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updated 10/4/2012 1:30:16 PM ET 2012-10-04T17:30:16

HARDBALL
October 3, 2012

Guests: Debbie Wasserman Schultz; Dana Milbank


CHRIS MATTHEWS, MSNBC HOST: Rocky mountain high! Let`s play
"Hardball"!

Good evening. I`m Chris Matthews at the university of Denver.

Let me start with the big debate here. I really thought today is the
future of this country on which of the two guys can make the most of the
latest gaffe or who can launch the most deadly zinger? What is this, the
Dean Martin Rose (ph) of the old days and Don Rickles contest? The gagster
cowboy, the sharpie of the street corner? Is that the part we`re casting
here?

Sorry. I thought it was president of the United States. The person
who will lead the west, set the direction on world affairs, lift his
country up from long economic struggle, take us to a stronger, fair
American future.

So, I`m looking for the big thought tonight, the fresh, crisp, candid
thinking that is the very essence of any set of solutions we can come up
with. What I fear is a sling shot war world tonight, a night of pestering
petty salvos from one candidate to the other, all in the crating bites for
the next TV ads, words to be packaged and said to be pitched down to us as
examples of spontaneous vision and uncanny wisdom.

Well, I`m looking for the real thing tonight. Smart calls to action
by someone who knows his number one job is simply to tell us what needs to
be done.

I`m joined by former White House press secretary - by Howard Fineman
right now and Steve Schmidt who is also with us. Thank you to have --

Steve, I want to join us tonight. You weren`t with us earlier in the
first edition.

I`m thinking about for the way this thing is getting settle tonight.
How does Mitt Romney overcome the last two months or so of bad campaigning?
Where he has been looking very un-presidential if you think about his trip
to Europe, the best about London over the Olympics, if you look at how he
is sort have been a quick shot artist on the Libya situation. And then,
you look at the way the Democrats, thanks to Bill Clinton in their
convention, they were able to perked up feelings about the economy.

How does he build up his presidentialness and bring down the economy
aspects all in one night?

STEVE SCHMIDT, FORMER SENIOR STRATEGIST FROM MCCAIN/PALIN 2008
CAMPAIGN: Well, tonight Chris, we see the real Mitt Romney. He`s going to
be standing toe to toe with the president of the United States on the
stage. He is going to have to answer questions. He has going to have to
make an argument. He`s going to have to explain where he wants to lead the
country. We live in momentous times. We live in difficult times in the
history of the country. What is Mitt Romney`s plan to move the American
people forward? I think the American people and the tens of millions are
going to take his measure tonight.

MATTHEWS: Would you lay out the map if you were him? Would you tell
him how he`s going to stimulate economic growth by cutting taxes and
getting rid of deductions? Would you tell the American people exactly or
even generally what you`re actually going to do?

SCHMIDT: Well, I`m with you, Chris. I mean, I think platitudes and
zingers don`t work in a format like this. He is behind in the race. He
has to have a good debate. He has to pass President Obama in the polls if
he`s to be elected president, obviously.

So tonight, at a moment of peril for the country, where we have
challenges abroad, we have severe challenges domestically, what is the
plan? How is he going to restore opportunity to the middle class in this
country? How do we restore physical health to our balance sheet in this
country? How do we deal with the challenges abroad? We live in a serious
time. He should present himself as a serious person with serious solution
to serious challenges. If he does that, we will have a serious, you know,
improvement and understanding in the race. But, you know, if it is all
zinger, if it is all platitudes, it is all transaction question by
question, poll tested sound bites that have been rehearsed over the last
couple of months, it will be a difficult night for him.

MATTHEWS: Let`s take a look at those numbers from the polls you
mentioned out there. let`s take a look at a new "National Journal" poll
just out today. It fell that the race is tied, exactly even.

Meanwhile, a new national poll with radio pool has Obama up by seven.
How could they both be right?

Anyway, the latest NBC/"wall Street Journal" poll splits the
difference, the national poll is often right, at 49, 46. And if you go
with registered vote, it is seven votes there. A new poll today from
NBC/"the Wall Street Journal" and Telemundo show a huge gap among Hispanic
voters. Obama is up, I never seen numbers like this. He is up by 50,
Howard, among Hispanics.

Let`s go to Howard Fineman. Back to my big question. The big one.
He`s had a terrible month or two. He is not look presidential. And Bill
Clinton, the other Democrat have been able to build up the notion that the
economy`s better than we thought. We have a new poll out here saying that
57 percent of the people think that the economy is getting better. What a
dramatic advantage.

HOWARD FINEMAN, EDITORIAL DIRECTOR, HUFFINGTON POST MEDIA GROUP:
Well, I agree with Steve. This is Mitt`s moment. He said months ago to
supporters just wait until I get on the stage with the president. Just
wait until I get to confront him, when I get to explain my version of
reality versus his. That`s when I`m going to shine. And he has to do it
tonight. I agree with you and Steve, that he has to be specific. He has
to be detailed. Partly because people haven`t warmed to Mitt Romney as a
person. They don`t really trust him yet as a person.

So, it is more -- all the more important that he set out a specific
plan, that makes sense. And that he does it in a humane way. I agree with
Steve. He has to be -- it`s OK if he`s serious. But he has to make it
clear that he wants the job. He wants to be hired by the American people
for this job because he wants to help all of the American people.

SCHMIDT: Here`s the problem --

FINEMAN: And not just the rich people that he grew up with.

