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updated 8/6/2012 9:44:09 AM ET 2012-08-06T13:44:09

Guests: Steve McMahon, Todd Harris

CHRIS MATTHEWS, HOST: If you want a crowd, start a fight.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews down in Washington.

"Let Me Start" tonight with this. One of my rules of politics is that
if the truth about a politician is better than it appears, they`ll come out
and tell you. If, however, the truth is worse, the politician will clam up
and stay clammed.

Mitt Romney has refused to release his income taxes over the years.
All he`ll put out is that 2010 return. He promises to put out his 2011
returns. So what about all the years he was swashbuckling at Bain, all
those decades when he was making the big money? Did he pay taxes in those
years, like regular people? And if not, why not?

Harry Reid, the Democratic Senate leader, is now on the hunt for
Romney. Reid says Romney`s sitting on 10 years of not paying any federal
taxes at all. Romney says Reid should put up or shut up, but hey, isn`t
Romney the one refusing to put up?

Let`s hear from David Corn of "Mother Jones" and Robert Costa of
"National Review."

Gentlemen, this fight has gotten to be a street fight. It`s livened
up. I don`t know whether Reid is playing surrogate or what he`s doing,
unusual (ph) for him, but he`s popping this guy.

DAVID CORN, "MOTHER JONES," MSNBC POLITICAL ANALYST: Well, what --
and what he`s doing is he`s taking up the oxygen. Any time that Mitt
Romney is attacking Harry Reid because Mitt Romney has not released his
taxes, that`s a really good day for Barack Obama.

MATTHEWS: Yes.

CORN: I mean, he`s -- this is a tar pit. And Harry Reid has drawn
Mitt Romney into this tar pit again and again in the last day or two. And
he`s damned if he does and damned if he doesn`t.

MATTHEWS: Well, what happens if he comes out and says I only spent
seven years without paying taxes, you were wrong?

(CROSSTALK)

CORN: ... paid 5 percent.

ROBERT COSTA, "NATIONAL REVIEW," CNBC CONTRIBUTOR: "National Review"
has editorialized that he has to release the returns. This thing keeps
festering. I spoke to Romney last week. He said, Look, Bob, if I release
them, Democrats are going to distort my financial returns and his records.
Well, guess what? They`re distorting them already!

MATTHEWS: You got close to Romney?

COSTA: I interviewed him last week.

(CROSSTALK)

MATTHEWS: ... anyway, a relentless drumbeat about his tax returns are
hitting Romney. Let`s go look. The Democrats may have found a way to pry
him open and shake something loose in this little kerfuffle. Harry Reid
refused yesterday on the Senate floor to back down. Let`s listen to him.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: The word`s out that he
hasn`t paid any taxes for 10 years. Let him prove that he has paid taxes.
Because he hasn`t.

(END VIDEO CLIP)

MATTHEWS: Boy, that`s talking soft and carrying a big stick. Today
on Reid`s home turf, Las Vegas, Romney hit back. Let`s listen to him.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R-MA), FMR. GOV., PRESIDENTIAL CANDIDATE: Harry Reid
really has to put up or shut up, all right? So Harry, who are your
sources? Let`s -- let`s -- let`s have Harry explain who that is.

And by the way, Harry, I understand what you`re trying to do. You`re
trying to deflect the fact that jobs numbers are bad, that Americans are
out of work. And you`re trying to throw anything up on the screen that
will grab attention away from the fact that the policies of the White House
haven`t worked to put Americans to work and the policies of the Senate
haven`t even got a budget in place for three years.

Let me also say categorically, I have paid taxes every year, and a lot
of taxes. A lot of taxes.

(END VIDEO CLIP)

MATTHEWS: OK, but last night, Senator Reid reinforced his attack,
releasing a statement that says, in part, "I was told by an extremely
credible source that Romney has not paid taxes for 10 years."

Now, it seems to me what Romney`s trying to cover up there is not
Obama`s (ph) and the economy and all that, which is mixed news today, but
he doesn`t want to release his tax returns. Why not?

COSTA: He does not want...

MATTHEWS: What`s he hiding?

COSTA: I have no idea what he`s hiding. That`s the big question. We
don`t know who Reid`s source is. We don`t know what he`s hiding. And
until we do, it`s just all going to be speculation.

But I saw a little bit of spunk from Romney there, saying, Put up or
shut up, to Reid. But you`re right, Chris, this thing is not going to go
away. Romney thinks he can keep moving on to the economy, talk about other
issues. But David was right. This thing keeps being about taxes.

MATTHEWS: How can a nonpartisan moderator of the debate say -- we
have the first presidential debate -- and it`s on domestic politics -- how
can that -- not that I would have any influence over such...

UNIDENTIFIED MALE: Of course not.

(LAUGHTER)

MATTHEWS: ... nor will I be selected, but I got to tell you, they
cannot not ask this question.

CORN: Oh, this question...

MATTHEWS: They have to ask if it hasn`t been answered.

CORN: This question is not going away until election day. There`s
only one way it goes away, and that is if he releases the taxes. But I`m
with you, Chris...

(CROSSTALK)

COSTA: ... pull off the Band-Aid and let it out there.

CORN: I`ve been saying this for weeks. Why do you go with a slow,
bleeding wound? Because ripping open the chest cavity...

MATTHEWS: Worse.

CORN: ... is worse. And Mitt Romney is the only guy probably in his
campaign who fully knows what`s on the taxes...

MATTHEWS: OK, let`s speculate here. It`s fair enough. It`s the
issue, it seems to me, of paying the right amount. If he ends up paying
25, 30 percent, he`s in clover. But if it looks like he got off with,
like, 10 or 15 percent, if it looks like he really skated on huge incomes
and not paid a reasonable amount -- most Americans out there are looking at
a pretty good tax bill.

(CROSSTALK)

CORN: Excuse me. There`s a lot of other things that could be in the
tax returns -- you know, Swiss bank accounts, other offshore havens,
getting, you know, forgiveness from the Swiss banking authorities for doing
something that was not maybe even legal but it might have been shady...

