>> 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! >> three strikes you're out. the president's third year could be the decider. like reagan and clintoun, y o could go down in two. what is obama going to do in his year three? you may not have any resolutions this year. but some need them. our panel tears hillary clinton and sarah palin and her liepubn rivals what they should be different. could t lheibertyle need an upgrade? what do the colonials wish for

will and kate? i like her already. let's look at the predictions we made in 2010. tell me something i don't know about something you told me i didn't know. come on. were we right every time. hi, i'm chris matthews. welcome to the show. with us today. "new york magazine's" john heilemann, cnn's gloria borger, nbc's kelly o'donnell and the atlantic's andrew sullivan. this new year may be make or break for president obama's chances at a skecked term. he has to change things if he is going to be a two-time winner. he is looking at near 10% unemployment and poll numbers below 50%. 58% of this country is saying we're head in the wrong direction. what does that predict for obama? what's history say? at this point, ronald reagan had worse unemployment and poll numbers, but reagan pulled himself out of the dive in his third year. he was running for re-election calling it morning in america. the same for richard nixon and

bill clinton, huge reversals in fortune in time to run for re-election. john, that's the question, what is his biggest challenge, though, holding the center as he did last year with his deal, or keep the left which is a bit unhappy with him lately? >> that's the easiest question that you have asked me in a long time. congressional democrats are mad at him for various reasons. who cares about those people. he has a huge -- he has a huge support among the actual members of his base, african-american voters, latinos, he has a high approval rating with him. the base is not his problem. his problem is winning back the independent voters who shifted in the 2010 elections. he can do that, the unemployment rate is important over the course of the next year. he has a bunch of big agenda items that are perfectly tailored to get back independents. he wants to do deficit reduction, trade, tax reform. he can get republicans to work

with him on and do a world of good politically. chris: one of the advantages of cutting deal with republicans, they can't call you a socialist anymore? >> there will be some republicans in the new congress that won't like the deals that the others cut. he will have those problems, but they will make him look good by the way. he will be able to triangulate and look like the grown-up which is what people want. >> kelly. >> i think he has to go for the center and the industrial heartland where i grew up and spent a lot of time back in the 2010 midterm campaign. chris: the industrial heartland. >> for me it's cleveland, ohio. chris: somewhere between scranton and oshkosh. >> there was a sense of disappointment and frustration. he can go after that, more than the campaign visits which he has done a lot of, but working with republicans and attacking these issues like debt and trying to deal with jobs, that's the kind

of thing that he can be at least on the high ground. chris: you're quiet, left or center, where is the left and the action for him? his third year, we have seen it with reagan and carter. carter didn't have a good third year. he couldn't put it together. what adjustments does he have to make to hold the center? >> he has to remain the president t he has always been. the left kept projecting stuff on him that he wasn't and the right projected stuff on the him that he wasn't. the great thing about having a republican house, you see obama's greatest strength, which has always about from harvard law review on talking recently with conservatives. he is temperamentally, he likes that. he is really good at that he exudes reason in that. the tax deal that he cut at the end of last year was the new obama. he was the old obama and the new one. finally he was liberated it seemed to me in being the president he wants to be. he didn't really want the stimulus package. he didn't expect when he ran for president he would have the worst depression in the world.

he has to spend that money. the health care reform in that context could have been skewed as a big spending liberal. he is not a big spending liberal, never was. he wants tax reform for the reasons he always said. the key thing is that he owns it. the state of the union will be his moment. >> huge. >> it will be his moment. if he puts debt first and tax reform second, simplifying your taxes and reduce the debt and has republican support, he diffuses the demonization from the right and he knocks down the left. >> i think it's what he has got to do in the state of the union. it's a momentous speech for him. chris: debt reform, debt reduction. >> and call their bluff, simplify the tax code. there were three republicans on the deficit commission, conservatives, who voted for exactly that formula. >> an alliance against ryan. chris: it was the reagan formula, go with your ideology,

accept your defeat in the election and grand for the greater coalition and brings in the center. john. >> yes, it's also partly the clinton formula. when i made the comment before about the base, actually democrats will hate hearing this. people forget the way that bill clinton just forgot about his base in 1995 and 1996. liberals hated bill clinton in 1995. they hated him on welfare reform and balanced budget and civil liberties stuff. he would bad mouth the aclu. the only exception, because he needed the black vote, so he stuck with that. divorcing himself from the congressional democratic leadership is the best thing he could do politically. they'll hate to hear it, but it's absolutely true. >> at the put putt to the matthews meter, 12 of our regulars including all four, will that be because of his own smart steps or because the republicans blow it? it's tied, 6-6. john, an drew, and kelly, you all voted that it will be his

