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updated 12/6/2012 1:18:27 PM ET 2012-12-06T18:18:27

HARDBALL
December 5, 2012

Guests: David Winston, Joe Klein, Ted Kennedy, Jr., John Kerry, Chris Kofinis

CHRIS MATTHEWS, HOST: Scaring the Republicans.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington.

"Let Me Start" tonight with this, with hope. I think we`re getting
somewhere with this fiscal cliff problem. Number one, the smart
conservatives, Bill Kristol, John Podhoretz, Byron York, now say the
Republicans would face hell if they let this country go over the fiscal
cliff just to protect the top 2 percent. Better to take the hit now, they
argue, than in January, with the world economy in turmoil and a second
recession coming.

Number two, John Boehner, the speaker, is claiming that he`s met
Obama`s demand for higher taxes for the rich. That`s good. He`s agreed in
principle that the rich must pay more.

Number three, there`s talk from the Republican leaders that they could
vote to continue the tax cuts for the 98 percent now, and therefore avoid
the fiscal cliff, and put off for now the top 2 percent. And the question
then, let the debt ceiling be -- not take effect. A tax cut delayed, I
argue, is a tax cut avoided. This has the look of a face saver.

Joining me right now to read the Republican defense is that highly
touted fan of the Philadelphia Eagles, Governor, Ed Rendell. Also, the
estimable Alex Wagner of MSNBC`s "NOW."

So Governor, I want you to read some of what`s going on here. First,
today Speaker Boehner defended the GOP`s tax proposal, saying it does take
a bite out of the rich. But President Obama held firm to a tax rate hike
for the wealth. Let`s listen to the back and forth.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: The revenues we`re
putting on the table are going to come from, guess who? The rich. There
are ways to limit deductions, close loopholes and have the same people pay
more -- more of their money to the federal government without raising tax
rates, which we believe will harm our economy.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Let`s allow higher
rates to go up for the top 2 percent -- that includes all of you, yes --
but not in any way that`s going to affect your spending, your lifestyles,
or the economy in any significant way. Let`s make sure that 98 percent of
Americans don`t see a single dime in tax increases next year.

(END VIDEO CLIP)

MATTHEWS: So John Boehner, the speaker for the Republican Party in
this partisan fight, is saying he`s already socking it to the rich. He`s
willing to raise their taxes in various forms but just not the rate.

Isn`t he agreeing in principle to the president`s argument of
fairness, you got to make the rich pay more? And having done that, isn`t
he in a weaker position in denying the need for a rate change, Governor?

ED RENDELL (D), FMR. PENNSYLVANIA GOVERNOR, MSNBC POLITICAL ANALYST:
Well, sure -- sure he is, Chris. There`s no question about it. But number
one, he hasn`t specified what deductions, so we don`t have a clue.

Number two, as Bill Clinton and President Obama pointed out, the math
doesn`t add up when you`re trying to do this just on deductions. You need
to do both deductions and loopholes, and of course, raise the rate. That`s
the only way the math works.

And as far as hurt the economy -- let me say for the 10,000th time,
Bill Clinton raised tax rates on the top 2 percent in 1993, and we then
proceeded to grow the economy by 23 million jobs. So that`s a bunch of
bull, Speaker Boehner.

MATTHEWS: Yes. Let`s go back to Alex with the same question. I will
argue that even though he hasn`t specified the deductions or the loopholes
he`s going to close -- and right -- the governor is right, there isn`t
enough loopholes at the top to close to really make up for this advantage
they have now. But it seems he`s accepting the moral argument. Maybe it`s
intangible, but he`s saying, OK, the rich should get socked, too. That`s
an amazing admission, I thought, for him to say that today. Your thoughts.

ALEX WAGNER, HOST, MSNBC "NOW": I completely agree with you, Chris.
It was -- this is something that would have been an anathema to the
Republican Party in 2011. The fact that John Boehner is out there saying,
We are asking the rich to pay more in taxes, is not something they ever
would have done in 2011.

If you remember, Matt Bai details this in his great tick-tock about
the sitdown between Boehner and Obama last year -- Boehner`s office
wouldn`t even write the number $800 billion in his initial offer to the
White House because they didn`t want other House Republicans to see that.

The fact that that figure is on the table and Boehner is taking to the
airwaves to say, You know who`s going to get soaked here, the rich, is a
shocking reversal of where the Republican Party was even a year ago.

MATTHEWS: Yes, and he`s agreeing to the number to start with
(INAUDIBLE) who`s going to pay.

But look at this. These are some smart conservatives. I read them
all the time -- Byron York, who`s in "The Weekly Standard," the
conservative columnist, and John Podhoretz, who`s in "The Weekly Standard"
and "New York Post," and of course, Bill Kristol. They`re all now saying
the Republicans have to do something here. They`re playing a losing hand
right now.

In fact, Podhoretz today writes the GOP should fold now before it`s
too late. Quote, "Every way you look at it, the GOP is trapped.
Republican politicians will cave and give the president most of what he
wants. The only real question is when. The answer is, probably at the
worst possible time, when they`ve done even more damage to the party`s
brand."

Governor, if you were a Republican today, would you sitting down say,
You know, we`re going to have to eat this, we`re going to have to deal with
this top 2 percent, we can`t be seen as hanging out for the rich guys and
rich women of this country, and we don`t want to be doing it during a
thunderstorm economic hell in January. Let`s do it now.

What do you think their thinking is in this fight?

RENDELL: It`s got to be clearly that because they`re going to lose
this eventually. No question about it. Even if we go over the cliff, the
president will make sure that there`s no legislation restoring the tax cut
for the top 2 percent. Everyone`s going to vote to restore it for the
other 98 percent.

