'Hardball with Chris Matthews' for Friday, November 9th, 2012

HARDBALL
November 9, 2012

Guests: Dee Dee Myers, Willie Brown, Matt Viser, Ashley Parker, Steven LaTourette, David Ignatius, David Frum

CHRIS MATTHEWS, HOST: The man and his mandate.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington.

"Let Me Start" with this. The reelected president did it today. He
said what he`s going to do, how he`s going to lead. He`s going do it like
a world leader entering into negotiations with preconditions. Those
preconditions are now clear, a take-back of the Bush tax cuts from the very
top. This is it, what we were waiting for, a tough, sharp statement of
what this reelection means.

It means that people will know we have a president who`s ready to
stand his ground for jobs, for growth, but not the Bush/Romney way. No
more trickle down now that the people of this country have sent their
message from the ground up. Armed for combat, Barack Obama takes the field
now against the very forces who fought to cut him down.

He will be a Democratic president. He will be fair on taxes. He will
use those taxes to rebuild this country and educate it up to the tough
competition we face in the 21st century. Rock solid, he`s backed again by
a majority of the American people, indeed reelected as the only Democrat
since the Civil War with two majority elections behind him, with an
upgraded mandate at his back.

Today he marched on to the field of combat against an uncertain foe,
some ready to deal, others hiding in their bunkers, waiting for something,
anything to save them from the terrifying sight of 21st century electoral
reality.

I`m joined by Dee Dee Myers, former Clinton White House press
secretary, and "Mother Jones" Washington bureau chief David Corn. He`s the
author of the e-book "47 Percent" -- by the way, that did it -- an MSNBC
political analyst , as well.

Well, today in his first public comments since his reelection, the
president stressed he`s willing to compromise to avoid the consequences of
going over that so-called fiscal cliff at the end of the year. However, he
said he`s sticking to his guns that the wealthiest need to be asked to pay
a bit more.

Let`s watch.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I want to be clear, I`m
not wedded to every detail of my plan. I`m open to compromise. I`m open
to new ideas. I`m committed to solving our fiscal challenges.

But I refuse to accept any approach that isn`t balanced. I am not
going to ask students and seniors and middle class families to pay down the
entire deficit while people like me making over $250,000 aren`t asked to
pay a dime more in taxes.

This was a central question during the election. It was debated over
and over again, and on Tuesday night, we found out that the majority of
Americans agree with my approach.

(END VIDEO CLIP)

MATTHEWS: Couldn`t be more direct than that. I like the clarity of
today. He said, I`ll negotiate, but not on this. David Corn?

DAVID CORN, "MOTHER JONES," MSNBC POLITICAL ANALYST: Two years ago,
when he cut that deal with the congressional Republicans to extend the Bush
tax cuts in return for basically a second stimulus -- I thought it was a
good deal at the time -- he said exactly this -- Last time I`m going to do
this. You took hostages. I`m paying ransom now because I`m getting more
in return, actually. But down the road, it`s not going to be that way.

MATTHEWS: He also said this is what the election was about.

CORN: He said what the -- and it was, if you look at the exit polls,
you look at the numbers. You know, "mandate" is a big word you used at the
top of the show, but he won. And at some point -- he has shown he`s been
willing to compromise on Democratic policies much more than the
Republicans. He will give on entitlements, but he has to get something in
return.

MATTHEWS: Dee Dee, tell me what you think, what you heard today. I
thought it was dramatic. He said this election meant something, it meant
fairness.

DEE DEE MYERS, FMR. WHITE HOUSE PRESS SECRETARY: Right. And that was
probably single most repeated phrases of his entire election campaign was
talking about the middle class. They truly believe that they won because
their message was protecting the middle class, and they beat Romney very
badly on that and...

MATTHEWS: And Romney defended the rich, and the middle class in all
the polls we showed, including he one again last night, didn`t buy his act.

MYERS: Right...

CORN: And he called for lower tax rates, which -- you know, which
didn`t win the day for him.

MYERS: Right, but you know, I think the other part of that that was
really important was that he said, I`m not wedded to any detail in my plan.
I`m open to new ideas and I`m open to compromise. That is really important
because both sides are going to have to give up things that they really
care about.

MATTHEWS: OK, I heard a totally different speech from the president
today, as we all did, from what Romney would have said, had he won. And he
could have won.

CORN: Oh, yes.

MATTHEWS: You know, a couple weeks ago, it looked like he was heading
that direction. Here -- he said he wanted the tax money from the rich
because he wanted to do things, not just to screw them but to do stuff. He
actually came out today and said, I want to build stuff in this country,
rebuild the highways. Look at New York, the places that really need
rebuilding now. Look at -- look at the education needs. We got to catch
up to the Chinese in education, catch up to the rest of the world.

CORN: I think this election that we just had in some ways was one of
the most ideological elections we`ve had in modern times.

MATTHEWS: Yes. Explain it in simple terms. What`s the difference?

CORN: Simple terms, the president put forward a vision that you look
at government as a way to come together communally through -- you know,
through taxes to invest in infrastructure, innovation, education to move
the country forward.

The Romney/Ryan view, which is very simply stated, and people believe
this...

(CROSSTALK)

CORN: ... is that government is the enemy. You got to get government
out of the way and let the markets work and that`s how you move ahead. It
was very clear-cut, and one guy won and one lost.

MATTHEWS: Well, we`re in this together now, and I thought the
president (INAUDIBLE) I`m beginning to like his speech election night, when
I was pretty tired there. I`m beginning to like it now because I`m
beginning to hear in it a lot of thought, a lot of thought.

MYERS: Yes, I mean, he -- he -- there`s no question that he has -- I
think David`s right that this was a very ideological election. But the
problem -- the challenge is still that half the country didn`t vote for
him, right? Half -- and they sent a Republican Congress -- or Republican
House back to Congress. And so that`s just the reality.

