updated 7/2/2009 10:41:50 AM ET 2009-07-02T14:41:50

Guests: Linda Douglass, Katrina Vanden Heuvel, Carlos Diaz, Thomas Frank, Laura Flanders, Sam Stein, John Feehery

(BEGIN VIDEOTAPE)

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

(END VIDEOTAPE)

SCHULTZ:  Good evening, Americans. 

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

One in, one out.  The Democrats finally get Al Franken in Senate seat number 60.  And look who‘s causing problems again.  It‘s our old buddy Joe Lieberman.

President Obama, I think you need to get these guys in line.

Mark Sanford, he says he‘s had a change of heart.  He says he doesn‘t want to talk to the media anymore. 

Governor, you‘ve already aired all your dirty laundry on Facebook, on Twitter, holding news conferences with absolutely no regard to your family and wife. 

I‘ve got something to say about that tonight. 

And a bombshell in the Michael Jackson story.  What‘s in his will? 

Why he wanted Diana Ross to raise his three kids. 

Plus “Psycho Talk.”  All that and a great panel, but first, tonight‘s “OpEd.”

You know, I think as Americans, we all know what the Bush administration would have done with 60 votes.  We‘d probably be in right Iran now.  But the word that comes to mind, to me, anyway, is ruthless. 

For weeks, we have been told by the Democrats, we don‘t have the votes.  And I guarantee you that progressives all over America are asking right now, well, what does that mean? 

Well, we found out in the last 24 hours, not a whole heck of a lot. 

The number one issue in this country with American families and businesses is health care.  The most controversial issue is the public option. 

Here‘s our old buddy Joe Lieberman sticking up for the party. 

(BEGIN VIDEO CLIP)

QUESTION:  Are you in favor of the public option? 

SEN. JOE LIEBERMAN (I), CONNECTICUT:  I‘m skeptical of it, both in substance and in the politics.  And by the politics I mean I think we‘re not going to get the votes to pass the overall bill, if that becomes a condition of it. 

Part of my concern is that this goes to the growing national debt.  That, inevitably, if we create a public option, the public is going to end up paying for it.  And that‘s a quest we can‘t take on. 

(END VIDEO CLIP)

SCHULTZ:  Well, Senator, if that‘s the case, I want you stay with me tonight, because I‘ve got a sound bite coming from a lady from a town hall meeting today that I think you need to hear and I think you need to answer for. 

Joe Lieberman, now, this is the guy that Harry Reid said we could

trust his vote.  This is a guy, remember, who campaigned for the other guy

you know, John McCain.  If the Democrats can‘t get tough on Joe Lieberman, who in the heck are they going to get tough on? 

So, here‘s the tough news tonight.

Liberals, we‘re not there yet.  All this jargon about 60 votes really is campaign trash talking.  That‘s what I think. 

And I was hoping today that President Obama would draw his line in the sand at a town hall meeting in Virginia and demand a public option.  But there seems to be some burning desire to satisfy the Republicans. 

The Republicans have drawn their line in the sand.  They have staked their claim, basically.  They have said no to the public option. 

They are threatening already.  Actually, they‘re dictating. 

The majority party I think refuses to play hardball on the issue.  They‘re just doing a bunch of Senate-speaking political talk.  But I guarantee you, Dems in this country, liberals in this country, progressives in this country want the president of the United States to draw that line in the sand and say there will be a public option. 

Maybe this qualifies from today‘s town hall meeting...

(BEGIN VIDEO CLIP)

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  I do think we should have a public plan to compete with the private plans, but, you know, these private insurance companies, they‘re always telling me what a great deal that they give to the American consumer.  If it‘s such a great deal, why are they worried about competing against the public plan, especially when they say government can‘t do anything? 

(END VIDEO CLIP)

SCHULTZ:  You know, if the president and the Democrats don‘t deliver on this, I think they run the risk of disenfranchising a lot of good people who stepped into the process for the first time.  You know, newbies to they system that heard all this stuff about change. 

And one thing I‘m really tired of is hearing that—and we heard it on this program last night—you know, we‘re a center-right country.  No, we‘re not. 

We have a bunch of Democrats in the House.  We now have 60 votes in the Senate—at least I think we do.  And we‘ve got the White House.  So, all this talk about we‘re a right-center country, I don‘t buy that. 

This country made a conscious decision to go with the progressive agenda.  And it is wrong for the president, it is wrong for the Democrats to bail out on the American people and not draw the line in the sand and basically be intimidated by the Republicans. 

Now, some people talk about President Obama being like President Lincoln in a respectful manner.  I get it.  But I think he needs to be more like Lyndon Johnson.  You know how Johnson used to talk from Texas?  He was that Texas Democrat that talked a lot different from Bush.

Actually, he talked a lot like him.  He said, come over here, boys. 

This is how we‘re going to get this Medicare thing done. 

Now, maybe it‘s just not in the Democratic culture or the DNA anymore to twist some arms.  Maybe the Democrats have just gotten soft and nice on us.  Or maybe there‘s some massive plan here that all of these Republicans who have all these ideas about how to fix health care in this country, they‘re just going to come to Jesus and they‘re going to come genuflect and say, doggone it, we were wrong all along on this.

