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updated 12/21/2012 11:31:06 AM ET 2012-12-21T16:31:06

HARDBALL
December 20, 2012

Guests: Jim Moran, Erin McPike, P.J. Crowley, Michael O`Hanlon, Jack Reed, Dana Milbank

CHRIS MATTHEWS, HOST: Battle lines.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Washington.

"Let Me Start" with this. It`s five days until Christmas, 12 until New
Year`s, and the battle lines are drawn. The trenches have been dug. The
president has made his promise and intends to keep it. That promise is
fairness.

He cannot go along with any Republican deal that protects the wealthy. He
will risk the cliff to keep his promise. If it comes to it, he`ll leap
right off it. To do less would be a sign to his enemies, a sign that they
can beat him if they simply try.

Well, the president is being tested on another front tonight. The word is
out he wants former U.S. senator Chuck Hagel of Nebraska for secretary of
defense. Hagel`s a Republican and a combat veteran of Vietnam, a holder of
two Purple Hearts. He would be first Vietnam vet to head the Pentagon.

The neocons are out to stop him for what he is and what they aren`t. He
served in war right up front. He opposes unnecessary wars, like the ones
we`ve been fighting, fighting and getting ourselves into in all these
years. In other words, they oppose a secretary of defense who thinks like
the man who is now the commander-in-chief. There`s not an Obama vote among
them, by the way.

U.S. Congressman Jim Moran, Democrat from Virginia, and Eugene Robinson`s a
Pulitzer Prize-winning "Washington Post" columnist.

Gentlemen, let`s talk about the first of these fights. Mr. Moran, thank
you for joining us. Tonight the Republicans are engaging in -- I don`t
know whether it`s a wild goose chase, some sign of something, some test of
what, of weakness.

Why are they voting on something that won`t even get to the Senate, will
never get near the president`s desk, and if it ever did, he`d love vetoing
it, this idea of cutting off the tax cuts -- or rather, protecting the tax
cuts of people all the way up to a million a year?

REP. JIM MORAN (D), VIRGINIA: They`re playing some kind of weird political
kabuki dance. I can`t imagine why the speaker is engaged in this kind of
thing on, basically, Christmas Eve. And we`re desperate to come to
solutions, and yet he`s moving further away.

This raises less than half the revenue. I mean, he may annoy part of his
base, but he`s doing nothing for the rest of the country. I just -- I
don`t understand it, frankly, Chris, and even millionaires, who supposedly
would have their taxes increased, actually get a tax cut of $108,500,
according to the Tax Policy Center, because there`s this provision that the
speaker included that protects their exemption from limiting their
deductions for high earners.

It`s a complicated provision called the Pease (ph) provision. Only
millionaires and their accountants are going to understand it. But they do
understand this isn`t going to hurt millionaires, but it does nothing for
the rest of the country and it doesn`t move us -- in fact, it moves us
further away from any kind of reconciliation with the president.

So I think the chances of going over the fiscal cliff were substantially
increased today, Chris.

MATTHEWS: Yes.

MORAN: I wouldn`t be at all surprised if we don`t go over the cliff.

MATTHEWS: I know. Now it looks that bad. Gene, the thing is, it protects
the first million anyway from raising taxes back to the Clinton levels.
They get the first million free in terms of tax cuts.

EUGENE ROBINSON, "WASHINGTON POST," MSNBC POLITICAL ANALYST: They get the
first million free. As Congressman Moran explained, there`s this other
weird little provision in there that protects them over and above that. I
mean, it`s just -- it`s -- it`s...

MATTHEWS: Well, who`s this bill for?

ROBINSON: It`s not a serious offer.

MATTHEWS: The press isn`t buying it. So who`s it for?

ROBINSON: Well, I think it`s supposed to be for public consumption back
home. I think -- and that members can talk about back home over Christmas.

Look, what seems to have happened is maybe we were close to a deal a few
days ago. Maybe Boehner can`t sell it, can`t sell it to his caucus, and so
he`s retreated to this position that he knows the Democrats are never going
to buy. It`s never going to get...

(CROSSTALK)

MATTHEWS: Mr. Moran, take a look at this. The Associated Press reports
today, quote, "Republicans have told senior administration officials that
the Boehner -- that Boehner decided to put forward his plan B" -- this is
what the million-dollar thing is -- "after he concluded he could not get
enough GOP support for the proposal he made to Obama over this past
weekend, according to a senior administration official.

So apparently, Gene`s got it. At least, that`s the way the press is
reading this thing. Boehner`s doing this weird sideshow thing of his with
the million-dollar cutoff because he couldn`t deliver on a million -- or a
trillion and a trillion over 10 years, which looked like a reasonable
proposal that might have gotten somewhere.

MORAN: Well, absolutely. And he`s further antagonizing more and more of
the electorate, Chris. And there are things -- some things that are just
so unfair. Not only does he not provide the "doc fix," which means that
Medicare reimbursement for physicians goes up by 30 percent on January 1st,
but he does things like take away the child care tax credit.

That means that hundreds of thousands of very low-income working mothers
are either going to -- well, they`re going to have to give up their job or
lock their pre-school-age children in their apartment. They desperately
need this little tax credit, and yet he`s taking that away.

And he gives a preferential provision for the estate tax. The cost of the
estate tax provision, which is $388 billion in Speaker Boehner`s proposal,
is equal to the revenue that you would raise by raising the Medicare
retirement age from 65 to 67 for all Medicare enrollees. The numbers are
similar.

