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updated 1/23/2012 10:20:15 AM ET 2012-01-23T15:20:15

Guests: Eugene Robinson, Chris Cillizza, Hampton Pearson, Howard Fineman, James Grimaldi, Erin McPike, Steve Kornacki

CHRIS MATTHEWS, HOST: So is the Newt scoop (ph) moot (ph)?

Let`s play HARDBALL.

Good evening. I`m Chris Matthews down in beautiful Orlando, Florida,
for a gathering of NBC-Universal people.

Leading off tonight: Here comes Newt. When Newt Gingrich is debating,
he`s winning. And right now, Newt is looking more and more like a winner.
Today the head of the Gallup poll said Mitt Romney`s lead over Gingrich
nationally is collapsing. You hear that word, "collapsing"? And even Mitt
conceded it could be a long race he`s facing right now.

Now throw in that all came together for Newt last night, an opening to
bash the elite media, a supportive, raucous crowd and a chance to show
moral indignation at a question about marital infidelity that he knew was
coming. So last night`s debate audience certainly gave Newt a pass. But
will this claim by his second wife that Newt asked for what she called an
"open marriage" actually change votes?

And then there`s Romney. As prepared as Newt was to zing moderator
John King last night, that`s how unprepared Mitt Romney was for that
inevitable "Will you release your tax returns" question. Not only was
Romney tongue-tied, saying "Maybe," he raised (ph) my old rule. If it`s
better than it looks for a politician, they`ll tell you.

Plus, Stephen Colbert says if you think what he`s doing is a joke,
then this whole campaign finance system is a joke. Good point.

Finally, "Let Me Finish" with Newt`s perfect pitch for conservative
contempt.

We start with yet another comeback of Newt Gingrich. Howard Fineman`s
the Huffington Post Media Group editorial director. Eugene Robinson is a
"Washington Post" columnist. Both are MSNBC political analysts.

Howard, it`s been a dramatic day for Mitt Romney`s campaign. This
morning, Gallup`s editor-in-chief said on MSNBC that Romney`s national lead
was collapsing. Take a look at the latest numbers. At the beginning of
this week, Romney led Newt Gingrich by 23 points. In the latest Gallup
tracking poll out today, that lead is down to 10.

This afternoon, Mitt Romney conceded South Carolina was going to be a
very close contest and that this could turn out to be a long race for the
nomination. Let`s watch.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R-MA), FMR. GOV., PRESIDENTIAL CANDIDATE: We have a long
process ahead of us, 1,150 delegates to get. I sure would like to win
South Carolina, but I know that if those polls were right, regardless of
who gets the final number, we`re both going to get a lot of delegates. So
I want as many delegates as I can get. I want the most delegates coming
out of South Carolina, but I don`t know what the numbers will be. I`m
pretty confident, cautiously optimistic.

(END VIDEO CLIP)

MATTHEWS: Well, one of those polls that Romney mentioned, an
important one in South Carolina, the Clemson Palmetto poll, just released
its latest results that show Gingrich ahead of Romney, believe it or not,
by 6 points now. The pollsters predict Gingrich will win tomorrow in the
latest (INAUDIBLE)

Let`s go to Howard on this. What an amazing turn-around week it`s
been for these top contenders. All of a sudden -- all of a sudden,
Gingrich is back. He`s back from that terrible beating he took, terrible
beating out in Iowa, the defeat way back in the pack he took in New
Hampshire, to now leading the polls in South Carolina, a state we all
thought coming into this was going to be a cinch to cinch the nomination,
really, for Romney.

HOWARD FINEMAN, HUFFINGTON POST MEDIA GROUP, MSNBC POLITICAL ANALYST:
Well, I didn`t think it was going to be a cinch, Chris. And I just came
from a Newt Gingrich event in Orangeburg, which, is Gene Robinson`s home
town. It was an overflow crowd, I`d say 1,200 people. And these are your
hard -- your salt of the earth, conservative crowd. Gene, you know, who
I`m talking about in Orangeburg. They were all there. And Newt Gingrich
was singing their song and speaking their language.

And it`s because of the debates. By my count, Newt Gingrich has now
come back three times from the dead. And the way he did it here in South
Carolina is by using the debates to show that he`s the kind of conservative
combatant -- tough, nasty, in your face -- that South Carolina
conservatives definitely want.

And the national numbers are affected by what goes on state by state.
National Republicans are looking at South Carolina. It`s not definitive.
South Carolina won`t be definitive, either. but judging by that crowd
today, Chris -- and I`ve seen surges in the past, I`ve been covering this
stuff for a long time -- Newt was surging, he was on the move. And Newt
himself said again today that he was going to win the South Carolina
primary tomorrow.

MATTHEWS: Wow. He`s actually promising victory now. Tell us about
your home state...

FINEMAN: He said he`d win. He said he`d win.

MATTHEWS: ... and the feelings you`re -- let me get this back to
Gene. Tell us about your home state. What is -- what is that he`s been
doing, Newt, that has gotten to the -- the funny bone, the erogenous zone,
whatever you want to call it, the heart of the South Carolina conservative
voter?