MATTHEWS: (INAUDIBLE) see attachment 20.

CORN: Exactly. So it`s not just the rate of return. There`s so
much...

MATTHEWS: OK...

(CROSSTALK)

COSTA: It`s not so much what`s in the return. We already know Mitt
Romney`s wealthy. I think the real issue here is transparency. I think
that`s what the Democrats have a real issue...

MATTHEWS: No, the issue is fairness too.

(CROSSTALK)

MATTHEWS: People don`t like the idea of people who make money off
money not paying the taxes that you or I pay off (ph) working.

CORN: Or if he bet against the U.S. housing market, if he paid more
in overseas taxes than American taxes because of tax dodges -- people have
been speculating for weeks, and this won`t stop just because Harry Reid is
getting into a fight...

(CROSSTALK)

MATTHEWS: ... his towel boy here is working on it. I shouldn`t all
him that -- his senior adviser, Eric Fehrnstrom, ramped up the fight when
he compared Harry Reid to Joe McCarthy? Let`s listen to this one.

(BEGIN VIDEO CLIP)

ERIC FEHRNSTROM, ROMNEY CAMPAIGN SENIOR ADVISER: This reminds me of
the McCarthy hearings back in the 1950s. And it was another son from
Massachusetts then, Joseph Welch, who finally asked the question that
should be asked of Harry Reid, which is, Have you no sense of decency, sir?

MATTHEWS: That is the lamest flackery I`ve ever -- there`s no
comparison! Have you now or have you been a tax avoider? I mean,
that`s...

(CROSSTALK)

COSTA: It goes again -- Boston`s message is that this is a frivolous
issue. It goes -- it`s a distraction. But if you`re comparing it to the
McCarthy hearings, it means it`s a pretty serious issue.

MATTHEWS: Why did his dad report 12 years?

COSTA: I think...

MATTHEWS: Why did George Romney give 12 years of taxes?

(CROSSTALK)

COSTA: ... one thing about George Romney. Harry Reid bringing up
George Romney I think was a little bit of a low blow, and it gives Romney
almost...

MATTHEWS: OK, here`s why it`s an issue -- for anybody watching.
What`s Romney`s big proposal on the economy?

(CROSSTALK)

MATTHEWS: It`s a relentless effort to give tax relief to the people
at the top.

(CROSSTALK)

COSTA: ... every bracket gets cut...

MATTHEWS: And now we find out -- he`s already hardly paying any
taxes. He wants further tax breaks. Meanwhile, they want to cut all these
entitlement -- all these health care programs.

CORN: It is inconceivable in the modern era that you can have a guy
who`s worth anywhere from a quarter of billion dollars to a billion dollars
who won`t give a somewhat full explanation of where that money came from
and how he got it and what he`s done with that money and how it might even
be impacted by his presidential decisions.

MATTHEWS: I started by saying the old P.T. Barnum -- give credit to
him. I always do that. P.T. Barnum -- If you want a crowd, start a fight.
It was the old technique. The circus is coming to town, get a couple guys,
roughnecks, to get in a little fight on the street corner, then start
passing out handbills. It as a great old technique before TV and radio and
all that.

But here`s my question. Why would Mitt Romney get into a fistfight
with Harry Reid? Why would he...

(CROSSTALK)

COSTA: It`s a mistake on Romney`s part. Harry Reid drew him into the
fight, wanted to not talk about the jobs report today, talk about the tax
returns --

MATTHEWS: Why did he have a flack go out and say there`s no basis for
that charge?

COSTA: I don`t know why.

MATTHEWS: Do you know?

COSTA: It seems like it`s playing into the Democrats` strategy.

(CROSSTALK)

MATTHEWS: ... say there`s no basis for that.

CORN: This is a fight that Mitt Romney cannot win. He can try to
duck it. He can`t do that successfully. But when he gets out there and
tries to make the issue Harry Reid`s source, rather than his own taxes,
it`s a bad strategy. It`s not going to work. And this impression that he
doesn`t -- he`s not transparent on his bundlers in his campaign. He`s not
transparent about his personal finances. He won`t explain the details of
his tax policy...

MATTHEWS: OK, here`s the guy...

CORN: It`s all the same thing.

MATTHEWS: Let`s take a look at someone trying to get the information
out of him. Romney does not give an inch on this question. Even when
asked broad questions about his tax rates, speculative questions, he
doesn`t. Let`s listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We know that there was one year when you paid
about a 13.9 percent tax rate. Can we clear this up by asking you a simple
yes or no question? Was there ever any year when you paid lower than the
13.9 percent?

ROMNEY: I haven`t calculated that. I`m happy to go back and look,
but my view is I have paid all the taxes required by law.

(END VIDEO CLIP)

MATTHEWS: Was that funny? Why was he laughing? Anyway, as far as we
know, Romney has not updated ABC News on his taxes (INAUDIBLE) ABC report
(ph).

Let me ask you this. Why does he make that idiot kind of laugh when
he`s making a point about his taxes?

COSTA: Chris, I`m not going to comment on a laugh!

CORN: It`s nervous laughter!

(CROSSTALK)

COSTA: I`m a reporter for "National Review." I talk to top
Republicans all the time. When they see an answer like that, they say the
same thing to me. Everybody says the same thing. Why wasn`t he prepared
for this? Why wasn`t he ready to address these questions? These questions
were always going to come. That`s the question on the right.

CORN: Well, you know what? The...

COSTA: Give his laugh a break!

CORN: I mean, you guys on the right...

(CROSSTALK)

CORN: ... and the guys -- you know, and the party should have been
maybe a little tougher in the primaries when people were raising these
issues and he was ducking then, realizing that if he couldn`t answer it
back then, he`d have a hell of a harder time in the general election.

MATTHEWS: How come Santorum didn`t jump on this? Because he was the
populist conservative, right?

