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updated 10/4/2013 11:19:11 AM ET 2013-10-04T15:19:11

HARDBALL
October 3, 2013

Guest: Rep. Jared Polis, John Feehery, Sen. Chuck Schumer, Josh Green,
Steve LaTourette


CHRIS MATTHEWS, HOST: Violence in a stalled city.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews up in Boston.

We`re going to get to the growing anger over the government shutdown
in just a minute, the growing anger at Ted Cruz, the back room Republican
fight over whether to make this an even bigger battle over the debt
ceiling, and the stunts that Republicans are pulling to make the gullible
out there believe that it`s the Democrats who closed down the government.

But "Let Me Start" tonight with this. The government shutdown was
shattered just hours ago by the death of a woman who just minutes before
that had crashed her car into the White House gate. A city already tensed
up with a compound of unpaid salaries required essential services and an
uncertain future was shaken by the crash at the White House gates, a
televised car chase, the violent death of a woman driver, a young child in
that vehicle witnessing the horrible end.

The death will no doubt become an iconic tragedy in this period of
government shutdown driven by the hatred of the president`s Affordable Care
Act and the compulsion of his critics on the hard right to punish him
politically.

Whatever mix of causes drove the woman to this day, the event is now a
vivid tragedy played out in the streets of the nation`s capital. We get
the latest now from NBC News justice correspondent Pete Williams.

Pete, give us a sense of this. What do we know?

PETE WILLIAMS, NBC CORRESPONDENT: Well, we don`t know the motive. We
don`t know why this woman, identified as 34-year-old Miriam Carey (ph) of
Stamford, Connecticut, a dental hygienist -- why she came to Washington in
the first place and why she did what she did.

The police say that this all started about a quarter after 2:00. This
car hit a security barrier at one of the checkpoints that ring the White
House. Now, this is not right by the White House. It`s one of the very
outer perimeters. And for some reason, she then drove off at a very high
speed, pursued by uniformed officers of the Secret Service.

And in fact, the Secret Service says when she hit one of the barriers
at the gate, at the White House gate there at 15th and E Street, the Secret
Service tried to stop her using these little portable gates, I guess you
could say, that they put out in front of a car to keep them from going.
And a witness said she simply floored the engine, ran over the gate.

The officer of the Secret Service, uniformed officer, was flipped up
onto the hood of her car and then rolled off as she kept going up
Pennsylvania Avenue, blasting through red lights, reaching at one point a
speed of more than 80 miles an hour, they say, and then for some reason
heading toward the U.S. Capitol, the one part of the city that had the
heaviest police presence on the streets.

Capitol police stopped her car -- that`s the video you were just
looking at -- at the foot of the Capitol on the House side. But as you
saw, she backed up and sped away. And then they opened fire again. But
she kept going, continued to speed on the streets near the Capitol, and
then a little bit later crashing the car outside a Senate office building,
when police again opened fire. And she was pronounced dead a short time
later at the scene.

Now, she did have a 1-year-old child in the car, and a Capitol
policeman was al injured when the policeman hit a barrier in the chaos of
the chase.

Now, tonight, state and federal investigators are searching this
woman`s home in Stamford, Connecticut. There`s -- we can see members of a
bomb squad going in and out. We don`t know what they`re finding. They
have no idea why she came here, why she went to the White House, why she
never stopped despite repeated efforts to get her to stop, and what her
problem was.

Some officials tonight say that she had some history of mental issues,
but they`re still trying to find out what the motive was here, Chris.

MATTHEWS: Do we know -- well, let`s ask about the shooting of the
suspect, I guess you`d call her. What was that about? Were they afraid,
the police officers, do we know, that she would drive recklessly, that she
would commit murder, perhaps, with her car? What was the reason for
shooting and killing her?

WILLIAMS: Because she wouldn`t stop repeatedly. I mean, she had
already injured a Capitol policeman -- or rather, a Secret Service agent up
at the White House. You can see there she kept going. She -- they, of
course, didn`t know what was in the car. They didn`t know why she was, if
you`ll pardon the expression, so hell-bent on getting up to the Capitol.
So that`s the training that they have.

And they were very alarmed that despite repeated, you know, oral
statements to her to stop and then firing a gun at her, she kept going. So
they had no idea what her intent was. They didn`t know if she was armed.

They tell us now they`re satisfied that she did not have a gun. So
the only shots that were fired today were fired by the Capitol police and
Secret Service.

MATTHEWS: So is this a Metropolitan Police matter or is it all a
federal matter? Is it just a local crime incident? Is that how they`re
being -- it`s being handled?

WILLIAMS: I think, ultimately -- of course, there are not going to be
any charges filed here. But the -- it`s basically the Metro Police
investigating it, but you`ve got the FBI involved because there are -- you
know, she`s from another state. There`s a search at her house there. So
there`s a federal involvement here, FBI, ATF (ph) and -- but this -- it is
important to point out here -- you were talking about the shutdown.

Every law enforcement officer that you`ve just seen in the video is
working without pay...

MATTHEWS: Right.

WILLIAMS: ... all the federal police, with the exception of the
Washington, D.C., police. I`m not sure what the situation is for all of
them. It`s probably the same. But certainly, as far as the federal
officials that are involved, they`re considered essential personnel.
They`re all still on the job, but they`re not being paid during the
furlough.

MATTHEWS: Just to finish that up, isn`t it true -- we were talking to
-- my producer and I were talking to TSA people, a friend of mine is a TSA
guy, said that`s the same situation they`re all in.

WILLIAMS: Oh, absolutely.

MATTHEWS: Essential employees have to show up, and they don`t get
paid.

WILLIAMS: That`s right. That`s basically everybody in the federal
system who carries a gun or has a badge. They`re all considered essential
for the protection of life and property. They`re exempt from the shutdown.
They must come to work. But they`re not getting paid.

