updated 6/30/2009 10:23:30 AM ET 2009-06-30T14:23:30

Guests: Jay Gray, Ron Christie, Todd Rutherford, Carol Browner, Rep. Frank Pallone, E.J. Dionne, Katrina Vanden Heuvel, Tom Tancredo, Mike Allen, Rep. Gary Peters

(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, it‘s THE ED SHOW on MSNBC.

Governor Sanford says he won‘t resign after all of his issues.  I say this man has no shame. 

Why aren‘t the people of South Carolina calling for his resignation? 

I‘ll ask a state representative.

David Axelrod, one of President Obama‘s closest advisers, says the White House won‘t rule out taxing health care benefits and they won‘t guarantee a public option. 

I was really troubled by what I saw on “Meet the Press” yesterday. 

We‘ll talk more about it.

And the House barely passes an energy bill.  More concessions could be coming from the Senate?  I don‘t like it. 

Plus “Psycho Talk.”  Rush Limbaugh blames President Obama for Governor Sanford‘s issues. 

All that and a great panel coming up.  But first, tonight‘s “OpEd.”

I‘ll tell you exactly why he‘s still the governor of South Carolina. 

He has no shame.  Absolutely no shame. 

Conservative Mark Sanford is back in the news tonight.  The big news is he won‘t step down.  He‘s going to stay on as governor.  At least that‘s what he‘s saying. 

Now, this is a man who violated the public trust.  He basically cheated on the people of South Carolina, saying he was going to do the job, and he didn‘t.  Take the family issues and put them off to the side.  That‘s a totally different chapter.  The issue here is a public servant who basically wants it both ways. 

Listen to what Sanford said today. 

(BEGIN VIDEO CLIP)

GOV. MARK SANFORD ®, SOUTH CAROLINA:  Initially, my reaction was to resign.  To be human is to, on occasion, fall flat on your face.  I‘ve done it in the most public of circles.  The question now is, what do I learn from it and what do others learn from it? 

QUESTION:  To be clear, you‘re going to remain as governor?  Your intent is to remain as governor? 

SANFORD:  Yes. 

(END VIDEO CLIP)

SCHULTZ:  The idea that he‘s going to pay back the $8,000 for the trip?  Cut me some slack. 

Now, that does not answer his dereliction of duty.  And his actions clearly illustrate he abdicated his responsibility as governor. 

Folks, taking a trip out of the country for days is not a moment of infidelity and an action of being irresponsible.  It‘s a commitment to act in a fraudulent manner while taking a paycheck from the state.  The guy is still on the payroll. 

Now, why don‘t you go try that in the private sector?  And of course the Republicans, they love to talk about the private sector.  Why don‘t you try that, be unaccounted for a week, go live out (ph) and just take off with some company funds without authorization and see what happens.  You‘d get fired. 

I‘m sure, now, if hadn‘t gotten caught—and he was really going to pay the money back, right?  I think this guy is a sleazy politician who is now hiding behind his plastic Jesus.  We‘re all supposed to be on bended knee with him because he screwed around with the taxpayer dollars. 

I have no mercy for this guy until he resigns.  And so far, there has been no public restitution. 

Now, we were told back in the Clinton years that, you know, character counts.  We‘ve got to have character in every office. 

Now, if the conservatives of South Carolina are going to allow this guy to continue to serve, after lying to them, after misusing their time—he was on the payroll.  Yes, he could pay the trip back, but he was on the payroll.  And what if something serious had happened?  Why can‘t the people of South Carolina step and up just do what they‘ve got to do and get rid of this guy? 

So, should the governor resign? 

For more, I am joined by GOP strategist Ron Christie, former special assistant to President George W. Bush and CEO of Christie Strategies. 

All right, Ron.  Tell me, why is it that the conservatives are allowing this to go on and not holding this man accountable?  What do you think? 

RON CHRISTIE, GOP STRATEGIST:  Well, Ed, I know you‘re standing up, up there in New York City, but perhaps you ought to sit down, because I pretty much agree with you.  I think it is a disgrace for a politician, be they Republican or Democrat, to betray the public trust. 

This is a man who left the country for five days.  He‘s the chief executive of the state.  He‘s in charge of the Army National Guard. 

I think it‘s a disgrace.  I think more people—my mother is a constituent, she lives in South Carolina.  And she is beside herself as to why this man remains in office. 

SCHULTZ:  Well, I, you know, agree with you obviously.  And I also think that it shows a great deal of character from the standpoint that politically, wouldn‘t this be an opportunity for the Republicans to send a message, trying to rebuild the party, that they just don‘t put up with this kind of honky tonk? 

CHRISTIE:  I actually tend to agree with you, Ed.  I think the Republican Party—this is obviously one bad actor who betrayed the oath that he made to his wife and obviously to his children.  But it‘s inexcusable as being the top elected official in the state of South Carolina, the governor. 

Republicans should say we stand for morality, we stand for what‘s right and wrong.  This was clearly wrong.  Obviously, the private matter, he can deal with his wife and his family.  But for betraying the public trust and the good of the party, for the good of the state, he needs to go. 

SCHULTZ:  All right. 

Now, this is Senator Lindsey Graham of South Carolina.  He made an interesting comment about how he thinks that he could stay on and continue to move forward. 

Here he is. 