Folks, it‘s going to take arm-twisting to get this thing done. 

Joining me now is Linda Douglass, the White House communications director for the Office for Health Care Reform. 

Linda, thanks for your time again tonight. 

I want to know, when is the administration going to use some of this political clout?  Because I think that there‘s a lot of Americans out there that want President Obama and the Democrats to draw a line in the sand the way Lindsey Graham did on the talking heads over the weekend and give a definitive answer, there will be a public option and insurance companies will get some competition. 

When is that day coming? 

LINDA DOUGLASS, WHITE HOUSE COMMUNICATIONS DIRECTOR, OFFICE FOR HEALTH

CARE REFORM:  Well, first of all, let‘s look at where we are, Ed.  I know you‘ve got great passion about this, but let‘s look where we are right now in terms of the legislation that is being written in Congress, that will be built upon the president‘s principles of lowering costs for all Americans, protecting your choice of doctors and plans.  You know, assuring quality and affordable care for every American.  It‘s going to be deficit-neutral. 

There are three places right now where legislation is being written—in the House of Representatives, where, of course, they certainly embrace the notion of a public option; the Health Committee, Health Education & Labor, the committee that is chaired by Senator Kennedy and is now—

Senator Dodd is working in his place as Senator Kennedy deals with his illness.  They, as you have been reading, are fashioning a public option.  And then, finally, there is the Finance Committee, which is still grappling with this issue. 

The point is, there‘s legislation being written out there in the Congress that has a public option, which the president made very clear that he wants to see in a plan, because it will provide more choices, it will lower cost, it will create more competition.  It will keep the insurance companies honest. 

SCHULTZ:  And I believe President Barack Obama.  I believe he has the heart, the will, the desire, and all of that.  But when does the tough talking start?  When does the arm-twisting start?  It seems to me that the White House has allowed the Republican Party to go out and say, if you want to have it bipartisan, that public option isn‘t going to be in there. 

What‘s the response to that?  Oh, we‘ll be nice to them and just see if it works out? 

DOUGLASS:  Well, as I just said, there are already two bills emerging from Congress which have a pubic option.  We don‘t know what‘s going to happen with the third committee bill. 

But the point is, we are in—I hate to speak to your viewers in this sort of Washington speak.  We are in the process of watching Congress write legislation.  The president has made his concerns very clear.  He wants more choice, more competition, wants the insurance companies to have to get in there and compete with a nonprofit, affordable option with lower administrative costs that would be available to Americans who currently are forced to buy insurance on the individual market or small businesses that cannot afford insurance at all. 

Those are the problems that have to be addressed out there in the country. 

SCHULTZ:  And Linda, will the White House take a position and support Senator Bernie Sanders, who is calling for cloture to stop a filibuster and get an up or down vote because the American people want it?  Would the president go so far as to support him on this? 

DOUGLASS:  Well, you‘re talking about—you‘re talking situations that are potentially far into the future.  This is a hypothetical. 

The president has said that, you know, already we see a bill that has bipartisan ideas.  It would be great if it also had bipartisan votes.  We are working forward to see what comes out of these committees, and we‘ll make very clear what he wants to see in bills, which, again, are lowering costs, protecting choice, assuring quality, expanding coverage, all of the things that he‘s talked about, and he talked about very clearly in that town hall today with voters who finally got to ask real questions about their lives. 

SCHULTZ:  Linda Douglass, thanks for your time tonight on THE ED SHOW.

DOUGLASS:  Thanks, Ed.

SCHULTZ:  For more, let‘s go to Katrina vanden Heuvel, who is the editor of “The Nation.”

Katrina, is the president strong enough to this date? 

KATRINA VANDEN HEUVEL, EDITOR, “THE NATION”:  Well, let me begin, we are at this moment of potentially seismic change with Democrats getting this cherished 60-vote filibuster-proof maturity.  When I think of Al Franken coming in to the Senate, he‘s taking over the late, great Senator Paul Wellstone‘s seat.  Senator Wellstone talked about change from below. 

We have the possibility of extraordinary change, Ed, but we need progressive mobilization, we need organized people to take on the organized money, the organized lobbies in Washington.  And President Obama could lead the way, but he needs the support, the wind at his back.  He has broad support for a public plan, as you well know. 

SCHULTZ:  But the line in the sand, why...

VANDEN HEUVEL:  We‘ve got to keep pushing.  And, I mean, people should support Health Care for Americans Now; DFA, Howard Dean,  Democracy for America. 

SCHULTZ:  Yes.

VANDEN HEUVEL:  All these groups seek and demand popular mobilization. 

The other thing I‘d say, though, is Barack Obama does need to make a move soon.  He does need, with pressure from below, to draw that line in the sand, because the great reforms in our time, our country, have come about not through timid bipartisan compromise, but Medicare, Social Security.  They were put through on close votes, and that may be the case when we get down the line. 

SCHULTZ:  OK.

Now, do you think the progressives in this country, those who put forward the money, put forward the legwork, the social networking, and did everything for this change, if there‘s not a public option, can you tell me there won‘t be political fallout? 

