'Hardball with Chris Matthews' for Thursday, November 17th, 2011

Guests: Rep. Barney Frank, Michael Feldman, Kathleen Kane, Ed Rollins, Ron
Reagan

CHRIS MATTHEWS, HOST: Casino Jack nails Newt.

Let`s play HARDBALL.

Good evening. I`m Chris Matthews in Philadelphia. Leading off
tonight: When Jack Abramoff calls someone corrupt, take note. It didn`t
take long for Newt Gingrich to get himself into another ethical mess. His
latest shoot himself in the foot moment, demonizing Democrats for helping
Fannie Mae and Freddie Mac at the same time that he was taking nearly $2
million from Freddie to advise it on winning over Republican conservatives
on Capitol Hill.

Barney Frank, who wrote the rules to regulate Wall Street, and whom
Gingrich sweetly said should go to jail, joins us tonight for a must-see
interview on Newt`s serial hypocrisy.

Plus, a distorting lie. Desperate to save his dying campaign, Rick
Perry, along with other Republicans, has reverted to a distortion so
obvious it should whack him like a boomerang. We`ll go to the videotape to
show you the distorting lie and what the president really said.

Also, bad news for Mitt Romney, who`s peddling the empty case that his
health care bill up in Massachusetts bears no resemblance to President
Obama`s. Well, the MIT professor who advised both Romney and the White
House says, quote, "The problem is, there is no way to say that because
they`re the same blanking bill." Jonathan Gruber says -- goes on to say
that Mitt, quote, "is just lying." And that may not be the worst, by the
way -- the worst news for Mitt Romney today.

And we now know more about Jerry Sandusky, his allegedly -- how
allegedly he chose his victims, as experts put it, groomed them for his
purposes. We`ve got the latest on that investigation.

And "Let Me Finish" with what appears to be the exasperation of both
of the country`s most alive political moments, the Tea Party and the Occupy
Wall Street movement.

We start with Newt Gingrich`s hypocrisy. One of Gingrich`s sharpest
critics has been Democratic congressman Barney Frank, who joins us now.

Congressman Frank, it just seems to me that this is getting more
crazy, this defense by Newt Gingrich, paid a couple of million of dollars
to, apparently, persuade conservative Republicans that Freddie Mac is a
great organization, members of Congress on Capitol Hill. He`s saying that
that is not lobbying.

REP. BARNEY FRANK (D), MASSACHUSETTS: Well, he`s just lying. It is,
of course, lobbying. And again, he slipped when he was defending the fee,
although he says he can`t remember how much, because he said, Well, after
all, I`m a former speaker of the House.

Well, that`s an important credential if you`re hiring a lobbyist. As
I understand it, it doesn`t get you tenure at the Yale history department.
Having been a former speaker has never been considered an academic
credential.

The fact is that what he`s -- this is really symptomatic of the
Republicans` effort to kind of blame us for their mistakes, which you see,
of course, with the effort to blame Obama for what he inherited from George
Bush.

Here`s the basic point. Fannie Mae and Freddie Mac went unregulated
for the 12 years during which the Republicans controlled the Congress.
They ran it from 1995 to 2006. Chris Dodd and I were in the minority. And
people who think I was secretly advising Tom Delay on what to do -- I got
to tell you, if I`d made a list of things I wanted -- well, first Newt
Gingrich, and then Tom Delay. I`ve said this before. If Tom Delay was
taking my advice during the period when I was in the minority, Bill Clinton
wouldn`t have been impeached, we wouldn`t have gone to war in Iraq, and he
wouldn`t have gone on the dance show.

(LAUGHTER)

FRANK: He didn`t accept my advice on any of those issues. Now,
Gingrich is clearly there when they are refusing to do any reform. Read
Hank Paulson`s book. Paulson says -- Bush`s secretary of the Treasury --
in 2006, when he became secretary, he talked to me. I was then in the
minority, but it looked like the Democrats might take over.

He said, accurately -- he said to me, Can we do something about Fannie
Mae and Freddie Mac if you guys are in the majority? I said, Yes, because
I had earlier thought they were OK. By 2004 and 2005, I realized I had
been wrong and I was too optimistic.

In 2007, when I first became the chairman, we passed the bill to
control Fannie Mae and Freddie Mac. And in fact, Senator Dodd and I got
the legislation through, and as a result of the legislation that was
ultimately signed in 2008, Fannie Mae and Freddie Mac were put in a
conservatorship and now are not losing any new money. They have old
losses.

So yes, during the period when Newt Gingrich was first the speaker and
then a Republican lobbyist, that`s when there were no regulations. And I
must say I was very impressed, though, with how well he was doing because
he said that he doesn`t remember how much money he got. Now, if you don`t
remember what a single client gave you when it was more than $1.5 million
five years ago, then things must have been pretty lucrative.

MATTHEWS: Yes. Well, here`s Gingrich today with a new theme for the
afternoon, arguing he never peddled his influence on behalf of Freddie Mac.
Let`s listen to the speaker, former speaker, as of late this afternoon.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R-GA), FMR. HOUSE SPEAKER, PRESIDENTIAL CANDIDATE: I
did no lobbying of any kind. I did no influence peddling of any kind. But
the truth is, if you have the reputation -- and I`m not going to use the
words because then they`ll distort them and take them (INAUDIBLE). If you
just take what people say about me in the debates and say to yourself, Gee,
is that a person somebody might have hired for advice? You know, I think
it`s hard to argue that they should have hired someone that was truly dumb.

