updated 7/27/2009 8:13:02 AM ET 2009-07-27T12:13:02

Guests: Chuck Todd, Michael Eric Dyson, Jeff Bingaman, Sam Stein, Jennifer Rubin, Jeff

Santos, Chrystia Freeland, Rep. Earl Blumenauer

(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.  And it‘s also Friday.

An exceptional moment from President Obama.  He puts out the fire over his comments on the arrest of a Harvard black president. 

NBC‘s Chuck Todd and Georgetown professor Michael Eric Dyson coming up on the program to talk about it.

My sources on Capitol Hill are telling me that the public option in the Senate is in serious trouble.  Senator Jeff Bingaman in New Mexico is going to be joining me on that.  He‘s been very close behind closed doors with Max Baucus on the negotiations.  We‘ll get the final word on that going into the weekend. 

I bailed them out.  You bailed them out.  So I want to know how these big banks are managing to have billions in bonuses and executive salaries and employee salaries when the jobs just aren‘t coming back to the rest of the country.  The Financial Times‘ Chrystia Freeland joining us tonight on that. 

Plus, “Psycho Talk,” a great panel. 

And get out your cell phones.  I want to hear what you think about health care, the delay on Capitol Hill. 

But first, tonight‘s “OpEd.”

And, of course, the big story is the president of the United States and what‘s going on in Cambridge.  Well, you knew it was going to happen.  I mean, it‘s just been just over six months into President Obama‘s first term, and the big issue and discussion about race takes the focus of the American people. 

The controversial arrest of a black Harvard professor has been Obama‘s headline since Wednesday.  The president‘s personal comment at Wednesday‘s press conference has sparked a firestorm discussion in this country about race. 

Earlier today, the Cambridge Police Department demanded an apology for the president of the United States for saying that they had “acted stupidly” in arresting the professor. 

Late this afternoon, the president stepped into the press room to make what some see as a critical political clarification. 

(BEGIN VIDEO CLIP)

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  I want to make clear that in my choice of words, I think I unfortunately gave an impression that I was maligning the Cambridge Police Department or Sergeant Crowley specifically.  And I could have calibrated those words differently. 

I continue to believe, based on what I have heard, that there was an overreaction in pulling Professor Gates out of his home to the station.  I also continue to believe, based on what I heard, that Professor Gates probably overreacted as well. 

(END VIDEO CLIP)

SCHULTZ:  The president stopping short of an apology, but he did invite both the officer and the professor to the White House to have a cool one to settle things down, which is kind of the regular guy thing to do. 

Obama‘s talents I think really took over today with grace, style and humor.  The president disarmed his critics and defused the situation. 

(BEGIN VIDEO CLIP)

OBAMA:  My hope is, is that as a consequence of this event, this ends up being what‘s called a teachable moment, where all of us, instead of pumping up the volume, spend a little more time listening to each other and try to focus on how we can generally improve relations between police officers and minority communities.  And that instead of flinging accusations, we can all be a little more reflective in terms of what we can do to contribute to more unity. 

(END VIDEO CLIP)

SCHULTZ:  The president did suggest the media had overplayed the story but underscored the importance of the discussion about race in America. 

Joining me now is Georgetown University professor Michael Eric Dyson. 

Professor, great to have you with us again tonight. 

PROF. MICHAEL ERIC DYSON, GEORGETOWN UNIVERSITY:  Good to be here. 

SCHULTZ:  Did the president do the right thing today?  I mean, was this a no-brainer for him to come out after the Cambridge Police Department had demanded an apology?  They kind of raised it up a little bit.  But do you think the president made the right move today? 

DYSON:  I don‘t know if it was so much a no-brainer as a no-choicer.  The reality is that the president had to step into the fray once again to intervene in a more edifying fashion than he had before.  But I think that what‘s critical here is to understand that the issue not be lost, because what apparently has happened is that there is an equitable relationship between the police department on the one hand, and a private citizen on the other. 

The reality is, Brother Schultz, that in American society, racial profiling and police brutality have been egregious examples of the occupation of black and Latino communities by forces that don‘t necessarily feel sensitive to or understanding of those populations.  And while it is good to resolve this particular instance of this conflagration between police and the community, the reality is we don‘t have an equally competing force here. 

Police brutality has been vicious, racial profiling has undermined the stability of these communities.  And I hope that, as the president says, as we tamp down some of this debate, as we have more light than heat now, we‘ll be more analytical about it.  And I think the president can use his bully pulpit to say, look, that is a very serious issue, we have to address this issue as I did as an Illinois state senator, to deal with racial profiling, and now as president of the United States I don‘t want to run from race, I want to run right through the middle of it so we won‘t have to dismiss it, but embrace it so we can move toward the future. 

SCHULTZ:  Do you think that the president will back off on any kind of conversation in the future on race relations after going through a three-day firestorm that we‘ve been through?  What do you think? 