EUGENE ROBINSON, "WASHINGTON POST," MSNBC POLITICAL ANALYST: Well,
first of all, a crowd of 1,200 people in Orangeburg -- that`s a huge crowd,
1,200 (INAUDIBLE) enthusiastic people there...

FINEMAN: Yes.

ROBINSON: ... is amazing.

FINEMAN: It was big.

ROBINSON: You know what -- the nerve he -- the nerve he touches, and
he touched it Monday night and he did it again last night, is anger, is
this sort of seething feeling that some Republican primary voters, and I
think a lot of Republican primary voters, have here.

He`s shown that he will get in Barack Obama`s face, and I think that`s
what Republicans here are looking for, someone who`s that combative. The
way he went after the elite media was just brilliant, frankly...

MATTHEWS: Wow.

ROBINSON: ... and he`s reaping the rewards.

MATTHEWS: Well, here he was. Here`s that moment, Gene and Howard,
the moment of the debate last night happened right at the start. The
moderator for CNN, John King, asked Newt about his ex-wife`s new interview.
Let`s watch Newt`s very effective answer. Right away, he turned it into a
charge against the media. Let`s watch.

(BEGIN VIDEO CLIP)

JOHN KING, CNN, MODERATOR: She says you asked her, sir, to enter into
an open marriage. Would you like to take some time to respond to that?

NEWT GINGRICH (R), FMR. HOUSE SPEAKER, PRESIDENTIAL CANDIDATE: No.
But I will.

(CHEERS AND APPLAUSE)

GINGRICH: I think the destructive, vicious, negative nature of much
of the news media makes it harder to govern this country, harder to attract
decent people to run for public office. And I am appalled you would begin
a presidential debate on a topic like that.

(CHEERS AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: Well, Howard, you notice there how he turns a question
about his behavior into a criticism of the media. He`s attacking from --
it`s an old tactic, attack from a defensive position. There you go again.
We`ll watch a bit more. Your thoughts on what we just saw, Howard.

FINEMAN: OK. Well, that was to be expected. I mean, CNN had been
talking about that open marriage quote all afternoon. Newt was loaded for
bear. He knew exactly what was going to happen. Newt has been attacking
the media all through this. And for a Republican crowd in a conservative
state, that`s just catnip.

They loved it because they view the national media -- virtually all of
it, not all of it but most of it -- as a tribune of the enemy. And they`ve
viewed it that way for a generation or more. So it`s a convenient way for
Newt to deflect attention from himself. That was a multi-leveled answer
with all kinds of different tactics through into it, none of which involved
answering the question.

But that was pure gold because, as I said, what the voters here want
is somebody who wants to attack. I mean, I keep mentioning the fact that
they used to have cock-fighting here in South Carolina. Well, they`ve
transferred it from the chickens to the people, and that`s what they like.
This is not Iowa. It`s not even New Hampshire. They want the -- they want
the colors bold and they want them bright.

MATTHEWS: Well, that`s the first-cock fighting reference we`ve had on
HARDBALL in the history of the program!

(LAUGHTER)

MATTHEWS: Gene, I want you to watch -- Gene, I want you to watch this
a little more and then respond to what we`re seeing. Here`s Newt going on
the attack against CNN, in this case, really going after all the media.
Here he is.

(BEGIN VIDEO CLIP)

GINGRICH: Every person in here has had someone close to them go
through painful things. To take an ex-wife, and make it two days before
the primary a significant question in a presidential campaign, is as close
to despicable as anything I can imagine.

(CHEERS AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: You know, Gene, he is loaded up, as Howard said, loaded for
bear -- "despicable," "appalling," "negative," "vicious," "destructive."
He has pounded this. You know what it reminds me of? The way that George
Herbert Walker Bush, I think with the advice and counsel of Roger Ailes at
the time, pitched up a fight with Dan Rather -- remember in the beginning
of the `88 campaign -- as a warm-up to go after Dukakis. And it really
worked for him and this may really work for Newt. What do you think?

ROBINSON: Well, it certainly is going to work for him in South
Carolina, I think. And contrast that, Chris, with Mitt Romney`s episode
from yesterday, when he confronted the Occupy protesters and I thought
tried to have that sort of moment to, you know, put them in their place and
put them down. And it was -- it was awkward. It didn`t work that way.
You know, Gingrich is good at this sort of thing. Mitt Romney really
isn`t. And that contrast was pretty stark.

MATTHEWS: You know, Howard, this morning I thought that colleague Joe
Scarborough had it nailed. He said that he speaks with the grievance of
the Republican Party, not just anger but grievance, a set of particulars.
He began to do this back in the `80s with my old boss, Tip O`Neill. He
began to complain, you know, We`ve been pushed around too long under Bob
Michel. We`ve been screwed in the rules in the House. We`ve been screwed
by the media. We`ve been abused. It`s time to fight back.

And even people in those days, moderate Republicans like Lynn Martin
of Illinois, got behind him under the argument it`s been playing softball
too long. It`s time to get vicious with the enemy, the enemy being the
media...

FINEMAN: Right.

MATTHEWS: ... the Democrats, everybody who`s not with you.

