Post-AFL-CIO Democratic Presidential Forum Coverage on August 7, 8:30 - 10:00 p.m. ET

Guests: Eugene Robinson, Pat Buchanan, Willie Brown, David Axelrod, David Bonior, Howard Wolfson, David Axelrod, Terry McAuliffe, Lynn Sweet, Jonathan Alter, Willie Brown

CHRIS MATTHEWS, MSNBC ANCHOR: It was not an NFL football game, but it was pretty close. I think that Hillary Clinton did what she always did - has always done so far in these debates, do well. She was able to be majestic, even, in fact, in her advantages over the other candidates.

I thought that Obama had a very good debate with here over how to deal with al Qaeda in Pakistan, whether we should attack, with or without the support of Musharraf of Pakistan. She countered that it would destabilize a government that we very much need as an alternative to an Islamist government that would then gain control of nuclear weapons.

I thought the man who talked about health care and not being able to pay for medicine - medical treatment for his wife, the man with crutches, was the most powerful message of the night. The need for health care for people who cannot afford right now. He talked about how his company had gone bankrupt to avoid paying the pensions. That is a severe problem in America today.

I thought it was interesting that Barack Obama gave a very tough assessment of what we have to do about illegal immigration. Therefore, I think the NBC poll, which just came, is very reflective of the debate tonight. Which is, terrorism in Iraq, health care in this country, and illegal immigration. And by the way, I phrase it just like that, illegal immigration. People don't like it and they want something done about it.

So, I'm going to ask right now: who did well tonight? Who did not do well? I've got Eugene Robinson of the "Washington Post," one of the great columnists of this city, and Pat Buchanan, who has been in these kind of tussles himself over the years. And also joining us from San Francisco, Willie Brown, the former speaker of the California assembly and longtime mayor of San Francisco, the most beautiful city in America.

We're going to start, first of all, with Gene Robinson. Kill it.

Kill it. No questioning. Who won the debate tonight? Who came out ahead, beat expectations?

EUGENE ROBINSON, "THE WASHINGTON POST": I think Obama had a good night, a good night with the Washington insiders trope that he used very effectively against Hillary Clinton.

MATTHEWS: He had the crowd.

MATTHEWS: He had the crowd. He definitely had home field advantage. He handled himself, I thought, very well in that debate over Pakistan, over would you invade Pakistan. They came at him really hard. He was like a Judo master, kind of. The harder they came at him, he seemed to twist it and turn it. He would have made a million dollars.

MATTHEWS: I think he handled the Barry Bonds question very go. Let's go to Willie Brown on the Barry Bonds question, but first of all, the big question, who won tonight, Mr. Mayor, Mr. Speaker?

WILLIE BROWN, FORMER MAYOR OF SAN FRANCISCO: I think that you cannot say who won or who lost very easily, Chris. I think the goal of Mrs. Clinton was to go into the home court advantage of Barack Obama and do well. She did exactly that. I thought Joe Biden made it very clear that he has as much knowledge, if not more, than almost anybody else on that stage. He made that very clear.

I think it was also fairly clear that Mr. Obama is a force to be reckoned with by all of the Democratic candidates. I think John Edwards did not do well for himself tonight. I thought he did poorly.

MATTHEWS: Let's go back to Gene for that question. Do you agree with the mayor? Edwards missed a chance tonight?

ROBINSON: Absolutely. Edwards took his cuts. He -

MATTHEWS: Why didn't they seem to sting? Why did they seem to be glancing blows that did not grab the audience? Is it the fact that he is a small man, literally, physically?

ROBINSON: He is not physically that small. He seems smaller in the setting of Soldier Field. It takes a lot to command soldier field.

MATTHEWS: I think he's great in a room of 200 people. I saw it in Iowa the other time.

(CROSS TALK)

MATTHEWS: He doesn't work in the big hall. And there we are in Soldier Field. Pat Buchanan, to open it up, we have heard some good words here about Obama. Both other colleagues here say he did well. Gene thinks he won. Where do you stand?

PAT BUCHANAN, MSNBC POLITICAL ANALYST: I do not think he won. He did well in the Pakistan debate. But he did well in this audience, which cheered a very tough, hawkish line. Now there's -

MATTHEWS: Hawkish line?

BUCHANAN: Yes, when he said, yes we would go after these guys. I will tell you, there's a little man there, Kucinich, who did extraordinarily well. He was clear, tough on NAFTA. He had the audience cheering. He was humorous. He was upbeat.

MATTHEWS: He was with you on that baby.

BUCHANAN: He was with me, but he was with the audience. Hillary won the debate.

MATTHEWS: Could it be, Mr. Mayor, that the problem with John Edwards, who is trying so hard to break into the top two, that his problem is that he was upstaged, if you will, by Kucinich, who was much tougher on the labor issues, those, if you will, lefty issues.

BROWN: No question whatsoever. As a matter of fact, Mr. Edwards went into the Chicago debate clearly the favorite of organized labor. They just assumed that John Edwards, their longtime friend - 200 pickets marches, et cetera - would do better than anyone else. And Dennis scored like you would not believe.

Pat is correct. He sounded as if he was labor's candidate. It was like Gephardt being revisited.

BUCHANAN: That's right, he makes Edwards look vanilla. He said I

will get us out of the WTO. NAFTA is done. - I will renegotiate. That's

weak. But I think Hillary won it for this reason: Hillary had one problem

I think won, but she has won problem. I tell you what, Edwards made a dumb mistake. He said, I won't be on the cover of "Fortune Magazine" as the candidate of the corporation. She came back and said, I fought the right wing. I'm your girl. She had -

MATTHEWS: If you want someone to take on the right wing, I am your girl. Post-feminist, you can say girl now. It's fascinating.

(CROSS TALK)

BROWN: She also said I'm your sister in New York.

BUCHANAN: Let me tell you one problem she had. She's in Soldier Field and these guys - all these guys, you could feel they're brought out by the stadium and the size of it. They're almost yelling. And when she moves up that line, she moves from being strong to being strident. She was getting close to it toward the end. You have to do that when you are in a stadium. When you see those folks, you do not think the microphone is doing it for you. You think all of them have to hear you in the back row and your voice is has got to get louder.

But she held it. She did not get too high. But she can go -

MATTHEWS: You did not hear the finger nails on the blackboard. You didn't hear them. Do we all agree? Hillary was not too strident, Mr. Mayor?

BROWN: No, she was not too strident. As a matter of fact, she was very clever. She talked about how her father came to Soldiers Field and he would be absolutely enthralled to see her or any member of their family on the 10 yard line. That was a neat way to enter. Unlike Mr. Obama, whose home court it was, she immediately became an acceptable person in that forum.

(CROSS TALK)

MATTHEWS: She was an Arkansas first lady for all those years. She is New York. She is the homegrown candidates of Chicago. She is really mobile.

ROBINSON: When she is the former Arkansas first lady, she has the southern drawl. Tonight -

MATTHEWS: Did you notice the Chicago?

ROBINSON: She's from there. It really came back. It was very strong tonight.