MATTHEWS: Howard, you hit on the problem. He`s got a surrogate out
there, the price that was most devastating surrogate I have ever seen. His
name is Bill Clinton, a former president who has got the mojo now. Will
Clinton be haunted tonight by that 47 percent? Well, here`s Bill Clinton
freshly today in New Hampshire taking on Romney on that very point, setting
him up tonight to have to respond. Let`s watch.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I couldn`t
believe the other day when the president`s opponent said that the 47
percent of the American people who don`t pay income tax just want to hang
around and be dependent on the government and, you know, we just have to
wean him off of that because we don`t want to pay income tax.

Now, the guy with a tax account in the Cayman Islands is attacking
people for not wanting -- you`ve got to give him credit, like I said --

(APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: Hey, Steve Schmidt, buddy. How would you like to respond
to that wise crack? I mean, it is not just the wise crack, it is one of
those great chucks the positions, we thinks. Two very different things it
seems, the fact that he has called people bunch of bums that don`t want to
pay taxes and then you look, wait a minute, look at your tax account. It`s
as tough when the respond to and it is all fun. Actually, the Clinton
makes it fun, too.

SCHMIDT: You know, obviously, President Clinton has such a huge
impact politically on the race for President Obama. The masterful speech
at the democratic convention, who were up in New Hampshire, one of the key
swing states. Whenever you can, you know, laugh a little bit about your
opponent, usually scoring good points on him.

You know, I do think that clearly Mitt Romney has not knocked out now
from under the 47 percent comment. He`s going to be confronted with it
tonight. He could be confronted with it tonight. What`s he going to say.
How he`s going to respond? How`s he going to look at the president and
look at the cameras, to the American people and explain what he meant to
say versus what he said? I think it was one of his big challenges tonight.
It`s such a constricted and long headed view of the country and so many of
the voters that he was described are in fact Republican voters and the
reason that don`t pay income taxes is because of Republican policies. And
you are going to have to get over that tonight.

MATTHEWS: His traveling body (INAUDIBLE) has come up with worse.
Paul Ryan is now saying 70 percent of the country is free loaders. He says
only 30 percent want to be but 70 percent are.

Why are they declaring war on the great bulk of the American people?
I want to go to Howard on this. Because I`ve never seen in politics where
you slice a little bit -- in this case, Ryan has 30 percent - he might on
his side.

FINEMAN: It is because -- Chris, it`s because they are repeating Paul
Ryan is still repeating the kinds of lines and red meat rhetoric that he
used to excite the conservative base when he was running for vice
president, when he was running to get Mitt Romney`s attention. That is not
his audience now. His audience has shifted totally to the ideologues in
the base and the people he grew up in Janesville, Wisconsin that he knows
how to reach out to. That`s what he should be talking about. Not trying
to score those kinds of abstract that he --

MATTHEWS: But, we have videotape today. We can take it back. And
meanwhile, this is what is going on, Steve. We`re going back and digging
up stuff. The tape always looks brand new and how he has to - let`s take a
look at the new piece of tape.

This is Paul Ryan on FOX this Sunday saying he doesn`t have time to go
over how he`s going to find all of this tax money to make up for these
cuts. Here he is.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE REPORTER: How much would it cost?

REP. PAUL RYAN (R), VICE PRESIDENTIAL CANDIDATE: It`s revenue
neutral. It doesn`t cost --

UNIDENTIFIED MALE REPORTER: I`m talking about -- we`ll get to the
deductions. But the cut in tax rates.

RYAN: The cut in tax rates is lower -- all American tax rates by 20
percent.

UNIDENTIFIED MALE REPORTER: How much does it cost?

RYAN: It`s revenue neutral. Lowering tax rates by broadening the tax
base works and you can --

UNIDENTIFIED MALE REPORTER: But I have to -- you haven`t given me the
math.

RYAN: Well, I don`t have the -- it would take me too long to go
through all of the math.

(END VIDEO CLIP)

MATTHEWS: You know, tonight, Jim Lehrer, he`s a great moderator to
say to Mr. Romney, take all of the time you want. In fact, the president
that jus say take my time and explain how you`re going to do it.

Anyway, yesterday Romney himself told a local Denver station that part
of his tax plan might include a cap on deductions at 17,000 a person which
would not hurt billionaires at all like him. Let`s take a look.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: You could say everybody`s
going to get up to $17,000 deduction and you can use your charitable
deduction, your home mortgage deduction or others, health care deduction
and you can fill that bucket, if you will, the $17,000 bucket that way and
higher income might have a lower number, or you could do it by the same
method that Bowles/Simpson did it, which is limiting certain deductions but
that`s the sort of thing that you do with Congress.

(END VIDEO CLIP)

MATTHEWS: Well, his tithing would take him well past 17 percent in
his income rate. Anyway, his spokesman - spokeswoman quickly followed up
on that statement and made clear she said, this is one of several policy
options Romney was considering. In other words, if you want specifics,
don`t count on this.

Howard, this is the problem the more he teases it and then pulls back,
the more he looks like --

FINEMAN: The more he teases it, the more confusion he saws and a
contrast still with his own situation. The guy who has 100 million IRA,
which is like unheard of. The guy who like president Clinton has said has
taken advantage of every legal tax advantage that he possibly can is now
throwing out a limit of $17,000 in deductions for families that consider
themselves middle class, that`s a pretty low ceiling. That`s a pretty low
ceiling.

MATTHEWS: Yes, he`s bringing in $10 million in income.

FINEMAN: Is he serious about that? I think he might ask about it.

MATTHEWS: Well, let me ask you Steve, about his strategic question
that I have here. You have a big mind about this thing. Should he look
upon this game the way George will talk about the baseball guy will, saying
basically, get your runner on, get him over, and get him in. In other
words advance the batter or go for the fences, what would you do tonight if
you were Romney?

