updated 4/16/2009 2:07:30 PM ET 2009-04-16T18:07:30

Guests: Robert Gibbs, Chris Van Hollen, Eli Lake, Sam Stein, John Feehery,

A.B. Stoddard, Kiki Friedman, Ralph Neas

ED SCHULTZ, HOST:  I‘m Ed Schultz.  This is THE ED SHOW.

Good evening, Americans.  Live from 30 Rock in New York City, it‘s THE ED SHOW on MSNBC.  We have got a great show for you tonight, folks.  We‘re talking with White House Press Secretary Robert Gibbs, that is coming up in just a few moments.  It‘s an exclusive. 

And, of course, right-wingers are going nuts on tax day.  They are holding these tea parties across the country. 

And Texas wants to be a sovereign state.  What the heck is that all about?  We‘ll ask Kinky Friedman. 

Pharmaceutical companies are just jacking up drug prices to turn a big profit, really sticking it to the middle class.  We need reform now. 

Plus, a tax day edition of “Psycho Talk.” 

All of that, and a great panel coming up, but, first, tonight‘s “Op Ed.” 

Every American knows the media can manufacturer a story.  We can focus the attention of the American people.  We can create.  And the tough thing about all of it is some of us from time to time can mislead for promotional purposes. 

Folks, what happened in cities across America today was anything but grassroots.  These tea parties were filled and fueled with one network, which has got, of course, a stable of talk show hosts, just throw around the word revolution all of the time. 

Now, pretty clever, pretty clever stuff, especially if you can motivate some disgruntled malcontents to follow you. 

Now today is tax day.  Hold it right here.  Nobody likes to pay taxes.  I mean, just think if we didn‘t have to pay any taxes at all.  But it‘s the American thing to do. 

Now unless you filed an extension, your taxes are due by midnight tonight.  Some Americans pay, some don‘t.  They‘re known as protesters, radicals.

They want to operate outside the system because they just don‘t like the way that the election turned out.  In a democracy, revolution is called an election. 

To function and operate outside the law, folks, I think is anti-American.  To reject the system is anti-American.  If these protests today were about taxes, it really needs to be mentioned that, you know, your taxes have not increased under President Obama, of course, unless you smoke. 

Now, what was the mission today?  That‘s kind of what I want to know.  Did they want to start a revolution?  Dud they want to start a revolt, or do they just want to feel better, you know, to heal the wounds after last November? 

I want to ask you, how many jobs were created today?  Who got health care?  Is the middle class better off today because we had a tea party in America?  I mean, I need some definition. 

What was this whole thing all about?  Just to go out and get frustrated?  Is this what it was about? 

(BEGIN VIDEO CLIP)

CODY WILLARD, FOX BUSINESS ANCHOR:  I‘m fighting conservatives and liberals because I can‘t tell the difference from either of them.  They‘re both fascists who are taking all of my money and building up corporate America with my welfare. 

(END VIDEO CLIP)

SCHULTZ:  Now was that reporting or deciding?  And you know, I just can‘t get away from this guy that we talked about earlier this week about brainwashing at one of these meetings. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  They are doing everything they can to brainwash our public right now.  That‘s the stain (ph) they‘re putting on our TVs.  It‘s a brainwash unit. 

UNIDENTIFIED FEMALE:  Burn the books! 

(LAUGHTER)

(CROSSTALK)

UNIDENTIFIED FEMALE:  . foundation before they go. 

UNIDENTIFIED MALE:  Well, you don‘t even have to do that.  You can send them off to college and these professors brainwash these kids. 

(END VIDEO CLIP)

SCHULTZ:  Burn the books?  Don‘t pay taxes?  That‘s American?  Now, I have just a couple of questions here tonight.  Where were all of these radicals when the TARP money came out under the Bush administration?  Fair question?  Where was the protest then? 

Question number two:  How can you support the troops if you don‘t want to pay your taxes?  So I need some definition about what this is all about. 

You know what this is about, in my opinion, these people are a bunch of malcontents who can‘t take the fact that the conservative agenda has been rejected by the American people and this president has got an approval rating that is extremely high for this time in his administration. 

Now, for these people to go out and draw a parallel between 1776 and what is going on in this country today is absolutely lunacy. 

Now my fourth grade teacher was Mrs. Harper (ph), and she made me kind of like history.  She told me back then, now maybe it has changed, but back in those days in 1776, you see, they had taxation without representation.  That hasn‘t quite gotten into our system. 

Now I want to know, these people that were protesting today, do they have a representative in Washington?  Do they have a senator?  Do they have a governor?  Were they part of the process or are they just out there making themselves just feel better because they are doing this? 

Let me tell you something, folks, when you talk about revolt and when you talk about revolution and you talk about brainwashing, unfortunately there are some children in this country that have been left behind that will be influenced by that kind of rhetoric.  It‘s unfortunate. 

Now on a serious side, here‘s what I want to do.  I want to go over to the White House right now and talk with White House Press Secretary Robert Gibbs and find out how the brainwashing program is going.  Because, after all, these people must be correct.  Look how many people showed up today.  Joining us now is Press Secretary Robert Gibbs from the White House. 