DYSON:  Yes.  I think that he‘s already been loath to embrace race for obvious reasons.  He doesn‘t want to be pigeonholed.  He doesn‘t want to be ghettoized.  But that‘s—there‘s a difference between not wanting to be pigeonholed and ghettoized and saying, look, as the supreme, if you will, political officer in American society, I have a responsibility to Americans to educate. 

Here‘s one of the things that we haven‘t talked much about with President Obama.  As an African-American, he has unique insight into the particularments and into the pains and possibilities of black life.  He has a responsibility to educate white Americans and others who don‘t understand that as well.  Not avoiding race. 

Avoiding race means he avoids some of the difficult issues that must be dealt with.  If he can teach us to do it with equanimity and poise, if he could teach us to do it with balance and insight, he would render up a tremendous service.  But he‘s got to get over the disinclination to embrace race and deal with it.  I think that‘s the real responsibility here. 

SCHULTZ:  You know, Professor, one of the things that‘s striking me is this criticism of the president right now that he should have left this alone because it‘s a local issue.  I want to remind our viewers tonight that when Rodney King was beaten up back in March of 1991, President Bush, Bush 41, came out and said he was sickened by the videotape. 

I think this is standard operating procedure.  I think the president has to come out and...

DYSON:  Of course. 

SCHULTZ:  ... directly answer the questions. 

But do you think we took a step forward in race relations this week, and could this be a first of many for President Obama? 

DYSON:  No question.  I think we have the great opportunity to learn something here. 

And by the way, Martin Luther King Jr. was constantly told, you‘re butting your nose into our business.  Get out of it.  But without his butting his nose into the business of Birmingham, Birmingham would have never ultimately been changed, because it became a symbol of not only race hatred, it ultimately became a symbol of race transformation. 

SCHULTZ:  No doubt.

DYSON:  Obama has the same opportunity here to use this, as he said, a teachable moment, so that America understands this is an egregious past that we have to confront, but we‘ll do so together.  And if white and black and red and brown can come together to focus our energies on overcoming the racial malaise that persists, then this will have been a great moment.  Professor Gates, Sergeant Crowley, and President Obama will have been critical role players in the determination that we will, from this moment on, have a better nation than we had in the past. 

SCHULTZ:  Professor Dyson, always enjoy the conversation.  We‘ll see you again.  Thanks so much. 

DYSON:  Thank you, sir.

SCHULTZ:  Joining me now is NBC Political Director and Chief White House Correspondent Chuck Todd. 

Chuck, this was supposed to be a health care week. 

CHUCK TODD, NBC NEWS POLITICAL DIRECTOR:  Yes. 

SCHULTZ:  How is the White House feeling about the president‘s performance this afternoon?  He was a surprise.  He‘s done this before, but do they feel like they got a victory at the end of the week? 

TODD:  Well, you know, victory, I wouldn‘t use that word.  I think they feel like they‘ve gone a long way to putting a period on this story. 

The president himself talked about how this seemed to disrupt health care.  And he said he‘d be right back on it next week.  And so I think they knew they had to—look, this is what he can do really well, is fix a problem politically. 

We saw it during the campaign.  We‘ve seen it once or a couple of other times during early in his presidency, is that, you know, when in doubt, he throws himself out there. 

Look, this was going to be a brutal press briefing with Gibbs because it was coming about an hour and a half after that police union press conference in Boston which directly called out the president.  And, you know, I saw at one moment, all three cable news channels say, press briefing with Robert Gibbs coming up soon, coming up soon. 

So, this was going to be televised and it was going to be brutal.  And so they did the right thing by getting the president out there to basically save another bad news day. 

SCHULTZ:  So, had the request for an apology not been made, you think maybe the president would not have done this today? 

TODD:  You know, I don‘t think it would have happened.  I think had that police union press conference gone differently, or maybe this looked like it was going to start fizzling out, I don‘t know if we would have seen the president today. 

SCHULTZ:  And finally, my sources on Capitol Hill—going to health care now, Chuck—are telling me that in the Senate, the public option is in serious trouble. 

Are you hearing that? 

TODD:  I‘ve heard the same thing.  You know, in the Finance Committee, Kent Conrad, who‘s the guy that sort of created the idea for the co-op, what I would advise you, Ed, is get to know what this co-op is going to do. 

I‘ve talked to some who are big advocates of the public insurance option who believe they can do things within the framework of this co-op that will make folks who are supporters of the public—overall big public option feel better about this.  But the fact of the matter is, you‘re not going to get Grassley.  You might not get Ben Nelson.  You might not get Kent Conrad for anything that‘s called a public insurance option. 

And the “co-op” may be just better language to use and easier to sell in some of these places.  So, as somebody said, it can walk like a duck, it can quack like a duck.  You just can‘t call it a duck.  And so, “co-op” may be the language of choice here.

SCHULTZ:  NBC‘s Chuck Todd with us tonight from the White House.

Chuck, thanks so much.

TODD:  You got it, Ed.

SCHULTZ:  And more on that co-op situation that Chuck was talking about.  I‘m told by a number of folks on Capitol Hill that one of the things this co-op is going to do, it‘s going to put an infusion of money to help states set this up, and it could end up being like the third or fourth biggest insurance provider in the country if it works out that way.