(LAUGHTER)

GINGRICH: So I`m happy to tell you I have been a very successful
business -- I`m not as successful as Mitt.

(END VIDEO CLIP)

MATTHEWS: Well, he`s coming off there as Charles van Doren or
somebody, somebody you just hire because of their uniquely high IQ.

FRANK: Well, I would say this. He is clearly the highest paid
historian in American history.

(LAUGHTER)

FRANK: People complain if you go into the humanities, you don`t make
as much money, but this may do a lot for that career path. It`s just
nonsense! Advice about what? If it was advice about what kind of policies
to follow, he was very critical of those policies.

Again, I`m just struck by his ability to say things that clearly make
no sense. And he also -- I gather he said it was -- the money wasn`t paid
to him. That was his other...

MATTHEWS: Oh, yes, that dodge.

FRANK: It was paid to the Gingrich Group, not him. Frankly, I
thought the Gingrich Group were his wives. I thought that was what that...

MATTHEWS: Well, Congressman, you`re not aware of the new lingo, which
is coming from Romney, actually, Mitt Romney, which is, corporations are
people, too.

FRANK: That`s right.

MATTHEWS: So we have to understand that way. Anyway, here`s an
interesting reaction to the latest news. Lobbyist Jack Abramoff, who`s
back for reclamation -- he, of course, went to jail for three-and-a-half
years on corruption and conspiracy charges...

(CROSSTALK)

FRANK: Chris! Chris, don`t you mean historian Jack Abramoff?

(LAUGHTER)

MATTHEWS: OK! Here he is with David Gregory yesterday in a taping.
Abramoff admits he crossed the line and acted illegally, which is a good
start for saying something. He says he wants to sound the alarm about the
corruption endemic in our system. On that note, Gregory asked him about
Newt`s ties to Freddie Mac.

Let`s listen to this interesting witness, if you will, what he said.

(BEGIN VIDEO CLIP)

JACK ABRAMOFF, FMR. LOBBYIST: This is exactly what I`m talking about,
people who come to Washington, who have public service, and they cash in on
it and they use their public service and their access to make money.

And unfortunately, Newt Gingrich is one of them who`s done it. He`s
engaged in the exact kind of corruption that America disdains, the very
things that anger the Tea Party movement and the Occupy Wall Street
movement and everybody who`s not in a movement and watches Washington and
says, Why are these guys getting all this money? Why did they go become so
rich? Why do they have these advantages? Unfortunately, Newt seems to
have played right into that.

DAVID GREGORY, MODERATOR, "MEET THE PRESS": You call that corruption,
though.

ABRAMOFF: Yes, indeed.

GREGORY: That`s a heavy charge.

ABRAMOFF: That is -- well, what is it? It is corruption.

(END VIDEO CLIP)

MATTHEWS: There he is, Casino Jack, giving his -- sharing the guilt
for his lifetime. Let me ask you, Congressman Frank, if you can explain as
a respected legislator -- and I mean this -- the way they hire big shots,
big feet who come out of Congress or politics generally, they put them in
these big law firms or consulting firms, and they don`t actually come to
the Hill and lobby in a sense of waiting for you folks outside the chamber,
but they basically are directing their traffic. Can you explain how that
works for these guys?

FRANK: Well, sure. First of all, you have the knowledge of how
things work. You know these people. Remember, Gingrich had been the
speaker and left Congress -- actually, he got driven out by the way he had
mishandled things, including the wholly hypocritical impeachment of Bill
Clinton for engaging in activity that was less flagrant than Newt was
engaging in at the same time.

But you know these people. Remember, the people who are running the
Congress eight years later, these are people who served in the leadership
with him, Tom Delay, Dennis Hastert, his successor, the leaders of the
committees. So you know these people.

Secondly, you don`t have to come and stand in the hall to talk to
people. You can call them up. You can meet them at other events. There
are all sorts of meetings that people have. So no, it doesn`t mean you
stand outside the door, but you give people advice about how to deal with
these individuals, and then you talk to them.

It is inconceivable to me that there weren`t conversations between
Newt Gingrich or his aides -- that`s the other way that people work. Look,
he was the speaker. People are used to dealing with some of his aides.
You know, he said it was the Gingrich Group. There were people working
with him. They go there and say, Gee, Newt thinks this and Newt thinks
that.

And again, it is just so clear. And this effort to blame us -- the
Republicans were in charge, Newt Gingrich for four years as speaker and
then for eight years after that, the people he helped put in the
leadership. They were the ones who had control over whether or not there
was any regulation of Fannie Mae and Freddie Mac.

Now, we know that there were people said it should have been
regulated. I was originally wrong on that. I came around by 2004. But it
was 2006, a couple years after I was trying to get them regulated, that
Newt was getting close to $2 million or over $1.5 million. And the notion
he was getting it for advice -- simply, if that`s the case, the
shareholders should have sued them for corporate waste.

MATTHEWS: And he wasn`t out there writing op-ed pieces or giving
speeches about the need for reforming Freddie Mac, was he. He says that`s
what he was thinking.

FRANK: No, well, he -- it was a well-kept secret. Actually, what he
was doing was helping formulate the doctrine, home ownership. And by the
way, I was one of those who said, Yes, I want to help low-income people get
homes, but primarily rental housing. I have always felt that they`ve
overdone the home ownership thing. But Newt acknowledges -- and that was
the Freddie Mac rationale and the Fannie Mae rationale, home ownership was
such a good thing.

