(BEGIN VIDEO CLIP)

SEAN HANNITY, HOST, "HANNITY": Do you think you can take over the House? Do you think Republicans...

MICHAEL STEELE, RNC CHAIRMAN: Not this year. And Sean, I‘ll say honestly...

HANNITY: You don‘t think so.

STEELE: Well-well, I don‘t know yet because we don‘t have all the candidates. We still have vacancies that need to get filled.

(END VIDEO CLIP)

MATTHEWS: Wow. Welcome back to HARDBALL. That was Republican National Committee chairman Michael Steele with Sean Hannity last night. A spokesman for the Republican Congressional Campaign Committee, the NRCC, said, quote, "Independent political analysts and even liberal columnists have stated that Republicans have a very real shot at taking back the majority in 2010. Make no mistake about it, we‘re playing to win."

Well, Chairman Steele has a new book called "Right Now: A 12-Step Program for Defeating the Obama Agenda." He joins us tonight from New York. Do you stick with what you said the other night on Sean, that you don‘t think your party can win back the House this time?

STEELE: Well, Chris, let me-let me just start by saying I gave, I think, an honest analysis of the situation. I‘m not a pundit there. I want to play to win. What-the point I was making, if you go through the rest of that interview, was we‘re in the process of now putting our players on the table. We‘re still building that farm team in some races. We‘ve got primaries that are going to be competitive. We want to see how that turns out. So there are a lot of things to take into consideration.

I agree with the NRCC and the NRSC and others around in the party who believe that we have real shots this November. And I‘m playing to win, as well. But I‘m not going to sit here in January, not knowing where all of my pieces are on this playground, or this chess board, and tell you, Oh, we‘re going to do it absolutely this way or that way.

MATTHEWS: OK...

STEELE: So what I was trying to say is, we‘re now beginning to put a good team in place. Coming off the wins in New Jersey and Virginia, I feel very good about next fall and I‘m excited and ready to rock and roll.

MATTHEWS: Let me restate the question...

STEELE: Sure.

MATTHEWS: ... that Sean put to you. Can you-it isn‘t "Will you," he said, Can you win the House this year?

STEELE: Yes.

MATTHEWS: Can you...

STEELE: Yes, we can.

MATTHEWS: ... Mr. Chairman, win the House?

STEELE: I think we can.

MATTHEWS: OK, so you have a different answer. Let me ask you...

STEELE: Yes, we can.

MATTHEWS: Let me-let me-the question-you know, I get the feeling, reading your book-well, not having read it, but looking at the cover and checking my name in it, like everybody else-and thank you for the mention.

STEELE: Hey, look, if you...

MATTHEWS: A lot of...

STEELE: Can I just say real quick...

MATTHEWS: Well, by the way, I‘ve got to ask-sir, go ahead.

STEELE: No, I was just going to say, you know what I appreciate and why I put that in there? Because the one thing I‘ve always appreciated about you is that you don‘t try to hide or color what your perspectives or your views are.

MATTHEWS: Well, thank you. Well...

(CROSSTALK)

STEELE: You wear that passion...

(CROSSTALK)

STEELE: We know you‘re an unabashed liberal...

MATTHEWS: ... this president, by the way-no, no. I‘ll accept all of that, except I don‘t think unabashed is right, but liberal on a lot of things. But let me tell you this. I‘m also a critic every day of when things go wrong. And I made that comment-I‘ll say it again-I wished him well, like I wished Bush well in the beginning, I wished Clinton well in the beginning. I wish all these presidents well in the beginning. And I have been-I have been rooting for him and I will continue to root for his success because I think I want him to succeed. That‘s clear.

STEELE: Yes.

MATTHEWS: But I‘m a critic every day.

Here‘s a question for you book-for your book, which I found fascinating. I‘m looking, like all Washingtonians do, at your book, and I look in the back of it under P‘s. And I look at these names, Pacino, Al. We know who he is.

(LAUGHTER)

MATTHEWS: Party of Lincoln, great for a Republican like yourself.

STEELE: Yes.

MATTHEWS: Paterson, David, the under-attack governor of New York.

STEELE: Yes.

MATTHEWS: Pawlenty, Tim, from Minnesota. PBS, that‘s an odd thing for a Republican to quote.

(LAUGHTER)

MATTHEWS: Daniel Pearl, of course, the man, the great heroic journalist who was killed over there.

STEELE: Yes.

MATTHEWS: Pelosi, Nancy. Prejean, the beautiful woman from California who was Miss California.

STEELE: Yes.

MATTHEWS: And public option.

But there‘s a big P. missing here.

(LAUGHTER)

MATTHEWS: Where is the big P. from Alaska? What-no mention of her?