Now, everybody agrees we have to do something about the fiscal cliff.
The question becomes now that you agree you have to do something, whose ox
gets gore and whose gets saved, and how do you make this work? And the
president made very clear today that investments in creating jobs and
things like infrastructure and education and technology are not negotiable.

MATTHEWS: The House -- by the way, all revenue measures have to
originate in the House. We know that. He has to deal with the House.

John Boehner, the Speaker of the House, today also talked about the
looming fiscal cliff, just like the president, and like the president he
also hinted at room for compromise. You got to listen carefully to see the
compromise that could be coming. Let`s listen.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: It`s clear that there
are a lot of special interest loopholes in the tax code, both corporate and
personal. It`s also clear that there are all kinds of deductions, some of
which make sense, others don`t. Everything -- everything on the revenue
side and on the spending side has to be looked at.

(END VIDEO CLIP)

MATTHEWS: Anyway, Senator Chuck Schumer of New York this morning on
MSNBC suggested that the right wing might be more willing to accept
compromise now. He`s being hopeful. Let`s watch.

(BEGIN VIDEO CLIP)

SEN. CHUCK SCHUMER (D), NEW YORK: Boehner wants to compromise.
That`s why he gave that speech. You know, Boehner`s not a hard right guy,
he`s a mainstream conservative. And I think it`s going to work because the
hard right is chastened in a lot of ways.

(END VIDEO CLIP)

MATTHEWS: Well, both Boehner and Chuck Schumer make sense. Here`s a
Republican who may not be quite in on what`s happening after the election.
Here he is. He`s South Carolina Republican Jeff Duncan. "The Washington
Post" quoted him as follows. "When I look at the results of the election,`
Congressman Duncan says, `it becomes clear to me that the House is now the
last line of defense for preserving freedom in this country. The people of
South Carolina clearly rejected President Obama`s policies, and I intend to
fight on their" -- in other words, it`s the civil war.

Wait a minute. I`m standing up for South Carolina, and Obama may be
interested in this thing called the union, I`m for South Carolina. What an
amazing -- loyalty to your state as opposed to your country. Didn`t we get
past that at one point?

CORN: I don`t think so. And this is the issue we have...

MATTHEWS: I`m standing up for South Carolina! What does that mean?

CORN: We went through this last summer, two summers ago...

MATTHEWS: Yes.

CORN: ... with the showdown over the debt ceiling.

MATTHEWS: Yes.

CORN: And at that point in time, the president tried to reach a grand
bargain. Schumer is right, John Boehner would have cut a deal, but he
couldn`t because at the end of the day, had he done so, his own House
Republicans would have risen up in mutiny and he would have lost the
speakership.

The question now is whether he has some points of leverage against the
Tea Party wing and whether Mitch McConnell and some of the more adult
members of the Republicans in the Senate can put pressure on the House. If
they can`t change these fundamental dynamics, we`re heading in the same
direction.

(CROSSTALK)

MYERS: I think Mitch McConnell is a problem because he`s up for
reelection and he`s clearly worried about getting a challenge from the Tea
Party right in Kentucky.

But I think one of the interesting things that Boehner said was it`s -
- you know, this is your moment, Mr. President, now lead, right? That`s
both an acknowledgment of reality and a little bit of a trying to pass the
buck, but it`s the truth.

It is going to be up to the president to go into those negotiations
and to lead and to continue to listen and find areas where compromise can
be built.

CORN: But he has to lead...

(CROSSTALK)

CORN: He has to lead publicly, as well, because this -- you know, the
election...

MYERS: Yes.

CORN: ... is over...

MATTHEWS: Sell!

CORN: He has to sell it. You know, there are a couple -- there
aren`t a lot of Republicans, I think, at play from -- from public -- in
regards to public pressure, but there are a few. And the president is
going to have to work hard to find points of pressure on those people...

MATTHEWS: OK, let`s try something here...

(CROSSTALK)

MYERS: ... willing to absorb some blows.

MATTHEWS: Remember how he ran against Hillary Clinton and beat her in
a very tough election for the nomination, but last time. Hillary Clinton
had a great idea, the individual mandate for health care, which means self-
reliance, everybody`s got to do something. You can`t just...

MYERS: It was actually a Republican idea.

(CROSSTALK)

MATTHEWS: So the president bought into an idea he had ran against.
Now this time, everybody on the Democrat side, the progressive side, said,
You can`t go this Romney direction of having -- keep the higher rates -- or
the lower rights but get rid of some big fat deductions.

Now the president is being given an opening here by Boehner saying,
There is a way we can compromise here. Keep that 35 percent for the top
rate, but take away all the fat cat deductions. There may not be enough
money there. People in that...

(CROSSTALK)

CORN: The Tax Policy Center.

MATTHEWS: Is there enough opportunity for that kind of direction,
take away a lot of deductions for state and local, for example, taxation,
which you have to pay anyway, all kinds of ways that -- oh, right, you can
have your formal 35 percent, but you`re going to pay a lot more taxes if
you`re rich.

MYERS: Yes. I think at the end of the day, right -- right now, the
White House is going to stand by, We want the top rate to go back to 39.6
percent. That`s their opening position. We want it to start with people
at $250,000 and above.

MATTHEWS: Yes.

MYERS: That leaves -- of course they`re going to stand by that now.
Going to negotiations, the principle that they really need to protect is
that the wealthiest pay more. Americans don`t care exactly how you get
there, whether it`s through the tax...

(CROSSTALK)

MATTHEWS: So there is an opening here.

MYERS: There`s no question there`s an opening here.

CORN: The president...

MATTHEWS: But it`s the president pushing this, and the other guy,
Boehner, saying, OK, I got a route for you here.

MYERS: Yes.

CORN: The president is willing to deal. He`s willing to compromise,
maybe even moreso than some Democrats would like. And -- but he`s also
able to get the votes and bring the votes to the table.

MYERS: Right.

CORN: All those things are open questions on the Republican side.