FINEMAN: Yes. And he listed all those. By the way, let me say
first, in that answer that Newt gave, he also managed to turn himself into
the object of pity. He said people have felt pain. So rather than
answering the question about whatever pain he might have inflicted on
others, he made it that he was the one who was pained. I mean, he went
from Judas to Jesus in one sentence there.

(LAUGHTER)

FINEMAN: But on the topic of grievances for sure, just listening to
him -- listening to him in Orangeburg just a few minutes ago, it was the
judges. It was the radical judges. It was the unseen power of the judges.
It was the academic journalists. It was the academicians. It was the
bureaucrats. It was all those "them." It was all those big people, all
those "them," who are trying to control your life.

That`s always what Newt Gingrich has been. He`s always been this kind
of anti-establishment guy who wants power. He wants power by complaining
that the people don`t have power.

And in that audience today, those are middle class people there.
They`re working people. It`s kind of an agricultural area. It`s small
business, small-town life. Gene knows it, you know, much better than I.

Those are people who feel under assault somehow, and they are looking
to Newt to send a message. There`s a little trace of George Wallace`s
populism in this. There`s a little trace of every populist in it. Newt
Gingrich, who has a Ph.D., who`s really originally from Pennsylvania,
learned in Georgia how to speak the language of Southern populism, and he
does it with perfect pitch. And that`s why he`s rocketing to the top here.

Gene makes a good point. Will it carry elsewhere? I don`t know. But
don`t forget that the modern Republican Party is a Southern-based party.
It began with the Strom Thurmond and the Dixiecrats here...

MATTHEWS: Sure.

FINEMAN: ... in `48. And out of that small root, the whole modern
Republican Party has grown.

MATTHEWS: Do you think, Gene...

ROBINSON: Just on...

(CROSSTALK)

MATTHEWS: ... they`re sending a message, as George Wallace used to
say, or are they sending a president? Are they picking this guy for
president, this pol, or simply sticking it in the eye of the establishment?

ROBINSON: Well, this is -- you know, it`s a genuine vote for him, but
it`s a message vote, I think, Chris. You know, just a ways out thataway is
Fort Sumter. We all know what happened there. So this state has a
history...

MATTHEWS: Yes, that was a message!

ROBINSON: ... of sending a message. That`s number one. But number
two, will it carry -- will it play elsewhere? Well, you know, when he said
"despicable!" in that way, I`m sorry, but I had to think of Daffy Duck, you
know? I mean, that -- because, you know, "You`re despicable!" the way he
used to say it.

(LAUGHTER)

MATTHEWS: He didn`t have a lisp, though, did he?

ROBINSON: And it reminds me -- well, but it reminds me that there`s
this sort of unstable, zany side of Newt Gingrich that...

MATTHEWS: Yes.

ROBINSON: ... we`re likely to see at some point in the campaign. So
when that comes out, is that going to work elsewhere? I just don`t know.

MATTHEWS: Do you think he knew...

FINEMAN: People love it.

MATTHEWS: ... how bored we were with Mitt Romney? And with -- even
as bad as Newt can be...

FINEMAN: Yes. Yes.

MATTHEWS: ... he`s a more interesting topic. I think he knew it.
Anyway, thank you, Howard and Gene. We`ll see you tomorrow night for the
coverage of the results in South Carolina. What a night it`s going to be.

Coming up: As prepared as Newt Gingrich was for that question about
his ex-wife, Mitt Romney wasn`t at all prepared. He was flat-footed when
he was asked about once again, Will you release your tax return? And his
non-answer of "maybe" suggests there`s something there, something that
could hurt his campaign, because when in doubt, you put it out. And that`s
ahead.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Republicans have chosen Indiana governor Mitt Daniels --
Mitch Daniels, rather, to give the official Republican response to the
president`s State of the Union address Tuesday night. Daniels decided
against running for president this year, and his speech Tuesday night may
overshadow the Republicans, that night at least, who are running for
president.

Think about it. If Newt Gingrich wins South Carolina, the Republicans
will have had three contests with three different winners this year,
something that`s never happened before. And some say that may spark new
calls for bigger names, someone like Daniels or Jeb Bush, to get in the
race.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Another great story. Welcome back to HARDBALL. The
drumbeat of calls for Mitt Romney to release tax returns is getting much
louder and louder. So when it came time for the CNN debate last night,
you`d think he`d have an answer ready to go. But instead of a clean, crisp
reply, Romney waffled.

Here`s his response when John King asked Romney when we`d see his tax
returns.

(BEGIN VIDEO CLIP)

ROMNEY: When my taxes are complete for this year -- and I know that
if I`m the nominee, the president`s going to want to insist that I show
what my income was this last year, and so forth -- when they`re completed
this year in April, I`ll release my returns in April, and probably for
other years, as well.

KING: Why not -- shouldn`t people of South Carolina before this
election see last year`s return?

(CHEERS AND APPLAUSE)

ROMNEY: Because I want to make sure that I beat President Obama. And
every time we release things drip by drip, the Democrats go out with
another array of attacks, as has been done in the past. If I`m the
nominee, I`ll put these out at one time so we have one discussion of all of
this.

(END VIDEO CLIP)

MATTHEWS: Well, does Romney have something to hide -- a good question
-- or would he just prefer to discuss his returns, as he once said on tax
policy, in a quiet room?