Why would you take care of 3 1,000ths of a percent of the population at the
expense of what it would -- of paying for it, basically, by raising the
retirement age for all of Medicare?

These things don`t make sense, and people are beginning to realize the
Republican Party is not only not leading, it`s regressing back into, you
know, pre-Medicare, Medicaid, Social Security days.

MATTHEWS: Well, I -- Congressman -- Congressman and Gene, it seems to me
the mathematics, the arithmetic, as Bill Clinton would say, is so
transparent. Forty-seven percent of the country, ironically, voted for
Romney, the Republican -- the Republican candidate. They are protecting
less than 1 percent of the country. So 46 percent of the electorate,
basically, was voting for the interests of less than 1 percent!

And now they`re making it clear that the 46 percent are getting screwed!

ROBINSON: I know.

MATTHEWS: Why is there -- you send an army in to battle to fight for what,
2 percent of your party?

ROBINSON: It doesn`t seem very smart.

MATTHEWS: If they`re all Republicans, the rich people.

ROBINSON: It doesn`t seem like this is...

(CROSSTALK)

MATTHEWS: Anyway, Harry Reid...

(CROSSTALK)

MATTHEWS: Harry Reid called out the speaker this afternoon for that plan B
Republicans have been focusing on the past couple days. Here`s Senator
Reid.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: It`s very, very, very
unfortunate. The Republicans have wasted an entire week on a number of
pointless political stunts, and that`s what they`ve been. It`s obvious
that the speaker, working with his Republican team, can`t get enough votes
together to pass much of anything.

(END VIDEO CLIP)

MATTHEWS: Well, Speaker Boehner argued this afternoon that the Democrats
haven`t done enough, either, but later went on to say he`s still hopeful a
deal can be reached. This is the part that I find very Byzantine and can`t
figure out. They`re working toward a solution by making sure nothing
happens.

Let`s watch the speaker in action here again.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: President Obama and Senate
Democrats haven`t done much of anything. Their plan B is just slow-walk us
over the fiscal cliff. And for weeks, the White House said that if I moved
on rates that they would make substantial concessions on spending cuts and
entitlement reforms.

I did my part. They`ve done nothing. Listen, and I remain hopeful. Our
country has big challenges, and the president and I are going to have to
work together to solve those challenges.

(END VIDEO CLIP)

MATTHEWS: Let`s try the politics end of this from the Republicans` side,
Gene. What do you think Boehner wants to win -- if you suppose he wins
tonight and gets 218 votes in the House for the million-dollar cutoff, not
the $250,000 or the $400,000 cutoff the president`s lately (ph) wants (ph).
What does he do to go to -- then he goes to the White House and he says
something to the president. What is he saying that I -- put up or shut up
about the spending cuts? What does he want?

ROBINSON: Well, you could guess that maybe he wants bigger spending cuts,
and maybe he says to the president, Look, I know you can`t accept this, but
give me some more on spending and I`ll sell something more reasonable.
Maybe that`s what he`s trying. I don`t know. I mean, he`s -- because he`s
gone so far with this plan B...

MATTHEWS: OK, Mr. Moran...

(CROSSTALK)

MATTHEWS: ... in the cloakroom -- when you guys try to figure out what the
other -- you try to read the offense on the other side, or defense,
whatever it is -- when you`re reading it, what do you see Boehner trying to
do with his -- it seems to me most of the people in his caucus are to his
right. Maybe Cantor is only a little to his right, McCarthy a little, but
the mass of them are Tea Party types. What`s he trying to do?

MORAN: Well, his end game is unfathomable. But I do have -- there`s one
possibility, and that may be to ensure that he gets reelected as speaker of
the House, Chris.

MATTHEWS: But he`s been -- the caucus has voted for him, right?

MORAN: Well, I don`t think it actually -- he doesn`t actually get sworn in
until January.

MATTHEWS: No, no. I know.

MORAN: I mean, he`s assumed to be speaker, but he wants to make sure there
will not be a challenge here. You`re absolutely right. I can`t imagine
there is a challenge. So it seems like a far-fetched reason to be going
through all this.

But somehow, he`s trying to appease the right wing of his party. I can`t
imagine that he doesn`t understand how badly this looks not just outside
the Beltway, even within the Beltway. We can`t figure it out.

He knows he has to compromise. He knows if he waits until January to
compromise, the markets are going to crash. They`re going to blame it on
him and the Republicans. He loses further ground.

I mean, it`s -- you can`t go lower than a zero approval rating. We`re in
single digits. It`s only our family and friends that have, you know, any
appreciation for what we`re doing, Chris.

(LAUGHTER)

MORAN: So what`s the end game? And we don`t know it. You know, we`re --
we`re -- this certainly -- this is not a fiscal plan that he`s offering
tonight. It`s a political play to appease the right wing not only within
his party but in their constituent bases.

But you know, normally, members would be home with their families for the
holidays. We`re going to be here at least through Saturday, then again on
the 27th, probably every day between Christmas and New Year`s. And what
are we accomplishing? Nothing.

MATTHEWS: Yes. I wonder -- I don`t know what -- Gene and Congressman
Moran, I don`t know what the markets of the world in Hong Kong and all
around the world are going to think of the United States for klutzing it up
again and not passing the deadline that Congress set for itself. Anyway,
thank you...

(CROSSTALK)

MORAN: Well, incidentally, Chris, can I just say, as a member of Defense
Appropriations for 20 years, Chuck Hagel would be a great secretary of
defense. I completely agree with you, my friend.