Mr. Gibbs, glad to have you with us.  So we might as get the.

ROBERT GIBBS, WHITE HOUSE PRESS SECY.:  Ed, how are you?

SCHULTZ:  I‘m doing great.  I just want to know how this brainwashing thing is working out for you guys.  Who is in charge of that at the White House? 

(LAUGHTER)

GIBBS:  I don‘t know what department that‘s in.  I was unaware of those activities until I heard them on your show. 

(LAUGHTER)

SCHULTZ:  You mean to tell me that the president hasn‘t paid any attention to these protests today at all, Robert?  What‘s happening? 

GIBBS:  Well, look, Ed, the president at an event here today was focused on telling the American people that as a candidate he ran on a platform of cutting taxes for working families.  And within the first month of his administration provided the largest tax cut that has ever been enjoyed by any number of people in the history of this country.

We‘ve cut taxes on working families.  We‘ve cut taxes for families that want to send their kids to college.  We‘ve made homes more affordable for people that are buying for the very first time. 

This president ran on and kept his promise to cut taxes for working families and that‘s something that we heralded here at the White House today. 

SCHULTZ:  Well, these folks are out there protesting today, Mr. Gibbs, that, heck, their taxes are going through the roof and you‘re telling me that the taxes haven‘t gone up on these people.  So is the White House telling the truth or are they just misguided? 

GIBBS:  Well, not only, Ed, has taxes not gone up for 95 percent of working families, for people that make less than $200,000 a year, they‘ve seen a tax cut that started the very beginning of this month in their paychecks. 

This administration is proud of the recovery and reinvestment plan that we put forward that has those tax cuts in it for working families. 

SCHULTZ:  You know, I just had to get this brainwashing thing out of my mind and I had to make sure that everybody knew that our taxes.

GIBBS:  You can get it brainwashed out. 

SCHULTZ:  Yes, that‘s right.  I just want to make sure that everybody knows that their taxes have not gone up, unless they are smokers.  Now that, of course, is connected to SCHIP bill which was passed and had so many votes it overrode a veto, twice in fact.  And this time, of course, President Obama signed it.  So that‘s the only tax increase, if you smoke. 

Now moving forward, is there a plan to raise taxes on the American people right now?  Is there a plan on the table by the Obama administration to do that? 

GIBBS:  Well, Ed, this president proposed in a budget that would put us on a path towards fiscal responsibility and finally make investments in health care, energy, and education that would cut taxes for working families and ask those that make more than a quarter of a million dollars a year to pay a little bit more. 

SCHULTZ:  Now when is that going to happen?  When... 

GIBBS:  Well, we‘ll see what happens with our budget in Congress.  But the president believes that we should institute some tax fairness.  For the past several years, working families have seen their incomes not just flat line but actually decrease while the wealthiest among us have enjoyed many of the benefits of this economy. 

This president believes and this administration believes that with some tax fairness, we can cut taxes for working families here in America. 

SCHULTZ:  OK.  So the folks that were out there today, if they make over $250,000 a year, then there‘s a chance their taxes might go up.  It‘s not etched in stone because if this economic recovery really comes roaring back and the money goes into the Treasury, we might not have to do that. 

So I just want to point that out.  It would seem to me that the majority of the people that were out there today have already had a tax cut. 

All right.  Now the other.

GIBBS:  They have. 

SCHULTZ:  They have, no doubt.  All right.  Now.

GIBBS:  I don‘t know if there were many quarter million dollar a year protests out there today.  I didn‘t check it out. 

SCHULTZ:  I didn‘t either.  OK.  What about this warning that has come out from the Department of Homeland Security?  How serious is the White House taking that?  Or is the White House paying attention to it at all? 

GIBBS:  Well, look, I think Homeland Security Secretary Napolitano addressed this today.  Nobody is watching any political group about their activities.  Obviously the Department of Homeland Security is there to protect all of us and this president values the work that they do and all of the men and women that serve our government, and in our military. 

SCHULTZ:  All right.  Robert, I‘ve got to ask you, this is my passion, small business.  I want cheap money.  I talked about this last night.  And I need the administration to explain to the American people, the middle class out there, that cheap money is on the way so we can get small businesses hiring again, so we can get people borrowing money. 

You know, Wall Street has got the cheap money.  What about the rest of us? 

GIBBS:  Well, Ed, one of the things that the Department of Treasury did under the guidance of President Obama was start a small business lending initiative using money from the TARP.  And what that does is it provides, as you said, more capital in the system for a small business that is suffering under this credit crunch. 

A lot of businesses that have perfect credit scores, that have borrowed money to meet payrolls, expand their businesses, or hired new employees that never missed a payment found it harder to get money in this economy because there was just less of it to lend. 

This president—I think you‘ve probably heard this story, Ed, gets about 10 letters a day from people all over the country on the issues and the cares and concerns they have.  The number of letters that he got from small businessmen and -women around this country asking for a program that helped them get access to loans and capital were phenomenal. 