VANDEN HEUVEL:  Oh, I can‘t tell you that, Ed, because there will be.  If there‘s no public option, I think 2010, those results coming out aren‘t going to look very pretty, because as you said, the newbies, those who were brought into this process, excited about change, are going to say, hey, what‘s going on? 

This is the moment for change.  The stars should be aligned.  So I do think it‘s potentially very problematic. 

What‘s also problematic is the power shift in Congress.  It‘s interesting.  The balance of power today shifted away from the two.  There are only two moderate Republicans to these centrists, I would say, far right, out in the field Democrats. 

SCHULTZ:  So the 60 votes aren‘t there.  They‘re not there on this issue.

VANDEN HEUVEL:  The Senate is a weird institution where you need new math to do the calculus.  Sixty doesn‘t mean 60 in the Senate. 

On the other hand, what does mean something are numbers.  And people should expose how so many senators don‘t support the public interest, but instead support the health care industrial complex.  So we‘ve got expose, propose, fight.  And, you know, no great change has come about, Ed, without that. 

SCHULTZ:  Yes.  So we‘ve still got some heavy lifting to do.  Lefties have still got to get out there and get after it.  OK.

VANDEN HEUVEL:  And then President Obama should campaign as hard as he did for the presidency for major legislative reforms which will change the conditions in a great way for the people in this country. 

SCHULTZ:  OK.

VANDEN HEUVEL:  Cementing their loyalty to the Democratic Party, if it does right.  There are broader issues.

SCHULTZ:  I think you‘re right on.  I just want the Republicans to know where liberals are on this.  And I wish it would come from the White House. 

Now, one final note tonight.  This is why the president is doing town hall meetings, to bring you stories like this. 

There was a woman there today named Debby.  She‘s 53.  She lost her dad to cancer.  Now she has cancer in her kidneys. 

Here‘s what she told President Obama about her situation.

(BEGIN VIDEO CLIP)

DEBBY, HAS CANCER, NO INSURANCE:  Basically, because of the damage of the radiation did in things, I‘m no longer able to work.  And I have no health insurance.  Now I have a new tumor.  I have no way to pay for it.  I‘m just trying to figure out how I‘m going to make it nine years until I‘m qualified to get my regular Social Security, now that I have a new tumor and have no way to treat it. 

OBAMA:  Well, come on over here.  I don‘t want you to feel like you are alone out there. 

(APPLAUSE)

(END VIDEO CLIP)

SCHULTZ:  She got a hug, but she doesn‘t have any coverage.  And now we know her story, and she represents millions of Americans out there who are in their 50s, who have had an event in their life, that have taken their savings, ruining their families.  These are real American stories. 

Is this who we are as a country, to say no public option? 

You know what gets me about the Republicans?  Is that they draw a line in the sand and they say no, no, no, no, no.  What‘s their knowledge base? 

I want to know how many Senate Republicans have gone on a field trip for health care to find out how other countries do it.  Now, we know they go to Iraq for fact-finding missions.  We know they go to Afghanistan, they do foreign relations type stuff. 

What about health care?  You know that I can go to LaGuardia airport, 20 minutes from here, and I can be in Toronto in one hour, arguably the best—the best health care system on the face of the earth in single payer. 

Has any Republican senators gone to Toronto to find out the real story about the long lines and people not being able to get the services they want when they need them?  Or are there a bunch of Debbies up there?  There must be a bunch of Debbies up there the way the Republicans talk about health care.  Heck, they‘ve got all the answers. 

Tonight, on this program, I am challenging any Republican senator to come with me, to come with the steel workers, to come with the Service Employees Union.  Let‘s go to Canada and let‘s go find out. 

It‘s only a one-hour flight.  We can get there before 8:00 in the morning, we‘ll spend all day there, and then we‘ll come home at night.  It‘s only one day of work.

Let‘s go up there and find out what the hell is really going on up there, because somehow, they‘ve figured it out and we haven‘t been able to figure it out.  But you know what?  We spend twice as much money on health care than they do. 

But the Republicans drew their line in the sand.  They had the guts to do it. 

Sixty votes.  It almost makes me puke the way the Democrats are just folding over on this. 

I speak for millions of Americans who have lost their jobs, who have lost their health care, and this COBRA thing is a fraud.  That‘s what COBRA is.  It‘s a fraud. 

You ever see the expenses of COBRA?  So we‘ll just let the—you know what we‘re going to do?  We‘re going to let the Bush agenda just continue on with 40 great Americans in the United States Senate. 

Let‘s go to Toronto.  Let‘s do a field trip.  Let‘s find out if anybody wants to go get the real story. 

Coming up, the “King of Pop” is outselling “The King.”  Michael Jackson‘s sales have now overtaken Elvis.  This story is changing by the minute. 

We‘ll have the very latest from Neverland, next. 

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.

A lot of questions surrounding Michael Jackson—his burial, his funeral, the will, how he died.  Things seem to be changing minute by minute with this story. 

For the very latest, we‘re joined by “Extra” correspondent Carlos Diaz. 

Carlos, you‘ve got some new information on Michael‘s final days.  This is very interesting. 