COSTA: Conservatives were pushing for this in the primary, but it
wasn`t a central issue because Republicans don`t play this game about tax
returns. They`re talking more about who`s better to beat Obama. It
wasn`t...

(CROSSTALK)

MATTHEWS: Who`s the best accountant, right?

(LAUGHTER)

CORN: Well, who`s more right and who`s...

MATTHEWS: OK, now we`re going to talk about the economy right
(INAUDIBLE) but I think what he`s done is he stepped on what could have
been a fairly good story for him today, which is the fact the unemployment
rate went up to 8.3. He didn`t. He focused on his own economic mystery
story, which is always good in politics because we always want the rest of
the story. Why did we get mad at Jerry Ford for pardoning Nixon? He
closed the books on Watergate.

CORN: Exactly.

MATTHEWS: And we didn`t want the books closed. We wanted to find out
what happened.

Anyway, thank you, David Corn. A mystery is afoot here, sir, Robert
Costa.

(LAUGHTER)

MATTHEWS: Coming up: Mitt Romney may not have shown much in recent
weeks, but he thought he could always count on a bad economic report to
buoy him up. He didn`t get it today, not the way he likes it.

Also, if you think you`ve seen a lot of political ads lately, just
wait. More money from a few deep pockets will flood a handful of swing
markets and right up -- in fact, right up to the end, despite being
outspent over the past month, it`s Obama`s ads that seem to be connecting.

And Republican Steve King, king of the crazies. He`s defending dog
fighting, calling for a concrete wall to separate the U.S. from Mexico.
More birther conspiracies keep piling (ph) out of his mouth. And that`s
just in the last few days. Steve King, king of the crazies.

And who says the entertainment industry hates Republicans? Mitt
Romney just got an endorsement from Jenna Jameson (ph). You know her?
She`s the star of the kinds of movies you don`t take your mom to. That`s
in the "Sideshow."

This is HARDBALL, place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Well, the U.S. Congress has gone on its summer recess, and
it leaves town with the distinction of being the least popular and least
productive Congress in modern American history. And it might not improve
any time soon. That`s because two more freshman Republicans won their
primaries last night in Tennessee, making the historic 87-member freshman
class of last year -- two years ago, the Republican Party, undefeated in
primaries this year.

In other words, all those right-wingers elected with Tea Party support
in 2010 are staying on.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. It`s been a bad few weeks for
Mitt Romney and his campaign, and it`s shown in recent polls. The Obama
campaign has hammered Romney on his taxes, and his big trip overseas only
succeeded in highlighting one gaffe by him after another.

Yet for the past few months, Romney`s one big trump card has been that
on the first Friday of each month, he`s been able to refocus the
conversation on the bad economy based on the government`s jobs report.

Well, today we got new numbers. And unfortunately for Romney, and
fortunately for Obama, they were better than expected. The government
added -- counted 163,000 new jobs in July, a dramatic increase from June,
which was about 60,000-some. The unemployment rate inched up to 8.3, but
that was really because, economists say, more people were out in the labor
force trying to get work.

The markets weighed in and gave their approval. Look at this, the Dow
Jones responding to the economic news, up over 200 points, 217 points in
the Dow after getting the economic news today.

Well, this morning, Mitt Romney and President Obama both responded to
the news in their separate ways. Let`s watch.

(BEGIN VIDEO CLIP)

ROMNEY: We just got a new number from the unemployment report, and
it`s another hammer blow to the struggling middle class families of America
because the president has not had policies that put American families back
to work! I do! I`ll put them in place and get America working again!

(CHEERS AND APPLAUSE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We haven`t had to come
back from an economic crisis this deep or this painful since the 1930s.
Here`s the thing. We are not going to get there -- we`re not going to get
to where we need to be if we go back to the policies that helped to create
this mess in the first place.

(END VIDEO CLIP)

MATTHEWS: So as we enter a critical period in the presidential race,
the question is, what does all this mean for Romney`s campaign?

Mark Halperin is editor-at-large for "Time" magazine and he`s a senior
political analyst here for MSNBC. And Eugene Robinson is a columnist for
"The Washington Post" and a political analyst, as well, for MSNBC.

Mark, this number -- I meant what I said. Normally, Romney can get --
if he can make it until Friday, the first Friday of the month, he`s in good
shape. Right now, I think it`s a little better than mixed, 163,000 new
jobs compared to about 60,000 last month, more people trying to get work,
which is a good sign, in a weird way, but the rate did go up to 8.3. But
I`m looking at the Dow, the Dow, to give the verdict, and the verdict was
very positive today.

MARK HALPERIN, "TIME," MSNBC SR. POLITICAL ANALYST: Well, Chris, in
Washington and New York, we can talk about those numbers and try to imagine
what they`ll do to the electorate.

I think the president can win with the economy this bad. And that`s a
bit of a change in the C.W. from what I think it was before. But I think
what matters is how real people are experiencing the economy. And whether
it`s 160,000 or 40,000, whether it`s 8.3 or 8.2, I don`t think that matters
nearly as much as how people are experiencing things.

And I think the Romney campaign is right, that people continue to
experience the economy as weak and continue to worry that businesses are
reluctant to invest until they see more certainty about Europe, about the
fiscal crisis and about what direction Washington`s going to go.

MATTHEWS: What strikes me, Gene, is we keep looking at polls, like we
all do around here, and you would think Romney, coming from a business
background and being the potential relief pitcher here -- he doesn`t do
much better than the president in these match-ups on who can deal with the
economy.

EUGENE ROBINSON, "WASHINGTON POST," MSNBC POLITICAL ANALYST: No, he
hasn`t really made the sale on the central thesis, really, of his
candidacy, which is that he can fix the economy and Obama can`t, but he
can.

Why hasn`t he made that sale? Well, we know where his favorable
ratings are. We know that he hasn`t been specific, and to the extent that
he has been specific, those policies sound familiar.

