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updated 2/15/2012 11:19:32 AM ET 2012-02-15T16:19:32

Guests: Steve Schmidt, Howard Fineman, Mark Halperin, John Heilemann, Milissa Rehberger, Andrew Sullivan, E.J. Dionne, Mick Mulvaney, Donna Edwards

CHRIS MATTHEWS, HOST: Santorum surges.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington. Leading off tonight:
Deliver us from Mitt. First came Donald Trump, then Michele Bachmann, Rick
Perry, Herman Cain, and Newt Gingrich twice. Now it`s Rick Santorum who`s
become the conservatives`s anyone-but-Mitt alternative.

Is Santorum the flavor of the month or an existential threat to Mitt
Romney? Three polls out in the last two days suggest Santorum is for real.
This time, Mitt has reason to be worried.

For the first time now, President Obama`s campaign team has to
consider the possibility that Santorum could be the GOP nominee facing him.
Would a race against a candidate who questions women, not just at the war
front but also in the workplace, be an easy target for team Obama?

Plus, the brilliant Andrew Sullivan writes in the new issue of
"Newsweek" that the birth control fight could end up as a big winner for
President Obama. He says the further the right wing -- the far (ph) right
(ph), in fact -- is identified as reactionary on birth control, the better
it is for the president. Andrew Sullivan joins us tonight.

And when House Republicans caved on allowing an extension of the
payroll tax cut, it was an admission that, once again, this was a loser
issue for the Rs.

Finally, "Let Me Finish" with why Rick Santorum is real and Romney
ain`t.

We begin with how serious a threat Rick Santorum is right now to Mitt
Romney. Steve Schmidt was senior strategist for the McCain-Palin campaign
in 2008, and of course, the 2004 Bush reelection campaign. And Howard
Fineman is the Huffington Post Media Group`s editorial director. Both are
MSNBC political analysts.

Steve Schmidt, imagine you`re sitting right there, right now, working
with Romney. And you`re looking at the following -- Santorum surging in
the new national polls. In "The New York Times"/CBS poll, Santorum leads
the field with 30 percent. That`s a 14-point bounce from last month.
Romney`s right behind him at 27 percent, with Paul and Gingrich trailing
further behind.

In the Pew poll, Santorum again leads with 30 points, 30 percent.
He`s more than doubled his standing from a month ago. Romney`s in second
with 28 percent -- again in second. And in the Gallup tracking poll,
Romney`s on top again, third time here, third poll, at 32 percent.
Santorum is right behind him at 30, with the margin of error obviously
close, well within.

Look at that. So you`ve got three things going on right now, Steve.
Gingrich -- rather, Santorum seems to be moving ahead in the polls. He`s
quickly getting the momentum here. So Romney`s not only falling behind,
but he`s beginning to fall behind significantly. And he has to win,
everyone in the business says, February 28th in Michigan or Arizona. He
best well win in Michigan. If he loses there and continues to fall in the
polls, he may be dead meat.

What do you do to turn that around, if you`re him right now?

STEVE SCHMIDT, REPUBLICAN STRATEGIST, MSNBC POLITICAL ANALYST: Well,
one of the things, Chris, too, is when you look inside those numbers, he`s
losing ground with conservatives. He`s losing ground with evangelicals,
and he`s losing ground with independent voters. If you`re the Romney
campaign, I think you`re looking at data that says you have to disqualify
Rick Santorum, which I think is easier said than done, as you look ahead to
Michigan.

But they`re in a tough spot. The three losses had a huge impact in
this race. I think the race is more wide open at this moment than it is at
any time since the beginning of the race. And Rick Santorum is a lethal
threat to the prospects of a Romney nomination, particularly if Rick
Santorum is able to win in Michigan.

MATTHEWS: Howard, is Rick Santorum the Barack Obama of the Republican
side, from last time, the guy who`s the true believer, the real -- in that
case, the real anti-war guy running against the sort of the centrist,
Hillary Clinton? Does he have a better shot at getting the zealots?

HOWARD FINEMAN, HUFFINGTON POST MEDIA GROUP, MSNBC POLITICAL ANALYST:
Oh, he definitely does. And on the authenticity question, Rick Santorum
impresses people out there. I know, having been out on the campaign trail
for months, he is the guy whom voters know believes what he says and says
what he believes.

You may not necessarily agree with him, but when you look at Rick
Santorum, you know that here`s a guy who`s saying what he really believes.

MATTHEWS: Yes, isn`t that great?

(CROSSTALK)

MATTHEWS: ... politics like that in a long time? I mean, I`m not
saying he`s perfect because he`s certainly not perfect...

FINEMAN: No.

MATTHEWS: ... for the -- he`s not a middle-of-the-roader. He doesn`t
fit with the polls.

FINEMAN: No. No.

MATTHEWS: But I can`t think of a politician who you never get the
sense is spinning.

FINEMAN: Well, the characteristic body language of Rick Santorum is a
shrug that says, No, I`m not going along with that.

(LAUGHTER)

FINEMAN: You`ve seen it. You see it on TV. He goes, No, and he
shakes his head. No, I`m not going to support gay marriage. Yes, I`m
going to be down the line pro-life -- you know, on the social issues in
particular. By the way, his campaign would like to stop talking about the
social issues.

MATTHEWS: Oh, yes.

FINEMAN: They want to sell Rick Santorum as a blue-collar
Pennsylvania manufacturing guy...

MATTHEWS: Who`s not one of the 1 percent.

FINEMAN: ... who`s not one of the 1 percent. And that`s another
threat to Mitt Romney. Mitt Romney, I think rather late in the game, but
smartly, is talking about his dad selling aluminum paint and all that. So
hey, it`s part of his background and it`s a conservative part of his
background.

