FBI pushes back on campaign "spying." TRANSCRIPT: 5/7/19, Hardball w/ Chris Matthews.

Guests: Dan Kildee, Evan McMullin, Tom Malinowski, David Cay Johnston, RussBuettner, Steve Israel

DAVE CHAPPELLE, AMERICAN STAND-UP COMEDIAN:  I`m standing there thinking in my mind, you dumb (EXPLICIT).  You are poor.  He`s fighting for me.

(END VIDEO CLIP)

CHRIS JANSING, MSNBC HOST:  Congrats to Dave Chappelle.

That`s going to do it for me.  Ari is back here tomorrow night at 6:00 P.M. Eastern.  "HARDBALL" with Chris Matthews starts right now.

CHRIS MATTHEWS, MSNBC HOST:  Who`s afraid of big bad Mueller?  Let`s play HARDBALL.

Good evening.  I`m Chris Matthews up in New York.  Why does Donald Trump fear Robert Mueller so much, not Mueller the report, Mueller the man?  What is it in the picture of Mueller sitting and testifying before the Senate Judiciary Committee that puts the fear of God in Trump?

We are learning that Trump`s dread of what the moral strength of Mueller would look and sound like to the country is spurring him to oppose the Special Counsel`s testimony before the Congress.  It`s clear that Trump resents the credibility and clarity that Mueller might bring to the table.  But above all, Trump fears and knows that Mueller has the ability to cut through the smoke screen that currently protects Trump`s presidency.

The Associated Press is now reporting that in contemplating the Special Counsel`s testimony, the President stewed for days about the prospect of the media coverage that would be given to Mueller, a man Trump believes has been unfairly lionized across cable news and the front pages of the nation`s leading newspapers for two years.

According to that A.P. report, Trump has long known the power of televised images and feared that Americans will be captivated by seeing and hearing Mueller who has not spoken since being named Special Counsel.  It`s that fear that prompted Trump to come out and say that Bob Mueller should not testify this weekend.

Likewise, Trump appears scared of Mueller`s star witness, his star witness, former White House Counsel, Don McGahn, who was the center piece of the obstruction case against the President.  And just today, the White House ordered McGahn to ignore a congressional subpoena for documents related to the Mueller probe.  It comes as the House Judiciary Committee prepares to vote tomorrow to hold Attorney General William Barr in contempt of Congress for refusing to reply with a separate subpoena for the full Mueller report.

Well, given those developments, any formal attempts to block Mueller`s testimony would be in keeping with the broader administration strategy to stonewall congressional inquiries at every turn.

I`m joined now by Phil Rucker, White House Bureau Chief for The New York -- New York -- The Washington Post.  I`m up here in New York.  I`m sorry.  Tip (ph) front newspaper.  Mimi Rocah is a former assistant U.S. attorney in the Southern District of New York.  And Zerlina Maxwell is a Senior Director of the Progressive Programming Sirius -- where I listen to all the time, SiriusXM.

I want to start with Mimi on this one.  First of all, Trump`s fear of the witness, what do you count that for?  I mean, yes, people tell me once you see a witness in a testimony that has more power than all you`ve heard beforehand.  Tell me what he`s afraid of.

MIMI ROCAH, FORMER ASSISTANT U.S. ATTORNEY:  Well, absolutely.  I think it`s a couple of things.  First of all, remember, unfortunately, a lot of Americans haven`t read the Mueller report.  And I think Barr and Trump --

MATTHEWS:  And they never will.

ROCAH:  And they never will.  And it`s a lot to get through.  I recommend reading at least the executive summaries.  But the point is that Mueller testifying is something people will watch.  More people will watch that than they will read the report.  And so even if Mueller said nothing outside the four corners of the report, which I think he is likely to do, by the way, right?

MATTHEWS:  To limit himself to that.

ROCAH:  He`s going to limit himself.  But that is a worthy exercise, I think, for a lot of reasons and I think that, in and of itself, terrifies Trump.

Beyond that, if he gets into and even Lindsey Graham seems to agree that Mueller should be able to testify about the interactions with Barr and those phone calls about sort of what was misrepresented, that`s not in the report.  That`s not anywhere we can read it.  And we only have Bill Barr`s side of it right now.  That could be very damaging.

I don`t think Mueller is going to come out and trash Barr.  I mean, I don`t think anybody should expect that or Trump for that matter.  But I think even if he just speaks the facts and the truth, it can be very damaging.

MATTHEWS:  So let`s talk about the marginal value of his testimony on fact.  For example, he never came to a verdict.  He never told us whether there should be a prosecution and indictment.  He never told us whether he thought the Congress should do that.  He left a lot of material out there and wanted Congress to reach for it.  Do you have a sense that he would go further and say yes?  What I meant was -- what I hope was Congress would see what I saw in these ten cases of obstruction of justice.  See what I see.  Let me help you.  Will he do that?  Will he go further?

PHILIP RUCKER, WHITE HOUSE BUREAU CHIEF, THE WASHINGTON POST:  Well, Chris, I don`t know what Mueller is prepared to say, but I can say with some certainty that some of the lawmakers on the panel would ask Mueller those questions and would try to drag out of him some sort of additional explanations for his conclusions in the report.

But, simply, Mueller getting out there and testifying is so scary for President Trump because it would expose Trump`s own misrepresentation of the conclusion of this report.  It`s the President who`s been saying for a month now that he was totally exonerated by Robert Mueller, when if you read the report, you know that`s not true.

And if Mueller were to get on camera and do an under oath testimony before the Congress ticking through all ten of those examples of obstruction of justice that were under review during this report, it could be very damaging to the President.

MATTHEWS:  Zerlina, a couple of thoughts.  First of all, let`s talk about the drama.  Hollywood big stars don`t go on T.V. much, because if you resist that and make yourself rare, then people think, wow, when you see them.  Remember, Burt Reynolds ruined his career by going on Carson all the time, I think.  But let me get to the other thing.

