updated 8/4/2009 11:24:55 AM ET 2009-08-04T15:24:55

THE ED SHOW

August 3, 2009

THIS IS A RUSH TRANSCRIPT.

THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

Guests: Jonathan Alter, Mark Warner, Barbara Boxer, Rep. John Yarmuth, Sen. Ron Wyden, AB Stoddard, John Harwood, Michael Medved, Bill Press

(BEGIN VIDEOTAPE)

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

(END VIDEOTAPE)

LAWRENCE O'DONNELL, HOST: Live from 30 Rock in New York, it's THE ED SHOW on MSNBC.

I'm Lawrence O'Donnell, sitting in for Ed Schultz, who, of course, has gone fishing.

Democrats declare war on insurance companies and their allies. Jonathan Alter, of all people, is asking, what's wrong with the for-profit health care system?

He joins me in just a moment.

Some eco-minded senators want to improve the Cash for Clunkers plan which could wind up killing it completely.

How to sell health care reform-why is President Obama using the same playbook as Bill Clinton and expecting a different result?

Senator Ron Wyden was on the front lines of this fight in the House in 1994. I'll ask him what the Democrats need to do to win this time.

Plus, the all-new and all-too-easily debunked Kenyan birth certificate.

But first, tonight's "OpEd."

Democrats had a winning narrative during the last campaign-change is better than more of the same. Now in the health care fight they're still drawing the dividing line between change versus the status quo, but with the health insurance industry playing the villain.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: It's a shock and awe carpet bombing by the health insurance industry to perpetuate the status quo, a status quo where they don't have to be responsible for antitrust states.

Make no mistake, facts mean nothing to them. Mythology is their game. Misrepresentation is the currency of the realm, and we intend to set the record straight.

(END VIDEO CLIP)

O'DONNELL: Nancy Pelosi and House leadership are vowing not to let health care reform be swift-boated during the summer recess. They promised the message that insurance companies are fat cats and afraid of competition will be drilled home to voters by Democratic lawmakers and allied organizations like Americans United for Change, which just launched this ad today...

(BEGIN VIDEO CLIP)

NARRATOR: Why do the health insurance companies and Republicans want to kill President Obama's health insurance reform? Because they like things the way they are now. Ed Hanway, CEO of insurance giant Cigna, makes $12.2 million a year. That's $5,873 an hour. Ed makes more in one day than the average workers makes all year long.

Now Ed's retiring with a $73 million golden parachute. The Republican prescription for the health insurance crisis? Be as rich as Ed. You'll be happy too.

(END VIDEO CLIP)

O'DONNELL: Sure. Democrats might be able to convince voters that health insurance CEOs make too much money, but they are doing nothing to convince voters to support a specific set of reforms. And that's why health care reform is once again sinking in political quicksand.

Joining me now is Jonathon Alter, a senior editor for "Newsweek" and an MSNBC analyst. Jon has a new piece on health care reform called "What's Not to Like?"

Jonathan Alter, your "Newsweek" piece this week is actually pretty funny. You take on the voice of one of those voters out there who's content with his health care plan even though, in your case, you tell the true story of your own battle with cancer. And within all of that, you try to deliver the mindset of someone who's content with the way things are.

Now, how can someone be content with the way things are now in a situation like that?

JONATHAN ALTER, "NEWSWEEK": Well, you know, Lawrence, I tried to use a little satire, which doesn't always go over so well. Some people at Newsweek.com, when they read the piece, they thought I was being serious. But what I was trying to point out is it's just-it's really kind of crazy to support the status quo.

People need to realize that if they get sick and then they lose their job, which is helping an awful lot of people nowadays, that because of that pre-existing condition, they are not going to be able to get health insurance under the status quo. And that then means they will face a very, very tough choice.

If they want the right treatment for cancer or heart disease, whatever they might have, they're going to have to sell their House, sell their possessions, do whatever to get the money to pay for that treatment because they're uninsured. And so, they will actually have to chose between selling their House or dying, basically, and that's the choice that, if, God forbid, I had a recurrence of cancer, which I had a few years ago, and I lost my job, I would be faced with that choice.

The problem is, is that when people are basically healthy, they say, nothing is ever going to happen to me. But you know what? It does. Think about your family, your friends. Bad stuff does happen.

And under the current system, were bad things to happen to you or somebody in your family, you're screwed. And people don't get that.

They don't get that the status quo that exists right now in this country with the insurance companies operating at will to screw people and cancel their insurance when they get sick, like your homeowners insurance gets canceled if you have a break-in-we know that story; right? That's the way it works with health insurance.

