updated 8/5/2009 9:53:03 AM ET 2009-08-05T13:53:03

THE ED SHOW

August 4, 2009

THIS IS A RUSH TRANSCRIPT.

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

Guests: Lawrence O'Donnell, Kathleen Sebelius, Susan Molinari, Mike Barnicle, Ken Vogel, Michael O'Hanlon, Sen. Debbie Stabenow, Rep. Joe Courtney, Mike Allen

(BEGIN VIDEOTAPE)

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

(END VIDEOTAPE)

LAWRENCE O'DONNELL, HOST: Good evening.

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

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

Mix the right wing fringe with the Internet, stir it all up with corporate lobbying money, and what do you get? A coordinated AstroTurf campaign posing as a grassroots uprising.

Health and Human Services Secretary Kathleen Sebelius recently had a run-in with them. I'll talk to her about how she plans to handle them next time.

And Bill Clinton drops into North Korea and gets two journalists freed. Is this a single diplomatic success or a new breakthrough in our relations with North Korea?

President Obama hosted Senate Democrats at the White House this afternoon. What was his message as they head off into the August recess? I'll ask Senator Debbie Stabenow at the half-hour.

Plus, new sources on Barack Obama's brand-new Kenyan birth certificate.

Hint-somebody in Australia was robbed.

But first, tonight's "OpEd."

The public protest against health care reform is not an organic outcry, it is an orchestrated disruption organized and funded by the anti-reform lobby. This is a scheme invented by a Washington lobbyist to hijack the health care debate and turn it into a story about how the country is turning against the president, who, by the way, has a 56 percent job approval rating, according to a new Gallup poll.

So, this is a difficult thing to pull off, turning the country against this president. But this is not a group that wants an honest debate.

As one woman protesting Congressman Lloyd Doggett in Texas elatedly told "The New York Times," "He jumped in his car and fled. It was like he was tarred and feathered and ridden out of town on a rail. It was a beautiful thing."

The point is not discourse. It's political terrorism. So, how should Democrats respond to these attacks when there is no proportional response to irrationality, there's no good response to bad faith?

Today, the White House posted a video responding to a mash-up video made by a conservative blogger. And this afternoon, after meeting with President Obama, Majority Leader Harry Reid vowed to press on even in the face of this opposition.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: The American people want health care reform and we're going to do health care reform. In spite of the loud, shrill voices trying to interrupt town hall meetings and just throw a monkey wrench into everything, we're going to continue to be positive and work hard.

(END VIDEO CLIP)

O'DONNELL: Health and Human services Secretary Kathleen Sebelius.

Secretary Sebelius, let's take a look at what you encountered in Pennsylvania this weekend with Senator Arlen Specter.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: That's a lie!

(END VIDEO CLIP)

O'DONNELL: Secretary, I have to tell you, I went to some of those kinds of town meetings when I worked for Senator Moynihan and never encountered anything like that. Did you expect this? Was there any hint that this planned sabotage was out there?

KATHLEEN SEBELIUS, HEALTH AND HUMAN SERVICES SECRETARY: Well, we had had a town hall meeting a couple of weeks ago with four cabinet secretaries in Louisiana, and had some similar folks show up with very similar statements and very similar arguments. So, it was clear that this is kind of a nationally driven campaign.

We knew that something was different in Philadelphia when the woman who is the director of the Constitution Hall welcomed people and she was booed. So, clearly, there were folks who were interested in disrupting a very serious conversation about health reform, and that really was their mission of the day.

In spite of that, I think we had a good exchange. There were lots of people in the hall who were eager to hear from Senator Specter about what the Senate is doing and eager to talk about how we need health reform, how the status quo is just failing millions of Americans day in and day out.

O'DONNELL: When I've seen politicians face audiences when they go out to talk to their constituents, I've certainly seen a lot of angry questions asked and a lot of angry constituents. But what they want is answers. I mean, at a certain point, they finish their angry question and wait for and demand your answer.

That's not what you were getting there, was it?

SEBELIUS: Well, I think we eventually got to that point, Lawrence. What was clear at the outset is, some folks intended to just disrupt the entire meeting and yell or shout or jeer over any kind of conversation.

I think the supporters of health reform and people who really had honest questions and real concerns about themselves and their family, about coverage being dropped, were retired health professionals, were a variety of folks. Finally, I think persuaded the disruptive element of the audience to allow the conversation to go on.

There can't be any more serious conversation taking place across America than whether or not Congress will indeed act, send the president a bill to reform our health care system. It affects everybody personally. It is life or death for way too many Americans.