It caused the president and secretary of the treasury to work on a program that will free up lending so that, as you said, we can hire more people, we can expand businesses, and we can bring prosperity and opportunity all over this country. 

SCHULTZ:  You know, being an old salesman now, I have to say, if you don‘t ask, you don‘t get.  I want that 4.5 percent money not only the house but for the small business loan.  I mean, I don‘t want 9 percent or 13 percent.  I want that down there at 4.5 percent.  I mean, and that‘s where I think Americans are right now.  They want the same deal. 

GIBBS:  Well, look, and what this administration wants to do is ensure that the job-producing small businesses of this country have access to the lending that they need to expand.  Lord knows we want small businesses to hire more and more people. 

There are tax incentives to create new businesses.  We want them to be able to take advantage of that, put people back to work in this economy, and spread some opportunity around. 

SCHULTZ:  All right.  What‘s the plan for protecting the border?  I see that the president last week put more resources down there.  Is this going to be a consistent thing? 

GIBBS:  Absolutely.  We and the Mexican government, the president will be traveling to Mexico tomorrow to talk about some economic things like you and I have discussed, but also to talk about security along the border. 

We have a special and unique relationship with Mexico.  Right now the Mexican president is involved in a battle with drug cartels.  The president today listed three additional cartels as drug kingpins, which allows us to start seizing their assets if they‘re in this country. 

The president is taking steps to insure that we do all that we can in assisting the Mexican president in stamping out these violent, awful drug cartels and keeping safety and security along the border. 

SCHULTZ:  So am I hearing tonight on THE ED SHOW that the president is going to have a better working relationship with Mexico when it comes to fighting these cartels? 

GIBBS:  We‘ll have a better working relationship with Mexico.  We‘ll have a better working relationship, we hope, with all of Latin America.  One of the things that we‘ve said as we travel to Europe and Latin America and tomorrow to Mexico and Latin America, and that is, this is a president that wants to visit the world, not just to help lead, but also to listen. 

SCHULTZ:  All right.  And finally, let me clear up, is it Auburn or Alabama, which is it? 

GIBBS:  Oh, let‘s not—there‘s—let‘s be absolutely clear.

SCHULTZ:  Don‘t be a politician now, it‘s either Auburn or Alabama, what is it? 

GIBBS:  It‘s Auburn.  You can.

SCHULTZ:  Oh!

GIBBS:  If you cut my arm, I bleed orange and blue. 

SCHULTZ:  No!  It‘s Auburn? 

GIBBS:  Absolutely.  Absolutely.

SCHULTZ:  Roll Tide, brother.  Good to have you on.

GIBBS:  No, no, no. 

SCHULTZ:  Good to have you on. 

GIBBS:  War Eagle. 

SCHULTZ:  All right.  Good to have you on, Robert.  I appreciate it. 

GIBBS:  Thanks, Ed.

SCHULTZ:  You bet. 

Next on THE ED SHOW, the Republicans say their party for the mainstream America, it‘s them.  Now, does this look mainstream to you?  Republican leaders are embracing the tea party madness.  Do they really think this is the road back?  

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  Remember all of that talk, all of that soul-searching from the GOP in November after they lost the big one?  How do we broaden the base, they said?  How do we reach out to the middle class?  How do we convince Americans we‘re for the middle class? 

Well, today the Grand Old Party showed it.  It is the party of the 21st Century.  That‘s right.  Republican leaders in 2012, presidential hopefuls from Newt Gingrich to Mark Sanford to John Boehner marched out to the tea parties to show that they‘re in touch with Americans. 

The Newt-ster, he even called into a washed-up presidential candidate‘s radio talk show, here is Newt talking to Fred Thompson. 

(BEGIN AUDIO CLIP)

FRED THOMPSON ®, FMR. TENN. SENATOR AND PRES. CANDIDATE:  Newt Gingrich is tea-partying in New York.  Newt, what does all this mean to you?  What are people saying? 

NEWT GINGRICH ®, FMR. SPEAKER OF THE HOUSE:  People have a growing awareness that the combination of the Obama administration and left-wing Democrats who dominate the Congress means a genuine threat to everything about their life. 

(END AUDIO CLIP)

SCHULTZ (imitating Fred Thompson):  Well, I went on to ask Newt if he thought this was the road back to the majority and he couldn‘t tell me. 

(LAUGHTER)

SCHULTZ:  Now joining me now is Congressman Chris Van Hollen of Maryland who is the chairman of the Democratic Congressional Campaign Committee. 

I see that you are shaking in your boots there tonight, you had to sit down, Congressmen.  Good to have you with us.

REP. CHRIS VAN HOLLEN (D-MD), CHAIRMAN, DCCC:  Good to be with you, Ed.  And I‘ve got to say, as I watched this unfold around the country, I said, if this is their best play, they are hurting even more than I thought they were hurting because taxes are not the problem, as you‘ve already said. 

The fact of the matter is the legislation that has been passed by Congress in this first 100 days, and signed by the president, actually provides 95 percent of Americans with tax relief.  And in the next two years under that proposal, $1.5 billion in tax relief will go to Americans as well as small businesses. 

