updated 8/6/2009 11:17:47 AM ET 2009-08-06T15:17:47

THE ED SHOW

August 5, 2009

THIS IS A RUSH TRANSCRIPT.

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

Guests: Chuck Todd, Sherrod Brown, Lloyd Doggett, Maureen Dowd, Jonathan Alter, Kevin Madden, Chris Frates

(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, sitting in for Ed Schultz this week, who has gone fishing.

The Democrats are hitting back on the AstroTurf campaign against health care reform, but is a strongly-worded press release an effective counter-punch to a screaming mob? I'll ask a congressman recently forced to flee his own event.

Bill Clinton to the rescue. There are so many angles to the North Korea story-Gore and Clinton, Clinton and Clinton, Clinton and Obama. Oh, and the two women who were reunited with their families today. Yes, yes, they were there, too.

"New York Times" columnist Maureen Dowd joins me to try to make sense of it all, coming up.

Many of the Republicans saying no to Sonia Sotomayor are facing tough primary challenges in 2010. Why are Republicans using the Sotomayor vote to pander to their base instead of expanding their base?

But first, tonight's "OpEd."

The foot soldiers on the right declared war on health care reform and the Democrats were caught flatfooted. House members and senators didn't know what to do when angry crowds shouted them down at town meetings. Now the Democrats are launching their own offensive.

(BEGIN VIDEO CLIP)

NARRATOR: Desperate Republicans and their well-funded allies are organizing angry mobs, just like they did during the election. Their goal? Destroy President Obama and stop the change Americans voted for overwhelmingly in November.

UNIDENTIFIED MALE: It will break him.

RUSH LIMBAUGH, RADIO TALK SHOW HOST: I hope he fails!

NARRATOR: This mob activity is straight from the playbook of high-level Republican political operatives. They have no plan for moving our country forward. So, they've called out the mob.

UNIDENTIFIED FEMALE: And I want to know why are these people ignoring his birth certificate?

NARRATOR: Call the Republican Party. Tell them you've had enough of the mob.

(END VIDEO CLIP)

O'DONNELL: President Obama is calling on the people who helped get him elected to campaign for his health care plan. The president sent this e-mail via the PAC Organizing for America today: "We didn't win last year's election together at a committee hearing in D.C. We won it on the doorsteps and the phone lines, at the softball games and the town meetings. And if you're willing to step up once again, that's exactly where we're going to win this historic campaign for the guaranteed, affordable health insurance that every American deserves."

The Obama White House wants to re-ignite its support base to take on a legislative agenda. That was why Organizing for America was created in the first place. But what is the president actually asking his supporters to campaign for?

There is no plan yet. There's no consensus bill in the House and the Senate. Maybe the mob will provide the enemy-would provide enough motivation, enough of an enemy to rally the liberal base, but at some point Obama supporters will ask, what exactly are we fighting for? Not just what are we fighting against?

For example, no show has been more vigilant about the public option than this one. Ed Schultz has pushed it day in and day out. But today, when NBC's Chuck Todd asked President Obama about what he wants to see in a bipartisan bill, he didn't mention a public option.

(BEGIN VIDEO CLIP)

CHUCK TODD, NBC NEWS: Where are you on bipartisanship?

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: You know what? I am glad that in the Senate Finance Committee there have been a couple of Republicans, Chuck Grassley, Mike Enzi, Olympia Snowe, who have been willing to negotiate with Democrats to try to produce a bill, but they haven't yet. And I think at some point, sometime in September, we're just going to have to make an assessment.

My bottom line is if we've got a bill that is reforming insurance practices so that, for example, people with pre-existing conditions aren't losing their health care, if we're cutting the long-term costs of health care and health care inflation so that it's affordable for families, businesses and the federal government, if it's deficit-neutral, if it's instituting the kinds of reforms that will improve quality and reduce cost, then I-that's what I want.

(END VIDEO CLIP)

O'DONNELL: Joining me now is Senator Sherrod Brown, Democrat from Ohio and a member of the Senate Committee on Health, Education, Labor and Pensions.

Senator Brown, you've already voted on a reform bill coming out of that committee. It has a public option in it. You didn't hear President Obama insist on a public option on what he's looking for coming out of the Senate Finance Committee.

Would that be a deal-breaker for you? Do you need to see a public option come out of the Senate Finance Committee?

SEN. SHERROD BROWN (D), OHIO: I don't know for sure. I would have trouble voting for any bill that doesn't have a public option. I can't absolutely say no depending on what else is in it, but that's very important to me. It's important to a huge majority of the American public.

