that Democrats would never go for.

So Speaker McConnell -- sorry, Leader McConnell and Leader Reid came
together on a plan that would extend the payroll tax cut. It didn`t squeak
by, it passed 89-10. It`s a bipartisan bill. It has the support of Newt
Gingrich and many, many others. Newt Gingrich, Mitt Romney have all said
we should pass a payroll tax cut. And it had -- and today "The Wall Street
Journal," Karl Rove and eight -- by now, eight Republican senators have
said, Pass it.

I mean, it`s absolutely turning truth on its head to say, as Newt
Gingrich did, that the Senate is abdicating its responsibility when Speaker
Boehner won`t even put that bill on the floor of the House for a vote.

SMERCONISH: Senator Schumer, thank you for being on HARDBALL. We
appreciate it.

SCHUMER: Thank you. Nice to talk to you, Michael.

SMERCONISH: You, too.

Let`s bring in MSNBC political analyst Howard Fineman, who`s the
Huffington Post Media Group editorial director. The politics of impasse
certainly seem to benefit the White House in this case. Howard, am I
giving them too much credit if I say it was all by design?

(LAUGHTER)

SMERCONISH: Did they reel in the GOP in a trap?

HOWARD FINEMAN, HUFFINGTON POST MEDIA GROUP, MSNBC POLITICAL ANALYST:
Well, I was amused by Speaker Gingrich`s statement that Obama is inept.
The president has inepted his way into having the Republicans go over the
edge of a cliff here.

To answer your question, I don`t think that David Plouffe, who`s the
political strategist at the White House who first floated this idea of a
two-month extension -- I heard about it on Tuesday, wrote about it on
Tuesday. I think I was the first to do so. That was -- they were putting
it out there right then. I can`t say that they thought when they did that
that it would be a perfect way to back the Republicans into a corner, but
that`s the way it`s turned out.

I think Plouffe and company at the White House just wanted to pass an
extension of the payroll tax cut because they`re concerned about the
economy. They didn`t want it at Christmas time. They didn`t want to kill
what looks like a creeping but real recovery. I don`t think it was a
Machiavellian plot, but it certainly worked out to their advantage.

SMERCONISH: Well, and here`s the proof. I mean, talk about the signs
that the president`s fortunes are turning around, thanks to the spectacle
coming from Congress. Look at these numbers from the most recent CNN
Opinion Research Corporation poll. In a matchup against Mitt Romney, the
president now leads by 7 percentage points among registered voters.
Against Newt Gingrich, Obama leads by a remarkable 16 percentage points.

It`s important to point out that other polls show the hypothetical
races to be much closer. But there lies the divide that we`re addressing.

FINEMAN: Well, I think there are -- there are other poll numbers that
bear on this, too. One is that Congress is just so reviled -- I mean, they
have an 11 percent approval rating. It`s probably, you know, too high by
that estimation. And if you look at poll numbers on who`s better handling
the tax situation and whom do you trust on taxes, the president`s numbers
have gone up.

I think this fall, he`s won the debate framing the millionaires` tax
against the payroll tax. And -- and now this two-month -- this argument
over the two-month extension kind of crystallizes in -- in the view of most
people who is being reasonable and who isn`t.

Those 100 Tea Party people in the House keep looking for ways to get
things done that they want to do, and they keep looking for must-pass bills
to do it on and -- and tie themselves in knots doing it. They really want
to have tough means testing of Medicare. They really want to change
environmental rules. They really want the Keystone pipeline.

It`s not just they`re putting poison pills in there to prevent the
president from doing anything, it`s that they want things that just are
going to blow up deals because they want them. And -- and Boehner, the
speaker, does not have the power to go against those 100 in his own caucus.

And what the president is doing here is kind of dividing the
leadership on the Republican side in the House from its -- from its rank
and file, and that`s going to pay dividends for the president down the
road, as well.

SMERCONISH: There were differences in the way in which Mitt Romney
and Newt Gingrich are responding to this situation. Speaking of Mitt
Romney, the candidate was asked about the payroll tax fight in Congress
this morning on "THE DAILY RUNDOWN," and specifically, Chuck Todd asked him
about comments by Senator Scott Brown that the House Republicans and what
they were doing was an irresponsible approach. Let`s watch.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R-MA), FMR. GOV., PRESIDENTIAL CANDIDATE: I`m not going
to throw gasoline on what is already a fire. What we really need is a
president that`s a leader, that can stand in with the members of both
parties and work together on finding a common solution. But this president
has been intent on attacking, and attack mode is not the way that a leader
tries to get people to work together.