What do we know tonight? 

CARLOS DIAZ, CORRESPONDENT, “EXTRA”:  Yes, some interesting reports that we‘re getting, that AEG, AEG Live, the company which basically was putting on the 50 shows that Michael was going to do in London, had gone to Michael Jackson in the week before he passed away and complained that he wasn‘t going to rehearsals, and basically said to him, listen, we‘re paying $100,000 a month for this house for you to live in here in Los Angeles, we need you at these rehearsals.  And Michael had complained, according to our reports, of being in pain, and that‘s why he wasn‘t at the rehearsals.  And they said, get yourself to these rehearsals. 

He went to one, maybe two, and then he passed on.  So, it‘s kind of a situation which we‘re looking into right now.  But if that‘s the case, there‘s going to have to be some answers from AEG Live. 

SCHULTZ:  Carlos, is this an exaggeration, or was he begging for drugs from an attending nurse? 

DIAZ:  Well, and that‘s the thing.  I mean, that‘s the big question right now, what drugs, if any, was Michael Jackson on? 

We have heard a laundry list of prescription medications that he allegedly has been on.  Demerol is one of them. 

There is, as we said, a list of things that Michael is supposedly on.  And that‘s the big question—how did Michael Jackson get these prescription drugs.  What doctor prescribed these drugs?  And that‘s the same thing with the Anna Nicole Smith case.  The doctor will be held accountable for prescribing Michael Jackson these drugs. 

SCHULTZ:  And how much of a surprise was it that Diana Ross was mentioned in the will as a guardian to the children, if it came to that? 

DIAZ:  You know, that‘s probably the most surprising thing out of the will.  That‘s the biggest eyebrow raiser. 

Diana Ross?  If Katherine, his mom, can‘t take care of the kids, Diana Ross is listed second, not his dad, not Debbie Rowe, who specifically—not only is she not mentioned, she‘s—Joe Jackson was not mentioned in the will.  Debbie Rowe was mentioned in the will to not have any part of this future with the kids at all. 

So, Michael put in the will Debbie Rowe gets nothing, she‘s not part of this at all.  She was getting a payout of $75,000 a year from Michael, but that‘s the most unusual thing.  Diana Ross is the second in line if Katherine Jackson can‘t take care of the kids. 

SCHULTZ:  And we still don‘t know about a funeral?  That‘s all still up in the air?  There‘s no official announcement there?

DIAZ:  Well, we do know that it will not be at Neverland.  Basically, that was a plan for the time being, but logistically, it was impossible because it was going to turn into Woodstock.  All of a sudden, you have this little, tiny road leading into the Neverland Ranch, which logistically, that was impossible.  So, it‘s not going to happen at Neverland. 

We still do not know where Michael Jackson, where the memorial for Michael Jackson will be.  The word that we‘re getting right now is that he is at Forest Lawn Memorial Park right now. 

SCHULTZ:  “Extra” correspondent Carlos Diaz with us tonight.

Thanks so much, Carlos. 

DIAZ:  Thank you. 

SCHULTZ:  Next up on THE ED SHOW, “Psycho Talk.”  Why one Republican senator thinks we‘re on the verge of losing everything that we have as a country.  It can only be explained in “Psycho Talk.”  

Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  Oh, “Psycho Talk” tonight.  We‘ve got a serious one—

Senator Jim DeMint of South Carolina. 

What is going on in that state?  Not a whole lot, is there? 

The senator has a new book called “Saving Freedom: We Can Stop America‘s Slide Into Socialism.”  Now, that really says it all. 

The senator joined our colleagues on MSNBC this morning to talk about his new book. 

(BEGIN VIDEO CLIP)

SEN. JIM DEMINT ®, SOUTH CAROLINA:  I really think we‘re on the verge of losing everything we are as a country.  We‘ve forgotten how exceptional we are and we‘ve forgotten those things that made us so prosperous and good.  And we have seen this movie before, in Europe, in the early 20th century.  We have seen it in the Soviet Union and China. 

The whole point of “Saving Freedom” is to inform Americans and tell them, if they don‘t get involved, Congress and this administration is going to run the country in the ditch. 

(END VIDEO CLIP)

SCHULTZ:  Let me be clear, we all know who put this country in the ditch.  It was George Bush and his cronies like Jim DeMint who spent your money, let Wall Street run wild, and lied us into a war. 

You know, Senator, if the country is in such bad shape financially, you know, why don‘t you give up your health care benefits?  That‘s a federal expense.  Why don‘t you sacrifice a little bit? 

Senator DeMint, you helped drive this country right into the ditch.  And talking like that puts you right in the fast lane and right into “Psycho Talk.”  

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  Tonight, there are more calls for Governor Mark Sanford to resign in South Carolina.  Most of them are coming from his own party.  I have been tough on this guy, but for the right reasons.  Yet, some people are asking, why are we focusing on him? 

Let me tell you something, I‘m focused on the Mark Sanford story because in a democracy, my vote is sacred.  Your vote, as an American, is sacred.  When you run for election, you tell the public no one can do this job better than I can.  That‘s what Sanford told the folks in South Carolina back in 2002. 