SCHMIDT: Well, I think you have to go out there and offer clear
rationale with so far he has been unable to do about why he want to be
president? Where is he going to lead the country? It`s totally unclear
and the hour is getting late.

And so, he has one of his last opportunities to be able to do that
tonight. He has one big thing going for him in this race. The structure
of this race, Chris, is 51/47. That`s the ceilings and the floors for both
candidates. So, the race is not going to spread much beyond that which
means that no matter how bad a campaign they run, Mitt Romney is always
going to be in the game here all the way to the end.

So, he`s not going to have to overcome you know eight, nine point
deficits to try to get into it. He needs to go out there and he needs to
communicate in a clear way where he wants to lead the country. What is the
alternative vision that he has vis-a-vis the president and thought for,
he`s been unable to communicate that over the entirety of the general
election. Tonight is one of his last chances to start doing it.

MATTHEWS: Let me give you another scenario, Steve and Howard, that is
that the president has a good night tonight. He gets it up to his actually
ceiling about 51, as you say, and the other guy is going down and very few
opportunities left. That would be a bad night for Mr. Romney.

Anyway, thank you, Howard Fineman, as always. And thank you, Steve
Schmidt. Great to have you on.

Coming up, how will we know who wins tonight`s debate? It`s not like
there is an official scorecard and spinners will insists their candidate
win, no matter what. But experts and journalists will look at which
candidate did a better job framing the argument deflecting criticism. And
you can`t discount the importance of body language. We are going to review
how to look at this thing in real time.

Also caught on tape, the running mate to this and yesterday "the
Huffington Post" reported Paul Ryan saying 30 percent of Americans wanted a
welfare state and conservatives jumped on Joe Biden as well for saying that
the middle class has been buried over the past four years. But, the
county`s deep in debate trapped, their running mates are causing some
headaches.

Plus, I have some questions of my own for the candidates. I`m going
to ask Michael Steele and Joan Walsh to fill in for Romney and Obama. Can
they answer my questions?

Let me finish tonight with what I want to look, actually when I`m
going to be looking for on this debate, some serious staff.

And a program note. At one hour, join Rachel Maddow and the other
MSNBC host for an hour long show previewing tonight`s debate at 9:00
Eastern. Please join us for the full coverage of the debate here
(INAUDIBLE). And then at midnight eastern, I`ll be back for the special
late edition of "Hardball," a brand new show with lots of results. We will
tell you who won.

This is "Hardball," live from Denver, the first presidential debate.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to "Hardball."

As we`re watching tonight`s debate, what will be doing, what will be
sign to tell us who is winning the thing, the small moves that takes the
subtext that reveals who has the upper hands?

Well, here are some moments, past debates that became the whole story
at the end of the night. First, the awkward moment in that third and final
between George Bush and Al Gore.

Let`s watch one of the funniest moments in debate history.

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, FORMER PRESIDENT OF THE UNITED STATES: It`s not like
what is your philosophy and position on issues but can you get things done?
And I believe I can.

(END VIDEO CLIP)

MATTHEWS: Anyway, 1992, in a debate conducted in a town hall format.
President George W. Bush 41 was seen checking his watch. There he is. A
move that telegraphed boredom to some and impatience with the whole debate.
I`m sure it was fair. He may have been counting the time for Ross Perot.

But in 2008, John McCain betrayed his frustration when he referred to
Barack Obama as that one. Let`s listen.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: It was an energy bill on the floor of
the Senate loaded down with goodies, billions for the oil companies and it
was sponsored by Bush and Cheney. You know who voted for it? Might never
know. That one. You know who voted against it? Me.

(END VIDEO CLIP)

MATTHEWS: Anyway, what will be the clues to oh tell us in real time
who is winning the debate as we watch them? Well, Dana Milbank is a
columnists for "the Washington Post" and "Time" magazine editor at Mark
Halperin. He is an MSNBC senior political analyst.

Gentlemen, I want be to start with Dana because you are such a wise
guy. I love your attitude as we say in Philly, attitude. Anyway, this
stuff. Number one, what`s your first way of looking at this? How do you
know who is winning?

DANA MILBANK, POLITICAL COLUMNIST, THE WASHINGTON POST: Well, I`m
watching it in the filing center over there, I`m going to do a little groan
and laugh index. If you`re groaning when the guy is talking, he`s losing.
If he gets you laughing, that`s better. You can do that for yourself at
home. If you`re cringing, the guy is not winning.

Now, Romney has set this up in terms of zingers. If he is - the
question is just --

MATTHEWS: Why does it get out that it is going to shoot zingers.

MILBANK: Got this note. Why does it get out that he couldn`t sleep
last night? I mean, everything seems to leak out of this campaign. But,
is he landing the zingers or do they boomerang next to him?

But I think ultimately, it is going to -- is he able to land some sort
of a serious blow. If we`re debating this on points the other night, if
it`s about the spin, Romney lost. He needs to break this open in a way to
establish something --

MATTHEWS: If you`re Jim Lehrer, do you have the nerve or the right or
protocol to say to a guy, who has just delivered an obviously manicured
cultivated, you know, polished up to even working on for three weeks to
just say, can we limit ourselves to a spontaneous conversation here? Can
you actually say that? Or will the audience spot it and say, that`s a
prefab job that his guys thought up two weeks ago and all he`s doing is
reciting like a parrot?

MILBANK: I don`t think Jim Lehrer needs to. I think it is obvious,
one of the guy recites --

MATTHEWS: OK. The knockout blow. We are going to know it? Will we
see it?