If people don't get that and we continue on with the status quo, there are going to be more and more people who are going to be more and more hurt. So, people have to get radicalized about this, mobilized. Get out there, and this recess they have to tell their members of Congress to pass this thing.

O'DONNELL: Jonathan, when you listen to what Nancy Pelosi had to say in that piece that we just ran, isn't there a flaw in her attack on the status quo? She goes after the health insurance companies as if they are the worst entity out there in the United States of America. And she then champions legislation that preserves them, that keeps them all operating in place, instead of going in the single payer direction. What she said in that bite sounded to me like what would you say if you were fighting single payer.

ALTER: Look, Lawrence, you've been there when you were a staff director for the Senate Finance Committee. Single payer is dead on arrival. It ain't happening; right?

So, you can't make-and I think Obama's quite right about this-you can't make the perfect the enemy of the good. Nobody is going to like the bill that goes through. It's going to be a big, hairy, ugly piece of legislation that satisfies nobody.

That's not the issue. The issue is, is a imperfect bill better than the status quo? And the answer to that question is, you're damn right it is.

It almost doesn't matter what the details are. The status quo is so terrible to people who get sick and then face bankruptcy on top of their illness that it must be changed. And any bill, all the bills out there, take care of that basic problem, a catastrophic illness.

And none of those bills leave people high and dry should they get really sick. That's the core of this. The rest of this is all important, but we cannot let this opportunity slip through the cracks.

And the idea of there being no bill, of liberals getting too upset because they don't get what they want, or moderates getting too upset because they don't get what they want, that is a disaster. There must be legislation this fall.

O'DONNELL: OK. Thank you, Jonathan Alter.

And take a look at his piece at "Newsweek," "What's Not to Like?" I think it summarizes the stakes of what's involved in health care reform legislation better than anything that's out there right now.

Joining me now is Democratic Senator Mark Warner of Virginia.

Senator Warner, you just heard Jonathan Alter predict that no one is going to like this bill, that it's going to be a big kind of compromised mess with something that everyone can find to dislike in it.

How do you pass a bill like that?

SEN. MARK WARNER (D), VIRGINIA: Well, we also, I think, got to acknowledge that we're probably not going to get it totally right the first time. You don't change 17 percent of our GDP and our whole health care system and do it perfectly right the first time. This is going to be an ongoing process.

But I want to build on what Jonathan said. Jonathan pointed out what happens, the consequences of doing nothing, if you happen to lose your health insurance or lose your job. But even if you maintain your health insurance, the status quo is a disastrous result.

If you maintain your health insurance, you're going to see your health costs double over the next decade with the existing-the current system in place. About $25,000 for an average family of four to pay for their health care costs. If you feel as I do that we've got to be concerned about the federal deficit, the federal deficit is going to go way over the top and explode the nation if we can't drive our costs down around Medicare and Medicaid.

So, whether the concern is around coverage, as Jonathan pointed out, or my concern around making sure that we've got a financially stable system, the status quo is a disaster. So, we've got to make sure that we get a reform.

It's not going to be pretty. It's not going to be perfect. Chances are we're going to have to come back and fix it again next year, and the year after, and the year after. That's what it takes when you're actually trying to re-shift the whole financial incentives around our health care system.

O'DONNELL: Senator Warner, you've seen how rough it is out there already trying to sell this reform in town halls. We saw what happened to Arlen Specter appearing with Kathleen Sebelius in Pennsylvania, getting shouted down, all that sort of thing.

During your recess, you're going to go down to southwest Virginia, which is not necessarily a friendly place for a Democrat. You're going to be walking down Main Street in Tazewell and people are going to be asking you, "What's in this thing for me?"

How are you going to sell it down there?

WARNER: Well, Lawrence, I was just down in southwest Virginia this past weekend. I had a town hall, a telephone town hall with 4,000 folks.

There's a lot of misinformation out there. There's a lot of misinformation about taking away your health care, or some government bureaucrat in between you and your doctor, as if there's not some kind of insurance bureaucrat in between you and your doctor already.

One of the most egregios things I've seen in my whole political life, though, was what took place in the last week or 10 days. I, for example, have got a bill around the issue of end of life discussions. How do we make sure that seniors and their families got a chance to have that kind of discussion, have all their choices available to them, have that chance to sit down with their minister or priest or rabbi and talk through these issues?

And then to see some of the outrageous scare tactics played by some of the anti-reform folks out there, saying that somehow health care reform is going to limit seniors and their choices or lead to euthanasia, that is beyond the pale. I've never seen any kind of tactic like that in my 20 years around politics.

