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updated 10/17/2013 12:35:04 PM ET 2013-10-17T16:35:04


HARDBALL
October 16, 2013

Guest: Sen. Amy Klobuchar, Susan Milligan, Neera Tanden, Steve Rattner>

CHRIS MATTHEWS, MSNBC HOST: Unacceptable.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews up in New York.

"Let Me Start" tonight with this. If it were just a supreme waste of time,
which this government shutdown and default threat was, it would be
disgusting enough. But look at the world out there. Look at the way this
beloved country of ours has been seen all these days of turmoil and
uncertainty and loss of faith.

Did the world look up to us? Did it? Does it now that it appears we`ve
avoided a colossal defeat? We have just witnessed an historic disservice.
Our political system has sustained what threatens to be an enduring injury
at the hands of what we`re constantly told, as if it were somehow
mitigating, is a minority of Republican members in one house of Congress in
a country supposedly co-governed by a Democratic Senate, and of course, a
Democratic president.

But isn`t that worse? Isn`t it worse that a majority of those who`ve taken
the oath to defend the country and its Constitution have been driven to the
very edge of the cliff in a clown car, that they`ve allowed their loyalty
to the country to be diverted by a group of self-styled "wacko-birds" who
owe their loyalty -- if "loyalty" is worthy of that word (ph) -- to the
loudest, angriest, most threatening mouth at the next town hall.

Or is this the end of the nightmare? By allowing these clowns to promenade
upon the national stage all these days, we have whetted their appetite for
more. They will harangue us from now to December 13th over the budget
talks, denying the need for revenues to balance out their push for budget
cuts.

They will threaten us until January 15th, Martin Luther King Day, with the
same torrent of demands that shut our government down until now. They will
pound us again with the specter of default come February 7th.

Only a fool would cheer at what happened today, relax at how this ended,
because it hasn`t.

I`m joined by the Huffington Post`s Howard Fineman and Washington bureau
chief for "Mother Jones" David Corn.

Howard, I don`t see any reason for applause or hot-dogging or dancing in
the end zone tonight. I see nothing more than this crowd has seen what it
could do, a small group of right-wingers led by Ted Cruz has basically
taken over our national attention, ground the government to a halt and
taken us to the edge of national, fiscal and economic embarrassment.

How can you say they lost? Your thoughts, Howard.

HOWARD FINEMAN, HUFFINGTON POST MEDIA GROUP, MSNBC POLITICAL ANALYST:
Well, Chris, I spent the day on the Hill, and I can describe the mood there
as a kind of grim exhaustion. And it took the entire collective will of
the Congress and the White House, for that matter, to stop one man, and
that one man was Ted Cruz.

And Ted Cruz came out into the hall outside the Senate after the deal on
the Senate side had been announced, and far from seeming cowed, far from
seeming defeated, he seemed empowered. And within the ranks -- perhaps
dwindling, but within the ranks of the Tea Party, he`s a new hero. He may
be the emperor of a dwindling kingdom, but he`s the emperor. And he is
going to be out there, as you say, taking it to the grass roots from now
until after the new year.

MATTHEWS: Just staying with you, Howard -- I saw you in that picture of
him. Does he still have the power to ignite government terrorism,
basically the bringing down of the government? Can he terrorize members of
Congress and say, All I have to do is point my finger at you and threaten
you with a primary opponent, and you`ll do what I tell you to do?

FINEMAN: No, I think not. My sense was -- and I know he`s going to be out
there for the next couple months, and I agree with you that we`re going to
be facing perhaps similar scenarios in January and February, but I got a
sense that the Senate as a whole is going to surround Ted Cruz, and they`re
going to say, Either you play ball to some extent, or we`re all going to
come after you.

That`s sort of what happened now. He`s got an enemy in Mitch McConnell.
Mitch McConnell, as we keep saying here on the show, has a Tea Party
primary opponent down in Kentucky. Mitch McConnell had enough of Ted Cruz.
And Mitch McConnell`s a pretty smart guy, and if he decides he wants to
make life miserable for Ted Cruz, he can.

But on the other hand, Ted Cruz isn`t there to legislate. He`s not there
to be a member of the club.

MATTHEWS: I know.

FINEMAN: He -- he gets his power from his sainthood -- you know, from his
martyrdom.

MATTHEWS: Gotcha.

FINEMAN: And to that extent -- and to that extent, he was a martyr in
front of those microphones I was at with him today.

MATTHEWS: So well said. David, I tell you, almost every demagogue has
used righteous indignation as their -- as their standard plea -- I`ve been
screwed here, I`ve been unfairly treated, I had a good cause and they let
me down, they weren`t strong like I am -- righteous indignation.

He`s good at it. He`s got that kind of hurt, evangelical look in his face.

DAVID CORN, "MOTHER JONES," MSNBC POLITICAL ANALYST: Well, that`s what he
-- his argument today. He said, you know, We could have won this fight if
it hadn`t been for all those wimps --

MATTHEWS: Yes.

CORN: -- in the Senate, you know, that the House, you know, stood
strong. And so, you know, as Howard said, he is unbowed here.

You know, the good news is, is that for everybody else other than Ted Cruz,
every other Republican who went along, was pushed along, there is no reward
for this carjacking. There is only pain.

At the end of the day, the Republican brand is at an all-time low. The
internal tensions, the civil war within the Republican Party has not been
resolved. I think it`s been exacerbated and will continue as we get to
these other deadlines and into the 2016 presidential race.

And the most prominent leader in the land, the leader -- really sort of the
de facto leader of the party, though not so much these days, John Boehner,
has been proven to be politically impotent.

