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updated 5/9/2012 1:45:06 PM ET 2012-05-09T17:45:06

Guests: Michael Steele, Howard Fineman, Amanda Drury, Eugene Robinson, Claire McCaskill, Hampton Dellinger, Melanie Sloan, Carolyn Maloney

CHRIS MATTHEWS, HOST: Could have been a contender.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington. Leading off tonight:
Star no more. Eight years ago, he was a gleaming star of the Democratic
future, exciting packed rooms in the caucuses and primary states. Then he
was the nominee for vice president. And now the once hotshot lawyer from
North Carolina is the defendant, facing charges that he broke campaign
finance laws to cover up an extramarital affair. But is he guilty under
the law, or is this a case of government overreach?

Also, looking for trouble. Are President Obama`s opponents now trying
to widen the Secret Service scandal to reach the White House, trying to
taint the president himself in this mess?

Plus, Senator Claire McCaskill of Missouri, long a favored guest here
on HARDBALL, is facing a hard battle for reelection. Can she win with a
crusade against the so-called super-PACs and the horrid Citizens United
decision by the Supreme Court that created these menaces? Let`s hear from
her tonight.

And we said last week that the Obama people are dropping the Mitt
Romney`s a flip-flopper charge and instead intend to blast him as a right-
winger, a man "severely," in his words, and dangerously conservative.
Well, now we have the evidence. This is the plan. And look who`s cheering
them on, the political master himself, Bill Clinton. Wow.

Finally, "Let Me Finish" tonight with this dangerous time in American
politics.

We begin with the trial of John Edwards. Melanie Sloan is the
executive director of the citizens group called group -- the group Citizens
for Responsibility and Ethics in Washington. And Hampton Dellinger is a
North Carolina attorney who was right there in court today.

While there`s no argument Edwards is a cad, this case is about whether
he violated campaign law. At issue, whether nearly a million dollars that
two wealthy supporters, Bunny Mellon and Fred Baron, gave to cover up his
affair with Rielle Hunter and the subsequent birth of their child were
campaign contributions or simply personal gifts.

Prosecutors say they were campaign contributions that were used
illegally because they allowed Edwards to stay a viable presidential
candidate. But the defense for Edwards says the money was simply a gift,
and further, that Edwards didn`t know about it at the time.

Well, only eight years ago, of course, he was the toast of the
Democratic Party. In the 2004 primary, he was John Kerry`s principal
competition, a liberal from the South who talked about the poor but also
knew how to talk about all kinds of issues and talk to rural blue-collar
voters Democrats have been losing in all these elections.

Well, he was a dynamic speaker and electrifying -- able to electrify
supporters wherever he appeared. And John Kerry made Edwards his running
mate. He eventually became the subject of parody, however. In 2008,
Edwards`s attention to his presidential good looks were mocked in this
hair-brushing clip that went viral.

Well, it`s funny unless you`re him. Anyway, let me go to Hampton
Dellinger, covering a much more serious matter than parody, the reality of
this trial, which could place John Edwards in prison for 20 years.

What happened today in the first day, sir?

HAMPTON DELLINGER, ATTORNEY: Well, Chris, I thought it was going to
be a dry, academic discussion about election law, of the kind only Melanie
and me and maybe you would be interested in, but it`s turned into a mixed
martial arts cage match, in essence, not the United States versus John
Edwards, but John Edwards versus Andrew Young.

MATTHEWS: We`re looking now at pictures of him going into the trial.
Well, when Andrew Young was promoting his tell-all book -- "The
Politician," it was called -- I interviewed Young, the main accuser here,
and it`s a preview, I believe, of the tack the Edwards` team may take to
discredit Young himself, what I did.

Let`s listen to what I did because, apparently, it`s a preview of what
the Edwards team`s going to do to the main witness against him today.

(BEGIN VIDEOTAPE)

MATTHEWS: You were pretending to be a loyal aide to John Edwards for
a year when you really weren`t, that you had -- that you were working
either against him or you didn`t like the guy anymore.

ANDREW YOUNG, FMR. EDWARDS AIDE: I don`t know that I was working
against him, but I was on Fred Baron`s payroll. I was not on John
Edwards`s payroll and...

MATTHEWS: But he thought you were an Edwards guy.

YOUNG: Definitely. Definitely.

MATTHEWS: How do you feel about that, being, basically, a rat fink?
I mean, working for a guy -- you know, I can`t imagine being in politics,
working for a guy that I`d -- that I`d given up on. It seems to me you
ought to get out.

(END VIDEOTAPE)

MATTHEWS: Hampton, that was my touch charge. Is that what they`re
going to do in court as the days proceed in hearings?

DELLINGER: Oh, absolutely. Even the prosecution, which is putting
forward Andrew Young as their star witness, spent a good amount of time
today talking about his arrest record. He`s had two arrests. That came
out on direct examination. Edwards`s team made it clear in the opening
statement by the North Carolina lawyer, the local lawyer, Alisson Van
Laningham, not D.C. super-lawyer Abbe Lowell, that this case is about
Andrew Young lining his pockets, not John Edwards trying to promote his
campaign.

MATTHEWS: What is the fact in dispute, whether he knew about this
money coming from Bunny Mellon and Baron, or that the money was used as
campaign contribution, therefore shouldn`t -- shouldn`t have been used for
covering up an embarrassing affair and a child out of wedlock?

DELLINGER: Well, I always thought that Edwards was focused just on
the law, that there`s never been a prosecution for this type of arrangement
before, money from third parties to another third party. It wasn`t a quid
pro quo. It didn`t line Edwards`s pockets. It didn`t buy TV ads.