And it remains to be seen whether they will be paid when this is all
over. But then when they come back, they will face almost certain
furloughs as the government has to tighten up for the sequester.

MATTHEWS: What a potentially dangerous situation. Thanks so much.
NBC`s Pete Williams, U.S. -- actually, NBC`s justice correspondent.

WILLIAMS: You bet.

MATTHEWS: U.S. Congressman Jared Polis was in his office on Capitol
Hill when the shots were fired. Congressman, thank you for joining us for
this unusual horror to talk about. What did you see? What did you hear?

REP. JARED POLIS (D), COLORADO: You know, Chris, it was a -- it`s a
tough day. I mean, here we are, you know, in the government shutdown, just
waiting to schedule a vote to reopen it. Alarm bells went off. There`s an
emergency intercom system in the Capitol. It said we were going into
lockdown. We were instructed to lock our office doors.

Luckily, our staff was accounted for. There were a couple people,
constituents from Colorado, meeting with us at that time. They were locked
in with us. And we were on lockdown for about half an hour, not knowing
what was going on or whether there was a live shooter here at the Capitol.

MATTHEWS: Anyway, are you confident we have a Capitol right now
that`s able to handle emergency situations like this? Are the employees --
there`s 12,000 of them up there, I believe up, at the minimum, able to get
out of these buildings in any tricky situation like this if they have to
evacuate, or would they get stuck in there?

POLIS: Well, you know, the protocol when there`s a shooter -- and
that was again what we thought at the time, or somebody who was trying to
do harm -- is for us to be secure in our building. So that`s a different
protocol than there would be for an evacuation or a bomb threat. So there
are different safety protocols for different kinds of threats. We have
chemical hoods available for ourselves and our staff, breathing masks.

Again, you know, clearly our institutions of government are always a
target for this sort of thing. There is a lot of security. But depending
on what the threat is, there`s different protocols.

MATTHEWS: Yes, well, thank you, sir, very much for joining us.
Congressman Jared Polis. By the way, a former -- or a current member of
Congress who understands the administration of the Capitol, called me just
about an hour ago and said this whole exercise showed him how dangerous it
is on the other end, getting the young staffers out of building, if we have
to.

Anyway, thank you, Congressman Jared Polis of Colorado.

Coming up, back to the big story this week -- it`s pretty messy, too -
- the government shutdown. Republicans are at each other`s throats now.
It`s getting to be intramural with them, admitting they have no exit
strategy politically except -- well, Ted Cruz doesn`t seem to want to have
an exit strategy. He just has a trouble strategy.

And then GOP leaders getting caught on tape, to their embarrassment,
talking the politics of this thing, and not in a particularly public-
spirited way.

Also, the shutdown fight may be only the beginning. I think so. Many
Republicans want to take the battle all the way to the debt ceiling and
jeopardize this country`s financial standing. The entire economy will be
held hostage in the process. But it`s not clear that Speaker Boehner is
one of the wild men.

And let`s talk about the political stunts that are being pulled even
today, and certainly yesterday. And this is -- we`re going to show you
here Texas Republican Randy Neugebauer. Here he goes.

(BEGIN VIDEO CLIP)

REP. RANDY NEUGEBAUER (R), TEXAS: How do you look at them (INAUDIBLE)
and deny them access? I don`t get that.

UNIDENTIFIED FEMALE: It`s difficult.

NEUGEBAUER: Well, it should be difficult.

UNIDENTIFIED FEMALE: It is difficult.

NEUGEBAUER: Park Service should be ashamed of themselves.

UNIDENTIFIED FEMALE: I`m not ashamed.

NEUGEBAUER: You should be.

(END VIDEO CLIP)

MATTHEWS: Who are you prouder of, the Park Service people with those
campaign hats on, or a clownish congressman trying to use them for his own
tackling dummy? Unbelievable.

Anyway, this whole government question, photo ops going on display,
Republicans have tried in just the last few days to convince Americans, at
least the gullible who don`t read the papers, that they`re not ones who
shut down the government in the first place. I said before, it`s like
hostage takers releasing one hostage at a time. They`re the bad guys, even
if they try to release a hostage.

Finally, I was on "The Colbert Report" last night, a little comic
relief.

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, "THE COLBERT REPORT": Are you implying there has to
be some compromise in politics?

MATTHEWS: Yes. Like in life.

(LAUGHTER)

COLBERT: Reagan never did.

MATTHEWS: He did so!

COLBERT: No, he did not!

MATTHEWS: That`s what the book`s about!

COLBERT: He did not. I don`t care what the book`s about.

(CROSSTALK)

COLBERT: I don`t care what kind of Harry Potter fantasy you`ve
written here!

(END VIDEO CLIP)

MATTHEWS: He`s the best.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: In the race to be Virginia`s next governor, Republican
candidate Ken Cuccinelli`s embracing the man behind the government
shutdown, believe it or not, Texas party (ph) firebrand Ted Cruz. The
Texas senator will be in Virginia this weekend for a pair of appearances
alongside Cuccinelli, who`s already trailing Democrat Terry McAuliffe in
the polls.

Virginia`s home to more than 300,000 federal employees and retirees.
I wonder how they`ll react to Cuccinelli cozying up to Cruz.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. On a day when Washington, D.C.,
was stunned by violence that put the Capitol on lockdown this afternoon, an
already tense political climate became moreso. I`ve said before the
Democrats fall in love, Republicans fall in line. But during this entire
shutdown fight, it`s been the Republicans who have been the ones in
disarray.

There`s growing anger and disillusionment with Senator Ted Cruz, who
Republicans increasingly see as more interested in helping himself than in
helping their party.

In Politico today, Senate Republicans vented anonymously following a
closed-door luncheon at which Cruz was reportedly pelted with hostile
questions. One senator said, "It was very evident to everyone in the room
that Cruz doesn`t have a strategy. He never had a strategy and could never
answer a question about what the end game was. I just wish the 35 House
members that have bought the snake oil that was sold could witness what was
witnessed today at lunch," close quote.

