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updated 7/18/2012 9:40:17 AM ET 2012-07-18T13:40:17

Guests: Maggie Haberman, Jonathan Weisman, Erin McPike, Keith Ellison, Bill
Nelson

CHRIS MATTHEWS, HOST: The heat rises on Romney.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in San Francisco.

"Let Me Start" tonight with Mitt Romney`s tax policy: Don`t pay it.
That`s one way to get rich, don`t pay taxes, any for years at a time. And
that`s one big fat reason he`s not going to tell you about those tax
returns. He`s going to tell you nothing about those years he was building
up his wealth. Got it? Nothing.

Instead, he`s going to unleash his dogs to bark that his rival,
President Obama, a guy who`s released all his returns, doesn`t know how to
be an American. Again and again, Romney and his right-wing allies push
this line. Limbaugh -- he hates America. Bachmann -- we`ve got the Muslim
Brotherhood sneaking around the government. DeMint -- that it`s the most
anti-American administration in history.

What a horror show. A candidate who hides who he is, sends out his
wolf pack to say the other guy is the enemy within. "Creepy" is too nice a
word for it, way too nice. And this guy wants to sit in Lincoln`s chair.

Robert Costa`s a political reporter for "The National Review" and
Maggie Haberman is the senior political writer for Politico.

I want to go to Bob. Thank you so much for joining us, Bob. You`ve
had a unique experience sitting with Mitt Romney, talking about something
he`d least of all want to talk about, his tax returns. Give us the tick-
tock.

ROBERT COSTA, "NATIONAL REVIEW," CORRESPONDENT, "KUDLOW REPORT": So I
spoke to Romney this morning, Chris, and he`s digging in. He`s sick and
tired of talking about his tax returns, talking about his offshore
investments! He wants to move on. I`m not so sure if he`s going to be
successful, but his whole strategy today on our conversation was to push
back against Obama, show some spine and say he`s going to play a little
hardball with Obama`s allies and he`s just not going to give in and release
anything pre-2010.

MATTHEWS: Why not? Does he -- does he give you any sense...

COSTA: Sure.

MATTHEWS: ... in his denial -- what`s he so sensitive about? Can you
tell?

COSTA: Well, he`s sensitive because he says to me today that he`s
already released hundreds of pages, and he said to "National Review" today,
I don`t want to release hundreds more, thousands more, to let the Obama
people, quote, "lie" about these thousands of other pages in his pre-2010
returns.

He, I think, is not nervous about what`s in the returns, but about the
political consequences...

MATTHEWS: Well, that`s what he says...

COSTA: ... of making his tax returns dominate the conversation.

MATTHEWS: But why didn`t -- what in his previous returns -- he`s
given us one year and an estimate for the most recent year. What in those
returns has been distorted? What`s his claim to be somehow a victim here
of his own limited tax disclosures?

COSTA: I don`t think it`s so much of being a victim of what`s in the
returns. He just does not want this dominating the conversation. Romney`s
whole campaign, as we all know, is pegged to being former CEO of Bain
Capital. He`s running on his business success. So he`s just playing a
political strategy here, nothing else, not really complaining about the
exact distortions, but rather he`s just trying to change...

MATTHEWS: Yes, right.

COSTA: ... this whole nature of the campaign.

MATTHEWS: Well, I think he`s hiding something. In Pennsylvania
today, where Mitt Romney`s campaigning, the Obama campaign is running a TV
ad that zeros in on Romney`s tax returns and asks what I`m asking, "What`s
he hiding?" Let`s listen to it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Tax havens, offshore accounts, carried interest --
Mitt Romney has used every trick in the book. Romney admits that over the
last two years, he`s paid less than 15 percent in taxes on $43 million in
income. Makes you wonder if some years, he paid any taxes at all. We
don`t know because Romney has released just one full year of his tax
returns and won`t release anything before 2010.

MITT ROMNEY (R-MA), FMR. GOV., PRESIDENTIAL CANDIDATE: You know what?
I`ve put out as much as we`re going to put out.

UNIDENTIFIED MALE: What is Mitt Romney hiding?

(END VIDEO CLIP)

MATTHEWS: Well, let`s go to Maggie Haberman. I`ve got great
confidence in your ability to track this baby down. And my question is
this. My way of measuring this, studying politician for all these year, is
if it`s better than it looks, they`ll tell you. And if this looks like
there`s something he`s hiding, he`ll have to deal with that effectively, by
telling us what we want to know, which is that it`s not as bad as it looks.
Now, if it isn`t as bad as it looks, why won`t he show us that -- show us
his tax returns?

MAGGIE HABERMAN, POLITICO.COM: Well, I think that you have a point
certainly in terms of if things could look worse. I think that he is
concerned that even if it`s not -- as Bob said, even if it`s not bad, it
will be made to look bad.

The problem is that he is a very wealthy guy. He is earning
investment income, which is a little different than the way most people
make their money.

MATTHEWS: Explain.

HABERMAN: Things are going to show up differently. He is getting
money -- in other words, instead of a yearly salary, because he has been
not at Bain for a long time, he is making money off of investments. So
remember, there`s a whole...

MATTHEWS: Which means he`s paying what rate at the most?

HABERMAN: Fifteen percent, I believe, was his last effective tax
rate. I might be off by a point or two. But that was a controversy during
the primaries, and that`s where this whole tax return thing snowballed and
became an issue around the South Carolina primary back in January.

I think he is concerned -- even if it`s not, you know, hiding, even if
it`s not specific details, I think he is concerned about trying to explain
to people what this all means for someone who is wealthy and someone who is
making his money in a different way than, you know, many Americans do.