MATTHEWS: Yes.

FINEMAN: But if Mitt Romney gets into a blue-collar-off...

MATTHEWS: He was one of the tin men?

(LAUGHTER)

FINEMAN: Yes. If he gets...

MATTHEWS: I don`t think so!

FINEMAN: If he gets into a blue-collar contest with Rick Santorum,
he`s going to lose.

MATTHEWS: Let`s take a look at this poll, Steve and Howard. The poll
PPP robo-poll in Michigan has Santorum on top at 39 percent to native son
Romney`s 24 percent. Look at that differential! Paul and Gingrich --
again, I go back to this, Steve. The way we`re watching this election is
very much like the Hillary Rodham Clinton fight against Barack Obama.
Every couple weeks, there seems to be a major event, and the one who wins
that seems to be the one in the driver`s seat here.

In a new ad, by the way, set to run in Michigan, here`s Romney playing
up his home state heritage. This is the old Tip O`Neill "all politics is
local." By the way, I counted, this guy has five states he claims as home
right now. He`s got as many positions as he`s got states he`s from.

Let`s watch here.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R-MA), FMR. GOV., PRESIDENTIAL CANDIDATE: I grew up in
Michigan. It was exciting to be here. I remember going to the Detroit
Auto Show with my dad. That was a big deal.

How in the world did an industry and its leaders and its unions get in
such a fix that they lost jobs, that they lost their future?

President Obama did all these things the liberals have wanted to do
for years, so the fact that you`ve got millions of Americans out of work,
home values collapsing -- people here in Detroit are distressed (ph).

I want to make Michigan stronger and better. Michigan`s been my home,
and this is personal.

I`m Mitt Romney and I approved this message.

(END VIDEO CLIP)

MATTHEWS: You know, he seems rootless, Steve. He`s from Michigan,
Massachusetts, New Hampshire, he has a house up there, he`s from Utah,
where he saved the Olympics, and he`s got a house now where he lives most
of the time in California.

Is that a problem, to claim so many places as home, or is that a
positive?

SCHMIDT: It could be a problem, but I do think that Romney`s family`s
roots go deep in Michigan. I think it`s smart for him to be talking about
it. What jumps out at me in that spot is how different it is from the
strategy in Florida, which was entirely negative, negative all the time to
take out Gingrich.

I think the Romney campaign has clearly settled on the fact that they
need to communicate some positive virtues...

MATTHEWS: Yes.

SCHMIDT: ... about Mitt Romney in Michigan, although I suspect you`re
going to see a pretty aggressive campaign against Rick Santorum there, as
well.

MATTHEWS: We got the word that they`re going after Gingrich. What`s
that about? They`re going to use the super-PAC money and the stuff without
his name on it to go after Gingrich. What`s that about, Steve? Isn`t his
problem Santorum now and not Gingrich?

SCHMIDT: Yes, I think his problem is Santorum. Santorum`s ahead in
the race, and he`s ahead in the race with Gingrich still in the race. And
I do think if Newt Gingrich were to drop out of the race tomorrow, all of
the polling data, all of the evidence suggests that most of that vote share
would move over to Santorum. So I`m not entirely sure what the benefit of
going after Newt Gingrich is at this point in the race.

I do think that as you look ahead to Tuesday the 28th in Michigan, you
know, this is a Punxsutawney Phil election. If, in fact, Rick Santorum is
able to hold on and win there, this nomination contest is going to be a
two-person race, and it`s going to go forward for a very long time.

If Mitt Romney comes back, he`s able to win in Michigan, he`ll win in
Arizona, he`ll have momentum going into super-Tuesday.

MATTHEWS: Yes.

SCHMIDT: I think he does well there. He becomes the de facto
nominee. But I think that Rick Santorum is a tougher opponent to run the
negative ads against and take him down the way that Gingrich collapsed in
Florida.

MATTHEWS: Well, let`s take a look at Santorum`s campaign. It`s more
ragtag than the perfectly orchestrated Romney operation. Take a look at a
Santorum rally last night, with the horror film lighting -- horror film
lighting, I should say -- as he tries to speak over the Occupy protesters
who crashed his event.

(BEGIN VIDEO CLIP)

RICK SANTORUM (R-PA), FMR. SEN., PRESIDENTIAL CANDIDATE: About one in
three Americans don`t graduate from high school. And almost all of them,
over two thirds -- over three quarters of them will end up impoverished
(INAUDIBLE) We`ve got to provide an opportunity for them. Instead of
standing here unemployed yelling at somebody, go out and get a job and work
for a living!

(CHEERS AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: You know, it`s like you used to hold a flashlight under
your face, that kind of thing, in high school, Boy Scouts.

(LAUGHTER)

MATTHEWS: And there he is saying something very intelligent, though,
if you could hear it without looking at it, which was instead of just
yelling at the protesters, why don`t we get them jobs and opportunities?

FINEMAN: Yes. Well, Rick Santorum`s events rarely have been well
crafted or well advanced. But he prospered in Iowa and he`s done well
elsewhere by selling himself as the guy in the sleeveless sweater who is
all about substance and not about show biz.

MATTHEWS: Yes.

FINEMAN: And that probably was taking authenticity one step too
far...

MATTHEWS: Well, he was trying.

FINEMAN: Yes. But it`s helped him. It`s helped him. And it`s very
interesting with Mitt Romney. In Florida, everybody kept repeating the
statistic, and it was true, that 99 percent of Mitt Romney`s ads, or ads on
behalf of Mitt Romney were negative.

MATTHEWS: OK.

FINEMAN: And it took down his approval numbers, and that`s why he`s
doing what he`s doing now.

