updated 6/5/2009 10:31:49 AM ET 2009-06-05T14:31:49

Guests: John Harwood, Richard Engel,  Martin Indyk, Keith Ellison, Evan Bayh, Sen. Sheldon Whitehouse, Sen. Byron Dorgan, Jonathan Martin, Laura Flanders, Ron Christie

(BEGIN VIDEOTAPE)

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

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SCHULTZ:  Good evening, Americans. 

Live from 30 Rock in New York City, it‘s THE ED SHOW on MSNBC.

An amazing thing today.  The American president speaking directly to Muslims, calling for them to reject extremists.  How are Muslims and Arabs reacting to what President Obama said today?

NBC‘s Richard Engel joins us live from Kabul, Afghanistan, in the next half-hour.

Here at home, it‘s all about health care.  Is six weeks enough time to fix what‘s broken?  I don‘t think so.

Plus “Psycho Talk.”  

All that, a great panel coming up.

But first up, tonight‘s “Op-Ed.”

America, our president, I think, has got a lot of guts.  Imagine if I told you back in 2004, you know, five years ago, if I had said, you know what?  The American president would be making a speech to the Muslim world, quoting the Koran, talking about our common good with Islam, saying it‘s his responsibility to the fight negative stereotypes about Muslims. 

Five years ago, it would have been almost unthinkable.  In fact, many people would have laughed about that.  But today, President Obama went to Cairo University and offered a simple, but powerful gift—it‘s respect. 

The president did something as an American I‘m really proud of. 

Barack Obama went on the same turf where Anwar Sadat was assassinated.  It‘s not a stable part of the world by any stretch of the imagination, but the president had guts to go there on day number 136 of his presidency and live up to a commitment that he made to you and to me, and that‘s change. 

We‘ve invaded that part of the world.  We‘ve killed folks over there.  We‘ve created refugees and we‘ve created terrorists.  And now we‘re no safer because of it. 

Do we really understand, do we really comprehend what has happened today? 

The president of the United States puts his hand out.  Do we comprehend that as a country? 

This was not just another speech.  Hopefully this will motivate.  Hopefully this will motivate young people in the Muslim world to understand us better. 

Our president, I think, showed a lot of courage.  He did what we hired him to do, and he didn‘t fear anybody. 

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I‘ve come here to Cairo to seek a new beginning between the United States and Muslims around the world, one based on mutual interest and mutual respect, and one based upon the truth that America and Islam are not exclusive and need not be in competition.  Instead, they overlap and share common principles—principles of justice and progress, tolerance, and the dignity of all human beings. 

(END VIDEO CLIP)

SCHULTZ:  It‘s the foundation of every good relationship.  You‘ve got to have it, it‘s trust.  But the president didn‘t just offer feel-good talk or empty rhetoric.  He threw down the gauntlet today for peace. 

When he uttered the word “Palestine,” this is an extraordinary thing.  President Obama made it clear he‘s not looking for a photo-op or a pat on the back.  He wants peace.  Peace for him means something concrete, a Palestinian state. 

(BEGIN VIDEO CLIP)

OBAMA:  The only resolution is for the aspirations of both sides to be met through two states, where Israelis and Palestinians each live in peace and security. 

(APPLAUSE)

That is in Israel‘s interests, Palestine‘s interests, America‘s interests, and the world‘s interests.  And that is why I intend to personally pursue this outcome with all the patience and dedication that the task requires. 

(END VIDEO CLIP)

SCHULTZ:  And of course, this is the monster issue that every president has had to wrestle with.  Obama is taking a gamble here, but I think he‘s going to get it right. 

A lot of critics are calling this trip an apology tour.  Now, let‘s get this straight.  He said that he would defend this country against anybody and against any threat. 

(BEGIN VIDEO CLIP)

OBAMA:  I made clear that America is not and never will be at war with Islam. 

(APPLAUSE)

We will, however, relentlessly confront violent extremists who pose a grave threat to our security, because we reject the same thing that people of all faiths reject—the killing of innocent men, women and children.  And it is my first duty as president to protect the American people. 

(END VIDEO CLIP)

SCHULTZ:  Day 136, he‘s getting after it.  I love it.  In my lifetime, I think this is the biggest speech any president has given on foreign soil. 

Joining me now is former U.S. ambassador to Israel, Martin Indyk.  He is the director of the Saban Center for Middle East Policy at Brookings.  He‘s also the author of the book “Innocent Abroad: An Intimate Account of American Peace, Diplomacy in the Middle East.”

Mr. Indyk, good to have you with us here tonight. 

MARTIN INDYK, FMR. AMBASSADOR TO ISRAEL:  Thank you, Ed.

SCHULTZ:  Am I overstating this?  Why do I feel that this speech today was so powerful yet so important?  Do you get that feeling? 

INDYK:  Oh, it was a big deal.  It was certainly a big deal.  And I think that the reaction in the Arab and Muslim world, as I‘ve heard it today, has been overwhelmingly positive. 