MATTHEWS: OK. We`re going to get to him later, and I agree with you on
that one. We`ll be right back. (INAUDIBLE) Congressman Jim Moran of
Virginia, Eugene Robinson, Pulitzer Prize-winner from "The Washington
Post."

Coming up: The tide`s beginning to turn as more pro-gun members of Congress
come out in favor of new gun control laws, believe it or not, even Senator
Casey of Pennsylvania. Is America ready to get serious about curbing gun
violence.

Plus, the Benghazi hearings. High-ranking State Department officials told
a Senate panel today that the department made mistakes and must do better,
but Hillary Clinton, the one everyone wants to hear from wasn`t there
today. But she`ll be there.

And why are some on the right savaging former Republican senator Chuck
Hagel, who was just mentioned? He`s now emerged as a strong contender to
be President Obama`s next secretary of defense.

Finally, Sarah Palin pans "Time" magazine`s pick of President Obama as
Person of the Year. No surprise here. But wait until you hear Palin`s
reasoning. It`s straight out of the Marx Brothers.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: One of the highest-profile election campaigns of the new year
will be the race for New Jersey governor. If you were hoping to see Chris
Christie up against Newark mayor Cory Booker, you`re out of luck.

Booker today announced he won`t take on Christie, whose approval ratings
have soared in the aftermath of Hurricane Sandy. Instead, Booker`s
planning to run for the United States Senate seat currently held by
Democrat Frank Lautenberg. According to WNBC. Anyway, Lautenberg, who`s
88 years old, would be up for reelection in 2014.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Back to HARDBALL. Vice President Joe Biden held a meeting today
of his gun safety task force, and law enforcement officials were there
today as the administration begins deliberating how to prevent tragedies
like the one in Sandy Hook Elementary last week. Some historically pro-gun
lawmakers came out in support of the assault weapons ban. Can they rally
their colleagues to act and act swiftly? Big question for me tonight.

And with me tonight are MSNBC political analyst Ron Reagan and
RealClearPolitics reporter Erin McPike.

I was absolutely stunned today to that see Bobby Casey, the senator from
Pennsylvania, who`s a classic Pennsylvanian -- in the past, he`s received a
B-plus or an A rating from the NRA -- he told "The Philadelphia Inquirer"
he`ll now come back for both a -- he`s coming out for both a new assault
weapons ban and legislation banning high-round magazines. "The Inquirer"
reported Casey said his decision amounted to being, quote, "summoned by
your conscience."

Casey told "The Inquirer" his wife had pressed him to rethink his position
on gun safety in the wake of Newtown. Casey said, quote, "The power of the
weapon, the number of bullets that hit each child, that was so to me, just
so chilling. It haunts me. It should haunt every public official. If
those two bills come before the Senate, I`ll will vote for both."

That is a risky, strong, courageous act by Bob Casey in a state that is
very pro-gun, Erin.

ERIN MCPIKE, REALCLEARPOLITICS.COM: It is, but remember, he is not the
only one. Joe Manchin, the senator from West Virginia, on Monday was
saying that this has changed his thinking. Of course, these are two
Democrats, but...

MATTHEWS: No, but Manchin hasn`t said he will vote for these two bills.
Bobby Casey just said he would. It`s different to have conversations.
It`s another thing to make a commitment.

MCPIKE: And I do think that there will be more and more lawmakers who will
follow what Casey has done. I don`t think he`s the only one. And I think
we`ll start seeing some Republicans...

MATTHEWS: Well, it`s -- (INAUDIBLE) it`s the toughest case.

Let me go to Ron Reagan. I know Pennsylvania defeated years ago Joe Clark
(ph), a great liberal senator, on this issue -- first guy I ever voted for,
actually. And now it`s back. I know the people on the gun side of the
argument. I know them closely. They will be out there vigilantly looking
for any traitor they find, anybody who dares to vote for any kind of
restriction, and any restrictions ends your virginity. You are the enemy.
Your thoughts?

RON REAGAN, MSNBC POLITICAL ANALYST: Well, it`s great that Bob Casey has
come out for these things. But if all that happens at the end of the day
is that we have a ban on a certain type of weapon or a certain type of
magazine with a certain type of magazine with a certain type of capacity,
100 bullets, let`s say, we`ll have failed here.

You know, it`s not just about the guns. It`s how people get guns, what
people have to do in order to get guns. We should be treating these more
like automobile licenses. You should have to prove you know how to use
these things. You should have to prove that you understand the law around
the use of guns and things like that.

If we start talking about that, then we`ll be realistic. I think what`s
happening now for a lot of these politicians is, we`ve had this moment here
in our culture which is pretty horrific, and they`re running for the hills
a little bit, running scared, so they`re going to look for something they
can do that is, oh, maybe better than nothing but largely cosmetic, just
like the assault weapons ban was largely cosmetic. This is not going to
be...

MATTHEWS: OK, give me a...

REAGAN: ... enough.

MATTHEWS: Give me a Ron Reagan gun bill.

REAGAN: A Ron Reagan gun bill says just like when you want to buy a car or
drive a car, you have to go and prove that you understand the laws
surrounding the use of your gun. You have to prove you know how to use
your gun, how to store your gun, how to clean your gun.

You`ve got to go through a background check, of course, whether you buy the
gun at a gun show or anywhere else. Think of the stupidity of the gun show
loophole. I mean, was Bob Casey talking about that? The fact that you can
buy the -- you can buy a gun over here at this gun dealer and you have to
go through a background check. You cross the street to the gun show, no
background check.