Suppose this turns out to be another one of these -- well, a little confusing.  I suppose he comes on and somebody on the democratic side, for example, says, would you have indicted?  And he goes, well, I left that to whoever reads my report.  Would you encourage Congress to take up an impeachment action?  Well, I left that.  And what happens if it`s another one of these disillusioning moments?

ZERLINA MAXWELL, SENIOR DIRECTOR OF PROGRESSIVE PROGRAMMING, SIRIUSXM:  I think that there is a risk of that happening.  I think that I don`t expect him to come out and flame throw and attack Barr or President Trump.  I think that he`s going to have that certain level of respect.  I think the democrats can formulate questions that would evoke answers that would make a lot of news.

MATTHEWS:  Give me one.  Come on, you`re good.  Give me one.

MAXWELL:  Does this report exonerate the President, yes or no?

MATTHEWS:  Does it exonerate --

MAXWELL:  Does this report exonerate the President, yes or no?

MATTHEWS:  So, in other words, the Attorney General did not give us the truth?

MAXWELL:  Right.  I mean, those are -- that`s a fact.  He can comfortably say no to that question because it`s actually in black and white in the report.  This report does not exonerate the President even though the President is saying the opposite.  So I think that the democrats have an opportunity here to formulate the questions that can invoke that kind of information from Mueller understanding that he is not going to go further or get ahead of his skis in any way.

MATTHEWS:  Mimi, another set of questions would be why did you make so many referrals to U.S. attorneys around the country.  There is a lot of potential criminality here.

ROCAH:  Yes.  I mean, right.  It`s a lot of referrals they can certainly ask.  I think that`s one area where they`re unlikely to get a lot of information, right, because those are -- they can ask categorical questions.  Are they under seal because of their investigations without telling us anything about what they`re about or are they under seal because there are indictments that are sealed?

But I think that`s an area where actually their time is not very well spent.  What would be better time used, I think, is actually talking about the substance of the report, because that`s something that Mueller is going to be more likely to answer questions about because it`s already public, privilege has been waived, there is no grand -- I mean, there could be grand jury issues with everyone of those.

And the other thing about seeing Mueller testify and even just saying, as Zerlina said, something that people who have read the report know, it does not exonerate.  Mueller is going to come across as looking not like a witch hunter, right, which is what this whole investigation --

MATTHEWS:  That`s the good side of what it looked like.  But he also has this sort of Robert De Niro, the Hollywood guy (ph), the guy on SNL, the brooding, hubby (ph), big gravitas presence that walks into the room.  And I think that`s what Trump is afraid of.

There is breaking news this hour.  The New York Times obtained ten years of tax information about Donald Trump between the years 1985 and -- there is the news story.  The numbers showed that in 1985, Mr. Trump reported losses of $46 million from his core businesses, largely casinos, hotels and retail space and apartment buildings.  They continued to lose money every year totaling more than a billion dollars of losses for the decade.  In fact, according to The New York Times, what a story, year-after-year, Mr. Trump appears to have lost more money than nearly any other individual American taxpayer.  The Times found when they compared his results, his results with detailed information the IRS compiles on an annual sampling of high income earners.

Well, this is coming out of nowhere.  I mean, we`re getting something when we look at his tax returns.  But just that first grab at it, all those losses means all those taxes not required to be paid.  These are all deductions, basically.

ROCAH:  Right.  I mean, there`s a few things.  One is this is Trump`s greatest fear of people actually being able to see that he is not a great business man, right, and two, there is like real tax fraud here.

MATTHEWS:  Well, Phil, as Joe Biden would say, folks, it`s time to reexamine this news report.  What do you make of what they`ve got here, this first look at this news breaking now?

RUCKER:  Yes.  Well, Chris, it`s extraordinary reporting and it follows on the heels of the investigation that The New York Times has been pursuing for several years now into Trump`s taxes.  It`s important to keep in mind that this decade of tax returns predates sort of the more recent years before he became president and still shows a pattern year-after-year-after- year of Trump not paying taxes and having pretty severe business losses, which gets right to the heart of what Mimi was speaking about.

It undermines the narrative that Trump has sort of created and spun for himself as this master businessman, this super wealthy guy worth $10 billion.  I mean, that number seems to have come out of thin air.  What we have here, as documented in this Times report, is that he actually suffered a lot of losses.

MATTHEWS:  Do you know how many of those were created artificially to avoid tax?

RUCKER:  Possibly.  I don`t know.  I mean, I`m not a tax expert and I`d want to read all of this reporting before commenting on it.

MATTHEWS:  Somebody in our group is smiling heavily and you can`t see it because the democrats know as a group that they want this information or all kinds of it.  Is he has rich as he says he is?  Does he pay a fair share, as most people make in 48 years say, well, I pay this percentage?  What`s he paying?  They want to know that too.

MAXWELL:  Right.  But they also want to know because he possibly could have conflicts of interest that are dictating his foreign policy.  That`s actually the major reason.  I mean, I don`t care if he says rich as he says does.

MATTHEWS:  The Deutsche Bank.

MAXWELL.  Right.  I don`t care if he`s as rich as he says.  That has to do with his ego and how he feels about it personally.  That`s not a concern to me as a citizen.  What I care about is national security of the country.

MATTHEWS:  Is he on the hook?

MAXWELL:  Is he on the hook?  Do they have blackmail material on him?  Is he in debt to a foreign nation and then making certain decisions, policy- wise, as a result of those debts?

MATTHEWS:  Do you think that`s his chief reason for keeping that to himself?

MAXWELL:  I don`t know that because we haven`t seen the tax returns.

MATTHEWS:  Yes.  Well, joining us right now is U.S. Congressman Dan Kildee of Michigan who is a member of the House Ways and Means Committee.  So your Chairman, Richard Neal, has been trying to get this information base upon the 1924 statute.  Apparently, The New York Times beat you to it, at least part of it.  What do you make of this politically and statutorily, Congressman?