We‘ll have more on it obviously next week, as this is a developing story.

Paging Harry Reid‘s spine.  Where is that spine?  I want to know what the heck is going on.  I mean, why is it that the deadline did not happen, and why isn‘t the president getting what he wants?

It seems to me that Jeff Bingaman‘s going to have something to say when we come back, right here on THE ED SHOW on MSNBC.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.

I really want to know what you think about this whole thing with the delay on Capitol Hill to kill the public option.  That is the question tonight: Do you think this delay in the Senate on Capitol Hill is going to kill the public option?  Text “A” for yes and “B” for no to the number on your screen, 622639.

Now, I spoke with New Mexico Senator Jeff Bingaman earlier today, and he is, of course, the Senator who is on the Senate Finance Committee.  We talked about a number of different things, and I asked him about the public option.

(BEGIN VIDEOTAPE)

SCHULTZ:  Senator, can you tell the American people tonight that there will be a public option coming out of the Senate Finance Committee?

SEN. JEFF BINGAMAN (D), NEW MEXICO:  I can‘t tell you with any great confidence exactly what we‘re going to come up with in the Senate Finance Committee.  We‘re—as you mentioned, there are six of us, three Democrats, three Republicans, who are trying to put together something that can be proposed to the rest of the members of the committee for their consideration.  And no decision has been made on public option or no public option at this point. 

SCHULTZ:  Senator, the president has made it very clear that‘s what he wants.  And many Democrats across the country think that he went to Washington with a mandate, winning nine Bush states and bringing out a new generation of Democrats, and their focus was health care. 

Do you think that you would be letting the president down as a Democrat, one of the three on the committee, if the Finance Committee does not offer a public option? 

BINGAMAN:  Well, I think that—I serve also on the Health and Education Committee here in the Senate.  And we reported a bill two weeks ago that does contain a public option, which I strongly supported.  And I think that‘s got to be part of the debate that we go through here. 

And I hope in the final analysis we wind up enacting a public option.  But I think the process we‘re engaged in right now is to get a bill that can get the support necessary to be reported out of the Finance Committee.  And, of course, then out of the full Senate. 

And there‘s a lot of aspects to health care reform which the president has committed to that clearly we have a consensus on.  And I think we need to be sure to do those and do as much else as we can. 

SCHULTZ:  Senator, is it all about the money?  Is that the biggest concern inside the committee right now as we get down to the 11th hour of these bipartisan negotiations on how to pay for it?  Is that it?  Is that the stumbling block? 

BINGAMAN:  Well, that‘s a significant issue.  And I hope it doesn‘t become a stumbling block. 

Clearly, we want to make some reforms that are going to require additional funds, but we are looking for ways to pay for that.  The president‘s committed that anything we do has to be fully paid for, and that‘s the commitment of the congressional leadership as well.  So, whatever we do by way of health care reform will be paid for. 

Now, that‘s in stark contrast to what was done a few years ago with the expansion of the prescription drug benefit for Medicare.  Under the previous administration, that was proposed and adopted.  There was no effort to pay for that.  That was just an additional cost that was loaded on to Medicare.  Here, we‘re going to pay for this health care reform. 

SCHULTZ:  Senator, there are some Democrats who are complaining that they haven‘t been fully briefed on what this committee is doing, and one of them is Senator Jay Rockefeller from West Virginia who was a big part of this whole process, as well with another committee. 

Is this a point of contention behind closed doors with Democrats? 

BINGAMAN:  Yes, there‘s no question that we have Democrats who are anxious to get more detail about what‘s being discussed...

SCHULTZ:  Are you conceding too much?  I mean, there are some who are saying that the Democrats on this Finance Committee, the coalition of the willing, are conceding too much to the Republicans to get a bipartisan agreement. 

BINGAMAN:  Well, we‘re trying to get something to propose to the committee, and the committee will ultimately decide what the majority of folks want to send to the full Senate for consideration.  Then the full Senate will decide what can be enacted. 

So, we‘re trying to find, where is some common ground?  What can we propose to the committee as a bill to work from? 

SCHULTZ:  Does the co-op plan still have life in your committee? 

BINGAMAN:  It‘s certainly one of the things that‘s being discussed.  This is a proposal Senator Conrad has made, and there are various variations on that idea.  But it is a way to have a non-private insurance company option available to people. 

SCHULTZ:  Senator, do you see us doing health care in this country, getting everybody covered, getting what the president wants, and not raising taxes?  Because this, of course, is what your opponents are saying there‘s no way it can get done unless everybody gets taxed. 

How are we, in your opinion, going to pay for this? 

BINGAMAN:  Well, the proposals we‘re talking about in the Finance Committee now are not putting a tax on average Americans, and...

SCHULTZ:  How about the top two percent? 

BINGAMAN:  Well, we‘re not proposing to do that either. 

SCHULTZ:  Well, then how‘s it going to get paid for? 