MATTHEWS: Steve Schmidt, my friend, you talk to a lot of Republicans
out there. Are they aware that the media is basically rooting for Santorum
out of sheer fear of the ennui, the boredom which will set into this
country if it looks like Romney locks this thing up? At the moment he
locks this up, we face a long, dull, summer of Mitt Romney.

SCHMIDT: Well, I think it`s pretty obvious, when you look at the
coverage of the race, where most of the reporters are, you know, where
their -- where their rooting interests are, you know, so far in the race.

And I do think when you talk to Republicans, the one thing that
everybody understood is that Mitt Romney had to avoid a situation where he
faced off against a plausible candidate.

MATTHEWS: Yes.

SCHMIDT: And I don`t think Michele Bachmann was plausible. Herman
Cain wasn`t plausible. But a plausible candidate, a plausible commander-
in-chief in an ideological contest, which is exactly where Mitt Romney is
now, it`s very different -- it`s very, very difficult for him to be in an
ideological contest against Rick Santorum.

MATTHEWS: Well said.

SCHMIDT: And so it`s going to be...

MATTHEWS: I`ve been waiting to...

SCHMIDT: ... interesting to watch...

MATTHEWS: ... for months.

SCHMIDT: ... over the next week.

MATTHEWS: You are a guy I trust completely about this. And your
assessment is he`s finally -- it`s finally the gunfight at the OK corral.
He`s finally faced a candidate in Rick Santorum who is credible as a
presidential candidate, right, is what you`re saying?

SCHMIDT: Absolutely.

(CROSSTALK)

FINEMAN: Mitt Romney said it was going to come down to a two-person
race. But because neither he nor the people around him are conservatives,
they assumed that if it came down to a two-person race, Romney would
automatically win. They don`t understand their own party.

MATTHEWS: Yes.

FINEMAN: Mitt Romney was...

MATTHEWS: (INAUDIBLE) Mitt Romney.

FINEMAN: Mitt Romney saying a year ago when he was raising money,
It`s going to come down to a two-person race, me against a conservative.
He assumed that was a winning combination.

MATTHEWS: Yes.

FINEMAN: It`s not, not in this Republican Party.

MATTHEWS: He doesn`t know -- Howard, I love your passion (ph).

FINEMAN: He doesn`t know the party!

MATTHEWS: I think -- I think you understood it more than he does, as
a reporter. And I think he doesn`t understand why a person would go to a
Tea Party meeting, the basics. He doesn`t get it, why they`re angry,
because he`s not angry. He hasn`t had it rough enough to know why anybody
would ever be angry.

Thank you, Steve Schmidt. It is great having you on this network.
Howard Fineman, of course, sir.

Coming up: The Republican -- I don`t have to say it.

FINEMAN: Thank you.

MATTHEWS: The Republican campaign -- but I will. The Republican
campaign`s turning into a two-man race. Is the president ready for this,
President Obama? Would he rather take on Santorum in the general election
or would he rather stick with Romney, the duller candidate? You never know
about the wild candidate. He might turn out to be a tougher one. That`s
ahead. This is a great one for the -- can they turn their weaponry in the
direction of Santorum, if they have to?

You`re watching HARDBALL -- what a show tonight! -- only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: Washington state is the latest state now to approve same-
sex marriage. The state`s governor signed it into law yesterday. Now the
debate turns to New Jersey, where the state senate just passed a bill to
legalize it. The state`s assembly now takes it up later this week and has
the votes to pass it. But Governor Chris Christie says he`s going to veto
the bill and he says he wants the issue to be put to a statewide
referendum.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. One of Mitt Romney`s strongest
selling points, of course, for much of the primary season has been that
he`s the most electable candidate, he says. But what if that selling point
was ripped out from under him? Rick Santorum`s now in a dead heat with
Romney and may be passing him, according to the latest national polls. And
Romney, who had been polling well among independents, has recently seen his
support drop among them.

In his latest ads up in Michigan, Rick Santorum rejected the idea that
Romney is the most electable. Let`s watch.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Who has the best chance to beat Obama? Rick
Santorum! A full-spectrum conservative, Rick Santorum is rock-solid on
values issues, a favorite of the Tea Party for fighting corruption and
taxpayer abuse, more foreign policy credentials than any candidate, and
Rick`s "Made in the USA" jobs plan will make America an economic superpower
again! Rick Santorum, a trusted conservative who gives us the best chance
to take back America.

(END VIDEO CLIP)

MATTHEWS: Great ad. So how big a threat is Santorum to Romney, and
how big of a threat would he be to Barack Obama come November? We got the
experts, Mark Halperin, senior political analyst for MSNBC and editor-at-
large for "Time," and John Heilemann`s an MSNBC political analyst and the
national affairs editor for "New York" magazine. They both wrote "Game
Change."

Let me start with a question for both of you. Start with Mark. Is
the White House believing now that they might have to face Santorum?

MARK HALPERIN, "TIME," MSNBC SR. POLITICAL ANALYST: They still think
there`s a better chance than not they face Romney, but they see real
weakness in Romney both now and as a potential general election candidate.

They`re fully prepared to face Santorum. I heard you earlier about
shifting their focus to Santorum. They`re well prepared. They`re sitting
on a bunch of stuff about Santorum I`m certain that will be tough for him
to handle. But they`re prepared to deal with him, and they think that he
may well be a stronger opponent than Romney right now.

MATTHEWS: Well, one of my favorite movies -- I often say it is my
favorite, although that my list changes a bit, John Heilemann, is "Lawrence
of "Arabia." And the Turks had all their guns at Aqaba pointed to the sea,
and the Arabs came in from the desert and beat them. Can Santorum be the
Arabs coming in from the desert? Not that he would claim that ethnic
identity.

(LAUGHTER)

MATTHEWS: But would he do it?

