>> this is "the chris matthews show." >> ask not what your country can do for you -- >> tear down this wall. >> i can hear you. >> the time for change has come! >> show me the money. democrats say it's good economics to end tax cuts for the rich. the republicans say the dems just want moey mono t spend. with the election coming and the recovery stalling, can the party of obama and pelosi win? give me liberty or -- is bashing gays no longer good politics? and finally, comeback kids. is this talk about hillary

clinton bumping biden from the 2012 ticket just backroom buzz for hill and bill when obama is gone? is it a boomlet without a bong -- bang? hi, welcome to the show. i'm chris matthews. with me today, john heilemann, erin burnett, kelly o'donnell and howard fineman. democrats say they will take up the bush tax cuts right after labet. but that gay marriage ruling this week could be a wild card. will it distract? >> we don't take more from the private sec and grow government with it and that's exactly what obama has in mind. it's idiotic t othink about increasing taxes at a time like this. chris: for his part president ob a ishitting the familiar democratic line, that

republicans cater to the rich. >> they want to extend the bush tax cuts for millionaires and billionaires. i don't understand. how do you get up here and talk about how you care so deeply about the deficit and yet you want to perpetuate a tax cut that cost $700 billion. chris: is the president right? is it good policy to raise taxes on the rich to fight the deficit? >> i don't know that they're going to use it to fight the deficit. last year the number of m ears and billionaire in america up 13%, average wages were flat. it's not an insignificant thing to do. we're talking about 35% to 39.6%. the -- we're not talking about something transformative like kennedy who cut the taxes from 90% to 70 phil esposito or reagan who cut them to 15%. chris: is it smart for them to

use the old democrat religion, basically that this is about fairness, the rich have got to pay their share? >> well, basically you're only going c thetolinton era tax rates, which as erin siad is not dramatic. that mistakes -- makes it smart politics because there is a group cool he isy in washington right now -- co-al he ising in washington about getting the deficit cuts. do you want to go forward or back? extending the bush era tax cuts for the wealthiest reeks of the bush era and that's going to fit into the broader frame he is trying to put the elections into. chris: so it's not whether you are happy with the economy but whether you want to shift back to the republicans? the tricky thing is the democrats control the congress and the white house. if they want to keep tax cuts

for most of their voters, which they say they want to, they have to pass a bill. how are they going to do it? >> one of the things they're inggoto talk about is perhaps an extension of these cuts for maybe a greater or two to try to get out of the worst of the recession. but they republicans to come along. that puts republicans in a tough spot. if they want to keep all the tax cuts they might be pressed into extending some tax cuts. tough for republicans to do. chris: but if nothing is done, the democrats can say it's the re publicans cutting their taxes. >> some are very wary of this. they understand what john is saying on the politics and erin is saying on the fiscal side but they're scared. chris: what's their fear? >> that a two or three-week debate about taxes is going to -- chris: going to help

republicans? >> in part, because the spending has made obama unpopular with some. there are at least three democratic senators, conrad, bayh, and ben nelson, who said they will not vote to let the tax cuts expire even on the wealthy. that makes it procedurally more complicated. talking to them late in the week i'm not convinced that they're hungry to have this keebt -- debate in the senate. the senate democrats scared tv and may try to put it off until after the election. >> you comp the stock market if new york all the time. what's the excuse me --sumption? that the tax cuts are going to continue or to die? >> they're assuming they're going up on the top 2%. but it's a dicey thing. you get more deficit but everyone knows they're going away in a year or two? so people aren't going to spend money on creating jobs. a year or two econmiocally

doesn't do much for you. chris: the weak economy, this friday, the economy seams to have stalled. does that make it easier to say no tax increase now? >> on the middle class. he's got to make this point. his biggest challenge is going to be this issue of small businesses. we all know small businesses create most of the jobs in america and if republicans are successful in saying ify ou raise the top 2% it's on the small business owners and that's not going to put a dent in the jobs lost. chris: a small store, for example, they technically make a quarter million a year but really they'ti putng the money into the business. republicans are focusing on this aspect. i hate to mention senate procedur bute it matters. if they try to just focus on an amendment to let the tax cuts expire on the wealthy, that opens up the bill to all kinds of other amendments that the

republicans are going to want to offer in a million different ways to try to score political points against the democrats and get the democrats to vote to protect tax increases. that's what the republican strategy is going to be and that's what harry reid, the democratic leader, is worried about. chris: talking taxes on the republican home court, that's always been their court. >> right. chris: and the gay marriage vote. are the republicans going to jump on this like raw meat as they usually do? or stick with the tax issues? >> the republicans i think know that they're playing a winning hand without the social issues right now. at the same time there is this inningstinctive desire that they always have to jump on those kind of social and cultural wedge issues. you also found out that the judge in question, a republican bush appointee, also is gay.