And I think in terms of the Swiss bank thing, that`s the one piece
that they do feel, or at least one of the pieces that the campaign does
think has been distorted. Their argument is the Swiss bank account showed
up because he reported it on his tax returns. Therefore, he paid taxes on
it. The Obama campaign has said he didn`t. But again, this is the kind of
thing that is not something average voters have...

MATTHEWS: Yes.

HABERMAN: ... and it requires a lot of explaining.

MATTHEWS: It`s also because he wants to lower the tax rate for
corporations and shift the burden to more humble people.

Anyway, this morning on the Romney campaign conference call, former
governor of New Hampshire John brought out the big battery attack against
Obama. Let`s listen to how they`re trying to shift this away from what
seems to be the serious embarrassment of taxes not paid to something a
little more ethnic sometime. If you don`t hear it here, I hear it. Let`s
listen.

(BEGIN AUDIO CLIP)

JOHN SUNUNU (R), FMR. NEW HAMPSHIRE GOVERNOR: The president clearly
demonstrated that he has absolutely no idea how the American economy
functions! The men and women all over America who have worked hard to
build these businesses, their businesses, from the ground up, is how our
economy became the envy of the world. It is the American way. And I wish
this president would learn how to be an American!

(END AUDIO CLIP)

MATTHEWS: "I wish this president would learn how to be an American."
Well, that`s an odd thing to say about a guy who`s basically a stellar
American, who went to the best schools, worked his way up, won political
offices time and time again by being gutsy to run for it.

Well, minutes later, a reporter on this call asked Sununu, the former
governor, to clarify his comment about the need for the opponent, President
Obama, to learn how to be an American. Let`s watch.

(BEGIN AUDIO CLIP)

SUNUNU: What I -- I thought I said, but I guess I didn`t say, is that
the president has to learn the American formula for creating business. The
American formula for creating business is not to have government create
business. The American formula for creating business that I wish he would
get comfortable with is to create a climate in which entrepreneurs can
thrive. If I didn`t -- if I didn`t give all that detail, I apologize.

(END AUDIO CLIP)

MATTHEWS: It wasn`t about a lack of detail. It was an insinuation
that somehow, again and again they keep pounding this -- this note -- "I
wish the president would learn how to be an American." I`ve never seen
this in American politics, where one candidate runs against the other guy
saying, You`re not really one of us. You`re not really in this campaign
because you`re not really a part of this country.

Anyway, Obama campaign spokeswoman Liz Smith fired out this response.
"The Romney campaign has officially gone off the deep end. The question is
what else they`ll pull to avoid answering serious questions about Romney`s
tenure at Bain Capital and investments in foreign tax havens and offshore
accounts."

Let me go back to Bob Costa. This shift in focus once again from the
debate issues about how Romney made his money, his claim to greatness as a
business expert and an economic expert, to the old -- I would call it the
ethnic factor, This guy`s really not one of us.

What do they mean by "learn how to be an American"?

COSTA: Chris, I disagree respectfully that it`s an ethnic play here.
I think it`s a -- obviously, a poor choice of words by John Sununu.

What I`m more interested is the role of John Sununu, this former White
House chief of staff for Bush 41. He`s been Romney`s biggest attack dog in
this campaign. He`s giving Romney an edge in a week when Romney really
needs an edge, a change in the topic.

You have Sununu out there trying to push that Obama`s dishonest, that
Obama`s a liar. He`s throwing around these phrases. This captures
reporters` attention, and I think it is a play by the Romney campaign to
get something else on the radar beside Romney`s tax returns. But I do
not...

MATTHEWS: Bob...

COSTA: ... think this was an ethnic play, Chris.

MATTHEWS: Bob! Bob, stop there. (INAUDIBLE) I said to you, Why
don`t you learn how to be an American?

COSTA: It`s a poor phrase. I don`t think...

MATTHEWS: No, what does it mean?

COSTA: What does it mean?

MATTHEWS: Yes.

COSTA: How...

MATTHEWS: Is it a poor choice of words, or what does it mean? Why
don`t you learn how to be an American, Costa?

COSTA: I think it means you made a mistake in that phrase. And I
think it`s obviously not...

MATTHEWS: What do you mean, you made a mistake? I consider it a
serious slur against somebody, a fellow American, to say they`re not really
an American.

COSTA: I mean, if you meant that in a direct way, it would be a -- a
mistake.

MATTHEWS: Want me to play it again?

COSTA: No, I`m not disagreeing with you that it`s a bad phrase and
that if Sununu meant it directly, it was obviously a very poor choice of
words and a mistake.

MATTHEWS: Yes, well, let me go -- let`s go to Maggie Haberman...

(CROSSTALK)

COSTA: Chris, Chris, real quick -- I was on the call, and it was an
economic argument he was making. I was listening to the whole call.

MATTHEWS: You know, if that weren`t so harmonious with the kind of
stuff that Limbaugh put out the other day -- he hates America, the stuff
that Bachmann`s been putting out, Maggie, over and over again, this sense,
and it feeds into that 48 percent of the American people in our latest
"Wall Street Journal"/NBC poll that are not willing to say this guy`s the
religion he says he is.

I`ve never seen this in politics, where people have a basic mistrust
of his national identity, his religious statements. They keep going back
to this, Learn how to be an American. Stop hating America. We got the
Muslim Brotherhood running around here in the government, this government.
We have DeMint, DeMint of South Carolina, the other day saying this is the
most anti-American administration in history.

What`s going on here, Maggie?