That‘s not the problem, the problem is Americans are hurting because they‘ve lost their jobs because we saw the economy be driven into a ditch over the last six years.  Those are the issues Americans care about.  And those are the issues we‘re trying to work on. 

The only people who are benefiting from today as far as I can tell are Lipton Tea Company and maybe some of the other tea companies maybe having a good day.  But this is not an answer to America‘s problems. 

SCHULTZ:  Well, the American people do want to know, OK, how long is this going to last?  The middle class has gotten a break.  The lower income brackets have gotten a break.  Unemployment benefits have been extended.  So when are we going to get the fine print in all of this? 

This is House Speaker Nancy Pelosi talking about the situation with taxes in America. 

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), SPEAKER:  What they want is a continuation of the failed economic policies of President George Bush.  This initiative is funded by the high-end, we call it Astroturf.  It‘s not a grassroots movement.  It‘s Astroturf by some of the wealthiest people in America to keep the focus on tax cuts for the rich instead of for the great middle class. 

(END VIDEO CLIP)

SCHULTZ:  Congressman, is there any way that this economic recovery could be so strong maybe in a year or year-and-a-half, or two years that there wouldn‘t have to be any raising taxes on anybody?  Is that possible? 

VAN HOLLEN:  Well, I don‘t know if that‘s possible or not because only time will tell just how deep and long this recession is.  But the president made a decision early on to just allow the tax cuts that the Bush guys gave to the very top end to expire on their own terms.

And the laws that exist now, those expire at the end of 2010, and that is his plan.  It‘s part of a plan for tax fairness.  That just takes you back to where they were at the beginning of the Bush administration. 

And as a result of that, we‘re also able to provide tax relief to a broader group of Americans. 

SCHULTZ:  Yes.

VAN HOLLEN:  You know, 95 percent of working Americans.  So I don‘t know how quickly we‘ll be able to get out of this, but I can certainly tell you that just having this tea bag protest is focusing on the entirely wrong issue. 

This is not the problem America is facing today and the American people know it. 

SCHULTZ:  So there‘s no way that today‘s activities would knock the Dems off their game and the numbers that show that this president is headed in the right direction, the country is headed in the right direction, reverse this?  Could this actually add to your momentum?

VAN HOLLEN:  Well, I think it will because what it shows is that the Republicans are just bringing out their old playbook.  I mean, they talked about taxes, taxes, taxes.  I think they think this is April 1st, April Fools‘ Day, because most people know that they just got a tax break, tax relief under the stimulus plan. 

So what it—I think it tells most Americans is, why are the Republicans talking about this issue when in fact the issue is economy, the issue is health care, the issue is what are we going to do about energy policy?  Those are the fundamental big questions in this country today.  And they‘ve got everyone distracted. 

SCHULTZ:  Chris, they do not have a plan for health care, do they? 

Just quickly, yes or no.  They do not have a plan? 

VAN HOLLEN:  No.  They have no plan and they have no plan for energy policy.  And they lost the last election because the American people got it. 

SCHULTZ:  Congressman, great to have you on.  You know we‘ll do it again.

VAN HOLLEN:  Good to be with you.

SCHULTZ:  Thanks so much. 

VAN HOLLEN:  Thank you.

SCHULTZ:  Next up on THE ED SHOW, “Psycho Talk.” Michael Steele is talking about taxes.  He suggests it‘s patriotic not to pay them.  Hey, Steele, it‘s also a crime.  A special tax day edition of “Psycho Talk” right after this.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  Have you heard some of the crazy things that are being said by conservatives?  It‘s time now for “Psycho Talk.”

Now, in honor of tax day and tea party protests, crazy talk from Michael Steele and Senator Richard Burr have made it into the “Psycho Talk” zone tonight.  Let‘s start with Steele, the chairman of the Republican National Committee.  You see, he put out a release suggesting it‘s not patriotic to pay your taxes in an e-mail titled “Enough is enough, send a teabag.” 

Steele reminds us Joe Biden calls paying taxes “patriotic.” The e-mail goes on to say: “I don‘t know about you, friend, but I don‘t believe there is anything patriotic about giving more of your hard-earned money to the government.”

Now, the American people are not giving more of their hard-earned money to the government.  The only people that have seen their taxes increase since Inauguration Day are smokers.  OK?  How can this be more clear?  Your taxes have not gone up, Mr. Steele.  There‘s nothing patriotic about paying your taxes, so why do it?  Folks, folks, that‘s called revolutionary. 

Then we have senator from North Carolina, the Republican, Mr. Richard Burr, admitting to his wife to put all the money in the mattress last fall.  That‘s right.  Kind of like what happened in “It‘s a Wonderful Life.”

(BEGIN VIDEO CLIP FROM “IT‘S A WONDERFUL LIFE”)

UNIDENTIFIED ACTOR:  Hey, Ernie, have you got any money in the bank? 

You‘d better hurry.

