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updated 11/19/2012 11:36:46 AM ET 2012-11-19T16:36:46

HARDBALL
November 16, 2012

Guests: Adam Schiff, Jonathan Allen, Aaron Smith, Marc Morial, Hedrick Smith

CHRIS MATTHEWS, HOST: The gift that keeps on giving.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Los Angeles.

"Let Me Start" tonight with this. We now know how Mitt Romney is
without a script. The words that come into his head, like that 47 percent
stuff from May that got out in the campaign, are just bad. The evidence is
that this guy`s default switch says, Blame the little guy, call him a
mooch, a taker, a parasite, someone who`s up for sale to any politician
ready to pay. In fact, gifts -- that`s what the little guy wants, the
older person, the hard-up youth, the minority -- boodle, payoff, scratch.
Just cross their palms and they`re pull the lever for you, cash-and-carry.

Well, the smart conservatives know this is no way to treat a potential
voter. And columnist John Podhoretz, who I usually only agree with about
movies, put it this way in his "New York Post" column today. "Romney
didn`t say that the election had come out as it did because Obama`s team
had outplayed and outfoxed his. He should have because that`s the truth.
Rather, he said that Obama had won the second term essentially through
bribery."

Well, look, I`ve got three rules for both parties as they converge now
to do their jobs. Respect the voter, respect each other`s offices, and
search hard for common ground. Those are what we should be doing, and that
should be the way we`re guiding our country`s conversation today, not
trashing the people who voted against you, but respecting the fact that
they did, for your own good.

David Corn is Washington bureau chief for "Mother Jones" and Joy Reid
is managing editor of Thegrio. Both are MSNBC political analysts.

Look, let`s take a -- let`s take a look at some of the stuff from John
McCain here. It`s been four years since John McCain lost his presidential
bid, just 10 days since Mitt Romney lost. But they still are both holding
a grudge, apparently, against the president in their bitter comments this
week.

Listen to Romney`s conference call about Obama`s gifts and McCain`s
complaints about Obama ally U.N. ambassador Susan Rice.

(BEGIN AUDIO CLIP)

MITT ROMNEY (R-MA), FMR. GOV., FMR. PRES. CANDIDATE: What the
president -- president`s campaign did was focus on certain members of his
base coalition, give them extraordinary financial gifts from the
government, and then work very aggressively to turn them out to vote.

(END AUDIO CLIP)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: Susan Rice should have known better.
And if she didn`t know better, she`s not qualified. She should have known
better. I will do everything in my power to block her from being the
United States secretary of state.

(END VIDEO CLIP)

MATTHEWS: Joy Reid, let`s go after Romney first and the way he`s
calculating how he lost. Now, you can give all kinds of reasons for
losing, and fair enough, that`s what you do in your head. But when you
spout the argument that the other guy bought all the interest groups, all
the categories of citizens, and that`s how -- that seems to diminish not
just the purchaser but the purchased. You`re basically saying these people
were up for grabs, just buy them. You`re never going to get them ever
again if you talk about people that way, it seems.

JOY REID, THEGRIO.COM, MSNBC CONTRIBUTOR: Well, exactly. And talking
about more than half of the voting public as essentially bribery victims or
being duped because they were given baubles by the administration -- you
know, it`s ridiculous and insulting, and precisely to some of the groups
Republicans needs to do better with.

Look, Latino leaders were outraged and incensed by this. African-
Americans were outraged. And you know, he went after women. They went
after essentially everyone.

And what they`re basically arguing is that government is nothing more
than a transaction of government giving you things in exchange for votes.
It`s an understanding of government that, to me, renders him unfit to be
the leader of the United States government, if that`s really what he thinks
that government comes down to, because the things he was describing that
the Obama administration did, that is called governing.

MATTHEWS: Yes. I think -- let`s go to -- same question to you,
David. Why would he use words like this? I think it`s the way he thinks,
unless he`s being scripted. "47 percent" was unscripted. This was
unscripted. This could be the pure Romney.

DAVID CORN, "MOTHER JONES," MSNBC POLITICAL ANALYST: You know, Chris,
I was the first guy in the media to see the "47 percent" remark. And when
I saw it, I couldn`t believe it, but I thought maybe there was a slight
chance that maybe he was saying it to play up to that crowd. He knew
that`s what they wanted to hear.

But now when we hear how he talks about voters -- he didn`t just say
yesterday that they were bought off, that they -- that they -- that Obama
won the their votes through bribery. He said, I ran a campaign of big
ideas, but these other people out there, they don`t care about it. They`re
just in it for themselves.

So they are the moochers, they are victims who are trying to -- who
are looking at who will pay them the most. And in the end, what happens?
Mitt Romney portrays himself as a victim of the victims.

So it just confirms all the worst impressions from the "47 percent"
rant, and now you have Republicans running away from him and basically
saying, Hey, don`t let the car elevator door hit you on the way out.

MATTHEWS: Yes. Well, let me go to one thoughtful conservative. I
mentioned before John Podhoretz, who I usually agree with on cultural
issues, not ideological issues.

CORN: Me, too.

MATTHEWS: He`s a smart guy. He writes for "The Weekly Standard." I
always read the back of the book. I don`t agree with the front of the
book, usually.

Joy, it seems to me that he has a pretty good point in his column. He
said Romney`s whole campaign was aimed at what he called entrepreneurs, job
creators, sort of the titans of industry, the Ayn Rand types who see
themselves that way, ignoring all the people who basically work for a
living, work 50 or 45 or whatever, 40 hours a week, show up for work, do
their jobs. Most people are like that.

He said if you limit your party simply to people who see themselves
as, you know, titans of industry, you`re going to have a very, very small
notion of America.

REID: Yes, absolutely.

MATTHEWS: And a very small electorate working for you.

