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updated 11/13/2012 10:56:29 AM ET 2012-11-13T15:56:29

HARDBALL
November 12, 2012

Guests: Jane Mayer, Patrick Murphy

CHRIS MATTHEWS, HOST: The lost world of Newt Gingrich, Mitt Romney
and Karl Rove.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews on Veterans Day up here in Boston.

"Let Me Start" tonight with this. It`s a war of the worlds. One
world is where you live. For you, America is a land of many people and
many places. There`s the deep South of cotton fields and warm summers.
There`s the California coast of sunny beaches and highways. There are
rural areas where agriculture is king, a magnet for those ready for hard
work. There are big cities in this world of yours, Chicago, New York,
Miami, all rich in ethnicity and spicy in their diversity. There are
suburbs where people take a tolerant view, where the prevalent attitude is
live and let live.

Well, in this America, your America, there are whites, blacks,
Latinos, people whose families came here from the Asian Pacific. There are
progressives, moderates, and conservatives all engaged in a running
argument about the kind of country they want to live in, the role they want
this country playing around the globe, how we ought to be protecting
ourselves. OK, that`s how you see it.

I got another world for you. It`s mainly traditional, culturally
conservative, closed in, if you will. It doesn`t go to the movies. It
keeps its entertainment options to reality TV, wouldn`t think to catch
National Public Radio or PBS. It doesn`t really like those things. And it
certainly didn`t get thrilled when Obama won the first time. It`s pretty
miserable now that he`s won again. In fact, it can`t believe it. It looks
at your America, this world of the actual election results, as a stranger
in a strange land.

For days now, it`s been in a daze, wandering around, wondering what
gimmick switched the channels? What odd happening bounced them from the
world they believed in, saw all around them, to the world they find
themselves so suddenly and shockingly now a part of, the world that is
truly undeniably America?

I`m joined to talk about this by the former RNC chair, Michael Steele,
and "Mother Jones" Washington bureau chief David Corn. He`s the author, by
the way, of e-book -- the e-book "47 Percent," a great book and a great
get. Anyway, he`s an MSNBC political analyst.

Let`s start right now. In Politico, Jonathan Martin this morning
describes the GOP media cocoon, he calls it, writing, "In this reassuring
conservative pocket universe, Rasmussen polls are gospel, the Benghazi
controversy is worse than Watergate, fair and balanced isn`t just marketing
and Dick Morris is a political seer."

(LAUGHTER)

MATTHEWS: This morning, former House speaker and Republican
presidential candidate Newt Gingrich said he never saw the GOP defeat even
coming, and said it`s time for a serious Republican post-mortem.

Let`s listen to Newt.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), FMR. HOUSE SPEAKER, FMR. PRES. CANDIDATE: I was
wrong last week, as was virtually every major Republican analyst. And so
you have to stop and say to yourself, If I was that far off, what do I need
to learn to better understand America?

The president won an extraordinary victory, and the fact is, we owe
him the respect of trying to understand what they did and how they did it.
But if you had said to me three weeks ago Mitt Romney would get fewer votes
than John McCain -- and it looks like he`ll be 2 million fewer -- I would
have been dumbfounded.

(END VIDEO CLIP)

MATTHEWS: Michael, thanks for joining us, as always. We`ve had a
good time arguing and discussing things during the campaign, occasionally
agreeing on things, and often not. But let me ask you about the Republican
world view, that world in which -- well, I wonder what color the sky is,
for example? How did they see this election as really the way Rasmussen
pollsters would see it, basically it`s going to be a Romney romp? How`d
they get it so wrong?

MICHAEL STEELE, FMR. RNC CHAIR, MSNBC POLITICAL ANALYST: Well, I
think there was sort of a feeding into a mythology that somehow, the
country would categorically reject the president because we had, that the
country would somehow say to itself, you know, We can`t live with this new
land of big government health care, big government spending, et cetera,
because we can`t. And that`s fine.

The problem was in articulating to the American people why we can`t
live with those things, why those things are bad. And instead, as you`ve
noted many times on this program, we got waylaid by, you know,
conversations about women`s bodies and abortion and things that didn`t go
to the nub of what was moving the electorate.

And I think, right now, Newt is absolutely right. There`s going to
require a level of soul searching that I don`t think this party has ever
really done before, where it`s not about, Oh, gee, should we be more
conservative or less conservative? It should be how do we define
conservatism?

Because I define it as a Lincoln Republican, as something recognizes
your invaluable gift to this country as a whole and that the freedoms that
the Constitution imbues in you is something that makes us a great nation,
so that life, liberty and happiness mean something. And the government,
yes, has a role, but it`s a limited role.

And so those are the kinds of contexts I think we need to begin to
have this soul searching and really understanding exactly, Do we really
want to stay in that sort of Moral Majority mindset, or do we want to get
into a 21st century mindset that recognizes just how diverse this country
is and how valuable an asset they are to our party?

MATTHEWS: Yes. David, I just think that -- you`re right there, but I
think there`s more to it. I think Republicans lived in a universe in which
they felt set upon, even though they`re the top 1 percent in many cases,
that they didn`t understand the anger this country had towards economic
unfairness and they wondered why Republicans treated women generally as
sort of, like, a secondary part of the population. I think that`s the way
it came across. Your thoughts, David?

DAVID CORN, "MOTHER JONES," MSNBC POLITICAL ANALYST: The Republicans
drowned in a sea of spin within an echo chamber within a time machine.
There are so many levels of denial that led them to this point, it`s
stunning.