(END VIDEO CLIP)

SCHULTZ:  Speaking to constituents Monday, Senator Burr said that when a major financial institution started collapsing last year, he called his wife Brooke and told her: “Go to the ATM machine and I want you to draw out as much as you can, as much as it will give you, as much as you can take.”

He told the crowd he was convinced “if you put a plastic card into an ATM machine, the last thing that was going to be coming out was cash.” 

Here‘s what I think.  A senator advocates a run on a bank and a party leader advocates don‘t pay your taxes?  That‘s serious stuff because they are supposed to be in a position of leadership.  That is “Psycho Talk.” 

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  A report from the Department of Homeland Security is warning about a rise of right-wing extremist activity.  It says the current economic and political climate in the United States may help extremists recruit more members.  And extremists are using President Obama as a recruiting tool. 

The report says most statements by right-wing extremists have been rhetorical, expressing concerns about the election of the first African-American president.  But stopping short of calls for action, recruiters are not just using racism to get new members, Homeland Security says they are also capitalizing on insecurities due to job losses, the rise in illegal immigration and fears that the government will limit gun ownership. 

The White House has distanced itself from the Homeland analysis.  The “Washington Times” obtained the report yesterday.  Joining us now is one of the reporters with that story, Eli Lake.  Mr. Lake, good to have you with us tonight here on THE ED SHOW.

Is this standard operating procedure?  Have these kinds of warning been put out in the past for both sides? 

ELI LAKE, “THE WASHINGTON TIMES”:  Yes, the Department of Homeland Security and other law enforcement agencies, like the New York City Police Department, have looked at the process of radicalization.  They‘ve looked at it in the context of Islamist ideology.  We wrote about in today‘s paper a report that looked at anarchists and environment—sort of Earth First groups.  And it is something that is a trend that the ACLU and other civil liberties groups are actually very worried about. 

SCHULTZ:  OK, who is joining these right-wing extremist groups?  Who are they?  Are they the unemployed?  I‘ve heard one report that soldiers are coming back from Iraq and Afghanistan and joining.  Is that true? 

LAKE:  The report speculates that there would be disgruntled soldiers that would be an attractive constituency for these hate groups to recruit.  But it provides no evidence of that or statistics or anything like that. 

SCHULTZ:  When was the last time that something like this was put out, that would parallel what this says? 

LAKE:  On January 26th, the Department of Homeland Security released a report that looked at environmentalist groups.  And not all environmentalist groups.  Most of them are mainstream.  But particularly animal rights groups and anarchist groups.  And it had a definition of what constituted sort of the political groups.  And it was more specific, I think, in that group, which was titled left-wing extremism, than in this group—in this report, which was released on April 7th, of right-wing extremism.  Part of it was that they said, which almost everybody agrees are kind of radical and anti-government.  No mainstream people would defend them.  And then it lumps in with that people who might be called federalist, who just have a problem with a large federal government, and single issue advocates on abortion and other issues. 

SCHULTZ:  And Eli, are these groups, these members coming more out in the open?  Or is this really underground activities that been identified? 

LAKE:  We certainly don‘t know from this report, because there were no specifics in it.  And I think that part of the controversy—Janet Napolitano released a statement today, the secretary of Homeland Security, saying that she‘s concerned about these issues.  She was one of the lawyers prosecutors of Timothy McVeigh in the 1990s.  And she basically—by the report, she also said that she—the Department of Homeland Security would not be monitoring people based on politics or ideology. 

SCHULTZ:  Well, they‘ve got the Patriot Act.  They can do whatever they want now, can‘t they? 

LAKE:  I don‘t think the Patriot Act says that you can monitor anyone willy-nilly.  Certainly there are new powers since 9/11 that have been granted to the federal law enforcement, as well as local law enforcement.

SCHULTZ:  Eli, thanks for joining us tonight on THE ED SHOW. 

LAKE:  Thank you. 

SCHULTZ:  Let‘s turn now to our panel, “Huffington Post” political reporter Sam Stein.  Also joining us tonight, Republican strategist John Feehery, and associate editor of the “Hill Newspaper, A.B. Stoddard.  We‘ll start with you Sam.  How concerned do you think the Department of Homeland Security is with these groups that have been identified? 

SAM STEIN, “THE HUFFINGTON POST”:  I think they‘re very concerned.  Like Eli said, Secretary Napolitano was intimately involved in the prosecution of Timothy McVeigh.  She know this from personal experience.  And certainly the sad reality is that there are groups of disgruntled Americans who could do domestic harm.  And I think the Department of Homeland Security is really doing their homework here.  I don‘t think it was construed in a political context.  And unfortunately, some people are taking it that way.  But they really need to be on top of these things. 

SCHULTZ:  John, it‘s pretty important that people distance themselves.  Sometimes these groups like to connect themselves to a party.  Is this a problem for Republicans that are not happy? 

JOHN FEEHERY, REPUBLICAN STRATEGIST:  I don‘t think it‘s any more of a problem than when environmental groups or those people did the World Bank stuff do all kinds of activities.  You know, the fact of the matter is political leaders of all stripes have to be responsible in their rhetoric.  That‘s in the left wing and the right wing.  That‘s how we have an adult discussion that keeps the extremism out of the debate.  I think that‘s very important.   