(END VIDEO CLIP)

SMERCONISH: So Governor Romney anxious to cast aspersions on the
president, but not necessarily choose sides with regard to the GOP House
and what they`re doing on this.

FINEMAN: Yes. Well, that -- that shows you both a stylistic and
substantive difference between Mitt Romney and Newt Gingrich, and shows you
why, at least until the barrage of negative ads against him in Iowa, that
Newt Gingrich was rocketing to the top because Newt Gingrich said the
obvious and sensible thing, which is in this case, pass the two-month
extension. Whereas Mitt Romney is so unsure of his own political ground,
is so afraid of his own shadow politically, that he was afraid to state the
obvious thing, that it took "The Wall Street Journal," of all people, to
state.

SMERCONISH: Right.

FINEMAN: To state.

SMERCONISH: Caused -- cause quite a ripple this morning.

FINEMAN: Yes.

SMERCONISH: Thank you, Howard Fineman, as always.

FINEMAN: Thank you, Michael. Take care.

SMERCONISH: Coming up: Iowa is being bombarded with ads, and many of
them have been against Newt Gingrich. As a result, he`s sinking in the
polls. We`re going to look at the ads that are crushing his campaign next.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SMERCONISH: We`ve got some new poll numbers from key Senate races
around the country, and for that we go to the HARDBALL "Scoreboard." Let`s
start in Virginia, where a new Quinnipiac poll shows Republican George
Allen with a slight lead over Democrat Tim Kaine, 44 to 42. But a PPP poll
out in Virginia just last week had Kaine with a 5-point lead over Allen in
that race. So it`s tight.

And in New Mexico, in the race to replace the retiring senator Jeff
Bingaman, it`s Democrat Martin Heinrich with a 7-point lead over Republican
Heather Wilson in a new APP poll. That`s a seat the Democrats hope they
can hang onto.

We`ll be right back to HARDBALL.

(COMMERCIAL BREAK)

SMERCONISH: Welcome back to HARDBALL. With less than two weeks until
the Iowa caucuses, a barrage of ads is on the air in the Hawkeye state, and
much of the money hasn`t come from the presidential campaigns but from so-
called super-PACs. They can run countless negative ads, and the candidate
can argue that, technically, he has nothing to do with the mud-slinging.
Nobody`s fooled except the voters.

And just take a lack at amount of ad money that has already poured
into Iowa so far by campaigns and PACs. Nearly $6 million have been spent
by Rick Perry and the Perry PAC. Mitt Romney and his PAC have spent nearly
$4 million. Ron Paul has spent almost $2 million. But Newt Gingrich has
only spent about $500,000, and he has the falling poll numbers to prove it.

Joining me now to take a look at some of the latest ads, as well as
what`s working and what isn`t, MSNBC political analysts Michael Steele,
who`s also a former chair of the Republican National Committee, and David
Corn, the D.C. bureau chief for "Mother Jones" magazine.

Gentlemen, I want to show you some commercials. Here`s an ad just
released today by the pro-Romney super-PAC Restore America`s Future, and it
throws everything but the kitchen sink at Newt Gingrich.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: You know what makes Barack Obama happy? Newt
Gingrich`s baggage. Newt has more baggage than the airlines.

Freddie Mac helped cause the economic collapse, but Gingrich cashed
in. Freddie Mac paid Newt $30,000 an hour, $1.6 million. Gingrich not
only teamed up with Nancy Pelosi on global warming, but together they co-
sponsored a bill that gave $60 million a year to a U.N. program supporting
China`s brutal one-child policy. As speaker, Gingrich even supported
taxpayer funding of some abortions. And Newt is the only speaker in
history to be reprimanded.

(END VIDEO CLIP)

SMERCONISH: Michael Steele, I can look at the focus group -- they
were like this -- Freddie Mac, check, China, check, Pelosi, check...

MICHAEL STEELE, FMR. RNC CHAIR, MSNBC POLITICAL ANALYST: Check,
right!

SMERCONISH: ... abortion check. I mean, they got it all. But it`s
effective, man! It`s a very effective spot.

STEELE: Oh, my gosh, is it effective! Absolutely. Look, you throw
$2.6 million at anything, you`re going to have an impact, and that`s what`s
happened here.

I think the Romney team has gone to their -- to their well, and they -
- they are digging up stuff and putting it out on the airwaves. And Newt
has taken, how shall we say, a kinder, gentler approach with his Christmas
message to be played over the next two weeks to contrast himself with the
style of Perry -- I mean, of Mitt Romney, but also to -- to remind the
voters that, You remember, for all these debates, I was the one who was
saying remember the 11th commandment, remember that this should not be
about Republicans tearing up each other, but by focusing our energies on
defeating the president.