JOHN HEILEMANN, "NEW YORK" MAGAZINE, MSNBC POLITICAL ANALYST: Well, I
don`t know if he`d be able to beat Barack Obama, or at least I don`t think
he would be in a better position necessarily than Mitt Romney, but I don`t
think he`d necessarily be in a worse position, Chris.

I mean, if you look right now, the national polls are more or less
meaningless because it`s fair to say that the Obama campaign and the
Democrats have been attacking Romney pretty steadily for months and they
haven`t been doing that to Santorum.

But that said, the national polls show them basically running about
the same place with respect to Obama, 8 or 10 points behind. And you know,
I think Rick Santorum and Mitt Romney would be very different kinds of
general election candidates and they would appeal to different kinds of
swing voters.

But they both would have appeal to different sets of swing voters and
they both would conceivably be able to give Obama a real battle, especially
if the economy stays bad over the course of the next -- or if the economy
turns back bad over the course of the next few months.

MATTHEWS: Yes. It seems like Romney would be better if the economy
went south. He`d be a great candidate. I`m not sure that Rick Santorum
would be good especially as a candidate to exploit an economic downfall
(ph).

Anyway, this morning, Joe Scarborough said he thought Rick Santorum
would be a tougher opponent for the president in the fall than Romney.
Let`s listen to "MORNING JOE."

(BEGIN VIDEO CLIP)

JOE SCARBOROUGH, CO-HOST, "MORNING JOE": The conventional wisdom is a
guy like Rick Santorum has said too many crazy things. And he`s too this
and he`s too that. I surprised that conservative activists a month or two
ago saying that I thought Rick Santorum would match up better in the
general election than any of these other candidates because he does have
the blue-collar background.

I think a Santorum/Obama match-up would be fascinating. You certainly
couldn`t call him the 1 percent.

(END VIDEO CLIP)

MATTHEWS: Looks like Joe has his Valentine`s collar (ph) on today.
Mark, the question there, again, a smart guy like Joe, who is really smart
on politics, does think that Santorum has strengths. He`s a blue-collar
guy. He`s the real thing, the genuine article, we always say in politics.

He would pass any political lie detector test, whether you like him or not.
He says what he believes.

And that`s always been a Romney, I think, shortfall.

HALPERIN: It`s a snapshot of where we are today. Romney and Santorum
match up about the same in the Electoral College, with one exception.

Santorum, right now, based on public and private polling, is stronger
in those Midwestern battleground states. Those are the most important.
Romney may have an edge in Florida right now, but otherwise, they`re about
the same. Neither of them would be particularly strong with Hispanic
voters, make those Western and Southwestern battlegrounds tough.

Santorum is strong where Romney is weak. The reason there`s such
confidence in the White House and in Chicago that Romney could be beaten if
he`s the nominee is all the things you listed. He`s a member of the 1
percent. He has a personality that a lot of people don`t cotton to.

Santorum would excite the base, which come across as a natural and
genuine guy and also again that blue-collar cred. So, on the other hand,
he would have to get -- win -- get through this nomination, and then he
would have to withstand $500 million of negative ads. So, a snapshot of
today is different than where we would be come fall.

MATTHEWS: Yes, you`re right. He hasn`t taken the beating.

Let`s take a look at these guys. Let`s take a look at the latest poll
numbers here. Obama vs. Romney and Santorum vs. -- Santorum vs. Gingrich,
let`s look at those numbers in the latest Pew Research poll this week. By
the way, in a general election matchup, here it is, the president easily
tops Mitt Romney by eight points among all likely voters. That`s a big
upswing for him.

He does just a little that against Rick Santorum, winning by 10
points. Compare that to how he would do against Newt Gingrich, who he
would beat by 18 points in a head to head. I don`t believe that. As Jack
Germond, our old friend for the -- he`s still around watching this show,
I`m sure. I`m hoping he is.

John Heilemann, these numbers are so out. Anybody that thinks the
general election come November 8 or whatever is going to be these kind of
spreads I think is "Looney Tunes."

I don`t see the president being able to wipe out Romney, but he could
wipe out Santorum, because you could nail him on so many far-out cultural
positions that it would kill him, first of all, among gay people. He`s
already dead among them. That`s a small percentage, obviously. But if you
get him on women and working women who work outside the home, he`s said
some strange things about why women work outside the home that I think
women who work very hard 50 hours a week outside the home and then another
30 or 40 hours at home would find offensive.

HEILEMANN: I mean, Chris, on your first point, I don`t think anybody
certainly in the White House thinks they are going to end up winning the
general election by eight or 10 points against any of these candidates.
They think it`s going to be a very close election.

MATTHEWS: Yes.

HEILEMANN: The second thing is, I think there`s no doubt the kind of
campaign the White House and the reelection committee, Barack Obama`s
reelection committee would run against Rick Santorum and it`s the kind of
campaign you`re suggesting.

They would be focusing, already -- even more than they already are, on
trying to bring over swing voters who are women voters, independent women,
that would be a big focus. And they would do that.

But, look, to go back to the earlier part of the conversation, Rick
Santorum has that blue-collar appeal that we have talked about. It isn`t
just about authenticity.

MATTHEWS: OK. Nail it. What is it?

(CROSSTALK)

HEILEMANN: If there`s an economic downturn, he`s going to be
appealing to a populist, white, working-class part of the electorate. That
part of the electorate delivered for Republicans in 2010. That was how
Republicans won back the House in 2010 was by appealing to kind of voter.

(CROSSTALK)

MATTHEWS: OK. I know that vote. It`s where I come from. Why did
that vote reject him by 18 points in Pennsylvania in favor of Bobby Casey
for Senate?

HEILEMANN: Well, you remember, Chris, quite well the 2006. I don`t
want to make Rick Santorum`s talking points for him.