Well, you know, where are crazy people and criminals going to buy their
guns?

MATTHEWS: Why do we have to have gun shows anyway? What`s that -- that
seems like an oxymoron.

REAGAN: Good question.

MATTHEWS: A gun show.

REAGAN: So people -- so that people can buy guns without a background
check, apparently.

MATTHEWS: Well, Erin, there`s a problem there, which I complete support
Ron in every sentiment he`s ever had, practically, on this show. But I
have to tell you we have a Supreme Court which is slaphappy. We have a
Supreme Court that believes in the purest definition, purest interpretation
of the 2nd Amendment. Forget the militia, give everybody a gun.

How do you say you got to learn how to drive a car? Well, that`s the law
because driving a car is a license, it`s not a right. To get on the
highways is considered a privilege.

Holding a gun at any age at any time for any reason seems to be a right, by
the definition of the Supreme Court.

MCPIKE: OK.

Well, we are also a little bit far away from having a new law be tested by
the Supreme Court. I mean, this has got to go through Congress next year
first.

MATTHEWS: OK. Go ahead.

MCPIKE: You`re probably going to have a new justice or two before
something would get to the Supreme Court.

MATTHEWS: Well, no, this bill is supposed to get written basically by next
month.

MCPIKE: That`s what they say. You know things take a lot longer.

MATTHEWS: You know what? I think he`s going to insist on it.

MCPIKE: I do think that the proposals will come out next month, but it
still will be legislated and go through hearings and...

MATTHEWS: Well, you have got a point there.

Here is something that really feasts on negatively. Here is Speaker
Boehner not ruling out the possibility of some kind of gun safety
legislation earlier this afternoon, but catch his act here. And this is
what the Republican Party has been brought down to. They have to kiss the
butt of the gun guys. Take a look.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: We join the president in
mourning the victims of that horrible tragedy in Connecticut. He`s
appointed Vice President Biden to lead a commission.

When the vice president`s recommendations come forward, we will certainly
take them into consideration. But, at this point, I think our hearts and
souls ought to be to think about those victims in this horrible tragedy.

QUESTION: So you`re hoping to...

(END VIDEO CLIP)

MATTHEWS: Did you catch that, Ron, that we`re not supposed to think about
gun control?

REAGAN: Right.

MATTHEWS: We`re supposed to think about how terrible what happened is, but
don`t think about why it may have happened or what could be done to stop it
from happening. That would somehow be desecrating the memory.

You know, these guys hide behind this. They say don`t think about what
caused it. Show reverence, which of course nobody is challenging anybody
not to do. It seems to me considerate to be thinking about making sure
something like this doesn`t happen again, if you can, as part of your good
sentiment.

You don`t just say there, oh, too bad, and move on. You go too bad, let`s
see what we can do about it. That seems to be a positive sentiment.

REAGAN: It is fair enough to say that there`s a bigger problem here than
just guns. There`s a problem with mental health issues. There`s a problem
with just the violent nature of our society, from our entertainment to our
sports to our foreign policy.

But those are all bigger issues that are going to take generations to
solve. The one part of this puzzle that we can do something about right
now and that is an essential part of the puzzle is the availability of
powerful weaponry here.

When the founding fathers wrote the Second Amendment, they never envisioned
100-round magazines or semiautomatic or automatic weapons. Antonin Scalia
when he came up with his ruling about individual right to keep and bear
arms, he said that that didn`t preclude regulations for, you know, very
dangerous or unusual weapons.

Well, I will tell you, in the colonial era, a semiautomatic pistol would
have been a very dangerous or unusual weapon, since everybody was using
muzzle-loading flintlocks.

MATTHEWS: How long did it take to reload a musket? It took several
minutes I think to reload a musket.

REAGAN: Minutes, yes, one shot.

MATTHEWS: By the way...

(CROSSTALK)

MATTHEWS: I used the word kiss the butt. I meant the butt of the gun, of
course.

(LAUGHTER)

MATTHEWS: Anyway, the NRA will be holding a press conference tomorrow
morning.

Earlier this week, they released a statement about Newtown that said in
part -- quote -- "The NRA is prepared to offer meaningful contributions to
help make sure this never happens again."

Erin, what do you think they mean by that, the NRA? What would you think
they will support?

MCPIKE: I think that they know that something is going to be passed, and
it will serve them best to be in this fight from the very beginning --
well, not a fight really. I think they -- they`re serious. I think that
they know this is a problem, and it would just be best for them to get
involved.

MATTHEWS: You mean they will support some gun restrictions?

REAGAN: I think they will, absolutely.

MATTHEWS: When have they done it before?

MCPIKE: I can`t say, but I...

MATTHEWS: No, when have they done it before? They have never done it
before.

MCPIKE: They never have, but I think when they say they want to give some
meaningful contributions, they mean it. And I think we`re hearing that
from...

(CROSSTALK)

MATTHEWS: Here`s what I think they will talk about . They will talk about
mental illness. They will talk about possible checks on mental illness.
They will talk about the video culture of our society. They will talk
about everything but guns.

Your thought, Ron. We are going to have to get out of here, but I don`t
have any confidence in the NRA.

REAGAN: Yes, exactly.

MATTHEWS: You may be right. I would like to think...

(CROSSTALK)

REAGAN: Meaningful contributions? No, cosmetic, cosmetic contributions is
what they`re looking for.

But Erin is right. They`re looking to get on board this thing so they can
steer the train, as it were.