SCHULTZ:  Let‘s talk about the Tea Party, if we can, all these activities across the country today.  A.B., is this effective?  Is this how the conservatives are going to get back on track?  Whatever happened today, was it just a big promo for a network, or does it have some legs? 

A.B. STODDARD, “THE HILL”:  I think if nothing went wrong in any of the tea parties, I think it will actually energize the Republican party a bit, that they had a high-tech grass roots success, energizing some anti-tax, small government members of their base, people to come out.  Surely as you pointed out earlier in the show, these were probably McCain voters.  They probably have had their taxes cuts.

If the Republicans could find a way, protests at the Fed or the Treasury Department, to kind of make the Democrats the party of stimulus and bailout, I think it would be a little more effective.  This tax issue, with everyone‘s taxes being cut, is just not as potent as it used to be.  If they can come out as a party and say, as a party, we reject John McCain and George Bush‘s support of this initial bailout and all of the successive bail outs since.  And we‘re going to be a new party that stands in opposition to this; I think they would end up with a bigger following. 

SCHULTZ:  Today, I was watching a lot of it to see exactly who showed up, if any of these extremist groups would reveal their ugly head.  Because some of the numbers that are out there right now—the Southern Poverty Center says that hate groups in this country have increased; 926 hate groups in 2008.  There were only 602 eight years ago.  That‘s up 54 percent. 

Sam, this is a pretty important story to follow and a trend to follow, isn‘t it? 

STEIN:  Yes.  I mean, listen, in tough economic times, certainly, a lot of people are feeling pinched and they want to express themselves.  With the tea demonstrations today, there are certain issues that come with being a minority party member and frustrations that are felt.  so you saw these demonstrations.

The problem, I think, is that the legacy of George W. Bush looms over these demonstrations.  That was the presidency in which the deficit sky-rocketed, in which spending was out of control.  So these people really have to abandon their own political party, in a way, in order to make this a political tool that they can come back into power on. 

SCHULTZ:  John, I have to ask you, where were all of the protests when the Tarp money was dished out under the Bush administration? 

FEEHERY:  Ed, I think this is where you misread this.  I know people who were at that demonstration.  There were Democrats at that demonstration.  This is a populous backlash against bail outs, bailing out the Bush bailout and the Obama bailout.  And I think A.B. is absolutely right, out of control spending.  This is not just about taxes.  This is about spending and bail outs. 

(CROSS TALK)

SCHULTZ:  But Congress voted on this stimulus package.  The American people want it.  We voted on it. 

FEEHERY:  Keep in mind that, you know, this started with a Rick Santelli comment from cNBC, not Fox.  It‘s because of his outrage at this kind of bailout fever that has driven people crazy and that‘s why they protested. 

SCHULTZ:  A.B. who gets the credit for this? 

STODDARD:  For the bail outs? 

SCHULTZ:  Yes. 

STODDARD:  Or the success of the tea party event?  I just want to say one thing because we‘re kind of talking about the Homeland Security report, you know, in conjunction with these protests.  Nothing is going to make a right wing extremist happier than a report issued by our government that has speculation in it and no evidence.  That‘s a problem.  When you go after—you know, the conservatives are upset, even though the report never mentioned political parties.  But that is a problem that when you start talking about hate groups, you really got to have your facts and figures ready.  Otherwise, that‘s going to galvanize that movement. 

SCHULTZ:  Panel, stay with us.  Next up, Texas Governor Rick Perry wants to be free from the federal government.  He‘s talking sovereignty.  I‘ll talk with Cowboy philosopher Kiki Friedman about that, next up on THE ED SHOW.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  In my playbook today, the word sovereignty is being tossed around by Texas Governor Rick Perry.  The last guy from Texas that talked about sovereignty gave us this definition.  Listen up. 

(BEGIN VIDEO CLIP)

GEORGE BUSH, FMR. PRESIDENT OF THE UNITED STATES:  Tribal Sovereignty means that, it‘s sovereign.  You‘re a—you‘re a—you‘ve been given sovereignty and you‘re viewed as a sovereign entity.  And therefore the relationship between the federal government and tribes is one between sovereign entities. 

(END VIDEO CLIP)

SCHULTZ:  I know that wasn‘t too clear, but it‘s one of my all-time favorite sound bites.  Listen to Governor Perry speaking Tuesday about his resolution for a resolution affirming Texas sovereignty under the 10th Amendment. 

(BEGIN VIDEO CLIP)

GOV. RICK PERRY ®, TEXAS:  Millions of Texans, just like yourself, that are tired of Washington, D.C. trying to come down here and tell us how to run Texas. 

The 10th amendment was enacted by folks who remembered what it was like to have a very oppressive government, to be under the thumb of tyrants. 