And what we know is right now, we've got a system where, you know, the health insurance industry gets to pick and choose who gets health care, who gets coverage. They often stand between patients and their doctors deciding what procedure, what recommendation, what drug, what process is going to be followed.

And we want a reformed system where-with the kind of consumer protections that the House and Senate bills are likely to have. Americans will have access to affordable health care, high-quality health care, and no longer will the insurance companies get to choose who gets health care in America.

O'DONNELL: How are you going to go forward with this kind of protest when you're trying to be heard? Has the White House developed a strategy? Have the congressional leaders developed a strategy for dealing with this on the road?

SEBELIUS: Well, actually, I think what we're seeing is that people were very frustrated at their neighbors and folks who got busted to try and disrupt this conversation. The same thing happened in Louisiana. So, I think over the natural course of a meeting, the majority of people who were there in Constitution Hall, who were with us in Reserve, Louisiana, actually wanted to have a dialogue, wanted to get information, wanted to know what really was going to happen. And hopefully that will be a continuation that members of Congress see as they come home over recess.

As I said, there is no more important conversation. And frankly, the notion that somehow the status quo is OK so we can yell and scream and drive out the real important facts of what reform looks like, how it will impact people who currently have coverage, who now are terrified that they're going to be dropped next week or next month-I can't tell you the number of people who talk to me and say, you know, "I had coverage, but when I got sick, the company told me that I would no longer be covered."

I have a great friend whose son was in the hospital as a young dad, had emergency surgery, and got the notice while he was in the hospital that his insurance policy would be dropped for himself and his family. We helped him get it straightened out, but that's happening all over America. And it just shouldn't happen anymore.

O'DONNELL: Madam Secretary, thanks for joining us today, and good luck being heard out there on the road with this message.

SEBELIUS: Well, thanks, Lawrence. Thanks for having me on.

O'DONNELL: Thank you.

For more, let's bring in our panel, MSNBC contributor and voice of wisdom, Mike Barnicle; Ken Vogel of Politico; and former Republican congresswoman Susan Molinari, from my favorite island in the world, Staten Island.

SUSAN MOLINARI, REPUBLICAN STRATEGIST: Thanks, Lawrence,

O'DONNELL: Susan, this could seriously back fire for Republicans. Your party's being labeled the "party of no," and now you have Washington lobbyists sending these people out in an organized way to these town meetings to stand up and scream "no" in the most incoherent way, not looking for any answers to any questions.

Should the National Republican Party be worried about how this looks?

MOLINARI: You know, I think the National Republican Party is hopeful that people understand-and I've talked to elected officials-that, you know, the people who work in the United States, have representatives in the United States Senate, don't want this, just like the Democrats didn't want it when MoveOn and Code Pink would do it to the Republicans when George Bush was president.

Look, it's the Republicans and people like me who said from the start, slow down a little bit. We don't have to have this August 7th deadline. This has to be a real conversation.

And disrupting these town hall meetings so that you can't have a real conversation doesn't benefit anybody. I think everybody can agree with what the secretary said no matter where you fall on health care. This is a very important conversation to take place throughout this country.

O'DONNELL: Mike Barnicle, there's a big difference between these people and what Code Pink does. Code Pink uniforms themselves. They wear pink. They identify themselves.

They let you know, this is how we organize, this is why we're here, and this is what we have to say. And oh, by the way, they're completely marginalized by the press and ignored whenever they do this stuff.

This thing of having a Washington lobbyist create an organizing pattern for what looks like, is supposed to look like a grassroots movement, is not something we've seen before.

MIKE BARNICLE, MSNBC CONTRIBUTOR: No. Well, I think, first of all, you can discount what happened in Philadelphia because it's Philadelphia. They boo Santa Claus in Philadelphia.

O'DONNELL: Tough times.

BARNICLE: They're going to boo free health care in Philadelphia.

But, you know, it gets to the larger issue, Lawrence, that there is a great fear, it seems, out in this land, and it's the fear of the unknown. Not so much what's going to happen with the health care plan, but fear of the unknown.

How much is it going to cost? Is the government going to be telling me who my doctor is? And those questions have to be answered, and the only way they can be answered, the only person who can answer them, is the president of the United States.

And instead of going directly to the House and the Senate, who have drafted this bill, he has spent a lot of valuable time and provided a lot of information in town halls and on television press conferences. But eventually, the rubber's going to meet the road and he's going to have to sit down with the people in the House and the Senate and say, at the end of the day, this is my bill, here's what I want, let's get it done.