So, we've just got to steal ourselves to the fact that this is one of the reasons why we've not had health care reform for close to 50 years. It's why we've got to make sure that we show that the status quo is not a successful outcome, and that we've got to recognize it's going to take a little bit of compromise from everybody to get the job done.

O'DONNELL: But isn't something like that end of life care exactly the kind of thing that you could predict would provoke a kind of reaction that you won't necessarily be able to win the argument over? Isn't that the kind of thing you might want to comb out of the bill at this stage to smooth its way through the Congress?

WARNER: Lawrence, I think the American people are way ahead, except for a few folks on the right who are trying to scare this issue. I think it is disrespectful to those families who are trying to sort through these issues right now, that want to have that kind of counseling, that want to understand what their options are as you go through this stage of aging. I've been meeting with religious leaders all over Virginia. They're supportive of this.

I've got a bill in that is supported by the AARP, by Alzheimer's Foundation, by the caregiver groups all across America. And I think it's actually disrespectful to say that this part of the conversation shouldn't be part of health care reform.

O'DONNELL: Thanks for joining us today, Senator Warner. We appreciate it.

Coming up, some Democratic senators want to up the mileage standards on Cash for Clunkers. But will that kill the bill? I'll ask the chairwoman of the Senate Environment Committee, Barbara Boxer, next on THE ED SHOW.

(COMMERCIAL BREAK)

O'DONNELL: One apparent success of the Obama administration's effort to pull the country out of the recession is the Cash for Clunkers program which gives consumers up to $4,500 in credit to trade in certain old cars for more fuel-efficient ones. Cash for Clunkers has become so popular, that the $1 billion set aside for it was used up in the first week of the program.

Right before leaving town for their August recess on Friday, the House passed a bill authorizing $2 billion more for the program. Now the Senate has to pass the identical bill by the end of this week to keep the program going.

Joining me now, Senator Barbara Boxer of California. Senator Boxer is the chairman of the Senate Environment and Public Works Committee. She is also the author of the new novel "Blind Trust."

Senator Boxer, your new novel is about a California senator, of all things, a woman senator who is a chairman of a committee running a confirmation hearing and getting herself into some serious intrigue.

Sell a couple of books for a minute before we move on to governing.

SEN. BARBARA BOXER (D), CALIFORNIA: Well, I just think if people want a good story, but they really want to know what it's like-you know what it's like, Lawrence, your years here. You know, the role the press plays, the radio talk show hosts. You know, how the staff relates to the member, the senator.

I think they're going to learn a lot. So I hope people will read it. I've been told it's a page-turner.

O'DONNELL: You can only get the inside story from an insider. And Chairman Boxer is exactly that.

Chairman Boxer, you've got the Cash for Clunkers suddenly upon you in the Senate. But procedurally, you have to pass an identical bill to the House since they've gone out of town. And if you change anything, they're not here to change it to turn it into something that the president can sign as law.

You have Senator Feinstein saying we want to increase the mileage standards for this program. You have other senators saying they don't want to renew it at all no matter what it looks like.

How are you going to navigate this in the final week of the Senate before recess?

BOXER: Well, I have some hot-off-the-presses news for you. I just spoke with Senator Feinstein, and we looked at the results of the program, and both of us are very happy. We both wanted to see more fuel economy be part of the program, but what happened, as you look at it, 250,000 vehicles were traded in and new cars bought, and new trucks bought, and the average increase in fuel economy is almost 10 miles per gallon.

So, that's really better than we ever thought. It looks like people have really gotten the message that they don't want to be relying on the oil companies to keep prices down, the gasoline prices down.

So, I think you'll see Senator Feinstein and I, and a lot of us, say, let's do this. It's a success -- 250,000 cars.

People are excited. The inventories are dropping.

We've been in the worst recession since the Great Depression. This is working. Let's just go ahead and move forward with it. And we could pay for it by simply taking some funds out of the auto retooling money that we had as part of the stimulus, which is the way Speaker Pelosi said she was going to pay for it.

O'DONNELL: And there have been some noises from the Republican side, including possibly Senator McCain, talking about just trying to block it, just trying to filibuster. Does it feel-it sounds to me like you're saying the Democrats seem to be coming together on this. Is it possible that the Republican opposition, the roadblock kind of opposition, will slip away under the force of the auto industry and others who want to see this thing going forward?