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM ®, SOUTH CAROLINA:  I think if Mark can reconcile with Jenny—and that‘s not going to be easy—that he can finish his last 18 months.  He‘s had a good reform agenda, and I do believe that if he can reconcile with his family, and if he‘s willing to try, that the people of South Carolina would be willing to give him a second chance. 

But he‘s also got to reconcile with the legislature.  If he can get his family back together, I think he can continue out his term and maybe do some good things next year. 

(END VIDEO CLIP)

SCHULTZ:  Ron, do you take some issue with the senator from South Carolina? 

CHRISTIE:  I hate to say it, Ed, I kind of do.  I mean, I‘ve been very consistent about this. 

I thought that Governor Spitzer, when Eliot Spitzer, when we found out what he had done, I thought he should go.  I think Governor Sanford has a lot of rapprochement to do with the people of South Carolina, and I don‘t know how he can rebuild the trust that he‘s violated. 

Obviously we all believe in forgiveness, we all believe in the powers of redemption.  I‘m just so troubled by the stories that went out.  He was on the Appalachian Trail, then he was here, then he was there.  And then we find he was in Argentina. 

I just can‘t stand for that, Ed.  I‘m just tired of it. 

SCHULTZ:  Do you think that he will survive this?  Do you think that they will mount the charge to get him out? 

CHRISTIE:  I don‘t.  I think there‘s a lot of concern that the lieutenant governor is a little bit inexperienced at this point.  And given that he has 18 months left in his term, they figure, well, that will give the Democrats an advantage going into an open election. 

But again, for the good of the party, for the good of his family, for the good of the integrity of the Republican Party, I think Governor Mark Sanford should resign. 

SCHULTZ:  OK.  Great to have you with us tonight, Ron.  Appreciate your time. 

CHRISTIE:  Thanks, Ed.

SCHULTZ:  Joining me now is South Carolina State Representative Todd Rutherford. 

Mr. Rutherford, the latest development this afternoon, as I understand it, your lieutenant governor down in South Carolina has said that if you get rid of Mark Sanford, I‘ll serve until the end of the term and then I won‘t run for re-election. 

Would that work for you? 

TODD RUTHERFORD (D), STATE REPRESENTATIVE, SOUTH CAROLINA:  That would work, but he didn‘t call me and say that.  And somebody else called him and he said that he was running that idea through his head, but he had not committed to it.  So if he has by now, then I think that‘s a good thing. 

But either way, going back to the initial point, here‘s a governor that was gone for five days and never once bothered to call his office and check in?  At what point do we say this is just ridiculous? 

It has nothing to do with the affair.  It as has only to do with if he were a regular state employee in South Carolina, if you check the guidelines, he would have been fired.  He is a chief executive of the state, 4.5 million people that he left in the lurch, and not once did he bother to call and say, hey, is everything OK?  Not once? 

SCHULTZ:  Is this a dead issue in South Carolina as far as forcing the governor to resign, or is this something that‘s going to linger on and affect the way the state is run? 

What do you think? 

RUTHERFORD:  I think listening to Senator Graham‘s comments, what troubled me is the fact that in South Carolina, and just about anywhere else, unless there‘s an election, there‘s no way to tell what the people are feeling.  So the governor‘s basically just being selfish and staying on because he chooses to. 

He‘s not saying, well, the people of South Carolina are asking me to stay, or they want me to stay.  He‘s saying that all these politicians that are surrounding me, that are being greedy and enjoying my position as governor, what I can give them, they‘re the ones that are asking me to stay. 

If he went out and held public forums, and overwhelmingly people said stay in office, then I would agree with him.  But he hasn‘t done that.  In fact, he has remained relatively sheltered ever since this occurred. 

SCHULTZ:  You know, Mr. Rutherford, this is not what I‘m not hearing, or maybe I missed the sound bite.  I don‘t hear Governor Sanford coming out saying this will not happen again, you can count on it that I‘m not going to be vacating this position for days on end and this will never happen again. 

Has he said that?  I mean, I haven‘t heard that anywhere.  It‘s almost...

RUTHERFORD:  He did not. 

SCHULTZ:  That just amazes me.  After all of that this, he‘s not going to guarantee the people that, hey, don‘t worry, this will never happen again?  I‘ve slipped up, I‘ve got my act together again, you can count on me, South Carolinians. 

I‘m not hearing that.  Are you? 

RUTHERFORD:  No, I‘m not.  And he‘s not even saying don‘t fire me, I‘ve got it together, I‘m going to call in, I‘m going to tell the lieutenant governor where I‘m going.  He‘s not saying any of that. 

Most of the talk that I hear in South Carolina is most people like myself forgive him for the affair.  That‘s not the issue.  We pray for his family, we pray for his kids.  But we are concerned about the fact that he was basically AWOL. 

He was in dereliction of his duties to the people of South Carolina. 

And nobody seems to care. 

I mean, where are all these Republican voices that were calling for Bill Clinton to resign?  Where are all these Republican voices, this moral majority, these bible thumpers that have been using their bibles to beat people over the head, where are they when it comes to Mark Sanford and his dereliction of duty to the people of South Carolina? 

Had a hurricane come while he was gone, no one could have reversed the highways in this state but the governor of South Carolina.  He potentially put lives in jeopardy and he doesn‘t care about it. 