MATTHEWS: Yes.

CORN: So you put that all together, and the whole Republican establishment
and even part of the Tea Partiers, like, you know, Rand Paul and others, or
Mitch McConnell, who`s trying to make nice to the Tea Party in Kentucky --
they all realize this went -- this went astray.

MATTHEWS: Yes.

CORN: And so, you know, the interesting thing will be after, you know,
this settles, whether John Boehner is able to look at these 40 or 50
firebrands again and say, You know what, guys? We`re not doing this again.
We`re not going to do this in January.

MATTHEWS: I want that tape.

(CROSSTALK)

CORN: -- and get together with Mitch McConnell and find a way --

MATTHEWS: I want that tape!

(LAUGHTER)

CORN: -- around this.

MATTHEWS: We`ll loop it. We`ll play it over and over again if he actually
does it.

CORN: He has yet to hammer them. At the end of the day today, I think it
was all exhaustion. You know, Boehner still is going to have to stare
these guys down and say, No more.

FINEMAN: He`s not going to do it. He`s not going to -- he`s not going to
do it, Chris. He`s --

MATTHEWS: Just think about what we`ve done here, guys. What we`ve agreed
to do is not bring down the government. Oh, that`s an exciting
accomplishment for three or four weeks.

Anyway, as I mentioned, Senate Majority Leader Harry Reid and Minority
Leader Mitch McConnell announced a deal today to reopen the government
through February -- actually, January 15th. That`s all. And raise the
debt limit through February 7th. That`s all.

Before either of these deadlines hits, a House-Senate conference committee
would be required to try to hammer out a long-term budget plan deal by
December 13th of this year. At least that`s the deal.

There was no -- I repeat, no -- significant changes to the Affordable Care
Act as part of all this.

In a radio interview late today, House Speaker John Boehner said he has
agreed to bring the bill to the floor, even though Republican support of
the legislation will be far from unified.

(BEGIN AUDIO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: (INAUDIBLE) we`ve been
locked in a fight over here, trying to -- trying to bring government down
to size, trying to do our best to stop "Obama care." We fought the good
fight. We just didn`t win.

(END AUDIO CLIP)

MATTHEWS: And earlier today, Ted Cruz vowed not to hold up the Senate
vote. Cruz identified -- actually, justified his decision in typical Cruz
fashion by claiming victory, and of course, as always, bashing his
colleagues.

(BEGIN VIDEO CLIP)

SEN. TED CRUZ (R), TEXAS: There`s nothing to be gained from delaying this
vote one day or two days. The outcome will be the same. Every senator,
every member of the House is going to have to make a decision where he or
she stands. But there`s no benefit -- I`ve never had any intention of
delaying the timing of this vote. I would point out that had Senate
Republicans united and supported House Republicans, the outcome of this, I
believe, would have been very, very different.

(END VIDEO CLIP)

MATTHEWS: Let me go back to Howard on this. It seems to me what he`s
calling for is a unified right-wing Republican Party. In other words,
forget the center, forget the center-right. Stop being regular
Republicans. I want the entire Republican Party on Capitol Hill to be
right-wingers like me.

That`s the call to arms right there. You just heard it.

FINEMAN: Yes, that is. And he`s going to take the vote in the House
that`ll be coming up later, which I think will pass substantially with
Democratic votes --

MATTHEWS: Yes.

FINEMAN: -- not Republican votes -- he`ll take that as a symbol of the
corruption and the weakness --

MATTHEWS: That`s the knife in the back, too.

FINEMAN: -- of the existing Republican --

MATTHEWS: Is that a knife in the back charge against Boehner, that he let
them do that? Will he go that far?

FINEMAN: Sure.

CORN: Yes.

FINEMAN: Yes. Yes. He`ll say that kind of thing, if not publicly,
privately. And the fact -- and the fact is that Boehner has done this
before. Boehner`s been forced to do this before, which is to put up a bill
that essentially passes with more Democratic votes than Republican.

Ted Cruz, as I say, is not there to legislate. He`s there to build a grass
roots movement. The Congress of the United States is merely the backdrop
for what he`s after. The more he`s criticized, the more he`s ostracized,
the more he`s surrounded, the better it is from his point of view.

CORN: But also, remember, the grass roots groups that sort of drove this
"defund Obama care" crusade, even before Ted Cruz grabbed ahold of it, they
came out this afternoon, and they said, We want people to vote no on this.
So Heritage Action, Jim DeMint, FreedomWorks. So this whole grass roots
energy that Cruz is trying to exploit and to lead remains. It`s not going
away.

(CROSSTALK)

CORN: As John Boehner puts this on the floor, he is now defying and
turning against where the true energy in the party is.

FINEMAN: I know, but the thing is that nationally, the Tea Party`s numbers
are going down --

CORN: Yes.

FINEMAN: -- as fast as the Republicans` are going down. That`s why I
say Cruz is the emperor of a dwindling kingdom right here. Yes, he`s got
Heritage Action and he`s got some of these other groups, but it isn`t clear
to me, however much they were able to hold up action here uselessly for a
couple weeks here in Washington -- how much that`s going to translate to
any kind of national mainstream popularity. If you want to talk about --

CORN: It won`t. It won`t.

FINEMAN: If you want to talk about the Iowa caucuses in 2016, maybe. But
the country as a whole, I doubt it.

(CROSSTALK)

MATTHEWS: Well, being the alligator in the river is a big deal if you`re
the only alligator.

(LAUGHTER)

CORN: Yes!