(LAUGHTER)

MATTHEWS: She‘s the most admired woman in the country, next to-alongside Hillary Clinton, and you don‘t even give her the respect of a mention in your book as chairman of the Republican Party?

STEELE: Hey, look, she just wrote a book.

MATTHEWS: Here‘s the book. Sarah, you‘re not even in here.

(LAUGHTER)

STEELE: She just wrote a book.

MATTHEWS: You‘re not even in here.

What do we make of that?

STEELE: Well, you know, there‘s nothing to make of that.

MATTHEWS: Nothing to make of it? She notices it, I‘m sure.

STEELE: Well, no, no, no. Look, first off, the governor and I are good buddies. And I have an enormous amount of respect and gratitude for her run last year and what she‘s done as governor of the state.

MATTHEWS: Well, why are you afraid to speak her name?

(CROSSTALK)

STEELE: Oh, come on, Chris. Afraid to speak-Palin, OK? I‘m not afraid to speak her name.

MATTHEWS: Well, what do you go to say about her, since you won‘t write about her?

(CROSSTALK)

STEELE: The emphasis of the book-look, the emphasis of the book, the emphasis of the book-and I invite everyone, starting with you, to actually read it cover to cover. And you will understand that this is not about singling out one individual and focusing on one personality.

MATTHEWS: All right. OK.

STEELE: This is about a party that‘s in recovery, a party that‘s about to enter into a renaissance, in which we can begin connecting to the American people on-I think on some foundational principles, whether you‘re talking health care or the war in Iraq or whatever it happens to be. That‘s the focus here. This is the blueprint and the pathway to do that.

MATTHEWS: Can I use some common language? I want to use some street language with you, if you don‘t mind...

STEELE: Sure

MATTHEWS: ... because I think we speak the language of the people of both parties.

STEELE: Absolutely. You hear me. I‘m street.

MATTHEWS: It seems to me that the Democrats have a problem. The economy is terrible, 10 percent unemployment. The president came in with hell on wheels and he‘s done, I think, a good job. But, clearly, there‘s nothing to hand-no roses to hand out yet, no rewards yet politically.

But the Republican Party keeps in all the polling by "The Wall Street Journal" and NBC keeps coming up as a bad brand.

STEELE: Sure, yes.

MATTHEWS: About one in five Americans call themselves Republicans. Even if you‘re a conservative, people aren‘t willing to say, I‘m a Republican.

STEELE: Yes.

MATTHEWS: If your brand sucks, how can you rebuild the product?

STEELE: Well, that‘s exactly what this blueprint is about.

That‘s what this-this book really focuses on, starting with the mea culpa, mea culpa, mea maxima culpa, which you and I are familiar with, as good little Catholic boys.

MATTHEWS: We are.

STEELE: And the reality of it is, you can‘t begin to make a step forward unless you understand what you‘re stepping away from, or, more importantly, what you have stepped into.

(CROSSTALK)

MATTHEWS: What, Iraq?

(CROSSTALK)

MATTHEWS: Was Iraq...

(CROSSTALK)

MATTHEWS: What were the big mistakes? Was it Katrina? Because you are getting honest here, and I know you‘re going to pull back, because you‘re almost getting honest.

(CROSSTALK)

STEELE: No, I‘m not going to pull back.

(CROSSTALK)

MATTHEWS: Not paying attention to Katrina, was that a mistake by the president?

STEELE: It was Katrina. It was the government buildup. It was spending.

(CROSSTALK)

MATTHEWS: Going into Iraq, when we should have been fighting al Qaeda, was that a mistake?

(CROSSTALK)

STEELE: No, I don‘t think that was a mistake, because...

(CROSSTALK)

MATTHEWS: Going into Iraq wasn‘t a mistake? The American people think so.

STEELE: Well, look, you have to-you have to look at the-the totality of what the president saw and what the president knew, the information, along with the Democrats, as you noted in the last segment, who stood with the president on the war in Iraq. And, when it became politically expedient for them, they flipped like a jailbird on the issue.

MATTHEWS: OK.

STEELE: But, having said that, the broader point here, more importantly, is that, as a party...

MATTHEWS: Right.

STEELE: ... we stepped away from principle. And this, I think, is a pathway back to regaining that ground.

(CROSSTALK)

MATTHEWS: OK. You know when you stepped away from principle? When President Bush wouldn‘t veto a single overspending bill the entire time your party ran the Congress, not one.

STEELE: Duly noted in the book. Duly noted in the book.

MATTHEWS: Not one.

Let me ask you a tricky question.

STEELE: Yes.

