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updated 6/25/2012 3:36:55 PM ET 2012-06-25T19:36:55

Guest Host: Michael Smerconish


Guests: Amanda Drury, Mark Halperin, Steve Kornacki, Michael Isikoff, Michael Steele, Leslie Sanchez, Bob Shrum, Lanny Davis, Tom Kline

MICHAEL SMERCONISH, GUEST HOST: Stop dreaming.

Let`s play some HARDBALL.

Good evening. I`m Michael Smerconish, in for Chris Matthews.

Leading off tonight: Mitt Romney`s Etch-a-Sketch moment on
immigration. During the Republican primaries, Mitt Romney tried to
outflank his conservative competition on immigration with talk of self-
deportation and support for Arizona`s tough immigration law.

Well, today, eager -- some might say desperate -- to win over
Latino votes, Romney softened his tone and talked of bipartisan reform.
Can Romney Etch-a-Sketch away months of tough talk on immigration with
one speech?

Plus, the Romney campaign tells Florida`s Rick Scott, Hey, stop
talking about how good the state`s economy is. It clashes with our
message that the economy is in a disastrous posture. In other words,
Ixnay on the good ewsnay.

Also, why is team Obama smiling over the contempt vote against
Attorney General Holder? Because it allows the Democrats to tie Mitt
Romney to an unpopular, and they would argue, extreme Republican
majority.

And we may now know why Jerry Sandusky decided at the last minute
not to testify at his own trial, and it involves what his adopted son
would have said about him on the stand.

Finally, leave it to "Joe the Plumber to blame the Holocaust on gun
control. Yes, you heard me right. Hey, Joe, stick to plumbing.

We begin with Mitt Romney on immigration. Leslie Sanchez is a
Republican strategist. Bob Shrum is a Democratic strategist.

Do you remember back in April, when Mitt Romney was overheard at a
fund-raiser saying if Republicans can`t get more Hispanics to vote for
their party, that would spell doom for them? Well, today, Romney had a
chance to chip away at Obama`s lead in that community. He was speaking
to a group of Hispanic leaders at the National Association of Latino
Elected and Appointed Officials in Florida.

After last week`s executive order from President Obama on halting
deportations for some illegal residents, Romney was expected to clarify
where he hands on that issue. So how`d he do? Let`s take a look.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R-MA), FMR. GOV., PRESIDENTIAL CANDIDATE: Last week,
the president finally offered a temporary measure. He called it a
stopgap measure that he seems to think will be just enough to get him
through the election.

Some people have asked if I will let stand the president`s
executive order. The answer is that I will put in place my own long-
term solution that will replace and supersede the president`s temporary
measure. As president, I won`t settle for stopgap measures. I`ll work
with Republicans and Democrats to build a long-term solution.

(END VIDEO CLIP)

SMERCONISH: Leslie, did he offer today that which you thought he
needed to close that gap in the Latino community?

LESLIE SANCHEZ, REPUBLICAN STRATEGIST: I did. I mean, I would
point to one thing. I think many analysts, many folks are saying he had
to speak specifically to the immigration issue. I think what Governor
Romney had to do that he did very well is speak to having an
alternative, that Latinos can be the jump ball.

He spoke particularly on this issue of immigration. I think the
most important part -- two points he said. One, he would have his own
permanent solution to this. And two, that he would work with Democrats.
That spirit of bipartisanship in a crowd that is overwhelmingly Democrat
-- Democratic elected officials is extremely important. They want to
know it`s a safe bet for someone who will work with them.

SMERCONISH: But was he not lacking in specifics as to what that
long-term play would be?

SANCHEZ: I don`t think so. I think he laid out a more general
specific outline of immigration reform. I mean, there`s a lot more
discussion that needs to go into that. But he talked about enforcement,
both exterior and interior. He talked about the kind of the value and
the importance of making legal immigration better. There were some
strong applause lines there.

But most important thing Governor Romney did is he focused on the
economy. Latinos are going to be looking at their own pocketbook, their
own financial security. As much as people would like to say it`s the
issue of immigration, immigration it`s the lens by which people will
judge him.

SMERCONISH: Bob Shrum, you know the numbers. You know the
dynamics in a race like this. It`s accepted as an article of faith by
outsiders that unless Romney closes that gap with the Hispanic
community, then he`s a stone cold loser. Is that necessarily the case?
Can he maintain the position where he is now and still pursue a strategy
where he wins?

BOB SHRUM, DEMOCRATIC STRATEGIST: Well, he has to get 40 percent
of the Hispanic vote. I mean, there`s not a lot Karl Rove and I agree
on, but that`s the truth. And if he doesn`t do that, I don`t see how he
wins the White House, number one.

Number two, that was a wonderful phrase Leslie had, a "general
specific plan." I thought it was remarkable...

(LAUGHTER)

SANCHEZ: I work hard on those, Bob!

SHRUM: I thought it was remarkably vague. And he did say that he
was going to take away the president`s provision to end deportations for
those who were brought here as kids, as children, and who are now young
people, except for those in the military. That means millions of people
who`ve obeyed the law, who have graduated from high school, who`ve
gotten a GED are going to be back in immigration limbo. I guess he`ll
tell them to self-deport.