O'DONNELL: Ken Vogel, the president tried some of that today with all of the Democrats from the Senate coming up to the White House. I've got to say, from my own experience working in government, nothing was ever accomplished in a meeting of more than three people. So, this looked to me like nothing but kind of a public event today so they could go out to the microphones in the driveway and say something positive.

Do they have a plan for getting through the August recess and keeping the president's plan from sinking in popularity, which is what has been happening lately?

KEN VOGEL, "POLITICO": Well, first of all, I want to take exception to what Mike said. As a Philadelphia native, I think that (INAUDIBLE) Santa Claus had it coming.

(LAUGHTER)

VOGEL: But on the point of what Democrats can do, I think we are seeing a little bit of a Democratic strategy, at least when it comes to confronting or dealing with some of these protests, and that is the highlight then. I mean, these are angry voices. These are not voices that are reasonable and are going to convince people who are undecided.

They do make the opponents of the plan look bad. And so I think that by highlighting them, they kind of marginalize some of the voices who have valid criticisms of the plan, and that's one way to kind of distract from those valid criticisms. And I don't see anything wrong with Democrats highlighting it as we go into summer recess.

O'DONNELL: Go ahead, Susan.

MOLINARI: Well, I do want to say, because part of the problem that it does distract from goes to what Mike Barnicle was saying, which is, you know, wait a minute. Democrats today are having big problems between Democrats in agreeing as to what this plan is going to be.

You have a significant portion of the progressives who sent a letter today saying to the Speaker, you better watch out, if the public option isn't included and if the reimbursement formula based on Medicare isn't part of what's going to be included, we may not vote for you. The Blue Dogs are giving them a hard time.

So, I mean, I think we do make a mistake if we don't-if we were to blame Republicans, as opposed to allowing Democrats to come up with one plan, as Michael suggested. What is it? What does it mean for you? How are you going to pay for it? What's it going to cost?

There's a lot of confusion because there are no answers out there, and this sort of muffles that.

O'DONNELL: Mike, is there a way for the Democrats to use this disruption of what they're trying to do, this disruption of just a public discussion, to actually unify the Democrats? I mean, when the Blue Dogs watch any Democrat get shouted down like that, they can't feel good about that. They have to feel, is there something I can do here?

BARNICLE: I think there's something the Democrats can do, and they're going to find out about it during the congressional recess in August. They're going to be confronted with it.

I think it's inevitable that they're confronted with huge numbers of voters, families, who have had to answer the question in this season of economic unrest that has gripped America for the last several months. Summertime is a time when families sometimes go on vacation, they go to the movies an extra time per week, they go out to dinner, perhaps. And they have to ask themselves a question that they feel Congress hasn't asked and answered-can we afford this?

American families ask one another, spouses ask one another, can we afford this? And that-I think that's the sense you get out there. That's the biggest unanswered question that the congressional delegations, House and Senate, during the recess are going to have to listen to and respond to.

O'DONNELL: Ken Vogel, does the White House have a theory and a counter-approach to explain the phenomenon of the more the president talks about this, the more he goes out and campaigns for it, the more the popularity of the plan decreases? Which is a model we have seen before when Hillary Clinton tried to do this. We saw this model when George W. Bush tried to do reforming Social Security.

Has anyone in the White House figured out what that's about and how to turn it around?

VOGEL: Well, I think if they had figured it out, first of all, they wouldn't be telling us, they'd be implementing it and it wouldn't be happening. But this is clearly the reason.

I mean, that model is very much the case. It's clearly the reason why they had set the deadline of finishing, or at least accomplishing-getting bills through either chamber before the August recess, because they knew that the longer that it went, the more potential there would be to drum up opposition to it. And particularly over the summer recess, where they're not making news and the members are back in their districts just hearing about it and getting bombarded by ads on both sides, we should add, on this issue.

It is going to-well, it has the potential both to have an informed debate, but it also has the potential to muddy the waters a little bit. And I think that's what we're seeing now with these town halls.

O'DONNELL: All right.

Coming up, it looks like Bill Clinton's trip to North Korea was an easy success. But does this one breakthrough mean a thaw in relations?

It's next on THE ED SHOW.

(COMMERCIAL BREAK)

O'DONNELL: Welcome back THE ED SHOW.

A breakthrough in North Korea. Late today we learned that former President Bill Clinton has convinced Kim Jong-il to issue a special pardon to two American journalists who were recently sentenced to 12 years of hard labor.