MATTHEWS: Yes.

DELLINGER: And clearly, Edwards is going to focus on lack of criminal
intent. But they`re also saying that this is essentially Andrew Young
defrauding Bunny Mellon, and John Edwards knew nothing about it.

MATTHEWS: OK, let me go right now to Melanie Sloan, who`s an expert
in these kind of cases. What do you -- when you look at this case -- I am
very skeptical, I have to tell you right now, Melanie. I don`t think this
is a criminal case of any merit at all. I think they found some new way,
this Republican U.S. attorney, who was held over by the president, to
prosecute this case.

I have always thought from the beginning that they went after a guy
who had a messy situation, he was unfaithful to his wife, he had a child
with someone else. The wife died, and many people, including me, really
respected Elizabeth Edwards.

And now he`s being blamed for doing something that really isn`t
related at all to those misdeeds. Your thoughts.

MELANIE SLOAN, CITIZENS FOR RESPONSIBILITY & ETHICS IN WASHINGTON:
I`m with you entirely, Chris. I can`t understand at all how the public
integrity section is allowing this case to go forward. There`s really no
basis for prosecution here. There`s never been a prosecution on facts
remotely similar to these facts.

And in fact, we know that the prosecution is just attempting to
inflame the jury here by playing to the love people had for Elizabeth
Edwards and how vile a person John Edwards was. Abbe Lowell sought to have
a trial to the judge, a bench trial, and the prosecution declined that
opportunity.

So they`re willing to expend all sorts of resources to try and
persuade the jury that this guy who cheated on his wife deserves to go to
jail. And really, if that were true, an awful lot of politicians have a
lot to worry about.

MATTHEWS: Well said. I want you to just take a minute now because
you know this case from both sides -- give the prosecution argument, at
least. What -- their argument is that this was really a campaign
contribution because it helped clean the guy`s record or prevent more --
more -- rather, to prevent him from a scandal, from the public knowing
about this affair, right? They call that a campaign contribution.

My question is, anything you do for a candidate, is that a
contribution to his campaign? I wonder. Your thoughts.

SLOAN: Well, that`s exactly the problem. Is anything, any money
spent by a third party automatically a campaign contribution? This isn`t
money that ever came into the campaign in any way. It went to Andrew Young
for Rielle Hunter`s support. John Edwards said he wasn`t involved and
didn`t know about it.

And furthermore, campaigns are -- candidates are banned from using
campaign contributions for personal use. There`s a prohibition on that.
You could go to jail for that. And personal use is anything -- any kind of
expense you might have, irrespective of the fact that you`re a candidate.

Well, presumably, having a mistress is not something you -- it`s
something you would still do, even if you weren`t a candidate. But you
can`t use campaign funds for that. So if you can`t use campaign funds for
that, how it you`re prosecuted when somebody else spends money on your
mistress?

MATTHEWS: OK, let`s go to...

DELLINGER: It just doesn`t make any sense.

MATTHEWS: Let`s go to the other side. Hampton, if you could just
give us a sense of what is the prosecution case really about, for people
who want to know exactly what this guy`s in jail for -- I mean, what he`s
facing 20 years for, rather?

DELLINGER: Well, you know, I`m a clean campaign guy, a do-gooder
type, down in North Carolina in terms of upholding and wanting vigorous
election laws. And I certainly am troubled, Chris, when you have hundreds
of thousands of dollars in the orbit of a candidate for high public office
coming from his political supporters.

And there`s no question I think this is a mixed motive case. Edwards
wanted to save his marriage and he wanted to save his campaign. But
there`s also no question that there`s never been a case like this before,
never been a prosecution based on facts like this.

MATTHEWS: Why do you think the prosecutor acted? Do you think it was
partisan? Now, the guy who brought the charges and investigated this case
was the U.S. attorney picked by the previous president, President George W.
Bush. He then went on to announce his candidacy for Congress coming out of
this case.

Was it partisan? Is that a fair assumption, it was a partisan
prosecution.

DELLINGER: Well, it`s certainly a troubling fact. You know, George
Holding (ph), the Republican, who will find out in a couple weeks whether
he`s going to be a member of Congress, because it`s a safe Republican seat
-- if he wins his congressional primary, he might be running for John
Edwards`s old Senate seat.

He drove this investigation. He drove the press for an indictment.
And a week after he got the indictment, after crossing swords with Edwards
some over the years in a partisan way, he steps down and announces he`s
running as a Republican for Congress. It doesn`t look great.

And I tell you what looked terrible today, Chris, was that Andrew
Young, the government`s star witness, was contacting other witnesses in the
case as recently as a few days ago. It`s a very serious fact that`s come
out. The government can`t be happy with it, particularly on the heels of
the Ted Stevens prosecution, which went so poorly.

MATTHEWS: That was a disastrous case. Let me go back to Melanie.
Melanie, it seems to me that this guy, Andrew Young -- I don`t think much
of him, obviously. You could tell that from the tape we just showed. I
called him a rat fink because he pretended to be loyal to Edwards all the
time he was basically working against him horrifically.

Let me ask you about this. Why is he being such a good government
witness? Has he been immunized against prosecution himself?

SLOAN: He has indeed been immunized. He`s got immunity from
prosecution. And he has all sorts of legal problems. And I think that`s
going to be one of the issues here. And further, even in his own book, he
talks about the gifts from Fred Baron and Bunny Mellon, and he talks about
them as being legitimate gifts, not campaign contributions.

So he`s even -- the prosecution is even going to need Andrew Young to
refute his own words in his own book.