And in fact, what the Republicans generally did was to cut back our
efforts to provide good rental housing for people and push them into
ownership. And he acknowledges that he was part of this effort to sell
home ownership, which was what led people to give loans to people who
shouldn`t have gotten them and led people who shouldn`t have gotten the
loans to ask for them.

MATTHEWS: Well, that`s heart of it. Yesterday, Newt`s opponent,
still opponent, Michele Bachmann of the Congress, was quick to jump on the
story. Here`s what she said. Let`s watch.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: Whether former
speaker Gingrich made $300,000 or whether he made $2 million, the point is,
is that he took money to also influence senior Republicans to be favorable
toward Fannie and Freddie. While he was taking that money, I was fighting
against Fannie and Freddie.

(END VIDEO CLIP)

MATTHEWS: Well, I guess she`s not expecting to be nominating him for
president next September in Tampa.

FRANK: Or serving in his cabinet. But let me say, to make this very
clear, it was not until -- and I know people got kind of mythologized (ph)
out of this -- read Henry Paulson`s book, Bush`s secretary of Treasury. It
wasn`t until the Democrats took over in 2007 that legislation was passed to
restrain Fannie and Freddie. So Newt was very successful.

As long as the Republicans were there, nothing happened. There were
disputes among the Republicans, between Bush and Chairman Mike Oxley and
Chairman Shelby in the Senate. But we worked with Hank Paulson, and as a
result, we got a bill passed in the House in 2007, in the Senate in 2008.

Paulson then put them into receivership. And the man who now runs
Fannie Mae and Freddie Mac, who is no friend of the Democrats -- Obama
tried to fire him and the Senate saved him -- he says that since the
legislation that we passed, the Democrats in 2008, went into effect, there
have been no further losses incurred by Fannie Mae and Freddie Mac. They
have been profitable since then.

The losses come from the period when the Republicans were in control
and blocked any legislation.

MATTHEWS: Great to have you on, Congressman Barney Frank of
Massachusetts. Sir, thanks for coming on.

FRANK: Thank you.

MATTHEWS: Coming up: Republicans are twisting President Obama`s words
-- I`d say worse than that, I`d say lying about it. He didn`t call
Americans lazy, the real "L" word here is "liar," and it applies to the ad
men who wrote this new ad for Rick Perry. We`ve got the videotape. We`re
going to show you what the president said and what they`re distorting about
it to the point of lying.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: This week in Wisconsin, the campaign to recall Republican
governor Scott Walker got under way. And right now, according to a new
poll from Wisconsin Public Radio, Wisconsin voters are on board with the
recall -- 58 percent of Wisconsin voters say Governor Walker should be
removed from office. First (ph) it was just 38 percent who say he should
stay. Democrats hope the unpopularity of Walker, along with Ohio governor
John Kasich and Florida`s Rick Scott, could give President Obama an edge in
those three critical states.

We`ll be right back.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to HARDBALL. Republicans have a new attack
line against President Obama by distorting his own words. Listen to this
latest ad from the Perry campaign.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We`ve been a little bit
lazy, I think, over the last couple of decades.

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: Can you believe that?
That`s what our president thinks wrong with America, that Americans are
lazy? That`s pathetic. Obama`s socialist policies are bankrupting
America. We must stop him now. I`m Rick Perry. I approve this message.

(END VIDEO CLIP)

MATTHEWS: Well, the problem with quoting the president calling the
country is lazy is that it`s a flat lie. It`s a lie. Here`s what
President Obama actually said when speaking at the APEC summit last
Saturday. Listen to his words and then decide for yourself whether he was
saying Americans are lazy or U.S. corporations seeking investment for
overseas have been lazy in keeping up with the competition.

(BEGIN VIDEO CLIP)

OBAMA: I think it`s important to remember that the United States is
still the largest recipient of foreign investment in the world. And there
are a lot of things that make foreign investors see the U.S. as a great
opportunity, our stability, our openness, our innovative free market
culture. But you know, we`ve been a little bit lazy, I think, over the
last couple of decades. We`ve kind of taken for granted, Well, people will
want to come here, and we aren`t out there hungry, selling America and
trying to attract new businesses into America.

(END VIDEO CLIP)

MATTHEWS: Well, you have to go to the bottom of the ocean to find
something that low. That`s nothing -- what Perry put in that ad about the
president saying Americans are lazy has nothing to do with what you just
heard there.

Michael Steele is the former chairman of the Republican National
Committee and a Republican strategist. And Michael Feldman is a Democratic
strategist.

I want to start with Michael Feldman on this. Michael, I`ve seen some
distorting ads before. This one beats them.

MICHAEL FELDMAN, DEMOCRATIC STRATEGIST: Yes, I mean, he used the
word. I think the word to describe this is pathetic.

And when he talks about lazy -- I mean, this is a guy -- this is --
Rick Perry had a shot at the nomination, had a real shot at least in
contesting Mitt Romney for the nomination, and lazy is a good word to
describe how he`s approached this campaign. I mean, the guy doesn`t
prepare for debates. He can`t name the three federal agencies he wants to
eliminate. I think "Oops" is probably the most memorable campaign line for
him.

So, I mean, look, this is a desperate ploy, right? This guy is trying
to appeal to a small subsection of the base of the Republican Party and try
to revive his campaign with these attacks, and he was called out on it
today.

MATTHEWS: Let me go to Michael Steele. Who`s going to believe the
fact that the president of the United States called the American people
lazy? Who`s going to believe that anybody did say something like that?