Chris Cillizza`s managing editor of the Postpolitics.com and David
Corn is Washington bureau chief for "Mother Jones." Both gentlemen are
MSNBC political analyst.

Chris, you first. You know, this game of cat-and-mouse that that this
guy`s created here -- because it never was created before. Everyone
assumes you have to show your tax returns. It shows you`ve been honest.
It shows you`ve done your tax returns. Everybody`s got them. You can`t be
a legal citizen -- you can`t be a legal person in this country without
having tax returns, so we know he has them. We know they exist.

He refuses to show them. There`s only one reason why he won`t show
them, he doesn`t want to. He doesn`t want to. Why?

CHRIS CILLIZZA, POSTPOLITICS.COM, MSNBC POLITICAL ANALYST: Yes,
Chris, I agree with you. I mean, I was -- I`ve been baffled. You know,
you showed -- first of all, you showed the bit from CNN last night, but on
Monday night, Romney was asked basically the same thing and he again
fumbled, which is odd to me because, look, this is a guy who is quite good
as a debater. He clearly had to know -- if he didn`t know it was coming on
Monday, he definitely knew it was coming last night. And yet he still kind
of struggled with it. I think it has to do with him being uncomfortable in
some way about his wealth, although we know he`s rich.

What it makes it look like, Chris -- and you know perception is often
reality in politics -- what it makes it look like is he`s hiding something.
Now, I don`t know that he is. Maybe he`s not, but the way that he talks
about it makes it look as though he`s uncomfortable, he`s awkward with it,
that he just doesn`t feel good about talking about it.

It doesn`t need to be a big issue. I think Mitt Romney has turned it
in a little bit into an issue at the moment because of his answers in the
debate Monday night and again last night.

DAVID CORN, MSNBC POLITICAL ANALYST: Well, remember, Chris...

MATTHEWS: It`s hard -- yes.

CORN: I was just going to say, back in December, when he was first
asked about this, he said he probably wouldn`t release his tax returns.

At that point, when it wasn`t as much focus, it was clearly his
inclination to try to get away without doing this. Now, he says he pays
about 15 percent. Maybe he pays 10 percent, 9 percent. There are ways --
even if you`re paying the low capital gains rates, there are ways of
crediting losses against gains to really lower your taxes a lot.

I`m sure he pays his accountants a lot. He has money parked in the
Cayman Islands. His campaign says there`s no tax benefit to doing that.
Well, then the obvious question is, why is it there? Why not put it in
good old American financial institutions?

And so all this, his inability to answer the question confidently last
night, when he knew it was coming indicates that something is wrong with
his taxes, something is wrong with his campaign or something with the
candidate, maybe all three.

MATTHEWS: You know, I think it`s totally fair game, particularly not
only for him, because all candidates have had to do this over the years,
but here`s a guy who has bragged every campaign speech he gives. The focus
of his campaign speech is, look at how successful I was in the private
sector making money, not doing things, but making money, bragging about how
much money he`s made, who successful he`s been, again last night saying,
I`m unapologetic about how much money I made.

Well, here`s John King noting that Romney`s own father released a
dozen years, 12 years worth of tax returns when he was a candidate because
he didn`t want to show that one year was a fluke. And then he was asked --
John King put the question to Mitt whether he would follow in his own
father`s footsteps. Here was Mitt`s response.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Maybe.

(LAUGHTER)

ROMNEY: You know, I don`t know how many years I will release. I will
take a look at what the -- what our documents are and I will release
multiple years. I don`t know how many years, and -- but I will be happy to
do that.

Let me tell you, I know there are some who are very anxious to see if
they can`t make it more difficult for a campaign to be successful. I know
the Democrats want to go after the fact that I have been successful. I --
I`m not going to apologize for being successful.

(CHEERING AND APPLAUSE)

I went off on my own. I didn`t inherit money from my parents. What I
have I earned. I worked hard, the American way.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: Let me start with David on this. Who is he arguing with
then? I have never heard anybody say they have a problem with him making a
lot of money. I have never heard anybody say that about any candidate in
history, that they made a lot of money.

From Roosevelt`s family or the Kennedy`s family, or Harriman or
anybody who -- ever thought of who had a ton of money, nobody has ever held
it against him. Arnold Schwarzenegger, nobody said, you made a lot of
money.

Who is he arguing with? I would argue he is arguing with a straw man.
He has made up this fictitious character who doesn`t like he`s made a lot
of money. No, what the public wants to know is, have you paid a fair tax?
I think that`s a legitimate question.

Go ahead.

CORN: Chris, you know when a politician changes the subject, it`s for
a reason. He thinks he has a better argument with that false argument.

But I will take a slight issue with you. Mitt Romney, you know, in
the year of Occupy Wall Street, three years after -- four years now after
the Wall Street-caused crash, he is Mr. 1 Percent. And the whole issue of
income and inequality has become a more populist and more popular issue.
Even the Republicans have been talking about it.

So the taxes will show to what agree he`s in the 1 percent and to what
degree he takes advantages of the rules that are really there for the top 1
percent. So I think there`s a tremendous sensitivity here from a political
point of view, which is probably justified on his part.