But you remember 2006 was a big Democratic wave year. There`s no
doubt that Santorum`s positions on things like Terri Schiavo got him in
trouble with again the white women and other women voters who the White
House would be attacking -- or would be trying to attack him with.

But I do think that there`s an interesting thing. Mitt Romney appeals
to swing voters who are kind of economically conservative, but sort of
socially liberal. Rick Santorum would be appealing to the opposite kind of
swing voter. He would be appealing to cultural conservatives who are kind
of in some ways economically liberal, economically populist.

You would see a campaign based on trade. You would see a campaign
based on a much more downscale kind of economic appeal.

MATTHEWS: I understand.

HEILEMANN: And those are some voting groups the president hasn`t
always been super strong with. I`m not trying to say that Rick Santorum
would have the advantage, but I am saying that there would be a very
different dynamic in a race where Rick Santorum were the nominee.

MATTHEWS: OK. Good case.

Let me try another case with Mark. He lost by 18 points to Bobby
Casey because he took $35,000 a year from Penn Hills County to pay for his
kids` homeschooling on television down in Virginia. That would haunt him
again, wouldn`t it? That may be a local issue, but it killed him last time
when he ran for Senate reelection.

HALPERIN: Chris, there`s a million things like that.

In Boston, the Romney campaign is sitting on some stuff about Santorum
as well, but not all of it would play as well in a nomination fight as in a
general. And the Obama campaign would have a bunch of stuff like that.

Look, he won in Pennsylvania too. Casey is a great centrist candidate
and had a great name and as John said, it was a great Democratic year. I`m
not as hung up on his big loss that year as I am on some of the -- just the
general performance questions of could he withstand the onslaught.

MATTHEWS: Yes.

HALPERIN: I think as a psychological matter, he`s better able to
handle an onslaught than Gingrich was, for instance.

But we`re going to see a real test for him. Remember, if he wins the
nomination, he will have beaten a huge front-runner with a very low-budget
campaign. He will get tons of opportunity to reintroduce himself to the
country and to those people not paying attention now. If he takes
advantage of that, a lot of things from his past won`t be as important as
how he has emerged in this narrative from this campaign beating Romney and
heading into a general election if he pulls it off.

MATTHEWS: I think the fact that he has a lot of kids is interesting.
And that`s probably a plus because Mitt Romney -- rather, Newt Gingrich has
half as many wives as Rick Santorum has kids.

(LAUGHTER)

MATTHEWS: Anyway, Mark Halperin, thank you.

And, John Heilemann, thank you.

Up next: Which failed Republican presidential candidate says he might
try again -- you won`t believe it -- four years from now? This guy is
coming back for another beating. That`s ahead in the "Sideshow."

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

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

First up: Go all the way. When President Obama took to the podium
earlier today to discuss the payroll tax cut, there was another order of
business that took priority. And it was the male listeners the president
was going for here. Let`s listen.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Let me start with a
quick public service announcement for all the gentlemen out there. Today
is Valentine`s Day.

(LAUGHTER)

OBAMA: Do not forget.

(LAUGHTER)

OBAMA: I speak from experience here.

(LAUGHTER)

OBAMA: It is important that you remember this. And go big. That`s
my advice.

(LAUGHTER)

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS: Smart man.

Well, time is running out, guys. Anyway, the first lady recently said
the ball was in the president`s court when it comes to organizing
Valentine`s Day.

Next up, was that just a rehearsal?

By the time Texas Governor Rick Perry bowed out of the presidential
race last month, he had racked quite a list of devastating gaffes and
embarrassing debate performances. So, you would think he`d had enough of
this. Well, think again.

Here he is with ABC`s Jonathan Karl.

(BEGIN VIDEO CLIP)

JONATHAN KARL, ABC NEWS: So, have you had some time to reflect on
what this experience was like?

GOV. RICK PERRY (R), TEXAS: Oh, yes. I tell people it was by far the
most exhilarating thing I have ever done.

KARL: You may run again?

PERRY: Absolutely. It was great practice for I guess...

(CROSSTALK)

KARL: For 2016.

PERRY: Yes, it could be.

(END VIDEO CLIP)

MATTHEWS: Well, before you run for president again, hoss, I would
recommend you take a solid American history course at the University of
Texas. We have had enough of secession.

And lost in the buzz over Rick Santorum`s rise is Newt Gingrich, whose
campaign has taken note of Valentine`s Day by launching an anti-Romney Web
site with the title of Liberals Love Romney.

Well, let`s take a look at some of the liberals that Gingrich features
on that site, all accompanied by an obviously fabricated quotation.

First in the lineup: Saul Alinsky. You have got to believe it.
Gingrich usually reserves that obscure punch for President Obama, but
desperate candidates require desperate measures. Then there`s Al Gore.
Remember him? Romney was for climate change -- climate change science, in
fact -- before he was against it.

And, of course, President Obama himself, whose health care plan is
modeled on the one Romney championed as Massachusetts governor.

What may be closer to the truth here actually I think is that
moderates and even some liberals out there don`t fear Romney as a
presidential candidate because they suspect he`s just pretending to be
conservative.

Up next: Is the birth control insurance issue a big winner
politically for President Obama? Journalist Andrew Sullivan says it`s a
big one. And he will join us when we return.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MILISSA REHBERGER, CNBC CORRESPONDENT: I`m Milissa Rehberger with
your CNBC "Market Wrap."

The Dow gains four, the S&P 500 lost one, and the Nasdaq is up just a
fraction. Stocks ended off session lows. Greece`s debt woes were again a
factor in the early sell-off. Meanwhile, January retail sales were weaker
than expected , rising only 0.4 percent, rather than the 0.7 percent that
economists had expected. And another big day for Apple. Shares rose 1
percent on news the iPad 3 will use the 4G networks in both Verizon and
AT&T.

