that's the last word from a lucky place called watertown. storm front. let's play "hardball." good evening. i'm chris matthews in washington. let me start tonight with this. it's here. that inspect general's report on the internal revenue service targeting tea party and patriot groups for special scrutiny. it's in. everything we've heard, everything we've been talking about is right there in the report. the one big news item is the inspector general's investigation itself was triggered by members of congress concerned that right wing groups were being harassed, getting their applications for tax exempt status delayed, being forced to provide unusual information. the ig report also pointed out,

this is big news. this kind of inappropriate screening by the irs officials was initiated within the irs and not because of any outside influence from the administration. but the key elements are there. the focus on groups called tea party and patriot. education of the public to make america a better place to live. that's in quote. issues such as taxes, government spending, and even criticism of how the government is being run. so now we have it. the president has it. the waiting game is over. it's time for action. and we're all looking right now at the white house to see what that action will be. chuck todd is chief white house correspondent and political director for nbc news. sam stein covers the white house for the huffington post. let's focus on the hard news right now. but i also want to focus on the reaction we expect from the president. to me, this is the big news here. all of these officials, i'm reading from the ig report, stated that the criteria were not influenced by any individual or organization outside the irs. instead, the determination developed and implemented an inappropriate criteria.

chuck, it was inside. it was in the bowels of the irs. they're accusing top level people of not watching closely and no influence from outside, including the white house. >> by the way, it also says this report has not been fully -- that the irs has not followed through on all of the recommendations that the inspector general has made. and, in fact, they continue this sort of an open audit, if you will. if they don't accept all of the different recommendations. the irs is pushing back. so there's an opening here if you're looking at sort of how to play -- if you want to play a leadership, there's an opening here to say the irs has got to accept all of these findings and all of these recommendations or these folks are going to lose their jobs. but it is all internal. seems to be the thing. if i were a member of congress and i were wondering, okay, is

there -- i see this report. why do i want to hold a congressional hearing? what i want to hold a congressional hearing, what i don't see in this report is why. i want to ask the agents in the determinations unit in cincinnati, why did they want these questions? why did they request a list of names of donors? what were they hoping to get at? what was the reasoning, the why here? that seems to be missing. the report really focuses on the managers. lack of supervision. the fact these criterias were developed. the missing piece here if i were a member of congress is the why. >> sam, the second question i would ask and maybe first i'd ask is why just right wing groups? why not groups with progressive in their names. there are a lot there. why didn't you go for them, too, to see if they were practicing politics as well as policy pushing. >> those are the two questions, chris. when you read through the report, what the irs officials say is that, well, from 2009 to about 2012 we had a two-fold increase in the uniform groups applying for the 501 c 4 designation. we had to find out a centralized

way to screen these groups. then it brings up your question. what gave you the idea these criteria that you applied were appropriate. i don't see this -- going through this report i haven't seen any justification for why they chose those criteria. they said statistically that ended up meaning one-third of all the groups they screened had the words tea party or patriots in the name. which is a lot. but i'd like to see why they didn't choose groups with progressive in the title. or any other delineation that would have made it more balanced. >> here's some good news for the white house. even in our first edition tonight we were talking about the possibility, purely the possibility that there might be some white house involvement or campaign involvement where somebody in the obama administration might have said, you know, we ought to look at these tea party people. they're raising a ton of money. maybe they're doing it illegally and getting involved in campaigning. according to this ig report that didn't happen. >> right. this is all internal. again, if i were a member of congress and i want to -- i'd sit there and say, you know

what? i want to question these individuals. i want to question the individuals in the cincinnati office. i want to know what made them come up with this criteria. what -- >> you mean ask if they had their own prejudice? >> yeah. their own prejudices, the same questions, frankly, that they were asking of these groups. these were sort of -- you know, the request for names of donors. they were making requests of all issues that are important to the organization. these were some -- it was clear that they were looking to see, you know, specifics on conservative groups, potentially. why were they doing that? what was their motivation in doing that? here you get a little bit in the report that says, well, the motivation was they were trying to streamline the process and this seemed to be easy. by the way, that's another part of this -- this reporting and this story, this is -- the 501 c 3 and c 4 status, particularly c 4, it's the most ridiculous loophole in campaign finance. >> basically you can do everything but use the name of your opponent. >> right. you can do all of that. but you hide the names of donors.