HABERMAN: Look, I think that, as you said, there are people who think
that this was deliberate. As Bob said, there are people who think it was
accidental. There is a reason it blew up on Twitter while the call was
going on, which was that there has been, by some on the right, a move to
sort of paint the president as "other."

The Romney campaign has publicly rejected that in the past. I know
Sununu apologized on the call. But you know, there has been this sort of -
- whether it is about race or not about race, it is a way of making him
seem sort of, you know, not one of us, sort of suspicious, and I think
that, you know, this plays into that.

Again, I think that, as Bob said, this was an effort to try to get
Mitt Romney back on offense. Whether it was an intentional statement or
not, that is now the result of it and this is now what is breaking
through...

MATTHEWS: Yes.

HABERMAN: ... countering some of the noise about Bain.

MATTHEWS: Well, Bob, let me get back to your magazine, "The National
Journal." I read it growing up...

COSTA: "National Review."

MATTHEWS: "National Review." I read it growing up as a kid, and one
thing I liked about William F. Buckley is that he took the ethnic, the
xenophobic aspect of conservative out of the movement. He said it`s not
fair to be anti-Semitic. It`s not fair to be anti-foreign. We`re going to
talk ideology in this country.

You`re not suspecting here that maybe Sununu`s playing that game, the
dirty old game of the hard right of making people`s nationality and their
loyalty suspect as part of winning the argument?

COSTA: I couldn`t agree more about Buckley`s leadership, and I think
we still try to follow it today at "National Review." But I think what`s -
- when I was on that call, Chris, in all honesty, I did not hear Sununu
trying to have a dog whistle, trying to make some kind of covert argument
about ethnicity.

I heard him making a mistake and a fumble on an economic argument,
trying to paint Obama as a lefty in economics. I`m not saying it was well
phrased, but I did not hear some suspicious game going on. Maybe I`m
wrong, but I did not hear that...

MATTHEWS: Well, let me tell you...

(CROSSTALK)

MATTHEWS: Let me correct you, sir. You can be on the left on
economics and still be a good American.

COSTA: Agreed.

MATTHEWS: Paul Krugman`s a good American.

COSTA: No disagreement.

MATTHEWS: You just made that mistake again. You can`t say you`re not
American if you`re what you just called a lefty. People -- Keynesian
economics is considered lefty by some people on the right.

COSTA: Right.

MATTHEWS: They don`t believe the government should compensate when
consumers stop spending and business stops investing. I happen to
disagree. I went to grad school in economics. That`s what we believe,
Keynesians believe. But you can`t just call that anti-American.

COSTA: I wasn`t calling it anti-American, I was just trying to report
on what I heard on Sununu`s call.

MATTHEWS: You said -- you said that Sununu was trying to say he was a
lefty by saying he`s not an American.

COSTA: Well, that`s what Sununu was trying to say.

MATTHEWS: They`re two different things.

COSTA: That`s what Sununu was trying to say.

MATTHEWS: Well, you can`t call somebody who disagrees with you about
economics or politics some kind of foreigner or anti-American.

COSTA: Couldn`t agree more. Couldn`t agree more, Chris.

MATTHEWS: OK, thank you. We`re on the same page maybe. Anyway,
thank you, Robert Costa. Please come back. Good reporting, Maggie
Haberman, as always.

Coming up: Yesterday it was Rush Limbaugh who said President Obama
hates this country. Today, as we reported, John Sununu said the president
needs to learn how to be an American. Well, why does the right hate
President Obama so much that it keeps playing this game? Is it as much
about who he is, his background, as it is about what he does in politics?

Also, "Dirty, Angry Money," anonymous donors popping up, spending
millions to defeat Democrats and then disappearing into the woodwork. Is
this sneaky business any way to run a democracy?

And you think Romney`s getting pounded on taxes, wait`ll Democrats
remind everyone that this protector of the rich supports Paul Ryan`s budget
plan to cut the health (ph) of the poor.

"Let Me Finish" tonight with Obama`s duty to sell what he`s done so
far so that anybody out there, all voters, can understand it.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: So how do people feel about President Obama`s proposal to
end the Bush tax cuts for the wealthy? Well, not too badly, actually. A
new Pew poll finds that 44 percent believe raising taxes on people making
more than $250,000 a year would help the economy, while 22 percent say it
would hurt -- that`s a 2-to-1 margin -- 24 percent say it would make no
difference.

So it looks like the president`s done the calculation here, at least
politically. Also by a 2-to-1 margin, Americans say a tax hike for the
wealthy would make the system more fair. Well, that`s obvious. And I`m
glad I agree with everybody.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. Well, as you just heard, Romney
surrogate John Sununu today said he wished the president would learn how to
be an American. By the way, Romney just today in Pennsylvania said he
calls Obama "extraordinarily foreign" in his economic policy -- "foreign"
again. It`s just the latest example of a conservative, including the
president (SIC), questioning the president`s patriotism.

Yesterday, Rush Limbaugh, of course, suggested Obama was indoctrinated
in his youth to hate this country. Take a listen to Rushbo.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: This man hates this country. He
was indoctrinated as a child! His father was communist, mother was a
leftist, sent to prep Ivy League schools, where his contempt for the
country was reinforced. He moved to Chicago. It was the home of the
radical left movement.

This is what we have as a president, a radical ideologue, ruthless
politician who despises the country and the way it was founded and the way
in which it became great!

(END VIDEO CLIP)

MATTHEWS: The walrus speaks. Anyway, Limbaugh`s not alone in this.
Michele Bachmann, of course, called Obama the most dangerous president in
history. Let`s listen to the congresswoman.