MICHAEL STEELE, FMR. RNC CHAIRMAN, MSNBC POLITICAL ANALYST: Well, a
lot of people would believe it. You say potato, I say potato. I don`t
know why we`re sitting here acting so surprised that a snippet from a sound
bite that the president gave is cut into a commercial. You think that`s
bad? Wait until we get to the summer of 2012.

I mean, you take between what our -- any of the guys or gals on our
stage on the Republican side have said is taken out of context, versus what
the president has said that`s taken out of context. That`s the nature of
political commercials and ads and TV. So I don`t know where the big deal
is here.

MATTHEWS: Well, let me ask you, do you think that`s an honest
portrayal of what the president said in any way?

STEELE: This is not -- this is not about honesty, being honest, in
the sense that you want to be, you know, sort of altruistic about this,
Chris.

This is hard-core, raw politics. And, you know, it`s like when I made
my comment about Afghanistan a year ago as chairman, the DNC took those
comments and snipped together a nice little Web ad and ran it.

And, so, you know, that`s what happens when you put a camera on
someone and you take their stream of thought or consciousness and you snip
it together to create the image and impression you want for political --
purely political purposes.

(CROSSTALK)

MATTHEWS: So even though he`s not -- so even though he`s not talking
about like a malaise speech about the American morale or the American
inability to compete with foreigners, he`s simply talking about
corporations` inability to realize they have got to get out there and
hustle in order to attract investment to this country, you say that`s fair
game, what the ad writers have done? You say it`s fair?

(CROSSTALK)

STEELE: But, Chris, that was not wholly clear from the clip, from the
entire clip that you played, that he was identifying corporations as being
-- he should have said that, then, if that`s what he meant.

When the sentence starts, "We have been lazy," and the "we," that
pronoun, doesn`t identify a noun, then, yes, you leave it open to
interpretation.

MATTHEWS: OK. OK. Let`s rerun it again. Let`s take a look at the
actual presidential words there...

STEELE: Yes, go ahead.

MATTHEWS: ... talking at APEC, to CEOs, by the way, talking to
American CEOs. Let`s listen to this.

(BEGIN VIDEO CLIP)

OBAMA: I think it`s important to remember that the United States is
still the largest recipient of foreign investment in the world.

UNIDENTIFIED MALE: Yes.

OBAMA: And there are a lot of things that make foreign investors see
the U.S. as a great opportunity, our stability, our openness, our
innovative free market culture.

But, you know, we have been a little bit lazy, I think, over the last
couple of decades. We have kind of taken for granted, well, people will
want to come here, and we aren`t out there hungry, selling America, and
trying to attract new businesses into America.

(END VIDEO CLIP)

MATTHEWS: So the effort by American trade groups to go over there and
try to encourage investment in America somehow reflects on the general
American character? You think that`s the statement the president said?

STEELE: Well, Chris, that`s not wholly clear from the clip. He
started off that section that you played with -- the United States is the
operative subject of that conversation. And then he goes to, "We have been
lazy."

So you make the connection, the United States, we have been lazy. And
that`s all -- I mean, that`s the way the president framed it. So you can
interpret it any way you want.

MATTHEWS: OK. OK. Let`s go back.

Here`s "The National Journal." It fact-checks the Republicans today.
And "National Journal" is pretty darn nonpartisan, I think we would all
agree. He said those words were distorted -- quote -- this is "The
National Journal" writing -- "Obama used the word lazy to describe American
business practices in a conversation about attracting foreign investments
on Saturday at the Asian Pacific Economic Cooperation Summit. His audience
was a group of CEOs, but some Republican presidential candidates would have
you believe that he was talking to individuals about their character."

So was he speaking about the American character, Michael Feldman?

FELDMAN: No, of course, not. It was very clear from the context.

Look, this is an act of desperation. None of the other candidates
took this whack. Rick Perry took this whack.

MATTHEWS: Well, I hate to tell you, Romney did. Let`s show Romney
right now.

STEELE: Yes, I was going to say...

MATTHEWS: You`re a little too generous.

No, you`re not right. He`s too generous in asserting the Republicans
are cleaner on this. It`s not just Perry. Here`s Mitt Romney using the
same line of attack against the president at an event earlier this week.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Sometimes, I just don`t
think that President Obama understands America.

Now, I say that because, this week, or was it last week, he said that
Americans are lazy. I don`t think that describes America.

Before that, I think it was in October, he was saying that we have
lost our inventiveness and our ambition. And before that, he was saying
other disparaging things about Americans. I just think he understands. He
was saying that we just -- just weren`t working hard enough.

(END VIDEO CLIP)

MATTHEWS: Well, there you go, patriotism being the last refuge of a
scoundrel.

I have to tell you, there he is trying to put the old malaise label on
a Democrat. This is classic Republican. You know what`s going on here,
Michael. Michael Steele, you know the game that`s being played here.

(CROSSTALK)

MATTHEWS: He`s talking down America.

STEELE: It`s never happened before in politics until now. It`s never
happened before. The Democrats have never in the annals of modern politics
ever run a commercial that`s clipped together out of context something that
George Bush or any Republican candidate for office has said. This is the
first time this has ever happened. I`m shocked.

(CROSSTALK)

MATTHEWS: You know, Michael, I -- Michael, you remind me of my uncle
Bill. He was a plumber and a good guy, but every time he heard about
somebody left somebody for their -- left their wife for somebody else or
stole some money, he`d say, you know, it`s like everything else.

That`s what you sound like. You sound my uncle Bill.