Why is that important?  It wasn‘t an apologetic speech.  He stood his ground, but he did it with such respect and understanding of their concerns, and addressing their concerns, that I think he got them to listen, which was very important.  He essentially—Ed, he rebranded America‘s values and interests to the Arab and Muslim world, and I think that that made it much more possible to sell what we‘re really about.  And that can help a lot in terms of dealing with the problems that we see emanating from that part of the world. 

SCHULTZ:  This affects so many things.  I mean, energy, relations with other countries, aligning the world against extremists. 

This is what the president—he really took a step further today, and I didn‘t know if he was going to do this or not, but he seemed to cover all bases.  But when it came to a Palestinian state, he didn‘t back off at all. 

Here it is. 

(BEGIN VIDEO CLIP)

OBAMA:  Palestinians must abandon violence.  Resistance through violence and killing is wrong and it does not succeed.  For centuries, black people in America suffered the lash of the whip as slaves and the humiliation of segregation, but it was not violence that won full and equal rights.  It was a peaceful and determined insistence upon the ideals at the center of America‘s founding. 

(END VIDEO CLIP)

SCHULTZ:  Martin, I really thought that was one of the most powerful statements he made today.  It was almost like walk a mile in our shoes, we know what this struggle is all about and we‘ve got our hand open. 

How is this going to be received by the younger generation?  Because demographically, the Muslim world under 30 years of age, it‘s a big percentage.  This is a generational fight. 

Do you think the president made some inroads with that demographic today? 

INDYK:  I do.  Look, I think it‘s very important to understand that essentially, he‘s competing with another narrative that‘s out there that up until today has been getting a lot more traction with those young people that you‘re talking about. 

That narrative comes from Ahmadinejad in Iran and Nasrallah in Hezbollah, and it‘s basically that violence, terrorism, defiance of the international community, threats to destroy Israel, that‘s the way to achieve justice and dignity for the Palestinians, Arabs and Muslims.  And what Obama did today was to explain that there‘s a different way, there‘s the American way, which is tolerance and compromise and peaceful settlement of disputes.  And if you‘re going to pursue your cause, to do it peacefully, because that historically is the way it succeeds. 

And it‘s been a long time since anybody has talked to them in that language.  And don‘t forget—and he did this, too, Ed—he put this in the context of his own amazing journey to become president of the United States as the first black American president.  And I think that that also helps to resonate. 

And one other point in this regard.  If you follow the things that he got applause for, one of the things he got big applause for was more student visas for the Muslim world...

SCHULTZ:  Sure.

INDYK:  ... for these young people to be able to come here not to blow up buildings, but to get an American education. 

SCHULTZ:  Now Martin, you being a former ambassador to Israel, how is this going to play in the state of Israel?  What do you think? 

INDYK:  Well, I think that some of the statements he made about the wrongness of denying the Holocaust, the way in which he made clear his support for Israel as a steadfast ally, and the nature—the desire to preserve the Jewish nature of the state were very positive.  On the other hand, I think the commentary in Israel tonight that I‘ve heard is that they feel no longer like the favorite son or the first born son, that Obama is now courting the Arab world and they feel that that somehow diminishes their importance. 

SCHULTZ:  In simplistic terms, Martin, I think basically the president said, you know, I think we can live side by side without butchering one another.  What do you say we give it a try?  I mean, I think that‘s where it all boils down. 

Martin Indyk, thanks so much for joining us tonight. 

INDYK:  Thank you.

SCHULTZ:  Joining me now is Minnesota Congressman Keith Ellison, who the president referred to in his speech today.  “Ellison, a good friend of mine, but he always gets this able he is the only Muslim elected to the United States Congress.”

Now that we‘ve got that out of the way, Keith, you know how this works.  A lot of people are going to wonder how you took this speech today from the perspective of the Muslim faith. 

What are your thoughts? 

REP. KEITH ELLISON (D), MINNESOTA:  I was so excited to hear it.  I thought it was a great speech.  It was a speech where he hit on the points. 

I think that he has rebranded this relationship between the United States and the rest of the world, including the Muslim world.  I feel that this war on terror rubric has been rejected.  He didn‘t even use the term.  He used the term “violent extremists.”  So I‘m glad to see that term go because it hasn‘t served us well. 

But I think it was a great speech.  I think it spoke to youth.  I think it‘s important that it was at a university because I think that signals to young people all over the world that it is time for a new era to begin.

SCHULTZ:  Congressman Ellison, here‘s what President Obama had to say referring to you today in his speech.

(BEGIN VIDEO CLIP)

OBAMA:  Since our founding, American-Muslims have enriched the United States.  They have fought in our wars, they have served in our government, they have stood for civil rights.

And when the first Muslim-American was recently elected to Congress, he took the oath to defend our Constitution using the same Holy Koran that one of our founding fathers, Thomas Jefferson, kept in his personal library.