First of all, they didn`t understand that, as you said earlier, Chris,
the type of country we are now demographically, culturally. They thought
that most Americans also, you know, agreed with them that Barack Obama was
an evil, you know, maniacal figure purposefully leading America to ruin.

You know, you have the birthers on the far end of that. But even so,
they thought that he was -- they portrayed him as being feckless, someone
who apologizes for America. And they said that the economy was worsening
when, actually, it`s not worsening. It`s getting better, not fast enough.

And you know, they just again and again were not in tune with the --
whether it`s polls, whether attitudes towards women. It was 1950s versus
2012. So it`s not surprising to me that they feel dumbfounded now. They
ran a campaign that was predicated on a lot of false assumptions and also
false assertions about the president.

MATTHEWS: It must have been confounding to realize that the guy they
said was not one of us, Michael, was somehow the other, turned out to be
the leader of the country.

STEELE: Well, yes. I think...

MATTHEWS: That`s a big mistake to make.

CORN: Yes, slight mistake there.

MATTHEWS: That`s a big mistake!

STEELE: It`s a very big mistake, and it`s -- and I think, again, it`s
-- and I said this when I was RNC chairman. The responsibility of the
party is not to go after Obama but to go after the policies that he`s
defining for the nation and make the counter argument.

And when we fail to do that, much to David`s point, you do come off
tin-eared. You do come off deaf to exactly what people are thinking. It`s
not enough to say the economy is bad. Show us how you make it better. And
when it starts to improve -- and this is, I think, a critical point. We
never acknowledged the good things that were happening in the economy for
people who were once unemployed who were now employed. So it`s...

CORN: But your party also went the demonization route. I mean, it`s
kind of funny to listen to Newt Gingrich on the "TODAY" show do his mea
culpa when he spent two years saying that the only way you can understand
Barack Obama is to see him as an anti-colonialist Kenyan. I mean -- and
now he`s -- now he`s surprised that he`s out of step with most of the
country because he listened to Dinesh D`Souza?

STEELE: But...

CORN: Come on! Who`s creating the firepower...

STEELE: Hey, David?

CORN: ... within your party...

CORN: But David, I`ll give -- look...

CORN: ... ex-chairman Michael?

STEELE: I appreciate that, but I`ll give -- I`ll give Newt his due.
He manned up and said, I was wrong. And that...

(CROSSTALK)

MATTHEWS: He accidentally got this wrong. You mean he was close to
the truth there, but he accidentally got it wrong.

(CROSSTALK)

MATTHEWS: He was on to something that this guy was an anti-colonial
Kenyan.

STEELE: But that...

MATTHEWS: He just missed it by a few notches. Is that it?

(LAUGHTER)

MATTHEWS: I mean, give me a break!

(CROSSTALK)

STEELE: Look, you can pile on Newt all you want to, but...

MATTHEWS: OK, let`s take a look at this. I keep thinking...

(CROSSTALK)

MATTHEWS: Remember that old New York -- OK, remember that old "New
Yorker" cartoon of a New Yorker`s view of the universe?

STEELE: Oh, yes.

MATTHEWS: It was a guy, like, looked across the Hudson and he saw,
like, Jersey, and the next signpost was Utah.

(LAUGHTER)

MATTHEWS: The whole country was like this foreign place. Anyway,
that`s, I think, some of the Republican mindset right now.

Anyway, right before this election on Fox News -- we`re going to give
you some golden oldies, reaching back into the stack now -- Republican
commentator Dick Morris -- I love the comment -- was fully immersed in the
GOP alternative reality. Let`s listen to Mr. Morris.

(BEGIN VIDEO CLIP)

BILL O`REILLY, HOST, "THE O`REILLY FACTOR": So you are standing by
your prediction of a Romney landslide?

DICK MORRIS, FOX CONTRIBUTOR: Absolutely. Romney will win this
election by 5 to 10 points in the popular vote and will carry more than 300
electoral votes.

(END VIDEO CLIP)

MATTHEWS: You know, I think we ought to bring back the public stocks
from New England, where if you`re a pollster -- or not even a pollster.
They`re good -- they do the numbers. But these people with their
outlandish partisan so-called predictions ought to have to sit there in the
public scare for a couple weeks so we can all realize who was telling us
BS.

Anyway, conservative David Frum, who`s a smart guy, described the
confluence of the Republican groups and agendas that led to the GOP
alternative reality. Let`s listen to him, Mr. Frum. He was on "MORNING
JOE" last week.

(BEGIN VIDEO CLIP)

DAVID FRUM, FORMER GEORGE W. BUSH SPEECH WRITER: The real locus of
the problem is the Republican activist base and the Republican donor base.
They went apocalyptic over the past four years, and that was exploited by a
lot of people in the conservative world.

The conservative followership has been fleeced, exploited and lied to
by the conservative entertainment complex. What happened to Mitt Romney
was he was twisted into pretzels. The people who put the cement shoes on
his feet are now blaming him for sinking.

(END VIDEO CLIP)

CORN: That`s a little...

MATTHEWS: Let me ask you, Michael, what`s the "conservative
entertainment complex"?

STEELE: I don`t know. You have to ask David what he was referring
to. But I think he probably was largely referring to folks who are in TV
and radio and in print media, who were, you know, articulating and
perpetuating some of the very things that we`re talking about that clearly
were wrong, Not only about what this election would turn out to be, but
ultimately, what the country would see this election as.