SCHULTZ:  Well, what you said about how people are letting this slide, you know, if it slides in conservative South Carolina, doesn‘t it lower the bar for public officials across the country?  I mean, if this guy can overcome this in South Carolina, anybody can overcome anything anywhere. 

RUTHERFORD:  You know, Ed, the problem is—and I don‘t mind lowering the bar just a little bit, because he‘s one of the people that raised the bar.  He kept talking about the expectations on public officials and the expectations on elected officials.  And I think that elected officials are people just like he was. 

He was not perfect.  He showed that in his actions.  But that‘s not my issue, and I know that‘s not yours as well. 

What we‘re talking about is taxpayer money being used to give somebody a job, in this case the governor, who abused that privilege, who went AWOL for five days, never bothered to call in, whose staff lied about where he was.  And who comes back and he says I‘m not going to do it again, but hey, forgive me for what I did, and I‘m going to stay in as governor because you all can‘t remove me.

SCHULTZ:  Well, quickly, will you keep up the drumbeat to get rid of him?

RUTHERFORD:  Absolutely.  I‘m going to do whatever I can.  I don‘t think that it rises to the level of impeachment, but yes, I‘m going to do whatever I can.

SCHULTZ:  All right.  State Representative Todd Rutherford here with us tonight on THE ED SHOW.

Thanks so much for joining us.

RUTHERFORD:  OK Ed.  Thank you.

SCHULTZ:  You bet.

The president is still confident he‘ll get an energy bill.  The House barely approved the first legislation.  The Senate is going to be a little bit tougher.

I want to know what kind of compromise the White House will be OK with.  We‘ll ask Carol Browner from the Obama administration next on THE ED SHOW.

Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  And when we put aside the posturing and the politics, when we put aside attacks that are based less on evidence than on ideology, than a simple choice emerges between a slow decline and renewed prosperity, between the past and the future.

(END VIDEO CLIP)

SCHULTZ:  Welcome back to THE ED SHOW.

President Obama speaking today.  The House gave him a win on the historic energy bill, and the White House has just been celebrating this.  But Republicans are making it clear that they‘re going to be targeting red state Democrats with the vote in 2010.  “Drill, baby, drill” I guess is going to be making a comeback.

The GOP is calling this, of all things, this bill, a jobs killer. 

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER ®, MINORITY LEADER:  Now we come to what I believe is the most profound piece of legislation that has come to the floor of this House in the last 100 years.  This is the biggest job-killing bill that has ever been on the floor of the House of Representatives.

(END VIDEO CLIP)

SCHULTZ:  They‘re no experts on creating jobs. 

Fence-sitting Democrats in the Senate are delaying any vote on this until fall at the earliest.  The White House has got a real tough issue and a real fight ahead. 

Joining me now is Carol Browner, White House coordinator of climate and energy policy and a former EPA administrator. 

Ms. Browner, great to have you with us tonight. 

What does the president need on this bill?  What does he have to have to make this effective? 

CAROL BROWNER, COORDINATOR, WHITE HOUSE CLIMATE AND ENERGY POLICY: 

Well, first of all, let‘s just put what happened on Friday in perspective.  You know, six weeks ago, people said we would never get energy legislation out of the House.  And we got it out of the House, and it includes all of the touchstones, the framework that was important to the president. 

You know, we need to be about changing our energy future.  We need renewables.  We need investment in new technologies.  We need to look at transmission.  We need to begin putting a cap on dangerous pollution that contributes to greenhouse gases. 

And all of that will allow us to create a new energy future and clean energy jobs for Americans.  So there‘s a real opportunity here. 

SCHULTZ:  Now Carol, the Republicans are calling this a jobs killer. 

Is it a jobs killer?  Counter that. 

BROWNER:  It‘s not a jobs killer.  This is about creating a different future for our country, one that allows us to begin the process of breaking dependence on foreign oil, to do right by our children, and to create a whole new generation of clean energy jobs. 

We need to lead the world in clean energy jobs.  We need to be building the turbines that we can send around the world for wind power, solar.  There‘s tremendous opportunity here, and this is about taking advantage of that opportunity. 

SCHULTZ:  OK.  So the bottom line here is, as far as legislation is concerned, is that you want polluters to pay.  And it‘s kind of a reverse incentive.  If they quit polluting, then they won‘t have to pay.  Right? 

BROWNER:  That‘s right.  I mean, people who are polluting in ways that are not good for the environment, they need to be held accountable.  But this program allows us to find the most cost-effective ways—this bill allows us to find the most cost-effective ways to achieve those reductions in pollution.  And it provides rebates to consumers and other protections so that we can move forward with a different energy future, a clean energy future. 

SCHULTZ:  So what are the Republicans hanging their hat on this?  They say it‘s going to be a job killer.  Where are the jobs that are going to be killed in this? 

BROWNER:  Well, I think sometimes people don‘t like change.  And for some people, change can be very frightening.  What we saw in the House was enough people were willing to embrace the idea put forward by the president that we need a new energy future and that a new energy future is good for America.  And now we‘ll turn to the Senate. 

SCHULTZ:  All right.  This is a very interesting comment by President Obama.  He said, “At a time when the economy worldwide is still deep in recession, and we‘ve seen a significant drop in global trade, I think we have to be very careful about sending any protectionist signals out there.  I‘m very mindful of wanting to make sure that there is a level playing field internationally.”