MATTHEWS: Anyway, Mitch McConnell may have been the only adult in the room
for Republicans (INAUDIBLE) Senate floor today, he had a clear message for
his fellow Republicans -- It`s time to move on. Here he is.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: Throughout this debate, the
public has rightly focused on "Obama care," for good reason.

The refusal to delay it reflects a kind of stubborn ideological obsession
that will do untold damage to our country. And Republicans remain
determined to repeal this terrible law.

But for today -- for today -- the relief we hope for is to reopen the
government, avoid default and protect the historic cuts we achieved under
the Budget Control Act. This is far less than many of us had hoped for,
frankly, but it`s far better than what some had sought.

(END VIDEO CLIP)

MATTHEWS: David, let me be brutal here in suggesting that Mitch McConnell
-- obviously, a smart guy -- John Boehner, a somewhat -- well, you have to
empathize, I guess, with on him on a level. He always looks like he`s in
distress.

These two gentlemen knew all these weeks that they had the chance to pull
the plug, as they did this morning. They knew they could do it. That was
their outlet pass. They could always do it.

And yet all those weeks when they knew they could do it, they threatened
this country with downfall economically. I think that`s a problem because
if they had just told the country, You know, in the end, we`re going to cut
a deal, we can talk, talk, talk, but in the end, we`re not really
threatening the country. I promise you now we`re going to come together
and we`re going to have a deal and it`s going to basically put all this
stuff aside.

No, they played the game. They played like they were really going to try
to threaten the government with shutdown -- we did that -- but the
government with economic failure. What do you think of that, that they
knew what they were going to do today all along?

CORN: Well, in the meantime, you know, millions of Americans did suffer.
Kids were thrown out of Head Start. People were denied cancer treatment,
all the things we`ve talked about the last two weeks.

MATTHEWS: Right.

CORN: I mean, Mitch McConnell for two weeks here basically hid, took a
powder. As Howard mentioned, he`s up against the Tea Party candidate in
the Republican primary next year, and it could be a competitive race.

But and at the end of the day, I think he made a calculation that, Hey, I`m
not -- you know, If I`m the one guy, if I`m the catcher in the rye,
stopping people from running off the cliff, I got to step up and do this.
And maybe he can be the guy who tells the Tea Party, OK, enough already.
I`ll take you on while still calling for the repeal of "Obama care."

It was, you know, in some ways a calculated, maybe semi-gutsy decision.
But you`re right, at the end of the day, they ended up where a lot of
people, where all the smart money -- the conventional wisdom was right that
this would not work out. They`d have to retreat at some point.

MATTHEWS: Yes.

CORN: And so Boehner takes more of a hit, obviously, because he looks
perilous (ph), not able to do anything. McConnell, at least in Washington,
I don`t know how it`s going to play in Kentucky, looks like a guy who stood
up at the very end to prevent his party from taking the rest of us over the
cliff.

MATTHEWS: This is the kind of behavior the governments engage in before
military coups, or some other way, because people say, I`m tired of these
BS-ing politicians who play games. It seems like they`ve figured it out
ahead of time between them how they`re going to do it, and we suffer.

FINEMAN: Well, Chris, I --

MATTHEWS: This is how democracy fails. This is what it looks like.

FINEMAN: I agree with -- I wrote about McConnell today, you know,because I
started in Kentucky. I keep an eye on all that. I think McConnell`s
calculation is that the Republican brand has been damaged.

MATTHEWS: I think he --

(CROSSTALK)

CORN: He may have a substantial Democratic challenger in the state, too.
Now he`s more worried about his left than his right. And you`re right, he
doesn`t deserve high marks for statesmanship, if only because, as you say,
he could have done this weeks ago. Instead, he let it play out.

I asked Darrell Issa, the firebrand from the House, today, I said, What did
you guys get? Did you guys get -- did you get anything out of this?

MATTHEWS: Yes. OK --

CORN: And he said -- and he said no. The simple answer is no.

MATTHEWS: OK, why did Nixon keep us in Vietnam for four years when he
could have made the deal that he made in `72 and `73 back in `69? Because
he wanted to get reelected. Self-interest is what people think of
politicians. That`s what they`re about, and that`s why they really have
come to hate many of them.

Thank you, Howard Fineman. And thank you, David Corn.

We`ll be right back with much more after this.

This is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Conservatives in the House of Representatives are backing up
House Speaker John Boehner for now, saying that there`s no talk right now
of dumping the guy.

(BEGIN VIDEO CLIP)

REP. RAUL LABRADOR (R), IDAHO: I`ve actually been really proud of Speaker
Boehner the last two-and-a-half weeks. I don`t think that he should be
ashamed of anything that he has done. So if anybody should be kicked out,
it`s probably those Republicans, and not Speaker Boehner, who are unwilling
to keep the promises that they made to the American people.

UNIDENTIFIED MALE: Absolutely no talk of anything along those lines. No
talk at all.

(END VIDEO CLIP)

MATTHEWS: We`ll see how many of those House Republicans vote with Boehner
tonight.

HARDBALL back after this.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. This entire debacle of shutting down
the U.S. government and risking default on the national debt came down to a
gamble that, ultimately, President Obama would cave.

Well, back in mid-September, U.S. congressman Marlin Stutzman told "The
Hill" newspaper, quote, "I think the president`s too weak to shut the
government down. I think we will win."

His colleague, Steve King, said, quote, "Syria has hurt him significantly.
It is a factor in the CR going forward. It is a factor in the debt
ceiling."

And Ted Cruz rallied Republicans, in his words, not to blink.

(BEGIN VIDEO CLIP)

CRUZ: What happens next is President Obama and Harry Reid are going to
scream and yell, Those mean, nasty Republicans are threatening to shut down
the federal government!