MATTHEWS: Yes. Well, there`s nothing I like less than seeing our own
country and it`s judiciary system, which has been starkly independent,
becoming partisan, like those third world countries, where the minute you
lose an election or fall out of political power, the people in power begin
to prosecute you. I don`t like the smell of it.

Anyway, thank you, Melanie Sloan. Thank you, Hampton Dellinger. And
I`m no fan of John Edwards.

Coming up, the Secret Service scandal. Now, here`s a real one. Are
President Obama`s political opponents really trying to link the president`s
people, if not the president himself, to what happened in Colombia? Wow.

This is HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS: Well, this is interesting. Florida Senator Marco Rubio is
changing his tune. He now says he wants the vice presidential selection
process to play itself out, even if it includes him. And today he`s
getting his first taste of the ticket. Rubio`s campaigning with Mitt
Romney up in Pennsylvania ahead of tomorrow`s primary there.

Rubio was the second most frequently mentioned name in an informal
survey of Republican National Committee state chairmen by the Web site
Buzzfeed. Tipping (ph) to the top of the list there, Ohio Senator Rob
Portman, who will probably be the nominee for VP.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. The Defense Department has added
another military member to the growing list of people investigated in the
Cartagena prostitution scandal, bringing the total number of military to 12
and another 12 from the Secret Service. That`s 24 people targeted here.

Some members of Congress have asked if any members of the White House
staff itself were involved, prompting the question, are politics at play
here among the president`s opponents? In fact, I`m asking that question.

U.S. Congresswoman Carolyn Maloney of New York City is the Democrat
from that City, of course, from Manhattan. She`s on the House Oversight
Committee. And the great Eugene Robinson sits across the table from me.
He`s a Pulitzer Prize-winning columnist. I always build him up because he
deserves it, actually. Among very few people that come on this show, he
deserves the most. MSNBC political analyst, as well.

Congresswoman, thank you. I`ve always respected your work, so let`s
look at this thing objectively. Where are we right now in terms of
targeting of people? We have what -- a number of them have already
resigned. We have one person who`s been sort of cleared. We got people
added to the list again. Where does it stand?

REP. CAROLYN MALONEY (D), NEW YORK: Well, I spoke to Director
Sullivan on Saturday night, and he is determined to get to the bottom of
this. They are under a thorough investigation.

But I`d like to respond to your initial comments. I believe that
these attempts to implicate the White House on innuendo, not based on fact
at all, is nothing more than a fishing expedition. And I believe the
American people are focused on jobs and growing the economy and that they
will judge this type of witch hunt very harshly.

The White House did their own internal investigation and said they did
not find any White House personnel implicated in any way, shape or form.

MATTHEWS: Well, Gene, I think there`s a common sense aspect to this,
a positive smell test. The president of the United States didn`t even get
there until a couple days after this mayhem. And now they`re trying to
say, Gene, that because one of these guys who may have been involved stayed
at the same hotel the president later stayed at...

EUGENE ROBINSON, "WASHINGTON POST," MSNBC POLITICAL ANALYST: Right.

MATTHEWS: ... somehow incriminated or involved him.

ROBINSON: Well, right. Clearly, there`s no involvement by the -- by
the president. Now, is it a legitimate question? And the White House
asked this question of itself. Obviously, they sent advance people down on
a trip, so "Let`s make sure our people were -- you know, are clean, we`re
not involved in this thing."

They say they have gone through and they have made sure. So it does
sound like a fishing expedition time (ph), but the White House had better
be right on this.

MATTHEWS: Yes, but Grassley, the senator, has also pushed this. He
practically audits everybody who`s up for an appointment. I mean, he`s
very aggressive.

ROBINSON: Yes.

MATTHEWS: Lee let`s take a look at this, Congresswoman. On Friday,
Iowa Republican senator Chuck Grassley, who I just mentioned, wrote a
Secret Service -- he wrote to Secret Service director Mark Sullivan, asking
if any White House personnel were also potentially involved in this
scandal.

And yesterday, Connecticut independent senator Joe Lieberman was asked
about the possibility on "Face the Nation." Let`s watch Senator Lieberman.

(BEGIN VIDEO CLIP)

BOB SCHIEFFER, HOST, "FACE THE NATION": Do you have any indication
anybody from the White House was involved?

SEN. JOE LIEBERMAN (I), CONNECTICUT: I don`t, Bob, but I tell you, if
the -- if anybody at the White House asked for my counsel on this, I would
say they ought to be launching their own internal review of all White House
personnel, advance teams the rest, who were in Cartagena, to make sure that
no one working for the White House was involved in any of the same kind of
inappropriate behavior that the Secret Service agents were.

(END VIDEO CLIP)

MATTHEWS: I think he`s a little late. They`d already done it, as the
congresswoman pointed out. Let`s go here -- Joe Lieberman is fishing for
trouble here. He is not a Democrat.

Let`s look at this. White House press secretary Jay Carney responded
to those questions today during his briefing. Let`s watch.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: The White House counsel`s
office has conducted a review of the White House advance team, and in
concluding that review, came to the conclusion that there`s no indication
that any member of the White House advance team engaged in any improper or
-- conduct or behavior.

So simply out of due diligence, over the last several days, that
review was conducted, and it produced no indication of any -- any
misconduct.

(END VIDEO CLIP)

MATTHEWS: Back to Congresswoman Maloney. Two questions to you at the
same time. One is, what is a legitimate inquiry? I would think it might
be patterns of behavior. Is this something that`s happened in the past,
this sort of "wheels up, rings off" ceremony they seem to have had down
there, which is hardly fun if you`re married to one of these people or
think about such things.