I don't put a lot of stock in that. That was one interview, and the president did mention it, mention the public option. He was at the White House yesterday, he mentioned the public option in strong terms to the entire Senate Democratic Caucus. He's mentioned it in speech after speech.

Organizing for America is behind it. A huge majority in-we've passed four bills in the Congress so far in committee, three different bills in the House and one in the Senate in the Health, Education, Labor and Pension Committee. All four of these bills have a strong public option. All four of these bills have an individual mandate with good subsidies for people that are low income.

So, these are the-this is what we're talking about. This is the bill that really will matter to the American people. That's what I'm going to be talking about in August. I think others will, too.

O'DONNELL: Now, once again, the Senate Finance Committee is the key committee that everyone's waiting for to come out with a bill that people believe will probably have a better chance of getting through the Senate than anything else, and, therefore, something closer to the reality of what the president will be signing. But Chairman Max Baucus on that committee is working right now with Mike Enzi from Wyoming, Republican on that committee. You worked with him on the Senate Committee on Health Education, Labor and Pensions, and you could not make a deal with him on any kind of bipartisan plan.

What do you think Max Baucus' chances are? You guys tried. Senator Dodd tried. Senator Kennedy tried. And you failed.

Can Max Baucus bring something that will get Mike Enzi to make a deal here that you guys couldn't come up with?

BROWN: It's hard for me to figure that out. I like Mike Enzi. He's a nice guy. Mike Enzi represents a state of about 600,000 or 700,000 people.

O'DONNELL: No, no, no. Just to correct you, he represents a state of 540,000 people. Fewer than live on Staten Island.

You represent a state of 11 million. That is more people than all six senators on the Finance Committee who are behind the closed door right now combined. They all represent very small states.

BROWN: And not only that, but Mike Enzi didn't win the election.

O'DONNELL: Right.

BROWN: I mean, the voters said they want something different. And let me point out one other thing.

I was on the-we had 11 days of markup, 11 days of considering amendments in the HELP Committee. I've been in the House and Senate for 16, 17 years now. And I've never seen a bill, in all this time, that had that much attention paid to it, that many amendments, that long a period of markup.

We accepted 160 Republican amendments. This is a bipartisan bill. It's just not bipartisan on the big, fundamental issues, but neither was Medicare. We would never have gotten Medicare 40 years ago if everybody had waited for the conservative Republicans to join on board. It's a different in views.

I'll accept Republican amendments when they work for my values and when they, I think, are good for the middle class and good for my state. But these big issues like public option, like subsidies for low-income people, like some of the prevention and wellness stuff, there's a difference between the two parties. And Senator Enzi is just not where the majority of this country is on these issues.

O'DONNELL: And at what point do you say to Max Baucus, give up, just go with the Democrats on your committee? At what point does the pressure from outside of his committee force his hand?

BROWN: Well, some people think it already should have. I think the reason that, in a lot of ways, the Democrats seem to be losing this public debate with all the anger aimed at Democrats is that there is not a bill to talk about.

There is a bill to talk about, the HELP Committee bill, but all the focus is on the negotiations among those six, three Republicans and three fairly conservative Democrats. And so we've lost our message.

There's a deadline of September 15th. We need to enforce it. If Senator Baucus can't get a deal by then, we need to move forward and pass this bill. And we should use the HELP Committee bill, which is mainstream, Democratic bill, mainstream American bill, and begin to move it through the Senate.

O'DONNELL: But-and we won't get into it now, but, you know, there's all sorts of jurisdictional problems with that since your committee has no jurisdiction over taxation or Medicare. It would be a unique approach to the Senate floor to try to go down there without the Senate Finance Committee having exercised its jurisdiction first, wouldn't it?

BROWN: Yes. Well, I know you worked on that committee and you're right about that. But the House of Representatives has dealt with all aspects of this through their three different committees.

Once the bill gets to conference committee, we can work a lot of it out so it has-it's a bill similar to HELP, combined with some of the stuff in the House. That's too much inside baseball, but we need the Finance Committee to do something, but they've got to put out something by beginning of September 15th if they can't get Republicans to go along.

And they may get Olympia Snowe, because she's more of a moderate. But Enzi and Grassley are much more conservative lawmakers that really will-if they're satisfied, it means a lot of others aren't, including, I think, a majority of the country.

O'DONNELL: All right. We'll see if the new deadline holds this time, Senator Brown. Thank you very much for joining us today.

BROWN: OK. We'll make sure it does.

Thank you. I appreciate it.

O'DONNELL: Joining me now is Democratic Congressman Lloyd Doggett of Texas, a member of the Ways and Means Committee in the House of Representatives.

Congressman Doggett, you had one of these famous events where you were basically kind of chased into your car and out of there by these protesters who...