I don`t think it`s enough for him after all he said in the
primaries. And by the way, the Obama campaign will remind people of
this in television advertising all the way to the election. I don`t
think it`s enough for him to offer generalities.

SMERCONISH: Leslie...

SHRUM: Leslie actually had a really good recommendation in a "New
York Times" op-ed piece almost a month ago. She said he ought to
embrace the Dream Act -- and I think I`m quoting her -- otherwise he
risks losing the vast majority of Hispanics and the election. He didn`t
embrace the Dream Act.

SMERCONISH: Leslie, he`s done his opposition research on you!
Listen...

(CROSSTALK)

SMERCONISH: Romney`s message to the group focused on the economy.
Allow me to show you this. When he talked about immigration, he made an
economic argument. Let`s watch.

(BEGIN VIDEO CLIP)

ROMNEY: Hispanics have been hit disproportionately hard. While
the national unemployment is still above 8 percent and has been for 40
straight months, Hispanic unemployment is at 11 percent.

Immigration reform is not just a moral imperative. It`s also an
economic necessity. Immigrants with advanced degrees start companies,
create jobs, and they drive innovation at a very high rate.

If you get an advanced degree here, we want you to stay here. So
I`d staple a green card to the diploma...

(END VIDEO CLIP)

SANCHEZ: Leslie, rank the issues, immigration and economy, for the
Latino community. In other words, there`s a tendency for those of us
outside the community to think that illegal immigration or how to deal
with lawful immigration is absolutely the paramount issue, even for
those already here, as citizens about to vote in this election. Are you
arguing no, it`s the economy that takes priority?

SANCHEZ: Absolutely. For 30 years, the Democrats have earned no
less than 60 percent of the Hispanic vote until George W. Bush. And
what Bush did was shifted the conversation for this open-minded swing
vote Latino voter to the economy.

They started looking at their own financial security -- good jobs,
the ability to grow their small businesses. That shift with George W.
Bush continued. I would argue that in 2008, many of these swing voters
gave the benefit of the doubt to President Obama.

And that was what`s interesting about this speech. Governor Romney
acknowledged the fact that President Obama`s extremely popular in the
Latino community. He said, You know, four years ago, three-and-a-half
years ago, you gave him the benefit of the doubt. I`m asking you, Are
you better -- it was basically the idea, Are you better off? There is a
better alternative.

It`s extremely important. It was a very savvy move. He`s speaking
to the personal interests of small business, which are thriving and
growing, and many are suffering under "Obama care." He talked about
repealing it and replacing it. That was an applause line.

These are folks that understand the economics of the Hispanic vote.

SMERCONISH: Well, I wonder if he`s locked in by the things that he
said in primary season -- "he" meaning Governor Romney -- Because in the
primaries, Romney ran to the right of his opponents on the issue of
immigration, even championing a position of what he called "self-
deportation" for illegals.

And at one debate, you`ll remember, he hit Rick Perry for his
record in Texas.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R-TX), PRES. CANDIDATE: In the state of Texas, if
you`ve been in Texas for three years, if you`re working towards your
college degree and if you are working and pursuing citizenship in the
state of Texas, you pay in-state tuition there.

ROMNEY: If they came for a handout, they`d be voting for
Democrats.

With regards to illegal immigration, of course we`d build a fence.
And of course, we do not give in-state tuition credits to people who`ve
come here illegally!

(APPLAUSE)

ROMNEY: That only attracts people to continue to come here and
take advantage of America`s great beneficence.

(END VIDEO CLIP)

SMERCONISH: Bob Shrum, big applause line, as you could tell, in
the Republican primary season. But are those sort of statements now an
impediment for where he needs to be to appeal to a general election
audience?

SHRUM: Oh, sure. They`re a big impediment, and he`s going to hear
them over and over again. And what we heard from Leslie was a
remarkable rewriting of history, in my view. George W. Bush did a very
good job with the Hispanic community in 2004, but that`s because he was
in the process of working with Ted Kennedy, with John McCain toward a
comprehensive immigration reform of the kind Ronald Reagan had when
Linda Chavez...

SANCHEZ: Bob, that`s delusional!

SHRUM: ... was working for him. You know what? You talk, I`ll
finish. What happened there was not the economy, which was not in great
shape in 2004. And in fact, there was no net job creation during the
Bush administration.

Look, Hispanic voters are smart, just like other voters. They know
where this economic problem came from. They know it came from the Bush
economic policies. Romney wants to reinstitute those economic policies.

And if you look at some of the state polls this week, they`re very
interesting. New poll out in Arizona, where the president`s only 3
points behind. That`s remarkable. A 10-point flip in Florida. He`s
now 4 points ahead. And if you look inside those polls, a lot of that
is being driven by Hispanics.

I don`t think Romney`s mealy-mouthed discussion today, in which the
only specific proposal aside from enforcement that he had would leave
millions of people in limbo, is going to help him with the Hispanic
community. And I think they see through his economic arguments.

SMERCONISH: Leslie Sanchez, you can respond to that, but I also
want you to address the issue of whether what really happened here is
that Romney was trumped. Both Romney and Rubio were trumped in that
they were intending to pursue something very similar to that which the
president announced last Friday, but he beat them to the punch.