And the other one is the question of whether there is, in fact, some
involvement by the White House communications team, which is nonpartisan
and not elected -- not appointed by the president. Anybody else involved,
can you tell?

MALONEY: Well, so far...

MATTHEWS: And was there a pattern here?

MALONEY: So far, Director Sullivan is conducting a thorough
investigation, and when his report comes out -- he is reporting information
as he -- as he comes to it. But this is not a political issue, this is
about protecting national leaders. And I believe no matter who is in the
White House, there would be a bipartisan response as we have had, with
numerous questions being sent to the Pentagon and to -- and to Director
Sullivan to answer, including my own, where are the women?

I want to commend Paula Reid, who is a female agent in charge, who was
sent in to take charge, and by all reports she`s done an excellent job.
Quoted in "The Washington Post" was a statement by a former Secret Service
man who said that if Paula Reid -- if every boss was like Paula Reid, this
would never happen.

So I -- I personally believe if we had had more women on the ground of
equal rank, maybe this would not have happened, if we had more diversity,
more minorities. Only 11 percent of the whole force is female. And I
believe that changing this would make a stronger elite force.

MATTHEWS: OK, I`m always for adversity. We all are, I think, who try
to do things right these days.

But how would -- how would ethnic diversity have avoided this? I`m
just curious to have your thinking. I understand why having women around
men makes them a little less macho. It sort of calms the herd, if you
will. But how would ethnic diversity, besides its obvious value in itself,
have prevented this kind of thing from happening?

MALONEY: I believe it`s a value in itself.

MATTHEWS: I do too.

MALONEY: But I believe that certainly women and like-minded men who
are upholding the standards of this elite core...

MATTHEWS: OK.

MALONEY: They had a definite standard that you are not supposed to in
any way interact with nationals. Here they were having nationals back to
their hotel room.

MATTHEWS: Yes.

MALONEY: So it was clearly a violation of the rules, it`s under
investigation, and I`m sure that it will be completed and steps will be put
in place so that it won`t happen again.

MATTHEWS: OK.

MALONEY: There are numerous questions.

MATTHEWS: Well, let`s take a look at -- yes, let`s take a look,
Congresswoman, at somebody that doesn`t agree with you completely, and
that`s one of the reasons we brought this up tonight.

President Obama came under fire, as you know, from Republican U.S.
Senator Jeff Sessions of Alabama last week who said the president needs to
display more managerial qualities to avoid the kinds of problems discovered
in the Secret Service, the GSA, and he threw in Solyndra, believe it or
not. Let`s watch.

(BEGIN VIDEO CLIP)

SEN. JEFF SESSIONS (R), ALABAMA: The president needs to assert
discipline, management directions throughout the executive branch, and
presidents are to be held responsible.

I don`t sense that this president is showing that kind of managerial
leadership that, at this point in history, in my view, is one of the most
important qualities in a president.

(END VIDEO CLIP)

MATTHEWS: It`s hard for me to take that seriously.

ROBINSON: Well, you can`t take it seriously.

(CROSSTALK)

MATTHEWS: I mean, I guess GSA certainly...

MALONEY: It`s ridiculous.

(CROSSTALK)

ROBINSON: You know, the president...

(CROSSTALK)

ROBINSON: The president is supposed to spend, what, three minutes and
10 seconds a day running GSA and two minutes running the Secret -- it`s
ridiculous.

Of course, that`s not the president`s job. That was other people`s
job.

MATTHEWS: Well, let me ask you both.

(CROSSTALK)

MATTHEWS: OK. Let`s -- let`s talk about your job then,
Congresswoman.

(CROSSTALK)

MATTHEWS: Do you think Mark Sullivan should retain his position
leading the Secret Service? There seems to be a lot of support from people
-- from your colleague from New York Mr. King and others. Is he a good
leader from what you can tell from your oversight role?

MALONEY: Me?

MATTHEWS: Yes.

MALONEY: Well, I think that he has the confidence. He was really
appointed originally by former President Bush. Leaders on both sides of
the aisle are supporting him. He`s conducting a thorough investigation.

MATTHEWS: OK.

MALONEY: And I would say that Sessions` attempts to attack the
president are nothing more than cheap political shots. It shows that so
far that a couple of bad apples ruined or put a bad name on a good agency
that has performed well in the past.

MATTHEWS: I agree with you.

MALONEY: And this should not be about politics. This should be about
facts and about getting to the bottom of what happened and protecting
national -- our national leaders.

MATTHEWS: OK.

Thank you so much for coming with those wise words, I believe.

Congresswoman Carolyn Maloney of New York.

I`m allowed to say they`re wise words, because they are.

(LAUGHTER)

ROBINSON: And thank you, as always, Eugene Robinson, known for his
wisdom.

(LAUGHTER)

MATTHEWS: Coming up, why did former presidential candidate Jon
Huntsman compare his Republican Party to the PRC, the Communist Party of
China? What`s he thinking? Is he right? That`s coming up in the
"Sideshow."

You`re watching HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL. And now for the "Sideshow."

First up: Remember back before the primaries when former New York
Mayor Rudy Giuliani had this to say about Mitt Romney.

(BEGIN VIDEO CLIP)

RUDOLPH GIULIANI (R), FORMER NEW YORK CITY MAYOR: I have never seen a
guy change his position on so many things so fast on a dime. Pro-choice,
pro-life. He was pro-gun control. Fine. Then he becomes a lifetime
member of the NRA. He was pro-mandate for the whole country. Then he
becomes anti-mandate and takes that page out of his book and republishes
the book. I can go on and on.