You know, I actually think the whole question of his personal finances
comes into play, too, as to, you know, if there`s something he won`t tell
us about that -- what is he not telling us?

MATTHEWS: Yes, murky.

ROBINSON: He hasn`t -- if he doesn`t make that leap, I frankly don`t
see how he wins this election.

MATTHEWS: Yes, well, let`s take a look at the latest "New York
Times"/CBS/Quinnipiac poll. In three key battleground states, Obama and
Romney are neck and neck on the question of who do voters trust to do a
better job on the economy. Look at those numbers.

They`re pretty even, Mark. And I think that is amazing because you
figure Obama has the strength on foreign policy, to some extent, he`s more
likable -- we`ll get to that in a minute -- and he`s the incumbent. And
you would think that with the economy as weak as it`s been, the challenger
would always look better.

HALPERIN: The votes who are going to decided this election, Chris, I
just don`t think have paid attention to Mitt Romney. This race, from the
point of view of Chicago and Boston, I think, is always going to come down
to one thing, assuming the economy didn`t improve. Could Chicago knock out
Mitt Romney? Could they make him unacceptable?

They`ve done a very good job for the last two-and-a-half months
putting things in that direction. I think, to some extent, the election`s
going to come down to, on the personal side, on the question of dealing
with the economy, Romney`s VP choice, convention speech and debates.

If he performs in those, if he hits his marks in those on the personal
side and on the economic side, I think he`ll win, and the Obama campaign is
going continue to do whatever it can to throw him off his stride, to use
allies like Harry Reid, to make it harder for Romney day to day to be ready
for those big moments.

MATTHEWS: Let me ask you -- - you`re the expert on this. Do you
think he could win an election -- I remember Jerry Brown doing it years
ago, winning an election in the summer, when nobody`s really watching -- in
other words, destroy (INAUDIBLE) younger, he did that back in his
reelection.

Can you do that in a presidential election, knock the guy out of the
box before Labor Day?

HALPERIN: I think you can. I don`t think they have done it.

I think they have done serious damage to him. There have been many
days in the last two-and-a-half months where the discussion wasn`t about
the president`s record on the economy, but rather about Mitt Romney`s
finances, about Mitt Romney personally, and about Mitt Romney`s policies
that Democrats can argue the country would prefer -- would like even less
than what the president`s done.

I don`t think they have knocked him out. I think they have laid down
a pretty solid foundation. As I said, if Romney hits his marks, veep pick,
convention speech, debates, I think he has got an excellent chance to win.
I think he probably would win. But I think the president and his allies
and his staff are doing and will continue to do a pretty aggressive and
good job at defining the election on their terms, making Mitt Romney not an
acceptable alternative.

MATTHEWS: Same to you, Gene.

I just wonder. Can you knock the guy out even if you have a fantastic
August of blasting the guy? Can you knock him out of the ring so he can`t
come back no matter what he does?

ROBINSON: I think you can.

I don`t think the Obama campaign has definitively knocked him out.
He`s not knocked out. He`s been damaged. Look, Obama won the summer. He
has won the summer. Romney wants to win the fall.

(CROSSTALK)

MATTHEWS: I love the way they do this. I didn`t know you could do it
in a presidential election, knock a guy out this early.

But let`s look at this "USA Today"/Gallup poll from late last month on
the question of who is more likable. I was talking about that briefly.
Twice as many people say the president. I don`t know how you can render an
opinion on Romney, to be blunt about it, because he doesn`t seem to have a
public personality.

I have heard different views of what he`s like in private. He doesn`t
show a personality.

ROBINSON: Well, the Obama campaign has gone out of its way to give
him a personality, to give him an unattractive personality. He`s a selfish
rich guy who laid you off.

MATTHEWS: Yes, that`s true.

ROBINSON: Or that`s what they`re trying to point. And, look, Romney
did not define himself. Therefore, the Obama campaign has gotten to define
him in the minds of the voters.

And that`s very dangerous I think for Mitt Romney. As Mark said, he`s
going to have to hit some marks.

(CROSSTALK)

MATTHEWS: Perfect execution, yes.

But I wonder whether Perfect execution -- let me ask you, Mark,
quickly, this thing about personality, you sort of have it or you don`t.
George Herbert Walker Bush didn`t seem to have one until he got to the
convention and then he gave his wonderful speech that Peggy Noonan scripted
for him, but he delivered so eloquently and poignantly.

And he came across as a real mensch by New Orleans. Are they working
on that?

(CROSSTALK)

HALPERIN: There are analogues for what Romney has to do in these
three big moments.

The Bush `88 convention speech is the analogue there. On the
selection of the veep, I think Bill Clinton`s selection of Al Gore, Al
Gore`s selection of Joe Lieberman, I think both of those showed a lot of
personality at top of the ticket.

And then in terms of the debates, I think Bush 2000 is the analogue
that the Romney campaign should look at. He showed a lot of personality in
those debates, made people more comfortable with him. You referred to it.
The private Romney is definitely more engaging and personable than he`s
been able to show. I will say again, it`s those three moments, if he can
perform in those three moments on the economy, on personality.

MATTHEWS: You grabbed me there. Naming Lieberman, the first Jewish
candidate for the highest offices in the country. I don`t know whether it
affected the Electoral College at all, but it did show guts.

I remember at the time saying this is Branch Rickey trying something
new. You think there`s still a chance that Mitt will name somebody that is
sort of revolutionary or really cutting-edge?

HALPERIN: I don`t. I think though it`s how he presents it.

If you pick a Rob Portman, which is not going to knock anybody over as
a surprise...

MATTHEWS: No.

HALPERIN: ... if you present it in the right way -- Clinton picking
Gore was a bit of a surprise, for sure, but it`s how the event goes, how
you talk about why you made the choice.

If Romney does that in an effective way, just as the way Gore showed
something about himself when he picked Lieberman, not just because of the
pick, but the presentation, I think that`s the analogue they want to
follow, along with Clinton`s selection of Gore.