BOXER: Well, I think it could slip away as a result of the American people. There are a lot of people who want to take advantage of this now, and I think they're going to be calling their senators. And the auto dealers, who've been in so much trouble, calling their senators.

It's interesting that about 50 percent of the cars and trucks were the big three. The other 50 were foreign made, but half of those made in America.

So, it's a good result, and it's the equipment of taking just a lot of cars off the road. We're going to get less pollution. This is a winner. And believe me, I wanted it to be written in a stronger way, but I have to admit, it is working way better than I thought.

O'DONNELL: Well, listen, a popular government program, a popular new government program, is not exactly a common thing. It's hard for me to believe that Republicans, when they really come up to the voting line on this, would really want to stand there and block it completely.

BOXER: Well, I don't know. They have sort of turned into the body of "no."

I just had a conversation with a colleague, a Republican colleague, and he was asking me about it. He said, "Well, I don't want to add to the deficit and the debt." And I said, "Look, we're going to take it from funds that we're planning to spend on auto retooling," and he seemed a little surprised at that.

So, maybe when they learn a little more, we all learn a little more, we can come together. As I said, if you really want to get out of this recession, if you really want to stimulate this economy...

(CROSSTALK)

O'DONNELL: Final word on-Senator, before I let you go, a final word on health care.

It doesn't feel like we're coming together on that, either within the Democratic Party or with Republicans. What's you're feeling for how it's going to work when people come back to the Senate in September?

BOXER: Here's what I predict-the status quo is horrific for people.

Every day, people who have insurance, 14,000 of them, lose their insurance. We pay twice as much as the rest of the world. We're 29 out of 30 on infant mortality, 24 out of 30 on longevity.

So, I think when people take a look at the status quo, they are going to be angry at folks who don't want to come to the table. So, we're going to tell the true story.

By the way, average CEOs in the insurance companies, they are at $14 million a year. And the profits of the insurance industry have gone up enormously. Over 400 percent in the last few years.

So listen, I think knowing all those facts, I think public opinion will turn towards us. Hopefully, we can sit down with the Republicans, find common ground, and make sure people have certainly about their health insurance. They deserve it.

O'DONNELL: Thank you, Senator Boxer. Thanks for squeezing in THE ED SHOW between Senate votes today. We really appreciate it.

BOXER: Thanks. OK.

O'DONNELL: Coming up next, the Birthers claim to have a Kenyan birth certificate. We have a map, the Internet, and two minutes. That's about all we need to debunk this one.

THE ED SHOW continues right after this.

(COMMERCIAL BREAK)

O'DONNELL: Welcome back to THE ED SHOW.

Time to address the latest so-called evidence that President Obama wasn't born in the USA.

The Birthers, the people who buy into this conspiracy theory, have come up with what they say is a certified copy of a birth certificate that proves President Obama was born in Kenya. This suspiciously new-looking piece of paper claims the president was born in Mombasa, in the Republic of Kenya, on August 4, 1961. The certified copy was supposedly issued on February 17, 1964.

A small problem, though. Kenya wasn't actually called the "Republic of Kenya" until December 12, 1964. It did become independent in December, 1963, but it was known as the "Dominion of Kenya" until the following December. That was 10 months after the document was supposedly issued.

Also, Mombasa, the city where the certificate claims Obama was born, wasn't even part of Kenya at the time of his birth. Until December, 1963, in was in Zanzibar, which is part of present-day Tanzania.

I know history is hard. You've got to grab some books, and colonial borders in Africa will trip you up every time. But next time, just look up some basic Kenyan history and pair that with a little common sense and a map, and you'll see the truth pretty quickly.

What's a Democrat from Kentucky hearing from voters back home about health care? I'll ask Congressman John Yarmuth next on THE ED SHOW.

(COMMERCIAL BREAK)

O'DONNELL: Welcome back to THE ED SHOW.

The fight for health care reform begins at home. House Speaker Nancy Pelosi was clear in her marching orders for the August recess-Democratic lawmakers need to explain the plan to their constituents and correct the misinformation out there. But with different plans emerging in the House and the Senate, how does anyone, including a congressman or the president, know what they should be trying to sell?

At a recent town hall, President Obama was confronted with questioned about rationed care, while a Republican lawmaker suggested on the House floor the Democrats' plan would lead to euthanizing seniors.

Joining me now is Congressman John Yarmuth, a Democrat from Kentucky. He sits on the House Ways and Means Committee and has already cast a vote in favor of this bill in the House Ways and Means Committee. Thank you, congressman, for joining us today.