REID: Exactly. I mean, basically this was a candidate of the boss.
And he left, basically, everyone else to the president, to Barack Obama.
And I think if you`re going to be the party of just the boss, you have to
presume that, A, either everyone else really loves and adores their boss
and so they`re willing to vote for a guy who essentially boils down to
being nothing more than a CEO, or as you said, you limit yourself to only
the rich, to only people who, by the way, are not just wealthy, but who
actually, as David said, they feel like they`re the victims in society.
They`re actually being put upon by the moochers, by everyone else who
essentially isn`t as good as they are, who doesn`t deserve the things that
they`re getting from government.

But what Romney forgets is that some of the people who receive from
government include his own base. You`re talking about seniors, who, you
know, are probably the largest recipients of government, of government
programs. And so he left off so many people and showed such disdain that
it`s no wonder he couldn`t get a majority of votes.

MATTHEWS: Well, let`s go through some of the people and what they`ve
said about him now that they`ve discovered this guy. I think you`re right,
David, they should have known what they were dealing with long before the
election returns came in. But of course, people like to be with the
winner, right, left and center in that regard.

As we`ve seen -- as we`ve been saying this week, so now you tell us.
More Republicans are backing away from Romney`s "gift" language, like New
Mexico governor Susana Martinez, who said, quote, "That unfortunately is
what sets us back as a party, our comments that are not thought through
carefully."

Or take Marco Rubio, who told Politico, "I don`t want to rebut him
point by point. I would just say to you I don`t believe that we have
millions and millions of people in this country that don`t want to work.
I`m not saying that`s what he said. I think we have millions of people in
this country that are out of work and are dependent on the government
because they can`t find a job." That was carefully carved.

And then there`s Chris Christie, the governor of New Jersey, who had
this to say on "MORNING JOE" just today.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE (R), NEW JERSEY: I voted for Mitt Romney, but the
bottom line is, we lost. And so now what we need to do as leaders of our
party is pivot and get back to our jobs. And if we do our jobs well,
people will put us back into office. And if we don`t, they won`t.

UNIDENTIFIED MALE: Is it time for Mitt Romney to move on and stop
having conference calls?

CHRISTIE: Oh, that`s up to him. I mean, listen, Mitt Romney is a
friend of mine. I understand he is very upset about having lost the
election and very disappointed.

UNIDENTIFIED MALE: But it`s not helpful, right?

CHRISTIE: Of course not, Joe, but he`s a good man and he will find
his level. And I think it`s still a little raw. So do I wish he hadn`t
said those things? Of course not. But on the other hand, I`m not going to
bury the guy for it.

(END VIDEO CLIP)

MATTHEWS: You know, it`s interesting. I want to go back to Joy on
this. This is just sheer human nature. I thought -- and I like to think
that I`m fair about this. I thought that Romney walked off the stage
election night as a noble figure in politics. However the campaign had
gone in some very bad directions, I believe, he ended it in the right
direction with nobility and graciousness and generosity, and I would use an
old Frank Sinatra term, class.

I thought he did it. He came out there alone -- we`re watching --
didn`t bring his wife with him, didn`t cry on anybody`s shoulders, didn`t
surround himself with family, took the loss, said he had a good running
mate, a great campaign team, and he was praying for the president.

Maybe that was shock. He was still, you know -- but a week or so
later, he`s out there saying terrible -- not just terrible, we`re all
buying votes and selling votes, but making himself look like kind of a
jester.

REID: Yes, sneering at the public that refused to take the
opportunity to make him their president. That`s not a way to go out.

And I think you`re right, Chris. I think a lot of times politicians
show who they really are and show their character in loss, in defeat,
almost more than they do in victory.

I mean, if you recall, you know, "Yes, we can," was a concession
speech. And that was the time when Barack Obama really soared, when he
lost to Hillary Clinton in New Hampshire. Sometimes you show more of who
you are in loss.

And I agree with you. I thought the night that he conceded, Mitt
Romney, for having apparently done that in an hour and just cobbled it
together, I thought he did a good job. And I think had he remained silent
or come across as a conciliatory figure, he might have a future -- maybe
not with the Republican Party because he really doesn`t have a base. There
are no Romney Republicans.

MATTHEWS: I don`t know what...

(CROSSTALK)

REID: ... given himself a shot. Right. What I think now...

(CROSSTALK)

REID: He`s of no use.

CORN: We`re finding out very quickly here that Mitt Romney is...

MATTHEWS: There aren`t many of them.

CORN: Mitt Romney is now the loneliest man in America.

MATTHEWS: Well, that`s the way it works.

CORN: There`s no one in the Republican Party with any loyalty to him.
He didn`t really represent any ideas...

MATTHEWS: Because he wasn`t one of the right wing...

CORN: ... that anyone cares about.

MATTHEWS: The right wing didn`t really trust him. The moderates gave
up on him.

REID: Exactly.

MATTHEWS: Everybody thought he was playing a charlatan act in their
favor.

Anyway, Republican strategist and Haley Barbour Ed Rogers told "The
Washington Post" today this. "There`s no Romney wing in the party that he
needs to address. He never developed an emotional foothold with the GOP,
so he can exit the stage anytime and no one will mourn."

So I guess I want to address a question to Joy here. You know, among
minorities, among people that are perhaps generally Democrats -- but you
know, for example, the African-American community -- you know the history
as well as I do, or maybe better. They were about 2 to 1 Democrat going
into the `60s...

REID: Right.

MATTHEWS: ... because of what Jack Kennedy did, that wonderful call
of consolation to Mrs. King when her husband was in prison, what he did on
Civil Rights with Lyndon Johnson (INAUDIBLE) the community went about 99 to
1 pro-Democrat. But if (ph) it was only 2 to 1, you`re only losing a third
of a black vote, if you`re a Republican.

REID: Correct.

MATTHEWS: You`re doing OK in big states.

REID: That`s right.