MILBANK: I think you will. You have it like that moment. You know,
we all, at least, people in the hall there missed it, I think, during that
infamous gore debate because we didn`t hear the sign.

MATTHEWS: That`s the first of, yes.

MILBANK: -- the awkward dynamics there. So, we won`t necessary see
it. But yes, if you have that awkward moment and people sort of jump back,
yes, that`s the sort of thing that can change the trajectory.

MATTHEWS: OK. Let me go to Mark on this, your thoughts. Who have
the best avoid processed answers, like Bob Dole when he said that bill is a
markup.

MARK HALPERIN, MSNBC SENIOR POLITICAL ANALYST: Exactly.

MATTHEWS: Something like that.

HALPERIN: I can get this out of conference. We can go forward. I
think that a lot of the discourse in politics and in debates can be about
process, about who`s got a plan or why you`ve done a certain thing in terms
of package and strategy. Often one candidate will try to accuse another or
something to drive him into process. I think the winner is the one who
sticks to, what do the American people care about? How to fix the economy?
How to move the country forward? And don`t get bogged down in the process.
It`s easy to flip to get the process.

MATTHEWS: Do you think it`s a problem -- you are talking about being
optimistic. These guys are used to throwing red meat out, getting flaws
lines for their nurtured, right? There`s no - Jim Lehrer -- the rules are,
I just read it, there is no noise, no reaction. So you throw out what you
think is the line of the century. Do you think that`s going to --

HALPERIN: So, I think zingers and humor don`t really matter id the
audience adheres to the rules. If somebody is optimistic, it`s going to
play in the hall fun. But it will play better on TV.

The benchmarks, Ronald Reagan and Bill Clinton. You can de-excel
your-say your opponent`s plans or opponent`s record is bad and still be
optimistic about America. And I think both of these guys have a tendency
to forget that the president is a little bit better on it. But Governor
Romney is an optimistic guy. I think he will be better for himself tonight
if he focuses on being optimistic same with the president.

MATTHEWS: Talk about strength. How did - it is such a great word.

HALPERIN: This is what matters more than anything in this debate.
Alex Castellanos, the Republican strategist, talks about this all the time.
The moments that matter, I don`t think our zingers are one liners. There
are moments where you do something that shows you`re a strong leader and
either by implication or direct at frontal attack, the other person is not
as strong. Reagan and Clinton, again, the masters of this, through their
demeanor, through their ceasing the moment, create a moment that is going
to be replayed everywhere over and over of strength, not weakness.

MATTHEWS: OK. My real freakish question here, right, a difficult
one. You know, (INAUDIBLE) they got a picture of Clay too, the alien from
abroad in the movie that stood still. And he looked at it and said, who is
that guy? And he said, it`s Romney. The belt was up around here. The
statue was Romney. It seems like something of it out of the normal conduct
we meet. How does he ever come that?

MILBANK: Well --

MATTHEWS: It is just seems ad.

MILBANK: This one advance that Romney has going tonight. All of the
polls have basically said by two to one that they expect Obama to
outperform Romney. So, he has won the expectation again. So, in that
sense if he gets up there on the stage and realizes that he`s not an alien,
that he seems to have pulse, looks like a human being, well, then that may
change some people`s impressions.

HALPERIN: If you went to Mitt Romney`s rally this week as compared to
last February, you would see no appreciable improvement in performance.
Tonight is opportunity, if he can do it, to rise the occasion, explain why
he wants be president, why be a better person. Do it tonight in front of
tens and millions.

MATTHEWS: I saw him do that twice. The day he picked Ryan, he was
alive and also at the convention acceptance speech. I thought that was a
great performance.

MILBANK: No one gets elected president and no one comes back from a
deficit without reaching inside of themselves and seizing the moment.
Tonight, is the opportunity to do that. He did it the night of the New
Hampshire primary. He did it when he chose Ryan. I`ve seen him do it a
few other times. But, he`s not going to do it consistently. He has got to
do it the big moment. Tonight is the audience to do it.

MATTHEWS: Well, you think you will be able to tell a guy when he
first walks out? Does there challenging Romney here. I think I was seen
this guy --

MILBANK: By the second answer we`ll know.

MATTHEWS: (INAUDIBLE)

MILBANK: I think you`ll see it in his -- look, he has never
disappointed in a debate but I think he needs to do more than hold his own.
He needs to --

MATTHEWS: So, what`s President Obama? I see them as one Boxer, I
don`t mean, I don`t mean exactly, but there`s this Boxer, one punch and
it`s the economy and then I see Obama who is a better Boxer. He can move
around fast. He can move in and out. And so, Obama is going to try to
avoid that punch. That is boom. How come the economy is so bad?

HALPERIN: The president has been in a title fight before. Mitt
Romney has done a lot of debates. There is nothing like this. I think
that`s a big advantage for the president. On the economy, he`s got to
strike a balance. He struck all year and I think of late, very well,
saying things are not like we want them to be. But here are ways that we
are moving forward. I think the president has got that wrapped down. I
think it will be hard --

MATTHEWS: Would you go for the home run if you area Romney or go for
the bases?

HALPERIN: 90 minute of showing his heart and that would be a home run
if he did that.

MILBANK: I think he needs to be better than that because to extend
the boxing, that is for Obama is ahead on points. She needs --

(CROSSTALK)

MATTHEWS: Anyway, thank you very much, Mark Halperin. Good thinking.
And Dana Milbank.

And as we go to break, we`ve got new poll numbers already from our NBC
News "Wall Street Journal" Marist poll. Let`s check the "Hardball"
scoreboard.