REP. JOHN YARMUTH (D), KENTUCKY: Thanks, Lawrence. I'm used to seeing you in the morning.

O'DONNELL: How are you going to sell this thing when you go back? You're in Kentucky now. Are you selling those-those new top three tax brackets that you voted for in the Ways and Means Committee to pay for this thing, or are you selling other pieces of it as you move through your district?

YARMUTH: Well, the people who are really concerned about what we are doing are the people who are very insecure about the future of their health care coverage, or in some cases the present of their health care coverage.

They want stability and security. They want to know that if something

happens to their job-they want to know if one of their kids happens to

have a medical condition, and they lose their coverage, that their kids can

get coverage

It's the anxiety that they are concerned about. Once I explain to them that all the provisions in this bill, which are designed to give them that stability and that security and that peace of mind in their health care, that part of their life, they really like what we're doing.

The other part of it is the senior citizens who are concerned. And I talked to them about the fact that we're going to narrow the donut hole by 500 dollars immediately. We're going to work to eliminate that. Things that are forcing them to make choices that they don't like to make, about whether to take their medication or not.

These are the things that the average citizen is concerned about.

That's what we need to convey to them.

O'DONNELL: Congressman, how do you deal with the fact that in the Ways and Means Committee you probably voted for a number of things that aren't going to bill in the final bill that actually becomes law, because you know the Senate Finance Committee isn't going to come anywhere close to you guys on this. You're going to have to find somewhere in between in the end. How do you pick what it is you're fighting for, and defending, and arguing for in these town hall meetings during this recess?

YARMUTH: I don't get too many questions about the tax part of it. I've campaigned against the Bush tax cuts for the wealthy for three years now, and I'm very comfortable talking about that and defending that. But, again, what we're concerned about-we don't know what is going to be in the final legislation, that's for sure.

And what I've talked to my colleagues about is talking about these broad themes which we all agree upon, that the key to this is making sure that American citizens have peace of mind about the health care, and seniors don't think that they are going to be out of pocket any more money, that they think they're going to lose their benefits.

These are the things that we talk about over and over again. The mechanics, the process are things that most Americans don't care about. They want to know what this means for them and their families. And that's what we are emphasizing.

O'DONNELL: What is the prevailing theory right now among House Democrats as to why the popularity for Obama health care reform continues to go down the more President Obama campaigns for it?

YARMUTH: I don't think anything that President Obama is doing or not doing. I think there's a concerted effort, financed by very well oiled machines, that are attempting to distract the American public from the essence of these plans. They're talking about things like this bogus-totally bogus issue like euthanasia and things like that. They don't want the American people to focus on the fact that their stability and their security is what we're primarily concerned about.

The Republicans and many in the industry, the health care industry, know that the biggest political victory that any Democratic president or Congress can win is to reform health care successfully. They are dead set on denying us that opportunity. They've expressed that in documents. Jim Demint said this would be President Obama's Waterloo.

We know what they are trying to do. We've got to remain focused on talking to the American people about how they will benefit from what we're trying to do. And once we tell that story-and I've had it happen dozens and dozens of times already. Once we explain that to them, they become very, very enthusiastic supporters of our reform measure.

O'DONNELL: There are no professionals in Washington on this subject who are more expert about it than Janis Mays (ph) and the Ways and Means Committee staff that you work with every day.

YARMUTH: Right.

O'DONNELL: Does Chairman Rangel and Speaker Pelosi have them combing these bills right now, looking for possible radioactive items that should be pulled out, no matter what their value might be, because they can be exploited and misrepresented more easily than others?

YARMUTH: Yes, we probably made a mistake in not doing that initially. I think you always-you always expect and you hope that you're going to have an honest debate on these issues, particularly one as important as health care. We should have anticipated that we would not get an honest debate.

So we are looking through those provisions again. You never know. You never know the breadth of distortion that people are capable of. It's a little bit hard to do that. We are looking for other possibilities, because, again, this is much too important to play games with. Unfortunately, the people who want to kill this are playing games.

O'DONNELL: Thank you, Congressman John Yarmuth.

YARMUTH: Thank you, Lawrence.

O'DONNELL: For more, let's bring in our panel. Bill Press is a nationally syndicated radio talk show host. AB Stoddard is the associate editor for "The Hill." John Harwood is cNBC's chief Washington correspondent and a political writer for the "New York Times." And Michael Medved is a radio talk show host and author of the book, "The Ten Big Lies About America."