REP. LLOYD DOGGETT (D), TEXAS: Well, Lawrence, that's really the right wing spin on it. They dribbled out a little videotape. What it doesn't show is that I spent an hour discussing and debating this bill and listening to all the taunts and the pictures of the tombstones with my name on it. And they showed some video at the end when their noise got so loud, it just wasn't productive to stay any longer.

Democrats shouldn't flee. We need to stand and fight these people.

O'DONNELL: All right. So now you're telling me something I didn't know based on this imagery, that you feel you had a productive meeting...

DOGGETT: No, I wouldn't say it was productive. I stood my ground and debated with them this bill, listened to all their laughable objections to the bill, explained why a public plan, a public option is essential. And then what they did after their views were expressed and responded to, they shouted down their neighbors because they didn't want to hear the views of other people.

And when it became obvious a little over an hour that they wouldn't let other people speak, I decided to move on to the next event. They followed me to two more events, and finally, in one of them, the police had to kind of separate out a couple of their members. They were interrupted in disruption, not dialogue.

O'DONNELL: All right. I want to read you an account of one of the people who was there, one of the protesters that appeared in "The New York Times," and you tell me if this is-obviously, there's coloration in it, but how accurate is this?

This person said, "The congressman 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."

Is that the way it felt to you, like you were being tarred and feathered?

DOGGETT: Total nonsense, but it is part of the right wing spin, that they want people to drop the fight. We can't do that, nor can we be caught up in the fight. It's the substance of this that counts. The great words you just got from my friend Sherrod Brown are important.

Let me just explain that on this public option, I view it as absolutely essential. We need to give individuals that choice, and we need to force some competition among these insurers that aren't competing for health care providers now.

The Congressional Budget Office had said that under our plan, even if it's not weakened by all this Blue Dog nonsense, that under our plan in 10 years, 96 percent of the population under 65 will be in private insurance plans and four percent will be in the public plan. How much more do we have to compromise? They got 96 percent.

I think what we have is a fair and reasonable approach. And we need to pass it in September in the House and insist the Senate do the same thing.

O'DONNELL: Congressman Doggett, do you really see it as nonsense from the Blue Dogs? I mean, you're a Democrat from Texas. You know what it's like to try to work Democratic Party politics in a state that is fundamentally unfriendly to the Democratic Party at this point. So, I would expect you to have a real sensitivity about what Blue Dogs are up against.

Are they, in your mind, exaggerating what they need to be able to get in this bill in order to be able to live with their own electorate? Are they in a sense underestimating what their own electorate is willing to support?

DOGGETT: Well, there's a big difference between Blue Dogs and blue Doggett when it comes to health care. Now, I agree with on some of their concerns about costs, but what I was particularly referring to as nonsense was their effort to limit our public plan even further, to restrict it, to require it negotiate prices.

That's not a good approach. It weakens the public plan. It's already been weakened too much.

O'DONNELL: Now, are you going to get back out there and try to do more town meetings? I mean, the problem with this kind of shouting is 10 shouters can drown out 100 supporters, can't they?

DOGGETT: That is a problem. And we need people to come out and to recognize, don't just leave this to President Obama and the Democratic Congress. You have a responsibility as a citizen if you want to see genuine health care reform.

But yes, tomorrow, Lawrence, I'll be meeting with the veterans in a public meeting about health care. On Saturday with community health centers. Next Monday with teachers and school personnel here in Austin.

We need to be out there spreading the message, not letting the mob rule.

O'DONNELL: All right. Congressman Doggett, thank you very much for joining us today.

DOGGETT: Thank you.

O'DONNELL: And good luck being heard out there on the trail when you're trying to explain this thing.

DOGGETT: Thank you.

O'DONNELL: All right.

Coming up, meeting and dinner with Kim Jong-il, three hours, 15 minutes.

Being relevant on the world stage again? Absolutely priceless.

Maureen Dowd takes on the big dog's diplomacy as only she can.

That's next on THE ED SHOW.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

LAURA LING, FREED U.S. JOURNALIST: Thirty hours ago, Euna Lee and I were prisoners in North Korea, and then suddenly we were told that we were going to a meeting. We were taken to a location, and when we walked in through the doors, we saw standing before us President Bill Clinton.

(END VIDEO CLIP)

O'DONNELL: Welcome back.

That was Laura Ling, shortly after she and Euna Lee reunited with their families in Los Angeles this morning.

In the starring role of this made-for-TV drama, former President Bill Clinton, whose diplomatic pinch-hitting brought the journalists home after months of backdoor negotiations.

Joining me now on the phone is "New York Times" columnist Maureen Dowd.