MATTHEWS: OK...

CORN: Can John Boehner match him in any of those departments?

(CROSSTALK)

MYERS: ... when he said, I`m open to new revenue. He didn`t say that
whatever -- you know, by eliminating deductions...

CORN: It could be magic pony revenue, though.

(CROSSTALK)

MYERS: It`s not. It`s not. He -- you got to give Boehner credit. He
said new revenue, and I believe that he meant it.

MATTHEWS: OK, the president goes to sleep tonight. He`s thinking, I
won. Must be tremendous relief on his part.

MYERS: Yes.

MATTHEWS: And then he`s thinking down the road because he is thinking
of the future...

CORN: He always does.

MATTHEWS: ... he`s going I`ve got -- yes, he`s thinking of the
future. He`s going, Wait a minute, I got two big risks here. One, I can`t
defend my philosophy, which my base will hate and I`ll hate myself for it.
Michelle will hate me for it.

(LAUGHTER)

MATTHEWS: I got to defend my fairness on taxes, rich...

CORN: Right. Right.

MATTHEWS: ... pay more to -- and we do more. We need more money to
do more things, infrastructure, education. The other fear he has is, I`m
going off that fiscal cliff, meaning I tried so hard to get my way that we
screwed it up with the Republicans, like we did last August, and nothing
gets done...

CORN: And the economy...

MATTHEWS: ... and the economy tanks again for a second recession...

MYERS: Right.

MATTHEWS: ... and I`m going down in history as a double failure.

MYERS: He can`t let that happen.

MATTHEWS: Now, so he has -- at some point, he`s got to pull back from
the Paul Krugmans of the world and the people on the far left, if you will
-- not far left but left -- and he`s got to say You know what? I`m
president. You`re a columnist.

MYERS: Right. I mean, the -- he has -- he`s going to get a lot of
flack from both his own left flank and the right. He has to accept that.
He cannot, as a responsible adult, let the economy go -- let us go over the
fiscal cliff. That would be terrible for the economy. It`d be terrible
for the people that he`s trying to protect in this. It would be terrible
for the middle class.

CORN: At the same time, though, the way he negotiates and the way he
tries to reach that compromise is going to be essential. I think people on
the Democratic Party will be willing to yield on some issues. They`ll
fight and they`ll scream and they`ll make good cases for their own
position, but at the end of the day, if the package -- if the compromise is
reasonable and is good and he`s gotten major concessions from the right,
then I think...

(CROSSTALK)

MATTHEWS: I got the solution. If it comes down to the Republican
Party led by John Boehner brings this country to economic hell to protect
the very rich, they`re gone.

CORN: Well, that...

MATTHEWS: So that`s what he has to do, is put them in the box where
the only thing separating this country from economic deliverance to a
better time is a bunch of Republican toadies and hacks working it out for
the rich people.

CORN: He has to set -- he has to set the narrative and the -- and the
context for what`s going on, and people will listen to him a lot more now
than they`ll listen to Boehner.

MATTHEWS: Let`s figure -- Jack Lew and the rest of them in the White
House figure a way to carve this so the Republicans` only escape is to say,
We`re here for the rich, which is not an escape.

MYERS: Right. But if he gets this right, this sets him up for suck
sets in a second term like -- like...

(CROSSTALK)

MATTHEWS: You notice he didn`t say...

MYERS: It will make the economy better.

MATTHEWS: You notice his big speech today, he started, I`m not here
to reduce the debt, I`m here to get more jobs for people and more growth.

Anyway, thank you, David Corn, and thank you, Dee Dee Myers.

Coming up, why Romney lost. This is a good one. David Frum, former
Reagan speech writer -- I think it was Reagan -- says Mitt Romney`s problem
wasn`t just shifting demographics or a fumbling campaign, it was his
message, the message of cut benefits for the poor, the elderly, and the
middle class to pay for tax cuts for the rich. Until that message changes,
the Republicans will not be a majority party, he says.

Also, Mitt Romney wasn`t this week`s biggest loser. How about Karl
Rove? Karl Rove! I`ll say it again -- Karl Rove. Not only did he spend
millions of other people`s money with little gain, his TV performance
Tuesday night made him the poster child for the Republican Party`s refusal
to be part of reality people.

Plus, inside the two campaigns, how the Obama campaign reacted to that
disastrous first debate and why as late as Tuesday night, the Romney people
thought they had this thing won. We`ve got reporters from both sides, a
lot of tick-tock, a lot of narrative tonight. You`re going to love it.

And the shocker of the day, CIA chief David Petraeus resigns, he says,
because of an extramarital affair. We`ll try to get to the bottom of that
water cooler story tonight.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Well, a nostalgic moment for President Obama now that his
reelection bid has ended successfully. On Wednesday morning, the president
addressed campaign staffers at the Chicago headquarters and thanked them
for their dedication.

(BEGIN VIDEO CLIP)

OBAMA: What you guys have done means (INAUDIBLE) the work that I`m
doing is important (ph), and I`m really proud of that. I`m really proud of
all of you and what you...

(CHEERS AND APPLAUSE)

OBAMA: The most important thing you need to know is that your journey
is just beginning. You`re just starting. And whatever good we do over the
next four years will pale in comparison to what you guys end up
accomplishing for years and years to come. And that`s been my source of
hope.

(END VIDEO CLIP)

MATTHEWS: Isn`t that something? One of those rare emotional, raw
emotional moments we don`t get to see too often from the president. He`s a
very cool guy most of the time. From campaign family to actual family, a
lot of people noticed this moment between the president and his younger
daughter, Sasha, on election night.

Well, on closer scrutiny, Sasha appears to be reminding her dad to
turn around and give some smile and wave action to the people behind him.
Boy, she`s the choreographer! He quickly took her direction.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. Well, the Republican soul-
searching is well under way, of course, after Mitt Romney`s loss Tuesday
night, and with the Democratic gains in the Senate and in the House, the
Republicans are facing the reality of a country moving further and further
away from the right-wing ideology that energizes its base.