(CROSS TALK)

MATTHEWS: The fact is, she is very good.

ROBINSON: Mid western twang.

MATTHEWS: OK, let's MATTHEWS: OK, let's watch a piece, gentleman, of something really important tonight. It is about American security. It's about al Qaeda, bin Laden - where most people think he is, on the north-west frontier of Pakistan. Let's look at the leading candidates and how they debated probably the hottest issue tonight. How do we deal with our worst enemy?

(BEGIN VIDEO CLIP)

SEN. CHRIS DODD (D), CONNECTICUT: I think it was wrong to say what he did in that manner. I think it is important for us to be very careful about the language we use, make it clear that if this United States is going to build the relationships around the world, we are going to have to do so with allies, in some cases, with allies that may not particularly like.

SEN. BARACK OBAMA (D), ILLINOIS: I find it amusing that those who helped to authorize and engineer the biggest foreign policy disaster in our generation are now criticizing me for making sure that we're on the right battlefield and not the wrong battlefield in the war against terrorism. And Chris, respectfully, you and I are close friends, but the fact is you obviously did not read my speech, because what I said was that we have to refocus, get out of Iraq, make certain we are helping Pakistan deal with the problem of al Qaeda in the hills between Pakistan and Afghanistan.

But, Chris, if we have actionable intelligence on al Qaeda operatives, including bin Laden, and President Musharraf cannot act, then we should.

SEN. HILLARY CLINTON (D), NEW YORK: I do not believe people running for president should engage in hypotheticals. It may well be that the strategy we have to pursue, on the basis of actionable intelligence - remember we have had some real difficult experiences with actionable intelligence - might lead to a certain action.

But I think it is a mistake to telegraph that and destabilize the Musharraf regime, which is fighting for its life against the Islamic extremists, who are in bed with al Qaeda and the Taliban. Remember, Pakistan has nuclear weapons. The last thing we want is to have al Qaeda-like followers in charge of Pakistan and having access to nuclear weapons.


So you can think big, but remember, you should not always say everything you think if you are running for president, because it has consequences across the world.

OBAMA: I did not say that we would go in immediately and unilaterally. What I said was we have to work with Musharraf, because the biggest threat to American security right now are in the north west provinces of Pakistan. And that we should continue to give him military aid, contingent on him doing something about that.

But the fact of the matter is that when we do not talk to the American people - we are debating the most important foreign-policy issues that we face. The American people have a right to know. It is not just Washington insiders that are part of the debate.

(END VIDEO CLIP)

MATTHEWS: That was classic, Pat. He was taking the outside view, outside of the box; let's try something new, let's get bin Laden this time. Hillary was doing the very sophisticated, diplomatic argument. We don't want to unsettle our ally in the region. Who won?

BUCHANAN: Hillary won the argument, in terms of the folks in D.C. and thinking folks, chattering class, who should run foreign policy. Obama won the battle of the stadium.

ROBINSON: I think he won for the country on that. I thought that was his best moment of the night, maybe his best moment of the campaign.

MATTHEWS: It could well be, because he stood toe to toe with her as a lawyer. I've got to ask Mayor Brown, who won the exchange between Hillary Clinton and Barack Obama on what we should do with bin Laden now?

BROWN: I think Hillary won that exchange. I think Mr. Obama did extremely well. But I think Mr. Obama was doing what we politicians occasionally do, and that was speak to the bigger crowd. Hillary was doing what she should do as a presidential candidate and as a person who is president, be incredibly focused, responsible, and not driven to simply seek audience approval. I think that was a mistake on Mr. Obama's part.

MATTHEWS: Very smart analysis tonight. Thank you, Mr. Mayor. Thank you Pat. Thank you Gene. We will be back with these smart gentlemen in just a moment with MSNBC's dialysis - diagnosis of what happened tonight at Soldier Field.

(COMMERCIAL BREAK)

MATTHEWS: Well, you saw the debate among the candidates tonight. Right now, we have the three number one surrogates for each of the top candidates. David Axelrod for Barack Obama, David Bonior, the former Congressman form Michigan, and Howard Wolfson for Hillary Clinton, the senator from New York.


I want to start with Howard. Did your candidate make her point as she wanted to about the dangers of unilateral action by the United States in Pakistan against a suspected location of al Qaeda?

HOWARD WOLFSON, HILLARYCLINTON.COM: I think she made her point about the dangers of discussing the unilateral action against Pakistan. Sometimes presidents have to take actions in support of our national security that are not previewed in the context of a presidential election. I think Senator Obama today had to clarify or explain his remarks, which point out the difficulties in making those kinds of remarks.

MATTHEWS: Let me go to David Axelrod. Did your candidate, Senator Obama, make the point he wanted to tonight, that the decisions about what to talk about in a campaign should be made in the context of the country as a whole, not among the diplomatic experts in Washington?

DAVID AXELROD, OBAMA SENIOR MEDIA STRATEGIST: Well, I think we have seen in Iraq what happens when you get Groupthink in Washington and conventional thinking, instead of common sense. That is how we ended up in a war there in the first place. In terms of what he said tonight, he did not clarify what he said. He repeated what he said, which is that we should work with Pakistan, that the great danger we face is not in Iraq, where we sent troops erroneously in 2002, but in Afghanistan where al Qaeda is.

If we know where they are, Osama bin Laden and the leadership of al Qaeda, and Pakistan can't take them out, then we ought to do it. By the way, Senator Clinton repeated the very same thing the same afternoon that Senator Obama made his speech on terrorism on Wednesday. So she has obviously refined her position since then. It makes common sense, Chris, if you can identify the people who killed 3,000 Americans and are plotting to kill more, who are stronger today because of this war in Iraq - it makes sense to take them out before we have to address this issue again. That's the point he was making.

WOLFSON: One of the reasons, Chris, that senator Obama Was asked by a voter in Iowa to clarify whether or not he would go to war against Pakistan and why you have the unfortunate and terrible spectacle of people in Pakistan burning American flags is that Senator Obama was not clear about what he said. I think it is very important for anyone running for president to be very, very crystal clear, especially concerning foreign policy.

Words matter. Words have implications. We're the strongest and greatest country in the world. People listen to what our candidates say. Unfortunately Senator Obama was not clear. He confused voters in Iowa and he certainly has confused some people in Pakistan as well.

AXELROD: Well, words do matter. As I said, Senator Clinton echoed his position in the hours after he made the speech. But actions matter too. Voting to go to war in Iraq was a terrible diversion from the war against al Qaeda. And that is why we find ourselves in the position we're in today. So actions matter.

The decisions can't be made on the basis of Washington Groupthink and conventional thinking. We've got a problem in the sense that the American people are not a part of their own government, not on domestic policy, because of the power of lobbyists and special interests, not on foreign policy, because a bunch of insiders and "wise men" make rules that say the American people should not be involved in this discussion. Senator Obama was straight forward about what he would do as president about terrorism in that and many other regards in the speech he made on Wednesday.

MATTHEWS: Let me go to Congressman Bonior. I have to get to Congressman Bonior on behalf of Senator John Edwards. Congressman Bonior, do you think your candidate was able to weigh in at this point? Does he have an opinion of what we should be doing in terms of catching bin Laden and killing him?