(APPLAUSE)

(END VIDEO CLIP)

SCHULTZ:  That‘s an excellent response from the people who were there.

Congressman, did you know that he was going to refer to you today?

ELLISON:  You know, it caught me off guard and was a pleasant surprise.  This morning, I started getting messages on my BlackBerry.  It started blowing up and going crazy, and it was really an interesting moment. 

But I‘m glad that I was able to in some way contribute to the president‘s ability to reach out and show a point of commonalty with the audience that he was talking to.  I mean, the fact is that I did swear it on the Koran, and it seems a long time ago.  It was only about two and a half years ago.

It was sort of a big deal at the time, but now it‘s not that big of a deal at all.  And here I am, having served, having won my reelection, and the sky didn‘t fall. 

So, it‘s been good so far, Ed, and I think that the president is right.  Seven thousand Muslims have served in the United States armed forces.  In fact, Colin Powell mentioned one who lost his life.  As his mother was at his grave—and Colin Powell used that reference himself to point out that Muslim-Americans and all Americans have contributed to the security of America. 

I was glad to see the president make the point. 

SCHULTZ:  Congressman, just weeks ago you came back from the Middle East.  Are we being viewed differently over there? 

ELLISON:  Days ago.  In fact, this is my third trip to the Middle East this year. 

I would say for sure.  You know, if you go to a market in the Middle East, known as a souk, you see Obama T-shirts there.  You see people who are hopeful, who talk about a new way forward.  You see people who are cautiously optimistic, but the hope is clearly there.  He has created an environment where we can really see people take a few risks, we can see people stretch out further than they have before. 

And you know, we were in Bethlehem, Jericho, and Ramallah, and we were in Jerusalem talking with both Israelis and Palestinians.  It‘s important.

You know, one day you should get General Keith Dayton on.  He‘s helping to train Palestinian security forces who are doing a really good job offering safety and security in the West Bank. 

This is giving Israel enough confidence so they can really begin to deconstruct these checkpoints, illegal outposts, and expansion of settlement activity.  So what‘s going on there is—there is good work going on, on the ground, and this is the kind of thing that really is going to help augment that.  I think the president‘s message is going to help things that are happening now and give a little bit more wind in people‘s backs. 

SCHULTZ:  Well, I think Americans are going to remember day number 136. 

ELLISON:  I think so. 

SCHULTZ:  Congressman Keith Ellison, always a pleasure.  Great to have you with us tonight. 

ELLISON:  You bet, Ed.  Take care, buddy. 

SCHULTZ:  You bet.

Next up, what President Obama said about Iran today.  Will Congress stand behind him or was it a bridge too far for some moderates? 

That‘s next on THE ED SHOW.  Stay with us. 

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(BEGIN VIDEO CLIP)

OBAMA:  We can recall the words of Thomas Jefferson, who said, “I hope that our wisdom will grow with our power and teach us that the less we use our power, the greater it will be.”

(END VIDEO CLIP)

SCHULTZ:  Welcome back to THE ED SHOW.

President Obama said today that dialogue is the best weapon against extremism.  How did his 6,000 words in Cairo play on Capitol Hill?  And will Congress line up behind the president‘s view on the limits of American power? 

Joining me now is Senator Evan Bayh of Indiana, a member of the Intelligence Committee and also on the Armed Services Committee. 

Senator, good to have you on with us tonight. 

SEN. EVAN BAYH (D), INDIANA:  Good to be with you, Ed. 

SCHULTZ:  You bet.

Did we become a superpower today in diplomacy?  How big was this speech? 

BAYH:  Well, I think the speech was huge, Ed.  Never underestimate the power of an idea eloquently presented by a compelling leader. 

You know, ultimately, while we have to track down the people who are trying to harm us, and occasionally remove them, incarcerate others, I mean, ultimately we can‘t do that with everybody.  And so we have to convince the people of the world that our ideals, our principles are right for them, too.  And in this case it was the ideal and the principle of freedom espoused very eloquently by a compelling leader. 

So I think that this enhanced our strength and security immeasurably.

SCHULTZ:  And the president addressed today the situation with Iran. 

This is exactly what he had to say about that country. 

(BEGIN VIDEO CLIP)

OBAMA:  No single nation should pick and choose which nation holds nuclear weapons.  And that‘s why I strongly reaffirmed America‘s commitment to seek a world in which no nations hold nuclear weapons.  And any nation, including Iran, should have the right to access peaceful nuclear power if it complies with its responsibilities under the Nuclear Nonproliferation Treaty. 

SCHULTZ:  Senator Bayh, after this speech today, do you think Democrats are going to line up behind the president when he starts talking about direct talks with the Iranians? 

BAYH:  I don‘t think there will be any objection to direct talks, Ed, as long as they‘re realistic talks.  And that means having a deadlines so the Iranians just can‘t kind of slow-walk us to the point where they‘re having a nuclear test the way the North Koreans did the other day, and also having some real consequences if they don‘t come to the bargaining table and aren‘t willing to compromise.