MATTHEWS: You`re winning state governorships and Senate seats. But
you start losing a community of the size of the African-American community,
which is 10 to 15 percent in big states, you`re losing 80 percent net of
that community. And if you keep talking like Romney`s talking...

REID: Right.

MATTHEWS: ... you`re going to keep losing it. Talk about that
because I think it is about percentages. You`re not going to bring back
the whole black community if you`re a Republican, but if you can get a
third of it, if you can get a third of the Hispanic community...

REID: That`s right.

MATTHEWS: ... or as W did, 40 percent of it, you change everything.

REID: No, absolutely. And when I look right now at the Hispanic
community, Chris, I see the African-American community in the `60s. And
you`re right, the Southern strategy broke the relationship, severed it,
which had been an historic and long relationship between African-Americans
and the Republican Party. I still know elderly African-Americans who stick
with the Republican Party because of the history. But the Southern
strategy broke that.

At the time in the 1960s, before that happened, black people broke
about the same percentage Democrat to Republican that Latinos do now.

MATTHEWS: Yes.

REID: Think about the fact that in this election, we went from about
a 65 percent Democratic Hispanic electorate to 72 percent. If that
trajectory continues, 10, 15 years from now, Latinos will be just where
African-Americans are, and that will make winning national elections
extremely difficult for the Republican Party.

CORN: Don`t forget about the youth vote. One of the things that Mitt
Romney talked of as a gift was college loans for kids...

REID: Correct.

CORN: ... which truly shows the...

MATTHEWS: Oh, he said they were being written off, and it`s a
complete lie. They`re not being written off. You still have to pay
student loans.

CORN: He was wrong. But the whole point of giving people a break on
college or making it easier for them to go to college is that`s how we
invest in our economy, and we compete better with China, India and Brazil.
And he seemed totally lost on that point. And if you get...

MATTHEWS: (INAUDIBLE) the facts. David, don`t forget the facts here.
He was wrong on that, too.

(CROSSTALK)

MATTHEWS: Nobody said you don`t have to pay interest on student
loans.

CORN: But in attitude going -- and if you use -- if you lose the
young vote and they end up voting for Democrats two, three, four times in a
row, that`s going to put the Republican Party in a similar hole.

(CROSSTALK)

REID: Not only that, but the African-American community and the
Latino community both read the signals. They saw the voter ID stuff. They
saw the disdain that was shown for the ability of African-Americans and
Latinos to vote. A lot of the voter ID stuff was directed squarely at
Latinos, at Latinos (INAUDIBLE)

MATTHEWS: OK, we`re burying this guy.

REID: Absolutely.

MATTHEWS: He`s being lowered in the grave now. He`s about 20 feet in
the ground now. We keep shoveling the dirt on.

One thing -- I want to stop here. If he`d only realized his kids
didn`t need student loans, and that makes him lucky, fortunate.

REID: Right.

MATTHEWS: That`s not something that -- you don`t have to learn those
things when you`re rich.

REID: Exactly.

MATTHEWS: This is special. Anyway, thank you, Joy Reid. I got to
go. Thank you, David. Thank you.

REID: Thanks, Chris.

MATTHEWS: You guys are great. Please come back as fast as you can.

REID: Absolutely.

(LAUGHTER)

MATTHEWS: Coming up, the general on the Hill. General David Petraeus
has probably got more ink this week than President Obama, and for all the
wrong reasons. But today he testified on Capitol Hill on what happened in
Benghazi and whether Ambassador Susan Rice had been given the facts when
she gave he administration`s account. We`re going to talk to a member of
the House Intelligence Committee who was in that room when Petraeus spoke
in that closed-door hearing.

Also, the fiscal cliff. How much room will the interest groups give
the president to make a deal? They met with the president today and
yesterday, and they told him where they stand. We`ll hear from two of them
who met with him.

And guess who showed up at "Parks and Recreation" last night, on the
show?

(BEGIN VIDEO CLIP)

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: On behalf of the
president and myself, I...

UNIDENTIFIED FEMALE: Oh, Mr. Vice President, I am deeply flattered!
But there`s no way that I could take over Madam Secretary Clinton`s
position.

(END VIDEO CLIP)

MATTHEWS: Wow. Vice President Biden goes Hollywood in the
"Sideshow."

"Let Me Finish" tonight with this question. Can Obama`s second term
be a true reach for greatness?

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Republicans are becoming something of an endangered species
out here in California. Today Republican congressman Brian Bilbray, who`s
been on the show, lost his bid for reelection in the San Diego area.
Bilbray conceded the race to Democrat Scott Peters in his state`s newly
drawn 52nd district. That was there.

And last night, the Associated Press called the race in the state`s
seventh district, not far from San Francisco. There longtime Republican
congressman and HARDBALL guest Dan Lungren is out. Notre Dame guy, by the
way. Another loss for them. He was beaten by Democrat Ami Bera. That
brings California`s congressional delegation now to 38 Democrats, 15
Republicans. Wow.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. David Petraeus has been headline
news all week, and for all the wrong reasons, his extramarital affair with
his biographer, Paula Broadwell. But today, he was on Capitol Hill talking
about a less prurient but more consequential matter, the attack on
Americans on Benghazi.

Arriving through a secret entrance this morning, the former CIA
director made his way to the Hill for closed meetings with the House and
the Senate Intelligence Committees to testify about that September 11
attack, an event he said and always believed -- he said he always believed
was an act of terrorism, according to lawmakers who were in the room.

Democratic congressman Adam Schiff of California sits on the
Intelligence Committee and was in the House hearing room this morning.

Congressman Schiff, this is so sensitive. Is it true or not true that
the United Nations ambassador, Susan Rice, was given the correct known
information about what happened in Benghazi when she went on those five
television shows on Sunday a few days after the attack? Was she given the
accurate, up-to-date information on what had really happened and that it
was a terrorist attack?