Well, even Grover Norquist, founder of the Club for Growth, described
Ted Cruz`s behavior this way. "He pushed House Republicans into traffic
and wandered away. Cruz appears to be losing his hold on the GOP."

In a moment, New York Democratic senator Charles Schumer. Joining me
now is Republican strategist John Feehery.

John, this is a strange situation. You`re having people talking out
of school. Here`s more evidence that Cruz is actually -- well, let`s take
a look at this. Anyway, more evidence Cruz is alienating fellow
Republicans comes in this quote from the Politico article. "Cruz was asked
point-blank if he would renounce attacks waged on GOP Senators, incumbents,
by the Senate Conservatives Fund, an outside group that has aligned itself
closely with the Texas senator Cruz." Anyway, here`s Cruz`s response. "I
will not," according to one of the attendees.

Isn`t it extraordinary for a member of a Republican or any caucus to
tell his fellow members of the caucus, I`m not only not going to protect
you from these characters, I`m sort of neutral, I don`t care if they knock
you buddies off?

JOHN FEEHERY, REPUBLICAN STRATEGIST: Yes, Chris, it`s a mess. I
think that Ted Cruz has a lot of explaining to do. You know, what I hear
on the Internet is that people are a RINO if they don`t agree with Ted
Cruz. RINO means "Republican in name only." But if you`re the one
spending all of your time attacking Republicans, who`s the real RINO?
That`s my question.

MATTHEWS: Good point. And by the way, remember Reagan`s 11th
commandment? I mean, this guy sort of flaunts that baby.

FEEHERY: Yes. I mean, I think members in the Senate especially, but
also the House. This strategy has just not worked out. And I commend John
Boehner for trying to keep his troops together. And ultimately, I hope we
do get a strategy to get out of this mess. And I hope we get a budget deal
because we need a budget deal, and I think that the president has to
negotiate to get a budget deal because -- and that will get us out of this
mess.

But you know, let`s not kid ourselves. Ted Cruz got us in this mess,
and it`s really shocking that he did not -- he was not able to stand up to
his members and explain what the end game strategy was.

MATTHEWS: Let`s talk politics the way you might as a top staffer
before. And it`s not out of the question that this could happen because it
may have to happen for your party. Do you think somebody who`s good,
somebody between Cruz and Boehner, some Republican, a trusted person who
doesn`t have a big mouth, could go to both of them and say, Look, two weeks
from now, we`d better kill this, we`ve got to get somewhere. So Mr. Cruz,
Senator, we`re just asking, can I go to the speaker and say you`re not
going to shoot to kill anybody that goes with Boehner if he opens up the
House to a majority vote? Then he brings up a clean CR and then he gets to
Boehner, Boehner doesn`t feel as comfortable that he won`t be attacked
directly by Cruz, Cruz will lay down his gun for a couple days, and this
thing will get done.

Is there any chance they`ll agree to a ceasefire between Cruz and
Boehner?

FEEHERY: Listen, I don`t think that John Boehner has to go on bended
knee to Ted Cruz. John Boehner, what he has to do is work through this
problem, come up with a solution, and most importantly, we got to get the
president to start negotiating. We got to get a deal. And this is not
just about this short-term budget deal, it`s also about the debt limit...

(CROSSTALK)

MATTHEWS: OK. Let`s go...

FEEHERY: ... and it`s also about...

(CROSSTALK)

FEEHERY: OK.

MATTHEWS: I agree. Let`s talk about a deal. Let`s forget the CR and
go to the real fight, which is going to be over the debt ceiling.

FEEHERY: Right.

MATTHEWS: What can he give them besides dismembering health care? Is
there something on the outside he could say, Look, we`re going to have --
we`re going to deal with the corporate tax reform, we`re going to deal with
entitlement reform, we`re going to do something, but I just can`t give you
the health care, but I`ll give you something else? Is there an outside-
the-circle deal here?

FEEHERY: Well, let`s assume, Chris, that "Obama care" -- repealing
"Obama care" is off the table, that`s not going to happen. Let`s see if
there are ways within "Obama care" to fix it or improve it a bit. And then
let`s talk about entitlement reform and then some sort of tax reform...

MATTHEWS: OK.

FEEHERY: ... and then something on the sequester that keeps the
sequester going, keeps government spending at about a 2009 level...

MATTHEWS: OK.

FEEHERY: ... which is a huge victory...

MATTHEWS: OK.

FEEHERY: ... for Republicans. I think you could get a deal like
that...

(CROSSTALK)

MATTHEWS: I don`t think they`ll cut that deal. I don`t think Obama
will cut the deal if it has anything to do with "Obama care." So we`re
still looking for the solution. Thank you...

FEEHERY: Well -- maybe not. Maybe not.

MATTHEWS: By the way, somebody put in the prompter here that --
somebody put in the prompter here "Senator John Feehery," so accept the
title, Senator. Thanks for joining us.

(LAUGHTER)

FEEHERY: All right.

MATTHEWS: Joining me now is the real Democratic and the real senator,
Chuck Schumer of New York. Senator, a little levity doesn`t hurt today,
I`ve got to tell you.

SEN. CHUCK SCHUMER (D), NEW YORK: You bet. We need it.

MATTHEWS: This whole question -- we need it. It`s a grim day, this
poor woman, whatever her condition, is dead. We know that.

SCHUMER: Yes. We do.

MATTHEWS: Two police officers doing their job are injured. A young
child, horrifically, had to witness this thing, a 1-year-old who`s going to
have memories forever.

SCHUMER: Yes.

MATTHEWS: And it is going to be an iconic event that may have nothing
to do with the shutdown. But talk about your city right now. What is the
mood of Washington?