So talks, yes, but you‘ve got to be realistic about it.  And I personally am rather skeptical about whether the Iranians will eventually agree to have only a civilian nuclear program and forego their quest for nuclear weapons. 

SCHULTZ:  What should be the president‘s next move in dealing with the Iranians after this speech today? 

BAYH:  I think he ought to tell them, look, there‘s a window of time here with a deadline for us to try and work this out.  We want to meet you halfway. 

You can have access to a civilian nuclear program.  The Russians are willing to work with us on that for you, as he indicated in the speech.  But if by the deadline you‘re unwilling to go there, then there will be real consequences. 

And Ed, I would start with their importation of refined petroleum products and gasoline.  That is Iran‘s Achilles‘ heel.  And they are hurting right now because the price of oil, although up recently, has been far below what it was.  And that might be the kind of thing that would get them to make some serious concessions and not just talk about it and try to and slow-walk us until this has become a fact. 

SCHULTZ:  Another big issue in that part of the world is Guantanamo Bay.  The president made it very clear today—here he is—we‘re going to shut it down and we‘re not going to torture. 

(BEGIN VIDEO CLIP)

OBAMA:  We‘re taking concrete actions to change course.  I have unequivocally prohibited the use of torture by the United States, and I have ordered the prison at Guantanamo Bay closed by early next year. 

(END VIDEO CLIP)

SCHULTZ:  What do you think, Senator?  The right move? 

BAYH:  Well, of course torture is against the law, Ed, and I do think prohibiting that is the right thing.  I think we should also point out that some of our adversaries, al Qaeda, for example, and some others, they not only torture people, they kill them.  They actively seek to kill not as collateral damage, but as their intent—women, children, innocent civilians.

So I think we need to draw a strong moral contrast between what we stand for and our adversaries stand for, because even at our worst, there really is no moral equivalency between the United States of America and how we conduct ourselves and how the terrorists and the extremists conduct themselves. 

SCHULTZ:  Senator Evan Bayh, always a pleasure.  Good to have you with us tonight. 

BAYH:  Thank you, Ed. 

SCHULTZ:  Next up on THE ED SHOW “The Drugster” compares the president‘s agenda to al Qaeda‘s?  Cut me some lack. 

That‘s next in “Psycho Talk.”    

(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 for “Psycho Talk.”  

Oh, “Psycho Talk” tonight, it‘s “The Drugster,” Rush Limbaugh, although this is pretty serious, I think.  This is pure hate speech.  It‘s a comment that makes Limbaugh an ally of Osama bin Laden. 

Here‘s the quote : “If al Qaeda wants to demolish the America we know and love, they better hurry, because Obama is beating them to it”.  In one statement, Rush Limbaugh aligns President Obama with a terrorist group, people who want to take this country down.

Now, I want everybody to recognize the seriousness of this kind of talk and what Rush is actually saying here.  And I‘ve been trying to think all day about this. 

I think this is the first time in history that someone with this big a platform and audience speaking so broadly like this about a president of the United States, he says Obama is doing a better job of demolishing America than a terrorist group, al Qaeda?  I mean, this goes far beyond advocating any policy. 

I think this is a slam on our military personnel or anyone wearing the uniform for America today.  There are liberals and conservatives serving this country in Iraq and Afghanistan, people in this country that have given their lives to make sure this president succeeds. 

Do you think people in uniform today want to see President Obama fail? 

This type of speech ruins and taints America. 

This is not the United States we know, and Rush Limbaugh goes unchallenged, unfortunately.  I didn‘t hear anybody in the Congress nailing “The Drugster” today. 

I mean, there is freedom of speech, but that comes with a responsibility.  I think this is dangerous rhetoric, and I just can‘t wrap my head around the fact that there‘s a guy out there who would sell his soul, with all the success that he‘s had, he would sell his soul to get some attention in this country, to get quoted. 

Rush Limbaugh, you are un-American, you are anti-American.  You do not love this country, and you are rooting against America.  You‘ve always hated liberals, and it‘s a sad, sad thing. 

You are one twisted sister, buddy. 

That‘s “Psycho Talk.”  

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  The Palestinian people, Muslims and Christians, have suffered in pursuit of a homeland.  They endure the daily humiliations, large and small, that come with occupation. 

So let there be no doubt, the situation for the Palestinian people is intolerable.  And America will not turn our backs on the legitimate Palestinian aspiration for dignity, opportunity and a state of their own. 

(END VIDEO CLIP)

SCHULTZ:  That was President Obama making his landmark speech to the Muslim world today.  He was tough and candid.  But did he get through to the audience?  That‘s the question.  NBC‘s Richard Engel has been talking to people in the region all day.  He‘ll be joining us later in the show, so stay with us. 