They ought to do it now. It should not be a discharge resolution.
They shouldn`t let the Democrats try to shop for Republican votes. Speaker
Boehner should say, I`m bringing the bill to the floor for a vote, and I am
urging Republicans to do it. These are people who deserve to have their
tax cut continued. In this economic time, we can`t raise taxes on them,
period. Get the issue off the table.

MATTHEWS: Would you -- would you -- let me talk about how this fight
may occur in the next couple of weeks. Would you -- if you were the
speaker, would you agree to separate vote for the 98 percent, everybody up
to $250,000, get that behind it so the people know they`re going to get
their tax cut continued? Would you do that as a separate vote or...

RENDELL: Absolutely. And I...

MATTHEWS: ... would you -- OK. Go ahead.

RENDELL: Separate vote. Separate vote now.

MATTHEWS: OK, your thoughts, Alex...

(CROSSTALK)

MATTHEWS: Is that a point of just letting the regular people off the
hook -- off the hook here?

WAGNER: Yes, I think I would -- I guess I would probably do a
separate vote. I think at the end of the day -- the Republicans want to
make the biggest -- they need to make the biggest deal possible. And they
need to -- we know that this is a messaging war, right, Chris? I mean,
it`s telling that Boehner went out with his message, not to the White House
-- he and -- he and President Obama are battling the air war right now, and
this is all about, you know, a rejoinder to the president`s -- what I call
a reasonableness tour of 2012, which the president making announcements at
the Business Roundtable, meeting with CEOs who voted for Romney, showing
that he`s bipartisan.

You have John Boehner now making the fairness argument? Which is --
again, it`s a shocking turn of events, but it`s also testament to the fact
that the Republicans know that the optics are not in their favor.

MATTHEWS: Well, here -- speaking of optics, here`s where it looks
like it`s heading, Governor and Alex. Republicans floated a face -- I
think it`s a face-saver today in a page one article in "The New York Times"
today. Here it is.

Quote, "If no deal can be struck to avert the automatic expiration of
all the Bush-era tax cuts and the onset of deep across-the-board spending
cuts, GOP leadership could foresee taking up and passing legislation this
month to extend the tax cuts for the middle class, and then resume the
bitter fight over spending and taxes as the nation approaches the next hard
deadline (INAUDIBLE) statutory barring (ph) (INAUDIBLE) that`s the debt
ceiling coming up later this year, actually, in the early part of next
year.

So here`s the question right now, Governor. It seems to me that`s a
face-saver because they (INAUDIBLE) say taxes deferred or delayed are taxes
avoided. If they basically say, OK, we`ll get to defending the rich later,
we`ll let their taxes go up in January, it just seems to me that that`s a
face-saver, even if they say, We`ll get to it later.

RENDELL: Well, I think what happens, Chris, though, is -- think about
the issue of leverage. And by the way, nobody`s thinking about what`s
right for the country. But let`s think about the issue of political
leverage.

MATTHEWS: Oh, you and I are!

(LAUGHTER)

RENDELL: That`s right. And Alex, too.

WAGNER: What about me?

(CROSSTALK)

MATTHEWS: And Alex is, too.

RENDELL: I said you, too, Alex. But President Obama`s got all the
leverage because he knows if it goes over the fiscal cliff, the tax cuts
expire and he`s never going to let the top 2 percent get that tax cut
reinstated.

But if they do what you just suggested, just vote the tax cut,
continue it for the 98 percent, then the leverage switches to them come the
time of the debt limit. And they might be able to make a deal where they
save some of it so it doesn`t go up to 39 percent. Maybe it goes up to
37.5 percent. Or maybe they do the Buffett rule and only raise taxes...

MATTHEWS: Yes.

RENDELL: ... on people making $500,000. So they have a little bit of
leverage to bargain. Right now, they have zero leverage...

MATTHEWS: Yes.

RENDELL: ... at all, zero.

MATTHEWS: Will you agree with that, Alex? Because I -- I`m not sure
I agree with that...

WAGNER: Well, I think -- look, I think...

MATTHEWS: ... because I think it`s very hard, once the tax rates go
back to 39.6 or 38 or whatever they go to, to go back and say, Oh, now we
to want cut taxes for the rich. What would be the reason to do it? The
Republican Party now says we got to stop the government...

WAGNER: Yes, and...

MATTHEWS: ... stop paying our debts, don`t pay our bills anymore
because we got to help out the rich now.

WAGNER: But Chris, I mean...

MATTHEWS: That would seem to be the worst situation to be in.

WAGNER: Especially as the conversation shifts really to the bottom
line and the deficit.

MATTHEWS: Yes.

WAGNER: But at the end of the day, this whole thing is about -- it`s
optical illusions and face-saving for the Republicans. Whether it`s the
notion that they may not vote yes on this but just vote present, which is
complete smoke and mirrors, or the fundamental argument -- and this is
something I always return to, that somehow, is closing loopholes and ending
deductions is not a tax increase. Of course it is.

I mean, at its -- at its core, this is about asking...

MATTHEWS: I know.

WAGNER: ... Americans to pay more money to the federal government. I
mean, this again is just -- it`s -- it`s -- you know, Bill Clinton calls it
Kabuki theater. It`s just that. It`s a way for Republicans not to be
completely ashamed and to be walking back the sort of ideological core that
they`ve run on for the last two years.

MATTHEWS: Well, if the president of the United States...

RENDELL: Well, Chris, I think...