(BEGIN AUDIO CLIP)

REP. MICHELE BACHMANN (R-MN), FMR. PRES. CANDIDATE: Now, remember,
this is the same president who whispered to the Russian communist president
that he would be more flexible in his second term. So he sees himself as a
law unto himself, rather than a man bound by the Constitution. That`s why
I say he is the most dangerous president we have ever had in the history of
the United States.

(END AUDIO CLIP)

MATTHEWS: And hear was Senator Jim DeMint last year.

(BEGIN AUDIO CLIP)

SEN. JIM DEMINT (R), SOUTH CAROLINA: It has been the most anti-
business and I consider anti-American administration of my lifetime.

(END AUDIO CLIP)

MATTHEWS: And Newt Gingrich, of course.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), FMR. HOUSE SPEAKER, PRESIDENTIAL CANDIDATE: The
president of the United States, the most radical president in American
history.

(END VIDEO CLIP)

MATTHEWS: Well, of course, he talked about his colonial attitudes --
anti-colonial attitudes. But anyway, based upon the rhetoric, you`d think
the president was a radical lefty and not the center-left politician he
actually is, based on the record. But then, do people care on the right
about reality?

Keith Ellison`s a Democratic congressman from Minnesota. Eugene
Robinson is a columnist for "The Washington Post." He`s also, of course,
an MSNBC political analyst .

I want to start with Congressman Ellison. You`ve been victim yourself
of some of this crapola. But this crazy yahoo talk -- do you think the
people who push this stuff, this malarkey over and over again, the guy
somehow -- this guy`s done everything right.

He`s raised his family right. He`s fought his way all the way to the
top of The Harvard Law Review, in a blind test becomes head of "The
Review," the top editor there. Everything he`s done is clean as a whistle.
He`s never not only broken any law, he`s never done anything wrong! He`s
the perfect father, the perfect husband, the perfect American, and all they
do is trash the guy!

And it`s impossible for me to believe they would have said the same
thing about a Walter Mondale or a Jimmy Carter or a Bill Clinton. There`s
an ethnic piece to this. It`s very hard to nail it down because they
always cover it in ideology. But I`ve never heard anybody in this country
call his opponent regularly anti-American or non-American, Congressman.

REP. KEITH ELLISON (D), MINNESOTA: Well, you know, Chris, there are a
group of people in our country who have a very rigid idea of who belongs
and who doesn`t.

And, in their mind, you know, what -- what economic class you come
from matters, what color you are matters, what is your sexual orientation
matters. There`s a whole set of criteria that they will use to decide who
is included in the American dream. And if you don`t meet those criteria,
you`re excluded. And...

(CROSSTALK)

MATTHEWS: Well, can I help you out here?

Can I -- I think you`re being too technical here. Black Americans
were here in this country before like 90 percent of us white guys, OK?
We`re the immigrants.

ELLISON: Yes.

MATTHEWS: We came in the last 150 years, most of us, Irish, Italians,
Armenians, everybody else, Jewish people, everybody. Most of us came in
the last 100 years.

Your crowd, to be honest about it, has been here since the beginning,
OK? This idea that you`re not an American is absurd. Now, you may not
like somebody.

ELLISON: That`s absurd.

MATTHEWS: But the idea they`re not American is crap.

Your thoughts.

ELLISON: I will agree. I will agree. It is. It`s nonsense.

MATTHEWS: As you should.

(LAUGHTER)

ELLISON: It should be roundly objected to.

And -- but like right now, we`re dealing with a controversy where, you
know, Ms. Bachmann has written letters to various agencies saying that
there`s deep penetration of the Muslim Brotherhood, and is pointing it at a
specific member working in this administration.

You know, so it`s not only the president.

MATTHEWS: Based upon what? What is that based upon?

ELLISON: Based upon nothing, nothing, just bald allegation.

We have challenged her on it. We wrote a letter saying this is wrong
and it`s untrue and prove it. And she has just regurgitated the same old
stuff. So, I mean, we`re -- this is not only the president. It is a
prevailing attitude of trying to kick some people out of what it means to
be an American. This is an ongoing, recurring theme. And we need to stand
up against it.

MATTHEWS: You know, let me bring in -- let me bring in my friend
Eugene.

Eugene, you have a woman, Huma Abedin, who`s married to a fellow who
happens to be Jewish from Brooklyn who has been through some very hard
times, of course all brought on by himself, but she stuck with him. I
would call her a loyalist myself, a real loyalist.

And that`s for her working with Hillary Clinton hand in glove.
Whatever you think of Hillary Clinton, and most of us think a lot of her,
she would be able to suspect someone who was trying to influence her.

Do you think she`s pretty political, Hillary?

EUGENE ROBINSON, MSNBC POLITICAL ANALYST: Yes.

MATTHEWS: And she would note if someone was trying to push a Muslim
Brotherhood line on her? It`s so absurd.

(CROSSTALK)

ROBINSON: She knows a lot about the Middle East. She knows a lot
about -- look, that`s absurd.

I think you have to, you have to tease all of this apart and you have
to separate out those who might sincerely have these crazy views and those
who pick their shots and who come out with this stuff strategically or
tactically I think right now frankly to change the subject from Bain
Capital and Mitt Romney`s tax returns.

I think John Sununu and Rush Limbaugh would love us to be talking
about anything but those subjects, and so they come out with these
eruptions to try to change the subject.

MATTHEWS: Well, it`s not all -- I`m not going to say this is some
brilliant choreography, but here`s Mitt Romney, the candidate himself,
today describing Obama`s economic program as extraordinarily foreign.
Let`s watch the candidate.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: It is changing the nature of
America, changing the nature of what Democrats have fought for and
Republicans have fought for.