Michael Medved, I want to start with you. We're watching a phenomenon that I see now the third version of in our recent history. That is, the more the president campaigns for a reform idea, the more unpopular it becomes. We saw this in 1994 with Hillary Clinton, when she started her bus tour across America. The more she campaigned for it, the more it became unpopular.

We saw it with President George W. Bush when he started, he said, his 60 day campaign for reforming Social Security. Every day he was out there pushing, the popularity of the idea it went down.

We are now seeing the same phenomena with the Obama health care plan. You live on the other side of the political world from the Obamas. Do you have a feel for what it is that the Obama administration and the Democrats are getting wrong in the way they communicate above this to swing voter, independent voters, and the Republicans?

MICHAEL MEDVED, RADIO TALK SHOW HOST: Yes, I do. I think one of the problems with the Obama administration was that they out outsourced the details of this particular reform. In other words, it became very easy to talk about the bill does this, the bill does that, change this and change that, because there was no specific bill.

Most American people have health insurance, 85 percent of us. And 77 percent of the people who have health insurance are happy with it. They are essentially conservative. They don't want the thing to change in a radical way.

We don't want to pay more. We don't want to see our care rationed. We don't want to see it limited. I think the problem that you have right now is even though the American people are very unhappy about the economy, unhappy about the level of spending, certainly unhappy about the deficit, they don't want to see any of those problems added to, to adjust something that we are relatively content about, which is our own health care.

Now, dealing with the 46 million who don't have health insurance, that's another matter. On that one, frankly, Republicans and Democrats should be coming together.

O'DONNELL: John Harwood, this is tricky. When Nancy Pelosi wants to send the troops out to fight for this bill. It's not like fighting a raise of the minimum wage of 1.50, something very simple, or even the change in a particular tax rate, up or down. This is a very complex piece where they don't even know what is going to be in it.

Should they be defending the new top tax rates they've invented on the Ways and Means Committee? Should they be fighting for a cap on deductibility of health insurance for people? How do they go out and sell this thing when they don't have a clear product to sell?

JOHN HARWOOD, CNBC ANCHOR: It's complicated and difficult. I think individual members are going to sell things that they voted for or advocated. Like John Yarmuth, whatever he's voted for in committee, as this process moves along.

I have got to say, I think Michael is completely wrong about that outsourcing point for this reason: what is one of the most unpopular things the Democrats are trying to defend right now against attacks from the right. That is the public option Who is the biggest advocate for the public option? Barack Obama is the advocate for that.

They are also trying to defend tax increases on upper income Americans. Well, Barack Obama has a different one than the House agreed to, or that the House put in their consensus bill. But he proposed a different method of raising money from people who make more than 250,000 dollars a year.

So it's not the outsourcing that is the problem. It's the complexity and difficulty of trying to make the case that this very complicated set of measures that they are proposing is better than the status quo.

O'DONNELL: AB Stoddard, how worried are the House Democrats that have voted for some very risky items, politically risky items in there that aren't going to become law, but the votes that they've cast already can be held against him in their next campaign?

AB STODDARD, "THE HILL": They're very aware of this because of the climate debate, the Cap and Trade Bill that has passed the House, and so many members came home to find themselves catching grief for, a vote that their membership really pressure them to hang in on. Although, it's, at this point, on August 3rd, going nowhere in the Senate, still a vote they think they're already going to pay for next year, even if that bill never becomes law.

On the health care vote, the House Democrats feel very strongly about having a public option in a bill. They want to cry out all their members, from liberal to centrist to conservative, to be on board, to raise the stakes, as you know, Lawrence, for the conference. Because if the Senate Finance bill has only a co-op or an exchange and no public option, the House Democratic leadership feels very strongly that they need to go in with the negotiating power of having passed a public option.

Members are very nervous about that being in the final bill, the conservative members. Even though you can say the premiums will sustain the plan and it won't pay Medicare rates, it's still easily made into a 30-second commercial. People very, very nervous about already how much the bill might spend.

And so this is the fear of House Democratic leaders, that they have three bills committee passed that they have to meld in August, and can they find consensus for September.

O'DONNELL: Bill Press, is there a set of compromises that can come out of the Senate Finance Committee or that could be worked through the process generally such that the final product is what liberals would consider so weak that they simply walk away from it, vote against, and no bill gets to the president? Is that possible?

BILL PRESS, RADIO TALK SHOW HOST: You know, it's possible. Lawrence, here's what I hear on the Hill. First of all, people have to wait for the Senate Finance Committee. But once it comes out, that Harry Reid and others will step in and say, OK, you've done a lot of work, but that's not what we want. We're going to move closer to what the House wants, the Senate Health Committee, and come together between the Senate Health Committee and the three-whatever comes out of the House, and make that the final version.