SCHUMER: Well, it`s pretty blue and pretty grim after what happened
today. The one -- the one silver lining -- it`s not a silver lining, but
the one good thing that happened is that our police officers, Capitol Hill
police, were dedicated. Now, remember, they`re working. They`re not
furloughed because they`re needed for our security, but they`re not being
paid. And it didn`t diminish their professionalism or dedication to do
their job one jot. We all admire that.

MATTHEWS: I do. Let me ask you about the Republican side. Looking
across the aisle and watching or hearing -- I`m sure you`ve heard the buzz
out of the Republican caucus, the lunch the other day...

SCHUMER: Yes.

MATTHEWS: ... where there was a lot of crossfire, friendly fire, you
might call it, that`s been aimed at Cruz. He doesn`t seem to have a
strategy figured out about how to...

SCHUMER: No.

MATTHEWS: ... end something he started.

SCHUMER: No. You know, he doesn`t have a strategy when he goes to
the Republican caucuses. He doesn`t have a strategy when he goes -- when
he speaks publicly here on the Senate floor.

And I will tell you, I have a good number of Republican friends, close
friends across the aisle. When he talks to them privately, he doesn`t have
a strategy. He`s been totally motivated by the Tea Party. The Tea Party
always wanted to shut the government down, and they did.

And, unfortunately, they used very strong-arm tactics, particularly in
the House, and scared people. One of the leading more reform-minded people
who was trying to round up votes among the moderates, and now we seem to
have more than enough votes to pass opening up the government, but while he
was rounding up the votes, Tea Party forces would go to the people he was
going to and say, if you do this, we`re giving you a primary.

So Ted Cruz doesn`t have a strategy. They have a bludgeon, and they
have this desire, fanatical desire to end Obamacare, but they don`t have a
strategy of how to do it.

MATTHEWS: Republican Congressman Marlin Stutzman of Indiana gave
perhaps the most revealing quote about why Congress is paralyzed. He says
that, for Republicans, it`s about saving face. They need some sort of
consolation prize for what they have been doing. Let`s listen.

(BEGIN AUDIO CLIP)

REP. MARLIN STUTZMAN (R), INDIANA: We`re not going to be
disrespected. And so that`s where we`re at today, where we have to get
something out of this, and I don`t know what that even is.

(END AUDIO CLIP)

SCHUMER: Yes. It was...

MATTHEWS: wow.

SCHUMER: That was an amazing comment, Chris.

MATTHEWS: Well, the president picked up on that. His war room`s
working. He picked up on Stutzman`s comments and referenced them in his
speech already this morning.

SCHUMER: Yes.

MATTHEWS: Let`s listen to his reaction at Stutzman`s strategizing
here.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If you`re being
disrespected, it`s because of that attitude you have got, that you deserve
to get something for doing your job.

(END VIDEO CLIP)

MATTHEWS: And then came the Stutzman walk-back.

A little while later, Stutzman`s office put out a statement that reads
in part: "Yesterday, I carelessly misrepresented the ongoing budget debate
and Speaker Boehner`s work on behalf of the American people."

(LAUGHTER)

MATTHEWS: I don`t know. But I guess he was trying to say in a
tongue-twisted way, Senator, we have got to get something for all this
grief, or what?

SCHUMER: Well...

MATTHEWS: What are they talking about?

SCHUMER: Well, here, they hurt millions of innocent people without a
strategy, with just strong-arm tactics, and now they say they need to be
respected?

The reason they`re not respected by most Republicans, every Democrat,
and 80 percent of Americans is because of what they have been doing. They
haven`t -- it hasn`t been that other people have disrespected them. They
brought the disrespect on themselves. The way out of this -- and I don`t
agree with John -- Senator Feehery over there.

(LAUGHTER)

SCHUMER: A large part of this blame is on Speaker -- a large part of
this blame is on Speaker Boehner himself.

He has let these hard-right people who he knows has no strategy, who
he knows have no experience, who he knows are rather fanatical, run the
show. And as long he lets them run the show, he`s going to have a
miserable speakership, and they will not stop demands. The only way you
deal with a bully is when you stand up to them.

And he`s got a lot of people in his caucus praying that he will. Ted
Cruz is probably one of the least popular Republicans among Republicans
here in Washington. And if he thinks that`s going to get him to be
president, it won`t. It`s just the way things work. If you don`t -- if
you show you can`t govern, if you show you can`t get along even with some
of your most conservative colleagues, even the most rabid Tea Party person
is not going to nominate him for president. I really believe that.

MATTHEWS: You are a gutsy guy. Let me ask you a simple question.

How do you know people will follow you when you try to lead? Or do
you have to take the chance and lead and hope they will follow you? What
comes first here for Boehner?

SCHUMER: It`s a combination.

You talk to your colleagues and you see what`s really motivating them.
And a lot of times, they wish you would lead, but they -- they`re not
guaranteeing you they would follow. Then you have to take the gamble,
lead, and usually they do follow. On the other hand, if you`re just on the
wrong course, you should know that too. So you don`t just go out willy-
nilly. That`s what Cruz did.

He didn`t talk to probably to more than three or four of his people.
But you find out where your colleagues are. And if you detect, oh, gee, I
wish they`d take the bullet for me, go forward, you go, and more cases than
not, people follow.

MATTHEWS: Thanks so much, Senator Chuck Schumer of New York.

Well, this is HARDBALL, the place for politics.

SCHUMER: That`s what -- by the way, that`s what Boehner should do.

Please, please, Speaker Boehner, rise to the occasion. We need you
now to do that.

MATTHEWS: Thank you, Senator.

(COMMERCIAL BREAK)

MATTHEWS: Well, these are certainly tense times, especially today,
but I think I lightened things up last night at least on the great "The
Colbert Report," where I talked about my new book, "Tip and the Gipper,"
when politics actually worked.

Here it is.