And I think David has got it exactly right. I mean, there was a lot
of folks taken advantage of here in many respects, and that`s got to be a
part of the conversation, as well. The honesty that the party now has to
confront is real. It`s palpable. I`ve said it on your show before, Chris.
If we don`t do it, we go the way of the Whigs because America has clearly
said they`ve had enough of what we`ve been doing so far.

CORN: You know, when you don`t -- when you don`t have good leaders
with a degree of courage...

STEELE: But we do. We do, David.

CORN: Let me finish, Michael -- then what happens is the grass roots
listen to Glenn Beck, to Rush, and they tune into Fox News and that
alternative reality, and they don`t see beyond it and they can`t be led
beyond it.

That`s what David Frum was talking about. They`ve been fleeced for
ratings and they`ve been fleeced by conservative groups that put out these
e-mails. I get them all the time -- Barack Obama is taking your guns away
from you! Barack Obama is turning this country into a combination of
Nazism and socialism! You know...

MATTHEWS: OK...

CORN: ... "Obama care" is going...

(CROSSTALK)

MATTHEWS: Michael, I want you to listen to this. Suppose -- well,
you are African-American.

STEELE: Yes.

(CROSSTALK)

MATTHEWS: Here we go. Here we go. Would you like the first
president who comes from that background to be called a racist by Glenn
Beck? A racist? Because of what? No reason. If you`re a woman and an
executive in the corporate world, a woman, would you like to be called a
"feminazi" by Glenn Beck? I`m sorry, by Rush Limbaugh, an even bigger
name. If you are thinking of voting and you`re a Latino -- comes from a
Latino background, would you like the candidate for president saying you
should self-deport yourself?

It isn`t like somebody dreamed up this horrible rejectionism on the
part of these people on the right.

STEELE: Right.

MATTHEWS: I think they are the -- it`s fair enough to say they`re not
office seekers because you couldn`t seek office and talk like this, but
your party gets blamed for this racket.

STEELE: Well, we get blamed for the racket...

CORN: Let`s not let Mitt Romney off the hook. He embraced Donald
Trump. He goes on Rush Limbaugh. He embraces Fox News. And so he gives
the legitimate Republican establishment seal of approval to a lot of
nonsense, and then he ends up getting bit in the backside because of it.

STEELE: But I think a lot of -- I think a lot of us would say
throughout the campaign that he should not do that for that very reason,
that it does come back to bite you.

And to be quite honest with you, you know, this happens on both sides.
The focus is on the GOP hotheads who say this stuff, and that becomes the
narrative for every Republican in the country. That`s not true. That is
not the fact.

The fact is, though -- to a point that was raised a little bit earlier
-- there are those leaders in the party right now, and my expectation is
that they need to emerge, not that they -- they need to emerge to really
begin to right the course of this party and the direction it`s going,
period.

MATTHEWS: OK. One big difference in this argument for symmetry,
which I know is very nonpartisan -- and you may have a point, but I don`t
think it`s the right one -- the fact is that this election proved that the
arguments made on the center left, and to some extent on the progressive
side, turned out to be a majority view. And the arguments about the
reality in which we live made on the right-wing side and even the center-
right turned out not to be the reality in which we live.

And you know how we know that? From the election results. The
majority of the American people supported the point of view coming from the
president, who I would argue is center-left. He`s been described as left,
mostly center-left. And that point of view turned out to be the popular
one.

So on the objective question, who spoke for the American majority, it
turns out it was to the people left of center. That`s just a fact of the
numbers.

(CROSSTALK)

MATTHEWS: Anyway, thank you, Michael Steele...

CORN: One of the great things about this election for all three of us
here -- we all care about policy. We have our different views. This was
the most ideological elections we`ve had in years because exactly what you
just said, Chris. The president laid out a clear vision and Mitt Romney
laid out a clear vision, too. And at the convention, Paul Ryan`s speech
was one of the most ideological acceptance speeches in recent memory.

MATTHEWS: OK...

CORN: And so it was really up to the voters to decide, and they did.

STEELE: I will submit there was not much clear about the agenda the
president laid out, but we can have that discussion as we go forward.

MATTHEWS: OK. Thank you. I`ll tell you there was a clear agenda
from Glenn Beck and Rush Limbaugh, though, and it wasn`t felicitous toward
a lot of Americans. Anyway, thank you, Michael Steele, as always, and
David Corn.

Coming up, why General Petraeus resigned. If he did, as it seems, the
honorable thing here by resigning, what`s all the continuing buzz about?
We got to find out what`s going on in the background here.

Also, more than a billion dollars was spent on ads this political
season, TV ads. But we`re going to talk about the one ad -- the one ad --
that did more to sink Mitt Romney than all the others and how it got done.
This is fascinating. It`s a fascinating ad because it really worked.

And by the way, closing down the clown show -- keep going -- at least
part of it. If the Democrats had a list of Republicans they wanted to
beat, Allen West`s name would have been right there at the top, or near it.
Meet the man who may well have sent Allen West packing, Patrick Murphy.
Looks like he`s ahead in the vote down there in Florida.

Before we put the election to bed, let`s take a fond look back at what
one Republican called the "conservative loons and wackos" who made campaign
2012 such a great spectator thing to watch.

(BEGIN VIDEO CLIP)

RICK SANTORUM (R-PA), FMR. SEN., FMR. PRES. CANDIDATE: President
Obama once said he wants everybody in America to go to college. What a
snob!

(END VIDEO CLIP)

MATTHEWS: "What a snob." Anyway, Rick Santorum was hardly alone, and
there`s much more where that came from in the "Sideshow."