(END VIDEO CLIP)

MATTHEWS: Looks like he had it right back then, shouldn`t it?

Well, early today, Giuliani came around, like all politicians, and he
adores Romney and managed to take a shot at the admittedly more likable
President Obama in the process.

(BEGIN VIDEO CLIP)

GIULIANI: I think that Mitt has won fair -- fair and square. He`s
proven he is the most effective Republican.

This reminds of going to a surgeon, right? If I have got a terrible
cancer or something to be operated on, when I had to be operated on for
prostate cancer, I didn`t go to the nicest doctor. I went to the best
doctor.

UNIDENTIFIED MALE: Right.

GIULIANI: A guy could have a great personality and tell great jokes,
but he put the knife in the wrong way.

(END VIDEO CLIP)

MATTHEWS: Oh, my God. Put the knife in the wrong way? I think
Rudy`s metaphor is a little morbid, don`t you?

Anyway, also, former GOP candidate Jon Huntsman is in the spotlight
today for some comments he made during an event in New York last night.
Huntsman talked about how he was disinvited from a Republican fund-raiser
recently after suggesting that the president -- presidential race might
call for a third party this year, a third candidate.

He said -- quote -- "This is what they do in China on party matters if
you talk off-script."

Wow. Well, here`s Huntsman follow-up today on "MORNING JOE."

(BEGIN VIDEO CLIP, "MORNING JOE")

JON HUNTSMAN, FORMER UNITED STATES AMBASSADOR TO CHINA: If you`re not
on script and you get knocked out of an event like that, the parties are
supposed to be big tent. You`re supposed to bring in all ideas. And I
said I thought for a moment about what they do in China if they`re off-
script of the party. They knock you out. We shouldn`t be doing that here.

(END VIDEO CLIP)

MATTHEWS: I think talking about a third party might be a problem in
any party.

Anyway, Huntsman blamed his failure as a candidate this year in part
on the compliments he got from those to his left, people like Bill Clinton
and filmmaker Michael Moore. Do you think that was his problem? I don`t
know.

And now to what happens when our favorite TV shows dive into politics.
To celebrate their network`s 25th anniversary, FOX Broadcast re-aired the
very first episode of "The Simpsons" last night. The folks behind the hit
series added something of a selective congratulations of their own.

Check out the alternate ending to the episode.

(BEGIN VIDEO CLIP, "THE SIMPSONS")

UNIDENTIFIED ACTRESS: What`s his name?

UNIDENTIFIED ACTOR: Night eight. I mean, Santa`s Little Helper.

(END VIDEO CLIP)

MATTHEWS: Wow. "The Simpsons" have a long history, of course, of
blasting FOX News.

Up next: The Obama campaign wants to paint Mitt Romney as the
severely conservative candidate that he was during the primaries, and not
the moderate he might try to be for the general election.

This is HARDBALL.

(COMMERCIAL BREAK)

AMANDA DRURY, CNBC CORRESPONDENT: I`m Amanda Drury with your CNBC
"Market Wrap."

Well, the Dow today sunk 102 points. The S&P lost 11 and the Nasdaq
was off by 300. Well, Wal-Mart shares dragged down the Dow. According to
a public support, the retail`s Mexican subsidiary was involved in a bribery
scheme which it allegedly tried to cover up.

Elsewhere, Kellogg`s shares lost about 6 percent following a full-year
earnings warning. Meanwhile, Facebook, which isn`t yet public, is paying
Microsoft $550 million for patents originally belonging to AOL.


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

MATTHEWS: Welcome back to HARDBALL.

The White House is refocusing its line of attack against Mitt Romney
right now. Gone is the language of flip-flopper and that clever one Etch A
Sketch. Instead, say hello to Mitt Romney, the severe conservative.

Well, according to Politico this week, it`s Bill Clinton who has been
urging the Obama campaign to take this hard-line approach for months --
quote -- "Clinton quietly argued that the empty core approach failed to
capitalize on what they see as Romney`s greatest vulnerability, an embrace
of a brand of Tea Party conservatism that turns off Hispanics, women and
moderate independents. A more effective strategy, Clinton has told anyone
who would listen, would be to focus almost exclusively of Romney`s
description of himself as a severe conservative to deny him any chance to
tack back to the center."

Well, Obama campaign adviser David Axelrod used the new line of
attack, the Clinton-approved line, this weekend. Let`s listen.

(BEGIN VIDEO CLIP, "STATE OF THE UNION")

DAVID AXELROD, SENIOR OBAMA CAMPAIGN STRATEGIST: A lot of Republicans
in Congress want to cooperate and know better, but they`re in the thralls
of this reign of terror from the far right.

In your poll, the president is winning among moderates by 41 points.
And there`s a reason for that, because Governor Romney and the Party has
gone way out to the right. I think that these folks are going to recognize
when they lose this election that that was the wrong path to take.

(END VIDEO CLIP)

MATTHEWS: And just to get a little point in our behalf, look at that
great cover on "The Economist" I saw at the airport this weekend, "The
Hardball Campaign." That`s what they`re calling it.

Michael Steele is a former chairman of the Republican National
Committee, of course. And Howard Fineman is editorial director for The
Huffington Post. Both are of course MSNBC top analysts.

Let`s talk about changing direction in the campaign.

Howard, you don`t change if it`s working. So let`s be tough on the
Obama people for a second. If they thought hitting the guy as a flip-
flopper was working, they would keep it up. My belief, it ain`t going to
work because the middle of the road people say, oh, he`s a flip-flopper.
So am I. I make up my mind as I go along day to day. I try to put things
together. I change. Maybe he will be a moderate.