(BEGIN VIDEO CLIP)

GOV. MARK SANFORD ®, SOUTH CAROLINA:  Jenny and I try our best to teach our four little boys Christian values, character and honesty.  You‘d like to think that those values apply to government too.  That starts with keeping your word. 

When I ran for Congress, I said I would support term limits, never take a dime from special interest, and not waste the taxpayers‘ money.  I kept those promises.  South Carolina needs a return to real honest leadership in the governor‘s office. 

(END VIDEO CLIP)

SCHULTZ:  You see that?  Governor, you begged people for their votes, spent millions of dollars asking them to vote for you.  You went to South Carolinian citizens and said give me your vote, because you can trust me in return.  Then you broke that trust.  South Carolinians aren‘t interested in your Latin love affairs.  They don‘t want to hear anymore sob stories.  They don‘t want it out in cyber space. 

They are not really too concerned with the personal growth that you can‘t stop talking about.  They are interested in having a governor who tells them the truth, all the time. 

When you lied, you knew you were lying.  You wanted to avoid the circumstances, but you knew there might be consequences. 

(BEGIN VIDEO CLIP)

SANFORD:  Did I want to pay the price?  Did I want the consequences?  No.  But I said this to her down there, I am fully aware of the price, fully aware of the cost.  I‘m—I‘m—I‘m willing to do that.

(END VIDEO CLIP)

SCHULTZ:  Governor, it‘s time.  It‘s time.  Stop talking about yourself.  Stop talking about your personal growth.  Stop talking about your tragic love affair. 

(BEGIN VIDEO CLIP)

SANFORD:  I will be able to die knowing—can we turn off the camera for one second?  Thanks.  That I met my soul mate.

(END VIDEO CLIP)

SCHULTZ:  Think about your wife.  You are publicly torturing and embarrassing your wife.  If—if—just think about what she is going through.  Then think about what the people voted for and what they thought they were voting for.  Many, you got to stand up and you got to step down. 

Joining me now is “Wall Street Journal” columnist Thomas Frank.  Mr.

Frank, good to have you on the program tonight. 

I understand that you recently wrote a piece about Mark Sanford before all of this broke out.  Tell us about that? 

THOMAS FRANK, “THE WALL STREET JOURNAL”:  It was about something completely different, of course.  It was about when he was—he wasn‘t accepting or he was threatening to not accept the stimulus money from the federal government. 

What struck me about it—so I went back and I read his book and I read up on the man‘s history.  He‘s an interesting guy.  What struck me about him, interesting—

SCHULTZ:  I‘m sorry, I‘m laughing on that one. 

(CROSS TALK)

SCHULTZ:  Mr. Frank, he‘s not only interesting, he‘s very complex. 

This is almost a walking talking movie right now.  But, your point. 

FRANK:  Look, to bring it up to date, with what we know the guy‘s been up to in Argentina, is that I think, in some ways, he and so many of the other, you know, Republican freshmen back from 1994 were romantics, in a way.  They really believed in their free market revolution.  He did these really—he conspicuously flaunted the hair shirt. 

You remember this?  He slept on the floor of his office in the House of Representatives?  He term limited himself out.  He was a great believer in self-denial.  But conspicuously so.  He wrote a book about his self-denial.  The man was a—this is what struck me about him, where so many of the other Republicans and so many politicians genuinely are such frauds, he struck me as a true believer. 

SCHULTZ:  Thomas, you think that Republicans might be just romantic, and the ‘94 crowd was the big part of it.  Does that explain Newt Gingrich or what? 

FRANK:  Newt is another interesting character.  You have these guys who really believe—who really believe in the Utopia that they thought they were ushering in.  Then you have others that are just pure opportunist, that were just in it to get their start in lobbying, or whatever it was, to get a tax break for some of their friends back home, some horrible thing like that. 

But that‘s always the way it is with the conservative movement that you are talking about.  You have this high idealism next to some of the lowest kinds of self-dealing.  They mesh together in this really miraculous way.  You know -- 

SCHULTZ:  My point on this is that I don‘t like kicking people when they are down.  But, he‘s kicking the taxpayers.  He lied to the taxpayers.  He knew what he was getting into.  He told the people of South Carolina vote for me because I‘ll do the best job.  The folks down there haven‘t gotten it. 

Now, you have conservatives who are stepping up down there.  Do you think he can survive this as governor? 

FRANK:  I have no idea.  I don‘t think I‘ve ever been to South Carolina.  I‘m from Kansas, for god‘s sake.  I‘ve never even been there.  I don‘t know anything about the state, really.  I‘m sorry to say, I‘m not that kind of political expert. 

SCHULTZ:  Mr. Frank, good to have you with us tonight.  Thanks so much. 

FRANK:  It‘s my pleasure. 

SCHULTZ:  You bet.  From the “Wall Street Journal,” Thomas Frank with us. 

Let‘s bring in our panel.  For more on all of this, “Grit TV‘s” host Laura Flanders, “Huffington Post” political reporter Sam Stein, and Republican strategist John Feehery. 

Now, one of the sound bites really caught my attention.  If I knew some Hollywood producers, I‘d probably try to voice this movie trailer, because this reads—one of his sound bites reads like a movie trailer. 