But first, I want to talk about health care tonight.  There‘s a couple of words that continually are being tossed out there.  That is reform and overhaul.  Here‘s the landscape.  We‘re expecting 100 senators—they‘ve got security.  They‘ve got a great pension, the best health care on the planet.  We‘re asking that group of people, 100 people, to fix this problem.  And they expect to see it done in six weeks, before the August break?  Don‘t hold your breath. 

You see, the institutions in the health care industry, they don‘t want change.  They are lining the pockets of elected officials to make sure that there is going to be reelection, and the they are going to be able to protect their nest.  They don‘t want change.  They don‘t want a public option.  Those are fighting words.

If you don‘t have insurance in this country, you‘re down to two really

two options here if you get a medical problem.  Let‘s say you get a tumor, and you don‘t have insurance, or let‘s there‘s a big medical issue with you; what are you going to do?  You either go the route of financial ruin or you‘re going to die.  That‘s what‘s going to happen in America.

Check these numbers out.  In the “American Journal of Medicine,” Harvard medical school, law school and Ohio University reported medical bills are involved—listen up, folks—in more than 60 percent of personal bankruptcies.  That‘s an increase of 50 percent over the last six years.  More than 75 percent of these bankrupt families had health insurance, but they still couldn‘t make it. 

This is a real problem.  I have to tell you, I got a phone call today on the radio show from a gentleman who‘s lost his job.  His kid is sick, and they don‘t have insurance.  Now if that guy was in the United States Senate, I know exactly how he would vote.  I know that he wouldn‘t turn to me and say, we don‘t have the votes.  No, he would understand the problem. 

I just hope that these senators, these Democratic senators push back on what the American people want when it comes to health care.  OK?  We‘re going to reach 1.5 million bankruptcies this years.  We are now at a level of 6,000 filings a day.  Why?  Because people don‘t have health care.  They get sick.  They can‘t pay the bills.  And what a heck of a life that is. 

For more, let me bring in CNBC chief White House correspondent John Harwood, who had the big story today.  He‘s also a political writer for the “New York Times.”  John sat down with the two key senators today, Finance Committee Chairman Max Baucus and the Republican Chair—ranking member Chuck Grassley.  Good to have you with us tonight. 

JOHN HARWOOD, “THE NEW YORK TIMES”:  Hey, Ed.  There‘s really two views on how you do health care.  There are some people who agree with you, who want a more robust public option, single payer plan, who want to pass this through the Congress with just Democratic votes, using that reconciliation process.  There are others, and Barack Obama says he prefers this route, who want to see a bipartisan plan. 

I talked to the two guys today, Baucus and Grassley, who are trying to negotiate that kind of bipartisan plan.  A few things that they seem to agree on—and they say they‘re close to an agreement—a plan that costs about a trillion dollars over ten years, that has an individual mandate—everybody‘s got to have coverage.  They disagree on whether or not there should be a mandate for employers to participate.

Here‘s one you‘re not going to like, Ed, and it goes to the taxing health benefits that you talked to the other day.  Both of them agreed that a bipartisan solution is going to tax some of them.  Take a listen. 

(BEGIN VIDEO CLIP)

SEN. MAX BAUCUS (D), FINANCE COMMITTEE:  A large majority of Democrats are also recognizing, yes, that does make some sense.  The limitations is just this, you get free health care.  It‘s free if you work for a company up to a certain limit.  Beyond that, it is taxable.  So we have to set the limit high enough so it‘s politically appropriate. 

HARWOOD:  Clearly that will play a role. 

BAUCUS:  It will play a role. 

(END VIDEO CLIP)

HARWOOD:  So, Ed, what they‘re talking about is taxing benefits that are at a certain high level, perhaps the so-called Cadillac plans that they think encourage too much use of health care.  That is clearly going to be, in their vision, a big chunk of the revenues needed to pay for the subsidy so poor people can get access to universal care, Ed. 

SCHULTZ:  John, I just read that—that‘s just attacking the consumer.  That‘s attacking successful people.  And I just—I don‘t like that.  One big key thing did happen before the president took over for Cairo and overseas.  He sent a her to the key committee members, to the key chairmen of this.  And this is what the president said: “I strongly believe that Americans should have the choice of a public insurance option operating alongside private plans.  This will give them a better range of choices, make the health care market more competitive, and keep insurance companies honest.” 

John, this is the first straight statement that we‘ve really gotten from the president since this whole debate started on health care.  He wants to compete against the private sector.  How is this going to be received on the Hill? 

HARWOOD:  That‘s right on the cutting edge of the difference between the people who think you can do it with Democrats and Republicans, and the others who think only Democrats can do it.  Chuck Grassley said we‘re opposed to a public option.  However, he did not rule out some sort of a version of this.  And Max Baucus said, oh, there‘s a million ways to skin a cat. 

So long, in Grassley‘s view, as the public option does not set prices or provide unfair competition to insurance companies, there may be some way of structuring it, perhaps some government chartered corporation, a quasi-public entity.  We‘ll see what they come up with.  But they‘re twisting around the Rubik‘s cube, and trying to figure out whether there‘s some permutation of a public option that can be sold to both Democrats and some of these moderate Republicans. 