SANCHEZ: I think -- to the latter point, I think there`s some
validity to that. You know, we -- I heard Senator Rubio talking about
that, that it took a lot of the impetus behind his pressure on his
colleagues to move forward with something right away. That is gone,
basically. And I think in an election year, it`s always very tough to
move forward on immigration reform.

I think as long as the Democrats continue to believe that
immigration reform is the big deciding factor for Latino voters, then
Republicans have clear opportunity to make inroads.

(CROSSTALK)

SHRUM: Nobody said it`s the deciding factor!

SANCHEZ: Latinos -- Latinos...

(CROSSTALK)

SHRUM: ... it tells us Republicans don`t like Latinos.

(CROSSTALK)

SMERCONISH: Thank you, both. Thank you, Leslie Sanchez.

(CROSSTALK)

SMERCONISH: Thank you, Bob Shrum.

Coming up...

SHRUM: ... whistling down the political graveyard...

SMERCONISH: ... enough with the good news already. The Romney
campaign tells Florida governor Rick Scott to stop talking about how
good the economy is in his state. That`s because it doesn`t quite jibe
with the Romney message that the economy is a mess. Can they have it
both ways?

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

SMERCONISH: We`ve got new polling data from some key battleground
states. Let`s check the HARDBALL "Scoreboard," starting in Florida,
where a new Quinnipiac poll shows President Obama with a 4-point lead
over Mitt Romney. That`s 46-42. That`s a 10-point swing from where
things stood one month ago, when Romney led by 6.

Now to Michigan, a state that`s gotten really close in recent
weeks. The new Mitchell Research poll has Obama with a 1-point lead, 47
to 46. And finally, Wisconsin, a state Republicans hope to win after
fending off a recall earlier this month, but it`s Obama up 6 in the new
Marquette Law School poll, Obama 49, Romney 43.

We`ll be right back

(COMMERCIAL BREAK)

SMERCONISH: Welcome back to HARDBALL. We`ve seen signs that the
economy is improving in battleground states, but what we hadn`t seen
until today is how much that concerns the Romney campaign.

Bloomberg reports, quote, "Mitt Romney`s presidential campaign
asked Florida governor Rick Scott to tone down his statements heralding
improvements in the state`s economy because they clash with the
presumptive Republican nominee`s message that the nation is suffering
under President Barack Obama." That`s according to two people familiar
with the matter.

The story says Romney`s campaign made the request after Scott`s
reelection campaign sent a press release touting 11 consecutive months
of improved unemployment numbers, which Democrats say are a testament to
President Obama`s policies.

Joining me now is Michael Steele, the former RNC chair and an MSNBC
political analyst, and Lanny Davis, former special counsel to President
Clinton. Both are partners in the new bipartisan strategic
communication firm Purple Nation Solutions.

So men, in the spirit of bipartisanship, let us discuss this.
Lanny, can they have it both ways? Can they trash the president and
tout what`s going on in their states?

LANNY DAVIS, FORMER SPECIAL COUNSEL TO PRESIDENT CLINTON: No, they
can`t. And I`m a little suspicious of an anonymous quotation from two
people familiar with the situation. I`ve been a leaker myself, and I
don`t trust that sourcing by Bloomberg.

But if that`s what they said, I would say that the Republicans
cannot have it both ways and Governor Scott has a right to tout numbers.
The ultimate reality is how people feel, not which is being touted or
what the spin message is.

SMERCONISH: And Michael, not just any states. We`re talking...

MICHAEL STEELE, FMR. RNC CHAIR, MSNBC POLITICAL ANALYST: Right.

SMERCONISH: ... some critical swing states on this list, Florida
chief among them.

STEELE: Well, you`re absolutely right there. And I would disagree
with Lanny on this point, to the extent that, you know, a lot of this is
less about what Obama has done and did and more about what the governor
is doing and has done to turn his economy around in his state.

I mean, you forget. The federal government doesn`t run individual
states. It`s what the chief executive does, the policies they put in
the place when they come in the door to hit the ground running. And
certainly, Florida was very important, you know, politically, but it was
also important economically.

And I think, you know, the governor`s done a number of things to
help move that economy in the right direction. So I would agree to the
extent that the sources are a little bit suspicious. Anyone who can`t,
you know, man up, if you will, and put their name to quotes like that,
I`m a little bit suspicious about.

SMERCONISH: Well, let me -- let me give you both an example of
what worries the Romney campaign. The Florida Republican Party released
this ad praising Governor Scott`s stewardship of the state economy in
March.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Across Florida, here`s the news. Companies
are hiring, expanding, putting more Floridians to work. Florida`s
unemployment rate continues to get better, now at a three-year low.

So what`s changed? Governor Rick Scott`s cutting the red tape,
getting government off the backs of businesses, over a dozen new pro-
business initiatives passed by Governor Scott and Republican
legislators. Florida`s getting back to work!

(END VIDEO CLIP)

SMERCONISH: Lanny, the only thing missing is "I`m Barack Obama and
I approved this message."

(LAUGHTER)

SMERCONISH: I mean, if you were half in the bag and you were
watching that, you`d think it was an Obama commercial.

DAVIS: It`s delicious! Last time I looked, the governor of
Florida had some pretty bad approval numbers. And so please just sign
it "Paid for by the Barack Obama campaign."