REP. ADAM SCHIFF (D-CA), INTELLIGENCE COMMITTEE: Yes, he was given
the best assessment the intelligence committee had at the time. And I
asked General Petraeus on this exact point, you know, Were the talking
points we were given their best intelligence assessment at the time? And
we were given that late in the day on Saturday, late in the afternoon. And
he said, Yes, these were the best -- this was the best assessment they
could do without disclosing classified information.

MATTHEWS: Whoa! Whoa! Stop right there! Stop right there!

SCHIFF: Yes.

MATTHEWS: He also said, according to what I`ve heard in the testimony
today, that he always believed that it was a terrorist attack.

SCHIFF: Yes, he did. He said that...

MATTHEWS: Well, how can that be both true?

SCHIFF: Well, he...

MATTHEWS: If he gave her the honest testimony to give to the
television programs that Sunday after the attack, which was a terrorist
attack, then she didn`t get -- she never got told that! He knew it and
didn`t tell her.

SCHIFF: Well, no, you know, I think what the general was saying, that
when he first briefed the Congress, he felt, and I think many of us did,
you shoot mortars and RPGs at an American diplomatic post, that`s an act of
terror.

The question really was not whether you describe it as terrorism. The
question was, was it pre-planned? Who committed the acts and how do we
find them and bring them to justice?

You know, what the intelligence community got wrong, and the general
acknowledged that this was wrong, is that they thought initially that this
was a protest that was either hijacked or got out of control, that
certainly, terrorists and extremists were involved in, but that it began
with a protest.

It did not begin with a protest. But the key thing in terms of the
master (ph) is the ambassador was given, as we were, the best assessment at
the time, as flawed as that was...

MATTHEWS: Look, I am a clear thinker, and I know you, are
Congressman.

SCHIFF: Yes.

MATTHEWS: Let`s be clear here.

Did he believe -- from the very earliest dispatches he got and cables
he got on this, did he believe it began as a protest, or did he believe it
was always a terrorist operation?

SCHIFF: No, he believed that it began as a protest, but he also
believed that terrorists and extremists were involved, and that`s I think
consistent with what he said at the time, although, you know, at the time
he also caveated, as all of the intelligence community did, that these were
very initial reports, that they were going to get a lot more information
and that we need to be concerned that this was..

MATTHEWS: OK. Let`s try it again.

SCHIFF: Yes.

MATTHEWS: Let`s try it again.

SCHIFF: Yes.

MATTHEWS: From what I understand today is he said he didn`t give her
all the information because he wanted to keep some of it classified, so he
wouldn`t give up our sources over there, our contacts.

SCHIFF: No, Chris, first of all, he didn`t say that he gave her this
information.

(CROSSTALK)

MATTHEWS: Well, the CIA director signed off on the talking points
that she used to go on the TV shows, isn`t that right?

SCHIFF: Well, he said that -- he said that he signed off on the
talking points that we were given as members of Congress. He doesn`t know
what talking points the ambassador was given.

But I asked him that to the degree that what she said on those Sunday
talk shows tracked to the talking points that we were given as members of
Congress, and it tracked almost identically, was she giving the
intelligence community`s best assessment at the time that did not divulge
classified information? His answer was yes.

You know, it was clear from his testimony that, number one, they were
wrong about the protest, the I.C., the intelligence community was wrong.
Number two, there was never an effort to politicize this. There was never
any manipulation by the White House.

(CROSSTALK)

MATTHEWS: OK. That`s not -- that`s a loaded word. Let`s stay away
from loaded words.

SCHIFF: Yes.

(CROSSTALK)

SCHIFF: Well, Chris, this is the allegations that`s being made. And
so to the degree that some of my colleagues on the other side...

(CROSSTALK)

MATTHEWS: That`s interpretative. But that`s interpretative. I want
to get to the facts.

(CROSSTALK)

SCHIFF: Sure.

MATTHEWS: Look, here is the question. McCain and Graham, they`re out
there pushing the case that she misled the American people, she should not
be secretary of state or even considered for nomination because she misled
on purpose. Is there any evidence that she did?

SCHIFF: Absolutely not. Absolutely not. And, in fact, if Ambassador
Rice departed from what the intelligence community told her and told us was
their best assessment, then she`s open to legitimate criticism. But she
didn`t. She took what the intelligence community said, this is our best
sense of what happened.

MATTHEWS: OK.

SCHIFF: How can you fault her for doing that?

MATTHEWS: Oh, no, I think she`s clean. My problem is with Petraeus.

From the day he saw the news reports and what she said on the Sunday
shows, including "Meet the Press" from our network, from the day how he saw
how she categorized it as beginning as a protest and somehow being hijacked
by the bad gives with RPGs and heavily armed and all that, from the minute
he heard her say that and learned that that was not the case, why didn`t he
correct the record?

SCHIFF: Well, at the time that he heard her say that, that is what he
thought took place. He did think it began with protests.

MATTHEWS: When was he disabused of that? When did he learn the full
story?

SCHIFF: I think we learned the fully story when...

MATTHEWS: When did he learn it?

SCHIFF: Well, I think he learned the full story in the most graphic
way when we got the video evidence, and that was not until well after she
appeared on those Sunday talk shows.

Now, there are legitimate questions about why didn`t we get that
evidence sooner?

MATTHEWS: Why didn`t he give it to us?

SCHIFF: Why didn`t the general give it to us?

MATTHEWS: He knew the country was misled, perhaps by accident, I will
take that, by the secretary -- or ambassador to the U.N. We were misled.
We were all believing what she said. We all thought this thing was
hijacked.

SCHIFF: Chris, hold on a second, hold on a second here.

When you say misled, that is a politicized term. There was nothing
deliberate about this. Unless you believe that General Petraeus and the
deputy director, now acting Director Morell, and the DNI director were all
in on some conspiracy, they were doing their job.