Clarify exactly what the president is talking about here.  Is he saying that he‘s not going to be advocating any responsible actions by other countries around the world?  It‘s just going to have to be the United States is going to have to do this? 

What are we hearing here? 

BROWNER:  No, absolutely not.  In fact, the president will shortly travel to the G-9, and then he will chair the major economics forum where climate change will be talked about.  And what he wants to say to the rest of the world is, we‘ve begun the process of leadership here in the United States, but we fully expect that all countries of the world will do their fair share.  We‘ve got to do this together. 

SCHULTZ:  I‘m surprised more Democrats didn‘t come on board in the House.  What about that? 

BROWNER:  Well, you know, it‘s—some people weren‘t prepared to be there.  The good news is there were lots of people who thought this was the right thing.  They‘re hearing from their constituents.  They want to be part of putting America on the right path. 

It was historic.  I mean, people didn‘t think we would do this six weeks ago. 

SCHULTZ:  Carol Browner, great to have you with us tonight.  Thank you so much. 

BROWNER:  Thank you.

SCHULTZ:  Coming up next on THE ED SHOW, “Psycho Talk.”  Another dandy from “The Drugster.”  He says it wasn‘t Sanford‘s mistress that simulated his run for the border, it was President Obama. 

It‘s next in “Psycho Talk.”  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  We‘ve got some breaking news in the Michael Jackson story. 

We‘re hearing there‘s no will.  More on that 6:30 sharp.  Stay right here. 

But first, it‘s time now for “Psycho Talk.”  

Oh, “The Drugster” is back.  That‘s right, Rush Limbaugh weighed in on Governor Sanford‘s issue, his Argentinean affair last week.  He feels sorry for the guy, because, of course, it wasn‘t Sanford‘s fault that he abandoned his wife and the state to go down south of the border for some honky tonk.  He did it because President Obama put him up to it. 

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  This Sanford business, I‘ve got to tell you one of the first thoughts that crossed my mind.  This is almost like I don‘t give a damn, the country‘s going to hell in a hand basket, I just want out of here. 

He had just tried to fight the stimulus money coming to South Carolina.  He didn‘t want any part of it.  He lost the battle. 

He says, what the hell.  I mean, the federal government‘s taking over. 

What the hell?  I want to enjoy life. 

(END VIDEO CLIP)

SCHULTZ:  So let me get this straight.  President Obama‘s policies drove Sanford to commit adultery?  But let‘s follow his psycho lineage here, this reasoning for just a second, and pretend that the president can make a guy actually go out and cheat on his wife. 

Governor Sanford admitted that his Argentinean fling started a year ago.  Hmm.  Now let‘s think about this.  Who was the president just a year ago?  Oh, that‘s right, it was George W. Bush. 

That would mean that the president who actually pushed Sanford over the edge was W! Hey, a year ago the country was, as Rush put it, going to hell in a hand basket.  So maybe “The Drugster” has a point.  He just got the wrong president. 

But back to reality.  Giving the governor a pass on abandoning his state and destroying his family because of professional frustrations is ridiculous, regardless of who lives in the White House.  Blaming President Obama, a family values poster boy, for Governor Sanford‘s indiscretions, that‘s “Psycho Talk.”  

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.

We have breaking news tonight.  The Jackson family attorney, Londell McMillan, has told NBC News that the family has no legal will for Michael Jackson.  But now we‘re hearing it may not be that simple.  This, after a Los Angeles court granted Katherine Jackson, his mother, temporary custody of the children this morning. 

For more on what this means for the Jackson estate and the three children, let‘s bring in NBC‘s Jay Gray, who‘s reporting from the Jackson family compound in California. 

Jay, do you get a sense from the folks on the ground that this is a power struggle on steroids, possibly?  What do you think? 

JAY GRAY, NBC NEWS CORRESPONDENT:  Yes, I think that‘s a perfect way to describe it, Ed.  I think this is just the tip of what will be a long and drawn out legal struggle over who has control of the Jackson estate, of those three children, and everything Michael Jackson right now. 

His long-time manager said this morning on “The Today Show,” yes, Michael Jackson has a will, it‘s been in a safe, his attorneys are going to get it out and read it today.  Now, we don‘t know that that‘s happened, but I think what‘s going on behind the scenes is that that contingent is telling the Jackson family contingent, hey, we have this will, we‘re going to see what it says before we discuss anything with you.   

On the other side, the Jackson family, who has for the last several days said we don‘t have any information; we haven‘t been provided anything about what happened to our son in the moments before he died and following they‘re pushing to try and get all the information they can.

And you talked about it today.  They went to court, filed two injunctions, and got temporary custody, at least, of Jackson‘s three children.  That was granted to Katherine Jackson, his 79-year-old mother.  Then both Joe Jackson, his father, and Katherine have filed to be the executors—I can‘t even say it—the executors of his will. 

So that‘s where it stands right now.  It‘s going to be a legal battle.  It‘s going to be a back and forth.  And I think, Ed, as you talked about, this is something that‘s going to go on for several weeks. 

SCHULTZ:  You know, this is really sad.  Do you sense that the family members are starting to get at one another on this?  Or is there family unity on this?  What‘s your sense? 