I don`t really believe it matters. And although Michael and I are
-- he`s red and I`m blue and we came together as a company and we`re
looking for solutions and we`re purple, the fact is, it really doesn`t
matter.

It matters how people feel. And right now, there is a movement,
and it does appear to be real, that people in the polls are saying they
feel better now than they did last year and the year before about the
direction of the economy, and that`s what Ronald Reagan benefited from
in 1984 after the `82 recession. That seems to be what`s going on in
Florida.

SMERCONISH: Michael Steele, may I ask you this question?

STEELE: Yes, sir.

SMERCONISH: Isn`t it true generally that we tend to give
politicians too much credit and too much blame, that there are a lot of
things going on out there...

STEELE: Oh, yes.

SMERCONISH: ... that, frankly, they`re not calling the shot for,
but they`re happy to take the praise and reluctant to take the
criticism?

STEELE: Well, absolutely. Michael, you`re dead on about that.
There`s a real truth there that, you know, you come into office and
you`ve got to deal with some of the residual. We spent the first three-
and-a-half years listening to Barack Obama whine about George Bush, for
example. So there is -- there`s some truth to that.

But there`s also the reality -- that commercial is a reflection of
the steps and the efforts that the governor has taken in his state to
turn around, to work with the Republican legislators, to cut the red
tape, to put the businesses back to work.

So you know, I think you`ve got to be very careful when you try to
federalize individual states and the work that the governors are doing.
And I speak as a former lieutenant governor in our state, with Governor
Ehrlich, where he inherited a $2 billion deficit from the previous
Democrat administration, over the course of four years fixed that $2
billion, raised an additional $2 billion in revenue that we were able to
put in the bank, and we did it without raising taxes and relying on the
federal government necessarily to get it done.

So you have got to look at that.

SMERCONISH: All right, I love you, I love you, but you`re now
telling me, it`s true for all the other guys, but in my state, we really
did deserve the credit.

(LAUGHTER)

STEELE: No, but what I`m...

(LAUGHTER)

STEELE: No, what I`m saying is that I`m saying that it`s true for
Governor -- for -- for Scott as well, that he has the opportunity to
turn his state around and he clearly has done that.

SMERCONISH: Well, let me -- let me...

STEELE: And if you talk about the polls, the people in the polls
will remember that, you know, Scott Walker was not very popular in the
state of Wisconsin. And look what happened a couple of weeks ago.

SMERCONISH: Well, let me give you some other examples, because
Rick Scott`s not alone in this. Republican governors all over the
country, including Romney surrogates, are bringing attention to their
state`s economic progress.

STEELE: Yes.

SMERCONISH: Ohio Governor John Kasich publicly praised his state`s
new jobs and falling unemployment rate. Rick Snyder called Michigan the
comeback state of the United States.

Virginia Governor Bob McDonnell`s PAC aired an ad on the state`s
progress since he took office. And Wisconsin`s Scott Walker, who you
just mentioned, credited the state`s improving economy for his win in
the recall election.

DAVIS: Michael, could we just say it straight? I think Michael
will agree with this, even though we`re looking at it from different
political perspectives.

If the situation were in reverse and the unemployment was going up
in Florida, Rick Scott would be blaming Barack Obama.

(LAUGHTER)

STEELE: Yes.

DAVIS: Now, let`s just get it straight. Both sides play this
nonsense game.

And, by the way, the polls you showed, a 1 percent margin isn`t a
margin at all. It`s within the margin of error. And the flip of
whatever you said in Florida, we still have my president who I`m
supporting stuck in the 40s. With all the things that I think are wrong
with Mitt Romney, he`s still stuck in the 40s. So we have a tight
contest here and it is going to be about real, real perceptions of the
economy, not how people are spinning it in...

(CROSSTALK)

SMERCONISH: I`m coming to your office.

STEELE: I do agree with that.

SMERCONISH: I want to see the purple interior. That`s what
intrigues me the most.

(LAUGHTER)

SMERCONISH: Thank you, Michael Steele.

STEELE: Thank you, Mike.

SMERCONISH: Thank, Lanny Davis.

DAVIS: Thank you.

STEELE: All right.

SMERCONISH: Up next, Joe the plumber hits a new low in American
campaigning. He blames the Holocaust on gun control. Stick around for
the "Sideshow."

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

SMERCONISH: Welcome back to HARDBALL. Now time for the
"Sideshow."

First up, all five Romney sons -- that would be Josh, Tagg, Craig,
Ben, and Matt -- appeared on Conan O`Brien`s late-night show yesterday.

And Conan came up with a not-so-novel system for keeping track of
all their names.

(BEGIN VIDEO CLIP, "CONAN")

CONAN O`BRIEN, HOST, "CONAN": You know what? This seems like a
joke, but it`s not. This will actually make this work a little better.

I have name tags for all of you.

(LAUGHTER)

O`BRIEN: Josh, could you distribute these? Because I don`t know -
- I really honestly don`t know who`s who and I have been looking at your
pictures for days.

(LAUGHTER)

O`BRIEN: Josh, Tagg, Craig, Ben, Matt.

My first question, why the name Tagg?

(LAUGHTER)

O`BRIEN: All of you guys, all boys, all boys. So my question is,
is one of you a girl being raised as a boy?