Maureen, in your column today, you-entitled "Let the Big Dog Run," you said, "Hillary and President Obama look bigger when they share the stage with other talented players. And Barack and Bill have finally started to put South Carolina behind them-without the need for a beer summit photo-op."

Maureen, this certainly puts the beer summit in the rearview mirror at the White House. They couldn't have asked for a better time to look like they can do something efficiently, right?

MAUREEN DOWD, COLUMNIST, "NEW YORK TIMES": Well, you know, I think when Obama chose Hillary, he set himself the most delicate task that anyone could have, which is to extract the great things that the Clintons can do from the sometimes dysfunctional, you know, cloud above their heads. And as is the wont with Bill, it's already gotten a little dysfunctional, because I was just talking to our brilliant State Department reporter, Mark Landler, and he was saying that they do not know how to get Bill Clinton into the White House now to debrief him, that he has taken a plane to Chappaqua, so they do not have the information that they're dying to get.

Because as one of the White House people said to Landler, you can't summon an ex-president to the White House. And they're worried that there's a little bit of this, on Clinton's side, of, well, Obama, you weren't in a rush, you weren't falling off over yourself to call me, and now I'm not going to be falling all over myself to call you.

I mean, they talked briefly on the phone this morning, as he did with Hillary, but they need to get him in a secure room, which Hillary may have at Chappaqua since she's the State Department chief. And they don't know how to do that.

So, again, as with everything Bill, this is why we love him. It's, you know, a hilarious situation. Unique in the annals of diplomacy.

O'DONNELL: Yes, it's never simple.

Now, Maureen, how much arm-twisting do you think it took to convince Bill Clinton to get on a plane to go rescue two damsels in distress?

DOWD: Well, you know, as you know because you've written these brilliant scenes for "West Wing," I'm sure it took none. And my favorite thing is "The New York Post" headline: "Bubba Gets the Chicks."

O'DONNELL: Yes, this is the call he's been waiting for, for a while.

Now, does this indicate any possibility of some other roles they could ask Bill Clinton to play down the road? I suppose if they're struggling with the aftermath of this one for a while, that will inhibit their enthusiasm for asking him to do anything else.

DOWD: Well, I think he can be-you know, play a wonderful role. But as with everything with Clinton, it's a little dicey.

For instance, he couldn't take, you know, an Air Force plane, so he took Bing's plane, you know, who's one of his Hollywood playmates. And the bada-Bing plane, you know, where allegedly wild goings-on happen. So, you know, there's always just that touch of diceyness with Bill, but that's what makes him such a great story.

O'DONNELL: Yes, Steve Bing's plane. Well, you need...

DOWD: Sorry, Steve Bing, right.

O'DONNELL: You need a very comfortable plane to cross the Pacific, and you need room for the damsels you're going to be rescuing. Everyone needs to be comfortable, right? That's a perfectly reasonable choice to make.

DOWD: That's true. And he had that extra schadenfreude spritz because he got the assignment instead of Al Gore, who the women work for, and Bill Richardson and Jimmy Carter, who, you know, he's had all these fraught relationships with.

O'DONNELL: Do you think there's one other seething politician at this moment in California who thinks, why didn't I get the call, the governor of California? Who better to rush in there and grab one in each arm and pull them back up onto the plane?

DOWD: Yes, he's played that role before. Well, maybe once he gets finished, they can start using him.

As long as Hillary isn't threatened by these high-profile envoys, I mean, it's fantastic. There are so many things wrong with the world, let all the peacocks roam.

O'DONNELL: Maureen, thank you very much for giving us the backstage elements of how this thing is unfolding.

DOWD: Thank you.

O'DONNELL: Thanks, Maureen.

DOWD: OK. Bye.

O'DONNELL: Coming up, choosing sides in the confirmation of Sonia Sotomayor to the Supreme Court. Why it may be less about her and much more about a date in 2010.

That's next on THE ED SHOW.

(COMMERCIAL BREAK)

O'DONNELL: The Senate will vote this week to confirm Sonia Sotomayor to the Supreme Court. Whether or not she'll be seated has never been the issue.

All of the Senate Democrats and Independents will vote for her. And even though 28 Republicans have said they'll oppose her, she'll still have twice as many votes from the Republicans as Justice Samuel Alito got from the Democrats when he was confirmed in 2006.

Let's look at the political motivation of some of her Republican opponents, specifically Senators John McCain and Bob Bennett, who are up for re-election next year; Senator Kay Bailey Hutchison, who is running for governor of Texas; and Florida Governor Charlie Crist, who is running for an open Senate seat. All four face primary challenges from the conservative wing of their party.