MATTHEWS: I love this stuff, yes, because as my son in acting says,
action defines character. You have to take steps to show who you are.

Anyway, thank you, Mark Halperin, as always. Have a nice weekend.

You too, Gene.

HALPERIN: Thanks, Chris.

MATTHEWS: Up next: Is Rush Limbaugh spreading more absurd conspiracy
theories, do I have to ask, about President Obama or is he just making fun
of Harry Reid? The latest from the underwater walrus. There`s El Rushbo.
Look, he makes fun of himself.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP, "THE COLBERT REPORT")

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": The world is gripped
with Olympic fever, and I have got it back. I caught it from a horse.

(LAUGHTER)

COLBERT: The Romneys` Olympic dressage steed, Rafalca.

Yesterday was Rafalca`s first day of competition and she crushed it,
power prancing to a score of 70.243. That is unheard of -- in that I have
never heard a dressage score.

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS: Well, in case you`re not a dressage enthusiast, Rafalca
came in 30th out of 50 in round one of individual dressage.

I had a fine time this week, by the way, playing HARDBALL with Will
Ferrell and Zach Galifianakis. They`re out promoting their new movie "The
Campaign."

Ferrell proved to us that his signature political impression is still
very much intact.

(BEGIN VIDEO CLIP)

WILL FERRELL, ACTOR: I`m glad I`m done with the circus. It`s a real
circus out there. Forget about it.

(END VIDEO CLIP)

MATTHEWS: Well, want to know what Ferrell`s first and only encounter
to date with W. himself was like?

He recounted the experience last on "Conan." It was back in Ferrell`s
"SNL"`s days during his run-up, the president`s run-up to the 2000
election.

(BEGIN VIDEO CLIP, "CONAN")

FERRELL: The White House press is all around him and -- the campaign
press, I mean. And they -- just go up and say hello. And so I`m like, hi,
Mr. Governor. Thanks so much.

He`s like, pleased to meet you.

(LAUGHTER)

FERRELL: And I can tell he has no idea who I am.

(LAUGHTER)

FERRELL: He`s just looking at me. It was like...

CONAN O`BRIEN, HOST, "CONAN": Looking at you.

(LAUGHTER)

FERRELL: Is this a long week for you?

(LAUGHTER)

FERRELL: The show, is it hard work? I`m like -- I think he thought I
was like a crew member or something.

So I was just like, anyway, nice to meet you. And he`s like, yes.

And then I walked away. And then I think he added it up later.

O`BRIEN: Oh, he added it up.

FERRELL: Yes, he did.

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS: Well, that was before Bush was even in office.

Anyway, Ferrell had the W. impression I believe for the history books,
best ever.

And Mitt Romney scores another endorsement. Hold off on the duo
making a joint appearance, however, for more reasons than one. It`s Jenna
Jameson known -- oh, there she is -- in some circles as queen of porn. She
voiced her support for Romney yesterday at a San Francisco strip club.

Her word of support for Romney -- quote -- "I`m very looking forward
to a Republican being back in office. When you`re rich, you want a
Republican in office" -- close quote.

Anyway, actually, that`s exactly what President Obama`s been saying:
Romney`s for the rich. Maybe Ms. Jameson should stick to acting.

And while we`re on the subject, Politico reports that at least one
Republican leader is worried about the prevalence of strip clubs in Tampa,
where they`re going to be holding their convention later this month.

"The New York Times" this month quoted strip club owners as saying
Republicans spend three times as much as Democrats in such establishments.

Now, there`s a generality.

Finally, how did El Rushbo respond to Harry Reid`s speculation that
Mitt Romney did not pay any federal taxes for a decade? When it comes to
Rush, if it`s not a birther conspiracy theory, it often has to do with the
president`s college transcripts.

If you think that has nothing to do with the Reid-Romney feud, take a
listen to Rush talking about a phone call he says he got during a break on
his radio show.

(BEGIN VIDEO CLIP, "THE RUSH LIMBAUGH SHOW")

RUSH LIMBAUGH, RADIO TALK SHOW HOST: I got on the phone. Somebody, I
don`t know, never -- said they went to school with Barack Obama at Harvard.

And the guy told me that Obama got the lowest grades that any Harvard
graduate ever got and that a bunch of professors gave him B`s and C`s when
he didn`t even show up to class.

I`m corroborating it now. I`m telling you now. So I am calling on
Barack Obama to release his Harvard transcripts, based on this -- I got a
call.

(END VIDEO CLIP)

MATTHEWS: What a joke. He won the distinction of being editor of
"The Harvard Law Review," the first African-American to do that, in a blind
test. In other words, the whole proceeding in which you get it, turning in
essays, turning in scores, and all that information, is done without your
name on it and certainly not your ethnic group.

Rush is completely -- well, he`s a windbag on this one.

See what I mean? See what I mean there? Touting an anonymous call.
He said somebody called in that Obama got the lowest grades at Harvard, but
also got B`s and C`s from some professors. You don`t get C`s at Harvard.

Anyway, that`s too big a stretch even for Rush, I think. He`s once
again bringing the president`s transcripts into the debate over Romney`s
taxes? There`s a connection.

Up next, a handful of very rich people are spending, dirty angry money
to control this campaign. But despite being outspent, the Obama campaign`s
ad campaigns seem to be connecting with voters. And that`s ahead.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MILISSA REHBERGER, MSNBC CORRESPONDENT: I`m Milissa Rehberger.
Here`s what happening.

More than 100 U.N. members voted earlier to condemn the Syrian
government for its escalation of the crisis there. But Russia, one of
Syria`s closest allies, called the measure harmful.

Temperatures are searing in Oklahoma, where six wildfires are burning
in Oklahoma City near the site of the Slaughterville fire. It was a
record-breaking 112 degrees today.