DAVID BONIOR, EDWARDS CAMPAIGN MANAGER: We should obviously go after the people who are trying to harm us. We are very strong and definitive on that. But we should all should understand that the main task right now is to remove ourselves from Iraq. He was very clear he wants to get 40,000 or 50,000 troops out right away, over a period of a year, responsibly bring them out, and do everything we can, working with our allies, to make a sincere effort and a hard effort and strong effort to go after those who would harm us.

But I think the point that David mentioned, with respect to the system as it is in Washington, rigged as it is, was a really key point in this debate tonight. Senator Edwards was absolutely on target by saying that we do not want to trade our insiders for Bush's insiders. Basically, we need to change the system. The way you change the system is you stop taking corporate money and lobbyists' money from folks from Washington.


We have pledged to do that. John Edwards is not taking any Washington lobbyist money. He's not taking any PAC money. Now the question is whether Senator Clinton will do that and whether we will be joined by Senator Obama to spread this message throughout the Democratic party. We need that fundamental change. That's what this was about today. That's why these people responded, these wonderful brothers and sisters of mine, to that issue.

MATTHEWS: Let me go to David Axelrod. David, Senator Clinton has said that all the money she may have taken from corporate lobbyists has not influenced her voting record. Do you believe it has and, if so, can you point to where it has?

AXELROD: Look, what I believe there is a pernicious influence of lobbyists generally over the politicians in Washington. Everybody in America knows that. There was a headline in the "Washington Post" today saying lobbyists cheer Clinton comments. Lobbyists don't need champions, Chris. The American people need champions. They need people to reinsert our agenda, our concerns into the national debate. That is why Senator Obama has not taken money from lobbyists or PACs.

Beyond that, it is why he fought both parties in Congress to pass the most far reaching lobbyist reform this year, to make lobbyists disclose who they are giving money to and who they are giving - taking money from. I think that will begin to help clean up that system. He has a track record of doing this. It's not just in his campaign, but in his career.

MATTHEWS: So you buy - You accept Senator Clinton's argument that the money she takes from corporate lobbyists does not affect her voting record? You accept that on behalf on Senator Obama?

AXELROD: I am not commenting on that.

MATTHEWS: Why not?

AXELROD: I think it strains credulity to think that you can raise millions of dollars from people who have a specific agenda and not be influenced by it. I will let Howard make that case. The point is, the whole system is corrupt. If you do not believe this is a problem, if you don't believe that influence of lobbyists is a problem, then you are not going to make it a priority as president of the United States. Barack Obama believes it is a problem. He is going to make it a priority. He's going to give people their government back.

BONIOR: If I could just break in for one second her. Senator Clinton said that she wanted to get a broom and clean up and sweep people out. You can't do that if you are taking corporate lobbyist money from the insurance industry, from the pharmaceutical industries, which is exactly the problem with trying to get health care passed. It does not work that way. We have got to say no to it.

Senator Edwards is leading the charge on this, as he has led the charge on a whole host of issues, from health care to tax reform to trade legislation.

MATTHEWS: David Bonior - Congressman Bonior, do you believe that Michael Moore's film "Sicko" is correct in saying that Hillary Clinton was affected by taking lobbyist money from pharmaceuticals and drug companies. That's what he charged in the movie. Do you accept that charge?

BONIOR: All I know is that, as you know Chris, I was right in the center of the North American Free Trade Agreement debate - I'm going to get to health care. The choice at that time the Clintons had to make was, is that a priority or was health care a priority. They went with the North American Free Trade Agreement, put thousands - millions of people out of work and we didn't get health care done.


You can make the judgment there. Go see "Sicko" and I think that will help enlighten peoples' decision on this.

WOLFSON: I would like the opportunity to respond. I think what we are seeing in this race is something very interesting. Senator Obama entered the race, promised to be a tribune of change, talked about running a different kind of race, elevating our politics, being a positive force. Just a week ago, Senator Edwards criticized the other Democrats for criticizing Democrats. Now they are both criticizing Senator Clinton.

What has changed? Maybe it is because in the last week we have seen Senator Clinton jump to huge leads in every national poll. As a result, her competitors are resorting to negative attacks. Senator Clinton said tonight that what we need to do is focus our energy on Republicans. And she had the line of the night when she said, If you're looking for someone to take on the Republicans, not other Democrats, but Republicans, I'm your gal. It brought the house down because this crowd knows that Senator Clinton has been a fighter for them and against special interests her entire life.

BONIOR: And what people have to remember is that when the Clintons were in office, triangulation was the name of the game. John Edwards is not for triangulation. He's not for vacillation. He's not for compromise. You heard him say that he wants to take on these big corporate interests, the oil, the pharmaceuticals, all these folks that are really trying to keep working people down. It's not a matter of compromising with them. You take their power, you got to grab it from them.

(CROSSTALK)

MATTHEWS: We're going to come right back with - I'm sorry, David Bonior, David Bonior, former congressman David Bonior of Michigan - we're going to come back with him on behalf of John Edwards, and David Axelrod on behalf of Senator Obama and Howard Wolfson on behalf of Senator Clinton right after this break. Stay with us for this battle of the surrogates.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. HILLARY RODHAM CLINTON (D-NY), PRESIDENTIAL CANDIDATE: You know, I've noticed in the last few days that a lot of the other campaigns have been using my name a lot. But I'm here because I think we need to change America, and it's not to get in fights with Democrats. I want the Democrats to win, and I want a united Democratic Party that will stand against the Republicans. And I will say that for 15 years, I have stood up against the right-wing machine and I've come out stronger. So if you want a winner who knows how to take them on, I'm your girl!

(END VIDEO CLIP)

MATTHEWS: Let's go right now to our own battle here. It's among the surrogates - David Axelrod for Senator Obama, David Bonior, the former congressman from Michigan, for John Edwards, and of course, Howard Wolfson, who's been on this show many times, for Senator Clinton.

I'm trying to get the gist of that. Is this the 11th commandment that Ronald Reagan once honored and codified that thou shalt say no evil of a fellow Republican? Is that the new dictum for Democrats, Howard, they should not criticize your candidate, she should be presumed to be above reproach?


WOLFSON: Well, look, Chris, this is a campaign. Things are going to happen. I would ask my friends to my right - to David Bonior - you know, last week, John Edwards criticized Democrats for attacking Democrats, said we ought not do that. Mr. Bonior, what has happened in the last week to change Mr. Edwards's position on that? Because he's certainly been criticizing Senator Clinton an awful lot. What's happened since then?

BONIOR: He's been criticizing the system, and he's asking whether you, Howard, and Senator Clinton, will join in saying, No, I won't take any more corporate lobbying money. That's what this is about and the question I pose to you again. He also posed the question whether you'd be for raising the minimum wage to $9.50 an hour. We haven't heard a response on that. We've been waiting for 13 months on whether or not you're going to have a health care bill - 13 years, excuse me. So...

WOLFSON: Sounds like you're violating your own candidate's dictum, sir.