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Nate Silver of "The New York Times" Fivethirtyeight blog
was one of the big winners from last week, and now he`s released a list of
best and worst polls from the presidential campaign.

Of all the pollsters that released at least five polls in the last
three weeks before the election, the most accurate pollster was the
"Investors Business Daily," the TIPP poll. The average error for that poll
was under 1 point.

In second place, Google Consumer Surveys, perhaps further evidence of
Google`s world takeover.

Among the least accurate polls this time around was Mason-Dixon, with
an average error over 5 points. But the least accurate pollster of all was
Gallup. The firm with the famous name had an average error of over 7
points.

By the way, Republican polling firm Rasmussen was fourth from the
bottom with an average error of more than 4 points.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. David Petraeus`s resignation
last Friday came as a shock to many in Washington. Petraeus stepped down
after news of an extramarital affair broke out. Here`s what we know about
the timeline of how the events unfolded.

Back in early June, the FBI began investigating what has been
described as menacing e-mails sent anonymously to a woman close to
Petraeus. Well, the e-mails allegedly came from Paula Broadwell, who the
FBI later discovered was having an affair with the CIA director. Well, the
FBI wrapped its investigation on November 2nd, after interviewing Petraeus
and Broadwell.

Well, "The New York Times" reports the FBI concluded there was no
evidence Petraeus committed any crime or breached any security problem. On
Election Day the FBI notified James Clapper -- he`s the director of
national intelligence -- about the investigation.

The next day, he told people in the White House. That was Clapper.
But the president wasn`t informed until the following day, November 8.

Anyway, lawmakers have expressed anger that they weren`t informed
earlier about the investigation.

Here was Dianne Feinstein, who chairs the Senate Intelligence
Committee, today.

(BEGIN VIDEO CLIP)

SEN. DIANNE FEINSTEIN (D), CALIFORNIA: This thing just came so fast
and so hard. And since then, it`s been like peeling an onion. Every day,
some -- another peel comes off, and you see a whole new dimension to this.
So, my concern has actually escalated over the last few days.

(END VIDEO CLIP)

MATTHEWS: Republican Congressman Peter King of New York said the
timeline he sees here doesn`t add up.

(BEGIN VIDEO CLIP)

REP. PETER KING (R-NY), HOMELAND SECURITY COMMITTEE CHAIRMAN: Once
the FBI realized it was investigating the director of the CIA or the CIA
director had come within the focus of its scope, I believe at that time
they had an absolute obligation to tell the president, not to protect David
Petraeus, but to protect the president.

And to have someone out there in such a sensitive position who the FBI
thought perhaps could have been compromised or was under the scope of an
FBI investigation who may or may not have been having an affair at the
time, that to me had to have been brought to the president or certainly to
the National Security Council. If not, the FBI was derelict in its duty.

(END VIDEO CLIP)

MATTHEWS: So, what`s really going on here?

Pete Williams is NBC News justice correspondent.

Thank you, Pete, for coming on.

PETE WILLIAMS, NBC NEWS JUSTICE CHIEF CORRESPONDENT: You bet.

MATTHEWS: If there`s no allegation of criminal wrongdoing, what`s got
Congress all up in arms here?

WILLIAMS: Well, I think it`s a policy matter, Chris.

I think they believe that this is the kind of thing the president
should have known, that the congressional committees should have known
because they think there`s the potential for trouble here whenever somebody
is having an affair. You heard what Peter King just said. I can tell you
what the Justice Department and the FBI say.

They say a couple things. Number one, they don`t inform other
agencies when they`re in the middle of a criminal investigation. They were
trying to figure out what this thing was and didn`t really reach any
conclusions until just before the election, a week or so before the
elections.

Number two, they say that the statues that govern when congressional
committees are informed say that they should be notified of all -- quote --
"intelligence activities," and they concluded that the CIA directors affair
wasn`t an intelligence activity.

And finally, of course, there`s the fact that the affair apparently
ended in July and some are saying that by telling the FBI about it, by
admitting it to the FBI, he`s basically taking away any possibility that
after that point he could be blackmailed.

So, it really comes down to not I guess you could say a legal
obligation, but the policy question about whether Congress should have been
told almost anyway.

MATTHEWS: Well, let me ask you about the -- you know the protocols
and the ethics in these cases. Is the DCI, the director of central
intelligence, because of the nature of being a spymaster, that he is not --
if something like this -- not to defend any kind of extramarital behavior.
But if something like this happened to another Cabinet member, for example,
would there been an automatic resignation over it?

Maybe there would be in the current environment. I can`t tell anymore
what the standards are sometimes.

(LAUGHTER)

WILLIAMS: Well, you know, I don`t know.

MATTHEWS: I mean it.

WILLIAMS: I doubt that. I think you`re probably right.

And certainly it doesn`t apply to members of Congress, but they`re not
-- they`re elected officials and these are appointed officials.

(CROSSTALK)

WILLIAMS: The FBI basically says, we decided to tell the DNI, the
director of national intelligence, James Clapper, when we were all done
what happened here because we thought he should know as, in essence, a
personnel matter.

Under the new system, the director of the CIA reports to Clapper.
Clapper is his boss, and they thought that Clapper should know. He
controls the security clearances. Let him make the decision about whether
it was proper to keep David Petraeus on the job. Obviously, Clapper felt
it wasn`t and told Petraeus that he ought to resign.