If the Republican Party wants to survive, then the party that
questions evolution is going to have to evolve, and quickly. But will
they, or will they double down on the far-right message pushed by many in
the party still and just blame Romney, the guy, for losing because he was a
flawed candidate?

Well, Steve LaTourette`s a Republican congressman from Ohio, east of
Cleveland, and David Frum is a former speech writer for George W. Bush.
He`s the author of a new e-book published by "Newsday" called "Why Romney
Lost."

Boy, that was a quick one to come out with, David. That`s journalism.
That`s one-day wonder stuff!

Let me start with the elected official. Steve LaTourette, what do you
make of it? I mean, it seems like -- and I`m sure David will do it and I
would do it, too. You always come out of these diagnoses, postmortems by
basically having an opportunity to express your philosophy you had going in
with it and say, This proves me right.

REP. STEVEN LATOURETTE, R-OHIO: Right.

MATTHEWS: But did this election seem to be going in the wrong
direction long before Tuesday night, as far as you were looking at it? Did
you know there was a problem?

LATOURETTE: Well, I knew there was a problem in -- what the
president`s campaign did beautifully in the month of August is, he said, 42
states really don`t matter, and we are going to concentrate in eight
states, Ohio being one of them, and we`re going to define Mitt Romney
before he has the chance to show up in Denver on October the 3rd and sort
of define himself.

And so, for a state like Ohio, there wasn`t enough time between
October the 3rd for the real Mitt Romney to get to the socially moderate,
fiscally conservative women because they`d already been convinced that this
was this evil guy from Bain Capital.

So, the president`s campaign was brilliant, and Mitt Romney ran out of
time.

MATTHEWS: But didn`t Romney commit a lot of personal attacks, like
talking about $10,000 bets with Rick Perry? Didn`t he talk about the
Spanish community self-deporting itself, the people without papers?

You let him off the hook here, but he seemed like he gave a lot of
clues to who he might well be.

LATOURETTE: Well, but I will tell you, those were -- we all say
things that are unfortunate from time to time.

But I happen to believe that the guy that showed up in Denver was the
real Mitt Romney. And the problem was that during that campaign season
when he has to debate Michele Bachmann and Rick Perry and Herman Cain, he
had to move so far to the right in order to get the nomination.

MATTHEWS: Well, why didn`t he go to the left? Why didn`t he go to
the left?

LATOURETTE: Why didn`t he go to the left?

(CROSSTALK)

LATOURETTE: Because he wouldn`t have won the nomination. He wouldn`t
have won the nomination.

MATTHEWS: Well, that`s -- there is my point. Your party is on the
far right, because that`s where the votes are in the primaries.

LATOURETTE: Well...

MATTHEWS: Isn`t that the problem?

LATOURETTE: Well, I would argue that the same is true in the
Democratic Party. The votes in primaries are on the far left. And that`s
why you see Democratic candidates having to veer to the left and then they
come back to the center. Mitt Romney got there too late.

MATTHEWS: I can`t argue with that.

Let`s take a look. Look at this conservative -- first, I want David
to look at this.

Look at this conservative blogger Erick Erickson. He does RedState.
He wrote this week arguing that it was wrong to blame the social
conservatives for alienating moderates -- quote -- "You may mentally decide
to escape having to deal with the other implications of this election, that
if only the GOP would abandon its social conservatism, it would do better.
But if you do, go find yourself a new coalition because you want have half
the votes the GOP has now. Good luck with that. In fact, if the GOP
really wanted to expand with minorities, it would keep the social
conservatism and throw out the fiscal conservatism."

David Frum, there`s a person who has found a way to rationalize the
defeat from their point of view, which is go right on social conservatism.

DAVID FRUM, FORMER SPEECHWRITER FOR FORMER PRESIDENT GEORGE W. BUSH:
The floggings will continue number morale improves and the party will
continue to shrink until it begins to grow.

Just to your question at the very beginning, your joke, I actually
started work on this book six weeks ago.

MATTHEWS: Yes. Well, good for you.

FRUM: And it was not a one -- it`s not a product of one day. It`s a
product of a lot of thought.

(CROSSTALK)

MATTHEWS: When did you see the problem emerge then?

FRUM: Well, let`s just start with this fact.

In the past six elections, the Republican Party has won a majority of
the votes or a plurality of the votes -- I`m sorry -- a majority of the
votes in the presidency just one time, 2004. Six elections, five of six,
less than half the vote.

In the previous six presidential elections going back to 1968,
Republicans won five times out of six, and even if you include their
defeats, even if you include the three-way election of 1968, they averaged
52.5 percent of the vote. So, one six-year -- one six-cycle period, 52.5
percent, and the other never a majority.

MATTHEWS: Yes.

FRUM: This is not about Mitt Romney. It`s not about Chris Christie.
It`s not about the storm. It`s about a deep obsolescence of what the party
was doing.

The core problem is this. Like all successful institutions, General
Motors after the 1960s, the U.S. Army after World War II, the Republican
Party has been slow to change to a new reality, because what it used to do
used to work so well. And it`s so difficult to admit it doesn`t work
anymore and hasn`t been working for a long time.

MATTHEWS: Is it just because there aren`t -- the percentage of white
people in the population is diminishing?

FRUM: No, it is not about that. It`s not about the Latino vote only.
It`s about the American middle class.

It`s that the Republican Party developed in the 1970s a series of very
powerful answers to the problems of low productivity and high inflation and
the Soviet challenge.

MATTHEWS: Yes.

FRUM: And now in the 21st century, all of those problems have been
solved and we have new problems of inequality, of high health care costs
and of the Chinese challenge. They are offering still the same ideas that
worked against completely different problems.

MATTHEWS: OK.

FRUM: It`s like giving antibiotics to somebody who is suffering from
mental depression.

MATTHEWS: OK.