(CROSSTALK)

STEELE: This is politics, buddy. Come on. You like to speak with
almost braggadocio about the way Jack Kennedy operated. And it was very
clear in your book he used -- he used the tools of politics to convey the
message to the base, and then ultimately to the nation, that he needed to
convey to win. This is no different than 1960.

(CROSSTALK)

MATTHEWS: Sir, you`re getting into the area of sacrilege and I`m
going to have to shut you up.

(LAUGHTER)

STEELE: Oh.

(LAUGHTER)

MATTHEWS: I`m just kidding.

Let me go to Mike Feldman.

This thing, will the -- let`s talk politics now. Can the Republicans
pay for this? Will the president be able to come out? Does he have the
tools to turn this against them like a boomerang, a word I used earlier?
Can he win on this by catching them in what looks to be a distortion?

FELDMAN: Sure. They did today.

By the way, the campaign was working very hard today to make sure
people had the facts on this. Many major news organizations came out and
actually played this in context today. And that`s...

(CROSSTALK)

MATTHEWS: Can they force Rick Perry to pull it back? Can they force
Mitt Romney to pull it back? Because if they don`t, you could argue they
didn`t lose on this. They at least gained some points on this,
Republicans.

FELDMAN: I would be surprised if they follow this line of attack any
further after the beating that they took today on this today. I really
don`t think they are. They were called out on this.

MATTHEWS: Well, that`s not exactly a victory -- that`s not exactly a
victory for the D`s.

Anyway, thank you, Michael Steele. You may be right, but how bad a
shape we are in.

STEELE: Well...

(LAUGHTER)

MATTHEWS: Anyway, thank you, Michael Feldman -- if lying is just OK.

Anyway, Herman Cain...

STEELE: It`s not lying, Chris. Come on, man, you know it`s not
lying.

MATTHEWS: Don`t try to interpret me. I`m telling you I think this is
a hell of a distortion.

(LAUGHTER)

MATTHEWS: Anyway, Herman Cain didn`t know China had nukes, he didn`t
know about neoconservatives, and he couldn`t remember what happened in
Libya this year. Now he`s added to that sorry resume. That`s coming up
next in the "Sideshow."

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

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

First up, shut down. Yesterday, GOP candidate Rick Perry challenged
Minority Leader Nancy Pelosi to a debate on his plan to completely overhaul
Washington. Well, Pelosi RSVPed to the invite today, and, as it turns out,
she won`t be in town.

But listen to just how she turned down the Texas governor.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), HOUSE MINORITY LEADER: Well, he did ask if
I could debate here in Washington on Monday. It is my understanding that
such a letter has come in.

Monday, I`m going to be in Portland in the morning. I`m going to be
visiting some of our labs in California in the afternoon. That`s two. I
can`t remember what the third thing is I`m going to be doing.

(LAUGHTER)

(END VIDEO CLIP)

MATTHEWS: Well, I would call that a rejection.

Anyway, next up, playing to the crowd, or at least that, what GOP
candidate Herman Cain was going for during a campaign appearance before a
large population of Cuban-Americans in Miami yesterday.

(BEGIN VIDEO CLIP)

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: Now, I know we have a lot of
small business people here. Now, let me tell you how nueve-nueve-nueve
helps the small business person.

(END VIDEO CLIP)

MATTHEWS: So he beefed up his language skills in advance. Later in
the day at a local restaurant, Cain needed some assistance.

(BEGIN VIDEO CLIP)

CAIN: I love it. I love it.

UNIDENTIFIED MALE: I think you`re eating a low-fat...

(LAUGHTER)

CAIN: Yes, low-fat.

(CROSSTALK)

CAIN: How do you say delicious in Cuban?

(END VIDEO CLIP)

MATTHEWS: Right, what language do they speak in Cuba again? Cuban?
There goes another performance to add to the 2012 Republican clown show.

And last night I was on "The Colbert Report" to talk about my book.
After discussing John F. Kennedy`s heroism during World War II, Stephen let
me know what he was really curious about when it comes to the book. Let`s
listen.

(BEGIN VIDEO CLIP, "THE COLBERT REPORT")

STEPHEN COLBERT, HOST, "THE COLBERT REPORT": So, he won World War II.
That part, we have established.

(LAUGHTER)

COLBERT: But why do you say "Jack Kennedy: Elusive Hero"? I mean,
everybody knows who this guy is. His face is on the 50 cent piece.

MATTHEWS: His wife said he was that unforgettable elusive hero. She
found him hard to figure out, trying to figure out who he was.

He lived his life in compartments, Stephen. He lived one life with
his wife. He lived another life with his Irish buddies, the Irish mafia
that got him elected, and then his elite social friends, his old college
buddies. Everything was a different compartment.

COLBERT: Who`s the next Kennedy? Is it Gingrich?

(LAUGHTER)

MATTHEWS: Hah!

(LAUGHTER)

MATTHEWS: No.

(CHEERING AND APPLAUSE)

(END VIDEO CLIP)

MATTHEWS: He always comes out with something wild like that, and
something ridiculous, of course. Thanks again to "The Colbert Report" --
that`s the name of the show -- for having me on.

Up next: the Penn State scandal and new details about how Jerry
Sandusky allegedly -- quote -- this will sicken you -- "groomed" his
victims. The latest on the investigation -- coming up next.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

HAMPTON PEARSON, CNBC CORRESPONDENT: I`m Hampton Pearson with your
CNBC "Market Wrap."

A sharp sell-off starting around midday leaving stocks deep in the
red, the Dow Jones industrials tumbling 134 points, the S&P 500 shedding
20, the Nasdaq giving up 51 points.