Clinton arrived in North Korea earlier today on what everyone involved insisted was "a private humanitarian mission." Previously, the White House and State Department had unsuccessfully lobbied for the journalists' release.

Joining me now is Michael O'Hanlon of the Brookings Institution.

Michael O'Hanlon, this couldn't possibly have been a private humanitarian mission, could it?

MICHAEL O'HANLON, BROOKINGS INSTITUTION: Well, you're right in one sense. Anything a former president does has a certain amount of official quality to it. And certainly when Bill Clinton is married to the secretary of state and the president is from his own party, it's pretty hard to claim that there is no connection.

On the other hand, of course, there's a certain deniability if Clinton were to go beyond this case of the two young women and had talked about issues like the nuclear crisis. He can always claim that he's speaking for himself and not coordinating fully with Obama, the same way that Jimmy Carter did not coordinate with him back in '94 on a similar visit. So, that's the only place where there's any kind of plausible deniability or separation.

O'DONNELL: And in the intrigue of setting up a mission like this, isn't it most likely that Kim Jong-il told us who he was willing to talk to, and it was maybe a very short list with one name on it?

O'HANLON: That's an interesting theory and it's not out of the question. It's also interesting to note that Kim Jong-il apparently was the one who called the shots here.

Not a huge surprise. He's been the leader of his country for 15 years. But as you know, he's had serious health issues the last year, and it wasn't entirely clear to what extent he had the full reins of government still in his hands. And so that's another side, you know, observation you might draw from this overall incident.

You're probably right, though. Bill Clinton was probably one of the only people that could have played this role.

O'DONNELL: And now, one of the very few American officials to have sat down and looked in Kim Jong-il's eyes and actually tried to discuss something. Does this mean that we could be possibly inching closer or stepping closer to some real breakthrough in our relations with North Korea?

O'HANLON: Well, we can always hope for that. I will say, though, that keeping my expectations a little more modest, I am just relieved that the process of worsening relations is not continuing, because who knows where that could go with the blustery and belligerent North Koreans?

Now, in the past, they've done a nuclear test and thrown a few insults our way and then calmed things down. And that's usually the way it works. But I'm still relieved that we've introduced a little bit of a softening in the relationship, because the last thing you want to see is the North Koreans decide, OK, now it's time to threaten Japan with a missile, or it's time to start threatening to sell these nuclear bombs to the highest bidder, or some other provocation that is not totally out of the question when you're dealing with Pyongyang.

O'DONNELL: And is there a chance that we could see Bill Clinton as the one who would resume any kind of continuing discussions with North Korea?

O'HANLON: You know, I think you have to be careful in trotting out the prestige of the American president or former president when you're dealing with a country that still has a couple hundred thousand of its own citizens in a gulag, forced labor camps, among other transgressions. This is probably the worst government on Earth. So, you have to be pretty careful and probably have some sense that you're going to succeed through a pre-negotiation process before you trot out a big gun like Bill Clinton.

This one time, OK, and obviously we're all relieved by what happened today. But I'm not sure he can really be the guy who rolls up his sleeves day after day and gets down and dirty with the North Koreans, unless there really is progress already clearly under way.

O'DONNELL: Michael O'Hanlon, thanks very much for joining us.

O'HANLON: Thank you.

O'DONNELL: Coming up next, in honor of President Obama's 48th birthday today, we have learned the alleged birth certificate from Kenya is really from Australia. So that means two confidantes (ph) are involved in this new conspiracy.

Details coming up next on THE ED SHOW.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Happy birthday, Mr. President!

UNIDENTIFIED GROUP (singing): Happy birthday to you. Happy birthday to you. Happy birthday, dear Helen, happy birthday to you.

(END VIDEO CLIP)

O'DONNELL: President Obama's 48th birthday today, a date he shares with veteran White House reporter Helen Thomas.

As you just saw, the president made a surprise appearance in the White House press room this afternoon to celebrate with a plate of cupcakes for the 89-year-old dean of the White House Press Corps.

And now we have a little birthday gift for the commander in chief. A whole lot more debunking has gone on in the 24 hours since we showed you a phony Kenyan birth certificate that some very silly people were using to "prove" that Barack Obama is not a U.S. citizen.

Today, we know where that pathetic attempt at a forgery actually came from.

A blogger in California tracked down this Australian birth certificate.

The format and fonts on the Australian document are exactly the same as the bogus Kenyan birth certificate bearing Obama's name. Also, check out the signature of the registrar.

On the Australian certificate, the name reads "G. F. Lavender" (ph). On the fake Kenyan one, "E. F. Lavender" (ph).