(BEGIN VIDEO CLIP, "THE COLBERT REPORT")

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": You`re implying that
there has to be some compromise...

MATTHEWS: Yes.

COLBERT: ... in politics.

(LAUGHTER)

MATTHEWS: Like in life.

COLBERT: No, no, sir. No, sir.

MATTHEWS: That`s why we have a Congress, because we have a vote. And
it has to be 218 in the House or 60 in the Senate. And then we go with
that vote. That`s how it works. Is this too complicated?

(LAUGHTER)

COLBERT: Yes. I believe in standing on your principles.

MATTHEWS: Which means don`t compromise?

COLBERT: Reagan never did.

MATTHEWS: He did so.

COLBERT: No, he did not!

MATTHEWS: That`s what the book`s about.

COLBERT: He did not.

MATTHEWS: That`s what it`s about.

COLBERT: I don`t care what the book`s about.

(CROSSTALK)

(LAUGHTER)

COLBERT: I don`t care. I don`t care what kind of "Harry Potter"
fantasy you have written here.

(LAUGHTER)

COLBERT: If Reagan were in the White House right now, do you think
we`d be at this impasse?

MATTHEWS: No, because Reagan had one great strength that Jimmy Carter
didn`t have and maybe Obama doesn`t have yet. He can scare the hell out of
the other guy. And he did it with the PATCO strike when he first -- when
he broke that strike...

COLBERT: Wait. So, you think that Obama doesn`t scare people?

MATTHEWS: He doesn`t scare people.

COLBERT: We haven`t done enough to make people afraid of Barack
Obama?

(LAUGHTER)

MATTHEWS: No, you haven`t done...

(CROSSTALK)

COLBERT: Really? I have tried.

(END VIDEO CLIP)

MATTHEWS: I love the way he twists things around. He`s so much fun,
though.

Up next: The fight over the shutdown may be the first volley and only
that in a much wider war, as some Republicans want to hold the economy
itself hostage over the debt limit. They want to make us a deadbeat
country. And that`s ahead.

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

VERONICA DE LA CRUZ, MSNBC CORRESPONDENT: Hey there. I`m Veronica De
La Cruz.

A woman shot and killed shot and killed by police near the Capitol is
now identified as 34-year-old Miriam Carey. Police say she tried to ram
her car through a White House barrier, then led Secret Service on a chase
to the Capitol. An 18-month-old girl was also in the car, but was not
hurt. Two officers were injured, but will be OK.

And the government shutdown driving stocks sharply lower, the Dow
falling 136 points and finishing below 15000, the S&P dropping 15, the
Nasdaq losing 40.

I`m Veronica De La Cruz. Let`s get you back to HARDBALL.

MATTHEWS: Isn`t the economic news just wonderful?

Welcome back to HARDBALL.

Look at the Dow dropping right now. As Washington recovers from a
frightening, but at least contained incident this afternoon at the White
House and outside the Capitol which has left one woman killed and two
officers injured, we continue on an issue that has consumed not just the
city, but the entire country, government default, real default, deadbeat
stuff.

President Obama continues to ratchet up the pressure on Republicans,
who are determined to take the country apparently to the edge of default,
if not over it. Yesterday, the president met with business leaders from
the country`s largest banks in a clear show of force to get the GOP to
remember that these executives are the country`s economic gatekeepers and
still wield enormous clout in politics, particularly with moderate
Republican congresspeople. They do not want to see a default, by the way.

Today, the president continued his assault on the Republicans.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The United States is
the center of the world economy. So if we screw up, everybody gets screwed
up. The whole world will have problems, which is why, generally, nobody`s
ever thought to actually threaten not to pay our bills. It would be the
height of irresponsibility.

And that`s why I have said this before. I`m going to repeat it.
There will be no negotiations over this.

(CHEERING AND APPLAUSE)

OBAMA: The American people are not pawns in some political game. You
don`t get to demand ransom for doing your most basic job.

(END VIDEO CLIP)

MATTHEWS: And good for him.

And just hours before the president spoke, the Department of Treasury
published a frightening report on the realities of a government default.

The report states -- quote -- "Political brinkmanship that engenders
even the prospect of a default can be disruptive to financial markets. A
default would be unprecedented and has the potential to be catastrophic.
Credit markets could freeze. The value of the dollar could plummet. U.S.
interest rates could skyrocket. The negative spillovers could reverberate
around the world. And there might be a financial crisis and recession that
could echo the events of 2008 or worse."

Well, the message may have finally hit home to GOP leadership. "The
New York Times" is reporting that -- quote -- "Speaker John A. Boehner has
told colleagues that he is determined to prevent a federal default and is
willing to pass a measure through a combination of Republican and
Democratic votes, according to multiple House Republicans."

Well, the question is, has the Republican Party totally alienated its
business allies, and with the economy hanging in the balance, can Boehner
take on Cruz and without them -- and live to tell about it?

Steve LaTourette is a former Republican congressman from Ohio. He
served as a key ally to Speaker John Boehner up until he left office last
year, due to his disgust, he said, with party extremism. And we also have
Joshua Green here, senior national correspondent at "Bloomberg
Businessweek."

Congressman LaTourette, I have got to ask you about John Boehner. I`m
getting two signals from him. One is, we`re really not going to fight to
the edge on the C.R. We`re going to go to the debt ceiling and that`s
where we`re going to make our big fight over Obamacare, and then the story
from "The New York Times" is at that point he will not risk default. Which
is it? He is going to risk default over Obamacare or not?

STEVEN LATOURETTE (R), FORMER U.S. CONGRESSMAN: Well, it`s a little
bit of both.

I guess, unwittingly, they have sort of taken the government shutdown
and it`s going to bleed into the need to raise the debt limit. And so I
think you will have both issues dealt with at the same time. In John
Boehner`s heart, he`s not going to let this country default. But I was
listening to John Feehery a little earlier. The president needs to get a
little bit off his high horse.