MATTHEWS: No, no.

SCHIFF: And, yes, they got it wrong. Their initial assessment was
wrong.

(CROSSTALK)

MATTHEWS: You`re missing my point. Congressman, you`re missing the
point.

SCHIFF: OK.

MATTHEWS: I`m dealing with the news here as we get it.

SCHIFF: Yes.

MATTHEWS: I don`t like rolling disclosure. At some point, he got the
full story. Why didn`t he come forward? Why did he have to be dragged
into that hearing room today and put before both committees to get the
truth? Why are we only getting the clarification today? Why didn`t he as
CIA director go to the president, the public ought to know what really
happened? Why didn`t he ever do that?

SCHIFF: Well, the intelligence community did put forward approved
assessments over time that gave us the clear picture and debunked the idea
that there was a protest.

And you can accuse them of being too slow to do that. And,
information, we have asked them exactly these questions, why it took so
long to get to the truth and to get a more accurate picture. Of course,
they need to put this forward to us, Chris, in a way that doesn`t divulge
classified information.

But I don`t think there`s any evidence -- I certainly haven`t seen any
evidence, that General Petraeus or any of the other intelligence community
were trying to mislead anyone. They are professional. They were trying to
do their job. And we can fault them for getting the initial assessment
wrong, but I don`t think we can ascribe any kind of malice or intent to
deceive here.

MATTHEWS: No. But when your pants are on fire, someone should tell
you your pants are on fire. You shouldn`t have to ask, are my pants on
fire? He`s only now giving us the straight skinny. Anyway, that`s my
view. I`m going to try to get some more information.

Congressman Adam Schiff from your California, thank you for your
straight story on this.

SCHIFF: Thanks, Chris.

MATTHEWS: Jonathan Allen is covering this story from Politico.

Jon, do you see what I`m trying to get at here? We want to know why
it took so long to get what now looks to be the straight story. The
picture developed like a Polaroid film in the old days. It finally
developed. It really was always a terrorist attack, in the sense that
terrorists organized the event, didn`t take advantage of it, didn`t hijack
it, it was their event.

What do you think?

JONATHAN ALLEN, POLITICO: Yes.

I mean, by definition, these guys attack a U.S. Embassy, they`re
terrorists. This is not rocket science. And these are nice glass houses
and glass Senates the folks on the hill are living on where they suddenly
think it`s a crime to go out and use talking points that aren`t honest.

Geez, if that was a crime, 535 members of Congress would be in jail
for it. I`m listening to this. I listened to Congressman Schiff. I have
listened to other members, talked to folks who were in the room today with
David Petraeus. And no matter how many conversations you have, nothing is
clear about the timeline of when our intelligence community knew that this
was a terrorist attack vs. some video-inspired, protest-inspired event, and
why that wasn`t brought forward.

I think, obviously, Chris, the American public has a right to know why
an American ambassador and three other Americans were killed there and
whether there was anything that we could do to stop it from happening then,
to give them support, or to prevent something like that from happening in
the future. And we`re not getting those answers, at least not in the
public right now.

Obviously, the members of the Intelligence Committee are getting some
kinds of answers, but when you talk to them, you get a completely different
read on what happened. Some folks say Petraeus was talking about terrorism
on day one. Others say he`s evolved from this video plot or this video
story to terrorism today.

And it`s not necessarily partisan. These guys are all over the place.
It`s like they`re in the same room and they have no...

(CROSSTALK)

MATTHEWS: Yes. That`s right. That`s a good account. That`s a good
account. That`s a good account. In fact, when he says it was always
terrorism, he`s just using it in a very broad term. We`re trying to find
what was the event caused by.

Anyway, thank you, Jonathan Allen, a great -- I think it was a great
summation there.

ALLEN: Take care.

MATTHEWS: Up next: Vice President Biden`s guest appearance on NBC`s
Parks and Recreation," a little lighter note coming.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

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

First up, fans of NBC`s "Parks and Recreation" know that Amy Poehler`s
-- her name is Leslie Knope -- has interesting criteria for her ideal man -
- quote -- "She wants the brains of George Clooney and the body of Joe
Biden."

Well, in last night`s episode, she got part of that equation. Take a
look.

(BEGIN VIDEO CLIP, "PARKS AND RECREATION")

JOSEPH BIDEN, VICE PRESIDENT OF THE UNITED STATES: You must be Leslie
Knope. Welcome. Welcome.

(LAUGHTER)

AMY POEHLER, ACTRESS: Your -- my -- my name just came out of your
mouth.

BIDEN: Well, yes, it did. I`m delighted to have you here. On behalf
of the president and myself, I want to...

POEHLER: Oh, Mr. Vice President, I am deeply flattered, but there`s
no way that I could take over Madam Secretary Clinton`s position. I
mean...

BIDEN: I`m confident you could do that job or any other, but the
reason...

POEHLER: OK, I will.

BIDEN: Well, the reason you`re here is, I`m told, you have done such
a great job in your town and in the state of Indiana, and I just want to
say congratulations for your public service.

POEHLER: I just want to say thank you. You`re very handsome.

BIDEN: Well, you`re very nice, but...

POEHLER: Thank you.

BIDEN: Thank you very much.

POEHLER: Thank you very much. We will see you tomorrow.

BIDEN: Well -- oh, well, you will?

POEHLER: You don`t let anything happen to him. Do you understand me?
He`s precious cargo.

(END VIDEO CLIP)

MATTHEWS: Wow. Well, Biden`s cameo is from last summer. It might
have needed a little tweaking if the election had turned out differently,
don`t you think?

Also, what`s the main thing that got in the way for Mitt Romney this
past election? Well, let`s take a look at two of the more blunt
assessments of what went wrong.

First, Karl Rove, he thought the drawn-out primary process and all
those Republican debates worked against Mitt Romney in the general election
or in his words from a speech in Pennsylvania this week -- quote -- "Mitt
Romney had what I scientifically call a butt-ugly primary."