GRAY:  They are playing it so close to the vest behind the gates here at their Encino estate that I‘m not sure we can draw any real conclusion from it.  We do know that three of the Jackson brothers went out to Neverland Ranch yesterday, leading to some speculation that perhaps that‘s where a funeral might be, and that there may be some type of Graceland event there, where he is buried there and then it becomes a museum. 

Today, Joe Jackson made a brief appearance outside here, as he looked at the shrine that‘s growing in front of the home.  And he said point blank, that‘s not true, that‘s not true, to the question of is that where Jackson will be buried? 

So there‘s just a lot of confusion.  Right now, they‘re all behind the gate.  We do know there‘s been some discussion over whether this should be a public or private affair, when it comes to the funeral.  He said today, Joe Jackson, that at least part of the service will be public.  But he also made a very important point, Ed.  He said that there will be no funeral until he gets results from a second independent autopsy, which we know is still going on right now. 

SCHULTZ:  All right, thank you, Jay Gray, NBC News, reporting from California tonight.  Of course, we‘ll keep our viewers posted on the latest on this. 

For more, let‘s talk about what‘s happening with the White House.  In the White House, David Axelrod was on “Meet the Press” this Sunday.  He was asked very directly, will the president get health care reform that includes a public option this year?  Listen to the response. 

(BEGIN VIDEO CLIP)

DAVID AXELROD, WHITE HOUSE SENIOR ADVISER:  I think we‘re going to get a health care reform bill this year. 

DAVID GREGORY, “MEET THE PRESS”:  But you‘re confident about getting that bill with a public plan this year? 

AXELROD:  I‘m confident we‘re going to get a health care reform bill.  I think a public choice will be part of it.  I think the public wants to have that option, and wants to see that kind of competition.  And I think we will have that. 

(END VIDEO CLIP)

SCHULTZ:  Axelrod is one of the president‘s closest advisers.  Where‘s the fire in the belly?  That sounds like we‘re just getting ready to put the flag up.  You know, the flag that shows surrender on this issue.  I tell you, the Democrats better not be caving on this.  I can‘t say it enough. 

Axelrod also refused to rule out the possibility of a tax hike on health insurance benefits.  I‘m against that.  That would be attacking the consumer.  No, no, no.  We want to go after the insurance companies on this, and level the playing field for consumers. 

Now, Democrats in the House have released an outline of their health care reform bill.  The plan includes—it includes, to their credit, a very strong public option.  One of the few authors of that bill is Democratic Congressman Frank Pallone of New Jersey, chairman of the Health Subcommittee.  And he joins us tonight here on THE ED SHOW.

Congressman, it appears now that the House is going to be the savior for a public option, if we‘re going to get one.  How do you read it? 

REP. FRANK PALLONE (D), NEW JERSEY:  I think we will have a public option.  I think it‘s very important, if you want to keep costs down, because the competition between the public and the private insurance plans is the main way to reduce costs. 

SCHULTZ:  What do you make of the White House?  You‘ve got Lindsey Graham over there answering the direct question from David Gregory on “Meet the Press” yesterday, saying no.  I don‘t get that kind of talk from the White House.  The American people are starting to wonder, what‘s going on here?  Are they giving up the fight on this?

PALLONE:  I don‘t think so.  I think the president has always tried to say, look, all options are on the table.  So we‘re going to continue to hear that.  But the public is overwhelmingly in support of a public option.  Again, mainly to have that competition that keeps costs down. 

SCHULTZ:  Well, here‘s what I‘m talking about.  There‘s two sets of thought here.  Here‘s how the Republicans are attacking the issue.  Here‘s Graham responding. 

(BEGIN VIDEO CLIP)

GREGORY:  Will the president achieve health care reform this year that includes a public plan? 

SEN. LINDSAY GRAHAM ®, SOUTH CAROLINA:  No. 

(END VIDEO CLIP)

SCHULTZ:  Why doesn‘t David Axelrod come out and say, oh, yes, we will, because we got 72 percent of the American people who want it. 

PALLONE:  They‘re still trying to, you know, show that all options are out there, that they want to work with the Republicans.  You know, that‘s what I think it‘s all about, trying to be bipartisan. 

But I agree with you, that if we don‘t have the public option, it‘s going to be difficult to actually keep costs down, which is a major part of this effort. 

So I think the president is supportive of the public plan.  And ultimately, that option or choice will be part of what we adopt. 

SCHULTZ:  OK.  Congressman Pallone, do you think the White House is being strong enough on this?  There‘s all these niceties being thrown out there.  When are we going to start drawing our line in the sand to make sure we do get this, because this is what the American people want?  You‘ve got Dianne Feinstein over there basically saying, I don‘t care what the public wants.  They‘re caving in on this. 

PALLONE:  Well, you know, I don‘t know the intricacies of the Senate.  But I think the fear is that if you rule out anything, then you make it more difficult to come to agreement or consensus.  So I think they just, you know, say, look, everything‘s on the table.  But ultimately, I think you will have a public option.  And it certainly makes sense, because you need that competition in the marketplace to reduce costs significantly. 

We have to reduce costs.  That‘s a major part of this.  It‘s not just covering the uninsured, which we‘re going to do, and that‘s important.  But also for those people that have insurance that we can reduce their premiums. 

SCHULTZ:  Congressman, good to have you with us tonight.  Thanks for working on this.  Thanks for being here.  Frank Pallone with us here on THE ED SHOW.