own smart move this year. andrew. >> yeah. i think that by tackling the debt and identifying himself as -- what his theme is i tackled the big problems, i'm not going to punt to the next generation. i tackled the health care crisis. i'm the grown-up tackling the hard stuff. that's what i'm about. chris: you covered all the institutions, all the interest groups, unions, teachers union, they don't want to hear this. >> where he has a real opportunity is only once you are president do you know the power of the unanticipated event. he went through that with the oil crisis, the spill, and only then do you learn how you have got to move quickly and he learned a lot from the, kind of the missteps there and the temperament issues that always get raised about him. he has had a chance to show anger and compassion that people have criticized. knowing that those events are

coming give him experience. chris: he is better angry? >> yes. chris: you are off the team. you're waiting for the republicans ala newt newt on the wrong side of the plane, those kinds of things, remember that? >> he was shoved into the back of the plane. chris: coach. >> i believe that in the end you'll have all of these number members of congress. of the new democrats, republicans in the house, 63 of them, half of them have never served iniolitl office before. you have got the tea party folks in the senate as well. they will be pushing their leadership to overreach andover reach and rover reach. the lers are away what happened to newt newt. they don't want to. they will make obama look good. >> they have given him the tintasfac gift of $800 billion in a stimulus for these following two years which predicts 4% growth this year. as reagan had 9% growth. the goal of this stimulus, which

i don't think he has ever gotten on just his own with the democrats, that's the irony of this, will probably kick the economy -- many say this into a self-sustaining recovery. once we do, he has really succeeded. chris: given that political assessment, is he better off at the end of this year than now? >> the biggest worry is that the same thing will happen this time that happened the last time with the stimulus. after a year, it will peter off and there will be a tailing off at the beginning of 2012 when the voters are really paying attention. and things may deplate a little bit. chris: the american economy has to do it on its own. >> he remains personally popular. we are talking about him -- chris: he is below 50, will he be above 50? >> a little bit. chris: is he going up this year? >> just a bit. >> i agree this is a 5-5 country. he could be above 5% next year which is a critical barometer.

chris: it's hard to move that thing off the 50-yard line. >> at the end of the year, look, this is a diverse country, guys. you liberals, you're not the only persons. i have to be the president of liberals and conservatives. that's what he promised in the campaign. he is not betraying anything. he is being the president he said he would be. chris: who was the cartoonist who looked at all of the country from new york's point of view? that's what sometimes the liberals look like. before we break, republicans are getting set to take on barack obama. most are making it official much later than usual. is it delayed gratification. guys who have not been honest have not done well. mitt romney's father, george romney, he ran in 1968 but was out there four years earlier already talking about how dick nixon was encouraging him to run that year. >> to be firmly forth right about it, dick and a number,

several of the governors have been urging me to become a candidate. >> romney continued to speculate openly that year. another guy to be candid about his plans was ed musky in 1972. and here he is not being very shy. >> how about you? >> i don't have any real plans. i realize, of course, that there is a question or two to be considered and some plans to be made and some work to be done and i expect to start that as soon as i get a good night's sleep. chris: that was a great man. here is rudy giuliani. he is on the "today" show not exactly denying interest in running four years later. >> what about your political aspirations? >> that's for the future, beyond tomorrow, right. >> the next day maybe? >> maybe the next day. chris: besides the big teasers, there is another category, candidates who were constant

presences on tv. take gary bauer, if you will who ran in 2000 after being a prominent anti-abortion spokesman. why mention him? it's a great reason to show you the most fun political event of all time. gary bauer competing in the bisquik presidential pancake flipoff in new hampshire. >> whoa! chris: the camera couldn't even take that. john, you have been there before. expect any late announcements for the republican, all late announcements? >> everybody is going to be late. you look at the record of some of those guys that got in early, republican candidates are studying that tape. nobody wants to get in ever in any race, you never get in earlier than you want to. chris: obama got in about this time. >> he thought he had to because he didn't get in then, too many donors and activists would be

gone. the dynamic to get in early pushes everyone in early. the republican candidates is like a game of reverse chicken. nobody sees anybody going except for one. >> sarah palin. >> how could she be more candid that she is running for president? >> i'm not sure. >> totally. >> this is her life's goal. chris: we come back, new year's resolutions from our panel for nd the boys' club that wants to stop her. for hillary clinton, for the democratic left, and for will and,ateus pl k check-up on how our panel's predictions last year turned out. we'll be right back.