REP. DAN KILDEE (D-MI):  Well, it`s not -- I mean, it`s obviously interesting information and in some ways not all that surprising because this president has been the master of obfuscation when it comes to his own personal interest and his own wealth.  He seems to be poor when he needs to be poor and rich when he needs to be rich.

But it underscores the importance of us exercising the authority under this 1924 law, which has been used regularly over those years, not always for our president, obviously.  We need to know whether or not the IRS is properly auditing and properly enforcing the tax laws on the President.  And the information that was reeled in this story just makes that question all that much more important.

But further, the response from the Secretary of the Treasury essentially saying that it is his view that our inquiry does not represent a legitimate legislative purpose is just a bizarre thing for him to say.  It is not up to Donald Trump, his Secretary of the Treasury or some lawyer that he hires to determine under the constitutional separation of power what is is a legitimate subject of legislative inquiry.  That is up to the legislative branch.  And we are going to pursue this.

MATTHEWS:  Yes.  Well, now, not that you need it, but you`ve got a reason to examine him.  He doesn`t pay many taxes.  It looks to me like he`s got huge tax losses that allows him to avert, avoid, if not, escape taxes, whatever means he has.  One of them is huge tax losses, huge losses of revenue, which he can set against his income and perhaps claim no income in some years.

KILDEE:  This clearly elevates the need for us to get this information to determine whether any legislation is necessary to ensure that the IRS properly enforces tax law on the President.  And, of course, the President raises this question by the way he uses his unilateral authority, as we have seen referenced in the Mueller report and in other instances, to direct people that he believes to be under his charge, that he thinks work directly for him rather than for the American people to do things to protect him.

We have serious questions as to whether or not that is the case as it relates to the IRS enforcing the laws of the United States on this president and this report just makes that question all that more significant.

MATTHEWS:  Let me ask you this extreme question.  If Trump continues, the President continues to use every trick ignoring subpoenas for documents or testimony, ignoring citations for contempt even if they can get one through this Justice Department, if he runs it all the way to the end and says, I`m not doing enough for you, guys, because what I really want you to do is show your teeth, impeach me, go ahead and do it because I think that`s going to get me re-elected.

With a strong economy and you guys coming after me like wolves, I will be able to say, if it weren`t for them, we would have an even stronger economy and all they do is attack me.  Are you afraid he`s what Nancy Pelosi apparently believes?   We interpret that she`s figured out Trumps wants to impeach him so that you guys can be portrayed as a totally negative force in our country.

KILDEE:  Well, I think it`s clearly a plausible argument.  And it does seem as though he enjoys the notion that it`s us versus them and he wants to rally the troops and this is just a big conspiracy.  But I don`t think we can make a decision on the use of the tool of impeachment based on the politics of the moment or even trying to outthink the devious mind of Donald Trump.  We have to do it based on whether or not we think the constitution is being violated.  And if we come to that conclusion, Chris, I don`t think we have much of a choice.

MATTHEWS:  Even if it hurts you politically, because that`s what he wants you to make that decision?

KILDEE:  We absolutely have to put the short-term politics aside and think about the long-term precedent we are setting for this country.  We cannot allow a president of the United States to just so completely ignore the constitution and the rule of law and because we think it might affect the next election, decide that we are not going to do what the framers of this constitution would have expected us to do.

MATTHEWS:  Well, I`m with you, sir.  Thank you so much.  It sounds like great government.  I`m wondering what the Speaker is thinking tonight.  Thank you so much, Phil Rucker.  Thank you, Zerlina Maxwell.  As always, thank you, U.S. Congressman Dan Kildee and Mimi Rocah.  Sticking around -- Mimi is sticking around.  We need her for another segment.

Coming up, spy versus spy.  Attorney General Barr said he believes the United States government, he loves this word -- well, he was taunted by the President, spied on the Trump campaign.  But FBI Director Christopher Wray has a much different view, and you`re going to hear it in a minute.  They`re crossing up their signals.  Wray is an actual public servant.  You can tell him apart from the hacks.

Also tonight, the republican cover up.

(BEGIN VIDEO CLIP)

MITCH MCCONNELL (R-KY):  The Special Counsel`s finding is clear, case closed.

(END VIDEO CLIP)

MATTHEWS:  Wow.  Well, republicans in congress are doing everything they can to protect the President from any oversight scrutiny.  Forget the constitution.  Forget Senate rules and integrity.  Protect the President while they`re setting in dangerous precedent, however, and betraying their own institution.

Plus, why is Joe Biden winning so much in the polling right now?  I know it`s just early polling, but what`s going on here?  Poll show with more than doubled the support of Bernie, in fact, there`s one big reason that he`s seen as the safest bet to beat the incumbent.  I think so.  I think that they like him, I think, but they also like the idea of beating Trump more.  Much ahead, stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

WILLIAM BARR, U.S. ATTORNEY GENERAL:  I think spying on a political campaign is a big deal.  It`s a big deal. 

SEN. JEANNE SHAHEEN (D-NH):  So, you`re not -- you`re not suggesting, though, that spying occurred? 

BARR:  I don`t -- well, I guess you could -- I think there was -- spying did occur.  Yes, I think spying did occur. 

(END VIDEO CLIP)

MATTHEWS:  Welcome back to HARDBALL. 

That was Attorney General William Barr last month igniting a firestorm, alleging that the FBI spied on President Trump`s 2016 campaign.

In congressional testimony today, FBI Director, however, Christopher Wray refuted the attorney general`s description of what the bureau does for a living.  Here he goes. 

(BEGIN VIDEO CLIP)

SHAHEEN:  When FBI agents conduct investigations against alleged mobsters, suspected terrorists, other criminals, do you believe that they`re engaging in spying when they`re following FBI investigative policies and procedures?