MATTHEWS: ... is smarter than -- smarter than anybody I know -- if
he`s able to come out and say, I`m going to support getting rid of tax cuts
-- tax deductions for giving to charitable organizations, hospitals,
universities, religious organizations -- I want to get rid of that tax
deduction -- if he ever puts his finger -- his hand anywhere near that
decision, he`s a loony-tune.

That is going to be the most unpopular, most dumped-on idea in
history. Every church, every synagogue, every hospital, every university,
every philanthropic cause in the United States, from the Rockefeller
Foundation down to the lowliest, littlest Catholic charities is going to go
through the roof fighting that! They need those tax deductions to survive.
It`s a crazy, literally loony-toon idea. And if the Republicans can sell
it, it`s like the Irish selling the bagpipes to the Scots and they took it
seriously.

I`m sorry, a little joke there. Let me ask you this. Do you think
the president -- let`s take a look at the president`s last comment of the
day. This is his response to the GOP`s what I consider a face-saving
proposal. Here`s the president.

(BEGIN VIDEO CLIP)

OBAMA: If Congress in any way suggests that they`re going to tie
negotiations to debt ceiling votes and take us to the brink of default once
again as part of a budget negotiation, which, by the way, we have never
done in our history until we did it last year, I will not play that game.

(END VIDEO CLIP)

MATTHEWS: What`s that mean to you, Governor, quickly? Just you.
What`s it mean to say, I will not play that game? Does he have an
alternative to playing the game over the debt ceiling, or does he need a
signature -- approval by the Congress of a debt ceiling increase?

RENDELL: He needs a debt ceiling increase, for sure. But he also
needs to get this done. We need to stop playing games and get the big deal
done. The big deal is more than just tax rates. The big deal is a lot of
important things that we got to get doing, and president`s got to lead on
that, Chris.

MATTHEWS: OK, well said. Thank you, Governor Ed Rendell of
Pennsylvania. Thank you, Alex Wagner of MSNBC`s "NOW," a great noontime
show if you`re on the East Coast. And any -- any time it shows up further
west, actually, earlier in the day...

WAGNER: 9:00 AM Pacific, Chris, 9:00 AM Pacific.

MATTHEWS: What a calculation that was!

Coming up: Want to know what a real fiscal crisis looks like? Just
check out the mess in Greece right now. That`s what happens when a country
avoids making the tough fiscal decisions for too long.

But up next, a top Republican pollster on what went wrong on their
side in this election. A lot of information coming here. And why, if the
Republicans don`t change the way they do business, they may be on the
losing end of elections for years to come.

Plus, the black helicopter crowd is at it again. Republicans in the
Senate reject a United Nations treaty to ban discrimination against the
disabled. They say it would allow U.N. officials to come into this country
and force home-schooled children into government-run -- that is, public
schools. Senator John Kerry joins us to cut through the nonsense.

Also tonight, "The Simpsons" Mr. Burns gives us a rich man`s look at
the fiscal cliff.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Think of the economy as a car and the rich man as
the driver. If you don`t give the driver all the money, he`ll drive you
over a cliff.

(END VIDEO CLIP)

MATTHEWS: Well, it`s worse than that for everybody, but that`s in the
"Sideshow."

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: It`s never too early for pollsters to start looking ahead
to 2016. And guess who`s looking very strong? Hillary Clinton. A new ABC
News/"Washington Post" poll finds that 57 percent of adults when asked say
they`d back a run by Hillary to succeed President Obama, 37 percent are
opposed.

We should note that it`s helpful that no one has run a campaign
against Clinton for the last four years. But also helping her numbers,
clearly, is the fact that 68 percent approve of the job she`s done as
secretary of state for this country.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. We know now that Mitt Romney
blames his loss on Obama`s "gifts" -- I should put the quote marks around
that -- to minorities and young people. The much maligned 47 percent, in
other words, came out in force. Well, last night, Paul Ryan distanced
himself from his running mate`s remarks. Take a look.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R-WI), FMR. VICE PRES. CANDIDATE: Both parties tend
to divide Americans into our voters and their voters. Let`s be really
clear. Republicans must steer far clear of that trap. We must speak to
the aspirations and the anxieties of every American.

(END VIDEO CLIP)

MATTHEWS: You know, it`s hardly a month and he`s gone already. What
a running mate! He ran away from his mate.

Anyway, the problem for Republicans in 2012, it`s now agreed, is that
Romney failed to speak to those aspirations and anxieties just mentioned.
In a must-read analysis of the race, Republican strategist David Winston
argues that Obama successfully lashed Romney to George W. Bush, an
interesting argument here. The bottom line was that Romney could not
counter the Obama narrative that he wanted to go back to the policies that
got the country in trouble in the first place. This was largely due to his
campaign`s strategic decision to try to make the election solely a
referendum on Obama. As a result, there was little clear rationale for a
Romney presidency, other than he would not be Obama.

David Winston joins us now. He`s an adviser to John Boehner, unpaid.
He also advised Newt Gingrich in his campaign this year. And Joe Klein, of
course, is a renowned political columnist for "Time" magazine.

David, thanks for joining us. (INAUDIBLE) I was trying to read your
thinking here and post-election analysis, and I think it`s so interesting.
If you get people really angry about the way things are economically, you
assume they`re going to all blame the incumbent.

But it seems like a lot of people said, yes, things aren`t that great,
especially poor working people, but you know, we`re going to blame Bush.
Explain how you would analyze it. That`s the way I sort of analyzed your
thinking, but what`s your way of putting it?