(LAUGHTER)

UNIDENTIFIED MALE: Ben, you want to take this one?

(LAUGHTER)

O`BRIEN: This seems like a large family to me. But this is just
the tip of the iceberg.

We have a photo here of a family gathering of the Romneys.
Absolutely incredible. You can tell, when you guys get together,
there`s a global khaki shortage.

(LAUGHTER)

O`BRIEN: I love that. You`re all dressed the same, but you can
tell Ben is the rebel in stripes. Check that out.

(LAUGHTER)

(CROSSTALK)

(END VIDEO CLIP)

SMERCONISH: And they were all good sports about it.

Next up, if you`re having trouble keeping up with the conservative
conspiracy theories around Fast and Furious, perhaps you should let
Stephen Colbert set things straight for you. Take a look at this.

(BEGIN VIDEO CLIP, "THE COLBERT REPORT")

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": I`m so mad about
this. Folks, just thinking about Fast and Furious makes me, I don`t
know, quickly angry.

UNIDENTIFIED MALE: Very clearly, they made a crisis and they are
using this crisis to somehow take away or limit people`s Second
Amendment right.

COLBERT: Yes, very clearly. Obama started this gun-tracking
program in 2006 when he hypnotized George Bush.

(LAUGHTER)

COLBERT: Then he secretly ordered Attorney General Holder to order
the Justice Department to order ATF to order gun shops to sell guns to
Mexican gun cartels, and then lose track of them, thereby panicking
Americans to gin up support for the draconian gun control measures that
Obama has never introduced.

(LAUGHTER)

(END VIDEO CLIP)

SMERCONISH: You got all that?

Now, here`s advice for wannabe super PAC players. Learn to spell
check. One piece of evidence that the new super PAC Massachusetts
Forward, Inc. might involve money from outside the Bay State, they
spelled Massachusetts wrong.

"The Boston Globe" is reporting that the Republican super PAC filed
an amended statement of organization last week with the FEC to correct
an embarrassing misspelling. Here`s how they initially spelled the
state, "Massachussets" with an extra S. and missing T.

According to the filing statement, their address is a P.O. Box in
Alexandria, Virginia. The group`s treasurer, Chris Marston, declined to
give any details about that, which raises -- in terms of which races
they`re going to get involved with. He cited instructions from -- quote
-- "the people in charge."

And who would they be? Well, according to Marston -- quote -- "the
people who pay me."

Well, thank you for clearing that up. Let`s hope they spell your
name correctly on your paycheck.

Finally, have you seen the new Web ad for Joe the plumber? Yes,
that Joe the plumber, who is running for Congress in Ohio against Marcy
Kaptur.

Take a look and see if you can figure out why certain Jewish groups
are calling the ad offensive.

(BEGIN VIDEO CLIP, AD)

UNIDENTIFIED MALE: In 1911, Turkey established gun control. From
1915 to 1917, 1.5 million Armenians, unable to defend themselves, were
exterminated. In 1939, Germany established gun control. From 1939 to
1945, six million Jews and seven million others unable to defend
themselves were exterminated.

UNIDENTIFIED MALE: I love America.

(END VIDEO CLIP)

SMERCONISH: Using genocide for partisan political gain, pretty
low, even for a wannabe member of Congress.

Up next, why team Obama loves to fight with House Republicans who
want to hold the attorney general in contempt of Congress.

And if you want to follow me on Twitter, you just need to figure
out how to spell Smerconish.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

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

Well, worries about the economy sending stocks sliding, the Dow
plummeting by 250 points, the S&P off by 30, and the Nasdaq sinking 71.
Well, factory activity was weak this month, according to the Philly Fed
Index, a key gauge of manufacturing strength. Weekly jobless claims
also fell slightly, but the four-week moving average rose to a 2012
high.

And sales of previously owned homes dropped by 1.5 percent in May,
according to the National Association of Realtors. We have also just
found out that Moody`s, as expected, has downgraded a number of banks.
Of course, some of these were domestic banks, such as Morgan Stanley,
which was also downgraded by two notches, instead of the expected three,
which is good news enough to rouse -- that stock is moving to the
upside.

Many other global banks were downgraded -- back to you.

SMERCONISH: Welcome back to HARDBALL.

If there was any doubt President Obama intended to tie Mitt Romney
to the Republican Congress, it was erased in the president`s big
economic speech in Ohio.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Governor Romney
disagrees with my vision. His allies in Congress disagree with my
vision. Governor Romney and his allies in Congress. Mr. Romney and his
allies in Congress. Mr. Romney and the current Republican Congress.
Governor Romney and the Republicans who run Congress. That`s what Mr.
Romney will say. That`s what the Republicans in Congress will say.

(END VIDEO CLIP)

SMERCONISH: And at the moment, the Republican Congress is tied to
an investigation of Attorney General Eric Holder. And by asserting
executive privilege now, President Obama is in the thick of the fight.

Is this where the Obama campaign wants to be?

Mark Halperin is editor at large for "TIME" magazine and a senior
political analyst for MSNBC. Steve Kornacki is senior writer for
Salon.com and starting Monday will be a co-host of the new MSNBC 3:00
show "The Cycle."