BONIOR: These are legitimate questions in a race for the presidency.

Where's health care? Where's decent wages?

WOLFSON: What did Senator Edwards mean when he said that Democrats shouldn't criticize other Democrats? What's happened since then? Change of position, change of heart?

BONIOR: No. I mean, Senator Edwards came up on this stage and he was complimentary to a number of folks today for positions that they have taken.

WOLFSON: Just not Senator Clinton.

BONIOR: But where there are differences on major issues - I mean, people in this audience today...

WOLFSON: That's not what you said last...

(CROSSTALK)

BONIOR:... care deeply about health care. You need to provide a health care proposal for them. Senator Edwards did that and did it very early, and it's been received well. He's leading on all the issues - health care, you name it, global warming, the issues that people care about here, Free Choice Act to join a union. You need to get with the program.


(CROSSTALK)

MATTHEWS: Mr. Axelrod, Senator Clinton made a charge tonight - Mr. Axelrod, Senator Clinton made a charge tonight. She said it's because of the polling - I guess the NBC polling, the other polls, the Gallup poll, showing a - not just a double-digit lead for Senator Clinton but over 20 percent in all the polls now, the big polls, for that candidate from New York. She's so far ahead that isn't Mr. Wolfson right that you guys are getting a little desperate? You're swinging at the frontrunner because it's all you can do at this point?

(CROSSTALK)

DAVID AXELROD, OBAMA SENIOR MEDIA STRATEGIST: I think the question was addressed to me, David.

BONIOR: I'm sorry.

(CROSSTALK)

MATTHEWS:... to David Axelrod. David Axelrod.

AXELROD: Well, first of all, I want to say, Chris, to my friend Howard, when we talked about a different kind of campaign and the politics of hope, the hope...

(CROSSTALK)

AXELROD:... the hope is to relieve our country of the influence of insider politics in Washington. The hope was to bring in new foreign policy that wouldn't take us off into adventures...

(CROSSTALK)

AXELROD:... like Iraq. And it was to have a dialogue on substantive issues. These are substantive issues. And I think it would be a great disservice to the country - he said in this debate it is important to defeat the Republicans, but if all we do is change parties in the White House and we don't change the fundamental politics that are broken in Washington, we're not going to achieve very much.


We had a Democratic president in the White House in 1993, a Democratic Congress and a Democratic Senate. We couldn't get health care reform done because the system was broken. Congressman Bonior was there. He remembers that. We have to fix the system, and that's why these issues are important. And it's not enough to say, We are the best known candidate, we are the frontrunner, and therefore you should not engage in a dialogue with us on these issues. I don't think that's what the American people want.

WOLFSON: Look, you're going to run your campaigns however you see fit. You can change your position on whether or not you're going to elevate politics and now you want to attack other candidates. Senator -

Congressman - Senator Bonior - Congressman Bonior can say that - one week that his candidate shouldn't attack Senator Clinton, and then the next week he does.

And I think voters are going to look at that accordingly, and they're going to say, Why is it that people are not living up to the standards that they've set for themselves? And the reason is that - I think you've seen a change in the polls, and you've seen Senator Clinton going from strength to strength. And she's doing it on the basis of issues. She is the candidate with the strength and the experience to bring about real change.

Every time the candidates are on the stage together, you can see the difference between them. And unfortunately, I think we're going to be seeing more of the same of what we've seen in the past few days, which is candidates are swinging at her. But you know, thankfully for us, they're mostly missing.

AXELROD: We're not a poll-crazed candidacy, and so I don't in with the same zealotry...

(CROSSTALK)

AXELROD:... zealotry of Howard about them. But the fact is that in all the early states - in all the early states, Obama is even or ahead in the most current public poll. So this isn't a matter - and the reason he's ahead is because he's talking about fundamentally challenging the way politics works in Washington, giving people their government back, developing a new foreign policy based on common sense and not conventional thinking that led us into Iraq almost five years ago. And that is the different kind of politics that we are promising in this campaign.

MATTHEWS: You know, Howard, I have to ask you one last question. You are one of the best communication people around, but you know, you're setting this bar pretty high. You're saying, Don't have the candidates attack each other, save your fire for the Republicans. That's a good position to take. But didn't you on our show a week ago accuse Barack Obama of wanting to sit down and talk with a Holocaust denier? Wasn't that pretty strong language to hit him with and then to say, I'm against candidates criticizing each other?

WOLFSON: I didn't - Chris, listen carefully. I didn't say I was against candidates engaging. I'm asking my friends to live up to the promises that their candidates made.

(CROSSTALK)

AXELROD: So he wants us to live up to our standards and not sink to his, is what he's saying.


WOLFSON: I'd like you to live up to your own standards, David. You know, a lot of people took Senator Obama at his word that he was going to elevate politics.

AXELROD: Your crocodile tears...

WOLFSON: And he has not.

AXELROD: Your crocodile tears are not real persuasive, Howard.

WOLFSON: He's not, David. You know that he's not.

(LAUGHTER)

MATTHEWS: You're allowed to touch each other. Do you want to shake hands or just touch him now, David?

UNIDENTIFIED MALE: I'd like to put my arm around this guy!

MATTHEWS: Well, why don't you shake hands for the camera? Look at this. I like it. This is - David, get in here, David Bonior. Let's have a big three hug here. Just kidding.

(LAUGHTER)

MATTHEWS: I don't want to push him too far, gentlemen. You're very good at what you're doing. David Axelrod, David Bonior and Howard Wolfson, it's great to have you.

Let's go right now to the man who moderated this whole thing tonight, and I think did an excellent, even spectacular job, in the heat of Chicago, in summer in the city. There he is, without a mark of sweat on him, hair perfectly in place, the U.S. flag right behind him...

KEITH OLBERMANN, DEBATE MODERATOR: It's 35 minutes after...

MATTHEWS: What a guy!

OLBERMANN: It's 35 minutes...

MATTHEWS: Keith Olbermann.

OLBERMANN: It's 35 minutes after we finished. That's why I already stopped sweating, Chris. Thank you kindly. That was - that energy level surprised me for the exact reasons - and you don't want to dwell on it. Nobody wants to hear about the labor pains, they just want to see the baby. But it was extraordinarily hot out there, even though everybody had a sort of personalized air-conditioning system, and the energy level and the go-to-it quality that was provided by that crowd really surprised me. Did it surprise you?

MATTHEWS: Yes. I thought it was interesting. But I want your take. You know, anybody who watches politics is always fascinated by the ability of a politician not to speak to crowd in front of them necessarily but to speak to the larger audience at home, several hundred thousand people compared to 10,000 or 20,000.

Now, how you think both candidates - all the candidates did in addressing the crowd there, but also recognizing the larger crowd at home?

OLBERMANN: I think, in this case, the emphasis from my best seat in the house - and in some cases, worst seat in the House because 15,000 people behind me, which is a very unusual feeling, as I'm sure you know -

I thought they were principally speaking to that audience in front of them. But then again, that audience in front of them is not so unusual compared to the electorate that they're seeking in the primary stage, certainly. Those are not - those might be more intense versions of the Democrats whose votes they seek, but they're certainly not aberrations in terms of the votes they seek.