And as Chris mentioned a moment ago, stocks surged following today`s
jobs report, the Dow Jones, 217 points, the S&P rose 26, and the Nasdaq was
up 58 -- back to HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

Swing states are being hammered with political ads this summer. And
if you look at the past month, the pro-Romney forces, meaning the campaign
and its allied super PACs, are consistently outspending the Obama people.
It`s a trend that is likely to continue as the Koch brothers group,
Americans for Prosperity, plans a $23 million month-long ad buy set to
begin next week.

But should the Obama campaign be worried? It seems that despite all
those Republican dollars being spent, Mitt Romney isn`t inching up in the
polls. In fact, he looks down in the latest poll I saw.

Let`s bring in our HARDBALL strategists, who are political ad makers.
The ad men, I must call them, Democrat Steve McMahon and Republican Todd
Harris.

Gentlemen, you are both gentlemen.

This campaign right now, look at the differential. Why is not paying
dirt? With your dirt money, you`re not getting pay dirt? Why not on the
Romney side? What are they doing wrong?

TODD HARRIS, REPUBLICAN STRATEGIST: This is probably heresy for a
media consultant to say, but the fact is you can reach a point of
diminishing returns with advertising budgets.

And what you have on the Romney side is over the last few months about
$150 million in pro-Romney/anti-Obama spending. You had about $130 million
on the Democratic side, which for the average poor bastard that has to sit
and watch all of these is the equivalent of...

MATTHEWS: Is that you talk with your friends?

(CROSSTALK)

(LAUGHTER)

HARRIS: That`s how I do with Steve.

STEVE MCMAHON, DEMOCRATIC STRATEGIST: He swore on the show.

(CROSSTALK)

HARRIS: I think you can say that.

MATTHEWS: We were talking about how Romney in secret is really a
charming fellow? In public, you`re gross.

(LAUGHTER)

HARRIS: That`s right.

But for the average person who has to watch these, it`s the equivalent
of being overtaken by a tidal wave or an avalanche. They are both getting
bombarded.

MATTHEWS: OK. How come we all -- covering the campaigns -- HARDBALL,
we went out there in Iowa. I compared it to like the Dresden bombing in
World War II. It worked. It blew away Santorum. How can you say ads
don`t work in presidential campaigns?

MCMAHON: Here`s what happens. The more you know, the less they work.
And the less you know, the more they work.

The reason that President Obama`s ads are working so well against Mitt
Romney, he was ahead two weeks ago in Ohio and Florida. He`s now behind in
both those states. It`s because they`re introducing that is new and
relevant to the conversation. Bain is new to most people.

It`s relevant because it`s about the economy and the kind of economy
he would create. And it`s troubling.

MATTHEWS: That`s something I`m learning tonight. I was reading some
of the pre-interviews. I think that`s so fascinating. It doesn`t do any
good to pound the old arguments.

But if you come up with something that is brand-new, like we try the
do here every night, it is what works.

Here`s a new ad by Obama and his people. They released it this week
set to run in eight swing states attacking Mitt Romney, guess what, on his
tax returns or lack thereof. Let`s watch.

(BEGIN VIDEO CLIP)

NARRATOR: You work hard, stretch every penny. But chances are you
pay a higher tax rate than him.

Mitt Romney made $20 million in 2010, but paid only 14 percent in
taxes, probably less than you. Now he has a plan that would give
millionaires another tax break and raises taxes on middle-class families by
up to $2,000 a year. Mitt Romney`s middle-class tax increase. He pays
less. You pay more.

(END VIDEO CLIP)

MATTHEWS: Why did they put him -- just a technical point -- maybe you
can help me with this.

Why did they do that product placement? Why the Trump airplane behind
him? What was that about?

MCMAHON: Well, it`s a visual medium and you`re delivering the
message.

(CROSSTALK)

MATTHEWS: Is Trump bad news?

(CROSSTALK)

MCMAHON: ... audio and the video at the same time.

MATTHEWS: Is Trump bad news?

MCMAHON: He`s pretty bad news if you`re Mitt Romney or you`re an
independent voter who thinks he`s a bonehead.

(LAUGHTER)

MCMAHON: That`s a great ad. And the reason it`s a great ad is
because it does three things really effectively, new information, relevant
to the conversation, and it leverages a concern that people have both about
the economy and where Mitt Romney would take it. It`s a very effective ad.

MATTHEWS: Do you like the ad?

HARRIS: I thought it was -- it`s classic class warfare. It`s an
argument that tried to prosecute earlier this year. And it didn`t work.
And they`re coming back to it now.

(CROSSTALK)

HARRIS: I don`t think it`s working because of this ad.

(CROSSTALK)

MCMAHON: ... Florida.

MATTHEWS: So what kind of an ad campaign would you run if you are
Obama, that the economy is better than you think?

(LAUGHTER)

HARRIS: I think the most effective attacks that the Obama has run on
Romney have been the ones where it`s Romney in his own words, where he`s,
you know, whatever the gaffe was, they put that sequence of gaffes together
in one spot, I think.

MATTHEWS: Yes. OK. The Romney campaign released this ad attacking
the president`s record in Florida. Let`s watch that one.

(BEGIN VIDEO CLIP, POLITICAL AD)

NARRATOR: Four years ago, Barack Obama was concerned about Florida`s
economy.

BARACK OBAMA, THEN-PRESIDENTIAL CANDIDATE: When wages are flat,
prices are rising, more and more Americans are mired in debt, our economy
as a whole suffers.

NARRATOR: But under President Obama, 8.6 percent unemployment, record
foreclosures, 600,000 more Floridians in poverty. He focused on Obamacare
instead of jobs.

Barack Obama, what a disappointment.

(END VIDEO CLIP)

MATTHEWS: That`s bleak.

MCMAHON: Yes. Do you know why that ad isn`t working for them?
There`s no information in there that`s new. The president is expressing
his concern about the economy in 2008. They`re saying that the economy
isn`t very good today. Everyone knows that.

But people don`t blame President Obama the same way --

MATTHEWS: I don`t know about the foreclosures. They came from the
financial crash.