He voted against raising the debt limit when he was in the Senate.
And there are some things, specific things that he could give up, wouldn`t
cost him anything, that would allow Boehner to save face so we can get this
thing done.

MATTHEWS: Give me some examples. Can you think of them?

LATOURETTE: Yes, sure I can, the medical device tax -- 76 senators
voted to repeal the medical device tax. The Keystone pipeline, which
everybody in town knows the president`s going to give up on eventually.
The president laid out chained CPI on the entitlements.

Those are three things that John Boehner can go, that`s a big win, if
you couple that with the fact that under sequester spending, we`re already
spending much less, about half-a-trillion dollars less than was projected.
So, you know, the Republicans need to take the win and go home and the
president needs to do what President Reagan did.

I mean, you were there, and you know President Reagan presided over
the biggest tax increase in American history to make that deal with Tip
O`Neill.

MATTHEWS: I know.

LATOURETTE: And the president needs to give a little.

MATTHEWS: Yes. Well, he needed to reduce the deficit back in `82,
and he and O`Neill got together.

Let me go to Josh Green.

Do you think that list makes sense? Keystone, that would drive the
environmentalists and a lot of Democratic progressives crazy. The medical
device thing would cost the Obamacare program about $30 billion. What
else? I forgot the other one, the dealing with the debt ceiling -- I mean
-- I`m sorry -- dealing with the cost of living, adjusting that downward,
in effect. Is that too much of a giveaway for the president, Josh?

JOSHUA GREEN, "BLOOMBERG BUSINESSWEEK": Well, I think he can give
away some of those things.

I think the key though is what are Republicans willing to give up?
The thing that stanched every deal for the last few years is that
Republicans have endless lists of what they`d like, but they`re not willing
to give either loophole closings or tax increases in return.

And until they get to the point where they`re willing to kind of offer
some of that up, they need to give Obama something in order to get these
nice things in return. And so far I don`t see any sign that that`s
imminent.

MATTHEWS: Let me ask you, Congressman, a logic question. If default
is terrible for the United States, why does the president have to beg for
it? Why does he have to give up anything to get the country to be
patriotic, especially Republicans, who say often they`re the most
patriotic? Why should he pay for that?

LATOURETTE: Well, he shouldn`t pay for it. But, you know, the fact
of the matter is...

MATTHEWS: You`re saying he should -- you`re giving me a Christmas
list of stuff he`s got to lay on the Republican table. Gee whiz...

(CROSSTALK)

LATOURETTE: Oh, no, no, no.

MATTHEWS: I`m sorry. Explain then.

LATOURETTE: That`s for reopening the government.

The debt ceiling should be a no-brainer, because the consequences if
you look at the chart of what happens if our credit rating is degraded at
all, it costs trillions of dollars in extra cost of money. So that`s just
stupid, among other things.

MATTHEWS: I know.

LATOURETTE: But to reopen the government, we do have a budget dispute
going on here.

MATTHEWS: Well, I`m with you.

(CROSSTALK)

LATOURETTE: And each side has to give a little.

MATTHEWS: But, look, when your party`s willing to give up -- look, if
you stop threatening -- if you stop threatening the debt ceiling, this
whole game is over, because the debt ceiling is the key to everything.

If he -- but the thing is, the guy setting the table for you guys now,
Ted Cruz of Texas, is talking about the debt ceiling.

LATOURETTE: Well, listen, Ted Cruz, you know, I compared him to a
trained monkey the other day, and I got a lot of phone calls from monkeys
that were pissed off that I made that comparison.

(LAUGHTER)

LATOURETTE: So, listen, he is not calling the tune. House
Republicans, 35 of them, have sort of rallied around him.

But I will tell you that the Hastert rule that always gets
misinterpreted, it`s the majority of the majority. Boehner can move
forward if there`s 233 Republicans with 120 Republicans and ignore these
outliers, and I think he signaled today, if "The New York Times" is right,
that he`s willing to do it.

MATTHEWS: So he`s willing to go with roughly half the caucus.

(CROSSTALK)

MATTHEWS: By the way, this monkey thing is always a bad thing to call
anybody an animal.

LATOURETTE: Yes. .

MATTHEWS: But there is sort of using the movie reference, Josh, a
"Planet of the Apes" aspect to this.

(LAUGHTER)

MATTHEWS: When you deal with some of these Republican outliers, they
don`t believe in climate change. They don`t believe in evolution. They
really don`t seem to believe in economics. They will say, I -- I got my
economics by raising a family. I don`t listen to economists.

This sort of troglodyte know-nothingism is endemic on the hard right.
They`re channeling ignorance.

JOSH GREEN, BLOOMBERG BUSINESSWEEK: The problem and this is where I
write about in "Businessweek" this week is that it goes beyond. Now,
they`re messing with kind of, you know, basic economic health of the
country. You know, I spoke to CEOs and businessmen for whom this shutdown
is kind of the last straw because if you look back over the last three
years, we`ve had the austerity imposed by sequestration. We had the near
default on the debt last time, 2011, that killed consumer confidence. Now,
you have a shutdown and you have the possibility of another default.

This is -- this is providing a huge headwind to the recovery. It`s
hurting economic growth. And frankly it`s driving away customers that a
lot of these small businessmen depend on. And they don`t understand why
the government is shut down and what Republicans are exactly holding out
for. I`m not sure Republicans know either.

MATTHEWS: You know, we thought during the campaign that Mitt Romney
was a typical Republican. He talked about the 47 percent. He was a
wealthy guy from the business world. Now your party seems more populist,
at least at the roots, against big business, against the Mitt Romneys of
the world.

Who is your party`s leader? Is it business or is it the populist
right wing?