I just want to point out, it was pretty interesting how Lindsay Graham was suggesting, maybe we should nationalize the banks.  Remember that talk?  He‘s not saying anything about that when it comes to health care. 

Let‘s turn to “Washington Post” columnist E.J. Dionne.  He‘s got a commentary today calling for President Obama to rule with an iron fist.  Thank you, E.J., for being here tonight. 

E.J. DIONNE, “THE WASHINGTON POST”:  Good to be here.  I would never say that of any leader of any country.  But I think he needs a little bit of iron right now to move this health care bill. 

SCHULTZ:  What do you mean? 

DIONNE:  Here‘s what I think is going on: you‘ve got the House bill, as you pointed out, that‘s out there.  You‘ve got the Senate Health Committee that basically has a bill out there.  Max Baucus, the chairman of the Finance Committee, has been negotiating and negotiating and negotiating with Chuck Grassley, the ranking Republican. 

Now give Grassley credit, he‘s one of the few Republicans who‘s willing to negotiate.  But Democrats are kind of frustrated with Baucus because he seems—the one vote he really seems to want is Grassley‘s.  And I like to joke he might make ethanol a reimbursable prescription drug to get Grassley‘s vote. 

At this point, they‘re running behind schedule because of that.  I think Senate Democrats are frustrated with Senator Grassley (sic), because he seems too willing to make concessions to Senator Grassley.  And I think the White House is frustrated.  And I think they‘re fighting over who can bring pressure to bear to get this process moving right now. 

SCHULTZ:  All right.  Here‘s David Axelrod.  He was asked yesterday on “Meet the Press” about the line in the sand.  Here it is. 

And the one thing that he says, the president had said in the past that he doesn‘t believe taxing health care benefits.  Here‘s that sound cut. 

(BEGIN VIDEO CLIP)

AXELROD:  The president has said in the past that he doesn‘t believe taxing health care benefits at any level is necessarily the best way to go here.  He still believes that.  But there are a number of formulations and we‘ll wait and see. 

One of the problems we‘ve had in this town is people draw lines in the sand and they stop talking to each other.  And you don‘t get anything done.  That‘s not the way the president approaches this. 

(END VIDEO CLIP)

SCHULTZ:  E.J., why don‘t they understand that if they do draw a line in the sand, there‘s going to be more people on their side than over on the other side?  I‘m just amazed that how slow this is going from the White House standpoint.  They accept this tough talk from the Republicans and the conservatives, and they don‘t even fire back, other than say, oh, gosh, we all got to get along.  What do you think the president should do at this point? 

DIONNE:  Well, first of all, on this tax issue, I think one of the hard things here is the progressives are divided on this issue.  The unions clearly don‘t want it.  They see it as a tax on the middle class, giving up wages to get good health plans.  Other folks look at it and say, look, if you only tax high-income people or high-end plans, very high high-end plans, that would be progressive, because you‘d pay for plans for the less well off. 

I think the White House is going to have to come in earlier than it intended to in this process to try to settle some of these issues on the progressive side, and also bring some pressure to bear to make sure that the bill doesn‘t get so compromised in the Senate that it gets very difficult to bring back to something that looks like the president‘s original plan. 

It‘s too bad his original idea of changing the tax deductions—it was a very good way to finance it progressively.  But that‘s been shot down by the Congress. 

SCHULTZ:  Thank you, E.J. Dionne.  Appreciate your time tonight. 

Great article.  It hits right where America is. 

For more, let‘s bring in our panel.  Joining us here in New York is Katrina Vanden Heuvel, who is the editor of the magazine “The Nation,” Mike Allen, chief White House correspondent for “Politico,” and former Congressman Tom Tancredo of Colorado is joining us tonight. 

I want to put up on a full screen here, if I may, just before we get going, Dianne Feinstein talking about all of the progressive groups out there who are pushing hard for the public option, and still have a belief that single payer is the way to go.  She says, “I do not think this is helpful.  It doesn‘t move me one whit.  They are spending a lot of money on something that is not productive.” 

Katrina, this is a Democrat from California. 

KATRINA VANDEN HEUVEL, “THE NATION”:  You know, there are a lot of Democrats, Ed.  Here‘s the thing.  As I wrote at TheNation.com yesterday, time to end false bipartisanship.  It‘s not just about jettisoning GOP obstructionists.  But it‘s also putting on notice centrist Democrats who are really out far right field.  Who are they going to pay attention to?  The broad majority supporting the public option or wads of dough from big pharma and the lobbyists? 

The last thing I would say, Ed, is in terms of our history, people should remember that the great social reforms of our country, Social Security, Medicare, really popular; they didn‘t happen through compromises.  They happened through very close votes.  It‘s time to get this together and move it. 

SCHULTZ:  Tom Tancredo, you‘re quarter-backing the Republican team, what‘s play you call?  It looks to me like you got them on the run. 

TOM TANCREDO, FMR. CONGRESSMAN:  That sounds like it to me too.  I would tell you that I think a lot of this is the result of the fact that people are just simply—I think even the Congress and certainly I think a large number of the—large portion of the American public are simply getting socialism fatigue. 

I mean, the government takes over the banks.  The government takes over the car companies.  The government is now taking over energy through cap and trade.  And this is the next huge step. 