(LAUGHTER)

CRUZ: What has to happen after that is we`ve got to do something that
conservatives haven`t done in a long time. We`ve got to stand up and win
the argument!

(CHEERS AND APPLAUSE)

CRUZ: If you have an impasse, you want (ph) to know (ph) one side or the
other has to blink. How do we win this fight? Don`t blink!

(END VIDEO CLIP)

MATTHEWS: Well, the gamble failed, of course, and as Republicans limped to
the finish line with historically low approval ratings and a caucus in
disarray, we are seeing just how badly they underestimated their opponent,
President Obama.

Senator Amy Klobuchar is a Democrat from Minnesota. She took part in
negotiations with Republicans to work out the deal.

Senator, here`s the thing that I never liked about the Republican approach.
It`s one thing to argue -- if you say -- I say 7, you say 9, let`s figure
it out, let`s make it 8. That`s how negotiations usually work.

In this case, they went to the president, said, We know your historic
accomplishment. You know how proud the country, the Democrats and you
personally are of health care. Democrats and some Republicans have worked
for it for a century, practically. Give me back. Give me that back as
part of the debt ceiling.

I think that was an outrageous personal assault on the man, the country and
his party and the achievement of this country, the last (ph) presidency.
And to ask for that, just, Give me that, was never a negotiation. It was a
personal insult to the president.

SEN. AMY KLOBUCHAR (D), MINNESOTA: Well, I think what the president did
here was to say, I`m going to govern. And yes, we need checks and
balances. And he, in fact, met with Republican senators all through the
summer on the budget and has clearly showed, at the end of last year in his
negotiations with Speaker Boehner, that he wants to do something long term
on the budget to bring the debt down, but it has to be a balanced approach.

But this time, as you point out, Chris, this was all about partisanship.
It was partisan poison pills, whether it was delaying the Affordable Care
Act just as it was about to be launched or whether it was putting on things
on about birth control on a budget. I mean, that just was the wrong
approach.

And I think what is most significant here is, the American people saw it,
as you point out. And, also, you have independents. We have a situation
where Karl Rove commissioned a poll; 58 percent of independents said they
didn`t think we should shut down the government over the Affordable Care
Act.

So I think this was the president standing up and saying, we have got to
move forward. And then also, the most significant thing here is because of
how extreme they were, how extreme Ted Cruz was, moderate Republicans
finally stood up and found their voice, whether it was people willing to go
on TV and talk about it, or whether it was a group that came together that
I was a part of 14, seven Democrats, seven Republicans, who were willing to
stand up to it and say, let`s find something here to get us through the
short-term and set the stage for a much more reasonable budget negotiation.

MATTHEWS: What is the future of Ted Cruz?

KLOBUCHAR: I don`t know. That is up to his supporters and what happens.
He is one senator from the state of Texas.

But, you know, I think a lot of his supporters think it`s very cool. He
just stands up and gives a speech by himself in the Senate for 24 hours. I
think what is good is people who are willing to stand next to people they
don`t always agree with for the betterment of this country.

That was a victory. And it`s not a big victory because we`re just getting
through to negotiate the next big thing. But at least we stood up to that
kind of extremism, and the president clearly led the way.

MATTHEWS: Do you think the president`s out of the woods in terms of this
happening again if the budget talks don`t work in December, by the 13th of
December, if you don`t get something done by the government closing? The
next deadline is in December and January.

And then you have another budget ceiling coming up or debt ceiling coming
up in January, in February. It just seems to me that these are all
opportunities, like a steeplechase. Right? At any one of those chases,
times in the race, they can use it again, slam that door again and do this
all over again.

KLOBUCHAR: Well, Chris, I think this has been brewing for a long time.
It`s been under the surface, and now it blew up. I think that almost had
to happen, none of us wanted it to happen, in order to stand up and say
we`re not going to let you keep doing this. Maybe they will try again.

But when you look at those polls, you look at the numbers, what the
American people thought, I think that makes a difference. And you also
have with January 15 where over $20 billion more of these sequestration
cuts take place on cancer research, Alzheimer`s research, military, you
have a group of moderate Republicans that really don`t want that to happen
that will join forces and say let`s bring our debt down. Let`s continue to
do it, but let`s do it in a balanced way. And that will be the real test.


MATTHEWS: OK. Explain this to me.

The president -- you don`t have to make a criticism of the president. He
certainly doesn`t deserve criticism today of all days. But he`s been hit
over the years -- I have been one of those -- saying he doesn`t really
spend enough time lobbying the Congress, working with them, working them,
members personally, using personal influence and relationships.

And yet, I have never seen such unity. Nancy Pelosi on the House side and
Harry Reid in the Senate side, the party has been incredibly united. Why?
What`s made it work so well as a unit this time?

KLOBUCHAR: Well, I think, first of all, I can speak more to the Senate,
but we`re a big tent. We have people as conservative Democrats like Joe
Manchin and my friend Senator Donnelly. And then we have people like
Bernie Sanders.

And we have all worked together to say this is so extreme to talk about
taking the health care away from $25,000-a-year staff members who are
working on helping kids get adopted. This is so extreme to say let`s mess
around with birth control while the government is shut down.

And I think it really united people in a way that we hadn`t seen. And then
finally, we have the fact that the president, since his last election, did
say, you know, I have got some work to do in working with Congress. And I
think he has reached out. He`s really made an attempt to work with
Republicans as well, to try to work on a budget.

So far, have we seen the fruits of the that? Not quite. But we might have
seen the beginning with the bipartisan group that we got together in the
Senate.