MATTHEWS: No, I mean, what happened was, is ultimately, Governor
Romney thought this was going to be a referendum on Barack Obama, and that
was the case closed. And when you take a look at the group of voters who
said the economy was not so good, OK, so you would think that would be an
opportunity for Governor Romney, actually, the president carried them by 13
points, 55 to 42.

So obviously, the economic argument on the Republican side was not
made. And the reason it wasn`t is because it was just a referendum. I
mean, again, it was just a contradiction of what the president was saying,
as opposed to providing an alternative, and that created an opening for the
president.

MATTHEWS: OK. It`s an old argument for me. I just want to ask you
quickly on this. I thought when Obama went in that first debate -- of
course, I went nuts after watching it because I thought Obama sort of
dropped the ball -- but Romney was really strong in that first debate
because all he kept saying was his strength, which is, I`m a business guy,
I can create jobs. Business equals jobs. The one strong punch he had, he
kept at it.

And then after he got out of that one, he starts talking about
Benghazi and all this other stuff and it lost that one -- could he have won
if he said, I`m the guy you need for this job?

WINSTON: Well, part of it is you need to go back and really show why
these policies were going to work. For example, if you take a look at 2003
Bush tax cuts, by 2007, $800 billion more revenue had come in and the
deficit had been cut from $370 billion to $160 billion. Did you ever hear
him say that?

That`s the sort of thing that he needed to do, sort of full-throated
defense of Republican policies that Bush implemented...

MATTHEWS: OK.

MATTHEWS: ... but also, he could have used to show why his policies
would work. But ultimately, when you make it a referendum, you take those
arguments off the table and...

MATTHEWS: Do you buy that, that David says, you could have gone back
and defended all the Republican policies of Bush and his own?

JOE KLEIN, "TIME" MAGAZINE: No, because those policies got us into
trouble in 2008 in a great many ways. Bush inherited a surplus and left
with this massive deficit, didn`t monitor the financial system, and so on.

But I -- the most important point here is -- David`s right about,
which is, there`s no such thing as a presidential referendum election. I
have covered 10 of these, and they have all been choices. Why? Because
these two candidates live in everybody`s living rooms. People make a
judgment about their character.

(CROSSTALK)

MATTHEWS: So even Reagan was partially positive, wasn`t just anti-
Carter?

KLEIN: Oh, Carter. No, that became a choice election after Reagan
appeared in that one debate against Carter and people said, hey, he isn`t
so bad. I have a choice in this thing.

MATTHEWS: Yes.

One of the other players in this, besides the two candidates, was of
course Bill Clinton, the former president. I don`t think anybody -- and we
agree on this -- did a better case of making the case for Obama than Bill
Clinton.

Listen to this. Here he is at the convention at a critical moment
when he explained the arithmetic of what Obama inherited.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: In Tampa, the
Republican argument against the president`s reelection was actually pretty
simple, pretty snappy. It went something like this. We left him a total
mess. He hadn`t cleaned it up fast enough. So fire him and put us back
in.

(CHEERING AND APPLAUSE)

CLINTON: When President Barack Obama took office, the economy was in
freefall. It had just shrunk 9 full percent of GDP. We were losing
750,000 jobs a month.

Are we doing better than that today? The answer is yes.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: You know, David, I don`t know you at all, but I have to
tell you, who would you rather have make your case to Saint Peter than this
guy?

(LAUGHTER)

MATTHEWS: This Bill Clinton, this guy can sell. And what did you
think of the impact of his convention address?

WINSTON: Well, no, again, part of that was set up by the fact that --
and I thought this was an unfortunate statement made by Republicans -- that
were you better off than you were four years ago? You couldn`t have picked
a more unfortunate contrast.

When John Boehner was focused on 2010, he made it a contemporary
question in terms of, where are the jobs? But ultimately by setting it up
as a contrast to four years ago, it created an opportunity for the -- for
Clinton to deliver that speech.

And, again, I want to go back for the opportunity here that Romney
had. In the exit poll, 63 percent of Americans said they don`t want to
increase taxes to cut the deficit. You would never know that in terms of
that was the economic opportunity. Yet, Governor Romney made it a
referendum and didn`t take advantage of this country still being a center-
right country.

MATTHEWS: What about that other number you came up with, that 47
percent, a plurality said raise taxes for people over $250,000?

WINSTON: Well, because then you have the kind of -- what it is, you
frame it as Bush and you make it all that dynamic, which Obama had set up,
or you make it about the broader economic policy of what do you do with
taxes and the deficit?

MATTHEWS: Well, in all fairness, didn`t the president do a pretty
good job of focusing on that differential between the top and the middle?

WINSTON: I`m not arguing that he didn`t lay out the case well.

What I`m saying is there was no other case to argue that and so by
default, unfortunately for Republicans -- and you see Speaker Boehner
dealing with it right now -- not only is he trying to deal with this
difficult negotiation, but he has to go back and reargue what should have
occurred this fall in terms of this campaign in terms of the economic
policies.

MATTHEWS: What I was impressed by in this campaign after it was all
over and I`m looking at everything, is the liberal message that was sent.

We have new numbers here that show that there was a slight movement,
about 4 percent or 5 percent, from center to left, if you use those terms.
But it seems to me, when you look at what happened in North Dakota with
Heidi Heitkamp winning for senator, and look at what happened with Jon
Tester winning in Montana, and you looked what happened in Florida for the
president, Virginia for the race, everywhere, the widest outposts of
Democratic potential were reached, all across -- and they voted for
marijuana in some states, for same sex for the first time in four states
effectively.

They voted to raise taxes for education in California. It was almost
like the West Village got to vote in the whole country, the West Greenwich
Village.