In Florida, President Obama is a one-point lead over Romney, 47-46,
not much there. In Virginia, president -- another tight one, 48, 46.
Ohio, looks better there, the president has more comfortable lead. He is
up eight over Romney, 51-43. That`s holding.

Stay tuned for our first presidential debate tonight. More "Hardball"
live from Denver right after this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: There is no soviet domination of eastern Europe
and there never will be under ford administration.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MATTHEWS: We`re out here at the beautiful university, the night of
the debate. I`m going to ask everybody here to come up with the question
for one of the candidate. They are going to tell me what the question is
and who is for. Who is it for?

UNIDENTIFIED FEMALE: I`m hoping to ask President Obama, will we see
more prosecutions of Wall Streets, the mess they made.

MATTHEWS: For whom?

UNIDENTIFIED FEMALE: President Obama.

MATTHEWS: OK. Thanks. Do you have a question for whom?

UNIDENTIFIED MALE: Yes, for Romney, are you a robot and, if so, where
is your on/off switch so we can switch you off.

MATTHEWS: Question for whom?

UNIDENTIFIED FEMALE: I do not have a question.

MATTHEWS: Are you going to vote to this year?

UNIDENTIFIED FEMALE: Yes, I am going to vote.

UNIDENTIFIED MALE: For Mitt Romney, I would like to know specific
loopholes or deductions he --

MATTHEWS: Great question. That`s my question, too.

UNIDENTIFIED MALE: I have a question for President Obama. How do you
plan on cutting the deficit.

MATTHEWS: Wow.

UNIDENTIFIED FEMALE: How does the bomb in Syria suddenly change
American foreign policies in the Middle East.

MATTHEWS: What?

(LAUGHTER)

UNIDENTIFIED FEMALE: Turkey and Syria, just he is asked the Syrian
conflict. How that does influenced what our policy (INAUDIBLE)?

MATTHEWS: What side of the fence are you on?

UNIDENTIFIED MALE: I don`t have a dog in the race yet. I`m just
curious on what the policy will be.

MATTHEWS: You`re not Turkish are you?

UNIDENTIFIED FEMALE: No.

MATTHEWS: OK.

UNIDENTIFIED FEMALE: Hi. I just want to say that I`ve been in health
care for 37 years as a provider and I am completely 100 percent for the
affordable health care act. Thank you President Obama.

UNIDENTIFIED FEMALE: I just want to know what we`re going to do about
the student`s act. I think it is a big issue and --

MATTHEWS: For what?

UNIDENTIFIED FEMALE: The students.

MATTHEWS: What percentage do you pay in interest?

UNIDENTIFIED FEMALE: Well, mine`s a government debt. I don`t have
any private debt. But, I know that is a big issue.

MATTHEWS: I paid three percent in college. I think they people pay
more now.

UNIDENTIFIED FEMALE: I just want to say happy anniversary, Mr.
President.

MATTHEWS: 20th anniversary.

UNIDENTIFIED MALE: Who is going to cut the spending? Who is it?
It`s Romney.

UNIDENTIFIED FEMALE: Can I ask a question about cancer, please?

MATTHEWS: Sure. Go ahead.

UNIDENTIFIED FEMALE: I want to know what Mitt Romney`s policy is on
cancer. My mom has cancer. And she just relies on Social Security and
Medicare. She`s not a lazy person. She works, she paid into a program and
it`s dependent for them to provide care. And I want to know what his
policy is.

MATTHEWS: Thank you very much.

UNIDENTIFIED FEMALE: We`re curious about Israel.

UNIDENTIFIED FEMALE: Yes. We want to know how - what policy if they
are working - going to continue with the Israel and who the relations are
going to happen.

UNIDENTIFIED FEMALE: Regardless, we have Obama or Romney.

Thank you. Let`s go down here. Do you have any questions?

MATTHEWS: OK. Thank you. Look at down here.

UNIDENTIFIED FEMALE: I have a question for Romney.

MATTHEWS: Sure.

UNIDENTIFIED FEMALE: I want to know where is the evidence that tickle
down works.

MATTHEWS: What?

UNIDENTIFIED FEMALE: How does trickle down work? Show me the
evidence.

MATTHEWS: That is a great question. How does cutting the taxes for
the rich help everybody else? Thank you.

We`ll be right back with more "Hardball" for tonight and the debate.

(COMMERCIAL BREAK)

VERONICA DE LA CRUZ, MSNBC CORRESPONDENT: Hey there, I`m Veronica de
la Cruz. Here is what is happening.

Drivers on both coasts are paying higher gas prices and the rest of
the U.S. because of the refinery of high tide problem. California drivers
are paying $4.23 a gallon, 45 cents more than the average.

According to the CDC, there were more than 400 new cases of West Nile
last week along with 16 deaths. Nearly 4,000 have been sickened with 163
deaths.

And a Meningitis outbreak that began in Tennessee has he can expanded
to five states. Twenty six people have been infected, four have died.

That`s the news. Let`s get you back to "Hardball."

MATTHEWS: Welcome back to "Hardball" and live from Denver, the
University of Denver, for the first presidential debate. Mitt Romney and
President Obama are less 90 minutes from the beginning of the debate
tonight. But their VPs nominees have also been in the headlines, right
now, each caught on videotape. Each troubling statement that could provide
fodder for the opponents tonight.

Right here, Congresswoman Debbie Wasserman Schultz, chairs the
Democratic National Committee. Joy Reid is managing editor of thegrio.com.

Thank you so much. Let`s take a look at this vice president bite.
Republicans have jumped on a line on his speech yesterday when he described
the middle class of this country as being buried economically. Let`s take
a look.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: This is deadly
earnest, man. This is deadly earnest. How they can justify -- how they
can justify raising taxes of the middle class has been buried the last four
years. How in Lord`s name can they justify raising their taxes?