STEVE LATOURRETTE (R), FORMER U.S. CONGRESSMAN: Well, the populist
right wing makes up about 38 percent of primary voters. And so they`re a
group of people paying attention to it. But make no mistake: John
Boehner`s the leader of the party. Mitt Romney became a flawed candidate
not because he wasn`t conservative enough but because he had to be on a
stage with Michele Bachmann and say if we gave you a deal where you got $10
of spending cuts for $1 in revenue increases, would you take it? When he
said no, the election was over.

MATTHEWS: Well said. You are an expert, sir. You ought to give more
commentary on programs like this. I really -- I think you got the heart of
the matter here. It`s really daffy behavior against reasonable
conservative behavior.

Thank you, Steve LaTourette for coming.

And, Josh Green, thank you for your expertise.

Up next, stunt men as in publicity stunts. The Republicans are using
phony, manufactured confected outrage to try to convince America that it
wasn`t them who used this shutdown as a tactic. It was the Democrats.
Hmm, who`s going to believe that that reads the newspaper?

Anyway, this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Here`s something you don`t see every day. Two big name
senators caught on camera talking cynical political strategy. Here
Kentucky Senators Rand Paul and Mitch McConnell caught in a candid exchange
about how Democrats haven`t poll-tested their public comments on the
government shutdown.

(BEGIN VIDEO CLIP)

SEN. RAND PAUL (R), KENTUCKY: Do you have a second?

SEN. MITCH MCCONNELL (R), KENTUCKY: I`m all wired up here.

PAUL: I just did CNN. And I just go over and over again, "We`re
willing to compromise, we`re willing to negotiate. I think -- I don`t
think they poll-tested we won`t negotiate. I think it`s awful for them to
say that over and over again.

MCCONNELL: Yes, I do too. And I just came back from that two-hour
meeting with them, and that was -- that was basically the same view
privately as it was publicly.

PAUL: I think if we keep saying we wanted to defund it, we fought for
that, but now we`re willing to compromise on this, I think they can`t --
we`re going to -- I think -- well, I know we don`t want to be here, but
we`re going to win this, I think.

(END VIDEO CLIP)

MATTHEWS: Back room chatter. Anyway, a lot of dugout noise there.

Republicans are on message while Democrats haven`t properly poll-
tested their position? Senators, you`re not supposed to be caught talking
like that. You`re supposed to be with us, not in that back room.

We`ll be right back after this.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL.

The World War II Memorial has become the go-to backdrop for
Republicans to grandstand and bash the president over a shutdown that they
in fact instigated. Yesterday, it reached absurd levels when Texas
Congressman Randy Neugebauer -- who, by the way, is a birther -- confronted
a park ranger about the closed memorial.

Take a look at what happens when he asked her how she could turn away
the public.

(BEGIN VIDEO CLIP)

REP. RANDY NEUGEBAUER (R), TEXAS: How do you look at them and say how
do you deny them access? I don`t get that.

PARK RANGER: It`s difficult.

NEUGEBAUER: Well, it should be difficult.

PARK RANGER: It is difficult. I`m sorry, sir.

NEUGEBAUER: The Park Service should be ashamed of themselves.

PARK RANGER: I`m not ashamed.

NEUGEBAUER: You should be.

(END VIDEO CLIP)

MATTHEWS: You know, that`s why Congress has about an 8 percent
reputation, 8 percent job approval, because of Babbitts like that, showing
off at the expense of somebody working for the United States government.

Neugebauer then confronted -- he was then confronted by a furloughed
federal worker.

(BEGIN VIDEO CLIP)

ONLOOKER: Ask those questions of the people who aren`t passing the
budget. That`s who you need to ask those questions to.

This woman is doing her job just like me. I`m a 30-year federal
veteran. I`m out of work.

NEUGEBAUER: The reason you are is Mr. Reid --

ONLOOKER: No. It`s because the government won`t do its job and pass
a budget.

(END VIDEO CLIP)

MATTHEWS: Well, perhaps the most shameless thing about this whole
encounter is that Neugebauer just a day before boasted to a Texas radio
station about his role in the government shutdown, the very thing that is
causing the memorial closing.

(BEGIN AUDIO CLIP)

CHAD HASTY: How long are you prepared to leave the government
shutdown?

NEUGEBAUER: As long as it takes, Chad, because this is an important
issue.

(END AUDIO CLIP)

MATTHEWS: Well, Karen Finney is the host of "Disrupt" on MSNBC on
weekends at 4:00. And Richard Wolffe is vice president and executive
editor of MSNBC.com.

Karen Finney, it`s rare that we catch a pol in the act of total catch
a pall in the act of total B.S. Here`s a guy who took credit the day
before for the shutdown, and then he`s out there bluffing his way into the
poor face of a hardworking, somebody with a campaign hat on.

By the way, I always work those people who work for the Park Service.
I don`t like everybody who works for the government, but certainly them.
And why would he make fun of somebody in uniform, especially, so he could
get a cheap shot on the news?

KAREN FINNEY, MSNBC HOST: Well, but I think, Chris, I mean, we`ve
seen this time and again. This is part of the ongoing demonization of the
federal government and federal workers. When you listen to how
conservatives talk about the government and government workers, it`s always
very negative, and without even thinking about -- I mean, they are the
government. They have young people working for them who are also being
harmed in this.

And I think he should have been ashamed at the way he talked to that
woman. And bravo to her for standing up to him and bravo to the other guy
for actually stepping in and saying, wait a second, you`re the person who
did this. I mean, people are not buying this argument, but Republicans are
very good at trying to create a shiny object over here to distract us from
what the real issue is.

MATTHEWS: And talk about class. This woman who`s a park ranger, it`s
a great job, she`s doing a great job, apparently. Look how she handled it.
She said, it is difficult, she agreed with the congressman -- it is
difficult to turn people away, I`m sorry we do it.

And then he kept at her, using her as a tackling dummy.

FINNEY: Right.