I want to go to Joe on this because he`s -- how did the get country
get so liberal in this one moment?

KLEIN: Well, I think the demographics are changing.

MATTHEWS: But in North Dakota, they ain`t changing.

KLEIN: Oh. Well, what`s happening in North Dakota is you have like
negative unemployment because they have an oil boom going on.

MATTHEWS: And they have a population that`s smaller than it was in
the `30s.

KLEIN: Chris, I saw a poll today out of South Carolina where the
president`s approval rating is 48 percent.

MATTHEWS: That`s pretty good.

KLEIN: Yes, that`s very good.

And the fact is that the Republicans have been very much out of touch
with where the country is on a lot of issues. Right now, that figure, 61
percent, don`t want to raise taxes to close the deficit, that`s because
deficit closing is only an issue here and on the Upper East Side of New
York.

MATTHEWS: I know. I know.

Let me ask you, David, last thought. What did you holistically look
at the election? When you look at all the things I talked about, the
anecdotal, the cultural statements being made very various states, what did
you make of this election?

WINSTON: Here`s the problem. Looking back at 2010, we won women in
2010, House Republicans did, by one. We lost them by 11 this time.

Back in 2010, we got 38 percent of the Hispanic vote. We got 27
percent of the Hispanic vote this time. What was it that we were not
saying and engaging in terms of economic issues and trying to win the
economic issue? We just did not do that.

As a result, it wasn`t these specific groups slipping. It was
collectively we did not make the economic argument like we should have.

MATTHEWS: Well, I will go back to my old saw. You did it in that
first debate. It worked that night. I don`t know why you didn`t stay on
that line. Stay on the line you`re winning on.

(CROSSTALK)

MATTHEWS: Anyway, thank you, David Winston. Great to have you on.
Please come back.

WINSTON: Pleasure.

MATTHEWS: Joe Klein, as always, a great columnist.

Up next, Mr. Burns from "The Simpsons" explains the fiscal cliff as it
affects rich people.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL and some gallows humor on the fiscal
cliff.

First, Jon Stewart on the status of the talks between Democrats and
Republicans and how to avoid that cliff.

(BEGIN VIDEO CLIP, "THE DAILY SHOW WITH JON STEWART")

JON STEWART, HOST, "THE DAILY SHOW WITH JON STEWART": So is there a
deal?

UNIDENTIFIED MALE: There`s, of course, no deal.

STEWART: Of course.

(LAUGHTER)

STEWART: Is there a prospect for a deal?

UNIDENTIFIED MALE: There`s not a prospect for a deal. There aren`t
even very many talks going on.

(LAUGHTER)

STEWART: You`re killing us. Give us something.

UNIDENTIFIED MALE: But, for the first time, there are numbers on
pieces of paper from both sides.

(LAUGHTER)

STEWART: Numbers on paper!

How were negotiations being conducted before they decided to put
numbers on paper?

(LAUGHTER)

STEWART: Were the two sides just spray-painting the side of a camel
and hoping it wanders past by the other side`s office?

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS: So, there`s that.

And here`s one on the stakes -- on the stakes of going over the fiscal
cliff from "The Simpsons"` Mr. Burns, the show`s rich and very unpopular
CEO.

(BEGIN VIDEO CLIP, "THE SIMPSONS")

UNIDENTIFIED ACTOR: More tea, sir?

UNIDENTIFIED ACTOR: No. Any word from Karl Rove?

UNIDENTIFIED ACTOR: Sir, despite what he`s been telling you, it`s
over. Romney lost.

UNIDENTIFIED ACTOR: Damn it. I guess it`s time I explain to these
good people the upcoming fiscal cliff.

Think of the economy as a car and the rich man as the driver. If you
don`t give the driver all the money, he will drive you over a cliff. It`s
just common sense. Furthermore, rich people feel things more deeply than
the common man.

(END VIDEO CLIP)

MATTHEWS: Well, the rich are hardly only the ones that are going to
suffer from a fiscal screw-up.

And did you catch the book strewn around there by Mr. Burns at the top
there. "Nate Silver Can`t Add" and then there are some binders full of
women. These guys are funny.

Next, former Senator Alan Simpson, one half of that Simpson-Bowles
plan to reduce the deficit, has joined forces with Can Kicks Back, that
campaign. The group is trying to get young people to recruit their friends
and use social media to encourage Congress to come to a deficit reduction
deal.

Here`s Alan Simpson doing his part with talk of old coots and an
homage to Internet sensation "Gangnam Style."

(BEGIN VIDEO CLIP)

ALAN SIMPSON, FORMER CO-CHAIRMAN, NATIONAL COMMISSION ON FISCAL
RESPONSIBILITY AND REFORM: Stop Instagramming your breakfast and tweeting
your First World problems and getting on YouTube, so you can get see
"Gangnam Style," and start using those social media skills to go out and
sign people up on this baby.

Take part or get taken apart. Boy, these old coots will clean out the
treasury before you get there.

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS: We need more senators like Alan Simpson.

Anyway, also from Simpson/Bowles to Panetta/Burns? I told you
yesterday about that new PPP poll showing most Republicans think ACORN, was
to blame for President Obama`s reelection, well, ACORN, an organization
that no longer happens to exists.

Anyway, there`s another fantasyland element in the poll. What
percentage of those polled said they supported the deficit reduction plan
they were told was being offered by Secretary of Defense Leon Panetta and
former Montana Senator Conrad Burns? Well, there is, of course, no such
plan, but here goes. Eight percent of the people polled said Panetta/Burns
should be a go. And 17 percent say they disapproved of the plan.