it's a way to funnel money, launder money, hide money. this is a problem. >> by the way -- >> this is not healthy for american democracy. >> the city we live in, sam stein, is packed with so-called -- what do you call them? think tanks. every one of them with dedicated senior fellow this, senior fellow that. just to push a political argument. i mean, it's all over this town. all -- >> you know -- >> the problem with this as chuck alluded to is that instead of going after the big fish, which there might have been reason to do for the irs, they went after the little guys. they ended up making this process incredibly problematic and burdensome for mom and pop shops so to speak. that's one major problem. the other one you have to understand the political climate in 2010-2011 was a lot different than it was now. there were several democratic senators begging the irs practically to go after conservative 501 c 4 groups because they were convinced that in the post citizens united world they were going to pop up and become influential -- >> they're not saying that here in this ig report. >> of course not.

>> people who are concerned about the targeting, in other words, conservatives, i would think. >> yes. that's what i'm getting at. it's changed now. no longer do we consider that -- no longer do senate democrats, for instance, want to talk about it as a uniquely conservative issue. the irs doesn't have exactly a reservoir of goodwill to work with. they're an easy target for lawmakers. i would be shocked if they weren't brought up to capitol hill to testify to the exact questions chuck talked about. >> let's take a look at some of the elements in the new report that just came out. it is the ig report in its entirety. here's one. determinations unit employees stated they considered the tea party criterion as a shorthand term for all potential political cases. >> that's why you sit there and say, so this was an accepted -- this is why congress sits there, a member of congress is going to say, i'm going to have to have a hearing. because the ig accepted that as a -- as a reasoning. that's an unacceptable answer. really? we're really supposed to believe that? i want to know what were the

follow-up questions to this employee and the head of this unit. >> what do you think, sam? it looks to me like -- i don't know. let me go to the president here. there's only one person elected in the executive branch, i guess the vice president comes with the team. it's the president of the united states. can the president step back from this and say, i'm waiting for another report, i'm waiting for a commission, i'm waiting to see what jack lou, secretary of treasury does. i'm waiting till i have a new irs commissioner. at some point, i'm going to ask you a political question here, doesn't he have to replace words with action? real action now? he's got the report. >> i would assume so. it would seem like it would be a political malpractice to say we want more studies of this. if only because everyone else is jumping on it and you would look like you were behind the curve on this issue. my suspicion is that they're going to look at this report, they're going to come out with a series of recommendations that they would like to see the irs make. keep in mind there's no acting commissioner. it's not like they have someone they can go after and fire. they need to appoint a commissioner first and confirm him or her.

they probably will end up suggesting, you know, full on changes throughout the structure of the irs. and they will also if they were smart, i would say, look at the broader campaign finance regime. >> let me tell you, let me look at this. let me talk to you from the position of, say, my brother. other people on the right. let me tell you how they look at it. my brother, bruce. as long as the people who did this are in the irs, they got a problem. in other words, the people that decided there was no political bias in pointing out and targeting patriot groups. the people that could still with a straight face say i wasn't going after right wingers when they said it. as long as they're still in there doing their tax returns, people are going to say i don't trust these guys. >> you know what, i -- >> as long as they're there. >> i guess the best way i think that the white house could sort of get their arms around this, appoint a face. i was trying to think of like a top cop type of individual. but appoint somebody who's going to go into the irs that is somewhat of a respected name. maybe it's a former member of the military. maybe it's -- i think of -- it's somebody who looks like ray ordierno.

find the 6'5", hulking general with the shaved head. >> who would want that job? sfwl that's going to go in there and say we've got to clean up this place and get the integrity of the irs back. it's that feel, this sort of give off the sense -- get off the sense you're putting in somebody who's just a no nonsense kind of guy. whether they have ties to the irs or not is less -- you want to give the public the idea that, you know what, maybe it's a member of the opposite party. maybe it's a former -- maybe it's jon kyle or something. i'm just -- maybe it's somebody from the opposite side of the party. you need to restore credibility immediately. >> what do you think of that, sam? i agree with thap p i think it's got to be a republican. somebody on the other side maybe matched with a democrat. it can't look like an inside job at this point. this president needs to take a hard step. i think it involves eventually through his appointment process getting rid of the people who did this. i'm sorry.