Senator McCain of Arizona is up against Chris Simcox who founded the Minuteman Civil Defense Corps and is a leading figure in the effort to crack down and crack down hard on illegal immigration. So, McCain played to the right and announced his decision to vote against a Supreme Court nominee for the first time in his 22-year Senate career.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN ®, ARIZONA: Regardless of one's success in academics and in government service, an individual who does not appreciate the commonsense limitations on judicial power in our democratic system of government ultimately lacks a key qualification for a lifetime appointment to the bench. For this reason, and no other, I'm unable to support Judge Sotomayor's nomination.

(END VIDEO CLIP)

O'DONNELL: That's what an incumbent United States senator looks like when he is terrified of a primary challenge.

Senator Bennett of Utah faces at least four primary challengers, all of whom are more conservative than he is, and they're all after him for not being conservative enough. So, voting against Sotomayor, knowing it will have absolutely no effect on the outcome, is an easy way for Bennett to show Utah Republicans he's still got some conservative moxie.

As for Senator Hutchison, she's about to leave the Senate and focus on her gubernatorial campaign, but she's sticking around just long enough to vote against Sotomayor. She's looking ahead to a primary showdown with incumbent Governor Rick Perry. You'll remember him. He's one of those TEA Party enthusiasts and someone who has actually entertained the notion of secession for Texas.

Finally, Florida Governor Charlie Crist doesn't get a say in the confirmation of Sotomayor-no governors do-but that didn't stop him from coming out against her anyway. He said in a statement, "I cannot support her appointment to the United States Supreme Court. I have strong concerns that Judge Sotomayor would not strictly and objectively construe the Constitution and lacks respect for the fundamental right to keep and bear arms."

The governor is, of course, running for the Senate seat being vacated by Republican Senator Mel Martinez, who, incidentally, has said he will vote to confirm Sotomayor. But Crist is up against Cuban-American Marco Rubio, former speaker of the Florida House and a conservative who also opposes Sotomayor.

They obviously think that coming out against Sotomayor will help them in a tough primary battle. But on the national level, opposing the first Latina Supreme Court justice is political suicide for the Republican Party. Only 20 percent of the ever-increasing Hispanic population has a favorable view of the Republican Party. So pandering to the ever-decreasing Republican base of white conservatives might still be the easiest way to win Republican primaries. But it is also the easiest way to lock the Republican party into permanent minority status.

Coming up, what's really gumming up the health care debate? I'll talk about it with our panel, next on THE ED SHOW.

(COMMERCIAL BREAK)

O'DONNELL: Welcome back. Health care reform has proved to be a hard sell for President Obama and the Democrats. But what's really gumming up the health care debate? Is it the complexity of the policy, philosophical differences across the political spectrum, or the influence of special interests?

Let's put it to our panel. Jonathan Alter is a senior editor from "Newsweek," and the author of "The Defining Moment, FDR's 100 Days and the Triumph of Hope." Chris Frates is a reporter for "Politico." And Kevin Madden is a former senior adviser to Mitt Romney's presidential campaign and the managing director at the Glover Park Group?

Chris Frates, what is going on here? Are we seeing the philosophical end of the spectrum that Mike Enzi represents in the Finance Committee negotiations, going up against the thinking of, say, a Ken Conrad? Or are we seeing the lobbyists secretly, or not so secretly, controlling this debate by pulling the strings from outside the room.

CHRIS FRATES, "POLITICO": I think what you are seeing is a mix of that. You are seeing is a Senate Finance Committee working very hard. Max Baucus has five other senators in there that he is working very hard to make sure he can come to some kind of bipartisan solution. And when you get down to these details, these very granular kinds of policy debates, it gets very hard about what the role of government should be.

At the same time, you have outside interest groups, from the insurance companies, to the pharmaceuticals, to the consumer groups, all working to make sure that they get their piece of this. And nobody wants to be left out. And that's why you're seeing so many, we're pro-reform messages, but so many concerns from guys like the Chamber or the insurance companies, who don't like things like this public plan.

So, it's a bit of a mix. It's a really, really difficult cocktail. And I think, of all the debates we see in Washington recently, this one is equal parts policy and politics.

O'DONNELL: Kevin Madden, when Ron-when Mitt Romney was governor of Massachusetts, a health care bill went through there and went through this entire process. And something came out that he was able to sign with the support of Ted Kennedy. What was different about that process than what you're seeing now?

KEVIN MADDEN, REPUBLICAN STRATEGIST: Well, the first thing you have to remember about that process, Lawrence, was that it took two years. The Obama administration and this Congress are trying to do this in the space of about eight months. So, that's one big difference.