MATTHEWS: Chris, where are you on this? I think we agree, David and
I.

Where are you on this? I think it`s the tax rate. The effective rate
he paid is going to have them if it`s too low.

CILLIZZA: Yes, I think that`s the issue, Chris, because here`s my
thing with Romney that I honestly don`t understand.

It`s no secret to anyone who has paid even passing attention to this
race that he`s wealthy. As you point out, lots of people who run for
office are quite wealthy, George W. Bush, John Kerry, Barack Obama. Now,
there are differing levels of wealth. Mitt Romney is on the higher end of
that, without question.

But he`s oddly uncomfortable with being wealthy, which is a fact
everyone knows. It would be as if I would say, oh, no, ties? No, I don`t
know anything about ties. I have a tie on. It is a fact. It`s
unchangeable.

(LAUGHTER)

CILLIZZA: It`s an unchangeable fact.

He needs to frame it in a way that he did a little bit. You played a
little bit of that clip, the whole, I`m not going to apologize. Do that.
But I do think the underlying issue, which you`re right about, is not his
wealth. It`s the tax rate, because if it comes out he paid 15 percent or
less, he`s paying a lot less taxes than people who made a lot less money
than him. And that`s just not a good political issue.

But, broadly, I just think he has to own it.

(CROSSTALK)

MATTHEWS: He might just look like a guy who likes an unfair tax
system.

(CROSSTALK)

CILLIZZA: Own your resume. Own your wealth. I just own your resume,
own your wealth, because you`re not going to be able to run away from it.

MATTHEWS: I think this story and the Newt story, I would say this
story is going to last longer than the Newt story.

Anyway, Chris Cillizza, David Corn, gentlemen, have a nice weekend.

CORN: Thank you. You, too, Chris.

MATTHEWS: And tomorrow night, join us at 6:00 Eastern for our live
coverage of the South Carolina primary.

The poll results -- actually, the polls close at 7:00. I`m not sure
when we will have results, but we will be giving you the results as they
come in, as fast as anybody, or faster, hopefully.

Up next, Mitt Romney gave what may have been the most unbelievable
line of the night when he referred to his background as being on the
streets. He`s kind of a street corner guy, isn`t he, street-living guy?

That`s next on the "Sideshow."

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL, and off to the "Sideshow."

First up: Herman Cain has teased that he`d be making an endorsement
in this presidential race. And in true Cain style yesterday, it was pure
hype.

(BEGIN VIDEO CLIP)

HERMAN CAIN (R), FORMER PRESIDENTIAL CANDIDATE: Here is my
unconventional endorsement, not a candidate seeking the nomination, not
someone that`s not running.

My unconventional endorsement is the people. We the people of this
nation are still in charge.

(END VIDEO CLIP)

MATTHEWS: As opposed to?

More on Cain with Stephen Colbert later in the show.

Next, in last night`s debate, Mitt Romney decried Newt Gingrich as
just another Washington politician and offered himself up as a regular
American alternative. Let`s watch.

(BEGIN VIDEO CLIP)

ROMNEY: What you`ve listened to, in my view, and the Speaker`s
rendition of history going back to 1978 and his involvement in Washington,
is, in my view, a perfect example of why we need to send to Washington
someone who has not lived in Washington, but someone who`s lived in the
real streets of America, working in the private sector, who`s led a
business, who started a business, who helped lead the Olympics, who helped
lead a state.

(END VIDEO CLIP)

MATTHEWS: He`s lived in the real streets of America.

Well, let`s get it straight. Romney is the son of the CEO of American
Motors, the son of a three-time governor and presidential candidate.
Romney himself attended boarding school, went to both Harvard Law and
Harvard Business School, is worth, some way, a quarter of a billion
dollars, and we`re supposed to believe he lived this life on the American
street.

Well, lastly, President Obama and his thanks to big-time and big-name
attendees at a fund-raiser last night had this special shout-out to singer
Al Green.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And then to know that
Reverend Al Green was here...

(CHEERING AND APPLAUSE)

OBAMA (singing): I`m...

(LAUGHTER)

OBAMA (singing): ... so in love with you.

(CHEERING AND APPLAUSE)

OBAMA: Those guys didn`t think I would do it.

(CHEERING AND APPLAUSE)

OBAMA: I told you I was going to do it.

(CHEERING AND APPLAUSE)

OBAMA: And the Sandman did not come out.

(END VIDEO CLIP)

MATTHEWS: Well, my hunch is that Romney and Gingrich, whoever it is,
isn`t going to try to match Obama`s singing.

Up next: The audience at last night`s debate definitely took Newt`s
side when he was asked about his second ex-wife`s charge that he asked for
what she called an open marriage. But what will South Carolina voters
think? Will the people down in Charleston and elsewhere think much of it?

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

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

The Dow gains 96 points. The S&P 500 is up less than a point, and the
Nasdaq down one. On the economic front, home sales were hot in December.
According to the National Association of Realtors, resales rose 5 percent
to their highest level since January 2011. For the year, sales total 4.26
million homes, far below the six million homes that change hands in a
healthy housing market.