MATTHEWS: I think they believe in the absolute right to carry a gun and to
bear arms. And they don`t want to hear anything against that, until
something really awful happens. And to them, I don`t think it`s happened
yet.

Anyway, thank you. You may be right. I hope you are.

Ron Reagan, thank you very much. Merry Christmas to you, and Erin McPike,
the same.

Up next, you would expect Sarah Palin to dump all over "TIME" magazine
naming President Obama as person of the year, but probably not for this
reason. Wait until you hear her Groucho Marx explanation of why she
doesn`t think much of this award.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

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

First, why are the folks at "New York" magazine comparing Sarah Palin to
Groucho Marx? Well, it has something to do with this famous Groucho line.
"I don`t want to belong to any club that will accept me as a member."

Well, here is Palin weighing in on "TIME" magazine`s selection of President
Obama for person of the year.

(BEGIN VIDEO CLIP, FOX NEWS CHANNEL)

SARAH PALIN (R), FORMER ALASKA GOVERNOR: "TIME" magazine, I think there`s
some irrelevancy there, to tell you the truth.

I mean, consider their list of the most influential people in the country
and in the world, some who have made that list, yours truly. That ought to
tell you something right there.

(LAUGHTER)

(END VIDEO CLIP)

(LAUGHTER)

MATTHEWS: That ought to tell you something right there. Well, there`s the
Groucho connection. She can`t be on board with the pick because they
considered her back in 2008.

Humor columnist Andy Borowitz went in a different direction, making the
case that Mitt Romney could be person of the year, if the year was 20 --
I`m sorry -- 1912. Borowitz wrote a man of the year spoof -- quote --
"Even though his quest for the presidency was unsuccessful, Mr. Romney`s
ideas about foreign policy, taxation, wealth inequality, and women`s rights
typified the year 1912 as no one else has. Mr. Romney could not be reached
for comment, a spokesman said because he was traveling around the world
visiting his money."

Next: victory for science. Louisiana Governor Bobby Jindal has a history
of backing legislation that supports teaching creationism in public
schools, but one New Orleans school district is saying, no thanks. School
officials voted in favor of new rules out of concern that state law could
open up the door to including creationism in science classes.

They refuse to follow in the footsteps of Texas, which sets the standard
for many schools. The approved rule states that -- quote -- "No history
textbook shall be approved which has been adjusted in accordance with the
state of Texas revisionist guidelines. No teachers of any discipline of
science shall teach creationism or intelligent design in classes designated
as science classes."

The facts prevail. Wonderful.

Finally, the political lowlight from last night`s Miss Universe
competition. The contestant from Venezuela fielded a question about what
new law she would want to put in place. She chose not to answer through a
translator, but you might find her -- or yourself hoping something got lost
in translation.

(BEGIN VIDEO CLIP)

DIEGO BONETA, JUDGE: If you could make a new law, what would it be, and
explain why.

UNIDENTIFIED FEMALE: I think that we should have a straight way to go in
our similar or in our lives as is this. For example, I am a surfer. And I
think the best way that I can take is the wave that I wait for it. So,
please do our only law that we can do. Thank you, Vegas.

(END VIDEO CLIP)

MATTHEWS: Even though she earned zero points for that answer, overall
scores put Ms. Venezuela in third place. By the way, Miss USA won.

Up next: the Benghazi hearings. And the State Department is now in the eye
of the storm.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

HAMPTON PEARSON, CNBC CORRESPONDENT: I`m Hampton Pearson. And this is
your CNBC news now.

Stocks modestly higher as investors continue to hope for a deal to avoid
the fiscal cliff, the Dow closing up 59 points, the S&P adding seven, the
Nasdaq gaining six points.

When it comes to auto safety, it turns out cheaper may be safer. Only two
of 18 mainstream midsize sedans earned good ratings in the new crash tests.
According to the Insurance Institute of Highway Safety, the 2013 Honda
Accord and Suzuki Kizashi came out on top, with Toyota`s Camry and the new
Prius receiving poor ratings. However, overall, the family sedans actually
outperformed their luxury counterparts.

It`s the busiest day of the year for UPS, the last chance to send packages
that will arrive in time for Christmas without paying an extra overnight
fee. The company expects to ship 28 million packages by the end of today,
compared to 27 million shipped on UPS` busiest day last year.

Amazon is getting into the TV business, the company investing in original
shows, but with a twist. Consumers have a say in which pilots are
produced.

That`s your CNBC News now.

MATTHEWS: Welcome back to HARDBALL.

There was some tough questioning today for the State Department in the
Senate and House hearings about the Benghazi attack. Two senior officials
testified and acknowledged that the department needs to do better and make
improvements to prevent something like this from happening again.

This week, an independent investigation concluded there were -- quote --
"systemic failures" at the State Department in the run-up to the deadly
attack. The report led to the resignation of four senior State Department
officials, including the head of diplomatic security.

Here was Senator Bob Corker this morning taking the department to task.
Let`s watch.

(BEGIN VIDEO CLIP)

SEN. BOB CORKER (R), TENNESSEE: What I saw in the report is a department
that has sclerosis, that doesn`t think outside the box, that is not using
the resources that it has in any kind of creative ways, is not
prioritizing.

I cannot imagine that we had people out there with a lack of security
existing. And it seems to me that what the State Department would have
done is to prioritize, and if, in fact, we cannot have people safely there,
not send them there.

(END VIDEO CLIP)

MATTHEWS: Well, absent from today`s hearing, Secretary of State Hillary
Clinton. She`s expected to testify next month on the same questions, but
today`s focus was the failure of Clinton`s State Department to recognize
the deteriorating security environment in Benghazi.