“This was a whole lot more than a simple affair.  It‘s a love story, a forbidden one, a tragic one, but a love story at the end of the day.”   Opening in theaters around the country, June, 2009. 

LAURA FLANDERS, “GRIT TV”:  Don‘t tempt fate.  I want the movie.  Stay away from Hollywood. 

SCHULTZ:  We‘re watching—you know what we‘re watching, Laura?  I think we are watching a midlife crisis in reality TV. 

FLANDERS:  Let‘s get serious, if this guy was a mom with kids and he went away, abandoned those kids for five days, the kids would be taken away from that mom, love story or no love story.  The state should be taken away from this governor, no question about it, romance or no romance.  That‘s not the story. 

It was his vows for the state that is where the problem is. 

SCHULTZ:  Sam Stein, as a journalist, when does this story stop? 

SAM STEIN, “THE HUFFINGTON POST”:  Hopefully never.  I love this.  It‘s very tragic, in a way, and personal, obviously.  I think the underlying point here is that all politicians, or many politicians have these personal demons.  It‘s not an ideological thing.

The problem with Sanford is that he wasn‘t doing a very good job.  He wasn‘t very popular in the state.  The unemployment level has risen.  So he‘s in this mea culpa, this come to Jesus moment right now. 

The fact of the matter is, if he was doing a good job, he might be able to hang on.  The fact that he‘s not means he‘s probably going to end up having to go. 

SCHULTZ:  John Feehery, you‘re a fair minded Republican strategist, if you were counseling, or should we say advising the governor of South Carolina, what‘s your call tonight? 

JOHN FEEHERY, REPUBLICAN STRATEGIST:  I‘d tell him to shut up.  You know, Ed, I think this a romantic strategy, but I think, in a sense, he‘s not the hero of this tragedy.  It‘s Jenny Sanford who is the hero of the tragedy. 

Ultimately, I‘d love to see her run for office.  I know her.  She‘s very sharp.  She‘s one of the smartest political wives I‘ve ever seen.  She really can run the show down there. 

Mark is—he thinks—you know, he‘s so self-involved, he thinks really that he‘s on this grand stage, some Shakespearean figure.  But really he‘s not the figure.  Jenny Sanford is the figure and she‘s the real hero of the story. 

SCHULTZ:  Laura, I don‘t get it.  The guy says he wants to save his marriage.  Then refers to his girlfriend as his soul mate.  He is just dissing his wife big time.

FLANDERS:  He referred to Maria as the woman down there.  She down there.  Let‘s not go there.  I did have one thought, watching your show today, I thought, quickly, what would it take to get Senator Lieberman to Argentina.  Could we just get him AWOL for a few days? 

SCHULTZ:  I wouldn‘t wish Mr. Sanford‘s problems on anybody.  But I guess I‘d probably do anything to get a public option or single payer.  I guess I hadn‘t thought about that. 

Sam, what is intriguing about the Republicans that are defending Mark Sanford?  What does it say about their family values stance at this point? 

STEIN:  I think we know at this point that the family values stance in the GOP is somewhat baseless.  I have talked to a couple strategist within the party about this very topic.  They have said, we need to move along from there.  We need to emphasize the economic matters.  Because it keeps blowing up in our face.  No one is going to respect it going forward.

So some people are trying to save face.  Don‘t expect the Republican party to make this the focal point of the 2010 platform. 

SCHULTZ:  John, has anybody learned any lessons from this? 

FEEHERY:  Well, if you live in a glass houses, it‘s better not to leave the stones on the ground.  I think that‘s one of the lessons.

The other lesson is, you know, be faithful to your vows.  That‘s really the big lesson.  I don‘t understand these guy who think they can get away with this stuff. 

SCHULTZ:  Panel, stay with us.  We‘re coming back with more tonight here on THE ED SHOW.

Up next, new details about Michael Jackson‘s will, including who will get custody of the children.  That‘s next on THE ED SHOW in my playbook.  Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  In my playbook tonight, Michael Jackson left a world of fans when he died.  He also left what I would call a mess, a legal mess that‘s going to go on for years. 

Here‘s what we know, this morning we got our first look at the legal, seven-year-old Jackson will.  Michael‘s mom gets the kids.  If she can‘t take care of them, then they go to Diana Ross. 

Michael‘s dad gets nothing.  Neither does his second wife, Debbie Rowe, mother to the two oldest kids.  I venture to bet there‘s going to be some real fighting over the money, as it‘s going to continue on for a long time. 

Let me bring in NBC chief legal correspondent Dan Abrams.  We expected this, didn‘t we? 

DAN ABRAMS, NBC CHIEF LEGAL CORRESPONDENT:  We expect a fight.  There were fights throughout Michael Jackson‘s life.  All his life, there were fights over money. 

So there‘s no question there is going to be fights over his will.  But just because he says that Katherine Jackson should be the one to get custody, doesn‘t mean she will.  You can‘t decide in a will decide who gets to take care of children. 

SCHULTZ:  No shocker his dad was left out? 