it's brutal. it's the british method. but sometimes resignation is the only way to deal with this. people have to have confidence that the bad pennies aren't still there. >> i agree with that. i agree with that entirely. i'm not sure it has to look like ray ordierno, but somebody that gets in there, cleans up house. gets confidence restored in the irs operations to the sense they can demonstrate to conservative groups they aren't going to be targeted. i don't know if it's going to be effective. it's something the president probably has to do. >> this president has a responsibility not just for the united states government right now, but for the democratic party and its legacy. legacy of good government. for the idea of the federal government. idea of the irs. all these now are in play right now in terms of attack and perhaps ridicule and, worse yet, derision. anyway, thank you, chuck todd. thank you, sam stein. >> that was the ball he dropped the other day. >> right back with more of the big three controversies threatening the administration right now and what the president needs to do to get a handle on these, to get his presidency back on track. this is "hardball," the place for politics.

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welcome back to "hardball." we're learning more by the minute about the irs scandal. as i mentioned earlier, a new headline out just now from the associated press. "inspector general, ineffective management at irs allowed agents to target tea party groups." wow. the "washington post" reported earlier today this case was not confined to that office in cincinnati. the office that had been tasked with reviewing the non-profit

groups. "post" reports additional irs employees in washington, d.c., and out in california also looked at the tea party groups to determine their eligibility for tax exemption. the irs says steven miller who's been serving as acting commissioner since last fall was told this has been happening, well, was happening back in may of 2012, about a year after lois lerner who oversees that division was informed herself. miller wrote in "usa today" in an op-ed piece in part, quote, we should have done a better job of handling the influx of applications by advocacy groups. mistakes were made but in no way due to political or partisan motivation. he also said there was a shortcut taken in our processes to determine which groups needed atigsal review. the mistakes we made were due to absence of sufficient process for working the increase in cases and a lack of sensitivity to the implications of some of the decisions that were made. senator sherrod brown is a democrat from ohio and member of the banking and finance committees. senator brown, does this cover it, lack of sensitivity when you see patriot and tea party on the name of a group and you don't

know it's a right wing group? is that conceivable that a person wouldn't know that? and if they didn't know it, why would they be looking for those words to decide which groups to take a look at? >> well, they should know it and they shouldn't do it, and it's, you know, people should lose jobs over things like that. but, you know, it's bigger than that. the irs, it's wrong what the irs did if they singled out individual ideological peoples that were in a certain place in the ideological spectrum. but it's also wrong that organizations posed as charitable organizations got this tax break, got this tax exemption and then obviously engaged in political activity. the irs needs to, regardless of whether they were on the left or right, no matter whom or who they were advocating for or against, the irs should go after people that broke the law in that way and posed as charitable organizations when they were spending millions of dollars in political campaigns. >> i'm not asking you because i trust you a lot, i'm just thinking, what would be your emotional reaction, gut

reaction, if you heard dick cheney, when he was still calling the shots with george w. bush, and you found out that they were investigating for irs purposes any group with the name progressive in the organization? >> of course, i'd feel an anger about that. and a moral outrage about that. i think this is the same thing. i do say it's bigger than just what the irs has done that's being reported now. the bigger issue is the irs allowing groups that are engaging in political activity in a big way, tens of millions of dollars, to pass themselves off as charitable contributions. that's breaking the law as the irs apparently has done here by singling out groups. so this needs to be an aggressive enforcement regardless of your political stance, political position. whether you're liberal, conservative, progressive or far right. the irs needs to look at the tax exempt status of these groups that are masquerading as charitable organizations. >> okay.