(END VIDEO CLIP)

MATTHEWS: Well, shortly after Joe Biden made those remarks, Mitt
Romney tweeted, agree with Joe Biden, the middle class can has been buried
in the last four years which is why we need to change in November with the
#cantafford4more. And within a few hours, Paul Ryan, the VP nominee of the
Republican Party mentioned binds remarks on the campaign trail.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R), VICE PRESIDENTIAL CANDIDATE: Vice president Biden just
today said that the middle class, over the last four years has, has been,
quote, "buried." We agree. That means we need to stop digging by electing
Mitt Romney the next president of the United States.

(END VIDEO CLIP)

MATTHEWS: Congresswoman, is this a gaffe over language? He had
simply said there has been a middle class squeeze because all the tax
breaks for the rich or whatever. The cost of living, would that even be a
story or is it about a word that he misused? Is this serious or what?

REP. DEBBIE WASSERMAN SCHULTZ (D-FL), CHAIRMAN, DEMOCRATIC NATIONAL
COMMITTEE: This isn`t serious. What this is, is another example of the
Romney campaign ripping remarks out of context, desperately trying to
distract from the fact that their candidate actually dismissed 47 percent
of the American people, called them victims said they don`t matter, said
they depended on government.

MATTHEWS: What did him mean that was misunderstood?

SCHULTZ: What he meant was that as a result of the failed policies in
the past, that President Obama inherited, the middle class has been buried
under polices that crashed our economy, got us into the worst crisis since
the great depression, and that President Obama has been working hard to dig
us out of it and brought us out, 30 straight months of job growth in the
private sector.

MATTHEWS: You are sure say he said it. Because I think he was
talking about the way the tax structure -- we`re still under the Bush tax
cuts. We prevent that. There`s been no Obama tax program. It`s all what
we`ve inherited. So either he`s making the point it wasn`t a fair taxes,
your thought.

JOY REID, MSNBC POLITICAL ANALYST: You know what, Chris, I think it
is a gaffer, if there was one in what Joe Biden said. and obviously he
misspoke, was the word for. You know, as you listen to the totality of
what Biden he was talking about, I think he was talking about policies that
go back over the last maybe 12 years, where we are talking about cutting
taxes for wealthy people and really squeezing the middle class. I think he
said four and that was a mistake. He`s obviously provided an opening for
the Romney campaign that really desperately needed a lifeline. So, you
know, God love him, Joe Biden, you know.

MATTHEWS: Yes, I know. Let me get to this point. Because I think we
are keeping the journalists and we are for short hand. Everybody wants a
headline. The word gaffe is when you say the wrong word. OK, everybody
makes a mistake in terms of language.

But when you say something, you deep down believe like this what I`m
about to talk about and it tells you what your philosophy, and it is in
fact that warning about what it is. Here`s Congressman Paul Ryan, the VP
nominee of the Republican Party. "The Huffington Post" dug up a tape of
Paul Ryan last year talking about how 30 percent of the country wants to
live on welfare. In fact, they want a welfare state. It sounds a lot like
Romney`s charge that 47 percent of the country wants to live like that.
Let`s watch.

(BEGIN VIDEO CLIP)

RYAN: Today, 70 percent of Americans get more benefits from the
federal government in dollar value than they pay back in taxes. So you
could argue we`re already past that tipping point. The good news is,
survey after survey, poll after poll, still shows that we are a center
right 70/30 country. Seventy percent of Americans wants the American
dream. They believe in the American idea. Only 30 percent want the
welfare state. What that tells us is, at least half of those people who
are currently in that category are there not of their wish or their will.

(END VIDEO CLIP)

MATTHEWS: So there he is. You represent a city, part of Florida.
That if you`re on Social Security and you are basically aren`t paying
income taxes like you were used to, you`re getting the benefits thaw earned
over 40 years of working or 45 years, you`re one of the problems, according
to him?

SCHULTZ: Yes. I mean, I sit on the budget committee with Paul Ryan.
So, I`ve had an opportunity to debate him on many occasions. This is a
case of birds of a feather. The only difference between Mitt Romney and
Paul Ryan is 17 percent that they dismiss.

MATTHEWS: Why are they talking 40 percent and 30 percent and 47
percent? Why are they running around the country cutting us in half saying
these are the bums. I don`t want their votes?

SCHULTZ: Because Mitt Romney and Paul Ryan really believe that half
the country doesn`t matter. They don`t get that the percentage of
Americans that they are dismissing and calling victims and government
dependence are our veterans who benefits --

(CROSSTALK)

SCHULTZ: Or 20 million seniors who paid into Medicare and Social
Security their whole lives and now deserve to have that safety net in place
for them. Or college students like those that go here to the University of
Denver who need to make sure that they can go to college and afford it and
have a student loan interest rate that`s low enough for them to be able to
pay back their loans.

MATTHEWS: Let`s just talk sheer politics, not this an run philosophy,
the objective is whatever they call it, the elite ruling of the world.
Why, Joy, does a politician trying to get 51 percent, as Romney has been
saying for months, all I need is 51, why would you write off 47? That
gives you three to play with? Because you only have 53 left?

REID: Exactly.

MATTHEWS: You got only at least two percent of the 53 you`re working
on. That`s kind of strange for a politician.

REID: And Chris, therein lies, and I`m glad you played both of those
tapes. Because therein lies the difference between the tapes that we are
seeing from Romney, the 47 percent, Paul Ryan, the 37 percent, by the way
his respond to the Joe Biden tape was to say yes, the American people are
buried under regulation.