MATTHEWS: I guess it`s one of those cases, once people know about it,
the catch-22 is you have to do something about it or else you`re part of
the cover-up. Maybe that`s the way they look at it.

Pete Williams, as always, thank you, sir.

WILLIAMS: That`s right. You bet.

MATTHEWS: Do you have a thought? I`m sorry. Do you have a thought?

WILLIAMS: Well, I was just going to say one other thing.

By -- by certainly mid to late October, Petraeus knows he`s under
investigation. He knows that the FBI knows about this. But he doesn`t
decide to go and tell the White House and offer to resign until Clapper
tells him to do so.

MATTHEWS: Oh, more information. Thank you so much, Pete, for that
reporting.

WILLIAMS: You bet.

MATTHEWS: More on the politics of the Petraeus scandal, if you will.

Eugene Robinson is an associate editor and columnist for "The
Washington Post." He`s also an MSNBC political analyst.

Gene, this sense here. Let me show you something. Some conservatives
are already howling about the timing of the Petraeus resignation. He was
set to testify of course, the director was this week about Benghazi. Here
is Ralph Peters, a military analyst for FOX News. This is what I`m talking
about, this emerging conspiracy theory here. And here it is coming from
FOX. Let`s watch.

(BEGIN VIDEO CLIP)

COL. RALPH PETERS, (RET.), U.S. ARMY: As an old intelligence analyst,
the way I read it, and I could be totally wrong -- this is my
interpretation -- is that the administration was unhappy with Petraeus not
playing ball 100 percent on their party-line story.

I think he was getting cold feet about testifying under oath on their
party-line story. And I suspect these tough Chicago guys knew of this
affair for a while, held it in their back pocket until they needed to play
the card.

(END VIDEO CLIP)

MATTHEWS: See, it`s not dead yet, that point of view you`re getting
in that voice there, the dark, conspiratorial voice about these Chicago
guys. And, of course, Benghazi is the biggest thing in the universe.

Anyway, here is Bob Woodward, your colleague here, Gene. He`s
reported the testimony would likely give support, that Petraeus` testimony
coming up next week was likely to support what happened as the
administration described it.

Let`s take a look at what Bob said.

(BEGIN VIDEO CLIP, "MEET THE PRESS WITH DAVID GREGORY")

BOB WOODWARD, "THE WASHINGTON POST": It turns out that Petraeus a
week-and-a-half ago went to Tripoli, Libya, and conducted his own personal
inquiry into Benghazi, interviewed the station chief, actually got the base
chief from Benghazi down, interviewed him, interviewed the head I think
twice of the quick reaction force that was involved in this episode. So he
knows the full story.

DAVID GREGORY, MODERATOR, "MEET THE PRESS": What was going to be the
takeaway from what Petraeus who have presented had he testified?

WOODWARD: I think it would essentially back up the White House.

(END VIDEO CLIP)

MATTHEWS: Well, there you have it from a real reporter, Gene, as you
know, the top investigative reporter in modern times, Bob Woodward, saying
that Petraeus basically was on the side of the administration`s point of
view on what happened in Benghazi and their reporting of that.

And now you have the right wing out there already now suggesting that
he was basically snooped on and outed, if you will, in his affair to shut
him up. They`re already getting crazy about this thing, I think.

EUGENE ROBINSON, MSNBC POLITICAL ANALYST: Yes. This has nothing to
do with Benghazi.

First of all, Petraeus has been very supportive. His version of
events has been the White House version of events all along, and now that
he`s done this further investigation, I believe Bob that he was going to
support the White House.

And, second, they can still call him. Congress can call him to the
Hill any time as a private citizen or CIA director or Joe Willy walking
down the street. They have subpoena power. So that somehow this was
supposed to shut him up is crazy.

But, you know, what we have here is he`s the head of the CIA, so this
immediately becomes a spy novel, and you`re never going to convince people
that there are coincidences in a spy novel. So the fact that the director
of national intelligence hears about it on Election Day is always going to
give rise to conspiracy theories.

MATTHEWS: Well said.

And, by the way, I think it`s interesting what you raise there. I
think this is what you said, that if you wanted to keep him on your side of
the argument, if you wanted to keep him making your case, you wouldn`t
humiliate him and kick him out of office by betraying his personal
relationship, his extramarital affair. That would be one way to enrage
him.

ROBINSON: No, you wouldn`t do that.

And what Pete Williams just pointed out I think is salient. Petraeus
kind of knew about this, and so he made some decisions in October about not
coming forward, not talking to the director of national intelligence, not
talking to the White House. So at some point, I suspect he`s going to be
asked questions about his role in ultimately disclosing this affair. He
seems for obvious reasons not to have been anxious to do so.

MATTHEWS: Oh, God.

Well, I guess everybody out there has a choice. Either go pay the
money to see "Skyfall," the new Bond movie, which is very good, or watch
this story unfold.

(LAUGHTER)

MATTHEWS: Anyway, thank you. And I hate to see people hurt on this
anyway, Eugene Robinson.

Up next, we have heard a lot of crazy stuff from conservatives running
for office this year, and some of those conservatives won and some lost.
And when we return, we will open up that can of mixed nuts, if you will,
and play back the wackiest of the bunch. That`s going to be fun.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL. Now to the "Sideshow."

Well, after this election, what comes in your head when you hear the
word conservative? Well, Republican strategist Steve Schmidt offered this
yesterday on "Meet the Press."

(BEGIN VIDEO CLIP, "MEET THE PRESS WITH DAVID GREGORY")

STEVE SCHMIDT, FORMER MCCAIN CAMPAIGN SENIOR ADVISER: Too many swing
voters in the country, when you hear the word conservative now, they think
of loons and wackos.