So we`ll see how it plays out. But you`re right, right now, Michael,
it`s been killer. And Newt has decided to parry that thrust with this
particular type of commercial, calling on all the campaigns to stray (SIC)
away from the negative advertising, and interestingly enough, to have more
one-on-one town hall-style meetings on the ground so he can address
directly those charges.

SMERCONISH: But that bus can`t drive fast enough...

(CROSSTALK)

STEELE: But it`s driving, right?

(LAUGHTER)

SMERCONISH: Hey, David Corn -- David, if you think that ads...

DAVID CORN, "MOTHER JONES," MSNBC POLITICAL ANALYST: I`m not sure
it`s even a bus, Michael.

SMERCONISH: If you think that ads...

STEELE: Exactly, David!

(LAUGHTER)

SMERCONISH: If you think that ads like these aren`t getting to
Gingrich, take a look at Newt as he lashed out at his chief rival, Mitt
Romney, for that ad out on the campaign trail.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: All he`s got to do is
simple. This afternoon, when one of you gets to him, he can say, I condemn
any further negative ads and I ask that PAC to run only positive ads, very
simple.

But anything short of that is baloney. And you ought to understand
it`s baloney. You ought to understand these are his people running his ads
and doing his dirty work, while he pretends to be above it.

(END VIDEO CLIP)

SMERCONISH: And then Romney hit back this morning on "The Daily
Rundown." Here that is.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Look, if you can`t handle
the heat in this little kitchen, the heat that`s going to come from Obama`s
Hell`s Kitchen is going to be a heck of a lot hotter.

We have to show that we as a Republican Party and as a candidate that
we can stand up to the barrage that`s going to come from the Obama world.

(END VIDEO CLIP)

SMERCONISH: David Corn, what of it?

CORN: Well, you know, it`s -- you know, you noticed when Newt was
talking he didn`t say that this stuff wasn`t true. I mean, usually, if
they are telling lies about you, you`re going to focus on that as well.

I mean, his life -- I said this the other day -- his life is not just
an open book, it`s an open sewer. And, you know, for the negative ad-
meisters in Mitt Romney`s camp, it`s Christmastime, literally. It`s like a
candy store.

He -- Newt Gingrich is an orchard of low-hanging fruit, all this
stuff, and there`s just no way this wasn`t going to be part of the
campaign. He knew that going in. I mean, they haven`t gotten to the
personal stuff. There`s 30 years worth of bombastic bomb-throwing pieces
of rhetoric that he has said that could fill up not just a two-minute spot,
but a two-hour infomercial.

So he`s getting off almost easy now. And if he -- believe me, if he
had the money to do the same to somebody else, he would.

(CROSSTALK)

SMERCONISH: But it`s not -- you know, it`s not just Romney that`s
banging him. Ron Paul has released...

(CROSSTALK)

CORN: Well, Ron Paul ads are fantastic.

(CROSSTALK)

SMERCONISH: Wait until you see this. He`s released some of the
hardest-hitting ads this time around. Take a look at one.

CORN: They`re like little mini-movies.

SMERCONISH: Yes. Here it is.

(BEGIN VIDEO CLIP, RON PAUL AD)

UNIDENTIFIED MALE: Newt Gingrich renewed his support for an
individual mandate, a key tenet of President Obama`s health care law.

RUSH LIMBAUGH, RADIO TALK SHOW HOST: Support for an individual
mandate? Folks, don`t ask me to explain this.

UNIDENTIFIED MALE: Everything that Gingrich railed against when he
was in the House, he went the other way when he got paid to go the other
way.

UNIDENTIFIED MALE: He`s demonstrating himself to be the very essence
of the Washington insiders.

UNIDENTIFIED MALE: It`s about serial hypocrisy.

(END VIDEO CLIP)

SMERCONISH: Michael Steele, people always say, you know, why all the
negative ads? The answer, because they work.

STEELE: They work.

SMERCONISH: Yes.

STEELE: They work, brother. They work. They do, Michael.

(CROSSTALK)

CORN: Especially when they are true, though.

STEELE: Well, it`s -- it`s not a question of what`s true or what
isn`t true. It`s how it`s packaged.

It`s how it`s all put together in a series of little vignettes that
tell a different story or the same story or continue a narrative, and
that`s really what it`s all about.

CORN: Right.

STEELE: When you`re doing these ads, it`s not really -- you can take
a fact, David -- and you know this.

CORN: Well, yes.

STEELE: You can take a fact and make it -- you can make it say
anything and you can make it true in one instance and untrue in another.

(CROSSTALK)

CORN: But in Newt`s case, they don`t have to do that. That`s the
thing here. They`re just -- he`s being hoisted on millions of his own
petards.