I want to come back to your statement about selling this in August. Most of the time, it doesn't matter what they do in August when they go home. This August, I think, is different. There's no doubt about it. I think Democrats are at a disadvantage, because the opposition is geared up. They're already running ads. And they have one simple message, which is no, which is status quo. The Democrats are all over the place. I think their challenge is to get together and say, yes, it's got to be now, and the status quo is unacceptable.

The more complicated they make it-in answer to your question-I think the worse off for them.

O'DONNELL: Bill, I think you're right. I think this thing, oddly enough, gets won or lost during the recess, in August this year.

All right, panel, stay with us. Coming up, Bill Clinton is having deja vu on health care. Can President Obama avoid Clinton's mistakes? That's next in the playbook.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BILL CLINTON, FMR. PRESIDENT OF THE UNITED STATES: All these debates about what change will save what money have an eerily familiar ring, and actually always give aid and comfort to the forces of the status quo.

I can see who the baseball manager is sending up to bat and what they are trying to do to get him to strike out. I don't like it.

(END VIDEO CLIP)

O'DONNELL: In the plyabook tonight, it's been 15 years, but President Obama is still staring down the ghosts of Clinton care. At every turn he's face-to-face with a bitter reality: there is no successful model out there for legislative health care reform. In 1994, the Clinton White House decided to take it's health care message to the heartland, by replicating the hugely successful summer bus tour of the '92 campaign.

So Hillary Clinton set off on the Health Security Express, with hundreds of reform writers. Instead of a ground swell of popular pressure on Congress for reform, the Clinton town halls were overwhelmed by protesters who tried to shout down Mrs. Clinton at every stop. And polls showed that every day Hillary Clinton was on the road selling health care reform, every day the popularity of her plan went down. She ended up going home early.

If President Obama wants to sign a bill this year, he should keep in mind a couple of lessons from the '90s. One, the more the president campaigns, the more unpopular reform becomes. Two, attempts to reform health care always turn into Democrat on Democrat dog fights.

Joining me now is a Democrat who was in the thick of the battle in the House of Representatives in 1994, and is back at it this year as a member of the powerful Senate Finance Committee, Oregon Senator Ron Wyden.

Ron Wyden, you have a health care reform plan of your own that seems to have been unable to get any traction so far. Where do you think this debate is going? And might we end up, through a series of compromises, in the Wyden zone legislatively here?

SEN. RON WYDEN (D), FINANCE COMMITTEE: Larry, first of all, I think, based on the events of recent days, a lot of senators and a lot of people in this country are giving our proposal, which is backed by 15 senators of both parties, a second look. The reason why is it's clear in the next few weeks it's going to be important to close the deal with the insured. That wasn't done in 1993 and 1994. That's the big job for the summer.

We give and opportunity for Democrats and Republicans to get that done. We say that everybody can go into a big group, like members of Congress can. The insurance companies can't discriminate against you. You have a lot of leverage. And you are going to be able to get a lower premium, and put that cash in your pocket.

O'DONNELL: So are you hanging on to the idea that what might come of

the Senate Finance Committee deliberations, or what might end up through

the amendment process on the Senate floor, that you could come out with a

vehicle in the Senate that is much more like your approach, which is

bipartisan-it seems to be the only bipartisan approach so far out there

than what the president and what the House Ways and Means Committee have been trying to get so far?

WYDEN: I have never said, Larry, that it is my way or the highway. What I do know is that you've got more than 160 million people. I don't think all of them are sitting around with their calculators, by any means, but they want to know how this is going to pencil out for them. And I keep coming back to the fact that members of Congress, if you're in D.C., signed up with your family, you've got more than 20 plans. You don't like what you're getting in 2009, you can in 2010 get a better deal, save money, get more preventative care, more mentality health services.

Let's give people the opportunity to shop wisely and financially win when they do.

O'DONNELL: Now, senator, you're not in the room in the Finance Committee now. There are six members of the committee, three Republicans, three Democrats, who are trying to work out some kind of compromise. Does it worry you that it's this subset of the committee, as opposed to the full committee, or even more senators who are not on the Finance Committee, with input into this process?

WYDEN: First of all, these are the senior members and I don't feel that we've been left out, those of us that are not by seniority in the room. I do think, for example, that when people looked at those early reports that you have to spend over a trillion dollars just to expand the coverage to folks on Medicaid, people said, look, there are 15 United States senators who are saying, and the Congressional Budget Office backs it up, that everybody can have choices like members of Congress for the amount of money that we're spending today.