So, that`s 25 percent of those polled with a firm opinion on a totally
made-up, fabricated plan that doesn`t even exist. Does that tell you
something about what people say to pollsters?

Up next, if you`re concerned that a U.N. treaty to protect the
disabled could cost America its sovereignty, fear not; 38 Republicans have
protected you from those black helicopters.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

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

The Dow gained 82 points. The S&P added two, and the Nasdaq fell 23.
The Nasdaq`s decline, however, was mostly due to Apple, which fell 6
percent after a clearinghouse raised its margin requirements on the stock.
As for the economy, payroll firm ADP says the private sector created
118,000 jobs last month, but that was below estimates.

The report precedes the big Labor Department`s closely watched
employment data, which is due out on Friday.

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

MATTHEWS: Welcome back to HARDBALL.

It was an iconic sight yesterday in the Capitol when former Senator
Bob Dole -- he`s 89 years old -- was wheeled on to the Senate floor to
rally support for the U.N. Convention on the Rights of Persons With
Disabilities. More than 125 countries have ratified this treaty already,
including Britain, France, Russia and China.

And here at home it was supported by a bipartisan group, including
John Kerry and John McCain. But the vote fell short of the 66 required
votes, the two-thirds required, when just eight Republicans joined
Democrats voting aye. At issue is belief by some Republicans, many of
them, that by signing the treaty, the United States would somehow surrender
some of its sovereignty to the United Nations.

With me now are two advocates of this treaty, Senator John Kerry of
Massachusetts -- he`s chairman of the Senate Foreign Relations Committee --
and Ted Kennedy Jr., a longtime champion of disability rights and president
of the Marwood Group.

Thank you, gentlemen.

Senator, thanks for joining us.

It`s hard for me to understand the ideological warfare this seems to
have stirred. It reminds me of the old fluoride debates you and I grew up
with, where there is some imaginary notion of something taking over in our
world where we have to fight, even though we can`t put our finger on it.

What are they afraid of on the right to vote for disability rights?

SEN. JOHN KERRY (D), MASSACHUSETTS: Well, they argued that they are
afraid that we were giving up some sovereignty of nation and that somehow
the United Nations was going to be able to tell us what to do.

Neither are true. There is no requirement in this treaty whatsoever
that any law in the United States would be changed. No new right was
created that hasn`t existed or doesn`t exist in the United States today.
And most importantly, because of the terminology of the treaty, under
treaty language that it`s not self-executing, that means nobody has
recourse in any court in the United States of America to enforce the
treaty.

So, you might ask, well, why sign up to the treaty, then? The reason
is this treaty is based on the gold standard of how America treats people
with disabilities. It`s based on Americans With Disabilities Act. And it
raises other countries to our standard.

It`s really exporting American sovereignty to other nations. It`s
exporting our values. And, most importantly, it makes a real difference in
the lives of people with disabilities, you know, people who are born with a
disability or something happens to them in life and they have one, or
veterans, for instance, who want to travel abroad, work abroad, study
abroad, you know, just visit.

This would have raised their quality of life. And these senators
turned their back on that out of completely fictitious, totally made-up,
entirely sort of fear-marketing rationale. We have to change that, and we
will.

(CROSSTALK)

MATTHEWS: Here`s the floor manager on the other side, Tea Party
Senator Mike Lee of Utah. By the way, he was the fellow that beat Bob
Bennett, conservative Bob Bennett, by running to his right. He was, as I
said, the floor manager opposing the treaty. Here`s some of what he argued
yesterday on the floor.

(BEGIN VIDEO CLIP)

SEN. MIKE LEE (R), UTAH: I and many of my constituents, including
those who homeschool their children or send their children to private or
religious schools, have justifiable doubts that a foreign U.N. body, a
committee operating out of Geneva, Switzerland, should decide what is in
the best interest of the child at home with his or her parents in Utah or
in any other state in our great union.

(END VIDEO CLIP)

MATTHEWS: Oh, my God.

KERRY: Well...

MATTHEWS: It`s -- let me go -- let me go to Ted Kennedy on that,
Senator, just for a minute.

Ted, you have to deal with disability. You lost a leg to cancer years ago.
I`ve always admired how you`ve handled it.

What does it mean to someone disabled, this bill, to an American, for
example?

TED KENNEDY, JR., DISABILITY ADVOCATE: Well, for disabled Americans, we
feel the Republican Party have really turned their backs, because what this
treaty does, as Senator Kerry, who, by the way, has been our champion on
this and so many other issues. And I commend Senator Kerry, as well as
Senator Lugar and the eight Republican senators who bucked the trend of the
incredible pressure by the extremists in the right wing of this party to
somehow mischaracterize this treaty.

The treaty is simple. It simply says that a disabled American, including
disabled American veterans, are afforded the same rights overseas as they
are here at home, which is why 21 leading veterans organizations, including
the VFW, the American Legion, the Wounded Warrior project, hardly left-wing
organizations, have been strong backers of this treaty.

In addition, as Senator Kerry knows, and has eloquently described so well,
this treaty was also endorsed by the U.S. Chamber of Commerce. Why?
Because it expands opportunity -- business opportunities. Many of the --
there`s a billion people with disabilities living around the world. Many
of whom will need wheelchairs and medical products that are designed and
fabricated by companies here in the United States.

So, we just feel that our rights have been neglected. And that is why we
want to support those senators who stuck their necks out --

MATTHEWS: Let`s talk, Senator, about the other -- you have to read the
votes up there and count them. All these senators you lost on this vote,
you fell five short. Can you get them back early next year? How soon do
you think you can win them back when they`re -- a lot are facing primary
threats? I guess that`s what`s stopping them from doing this.

