MATTHEWS: Welcome back to HARDBALL. That was President Obama today, marking the one-year anniversary of his stimulus bill. Jared Bernstein is chief economic adviser for Vice President Biden.

Jared, thank you so much for joining us on a cold day out there. Let me ask you about the central question. The Senate is voting on a 15 billion dollar jobs bill. Is that really going to be worth many jobs?

JARED BERNSTEIN, CHIEF ECONOMIC TO VICE PRESIDENT BIDEN: Look, that‘s a step in the process. You have the House, the Senate out there. This-

President Obama has stressed his priorities, in terms of some targeted jobs ideas to build over the successes of the Recovery Act, over its first year. In every case, we‘re talking about pretty much the same things, some tax credits to help small businesses.

You know, oftentimes it‘s the small businesses hiring that lead you out of a downturn like this in the job market, to build on some of the infrastructure projects that have helped put some people to work, and also further clean energy investments. In each case, that‘s what the policy discussion is targeting around.

MATTHEWS: Let‘s talk numbers. You and I know history. I assume you

know the political history. It‘s that if presidents can get the

unemployment rate down from where they started, especially if it went up to

10, 11 percent like it did with Reagan-he got it down to seven by

Morning in America time, when he could celebrate himself with TV ads to get

re-elected overwhelmingly. I just saw a Fed report today that says we are

going to get to that terrain, in the six to seven percent range, by 2012.

Is that the good news you embrace? Are you skeptical? Where are you on the possibility that we will be back into that safe area politically by the next election for president?

BERNSTEIN: Well, you know, I‘m really focused on getting that-

MATTHEWS: Well, no, can you focus on my answer for a second, please. Is it possible-are you sublime about that number? Do you think we can get to six or seven by the time the president faces the voters again personally?

BERNSTEIN: We have a forecast on the unemployment rate in the economic report of the president that just came out. The number for 2012 is I think around a point in that neighborhood, around where you were, maybe a little bit higher. And the important point there is that you get the unemployment moving in the right direction. It‘s very much what you started out with.

You know, this economy is not going to get back to full employment, you know, five percent unemployment, you know, anytime soon. It took years to get into this mess, and, as you heard the president say, we‘re doing everything we can to arrest the free-fall. And I think we‘ve accomplished that. And to now get those trends moving in the right direction. And that‘s the key moving forward.

MATTHEWS: Let‘s go to something. You and I studied economics in grad school. I didn‘t go for a PHD, but I was working on it, but certainly studied Keynesian economics, the idea that when consumption is down, business investment is down, the government has to compensate by spending more than it‘s taxing. Has that basic philosophy of John Maynard Keynes, exemplified by the stimulus bill, proven itself to be true again this past year?

BERNSTEIN: Unquestionably so. The economy was contracting at a six percent rate when we got here. We were hemorrhaging jobs at a rate of 750,000 per month. I‘ve been looking at these statistics for decades. I never saw anything like that. The most recent quarter, the economy expanded at about that rate and job loss is a fraction of what we saw. It‘s not where we need it to be, by any stretch of the imagination.

You and I just talked about the urgency of building on some of the successes of the Recovery Act, to get the unemployment rate moving down. Once again, Keynesian economics, the temporary use of government stimulus to get you over that economic chasm when the private sector economy is on the melt, has proven to be effective. What matters now is building for the future, making the investments not just in good jobs today but in the growth industries of tomorrow.

MATTHEWS: Let me give you an old dose-tell you how liberal I am.

I‘m old school.

BERNSTEIN: OK.

MATTHEWS: I look at economic enterprise by the government as a wonderful contributor to economic progress. I look at the city we‘re in now, the beautiful buildings around us in Washington, many of them built during the Great Depression. They‘re beautiful buildings like the Jefferson Memorial, the federal-the Triangle. All those buildings went up, I think, at time of relatively cheap labor and resources. You could get the goods, the stone, the granite. You could get the cement. You could get the stuff put together in terms of labor and quality.

We have a period of time right now where the construction companies and the construction crews and labor forces are out there ready to be put to work. Why don‘t we build our transportation system in America right now. Why don‘t we show some guts, make some capital investments in a state-of-the-art rail system like they have in Europe, like they‘re building in China. Why do we have to have Amtrak and these old chug-a-lug old rail systems in this country? Why do you and I fly to New York instead of taking a faster train? Why can‘t we take a train to Chicago. Why not build America again? Why are we so squeamish?

BERNSTEIN: I‘m ready to kick it old school with you all the way on this point, because that‘s exactly where we are. We have over 12,000 transportation projects in the field either right now or ramping up in year two of the act. And the thinking behind that is very much as you said. In fact, this is the largest investment in the National Highway System since the Eisenhower years. High speed rail, eight billion of investment for high speed rail.

Now, does that build high speed rail system throughout this country in the way that you‘re suggesting? Of course not. But-let me finish, let me finish. But it does plant the seeds.

MATTHEWS: That is so small. You‘re building that chug-a-lug from Tampa to Orlando. Give me a break. That‘s a nice little project but-

BERNSTEIN: Here‘s where we may have a different view. I don‘t believe-nor does this president or vice president, that the US government is going to build the national high speed rail, or build out the smart grid, or completely take the ball on clean energy. What we can do, especially at a time like this, with credit constraints and private capital on the sideline, is seed those industries, create the conditions for private capital to come in, and leverage up those federal dollars to make long-term investments in these industries.

MATTHEWS: Well, let‘s see. Let‘s see if it happens. Thanks so much, Jared Bernstein, for joining us on the big news today, the first anniversary of the stimulus package.