HOWARD FINEMAN, NBC CHIEF POLITICAL CORRESPONDENT: No, I think -- in
the primary season where the Obama campaign was trying to create as much
trouble as they could, they wanted to emphasize the flip-flop message
because they wanted to make the right wing of the Republican Party fearful
of Mitt Romney.

MATTHEWS: Because they didn`t want him to win.

FINEMAN: They didn`t want him to win. They wanted to sow as much
discord as possible, which is why they did it that way. As soon as Romney
wraps it up, they move to a different strategy.

Did it work or not? It didn`t really help President Obama in the
matchup, but they were trying to monkey with the Republican race as much as
they could. Now they`re in general election mode and I think they are
taking Bill Clinton`s advice and they`re following logic, which is if they
want to win the middle, they have to try to push...

MATTHEWS: Yes.

FINEMAN: ... they have to try to push Mitt Romney off to the side.

MATTHEWS: Michael, who is this guy Romney?

MICHAEL STEELE, MSNBC POLITICAL ANALYST: Sure.

MATTHEWS: Let me ask you a question. I will ask you a legitimate
question and I`m going to ask you to be tactical with us.

As you know Mitt Romney, is he the Massachusetts moderate governor we
knew, who is pro-choice, pro-environmental, did all the right things on
health care, as an individual candidate kind of a guy, a moderate that most
people in Massachusetts would have said, not bad, not a very popular
governor, but OK, or is he this crazed guy out there saying self-deport,
all this really right-wing stuff in this campaign? Who is he?

STEELE: I think Howard takes the -- hits the right point in terms of
the primary.

And the primary had you framing -- as a candidate, had you framing
arguments to your base to let them know on key things that are important to
them you`re ready to fight. I think more broadly speaking, you will see
this shift toward the general election. You will see more of that moderate
conservatism, that balanced sort of argument that talks about the core
conservative principles, particularly on the financial front.

But a lot that conservative rhetoric tends to go more to the social
issues, whether we`re talking about women`s health and all those types of
things, abortion. I think Romney is going to find a way, and I think he
will find a way to bring that message around, focused on a moderate
conservative message on the economy that recognizes that people make
decisions in their lives that are personal to them.

He has already said a number of times, I don`t want to get into that
discussion. That`s not for me to talk about as a presidential candidate.

MATTHEWS: Yes, but what good is -- but what good is him talking about
gas prices, Howard, if you`re Hispanic and he wants you to get out of the
country?

FINEMAN: Yes.

MATTHEWS: You can`t gas here if you`re not here. You can`t worry
about prices. He wants -- when he says self-deport, when he comes out with
these very conservative positions on abortion rights and plays the game on
the right, how does he hide from that? That`s my question.

FINEMAN: Well, I don`t know how he does.

And I think the Obama campaign will try to paint himself into this
corner, and I think he...

MATTHEWS: Didn`t he do it himself?

FINEMAN: I think he painted himself into the corner. And how he gets
out of that now, I don`t know.

And I think what David Axelrod and David Plouffe and Barack Obama and
Bill Clinton are trying to do is to keep him in the corner that he put
himself in. And it does beg the question about who he is at his core.
What do you think? Which is he?

(CROSSTALK)

STEELE: But I think on that -- on the issue of immigration, for
example, Barack Obama has got an issue here as well. He`s not -- he
doesn`t have a...

MATTHEWS: OK. But you can`t change the subject.

STEELE: No, I`m not changing the subject.

(LAUGHTER)

FINEMAN: Yes, you were. You`re changing the subject.

STEELE: No, I`m not changing the subject, but I`m just saying both...

(CROSSTALK)

MATTHEWS: OK. OK. Let me start with something historic here.

(LAUGHTER)

MATTHEWS: We all love history here.

(LAUGHTER)

MATTHEWS: It used to be you could go down to Louisiana, and you could
-- I don`t know it was Humphrey did this or one of the long brothers. You
could travel around the state before there was video --

STEELE: Right.

MATTHEWS: -- before there`s really reporting. In one crowd, you
could say, yes, my Roman Catholic, my grand -- Roman Catholic grand poppy,
and you could do, the Baptist grand poppy, and nobody was keeping score
because it depended what town you were in.

Now we have videotape.

STEELE: Yes.

MATTHEWS: We can throw it up there. The Democrats can do it, right?
How does this guy go from hard right, severely conservative, to this
regular mainstream character he`s portraying himself as? How can we do it
with tape?

STEELE: Well, first off, you`re making the assumption that there`s
something wrong with being conservative, that conservativism is not going
to win the day of the argument this fall, and I think it still can.

MATTHEWS: OK.

STEELE: It won in 2010. And I don`t think Romney has to go out
there and prove to be severely conservative on every issue.

MATTHEWS: But he said he was.

STEELE: But that`s his description --

MATTHEWS: But he managed a full mooner. You know he`s saying he
doesn`t really believe in -- how can you say you go from flat or round?
How can he go from flat earth, I don`t believe in evolution, to all of a
sudden he`s into evolution?

STEELE: But that`s not what he said. Why are you putting those
words in his mouth? He`s never said he`s a flat earther, or doesn`t
believe in evolution. Those are your words, Chirs, because that`s what you
want to paint him to be.

MATTHEWS: Because that`s who he is.

STEELE: That`s not who he is.

MATTHEWS: Where is he on science?

STEELE: Ask him, I don`t know.

MATTHEWS: Where is he on climate?