KERRY: First of all, we had two senators who voted yes on the floor and
then they changed their votes because of what was happening. In addition
to that, there are several senators who have said to me, when we`re out of
the lame duck session and beyond the fiscal cliff, they`ll be prepared to
vote for it.

In addition to that, I believe we can satisfy with additional language to
resolution of ratification, I believe we can satisfy even these sort of out
of the blue sky, fictitious concerns.

MATTHEWS: Yes.

KERRY: We`ll address them. I think we can come back within the first
three months of next year.

And I want to say to Bob Dole and to every person with disabilities who
cares about what happened yesterday, this is not going to go away. We`re
going to come back. We I think can address the concerns of people and
hopefully we`ll pass it because it makes a difference to the quality of
life of Americans traveling abroad and to all those people abroad living
with disabilities, whose standards will be raised because of what we`ve
done.

This is -- this is as pro-America as pro-American values and as noninvolved
with the United Nations as you can be. The only thing the United Nations
has is its name on the treaty. It has no rights, no ability whatsoever to
change one thing that we do in the United States.

MATTHEWS: OK. Well, one of those who likes the phrase "United Nations".
But thank you. I guess I know the politics on the hard right.

Ted Kennedy, thank you for coming on.

KENNEDY: Thank you. Thanks.

MATTHEWS: Advocate for disabilities.

Thank you, Senator Kerry.

KERRY: Thank you.

MATTHEWS: Chairman of the Foreign Relations Committee.

Coming up, what a country looks like when its leaders ignore financial
problems for too long. Greece is the word. We got somebody just back from
Greece -- a Greek-American is going to tell us what it`s like over there.
It is horrific.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: What`s a few billion dollars among friends? Anyway, last month
Republican Senator Marco Rubio punted on the question of how old the earth
is, calling it a great mystery. Well, it wasn`t a mystery. It`s what the
potential presidential candidate for 2016 was doing, playing to the large
number of Republican evangelicals who believe in the literal truth of the
Bible.

Well, fast forward to yesterday when Rubio was given a retake on that pop
question by politico`s "Mike Allen".

(BEGIN VIDEO CLIP)

SEN. MARCO RUBIO (R), FLORIDA: There is no scientific debate on the age of
the Earth. It`s established pretty definitively. At least 4.5 billion
years old.

I was referring to a theological debate, which is a pretty healthy debate.

(END VIDEO CLIP)

MATTHEWS: I don`t know what he`s talking about.

Rubio went on to say that Americans should teach children science but they
also have the right to teach them religion. That`s interesting. And the
reconcile the two.

Well, Senator, there`s a problem with that. You can`t teach religion in
public schools. And, by the way, think about it, what religion would you
teach in public schools? Would you want to decide that?

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL.

So, what is the Washington gridlock on fiscal negotiations look like to the
rest of the world, particularly the Europe where eurozone countries are
taking drastic budget cuts right now and austerity measures that make our
situation look tame?

Chris Kofinis is a Democratic strategist who just returned from a trip to
Europe`s capitals, including Athens, and shares his experience of the
complete economic devastation in Greece is currently dealing with.

Jared Bernstein is former economic adviser for Vice President Biden.

Now, I want you two to come on to give us a sense. We don`t know what the
risks are or what might happen January 1st. But there is a risk, it could
be horrible. That`s all I`m saying.

Tell me what you saw in Athens, in Greece when you were just there.

CHRIS KOFINIS, DEMOCRATIC STRATEGIST: Well, I`ve traveled to Greece quite
a bit over the last few years for political work that I`ve done there in
the past. I mean, I don`t know how to express it any more clearly than it
was unbelievably sad and depressing. I mean, the country is in a Great
Depression.

Unemployment is about 25 percent. Unemployment among youths is about 55
percent. The economy contracted by 7.2 percent in the last quarter. Those
are numbers.

But I`ll tell what you what I saw which even more I think is more powerful.
You go through certain parts of Greece, Kolanaki, which is like the Greek
Beverly Hills, if you will, and you see store closed everywhere. You go
down near the Acropolis, where there`s shopping area called the Plaka, and
stores are closed everywhere.

But the most powerful story I remember was in a cab going back to the hotel
and asked the cab driver, how are things going? He says, terrible. He
says, after expenses, I live on $10 a day.

MATTHEWS: What about these violent scenes we`re seeing? How do they fit
into all that?

KOFINIS: Well, I mean, the protests I think are not as frequent as you
see. But there were when I was there. But it has to do with the general
despair that is now pervasive in the country.

MATTHEWS: So quickly, the country went too far with fiscal chaos and not
taking seriously the difference between spending too much and too much
bureaucracy and raising not enough money to deal with it. And then they
had the medicine from the international community, the Europe community
which was the real terror, that you had to pay to fix the problem.

KOFINIS: The medicine is killing the patient right now. You have severe
austerity where you have cuts amongst those the most vulnerable. You have
tax increases in a country where no one basically pays taxes.

MATTHEWS: Who the people blame? Who the middle class people blame?

KOFINIS: Oh, they blame overwhelmingly the political leaders. Both
parties.

MATTHEWS: Both parties?

KOFINISH: Well, no, what you have are two parties that were basically the
Republicans and Democrats, center left which is Pasok, and center right
which is the New Democracy. Those are the ones getting primarily the
blame.

MATTHEWS: The leadership parties?

KOFINIS: Right, the leadership parties. Pasok, for example, when they won
in 2009, they were 44 percent, one of the largest in Greek history. I
worked on that campaign. They are at 7 percent now.