the president. i don't know, sometimes when he talks about gitmo and things like that, i get the sense he's more of an op-ped writer than president. that he doesn't act like he has control over the united states government. does he or does he not, as chief executive of the executive branch, control the treasury department? does he or does he not control the irs which is part of the treasury department? can he go over there and clean it up himself? can he make it happen? >> well, i think he can. i understand people are protected by civil service and all of that. but the president needs to show leadership here. needs to msure this gets cleaned up. people should lose jobs if they were doing what the media think that they were doing. at the same time, the president needs to be part of a broadening of this enforcement. whether it's department of justice or whether it's an aggressive, whether it's other aggressive federal agencies that say, no, you're breaking the law. you don't automatically get a tax exempt status just because you say you should. you need to -- >> i know.

we had somebody on yesterday told me they were -- it was somebody on the right yesterday was here. and she was pointing out that they were held to a standard. they could not get involved in elections. they couldn't put the name of candidates on their ballot, on materials they send out. there is some disciplining going on among these groups. you and i know it's a vague difference between saying you're a policy organization and you hate obama care, but they were told they couldn't say the word "obama care" as they get closer to the election. so somebody's at least policing this correctly. if you were holding a hearing right now on the next commissioner of the irs, what standard would you set? what actions would you demand of that person, man or woman, who's about to get the permanent job now, because it's open? >> well, i would look at, first of all, i'd look at what senator whitehouse shared with a group of us today. senator whitehouse from rhode island. what these forms say that you fill out before you get this charitable exemption. the social media organizations. so called 501c4s. if you're going to take in

millions of dollars and not spend it for charitable purposes. whoever is head of the irs, whoever is doing the day-to-day work there, needs to begin to look more aggressively and to look more thoroughly at what they're doing that way. because, you know, whatever this right winger said on your show, this conservative said yesterday, i saw part of your show. i didn't see that. i saw congressman from ohio, turner, on yesterday. but there clearly were tens of millions of dollars spent last year, chris, as you know in races all over the country where these supposedly nonpolitical, these supposedly charitable organizations were taking very strong political stands for or against candidates. and, you know, we should look, should they have gotten that tax exemption? i don't know what the answer is. i think the answer is probably no in many cases. i think you look at the left or the right. it doesn't matter. if they broke the law, they broke the law. >> by the way, mr. turner was on yesterday. mike turner. he's studied well at the school of not answering questions. >> right. you caught him on that.

>> i think he was 0 for 6, by the way. thank you so much, senator sherrod brown, for coming on tonight. jonathan alter is msnbc political analyst. author of the upcoming book "the center holds: obama and his enemies." it's a fantastic book. i'm reading it already in galley. i won't say a word about it. it's great. you're a great writer. there's a hell of a lot good stuff in there. i didn't know already the stuff. let me ask you this about the situation here. if you were -- this president, i think, is facing some historic notes in his biography. he may not want to see. like irs, fbi, even benghazi. although it's unclear right next -- although it's unclear what they'll write next to it. how does he get through this thing? he's up to his elbows in alligators. >> he has to get on top of this story. you know, today was disastrous. i thought that eric holder's briefing was disastrous. he tried to claim that they had exhausted all other avenues before they surveilled 100 "ap" reporters, which is completely untrue. they didn't even tell the

reporters that this surveillance was going on. so that was one avenue they didn't exhaust. and i thought jay carney's briefing was also disastrous. it was kind of like, reminded me of in the '50s when kids would get under their desks in the cold war for duck and cover exercises. >> yeah. >> it was duck and cover today in washington. so he needs some new political help inside the white house. he doesn't trust people very much. unless he's comfortable with them over many years. he has to get over that, bring in some new high quality political help. not to work the political angles, but to help him get on top of this and save his presidency. otherwise it's going to be a long, hot summer of scandal. >> john, you've got to the heart of it. sometimes your best advisers are people who are not invested in you. >> right. >> that's the hardest thing. you bring in a gergen to help clinton. you bring in howard baker to help reagan. sometimes the best advisers are