STEELE: That may be, but this is the broader point that should not be
lost here. There is a level, a threshold where the voters go enough is
enough, and I think you`re beginning to see that threshold being reached in
Iowa, when you`re looking at 1,200 commercials being played in a 24-hour
period in some cases.

CORN: They are used to that when it comes to the Iowa caucuses and
New Hampshire.

(CROSSTALK)

STEELE: To your point, Michael, this barrage of negative ads, it does
have a -- does have a downside of its own. And those who run those ads
need to be very, very careful.

I think, interestingly enough, interesting enough, sitting on the
wings is someone like a Rick Santorum, who could benefit because those who
play the ads could lose support. Newt obviously has lost support. So
Santorum and Bachmann are sitting there going, let the crumbs fall this
way.

SMERCONISH: Well, for parity, allow me to show you the Gingrich
response. He`s vowed not to go negative. So far, his ads have been
positive. Here`s a morning in America-ish kind of a spot.

(BEGIN VIDEO CLIP, NEWT GINGRICH CAMPAIGN AD)

GINGRICH: These are challenging and important times for America. We
want and deserve solutions. Others seem to be more focused on attacks
rather than moving the country forward. That`s up to them. I believe bold
ideas and new solutions will unleash America`s creative spirit.

When I was speaker, our budget was balanced, and 11 million jobs were
created. We can do it again and rebuild the America we love.

(END VIDEO CLIP)

SMERCONISH: Gentlemen, I`m limited on time.

In a short answer, can that get it done? Michael Steele, you first?

STEELE: It can get it partly done, partly done.

But he is going to have to do a little bit more on the ground, since
he doesn`t have the resources to be up on air.

SMERCONISH: David Corn, can the happy talk work?

CORN: No, that ad is hollow. He doesn`t even propose any of his bold
idea, like lunar colonies. So I think people are going to see that and say
it`s nothing to relate to, it`s nothing to consider.

(CROSSTALK)

STEELE: David, you are totally wrong...

(CROSSTALK)

SMERCONISH: You have got to say, though, it`s a sad commentary --
it`s a sad commentary, though, if only the bombast works.

Thank you, David Corn.

(CROSSTALK)

CORN: Well, specific stuff -- positive, specific -- specific ads can
work, too, but not that hollow tripe.

SMERCONISH: I`m not sure. Negativity sells.

(CROSSTALK)

STEELE: Yes, but, David, you`re being very cynical there. And I
think there`s a little bit more to it than that.

(CROSSTALK)

SMERCONISH: Thank you, David Corn.

Thank you, Michael Steele.

(CROSSTALK)

SMERCONISH: Up next: Barney Frank`s advice to the colleagues that
he`s leaving behind. That`s next in the "Sideshow."

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

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

First up: on the homestretch. If Massachusetts Representative Barney
Frank was having any doubts about his decision to retire from Congress at
the end of his term, this week`s debacle over the payroll tax extension
probably serves as a really good convincer. And it looks like he`s already
fleshing out plans for when his time on Capitol Hill is up.

Frank took the time to make a blog post on the Hill -- quote -- "With
more free time on my horizon, I have decided to diversify my activity, and
as part of that, I have compiled a retirement songbook which I will fill up
with some of my new leisure time. What follows is the annotated version of
the song titles, jingles and other fragments, suitably annotated."

And here are some of the highlights that follow. "To be chanted on
the last day of the 112th Congress, no more hearings, no more votes, no
more out-of-context quotes."

And there`s this advice that Frank received from a colleague on how to
avoid looking awkward while marching in a parade -- quote -- "Take three
steps and wave to the left, and then take three steps and wave to the
right. This sometimes resulted in my waving to telephone poles, fire
hydrants and empty buildings, but it did make it easier to march without
having to make difficult decisions about to whom and when to wave. I have
merged two that seem to me very relative to my future plans. I love a
parade, but I`m not marching anymore."

I think it`s safe to say that Frank`s countdown to retirement is
officially on.

Next up: Call it quits. That`s just the topic of the phone call
Michele Bachmann says she got from Bob Vander Plaats, CEO of The Family
Leader. That`s a Christian conservative group in Iowa. Bachmann says that
Vander Plaats suggested she throw in the towel and then give her support to
Rick Santorum. Suffice to say she was less than on board.

Well, today, Vander Plaats said she got it wrong. Let`s listen.

(BEGIN VIDEO CLIP)

BOB VANDER PLAATS, CEO, THE FAMILY LEADER: There are several good
pro-family candidates in the race. And it would make the decision a lot
easier if a couple of them would team up and basically form a team.