SCHULTZ:  John, great to have you on.  Great reporting, as always. 

Thanks so much for joining us on THE ED SHOW.  Really appreciate it. 

SCHULTZ:  You know, it‘s almost as if the president is saying OK, everybody and everybody pays, which I think has got a lot of merit. 

Now, let me turn to another key player, the newest member of the Senate Committee on Health Care, Senator Sheldon Whitehouse.  Senator, great to have you on tonight.  What do you make of the president‘s statement to the committee chairs about competing with insurance companies with this public option?  What do you think? 

SEN. SHELDON WHITEHOUSE (D), HEALTH CARE COMMITTEE:  For those of us who believe in a public option, the fact that the president came out so strongly is a very, very good sign.  And I think that there‘s room to work with the Republicans to come up with a public option that‘s not founded on government subsidies, but it‘s founded on a new and better business model for health care, one that doesn‘t depend, as the insurance industry now does, on denying coverage if they think you‘re going to get sick, denying claims if you have the temerity to get sick, and trying to deny payment to your doctor if they can‘t get rid of the responsibility for your coverage.

That‘s a lousy business model.  And a public option has the opportunity to try to find new ones that are based on prevention, that are based on improved quality, that are based on better coordinated care. 

SCHULTZ:  Senator, we should point out that the president also asked for a hardship waiver, meaning that people can‘t afford to buy insurance, they would still get covered because they would get a hardship waiver.  Can you support that? 

WHITEHOUSE:  I think it‘s important to reach out to all Americans.  As you were saying it‘s now—it has actually for a while been—the number one cause that American families go into bankruptcy is health care expense.  For a lot of them, they‘re insured already.  But we really have to get our arms around making sure that everyone has access to this coverage.  And if they can‘t afford it, that they get support to get the care they deserve. 

SCHULTZ:  Are you in favor of taxing health care benefits?  Could you support that? 

WHITEHOUSE:  It depends.  If you‘ve got a CEO with you concierge health care plan that was designed for them as part of a multi-million dollar benefits package, yes, I could tax that.  If you have a union member who gave away wages for years so that he could have his benefit, and now you‘re suddenly going to tax it, no, I‘m not interested in that. 

I think you have a find a medium point, where you protect the people who have given up wages, have given up other things in order to have that benefit.  But if you‘re taxing high-end, concierge, luxury policies and things like that, it‘s a different story.  Where it falls out in the middle, I think it‘s too early to tell. 

SCHULTZ:  Senator, quick answer, six weeks, can you get it done, yes or no?  

WHITEHOUSE:  Yes. 

SCHULTZ:  OK, great to have you with us tonight. 

Coming up, GM and Chrysler are bankrupt.  It‘s hurting a lot of people in the Rust Belt.  Will Democrats face a back lash in the midterms?  That‘s next on THE ED SHOW.  Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  In my playbook tonight, I want to talk about the political fallout from General Motors bankruptcy filing on Monday.  I think the political risks are real for the president and the Democrats, very high.  Labor has positioned itself with Democrats over the years.  With the midterm coming up, who knows what is going to happen. 

Layoffs are going to hit the Rust Belt pretty hard.  States like Michigan, Indiana, Ohio.  To soften the blow, President Obama sent his cabinet members to the Rust Belt on Tuesday to calm concerns. 

Labor Secretary Hilda Solis announced plans to give Michigan another 49 million dollars to help retrain workers.  Remember, President Obama ran on helping the middle class.  The unions put him at the podium and in the White House. 

Joining us now is Senator Byron Dorgan of North Dakota.  He has a great new book out.  It‘s called “Reckless, How Debt, Deregulation and Dark Money Nearly Bankrupted America and How We Can Fix It.”

Senator, good to have you with us tonight. 

SEN. BYRON DORGAN (D), NORTH DAKOTA:  Good to be here, Ed.

SCHULTZ:  This is a scary situation I think for your party, to promise jobs, to help out the middle class, and then to go through what Chrysler and General Motors has gone through.  Is there a time table here?  You really got to reinvigorate this part of the country?  What do you think?

DORGAN:  Listen, we‘ve had a long lead up to this set of financial problems.  This is a serious financial crisis.  This president inherited it.  But what we have got to do now is pull the country out of the ditch and put people back to work.

We‘ve got 13.7 million people out of work, people losing their homes, and, you know, losing hope.  So I think the president is trying to do the best he can.  All the other things that you described tonight, health care and those kinds of issues, it depends on our trying to resurrect this economy and putting it back on track. 

SCHULTZ:  How would we do that, in your opinion?  The stimulus package is out there.  We‘re seeing some good construction numbers out there.  But it seems sluggish, or am I wrong on that? 