not sicca fans. sycophants. they don't depend on you for emotional response. they're willing to come in and say, i'm only here for six months. i'm here to clean up. i can help you. i'm a pro. sometimes a professional or an elected president says, wait a minute, i got elected to this job, not you. i'm the boss. you know, it's hard to get the boss to come down from his high ladder and say, i need some help. >> he kind of in some ways infantalizes the people around him. a lot of them are young. some of them are smart and talented. they're all in awe of the president. they have an unhealthy love for him. yes, they do sometimes tell him the bad news which he says he wants. they're not all sycophants. he has not figured out how to get other people in. we could go over a list of names. i think there are actually very talented people around who could help him with more creative ideas for getting on top of it. on the irs, for instance, he needs maybe former heads of the irs to be a special term-limited prosecutors who have to report

back in six months instead of six years the way it was in the 1990s. and they need to make recommendations that include not just possible prosecution, because it sounds pretty bad what happened there. but also to strengthen the law, you have a situation, chris, where karl rove, just to go to specifics on what sherrod brown was saying, karl rove in 2010 had a filing to the irs where he said that crossroads gps, his c4 superpac was not, quote, predominantly a political organization. then they spent $70 million in 2012 on attack ads. if that's not political, what is? so basically in some ways the irs has not been aggressive enough. the same thing applies, by the way, to bill burton and the pro-obama superpacs. the law is not being enforced to prevent these organizations from masquerading as social welfare groups. they are political groups and should be fined by the irs if they engage in this kind of political activity. that's not happening.

>> i think actions speak louder than words and i got to tell you something, when reagan broke the petgo strike and fired them all for breaking their oaths, everybody in the world, including the people in moscow got the word. >> heads should roll. we had never used a contractor before and didn't know where to start. at angie's list, you'll find reviews on everything from home repair to healthcare written by people just like you. no company can pay to be on angie's list, so you can trust what you're reading. angie's list is like having thousands of close neighbors

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back to "hardball." now to the sideshow. some republicans are tickled to see the white house caught in a trifecta of stories this week. benghazi, the irs, and now the "associated press" story. steve colbert focused on the irs scandal and brought champagne. >> this should send a chill up your spine. >> it is absolutely chilling. >> this is chilling. >> oh, yes. it's chilling. which also describes the champagne i've been waiting to

break out for just this scandal. because -- mmm. mmm, mmm, mmm. mmm, mmm, mmm. folks, this proves that everything i've ever said about obama is true. so it's official. he's a secret muslim shape shifting alien from kenya who is coming for our guns and bo is a member of the illuminati. next, prince harry was in new jersey today visiting areas hit hard by superstorm sandy. meeting governor chris christie had to follow through on a promise. back when christie found out about the royal visit, he assured everyone harry's stay would be far different from his scandal-plagued visit to las vegas last year. >> i'm thrilled that he's willing to come. he wants to come and see the destruction himself, first withinhand. and he wants to be helpful. and i'm going to be spending the entire day with prince harry. so believe me, nobody's going to

get naked if i'm spending the entire day. >> the proof comes in the form of a tweet from governor christie earlier today. greeting prince harry at the jersey shore the best way i know how, with his own royal fleece. in the aftermath of the storm, of course, it seemed like christie didn't go anywhere without his fleece. there it is. up nelks, the other controversy for the obama administration. the justice department's secret subpoena of phone records from reporters of the associated press. you're watching "hardball." the place for politics.

welcome back to "hardball." the obama administration has been besieged with criticism and questions about the department of justice's controversial and sweeping use of subpoenas. the secretly collected phone records from more than 100 journalists at the associated press. those records included two months worth of outgoing calls for work and personal phone numbers for more than 20 separate phone lines in new york, washington and hardford. what was doj and the fbi looking for? the associated press was informed their phone records had been seized by the u.s. attorney ronald machen who was leading an investigation tied to an associated press story last year

in which administration officials leaked sensitive information about a foiled terror plot based in yemen. attorney general eric holder told members of the press today he recused himself from investigation into the leaks including that one. but he still voiced strong support of his deputies who ordered the subpoenas. take a listen. >> i have to say that this is among -- if not the most serious, it is the top two or three most serious leaks i've ever seen. it put the american people at risk. and trying to determine who was responsible for that, i think, required very aggressive action. and, as i said, i'm sure that the subpoena as formulated based on the people that i know, i don't know about the facts, but based on the people i know, i think that that subpoena was done in conformance with doj regs. >> holder is slated to testify at a previously scheduled house hearing tomorrow. and white house press secretary jay carney also fielded numerous questions about the issue at today's white house briefing, including those essentially