On several occasions - and I think this is true of almost every one of our seven candidates tonight - something happened involving the crowd that allowed them to swing on a rather slow-moving pitch and put it out of the park. I'm thinking particularly of Senator Edward after the question from the veteran who had been laid off and lost most of his pension and was standing there on braces and had gotten a standing ovation from the crowd. And then Senator Edwards was able to - to convert that, the way politicians do.

So I really did think they concentrated on this crowd with the assumption that because the entire experience was so vibrant, I'm pretty sure it came through on TV just how into it this crowd was.

I gave up very early on trying to quiet them down, as the original instructions were. That went right out the window. I didn't have a chance to do that. They're still yelling after my instructions out there now. But I thought that all came through and that energy came through, and it lifted this debate to something else, maybe not something better but perhaps something a little more intense than the previous ones.


MATTHEWS: And I agree with you. I think the crowd represented in its questions and in your questions, those questions that show up in the NBC/"Wall Street Journal" poll of just a few days ago, the war in Iraq, the war with terror, and of course, health care.

Let's talk about what you talked about, that amazing gentleman who had worked for LTV (ph) Steel, which declared bankruptcy so they didn't have to pay their pensions. He got screwed. Let's listen to him.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: After 34 years with LTV Steel, I was forced to retire because of a disability. Two years later, LTV filed bankruptcy. I lost a third of my pension and my family lost their health care. Every day of my life, I sit at the kitchen table across from the woman who devoted 36 years of her life to my family, and I can't afford to pay for her health care. What's wrong with America, and what will you do to change it?

(APPLAUSE, CHEERS)

OLBERMANN: Senator Edwards?

JOHN EDWARDS (D-NC), PRESIDENTIAL CANDIDATE: Bless you, first of all, for what you've been through. You're a perfect example of exactly what's wrong with America, both on pension protection and on health care. And we've unfortunately not been able to do the things that need to be done in this country.

I have a very simple view about this. My view is that we ought to treat the pensions and the retirement of the chairmen and CEOs of companies exactly the way we treat every other worker in the company!

(APPLAUSE, CHEERS)

EDWARDS: That's what we ought to be doing.

(END VIDEO CLIP)

MATTHEWS: Keith, I wonder if that wasn't a moment that's going to change American political history. I think the time is coming when health care really does affect the politics of our country and we really do move toward a different system. Is that a moment, do you think?


OLBERMANN: Perhaps. I think - I know what Senator Edwards was trying to phrase there, that not certainly that gentleman represented everything that was wrong or many things that are wrong in the country, he represented the victimization of many things that are wrong in the country, a confluence of economic factors and corporate control of the country in a sense perhaps we have not seen since Teddy Roosevelt tried to do trust-busting.

But I think you might be right relative to the prospect of a tipping point on this issue because so many people are in so many ways disaffected because of the issue of health care that the candidate or candidates who seize health care and translate it to as visceral an issue and have a solution that is as viscerally understandable to the electorate as the pain of health care plus pensions plus corporate favoritism - let's call it favoritism towards corporations against citizens. The confluence of those things - the candidate who can articulate that - it's almost time for a Williams Jennings Bryan. I mean, isn't that the best historical analogy at this point? It's almost time for somebody like that to run out and talk about crucifying people on a cross of bad medical care.

MATTHEWS: You know why? Because a lot of union people - and they're there tonight - have always been represented not just by their unions but they've been employed by big corporations like GM...

OLBERMANN: Right.

MATTHEWS:... and Chrysler and LTV, and they could rely on those union pacts, those contracts, to give them health care on through their retirement. Now those corporations are falling, they're failing, and they're being picked up by equity groups like Cerberus...

OLBERMANN: Yes.

MATTHEWS:... with no guarantee whatever they're not going to be dumped as pensioners and certainly as people with health needs as they grow older. And so now you can't rely on a good union contract. You can't rely on an old corporation for which you've worked through generations. I think that's the tipping point. It's not just a movement ideologically, it's a movement in the structure of American industry because of trade, other things Pat Buchanan talks about, that has endangered people's basic human security.

We'll be right back. Keith, you were great tonight. I was very proud of you. You did a dynamite job. When you watch the tapes, you'll know how good.

We'll be right back with Keith Olbermann. Terry McAuliffe is going to join us in a moment. He's, of course, the chairman of the Hillary Clinton for President campaign. He's coming in. We got the big - big (INAUDIBLE) big enchilada coming joining in here.

(BEGIN VIDEO CLIP)

EDWARDS: I want everyone here to hear my voice on this. The one thing you can count on is you will never see a picture of me on the front of "Fortune" magazine saying, I'm the candidate that big corporate America is betting on.

(END VIDEO CLIP)


(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CLINTON: Six-and-a-half years ago, we had a balanced budget and a surplus. Now we are in deep debt with a rising deficit. And it is absolutely true that George Bush has put it on a credit card, expecting our children and grandchildren to pay for it. We've got to get back to fiscal responsibility in order to undercut the Chinese power over us because of the debt we hold. We also have to deal with their currency manipulation. We have to have tougher standards on what they import into this country. I do not want to eat bad food from China or have my children having toys that are going to get them sick! So let's be tougher on China going forward!

(END VIDEO CLIP)

MATTHEWS: I'm back with Keith Olbermann. Let me go to Keith on that before I bring in Terry McAuliffe. By the way, Terry, welcome.

TERRY MCAULIFFE, CLINTON CAMPAIGN CHAIRMAN: Great to be with you, Chris.

MATTHEWS: I want to get my colleague's view because he was an umpire tonight, as well as a moderator. Did you sense that Hillary Clinton was able to control that ability to speak to a crowd with firmness and strength without becoming strident? Was she able to hold that line?

OLBERMANN: Yes, I believe that was the case for virtually everybody for virtually the entirety of the 96 minutes out there, Chris. I think, given the fact that each one of them perceived that as a 15,000-person pep rally for themselves, I thought there was remarkable restraint, on the whole, and just a few excesses, and not very excessive at that.

MATTHEWS: OK, let's go to Terry McAuliffe. You have candidate who's extremely attractive. She's very good at modulating her voice in interviews. And sometimes, when you got into a big room, there's a tendency to tub thumb like Ted Kennedy. Did she do it right?

MCAULIFFE: Well, I think she had the perfect pitch tonight. I think if you watched the crowd...

(CROSSTALK)

MCAULIFFE:... reaction to it, she looked spectacular. People looked at her and said, You know what? She knows these issues inside and out. What has helped us in our campaign, the reason why she's ahead in every poll in America today, is you look at all those candidates up there - they're all great.


MATTHEWS: You're a Chicagoan, aren't you.

MCAULIFFE: She stands alone.

MATTHEWS: Chicago.

MCAULIFFE: She has the...

MATTHEWS: You've got the voice!

MCAULIFFE: She has the strength of experience. I mean, you watch her

you know that people say, Chris? She could be commander-in-chief tomorrow, and that's what they want right now.