MATTHEWS: And then he said, you should be ashamed. And she said the
greatest thing in the world, "I`m not ashamed to be doing my job."

FINNEY: Yes, good for her.

MATTHEWS: Anyway, who`s got -- Richard, who`s got the class in that
situation? The elected birther? By the way, let`s start with the fact
that he thinks the president is the from Kenya somewhere. He`s not exactly
a great American, this guy who he thinks he`s in charge of saying who is
the great Americans.

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: I would humbly suggest that
he`s not actually a good politician either. You don`t punch down, you
know, you find your equal. Pick on someone your own size. You know --

MATTHEWS: Or bigger.

WOLFFE: -- we`re talking about park rangers as well, not some
faceless bureaucrat, someone who`s out there trying to help tourists,
people getting around the nation`s capital. You know, there`s a bigger
problem as well as just basic manners and having respect for people trying
to do their job, whoever their employer is.

The bigger problem for people like this congressman is that they say
they want to run government, but they`re perfectly happy to shut it down.
That`s a basic contradiction. If you want to run government, if you want
to look like you`re ready to govern, then you don`t shut things down so
that people cannot go about their day-to-day business or even be tourists
in the nation`s capital.

FINNEY: But, Richard, I think the point is that they don`t want to
run government. They don`t care about blowing up government. They are
happy to have it look perfectly dysfunctional.

And I think what Democrats need to do, just speaking very politically,
there`s an important opportunity here to remind people that this is what
happens when the Republicans are in control. They get this kind of
dysfunction.

Make them own this level of dysfunction and make their brand own it
for generations to come. I mean, the last time we had Republicans
controlling the House, you had Tom DeLay and the culture of corruption and
K Street and the time before that, you had Newt Gingrich, and what did we
do? We shut down the government.

I mean, I think there needs to be longer term, deeper consequences in
the way people view the ability of Republicans to lead this country.

MATTHEWS: Well, Tom DeLay was acquitted.

OK. Well, let`s go on here. Congressman Steven King made it over to
the memorial today -- there must have been a carpool for the clown car
here. They were all going over there. And why he was there, he accused
the president of having a hand in personally shutting down the memorial out
of spite. Let`s watch.

(BEGIN VIDEO CLIP)

REP. STEVE KING (R), IOWA: What the park service did, and I believe
this order came right out of the Oval Office, they rented barricades, they
called people off of furlough, they brought forklifts in to haul the
barricades in and set them up to barricade this memorial and there`s no
rational reason for it.

I believe this is the act of the commander-in-chief of our armed
forces, which is another thing that galls me a great deal. So I think
that, you know, this memorial -- we`ll see whether the president will order
it open. He can do so in a heartbeat, because I believe he ordered it
closed.

(END VIDEO CLIP)

MATTHEWS: Just for a thinking purposes, Karen -- imagine if the
president had kept the World War II Monument open, but there wasn`t an
adequate number of park rangers, because they`re furloughed, and there was
a defacing over there, perhaps, a spray painting, the kind of things we
hate to see happen, but you have to be careful they don`t happen.
Remember, it happened to the Lincoln Memorial.

FINNEY: Right. Or an accident!

MATTHEWS: Who would be blamed? The president would be blamed.

FINNEY: To make sure somebody slips and falls. That`s also part of
what they`re for. But, you know, Chris, just very quickly, this is part of
what they do, right? It`s the photo op that they go for. They went for
the photo op of, you know, in their white coats, talking.

Once they realized that people were upset about children being turned
away from NIH, well, then they were all about, we should be reopening NIH.
But they don`t give a rat`s you know what about kids being kicked out of
Head Start. You can`t be pitting groups of Americans against each other.
That`s exactly what they`re doing with this.

MATTHEWS: Unless you`re on the far right. Anyway, King`s protest
wasn`t without a hitch. A protester muddled his message a little bit.
Let`s watch.

(BEGIN VIDEO CLIP)

PROTESTER: The real patriots are the veterans who came down here.
Put your tail between your legs, go back up on the Hill, and do your work!

(END VIDEO CLIP)

MATTHEWS: Wow. Well, that`s going on air. The trouble with going
out and becoming a street protester, Richard, is you have to put up with
other street protesters.

WOLFFE: Right.

MATTHEWS: You just become -- you don`t have the usual big shot
protection anymore, that congressmen like.

WOLFFE: You get what you deserve. And, look, the congressman should
run the department of making stuff up, because he was making assertions
that -- never mind about shutting down the government. He`s making
assertions based on what he believes. This order came directly from the
Oval Office. I guess he has nothing to base that -- and he offers up no
evidence.

There`s nothing the president has ever done to disrespect veterans,
you know, not like not funding a G.I. bill or anything like that.

MATTHEWS: Hasn`t -- hasn`t the president`s wife, who`s probably had a
lot more influence on him, more than some of these congressmen, spent her
entire first ladyship looking out for the families of service people.

FINNEY: Yes.

MATTHEWS: Anyway, thank you, Karen Finney.

Thank you, Richard Wolffe.

WOLFFE: Thank you.

MATTHEWS: We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this:

I`m up in Boston tonight, where in a few minutes, I`ll be addressing
the Cambridge Public Library on my new book "Tip and The Gipper: When
Politics Worked."

Tomorrow morning, I`m speaking to the Boston Chamber of Commerce.

Tomorrow night, a book party hosted by Speaker O`Neill`s oldest son,
the former two-term governor of Massachusetts -- lieutenant governor of
Massachusetts, that`s right, right after the playoff game, hosted by the
Sox against Tampa Bay.

I`ve got to tell you, it`s a joy to be in my former boss, Tip
O`Neill`s hometown, telling the grand story of how he and President Ronald
Reagan were able to champion their own causes and yet find ways to deal
good for America, to make good deals. We need some of that "we`re in this
together" spirit today, don`t you think?

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

"ALL IN WITH CHRIS HAYES" 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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