CHRISTOPHER WRAY, FBI DIRECTOR:  Well, that`s not the term I would use. 

SHAHEEN:  Do you have any evidence that any illegal surveillance into the campaigns or individuals associated with the campaigns by the FBI occurred? 

WRAY:  I don`t think I personally have any evidence of that sort.

(END VIDEO CLIP)

MATTHEWS:  Well, Barr has faced intense criticism for his parroting of the president`s talking points regarding FBI surveillance of people connected to his campaign.

But, just last week, he doubled down on his use of the term spying.  Here he goes. 

(BEGIN VIDEO CLIP)

BARR:  And I don`t think the word spying has any pejorative connotation at all. 

I think spying is a good English word that in fact doesn`t have synonyms, because it is the broadest word, incorporating really all forms of covert intelligence collection.  So I`m not going to back off the word spying.

Up until all the full outrage a couple of weeks ago, it`s commonly used in the press to refer to authorized activity, such as referring to the FISA court as the spy court.

SEN. SHELDON WHITEHOUSE (D-RI):  But it`s not commonly used by the department.

BARR:  What?

WHITEHOUSE:  It is not commonly used by the department.   

My time is up.

BARR:  It`s commonly used by me. 

(END VIDEO CLIP)

MATTHEWS:  Well, Mimi Rocah is back with us.

Joining me right now is Evan McMullin, a former CIA operative and former chief policy director of the House Republican Conference. 

Mimi, thank you for sticking around. 

But I think that question, spying sounds to me pejorative. 

ROCAH:  Absolutely. 

It`s pejorative in two ways.  But what his statement was, was pejorative in two ways.  One, he`s using the term spying, which clearly is implying something illegal, unauthorized, certainly.

MATTHEWS:  By the deep state. 

ROCAH:  By the deep state. 

And we know here that, in fact, whatever happened in the beginning of this investigation, as we have discussed many times, was court-authorized.  You can like it or not like it, but it was court-authorized.  It was not illegal.  It was not unauthorized. 

The second thing is, he said spying on the campaign, right?  So, he`s trying to make it seem like, as Trump does daily, the focus here was the deep state trying to get into the Trump campaign. 

No, they were -- the FBI and other law enforcement was trying to investigate what Russia was doing, perhaps in the campaign.  And they were trying to do it without blowing up the Trump campaign, without coming out and saying, hey, we have got to look at what Russia is doing with the campaign because they keep meeting with Russians. 

So they did it in an undercover way.  That doesn`t make it unauthorized or illegal.

MATTHEWS:  You know, Evan, thanks for coming on, because you have got so much expertise.

It seems to me any of us who watched "The Americans" the whole way through understood there was something called counterintelligence.  We, the Americans, the real Americans, were looking out for what the Russians were up to in our country.  That`s called surveillance.  That`s called counterintelligence. 

It`s not normally put down as spying. 

EVAN MCMULLIN, FORMER PRESIDENTIAL CANDIDATE:  Yes, that`s right.  And I got to tell you, Chris, the word spying actually isn`t a word that`s regularly used by our intelligence agencies or our intelligence officers or by our law enforcement officers. 

It`s just not a word that`s regularly used in that business, in that world.  And that`s the world that Barr comes from.  Barr worked for the Central Intelligence Agency.  Obviously, he`s been an attorney general or the attorney general before.  He knows this. 

When spying is used occasionally, it`s actually to describe fellow Americans who have betrayed the country and who are working on behalf of a foreign power against the country, or sometimes, but less frequently, about the work that our intelligence officers do overseas against our adversaries overseas. 

It`s never used to describe what our law enforcement officers, what our counterintelligence people do in investigating counterintelligence threats to the country. 

I will say that, as much as Barr has tried to protect and defend his use of the word spying, his actual true intent was revealed by what else he said about that, which was, he called into question whether those investigations were -- quote -- "authorized" and -- quote -- "adequately predicated."

MATTHEWS:  Yes. 

MCMULLIN:  And so he was trying -- I mean, by his own words, he was trying to suggest that they may have not been on the up and up, they may have not been legal.

And so we can understand, through those -- those words, what he meant by spying and what his intention was.

MATTHEWS:  Evan, we got a hell of a story breaking, as you saw, this tax story about Trump in "The New York Times."

MCMULLIN:  Yes. 

MATTHEWS:  It`s breaking as we speak. 

Let`s get to that story. 

"The New York Times" obtained 10 years of tax information about Donald Trump between the years 1985 and 1994.  And the numbers in those records show that, in 1985, Mr. Trump reported losses of $46 million from his core businesses, largely casinos, hotels and retail space and apartment buildings. 

They continued to lose money every year, totaling more than a billion dollars in losses for the decade.  In fact, according to "The New York Times"` report just out this evening, year after year, Mr. Trump appears to have lost more money than nearly any other individual American taxpayer in the country. 

Let`s bring in Trump biographer David Cay Johnston, who joins me on the phone.

David, what did you make of this?  And what -- does this square with your information you had you all working with him? 

DAVID CAY JOHNSTON, AUTHOR, "THE MAKING OF DONALD TRUMP":  Absolutely. 

This is exactly what I have been trying to tell people about.  It`s consistent with what I reported when I got Trump`s 2005 Form 1040 tax return two years ago and what I reported back in the `90s, when he arranged to share a billion dollars of his debt. 

And, Chris, these losses that "The New York Times" shows are way beyond the losses he could take from depreciating real estate.  These show that, in fact, Donald Trump is not the modern Midas who turns everything to gold.  He is the Wizard.  And Toto, in the form of "The New York Times," has pulled back the curtain and revealed the con man. 

MATTHEWS:  Unbelievable.  Depreciation, I was thinking of that word as we first got this report.  One good way to roll up losses is depreciation. 