MATTHEWS: Well, I think you deserve some congratulation on your side of
the aisle. Thank you so much, Senator Amy Klobuchar of Minnesota.

KLOBUCHAR: Thank you very much.

MATTHEWS: Joining me right now is David Axelrod, former senior adviser to
President Obama and an MSNBC senior political analyst.

You have got the keen eye. And you know what`s going on now. What is this
going to do in terms of the president`s prestige? What`s it going to do in
terms of his track record? A lot of these guys on the weenie right that
weren`t exactly the impressive people out there taking their spitballs at
the president, shooting them at him, have been saying he doesn`t have the
guts to stand up to us on this thing.

He did. He didn`t blink. I hate that word, blink, because even the Cuban
Missile Crisis required a blinked on both sides called Turkish missiles
which everybody knew was the reason we got through that thing. I`m glad
Kennedy blinked under the table, or else we would have had nuclear war,
which I think only Ted Cruz might even think about.

(LAUGHTER)

MATTHEWS: But, anyway, what do you make of this in terms of -- if you were
like the -- you were watching the president`s history -- and you have been
a big part of helping him with his story -- where`s he stand now in terms
of prestige and power?

DAVID AXELROD, MSNBC POLITICAL ANALYST: Well, look, I think it`s -- you
know, they did test him. He was very -- as you said, he didn`t blink.

He was resolute. And he was resolute, Chris, not because of himself, but
because there was a principle here that was very large, which is if you
yielded on this point, then why not three months from now, six months from
now, why not in future presidencies? And both parties would see this as a
legitimate tool of negotiation or of extortion, really.

MATTHEWS: Yes.

AXELROD: He felt very, very strongly about this. So this was bigger even
than the issue of the health care law. It was bigger than the issue of his
particular standing.

The question now is what happens after. I wouldn`t, and I don`t think he
will, and I think the White House signaled that -- this is not a time for
spiking the ball in the end zone, because all it did was open the
possibility that in the next few months that there can be some rational
budget discussions that will yield some solution.

In answer to the question you asked Senator Klobuchar, though, I do think
that everybody has stared over the abyss and they don`t like what they see.
In fact, Standard & Poor`s, Chris, said today that this shutdown was a $24
billion hit to the economy, would reduce the GDP for this quarter by six-
tenths of a point, which is a pretty big number.

And so everybody understands now this is not a game. It`s not about
positioning. It`s not about poll numbers. Ultimately, there are real-life
consequences to this. The American people are the ones who bear them. I
don`t think people want to go back to this again. So can you take
advantage of this moment and make some progress?

MATTHEWS: Let me ask you. When you put your head on the pillow at night
and you were thinking in the last three days or so, what do you think the
president would have done if they had jammed him on this and said, look,
we`re taking your baby away, we`re killing health care, we`re going to find
a way to defund it some way, really rip some of its legs off?

Would he have said I`m not going to deal with you on that basis? We`re
just going to have to go to default? What would he have done if he was
forced between a dismemberment of his main achievement and default? What
would he have done?

AXELROD: Well, I think that obviously he was studying all the options that
he had.

(CROSSTALK)

AXELROD: I don`t know -- I don`t know -- I don`t know what he -- I don`t
know what he would have done in specific.

I think that he -- as I said, he was resolute about this, though. And at
any time, if you didn`t -- if you were willing to yield at any time and
sort of pay ransom, then you`re really opening the door to a recurrence of
this again and again and again. He was very aware of that.

So, it was I`m sure -- I know it was a tense -- it was a tense prospect.
On the other hand, you know, one of his great I think virtues is that he
does think long. And he was thinking about the long-term implications of
this. And I think he did the right thing by hanging tough on it. Again,
now the question is what happens moving forward.

And my sense is what he`s thinking about is, can we take advantage of this
window here? For the first time, Chris, they have -- in five months, the
Republicans in the House have agreed to appoint conferees to discuss the
budget. So that`s progress right there.

(CROSSTALK)

MATTHEWS: Finally. Ted Cruz hasn`t stopped that one.

By the way, quick yes or no, do you wish you were back in the huddle last
week?

(LAUGHTER)

AXELROD: The truth is that I didn`t, because it looked like a lot of
sleepless nights and a lot of -- I spoke to my colleagues frequently, and
none of them sounded like they were having a great time, I must say.

MATTHEWS: Well, these are the burdens of life, anyway, and the burdens of
office.

Thank you so much, David Axelrod.

AXELROD: Yes. Good to be with you.

MATTHEWS: Up next, sing along with Ted Cruz, the wrecking ball of
Washington. This is pretty wild, not funny times, but we can make fun of
some of this stuff.

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP, "CONAN")

CONAN O`BRIEN, HOST, "CONAN": Yesterday, President Obama helped make
sandwiches at a soup kitchen for the homeless.

(APPLAUSE)

O`BRIEN: And, by homeless, I mean people who work for the federal
government.

(LAUGHTER)

O`BRIEN: The White House rejected a plan from House Republicans. Yes,
House Republicans sent up a plan, and they rejected it. Apparently, the
Republicans offered to end the government shutdown if the Democrats would
just go back in time and lose the 2008 presidential election.

(LAUGHTER)

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: Time now for the "Sideshow."

That was of course Conan O`Brien on the ridiculous demands coming from the
GOP over the last two weeks.

And while the brinkmanship on the Beltway is no laughing matter, David
Letterman took the debt limit fight to an absurd new level on "The Late
Show" last night.

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

DAVID LETTERMAN, HOST, "LATE SHOW WITH DAVID LETTERMAN": How do you do?
I`m Dave.

UNIDENTIFIED MALE: Hi, Dave.