Gentlemen, today in their weekly briefings, both House Minority
leader Pelosi and Speaker Boehner put their spin on the politics of the
Holder investigation.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), HOUSE MINORITY LEADER: Instead of
bringing job-creating -- creating legislation to the floor, the
transportation bill, they are holding the attorney general of the United
States in contempt of Congress for doing his job.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The decision to
invoke executive privilege is an admission that the White House
officials were involved in decisions that misled the Congress and have
covered up the truth.

(END VIDEO CLIP)

SMERCONISH: Mark Halperin, do you buy the theory that the
president injected himself into this through executive privilege because
he wanted to again be add odds, second time in less than a week, with
the GOP-controlled House?

MARK HALPERIN, MSNBC SENIOR POLITICAL ANALYST: I don`t think that
was his motivation. I`m really not entirely sure what his motivation
is, although I think clearly part of it is, like all presidents, wants
to project -- protect the prerogatives of the office.

But I do think, as your introduction suggested, that they are not
unhappy when the president`s seen as being strong and decisive in
standing up to a Republican Congress that is in the eyes of a lot of
Americans part of the problem in not addressing the big issue facing the
country, the economy.

SMERCONISH: But what if a vote is taken and some of the D`s break
ranks, in other words, that it`s not a partisan vote? Then how is it
spun?

HALPERIN: Well, that will be a big deal. I think, for the most
part, I think the American people hear things like John Boehner vs.
Nancy Pelosi like this: "Wa wa wa wa wa, wa wa wa wa wa."

If somebody breaks rank on either side, if Republicans say this
isn`t what we should be doing or if Democrats say, you know what, there
are real questions here, then I think it becomes a different issue and
it moves out of the realm of politics and political theater and more
into what this is, at least is in part, which is a constitutional clash
between two branches of government over some important principles about
investigating and oversight over the executive branch vs. the executive
branch need to have some privacy and confidentiality in communication.

SMERCONISH: Steve Kornacki, I would think the downside politically
speaking for the White House is that it rallies the GOP base. You would
be surprised, I think, to hear that I entertained a lot of radio callers
today who essentially said, well, what`s he got to hide? How deep is
the president involved in this?

STEVE KORNACKI, MSNBC POLITICAL ANALYST: Yes, but I think the
origins of this one are really important to kind of keep in mind here.

And it`s sort of the reason why John Boehner has no choice but to
sort of go forward with it and why every Republican in Congress probably
has no choice but to vote to hold Holder in contempt, and that is this
is a scandal that really began on the right, to the extent it`s scandal
at all, which I don`t really think it is.

It began on the right. The right had decided sort of when Obama
became president that one of the top targets in the administration, one
of the symbols sort of for their resentment of the administration would
be Eric Holder. So there`s sort of been a target on Eric Holder`s back
since the Obama administration began.

This has been the thing that has been pushed sort of on the right,
talk radio, cable news, all sorts of outlets like that. And now it`s
finally -- because Republicans control the House, they`re able to kind
of push this thing far enough that it gets a little bit of mainstream
exposure.

But I think, as Mark said, it`s a fight the Democrats are not
necessarily upset about having, because as Nancy Pelosi says in her clip
right there, they can just look at the Republicans and say, look,
there`s no scandal here, let`s talk about jobs.

Meanwhile, a guy like Boehner, because his base is pushing this and
because Boehner basically is beholden to the base, he is not trusted by
the conservative base. He has to constantly be appeasing them as
speaker. He has no choice but to sort of carry the water on this one.
And again, yes, it does excite the Republican base, but the Republican
base was always going to be excited about this.

SMERCONISH: Mark Halperin, does the NRA involvement change the
dynamic? The NRA put House members on notice that their votes on the
contempt issue were being watched.

The NRA`s chief lobbyist, as a matter of fact, wrote to leaders of
the House Oversight Committee and said this: "This is an issue of the
utmost seriousness and the NRA will consider this vote in our future
candidate evaluations."

HALPERIN: Well, that may intimidate or influence some Democratic
candidates or office-holders who are on the ballot.

Look, this is not a central -- election just over the center. It`s
not just an election about energizing the base. For both sides, it`s
both. And I think that while we monitor very closely on issues like
this what Mitt Romney and John Boehner are doing, are they being dragged
too far to the right, you can bet that the NRA will use its normal
strength and wealth and expertise in communicating with base voters.

And I think there are some voters who -- I think that`s right that
a lot of Republicans are energized, but I think there are some voters in
Ohio and Pennsylvania and Iowa and Wisconsin who may hear from the NRA
on this issue in a way that gets them to maybe contribute more, maybe to
volunteer more, maybe to vote when they otherwise wouldn`t be energized
to vote.

And so that is a factor here, I think that the Republicans can be
pleased about, even if they might be losing the battle in the center on
this issue to some extent.

SMERCONISH: Steve, what drives the antipathy toward Eric Holder
from the right?

Of all the Cabinet members -- and I have noted this and others have
tracked it -- it`s Holder who is most perceived as the surrogate for
Obama and who seems to incur the wrath of the harshest of criticism.

KORNACKI: Yes.