According to "The New York Times," by the way -- and this is the killer for tomorrow`s news -- Trump paid no -- is everybody listening now?  No federal income taxes for eight of the 10 years. 

David, I just want to stick with you, because you know the guy`s character and his M.O. 

This is what so many people suspected, that he was able to drum up enough costs in depreciation and other intangibles to justify not paying any taxes, like all the people who don`t make a billion dollars a year or the guy who makes or woman who makes 40 a year, pays taxes, and does it every year in April 15, that they pay a big check, if it`s not withheld already. 

And here`s this character who pays no taxes eight out of 10 years?  That`s what a lot of people suspected was the reason he kept this secret. 

JOHNSTON:  Exactly, because he is -- Donald is a con man.

Chris, there is not now and there never has been any verifiable evidence that Donald Trump has ever had a billion dollars.  What we do know from public records and his actions and now this report in "The New York Times" is that money flows in and it flows out faster than it flows in.

And one of the reasons we should all be coming concerned about that is, someone who is constantly desperately in search for money to maintain the appearance that they`re wealthy is likely to commit crimes and be open to various actions. 

And one of the things that has been looked at and we don`t have a definitive answer yet on is Donald Trump and laundering money for Russian Saudis, Emiratis, and others through real estate deals, some of which I have written about, that make no economic sense as a business deal, but absolutely make sense as money laundering and payoff operations. 

MATTHEWS:  Evan, you ran against.  Did you suspect this? 

MCMULLIN:  Well, look, I think people have long wondered, of course, why the president has been so careful to hide his taxes. 

I mean, it is his red line.  And I think most of us expected that maybe they might reveal one of two things, or both things, that he wasn`t as wealthy as he said he was, which, frankly, I couldn`t care less about, but, more importantly, does he -- does he actually contribute to the country?  Does he pay taxes, like every other hardworking American?

And then you get into sort of some of the other money laundering issues and potential compromise by foreign powers that David mentioned as well.  Those are important.

But, at the most basic level, I think, for hardworking Americans across the country, to know that Donald Trump really didn`t pay taxes, at least for the bulk of this 10-year period, while they`re working so hard, and while they didn`t inherit millions of millions of dollars, and they struggle to make ends meet, and they still pay taxes.

And yet they have this alleged billionaire in New York City who was paying essentially nothing.  I think that`s going to create a problem for him in 2020. 

MATTHEWS:  Yes. 

Mimi, I tell you, the average person out there who gets out, put their hat on, maybe a baseball cap or something, something to get through the hours they got to put their taxes together -- just, I got to sit there.  I got to sit there with a cup of coffee and all this paperwork, but I`m going to be honest.  I hate it.  I got to be honest.  I`m not a -- and you feel like a chump, because you`re just being honest. 

Then you find out about a guy like him, living in that house, living like he lives, with the planes and everything else, and you find out, wait a minute, he came up with tax dodges, depreciation allowances, stuff to justify -- which he has a good accountant -- to get out of it.

What you`re paying in dollars, he`s evading in millions. 

ROCAH:  Yes. 

I mean, look, there`s a bunch of things going on here.  I think one of them is, as Evan said, as you`re saying, just this idea that he didn`t contribute in any way, apparently, for at least a good chunk of time...

MATTHEWS:  To America.

ROCAH:  ... to the American economy, while trying to pass it -- I mean, this is where the whole like, I do care that he`s rich or not. 

I don`t care if he`s rich.  I care that he was trying to pass himself off as this great charitable person, I`m rich and I have this Trump charity, and I do good with it, when that`s a scam too.

MATTHEWS:  Well, no wonder he`s being audited. 

(CROSSTALK)

MATTHEWS:  Of course, I don`t think he is being audited. 

ROCAH:  Right. 

MATTHEWS:  But he would if he had ever paid taxes for eight out of 10 years.

ROCAH:  Right. 

But the other question is going to be, are these losses real?  I mean, this is just smart moving around of money, or is there tax fraud here?  And, I mean, my guess is, if he was trying this hard to hide it, it`s not just he`s not this really rich guy, but it`s also, what has he -- what scheme has he created here to make it so that he doesn`t have to pay taxes? 

MATTHEWS:  Well, I think the one question here -- I want to go back to David -- is, look, anybody can look at your taxes and have a different reaction. 

I mean, every -- that`s why Trump said he didn`t want a bunch of think tank people looking at his tax returns, because someone would have a different interpretation and wouldn`t be so kind as to say, you don`t have to pay any taxes eight out of 10 years.  I mean, he`s right. 

And probably you get a sharpie accountant that helps you out and you figured out ways to do it.  He probably did it legally, technically.  And yet he faces the fact that nobody`s going to believe it, that that`s fair. 

JOHNSTON:  Well, Chris, first of all, remember, in an earlier story, "The New York Times" said, without question, Donald Trump and his family have been committing tax fraud for years.

And as soon as the federal judicial authorities began investigating federal Judge Maryanne Trump Barry, she resigned, because that stops the investigation. 

MATTHEWS:  Sure.

JOHNSTON:  Donald Trump also had two civil income tax fraud trials.  He lost both of them and was excoriated by the judges. 

So I think there`s lots of evidence that Donald Trump is a criminal level tax cheat.  And it`s one of the reasons it`s important that Congress, under this 1924 anti-corruption law that you and I have talked about in the past, needs to get his returns and have them audited by congressional staff experts. 

MATTHEWS:  OK, we`re talking about this, this breaking story tonight or HARDBALL.  It just came in, decade in the red is headline.

Trump tax figures show over $1 billion in business losses. 

We have got the author on right now, Russ Buettner, a "New York Times" investigative reporter.  He co-wrote the piece.

Russ, thank you for coming on.

Two questions.  The big headline story, avoiding the tax -- how did he avoid -- how did he come up with these losses?  What, were they all depreciation, intangibles?  What did he come up with for his losses? 