I think the other was there was really true bipartisanship. Governor Romney's bill passed, I think it was something like 198 to two by a very Democrat legislature, with the support of lion on this issue like Ted Kennedy. And it was also crafted with a great deal of input from Republicans, Democrats, and industries and hospitals and all the key stakeholders in the process.

And that, along with the fact that it took two years, was the reason that he had a successful universal health care bill.

O'DONNELL: Jonathan Alter, do you see any political lessens from Massachusetts that apply to this case now?

JONATHAN ALTER, "NEWSWEEK": Yes. Massachusetts has done a great job insuring people, but they've done an awful job in paying for it.

O'DONNELL: That's part of it.

ALTER: So, that's why they are focused, you know, on the revenue side, and that's a lot of hard rock breaking in that Senate Finance Committee.

You know, but one of the big questions is, what will the insurance industry have to pay in exchange for getting 30 million new customers? See, what people forget is this is a huge, huge windfall for the insurance industry. It's not like they're taking it on the chin. We're talking about tens of millions of new customers for the insurance industry.

So they're making it seem-they're crying, you know, these crocodile tears; oh, we're going to be driven out of business. This is huge for them. So they're trying to set up a deal where they don't actually have to give up very much in exchange for that. And the burden on the legislators should be to make sure that they get some kind of competition, if not from a public plan, then from a co-op, as they call it, that has real teeth and can really compete with those insurance companies.

And otherwise, you regulate them so that they can't screw real people, which they've been doing for many, nanny years now.

O'DONNELL: It's reminiscent of the medical profession's opposition to Medicare at the time, when it turned out Medicare was going to be the way -the thing that was going to make them richer than anything else that had ever come along.

Chris, what about that? There's something peculiar to me in Nancy Pelosi telling her troops, as they go off for August, make this hard attack on the insurance companies, portray the insurance companies as the most evil force in America. But their legislation, as Jonathan's pointed out, preserves the insurance companies and, by government order, delivers new customers to them. How do you condemn them when you're running a health care reform that requires them?

FRATES: Because what the speaker also wants to do is sell this idea of a public plan. Now this would be a plan where everybody could apply to it. It would be open and part of the insurance-the new insurance landscape. And that has the insurance companies' hackles up in a big, big way.

They believe it's a back door to single payer, that it will lead to a system that they, as private companies, will not be able to compete with a government option. That's very scary to them.

So, what Pelosi is telling Democrats to do is to go out there and paint the insurance companies as folks who don't want to compete. They don't want to have to offer better rates to people. They don't want to have to offer better coverage. And the messaging by the insurance companies, the Chamber of Commerce, a number of business groups, has been that this public plan will drive the employer-based system out of existence.

So that is what the speaker is responding to, is a very real fear that if that message continues to resonate, and we continue to see polls fall for the public plan, that by the time they come back in September, they won't-the public option will no longer be a palpable political sell. And they need to keep that on the table for the next five weeks, so that when Congress returns, they have a real shot at passing it.

O'DONNELL: But, Kevin Madden, it seems to me that what Republicans are doing with the Pelosi attack on the companies is to say, look, this reveals what she really wants. She really does want to drive them out of business with this public option. And in a certain sense, they're trying to use Pelosi's energy against those companies as a rationale for why they are actually opposing this public option plan.

MADDEN: No, that's right. And I think that, you know, on the fulcrum of this whole debate on costs and crowd-outs-is being balanced on the fulcrum of whether or not Democrats in some of these plans, some of these proposals, and anything that includes a public option, would essentially be punitive towards the-the health insurance industry, that you have many Republicans-I'm sorry, you have many Democrats that actually do want to drive these guys out of business.

And this is a debate, I think, that's largely being observed by many of the persuadables. They understand that they like their care. They like their doctor. They always think costs can go down. But now they're worried that they're actually going to get dropped out of their private insurance and be forced into a public plan. So I think that's where the debate is going on.

O'DONNELL: Jonathan, what is the right course for Pelosi and her troops? There seems to be this message that they're trying to drive-they would like to drive the insurance companies out of business. On the other hand, they are insisting they don't want to do that. So, what do they need to say to be convincing about this?

ALTER: I think they need to say just say yes. The Republicans are the party of no. The Democrats should be the party of yes. There must be a bill. When I hear liberals say, well, I can't vote for any bill that doesn't include a public option, what planet are they living on? They want to have nothing to help people who have pre-existing conditions and can't get insurance, people who are thrown out of work, they get sick and then are completely at sea?

Do the Democrats want to abandon those people? Yes, I'm totally for a public option. It's the right thing to do. But the main thing is there must be a bill. The message should be health security for everyone.