Good for you, Karl.

Anyway, the election didn`t exactly end well for Rove either having to
answer to all those people who donated to his super PAC in the hopes of a
Romney victory. Didn`t happen.

Then there`s GOP strategist Glen Bolger. He gave this blunt diagnosis
for the loss at the Republican Governors Association conference yesterday.

(BEGIN VIDEO CLIP)

GLEN BOLGER, REPUBLICAN STRATEGIST: What we need to do, one is we
need to convert and get more Republicans, because if we`re going to win
independents and get Republicans and still lose an election, it`s because
there`s too many damn Democrats out there.

(END VIDEO CLIP)

MATTHEWS: Too many -- quote -- "damn Democrats," and not enough,
what, damn Republicans? That`s one way of summing up the arithmetic. You
need an expert to do that for you?

Anyway, David Letterman also weighed in with some potential scapegoats
on his top 10 list.

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

DAVID LETTERMAN, HOST, "LATE SHOW WITH DAVID LETTERMAN": Number nine,
properly functions voting machines.

(LAUGHTER)

LETTERMAN: Number six, Congressman Todd Akin`s biology teacher.

Number four, this guy right here, that guy. There`s Paul Ryan. Hey,
buddy.

Number three, fact-checkers. I don`t get this one either.

(LAUGHTER)

LETTERMAN: Number two, the Republican Party for nominating him.
Ouch. Oh.

(END VIDEO CLIP)

MATTHEWS: That`s good stuff.

Up next: the fiscal cliff. Will the interest groups give President
Obama room to make a deal? We will talk to two of them who met with the
president just today.

And you`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

COURTNEY REAGAN, CNBC CORRESPONDENT: I`m Courtney Reagan with your
CNBC "Market Wrap."

Stocks did end higher. The Dow rises 46 points, the S&P 500 up six,
and the Nasdaq gaining 16.

Facebook shares jumped 6 percent, as the post-lockup expiration rally
continued. The stock is up about 20 percent this week.

However, Dell moved into the opposite direction, sinking 7 percent
after earnings missed expectations.

And a sad day for Twinkie lovers. Hostess is seeking to go out of
business after failing to cut a deal with striking workers.

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

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Our challenge is to
make sure that, you know, we are able to cooperate together, work together,
find some common ground, make some tough compromises, build some consensus
to do the people`s business.

(END VIDEO CLIP)

MATTHEWS: He still seems a little tired from the election.

Anyway, back to HARDBALL.

Today, President Obama met with congressional leaders to kick off
talks to avoid that fiscal cliff. It caps a week in which he`s reached out
to union leaders, business leaders, congressional leaders to soften the
ground for a deal.

At stake is the White House -- by the way, the congressional leaders,
Boehner, Reid, Pelosi, McConnell, were cautious, but optimistic about a
deal. Here they are at the stakeout.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: To show our
seriousness, we have put revenue on the table, as long as it`s accompanied
by significant spending cuts.

SEN. HARRY REID (D-NV), MAJORITY LEADER: We have the cornerstones of
being able to work something out. We`re both going to have to give up some
of the things that we know are a problem.

REP. NANCY PELOSI (D-CA), HOUSE MINORITY LEADER: We should have a
goal in terms of how much deficit reduction. We should have a deadline
before Christmas. We should show some milestones of success, so that
confidence can build.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: We`re prepared to put
revenue on the table, provided we fix the real problem.

(END VIDEO CLIP)

MATTHEWS: The real problem. You got that? Old McConnell is always
all the tree stump on the lawn when you`re trying to cut it.

Anyway, this afternoon, the president held his fourth and final
meetings with stakeholders in the budget negotiations to come, civic
leaders and members of civic leaders.

Marc Morial of course is president of the National Urban League. He
was at the afternoon meeting, as was Aaron Smith. He is co-funder of a
group called Young Invincibles, a nonpartisan, nonprofit group dedicated to
ensuring that young people`s perspectives are accounted for in policy and
economic opportunity, education, and health care issues.

Thank you both.

MARC MORIAL, PRESIDENT, NATIONAL URBAN LEAGUE: Thanks, Chris.

MATTHEWS: I want to start with Mayor Morial.

You know, I want to be blunt with you. What can we do about this debt
problem? It`s growing. Do you accept the fact that it`s a serious threat
to our country?

MORIAL: Yes. The deficit is a serious threat. We need a long-term
fiscal plan, not a short-term fix.

And I think the idea is, is that there has to be shared sacrifice to
achieve shared prosperity.

MATTHEWS: Let me go to Aaron with the same question so we`re on the
same table here.

Do you believe the national debt, as it`s grown up to basically around
the size of our GDP, where we owe as much as we make every year, is that a
dangerous position to be in, or not?

AARON SMITH, YOUNG INVINCIBLES: Well, I think there are definitely
tough choices we have to make about how we`re spending our money and how
we`re being sustainable.

I think there are smart ways to make government more efficient. If
you look, for example, we spend about $93 billion every year in social
services for unemployed young people, young people who are not connected to
school. We only spend about $2.5 billion for job training programs. If we
invested in the kind of job training and education that young people need,
that could grow our economy and it could reduce some of those government
expenditures.

MATTHEWS: Well, let`s get to actual cuts, then. You open the bowl.
Where would -- where would you get $4 trillion in cuts over 10 years?

SMITH: Who are you asking?

MATTHEWS: I`m asking Aaron.

SMITH: OK. Well --

MATTHEWS: Cuts. What would you cut to get down to save $4 trillion?

SMITH: I think we should start, Chris, by talking about what our
priorities are.

MATTHEWS: No, no. I`m asking you, where are the cuts? Give me some
ideas -- big chunks of federal spending. Big increases in federal revenue
to erase that $4 trillion debt we`re trying to get rid of.