STEELE: It wasn`t an issue in the primary.

MATTHEWS: OK, it certainly was on the grand wizard over there.

Anyway, look, Howard, let`s take a look --

STEELE: I resent that. Come on, what is this grand wizard nonsense?

(CROSSTALK)

STEELE: Give me a break. Don`t go there with me on that, all right?

MATTHEWS: OK, good. Thank you. There`s none of those problems over
there, all those birthers out there.

STEELE: Oh my God!

MATTHEWS: Anyway, the latest NBC/"Wall Street Journal" poll, there`s
about 30 of them in the Congress right now, who are the birther crowd, that
are right there. Anyway, someone has a lot of ground to make up with a
number of groups, take a look.

Among Latino voters, Obama leads 69 to 22. The president also has a
big lead with younger voters, women and independents.

How is he doing with that, Howard? How does he move over to the
center? And they`re saying no, he`s severely right. Is it a smart move to
say he`s a right winger, even if you`re a Democrat who believes he`s
probably more of a moderate than he portrayed himself as? What`s the smart
move?

HOWARD FINEMAN, MSNBC POLITICAL ANALYST: The smart move for whom?
For the Democrat?

MATTHEWS: The Democrats. That`s the question here: what kind of a
strategy should they run?

FINEMAN: Well, what they`re doing now, I think, if they can do it.
If they want to pin Mitt Romney in the corner, as we said before, that he
put himself in in the primary campaign.

And it`s up to Mitt Romney to explain a coherent theory of who he is
and why he`s running and where he really stands after having survived the
primary season. He has an opportunity to do that because Barack Obama`s
campaign is essentially going to be -- try to be -- about Mitt Romney.

Barack Obama is not really going to run on his record. He`s going to
run on Mitt Romney. Mitt Romney is too extreme.

MATTHEWS: Right.

FINEMAN: He`s too right wing, he`s too crazy.

Now, that presents an opportunity for Mitt Romney --

STEELE: To run on Obama`s record.

FINEMAN: No, if he can take it. It`s like the Ronald Reagan thing,
oh, there you go again. If Mitt Romney can jujitsu it --

(CROSSTALK)

MATTHEWS: I didn`t mean to say grand wizard, I want to make it very
clear. I believe this, if Romney will come out and denounce all the
birtherism, all this attempt to make Barack Obama some kind of foreigner,
who`s not really one of us, not really an American, I`ll be with him on
that point.

Anyway, thank you, Michael Steele. And you know, none of those guys
really do that stuff, anyway.

Howard Fineman, thank you for joining us.

Up next, Senator Claire McCaskill of Missouri, she`s in a big fight
to hold onto her seat, as we all know, and with it perhaps the Democrats`
control of the Senate. But let`s watch her fight. She`s coming here.

There she is, she`s ready to fight.

You`re watching HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS: Well, the Republican primaries took a toll on Romney,
Santorum and the rest. But the one who got the worst of it, Barack Obama.
According to a study by the Project for Excellence in Journalism, the
president got the least favorable news coverage of anyone in the primary
season.

Overall from January until now, only 18 percent of the coverage of
the president was positive versus 34 percent that was negative. Compare
that to the coverage of Mitt Romney that was 39 percent positive versus 32
percent negative.

We`ll be right back. Stay with us (ph).

(COMMERCIAL BREAK)

MATTHEWS: We`re back.

Senator Claire McCaskill of Missouri is in the fight of her life.
Republicans are hoping to take the Senate back after six years. And among
their targets is McCaskill, who`s running for reelection in a state that`s
becoming increasingly conservative.

The GOP is pouring cash and resource in Missouri and McCaskill has
decided to take on the super PACs, and make all that Republican money an
issue in itself.

Senator Claire McCaskill joins us now.

You have got the wind in your back on this issue from this show. I
got to tell you, Senator, nobody I know likes Citizens United. Nobody I
know thinks this is good for American democracy, to have these super PACs
running around as a menace in this country, attacking people without even a
mention of who is paying for it. Your thoughts.

SEN. CLAIRE MCCASKILL (D), MISSOURI: Well, you know, that`s really
the insidious part of this, Chris, is that there`s already been $3 million
of anonymous hits on me in Missouri. And I got to tell you, if Missourians
knew who was paying for these ads, I think they would be proud of me. I
think they`d like the enemies I`ve made in Washington.

I haven`t been afraid to take on the big guys, and that`s what`s so
frustrating, is the notion that this isn`t transparent. You know, if
you`re going to open the doors, that`s one thing, and tell corporations
they can give as much money as they want to buy elections. But to let them
do it anonymously, which the Republicans completely blocked us from at
least having disclosure of who was giving this money.

MATTHEWS: Well, a lot of people doing this, I don`t know if it`s in
your case, tell me if it is, Karl Rove is pushing this. He`s got a big
PAC, a super PAC. Of course, he was the mastermind, the architect, he
called himself, behind Bush W.

And then you got the Koch brothers, who we don`t even know what they
look like, a couple of very wealth billionaires out there doing this kind
of right wing stuff. Are they the ones coming after you -- these name
brand right wing people?

MCCASKILL: Oh, yes. Oh, yes, I`m getting all of the name brands,
I`m at the top of a lot of folk`s list, and I`m really trying to turn it.
I`m going to let Missourians know that they can`t -- f you don`t know who
is paying for it, don`t believe a word of it.

And on the other hand, I`m asking regular folks to be my super PAC.
I`m really proud that we raised a lot of money last quarter, but 90 percent
came in donations of less than $200. And on ClaireMcCaskill.com, people
can give 25 bucks. And if we get a lot of those, we`ll have our own super
PAC, and that`s the kind of PAC that should be super, made up regular
people giving small amounts.