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

(BEGIN VIDEO CLIP)

OBAMA: I understand some folks in Washington may want to treat this
as another political wedge issue, but it shouldn`t be. I certainly never
saw it that way.

This is an issue where people of good will on both sides of the debate
have been sorting through some very complicated questions to find a
solution that works for everyone. With today`s announcement, we`ve done
that. Religious liberty will be protected and a law that requires free
preventive care will not discriminate against women.

(END VIDEO CLIP)

MATTHEWS: Well, that was last Friday.

Welcome to HARDBALL.

President Obama says he never saw the contraception debate as a wedge
issue, but it`s turned out to be a wedge issue in a whole new way right
now. By making an accommodation to the Catholic Church on contraceptive
coverage, mr. Obama solidified his base perhaps among liberal Catholics and
splintered the right, you might say.

But how has this changed the political game right now?

Andrew Sullivan is brilliant, of course, and he breaks it down in a
cover piece for the latest "Newsweek," Daily Beast called "The Politics of
Sex." E.J. is -- E.J. Dionne also joins us. He`s a columnist for "The
Washington Post" who has been covering this as a columnist.

Andrew, I guess that`s the key question out there. And you have
gotten to it in your brilliant essay. So let`s ask the question. Did the
president go in this siding with the women, like Secretary Sebelius and the
people around him at the White House, the pro-choice crowd, if you will,
the very committed people, knowing he was going to go up against
conservative Catholics? Did he want this fight?

ANDREW SULLIVAN, ANDREWSULLIVAN.COM: No, he didn`t want this fight.
Who would want this fight? Obama spent his entire administration trying to
avoid this kind of fight.

But he couldn`t avoid the choice. He had to make a choice. And I
think the get-out was that we would have a year to figure it out. And when
push comes to shove, he decided to back the 98 percent of Catholic women
who use birth control and the vast majority of Catholics in America who
support birth control, and take on the Benedict XVI- and John Paul II-
appointed bishops, for whom no issue seems to be more important than
controlling the sex lives of other people.

(LAUGHTER)

MATTHEWS: Well, E.J. is here. E.J. Dionne and I, I think, may agree
on this.

But, E.J., you have pointed out that -- you have been out at the front
of this thing basically taking what we might call liberal Catholics and
others among -- and the secularists -- and saying this can be resolved.
You don`t have to have this fight with us, at least.

E.J. DIONNE, COLUMNIST, "THE WASHINGTON POST": Right.

I still think that he pays some price for not coming to this
compromise right out of the box. I agree that, as a sort of narrow --
looking at it narrowly politically right now, if this is a fight about
contraception and not a fight about religious freedom, obviously, Obama
wins that fight.

And I think the bishops are making a mistake, those bishops who really
want to fight him all the way down the line on this.

MATTHEWS: They want to take contraception out of health care, period,
not just out of the church.

DIONNE: Yes. And I don`t think -- I think, there, they start losing
a lot of support, including within the church.

MATTHEWS: Yes.

DIONNE: Where there were others, like Sister Carol Keehan of the
Catholic Health Association, who basically said we have a religious liberty
interest here which we want to protect, and we also understand that the
notion of providing contraception as part of a health plan is not alien.

MATTHEWS: Yes.

DIONNE: For goodness sakes, there are a lot of Catholic institutions
that provide it.

MATTHEWS: Well, I said so on Friday, Andrew. I really like the way
the president handled this. He recognized that he had gone too far in
intruding on what I think is the place in the church in defending its own
beliefs by telling them what to do. And he fixed it by saying, OK, the
insurance companies will pay the cost for this birth control coverage.

You agreed with me, I think, on that. I read carefully your article,
and you said you didn`t like the first way he went at it, the initial take
he took on this.

SULLIVAN: No, and I think because, inevitably, someone would have
raised the question of religious liberty, even though, of course, this
question of contraception is very controversial and was controversial in
the Vatican.

If you remember, in the Second Vatican Council, the commission set up
by Pope John XXIII approved the pill, only to be overruled by Pope Paul VI.
So the idea this is a crucial and critical doctrine was false from the
first place.

But, nonetheless, if you can avoid a fight with religious people, you
should. And I think it`s a very complicated issue. I might add, also,
that in California and New York, this was already the rule. This is
already the law. In 2000, the Employment Equality Opportunity Commission
ruled it had had to be mandated in every health care plan because otherwise
it would violate sex discrimination laws.

So I think a lot of this was gender by the bishops. They were the
one that set a trap for Obama. They are like Wile E. Coyote trying to blow
up the Road Runner, only it blew up on them.

MATTHEWS: Let me go back to E.J. on this.

You think, overall, they`re going to ask the same question of Andrew.
Politically speaking, as well as being a Catholic, like I am, this whole
issue -- do you think the president handled this, overall, from beginning
to end, pretty well in the way he corrected himself along the way?

DIONNE: I wouldn`t put it that way. I think he blew it at the
beginning because it`s not like this compromise wasn`t out there. They
considered this compromise. It was proposed a long time ago back in the
fall.

And so I think that if he had started with this right off the bat,
you know, the first time around, I think some of this fighting simply
wouldn`t have happened and he could have said right out of the box, I
understand religious liberty.

Having said that, I think he`s a lot better to have corrected it.

(CROSSTALK)

MATTHEWS: Could he have gotten the liberal Catholics if he had done
it from the beginning?

DIONNE: Yes, I think he could have and I think he could have gotten
a lot of the Catholics --

MATTHEWS: Same question to you, Andrew. Overall -- we don`t have
much time -- overall, take a moment. How would you say the president`s
political skills and good conscious came together here?