LETTERMAN: Nice to see you. Welcome to the show.

UNIDENTIFIED MALE: I`m from the Congressional Budget Office.

LETTERMAN: I`m sorry. You`re from the Congressional Budget Office?

UNIDENTIFIED MALE: Yes, sir.

LETTERMAN: Oh, my goodness. Is everything OK?

UNIDENTIFIED MALE: I have got bad news, Dave.

LETTERMAN: Oh, no.

UNIDENTIFIED MALE: We can`t raise the debt ceiling.

LETTERMAN: Oh, my God, that is -- that is --

(CROSSTALK)

UNIDENTIFIED MALE: The good news is --

LETTERMAN: Good news?

UNIDENTIFIED MALE: -- we can raise the roof.

Hit it, Paul!

LETTERMAN: What?

UNIDENTIFIED MALE: Raise the roof. Raise the roof. Everybody, raise the
roof.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: Well, that happened. And if it wasn`t far out enough, just take
a look at this new Ted Cruz-inspired mash-up of Miley Cyrus` video
"Wrecking Ball." It`s beyond creepy.

(BEGIN VIDEO CLIP)

(MUSIC)

(END VIDEO CLIP)

MATTHEWS: Occasionally, this job asks too much.

Anyway, up next: Ted Cruz says he`s not giving up. My question is, is it
time for Republicans to give him up?

You`re watching HARDBALL, the place for politics.

(COMMERCIAL BREAK)

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

The United States Senate is right now voting to invoke cloture on a measure
that would end the government shutdown and would the default on the
national debt. It is the first of two votes in the Senate tonight. The
second one is a vote on final passage, and it is expected to pass. The
House of Representatives will take it up later tonight. We`re also
expecting the Senate`s Democratic leadership to hold a news conference once
that final vote in the Senate is complete. And we will of course bring
that to you when it happens.

Let`s now get you back to Chris Matthews and HARDBALL.

MATTHEWS: Welcome back to HARDBALL.

Does anyone want to be identified with the Republican Party these days?
Well, nearly a year after Republicans lost a second presidential election
to Barack Obama and lost even more seats in the U.S. Senate, has the
Republican Party improved its image and shortcomings among voters? No.

Is it in a stronger position to win elections than it was a year ago? No.
And the man responsible for the GOP becoming so self-destructive, going
down that path, Ted Cruz, couldn`t care less about the health and direction
of his own party and the damage he has caused it.

Don`t take my word for it. Just listen to one Republican candidate last
night.

(BEGIN VIDEO CLIP)

JOE LHOTA (R), NEW YORK CITY MAYORAL CANDIDATE: Where I don`t agree with
the national Republican Party is long and hard.

I am pro-choice. They are not. I am pro-gay rights, as well as marriage
equality. They are not. I have been outspoken about these issues other
and over again. Do not lump me with the national Republicans. It`s
unbecoming, Bill.

(END VIDEO CLIP)

MATTHEWS: "It`s unbecoming." That was Republican candidate for New York
mayor, Joe Lhota, not just running, but sprinting away from being
identified with the national Republican Party.

You heard him. It`s unbecoming to call a man a Republican, he said.

Well, Republicans have blindly followed Cruz, their supreme commander, as
he sends them out on a kamikaze mission. He`s become the folk hero of the
far right, laying the foundation for his own presidential run, as his
party, humiliated in this bruising defeat, burns.

Joining me right now is "The Washington Post"`s Jonathan Capehart, and
contributing editor "U.S. News & World Report" Susan Milligan.

Susan, I want to hear your fresh thoughts on this, which is, why would you
ride or chase after this pied piper, when it`s clear he was making a demand
to the president that the president could never meet, ever, and still be
able to be president, knowing he would face defeat, knowing it would follow
weeks and weeks of government shutdown, and right on the edge of a possible
national economic humiliation? He knew it would end this way. It had to.
Or is he dumb? What`s going on here?

(LAUGHTER)

SUSAN MILLIGAN, "U.S. NEWS & WORLD REPORT": I don`t think he`s dumb.

I mean, I think he`s smart, or he`s book-smart. I don`t think that he
really quite understood the politics of -- of the situation. I think he
vastly underestimated the president`s resolve on this.

I`ve been watching the president`s face on this. It was like in that
second debate with Romney, when Romney was kind of digging himself in and
saying that Obama had never used the word terrorism with Benghazi. And
Obama just kind of went like this and said, please go one, Governor, and he
had that face during this entire thing with the shutdown. He knew he was
going to win this.

So, now, you have Cruz who I think is just listening to his own echo
chamber of Tea Party people and so convinced that he`s right and so
convinced that all of America is behind him. He`s not only damaged any
chance that he has to run for president, but he`s done damage to the party
nationally. He`s damaged the chances that they have to take the Senate
back for a third election cycle in a row. They had a good chance of taking
the Senate back, and now, that doesn`t look so bad.

And I think he`s also damaged Speaker Boehner in all this, and weakened
Speaker Boehner even with his own party. So, it will be interesting to see
how much more they distance themselves.

MATTHEWS: What a perfect villain.

Anyway, Cruz stepped off the Senate floor earlier today to speak to
reporters as he took a parting shot for now at least to the Affordable Care
Act. That`s all he`s going after. Let`s listen to this guy.

(BEGIN VIDEO CLIP)

SEN. TED CRUZ (R), TEXAS: My focus is, I think, where the American
people`s focus is, which is what are we doing to provide real relief to the
people who are hurting because of Obamacare. And, unfortunately, today,
the United States Senate and the Washington establishment is doing nothing
to provide relief for the million of people who are hurting because of
Obamacare.