(END VIDEO CLIP)

MATTHEWS: Loons and wackos. That`s -- look -- well, let`s look at
Steve is talking about -- what he is talking about here.

(BEGIN VIDEO CLIP)

RICK SANTORUM (R), FORMER PRESIDENTIAL CANDIDATE: President Obama
once said he wants everybody in America to go to college. What a snob.

(LAUGHTER)

REP. MICHELE BACHMANN (R), MINNESOTA: I don`t know how much God has
to do to get the attention of the politicians. We have had an earthquake,
we have had a hurricane. He said, are you going to start listening to me
here?

GOV. RICK PERRY (R), TEXAS: The third agency of government, I would -
- I would do away with the Education, the...

(LAUGHTER)

UNIDENTIFIED MALE: Commerce.

PERRY: Commerce. And let`s see. I can`t. The third one, I can`t.
Sorry.

(LAUGHTER)

PERRY: Oops.

QUESTION: Do you agree with President Obama on Libya or not?

HERMAN CAIN (R), FORMER PRESIDENTIAL CANDIDATE: OK, Libya.

REP. PAUL BROUN (R), GEORGIA: I have come to understand that all that
stuff I was taught about evolution and embryology and Big Bang theory, all
that is just lies straight from the pit of hell.

REP. JOE WALSH (R), ILLINOIS: President Obama, quit lying. You know
darn well that if August 2 comes and goes, there`s plenty of money to pay
off our debt. You`re either in over your head, you don`t understand what
makes this country great, or you`re hell-bent on turning us into some
European big-government wasteland.

CAIN: I do not agree with the way he handled it for the following
reason. No, that`s a different one.

REP. TODD AKIN (R), MISSOURI: If it`s a legitimate rape, the female
body has ways to try to shut that whole thing down.

RICHARD MOURDOCK (R), INDIANA SENATORIAL CANDIDATE: Even when life
begins in that horrible situation of rape, that it is something that God
intended to happen.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: There`s so much at stake. I
hope you will join me in supporting Richard Mourdock for U.S. Senate.

REP. STEVE KING (R), IOWA: It would have been awfully hard to
fraudulently file the birth notice of Barack Obama being born in Hawaii and
get that into our public libraries. That doesn`t mean that there aren`t
some other explanations on how they might have announced that by telegram
from Kenya.

ROMNEY: I`m looking here at Steve King. This man needs to be your
congressman again. I want him as my partner in Washington, D.C.

(CHEERING AND APPLAUSE)

BROUN: I don`t believe that the Earth is but about 9,000 years old.

CAIN: Got all this stuff twirling around in my head.

(END VIDEO CLIP)

MATTHEWS: So, thanks for the memories.

Anyway, Joe Walsh did not win reelection, but Michele Bachmann and
Steve King are back by popular demand. And Texas Governor Rick Perry
hasn`t ruled out another run. Wow.

Up next: the campaign ad that may have done the most damage to Mitt
Romney this election, and it has nothing to do with Jeep. That`s ahead.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

JON FORTT, CNBC CORRESPONDENT: I`m Jon Fortt with your CNBC "Market
Wrap."

The markets trade sideways, with the Dow, S&P, and Nasdaq moving less
than a point each. Facebook was a winner today after losing ground
earlier. It ended nearly 5 percent higher. Apple shares lost about $4
each. Their stock is down now more than 23 percent from its mid-September
high. And Microsoft fell about 2 percent after CEO Steve Ballmer
acknowledged that distribution of its Surface tablet was modest for its
initial launch.

That`s it from CNBC, first in business worldwide -- now back to
HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

Over the past year, we have shown you scores of political ads running
the gamut, from Morgan Freeman`s dulcet tones at the end of the election
cycle to the ominous voices warning of Newt Gingrich and Rick Perry
presidencies during the president.

And yet one ad seems to have had a lasting and damaging effect on Mitt
Romney`s chances in Ohio and other swing states. That ad, a low-budget
spot produced for the Obama super PAC Priorities USA, framed the narrative
of Mitt Romney as a heartless corporate tycoon, without a care for the
working man.

Jane Mayer covers politics for "The New Yorker." And she has a
terrific piece on the ad in this week`s magazine. And Joy Reid is managing
editor of TheGrio.

Let`s begin with that ad, Jane. It`s called "Stage." Take a look.
It`s a killer.

(BEGIN VIDEO CLIP, POLITICAL AD)

MIKE EARNEST: Out of the blue one day, we were told to build a 30-
foot stage. Gathered the guys and we built that 30-foot stage, not knowing
what it was for. Just days later, all three shifts were told to assemble
in the warehouse. A group of people walked out on that stage and told us
that the plant is now closed and all of you are fired.

I looked both ways, I looked at the crowd, and we all just lost our
jobs. We don`t have an income.

Mitt Romney made over $100 million by shutting down our plant and
devastated our lives. It turns out that when we built that stage, it was
like building my own coffin. And it just made me sick.

(END VIDEO CLIP)

MATTHEWS: Jane Mayer, great piece today in "The New Yorker". Thank
you for that.

And tell me what the impact was in obviously Ohio and places like
that in that part of the country, the industrial part of the country.

JANE MAYER, THE NEW YORKER: Well, you know, it`s always hard to
measure scientifically, but they did some internal studies on this ad that
showed in places that it showed, the trustworthiness of Romney was 11
points behind that of Obama, and in places where it didn`t show, it was
just five points behind. So, it gave them a seven-point boost in terms of
totally undermining Romney`s trustworthiness.