(END VIDEO CLIP)

SCHULTZ:  OK, governor, serious business.  Where is this going?  Do you want to operate outside of the guidelines of the country?  What happens if there was a drought in West Texas?  What about those ranchers?  What happens when the next hurricane hits Houston?  You know?  What are they going to do to secure the border.  Define sovereignty, please. 

We should also note the governor is facing a pretty tough re-election challenge from Republican Senator Kay Bailey Hutchison in 2010. 

Joining me now is Cowboy philosopher, and, who knows, possibly the next president of Texas, Kiki Friedman.  Kiki, good to have you on THE ED PROGRAM. 

KIKI FRIEDMAN, COWBOY PHILOSOPHER:  Hey, Ed.  Great show, man.  

SCHULTZ:  Thank you.  How serious are people in Texas about not being part of the United States anymore?  What is going on? 

FRIEDMAN:  I don‘t think they are.  I think it‘s political posturing on Rick Perry‘s part.  And this upcoming primary, the Republican primary, is a battle of the cheerleaders.  Both of them were former cheerleaders.  And they have been both into such big, big money.  They‘ve been in the hands of big money for so long that they agree on one thing and that is that dinosaurs were here 200 years ago.  That‘s what they both think, except he‘s pro-life and she‘s pro-choice. 

SCHULTZ:  Kiki, are you going to get back in this race?  You going to run for governor again? 

FRIEDMAN:  I believe I am.  We‘ve taken steps in the past two days to run in the Democratic primary.  And I think, Ed, the—what we need is an old school Democrat that can get the grass roots excited.  And we did that in 2006.  I think we need those independents and libertarians and disgruntled Republicans, because the Democrats have lost every statewide race since Ann Richards.  And that‘s the reason. 

SCHULTZ:  You know, people get a little nervous when they hear the word sovereignty.  What does that mean to you?  Certainly, you can outdo the former president with his definition, can‘t you? 

FRIEDMAN:  Well, look, Texas is a great place.  It‘s history is very, very rich.  And with people like Sam Houston and Sam Rayburn is a good example of an incorruptible politician, that‘s very rare.  Barbara Jordan, Ann Richards.  So, you know, I think Perry has made a tragic mistake turning down that stimulus money.  I think it was—I mean, let me give you what he could have done.  He could have taken that 550 million and added it to a little workforce commission budget money that we have.  And he could have gotten unemployed people, people on unemployment to start a conservation Corp to clean up and fix up Galveston, which is still a mess, you know. 

SCHULTZ:  Yes. 

FRIEDMAN:  Now there‘s an idea. 

SCHULTZ:  If you were governor, would you take the stimulus money? 

FRIEDMAN:  Absolutely.  You know, I think President Obama has brought a spiritual change to the whole country.  And Texas has gotten short changed.  We‘re still dominated by one political party. 

SCHULTZ:  OK.  On a scale of one to ten, where do you put the president‘s performance so far? 

FRIEDMAN:  I‘d say he‘s about a seven at this point.  And I think—you know, I really think that a lot of people like Abe Lincoln, when he was president, his first couple of years were very rocky and nothing good happened.  And then he just blossomed and he bloomed.  I think FDR, nobody thought he would be a good war-time president. 

SCHULTZ:  Kiki, you‘re a ten on this show.  You‘ve got to come back. 

Good to have you with us. 

FRIEDMAN:  Thank you, Ed. 

SCHULTZ:  Up next, drug companies are just jacking up prices on medicine to turn a profit.  President Obama wants reform.  Can he beat the powerful health care lobby?  I‘ll talk to a guy on the front lines on that fight up next on THE ED SHOW.  Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  Inflation is falling at the fastest rate in the last 50 years.  Energy costs, dairy prices, airline fares, they are all down in March.  Over the last 12 months, prices have fallen at the fastest rates since 1955. 

So why are you paying more when you get sick?  One of the largest hospital owners in the country just announced it‘s going to bring in at least, so I don‘t choke here, 7.4 billion dollars in revenue in the first quarter of this year, 7.4 billion.  Fewer people are checking into hospitals and this big full profit hospital corporation is making double what it did a year ago.

The “Wall Street Journal” reported today that prizes for about a dozen top-selling drugs are going through the roof.  The price for a Leukemia drug is up 33 percent in a year.  Bristol-Myers is now cashing in on cancer.  And three other top pharmaceutical companies have raised their drug prices by double digits. 

Joining me now is a guy who has always fought for the American people, a guy I really respect, Ralph Neas.  He‘s the CEO of the National Coalition on Health Care.  It‘s good to have you with us tonight.  What do you make of this?  How do you reel these folks in?  They are just predators on sick people in this country, are they not? 

RALPH NEAS, NATIONAL COALITION ON HEALTH CARE:  Ed, it‘s great to be back with you.  These sky-rocketing prices are just outrageous.  But as you know, over the last ten years, wages have gone up 34 percent and health care costs have gone up 120 percent.  That‘s unbelievable. 

It‘s no wonder that health care costs sky-rocketing so quickly is a major contributor to our economic tsunami. 

SCHULTZ:  Mr. Neas, what do you want President Obama and his team working on health care, what do you want them to do about this? 