A rough day for shares of Google, which lost more than 8 percent.
Earnings missed Street expectations. It is gaining back some ground,
however, in after-hours trading. Fast food giant Taco Bell is reportedly
looking to start serving breakfast. An 11-item breakfast menu is said to
be rolling out next week at 750 restaurants.

And finally, Schlumberger reported a 36 percent jump in fourth-quarter
profits thanks to strong offshore operations in the Gulf and abroad. The
stock was up more than 1 percent today.

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

MATTHEWS: Welcome back to HARDBALL.

Newt Gingrich deflected that question about his second ex-wife
Marianne`s allegations that he asked her for what she called an open
marriage. Well, the crowd was with him last night, certainly. But will
the voters be him tomorrow when they vote in South Carolina?

Joining us right now is James Grimaldi. He`s an investigative
reporter with "The Washington Post" who interviewed Marianne Gingrich about
her allegations just yesterday. And Erin McPike is with RealClearPolitics.

Thank you both for joining us.

Let`s take a look at something right now. Here`s Marianne Gingrich
last night on "Nightline," which of course is on late at night, describing
how she found out about Newt`s conduct.

(BEGIN VIDEO CLIP)

MARIANNE GINGRICH, FORMER WIFE OF NEWT GINGRICH: I found out during
our conversations that it was occurring in my bedroom in our apartment in
Washington. And he always called me at night. He was always ended with "I
love you" while she was there listening.

BRIAN ROSS, ABC NEWS: Right next to him?

M. GINGRICH: In my home.

(END VIDEO CLIP)

MATTHEWS: Well, I guess I don`t like -- I`m not into judging the
moral behavior.

But I want to ask you, James Grimaldi, about her conduct with you, her
reason for coming forth with this just on the eve of this big vote in South
Carolina. Is she out to have an impact or is she simply being responsive
to reporters` questions grudgingly? How would you describe her
participation?

JAMES GRIMALDI, "THE WASHINGTON POST": Yes, I would say it would be
the latter.

I was one of a lot of reporters who were trying to get her to talk
about this, because she hasn`t talked about it since an "Esquire" interview
a couple of years ago. And she knew it was inevitable that -- unavoidable
that she was going to have to do it. And as Newt Gingrich continued to rise
in his resurgence in the polls, she agreed.

She was in negotiations with two networks. She inevitably went with
ABC News and Brian Ross. And she thought last week that the interview was
going to run after the election. That`s what they told her.

But during the course of -- after she finished the interview, she gave
a call to the other networks, CBS and a producer over there. And within an
hour, it was on Drudge. And ABC felt that they were kind of boxed into
doing it as soon as they did.

Some of this is played out in some of the media reports. But they
ended up putting it -- Drudge had it Wednesday night. They ended up
putting it online Thursday morning.

I got Marianne -- I saw the Drudge Wednesday night. I called Marianne
Thursday morning and I persuaded her. And I said, "Hey, you need to talk
about this."

And I think she was doing it partly out of a sense of patriotism. I
mean, remember, she was married to a politician for 18 years. She was a
political wife. She understood that the public had some right to know
about what happened.

And, finally, she also is a political wife knows the first rule of
politics. Define yourself before the other guy does. In this case,
because she was estranged from Newt Gingrich, she was worried she was going
to be slimed during the campaign. And in fact, she`d even heard a radio
call to a conservative talk show where some of that negative against her
had come out. And she just decided, I better get my story out there. It`s
going to come out so that people know my point of view.

CHRIS MATTHEWS, HOST: Let me go to Erin on this. Do you have
anything to add on this in terms of reporting? I mean, everybody knows the
story now. It`s out there. It`s going to have people listening to it and
judge it. My sense is that the stakes are pretty high here.

The president of the United States -- in an electorate where they
don`t really like the president, they want to change the presidency. They
want somebody new there. It`s almost like picking a boxer. Do you really
ask a boxer what his marital conduct is? Do you want somebody t go in
there and fight the opponent, with all he or she`s got? Do you really
focus on marital conduct in this context? That`s what I`m asking.

ERIN MCPIKE, REAL CLEAR POLITICS: Yes, I talked to a lot of voters,
Chris, who say they are over it. It happened a long time ago. And they
don`t think that his personal life should affect him on the job.

Now, Rick Santorum has said just today that it is an issue of
character. And we do talk a lot about character in a presidential
election. But you raise another thing you talked about tonight, which is
that Newt had a lot of fight in him last night when he was taking on John
King. That`s a lot of these voters wanted to see, a candidate with
conviction, who could fight.

And, you know, I talked to Kevin Kellems, he`s a senior strategist
for the campaign, today. And he thought that Newt answered the question
last night, which is why he cancelled Gingrich`s daughters this morning for
their morning interviews today. They said it was yesterday`s news.
They`re over it.

And I`ll tell you something else, Chris. This campaign has been
preparing for this for the past year. That`s why Newt Gingrich and
Callista has been out campaigning together, showing movies from their
documentary company that they have been out around the country promoting,
and books of both of theirs, because they are trying to show that he`s in a
happy marriage now. That his character issues have been worked out, and
he`s a family man with these grandchildren.

Again, they`re trying to say this is a nonissue for them and it`s
well in the past.