I was watching this whole thing that`s going to go on, Congressman
LaTourette. Congratulations on getting reelected.

It`s interesting to go look. I only have a minute here. Hannity has
one view, which is basically get with this immigration situation and give
people a path to citizenship. Then Limbaugh says, what are we going to do,
become one of those lefties and start handing out condoms basically? He`s
such a ridiculous person on this regard.

Your view of the party. Is there one thing they could do that would
make your party more acceptable to the middle?

LATOURETTE: Well, absolutely.

And that is we can`t abandon the entire New England states to -- and
say we`re not going to elect Republicans. And the way you do that is --
our message on finances is sound. It`s when we get a guy in Indiana and a
guy in Missouri saying being pregnant after a rape is a gift from God.
Well, that scares some people. And some people in my party need to figure
that out.

MATTHEWS: OK. Well said.

Thank you very much, David Frum. Good luck with the e-book.

FRUM: Thank you.

MATTHEWS: And, Congressman Steven LaTourette, it`s great to meet you
on this show.

Up next: a big shocker here in Washington. CIA Director David
Petraeus today, late today, resigned over what he described as an
extramarital affair. We will get the latest when we return.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL.

Big news here in Washington late today. CIA Director David Petraeus
has resigned his position over what he called an extramarital affair.

NBC chief foreign affairs -- or actually chief correspondent for
foreign matters Richard Engel is with us, along with David Ignatius of "The
Washington Post."

Let me go with you, Richard. What do you make of this? It didn`t
seem -- what`s the right word? It didn`t seem to be freighted right. He`s
quitting over an extramarital affair, but why is he telling us about this
extramarital affair? It doesn`t seem like the normal Washington sort of
scandal developing here. What`s going on?

RICHARD ENGEL, NBC CHIEF FOREIGN CORRESPONDENT: Well, the timing --
we may have some new indications about the timing based on the information
I`m about to say.

This is what we know so the far and what we have been able to confirm
and is reportable. Of course, the CIA director today resigned. And he
cited that extramarital affair. Also, we have learned from law enforcement
sources and law enforcement officials that the FBI is now investigating,
and this is an ongoing investigation, into Paula Broadwell.

She is someone who has had close access to General Petraeus. She was
his biographer and wrote a book on General Petraeus called "All In." She`s
spent extensive time with him in Afghanistan, has made numerous television
appearances talking about General Petraeus, says she`s gone running with
him.

The FBI investigation is seeing whether she had improper access to the
general -- to General Petraeus` e-mails and may have had access to his --
may have accidentally or deliberately had access to classified information.

And so we know this investigation is taking place, and that it`s
identified Paula Broadwell, someone who has been close to David Petraeus...

MATTHEWS: Wow.

ENGEL: ... which many people are saying could be an indication of the
timing of all of this.

MATTHEWS: OK.

David Ignatius, you`re excellent at covering the -- all the spying
agencies. What`s going on?

DAVID IGNATIUS, COLUMNIST, "THE WASHINGTON POST": Well, I think
Richard mentioned the FBI investigation of Paula Broadwell. Paula
Broadwell is General Petraeus` biographer and somebody who has been close
to him, kind of the many (INAUDIBLE) as they say in literary circles.

To speak for a moment about the CIA, General Petraeus, when he came to
the CIA about 15 months ago, appointed as his deputy the then acting
director, Michael Morell, who is a career agency analyst. Michael Morell
has now stepped in as acting director again.

And I think that`s from the standpoint of the CIA and the stability of
U.S. intelligence efforts the most positive thing you could say. Morell is
a career guy. He`s trusted by the White House. He was trusted by
Petraeus. And so you have a smoother transition than you sometimes do in
these situations.

MATTHEWS: Yes.

Let me get back to Richard Engel about this.

You know, you know these guys. And you know as a military guy
covering our fights overseas, the combat operations in Iraq especially,
this man was almost at the General MacArthur level just a few years ago.
People were talking about him as coming in and being the Republican
candidate for the presidency just in this current election cycle.

This is a big fall. This is a big fall down from where he was in our
national estimate.

ENGEL: Well, I think it`s almost you could say the fall of an
American hero.

MATTHEWS: Yes. I agree.

ENGEL: This last decade didn`t create very many heroes in the public
imagination. There were many heroes who were recognized by their brothers
in arms.

But I think there have only been really two so far, and both of them
have been brought down in scandal, one, General Petraeus today, and the
other General McChrystal, who was fired unceremoniously after that article
in "Rolling Stone." They were really the two names that Americans could
recognize, one, General McChrystal, for his role in counterterrorism, in
black ops.

And General Petraeus, he was perhaps the only person in America who
could walk into a football stadium and get a standing ovation.

MATTHEWS: Oh, what a difference a day made.

Anyway, thank you, David Ignatius. Not a good start for our country,
anyway.

Richard Engel as well.

Thank you so much, gentlemen.

Up next: Karl Rove is peddle a new line -- you could call it a line
or spell it with one less letter in it -- about why President Obama won
reelection. Rove says, claims the president`s campaign -- loved the way he
stole this phrase -- suppressed the vote to win. Really? When is this guy
going to deal with reality and stop talking. I mean, suppress the vote? I
think that was their number.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

SUE HERERA, CNBC CORRESPONDENT: I`m Sue Herera with your CNBC "Market
Wrap."

Stocks are up, finally, following the worst two-day slide in a year.
The Dow only gained four points, however. The S&P 500 added 2. And the
Nasdaq was up nine points.

Apple shares making a bit of a comeback after falling earlier in the
week. Shares are up nearly 2 percent. J.C. Penney shares, however, fell 4
percent, that after reporting a larger-than-expected loss of $203 million
in the third quarter.

And that`s it from CNBC. We are first in business worldwide -- and
now back to Chris and HARDBALL.