BINGAMAN:  Well, we‘ve got a variety of mechanisms we‘re looking at.  We don‘t have the final list yet, but we‘re looking at ways to incentivize people to buy health care in a more prudent way, and to get the health care they need, and to expand coverage at the same time.  And then the cost curve, which I think is the president‘s priority. 

SCHULTZ:  Senator, why does the Finance Committee need more time after there has been so much pre-work to this and buildup to this?  And why weren‘t you—your committee able to meet the August deadline?  Which, of course, Harry Reid says it‘s not going to happen, and of course that is what the president wanted. 

What‘s the holdup?  Why do you need more time? 

BINGAMAN:  Well, the holdup is that this is a very complex, difficult piece of legislation, extensive piece of legislation.  It does involve about a sixth of the U.S. economy.  And there are members on our committee, and particularly in our group of six, who are anxious to understand the detail of what they‘re getting ready to propose. 

SCHULTZ:  But are you concerned that the opponents to any kind of reform—and they are out there, and the advocacy money is at an all-time high, the lobbying effort has been at an all-time high on this issue.  Are you concerned the longer this goes on, the less likelihood the Democrats, the majority party will have to get something done when it comes to reforming health care in this country? 

BINGAMAN:  No, I think that‘s obviously got to be a concern.  But the other concern on the other side is, if you come out with something that‘s half-baked and that can‘t be adequately defended and supported, then, of course, you‘re that much more subject to attack. 

So, we want to get something that people can stand behind and defend and put forward and urge their colleagues to support.  And we‘re hoping that we have some Republicans who are willing to support that as well, outside of our six. 

SCHULTZ:  Well, there are 60 senators in the Senate that do caucus together.  They‘re called Democrats.  There‘s a couple of Independents. 

How much of it is a personal disappointment to you that all the Democrats can‘t get together and this bipartisan thing has to take place? 

BINGAMAN:  Well, I think the reality here in the Senate on virtually every issue is, we need at this time in our country‘s history, with 60 Democrats -- 58 Democrats, two Independents, and 40 Republicans—we need to have some bipartisan support to do very major legislation.  And this is very major legislation.  So we‘re trying to find that bipartisan support, and that‘s the whole exercise we‘re engaged in. 

(END VIDEOTAPE)

SCHULTZ:  Folks, the landscape just got a lot tougher to navigate through.  For the Senate not to be able to meet this deadline, sets up, I think, a real tough play for the Democrats.  The righties couldn‘t be happier about this whole thing. 

Listen to Senator Jim Inhofe from Oklahoma in a recent radio interview. 

(BEGIN AUDIO CLIP)

SEN. JAMES INHOFE ®, OKLAHOMA:  I just hope the president keeps talking about it.  He‘s trying to rush it through.  We can stall it.  And that‘s going to be a huge gain for those of us who want to turn this thing over in the 2010 election. 

(END AUDIO CLIP)

SCHULTZ:  Oh, yes.  It‘s all about the 2010 election, isn‘t it?  Let‘s just stall, make Obama a failure on this deal. 

It doesn‘t stop there.  Republican governors are now getting into the act. 

Minnesota Governor Tim Pawlenty, who has definite aspirations for 2012, nailed Obama on Fox News. 

(BEGIN VIDEO CLIP)

GOV. TIM PAWLENTY ®, MINNESOTA:  This whole health care proposal by President Obama is really quite a joke on a number of levels.  I think he‘s scamming the American people. 

And just on this payment issue alone, even if you believe that he‘s only going to tax people over $1 million, which I don‘t think is true, what‘s going to happen that he‘s proposing is that‘s only going to cover about a third or 25 percent of the total cost of the package.  The rest of it is going to be paid for “by saving waste, fraud, and abuse.”  And if you believe that, then I‘ve got some January tee times for you in northern Minnesota. 

(END VIDEO CLIP)

SCHULTZ:  I‘ll take that tee time, Governor Pawlenty, if you can guarantee me that you‘ve been right in on all of these negotiations. 

Get ready for the onslaught of television commercials, folks, trying to defeat Obama and the health care reform effort.  Now, they have the money to burn and now they have the time to burn it because of this delay.  What a travesty. 

Harry Reid letting the Senate go with no deal?  They ought to be working through August.  Advocacy money is going to start pouring into every market where they want to target Democrats to make them look weak with no leadership. 

The right wing sound machine, they‘re not going to take a day off on the Dems.  Not at all.  This is about winning the hearts and minds of the people over the next 60 days. 

I don‘t want to say I‘m losing confidence.  I‘m just saying, I think we could be in the 11th hour a lot sooner than we thought we were. 

All right.  We‘re going to take up what you just heard with a terrific panel coming up later on in the show. 

But first, “Psycho Talk.”  I want to know if the Republicans can—do they get a nickel for every time they say “government takeover of health care” or “Lewin Group,” or “between you and your doctor”? 

The worst talking point offenders next on THE ED SHOW. 

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Oh, yes.  My favorite, a Friday night “Psycho Talk.” 