O'DONNELL: So, would you-would you lay off the demonization of the companies and just push on that positive, we've got to do something?

ALTER: I think a little of bit of demonization helps to rally the base. But they don't want to take it to the point that some Democrats in the House have, where they're actually saying, you know-they're believing their own demonization to the point where they-

O'DONNELL: Yes, yes.

ALTER: -- where they're actually saying that they prefer no bill to the one that, you know, doesn't meet all of the-if you had said to Democrats two years ago, this is a bill that is going to, you know, end the discrimination against people who are sick, that's going to greatly expand access to care, do preventive things, all other kind of wonderful things, they would have said, my god, that's fantastic. And now they're saying, no, that's not good enough.

That's fine as long as that's a negotiating position. But if they actually believe that and it actually hurts the eventual approval of this bill, that would be tragic.

O'DONNELL: All right, we'll hold it there for a minute. Coming up, the Democrats are taking on the screaming mob. What's the best response? Our panel is going to go to that next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: In order to lead in the global economy and ensure that our businesses can grow and innovate, we also have to pass health insurance reform that brings down costs.

I promise you, we will pass reform by the end of this year, because the American people need it. The American people need some relief.

(END VIDEO CLIP)

O'DONNELL: That was President Obama speaking today in Indiana. The president is trying to rally the American people behind his health care reform plan. And he's banking on the idea that the kind of organization that helped get him elected can help push him back-can help push back against the Astroturf protests trying to derail his health care plan.

Let me bring back the panel on this. It's Jonathan Alter, Chris Frates, and Kevin Madden. Kevin Madden, do the Democrats a favor today, tell them how to counter this organized protest that is showing up at every Congressman's, you know, town hall rally about health care reform, where they've got ten people shouting down the 100 people who want to listen.

MADDEN: Lawrence, you're trying to ruin my Republican street cred here by making me give advice to Democrats. Look, I think the key to success for Barack Obama in 2008 was independents. It was building the broad coalition of voters, along with his progressive base. And, you know, I think he did that by being very post-partisan, and he did so by offering solutions.

He's done the solutions part. He's talked in very broad terms. He sketched out health care principles. He hasn't really gotten into the specifics, and I think that's starting to hurt him.

But I think where he has failed is that he has been quite partisan here. He hasn't reached out to these independents that are going to move this in a 25-point swing one way or the other. He hasn't persuaded them yet that this does what the American people want to do on health care, which is control costs.

Right now, it's filtered back very easily to the American public, particularly independents, that this-there is a trillion dollars plus worth of health care in the proposals, but there's very little reform.

O'DONNELL: Chris, do the Democrats in the White House have a plan for being heard during the month of August, during the Congressional recess, for being heard over the screaming mob?

FRATES: Absolutely. They have the president of the United States on their side. And what they will do is take a very coordinated effort, through social networking sites-we're talking Facebook, Twitter. The bully pulpit of the president will have his whole entire cabinet spread across the nation talking about health care.

The same kinds of Sebelius/Specter events that we saw in Philadelphia a few days ago, look for that. They are blanketing the airways. They are blanketing town hall meetings. And that's in coordination with what the Congressional Democrats are doing. Those folks have been issued talking-point cards about how their legislation, how many more people will be covered, how much money it will save.

They will send those kind of notes out across the nation to law makers and their constituents, as they move forward here. It's very coordinated. And as you watch this kind of happen, the most interesting thing I think is going to be the Democrat response to all these protesters.

And what Chris Van Hollen, who oversees the election of House Democrats, is saying is we're not going to do anything. We're not going to inflame these folks, because we believe this will boomerang back on the Republican party and make them look bad. When they are hanging our members in effigy, that kind of extremism isn't going to play with the American people. We'll see how the strategy plays out.

O'DONNELL: Jonathan, there was an interesting strategy in the Obama speech today in Indiana, because most of the detail in that speech was about his economic plan, and specifically what his economic plan has delivered to the city he's standing in at the time he's giving the speech. And health care was just folded in, as a smaller piece in a much larger speech.

And for me, strategically, that seemed much more effective, because he had a lot to talk about in terms of what they've already done, in what seemed like a very competent way, and folding it into that seemed like a pretty successful way of getting it across.

ALTER: Well, Elkhart, Indiana, for Obama is like Peoria, Illinois, was for Nixon.

O'DONNELL: He's been there four times in the last 18 months.

ALTER: I went with him the first time he went in May of 2008. And at that time, unemployment there was six percent. Then it shot up, because of unemployment and-

O'DONNELL: Sixteen point eight percent today.