accusing the administration of resorting to bully tactics and intimidation when it came to the first amendment rights to freedom of the press. here's jay carney. >> the president is a strong defender of the first amendment. and a firm believer in the need for the press to be unfettered in its ability to conduct investigative reporting and facilitate a free flow of information. he also, of course, recognizes the need for the justice department to investigate alleged criminal activity without undue influence. as i said yesterday in my statement, other than press reports, we have no knowledge of any attempt by the justice department to seek phone records of the associated press. >> rachel is deputy managing editor for politico. michael crowley is senior correspondent for "time" magazine. rachel, what was -- what is the department of justice, fbi looking for in all those phone records of the associated press? >> chris, thanks so much for having me. they are trying to find out who

the leakers were. remember, this is a leak investigation. and, remember, this came up at the height of the presidential election. the republicans were crying foul in a major way, saying that the obama administration was playing politics with national security. now you see this all unfolding and reporters, of course, worried that this will have a chilling effect on our news gathering abilities. >> well, this is strange, because michael, here you have what looks to be an investigation to find out who leaked something when the leak was supposedly, according to the republican critics, advantageous to the administration. >> well, that's right. i mean, as rachel just said, this was a theme for republicans in the spring of last year. around the same time, i believe, "the new york times" reported on all the kind of covert actions the obama administration was taking to sabotage iran's nuclear program. there was a lot of what to republicans seemed like boasting by obama officials. by the way, also some stories about the drone program that i think republicans were upset about. so republicans saw this picture

of obama officials willing to talk about classified information to the media in a way that boosted the president's election prospects. there's a bit of an irony here in that conservatives were furious. they were demanding very strong investigations. i guess they didn't specifically say that the press's phones should be tapped or phone records should be seized. >> they weren't tapped. they weren't tapped. >> no. they weren't tapped. what i'm saying is they weren't calling for a crackdown on the press, per se, but there is a little bit of an irony here of the conservative criticism of the administration for following through on the kind of tough investigation they were calling for. >> let's take a look at carl bernstein, what he said on "morning joe" this morning. >> it's totally inexcusable that this administration has been terrible on this subject from the beginning. the object of it is to intimidate people who talk to reporters. this was an accident waiting to become a nuclear event. and now it's happened. this is a matter of policy. it is known to the president of

the united states that this is the policy. to say that there was no knowledge in quotes specifically about this in the white house is nonsense. >> well, there you saw one of the high priests of journalism there, carl bernstein there, rachel, speaking i believe for the political -- the journalistic establishment. krou start messing with us, you start collecting our phone numbers, our records of who we call, you're challenging the first amendment. he certainly made that statement there. is he right? >> he made it very strongly. i don't think you'll find a lot of disagreement among members of the press corps on that. it really does go to the heart of the news gathering process. i mean, reporters assure sources, we're going to keep your information confidential. sources can turn around and say, really? confidential forever or just until the department of justice subpoenas your phone records? it makes it very hard for us to do our jobs. you're going to hear a lot of outrage, certainly, from journalists on this. the question is whether there will be continued outrage from lawmakers on this as well. >> so you're going to have to be -- michael, you're going to have to be like the menendez brothers

taping separate phones together some where so you can do indirect calls. you can't use your phone number. you can't use the phone number of your source. you got to find some other way to communicate besides the usual way which is the phone. >> people who watch "the wire" will remember the burner phones they would use and throw away. the challenges in tracking those. >> yeah. >> people are going to have to be creative. they're going to have to use more face to face meetings. i really do think it will have a chilling effect. the reality is here was a white house that was already kind of -- there was blood in the water. it felt like a scandal mode. then what did you have? a story about the press. and reportorial freedoms. talk about stoking the fire at the worst possible time. the timing was horrendous for the administration. >> the fact they've enraged the right and everybody from the moderate republican tax concerned republicans from the suburbs to the far right gun toting people living in the hills. all of them are angry about this irs story even if it's just the irs doing it.