SMITH: Well, again, Chris, I reject the premise that we should start
from the focus of cuts when the real priority for young people is jobs and
it`s making college more affordable.

MATTHEWS: OK. We`re talking about debt reduction and the
president`s problem of avoiding the fiscal cliff and I got to get back to
the mayor.

Think about it -- I want to go to ways we can actually do this. I
know everybody has to give something. I`m wondering what people are
willing to give.

Mayor, what are the areas that affect the big cities? Mayor, what
are the areas that affect the big cities?

MARC MORIAL, NATIONAL URBAN LEAGUE: The big cities are affected by
housing, community development investments, education investments, which I
might add have already taken cuts. This is what`s important is that this
is not happening in a vacuum. This is a continuum of looking at with the
sequestration and the debt deal where have the cuts already taken place.

Let me give you an example. Community Development Block Grant, Title
I, Head Start, Workforce Investment Act, which is job training. These have
taken cuts.

The most important thing is, one, to sustain -- sustain the middle
class tax cuts because to allow them to expire would mean a $3,000 hit for
someone who makes $50,000 a year.

So, it`s important to understand that revenues and expenditures go
hand in hand, and any plans got to include all.

MATTHEWS: Yes, that`s right. Let me get back to Aaron. There`s
three ways to reduce the debt. You increase revenues, reduce expenditures
on entitlement programs, or you reduce expenditures on regular
appropriations.

If you were sitting with the president and he`s sitting there with
his pencil and his paper trying to figure out the arithmetic -- how could
you help him do this thing when he has to do it?

SMITH: Well, let`s start by putting some of our spending in
perspective. The cost of the Bush tax cuts for those above 2 percent is
about $80 billion a year. We only spend about $60 billion a year on our
whole education system from a federal perspective. So, obviously, that`s
something that`s got to be on the table.

I agree with Marc about the point about middle class tax cuts, things
like payroll tax cuts, the AOTC.

MATTHEWS: Yes.

SMITH: Those are critical. There`s issues about Pell Grants which
have a shortfall in the future. But I think we need to start with those
tax cuts on the upper income earners --

MATTHEWS: Would you cut any spending --

SMITH: Eighty percent of young people support getting rid of those
tax cuts.

MATTHEWS: Yes. Would you do anything besides raise taxes on the
rich? Would you do any cutting federal spending?

SMITH: I think there are ways we could make some of these programs
more efficient by investing in the front end in education and training that
in the long term can reduce --

(CROSSTALK)

SMITH: -- over a long period of time.

MORIAL: I want to offer this perspective because in the entire
conversation, what`s been missing is the military --

MATTHEWS: Sure.

MORIAL: -- where military expenditures for the United States are
greater than that of the next 10 nations combined.

So when you talk about putting everything on the table, domestic
discretionary is about 14 percent to 15 percent of the budget. You`ve got
to have all appropriations on the table. You`ve got to have all taxes on
the table. You`ve got to have a comprehensive look.

But our starting point is to sustain those middle class tax cuts and
from a principled position, I believe that those who are most vulnerable
shouldn`t take the biggest hit, the must substantial hit, and I have
confidence that the president is going to take those principles into these
negotiations.

MATTHEWS: I think we found out something here very important from a
progressive point of view. We`ve got to go after the rich tax breaks at
the top. They`ve got to lose those things at the top.

They`ve got to get back to the Clinton era 39.6 percent rate. It
didn`t hurt our economy back in the `90s. We had a booming economy.

We`ve got to do something about the defense budget as part of the
discretionary spending. We`ve got to do that.

And we shouldn`t whack the middle class again. They`ve been whacked
for 12 years now.

Anyway, thank you, Marc Morial.

MORIAL: Thanks a lot.

MATTHEWS: And thank you, Aaron Smith.

Good luck, both of you fellows.

SMITH: Thank you.

MATTHEWS: Up next, as the rich gets rich and the middle class
stagnates, a new book asked the provocative question, who stole the
American dream? That could be interesting. Hedrick Smith, one of the
great journalists, comes -- joins us next.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: This week, I told you about a few of the groups doing real
work, the good work, on the ground in the New York City area, helping
victims of hurricane Sandy get back on their feet. And again, get your
pens out and write down this information for yourself.

Starting with the Dr. Theodore Atlas Foundation. It`s run by a good
man, Teddy Atlas, whose father was a doctor on Staten Island for half a
century. Teddy`s group is gathering supplies and raising money for people
facing real dire straight.

And you can help this good man do good work by going to his Web site.
Now, this is all one word. Dratlasfoundation.com.

In the Belle Harbor section of Queens, where so many of the city`s
first responders, cops and fire people and all those come from, the church
of St. Francis de Sales has set up a relief center. St. Francis de Sales
Parish and they do help. You can send a contribution to them right there
at the church. Saint Francis de Sales Parish, 129-16 Rockaway Beach
Boulevard, Belle Harbor, New York, 11694. Write on the check "relief
effort".

The devastation caused by Sandy is real and I know you want to get
involved. It`s a very good thing to be doing.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: We`re back.

Here is what that fight over the fiscal cliff in Washington comes
down to. The president and the Democrats say the wealthy should pay a
little more, while the Republicans say the wealthy already paid too much.
Let them keep their money and they`ll create jobs for the rest of us they
say.

Well, a little historic perspective shows why the Republican argument
is false. And veteran journalist Hedrick Smith offers that perspective in
his new book, "Who Stole the American Dream?"

In the last 40 years, for example, the middle class has been squeezed
financially -- I don`t have to tell you that -- and sidelined politically.
The average worker`s salary remained flat and the retirement security has
largely disappeared. We`re talking about 401s here.

But the pay for CEOs has skyrocketed from -- catch this -- from 40
times the salary of the average company worker in 1980 to 400 times it by
2000. All this was made possible, Mr. Smith argues, thanks to powerful
corporate interests in Washington which have shifted the balance of power
politically.