I talked to a few candidates and I said, I`m not saying what you
should do. I`m not telling you to drop out or anything of that nature, but
maybe if you like another candidate, maybe you and the other candidate
should get together and say, hey, can we make something work where it`s a
team deal?

(END VIDEO CLIP)

SMERCONISH: All right, last I checked, you can`t run for president as
a team. Although the Family Leader organization opted not to endorse any
of the 2012 candidates, Vander Plaats individually chose to go with Rick
Santorum.

Up next, is 2012 the year we will see a serious third-party candidate
run for president? We have got new poll numbers showing who could be
successful running as an independent and which major party benefits the
most.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

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

The Dow ends up four point. The S&P 500 gains two. However, the
Nasdaq fell by 26 points. The declines in tech shares were courtesy of
Oracle. The software giant`s earnings missed estimates for the first time
in a decade, and that sent the stock down 11 percent.

In the housing sector, sales of previously owned homes rose 4 percent
in November. Prices were also up slightly from the previous month.
Distressed properties, foreclosures and short sales accounted for about 30
percent of those sales.

Bank of America has agreed to pay $335 million to settle allegations
its Countrywide credit union discriminated against minority borrowers.
It`s the largest settlement in history related to residential fair lending
practices. B-of-A bought Countrywide back in 2008.

And the Justice Department has cleared the planned merger of Exelon
and Constellation Energy. The $8 billion deal was announced back in April.

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

SMERCONISH: Welcome back to HARDBALL.

Today, the Republican presidential field shrank. Former New Mexico
Governor Gary Johnson quit the party to run as libertarian. But if more
high-profile GOP candidates like Ron Paul or Jon Huntsman make independent
runs, new polls show that they could really hurt the Republican nominee.

Even Donald Trump takes a big chunk from Mitt Romney in an
Obama/Romney/Trump three-way.

Here`s what worries Republicans, Ron Paul on "Meet the Press" keeping
his options open.

(BEGIN VIDEO CLIP, "MEET THE PRESS")

DAVID GREGORY, MODERATOR, "MEET THE PRESS": Are you ruling out a
third-party run at any point?

REP. RON PAUL (R-TX), PRESIDENTIAL CANDIDATE: I have no plans to do
that.

GREGORY: Are you ruling it out?

PAUL: Well, I`m not going to rule anything out or anything in.

GREGORY: Are you open to a third-party run?

PAUL: I am not even thinking about it.

GREGORY: But you won`t rule it out completely?

PAUL: Because I have enough on my plate right now.

(END VIDEO CLIP)

SMERCONISH: What could a third-party candidate do for the 2012 race?

Ken Vogel writes for Politico. And Shira Toeplitz is covering the GOP
2012 race for "Roll Call."

I want to show you some numbers. The new "Washington Post"/ABC poll
breaks down how a Ron Paul independent run could change the political
dynamics of the campaign. In a head-to-head match, you have got President
Obama, Mitt Romney, they are tied at 47 percent. But now add Ron Paul to
the mix, and he pulls far more voters from Romney in a three-way matchup.
It now becomes Obama 42, Romney 32, and Paul 21 percent.

The poll also played out the effect of a Ron Paul independent run on
an Obama/Gingrich contest. In a head-to-head matchup, you have got Obama
beating Gingrich 51-43. But if Ron Paul runs as a third-party candidate,
it`s Obama 43, Gingrich 32, Ron Paul 21.

Shira, a significant Ron Paul factor.

SHIRA TOEPLITZ, "ROLL CALL": Yes, it is significant.

I`m sure the White House is praying and hoping that this is exactly
what happens, that there is a third-party candidate with a national
following that can really chop off either Gingrich, Romney, whoever the
nominee`s support is.

I think Democrats would really like that. Whether or not that`s going
to be the actual result on Election Day if that indeed is the scenario, I
think that`s a little more undetermined. I think third-party candidates
have huge hurdles to cross when it comes to getting on the ballots in a lot
of these states. And these candidates need to be particularly well-funded
if they are going to achieve that and if that`s going to be the result on
Election Day.

I think it`s still unlikely.

SMERCONISH: Ken Vogel, he certainly didn`t rule it out with David
Gregory.

KENNETH VOGEL, POLITICO: Yes, and Ron Paul, there are definitely
enticements there for him to think about running as a third-party
candidate.

Let`s not forget in 2008, when he finished with 10 percent of the vote
in the Iowa caucus, that he refused to endorse John McCain, the eventual
nominee for the Republican Party that year. He even staged a counter-rally
to the Republican National Convention that coincided with the Republican
National Convention.