Same trick with the district registrar, "J. H. Miller" (ph). On the legit Australian one, "M. H. Miller" (ph) on the forgery.

Moving up to the top-left corner of both documents, you can clearly see those numbers are identical. And the forger also didn't bother to change the book and page numbers down on the lower-right corner.

An Australian radio station tracked down the man whose birth certificate was used for the forgery. He said he had posted it on a family genealogy Web site where someone evidently ripped it off and switched up some of the information.

They're not very good at this.

So, happy 48th birthday, Mr. President. We got rid of that fake birth certificate for you, but we're sure there are many, many, many more to come. Get used to it.

Up next, Senate Democrats are split over health care reform. They met with President Obama today. Did he give them marching orders?

I'll ask Senator Debbie Stabenow next on THE ED SHOW.

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SEN. HARRY REID (D), MAJORITY LEADER: There was a lot of experience in that room. And we had someone who is leading us that we all admire so very, very much. The president didn't get one standing ovation, but several of them. He was really-kind of reminded me of the days when I was an athlete, and the coach was giving you a pep talk before the game. You came out of that pep talk that the coach gave you ready to take on the world. We're ready to take on the world.

(END VIDEO CLIP)

O'DONNELL: Welcome back to THE ED SHOW. That was Majority Leader Harry Reid just after the Senate Democrats emerged from their White House lunch today with the president. Joining me now, one of the senators who met with the president today, Senator Debbie Stabenow of Michigan. Senator Stabenow, back in 1994, in the middle of a health care war, when I was chief of staff of the Senate Finance Committee, I was sitting in on the senators' luncheons every week on this subject. And I can tell you they got very contentious. There were moments when I thought maybe a punch was going to be thrown, maybe not.

It was like nothing else I'd ever seen in the Senate. What was it like up there today? Was it a tense meeting? Was it a unified meeting?

SEN. DEBBIE STABENOW (D), MICHIGAN: You know, it was a unifying meeting. I have to say we started out by singing happy birthday to the president. There were no punches. There was no yelling. We are unified.

First of all, we have had the first session of Congress be the most productive I think in our history. From the jobs bill and equal pay, children's health insurance, credit card reform, FDA tobacco legislation we've been trying to get done for 30 years. The list goes on and on.

We are refocused on health care. The current system doesn't work. If it worked, you and I wouldn't be talking about it. It doesn't work. We want to take the insurance company out from between you and your doctor. So the first call the doctor makes isn't to the insurance company, to see if they'll pay for what they want to do to treat you.

So we are very unified on what needs to happen. Little differences around, you know, how the approach is. But we are unified in needing reform.

O'DONNELL: There's a lot of pressure in the Senate Finance Committee, a lot of pressure on Chairman Max Baucus, who was standing right beside Harry Reid in that picture we just saw. There's been some grumblings from the Democratic caucus in the Senate about how Senator Baucus was going about this. Jay Rockefeller, one of the members of the Senate Finance Committee, long-standing member, has been grumbling a little bit. There's been more than that out there.

How was Senator Baucus greeted by the president? And did he have anything in particular to say to the group about what his timetable looks like now?

STABENOW: Well, we have been talking every day, of course, as a member of the Finance Committee. We meet almost every day about with Senator Baucus. And Max didn't speak directly to the caucus today. We really were hearing mostly from the president and answering-he was answering questions. But he praised Max for working to get a bipartisan agreement, but said very clearly that if we can't get Republicans that are willing to support changing the current system that doesn't work for people, and is breaking the backs of too many businesses and families, then we will go ahead and fight for our principles and get something done.

O'DONNELL: And did the president say today that the Senate should consider itself free to go forward and act in a reconciliation bill, if necessary, to pass this with Democrats only?

STABENOW: We didn't talk about reconciliation today. It's always in our back pocket. We would rather not do that if we can get bipartisan agreement, because we can do more comprehensive reform if we do it outside of that particular process. It's a limiting process. But if we have to, that's certainly on the table.

But I think we can get there. I honestly believe we can get there.

O'DONNELL: Senator, does it concern you there is not a single big state or even medium-sized state senator in the group of six, meeting at the Senate Finance Committee, with Chairman Baucus? Mike Enzi, for example, the leading Republican in that room, represents fewer people than live on Staten Island. The total number of people represented by the six senators in that room do not equal the population of New York City. It's 8.5 million people.

Shouldn't Michigan be in there, shouldn't Illinois, California, New York be in there? There are no teaching hospitals represented in that room. I mean, this is a group that is-for the whole shape of the bill to come down to this group is very unusual. They represent much more land than they do people.