In the past, people of both parties understood that encouraging
achievement, encouraging success, encouraging people to lift themselves as
high as they can, encouraging entrepreneurs, celebrating success, instead
of attacking it and denigrating it, makes America strong. That`s the right
course for this country. His course is extraordinarily foreign.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: He snuck it in there, Congressman, through the applause
there, which usually you do to gin up more applause, but he snuck it in
there, extraordinarily foreign.

If I were Romney, given what is going on with his Swiss bank accounts,
and his money in the Caymans, I wouldn`t be talking about foreign economics
because that must be what he might be accused of. I will get my money
abroad and not pay taxes on it.

But here he is once again playing the ethnic card. Foreign, anti-
American. It never stops. Again, nobody ever accused Walter Mondale or
Jimmy Carter or Bill Clinton of being a foreigner in their thinking.

ELLISON: What I want to say, Chris, is that, yes, it does have some
political utility. It works now. But it only works because it strikes a
deeper chord.

And, as a matter of fact, but it`s not only ethnic. I want to stress
that in my view, I think this is akin to what Senator McCarthy was trying
to do, trying to whip up and make people alien, foreign, and then make them
radioactive so you can do anything you want to them.

MATTHEWS: Well, McCarthy was drunk most of the time and wrong all the
time.

(LAUGHTER)

MATTHEWS: There were in fact before he came along a couple of
communists they did find, like Alger Hiss.

But I want to thank you guys.

Eugene Robinson, it`s great to have you on, as always, sir.

And Congressman Keith Ellison, keep it up.

Up next, the first couple on the kiss cam. We`re going to lighten
things up here -- why it took the Obama two efforts to get this scene right
last night. There he goes. Romeo, there he is. Thou dost thou not,
Romeo, or whatever.

Anyway, thanks.

This is HARDBALL. Stay with us, the place for politics.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP, "THE COLBERT REPORT")

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": Obama is now attacking
Romney`s record. It`s like he is hell-bent on making the word Bain
synonymous with a source of harm or ruin.

(LAUGHTER)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I had no role whatsoever in
the management of Bain Capital after February of 1999.

ED GILLESPIE, FORMER REPUBLICAN NATIONAL COMMITTEE CHAIRMAN: He took
a leave of absence and, in fact, he ended up not going back and retired
retroactively to February of 1999.

COLBERT: In 2002, he retired retroactively back to 1999.

(LAUGHTER)

COLBERT: If Mitt wins in November, he`s beaten Obama. And if Obama
wins in November, Mitt can just say he retroactively retired from the race
in 2009.

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS: Back to HARDBALL. Of course, this is the "Sideshow."

Love is on the JumboTron -- JumboTron. Here`s a fun one. The
president and first lady, Michelle Obama, were at courtside as a U.S. vs.
Brazil basketball game last night, along with their older daughter, Malia,
and Vice President Joe Biden.

Well, let`s see what happened when they showed up on kiss cam, the
first time, that is.

(BEGIN VIDEO CLIP)

(CHEERING AND APPLAUSE)

UNIDENTIFIED MALE: We got President Obama on the ever popular arena -
- in-house arena kiss cam.

UNIDENTIFIED MALE: He blew it.

UNIDENTIFIED MALE: I didn`t -- booing him.

He didn`t?

UNIDENTIFIED MALE: I don`t think he saw it.

(END VIDEO CLIP)

MATTHEWS: So, he missed that first love shot. The two got another
shot later in the game.

(BEGIN VIDEO CLIP)

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: Boy, Malia`s cute. Anyway, how many people get a second
try on the kiss cam?

According to the White House, the president and first lady didn`t know
they were on the camera the first time. Hmm.

Next, there`s been some buzz about the uniforms team USA will be
wearing at the opening ceremony for next week`s London Olympics. The Ralph
Lauren uniforms were made, as we all know, in China. Some members of
Congress even called for a complete do-over, a remake of all the uniforms
here in the U.S.

Anyway, Mitt Romney headed up the Salt Lake City Olympics back in
2002. As for the current made in the USA brouhaha, Romney was oddly
evasive last week when asked about it by ABC`s Jonathan Karl.

(BEGIN VIDEO CLIP)

JONATHAN KARL, ABC NEWS NATIONAL SECURITY CORRESPONDENT: Should those
uniforms be made in the USA?

ROMNEY: You know, I`m not going to weigh in on that. The Olympic
Games are about the athletes. And we`re going to watch the athletes
perform, and these other matters are extraneous, I think.

(END VIDEO CLIP)

MATTHEWS: Of course, he says ouch whenever outsourcing is an issue,
but it was also an issue back in 2002. Human rights groups protested they
learned that the torchbearer uniforms were made in Burma, a country ruled
at the time by a brutal military regime.

Well, asked about it, the Salt Lake organizing committee said the
torch relay clothes were not made in Burma. They were manufactured in
Myanmar. Well, Myanmar, not Burma. The fact is, Myanmar is Burma. It
just shows the dangers of a too-quick denial.

And a reminder: Two nights from now, Jeff Daniels, start of the HBO
series "The Newsroom" about a cable news show, something like this one,
will be our guest here on HARDBALL. That`s Jeff Daniels here Thursday
night on HARDBALL.

Up next: more dirty angry money, of course, $14 million of outside
money raised so far to defeat our next guest, Senator Bill Nelson of
Florida. Where`s all that dirty money coming from?

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

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

Well, the Dow gained by 78 points today. The S&P rose 10 and the
Nasdaq was up by 13. Well, stocks ended higher following testimony from
Fed Chairman Ben Bernanke before the Senate Banking Committee. He told
lawmakers that the Central Bank is prepared to take action if needed to
boost the economy.