And you know what?  I think they‘re just getting tired.  I think even the Congress is thinking, maybe we have gone too far too quickly.  And I think they certainly have.  And that‘s exactly the kind of counseling I‘d give to Republicans, to push the fact that they‘re trying to take too many take too big a bite out of the socialism apple for most Americans. 

SCHULTZ:  Mike Allen, what do you make of Senator Feinstein‘s comment?  I mean, this is like we‘re not listening to you out there across the country, and you‘re just going to have to put up with what we come up with. 

MIKE ALLEN, “POLITICO”:  I think she was giving a statement of fact, Ed, that it‘s not helpful to the efforts to come up with something that can pass.  But we have an important breaking story tonight.  The AP in Portland, Maine talked to Senator Olympia Snowe, a moderate swing vote on health care.  She says she‘s working with Senator Schumer, a very high Democrat in the leadership, on a plan that would have the public option as a fallback, that they would give private insurers a chance to make affordable coverage available.  If that didn‘t work, then a public option would kick in.  Maybe that would be a way to sort of bridge this gap. 

SCHULTZ:  Katrina, what do you make of that?

VANDEN HEUVEL:  This is a dilution of what a robust, real public health plan—

ALLEN:  Yes, it‘s a dilution, but they‘re looking for something they can get 60 votes for. 

VANDEN HEUVEL:  But I think you can push through something without these compromises, if you get the people—people need to come out and show the support. 

The other thing I would say about Congressman Tancredo, it is laughable to talk about a public plan as socialized medicine.  One of the great programs of our country is Medicare.  You want to call that socialized medicine?  And for Mike Allen—

TANCREDO:  Yes. 

VANDEN HEUVEL:  I think you‘ve got to get the wind behind these representatives‘ backs, and get some motion behind something more robust.  Otherwise, I think private insurance is going to win out, if they are going to control the stakes, which it sounds like that compromise might be. 

ALLEN:  I hear you, Katrina.  I think you‘ll agree with me, the one force in America that could put that wind at their backs would be the president. 

VANDEN HEUVEL:  I agree. 

ALLEN:  Don‘t you think he needs to put that line in the sand? 

SCHULTZ:  He needs to get out on the road and find out what the heck is going on, because he‘s got the people behind him.  Panel, stay with us.  We‘ve got so much more coming up.  We‘ve got more news on the will in the Jackson—Michael Jackson death.  That will be coming up here on THE ED SHOW.  We‘ve got some more information.  We‘ll keep you up to date.  And our panel will join us.  Stay with us.  You‘re watching MSNBC, the place for politics.

(COMMERCIAL BREAK)

SCHULTZ:  In my playbook tonight, for months we‘ve been arguing the case to keep manufacturing jobs here in the United States.  Well folks, we finally got a victory to report tonight.  General Motors has announced that instead of outsourcing its new subcompact car to China, they‘re going to build them right here on American soil.  That‘s right, right outside Detroit.  This move will save 1,400 jobs that would have otherwise disappeared. 

Joining me now is the man who led the campaign, quote, Make it in Michigan, Congressman Gary Peters.  Congressman, congratulations in order tonight.  Been a lot of tough news surrounding the car business.  What does this mean? 

REP. GARY PETERS (D), MICHIGAN:  Absolutely, Ed.  And I want to personally thank you as well.  We came to you early, talked about this story, about General Motors building this car in China, when we wanted them to be building it here in the United States.  You picked up this charge, helped us really get this message out on your program.  And it‘s great to have this victory. 

This is jobs in the United States, good-paying jobs.  Not only the 1,400 in the plant, but all of the auto suppliers and other indirect jobs as a result of that.  More importantly, it‘s going to be the future of General Motors, building high-technology vehicles, fuel-efficient, low-polluting cars, made right here in America.  We‘re certainly very pleased with General Motors‘ decision. 

SCHULTZ:  Congressman Peters, it would seem to me that the silver lining here is not only the jobs here in America.  But if General Motors turns around and starts making a dollar, and starts paying back the loans, wouldn‘t this open the door for expansion on our soil if we can get these trade agreements squared away? 

PETERS:  Absolutely.  And that‘s what we were concerned about, is that you‘d have the downsizing here with American plants, and as the economy recovers—and it will recover, and people will start buying cars again.  And General Motors‘ cars are the finest in quality.  People will get out and buy those.  We wanted to make sure the production capability was right here in the United States and not in China. 

This is a huge victory for America.  It‘s a huge victory for American workers.  More importantly, for the American middle class. 

SCHULTZ:  OK.  But what about the other plants that are being shut down?  Is there a chance that maybe there would be some more good news coming down the road here?  What else can we do to push General Motors to keep more jobs here and to expand here? 

PETERS:  Well, that‘s a great point.  We still have plants that have been shut in my district, as well, as well as throughout Michigan, throughout the Midwest.  There is production overseas.  We want to continue to make a very aggressive business case to General Motors to bring those jobs from Mexico, Korea, and other places right here on our soil.

We certainly showed a lot of community support with our Make It in Michigan campaign.  We had an open letter to General Motors; 30,000 people in a little over a week signed that letter, urging General Motors to make this decision, the right decision.  And we‘re pleased that they did.  We‘re certainly pleased with your support and your program. 

SCHULTZ:  Well, every little bit of positive news helps.  In Michigan, you‘ve got unemployment rate of 14.1 percent.  Those were the numbers for the month of May.  Congressman, way to get the victory.  Let‘s get more of them.  Thanks so much for joining us. 