RUSS BUETTNER, "THE NEW YORK TIMES":  No, a small -- Chris -- thanks, Chris. 

A small portion of that is -- are -- is appreciation, where you can write off the cost of a building over a period of years.  Most of this is banks` money, money from bond investors that he`s put in his casinos that never supported the debt that he had loaded them with.  And he was able to record these colossal losses. 

Some of it was even before that, though.  And we really see that there`s a couple of, like, odd income streams that seemed to keep him afloat in the late `80s there, as all of it`s collapsing around him.

MATTHEWS:  What about not paying taxes in eight of the 10 years?  Explain how he managed that outcome. 

BUETTNER:  It`s really the magic of recording business losses. 

When you organize your businesses at these -- what is called pass-through entities, all of their balance sheet flows on to your tax returns.  So you can take -- if you run an unprofitable business, and you can still manage to live, you can use that, those losses, to write off your income from everything else. 

So, for example, in some years, he`s making $10 million, $20 million on stock trades, and he`s able to not pay any taxes on that because of his business losses.  It`s really a wonderful thing, and it rolls over year to year. 

So, there`s really only one in this 10-year period when he pays any significant taxes at all.

MATTHEWS:  Some questions about tradecraft, your own.  How do you get to tax information that the Senate, the House Ways and Means chairman hasn`t been able to get to?

BUETTNER:  Well, we don`t go through the front door, I guess, is the main answer to that.

I mean, there are -- Donald Trump was a busy fellow during these years.  He was dealing with banks.  He was dealing with casino regulators.  He had auditors for various agencies crawling up his business.  And there were a lot of places that this information was floating around.  And we were able to pull it together. 

But, obviously, I have to protect the...

(CROSSTALK)

MATTHEWS:  I know, but you have got eight out of 10 years not paying federal income taxes.  How did you get that information? 

BUETTNER:  Well, the information that we have is a printout from what is called his tax transcript. 

The IRS creates this database from every tax return that`s filed.  It has every line item from the 1040, every line item from the tax schedules. 

MATTHEWS:  Ah.

BUETTNER:  And what we got is a printout of that. 

So we have dozens of points of data for every year in the cycle.  And in includes whether you paid any income tax, if you paid an Alternative Minimum Tax, how much that was and all that stuff. 

MATTHEWS:  Well, I think the American people out there listening right now, especially regular people making regular incomes, around the average income in this country, are going, wait a minute, I paid X-many thousands of dollars this year. 

I just did it in April 15.  I paid what I hadn`t paid in my withholding.  It`s hurting me.  I don`t get to buy things I would like to buy for my family, like tuition bills I would like to pay. 

And they hear about this behavior by what -- seems to be incredibly, awfully unfair. 

Anyway, hold on there.  Thank you so much for us.  Hold on. 

I want to bring in right now Democratic Congressman Tom Malinowski of New Jersey.

Congressman, thank you for waiting around.  We didn`t think we would talk to you.  This story is huge. 

For months, ever since this guy stuck his head up and said he wanted to be president, the American people have said, well, OK, tell us about yourself.  How much money do you make it?  And, more importantly, how much do you pay?  Are you paying a fair share? 

We`re finding out now in this astounding report that, eight out of 10 years, he didn`t pay nothing, nada, nothing. 

REP. TOM MALINOWSKI (D-NJ):  Yes.

Well, I`m just seeing this with you for the first time.  But I will start with what I think most Americans, the vast majority of Americans believe, and that is the every president and everybody who runs for president should just release their tax returns. 

We shouldn`t be learning about this two years into his presidency...

MATTHEWS:  He wouldn`t have won.

MALINOWSKI:  ... from a leak.

MATTHEWS:  That`s the catch-22.  If the American people found out a guy is prancing around with airplanes and skyscrapers, and he owns everything in the world, golf courses all over the world, and he doesn`t pay any taxes, they`d say, that`s not fair.  You can`t be our leader. 

I think even the people in Pennsylvania, Wisconsin and Michigan would say, at the margin, he`s not my guy.  My people pay taxes. 

MALINOWSKI:  I hope so. 

I mean, I have got thousands of people in my congressional district, middle-class homeowners whose taxes went up $2,000, $3,000, $4,000 this year because Trump and the Republican Congress took away their state and local tax deductions. 

MATTHEWS:  Because you didn`t vote for him.

MALINOWSKI:  They didn`t do anything to take away...

(CROSSTALK)

MATTHEWS:  No, you didn`t vote with Trump.  So he got even with all the blue states. 

MALINOWSKI:  Yes, well.  Well, there you go, yes.

MATTHEWS:  You know what he was doing.  He`s screwing the taxes of the middle class because they wouldn`t vote for him in Connecticut and New Jersey and New York and a lot of people in Pennsylvania, I think.

MALINOWSKI:  Oh, yes.

MATTHEWS:  Let me ask you about the impact of this in terms of the Congress. 

Now that you have got this story -- and everybody will have it tomorrow morning or earlier online -- the fact that Trump didn`t pay taxes for eight of 10 years, in fact he had a billion dollars in tax losses rung up just by what "The Times" has been able to get -- and they have -- obviously not able to get everything. 

Will this change Trump`s power in this country that he`s seen -- he looks now like a guy who`s skated? 

MALINOWSKI:  You know, I have quit predicting when that`s going to happen.  I don`t know if it`ll change the minds of his staunchest defenders in the Congress.

But it`ll add impetus to our effort to get his tax returns through the front door.  And I believe we will.  The law is absolutely clear that the chairman of the Ways and Means Committee has the right to request the president`s tax returns.  We will get those.

And, hey, you know what?  If he made this money back fair and square, we will be able to tell the American people about it.  He should be willing to cooperate with us.

MATTHEWS:  Would you vote to arrest him under the right to subpoena, inherent subpoena power of the House?  Would you vote to send the sergeant at arms of the House to go up and arrest Mnuchin at his house or when he`s in an airplane or whatever?