On the earnings front, Goldman Sachs` profits far exceeded
expectations, but shares ended only slightly higher. And after the bell,
Intel reported earnings that beat estimates.

And that is it from CNBC for now. We`re first in business worldwide -
- now I`m going to hand you back over to HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

Well, dirty, angry money is definitely flowing down into Florida.
Karl Rove, Koch brothers, Sheldon Adelson, all the usual suspects are
trying to influence that Senate race down there. And they`re using big
dollar amounts to do so, the goal, to oust Senator Bill Nelson, who`s
facing off against Republican challenger Connie Mack Jr., who is certainly
not his father. He`s the kid.

And what do the Koch brothers and the Adelson brothers -- or the
Adelson family want out of all these deep contributions?

Well, Senator Bill Nelson`s with us now.

Why would a guy named Sheldon Adelson, who`s all made his money, fair
enough, over in Macau, over in China -- apparently, he makes more money
every night in his casinos in Macau in China than they make in Vegas
overall.

So, L.V. Sands is booming. Why does he want to nail you?

SEN. BILL NELSON (D), FLORIDA: Chris, I don`t think he cares about
Florida.

I think he is just symptomatic of the others that are throwing money
in because they want to buy elections and have the public policy enacted
what they dictate. And so I think it`s pretty clear. We`re seeing the
influence of money coming in.

But, you know, at the end of the day, I don`t think it`s going to be
successful. I think the American people are going to really stand up on
this one.

MATTHEWS: Yes.

Well, it`s this funny money. We have got a count here, $15 million.
Let`s look at the figures, Senator. Look at this. Karl Rove`s super PAC,
American Crossroads, announced last week they had reserved over $6 million
in airtime this fall to run against you. Then Las Vegas casino mogul
Sheldon Adelson, I mentioned, has given a million dollars to a pro-Connie
Mack super PAC. And the Koch brothers, of course, from the oil and gas
industry, their group, Americans for Prosperity, their prosperity, has
spend a million dollars in the race.

In total, outside conservative groups are spending nearly $15 million.
It`s not even part of the official campaign.

Now, let`s go down the list here. You`re very pro-Israeli. Sheldon
Adelson, fair enough, cares about it. He is hawkish on Israel. You`re
pretty hawkish. What has he got? Has he raised any issue with you on
foreign policy, anything that really would justify a voter switching sides
down there?

NELSON: The short answer is no.

And at least we know who Sheldon Adelson is, because he`s not hiding
behind these IRS (c)(4) organizations that don`t have to disclose their
donors. And, of course, that`s why we had the legislation trying to get it
considered -- and it was blocked with a filibuster -- in order to disclose
the names.

Just like all the rest of us have to disclose our contributors, why
shouldn`t they? But it`s because they can hide behind that masquerade,
and, therefore, they can give their billions of dollars, and not be known.
If you required a lot of those donors to put their names out there in the
public, like everybody else has to, they wouldn`t do it.

MATTHEWS: Well, you know, in Pennsylvania and other states now, you
can`t vote. If you`re just a little person, a regular human -- I shouldn`t
say little -- a regular human being in this country who is an American, and
you want to vote, you have got to get a photo I.D. card issued by the
government.

You have got to walk in with that photo I.D. These people can walk in
with millions of dollars and never show their face.

NELSON: That`s correct.

And, by the way, just to add insult to injury, in the state of
Florida, the legislature has passed what in effect is a voter suppression
law specifically to cut down on the amount of minorities, specifically
Hispanics and African-Americans.

So they`re really stacking the deck here. You take those kind of
efforts that make it harder to vote, and then add that with this avalanche
of TV advertising that is attack -- and, by the way, all the stuff that has
been run against me, the fact-checkers like PolitiFact and the Annenberg
school, they all said, it`s not only false, it`s pants-on-fire false.

MATTHEWS: Yes.

NELSON: And, yet, that`s what the public is being dished.

Now, Chris, you and I know, you put enough TV advertising, you can
sell a box of soap.

MATTHEWS: Yes.

NELSON: And so that`s what we`re up against, and that`s what I`m
fighting.

MATTHEWS: And they`re also trying to confuse Connie Mack with his
father.

Anyway, thank you very much, Senator Nelson, a moderate Democrat who
ought to get reelected.

Anyway, turning now to Jonathan Weisman, the congressional
correspondent for "The New York Times."

Thank you for telling us about how this works, where people go in almost
like a hit squad. They go into a state like South Carolina. They go after
a guy like John Spratt, again, clean as a whistle, moderate Democrat,
budget chair for all those chairs, budget hawk. No liberal. And they kill
the guy and you still don`t know even know who put the $4 million check on
the table.

Tell us about it.

JONATHAN WEISMAN, NEW YORK TIMES: Yes, John Spratt has no idea. You
know, this is a group called the Commission for Hope, Growth and
Opportunity. It was founded in 2010. Scott Reed, you might remember he
was the campaign manager for Bob Dole, he announces this organization. He
says, you know, it`s going to be a $25 million organization. It`s going to
have the backing of all these different industries.

But they go to the IRS and they say we want to be a non-profit social
welfare organization. We`re not going to be involved in electoral
politics. Don`t worry. They get that, that designation from the IRS.
Therefore, they don`t have to divulge the names of their donors.

They quickly get one $4 million donation from one anonymous donor and
immediately go on the air against 11 Democrats with just brutal ads. Their
real focus, as you said, was John Spratt. He was the chairman of the
budget committee of the time, one of only three committee chairman taken
out in 2010.