PETERS:  Thank you, Ed. 

SCHULTZ:  The Supreme Court reverses a decision by Judge Sonia Sotomayor.  Some call this a setback for the judge.  I call it judicial activism.  Our panel weighs in on it next on THE ED SHOW.  Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  An update on that breaking news we brought you earlier about Michael Jackson‘s will.  NBC‘s Mike Taibbi says an attorney has confirmed to him that Jackson did leave a will.  The attorney says it‘s very specific and has already been reviewed by several people.  He says a Jackson family attorney, who earlier claimed that there was no will, has not yet seen it due to an apparent conflict of interest. 

Turning back to politics, Republicans are hyperventilating today because they just can‘t contain themselves.  The Supreme Court decided five to four in favor of the New Haven firefighters, reversing the decision of the Second Circuit and Sonia Sotomayor. 

I‘ll bring back our panel tonight.  Katrina, is this—they‘re going to play this up as a sign of weakness.  But do you think this would slow her confirmation in any way? 

VANDEN HEUVEL:  I don‘t.  I think this was a sign today of the conservative wing of the Supreme Court showing judicial activism.  A term they throw at Sonia Sotomayor and liberal justices all the time. 

Sonya Sotomayor is someone in the mainstream of judicial opinion.  If you study 700 of her decisions—I studied a few of them—they defy liberal and conservative stereotyping.  What we saw today in Judge Ginsburg was good on this.  They should have remanded this to the lower court. 

What Judge Sotomayor did in the Ricci decision, which was over-turned, was follow the court, follow the precedent.  Anyone who wants to know more about this hysteria about this decision should read District Attorney Robert Morgenthau‘s letter in the “New York Times” of June 16th, where he puts Sonia Sotomayor in context. 

SCHULTZ:  What do you make of this, Tom Tancredo?  Is this trouble on the horizon? 

TANCREDO:  For her nomination, do you mean? 

SCHULTZ:  Yes. 

TANCREDO:  No, I don‘t think so.  I don‘t think it will really matter.  After all, look it, here‘s a woman who is relatively incompetent as a judge.  Most of her decisions, when they had been appealed, had been reversed. 

She is also a racist.  We‘ve talked about this before.  And now she‘s in a position where her statement, not too long ago, that she believes it‘s impossible to be impartial in these decisions, is a statement that if made by anybody being impaneled by a jury, on a jury, anywhere in the United States, they‘d be thrown off the jury. 

But in Obama-land, she‘s going to become a Supreme Court justice. 

What a weird world in which we are living. 

SCHULTZ:  Mike Allen, I believe Judge Alito got reversed quite a bit. 

I think 100 percent of the time, but who‘s counting. 

ALLEN:  Ed, this unquestionably gives Republicans new ammunition, gives them something to talk about, something more substantive to talk about.  But this is professional wrestling.  It‘s clear that it‘s not going to change the result.  She‘s going to have her hearing, July 13th.  It‘s all going to happen in a matter of days.  There will be a vote by the August 4th recess, when the president wants it. 

What you‘ll hear the White House say about this is that the judge was following Second Circuit precedent, and that, in fact, her decision in this was an act of judicial restraint. 

VANDEN HEUVEL:  That‘s right.  She was following the law.  But I think it‘s obscene for Tancredo to call Judge Sotomayor a racist. 

TANCREDO:  I couldn‘t care what you think, Katrina.  You are—

(CROSS TALK)

VANDEN HEUVEL:  May I speak?  Who will bring through her decision—

TANCREDO:  If I get a chance to rebut. 

SCHULTZ:  You will. 

VANDEN HEUVEL:  You will.  She brings—

ALLEN:  Ed, you and I can talk about sports over here—

VANDEN HEUVEL:  She brings more federal judicial experience to the Supreme Court than anyone else in the last hundred years.  She‘s a woman of extraordinary integrity, of great life experience, who has been clear that she stands aside.  As I said earlier, she—you cannot place her in one of the two boxes in your Manichean, black and white head, liberal or conservative. 

She defies stereotypes.  She is complex in the spirit that Barack Obama has asked Americans to think about. 

SCHULTZ:  All right, time to get a 30-second rebuttal here.  What has she done that leads you to believe that she‘s a racist? 

TANCREDO:  Well, have we gone through this before?  Certainly her involvement with a racist—what I believe is a racist organization.  We‘ve already talked about that, La Raza.  It‘s not the only one.  Her comments—when she says, as she has in the past, that a Latina woman is better able to make these judgments than a white male—

SCHULTZ:  The American people have already rendered judgment.  That‘s all old stuff.  

TANCREDO:  I don‘t know how anybody can get away with that.  Katrina, you have never dealt with the very basic issue.  She says that she believes that it is impossible to be impartial.  What are we going to do?  Get up there and chisel the—

SCHULTZ:  Mike Allen, you‘ve got the last word. 

TANCREDO:  -- the blindfold off of lady justice? 

SCHULTZ:  Unfortunately, we are out of time. 

(CROSS TALK)

VANDEN HEUVEL:  To call La Raza a racist group is obscene. 

SCHULTZ:  We will continue on tomorrow.  That‘s THE ED SHOW.  I‘m Ed Schultz.  “HARDBALL” with Chris Matthews starts right now.

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