Looks like the focus may be shifting from Europe back to Capitol Hill,
with growing concerns about a lack of progress from the deficit-cutting
super committee, which isn`t to say Europe isn`t still weighing on the
markets, as Spanish bond yields neared 7 percent today. And Italy`s new
government unveiled a plan aimed at dragging it back from the brink of
economic collapse.

So, just a sea of red on the Nasdaq, weighed down by ongoing supply
disruptions overseas, and an earnings report from Sears showing weaker-
than-expected demand for gadgets. Even Boeing couldn`t buck the trend,
despite taking its largest order ever, $21.7 billion for 230 jets from
Indonesia`s Lion Air.

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

(BEGIN VIDEO CLIP)

QUESTION: Can you explain what`s going on for you and your family
right now?

MIKE MCQUEARY, ASSISTANT FOOTBALL COACH, PENN STATE: I can`t go into
detail, but it will work out. I think it`s -- I think it`s obvious I tried
to do the right thing.

(END VIDEO CLIP)

MATTHEWS: Wow. Welcome back to HARDBALL.

That was Penn State assistant coach Mike McQueary again answering
questions today about the events he allegedly witnessed in a shower between
Jerry Sandusky and a young boy back in 2002.

Details continue to emerge in this case. "The New York Times" reports
it was an Internet posting that led investigators to question McQueary last
year about that attack.

For the latest on this case, I`m joined by NBC`s national
investigative correspondent Michael Isikoff. He`s up in State College,
Pennsylvania, right now. And Kathleen Kane, who is an attorney who`s
prosecuted child sex crimes, she`s currently running for Pennsylvania
attorney general.

First to Mike.

What`s new on this case today?

MICHAEL ISIKOFF, MSNBC CONTRIBUTOR: Well, more lawyers saying they
have got more victims who have come forward of Jerry Sandusky.

It`s very hard to verify this at this point. Obviously, all the
publicity has brought in a flood of phone calls to that hot line, and a
flood of phone calls to lawyers who are representing victims and who want
to represent victims.

But right now, we have got a couple of lawyers come forward in -- just
in the last two days, one today, saying they are representing new victims
in the case who have gone to authorities, who are being vetted by
authorities.

No new charges have been filed against Sandusky, so I think we have
got to be a little cautious at this point, but that is another indication
of how fast-moving and expanding the case is.

We also have these new reports, interesting story from "The New York
Times" today about the origin of the investigation. One aspect of that
which I can confirm is that some of the records from The Second Mile that
were subpoenaed by investigators are missing. They haven`t been able to
come up with them.

That does raise questions. Were records removed relating to Jerry
Sandusky`s travels and expenses that might verify some of these
allegations? We don`t know yet. All we know is that some records are
missing.

And yet another -- by the way, I should add that The Second Mile has
launched its own investigation into all of this. You put it all together
with the San Antonio police investigating the Alamo, Department of
Education investigating whether Penn State broke the law, Penn State
investigating, and, of course, the attorney general of Pennsylvania
investigation, you have got five investigations going of this sex abuse
scandal right now.

MATTHEWS: Let`s go to Kathleen Kane on this one.

"The New York Times" today outlined an alleged pattern of behavior for
the former coach. Listen to this -- quote -- "Sandusky engaged in what
experts on child predators call grooming behavior, law enforcement
officials asserted this month, making his first approach when children were
8 to 12 years old. He tended to choose white boys from homes where there
was no father or some difficulty in the family, investigators said. And he
drew them in with trips to games and expensive gifts like computers."

Well, Kathleen, tell me about this grooming. Are you familiar with
this, where a guy picks out a target for sexual abuse? And so, in this
case, some horrible abuse.

KATHLEEN KANE (D), PA ATTY. GENERAL CANDIDATE: Yes. Every trained
child abuse investigator knows about grooming. It`s a very common
technique among sexual predators. And what it is, is they start first by
gifts, they move then into familiarity with the child, saying, you know,
they know their favorite color or their favorite teacher or certain
problems that they may be having with someone else at school.

And then they move into the most heinous phase, which a zone of
trust. They basically isolate the child. They make the child feel like no
one else, they can`t trust any one else, no one else loves them, no one
else cares for them like their attacker, and no one else understands them
like the way that they do. Now, the child is blocked off and basically
backed into a corner where that child feels like he has no way out. And
there`s no one to go to, except consequently enough, his attacker.

MATTHEWS: And then they use another pattern, apparently. I want you
to talk about this after we watch this interview with Bob Costas from "Rock
Center" where people like Sandusky apparently find ways of putting their
focus on the victim rather than their own behavior.

Here he is describing what he says happened in the shower that night
that McQueary walked in on them during that horrible, at least alleged
horrible act going on. Let`s listen.

(BEGIN VIDEO CLIP)

JERRY SANDUSKY, ALLEGED CHILD ABUSER (via telephone): OK. We were
showering and horsing around, and he actually turned all the showers on and
was actually sliding across the floor, and we were, as I recall, possibly
like snapping a towel and horseplay.

(END VIDEO CLIP)

MATTHEWS: OK. What do you make of that, Kathleen?

KANE: Well, again, they always turn it back on to the child. Number
one, that the -- no one`s going to believe the child, because the child is
untrustworthy.

But as soon as I heard that interview with Bob Costas, immediately
what runs through any mother`s or father`s mind is they`re picturing now
this child sliding across a slippery bathroom floor. My next thought, is,
oh, my God, the child`s going to fall and bang his head, and why is he
doing something like that, he knows that he shouldn`t be doing?