(BEGIN VIDEO CLIP, "LATE SHOW WITH DAVID LETTERMAN")

DAVID LETTERMAN, HOST, "LATE SHOW WITH DAVID LETTERMAN": The people
who gave him the money -- I think it was the Koch brothers -- they gave him
$400 million. They said, here, hey, tubby, go get us a president.

(LAUGHTER)

LETTERMAN: We got stuff we want to ramrod through. We want to turn
this America -- we want America back. Here, what`s it going to take to get
America back, Karl? Here, come on. Here you go, $400 billion, bring back
a real America, will you?

(LAUGHTER)

LETTERMAN: So a lot of that money is left over. And, boy, I will
tell you, the Koch brothers -- don`t be surprised if you read that Karl
Rove was beaten up by the Koch brothers.

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS: Welcome back to HARDBALL.

Of all the postmortems on the election, the complete flop of Karl Rove
and his billionaire-supported super PACs is the most incredible. And now
that he`s apparently come to grips with the fact that President Obama did
win election again, he has a new theory of why it happened.

This is Rove`s theory on why President Obama was reelected. Let`s
listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Now, with the state of Ohio...

(CROSSTALK)

KARL ROVE, FORMER SENIOR ADVISER TO PRESIDENT GEORGE W. BUSH: ... by
suppressing the vote, by making -- by saying to people, you may not like
who I am and you know you can`t bring yourself to vote for me, but I`m
going to paint this other guy as simply a rich guy who only cares about
himself.

(END VIDEO CLIP)

MATTHEWS: You know what? You know, it reminds me of a criminal trial
when the guy is caught red-handed stealing the car. Joe told me to take
it, just complete nonsense.

(LAUGHTER)

MATTHEWS: Anyway, Karl Rove kept up the spin. FOX host Megyn Kelly
tried to bring him back to reality. She`s been pretty good lately at
dealing with this guy. Let`s listen.

(BEGIN VIDEO CLIP)

ROVE: President Obama has been reelected with the -- becoming the
first president in history to win a second term with a smaller percentage
of the vote than he did in his first term.

MEGYN KELLY, CO-HOST, "AMERICA`S NEWSROOM": I know. You keep saying
that, but, I mean, he won, Karl.

ROVE: And it was close.

KELLY: He won. And that`s what the Republicans...

ROVE: He won.

KELLY: ... care about and the Democrats care about.

ROVE: But you know what?

(END VIDEO CLIP)

MATTHEWS: It`s like, sober up. Karl Rove, get your head together.

(LAUGHTER)

MATTHEWS: Anyway, Michael Steele was chair of the Republican National
Committee, and I have to say a better one than Reince Priebus, all things
considered. He`s an MSNBC political analyst. And Willie Brown was of
course mayor of San Francisco.

Let`s start about -- I have to say one thing about California, Mayor.
You know, I thought this race, I`m going to say, it was very much like the
West Greenwich Village got to vote for everything. We got same-sex
marriage, we got marijuana, we got raise taxes to pay for education. This
is the most liberal electorate I have seen out there since LBJ`s day.

Your thoughts quickly on what happened Tuesday, Mayor.

WILLIE BROWN (D), FORMER MAYOR OF SAN FRANCISCO: Well, I think that
what happened Tuesday is the Republican Party literally gave it away.

They have been obviously succumbing to whatever was required from the
Tea Parties for so long that they have gotten out of step with who the
people are, what the people care about, and why the people would be
motivated to vote. They didn`t do a job of selling the Republican Party
with anything anybody could support.

MATTHEWS: OK.

What`s the suppression thing? We all know what usually historically
suppression means, usually directed at the minority vote. We will make it
difficult for you to vote. We will have -- what do we call it -- I can`t
remember all these old terms you would have -- you had to pay to vote.

MICHAEL STEELE, MSNBC POLITICAL ANALYST: Pay to vote. Right. Right.

MATTHEWS: Poll tax.

STEELE: Poll tax.

MATTHEWS: And then what they would have what they call literacy test,
some question in Greek, some incredibly complicated thing, all to screw the
black voter.

(CROSSTALK)

MATTHEWS: Now he`s using it in what context? Translate what he`s
talking about.

STEELE: I don`t know. I think Megyn was obviously a little bit
incredulous, too.

MATTHEWS: I think she`s a lawyer. I think...

(CROSSTALK)

STEELE: -- suppress the vote. You have to keep in mind, the
president got 8 million votes less than he got the last time. Did he
suppress his own vote? I mean, it makes -- it doesn`t make a lot of sense.

Look, there`s a lot of grasping at straws in the face of what was a
real, you know, smackdown by the Obama team on Tuesday night. And I think
that instead of trying to analyze this thing so you people better about
what happened, you understand and appreciate that the country has changed.
You got your clock cleaned because you were out of step with where the
country is, and now you need to regroup and refocus on a message as we did
in 2010 and in 2009 to elect Chris Christie out in New Jersey and a Bob
McDonnell in Virginia, a state we lost again, how we go forward.

And I think the mayor is exactly right. Laying out a comprehensive,
cogent message about our economy, our future --

MATTHEWS: Yes.

STEELE: -- and our families, and not get into the weeds on things
that people aren`t focused on.

MATTHEWS: It seems, Mr. Mayor, that the Republicans built their
whole strategy this time about what worked in 2010. A small electorate,
more white electorate, older electorate, the kinds of people who vote
dutifully all the time and then they faced a Democratic Party which was
armed with a larger electorate of people who voted this time more for the
president, younger people, minorities, women winning with 53 percent.

It seems like their whole model was based on a very low -- very, very
low turnout of voters.

WILLIE BROWN (D), FORMER SAN FRANCISCO MAYOR: That is exactly how,
in fact, they lost.

But let me also tell you, Chris, you have got to look at how the
Obama team, which clearly was a superior operation when it comes to
politics, they took the model that`s been used in cities all around the
country, and that is go to people who have not voted before. Go to people
--

MATTHEWS: Yes.