And, you know, look, it can be uncomfortable to talk about this
stuff, but I think you have to consider the possibility that there might
be an aspect of race and color of that because, you know, you have the
Justice Department -- first of all, you have sort of the caricature of
Obama that gets sold on the right a lot is that he`s this secret black
radical and he`s looking to sort of -- you know, he`s looking to sort of
take away rights this sort of, you know, money from white people and
redistribute it and that sort of thing. You take prominent black lawyer
and put him in charge of the Obama Justice Department. And I think
that`s, you know, to people who sort of traffic in that sort of thing,
it really is kind of a lightening rod.

I mean, I picked up on it, too. I can remember at the end of
2008, 2009, all those cabinet secretaries having to do in there for
confirmation. There was Geithner. He had his tax issue. He attracted
a lot of heat and really the only other one I remember was Eric Holder.

SMERCONISHI: Well, there`s no doubt. He`s incurred the same sort
of Internet wrath, those emails that I still get in all capital letters,
"you must read this", that if they weren`t typed, they`d be written with
a crayon. And I wanted to ask you that question.

Anyway, thank you both for being here, Mark Halperin and Steve
Kornacki.

Up next: the jury has the case in the trial of Jerry Sandusky and
we may now know why Sandusky himself didn`t take the stand. The latest
from the courthouse, next.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

SMERCONISH: Commerce Secretary John Bryson has resigned from the
Obama administration. Bryson was involved in two-car accidents in
southern California in the same day this month after suffering a
seizure. President Obama thanked Bryson for his, quote, "invaluable
experience and expertise." Bryson said he worried the seizure could be
a distraction and thought the Commerce Department would be well served
by a change in leadership.

We`ll be right back.

(COMMERCIAL BREAK)

SMERCONISH: We`re back.

After closing arguments in Bellefonte, Pennsylvania, a jury has
begun deliberating on the 48 counts of sex abuse former Penn State coach
Jerry Sandusky faces, all of which he denies.

NBC`s Michael Isikoff reported this morning that Sandusky declined
to testify after prosecutors warned his legal team if he took the stand,
his adopted son, Matt, was ready to act as a prosecution witness with a
damaging rebuttal. And just a short time ago, we learned what they
would have been. Matt`s attorneys claim that he, too, claims to be an
abuse victim of Jerry Sandusky.

Michael, I saw your report on the "Today" show this morning. This
is -- this is quite a bombshell.

MICHAEL ISIKOFF, NBC NEWS: Yes, it was. And when prosecutors
warned the defense team about this this week, it was pretty explosive
news and it was from all indications, it was a factor -- perhaps the
most important factor in Jerry Sandusky`s decision not the testify.

This went right down to the wire yesterday. There was wide
expectation he would take the stand. I was in the courtroom and just
during a court recess, he got summoned by his lawyers to discuss this
issue then they go into the judge`s chambers. When Sandusky emerged, he
looked somber, chastened, almost ashen. You could tell he was really in
very bad straits and had been almost hit in the gut with something that
he hadn`t expected.

Now, when he exactly learned that Matt Sandusky, his son who`s
been adopted son has been a stalwart supporter all this time, had turned
on him, we don`t know, but it clearly seemed to have had an effect
yesterday.

SMERCONISH: Michael, there was -- there was reference made,
passing reference made by one of the alleged victims during his
testimony to an encounter where Matt was present and the question from
prosecutor McGettigan I recall was, you know, did his face reveal his
expression or some such thing? I hope you know what I`m talking about.

I wonder whether reference to him caused him to come forward or
maybe if the prosecutor made reference to him so as to drive home the
threat to Sandusky, we`re going to call him if we need to.

ISIKOFF: Well, what we do know is that Matt Sandusky was in the
courtroom that day. This is the opening day of the trial and the young
man known as victim number four was testifying and that is where Matt
Sandusky, that`s the day Matt Sandusky`s name surfaced in the testimony.
And then after that, Matt Sandusky dropped from sight. He was not seen
back in the courtroom and did not reemerge in the courthouse until our
NBC cameras caught him entering the courthouse yesterday morning with
state troopers and then exiting right after court adjourned.

So all indications are that Matt Sandusky had flipped, gone over.
In fact, the statement from his lawyers says he was retained last week
to negotiate an arrangement, to can contact the prosecutors in this case
and that they had him on hand to testify if Jerry Sandusky took the
stand, they would bring Matt on as rebuttal.

And very quickly, it just underscores prospect of more charges he
could face when this is behind us.

ISIKOFF: Certainly that, but look, there`s a lot of other aspects
to this case as you well know, Michael. There`s a wide ranging
investigation including into high level Penn State officials, what they
knew, what they testified to, whether they testified to truthfully.
There`s new e-mails that have been gotten.

So, they`ve got a lot on their plate. I think prosecutors are
hoping to get a fairly quick conviction here from Jerry Sandusky, and
then move on to the people they believe were his enablers.

SMERCONISH: Thank you, Michael Isikoff.

I might add when I have an opportunity to offer, let me finish
tonight, I`m going to talk of what`s still to come in this case.

Joining me now also from the courthouse in Bellefonte,
Pennsylvania, is Tom Kline. He`s an attorney representing the young
victim 5 in this case. He`s also a named partner of the law fire where
I`m associated.

Tom, I learned from Joe Amendola`s closing argument today that
you`re to blame. It`s the attorneys and it`s all about money.