DORGAN:  I don‘t know.  No one quite knows what will happen in the next month or two or six 12 months.  But you‘re starting to see some signs that are encouraging, that perhaps we‘ve hit bottom and we‘ll build out of it. 

I think one of the keys to watch for, however, is what is the financial reform package?  How are we really going to reform the financing system?  That‘s a system, as you know, that loaded up with bad assets.  Everybody was getting rich.  Nobody was willing to ask questions, because they were wallowing in money.  And we have to have a financial reform package that puts an end to what happened to cause this financial crisis. 

SCHULTZ:  Senator, you were one of, I believe, eight in the Senate that voted against deregulation back in 1999.  Now you‘ve written this book.  Many people think it‘s a road map back, so we know exactly what happened.  But moving forward, what kind of regulation would you want to advance? 

DORGAN:  You ought not have to learn a lesson twice.  We learned a lesson in the Great Depression about letting banks load up with substantial risks, and the banks went under.  So we put in place Glass-Steagall and other protections.  And then ten years ago, we had Republicans and Democrats suggest we needed to modernize.  What did modernize mean?  Back to the future. 

This too big to fail; we ought not have too big to fail institutions in this country.  We ought to say no more.  And these financial institutions, you know, loading up with credit default swaps, all this dark money.  Somebody asked what‘s dark money?  Last year, the price of oil went to 147 dollars a barrel in day trading, gasoline to four and a half dollars a gallon.  And no one could understand why, because there was no change in supply and demand. 

All those trades out there were in the dark.  You didn‘t know who was trading, how much speculators were involved.  It can happen again unless we fix it. 

SCHULTZ:  Senator, great book.  Everybody, I think you‘ve got to read it.  You nailed it and you voted correctly, with a handful of others.  Thanks so much for joining us tonight. 

DORGAN:  Thanks, Ed.  Good to be with you. 

SCHULTZ:  You bet.  President Obama spoke directly to Muslims today, calling for an end to violence and pushing for a two-state solution.  How are people in the region responding?  I‘ll ask NBC‘s Richard Engel next on THE ED SHOW.  Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  I know there are many, Muslim and non-Muslim, who question whether we can forge this new beginning.  There‘s so much fear, so much mistrust that has built up over the years.  But if we choose to be bound by the past, we will never move forward. 

(END VIDEO CLIP)

SCHULTZ:  That was President Obama in Cairo today.  It‘s been almost 12 hours since the president finished his speech to the world‘s 1.5 billion Muslims.  How is his outreach playing in the Muslim world? 

Joining me from Kabul, Afghanistan, is NBC News chief foreign correspondent Richard Engel.  Richard, I understand you listened to the speech in Arabic.  How did it play?  How did it translate, in your opinion? 

RICHARD ENGEL, NBC NEWS CHIEF FOREIGN CORRESPONDENT:  It translated very well, Ed.  It was clearly designed to be translated.  It was broadcast live on all of the major Arabic language networks, Egyptian state television. 

And he was using all of the key tools of Arabic rhetoric.  There was a lot of flattery involved, many references to history, and extensive use of Islam.  All of these are common in the Arabic world.  It sounded very much like an Arabic speech that was given by a well-spoken leader in the Arabic world. 

The location was also highly significant.  Cairo, being the cultural and media capital of the Middle East, and from the Cairo University, which has seen so many important graduates leave that great rotunda where he spoke, including the Nobel Prize winner for literature, the Egyptian Naguib Mahfouz, and many politicians, even some controversial, like Yasser Arafat and Saddam Hussein have all studied there. 

So it was the right city.  It was a place of great symbolic importance and it was used—the speech was carried out in translation in Arabic very effectively, Ed. 

SCHULTZ:  Richard, what was the reaction of U.S. troops?  Were they obviously paying close attention?  What was the reaction? 

ENGEL:  U.S. troops here in Afghanistan didn‘t have an opportunity to take a break and really watch this speech.  Actually, it was a tough day for American forces.  Just as he was starting to speak, news crossed that three American soldiers were killed in a roadside bomb attack.  That was followed up by small arms fire, so a secondary ambush just north of Kabul this morning. 

So the conflict here in Afghanistan is still one that is escalating and one that President Obama says he wants to commit more troops to. 

SCHULTZ:  In the Muslim world, do you think this is a step forward? 

Is that how it‘s being received? 

ENGEL:  Absolutely.  It was described by people that I spoke to today, and all of the commentators that I listened to on a variety of Arabic language networks, as historic, as a potential turning point.  This speech will actually be the focus of a major debate show tomorrow on al Jazeera.  Al Jazeera is the main Arabic language broadcaster here.  Their program, similar to “Meet the Press,” and they‘re billing it as a potential turning point, a potential new beginning for relations between the United States and the Muslim world. 

It was something that many in this part of the world had been waiting for. 

SCHULTZ:  Richard Engel in Afghanistan tonight, thanks so much for joining us here on THE ED SHOW.