STABENOW: Well, it's not unusual to have a small group negotiating. I can tell you as a member of the Finance Committee that I will have a vote on the Finance Committee, representing Michigan, representing a major industrial state. And I will view what they recommend through that lens.

And the chairman has indicated that he's not going to move forward on something that we don't feel comfortable with. That's why we are talking with him every day. But there's no question about it, that we need every size state represented. All of us on the committee, in the end, will make a decision about whether or not we support what they are recommending, or whether we wish to change it.

O'DONNELL: And before you go, senator, did the president get to the Cash for Clunkers bill, and urge you to pass the identical bill that the House has passed?

STABENOW: Well, he congratulated me as the Senate sponsor and said he was very impressed with the results. Told everyone he was very impressed with the results. And it's very important to get done. I appreciate his support of that.

The reality is, this is something that people can see, that's tangible, that supports their efforts to get better fuel economy, turn in the old car, get a new one. Please make it American-made, preferably in Michigan. And make sure that you are able to get a vehicle that's going to cost you less in gas. And that's what we're talking about. And we're trying to also keep middle-class families working.

O'DONNELL: Thank you very much for joining us, Senator Stabenow.

Thanks for being our ears in the room today with the president.

STABENOW: You're welcome, thanks.

O'DONNELL: For more, let's bring in our panel. We have MSNBC contributor Mike Barnicle, chief political correspondent for "Politico" Mike Allen, and former Republican Congresswoman Susan Molinari.

Mike Allen, what does the president have to do in a meeting like that to get the senators' attention in a way that is different from what we see them doing in speeches? What does he have to do differently in that room than he does, say, in the press conference or in his public presentations?

MIKE ALLEN, "POLITICO": Well, Lawrence, he pulls out the hot poker and that can take a lot of different forms. Presidents have lots of different ways of sending a message, just like your boss or my boss does.

Look, they're going to move quickly to plan B here. If the Senate Finance Committee can't get their act together more quickly, there's lots of ways to move on.

Lawrence, going the reconciliation route, which means passing health care without Republicans, a purely Democratic bill, it's not as limiting as you think. They are very-I shouldn't say you think. As most people think. You know a million times more about this than I do.

But using that system, they can do the budget part of it. They can do the money part of it. And then they can add on some of the policy things using 60-vote amendments.

So using a Democrat's only process, with some Republicans added on in specific measures, you actually can go quite a long way with the president's plan. And Lawrence, I think you'll agree with me, the American people are not going to remember which way it went. It's clear from the shenanigans of the last few months that bipartisanship is not back with us anyway. So any bipartisan fig leaf I think they're happy to throw by the road.

O'DONNELL: Mike Barnicle, here's what the problem would be publicly. There has never been a legislative change in Medicare, and there are massive changes in Medicare in this bill, that did not go through the Senate Finance Committee. If they somehow decided to go around the Senate Finance Committee and go into reconciliation-and by the way, they've never gone into reconciliation without going through the Finance Committee first-Republicans would get to say, you're using a legislative process you have never used before. You're bypassing your own people-

MIKE BARNICLE, MSNBC CONTRIBUTOR: Nobody would listen to them.

O'DONNELL: That's my question. My question is, would that be somebody that the public would be listening to and care about?

BARNICLE: No, I don't think the public would be caring about it. You ask Mike Allen what the president should do. One of the things he should do is perhaps read the great history of Lyndon Johnson's presidency, and how Lyndon Johnson dealt with things in 1964 and 1965, the passage of civil rights bills. It wasn't a professorial deal. He wasn't standing up at press conferences and talking about his great knowledge and detail of the bill.

He was talking about politics. He was talking about dams. He was talking about very parochial interests that all these senators and congress-people have. And I think maybe that's where the president has to go on this.

O'DONNELL: Susan Molinari, if they have to use a legislative process that the Senate has never used before on anything, do you think that your side can make that something that the public would care about and think that something strange is happening here?

SUSAN MOLINARI, FORMER CONGRESSWOMAN: You know what, the point is-let's stop all this. If the Democrats thought they could pass this bill with all Democrat votes, that's what they would do. They know they can't do it. You talked about the disagreements that Senator Rockefeller is having with Senator Baucus right now. He doesn't want the co-op plan. The co-op plan is the only thing that's getting some conservative Democrats in the United States Senate, in the House of Representatives, staying seated at the table.