Do you believe you would go that far to get this information? 

MALINOWSKI:  I think we`re going to win this in the courts.  I think the law is absolutely clear. 

And for all the norms this administration has violated thus far, they have respected court orders.  And I believe they will when they are ordered to deliver this information to us.

MATTHEWS:  I hope you get that order. 

Thank you so much, U.S. Congressman Tom Malinowski of New Jersey.

David Cay Johnston, an expert on Trump, whatever that is, but you are that, thank you so much.

MALINOWSKI:  Thank you. 

MATTHEWS:  Russ Buettner of "New York Times," if you don`t get the Pulitzer for this, it`s unwinnable.  Thank you, sir. 

And Mimi Rocah, and Evan McMullin, sir.

Up next:  Trump`s defenders in Congress are trying to slam the door on the Mueller report and blame the Obama administration for Russia`s interference in our election.  We will get to that after this story.

The damage they`re doing could last -- well, it could outlast Trump, in our Constitution.

Stick with us. 

(COMMERCIAL BREAK)

MATTHEWS:  We have more on the tax story in a minute, but welcome back to HARDBALL.

The Republican Party has morphed from the Grand Old Party to the party of one, Donald Trump.  The metamorphosis began way back during the campaign when Donald Trump remained the party`s nominee after the release of that awful "Access Hollywood" tape. 

It accelerated when the party drugged off proof that president Trump paid a porn star and Playboy playmate to keep quiet about alleged affairs with them.  Well, today, the transition is complete.  The congressional Republicans have closed ranks around Trump, defending him against scrutiny and abdicating the fundamentally constitutionally mandated oversight authority.  Let`s take a look. 

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R-SC):  Have I been confusing on this?  It`s over.  What else? 

SEN. CHUCK GRASSLEY (R-IA):  Now we know without a single doubt that there was no collusion by the Trump campaign with Russia.  The real collusion was actually with the Democrats. 

SEN. JOHN KENNEDY (R-LA):  I`d like to move on. 

(END VIDEO CLIP)

MATTHEWS:  Well, Fox News host Sean Hannity took it a step further, calling Democrats psychotic for wanting to do their job and accusing some Democrats of using dictatorial tactics. 

Let`s watch him. 

(BEGIN VIDEO CLIP)

SEAN HANNITY, FOX NEWS HOST:  They`re lost their mind.  Democratic congressman wants to handcuff, get this, the attorney general of the United States, have the sergeant of arms drag him before the committee or to prison.  No trial, no charges, nothing.  Well, welcome to Saddam Hussein`s USA. 

(END VIDEO CLIP)

MATTHEWS:  What`s startling of all is how the Senate majority letter is rejecting the checks and balances between Congress and the White House established by the founding partners and the constitution, all to protect Trump.  You want to hear what Mitch McConnell had to say, it`s coming up next.

Mitch is doing anything he can for Trump. 

(COMMERCIAL BREAK)

MATTHEWS:  It gets worse.  Welcome back to HARDBALL.

After two weeks of relative silence, Senate Majority Leader Mitch McConnell took to the chamber floor today to trump at President Trump`s claims of complete and total exoneration.  The Kentucky Republican acting as judge and jury went a little further by declaring case closed. 

He`s Perry Mason now.  Let`s watch. 

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY):  Two years of exhaustive investigation and nothing to establish the fanciful conspiracy theory that Democratic politicians and TV talking heads had treated like a foregone conclusion.  The special counsel`s finding is clear.  Case closed!  Case closed. 

This ought to be good news for everyone.  But my Democratic colleagues seem to be publicly working through the five stages of grief. 

(END VIDEO CLIP)

MATTHEWS:  It`s amazing the number of people going to prison for practically a long time, including a lot of Americans and Russians for something that didn`t happen, is it?

For more, I`m joined by former New York Congressman Steve Israel who`s now director of Cornell University Institute of Politics and Global Affairs.  And Michael Steele, my friend, former RNC chair. 

What do you make about Mitch McConnell? 

I`d go to Michael first. 

Mitch McConnell I thought and had reason to believe, believed in the institution, especially the U.S. Senate, he wanted to keep the filibuster, he believed in all the old processes, and now, he has given away the store.  He doesn`t support subpoenas or contempt -- citations for the Congress for demands of testimony or documents.  He doesn`t believe in any of that.  He`s now a Trumper all the way. 

MICHAEL STEELE, MSNBC POLITICAL ANALYST:  Well, Chris, it`s a reflection of how much the paradigm has shifted inside that building on Capitol Hill where senators supposedly there to protect the institutions, particularly on Republican side are now more interested in protecting themselves.  The fact of the matter is, this is all about reelection, this is all about maintaining control and power. 

This whole thing with, whether it`s the Russia piece or the obstruction piece has never been a Democrat-Republican partisan battle.  This has been borne out of the attack on our country by the Russians. 

MATTHEWS:  Right.

STEELE:  And the fact that you have political leadership with the Republican side that refuses to even acknowledge that much of this narrative is not surprising at this stage, quite honestly, because at the end of the day, Chris, this is about how do we hold the Senate, how do we reelect the president and how do we maintain the power and control.  Nothing else is getting done much beyond that. 

MATTHEWS:  Well, revolt and development comes tonight.  The president and Mnuchin, his secretary of treasury, both wealthy men, worked together to keep the president`s tax returns from the public.  And now, we get pieces of it. 

So, we`re getting like a billion loss here, and eight out of ten years taxes not paid there.  We`re going to get it in pieces because we are not getting it all.  And now, the president is going to be forcing his flax to put out the truth to prove they are right when they don`t want to put out the truth.  That`s their problem now.