BROWN: -- who are not campaigned to before, and see if you can`t
convince them to become a party of the body politic. They`re never going
to be polled by anybody. If you can put them, you will have a hidden
treasure of people who want to vote. And that`s what happened this time,
and the Republicans suppressing the vote.

That business that you described about the poll tax and all the other
kinds of means by which you suppress votes, that happened in 40 or 50
states, and it was all Republicans and Republican control. That made
Democrats really angry, and in particular, it made African-American
Democrats in Cleveland and in Cincinnati and in Columbus and in Akron and
Toledo really mad.

And that anger caused them to stand in line for hours to be able to
cast their vote.

MATTHEWS: Mr. Mayor, I heard it said with a little fine tuning, they
said, not only did it make them angry. They weren`t that hot on the
president to begin with. They liked him.

STEELE: Right, right.

MATTHEWS: They weren`t feverishly for him until they saw they were
being kept out for voting.

By the way, you describe -- the mayor -- talk about it. You are a
Republican, Michael. Tell me about this.

I heard exactly what the mayor said. The strategy was in the
beginning, go out and find people that haven`t been talked to, Puerto
Ricans assumed they`re probably Democrats. Get them registered. Get them
activated.

STEELE: Right.

MATTHEWS: Skip the guy with the gun and a rifle or whatever, and go
with the person you think is going to be a Democrat. Get them activated,
bring them into system and then get them to vote. That`s a very positive,
aggressive system.

STEELE: Actually, you set the question up and I just want to clarify
the record. What you described we did in reverse. We actually did that.
That`s how we were so successful in 2010. That`s how we expanded the base
and the reach of the party.

MATTHEWS: How did you go it?

STEELE: We built a network of coalitions around the country. We
were on ground in communities. We brought our states --

MATTHEWS: You were with the evangelicals and the gun people --

STEELE: We got everybody under the same tent for the first time in a
long time of the party. Remember, Chris, we came off in 2006 and 2008, in
the (INAUDIBLE) of those elections.

MATTHEWS: But did you see the demographic problem coming?

STEELE: Yes, absolutely. I have been seeing it since the year 2000.
I`ve been seeing the shift in Maryland, in our state -- watching Charles
County and St. Mary`s County in the southern part become more minority in
majority and so nationally --

MATTHEWS: Because they brought so many people in for agriculture and
other --

STEELE: Absolutely, absolutely. So, the reality of the party is
exactly what the mayor and you are talking about only in reverse. We need
to go back out and do what we did over the last two years and expand the
base of the party.

MATTHEWS: Guys put together know a lot.

Anyways, thank you, Mr. Mayor. It`s great to have you on.

BROWN: Thank you, Chris.

STEELE: Hey, Mayor.

MATTHEWS: I am impressed once again by California, once again either
showing the way or doing something completely new like voting to raise
taxes for any reason, even education, and they did it. You guys -- I never
thought Jerry could do it again. He is --

BROWN: They`re amazing out there.

MATTHEWS: Well, you have the knowledge here much deeper than mine.
Thank you, Mr. Mayor.

Thank you, Michael Steele. You`ve overcome -- you handled this
already, didn`t you?

STEELE: It was pretty good.

MATTHEWS: OK. Up next -- you voted for the other guy, right?

STEELE: No. I voted for Mitt Romney. Thank you very much.

MATTHEWS: I thought you might. Anyway, I didn`t know who the other
guy was.

Up next, inside the final -- it`s going to be great. Junkies stay
with us tonight. We`ve got the greatest inside stories coming up from our
embeds of what actually happened to Romney in the last couple months, what
happened to the Obama camp, inside. I wish we had two hours for this. But
we`ve got a few minutes for it.

Anyway, what happened -- the fact that the Romney people thought they
had won right up through Tuesday evening. The Obama retooled after the
president`s disastrous first debate. How it all went to the end.

Great stuff coming up. That`s ahead.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: We`re coming back with the inside story of both campaigns
in the final days before the election this week. I cannot wait to hear it
myself. Back after this.

(COMMERCIAL BREAK)

MATTEHWS: We`re back.

Years of planning, months of rallies and days of waiting came to an
end Tuesday when polls closed nationwide and results starting pouring in.
While both campaigns felt confident in their chances of victory, in the
end, Mitt Romney was able -- only able to nab just one swing state, North
Carolina, away from the president.

And no one can tell the story better than the men and women who lived
every day of the 2012 -- life of 2012 on the campaign trail itself.

We`ve got two of these political reporters with me tonight. Matt
Viser of "The Boston Globe" and Ashley Parker of "The New York Times."

Ashley, thank you so much.

You were right in there. Give me what we call the tick tock. Tell
me the mood Tuesday night because it seemed to me there was some amazing
time before -- between when we called it here at NBC, around 11:00, well,
after 11:00, 11:20, and when the loser came out and talked, Romney.

ASHLEY PARKER, THE NEW YORK TIMES: Sure. Well, it came from extreme
confidence during the day when he was flying around, to sort of extreme
shell-shocked at the very end when he came out to speak. In between, there
was sort of this weird moment of what`s going to happen? All of these
aides have been told to show up with packed bags and ready to go in case
there was going to be a recount.

At one time, the call came out of the war room, it said, thought
there`s going to be a recount in Virginia or Ohio. They said, take your
bags, bring them outside of the garden, which is where their war room is.
We`re taking them to the airport and you guys are going to be on the first
flights out to Virginia and Ohio and then, obviously, that was called off.

MATTHEWS: And then there was a point when the presidential
candidate, Governor Romney, came out side and said it`s gone?

PARKER: Yes. So he was not watching TV, actually. He was in a room
with his family, his five sons, the daughter-in-laws and he was getting
updates from his campaign manager, Matt Rhodes. But things were not
looking good, but they were kind of waiting to see what could they do, what
were the options and finally he just sort of realized -- he hadn`t actually
even written a concession speech, that it was time for him to start, you
know, pecking away on his iPad, writing that concession speech and it was
over.