You know, they accumulate all of these different complaints to the
FEC, to the IRS, saying these guys are just breaking the law, breaking the
law, breaking the law and then what happens? 2011, they just go out of
business and there`s nobody to go over after.

MATTHEWS: So there`s nobody coming on the air man or woman saying my
name is this, and I paid for this ad. People learned -- they simply
learned all these terrible things about a good guy like John Spratt and I
mean that. I don`t think he was -- he was a moderate Democrat, a budget
hawk, and he fit that district pretty well for a Democrat.

And then to have somebody come in, and basically just -- do we know
if this person has a particular knowledge of John Spratt, or a particular -
- why did they pick him?

(CROSSTALK)

WEISMAN: When I asked John Spratt that, he didn`t really know. His
idea was look, if you take out the budget committee chairman, you going to
undermine the entire fiscal policy of the Democratic Party and, especially
the president -- of President Obama. He thought it came down simply to
that. It was obviously a big trophy in 2010.

MATTHEWS: The funny thing is, I mean, I`d say funny in the worst
way. Spratt made sure there was a budget every year in the House. He came
through. Unlike the Senate in many cases, he actually delivered on the job
even though it was tough to do it.

He`s always been a moderate and smart guy. This is a real loss.
It`s really political terrorism, this kind of money going in with no name
on it.

Anyway, thank you -- from "New York Times", Jonathan Weisman joining
us tonight.

WEISMAN: Thank you.

MATTHEWS: Up next, if you think Mitt Romney`s getting hurt on Bain
Capital, just wait until the Democrats start hitting him for supporting
Paul Ryan`s budget plan. What do you get in this?

There`s stuff in this plan that he`s going to have to pay for like
cutting Medicare and Medicaid while protecting the wealthy on taxes. In
other words, every dollar that doesn`t go to somebody that needs an
operation, sits in the pocket of somebody with a lot of money. Is this the
way we want to run this country?

It`s HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: President Obama put Iowa back in the Democratic column in
2008. But this year, the race has been nip and tuck. We`ve got a new poll
from Iowa. Let`s check the HARDBALL scoreboard. PPP poll shows a
president with a five-point lead over Mitt Romney in the Hawkeye State, 48-
43. Other polls have called Iowa a toss-up, so this could be good news to
the Obama camp.

We should note that PPP tends to skew slightly Democratic.

We`ll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: Don`t tell me that
you value and are deeply concerned about seniors if in fact you eviscerate
the things that you know they rely on. Not only for their well being but -
- I`ll return to this -- for their dignity, for their dignity and their
pride.

They made a clear choice: lower the standard of living for those on
Medicare and Medicaid rather than ask anything of the wealthiest among us.

(END VIDEO CLIP)

MATTHEWS: There you have it, and we`re back.

That was Vice President Joe Biden yesterday at the White House in a
briefing for senior citizen`s issues with a critique of the Paul Ryan
budget, which Republicans, including Mitt Romney, do support. Democrats
are convinced that the Ryan budget will become toxic once the public
understands how harsh it is on people, how harsh its cuts and how deep they
do cut. The Biden speech will be a harbinger in many cases, we believe, of
attacks that could come this fall.

With me now is Chris Cillizza, MSNBC political analyst and author of
"The Gospel According to the Fix" -- there it is in hardcover. And Erin
McPike, national political reporter for "Real Clear Politics".

Chris, you`re the great political watcher, moment by moment, hour by
hour. You know what`s going on.

This Biden attack on the cuts Medicaid, Medicare, which affect not
just poor people, but in the case of middle class people, Medicare
operation, procedures you won`t be able to get, whatever goes on, it`s
going to hurt people.

At the same time, this fella, Paul Ryan, who advertised the fact he`s
a fair budget cutter is protecting the rich while he hurts the poor.

Obama has never endorsed Ryan, of course. But the other guy has.

Is this going to be an issue?

CHRIS CILLIZZA, MSNBC POLITICAL ANALYST: Well, Democrats certainly
think so, Chris, and I would say that this is -- you mentioned Biden made
these comments to a group of seniors. I think this is an attack or a point
that Democrats think wins them the most points, the most credibility,
really cuts against Romney the most 60 plus voters, talking about Medicare
and Social Security. We refer to it as the third rail of American politics
for a reason.

Back in 2005, George Bush tried to do something with Social Security.
We know how that wound up. And so, that`s the danger with Paul Ryan
talking about fundamentally reimagining Medicare, basically ending Medicare
as we know it, turning it into a voucher program.

I`ll point this out, Chris, in both 2004 and 2008, 60-plus-year-old
made up about a quarter of the presidential electorate. McCain won them by
four. George W. Bush in `04 won them by eight.

Obama just wants to narrow that gap or not lose them badly, because
he`s not going to win the election there but could lose it. So he wants to
keep it narrow among seniors. They think this is certainly a way to do
that.

MATTHEWS: You know, Erin, my dad was pretty conservative Republican.
But the one thing he liked was Medicare. You know. He worked all his life
and said finally I get something for all the money I paid into the
government.

Medicare doesn`t -- really popular among people over 65. They really
like it.

And now to come along and threaten to cut it or turn it into a
voucher program, as Chris says, could be really political suicide for the
Republicans.

Do you sense that Biden is out there like advertising what`s to come
of a preview of a movie coming?

ERIN MCPIKE, REAL CLEAR POLITICS: Oh, absolutely. And President
Obama is going to Florida actually on Thursday and Friday for a couple of
events and I expect that he`ll talk about it then. I mean, look, as Chris
mentioned, this is an important thing with senior citizens and, as you
mentioned as well, in Florida -- and I think that`s the reason why Paul
Ryan is not as hot a commodity in terms of the veep stakes right now
because so many Republicans I have --

MATTHEWS: Well said.