SULLIVAN: I think he`s a conscientious person who tried to make the
right call. But I`ll tell you, he`s also a politician. What does this
really do? It puts contraception right in the center. It riles up the
evangelical base.

And who does it really benefit? It benefits Rick Santorum.

MATTHEWS: Yes. Absolutely right.

SULLIVAN: It allows Rick Santorum to say, look, Romneycare was just
the same as Obama care on this. He signed the same rule. It`s going to
empower Rick Santorum to win and do well in the South, which long-term, is
going to be a fantastic advantage for Obama.

So what this did I think, accidentally, and I called it an improvised
bait and switch, is that he gave Rick Santorum the gift that could win him
the nomination of the Republican Party which will be a catastrophe for the
Republican Party.

MATTHEWS: So, Machiavelli or serendipity?

SULLIVAN: Both. The Machiavellian, of course, doesn`t want to look
Machiavellian. And Obama doesn`t Machiavellian. But, boy, is Rick
Santorum happy tonight. And he`s going to use this issue.

MATTHEWS: I agree. This president, I go back to -- what`s the
religious word for luck?

DIONNE: I think from the beginning of his career, he`s always been
lucky. Although I still don`t think they should get arrogant about this.
I agree with what Andrew said about Santorum. I also think there are women
who care about contraception he won.

MATTHEWS: OK.

DIONNE: But I think there`s still some more trouble to be had here.

MATTHEWS: The good news is I`ve heard from the White House, from
around -- I can`t say where, from a good source that the president knows
the church had a good case in this first round and he thinks he dealt with
the concern that they had. But he said it was a legitimate concern, which
makes me happy. So there is peace in the land.

Thank you, Andrew Sullivan, coming from London. Staying up very late
over there. Sir, a brilliant article. But you`re always brilliant. I
don`t have to tell you that.

SULLIVAN: Thank you.

MATTHEWS: Up next, House Republicans caved on the payroll tax cut.
It`s a loser for them -- perhaps a lose-lose because they would have lost
if they won.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: We`ve got some new polling from the Massachusetts Senate
race up there, which along with Virginia will be among the hottest fights
this year.

Let`s check the HARDBALL score board. According to a new poll from
WBUR Radio in Boston, it`s a three-point race right now. Democrat
Elizabeth Warren is up, 46. Incumbent Brown has 43. She was farther off
before that. That`s win the poll`s margin of error.

We`ll be watching this one all the way to November.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: We`re back.

Democrats and Republicans have spent much of the last 24 hours
jockeying for position after House Republican leaders surrendered
yesterday, agreeing to an extension of the payroll tax holiday, which is in
much a dispute for months now.

Now, it looks as though President Obama may get everything he wants
in this area of the payroll tax extension itself, and an extension of
unemployment benefits, which he also wants for those out of work and
protects the Medicare reimbursement to doctors, which has become an issue

Well, joining us is now U.S. Congresswoman Donna Edwards, a Democrat
from Maryland, from nearby here. And U.S. Congressman Mick Mulvaney, a
Republican from South Carolina, who`s a member of the Tea Party Caucus.

Lady and gentleman, it just seems like the wind has changed
politically. The president is sky high now. He`s up by eight points, up
against his nearest opponent who would be Romney. He`s way ahead of the
other potential opponent. He`s not looking around for deals to cut right
now. He`s looking around for victories.

Congressman Mulvaney, it looks like the president was not -- was a
tough guy to negotiate with here.

REP. MICK MULVANEY (R), SOUTH CAROLINA: Chris, you know, I`ve heard
that all day on your network. And I have yet to understand why the
Republicans getting what we wanted in December, which is a year extension
on the payroll tax cut and allowing people to keep their money is a cave on
our part. Maybe it`s just possible that in this circumstance, we both
wanted the same thing.

MATTHEWS: But you wanted a deal. You wanted an offset. You wanted
him to cut some other stuff to pay for it. He said no. And he got away
with it.

MULVANEY: Actually it was a group of us -- a large group of us who
were not focusing on the pay-for on this particular portion of the bill.
Remember, Republicans have said for many, many years that it`s peoples`
money to begin with. And when we cut taxes, that`s not the same as
spending and we don`t need to pay for it.

What you`re talking about was the pay-for for the doc fix and for the
unemployment --

(CROSSTALK)

MATTHEWS: OK, Congressman, I respect you a lot. But here`s the
problem, why has this been held up all these months if it was that easy?
If you both agreed.

MULVANEY: No, I think what you`re seeing is there`s still
disagreement as of today on unemployment insurance and on the doc fix, the
pay-fors for that.

MATTHEWS: OK.

MULVANEY: I think what we did was take the stuff we can agree on and
move on the stuff that we`re struggling with.

MATTHEWS: That`s what you did. It`s called bailing out.

Congresswoman, what happened here? Your view.

REP. DONNA EDWARDS (D), MARYLAND: Well, Chris, even on HARDBALL, you
can`t rewrite history.

MATTHEWS: Never on HARDBALL.

EDWARDS: That`s right. Democrats and the president -- excuse me,
have been fighting for --

MATTHEWS: Take a minute. That`s all right.

EDWARDS: Excuse me. Democrats and the president have been fighting
for an extension of unemployment for the payroll tax cut and for the doc
fix, and Republicans have been fighting him all the way. And what we see
here is that the president, not did he just get what he want, but the
American people got what they want and what they needed.

MATTHEWS: Let me ask you about the mood up on the Hill now,
Congressman Mulvaney. The -- South Carolina is probably going to vote
Republican no matter how run against. You could probably count on that
state as long as you are down there as a member. I can`t see the Democrats
carrying South Carolina. Nor can I see the Democrats losing New York, for
example, or D.C.