MATTHEWS: You know, there`s very little comic -- you know, comic
nature to divorce. In these kinds of situations, they`re sad all around.
But I was just wondering, you know, Newt said -- James, are you familiar
with the fact he said his patriotic spirit, in his case --

GRIMALDI: Right.

MATTHEWS: -- was what caused him to have the affair that ended that
second marriage, which a lot of us thought was a ludicrous cover story.

GRIMALDI: Yes, he seemed kind to have almost Mitt Romney-like
answers. Mitt Romney, as you mentioned in your earlier segment, has not
been able to answer this tax question at all.

And earlier on, Gingrich had really poor answers to this question.
He did address it head on. He attacked the media, which is an old standby.
He used the question just like judo, and he handed John King his head back
on the platter.

And he got the standing ovation. It probably won him a lot of votes
in simply the way he handled it.

So I think that, you know, there was a transformation. They were
certainly ready for it. He came back after it really hard and he denied
it. I think what`s the -- one thing that`s interesting to me, just
listening to him on the campaign trail and going back and reading and
listening to the transcript of a speech he gave on traditional values and
religious values the day after he asked his wife for a divorce, I`ve
noticed that he has not really brought that card to the table this year.

And of course, this is an economic election. It`s not a values
election. I don`t think he needs to.

MATTHEWS: You`re right. You`re dead right. Our table is filled
with what we worry about as a voter. I think voters are so caught up in
the economy and their anger against this president --

GRIMALDI: Right.

MATTHEWS: -- on the Republican side. They got no time to think
about somebody`s marital history. And besides, what do you expect her to
say? Can`t stop loving that man?

GRIMALDI: Right.

MATTHEWS: I mean, the fact is these divorces are always sad.
They`re always based on acrimony. It`s always based on misbehavior, almost
always on misbehavior. I think a lot of people think what Erin just
reported is old news.

(CROSSTALK)

MATTHEWS: Erin, thank you for joining. And thank you, James
Grimaldi.

GRIMALDI: Sure.

MATTHEWS: No more time. We`ll have you back.

GRIMALDI: OK.

MATTHEWS: Up next, what`s Stephen Colbert really up to in South
Carolina? That`s ahead.

And tomorrow, I`m going to be in Tampa, Florida, at the "Tampa
Tribune", not far from here. The auditorium of the "Tampa Tribune"
newspaper, talking about my new book with a big crowd, "Jack Kennedy:
Elusive Hero."

The event, by the way, is open to the public this time. It`s free.
So, come on over. I`ll sign a book for you.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Well, tomorrow night, MSNBC`s live coverage of the South
Carolina primary begins at 6:00 Eastern. Join me, Rachel Maddow, Lawrence
O`Donnell, the Reverend Al Sharpton, Ed Schultz and Republican strategist
Steve Schmidt. We`ll all be there as we watch the returns come in. Polls
close by the way at 7:00 Eastern. We`ll go all night. Please join us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, COMEDIAN: I think people are hungering for a
positive campaign. So, I`m not going to go after this man`s opponents. I
won`t be saying things like the only difference between Mitt Romney and a
statue of Mitt Romney is that the statue never changes its position.
That`s not positive. Not even to the statue.

And I`m not going to answer the gotcha question, am I interested in
an open marriage? Though I am flattered that Newt Gingrich asked me.

(END VIDEO CLIP)

MATTHEWS: Welcome back to HARDBALL.

Stephen Colbert rolled into South Carolina, his home state, today
where he held a pretty big rally. Some say a huge rally by local standards
with Herman Cain there.

Police estimated the crowd was attended by 4,000 people. That`s a
big number down here. That`s more than the actual candidates see in a
rally. And he continues, Stephen Colbert did, exploring a run for
president down here in South Carolina.

What affect will Colbert have on this election?

Steve Kornacki is a real reporter, a political columnist for "Salon."

Sir, I don`t know what to make of this. But today on "MORNING JOE,"
Colbert took on the question of open marriage. God knows what he said, but
here it is. Let`s listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What, sir, is your position on open marriages?

(LAUGHTER)

COLBERT: I just can`t believe that a journalist of your stature --

(LAUGHTER)

UNIDENTIFIED FEMALE: He`s adorable.

COLBERT: -- would lead with such garbage like that. I don`t care to
answer that question. I don`t care to answer that question, Willie, and I
don`t think the people in this room want me to answer that question.

UNIDENTIFIED MALE: Standing ovation.

COLBERT: So I`m all for it, but -- I`m all for it, but you need two
people to make that vote.

(END VIDEO CLIP)

MATTHEWS: Well, later, Colbert defended Gingrich for his honesty.
Let`s listen.

(BEGIN VIDEO CLIP)

COLBERT: You know, honesty is the best policy. Here`s the thing
that I don`t think Newt Gingrich gets credit for, OK? A lot of politicians
screw around on their wives but he was enough of a gentleman to ask
permission first. OK? That`s a Southern gentleman. That`s what Robert E.
Lee would have done.

(END VIDEO CLIP)

MATTHEWS: That`s what Robert E. Lee would have done.