because it's the government. the government's coming to get us. now, rachel, you're shaking your head positively because now you get the middle and sometimes on the left journalists and sometimes on the right journalists, all now saying, hey, they're coming at us, too. not just after the tax paying people out there, but the news reporting people. >> remember how angry the republicans were about these national security leaks at the height of the presidential campaign? now they're angry about the aggressive way in which the obama administration is going after the leakers. so that's a little bit of a turn for us. and it's absolutely true that this scandal comes in the middle of the irs mess, the benghazi questions which aren't going to go away any time soon. so there is a little bit of -- i wouldn't even say a drip, drip, drip. it's more like a flood for the administration. >> yeah. >> definitely not the week they wanted when they're trying to

focus on immigration and maybe bringing back gun control and many other things on their domestic agenda. >> chris, if i could -- >> you're right. go ahead. >> if i could jump in, there's a kind of -- there's a real civil libertarian mood in the country right now. particularly you're seeing it rising in the republican party. think about rand paul's filibustering about drones. the jon brennan confirmation hearings. anxiety about executive power, killing american citizens through secret documents the public doesn't see. now we've been spying on the irs. there is this i think growing concern about the power of the government that is resonating with people even if in some ways it's exaggerated, in some ways it's real. >> michael, neither you or i or the up up man for rand paul. but here he is based on that very point. when word of the doj's action broke last night, rand paul went on the offense accusing president obama misusing his power. wait till you hear these strong words. take a listen. >> he has extraordinary power. he's supposed to be able to be wise enough to restrain himself. but he's using the power of government to investigate his enemies. he's tapping the phones of the

press. this sounds like a president somewhat drunk on power. >> well, be careful there, mr. paul. because we should note that senator paul was wrong. there was no talk here of anybody's phones being tapped. they weren't. the department of justice collected records of phone calls, not the substance of the calls themselves. i think that's a significant point. but you can see there, rachel, that the right, and i don't knock them for doing this. this is politics. when you catch the other side being big government, being bullies, looking around to show their power, rightly or wrongly, this rubs most americans the wrong way because we'd like to think that we're the good guys. the government is a necessary evil, at best. your thoughts? >> the right has an opportunity here. you can absolutely believe they will seize it. they've been talking about benghazi for months. it didn't catch on during the presidential campaign. it heated up last week. but now they have the irs and the justice department probe to throw into the mix as well. so a lot for the republicans and congress to work with right now.

and also president obama ran for re-election essentially making the argument that government can help people. that was where he differed in so many ways with mitt romney. now we're finding that government is not always helpful. that's the narrative that he had put forward. these -- whether you call them scandals or distractions or simply a mess, that definitely distracts from that argument. >> rachel, great to have you on. rachel smolkin from politico. up next, three controveries brewing. can president obama make his second term with all this around him? he is up to his elbows in alligators right now. maybe not a week from now. this is "hardball," the place for politics.

so far, hillary clinton's poll ratings haven't been negatively affected by all this talk by republicans, of course, about benghazi. a new ppp poll finds that hillary's at 52% favorable, 44% unfavorable. virtually identical to where she was in late march before this brouhaha started. and voters trust the former secretary of state over congressional republicans on the issue of benghazi by a margin of 49% to 39%. we'll be right back. my mantra?

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i sure want to do some governing. i want to get some stuff done. i don't have a lot of time. i've got three and a half years left and it goes by like that. >> president obama speaking at a fund-raiser after the news broke that the justice department secretly detained two months of phone records from the associated press. irs misconduct and a muddy benghazi explanation that people have been talking about. here on "hardball," we've gone to look at obama's stated goal to quote do some governing, do some stuff in the face of republicans are going to use like a hammer to stop this president in his tracks. doug brinkley, maly kai henderson, i'm going to give you both a chants to think big. nia, missed you lately. you've been doing other shows. seriously now, the president's two goals, defense and offense. does he start doing stuff and hope this other stuff will start rattling away from him or does

he have to put out all these fires? does he have to deal with clarifying benghazi, putting the blame where it belongs and dealing with this whole question of the fbi going after a major news organization? does he have to do something else to put them in perspective? >> i think in many ways, he's got to do both. he's got to get out front in these scandals. show some leadership. have a buck stops here moment, but he's also got to do his day job. he's got a meeting with a turkish leader. he's going to go to baltimore and talk jobs, but until he's able to put a better framing around these scandals, it really threatened to engulf these next few weeks if not months. he's going to have trouble sort of setting the agenda. that's the problem.