But this election now, I thought until a couple of weeks ago that the
president had real problems. I saw the growth rate looking pretty small
this year. Now, it looks like it may climb to three points this year,
three points real growth, unemployment may drop down below eight.

Your candidacies are very mixed. Romney who looks solid now looks
weak. He looks like he may lose even the battle to Santorum.

What is going wrong in the wind direction? Is it simply a question
about an economic recovery coming faster than a lot of people thought it
would a couple of weeks ago even?

MULVANEY: Chris, first of all, I think you will see this change over
the course of nine months. You know this is a short-term business. We are
three election cycles away from going to November.

But I think you`re overstating the point. I live very close to the
North Carolina border and the president is really struggling there. They
had a very unpopular Democrat governor, actually say she is not going to
run for re-election.

Now, they are struggling to find someone to run on the Democrat
ticket with the president in North Carolina. This is a state that he needs
to win in 2012.

MATTHEWS: He does?

MULVANEY: He is really struggling -- he`s really struggling there.
So, I think you are overstating the point.

MATTHEWS: OK.

MULVANEY: Again, it is state by state, not a national poll that
turns an election.

MATTHEWS: Well, being a Carolinian, I can see your perspective. But
I`m not sure he needs North Carolina. He got it last time by a tad.

Congresswoman, let`s go back to you about the liberals in your
caucus. Is everybody pretty cool with this guy now? He stood up for
women`s rights on the issue we just talked about, with -- even though it
seems like an archaic discussion about birth control, he definitely stood
with the women who care most about it, people like Boxer and Secretary
Sebelius.

But it seems like he`s got the high hand right now. He`s got the
rope in his hand, if you will -- whatever the phrase is, he seems to be on
top.

EDWARDS: Well, I think all along, Chris, the president has
understood where the American people are and, of course, he stood with
women because the overwhelming majority of women believe in contraception
in this country and he did get it right on straightening things out with
the church and the separation between church and state.

But also, he`s gotten it right on the economy. The American people
can see that our economy has been growing for 23 straight months. We have
been creating jobs and opportunity.

We need to extend unemployment insurance for those who are still
struggling.

The tax cut is a big win, not just for Democrats, it`s a big win for
the American people -- 160 million people who will have the assurity of a
tax cut through the end of the year until we can get this economy really
back on track. The American people see the difference.

And for all the shenanigans that are going on on the other side of
the aisle, the fact is the president is really leading here. We are
standing with him and standing with the American people. And we are going
to make sure that we keep this economy going, that we continue to create
jobs, and that anybody who wants to get in the way can do that but they do
it at their own peril, because this is not about playing politics anymore.
It`s really about what we are all willing to do --

MATTHEWS: OK.

EDWARDS: -- on behalf of the American people and people can see the
difference.

MATTHEWS: Who`s your strongest candidate at this point, Congressman?

MULVANEY: I don`t know. It is not determined yet. What I do know -
-

MATTHEWS: Who do you think it is?

MULVANEY: I honestly don`t know. You know that I was with Rick
Perry. I have not endorsed anybody else.

I think that the same thing will happen to the Republicans that
happened to the Democrats four years ago, which is at the end of a very
difficult primary, the very best candidate for that party will step
forward.

MATTHEWS: OK. Well, good news for you because Rick Perry said today
he is going to run again next time. So, you got another shot at President
Perry. If that`s good for the country, I don`t know.

But anyway, Congresswoman Donna Edwards, thank you.

Congressman Mick Mulvaney, thanks for coming on tonight.

When we return, "Let Me Finish" with why Rick is doing so well --
that`s Rick Santorum -- and Mitt isn`t. One of the real deal I think
against the not so real deal.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: "Let Me Finish" tonight with this:

Mitt Romney makes moderation look meek. He shouldn`t, because it
shouldn`t.

This country has been led for much of its history by presidents who
strode the middle road. Some such as Ronald Reagan walked the right lane.
Some such as Barack Obama the left. But generally, they stuck to the main
highway and that`s even if they won election tilting hard in either
direction, because once they got into government, they tended to be
centrist.

But Mitt is a trimmer. That`s what the old politicians called the
guy who says he`s with you, except when he`s with your enemies, then he`s
not quite with you. Nobody likes a trimmer.

You heard the joke the Santorum guy told at CPAC last week -- a
conservative, a liberal and a moderate walk into the bar, the bartender
says, "Hi, Mitt." Used to say up in Massachusetts that Romney wasn`t pro-
choice or pro-life, he was multiple choice.

Enough of Romney. How can you follow a guy into battle when you`re
not even sure what side he is going to be taking in the battle? The
soldier can`t respond to the bugle call if he can`t figure out which army
the bugler is in.

So, that`s why Santorum is surging. It`s the same reason why
starting way back early last year, some other candidate was always surging.
Some candidate was always there, except for Romney -- some candidate other
than Romney.

It`s because Romney ain`t got it. He lacks the central trait of the
winning candidate, a sense of purpose beyond personal career ambition that
is. It`s hard to focus even today on what the man`s purpose is in national
politics -- again, apart from personal advancement.

So, here we go again, another set of primaries, this time in Michigan
and Arizona, another opportunity to test purpose. And that would be
Santorum`s strength against well-purchased organization and negative
advertising, those assets most precious to Romney.

It`s really a simple question. Why are you in this race? Why are
you in politics? Why do you care?

The man from Michigan or Massachusetts or Utah or New Hampshire or
California, wherever Romney`s currently saying he`s from can`t seem to pin
down that answer. And that tells you all you have to know about why the
fellow in the sweater vest seems just perfect for this right-wing jamboree.
And the perfectly turned out Mitt Romney looks more than ever like an empty
suit.

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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