MATTHEWS: You know, I get-there‘s a lot of fight. And I may take the Republican side on this fight, whether we should be taking these people, like Khalid Sheikh Mohammed, up to New York and having them a big trial at the cost of $200 million in a year in New York City. And I would say that just exposes us to all kinds of trouble, including crazy jurors, potentially, who just have all kinds of theories.

STEELE: Yes.

MATTHEWS: Let me ask you this.

Is it a reasonable debate or is there a right side and a wrong side to this? Is the right side we have to have military tribunals for these kind of people, and the wrong side we have criminal cases? Is it as simple as that?

STEELE: I think, to a large extent, it is, Chris, because, at the end of the day, you have got to call it what it is. Who are you dealing with here? Who are the-who are the jury of Khalid Mohammed‘s peers? Who are his peers?

I mean, what American or what New York citizen is his peer that can sit in judgment of him?

MATTHEWS: So, that‘s the wrong side of this issue.

STEELE: It‘s the wrong side. And the reason it is...

MATTHEWS: So, then, why did your president, our president at the time, George W. Bush, try the shoe bomber under criminal court in the United States? You said it was the wrong way to go. Well, then why did your president and our president at the time do that?

STEELE: You know, look, again, I wasn‘t in that meeting.

MATTHEWS: Have I tricked you? I have tricked you.

(CROSSTALK)

STEELE: You have not tricked me.

MATTHEWS: I have let you give a policy position here which I have now explained to you ran contrary to what the Republican president did.

(LAUGHTER)

MATTHEWS: You‘re laughing. But you just took a principled position and said it‘s wrong to have a criminal trial.

(CROSSTALK)

STEELE: Wait a minute.

MATTHEWS: And I have just reminded you that the shoe bomber got a criminal trial...

(CROSSTALK)

MATTHEWS: ... and was convicted of life imprisonment.

(CROSSTALK)

STEELE: You haven‘t let me tell answer the question, bro. Let me tell you what the deal is.

(CROSSTALK)

MATTHEWS: You did answer it. I caught you.

STEELE: No, you didn‘t catch me, because you started...

MATTHEWS: I nailed you.

STEELE: I started to tell you that...

MATTHEWS: The tape will show it.

(LAUGHTER)

STEELE: Let‘s go to the videotape.

MATTHEWS: The tape will show, sir, that you said the right position was military tribunals and the wrong position was criminal. And the president of the last instance, George W. Bush, went the criminal route with the shoe bomber. And you cannot explain the contradiction in your thinking.

(CROSSTALK)

STEELE: No, I‘m not. OK. Well, you clearly have answered my question for me. So, I guess I will just leave that as the answer...

MATTHEWS: No, I have judged it. I have judged your answer.

STEELE: ... because all I said-my start was, I wasn‘t in the room on that.

But, then, if you let me finish it, I would have gone on to say that I do not think that we should subject our courts, whether it‘s under a Republican administration or a Democrat administration, to-to terrorists who are not about our Constitution. To wrap our Constitution around these imbeciles is not smart. It‘s not smart politics and it‘s not smart national security policy.

And the reality of it is, again, whether you‘re talking then or now, to be consistent, in review...

MATTHEWS: I agree. By the way, that‘s a reasonable position.

STEELE: ... that this-our criminal justice system tries crooks, common criminals. It doesn‘t try terrorists.

(CROSSTALK)

MATTHEWS: And, by the way, we can disagree, because I could argue that terrorist behavior is criminal.

But let me ask you this. Can you still be a liberal Republican, like the ones we grew up with like Rockefeller, and Henry Cabot Lodge, and Jack Javits, and Bill Scranton? Is it still OK to be a liberal Republican?

(CROSSTALK)

MATTHEWS: Or there‘s no-there‘s not-a liberal Republican, not a moderate, a liberal?

STEELE: Well, I don‘t know what a liberal Republican is, I mean, because I-what I do know, I know Republicans who adhere to certain core principles like, you know, taxes and the amount that we pay, the role of government, free markets and free enterprise, you know, looking at communities and appreciating the ability to create reinvestment and opportunities for people who are trying to move up the ladder of success, if you‘re standing with us on those core principles, if you value, you know, the livelihoods and the lives of individuals to achieve the American dream, then I think this is a party you can stand with.

MATTHEWS: OK. OK. OK. Thank you very much, Michael Steele.

The name of your book is "Right Now: A 12-Step Program For Defeating the Obama Administration." It sounds like something to do with Alcoholics Anonymous here, a 12-step program.

(LAUGHTER)

MATTHEWS: Anyway, we will talk about that the next time.

STEELE: It‘s all about recovery, my friend.

(LAUGHTER)

MATTHEWS: Oh, God, you‘re open-minded about it.