MATTHEWS: Let`s run through the issues that voters are looking at
jobs, of course, in manufacturing. I would think that President Obama, who
would have a tough time in your state, except on this issue, it seems to me
that bringing back the auto industry. It was dead and buried a couple of
years ago, a very few years ago, and Obama decided to get in there and back
it and saving all those big companies who have come to respect, G.M. and
Ford and Chrysler, and at the same time, Romney said let them die.

MCCASKILL: In Winston, Missouri, the G.M. factory just added a
second shift. In Kansas City, at the Ford plant, a billion dollar
investment is being made right now.

And you know what we held on to, Chris? We held on to the notion
that we can say made in America when it comes to automobiles. That was
worth saving. And everybody who wants to slam the stimulus needs to
realize that General Motors just took over as the number one manufacturer
in the world. That would not have happened had we not been there with the
stimulus at a time of economic recession, brought about by the very same
that Romney is trying to sell the country right now.

That`s what really weird about this, they want to go back to figuring
out a way we can give more and more tax breaks to the mega wealthy, and
less and less regulation, in order to create jobs. And we all know that
didn`t work last time.

MATTHEWS: Well, I`m a big booster of senators like you because I
believe this country will not work without moderates on both parties being
part of the mix. You`re out there more on the more moderate side of the
Democratic Party. If you don`t have moderates like you, the Democrats
certainly will not be a majority for much longer because you can`t win this
country with liberals or self-proclaimed progressives. There ain`t ever
going to be 51 senators who call themselves progressives.

Explain that. Make the case for why you believe somebody like
yourself, who`s not a lefty, should be in the Senate.

MCCASKILL: Well, I got to tell you, Chris. As you well know, as a
student of the Senate through history, the Senate has have done its best
work around the table of compromise, and compromise happens because of
moderates.

And many of your listeners may not want to hear this, but honestly,
if we don`t have moderates, we`re not going to get things done on behalf of
the American people. I am in this campaign going to talk to a lot of
Missourians. I`m going to cover the state like a blanket. I`m not going
to get very much sleep, and proudly tell them I`m part of a moderate middle
that believes compromise is a value that we need to cherish in this
democracy.

If we`re just at opposite ends of where we`re screaming at each
other, we`re never going to solve the hard problems. And that`s why I
think moderation is important.

And believe me, the folks running against me, I mean, they are so
extreme. They look -- they make some of these people that are in the House
look like moderates. They`re very, very extreme folks.

MATTHEWS: Are the Tea Party folks still running the parties out
there?

MCCASKILL: Yes, by and large. In fact, I think that some of the
moderate Republicans tried to get somebody else to run against me. They
all took a pass, so we have three people running that are all fighting over
whether or not they are the Tea Party-endorsed candidate. One of them got
one Tea Party endorsement, the other two said, well, that`s not the real
Tea Party, we have the Tea Party endorsement.

So this is all about fighting for the far right-wing base of the
Republican Party. That`s who`s going to get the nomination in my state.
And so, the Missourians are going to have a real choice, somebody who is a
moderate, and believes in compromise, or somebody who believes we need to
turn out the lights on the federal government and go home.

MATTHEWS: OK. Senator McCaskill, Claire McCaskill, please come back
as often as you can. You`re great. We love moderates. We love smart
people who want this country to work.

MCCASKILL: Thanks, Chris.

MATTHEWS: When we return, "Let Me Finish` with these unsettled,
these dangerous political times we live in. And I`m feeling it right now.
It`s very eerie out there politically in this country these last weeks.

You`re watching HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS: "Let Me Finish" tonight with this:

We`re in a dangerous time in politics. There are no big fights in
the Congress. There are no raging push by the president right now for
action, nor the counterforce of resistance by the opposition Republicans.

There`s only an unsettling out there, the stir by the George
Zimmerman case down in Florida, the embarrassment of the Secret Service
agents caught with sex workers, the scandal of that over the top GSA party
out west. As I said, this is a dangerous time especially for the president
and the political party controlling the president, controlling the White
House.

People want a leader, they want someone in control. They want to
feel the authority coming from the top. Otherwise, chaos takes its part.
The ranks start to abuse their liberties, troubles come into the air.

And that`s what it feels like right now politically and I don`t like
it. Ill winds are blowing, resentment is in the air, unchecked resentment
right now, and the natural authority figures are missing from the scene.

I like it when President Obama is out there fighting the opposition
in Congress. I like it when there are high stakes on the table, and the
American people can see their champions fighting for what`s right. They
like a row-bar about there on the playing field, a good fight to know that
their interests are being protected or at least battled for.

Right now, there`s just unease in the air right now on this country,
an unsettled criminal case, a messy bit behavior by the men with an
historic brand for steely courage, people duty bound to keep the order are
now seen on the grill for a bad night of anything but.

Again, I don`t like. It`s times like this that the small people rise
up, the exploiters of trouble, those who fish in troubled waters. Up on
Capitol Hill, you see them peaking out of their offices right now, issuing
statements of interest, trying in their small, careful ways to find
themselves a role.

Well, it`s time for this president, elected to a much bigger role, to
grab the reins, pull them sternly, and lead this country to the clear,
healthy direction right now. Nothing braces us, nothing helps us better
days, better sleep than a palpable feel of a president calling the shots.
Right now, he`s not. And that`s why the little people are making all the
noise.

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

"POLITICS NATION" with Al Sharpton starts right now.


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