MATTHEWS: OK. So the world -- Jared, this is my question. We look at
Greece and we wonder, why can`t they get their act together? We look at
Spain and Portugal and Ireland even -- get your act together, you know the
problem, shake out of it.

What is the world thinking when they look at us, setting up a fiscal cliff,
a manmade, Congress-made challenge, and not looking like they really --
maybe they aren`t today. But they have really been screwing around with
this thing. What do they think of us?

JARED BERNSTEIN, MSNBC CONTRIBUTOR: They look at us and they think that we
are going to work it out. They`ve been here before --

MATTHEWS: To put it differently, they can`t believe we will screw up?

BERNSTEIN: Exactly. They are kind of thinking the debt ceiling debate. I
mean, they are not following this hour to hour like we are and they
remember the last time we were in a situation --

MATTHEWS: But last time we got downgraded from a good bond rating to a not
good bond rating.

BERNSTEIN: That`s true. But it didn`t affect our bond yield at all. It
didn`t seem to have much economic impact. And so, people are being looking
at us figuring, oh, those craziest Americans will work it out at the last
minute. And, you know, the ironic thing --

MATTHEWS: What will they say if we get to January 2nd or 3rd after the New
Year and see we didn`t work it?

BERNSTEIN: I think they will be rudely surprised, however, by then, it`s
my hope towards later December we`ll actually have --

MATTHEWS: Well, I agree with that. To convince people on the right, I
think it`s the president`s job to convince the little slow learners on the
Republican side that this is serious business. And the real now is if you
know what`s going to happen in January, there is going to be a January. We
know that. There is a December, there will be a January.

Do you want to be in January when we haven`t done this thing and you`re a
Republican and you`re hanging on to the rich people and looking after them?
Do you want to be that guy or that woman? I don`t. Your thoughts?

KOFINIS: I mean --

MATTHEWS: Of course, you have to blame the Republicans mostly.

KOFINIS: Well, I mean, of course, I think you have to blame the
Republicans in this because their position on tax rates is untenable.

MATTHEWS: Yes.

KOFINIS: I mean, we`re not talking about raising taxes like France to 75
percent to the top rate. We`re talking about 39.6 and let`s be honest,
with other loopholes and deductions, it`s going to be a lot lower.

At the end of the day, you cannot deal with the fiscal situation that this
country faces without raising taxes, raising revenues. It`s that simple.

MATTHEWS: I know because we`re only bringing in 17 percent of the GDP and
spending 23 or 24.

BERNSTEIN: Fifteen and a half.

MATTHEWS: Well, I`ve got a new number. Are you sure that`s the recent
number?

(CROSSTALK)

BERNSTEIN: But anyway, we`re not bringing in enough revenue.

But, look, the ironic thing in many ways which makes us sort of different
from Greece in this regard, I think a lot the dysfunctionality is
alarmingly familiar. But if we go over the cliff, what we actually do is
resolve too much of our debt situation all at once. I mean, unlike Greece
whose fiscal profligacy has them where they are today, interestingly, if
you actually go over the cliff, you get on a budget path that`s a far more
sustainable than the current one, we just do it much too quickly.

KOFINIS: Except that if you, if we go over the cliff and given how tenuous
this economic environment is right now -- I mean, the message it sends to
business leaders, employers, let alone the American people is, this place
is not only ungovernable, it`s dysfunction beyond dysfunction.

MATTHEWS: A friend of mine is a wealthy California guy, a liberal, said,
you know, if you think they are going to trust you after you missed the
January 1st deadline, do you think they will trust you do that week?
They`ll be no trust. If you can`t meet your own deadline, why should they
make anybody else`s?

BERNSTEIN: And the thing about this, as I said earlier, the markets,
whether it`s Europe or American, are pricing in a solution. I mean, you
see it really quite clearly.

MATTHEWS: And somebody was on -- McMahon the other day was wrong. There
are not pricing in a failure, they`re pricing at a solution because they
think they`re grownups in Washington.

Thank you, Chris Kofinis, for that report from Greece.

KOFINIS: Thank you.

MATTHEWS: Jared Bernstein, as always, thank you.

When we return, let me finish with the ghost of fiscal cliff yet to come,
when you see this story.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this. Remember the Ghost of
Christmas Yet to Come in a "Christmas Carol"? He`s the scary one, the
ghost that comes last. Well, he shows up and he`s a Scrooge at the end
he`s heading for, a cold, lonely miserable future in which his greed and
selfish view of the water is taking him.

In the next days and short weeks, President Obama has to be the Ghost of
Christmas Yet to Come. He has to show the Republicans in the House how
horrible it will be to be them come the first days of January if they don`t
change their path. He has to show them how disrupted the world will be,
how bad they will look in that world beyond this December 31st if they hold
true to a tight and jealous protection of wealth.

The reason the president wants to be the Ghost of Christmas Yet to Come is
stark. Unless he shows them the future now, we will be in that future. We
will be together, this country of ours over the express precipice. We`ll
be holding to our economic life by the most precarious of lifelines, the
fast, diminishing faith of the world money markets. We will still be a
great country that can no longer be relied upon to act great.

I really don`t want to be there. Either America wins or it loses. Heading
off that cliff is losing and I want the Republicans to take their part in
avoiding it.

We need a persuasive, frightening message for the president to see they
take it. We don`t need a smile from this president or an inspiring speech.
We need cold, awesome words of warning. We need the president to scare the
dickens out of those people.

And that`s HARDBALL for now. Thanks for being with us.

"POLITICS NATION" with Al Sharpton starts right now.

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

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