And that`s exactly what the predator is trying to make us do. He`s
trying to make us put it all back on to the victim and say, that victim
shouldn`t have been doing those actions, and my God, you know, here`s
Sandusky is ready to save him from falling into the shower and banging his
head.

But it`s a classic technique. It always comes down into a trial,
whether the defendant is telling the truth or whether the victim is telling
the truth. And the defendant, the predator counts on us saying, that that
child, by the mere nature of being a child is untrustworthy, is bad, will
never tell the truth. And here he is as an adult in standing within the
university or within his community, and by God, he`s the one who will
always be telling the truth.

It`s -- I have seen -- I`ve prosecuted hundreds of child abuse cases,
and I`ve seen it almost in every single case where the defendant, the child
predator, turns it back on to the child.

MATTHEWS: I don`t know how practice criminal law -- anyway -- on the
other side, how they defend that kind of behavior, that kind of defense --
anyway -- blaming the kid after this apparently horrible incident.

KANE: Right.

MATTHEWS: Anyway, Michael Isikoff, thank you. Kathleen Kane, it`s
great having both of you on, obviously.

Up next, Mitt Romney wants you to believe his health care law is
nothing like President Obama`s. But now the MIT professor who advised both
Romney and the White House says Romney`s full of it, these are exactly the
same plans. And what`s worse? New evidence the Republicans this is worse
for Romney not for everybody else, don`t like Romney.

I`m up here in Philadelphia, by the way, for the Father and Son
dinner tonight at my alma mater, La Salle College High School.

This is HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: So much for building. Republicans in Congress are on the
verge of killing President Obama`s plan to build high-speed rail lines
around the country. The House votes today and the Senate tomorrow on a
measure that eliminates any funding specifically for high-speed trains.
The president called for $8 billion this year and $53 billion over six
years, but Republicans have long complained that the plan was too costly.

Now, Republicans say they want to focus on high-speed rail in the
Northeast only, not the national network the president envisioned.

We`ll be right back.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: You just don`t have
credibility, Mitt, when it comes to repealing Obamacare. Your plan was the
basis for Obamacare. Your consultants helped Obama craft Obamacare. And
to say that you`re going to repeal it, you just have no track record on
that that we can trust you that you`re going to do that.

(END VIDEO CLIP)

MATTHEWS: So the question is credibility, Rick Santorum says.

This is HARDBALL.

Again, that was presidential candidate Rick Santorum, as I said,
taking a hard swipe at Mitt Romney for hypocrisy on health care.

And today in the publication "New York Capitol," Jonathan Gruber, an
MIT professor whose ideas made up Mitt Romney`s Massachusetts health care
overhaul, and who helped to create Obama`s health care reform law, says
Romney`s attempts to distinguish between his health care plan and Obama`s
are dishonest.

Quote, "They`re the same blanking bill. He just can`t have his cake
and eat it too. Basically, you know, it`s the same bill. He can try to
draw distinctions and stuff, but he`s just lying."

And a new Bloomberg poll of Republican caucus-goers and primary
voters in Ohio and in New Hampshire shows the portrait of Mitt Romney as a
flip-flopper has traction in the GOP. Will Republicans ever
enthusiastically embrace Romney as their nominee?

Ron Reagan is a political commentator, and Ed Rollins is a Republican
strategist and former campaign manager for Michele Bachmann.

Let me go to Ed Rollins on this.

Ed, we have new polls out that basically confirm the argument put
out. Here`s the Bloomberg poll of likely Iowa Republican caucus-goers. It
shows that voters consider Romney qualified to be president, but 48
percent, just about half, say he will do or say anything to win. And 47
percent say the same thing. He`s a flip-flopper.

Same thing in New Hampshire among likely primary voters. Again, a
huge majority, 81 percent say qualified to be president. But among here
again among people who trust him to be a good president, 43 percent say
he`ll do or say anything to win. Forty-three percent, the same number,
says he`s a flip-flopper.

So, creeping towards 50 percent Republican voters in both Yankee New
Hampshire and Christian conservative Iowa, both believe the guy can`t be
trusted to stick to a position.

Your view, Ed Rollins?

ED ROLLINS, REPUBLICAN STRATEGIST: My view is he was badly damaged
both in the Senate race before he got elected governor. You know, running
in Massachusetts, he ran as a very, very moderate Republican, took a lot of
positions that obviously people in New Hampshire know about. Obviously, in
a tough race last time that he lost in Iowa in the caucus, a lot of the
stuff came out. I think he`s been pretty stable in this election and not
flip-flopping much at all, but he is going to basically take a lot of heat
on Romneycare.

And I don`t think, you know, the president himself said he based his
policy on Romneycare and someone like Howard Dean that knows a lot about it
has said it many times to me, we`re both teachers at the Hofstra
University. So, he`s got to live with it.

MATTHEWS: Let`s go to Ron Reagan on this. I think it comes down to
this: Can you predict this man`s position on anything but what predicting
the future polls will hold? In other words, will he simply track the
future polls of popularity on any given issue in the Republican camp?

RON REAGAN, POLITICAL COMMENTATOR: Well, that`s what it seems. It`s
fair I guess to say that he was damaged in his Senate campaigns and his
gubernatorial term in Massachusetts. But if he was damaged by that, he
damaged himself, simply by revealing what he presumably felt at the time
about issues like global warming and choice and gay rights and things like
that, all of which he has flip flopped on now that he is running for
president in the Republican Party.