We‘ve got a collection for you tonight, folks.  It‘s the Republican sound machine, plural. 

Republicans have been out there with their right wing talking points so often, we had to put them all on “Psycho Talk” tonight. 

Now, we‘ve told you about The Lewin Group.  This is the one consulting firm that the Republicans, they just love to quote this outfit.  It‘s also owned by the insurance giant UnitedHealthcare.  Very convenient there. 

We‘ve also told you about the GOP hacks—Frank Luntz and Alex Castellanos.  Now, they wrote the poll-tested Republican playbook on health care.  We wanted to put this together so you can see what they‘re really up there.  Watch for yourself. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  The cost of doing what is currently on the table is to have a government takeover of health care. 

The Lewin Group did a study—

REP. JOHN BOEHNER ®, MINORITY LEADER:  A government-run plan.  Lewin and Associates, a consulting firm, health care experts—

UNIDENTIFIED MALE:  A study by the respected Lewin Group. 

UNIDENTIFIED MALE:  Government health care—

UNIDENTIFIED FEMALE:  The government control—

UNIDENTIFIED MALE:  The Democrats want a top-down, bureaucracy-driven, punishment-driven, command people around, mandate coverage. 

UNIDENTIFIED MALE:  The government has taken over. 

NEWT GINGRICH, FMR. HOUSE SPEAKER:  The Lewin Associates, a respected technical firm—

UNIDENTIFIED MALE:  According to the Lewin Think Tank—

UNIDENTIFIED MALE:  According to the Lewin Group.

UNIDENTIFIED MALE:  Government takeover. 

UNIDENTIFIED MALE:  One study from the Lewin Group—

UNIDENTIFIED FEMALE:  What the president wants to do is put the federal government in charge of our lives. 

the government control of our lives.  We do not have 47 million

Americans who don‘t have health care.  There are no Americans who don‘t have health care.  Everybody in this country has access to health care. 

(END VIDEO CLIP)

SCHULTZ:  Everyone in this country has access to health care?  If you‘ve got the greenbacks.  did the Lewin Group come up with that one?  The Lewin Group; oh, yes, government‘s health care, so bad.  It‘s on-going.  It‘s repetitive.  It is unoriginal.  And it is Psycho Talk.

(INAUDIBLE)

SCHULTZ:  -- discussion about routine police arrests.  Does this mean American citizens can‘t lip off to cops without getting arrested?  Stay with us.  That‘s coming up.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  It has been a rough week for the president.  Well, it ended I think with a very strong performance today.  This afternoon, President Obama made a surprise appearance in the press room to clarify his comments about the controversial arrest of the Harvard Professor Henry Gates. 

He used his, I think, trademark calm demeanor to bring perspective and insight to the emotionally charged situation. 

(BEGIN VIDEO CLIP)

OBAMA:  My sense is you got two good people in a circumstance in which neither of them were able to resolve the incident in the way it should have been resolved, and the way they would have liked it to be resolved. 

The fact that it has garnered so much attention I think is a testimony to the fact that these are issues that are still very sensitive here in America. 

(END VIDEO CLIP)

SCHULTZ:  OK, big discussion on this tonight on THE ED SHOW.  For more, let‘s bring in MSNBC anchor Carlos Watson with us tonight.  President make the right call today.  Or was he forced to do it because he was called out by the police department that was involved in this? 

CARLOS WATSON, MSNBC ANCHOR:  A little bit of body.  In the end, I think he did the right thing.  When I say the right thing, I was one of the few guys who said all along that I was glad the president addressed it at the press conference.  I thought he was right in saying that ultimately, even if you don‘t believe race was involved—and I suspect that it was, but no one knows for sure.  Some involved, not the only factor—that the police department, not the way you resolve something with a 58-year-old guy once you‘re in his house and you knows it. 

For President Obama, I think he had to walk it back because the word stupidly had more power than even I initially appreciated. 

SCHULTZ:  Can we put up that picture that we just had on the screen because there were black officers on the scene. 

WATSON:  Yes. 

SCHULTZ:  And I don‘t think we‘ve really touched on this too much.  Why wouldn‘t that black officer turn to his fellow white officer and say, back off, will you.  The guy‘s 60 some odd years old.  He‘s got a cane.  He‘s not a threat.  He‘s in his house.  I find that interesting. 

WATSON:  I did too, when I saw it originally.  Any one of a couple of reasons, right.  First of all, we don‘t know whether that guy‘s new on the force.  Right?

SCHULTZ:  Afraid of the boss? 

WATSON:  Yes, happens all the time.  Right?  We see it.  We see it here.  We see it in all sorts of situations.  That‘s one.  The other one, though, by the way, is, let‘s be honest.  Lots of people could do wrong, whether you‘re white, black, Latino, Asian.  It‘s not limited to just one particular race. 

So, for all we know, that guy could have made the same bad decision.  In the end, that‘s the part I‘m confident on, that this was a bad resolution.  You can do better. 