The American people aren`t buried under regulation. That is referring
to corporations. The difference between the Ryan/Romney tape, in what they
said and what Joe Biden said, is that you can feel Joe Biden speaking for a
palpable love for regular folks. No one can argue that this guy doesn`t
have real deep down in his guts, a love and admiration for the average
working person. Whereas what the Romney and Ryan tapes showed what just a
disdain, a disdain for whatever percentage you want, make it 30, make 47
percent. People who want to be president of the United States don`t
typically dislike a large swath of the American people. And they express
what sorted found like this day and that is a big difference.

MATTHEWS: OK. Congresswoman, you`re out there talking to people all
the time. What has been the impact? I think 47 percent of the line for
Romney is going to go right through November, my sense.

SCHULTZ: I think so, too. Because, look, the poet Mayo Angelou said
it best, if people show you who they are, you should believe them. Mitt
Romney and Paul Ryan have consistently showed us that they have this
disdain as Joy-Ann said for half the country. They don`t understand that
we need to have a president who fights for the middle class and working
families and I think that`s the clear contrast that we will see on the
debate stage tonight.

MATTHEWS: What about next week? If we have a good debate tonight,
this could be the battle of the century. But next week, we have the middle
weight championship, you might call, or light heavy weight. You have Biden
against Ryan. Give me a prediction. What is that going to be like?

SCHULTZ: Well, I think that`s going to be a really clear contrast as
well. Joe Biden has been fighting for the middle class and for working
families for the regular guys for his entire career for more than 30 years
and Paul Ryan dismisses 30 percent of the country as being depending on the
welfare state. I think it is going to be clear who is in there swinging
for the middle class.

MATTHEWS: Joy, that`s going to be a battle of generations. I mean,
Joe has been winning elections since he was 29 back in `72. He won his
senate race for McGovern lost. And now he`s out there against this guy
that`s the new kid on the block. How`s it going to look?

REID: Yes, absolutely. And I think people are going to underestimate
Biden because they are going to assume. There he is. He`s going to do a
gaffe. He is going to mess up. Don`t under estimate this guy. Because
what you are going to see up there is a guy who can speak for his
generation, who are critical to both of these campaigns, older people,
working class people. And he can zero in on those folks and say, you know,
I know she next door can`t afford to have a voucher and shop for her
Medicare and when he turns to Paul Ryan, explain to me how you voucherize
Mrs. McGill (ph) cut his Medicare, I don`t care how much the media has
built up Ryan as this sort of genius. He`s not going to be able to answer
that and that is going to be difficult for them. and I think they are more
boxed in. So, don`t underestimate Biden.

MATTHEWS: I want to know about the neighbor on the other side. This
is a (inaudible). I want to know about both of those ladies.

Anyway, --

(CROSSTALK)

MATTHEWS: I love Migilicutty, Lucille Migilicutty. I love Lucy. And
her dad, as well.

Thank you very much. I love that name. U.S. Congressman Debbie
Wasserman Schultz, chair of the Democratic Party and Joy-Ann Reid, our own
and Grio`s.

Up next, it`s not just Jim Lehrer, we have a "Hardball" house that got
big questions for the candidate. E got it for you right now coming up. We
would try to get the answers to some surrogates.

This is "Hardball," live in Denver, at the first presidential debate.

(BEGIN VIDEO CLIP)

RONALD REAGAN, FORMER PRESIDENT OF THE UNITED STATES: Are you better
off than you were four years ago?

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MATTHEWS: We`re back at the University of Denver, just an hour before
the big night, an exactly one hour, the first presidential debate of this
year. And all presidential debate tricked by the way is not to answer the
question that was asked but to answer the question that a candidate wish
had been asked.

So tonight, I`m going to ask some direct questions of my own that I
want answered.

Please, with me now are two MSNBC political analysts, salon`s editor
at large, Joan Walsh, author of "what`s the matter with white people,"
interesting title, I`m still pondering. And then, she is going to play the
role of President Obama tonight. And former RNC chair, Michael Steele, is
playing the role of Governor Romney, a somewhat more difficult task.

Anyway, the first question for you, Joan, is this. Are you against
school choice? If so, why do you send your daughters to private school in?
Is choice just for the one percent, Mr. President?

JOAN WALSH, EDITOR-AT-LARGE, SALON.COM: Chris, I love my daughters
and Michelle and I made the decision that was best for them. Being the
children of the president comes with some special burdens and we picked a
school that we felt could handle that. But I am for school choice. You
will see in my race to the top initiative that we have expanded school
choice opportunities through charter schools and some of my friends, some
of my Democratic Party friends are not entirely happy with the way we`ve
expanded charter schools. But we think that there are a laboratory of
innovation and we want to encourage choice.

But Chris, I have to make the point that I am the president.

MATTHEWS: You are for your idea choice, which is you`ve got to go to
public school. What about choice that allows you to pick a parochial
school or another kind of private school that you can go with a voucher or
what we call in D.C., an opportunity scholarship? Why should we let kids
opt out of public school?

WALSH: There`s a role for voucher programs. There`s a role for the
parochial schools. But Chris, you know, vouchers and charter schools are
not a panacea. We have enough research done that shows us that kids don`t
necessarily outperform public school kids using those options. And the
point I need to make, Chris, is that I am the president of all children.
And that includes the children whose parents aren`t able to exercise school
choice. I want all --

MATTHEWS: So you answered my question my way, which is if the
president gets to send his two wonderful daughters to a private school and
a nice school, let`s extend a little bit of liberty to other people.
That`s where I stand. Let`s go to Romney.

WALSH: I`m extending a lot of liberty.