MATTHEWS: Is she really hoping to succeed by basing her history as a Chicagoan, somebody whose father rooted for the Bears, someone who feels very much at home as Midwestern daughter, calling herself "I'm your girl"? It just grabbed me as a new kind of - it's not the kind of lingo we heard from her running for senator from New York.

Let's listen because I think this is a new, maybe very attractive Hillary, but it's a little different. Let's watch.

(BEGIN VIDEO CLIP)

CLINTON: You know, I've noticed in the last few days that a lot of the other campaigns have been using my name a lot. But I'm here because I think we need to change America, and it's not to get in fights with Democrats. I want the Democrats to win, and I want a united Democratic Party that will stand against the Republicans. And I will say that for 15 years, I have stood up against the right-wing machine and I've come out stronger. So if you want a winner who knows how to take them on, I'm your girl!

(END VIDEO CLIP)


MATTHEWS: Wow! That is a very impressive line. In other words, Hillary Clinton is now bragging and claiming strength from the fact that she has been hated by the right.

MCAULIFFE: Well, listen, they've been after her for years. She...

MATTHEWS: Yes, now she's turning it around.

MCAULIFFE: Well, sure. She has fought back. And you know what people want, Chris? They want a Democrat who's going to fight for them because they know if you don't defend yourself, you sure as heck aren't going to defend them. They want a fighter. She is a fighter. She is tough. She is strong. She's experienced. And that's what we need right now.

We saw in 2000 what happened in the 2000 election. We won that election, and they stole it from us. In 2004...

MATTHEWS: The Court did.

MCAULIFFE: The Court did. Sure. And Republicans and everybody else...

MATTHEWS: Supreme Court stole it from Al Gore.

MCAULIFFE: No question about it. I've been saying that from day one. We talk about it, Chris, because we can't let that ever happen again. We saw the issues around 2004, when they went after - John did a great job, got 59 million votes. But they want a Democrat who's going to respond. When they go out and define you, you can't let them do that. You've got to fight back. And they know with Hillary Clinton, she's got strength, she's got the experience. People want change. She's got all the qualities. You can tell she was having fun tonight-...

MATTHEWS: That line, right wing - that's not Republicans, that's the right wing. What does she mean by that, when she says the right wing?

MCAULIFFE: I think she's referring to people out there who don't use facts as a basis to go and attack, personal...

(CROSSTALK)

MCAULIFFE:... character assassinators. Don't deal with the facts, they just say whatever they want. They will do that. I have no illusions how tough this campaign's going to be. This is going to be one of the toughest campaigns I think the Democrats have ever fought. But we got someone in our corner who's ready to fight and who's been through it and who has won.

MATTHEWS: You know what I heard? And you won't like this. But there's a resonance there of there's a vast right-wing conspiracy - in other words, at her most critical time in her life, when she had to defend her family, she used that phrase, and everybody gives her credit for that now because they remember it. In other words, she is running as a veteran of the war against the right wing.

MCAULIFFE: She is running...

MATTHEWS: They more they hate her, the more she's going to sell the fact they hate her because that's her sales pitch for being nominated by the Democrats.

MCAULIFFE: She's...

MATTHEWS: It's fascinating.

MCAULIFFE: She can fight back. But deeper than that, Chris, she is willing to fight on the issues. She'll take on health care.

MATTHEWS: Right.

MCAULIFFE: She will taken on the special interests. She'll take on the lobbyists. She did it today up in New Hampshire...

MATTHEWS: Not all the lobbyists.

MCAULIFFE:... fighting for the banking and mortgage companies...

MATTHEWS: Not all the lobbyists!

MCAULIFFE: She took on the oil companies...

(CROSSTALK)

MATTHEWS:... takes money from the lobbyists!

MCAULIFFE: You know what? If you want to go down that path...

MATTHEWS: No, I'm just saying that's what she says.

MCAULIFFE: But you know what? So does everybody. You want to go with spouses, you want to go with state lobbyists...

MATTHEWS: OH.

MCAULIFFE: Who doesn't have an interest in federal legislation? But you look at her career, you can give all the money you want, she's going to do what...

MATTHEWS: So the other fellow...

MCAULIFFE:... she thinks is right.

MATTHEWS: The other candidates are hypocrites when they say they don't take corporate money in any form, or business money. They're being hypocritical, is what you're saying.

MCAULIFFE: I...

(CROSSTALK)

MCAULIFFE: I think people are down in the polls, they're getting a little aggressive. So be it. Listen, I have no illusions. This is going to be a tough campaign. But fair is fair. She is - just look at her record. She will fight for those people.

MATTHEWS: There's nothing I like an Irish politician.

We'll be right back with Terry McAuliffe. And I'm going to get Keith in on him in a minute (INAUDIBLE) a piece of this guy.

We'll be right back with Keith Olbermann, who did a great job tonight, and Terry McAuliffe, chairman of the Hillary Clinton for President campaign.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SEN. HILLARY CLINTON, (D) PRESIDENTIAL CANDIDATE: We have to have a source of jobs. That is why we have got to invest in energy. We can create millions of new jobs if we go towards renewable energy. Those are not jobs to be outsourced. Those are jobs that will actually save us money and create jobs right here in America.

(END VIDEO CLIP)

MATTHEWS: I am here with Terry McAuliffe, chairman of that woman's campaign for president and obviously doing a great job. I thought Obama would catch you guys in May. I looked at his trajectory going into that announcement out there in Springfield we covered. It was very dramatic, 17,000 people, he was drawing crowds of 21,000 down in Austin, 13,000 up in Oakland, huge crowds. Why has Obama failed to present himself as a close challenger of your candidate despite all the crowds and the excitement and the money? Why can't he do it?

MCAULIFFE: Is still early. We've still got six months to go till .

MATTHEWS: You're 22 points ahead and it's growing.

MCAULIFFE: The bottom line is, I said it before, if you watch those debates, Chris, they are all great, I think all our candidates are terrific, clearly, Hillary stands alone. You watch her, she could be commander-in-chief tomorrow. In a time the world has serious issues throughout the Middle East, all over the world, they have to feel comfortable with the commander in chief who will keep them safe. Hillary leads on terrorism, dealing with the military, the economy, health care, education, every single issue. She is strong, she has got the experience. People want change.

Everybody talks about change .

MATTHEWS: But not everybody wants change. The thing is what struck me in the "Washington Post" poll this morning about your candidate, Hillary Clinton, of course, you're right, she leads in all the categories.

What I found a little confounding, she leads among hawks, the people who say we should stay in Iraq, and also leads among people who think we should leave Iraq. How do you explain that? How do you explain that except slick politics? Why would people who disagree with each other and agree on her?

MCAULIFFE: They want to get out of Iraq, everybody wants to .

MATTHEWS: What about the ones who want to stay in Iraq? They like her? The hawks in the Democratic Party.

MCAULIFFE: They know that she will bring her brains, her strength and her experience to solve that situation. And they know that of all the candidates running, she has a best ability.