so i think one of the ways republicans are going to go after this is not to make it look like gay bashing but activist judges imposing their will on america. that's a traditional republican trope and one way to get at the issue without overtly bashing gays. >> there's a memo from republicans about how they should talk to the elections. keep coming back to the economy. >> six years ago thiass w an issue, the same-sex issue on the ballot in ohio basically killed john kerry out there. is this a place where the markets have basically changed their mines? >> chris, there's the canopy on top of the general and the jound -- ground level. people are more tolerant. younger people, under 30, it's not an issue at all with most kids. but in certaindistricts in certain red states it's going to matter. if the republicans can restrain

thesselvem. as john says, they have almost a compulsion to talk about it. if they can restrain it and focus on individual districts an states -- and zates it's going to help. chris: you have missouri and ohio, states where they're more culturally conservative, but keep it away from the most? >> but look at utah. john hunt came out in favor of same sex unions. now he works in the obama administration as ambassador to china. but you are seeing it in even -- chris: well, he's a little different cut! >> i'm not saying he represents all of them but you are seeing people like that. >> what makes it hard is republicans have been saying and they're right, that they're trying to nationalize the elections. once it goat viral it's very hard to keep it out. the republicans started talking about repealing the 14th

amdment or tinkering with it on citizenship. chris: you keep reminding me we're in the 21st strrment if sarah palin or rush limbaugh says something all of a sudden they're steak -- speaking to everyone whether they like it or not. before we break, a little romance the major -- for more than 30 years this man salt down to ploo the piano for presidents. nixon's idea of hospitality was according to sergeant smith what tricky. >> he would come on board with these empty bottles of whine -- wine that when you looked at them you thought you were getting a $300 bottle of wine. he would take them to the ga ley and set up to fill them with the cheapest wine he could fine. carlo rossi or something like

that, the president of the united states filling the bought doctor bottles with a funnel. so i would be there and tap, tap shall 257, it would be time for the toast. you would watch each guest as they would savor this $300 bottle of wine. oh, this is just fantastic, the president thinks this of -- much of us to do this. oh, this is the best wine we've ever had dan nixon would look at me and just, "got them again." [laughter] chris: smith hd a front row seat to history like when ronald reagan had some friends over and carey grant came over to chat. >> everybody else had gone to dinner. i said, "mr. grant, they've rung the dinner bell. aren't you hungry?" he said no, i'm not, i'm in a rather pensive mood tonight. i don't eventual want to be myself tonight. i want tobe archie leech.

i was in yts -- "night and day," the story of cole porter. would you join me on the piano bench and play every bit of cole porter that you know in chris: i love these stories. he said he also got to know some presidents quite well. he loved the senior george bush and remembered meeting his son, the future president. >> after the inauguration they all came back to the vice president's residents -- residence and i recognized everybody in the family. doro, the daughter. i recognized marvin because he used to hang out in old town alexandria and i remembered him very well. recognized jeb. then why is this guy sitting in a corner? i'll say no more. [laughter] chris: i think he did say something the even though smith stayed on through bill clinton and says clinton played a very respectable sax in some

impromptu duets, he retired playing prior to his arrival. whco we enme bac this real or just sleepy summer kibbutzing? is be right back.

chris: welcome back. it's been a while since democrats were distracted by clinton talk, but now it's back. listen to this from "hard ball" the other night. former virginia governor wilder wrote a piece with the headline, obama-clinton the ticket for 2012? governor warner, why would you do something about a fellow democrat, you basically said dump biden?