chris: welcome back. our panel may have made their own new year resolutions or not, but today we want them to give ideas for a few others. first, hillary clinton. what does she need to do or avoid this year, john heilemann? >> she is right now the most

popular politician in the country. she is ahead of everybody. mike huckabee is the second most popular. she is ahead of him in net positives. chris: hillary clinton. >> according to a poll in early december. chris: she can improve? >> she has gotten there by being loyal, looking loyal, not looking political, staying away from anything that looked like that she has designs beyond doing -- chris: stay the course. >> when someone says we would like you to come to iowa and become chancellor of the university of iowa. turn it down. some democrats say you should challenge obama, laugh. chris: a great question. >> how about a resolution for sarah palin, kelly? >> when people talk about her not knowing enough on big issues, instead of reaching all the way to that she looks worldly, demonstrate confidence on smaller issues, things where

she doesn't have wheelhouse. not energy, but issues not reached too much, build a base. chris: a tough question, i want to single her out, but do you think she is the kind of person that can put her head in books every day? bill clinton told me recently he spends an hour every day studying economics, just reading the issues, reading the "wall street journal," keeping up on business. when he goes out and speaks, he knows more than the people in the audience. is she willing to do that? >> for people who have worked with her and prepped her for things in the past, they thought she was a quick study but not spending endless hours the way you describe. chris: let's have your question, what about the guys out there racking her all the time, the secret boys club down in the south. all of the governors that get together and they don't want her to run. haley barber and the rest of them, jeb bush, what is their resolution, what should they do? >> ignore her. it's the one thing that drives her crazy. this they actually try and attack her, she has the

brilliant defense mechanism, the gold old boys are fighting me, therefore, support me. it's palin versus barber, palin wins. just in terms of what that looks like and what i'm curious about, kelly, what small issues could she actually credibly engage? i haven't seen any in two years? >> domestic issues as opposed to talking about foreign policy. if she wants to talk about job creation, specific tax issues, things that she does not go into great detail about now as they come up instead of trying to -- >> she was monitoring policy not long ago. chris: you covered it for years. what is your recommendation? coming off a bad season of fighting between the president and the democratic left, the guys that held their seats, what do you recommend for sthem >> remember that there was an election and they lost the house and they lost 63 seats in the house. there is another election coming up and it is in their own

self-interest to make their president look good and make their party look good and make them look like the adults sitting at the table. so, therefore, understand that sometimes you're not going to agree with your president on everything, but he is working for you. chris: let's go to andrew. heom tfr home country, we all velothem, kelly and i are very h irisicameran and the royals. lowe ve will's selection. we love this bride to be. what are your recommendations for kate middleton? >> do what she has been doing which is stay under the radar and make a very clear distinction in public and private. in other words do not follow the course of william's mother, however revered she is. it's time for another kind of princess. also, in so far as she can remind the brits that she is still middle class and she is owon them.

that again strengthens the legitimacy. chris: we all lov

chris: welcome back. john, let's take a look at one of your standout predictions from 2010. >> chris, november 3 is going to be an ugly day for democrats. there is one bright spot in california where i believe it's

risk to say but it's true that both are going to lose. the democrats are going to win. chris: how did you know that? >> you don't go against jerry brown. it's too big a state and to complicated to run in. you can see meg was going to screw up somewhere down the line and she did. on the other side, with the way the state works is when the governor's race goes to one party, the senate race that's the same year goes to that party. once you call the governor's race, you had to go to the senate race for boxer. chris: gloria, let's take a look at your prediction. >> tax cuts, have you the democratic plan for the middle class. i predict neither passes and it goes in a lame duck session. chris: how did you know that? >> i'm not a rocket scientist, it was clear that they weren't going to come to any agreement and would end up in a lame duck.

another prediction, you're going to be dealing with the tax cut issue in a couple more years. chris: kelly, here we go, kelly o'donnell. >> we think of the magical mystical bipartisanship, we're seeing it in strange ways. people are voting against what they normally would to prepare for november and democrats and republicans trying to find things to work together on so they can sell themselves as by part sans when we get to the midterm elections. chris: you were very hopeful. >> i was very hopeful. i have proved the credibility of the producers, they weren't only looking for winners, but a sample of someone that got it wrong. i'll fall on that sword. chris: you were so hopeful. congress was wrong, you were right. they should have been bipartisan. now, andrew sullivan, your turn. >> in the palin area, no one who is actually, no repuican who is actually competing in a really competitive seat wants her anywhere near them. chris: wrong. dozen and dozen of republicans

asked her to come in. >> dozen and dozen and dozens didn't. my point was a close one, the close races. nicky haley was not a close race. it was a distant race. she catapulted her to the top. those that thought they could win without her did not bring her in. chris: you were right. >> i was dead right. >> i think after you said that, she started endorsing candidates so she would be called in. chris: it's greati stting in the middle here not predictions. i just listen. thank you. we'll be right back.

chris: i want to say happy new year to people who love politics like we do and especially all of those that love this country like we all do. thanks to a great roundtable, john heilemann, gloria borger, kelly o'donnell and andrew sullivan. that's the show. thanks for watching. see you here next week.