HARRIS: The purpose of that spot, though, was not to deliver a
factoid. It was to deliver an idea and an emotion. No, it doesn`t have to
be new. The idea is while people are out of work and what people are
suffering, the president has been off chasing this extreme agenda, whether
it`s Obamacare or --

MATTHEWS: Do you think the country is in that bad of a mood as the ad
is? I mean, I wouldn`t say we`re in a great mood right now. But I`d say
we`re in mid-land kind of concern. But that ad was bleak.

HARRIS: That was in Florida.

MATTHEWS: Is it worse down there?

HARRIS: In Florida, they`re worse.

MATTHEWS: You guys are running that pace. Two Republican senators
and a governor, with most of the delegations, you`re blaming it on the
Dems.

Anyway, "Mother Jones" reported today of a new study by the U.S.
Public Interest Research Group and Democrats, actually, two left-leaning
groups that showed the tiny fractions of Americans spending big money on
super PACs this year. This is really educational for us -- 1,082 people
made up 92 percent of contributions by individuals in a 2012 election
cycle.

Now, catch this number, this is devastating. Just 47 of those people
who each donated a million dollars or more actually account for more than
half of the super PAC giving.

Now, Todd, I`m going to put you on defense on this. I`m usually doing
this to you. But here we have a hundred senators but only 47 contributors
now are running this show. They put -- they are giving the lions share of
all the money going to super PACs, 47 guys, maybe some women, are calling
the shots in the presidential election.

You think that`s good for the country, the super PACs?

HARRIS: No. But guess whose fault this is. This is --

MATTHEWS: Citizens United.

HARRIS: No, all of this so-called campaign finance reform that said
an individual can give as much as they want but a political party is capped
at this paltry amount of money that is not enough to do anything in any
modern day campaign. That`s the problem.

MATTHEWS: What`s the issue here? I think these people are fanatical.

(CROSSTALK)

MCMAHON: The political party -- I mean, the political party is a
distinction without a difference. These are all Republicans, 98 percent of
them are Republicans, 98 percent of the money is going to defeat Democrats.
And they`re all people worried about their estate taxes going up and
they`re hoping Mitt Romney --

MATTHEWS: So, if you turned on the TV in one of these key states
during the campaign now to November 6th or whatever it is? Sixth?

MCMAHON: November 6th.

MATTHEWS: Yes.

You`re going to hear money thrown at you by 47 people.

HARRIS: Look, $150 million on one side, $130 million on the other.
This is -- we are not talking about the Republicans in the Romney campaign
significantly outgunning the Democrats. It`s not just happening. The
numbers speak for themselves.

MATTHEWS: What I know is this. Romney won`t tell us the tax returns.
The rich people on your side won`t tell who`s giving money to these
campaigns. That`s consistent.

Thank you, Steve McMahon, and thank you, Todd Harris. You`re hiding
something.

Up next, Republican Congressman Steve King, the king of the crazies,
had a heck of a week this week. He`s done everything from defending dog
fighting, to suggesting President Obama`s mother telegrammed news of his
birth from Kenya so it looked like he was born -- he`s a nut. He`s a nut.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Well, the Romney spokesman who told reporters among other
things to shove it is taking time off from the campaign. I love the way
this has done. ABC was first to report the news that Rick Gorka would take
a break this week.

Well, early this week, at the Tomb of the Unknown Soldier in Warsaw,
Gorka was involved in this now infamous dust up with reporters.

(BEGIN VIDEO CLIP)

REPORTER: Governor Romney --

REPORTER: Are you concerned about some of the mishaps of your trip?

REPORTER: Governor Romney, do you have a statement for the
Palestinians?

REPORTER: What about your gaffes?

REPORTER: Governor Romney, do you feel your gaffes have overshadowed
your trip?

RICK GORKA, ROMNEY OBAMA: This is a holy site for the Polish people.
Show some respect.

REPORTER: Governor Romney --

GORKA: Show some respect, Jim.

REPORTER: We haven`t had another chance to ask him questions.

GORKA: Kiss my (EXPLETIVE DELETED). This is a holy site for the
Polish people. Show some respect.

(END VIDEO CLIP)

MATTHEWS: I just love the juxtaposition. Kiss my -- this is a holy
site. Put those thoughts together.

Anyway, no word on when he will return to the campaign. Who knows?

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: We`re back.

Congressman Steven King of Iowa is no stranger to making controversial
statements. But even by his crazy standards, he`s had a heck of a week.
In just the past few days, he`s questioned why dog fights are illegal and
why modern day multiculturalists keep push the idea that diversity has made
our country strong. He doesn`t believe in that.

He also floated the idea that maybe -- just maybe Obama`s mom sent a
telegram from Kenya to Hawaiian newspapers 51 years ago to announce her
son`s birth inaccurately.

Is this guy for real?

Ron Reagan is an MSNBC contributor and author of "My Father at 100."
And Lizz Winstead is a comedian, appropriately for this discussion, and
creator of "The Daily Show," co-creator. She`s the author of "Liz Free or
Die."

Liz, thanks for joining us. We`ll go to you first.

In a recent tele-town hall, Steve King, the congressman from Iowa,
answered a question from someone who wanted to know why he opposed
legislation that makes it illegal to attend dog fights. Let`s watch what
the congressman said.

(BEGIN VIDEO CLIP)

REP. STEVE KING (R), IOWA: When the legislation that passed in the
farm bill that says that it`s a federal crime to watch animals fight or to
induce someone else to watch an animal fight, but it`s not a federal crime
to induce somebody to watch people fighting? There`s something wrong with
the priorities of people who think like that.

(END VIDEO CLIP)

MATTHEWS: What do you make of this guy? This character?

LIZZ WINSTEAD, CO-CREATOR, "THE DAILY SHOW": Well, it`s so
interesting because you know, he went on to say all these crazy things
about kidnapping children and taking them across state lines and then
dropping them off as a playground, which is illegal, I`m pretty sure, in
all 50 states.