For more let‘s turn to our political panel tonight, founder of GritTv.org Laura Flanders is joining us tonight, also senior political correspondent for “Politico” Jonathan Martin, and former special assistant to President Bush, Republican strategist Ron Christie. 

Ron, I‘ll start with you tonight.  I know you‘re going to tell me it was a good speech, because I know you respect President Obama‘s ability to deliver.  But do you agree with the content and the approach? 

RON CHRISTIE, REPUBLICAN STRATEGIST:  Well, I certainly agree with the approach.  I think it‘s always very important for the president of the United States to try to bring together countries and people of the world.  I think the president‘s message was very well delivered.

But I wish he had gone a little bit further, Ed.  There are two areas.  One, I wish he would acknowledge the really strong accomplishments that the American people have done.  We‘ve protected Muslims in Bosnia.  We‘ve protected them in Serbia.  We liberated Kuwait.  The president could have done more a lot more to talk about what America has already done. 

Two, he never mentioned the word terrorism.  He never mentioned the fact that there is an extreme group in Islam that has tried to hijack the religion.  I only wish he had done more and called on the leaders in that part of the world to do more against Islamic fascism. 

LAURA FLANDERS, GRITTV.ORG:  I can‘t wait until we actually hear from some Arabs in the Muslim world, some people from the region, talking about how they‘re responding.  Because I think you‘re right, great speech, lots of great things in it.  But again, there are words and there are deeds.  The words are beautiful.  When he talks about respecting the dignity of every human being, that‘s nice.

But I think it‘s hard for people in the region to really feel that when there are still young men in Guantanamo Bay never charged with any crime being brutally force fed.  We lost another one this week with the fifth suicide in Guantanamo, a 31-year-old guy, who had gotten down to 87 pounds during his detention. 

These people could be released.  That sort of action would put some flesh on the bones.  Then, of course, there‘s a lot of people still waiting, while there was the critique of Palestinian violence, for any kind of even-handed critique on the Israeli assault on Gaza this year. 

SCHULTZ:  Jonathan Martin, what do you make of Osama bin Laden putting out a statement during the speech?  To me, at least, it seems like he knows it‘s a war of words going on, and really a fight for the minds and hearts of the younger generation.  What do you think? 

JONATHAN MARTIN, “POLITICO”:  It‘s fascinating.  It‘s like the highest levels of—sort of stakes of a campaign.  You know, instead of mere politics, Ed, you‘ve got real diplomatic consequences here overseas.  You know, watching the president give this speech, then minutes afterwards flashing on the wire that bin Laden had put on this video, it under scores how important the stakes here are. 

Real fast, I have to comment on what your guest there in the studio just said.  I talked to some strong pro-Israel advocates this afternoon.  They were actually making the opposite comment, sort of carping about some of the things the president said, the pressure he put on Israel.  So it just goes to show your perspective, it all depends on where you sit. 

SCHULTZ:  How is going to play with Israel, Ron? 

CHRISTIE:  I think Benjamin Netanyahu has to be very concerned this evening.  I think he has to be very worried and very concerned about the strong commitment that the United States has always had with the state of Israel when you hear the moral equivalence argument that he made with, on the one hand, Israel, and, on the other hand, the plight of the Palestinians.  I wish he had talked more -- 

FLANDERS:  Violence is violence is violence.  Human dignity is human dignity.  Again—

CHRISTIE:  The Palestinian—excuse me.  I didn‘t cut you off.  Let me finish my point. 

My point here is that the Palestinian leadership has failed their people.  They could have done a lot more.  I wish President Obama had called on the leadership to act more responsibly. 

SCHULTZ:  But he was talking about the future, Ron, most of the day. 

Was he not?

FLANDERS:  Let‘s hope he was talking about the future.  I think there‘s still a place to talk about violence on both sides.  Again, bin Laden would have one less recruitment tool if we did not have people not charged in detention in Guantanamo Bay.  Let them go. 

SCHULTZ:  Jonathan Martin, what‘s the president‘s next move on Iran, now that he made it very clear what he wants to do? 

MARTIN:  Well, I think they‘re going to try to go forward with some sort of early negotiations, try—try diplomacy.  I‘ll tell you what, though, I talked to folks today in the pro-Israel community.  And they are very wary about what exactly the president is going to do with regard to Iran.  Some of them wanted some stronger language today towards the Iranians.

So it‘s one of the most delicate issues out there, obviously.  And only one of very many the president right now, Ed, as you know, is dealing with. 

SCHULTZ:  Jonathan Martin, Ron Christie, and Laura Flanders, thanks for joining us tonight.  

That‘s THE ED SHOW.  I‘m Ed Schultz.  We‘ll see you tomorrow, same time, 6:00 Eastern, right here on MSNBC.  For more information on THE ED SHOW, go to WeGotEd.com or go to MSNBC.com. 

“HARDBALL” is coming up next with Chris Matthews.  It starts right now on MSNBC, the place for politics. 

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