SCHULTZ:  Carlos, you know this.  Everything in Washington, not just some things, everything is political.  You got the conservatives over there, the Republicans over there saying, well, gosh; Obama doesn‘t support law enforcement.  You know?  He‘s weak on all this.  Obviously trying to pit him against authority. 

Did he end that today by doing what he did? 

WATSON:  We won‘t know until Sunday.  And I say we won‘t know until Sunday because we‘ve got to see what happens on the Sunday talk shows.  That could ignite it again.  We‘ll see where that goes. 

I will say this, though.  That is about as dangerous a charge as Democrats can end up facing, is hearing that they‘re weak on law enforcement.  There was a time, and I don‘t have to remind you, that for 20, 30, 40 years, there were a couple of Democratic Achilles Heels.  One was that they were weak on law enforcement.  Another was that when it came to national security, they were weak as well. 

SCHULTZ:  All right, Carlos, stay with us.  Let‘s bring in our panel tonight, Sam Stein, political reporter for the “Huffington Post,” Jeff Santos, radio talk show host from WWZN in Boston joins us tonight.  Also, Jennifer Rubin, Washington, DC editor for the “Pajamas Media.” 

Let‘s go to you, Jeff, to start things out tonight.  Your right there in the backyard of all of this activity.  How is the community responding tonight, if we can, to what is happening now that the president has come out and made a statement late this afternoon?  What about that, Jeff? 

JEFF SANTOS, RADIO TALK SHOW HOST:  I think people are going to be, like President Obama, defuse the situation.  That‘s what should have happened in the beginning.  Both Mr.—the professor, as well as Mr.  Crowley, should have taken the situation, looked at it, defused the situation.  As the “Boston Globe” editorial page said, basically just walk away. 

If you do that, you don‘t have the words.  You don‘t have the confrontation.  You don‘t have the arrest.  I think, look, Crowley‘s not a racist.  The professor‘s not a bad guy, Professor Gates.  This is a situation where people just overreacted.  And the emotions and then the partisans took over and it ran from there. 

WATSON:  With all due respect to Ed—with all due respect to Jeff, I just need to make sure that he‘s not saying that those two individuals were in equivalent positions. 

SANTOS:  No, you‘re right, Carlos.  The officer is in charge.  He had the power.  He‘s the one that should have basically defused the situation. 

I‘ll take you back to the movie “The Colors,” back in 1984, with Sean Penn and Robert Duvall.  It was Duvall, the older cop, who basically said to the younger guy, I‘ll take care of this; I‘ll handle it; I‘ll talk to the gang leaders.  It was Sean Penn, the young guys, who want to go forward. 

You need that kind of leadership.  That‘s what had to happen that didn‘t happen, and it escalated from there. 

SCHULTZ:  Jennifer Rubin, tell us tonight, what‘s the next play for the president?  Is it over?  Does he touch this any more?  Do we just move on to the next page?  What do you think? 

JENNIFER RUBIN, “PAJAMAS MEDIA”:  Well, we‘re talking about it.  I suspect we‘re going to be talking about it tonight and Saturday and Sunday on the talk shows.  And it‘s yet to be determined whether this is completely behind him. 

I think they very much regret having wasted several days on a bad story for them.  And I think they regret having a loss of momentum on health care.  It wasn‘t a good press conference to begin with.  And this just made it worse.  So I think we‘re going to try to put it behind them.  Whether they will or not, we‘re going to have to find out next week. 

SCHULTZ:  You better not say it wasn‘t good press conference on liberal talk radio, because they‘ll tear you apart. 

(CROSS TALK)

SCHULTZ:  There‘s a lot of people out there who are really defending the president for his press conference the other night.  I know, I got a lot of it the last couple of days.  Sam Stein, the way the president handled this today, that‘s President Obama.  This is the third time he has walked into the press room and said, I want to talk about something. 

SAM STEIN, “HUFFINGTON POST”:  This is quintessential Obama.  I mean, he takes an issue.  He addresses it head-on.  He says, let‘s all get together.  Let‘s come to solution.  Then let‘s get it off the front page. 

The one thing I took away from this was his disdain for the media.  He did not want to talk about this.  He couldn‘t believe the media had elevated this.  He wanted it off the front page.  He wants health care to be the sole objective.  Hopefully for him he‘s going to get rid of it.  I think Sunday you could see it reemerge right again. 

SCHULTZ:  I‘m not dissing the president here.  I‘m a big fan.  But I think that because of his life experience, for maybe just a couple of seconds at the podium, at the press conference the other night, he might have forgot, you know, I‘m a regular guy too. 

(CROSS TALK)  

WATSON:  You‘re saying he really felt it. 

SCHULTZ:  For maybe a second, he wasn‘t the president.  You know what I‘m saying? 

WATSON:  Which, by the way, is not the worst thing. 

SCHULTZ:  No, it‘s not. 

WATSON:  No moment in Ronald Reagan‘s career was more powerful than that debate, that sole debate in the primaries, where he said, “I paid for this microphone.”  Right?  Where he felt it.  Sometimes those moments are right. 