MATTHEWS: I want to know why Romney pays 13 percent and the tax law
says you should pay 35 percent. It`s written right there. Top bracket.
He makes 13 million bucks last year out of equity and he pays, what, 13
percent. How come? Is that fair?

MICHAEL STEELE, CHAIRMAN, REPUBLICAN NATIONAL COMMITTEE: Well, it`s
fair because that`s how the law is written, Chris, with respect to
investment.

MATTHEWS: The law can be changed.

STEELE: Well, the law can be changed and that`s one of the debates
we`re going to have during my administration. Where we look at the entire
tax code and we look to find that fairness and that balance in the system
to make sure that everyone, to use the president`s term, pays their fair
share. I`ve paid my fair share under the law. The law says that, you
know, I can take these deductions. I didn`t take all the deductions that I
was entitled to because of --

MATTHEWS: How come your party voted down to the last woman and man
against the Buffett rule? Against requiring, in principle, that CEOs pay
the same tax rate as their secretaries?

STEELE: Because that`s just politics. That`s not getting to the nub
of reforming the tax code.

MATTHEWS: It isn`t?

STEELE: That`s just getting out there and doing the typical --

MATTHEWS: Why does it seem like the right thing to do?

STEELE: Well, it seems like the right thing to do for you, Chris, but
what is the fair share? What is the fair number that a Warren Buffett or a
Mitt Romney or myself should pay? That`s going to be at one end of the
debate? But then, how do we get others in our economy who want to be
taxpayers, who want to be taxpayers, those who lost their jobs under this
administration, want to be back in the system, want to pay their fair share
to the tax process, so let`s get them the jobs to do that.

MATTHEWS: I`m not sure that was a clear response. But, let`s go on.

STEELE: It was clear. It worked for me.

MATTHEWS: Let me go to Joan. The vice president Biden right when he
urged you to switch to an anti-terror strategy in Afghanistan, just go
after the terrorists, maybe from offshore, from out of the country, and get
away from this counter-insurgency strategy of trying to nation build,
that`s cost us all these lives. Was your VP right and were you wrong when
you stayed with counter-insurgency?

WALSH: You know, I listened to Joe Biden, my vice president, Chris.
He was an important -- he played a huge role in crafting our strategy. I
listened to my defense secretary. I listened to my secretary of state pip
also listened to my generals. And at the end of the day, I went and
visited Arlington national cemetery. I went to Walter Reed. I saw the
costs of war. And I made the best decision I could make at time, with
plenty of input.

But the most important thing to me was setting a deadline for our
soldiers to come home, and that is happening. We are disengaging. But
this question makes me wonder if you`re suggesting that Mitt Romney perhaps
would prefer that I not have sent troops into Afghanistan, because he`s
been very vague on his own plans for Afghanistan.

And so far, I`ve seen a lot of saber rattling, Chris. I`m not sure
that I`ve seen a war that he doesn`t like. I really would love to hear him
answer what his plan for Afghanistan truly is.

MATTHEWS: Fair enough. Let`s go to the tough question for governor
Romney. You supported the Vietnam war. You were a protester, a student at
Stanford, for the war. I never heard of such a person. You were out there
with placards yelling, we have to go to Vietnam. We sent two million young
men at your age to that war in Vietnam. If it was worth their lives, as
you argue to know a protest like, that you got to fight, why wasn`t it
worth yours or even your time?

STEELE: Well, I think the premise of your question is unfair.

MATTHEWS: Well, a lot of people want the unfair question asked and
answered.

STEELE: It wasn`t worth my --

MATTHEWS: Do you believe it`s pacifist to not fight yourself --

STEELE: Well, there are a whole lot of reasons and decisions that
were made during the time, during that war, that you know, my family and I
talked about, that I had my concerns about. But that is not what this
election is about. This election is not re-litigating the past of why I
did or didn`t go.

MATTHEWS: The reason it`s relevant --

(CROSSTALK)

MATTHEWS: That you`re going to be sending more men and women into
combat to get killed in some cases or take serious life-long wounds, and at
the same time, when you had supported a war, another time you were for a
war, you made sure other people did the fighting.

STEELE: Well, look. We`re trying to make sure this economy grows,
yes. But there also that we protect our interests here and abroad and that
we want men and women who want to serve to serve.

MATTHEWS: Some of your answers requester quite adequate, others were
not.

Thank you very much, Michael Steele. Thank you, Joan Walsh.

When we return, let me finish with what I`ll be looking for from the
actual candidates tonight in about an hour.

You`re watching "Hardball," live from the Denver, the University of
Denver, the first presidential debate.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with what I want you to look for
tonight.

Look for motive. Why is he out there, this candidate? What`s he
really want to do as president? Who`s he for? And why does he think he
should be president at this time in our history? Look for passion. What
turns this guy on? America? The idea behind the country? The chance for
help people deal with their really hard chances. What makes the guy laugh?
What makes him cry? What makes him give a damn? Beneath the nice suit,
the tie and shined shoes, what soul lies there? What spirit? What`s the
music to the guy?

Finally, maybe the easiest to catch and the hardest to forge,
spontaneity. OK, The lights are on, is anybody home? Does this person
react to the moment? Does he come alive faced with a challenge, a question
he hadn`t expected? Does he like this arena of the mind and through it,
does he love the challenge of serving and leading this country?

If he has it all, motive, passion, spontaneity, stop looking for a
president, you may have found one.

That`s "Hardball" tonight. Thanks for being with us. Stay tuned to
MSNBC all night for our coverage of the first great presidential debate
here at the University of Denver. It begins right now with my colleague,
Rachel Maddow.

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

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