ABRAMS:  No, it‘s not a surprise.  It‘s long been known that he didn‘t have a great relationship with his dad. 

SCHULTZ:  Where is the big fight going to be?  Is it all about the money?  

ABRAMS:  Look, I don‘t know who is going to fight for custody of the kids.  Would the nanny fight for custody of the kids?  I don‘t know.  That‘s going to be question one.  Who is going to seek custody. 

Number two, there will definitely be fights over money.  There is just no question.  From the beginning, there‘s going to be fights from all the people he owes money to, are going to be fighting as to who gets paid first. 

SCHULTZ:  But Dan, a will is a will.  How can it be challenged? 

ABRAMS:  Well, first of all, the fact Michael Jackson has said that he wants his mom to get the kids is not binding, period.  You cannot automatically say who gets custody.  The standard is best interest of the child. 

But there‘s always ambiguity.  And there‘s questions about the circumstances surrounding the will.  Was it executed in a valid way.  Was there another will that came later?  Et cetera, et cetera.  There always can be questions.  Look, if it‘s a good will and it was done well, then it‘s going to be tough to challenge. 

SCHULTZ:  How good can a will be if you owe people half a billion dollars? 

ABRAMS:  Look, you can still—the interesting thing about Michael Jackson‘s assets are most of them are these sort of on-going assets.  Michael Jackson was constantly running out of money, and leveraging what money he was going to make. 

Now, if he‘s eventually able to pay back—his estate is able to pay back all the money he owed, then you don‘t have anyone spending all the money the way Michael Jackson did.  Then you just have an asset. 

SCHULTZ:  Are you surprised?  You covered the trial and you saw a lot of negativity surrounding Michael Jackson.  Are you surprised at the outpouring, worldwide, in support, in love for this guy? 

ABRAMS:  No.  During the trial, every day—I mean, when this guy is at his lowest point, there were throngs of these fans out there from around the world, coming to court every day to support Michael Jackson.  That‘s always been bizarre to me.  Even if you like his music, the guy, Michael Jackson the person, has always been a guy who I think would be tough to identify with. 

Yet people weeping around the world isn‘t surprising to me after seeing them at the trial. 

SCHULTZ:  Out-selling Elvis. 

ABRAMS:  Short term.  You know, we‘ll see.  It‘s the first month.  We‘ll see long term what happens.  Look, no one has questioned whether he was a great musician.  A lot of people have questioned whether he was a great guy. 

SCHULTZ:  Dan Abrams, good to have you with us.

ABRAMS:  Ed, good to see you.

SCHULTZ:  Thanks for coming in tonight. 

This could only come from the mouth of Republicans: people are afraid of having health care.  You heard that right.  In Arizona, Republicans are trying to protect people‘s rights to be uninsured.  I‘ve never heard of anything like this.  We‘ll take it up next right here on THE ED SHOW.  Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  Setting the record straight at a town hall meeting in northern Virginia today, if you have a health care plan and you like it, you can keep it.  Got it?  Well, the state legislature in Arizona does not see it that way.  There‘s no health care bill in the nation‘s capital, yet.  But that isn‘t stopping the folks down in Arizona.  Legislators in that state, are taking out—I guess you could call it a preemptive strike on a national health care plan.

They passed a bill to put a constitutional amendment on the 2010 ballot next year that would ban nationalizing health care in that state.  This is a preemptive strike.  Arizona State Representative Nancy Barto sponsored the measure.  She joins us now here on THE ED SHOW.

Ms. Barto, thank you for your time tonight.  What is the mission here?  If this passes, wouldn‘t this deprive a bunch of Arizonans from possibly getting some health care?  What is happening here? 

NANCY BARTO ®, ARIZONA STATE REPRESENTATIVE:  On the contrary, Ed.  What the Arizona Health Care Freedom act will do, if Arizonans pass it, which I believe they will, it will guarantee that they will have more options for health care, rather than have them limited to the government options. 

I know President Obama has guaranteed Americans that a government plan will be just one of many choices available.  But eventually, what‘s happened when the government starts competing, they drive out their competitors, because they will be making the rules. 

SCHULTZ:  Do you think folks in Arizona are going to pass this in 2010?  Do you think they are that adamant against a public option? 

BARTO:  Oh, you wouldn‘t believe the impact of this legislation already.  Yes, the feedback has been phenomenal.  I think people are excited that we are interested in health care reform, but we‘re not interested in what is being discussed seriously in Congress.  We want to protect ourselves against it. 

SCHULTZ:  Well, the discussion is to get everybody covered.  Now if the people of Arizona—I‘m sure there‘s millions there that don‘t have insurance—what are they going to do to get it if there‘s not a public option, if they can‘t afford it? 

BARTO:  Well, like I said, Ed, we are interested in many options.  When people have the freedom to choose their own health care, and the right, which this act will guarantee, to have that health care provided in the state, there will be options. 

SCHULTZ:  What‘s so dangerous about a public option?  What‘s so dangerous about offering up something that people don‘t have right now? 

BARTO:  Well, Americans are too smart to accept another huge government program, because they have seen what we have already had and how it doesn‘t work and how it does ration care.  They have seen what other nations have been going through with their 900,000 people on a waiting list in Britain, waiting for care; 25,000 Swedes waiting for heart surgery. 