I will say this; I think, Ed,  where a lot of this starts is it never should have been a press conference.  It should have been a speech the other night.  It should have been an LBJ-like speech about the issue of our time. 

SCHULTZ:  In fairness to the media, though, this was a big story for a number of days before it got to the presidential press conference.  If he had had the press conference maybe next week—you know, timing‘s everything in our business.  Fellows, stay with us.  Great panel tonight. 

Coming up, I thought these banks were on the brink of disaster.  Now we‘re hearing they got 74 billion dollars sitting around to hand out to pay bonuses and extra salaries.  You know, I want to know what they‘re going to do to get back in the black, as we‘re leaving American workers without jobs.  That‘s next on THE ED SHOW.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  In my playbook tonight, this is a fairness story, workers versus Wall Street, so to speak.  I want to talk about the record bonuses that we‘re seeing on Wall Street.  These things are projected to be larger than ever. 

Taxpayers rescued these banks.  We bailed them out.  Tens of millions of people are unemployed.  And they‘re setting aside billions of dollars more to pay themselves huge bonuses?  What‘s going on here? 

The “Washington Post” reports the top six banks have set aside 74 billion dollars to pay their employees.  Last year at this point, they only had 60 billion dollars set aside.  Goldman Sachs set aside 6.6 billion for compensation in the last quarter.  That, my friends, is a record. 

If that pace continues, the average Goldman employee will make 733,000 dollars a year. 

Joining me now is Chrystia Freeland from the “Financial Times.”  Chrystia, is this the fine print that we kind of missed as tax payers?  How could the Treasury Department sell this to the American people without telling us this is the way it was going to be? 

CHRYSTIA FREELAND, “THE FINANCIAL TIMES”:  Well, I think, in a way, particularly with Goldman, what we‘re seeing is greater success, actually a quicker recovery on Wall Street, than the Treasury and, frankly, than the banks themselves had expected. 

And part of this actually—you may not agree with me here, Ed—is a good news story.  It‘s better for Goldman to be making money than for Goldman to be losing money.  It‘s better for American taxpayers that Goldman is able to repay the Tarp funds and to buy back the warrants, which it did this week, than to continue to be on the government dole. 

Where I think there are legitimate public policy issues are around the incentive structure of bankers‘ pay, and also around the continued implicit guarantee which is allowing all the banks, including Goldman, to continue to operate.  Maybe they should be paying the government a little bit more money for that guarantee. 

SCHULTZ:  All right, now I think the public—I‘m just guessing here.  At least this is the way I take it.  They see this money going to Wall Street.  You know, we‘re on the verge of financial collision.  In the midst of all this conversation and run-up in rhetoric about how serious this is, we just happen to have a line item budget that we‘re going to set aside, you know, billions of dollars for, let‘s see, bonuses.  Let‘s see, better salaries than we had a year ago. 

I mean, this really is almost, in my opinion, finagling the numbers big-time, cooking the books against the American people.  I mean, I‘m all for the recovery.  I‘m all for profit.  But it looks to me that the timing of this and the budgeting of it is very suspect. 

FREELAND:  Well, I would actually disagree there.  And I do think that it‘s important to make a clear distinction between banks which are continuing to receive government money, banks in which the government is a significant shareholder at the moment, like Citigroup, like Bank of America, and banks like Goldman Sachs and JP Morgan, which are now private companies.  They paid back the government money. 

So I do think there‘s a significant difference there and I think it‘s

the taxpayer has much more jurisdiction to say to the banks that are owned by the American people, look, we are your major shareholder, and this is the way we think you ought to operate. 

But coming back to the government guarantee point, I do think there is an issue there.  And the important thing that happened in terms of the markets last year was the markets understood that the big banks would not be allowed to fail. 

SCHULTZ:  And the managers of the financial houses knew exactly how

much money was coming, and what they could do with it.  I mean, that‘s just

maybe I‘m being too cynical. 

FREELAND:  No, no, you‘re not.  But that insurance policy is worth a lot of money in the market. 

SCHULTZ:  In the long haul. 

FREELAND:  To put it crudely, it‘s similar to what we have as depositors in our commercial banks from the FDIC.  And commercial banks pay the FDIC money for that insurance, which gives us security.  I think that there‘s a legitimate argument to be made that the Wall Street firms should be paying the government for this implicit guarantee.  And they‘re not right now. 

SCHULTZ:  OK, but you would agree that this is not what was sold to the American people.  And the Senate was pretty coy about all of this, the Senate Finance Committee.  I mean, because if you had said bonus in the same sentence as financial collapse, it just doesn‘t fit. 

FREELAND:  Well, again there, I don‘t think that it‘s bad news that some of the banks are recovering.  It‘s good news, right?  I mean—

SCHULTZ:  It is. 

FREELAND:  Would you prefer that some of these banks continue to need more taxpayer money?  Absolutely not. 

SCHULTZ:  It is but did they need all of that money?  Did they need all of that money.  You‘re the nicest person I‘ve ever had a disagreement with. 