the president wants to be in a place where he is setting the agenda. everybody was talking about the irs in benghazi, but he's really got to tamp down on these, it's almost like he's got to not only call olivia pope and figure out what she would do in a situation like this, he's got to figure out how to have a direct camera address about these issues. >> does he have to play offense or defense to restore his second term prospects? >> he's got to immediately get control of these three issues. i think he might have to look at a resignation from eric holder, possibly. benghazi has drug out too long. talked straight about the talking points and move on. it's the cover up and you just don't need this. it's not been a good season for barack obama and i think he has an opportunity to just, i'm sure his poll numbers are going to stay high.

people trust him, but he can't let his integrity get dented. don't talk abt. if you're dwoik to close guantanamo, close it. if you want the keystone pipeline to happen, say it's going to happen. there have been too many trial ones. >> good point. what i sense is a lot of action, talk, you know this covering him all the time. he's good at words and go back to reagan and the patco strike. all the history of iran contra. reagan didn't put that behind him until his wife got him to admit it, he did trade arms for hostages. until that, it wasn't over with. roosevelt tried to pack the court until he pulled back on that. that was the only issue. i don't know whether you can get away with the issue that's in his face right now. >> i think he's always had this sort of above the fray approach to politics and part of his brand was that he was a break

very much from bush and now, you have his supporters, the only sort of way they're able to defend him now is to say well, bush did the same thing. he's got to figure out a way where he can get that brand back, protect that brand. his words in some ways seemed divorced from feeling. doesn't seem like there's a lot of outrage there. you have jay carney looking a little waffly out there, so i think he's got to get something done. but the problem is is always the same thing. he's got the same problem now that he had before. that is a very poisonous atmosphere on the hill and this, i think, is only going to imbolden reasons. >> is he in real trouble? >> not yet, but he's got to talk directly to the american people, push for immigration reform. if he doesn't get it, he's going to have to cut out on his own and find ways to lead without worrying about congress, with but i think the gun control

failure really did some damage to him this spring.if hwon that smaller. >> when we run, let finish -- jobs. [ heart beating, monitor beeping ] woman: what do you mean, homeowners insurance doesn't cover floods? [ heart rate increases ] man: a few inches of water caused all this? [ heart rate increases ] woman #2: but i don't even live near the water. what you don't know about flood insurance may shock you -- including the fact that a preferred risk policy starts as low as $129 a year. for an agent, call the number that appears on your screen.

let me finish with this. i said that the president's problems, the benghazi talking

points, the irs digging into the tea party, the fbi digging for reporter's phone records are containable if the president takes two steps. clear himself of mischief and fire anyone in the executive branch that was into the mischief. the real problem is the nature of the second term. there's a strong chance he lacked a hard nosed agenda. there's nothing the president's fighting for, asking us to fight for. there's no cause and without a cause, there is no urgent need to be there for him. i think the best goal for this president is to create jobs. no one will ever target a democrat for trying to do what they believe in doing. it's what made the democratic party great in the 1930s. put men and women to work. create big construction projects that demand work and do it now, mr. president. interest rates will never be this low, ever. money will never be this less

expensive. there will never be a better time to put money where it's needed and it will give the president, you, sir, something to do and that's "hardball" for now. thanks for being with us. all in with chris hayes starts right now. good evening from new york. president obama said the irs should be prepared for a full investigation after targeting conservative groups. tonight, we have the results of the investigation and it's a stunning look at an organization and bureaucracy completely overwhelmed in the aftermath of citizens united. plus, i'll tell you about angelina jolie's brave admission "the new york times" and the spotlight it shines on health