And this time, he has more support in polls. He has more money. He
has more infrastructure. And he`s really influenced the Republican debate,
the party and the nominating process. In many ways, he sort of gave birth
to the Tea Party movement, and you hear a lot of the Republican candidates
now talking about his issues.

So if he`s not the nominee and he wants to continue that discussion,
he has a couple of options. He can try to go to the convention with the
delegate votes that he has and have a role in the convention and the
platform or he could think about running as a third-party candidate. It`s
not so farfetched.

SMERCONISH: Well, here`s another wildcard.

The latest robo-poll from a PPP survey shows that in a head-to-head
matchup between Romney and Obama, Romney has a statistically insignificant
lead, 47-45 percent. But now add the Donald to the mix, and Obama`s number
doesn`t change at all. He`s still at 45, but look at Romney.

Romney drops to 31 percent, and Trump gets a fairly strong number at
19 percent. And an independent run by Jon Huntsman would shave two points
off Obama`s support, leaving him with 43 percent. But he takes a 10-point
chunk out of Romney`s support, dropping him to 37 percent. In other words,
Huntsman then is at 11 percent.

I guess, Shira, the common denominator here is, if you throw in Ron
Paul, if you throw in Donald Trump, if you throw in Jon Huntsman, it`s to
the benefit in each case of Barack Obama.

TOEPLITZ: You know, and that`s what these numbers show. It is to
the benefit of Barack Obama.

But let`s think about which one of these candidates could actually
mount a serious third-party bid. I think Ron Paul has a lot of support. I
think he could find the fundraising to do it. In a lot of ways, Jon
Huntsman, I think he`ll struggle a little with fund-raising unless he chips
in some of his own money.

I think Donald Trump, obviously, money there not an issue. But
Donald Trump as a candidate, I know he takes a big chunk out of Romney`s
support there. But I think if he runs as a national candidate, voters are
going to have a hard time stomaching him in the long run. I mean, voters
have issues with Newt Gingrich`s three marriages, I can`t imagine what they
will think about Donald Trump.

SMERCONISH: Well, he hates it when anybody sees it on air. Witness
his treatment of Chuck Todd, he will never run.

Ken Vogel, what about Americans Elect? I mean, there`s another wild
card. I am convinced that we`re going to have four candidates running in
most states this year. That you`ll have the R. You`ll have the D.
There`ll be one of these factors that we`ve addressed.

And Americans Elect, they got on the ballot in California this week,
which I think makes the 12th state. That`s a gargantuan task to get on
that ballot and they have done that. What role might that play?

VOGEL: That could play a major role, Michael. When you talk about
the hurdles that Shira is mentioning in terms of ballot access in terms of
raising the amount of money, getting enough signatures to get on the ballot
in 50 states, well, Americans Elect appears to be headed in that direction
-- California huge. They are also on the ballot in Michigan, Ohio, I think
Florida as well. Those are huge states.

And they are going to have an impact, depending on which candidate
wins their rather byzantine nominating process that they sort of hold up as
the height of democracy. It`s an Internet-based nominating process.

But you hear the White House expressing some concern about it, that
the Obama campaign that is. They kind of tossed some cold water on it,
suggested that it`s actually a back room process. But either way, they can
make a major impact, and both of those candidates that you mentioned in the
PPP poll, potential candidates, independent candidates, Jon Huntsman and
Donald Trump, their supporters have pushed them to seek this Americans
Elect nomination.

SMERCONISH: And I would say the reason the White House is throwing
cold water on it is because Americans Elect could draw from Obama in the
way that these other candidates would draw from the Republicans.

Thank you, Ken Vogel.

VOGEL: Thank you.

SMERCONISH: And thank you, Shira Toeplitz. We appreciate you being
here.

TOEPLITZ: Thanks for having me.

SMERCONISH: When we return, I`ll ask former Pennsylvania Governor
Tom Ridge about the payroll tax standoff and what`s happening within the
Republican Party.

You can follow me on Twitter, so long as you can spell Smerconish.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SMERCONISH: We`re still a long way from knowing who is going to win
the Republican nomination, but there`s plenty of talk about possible
Republican running mates, and one possible veep whose stock is on the rise,
Republican Governor Susana Martinez of New Mexico. PPP just ran a poll
that found that Martinez is the most popular of all the new Republican
governors elected last fall. Of course, that means she`s competing against
the likes of Rick Scott, John Kasich and Scott Walker.

But her approval rating is among the highest of any Republican
governor in the country, and she`s doing it in a state that voted for
Barack Obama by 15 points in 2008.

We`ll be right back.

(COMMERCIAL BREAK)

SMERCONISH: Welcome back to HARDBALL.