MATTHEWS: Let`s talk about the Obama campaign in Ohio State. What
happened out there?

MATT VISER, THE BOSTON GLOBE: Yes, I went to Ohio State on Halloween
night. It was a night when college students should probably be doing
anything else but voting. But the Obama campaign had these bus and they
were bussing people out in Franklin County to go vote early. It was a
lively scene, loud music.

And after they voted, the Obama campaign had four or five people
walking down each row and gathering data on each student who had voted, and
asking their names, if they can volunteer on Election Day and gathering
information.

So the next morning, I sat down with the Romney campaign, people on
the ground in Ohio and asked them, are you guys doing anything similar?

MATTHEWS: Yes.

VISER: Is there anything to replicate that?

And they said the juice on that is not worth the squeeze, you know?

MATTHEWS: They don`t think it was important. I kept -- I was
skeptical because I kept saying the president go to college campus after
college. I said he ought to be back in Washington running the country.
That`s not -- he ought to be like he did with the storm.

VISER: Yes.

MATTHEWS: He effectively used his office. But apparently that`s
what got younger generation, 18-29, out to vote, all that stirring up with
them.

VISER: Yes, yes. I mean, you had also a new group of college
students who were not the college students that were excited four years
ago.

MATTHEWS: Yes, different college students.

VISER: They were different college kids.

MATTHEWS: Two 2 percent or 1 percent increase in their share of the
vote. Let me ask you about this thing about the debate. I, like everybody
on the planet, but perhaps me more emotionally, reacted more to that first
debate, thinking the president who we all thought had an I.Q. of about 180,
went out there and showed that he can go to sleep in primetime.

What did come out of that from the Romney side, or what didn`t? Why
didn`t they stay on that line and say, we`re going to win this election by
talking, I`m a businessman, I can create jobs. So, they were flying off,
talking about Benghazi and all of that other stuff. That`s just my
question.

PARKER: Well, they actually tried to do that. They saw how good
Governor Romney did in the debate and how well bipartisanship tested when
you talk about that. And so, they immediately cut it off.

It was interesting. The Romney campaign have said that when they
were trying to get Governor Romney to talk direct to camera and that`s
previously, he didn`t come off well, it wasn`t compelling. But that debate
footage gave him a chance to get that message out.

When you saw him at the campaign trail, it was interesting, he was
going to Iowa where it`s all started for President Obama four years ago and
sounding like President Obama, talking about bipartisanship, talking about
reaching across the aisle. But, yes, sure, there was distractions, not
least of which the huge storm that kind of threw them off their game and
they couldn`t stick to that just one message.

MATTHEWS: Let`s talk about Romney in Pennsylvania, because I`m from
up there, Philly part, and I just -- I wonder when he got 33,000 people in
Bucks County. I said, wait a minute, maybe he knows something we don`t
know.

VISER: And those last three weeks of the Romney campaign felt very
much like something was happening. You know, he got crowds.

MATTHEWS: He was going for a bigger majority than he thought he was
getting.

VISER: Yes. And the crowds were big, they were much more
enthusiastic than they had ever been for Mitt Romney before. So, they did
feel like something happening.

MATTHEWS: What were you saying when you saw it in your reporting?
What did you say it meant?

VISER: Well, that we don`t know how broad base that is. And it
turned out that it wasn`t as broad base as we thought it was.

MATTHEWS: So, you say big crowds in the suburban areas where people
like people like Romney in terms of background and then it wasn`t
translating into the country.

VISER: Right. It was a different feel among Romney crowds and Obama
crowds. Romney crowds felt like they were changing things. Obama crowds
were nervous. I mean, they had a pit in their stomach. They didn`t quite
know how it was going to turn out.

MATTHEWS: I went up to the thing right before the election. It`s
hard to believe that it was this week. It was everything -- it was Monday
night in Pennsylvania, in the Palestra, where they play the Big 5 games.
And there is Bill Clinton with a crowd of people your age. I mean, they
were all like in their early to late 20s, packed, like 10,000 maybe
students.

I said, I haven`t seen this enthusiasm. Maybe that was going across
the country? Ashley?

PARKER: Yes. After the debate, Governor Romney started getting not
all of his crowds were huge, but, you know, he went to Red Rocks in Denver
which is where, you know, musician actually performed and it felt like
people came out to see a rock star there. You had huge crowds, packed.

Again, in Pennsylvania, one of the most striking things was actually
on Tuesday, on Election Day, when Governor Romney touched down in
Pittsburgh, there was a huge crowd. They had an advice that it wasn`t an
event, that it lined the upper deck of a parking garage overlooking where
he landed and they were all just waiting for him and cheering for him. And
he was so touched. He had sort of finally found the love that he had been
searching for the whole campaign.

MATTHEWS: Yes, I heard about that. What an amazing thing this
election has been. What an amazing thing.

Thank you, Matt.

VISER: Thank you.

MATTHEWS: Thank you, Ashley.

PARKER: Thank you.

MATTHEWS: When we return, let me finish with this still wonder --
and I just said it again -- of this election.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: So let me finish tonight with this. It stunned me, too,
as I sat there Tuesday night. I couldn`t believe what I was watching. So
I sympathies with Governor Romney on this at least, I didn`t see this sweep
coming.

Same sex marriage, legalizing marijuana, new taxes to pay for
education, is this country America or Greenwich Village? How liberal have
we gotten? We`re going down in history election the first African-
American, now we`ve done it again -- giving this president double majority
votes, something only FDR has gotten among Democrats, going all the way
back to the Civil War. So I`m still stunned.

I will wake up sometime this weekend and after, I hope, some long
sleeps and realize just as I did four years ago that this is even a better
country than I thought it was. And I really did think it was a wonderful
country in the world long before any of this happened. Wow.

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

"POLITICS NATION" with Al Sharpton starts right now.

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

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