Look, I believe that the leadership of the Democratic party-I don't mean this pejoratively-would do this without a Republican vote if they thought they could. As it stands right now there is no agreement, or enough to pass a bill in the House-well, in the Senate in particular-with Democrats agreeing on what it's about going to-how they're going to do it, how it's going to cost, how they're going to pay for it. Pick a topic. There's no agreement right now.

O'DONNELL: Susan, last time around, 15 years ago, the Republicans profited hugely by completely killing the bill. They killed it. They got Democrats got absolute zero, and the Republicans won big-time in the next election. Do you think those same political dynamics apply this time around?

MOLINARI: I don't think so. I think that President Obama is coming in with a lot more support, although I think obviously we're seeing from polling numbers that that's starting to dwindle. I think a lot of that has to do with what kind of-what he does and the Democratic party does from here. I think if it's health care and it's a mandate passed by the Democrats, I think there will be some concerns, particularly if middle-class tax cuts are enacted, if tax cuts on small businesses are enacted, if all of a sudden the economic recovery and unemployment numbers-the recovery goes down and unemployment continues to go up.

I think it all will be brought in to bear. Particularly if he then proceeds to move with climate change and a budget that does not continue to cut the deficit. I think it all depends on does President Obama pivot at this moment in time into more of a President Clinton mode, or does he sort of stay the course that he's outlined from day one. I think that's the different dynamic taken in total.

O'DONNELL: Coming up, a Connecticut lawmaker won't accept the Congressional health care plan for himself until Americans have access to coverage as good as that. What's he hearing from his voters in his district? And can Nancy Pelosi count on his vote even if the final bill doesn't include a public option? That's next in the playbook.

(COMMERCIAL BREAK)

O'DONNELL: In the playbook tonight, liberals say Nancy Pelosi is ignoring them. The speaker pulled her team together for a last-minute deal on health care reform with some of the Blue Dog Democrats before the House left Washington Friday. But 60 liberals in the House say the speaker is rolling over to the Blue Dogs' demands. Their message, in the letter to the speaker, "we will vote against a bill without a strong public plan."

They insisted they're not bluffing. And they're particularly bothered by Pelosi's response to their news conference last week. She laughed when asked if she believed they'd really vote down the compromise bill. She said, "are the progressives going to take down universal, quality, affordable health care for all Americans? I don't think so."

Joining me now, Connecticut Representative Joe Courtney, a member of the House Education and Labor Committee. Congressman Courtney, what's going on with the liberals in the House? Are there 60 of them who really will vote no on any plan that does not have a public option?

REP. JOE COURTNEY (D), EDUCATION AND LABOR COMMITTEE: There definitely was a letter that 60 members signed. I was not one of them, actually. But that did object to some of the press reports about what was being negotiated with the Blue Dog caucus. The letter, as I read it, wasn't quite black and white in terms of whether people would absolutely, totally vote no.

But clearly there are people who have very strong feelings about what they're reading about, in terms of negotiations with the Energy and Commerce Committee, and obviously with the Senate Finance Committee, which you just discussed, Larry.

Certainly, there's I think a belief that, you know, the public option is really something that members consider the highest priority to make sure that you've got a credible benchmark for private insurance companies to have to match up to or perform to, if you're going to have true, honest to god health care reform.

O'DONNELL: Congressman Courtney, how eager are you guys to go out on the House floor? And what I mean by that is, are you willing to go out on the House floor, say, in early September, before the Senate Finance Committee has delivered a bill?

COURTNEY: You know, I think it would be helpful in terms of getting to 218 votes if we had some clear idea of where the Senate end game was. And that's certainly something I've expressed to Rahm Emanuel and others at the White House. Having said that, you know, there's a lot of ways for a bill to make it through the process. And certainly I could see a strategy where if the House moving first and having an aggressive, strong health care reform bill pass might stiffen some spines in the Senate side, and create sort of a groundswell of support for the public to push the Senate -So That's certainly one scenario that could take place.

Ideally, we would have a package that everybody could see, both in the House and the Senate, when we're taking up the final action, so that, you know, you really increase everybody's comfort level. And I think get the strongest number possible.

O'DONNELL: You have members on the Ways and Means Committee who have already voted for three new top tax brackets, which, by the way, will hit Connecticut harder than it's going to hit other states, in terms of income distribution by state. I would imagine that the rest of the House is very reluctant to vote for new high tax brackets in the House bill, if they're not going to be voted on in the Senate.

Why would House members want to extend themselves on that, if they think the Senate might not go for it at all?