So I do think that we've got a chance over the next few weeks to get a lot of second and third looks. A number of senators have come up to me on the floor just in the last few days, and are saying that you've got an opportunity to give us something better to talk about with those who have insurance. They can reject the coverage they have if they want to, and get a better deal.

O'DONNELL: Senator, everything I'm hearing these days from the Democrats and Republicans is an echo of what we heard in 1994. I don't see the root from here to the finish line. I don't see how it's different from 1994. Can you tell me now what factors are new in 2009 that can get you across the finish line and actually legislate something here?

WYDEN: In 1993 and 1994, Larry, you remember this, you didn't have a bipartisan bill that provided universal coverage, that had Republican support. I've got Republican sponsors, in fact, most of the Republican leadership on a piece of legislation that plays hardball with the insurance company. We don't let the insurance companies cherry pick. We don't let them discriminate. We make sure that the consumer is protected.

You never had that in 1993 and 1994. The business community was in a very different place. So there's a lot more to work with this time.

O'DONNELL: All right, thanks for joining us today, Senator Wyden.

Senator Wyden hanging tough with the Wyden Health Care Reform Bill.

Coming up, the tea partiers are back. Senator Arlen Specter and HHS Secretary Kathleen Sebelius were ambushed by them during a town hall on health care this weekend. Is this mission accomplished for the GOP? They do actually think that the fringe is going to work their way back into the majority. We'll put it to our panel next on THE ED SHOW.

(COMMERCIAL BREAK)

O'DONNELL: Back with me now is tonight's panel, Bill Press, AB Stoddard, John Harwood and Michael Medved.

Michael Medved, is that the kind of protest that will be effective for Republicans, in terms of trying to stop or slow down health care reform? Or does it seem kind of hysterical and over the top?

MEDVED: The latter. Clearly, we're not going to do this by carrying to signs or talking about Obama's birth certificate or any of that. What we're going to have to do is rely on more strong leadership from the Republicans, particularly in the Senate. I am sort of encouraged. John McCain, for once, speaking out strongly against this, and Governor Pawlenty, on the state level, had an outstanding piece today, and offering positive alternatives, which I think is going to be crucial to Republican success.

O'DONNELL: John Harwood, is that the way you see Republicans strategizing this thing, that they have to at least look constructive as they steer through it?

HARWOOD: I think we're in a total war situation on both sides. Democrats are pulling out all of the ammunition, advocacy groups and Democrats. And they are going to have to live with what is coming from the other side, including people shouting at town meetings. Some of this stuff can be refuted. There's been an argument going around about a tape that supposedly shows Obama favored abolishing private insurance. It's not true. Actually, Obama was talking about the end of employer provided insurance, which is different.

I think the toughest thing, Lawrence, they've got to deal with is when you talked about earlier with Mark Warner, and that is the issue of end of life care and the concerns that people have about being told to die. The reason is there's a grain of truth to it. If anybody's serious about controlling costs in the long run, something has got to be done about curbing end of life care that has only marginal impact on people's lives.

O'DONNELL: Bill Press, how do the Democrats counter these types of demonstrations? If they make their own signs and make their own noise, doesn't the whole debate get drowned out?

PRESS: And I would pay them to do it, Larry. I just think encourages them. More of the same. The Republican party today, let's face it, they are anti-stimulus, anti-health care, anti-cash for clunkers, anti-Sonia Sotomayor. They think Obama was born in Kenya. End of story.

O'DONNELL: AB, does it matter whether these protests are organized or spontaneous. Isn't it just the video that ends up in the local news that does the damage here?

STODDARD: It doesn't matter at all. And the fact is that the only goal for the Republicans right now is to scare people off of this, to depress voter support for this, so that when they come back in September it's even harder for for the Democratic party than the chaos we just witnessed on Capital Hill for the last month.

All they have to do is say, this is going to be terrifying. This is a risky experiment. They don't have to be constructive right now. Remember who turns out in midterm elections, Lawrence, the angry. OK, African Americans are not going to turn out the rate they did last year. Neither are young people. People who carried marginal Democrats in formerly Republican districts. It's going to be a very tough year for Democrats next year.

O'DONNELL: That's all the time we have for tonight. That's THE ED SHOW. I'm Lawrence O'Donnell. I'll see you back here tomorrow, same time, 6:00 p.m. Eastern on MSNBC. "HARDBALL" with Chris Matthews starts right now.

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

END

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