Hedrick Smith joins us now.

Rick, thank you so much for coming in.

I`m going to let you make your message without a lot of Q&A. What is
the kernel of what you discovered in your reporting about how people have
been squeezed because they know they`ve been squeezed?

HEDRICK SMITH, "WHO STOLE THE AMERICAN DREAM?": Chris, everybody
tells us the middle class has been squeezed because of globalization and
technology, because of market forces, impersonal forces.

But when I dug into this and started to look back into it, what I
found out was what really happened back when you and I met, when you were
working for Tip O`Neill as speaker of the House. That was when there was a
power shift.

Lewis Powell, who was corporate attorney named to the Supreme Court
by Richard Nixon, actually wrote a memo and said: We`re getting killed.
Business is getting killed politically by the environmental movement, by
the labor movement, by the women`s movement, by the consumer movement --
Ralph Nader and those guys.

And he said: Business, you got to organize. You got to get to
Washington. You got to take the high ground.

And sure enough, literally within months, the Business Roundtable was
formed, biggest most powerful voice of corporate America today and back
then. National Association of Manufacturers moved their headquarters to
Washington. There were 175 companies when Powell wrote his memo that had
lobbying offices in Washington. Several years later, there were 2,400,
50,000 people working for business trade.

There was a political rebellion and they already stuffed labor. They
stuffed the consumer movement. They got deregulation. They got tax cuts.
They got all kinds of things.

So the power shift tilted the policy towards business, towards the
wealthy. That started in the late `70s, literally when you and I were
there. And at the same time, you had what I call wedge economics in the
economy.

It used to be that the prosperity, the growth of American
productivity was shared. Middle class had its share, along with the
owners, along with the shareholders. The productivity of the American
workforce, it doubled from 1945 to 1975.

MATTHEWS: So -- I know a lot about this. But give us -- there`s
Gucci Gulch for all the lawyers and lobbyists come in and tell us how to
write tax policy. A lot of businesses actually write the bills. They
draft them for the Republicans and sometimes Democrats.

SMITH: You got it.

MATTHEWS: Talk about that, how that works, because I don`t think the
public knows some of that.

SMITH: Well, I mean, they`re absolutely -- they`re absolutely write
in there, doing exactly what you`re saying. And they started out by doing
it.

The 401(k), it was never intended to be a national retirement plan.
It was stuck into the legislation by Barber Conable, an Upstate New York
Republican, as a favor to Xerox and Kodak because they had their head
offices in his home district. And what they wanted a tax shelter for
retirement payments to their executives. That`s how it started.

They wrote it. It was 401(k) because it`s 401 provisions down in the
tax code and it`s all the way down to K. It was so small nobody even knew
it was there. You guys didn`t know it was there. The speaker didn`t know
it was there.

MATTHEWS: So, instead of not having -- instead of having a solid
pension with a guaranteed annuity coming to you, you have 401(k)s, which
have shrunk in many cases over the years.

SMITH: What you got is hundreds of billions of dollars of
expenditures are shifted from the corporate books into the pocketbooks and
wallets of ordinary people. And it`s a disaster. The average 401(k)
balance today is $18,000. The median 401(k) balance for people on the
verge of retirement after 20 years in the 401(k) is only $85,000.

So, the corporations have saved enormous amounts of money and the
people are spending -- having to spend a lot more money and they`re not
saving enough.

MATTHEWS: We have to have you back again and again. This is great
stuff. Thank you.

Because a lot of our progressive viewers have a hunch about this,
they don`t know the details. Thank you so much -- because they know the
squeeze is real.

Rick Smith, Hedrick Smith, the book is called "Who Stole the American
Dream?" I think this is required reading and I never say that. Rick
Smith, thanks for joining us.

When we return, let me finish with whether President Obama will reach
for greatness in his second term.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this: a leader must have a
mission -- an American leader especially.

We are frontier people -- happiest most excited, most American when
we`re on a quest. Presidents need to know that. Great presidents know it
because it`s who they are, why they set out to lead us in the first place.

All our great leaders -- Washington, Lincoln, FDR, John F. Kennedy --
were men with a mission.

Washington led us into nationhood and defeated the most powerful
military force in the world basically by a brilliant campaign of retreat
along the Delaware, until they caught them pretty sleeping at Trenton, and
outsmart them again at Princeton. And then he did something remarkable,
setting the model that made him truly great -- walking away from power
twice. First, as the winning commander of the revolution, then as our
first elected leader.

He would have been without match until Abraham Lincoln came along,
championing a bloody Civil War that cost us 600,000 countrymen shooting at
each other across fields in point-blank range with their blue and gray
uniforms, their only cover. He emancipated slaves and ripped the
institution from our Constitution for good, and through it all began the
healing.

Finally in our trinity of greatness came Franklin Delano Roosevelt,
who carried us through the Great Depression and World War II, yielding us
up as the leading country of the modern world. He did it by force of human
will, getting this country to prevail against the toughest challenges of
its century, through the strength of his own confidence. One author said
he knew who we would win the war, World War II, just hearing FDR declare
it.

Jack Kennedy gave us the new frontier, a hero in World War II. He
led the country through the Cuban missile crisis, changed the Democratic
Party from a segregationist party to a civil rights party, created the
Peace Corps and took us to the moon. My book on him, by the way, "Jack
Kennedy: Elusive Hero", of which I`m actually very proud. It`s just out in
paperback.

And now for Barack Obama. He`s given us health care, end a
discrimination based on sexual orientation in the armed forces, begun the
quest for marriage equality, toughened the fight against terrorism.

Will he now bring us fiscal and immigration policies that secure a
confident, competent 21st century? When we face down the threat of climate
change, will he dare to be great? Those are the questions I want answered.

And this 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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