Tom Ridge served five terms as a Republican in the House of
Representatives, was a two-term governor of the great state of
Pennsylvania, and the first homeland security in the nation`s history. He
knows Washington. He knows politics and he knows a party in trouble when
he sees one, and right now that would appear to be the GOP.

Hey, Governor, it`s great to have you back on HARDBALL.

FMR. GOV. TOM RIDGE (R), PENNSYLVANIA: Hey, Michael, nice to join
you again. Thanks for the invite.

SMERCONISH: In those five terms in the House, did you ever see
dysfunction like we`re witnessing today?

RIDGE: Never. You know, I`ve tried to figure out over the period of
time going back to the `80s when I was privileged to serve. You had Ronald
Reagan, the president. You had Tip O`Neill, the liberal, Bob Michael, the
conservative. You had Senators Dole and Mitchell in the Senate.

And there was so much respect, so much facility. There was hardball
politics, but there were able to get things done. And I`m trying to figure
out whether it`s the World War II generation that provided the leadership
and we`ve just gotten away from it.

But it`s kind of tragic when you`ve got one party, particularly
President Obama had the House and had the Senate for two years and they
operated for two years on a continuing resolution and the deficit kept
going higher and higher. So, it`s rather remarkable what`s going on out
there.

SMERCONISH: It looks like Speaker Boehner has lost control of his
caucus. Is that how it strikes you?

RIDGE: Well, I`m not quite sure. I think Speaker Boehner has a lot
of challenges associated with being in the majority there and not the least
of which is folks in the Tea Party, and trying to get them to come to a
consensus. And I`d like to think he keeps plodding along and doing the
best that he can.

And everybody in the party needs to understand that the American
public, folks outside the Beltway, frankly aren`t happy with either party
right now, are not happy with the president. You`re sent to Washington to
solve problems.

Look, when the super committee was meeting to solve the deficit, to
try to reduce the deficit by $1 trillion, you had a president hopscotched -
- running around the world when he should have been in Washington dealing
with the super committee, using the bully pulpit.

Take a look at the Senator Reid, again, tried to give us a two or
three-month tax cut instead of solving the problem. The problem is
deficit, debt, deficit, debt. They are unlikely to solve that problem and
the American public is getting tired of both parties not resolving it.

SMERCONISH: Governor, it looks like pragmatism at least to my eye is
in short supply on the GOP side of the aisle, and the 2012 race is a great
illustration of what I`m talking about. There`s such hostility towards
President Obama from a core Republican constituency, but they don`t appear
to be looking for he or she who might best defeat Barack Obama in a general
election.

RIDGE: Yes.

SMERCONISH: And perhaps all that angst and anger is going to get
lost in primary season.

RIDGE: Yes.

SMERCONISH: You know to what I refer.

RIDGE: Absolutely, but I`ve got the answer for them.

You know, I start by being governor-centric, and I take a look at a
governor with a great track record as governor, led the state in job
creation, and Pew Foundation said it was the best managed state. He`s only
governor with foreign policy experience. He`s the only candidate that "The
Wall Street Journal" says his economic plan is the best for the country,
both short and long term, and someone who understands that America`s future
is in dealing with China and India.

And that individual is Governor Huntsman. He`s a solid conservative.
He`s a nonjudgmental conservative. He`s got a foreign policy experience,
unlike the rest of the field combined. And he`s got a heck of a record as
governor.

If they`re looking for somebody to win in November, and you and I
know this is not a 50-state election. We`re down to eight or 10 states,
Jon Huntsman is the answer.

SMERCONISH: Right. But they`re looking for somebody who`s going to
kneecap the president in the process, and he, because of the civility, and
I credit him for that, with which he`s run his campaign, you know, he
doesn`t stack up in that category.

RIDGE: Well, you know, there may be some people within or party that
are looking for somebody to use a blunt assault weapon on the president.
But I must tell you, I think the public at large is looking for someone
with a better idea, a proven track record, who can attract them not only
with the power of his ideas, but the civility with which he criticizes and
confronts the president -- and that candidate is Jon Huntsman.

SMERCONISH: Take a look at some of this data. Here are numbers from
the most recent CNN/Opinion Research Corporation poll, a matchup against
Mitt Romney, the president now leads by seven percentage points among
registered voters; against Newt Gingrich, he leads by a remarkable 16
percentage points. It`s important to point out that other polls show the
hypothetical races to be much closer.

But my observation is you got that wave that`s moved from Bachmann to
Perry to Cain, now settling briefly on Newt. But I would argue that none
of those candidates can defeat Barack Obama in a general election.

So, the question is, are they going to ultimately go back to Romney
or to your guy?