COURTNEY: The fact is a lot of House members wouldn't want to extend themselves and walk that gang plank. The House Ways and Means Committee did take up that action. And you're right, there were members from the northeast and the West Coast who sit on that committee. That was a very tough vote for many of them to cast.

And I think you're going to see a lot more noise aimed at the White House saying, hey, we want you to weigh in with the Senate so we can see what the end game is. If we're going to take a really, really tough vote, we want to make sure it's not just symbolic and something that's going to be used as cannon fodder against us in 2010, but that it's actually going to be meaningful.

At this point, I think a lot of people are skeptical that that's really going to be the final version, and why should we walk the gangplank if that's not the case?

O'DONNELL: Thank you, Congressman Courtney.

COURTNEY: OK, Larry.

O'DONNELL: Coming up, a former president's success in North Korea. Can it be a first step to something more? I'll put it to our panel next on THE ED SHOW.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

WOLF BLITZER, CNN ANCHOR: If you were president, Senator Clinton, what could your husband do?

HILLARY CLINTON, SECRETARY OF STATE: This is a fascinating question. When I become president, Bill Clinton, my dear husband, will be one of the people who will be sent around the world as a roving ambassador.

(END VIDEO CLIP)

O'DONNELL: Welcome back to THE ED SHOW. Hillary Clinton may not have made it to the presidency, but today Bill Clinton is on his way back from a sensitive mission to North Korea. Now two American journalists are free. Has Bill Clinton created a new opening to improve relations with North Korea?

Let's bring back our panel, Mike Barnicle, Mike Allen and Susan Molinari.

Mike Barnicle, they finally found something to do with Bill Clinton.

BARNICLE: You know, he's a very valuable asset.

O'DONNELL: Certainly is today.

BARNICLE: They've finally begun to use him. Hopefully this will diminish what you hear anecdotally, the resentment that the former president still carries I think in part towards President Obama and the administration, and what happened to his wife during the course of the campaign.

O'DONNELL: Mike Allen, Barack Obama should be grateful to Bill Clinton today for getting this headache out of his way.

ALLEN: Of course he should. I think this is showing how quickly the campaign is fading. This is a great new chapter for President Clinton. His wife had been ascendant. The Democratic faithful have been going with this young new president. In direct mail pitches, the President Clinton has been drawing much less well than he had from either side.

So now he has new mojo. This is a reminder that he's very well known around the world. Even though he doesn't work for a government or he's not a formal diplomat, he can do the job.

O'DONNELL: Susan Molinari, do you think Bill Clinton exchanged e-mail addresses with Kim Jong-il today, and figured out a way to keep the conversation going?

MOLINARI: Be on each other's Twitter pages, Tweet together?

O'DONNELL: Yes, think they might have found a way to keep the conversation going between our two countries?

MOLINARI: I don't think so. I think that, you know, President Clinton respects the line between being sort of the ambassador that helps save lives, like Jesse Jackson had, and Governor Richardson in the past. In terms of closing that, that really is the job for President Obama and for Secretary of State Clinton.

I think we just all have to be grateful that this is able to be done today, that two lives are saved, and that diplomacy by a former president works out there. And I think that's sort of the end of it.

O'DONNELL: Mike Barnicle, what does it mean for Hillary Clinton? She has George Mitchell, who has been brought in as special envoy, taking up some of her jurisdiction. She has Richard Holbrooke as another special envoy taking up some of her jurisdiction.

Now you have a crisis where you're going to do a mission like this and her husband comes in. Is the imagery here working against Hillary Clinton? Or is this just showing that she's a good team player?

BARNICLE: I don't think the imagery is working against her. But again, what you hear is there's a little bit of confusion in the foreign policy shop. General Jones in the White House, the envoys that you mentioned-George Mitchell in the Middle East, Dick Holbrooke in Afghanistan, the secretary of state herself, and now her husband out there on the trail. Where-

I think, you know, he's a terrific ex-president, along with President George H.W. Bush. He's been terrific. And hopefully, appearances aside, he'll only continue to do better things and play a bigger role.

O'DONNELL: Do you get the sense from anyone in the former Clinton campaign that they're worried about any of this imagery around her?

ALLEN: No, they're not. Here the president was doing a specific job. You can say it's ironic that a nation that's frozen in time is the one that's treating Bill Clinton as the acting head of state. But the way that this came about shows that it's no bad reflection on anyone. We're told that the government of North Korea told the family-

O'DONNELL: Mike, we're going to have to hold it there. That's it for THE ED SHOW today. Please. I'm Lawrence O'Donnell. See you back here tomorrow at 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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