TOM KLINE, ATTORNEY: It`s cops, prosecutors, media, and lawyers,
in some order.

SMERCONISH: In other words, it`s a grand conspiracy of O.J.-like
proportions. That`s essentially what Amendola is asking this jury to
believe.

KLINE: Amendola asked the jury to believe exactly that, Michael.
That it is a conspiracy that started with one victim. The prosecution
they then coerced and convinced seven other individuals -- actually more
than that -- that they should also testify, that they made up these
gruesome, horrible acts. They all came in and testified under oath to
that.

Then they hired lawyers. Some of them that the lawyers put words
in their mouth. And even that in one instance because one of the
members of the print media had suggested to the mom, a mom, that she
reached to the prosecutors, that she was part of the conspiracy.

The prosecutor countered by simply saying this kind of conspiracy,
like all conspiracies, falls of its own weight.

SMERCONISH: And the prosecutor also said -- Joe McGettigan also
said if this is all it`s about -- and I`m paraphrasing -- you`re in the
courtroom, but you may as well go ahead and cuff me.

KLINE: I heard bit of testimony, and I heard McGettigan`s closing
speech. And that`s exactly what he said. He looked at the jury. He
put his hands towards himself and said me, too, then -- as if to say
bring it on. Old fashioned style, I might add.

SMERCONISH: So tom, this jury has now taken its dinner break.
They`ll recess for an hour or so. Then they`re going to come back and
they`re going to continue their deliberations. They`ve had a long day
all right, right? They`ve been there since 9:00 this morning. What does
that tell you about their demeanor, focus, et cetera?

KLINE: Well, I think conventional wisdom is they have to work
through what is now 48 counts. And it`s going to have to take some
time. A jury that`s telling us is an old hand waiting for juries to
come back. If they`re asking to go to dinner and then come back, it may
tell us they`re closer than we think. That would be my reading -- but
just reading the tea leaves.

SMERCONISH: I have only 30 seconds left with you. Is your
anticipation that this -- if it is a guilt verdict to some extent would
be an all or nothing?

KLINE: Oh, I believe looking at this jury that they will look
carefully at it. And I would be very surprised if it was just flat out
all guilty. This looks and appears to be the kind of jury that`s going
to carefully sift through evidence. And I think we`re going to see the
way I read the evidence, guilty on some very important charges.

But I also think they may find some things less credible than
others. Just my sense of it.

SMERCONISH: Tom Kline, we appreciate your time.

When we return, allow me to finish with some of the still
unanswered questions in this Sandusky case.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

SMERCONISH: Let me finish tonight with this.

And so, the Sandusky jury is finally out. No doubt many can`t
wait until this legal process reaches a conclusion. The subject matter
is unpleasant, the testimony hard to read.

But this is not the end of the inquiry and nor should it be.
Jerry Sandusky will have his fate determined very soon, but there are
many questions and issued still to be resolved. And the only way to
protect children in the future is to ensure we`ve learned the lessons of
the past.

Among the unresolved matters, was the investigation handled
expeditiously? "The Patriot News," where Sara Ganim earned a Pulitzer
for her coverage, has reported that for the first year of the
investigation by the state attorney`s general office, there was only one
investigator assigned to the case. And that it took that investigator a
full year to learn that Sandusky had been the subject of a prior
criminal probe. There was similar delay in recognizing Sandusky had
written a book oddly titled "Touched," which became a road map for
finding alleged victims.

All the while, the same attorney general office had a large staff
investigating state corruption in a matter called bonus-gate. Was that
an appropriate distribution of resources.

A second question, during the Sandusky trial, reports surfaced
that the independent investigation conducted by former FBI Lewis Free
has uncovered e-mails that evidenced discussions within the upper
echelons of Penn State`s leadership where there was a desire expressed
to treat Sandusky humanely when the Mike McQueary incident was reported.
That requires a full vetting and perhaps additional criminal charges.

Third, there are criminal charges already pending against two
former Penn State officials for perjury and a failure to report what
Mike McQueary told them. McQueary, by all accounts, was a credible
witness at the Sandusky trial. It`s important that the legal system now
hold accountable those individuals who had a duty to report and did not.

Fourth, there will be and should be civil litigation in the event
of a Sandusky conviction. If the criminal jury finds Sandusky
responsible, those young men are entitled to be fairly compensated for
their horror.

And finally, society needs to recognize the failure of adults to
protect the interests of children. The prosecution of Jerry Sandusky
brought to light many instances where adults had reason to suspect bad
behavior, but did not exhaust their remedies to protect children.

Mike McQueary`s claims of witnessing Sandusky raping a child is
well-known, but there were other instances. The janitor who failed to
report to police seeing Sandusky allegedly performing oral sex in a boy
in a locker room shower, the D.A. who didn`t prosecute the 1998
allegation, despite the detective who investigated, thinking it was
solid, the wrestling coach who saw Sandusky on the floor with a young
man, the school officials who were initially skeptical of the abuse
claims of the boy who was the first to step forward with a complaint,
and the parents who did not perceive the unhealthy nature of the
relationship between the football coach and their sons.

This chapter might be over, but we can`t yet close the book.

That`s HARDBALL for now. Thank you for being with us. "POLITICS
NATION" with Al Sharpton starts right now.


END

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