And I think one of the things that interested me was it looks like an
ad maybe about unemployment, but what it really is, is an ad about Romney`s
character. And particularly this issue of trustworthiness is what they
found in their internal research. They -- it made people who watched it
think he was profiting from laying people off and breaking promises to fund
people`s pensions and their health care plans, and those things were just -
- it was a killer ad.

MATTHEWS: You know, Joy, we`ve been on so often and we`ve talked
about this, but here you have a portrait, a real life portrait, of somebody
who would have people build a stage, almost like digging their own grave
and have them troop up onto the stage as loyal employees and then tell them
you`re dead here, you`re finished. It`s almost macabre.

JOY REID, THEGRIO.COM: Yes. Absolutely, Chris. And you know, you
talked a lot about this. We have talked about this show about Bill Clinton
as a sort of super surrogate for Barack Obama. Mike, the guy in that ad,
he`s a super anti-surrogate that was just a devastating, you know, an anti-
validator of Mitt Romney.

Here was a guy who looks like the voter that Barack Obama needed to
change sides, that former Reagan Democrat, that white working class guy
looking dead into the camera and saying this guy destroyed us. He took
away our livelihood and he made us build the stage that we had to stand on
to announce the end of our jobs. It was absolutely the most devastating
ad.

But what was also remarkable as the Romney people had no response.
Look, they had a six-month lead time on this line of attack because,
remember, something called Winning our Future PAC back in January? That
was a Newt Gingrich super PAC, the pro-Newt Gingrich super PAC that ran a
27-minute version of the same ad. It was basically the same message. And
Romney because he survived in Florida after that, he seemed to think, well,
I can get over this because he didn`t respond to the "Stage" ad.

MAYER: I talked to Bill Burton --

MATTHEWS: OK. Jane Mayer -- Jane Mayer, you write in your piece
that Sarah Palin of all people thought that the Bain ad had a negative
impact on Mitt Romney`s candidacy. She thinks it worked.

Here she is on FOX on election night.

(BEGIN VIDEO CLIP)

SARAH PALIN (R), FORMER ALASKA GOVERNOR: The realization at this
point is that those Bain Capital ads that voters just got inundated with
early on in Ohio and some of the other areas as it pertained to the auto
bailout I think really hurt Romney.

(END VIDEO CLIP)

MAYER: Right.

MATTHEWS: It seems to be --

MAYER: I mean, the ultimate compliment really.

MATTHEWS: Yes, in a weird way, yes. What do you think of her
assessment that the whole focus on Bain early on is what really put the guy
in a situation he couldn`t get out of?

MAYER: Well, I think that`s what some of the internal research
showed and what they couldn`t believe as you were just saying was that the
Romney camp didn`t respond to this because basically Bill Burton, who was
the co-founder of Priorities USA said they thought any minute the Romney
campaign would have the opposite ad, where they would show guys who got
jobs because of Bain, you know, people at sports authority or, you know,
places like that that were supposedly helped out by Bain, but that ad was
never made. And, you know, it`s baffling to people like Burton about why
they didn`t respond.

But when I talked to Romney people early on in the campaign they
thought Bain was going to be a big asset. You know, they were describing
Romney as a job creator and they just didn`t see this counter-narrative
really.

And one of the people who made the ad, Saul Shorr, is a great old-
time movie fan of Frank Capra movies.

MATTHEWS: Yes.

MAYER: And I don`t know if people know those movies, but they`re all
about like the little guy, the underdog who`s facing some kind of authority
figure who is corrupt and wealthy and unfair. And that tapped right into
that American sentiment, that feeling of unfairness, and I think it really
resonated.

REID: And, Chris --

MATTHEWS: I agree. I have seen all those movies and I love the
character played by Edward Arnold who is always the bad political boss, or
the bad power man. And you`re right. It worked great. Jane, it was
always great to read your writing and reporting. Thank you.

Joy, I think all this began against the backdrop of 1 percent and
Occupy Wall Street and it set up the idea there`s more trouble in this
country than just unemployment. That`s trouble.

REID: Absolutely.

MATTHEWS: But there`s also this unfairness and that pervaded and
they picked up on this in this ad copy.

REID: Absolutely. What Jane just said is exactly right. And those
are precisely the kind of people, the victim, the good stand up guy who
gets beaten down by the corporate villain in those Frank Capra movies,
those are the people who seem to be invisible to Mitt Romney. They were
invisible to him when he made the 47 percent remark.

MATTHEWS: Yes.

REID: They were invisible to him when on Labor Day you had
Republicans saying, hey, job creators, this is your day. No, it was Labor
Day. Like there was this constant sense that those kind of guys, Mike, was
invisible to the GOP and that`s why they lost Ohio.

MATTHEWS: OK, thanks to Mike.

Anyway, thank you, Jane Mayer. And thank you, Joy Reid.

Up next, the man on the verge of knocking out the Tea Party, the man
himself, Congressman Allen West down in Florida. Patrick Murphy is coming
to HARDBALL when we get.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: I want to bring to your attention tonight one of the local
New York groups that`s doing great work helping with relief efforts in the
wake of tropical storm Sandy. I`d like you to get your pens out by the way
and write this information down for yourself.

It`s on Staten Island. It`s called the Dr. Theodore Atlas
Foundation. It`s run by a good man, Teddy Atlas, whose father had treated
the people of Staten Island for over half a century and was very much
beloved. Teddy`s group helps families year round deal with real needs they
can`t afford.