FORMER REP. STEVE ISRAEL (D-NY):  Yes, this is a real dilemma for them.  But, you know, this administration is not bothered by dilemmas.  They`ll just double down on this.  Politically, Chris --

MATTHEWS:  What`s he hiding?  Besides --  

ISRAEL:  We don`t know and that`s why --

(CROSSTALK)

MATTHEWS:  We know he wasn`t paying taxes.

ISRAEL:  Politically, I think this is how to plays out.  This is a love-or- loathe electorate.  Thirty-five percent of this electorate loves Donald Trump no matter what.  This is the tax equivalent of shooting somebody on Fifth Avenue and not losing votes. 

Forty-five percent of the American people loathe him.  And so, this gives them more excuse to vote against him.  This election is about the 20 percent who are in the middle who has not yet made a judgment. 

And you know what drives those people crazy, those fierce independents -- a rigged system, the sense that we have a president who says support the troops, but didn`t fund them by paying his taxes.  This could be his Achilles heel with that 20 percent who have not yet made a judgment for 2020. 

MATTHEWS:  So, you may have missed it, but I go to you, and then Michael on it, I think most Americans pay their taxes honestly and when they sit down, they put all the papers together and they hate it.  They hate having to do it because they don`t want to make a mistake and they want to be crooked, and they don`t want to walk away with it. 

You know, there`s a couple of close calls, but I think I did the right thing.  That`s how the system works.  You are the judge.  It`s a self- reporting system.  There is nobody hanging over your shoulder.

And Trump --

(CROSSTALK)

ISRAEL:  You don`t want a president who makes that mistake.  You expect that the very least, your president is going to pay his fair share.  And this president appears not to have done that. 

MATTHEWS:  I think all these losses we`re going to find out, Michael, to the president`s advantage, I think when you don`t have to pay taxes and you`re a billionaire, people wonder, how come you are a billionaire if you`re not paying taxes?

STEELE:  Right.

MATTHEWS:  It doesn`t seem to square.  I mean, obviously, you are supposed to pay based on how much money you make.  How do you stay rich and have skyscrapers and fleets of airplanes and any number of dozens of golf courses and you didn`t make any money? 

STEELE:  Well, a lot of this -- a lot of this is tied up into how the tax laws play out, how real estate deals are done and particularly how they are financed -- 

MATTHEWS:  I know.

STEELE:  -- and how the banks, quite frankly, carry those loans and that debt on their books.  So, there are a lot of moving parts here.

At end of the day, though, when you are running for public office, the expectation is that you do come clean with the American people about how you`ve been positioned in the system. 

And so, there is no crime in being a billionaire.  There`s no crime in having wealth and there`s nothing wrong with that.  But you -- if you take advantage of the system in a way that to your point, Chris, taxpayers look at it and go, well, wait a minute.  Each year, you continued to play the game that you didn`t have to pay any taxes. 

MATTHEWS:  Right.

STEELE:  What does that say to them, which is again, why Donald Trump really didn`t want it exposed in the first place, because the narrative is not a good one.  They got it to whether or not he has given charitably to other institutions and groups out there.  We haven`t gotten to the foreign entanglements and the enterprises and the relationships he has beyond the U.S. borders and how that shows up on his tax books. 

So, there is a lot that the president just didn`t want to talk about. 

MATTHEWS:  I think everybody to do is, Geraldine Ferraro once did it.  She stood in a platform, a stage with her -- his name is Murray.  And she answered every question the whole day until people were tired of asking questions.  So, that would be a good start.

Anyway, former Congressman Steve Israel, my pal, coming up here, thanks so much.  And Michael Steele. 

Up next, one big reason the early polls look so good for former Vice President Joe Biden, we`ll know the big reason in a minute.  I`m going to explain I think. 

You`re watching HARDBALL.

(COMMERCIAL BREAK)

MATTHEWS:  The latest 2020 poll numbers give us a glimpse into how this country sees this coming election.  By that I mean both sides.  To put it bluntly, 2020 looks to both Trumpite Republicans and anti-Trumpite Democrats like it`s going to be a tight one. 

This may explain why Democrats are taking nothing for granted.  The idea that the country was ready to dump Donald Trump in a giant fun-filled splash is no longer in the picture.  The latest poll number has Trump at his highest approval rating ever.  His numbers for the economy are also at an all-time high.

As I said, this largely explains the pattern of today`s poll numbers among Democrats.  Joe Biden is running at 40 percent now, two out of five Democrats back him for the presidential nomination.  This is especially remarkable given the large number of candidates to choose from. 

But except for Biden and Senator Bernie Sanders, all are now in single digits.  And Sanders is even dropping. 

What this tells me is that Republicans are rallying around Trump, and Democrats are rallying around Biden, the one they see as the best chance of dumping Trump. 

The country`s top Democratic elected official apparently agrees.  Seeing the challenge of beating Trump, Speaker Nancy Pelosi wants her fellow Democrats to, quote, place their bets on the best bet, own the center, own the center left, she said.  Own the mainstream. 

That`s why Joe Biden is taking off in the polls, she said, he took off because people know him.  They trust him.

Listen to what Biden said during his first campaign event as a presidential candidate.

(BEGIN VIDEO CLIP)

JOE BIDEN (D), PRESIDENTIAL CANDIDATE:  I make no apologies.  I am a union man.  The country wasn`t built by Wall Street bankers, CEOs and hedge fund managers.  It was built by you.  It was built by the great American middle class. 

(END VIDEO CLIP)

MATTHEWS:  That`s the reason Biden is rising in the polls right now.  Democrats want to beat Trump and they know how hard it`s going to be.  They know they need a candidate that can withstand Trump`s coming assault on the hard left, on socialism, open borders, late term abortion. 

One word of caution for me right now -- there is no way to know with any precision how any candidate will look head to head with Trump in the full fire of the 2020 general election.  No way to know now. 

And that`s HARDBALL for now.  Thanks for being with us. 

"ALL IN WITH CHRIS HAYES" starts right now. 

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