So what are the lessons from Benghazi and how high up should the focus go?

Michael O`Hanlon is a senior foreign policy fellow at the Brookings
Institution. And P.J. Crowley is a former assistant secretary of state for
public affairs.

Let`s go, gentlemen, the same question to you as experts in this field. Is
this the kind of thing that happens when we have nervy, courageous
diplomats who are willing to go into dangerous areas, and it just happens,
that occasionally the enemy erupts up out of nowhere, you can`t predict the
next turbulent storm to hit in one of these areas of the Third World,
especially in post-revolutionary Libya, and that it`s not really anybody`s
fault, unless everything that happens bad is somebody`s fault?

Your thoughts, Michael?

MICHAEL O`HANLON, SENIOR FELLOW IN FOREIGN POLICY STUDIES, BROOKINGS
INSTITUTION: Chris, it`s an important question.

MATTHEWS: Which is it?

O`HANLON: I have a nuanced answer.

This was clearly not the State Department`s finest hour. And it`s easy to
say in retrospect. But, also, I would make an analogy with military
commanders in the field, who often make decisions that could be second-
guessed and sometimes wind up getting people killed unnecessarily.

But you don`t assess a battlefield`s commander`s entire tenure based on one
battle or one decision that went bad. You understand you`re going to make
some correct calls and some bad ones. That`s how I interpret this.

This was not the best decision that could have been made in regard to
Benghazi, and we do need to accept a certain amount of tough criticism from
Congress.

(CROSSTALK)

MATTHEWS: Well, whose decision was it? Was it Ambassador Stevens`
decision to go into a very dangerous area, where there wasn`t a regular
government, there wasn`t a regular military or police force, the normal
arrangement where the host country protects you, where there wasn`t really
a host government there to do that? They relied on militia, who are very
unpredictable and perhaps dangerous in this case.

O`HANLON: Well, the larger point, I agree with, Chris, that in this case
we have to avoid a zero defect, zero casualty mentality. It will prevent
us from having an effective foreign policy.

And there are some innate dangers, and sometimes correct decisions will
lead to people getting killed, just because that`s the way the world works.
In this case, I do think that it`s fair to ask if the State Department
should have made some better decisions. But I don`t see it as the sort of
thing that amounts to a huge error.

MATTHEWS: Right.

O`HANLON: It`s worth going back and asking how we can prevent it from
happening in the future, but it was not a huge error.

MATTHEWS: Do we want -- Mr. Crowley, do we want diplomats, career --
career people who become ambassador in tricky areas, do we want them to be
the kind of people that go to Benghazi to try to deal with the locals, with
the militia, or do we want somebody that stays back in the protection and
the environment of our embassy?

Do we want -- which kind of guy or woman do we want?

P.J. CROWLEY, FORMER U.S. ASSISTANT SECRETARY OF STATE FOR PUBLIC AFFAIRS:
Well, you want Chris Stevens, and you want him exactly where he was.

I mean, to Senator Corker`s clip, ironically, this was the State Department
thinking outside the box. Chris Stevens had been in Benghazi in the midst
of the civil war advising the rebel group that became eventually the
interim government. And he was back in Benghazi for the first time since
he had been a special envoy there as ambassador.

I mean, obviously, and I think you touched on it, Chris, which is the
miscalculation here was thinking that in a post-conflict environment like
Libya, the same normal rules of the Vienna Convention apply, that the host
nation can provide for security.

So, I think, much as the military learned where -- from experiences like
Beirut in 1983, Khobar Towers in 1986, that when you deploy people into
dangerous situations, you have got to concentrate on force protection and
bring the resources with you that can provide an adequate level of
protection.

The State Department has got to rethink how it operates in these kinds of
environments.

MATTHEWS: Well, I still remember `83. And I think that was the wrong
decision to put our troops there, with no purpose but to guard the airport.
It was a symbol of strength, not strength.

Anyway, New York Congressman Gary Ackerman is retiring at the end of his
term and he had strong words for his fellow representatives, I think
especially Republicans, at today`s House hearing on this matter. Let`s
watch Gary Ackerman.

(BEGIN VIDEO CLIP)

REP. GARY ACKERMAN (D), NEW YORK: This might be my final six moments to
speak in my 30-year career here, and I want to first start by apologizing
to the deputy secretaries because you have been brought here as a ruse.
You are being used as foils to the conflicting intentions of some people on
our committee and others in Washington for partisan, political purposes.

(END VIDEO CLIP)

MATTHEWS: I have always liked Gary Ackerman. I went to Ethiopia with him
with (INAUDIBLE) years ago. And I like him even more now.

P.J. Crowley, what do you think of that assessment? Are these hearings
basically are witch hunt? What are they? What are these hearings about?

CROWLEY: Well, they`re about political politics, and we saw that with the
episode preceding involving Susan Rice. But at the heart of this, the
Congress -- resource is not the only answer. The Congress bears some
responsibility here. When a defense budget goes up to the Hill,
congressmen trip over themselves thinking, what can I add to this budget?

You know, when a State Department budget goes to the Hill, they look at,
what can I subtract from it? The chairwoman of that very committee has
been very outspoken about chopping the significant sums of money out of
foreign assistance.

MATTHEWS: Yes.

CROWLEY: So ultimately there are, you know, two agendas here, and to get
the lessons learned and integrate those into State Department operations,
there are going to have to be more resources devoted to this task.