NEAS:  Well, number one, we have to have coverage for all Americans.  Number two, we have to address the epidemic of sub-care, quality health care.  Number three, and very importantly, we have to have cost containment.  This country spends twice as much on health care costs per year than the average of all of the industrialized countries.  And they cover every citizen.  We don‘t have 50 million Americans covered. 

SCHULTZ:  Are you disappointed that the Obama administration has taken single pay pretty much off the table? 

NEAS:  Well, Senator Kennedy introduced the single payer bill a couple of years ago and there were no co-sponsors.  I think there are a number of ways to get to universal coverage that address cost containment, address quality care, address financing.  There are a number of ways to do it.  We‘ve got to be pragmatic, principled but pragmatic.  And it‘s got to be bipartisan.

But, Ed, most importantly, it has to happen now.  We have to have health care reform enacted that‘s systemic and system-wide in 2009. 

SCHULTZ:  Tell me that you think the 634 billion dollars they‘ve got in the budget is going to be enough or work and is going to be used properly, and not just be thrown away.  Is this going to work? 

NEAS:  It‘s not enough. 

SCHULTZ:  It‘s not enough? 

NEAS:  It‘s not enough.  It‘s a down payment.  We‘re going to have to figure out how we‘re going to raise the money to do much better than that.  But part of it is addressing the cost issue.  In fact, there are many studies that show of the 2.5 trillion spent on health care, if you just address quality and efficiency, you could cut 750 billion dollars a year just on that issue alone. 

But you‘ve got to address prevention.  You‘ve got to address health care technology.  But you‘re also going to make hard choices.  And we‘re not addressing them yet.  The Obama plan doesn‘t address some of the hard choices.  I certainly hope that the bills we‘re going to see in the Senate and the House will. 

SCHULTZ:  OK, Ralph, we‘ll have you back talking about price controls, because I really think that is a possibility.  Great to have you with us tonight.  We‘ll visit again.  Thank you so much. 

Let‘s bring back our political panel, Sam Stein, John Feehery, and A.B. Stoddard.  John, can you endorse these incredible rate increases on drugs by these drug companies?  Is this just the way it‘s going to be?  What do you think? 

FEEHERY:  What I can endorse is some of the great technology that‘s been done to protect and save people‘s lives.  I‘m also going to endorse the Medicare prescription drug bill that was passed by old former boss, Speaker Hastert, that has provided millions and millions of Americans with low-cost health care and prescription drugs to save their lives.  It‘s one of the most popular programs going on today. 

SCHULTZ:  A.B., isn‘t this the kind of story that just infuriates the American people?  And is there enough anger out there that this might force some change and bring some limitations on profit on some of these companies? 

STODDARD:  Well, obviously health care industry is a business, and they see the landscape, and they know reform is coming.  And they decided to jack up the prices, so they don‘t get discounted too low in the process.  I don‘t know how much reaction is going to move the White House.  The White House is being very purposely non-specific and leaving it up to the Congress right now. 

There‘s a blank slate and there‘s these two B‘s.  What Mr. Neas is talking about, coverage of access is different from cost containment.  And there‘s growing concern about whether or not you can cover everybody before you reign in the costs.  Can you do them both at once.  Obama is silent on this, and that‘s really a concern, if they want to get this done by August or September.  If they don‘t, we‘re in a midterm election year.  We‘re not going to get health care. 

I really thought these were marks that came out in the paper this week from Dick Gephart, former Democratic leader in the House, saying we can‘t do coverage, universal access this year.  We have to control those costs. 

SCHULTZ:  I think they are going to try to get what they can politically achieve.  Sam, this is a big story for your readers.  They are on fire about this. 

STEIN:  Yes.  Well, there‘s obviously the human element here, which is that, in all likelihood, less people are going to get coverage now, before health care reform can be undertaken, which means it‘s going to be much harder to do health care reform.  You know, Pharma has indicated some willingness to come to the table and negotiate on a comprehensive bill.  But said, automatically, that a public plan for insurance is off the take.  That‘s going to be a huge sticking point.  I know a lot of the progressive health reform advocates want a public plan.  They are insisting on a public plan.  And it‘s going to be tricky to get it. 

SCHULTZ:  You know, back where I come from, they have this thing called the Public Utilities Commission.  And they have to go through a bunch of stuff before they can start charging people.  I don‘t know why, John, we don‘t have that in health care. 

FEEHERY:  I don‘t know either, Ed.  I do know that you don‘t want to screw up an industry that is saving lives. 

SCHULTZ:  I got to run.  John, thanks for joining us.  A.B. and Sam, thanks for being here tonight.  That‘s THE ED SHOW.  I‘m Ed Schultz.  For more information on THE ED SHOW, go to Ed.MSNBC.com.  Check out my website, WeGotEd.com.  And get text alerts about THE ED SHOW sent to your phone.  Just text the word Ed to 662639.  We‘ll see you back here tomorrow night at 6:00 p.m. Eastern.  “HARDBALL” with Chris Matthews is starting right now.

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