ALTER: It actually went to 20 percent, close to 20 percent. Now it's down to 16.8 percent. So, they're seeing some signs of progress. But this is close to Depression-era unemployment. So when he goes there, he has to be talking jobs, jobs, jobs. And to the extent that health care relates to this-and this is part of what is a very powerful message, if properly used by Democrats-it has to be, for lack of a better word, a fear message.

If you lose your job and then you're going to lose your health insurance, then where are you? This bill, all of these bills, address that problem. It hasn't been as controversial as the public option and some other things, so most people don't even know about it, that it ends that worry. It ends that fear for all Americans.

Health security now and forever should be the message of this administration. It goes right to that gut issue, people's concern about what happens if they lose their jobs. If it's done as an abstraction or about costs, then people say, well, why do we have to spend a trillion dollars to save a trillion dollars? People don't get that. It's very confusing.

It needs to be about anxiety over what happens if you lose your job.

O'DONNELL: All right. White House, listen to this guy, Jonathan Alter. That's the message.

Coming up, tonight's playbook; the president's away-game strategy. NBC News political director Chuck Todd joins us with what he said and didn't say about health care reform. It's next on THE ED SHOW.

(COMMERCIAL BREAK)

O'DONNELL: In the playbook tonight, besides Obama's-this is President Obama's-this teleprompter-President Obama's away game. The president-the word president really should be on one line of the teleprompter. The president hit the road today to sell the success of his economic policies in Elkhart, Indian. It's his fourth trip to the RV manufacturing capital of the world in the last 15 months,w ith unemployment in Elkhart at 16.8 percent.

Joining me now is NBC News Chief White House correspondent Chuck Todd. I don't even need a teleprompter for that. Who interviewed the president today. Chuck, it seemed the speech today was much more about jobs, much more of what he's already delivered to Elkhart than what he's promising to Elkhart in health care reform.

CHUCK TODD, NBC NEWS CHIEF WHITE HOUSE CORRESPONDENT: It is. You know, I heard Jonathan Alter make this point about Peoria. How's it playing in Peoria, the way Nixon cared about that back in Illinois, the way all Illinois politicians, a la one time Illinois Senator Barack Obama. So Elkhart is his-as Elkhart goes, so goes the Obama presidency. In fact, the headline of the local paper here, "The Elkhart Truth," said the community and Obama's presidency are intertwined.

And I showed that headline to the president and he agreed. He said, absolutely. He said, if I can come back here in four years and show progress and show that Elkhart is moving forward, then he can make the case that he's turning the economy around. If he can't, and the Midwest isn't feeling good, well-look, we know what the political map looks like. The Midwest, which dramatically went Dem in the '06 and '08 election, will swing right back. This is not an area that is sitting there that is home to one party or another. They're very economically sensitive.

O'DONNELL: Chuck, is the president getting any credit in Elkhart for the unemployment rate coming down four points from its peak?

TODD: It's tough because he came here in February and it was about 15 percent. It peaked at that number of almost 20 that Jonathan Alter referenced in that last segment. So now it's down to about 17. Lawrence, think about this: that means it's one in six people here. That means most people do not live-have at least a neighbor-if they're not unemployed, their neighbor is unemployed. When you think about that, one in six adults.

So three houses in a row, two family incomes. One of those six people is unemployed. So they're not feeling the credit yesterday. In fact, MSNBC.com is sort of covering the recession through the prism of Elkhart. These residents-they were fair questions but it was very raw. Actually, my favorite one, because I got to get on health care here for a minute, was one about health care, where you had somebody say, just get it passed, Mr. President. Stop playing with the Republicans. Just ram it through, do what you have to do.

That was somebody supportive of him. All of the questions were very raw. I think you feel that here. It's raw emotions. People are warn out. They are just wondering-they need health care. They need their jobs.

And they need help now.

O'DONNELL: But the public does seem to be losing confidence in his ability to deliver health care as promised. For example, we got this Quinnipiac Poll saying that only 21 percent believe that he can keep his promise to not add to the deficit with health care reform. That makes this thing much more difficult than it was a couple months ago, doesn't it?

TODD: It is. When I asked him that question about that partisanship, about the Republicans, that's where you sensed the frustration in the president. You and I have talked about this. You're a veteran of the Hill. You know how that sausage is made, and the uncomfortable relationship, sometimes, between the White House and Congress. I'll tell you what-what the president said. He said, you know what, when September comes along, we may rethink our strategy. Meaning he's ready to do this with 50 votes, do it in reconciliation. I don't mean to use

O'DONNELL: We're going have to wrap it up there.

TODD: Get it done.

O'DONNELL: That's it for THE ED SHOW tonight. 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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