MATTHEWS: But let me ask you both this question, how many troops can we
put in a facility which is basically associated with a CIA operation in
Benghazi? We can`t plant a small military force there without causing all
kinds of trouble, a show of force like we did in Lebanon, Beirut back in
`83. You just invite the kind of attack we had back then.

Let me go to Michael on this. Why would you want to put a big detachment
or contingent with U.S. troops with all that firepower in a place like
Benghazi and to station them there without expecting that to be a lightning
rod for any local militia that wanted to make its bones?

MICHAEL O`HANLON, BROOKINGS INSTITUTION: Well, Chris, what I would say is
you`re right. You can`t have it be huge. You could put a couple dozen
people there however, and I think there`s a good chance they could have
held off this attack, but your larger point I agree with. I agree with
your larger point, which is that there are going to be some attacks that
you can`t repulse with a small force. That`s the kind of uncertainty you
live with in a world where you`ve got to operate in dangerous places.

So, I think the larger point is state probably should have done some things
differently here. Congress probably should have done some things
differently here as P.J. says. Let`s all learn from this together. Let`s
try to make sure we do better the next time, but let`s not pretend we can
get to a zero defect, zero risk foreign policy.

MATTHEWS: Yes.

Quickly, P.J., do you know of any evidence, this is get agree around the
right wing and people contacting me like they all do, saying they called
for help, they refused to bring help because they wanted to keep this low
key, they didn`t want terrorism to look too big for the election. Is there
any truth to that?

CROWLEY: I don`t think so. There are still questions we don`t know the
answers to, who did this and why? But, no, there was no cover-up here.
There was a tragedy and as Mike just said, we`ve got to learn the lessons
and apply them smartly so we can do better next time.

MATTHEWS: OK. Merry Christmas, gentlemen. Thank you for coming on,
Michael O`Hanlon and P.J. Crowley.

Up next: why are so many Republicans, in fact, some of them, hating or
attacking -- why are they attacking Chuck Hagel, the neocons? The former
Republican senator who may end up as the next secretary of defense. I
think it`s for philosophical reasons. He`s a man who doesn`t believe in
war as the first solution to every problem and they`re at the opposite end
of that argument.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: When you`re in the stores this weekend, pick up a copy of my
book, "Jack Kennedy: Elusive Hero". It`s a perfect stocking stuffer for
HARDBALL fans who treasure the JFK legacy, people like me.

It`s a great American story filled with high ideals and romance. It will
take you to a different time, a different man, a different America. If
you`re like me, you`re going to love it.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: We`re back.

If President Obama nominates former Senator Chuck Hagel of Nebraska for the
next secretary of defense, he could find himself with a tough political
fight on his hands. Take a look at this new ad from a pro-Israeli group.

(BEGIN VIDEO CLIP)

ANNOUNCER: Secretary of Defense Chuck Hagel? President Obama says he
supports sanctions on Iran. Hagel voted against them. Hagel voted against
labeling Iran`s revolutionary guard a terrorist group. And while President
Obama says all options are on the table for preventing a nuclear Iran,
Hagel says military action is not a viable, feasible, responsible option.

President Obama for secretary of defense, Chuck Hagel is not a
responsibility option.

(END VIDEI CLIP)

MATTHEWS: Well, "The New Yorker" magazine`s Ryan Lizza tweeted this week,
quote, "The coming attacks on Chuck Hagel will make the Susan Rice episode
seem quaint."

Those attacks have already started. One senior Republican aide told "The
Weekly Standard," that`s the neocon magazine which I happen to read every
week, quote, "Send us Hagel and we will make sure every American knows he`s
an anti-Semite."

Wow. Well, the anti-Semitism charge stems from comments Hagel made back in
2008 in an interview with an author about the power of AIPAC, a major pro-
Israel lobbying group. Hagel said he was a strong supporter of Israel but
also said, quote, "The Jewish lobby intimidates a lot of people up here,
meaning Congress. I`m a United States senator. I`m not an Israeli
senator."

Well, many people have defended Senator Hagel`s potential nomination. He`s
a Vietnam vet, Purple Heart recipient. His views on foreign policy are far
from being outside the mainstream.

So, what is really motivating his critics?

Jack Reed is a Democratic senator from Rhode Island and Dana Milbank is a
columnist for "The Washington Post."

Senator Reed, you know, one of our producers who is pretty sharp said that
Chuck Hagel is Barack Obama with a war record, they think very much alike,
except one guy has got a couple of Purple Hearts to prove he knows what
battle and war is all about.

Your thoughts, how would you size him up as a former colleague
ideologically, in terms of peace and war issues?

SEN. JACK REED (D), RHODE ISLAND: Well, first of all, Chris, as you
pointed out, this is someone who has been in combat, who received two
Purple Hearts, instantaneously. The men and women in the armed forces will
know that at the top of the Pentagon is someone who has literally walked in
their boots, that experiences what -- has experienced what they experienced
and that I think is a huge asset he brings.

As far as his foreign policy credentials go, he has been very thoughtful
and very constant observer of shifting foreign policies all across the
globe, not just in one area. But I think the most compelling comments
reference in Israel, nine former ambassadors, including some who are, our
ambassador to Israel, say their dealings with him show he`s a strong
supporter of Israel, as we should be. They are our most important ally in
that region.

MATTHEWS: Let`s go to the neocons who intend to go to battle with, because
I think they always liked the Iraq war, I always hated it. I wonder about
this insistence, why we have to be so militarized as a country, so
insistent on using our battlefield strength as our first diplomatic move.