SCHULTZ:  That‘s why I got to do a field trip.  I to go find out about all this stuff.  I‘m amazed that Arizonans think—you think this is going to pass, because if it does, that‘s a rarity, I think.  But did you pass this in the legislative session, or did you have to go out and get a bunch of signatures to get in on the ballot for 2010? 

BARTO:  We passed it in the House and Senate. 

SCHULTZ:  Nancy, good to have you with us tonight.  Thanks so much. 

BARTO:  Thank you. 

SCHULTZ:  There are other states talking about doing all this.  That‘s Wyoming and North Dakota.  Nancy Barto, Republicans in Congress have drawn a line in the sand.  They say no to public option.  Now, President Obama has 60 votes, or at least we think he does.  But he needs to be willing, I think, to get tough with the Democrats, twist arms in his own party. 

For more on that, how do you play tough?  Laura Flanders, Sam Stein, and John Feehery tonight.  What should the president do? 

FLANDERS:  You have been saying Barack Obama didn‘t draw a line.  I think he did draw a line in the sand when he said that health care is a human right.  There‘s a line.  If it‘s a human right, it‘s immoral to let private health insurers drive this debate. 

I think voters are wondering, when was it that Democrats bought the GOP line that lobbyists rule this roost, instead of we the voters.  You got more 70 percent of Americans wanting a public option.  Who rules?  Is it those voters or is it -- 

SCHULTZ:  Apparently, they don‘t live in Arizona.  According to our last guests, they don‘t live in Arizona.  John Feehery, do you think more states are going to start piling on with this, and maybe we‘re just misreading this whole thing? 

FEEHERY:  I think some might.  Look, the problem here is people do want health care reform.  There‘s no doubt about that.  People actually want more access to health care.  They want everyone to get covered.  What they don‘t want is they don‘t want to be forced into government run health care. 

That‘s a critical point that Nancy Barto brought up, which is a lot of people are very satisfied with their health care.  They are panicked that they going to lose their health care.  That‘s the big panic, and that they will be forced into a government run option. 

FLANDERS:  Americans are choosing—

FEEHERY:  The reason is they can out-compete the private plans.  A lot of people are very satisfied with their health insurance.  They do want greater regulation of health insurance.  The insurance industry understands that. 

SCHULTZ:  Sam, what is the best play for the White House right now, now that Senator Grassley and Senator Graham from South Carolina, they‘ve come out and said no to a public option.  What is the play now? 

STEIN:  Who knows what the play is?  What they are trying to do is really personalize the debate.  They are going up with videos of testimonies from people who have lacked insurance coverage.  They are going to these town hall settings.  They‘re really trying to get the grass roots organized. 

Let me say something about this Arizona Health Care Freedom Act.  I can‘t believe the word freedom is put into that act.  What are we talking about for all those millions who are uninsured in the state, for the 49 million people who are not insured nationally?  What kind of freedom of choice do they have when they can‘t get insurance coverage? 

There‘s a public plan that could get them insured.  I don‘t understand what‘s actually so horrible about that.  Why put freedom into that legislation title?  

FLANDERS:  Let‘s not talk about Arizona.  Let‘s talk about the national picture. 

STEIN:  I was talking about national. 

FLANDERS:  -- public option coming out of this last election, right now facing these Democrats.  And when people talk about government controlled, right now we have public insurance controlled health insurance. 

(CROSS TALK)

SCHULTZ:  What don‘t they get about the mandate of the last election?

FLANDERS:  Take them to Canada, Ed.  Take them to Canada.  They are being sold this big of goods. 

Let‘s talk about the money.  There‘s an elephant in the living room here, which is lobbying power by private health insurers.  Fifty million dollars spent in the first quarter this year on lobbying. 

SCHULTZ:  John Feehery, I think you‘re a fair minded conservative.  We have good discussions on this program.  And I‘m not trying to diss you here.  I want you to come to Toronto with me.  I don‘t want to lie about the—I want this so bad, I don‘t want to go up to Canada and see a health care system in Toronto and come back with the wrong story.  I want you to go with me.   

FEEHERY:  Ed, if you‘re paying, I‘m going. 

SCHULTZ:  I‘ll tell you what, I‘ll even buy dinner. 

FEEHERY:  Beautiful, I‘m there.  I love Toronto.

SCHULTZ:  All right, good.  I think a field trip is in order.  Sam Stein, you‘re from the “Huffington Post,” I want you to come on this field trip as well. 

STEIN:  I‘m coming. 

SCHULTZ:  We have to see these long lines and we have to get sound bites from all these people that aren‘t getting any kind of coverage.  And we got to find out how they are actually doing it in Canada.  Apparently, we can‘t get it done here in this country. 

FLANDERS:  I want to talk to people whose actual doctors get to decide their health care, rather than their health insurers.  Can I come too?

SCHULTZ:  Yes, you can.  The love is everywhere tonight.  That‘s THE ED SHOW.  We‘ll be back with more issues tomorrow, of course.  “HARDBALL” is next right here on MSNBC. 

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

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