Right now, with so many families in Staten Island facing really
tragic need, Teddy Atlas is out there raising money to help them.

Here is how you can help this good man do good work. The Web site is
dratlasfoundation.com. Just as I said, dratlasfoundation.com. The address
is Dr. Theodore Atlas Foundation, 543 Cary Avenue, Staten Island, New York,
10310. That`s Dr. Theodore Atlas Foundation, 543 Cary Avenue, Staten
Island, New York, 10310.

If you have seen the devastation caused by Sandy up in that area, I
know you want to get involved. It`s a good thing to be doing.

And I`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: We`re back.

Allen West is well-known and well-loved on the right at least for his
blistering criticism of Democrats, even referring to liberal House members
as communists. He said there was 78 to 81 communists in the House of
Representatives, all Democrats, of course.

But following an expensive and bitterly fought race in southeast
Florida, Democrat Patrick Murphy is ahead of West in this state`s vote
count, while Congressman West, so far, refuses to concede.

By the way, NBC has not yet called the winner in the race.

But Democrat Patrick Murphy joins us right now.

Welcome.

Mr. Murphy, did you win the election? Is it over?

PATRICK MURPHY (D), FLORIDA CONGRESSIONAL CANDIDATE: No question
about it, we won this race. And three supervisors of elections in this
district have called the race. And the state did certify us as the winner
this week. So we`re excited and I`m ready to get to Washington.

MATTHEWS: Do you think Mr. West is certifiable? I mean, people
that`s called out names like calling members of the House of
Representatives being very specific, there are 78 to 81 members of the
communist party in the House of Representatives. And what do you make of
that when you run get against a guy like that? How did you deal with it?

MURPHY: You know, I`m glad that we can put this campaign behind us.
I spent way too much time talking about Allen West and his comments and his
rhetoric because I think it was way too divisive for our country. So,
truthfully, I`m excited to get to work -- to get to work for this district
and for the country. And I`m tired of talking about Allen West and really
looking forward to moving on.

MATTHEWS: Were you able to get Republican votes against him?

MURPHY: Quite a bit actually. We outperformed President Obama in a
couple counties here by about 4 percent to 5 percent. So we did pretty
well with Republicans.

A lot of people reached out to us throughout the campaign and said,
look, Patrick, I`ve been a Republican my whole life, but I`m not going to
support Allen West. Tell me about you.

So I told them about my background as a CPA and small business owner
and we did very well with Republicans.

MATTHEWS: What -- I do want to ask you about this, what happened to
the Republican Party in Florida? Used to have -- well, of course, Connie
Mack -- the first Connie Mack, his father, was a -- actually a
conservative, but not a whacky. And then you also have people down there
like -- today like Jeb Bush who is not whacked out at all.

What is it that`s happened to the party that they`ve subscribed to
this hard right thinking? Is it anomaly or is it a real trend for the
future down there?

MURPHY: Well, I don`t think it`s specific just to Florida. I think
it`s throughout the country. There`s a lot of Republicans that are
confused right now.

I get calls all the time from Republicans that don`t know which way
to go because they fear the party is going way too far right. So the party
is going to have to make a decision pretty quickly. If they continue going
this far right, they`re going to lose a lot of people. And it`s going to
be a lot of victories for Democrats to come, in my opinion.

MATTHEWS: Are we going to have a deal this Christmas on the debt?

MURPHY: I sure hope so. I think what this race showed for the
country and for the Congress is that the American people want to put, you
know, the country first, that they`re tired of the partisanship.

You know, 2010 was an interesting cycle. The Tea Party had its turn.
It didn`t work. It created a divide in our country.

The American people don`t want that anymore. We have to come
together as a country and I hope our Congress figures that out. And that`s
a big part of what I ran on, and a big part of what I plan on do when I get
to Congress is reaching across the aisle, sitting down with Republicans and
finding some sort of legislation I can put forward.

MATTHEWS: I can only say the best of luck to you, sir. I hope you
win the race. You look like you`ve won it anyway.

Patrick Murphy of Florida, joining the United States Congress.

MURPHY: You get it. Thank you.

MATTHEWS: When we return -- you got to be improving the place after
that guy.

When we return, let`s me finish with a thought for those who were
baffled by the presidential election. I know some people.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: First of all to all the veterans out there, you`re great
people. Thank you for your service to our country.

Let me finish tonight with this, though. I want to pay tribute to
those who remain baffled by this election. I`m talking about the people
who were with Romney, a lot of them. I want to give them the compassion I
would want myself where I among the dispossessed and now forlorn.

I was thinking to the days to the last lines from my favorite novel,
"The Great Gatsby." It isn`t hard, of course, the story of a successful
man who wants more than anything what his money can`t buy. He wants to go
back to the world of his earlier youth when he was in love and his love
loved him. He wants back what he had when he had nothing else.

Here is the great Fitzgerald`s writing. `He had come a long way to
this blue lawn and his dream must have seemed so close that he could hardly
fail to grasp it. He did not know that it was already behind him,
somewhere back in that vast obscurity behind the city where the dark fields
of the republic rolled on under the night. Gatsby believed in the green
light, the orgiastic future that year by year recedes before us. It eluded
us then, but that don`t matter, tomorrow we will run faster, stretch our
arms further. And one fine morning -- so we beat on, boats against the
current, borne back ceaselessly into the past."

That`s HARDBALL -- that really is 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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