Hagel is not like that belief. He`s one of these guys like Anwar Sadat,
like Yitzhak Rabin, who`ve been to war, knows what it looks like and would
prefer an alternative.

DANA MILBANK, THE WASHINGTON POST: He`s a foreign policy realist which
used to be a dominant strain here. I think a lot of the reason the neocons
are opposed is because he was President Bush`s most strident critic,
certainly within the Republican Party, an adamant critic of the war. And
he just has the view that war is actually your last option. It`s not
something you do because he fought --

MATTHEWS: What percentage -- you`re a journalist, you`re a great columnist
-- what percentage of the American people, when they think about it, think
that the Iraq war was necessary? That it was the move that we had to make
that cost all of those lives?

MILBANK: Well, certainly, the polls show that the vast majority did not
think it was necessary in the end.

Now, Chuck Hagel is not some sort of dove. He voted to go into Iraq. He
voted for Afghanistan, the conflicts in the Balkans.

But he believes in multilateral action. That`s why he`s opposed sanctions
when it`s unilateral sanctions because he says that doesn`t work. It needs
to be done in concert with the world community.

MATTHEWS: Well, let me ask you, Jack Reed, Senator, what do you think
about this? Do you think there`s any chance the president would consider
this fella and would pull him back because of the level of criticism that`s
come so far? Is this enough to make the president change his mind about
someone he believes in and shares views of?

REED: Well, the president will ultimately make judgment, but I think he`ll
be on strong ground if he`s set up Chuck`s name. Chuck is quite prepared
to set all of these questions. They`re all questions that could and should
be asked.

But, again, as Dana said, this is someone who has a very sound, realistic
view of foreign policy, of military policy, based upon his one experience
as a soldier himself, two, his experience in the Senate dealing with these
issues.

So, I think he brings great credibility, great integrity to the office.
And, by the way, the foreign policy of the United States is not set by the
secretary of defense.

MATTHEWS: Yes.

REED: He will be carrying out the foreign policy of the president of the
United States. And he`ll be giving them the military options. But he`ll
be giving them those options with, I think, the hardest and closest
scrutiny because he understands ultimately young Americans have to carry
the battle. Not a lot of people who are commentating on his credibility
today.

MATTHEWS: Sure, the armchair generals. But I definitely -- I don`t like
chicken hawks either, the guys who are the hawkish in the people in the
world, most hawkish in the world, but never think to put uniform on.

But here`s the question about this. What I was so stirred by when I read
his comment, when he was being medivaced in Vietnam and he`s lying there
wounded, ready to be picked up, I guess put on a helicopter, he remembers
thinking at the time, I`ve got to do everything I can when I get back to
the States to make sure that war is a last resort, not a first resort.

Having been -- you have been in the military. Does that sound like
something that would drive a man into his public life afterwards? That
that experience of being wounded in battle and seeing the suffering in
battle. It`s just worse than your own suffering, would drive your
political and public career thereafter?

REED: Well, I was not in combat. I served 12 years in the United States
Army, a paratrooper, a ranger, but Chuck Hagel has been in combat. I`m
sure he`s left a distinct and precious honor.

As Dana pointed out, he did support the efforts in Iraq. But he didn`t do
it unquestionably. He didn`t do it without raising questions, continually
asking for better policy. More answers.

That`s what I think you want in someone who might be the secretary of
defense. And this is perhaps coincidental, but another great warrior,
Senator Daniel Inouye who were laying to rest today, and a Medal of Honor
winner was also a critic of Iraq, because I think he, not just in this one
vote, but through his entire career, understood that suffering and
sacrifice that young Americans make on behalf in this country, and must
make.

MATTHEWS: Let`s talk about the Israeli lobby, which is a strong lobby, we
know that. It`s probably called the Israeli lobby. They`re very concerned
about the security of Israel. We write about it, we talk about it, we know
that people who are in it.

It seems to me the question is to some extent the degree to which you`re
willing to be critical of the current Israeli government, whether it`s a
right wing government like Netanyahu or not. Some people may be more
unquestioning in their support of Israel. Others would say, well, in this
issue, like invading Lebanon wasn`t the smartest move in the world.

Where would you put Hagel on that one?

MILBANK: Well, I think where Chuck Hagel got in trouble was one remark
when he referred to the Jewish lobby instead of the Israel lobby.

MATTHEWS: Why is that wrong? Explain to viewers.

MILBANK: Because a lot of the pro-Israel lobby are concerned --

MATTHWES: They are right wing Christians.

MILBANK: A lot of American Jews are quite liberal and are not necessarily
--

MATTHEWS: I`m very aware of both differences. I`m glad you said it.

MILBANK: So he misspoke and he said that he misspoke.

MATTHEWS: And by the way, the context of "New York Times (ph)", in that
same article where he said the Israeli lobby over and over again. So, he
got it right. And we have to get it right.

Anyway, thank you, Dana Milbank, a great columnist.

And thank you, Senator Jack Reed, for joining us tonight.

We`re going to be right back.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this:

President Obama is a conviction politician. That means he stands for
things. He runs for office to accomplish things. He believed in health
care and he got it done. He opposed unnecessary wars. He is now being
attacked for considering for secretary of defense someone who shares his
view.

Chuck Hagel is someone said is Barack Obama with a war record. He wants
war to be the last resort, a position we barely associate with the
neoconservatives. The president should pick a secretary of defense he
trusted to do the best job of helping him defend the country.

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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