>> what i basically said is if obama wants to win, he needs to evaluate what those chances are the >> you are basically sayng barack obama would have it in his interests to name his successor, hillary clinton. >> that's exactly right. you got it, as you always do. [laughter] chris: is tht true? hillary denied it to anne cur ir. >> will you ever run for president again? >> [laughter] no. i mean no. this is a great job. it's a 24/7 job and i'm looking forward to retirement at some point. chris: we asked the matthews meter does hillary want to run in 201? john and howard, the two boys here both say yes. i love the cackle from senator clinton. t don'i know what that meant. >> laughing a little too eagerly there and the key words are "at some point."

she's going to retire at some point. listen, i've covered hillary for a long, long time and i know the question is does she want to do it. and the answer is yes, because it's hillary. it's who she is. she's watched barack obama. i think in her mind she's saying he's done some good things but there are things i would have done much, much better. chris: does she say that? >> she thinks that. and if it's possible to work out a deal to gate on -- get on the ticket absolutely, she would take it in a second. chris: how do you explain no sign of political life or interest, yet you say she has political ambition. >> i think she's done a great job and served the administration well. chris: but what about political interest? >> well, not to be machiavelliian about it but that actually does serve her interests. this is obviously a summertime

distraction. i don't believe that right now there is active consideration in the white house but i do think there is a case for it and the case goes what does barack obama need to do to win in 2012? right now with a, an approval rating among white voters in the mid-30's -- chris: well -- >> having bill clinton or hillary clinton on the ticket would be a huge advantage with the voters. it would inject energy the >> but hillary clinton well. age factor? chris: you say no. why? the age thing? >> i say no because i do think we have to give her a chance to say i've got bigger numbers than i ever had, i have accomplished a lot at secretary of state. having said that, she may want to goat gsh go out on a high. it's the hardest thing in the world to run for president and it was grueling and painful. i love when mondale asked

mcgovern, how long does it take to get over losing and mcgovern said "i'll let you know when i get there." chris: and eugene mccarthy said it's easier to run for president than to stop. >> well, right now, 15% chance these -- that she's gongi to be on the v.p. ticket in 2012. by the way, wall street likes here -- her for those very reasons. she's put her nose to the grindstone and gotten things done. they like that. >> and the history thing. he was the first african-american president and -- chris: would help in ohio in 2012 on the ticket -- that's the only way this would happen if -- chris: if there say real sign desperation or need? >> that's the only way. >> but he's put john huntsman

in china. it shows he can put good people -- maybe it's a sign of his strength. >> got to find a way to get biden to slide away happily and you have a way to do it. joe biden always wanted tobe secretary of state. have the jobs switch. >> that would be a real game change? chris: when we come back, scoops and predictions.

chris: welcome back. john, tell me something i don't know. >> with all this talk about 2012, newt gingrich i think is going to run in 2012 on the republican side and i think people underestimate him alt their peril especially if the field is as small as it could be the he could win the nomar:. chris: erin? >> this week we found out mortgages were at almost a record low for 30-year mortgages. home sales still down. one economist said we're going to see new home construction double in the next two years. don't know. but many are saying it's possible. if that happens this economy is going to be in a totally different place. >> here's one -- guns and bankruptcy. there are members ofesongr cs

-- congress who want to protect guns if you file pernalso bankruptcy. you get to keep some household guns. the n.r.a. would like you to be able to keep gps. >> in september when congress comes back the democrats aren't sure they want to talk about taxes but they to do want to talk about jobs being shipped overseas. this tested especially well with white men. that's a target with 32% or more. bill after bill after bill to try to punish corporations for, quote, shifting jobs overseas. chris: when we come back, the big question of the week. president obama turned 49 this week. will his youth be a plus or minus when he runs next time?

[captioning made possible by nbc universal] chris: welcome back. president obama turned 49 the other day. that brings us to this week's question. his youth won him the white house you could say, last i time. next time will it be a plus or a minus? >> i think a minus. a republican attack on obama is going to revolve around too liberal and also too ineconomy and the inexperience the republicans will try to hang around his neck, they're going to say look, you hired this guy who was too young and

inexperienced for the job the >> i agree except nobody will care if you start getting real jobs creation in the next six months. >> i think still a plus. how you feel about a president, a youthful president with a young ibf and children is still aheal -- appealing. >> historically, still appealing. but i think obama is a person and what got him elected the first time is still an overall plus. chris: and he'll campaign like heck. that's the show. thanks for watching. see you here next week.