This is an extraordinary event we have here watching this Republican
Party. Most Republicans don`t really like Mitt Romney, but they`re
resigning themselves to the fact that he`s going to be their nominee
because everybody else in the field is frankly just impossible.

MATTHEWS: Ha!

Ed, let me go to that. How many voters in your party tend to vote
strategically? In other words, vote for the guy or woman they believe can
win the general election whether they prefer that person or not?

ROLLINS: More so this time. Usually, there`s an ideological bent
and some single issues that people vote on. But in this particular case,
we want to beat Obama. I think most people at this point in time, Ron
represents a view that I don`t disagree with, that we think that Romney may
end up being the strongest candidate against Obama and certainly some polls
show that.

It`s not over yet. Voters haven`t cast any votes. But, at the end
of the day, I think a lot of people -- conservatives in particular -- will
basically swallow hard and support and support him enthusiastically.

MATTHEWS: Down in Tampa next September, when you have your
convention. You may be there as an observer, or whatever role you`ll play.
You`re probably an analyst. Will they get excited in that hot house
environment with the humidity way up and the temperature? Will they get
out and scream for Mitt Romney? Is that feasible?

ROLLINS: Not in the same way that they would for some of the other
candidates. You know, Mike Huckabee would have run, they`d have been very
enthused about him. And it would have been a very interesting race.

But, at the end of the day, they weren`t enthused about John McCain
early in the process last time.

MATTHEWS: Or Bob Dole.

ROLLINS: Or Bob Dole.

And by the end, he was the nominee. You know, everybody is looking
for Ron, for your father`s reincarnation and, you know, we all know --

REAGAN: We don`t see it there do, we?

ROLLINS: Well, we all see how he was a great president but he`s
bigger than life today and that`s a shout-out that very few people can
stand in.

MATTHEWS: Ron Reagan, Jr., three Republican candidates in a row.
George Herbert Walker Bush, Bob Dole, and McCain, not one of them they
liked. Why don`t they just do it again, a fourth guy in a row they don`t
like?

REAGAN: Well, they will. I mean, Romney is going to be the nominee.
But this is incredible.

You know, Ed is right. The Republican voters are saying, look, he`s
the guy that can run against Obama and maybe win.

MATTHEWS: Yes.

REAGAN: So, we should try and get this guy in. But what`s the big -
- you know, (INAUDIBLE) for the Republicans now, it`s Obamacare, it`s
Obama`s health care plan, it`s creeping communism. But Romney`s plan is
the same.

MATTHEWS: I got you. We got witnesses tonight.

REAGAN: So, why do they vote him for?

MATTHEWS: Ron, we got witnesses. Thank you. And we had one
tonight.

Thank you, Ed Rollins.

ROLLINS: Thank you.

MATTHEWS: As always, thank you, Ron Reagan.

When we return, "Let Me Finish" with the exasperation in this country
with the two most vibrant political movements: the Tea Party, if you will,
and certainly, Occupy Wall Street.

You`re watching HARDBALL, only on MSNBC.

(COMMERCIAL BREAK)

MATTHEWS: "Let Me Finish" tonight with this:

We`re looking now at what appears to be the exasperation of the
country`s most alive political movements: the Tea Party and Occupy Wall
Street.

Exasperation -- it`s when a felt need, a passion even fails to be
satisfied. It`s when you want something and can`t get it, like in the
song. Can`t get no -- can`t get no -- satisfaction.

But I`m speaking here with dead seriousness about forces that appear
to be deadly serious. The one on the right that gained tremendous and
proven force the summer before last and then in the fall elections a year
ago, and the Occupy Wall Street movement that has replicated itself across
the country.

One movement the Tea Party stands is totally -- are you listening to
this -- incapable, incompetent I would say in selecting a leader, someone
fit to run for president. They ain`t got one. No, no, no, they ain`t got
one. They looked at Trump, yes, Trump, and Bachmann, Perry, and Cain and
they`re dallying now with Newt.

But they ain`t got one. Not a real leader -- not a real leader in
sight. In fact, if you look back across the months to the summer of last
year, they never have. And that tells you something about the negativity
of their cause. They are against and that`s not enough to lead this
country.

The Occupy Wall Street movement has had a different failure, in some
way worse in some way not. They can`t come up with a clear voice, a clear
statement that put the focus where it belongs: Wall Street.

Well, that`s where they`ve been right. They`ve been in sync with the
country on where to go. They put the blame on Wall Street. More to the
point to the clout Wall Street has in our government in Washington.

But even as the occupiers are being pushed from their encampments,
they fail to speak out in clear terms about what they want done and that is
a deadly -- that`s a deadly failure. Demonstrators need, most of all, to
demonstrate -- tell us what we need to do.

I may surprise some people with this -- but both of the movements,
right as well as left, had a point, a good point to make, both of them.
Government is spending too much money. If you mean it`s spending more than
people are willing to finance in taxes, it`s spending 25 percent of our
economy, taxing just 15 percent. It would seem to most people that 25
number we spend is almost, almost as out of whack as the 15 percent in
taxes.

Occupy certainly has a great point to make. Both parties rely too
much on Wall Street for their money and he who pays the piper calls the
tune.

But exasperation isn`t enough to fix our problems. That`s what
politicians are supposed to do. We`ve got an election coming up to force
that one, to force them to do what we want them to do -- lead us.

That`s HARDBALL for now. Thanks for being with us.

"POLITICS NATION" with Al Sharpton starts right now.

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