(END VIDEO CLIP)

MATTHEWS: You know, Jonathan, there is so much of acumen in the movie
"Advise and Consent", so much of Joe McCarthy, in the way he points the
fingers, threatens people, goes after Hagel, accused him of taking money
from the North Koreans, and now he goes around in that sort of -- what`s
the right word -- crusade.

Now, these things, historically don`t last long. Demagogues don`t last
long in the United States Senate. Four years for McCarthy, that was a long
run. How long is this roman candle of a demagogue going to burn, do you
think? Your thoughts, Jonathan?

JONATHAN CAPEHART, THE WASHINGTON POST: Well, you know, if you look at
"The Houston Chronicles" editorial this morning, I mean, they were the ones
who endorsed Ted Cruz in his election primary last year and they took it
back. They said that they regretted making the move.

If he keeps going the way he`s going, losing support back -- and losing
support back home, there`s no way he can win reelection. But in that clip
that you showed when he talks about listening to the American people and
the people who are being harmed, the people who support him most are the
people who really, really hate the Affordable Care Act, they really, really
hate Obamacare. So they supported him 100 percent what he was doing.

And Ted Cruz might not look at the polls, the "Washington Post"/ABC poll or
NBC News/"Wall Street Journal" poll showing that the Republican Party`s
support has tanked. But all he has to do is look at his fundraising and
see that his numbers are through the roof and, for him, that`s all that
seems to matter.

MATTHEWS: Well, to me, it`s not about belief. It`s fine to be a
conservative. It`s fine to be a liberal, even a bit far out, either
direction, a bit far out. It`s about tactics. It`s the way you attack
your fellow people, it`s the way you deal with reality and your country.

And at some point, you say, I have a decent respect of opinions of mankind.
At some point, I`d say, I have disrespect of this republic of ours to
continue doing its business.

Here`s "The Houston Chronicle" editorial you alluded to, Jonathan. "When
we endorsed Ted Cruz in last November`s general election, we did so with
many reservations and at least one specific recommendation, that he follow
Kay Bailey Hutcheson`s example and his conduct as a senator. Obviously, he
has not done so. Cruz has been part of the problem in specific situations
where Hutcheson would have been the solution."

Susan, that is the issue. It`s tactics. It`s meanness.

MILLIGAN: Yes.

MATTHEWS: It`s pointing the finger at your fellow Republicans. It`s
pointing your finger at the guy like Chuck Hagel. It`s just the nasty
tactics that he used, which are so riddled in Joe McCarthy, they just are.
And that`s why McCarthy was the villain. He was the odd guy out, if you
will, in the Republican Party, and they basically got rid of him.

MILLIGAN: But there`s a lot of people out there who kind of like that. I
mean, I think we`ve had this general corseting of our culture. People lost
the ability to distinguish between truth to power, and just being a
malcontent. It`s one thing to be a malcontent when you`re a voter, but you
can`t act that way when you`re a legislator and you`ve got to, you know,
work with other people and compromise with other people.

You had it right. He`s on a crusade. He`s on a mission. I really think
he doesn`t see or hear any other voices as he goes on this mission.

MATTHEWS: Yes, I`m not sure what he`s doing positively. He`s only doing
negative.

Anyway, thank you, Jonathan Capehart. And thank you, Susan Milligan.

Up next, the Republican fantasy of gutting the Affordable Care Act has been
an abject failure. So if Republicans learned their lesson? Or will they
go back at it in January, the next time the government shuts down?

And this is HARDBALL, the place for politics.

(COMMERCIAL BREAK)

MATTHEWS: Mitch McConnell`s Tea Party challenger in the Kentucky primary
is on the attack. Matt Bevin said this of McConnell and his role in
cutting a deal to raise the debt limit. Quote, "When the stakes are
highest, Mitch McConnell can always be counted on to sell out to
conservatives. McConnell just negotiated the GOP surrender to Harry Reid,
leading the charge to get President Obama a blank check and lifting the
debt ceiling, once again with any spending reforms."

Well, don`t count the Tea Party out in Kentucky. It`s the state that sent
Rand Paul for the Senate over McConnell`s establishment choice in 2010.

And we`ll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: Look at "The Wall Street Journal" poll.
"Wall Street Journal" is not a liberal organization. Look at "The Wall
Street Journal" poll this morning, 24 percent of the American people
approve of Republicans. That`s an all time low. You better wake up.

We`re in a serious situation right here. And we better wake up and we
better to try to come to an agreement, salvaging something out of this.

(END VIDEO CLIP)

MATTHEWS: Welcome back to HARDBALL.

That`s an exasperated Republican Senator John McCain imploring his party to
wake up. And these are the cold harsh poll numbers you mentioned, the GOP
at an all-time low in favor of favorability. As he said, 24 percent in the
NBC/"Wall Street Journal" poll. Their negatives are nearly 30 points
higher than their positives as a political party.

Republicans have, unquestionably, been the most bloodied in this fight.
Well, what, if anything, have they learned? They can either decide that
they failed because they overreached. Or the red hots might conclude that
they failed because they didn`t go far enough. That`s pretty scary.

Neera Tanden is president of the Center for American Progress. Steve
Rattner is a former economic adviser to President Obama.

Neera, reaching across the political spectrum from where you sit, what do
you think they will do after a defeat like this? Will they re-consider
their approach or will they try to put it -- make it even hotter the next
time when we have another fight over the government shutting down as near
as say, January, and certainly another debt ceiling fight as near as
February?