RIDGE: I think that`s a good question. I think we`re going to see
Jon Huntsman who decided for many, many reasons not to contest Iowa, has
spent a great deal of time in New Hampshire and in South Carolina.

And one of the challenges I think when you kind of distill the
arguments for candidates throughout, and we will respect them all. I know
I do, and I know Jon Huntsman does -- at the end of the day, who is the
consistent principled conservative. What Jon Huntsman tells you on Monday,
he tells you the same thing on Friday. So, you never worry about changing
a position there.

But who can best articulate an entirely different vision, a 21st
century vision based upon our engagement with the part of the world that
we`re kind of ignoring now in both a tough and a sensible kind of way,
someone with foreign policy experience.

And I`m going to keep going back to that arbiter of finance and
economic plans, "The Wall Street Journal" says if you really want somebody
to do something effective with regard to the economy, they got to look at
Jon Huntsman`s plan.

At the end of the day, if you win, if you think about it being eight
or 10 states instead of 50, you got to be looking at Governor Huntsman.

SMERCONISH: I`m going to lose you in just a minute, does he need to
win New Hampshire or have a strong showing in New Hampshire?

RIDGE: No, I think a strong showing. Several people have said
second or third, all of a sudden, gets him in the limelight, where he needs
to belong. There`s been a winnowing of all these other candidates. And at
the end of the day, it could end up being Governor Romney, speaker Gingrich
and Jon Huntsman after New Hampshire.

SMERCONISH: Governor Ridge, merry Christmas. Thanks for your work
on the Flight 93 Memorial. And thanks for being on HARDBALL.

RIDGE: I was going to thank you for your work on Flight 93 Memorial.
Thank you, Michael.

SMERCONISH: Thank you, sir.

When we return, "Let Me Finish" with how the Republican Party`s
opposition to everything President Obama does is finally catching up to
them.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

SMERCONISH: When the editorial page of "Wall Street Journal" takes a
shot at House Republicans on a matter of tax policy, you know there`s a
seismic shift under way in Washington, but that`s what Wednesday`s paper
delivered under the headline, "The GOP`s Payroll Tax Fiasco: How Did
Republicans Manage to Lose the Tax Issue to Obama?

Said "The Journal", "The GOP leaders have somehow managed the
remarkable feat of being blamed for opposing a one-year extension of a tax
holiday that they are surely going to pass. This is no easy double play."

Superficially then, this is about whether the payroll tax will be
extended for two months. Two months? Not really. This has much more to
do with the continued recalcitrance of House Republicans whose primary
objective is to oppose whatever President Obama wants. Their obstinacy is
so pronounced that even when he takes a page out of their playbook, a tax
cut, their visceral reaction is to oppose it just because he proposed it.
This is about the personal, not the policy.

"The Journal" itself reminded readers that over in the Senate,
Minority Leader Mitch McConnell said earlier this year that his main task
in the 112th Congress was to make sure that President Obama would not be
reelected. It was at least an honest statement.

But think about that -- following the Republican Party`s huge gains
in 2010, his top stated priority was not to create jobs, not to rein in the
debt, not to end two wars with honor. No, his main task has been to focus
on thwarting President Obama`s reelection.

In this regard, he`s only parroting a number of pundits who seem to
give the marching orders, some openly hope for the president to fail.
Other called him a racist. And ironically this venom gets spewed among
like-minded critics who congratulate one another on their respective
patriotism.

There`s a constituency for this anger. It represents a small but
loyal core of the party, the type of voters who shifted from Bachmann to
Perry to Cain to Newt, looking for a pugilist, not just a political
opponent, to step into the ring with President Obama next year.

You`re wondering why Mitt Romney is leading the GOP candidate field,
but can`t close the deal? It`s because he`s heretofore been unwilling to
knee the president in a groin in a manner demanded by this crowd -- the
same crowd to which the House GOP is responding by fighting over a two-
month extension of a payroll tax cut.

But something interesting has happened along the way. While the
"stop Obama at any cost" mentality has gripped the GOP-controlled House,
congressional approval numbers have tanked down to 11 percent. And
meanwhile, the president`s numbers have gone up.

And "The Wall Street Journal" today recommended that the Republicans,
quote, "would do best to cut their losses and find a way to extend the
payroll holiday quickly, then go home and return in January with a united
House/Senate strategy that forces Democrats to make specific policy choices
that highlight the differences between the parties on spending, taxes and
regulation."

That`s good immediate advice. But how about something more bold?
Like putting the country first in the New Year? Sadly, that`s a resolution
that would last about as long as my annual vow to lose weight.

That`s HARDBALL for now. Thank you 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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