MATTHEWS: Who's right, the hawks who support her or the doves that support her? That's what I don't get. Who is right? One must be right. If the doves are right, she is pulling out in the next year or two. If the hawks are right, at the last minute she will stay in there and maybe take on Iran.

MCAULIFFE: Here is the issue in foreign policy.

MATTHEWS: Well who is right?

MCAULIFFE: They want someone with smarts who can deal with the situation. It is not right or wrong, Chris. It is who can bring that experience.

MATTHEWS: I'm just talking about doves and hawks is what I'm asking.

MCAULIFFE: And when she is president, I promise she is going to get in, she is going to get this situation resolved very quickly, she is going to know what to do on it, she has got the experience, she has been to 82 countries. That is what they want. It is not the one answer fits all, they know she will make smart decisions.

MATTHEWS: Did she give a smart answer when she said she is not affected by corporate lobbyist contributions to her campaigns? Is that a credible argument, that someone receives money from people but is not influenced by that money.

MCAULIFFE: Chris, we have received $53 million since we started this campaign. We have gotten money from all walks of life, from all different industries, from individuals. Small donors, large donors. If you look at her record over the last 15 years or the last 35 years, she is going to do what she thinks is right. She went up there today. Has the banking and mortgage industry given us money? Yes. She went up there and whacked them today. She says that brokers need to disclose all their fees, borrowers need to know what their total payments are. That's what she did today.

She took on the health care industry, insurance.

MATTHEWS: Is she going to take on those tease loans? Those tease loans that trick people into loans and mortgages they cannot afford to pay?

MCAULIFFE: She said it today, we ought to have full disclosure. When someone borrows money, you have to tell them what their escrow is, their taxes, everything is, what their insurance payments are, so that people understand what their total payment is going to be. You are going to get the truth with Hillary.

MATTHEWS: Terry McAuliffe. Chairman of the Hillary Clinton for president campaign. As you heard, it is a vociferous campaign tonight. We'll be right back with more coverage of this amazing debate tonight in Chicago. We will be right back with more analysis.

(COMMERCIAL BREAK)

MATTHEWS: Welcome back. We are back covering the big Chicago debate sponsored by the AFL-CIO with all the Democratic candidates attending. Of course there was a big fight over foreign policy involving Senator Obama, and it involved a hot exchange including Hillary Clinton. Let's take a look at that bite.

(BEGIN VIDEO CLIP)

CLINTON: I do not believe that people running for president should engage in hypotheticals, and it may well be that the strategy we have to pursue on the basis of actionable intelligence, but remember, we've had some real difficult experiences with actionable intelligence might lead to a certain action, but I think it is a big mistake to telegraph that ends to destabilize the Musharraf regime which is fighting for its life against the Islamic extremists who are in bed with al Qaeda and Taliban and remember Pakistan has nuclear weapons. The last thing we want is to have al Qaeda-like followers in charge of Pakistan and having access to nuclear weapons.

So you think big but remember, you should not always say everything you think if you are running for president, because it could have consequences across the world and we do not need the right now.

KEITH OLBERMANN, MSNBC HOST: I owe Senator Dodd a response. Your name was invoked in several of these answers. Please take 30 seconds.

SEN. CHRISTOPHER DODD, (D) PRESIDENTIAL CANDIDATE: I just want to say, and look, Barack, I certainly said I made a mistake in that vote in 2002. I don't deny that. But when you make a mistake, if you run on something like that, I think if I had the courage, I made a mistake on the vote in 2002, if make a mistake today, you ought to stand up and say so. It was a mistake in my view to suggest somehow going in unilaterally here into Pakistan was somehow in our interests. That I think is dangerous and I .

SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: This came back to me and so let me just .

OLBERMANN: All right. Senator Obama, 30 seconds, and I have to stop this.

OBAMA: I did not say we would immediately go in unilaterally. What I said is that we have to work with Musharraf because the biggest threat to American security right now are in the northwest provinces of Pakistan, and wheat should continue to give him military aid contingent on that. But the fact of the matter is that when we do not talk to the American people, we are debating the most important foreign policy issues that we face. And the American people have a right to know, it is not just Washington insiders that are a part of the debate that has to take place with respect to how we are going to shift our foreign policy. This is a fundamental question.

(END VIDEO CLIP)

MATTHEWS: We are joined right now from Chicago by the "Chicago Sun-Times'" Lynn Sweet, MSNBC's Chris Jansing and "Newsweek's" Jonathan Alter. I want Lynn to explain to me the difference between the booing out there against Hillary and perhaps her victory general in the country with the points she made?

LYNN SWEET, "CHICAGO SUN-TIMES": I think it shows that - she lost battles, but she won the war, because there is a punch and counterpunch. She stayed above the fray and did not have to engage except for that big punch against Obama dealing with hypothetical, she mainly was able to stay above the fray, and I think the crowd ebbed and flowed. In the end, she was able to engage and make her points from saying I am your girl, I was a little surprised when she said that, to trying to humanize herself. She has a mixed record within the crowd, but not a mixed record to the world that watched it on TV.

MATTHEWS: Jon Alter, I have to ask you, what was your impression when you heard those boos? Were they coming from the Obama people or was it general reaction to what seems to be a bit of perhaps an arrogant dismissal of what Obama, their state senator, had said?

JONATHAN ALTER, "NEWSWEEK": I do not think it was from the Obama crowd, which was surprisingly quiet tonight for a Chicago crowd. I was sitting out in the audience. They were booing the idea that people running for president should not say what they think.

MATTHEWS: Right.

ALTER: When she said that, people had an immediate negative reaction to that. Now she did very well in some other parts of the debate, but I thought she lost to that particular exchange because people want an open dialogue about how we should conduct foreign policy. Obama made a mistake by not indicating. Chris, that going after Osama bin Laden would not necessarily destabilize Musharraf in Pakistan. That was accepted by other candidates as a given, and Obama did not point out that that would not necessarily take place.

The Islamists only represent about 10 percent of the political establishment in Pakistan. It is not at all clear that Musharraf being ejected would mean that bad guys would take over there.

MATTHEWS: Chris Jansing, give us a sense of what it smelled like in that crowd. What did it feel like that we could not see on television?

CHRIS JANSING, MSNBC CORRESPONDENT: I will tell you what it was. There was a sense there that we can finally win this. I was in the crowd before, before, during and after, and I talked to union members and they are on fire. They think that they can win next November and when I talked to them about who they support, that is really interesting Chris, because I did not get a strong sense, anymore than you get a sense from some of the leaders in the union, who they would they would vote for, I really had a sense that they would do work the Democratic candidate.

One of them put it to me this time, he said, if we cannot win this time, when are we going to win? I also think, and I though it was an interesting reaction, that boo, and my reaction to that being out there that this was that crowd saying we believe we have a president who is not a straight talker, and we want one who is a straight talker. I think the reaction was very much what Jonathan just said. And that is we want to look at our commander-in-chief in the eye and we want to know that they are giving us the real deal.

MATTHEWS: That's interesting. It sounds like open covenants openly arrived at, a plea for open diplomacy rather than the back room stuff that a guy like Dick Cheney would be more comfortable with.