Kornacki, I`m not used to asking these questions. This is a bizarre
territory for us, even on a Friday night, late this evening. What is this
guy going to do, his campaign? He`s running under the name of Herman Cain.
He`s saying if you vote for him, whose name is still on the ballot, then
you are voting for me or what.

Talk about sending a message. What is it?

STEVE KORNACKI, SALON.COM: You know, I`m not sure myself, although
part of me wonders. We saw Rick Perry get out of the race yesterday and,
obviously, he wanted to help Gingrich. But you also kind of wonder with
Stephen Colbert making the push for Herman Cain`s name on the ballot, if
maybe Rick Perry was a little nervous about finishing behind even Herman
Cain/Stephen Colbert in this thing.

But I just think his entire sort of pose here, in a way, he`s trying
to draw attention to campaign finance stuff. But it`s also kind of a
commentary, I think, maybe unintentional on that blurring of the line
between celebrity politician/presidential candidate. In a way, Herman Cain
kind of typified that.

You know, this year, the big question with Herman Cain all year was,
is he actually interested in being president? Is he actually interested in
running a serious campaign or just interested in saying he wants to be --
he`s running for president to get media exposure to get on the talk shows,
to get in the debates?

And here we have Stephen Colbert who clearly doesn`t want to be
president but is going to sort of flirt with the idea and look what it gets
for him.

MATTHEWS: Well, somebody ran for mayor of New York years ago, Jimmy
Breslin, a great columnist. I think his promise if elected, he would
demand a recount.

I mean, this is not going to happen, you get two or four votes. And
I guess the question is, is this going to send any good message? Because
people, I am convinced, this is a sad commentary, I don`t know if you agree
or not, regular people don`t give money to candidates. They maybe give a
couple hundred bucks. Some may give that kind of money, which a lot of
money for people.

But most people, when they see millions of dollars being paid by
people like the Koch brothers, they can`t even get it in their heads what
that means. And so, they move on to voting on a guy, how he deals with his
wife, how he deals issues like the economy, they can understand.

Do you think people focus on campaign finance when they go to vote?

KORNACKI: No, I mean, I`ve never thought so. I`ve always thought
the power of sort of campaign finance messages is what it says about the
candidate`s character. I mean, what I`m talking there is the example that
comes to mind is John McCain when he ran for president way back in 2000
when he was the straight talk express.

MATTHEWS: He looked good.

KORNACKI: Yes. His special issue was campaign finance reform.
Nobody actually cared about the specifics of what he was calling for, but
it was him against the system and that looked good to people.

MATTHEWS: Yes, and the system beat him.

Well, tonight in South Carolina, the rally, Colbert addressed
questions about whether his campaign is for real or not. Let`s listen.

(BEGIN VIDEO CLIP)

COLBERT: The pundits have asked, is this all some joke? We`ve all
heard it, haven`t we? I say, if they are calling being allowed to form a
super PAC and collecting unlimited and untraceable amounts money from
individuals, unions and corporations and spend that money on political ads
and for personal enrichment and then surrender that super PAC to one of my
closest friends while I explore a run for office, if that is a joke, then
they are saying our entire campaign finance system is a joke. And I don`t
know about you, but I have been paid to be offended by that.

(END VIDEO CLIP)

MATTHEWS: OK. Herman Cain gets five points tomorrow night when
we`re reporting. It`s 11:00 at night. What will people report? Will they
say this is important? A stab in the eye, a poke of the eye of the
campaign finance system or they won`t even make a paragraph? What would be
the report if Colbert succeeds on the Herman Cain ticket?

KORNACKI: I guess, first of all, it`s humiliating if any candidate,
for any candidate who happens to finish below him if something like that
happens.

MATTHEWS: Right.

KORNACKI: You know, some people will say it`s about campaign finance
reform. I think the prevailing interpretation of it will probably end up
being, if he does well, will be: this is how bad and how unimpressive this
field was to the voters of South Carolina.

MATTHEWS: OK, Steve Kornacki. It was the Bill Buckley, the great
Bill Buckley, the late Bill Buckley, who said, I`ll demand a recount.
Breslin ran in another race.

When we return, "Let Me Finish" with the collapse, that`s what Gallup
poll is calling it, on Mitt Romney. The dogs just aren`t eating his dog
food -- he being the dog food.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: "Let Me Finish" tonight with this:

The reported collapse in Mitt Romney`s poll numbers reminds me of the
old story about the well-advertised dog food. The campaign to sell that
dog food was great. It came in a brightly colored can. The owner thought
it was the best possible food to be serving his pet.

But no matter what, after all the great advertising and the great
response by the owner, the dog just wouldn`t eat it. It just kept looking
at his bowl.

Well, this is the Republican Party today. The reason is pretty
clear. Romney`s not what they want, especially this year.

The Republican right is angry this year and Romney isn`t. He wants
the job all right. He wants to beat Obama to get it, but he`s not out to
beat Obama for the very purpose of beating Obama the way red-hot
Republicans are.

And Newt is. You watch him tear into the moderator last night and
you get it. He`s ticked off the way most Republicans are ticked off. And
this is an election primarily about the country`s mood. Newt Gingrich
speaks with the attitude of conservative Republicans that the country`s
establishment is out to get them. And because he does, he has a great
chance to be its leader.

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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