MCPIKE: -- I have spoken to said that if he is Mitt Romney`s running
mate in Florida, it would damage the Republican ticket with senior
citizens.

MATTHEWS: Well, today in "MORNING JOE," MSNBC political analyst John
Heilemann talked about a newly released survey by democracy court showing
the Mitt Romney is vulnerable to attacks for his support of Ryan. Let`s
watch.

(BEGIN VIDEO CLIP)

JOHN HEILEMANN, MSNBC POLITICAL ANALYST: To go around independent
voters, swing voters, and explains them what`s in the Ryan budget on
repealing child tax credit, on education cuts, Medicare, some of the stuff
you talked about, Steve, it is one of the things Mitt Romney is most
vulnerable. Vice president is a leading indicator of where the campaign is
going now because they think with swing voters, independent voters, if you
spell out the implications of the Ryan budget, it`s horrible for Romney.

(END VIDEO CLIP)

MATTHEWS: Well, I guess the real question is if there is going to be
pain all around, I think even seniors would understand that. They know
what`s going on. These are tough times. They don`t want to screw the
young people.

But when they see Romney or they will be told Romney wants to protect
the tax breaks for the very rich people, makes sure nobody pays even 39
percent of their income, will they wonder why are we getting cut in
Medicaid -- Medicare?

CILLIZZA: Well, you know, Chris, I think that`s certainly what Obama
and Democrats hope to say. You heard Biden in that clip you played at the
top of the segment saying that -- they have shown what they care about and
values are.

I continue to return to this over and over again -- that presidential
elections are very rarely decided by people going -- undecided voters going
to the two Web sites of the candidates, looking at where they stand on
every issue, checking the box on which one you agree with, counting up the
checks on one side, counting up the checks on the other side, and voting
for the guy have you more checks with.

It winds up being about values. It`s a feel vote. It`s a heart
vote. It`s who understands me better, who empathizes? Who sympathizes?

And I think that`s what Biden is trying to use the Ryan budget, to
say, look, they have laid out their priorities. It shows that they don`t
share your value, senior citizens. I think that`s really kind of the
broader context of the argument that the Obama campaign is going to put
forward.

MATTHEWS: Well, that`s right. Erin, you last word here seems to be
people hate the word socialism. But when it comes to people in 60s, 70s,
80s, who paid into a program their whole life, they don`t consider it
socialism, Medicare.

MCPIKE: Not at all. And just again, I mean, this is what we`re
going to be seeing. I think it`s going to be a bigger issue in October as
we are going into the debates. We`ll hear about it a lot in those debates.
I talked to some of the super PACs today who are supporting the president
and they, of course, plan to make this a big issue later this fall.

MATTHEWS: So, Ryan is not on the ticket. Do you agree with that,
Chris Cillizza?

CILLIZZA: I don`t -- I do agree because I don`t think Mitt Romney
wants to double down on a plan he had nothing to do with the writing now,
Chris. And tie himself very closely --

MATTHEWS: Well --

(CROSSTALK)

CILLIZZA: -- Republicans who are not popular.

MATTHEWS: OK, the plan, not the man.

CILLIZZA: I mean, I think Ryan without the plan is appealing. But
Ryan without the plan isn`t Ryan.

MATTHEWS: Well, I think he`s going to be Ryan all over this ticket.
And the other side has anything to say about it. He`s got Ryan as a
running mate whether he likes him or not.

Anyway, thank you, Chris Cillizza. Thank you, Erin McPike.

When we return, let me finish with Obama`s duty to sell what he`s
done so that anybody, 2-year-olds, can understand it. He`s got to do some
explaining. He certainly has the ability to do it. I think he has four
months to do it and I think he should.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this: I want President Obama to
focus on something between now and November. I would like him to speak
similarly and clearly to this country about what he`s accomplished.

I have said simply and clearly. Remember Denzel Washington in the
movie "Philadelphia"? He played the lawyer who told prospective clients to
explain this to me like I`m a 2-year-old. Well, I know what that means --
no fancy words, no jargon, no language that shows how smart you are, just
clear and basic and real.

Obama rescued the American car industry. We are back -- what we were
proud of and excited by as kids, we`ve gotten back. And the biggest reason
is this president did what was necessary.

He rescued the industry. It wasn`t a bail out. It was a rescue. So
call it that. That we, this country, rescued our auto industry.

Second, this country pulled itself back from the economic abyss we
saw right there in our face in 2008 and 2009. We did it by using the
smartest, most state-of-the-art thinking of our great universities, stuff
that Nobel Prize winners like Paul Krugman teach. We saw the huge drop in
consumption, a huge pullback in investment. And we, the American people,
countered it with a giant commitment in public investment, that Jobs Act of
2009, just when we needed it to prevent a second Great Depression.

Third, that health care bill. We as a country faced up for the first
time in our history to our duty. We agree every American has to take
personal and family responsibility for their health needs and agreed as a
country to meet our duty on health and millions rely on emergency rooms.

We agreed that every American should meet their own health duty, not
to dump the cost on someone else. It`s the president`s duty now to tell
people. This country`s middle class that has health insurance and people
that have health challenges, how this act will make things better for him.

He needs to sell his auto rescue plan, his jobs act, his healthcare
act, as if he were talking to a 2-year-old. And he can do it.

And that`s HARDBALL for now. Thanks for being with us.

"POLITICS NATION" with Al Sharpton starts right now.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

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