I think somebody like this. He`s gone out of his way to vote against
any kind of bill that has anything to do with protecting animals. After a
while, you think, (a), what did an animal to do him? And, (b), I think he
watches those ASPCA ads with the dogs in the crates like other people watch
porn. It`s insane.

MATTHEWS: What`s he, the Michael Vick fan club? What are we talking
about?

WINSTEAD: I don`t know.

MATTHEWS: I mean, Vegas cleaned up its act apparently, but this guy
wants to go further in this direction, Ron. He wants to legalize dog
fighting, cock fighting, under the theory that`s just as bad or no worse
than people, except for the obvious difference. People decide to go into
boxing.

RON REAGAN, MSNBC CONTRIBUTOR: Well, exactly the point, yes.

But it`s easy to make fun of the Steve Kings of the world.

MATTHEWS: I intend to.

REAGAN: Really easy to make fun of the Steve Kings of the world. I
mean, if ignorance was an Olympic event, he`d be a medal favorite. Maybe
not the gold medal because he`s got a lot of competition out there. But he
definitely be on the medal stand.

Maybe he`s on to something with this dog fighting. Maybe what he`s
really saying, Chris, is that we ought to make it illegal to watch people
fight just like we do dogs. Your point was actually the right one, dogs
don`t choose. People do.

WINSTEAD: And also, you don`t shoot people after they fight if they
lose.

REAGAN: Right. Yes.

MATTHEWS: I never thought of that end game.

Anyway, this week, King said his comments had been distorted and he
tried to explain what he meant. You`re not going to believe this. Take a
look.

(BEGIN VIDEO CLIP)

KING: And what I said is we need to respect humans more than we do
animals. Whenever we start elevating animals up to above that of humans,
we have crossed a moral line. For example, if there is a sexual predator
out there who has impregnated a young girl, say a 13-year-old girl, and it
happens in America more times than you and I would like to think, that
sexual predator could pick the girl off the playground at the middle school
and haul her across the state line and force her to get an abortion, to
eradicate the evidence of his crime, and bring her back and drop her off at
the swing set and that`s not against the law in the United States of
America.

(END VIDEO CLIP)

MATTHEWS: You know, I don`t know where to begin, but I guess it has
something to do with the pro life position. Nobody can be -- you`re
kidnapped, raped, it`s at least statutory, and then somehow the young girl
would never bring evidence because she obviously has no brains at all. He
said took her back to the swing she was swinging on in the playground.
What does he mean here?

WINSTEAD: I don`t know. This is what`s so insane about him. And
just to top it off, you know, in his big week, he goes on, he`s hammering
home the fact that we need English as the national language. He apparently
speaks English and I have no idea what he`s saying.

MATTHEWS: You know what I`d like to, I`d like to have a spot check
take the U.S. congressman like him and make him take the immigration exam,
the naturalization exam, make him answer the logical questions. Your
thoughts?

WINSTEAD: That would be great.

REAGAN: That would be great.

You know, he`s warning us of this epidemic here in the country, of
legal child rape and kidnapping.

WINSTEAD: Yes.

REAGAN: You know, it`s going all over the place. I thought it was
illegal, you probably thought it was illegal, too.

MATTHEWS: I know. I thought -- it`s called the Mann Act. There`s a
law against taking someone across a state line for sexual purposes.

Anyway, at the same telethon town hall that he talked about dog
fighting, King also took a question from a birthers asking why he isn`t
investigating Obama`s eligibility to be president. Here we go again. He
went back into it again. Here`s his theory. Let`s listen.

(BEGIN VIDEO CLIP)

KING: We went down into the library of Congress and we found the
microfiche there of two newspapers, only two newspapers in Hawaii. Each of
them had published the birth of Barack Obama. It would have been awfully
hard to fraudulently file the birth notice of Barack Obama being born in
Hawaii and get that into our public libraries and that microfiche that they
keep published. That doesn`t mean there aren`t other explanations how they
may have announced that by telegram from Kenya, the list goes on.

(END VIDEO CLIP)

MATTHEWS: I have another explanation -- you, sir, are insane.

Thank you, Ron Reagan -- and politically not used (ph). Lizz
Winstead, thanks for joining us tonight.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this. It`s about the king of
the crazies. U.S. congressman Steve King, Republican of Iowa.

So he goes through the records, documents the newspaper announcements
of Barack Obama`s birth in Hawaii, but continues to push the birther case.
This maker of laws continues to maintain that the president of the United
States wasn`t born in the United States, that somehow a white woman from
Kansas married a guy from Kenya, then went over with him to Kenya to have
the baby they named Barack Hussein Obama, with the purpose of having the
kid grow up to be our American president. She did all this with the
cooperation of the immigration service who were in the planet again to make
this about to be infant the president of the United States a half century
later.

Any sane person would ask the question, if this woman from Kansas had
this idea to have her son elected president, would she, (a), marry a guy
from East Africa, (b), schedule the delivery of their baby in East Africa,
(c), take the boy with her to Indonesia for several years, and (d), create
a false paper trail, including newspaper announcements that place the
child`s birth in a state far from the North American mainland?

The king of the crazies has an interesting way of thinking, of course.
He asks why everyone would outlaw dog fighting or cockfighting or anything
when there are humans allowed to fight? Is there a trick in that question?

Obviously, people might actually who fight decide to fight. Animals
are thrown into an arena, perhaps in someone`s garage, and prodded into
fighting. Is that difference too cool for school?

He says a sexual predator can impregnate a 13-year-old which he says
happens more time than you would know, haul her across the state line and
force her to get an abortion, bring her back and drop her off at the
playground where he found her. What kind of a country is this he implores
us to think? Well, Mr. King of the crazies, it`s not here. The only thing
both weird and real in these stories of your is the real life U.S.
congressman out there telling them.

That`s HARDBALL for now. Thanks for being with us. Have a nice
weekend.

"THE ED SHOW" 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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