NEERA TANDEN, CENTER FOR AMERICAN PROGRESS: Well, I think the issue is
there is not only one day, there`s multiple forces within the Republican
Party. Obviously, we have the deal we have because moderate, mainstream
conservatives in the Senate, many of them women, like Susan Collins, Lisa
Murkowski, they really led an effort to do the business of governing, and
compromise with Democrats and do kind of the rational course here.

The big challenge is, what are the House Republicans going to do?

Now, in 1995, they saw they made a huge mistake and didn`t re-litigate
these issues again and again and again. They just tried to put it to the
side and move on. That would be the best course for them I think it
politically and I think it would be the best course obviously for the
country, because just the last few weeks has been horrible for our economic
growth. We have lost hundreds of thousands of jobs from the GOP shutdown.

MATTHEWS: Why do you think -- well, this is an anthropological question --
but why do you think the women, I agree with you, observing, it`s patently
obvious. Why do you think that women Republicans in the Senate, maybe not
all the moderates, were the best people trying to be collegial with the
other side, trying to find some way to broker this thing, effectively? Why
do you think that women are better at this, or seem to be now?

TANDEN: Well, the women on the Senate meet on a bipartisan basis. They
meet regularly at least once a month. They try to work on smaller
problems, they have bipartisan bills.

So I think they have that kind of new relationship that`s ongoing, which
allowed them to see that, you know, the Democrats and Republicans, they
aren`t enemies, they were people who were put there to govern. And so, I
think that`s why they were part of the solution.

MATTHEWS: Let`s talk about testosterone with Steve Rattner.

Steve, why do you think the men in the Republican Party so many are hard-
nosed, that`s a nice way to put it. But the fact they would take a lead
from Ted Cruz tells you there is something in the water over there, that
they are either afraid of the guy. They think he is hot. They think -- I
mean, hot politically -- they think something.

Why would they listen to a guy who is so clearly in that sort of outlier,
renegade format that McCarthy was -- Joe McCarthy followed and we see once
in a while in American politics. Not a leader type, a troublemaker.

STEVE RATTNER, FORMER U.S. TREASURY AUTO ADVISOR: Well, first of all, I
don`t know of I want to get into the discussion of men versus women. I
leave that to you two.

MATTHEWS: I didn`t bring it up.

(LAUGHTER

RATTNER: But the question, look, the question is why --

TANDEN: I just stated the facts.

RATTNER: The question is why did the 599 members of the Charge of the
Light Brigade follow their general into the massacre? These are
anthropological questions.

But I do think that this has been a teachable moment for the Republicans
and for the country, I think they learned that they cannot litigate
Obamacare, certainly through the debt ceiling and probably not even through
a government shutdown. I think they learned that the debt ceiling is
politically toxic, that Americans get the idea that America should not
default on its debt.

Whether they choose to use the shutdown again in January to achieve other
means, we`ll see. But I think they have learned a lot from this and I
don`t think you`ll see them trying this playbook again.

MATTHEWS: Neera, on the question, I agree with that analysis, I think
people know the debt ceiling is for real. It`s international. It
threatens our patriotism really.

But the government shutdown, you know, it caused pain. It hurt people.
But I think people looked into the eye, wait a minute, we`re going to pay
all of these people for not going to work? I mean, I think (INAUDIBLE) to
the point of wait a minute, we`re punishing them by telling them to stay
home, and chicken out, saying we`re going to pay them, of course. And then
you get to the realty of two, three, four weeks, that it begins to get
absurd, it`s not symbolic, it`s wasting workers and wasting time.

TANDEN: Absolutely.

MATTHEWS: The fiscal conservatives should bet concerned about that.

TANDEN: And I think who really broke the fever on this was "The Wall
Street Journal" story, "The Wall Street Journal" poll last week, which
showed a collapse in the GOP brand. And I think that was driven a lot by
the government shutdown, people didn`t understand what they were trying to
accomplish. You know, Obamacare has really nothing to do with, you know,
paying your bill and making sure that the government is operating. So,
people didn`t really understand what this was, other than what they hate
most about politics, which is you know, bitter, unending partisan
ideological fights.

MATTHEWS: I understand.

Steve Rattner, tell me about, you really know, that`s the fault line
between the ideologues and the grassroots level, people like Ted Cruz and
the money people, the people that have a real fiduciary authority for the
big business in this country, people Donohue of U.S. Chamber, even the Koch
brothers.

How about that division? Will that be important between the haters and the
wealthy?

RATTNER: Well, how about "The Wall Street Journal"? You had "The Wall
Street Journal", which is the bastion of Republican politics,
editorializing against these guys day to day. So, I think there is now a
very clear fault line between the business establishment Republican types,
and the Ted Cruz types. And of course, you saw Ted Cruz` own hometown
newspaper unendorsed him, which is something I have never seen.

MATTHEWS: It was the good hearted paper, I`m glad they did that. I used
to have my column run there.

Anyway, thank you, I have my heart in that place.

Anyway, thank you, Neera Tanden, reaching across the ideological spectrum
for some brilliant analysis and I mean. And women did play a role and that
was all over the papers. But thank you for bringing that back.

Steve Rattner, of course.

We`ll be right back after this.

(COMMERCIAL BREAK)

MATTHEWS: Let me finish tonight with this:

I`m up in New York tonight for a big party to mark the publication of "Tip
and The Gipper: When Politics Worked." Well, let me say, it sure doesn`t
work now. Anybody who thinks what happened to today is anything better
than the unusual, disappointing, 11-hour end to yet another government
shutdown, even worst to the most dangerous engagement with a real default
in our national credibility has either too short a memory or doesn`t care.

Thomas Jefferson said the people get the government they deserve. Do we
deserve this?

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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