ALTER: That's right. That Woodrow Wilson quote is very apt.

Americans want some transparency. They are tired of all the secrecy. Democrats in particular are outraged by the approval of this bill that was just signed that will allow for a lot more eavesdropping on anybody talking abroad, whether they are terrorists or not.

And all of this is of a piece with the sense that we have taken our eye off the ball getting Osama bin Laden and in exchange these kind of backroom conversations about secret foreign policy, Democrats have had it with that. I do not think Hillary hurt herself tonight, but she will have to dig herself out on that particular question in the next couple of days as to whether she thinks that we should - that is not right to go after Osama if we do have actionable intelligence to strike him.

MATTHEWS: OK. Thank you, Lynn Sweet of the "Chicago Sun-Times."

Chris Jansing of our own MSNBC and Jonathan Alter of "Newsweek."

Up next, Hardball's David Shuster will be here with the truth squad report. I love him. Who stretched to the truth tonight? Who did it the furthest? That's coming up. Who was the biggest non-truth teller tonight? You are watching MSNBC's coverage of the AFL-CIO presidential forum.

(BEGIN VIDEO CLIP)

REP. DENNIS KUCINICH, (D) PRESIDENTIAL CANDIDATE: The time to worry about China trade was really when some of my friends on stage actually voted for most favored nation. Now as president, my most favored nation is America, and there was a myth when I was growing up in Cleveland that if you dig a hole deep enough, you'll get to China. We are there. We need to have a president that understands that and is ready to take a whole new direction of trade with China. Thank you very much. A working person's president.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

MATTHEWS: Welcome back to MSNBC's coverage of the AFL-CIO presidential forum tonight. Let's check out the truthfulness of what we heard tonight. Hardball correspondent David Shuster is on the truth squad for us.

David?

DAVIS SHUSTER, MSNBC CORRESPONDENT: Chris, the biggest point of contention was the argument between Chris Dodd and Barack Obama over Obama's recent speech as to what he would do in Pakistan as far as going after al Qaeda. Let's watch the disagreement and then we'll find out who was telling the truth. Watch.

(BEGIN VIDEO CLIP)

DODD: If you make a mistake today, you ought to stand up and say so. It was a mistake in my view to suggest somehow that going in unilaterally here into Pakistan is somehow in our interest. That I think is dangerous. And I don't think that at all.

SEN. BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: This came back to me and so let me just .

OLBERMANN: All right. Senator Obama, 30 seconds, and I have to stop this.

OBAMA: I did not say we would immediately go in unilaterally. What I said was that we have to work with Musharraf .

(END VIDEO CLIP)

SHUSTER: Actually, Obama is incorrect and Dodd is right on this one.

Watch what he said in his speech just a few days ago.

(BEGIN VIDEO CLIP)

OBAMA: It was a terrible mistake to fail to act when we had a chance to take out an al Qaeda leadership meeting in 2005. If we have actionable intelligence about high-value terrorist targets and President Musharraf will not act, we will.

(END VIDEO CLIP)

SHUSTER: Again, Barack Obama was misleading tonight about his own speech. John Edwards made several claims tonight about his history of supporting unions. Watch this.

(BEGIN VIDEO CLIP)

JOHN EDWARDS, (D) PRESIDENTIAL CANDIDATE: Every president of a union who is here today and their membership knows exactly where I have been, 200 times, I have walked on picket lines. I was on a picket line on Saturday. I was on a picket line on Sunday.

(END VIDEO CLIP)

SHUSTER: John Edwards was in fact on a picket line on Saturday and he may have been on two picket lines, but the "Chicago Sun-Times" reports that the picket line he was on on Saturday was for only 10 minutes and that he used the occasion to film a campaign commercial, even looking to the camera and say, "I am John Edwards and I approve this message."

There were a few instances in this forum tonight where Democrats gave some untruthful descriptions of the Bush administration and the impact of administration policies on the nation. Watch.

(BEGIN VIDEO CLIP)

CLINTON: Well, the first thing I would do would put somebody in charge to actually cared about the people of New Orleans and the Gulf Coast.

SEN. JOE BIDEN, (D) PRESIDENTIAL CANDIDATE: We know how badly this president has ruined the country.

(END VIDEO CLIP)

SHUSTER: The use of the word ruin is pretty amazing, Chris, because you think "ruin" is defined as irreparable damage, and for Joe Biden to say the nation is irreparably damaged, is ruined permanently, that is a bit of a stretch. And also you can have arguments about whether it is right policy as far as rebuilding New Orleans and what they're doing, but to say that the Bush administration does not care about New Orleans, that's a leap.

MATTHEWS: OK. Thank you, David Shuster.

Chuck Todd is NBC's political director. Chuck, give me a verdict on tonight's performance by the candidates.

CHUCK TODD, NBC POLITICAL DIRECTOR: I'll say this. Hillary Clinton found some impressive surrogates tonight in the form of candidates Biden and Dodd. They did a lot of her dirty work tonight, thinks that allowed Clinton to stay more above the fray than she has in previous debate. Obama had it coming from both ends, from multiple candidates. Edwards had it coming from multiple candidates. Clinton found out she had allies tonight in Dodd and Biden, and I think the fact we're seeing these candidates pair up and you almost wonder, is this a transitional moment where you are going to see folks starting side with Clinton because they think maybe they smell a winner, and you're going to have Edwards and Obama having the fight to be the alternative to Hillary. Right now they seem to be allies, but of course it is inevitable that they will have to fight each other.

MATTHEWS: Very smart. They're all going for number two. They've given up on being number one perhaps.

Final thoughts now from MSNBC political analyst Pat Buchanan and former San Francisco Mayor Willie Brown. Mr. Mayor, you're first. Your thought on tonight, how it will read, how it will change the campaign.

WILLIE BROWN, FORMER SAN FRANCISCO MAYOR: I do not think it will change the campaign at all. I think everyone of the persons participated stayed exactly where they wanted to be, and I agree wholeheartedly with the analysis that all of a sudden there appears to be a tag-team relationship between people, and the only person that benefits from that is Hillary Rodham Clinton.

MATTHEWS: Well said. Pat?

PAT BUCHANAN, MSNBC POLITICAL ANALYST: I agree with the mayor 100 percent. Dodd and Hillary double-teamed Obama and had him fighting back and forth and I think it was a successful hit, and I think they are moving toward Hillary quite frankly. As the candidate who is going to win this thing. The challenger is Obama. So they're both going after him.

MATTHEWS: Everybody wants to be number two now with the hopes that Hillary makes a mistake.

BUCHANAN: Yes. If he falls, that is their only shot.

BROWN: Chris, there is one thing, though. Hillary Rodham Clinton has got to handle the allegation about lobbyists' contributions. That is a deadly virus, that will grow and grow unless it is somehow rooted out early.

MATTHEWS: I think you are right. I think she stepped into a manhole cover. Anyway, thank you, Chuck Todd. Thank you, Pat Buchanan and Mayor Willie Brown.

Join me tomorrow at 5:00 and 7:00 Eastern tomorrow on Hardball. See you then.

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