FREELAND:  Well, no.  But the banks like Goldman and JP Morgan actually didn‘t want the money.  They took the money because they wanted the systemic guarantee.  I think what is fair to say, Ed, is did the government drive the hardest bargain it could?  The answer is no.  With Goldman in particular, there‘s a comparable case, and that is Warren Buffett.  Warren Buffett also lent Goldman some money last fall, and Warren Buffett got a much better deal than Uncle Sam did. 

So you‘re right on that. 

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

FREELAND:  Pleasure. 

SCHULTZ:  The Republicans aren‘t offering solutions.  They‘re just complaining about everything the Democrats are trying to do.  Oregon Democratic Congressman Earl Blumenauer joins us next on THE ED SHOW.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  Late word this afternoon, House Majority Leader Steny Hoyer says that the House probably won‘t meet the deadline and will have to work into August.  Joining me now is Congressman Earl Blumenauer of Oregon.  Congressman, what do you make of that news, that these deadlines are going to be backing things up? 

REP. EARL BLUMENAUER (D), OREGON:  Well, it‘s disturbing on one level, because it‘s clear that our Republican opponents here will just do anything to try and put sand in the gears, to try and inflict a Waterloo, as they say, on President Obama.  And they are certainly not committed to health care reform. 

SCHULTZ:  And will these delays really give the right wing an opportunity to nail what the president really wants to accomplish, along with the Democrats in the House and the Senate?  I mean, we really now have got a word game going on here for the next 60 days. 

BLUMENAUER:  No question about it.  It gives them more time to spread deliberate falsehoods.  I just had a very personal example of a bipartisan piece of health care reform that I worked to put in this bill, that had Republican support on our Ways and Means Committee.  And the Republicans are suggesting that somehow this is a fast track to Euthanasia.  It‘s really disturbing. 

SCHULTZ:  Congressman, good to have you with us tonight.  I appreciate your time and thanks for your work on this. 

Joining us back on our panel, tonight, Sam Stein.  Also with us is

Jeff Santos from Boston.  And Jennifer Rubin joining us from Washington

tonight.  Sam, you know, to have more time also gives the grassroots that

Obama was so effective using in the campaign a chance to go back and really

re-sell this thing and gain momentum.  It works both ways.  What do you

think? 

STEIN:  I totally agree.  I talked to a bunch of those people from the grassroots yesterday for an article.  They said,  we‘re going to gear up.  We‘re going to double down.  More grassroots events, more town halls. 

Also, I have to say, it sounds like spin, but it‘s actually truth.  There was a faction within the White House that wasn‘t displeased by the fact that they missed the deadline.  Their rationale is legislation is going be out there on the August recess.  All it‘s going to do is be attacked by the Republicans.  This way we don‘t have that vigor of attack.  We can get when it we come back in the fall. 

SCHULTZ:  Jennifer, with these attacks, that means the president is going to have to get visible with the American people.  We all know he can do that, but how critical is it? 

RUBIN:  He‘s actually not doing it.  He‘s largely been unsuccessful.  In fact, if you look at poll numbers, whether it‘s Gallup or whether it‘s a lot of others, he‘s now upside down in Americans‘ confidence in him to handle health care.  I‘m not sure he is the best salesman. 

I have to laugh when you say Republicans are throwing sand in the gears.  Republicans are in the minority.  It‘s the Democrats who can‘t get this out of the House or the rest of the Congress—

SCHULTZ:  Wait a minute now.  The phraseology that is being used by Senator DeMint and some others over there about killing the legislation, the stall game—we play that sound bite earlier tonight.  Jeff, your thoughts on that?  Do the Republicans have the upper hand? 

SANTOS:  Yes, this is ridiculous.  It‘s the party of no.  This is the people who basically tell 47 million Americans that they have health care; it‘s fine; everything‘s groovy; it‘s all great. 

It‘s ridiculous.  It‘s typical Republican mantra.  Before you know it, they‘ll be calling us socialists.  Before you know it, they‘ll be calling us communists.  It‘s the typical Republican game plan.  They‘ll figure out everything to delay.  Might as well call Dean Smith up now.  It‘s ridiculous. 

SCHULTZ:  It‘s all about the stall.  Panel, good to have you with us tonight.  We‘ll have you all back. 

Earlier in the show I asked will the delay on Capitol Hill kill the public option?  Here‘s what you had to say; 57 percent of you say yes; 43 percent of our respondents tonight say no.  That‘s THE ED SHOW.  “HARDBALL” with Chris Matthews is coming up right now here on the place for politics, MSNBC. 

Have a great weekend.  Off to the lake country in Minnesota.  Back with you Monday and a heads-up for next week‘s coverage.  Another insurance company is going to be coming out with their numbers, what kind of profits they had in the second quarter of this year.  And, of course, we‘ll see if they match up with United Health Care, which recorded 155 percent increase this quarter, second quarter of ‘09, versus ‘08. 

“HARDBALL” with Chris Matthews is next, right here on MSNBC.

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