updated 8/13/2009 9:34:52 AM ET 2009-08-13T13:34:52

THE ED SHOW

August 12, 2009

THIS IS A RUSH TRANSCRIPT.

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

Guesst: Mark Potuk, Earnest Istook, Roy Sekoff, John Harwood, Rep. Ron Paul, Mike Snider, Sherrod Brown, Linda Sanchez

(BEGIN VIDEOTAPE)

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

(END VIDEOTAPE)

SCHULTZ: Good evening, Americans.

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

Tonight, believe it or not, it's Democrats versus Democrats in the heartland over health care.

Senator Ben "Nervous Nelly" Nelson is shaking in his boots.

That's right where I want you, Senator.

A key ally in the fight joins me in just a moment.

Also, Ohio Senator Sherrod Brown just wrapped up a huge town hall. He'll tell us if the "Dumber Than Joe the Plumber" crazies showed up, and are they really going to stop real reform in this country.

And a Ron Paul supporter showed up at a New Hampshire rally with a loaded gun. The congressman will join me himself tonight and get his take on just how far people should go with this "Live Free or Die" motto.

A frightening wakeup call. An anti-government militia movement is growing, and the ATF says the only thing it's lacking is a spark.

We'll explain the dangers and show you who these folks are and where they are.

Plus, Karl Rove's firing squad? Ah-ha. New evidence reveals that the turd blossom himself was a driving force in the politically motivated termination of a U.S. attorney and eight others. Congresswoman Linda Sanchez will be here to explain just how the House Judiciary Committee is going to be dealing with that.

Michele Bachmann makes a "Psycho Talk" encore.

And get your cell phones ready, folks. We've got another text survey for you tonight.

Got a great panel showing up on all the hot topics.

And one quick note before we get to the "OpEd." The Fed did not raise the interest rates today. And the market-you know, that Obama economy? -- it went up 120 points.

But first, tonight's "OpEd."

Well, the fear card being played by the righties is now, I guess you could say, at a fever pitch. The numbers honestly are showing that the Obama administration is in trouble with some demographics.

Senior citizens are believing this right-wing garbage, believe it or not. The very people-and this is what gets me-the very people that get government assistance in health care are now actually turning on the president of the United States. It's the geezers!

This isn't about reform. It's about politics. Dirty politics. Blatant lies. That's what they are.

Conservative Democrats seem to be buying into some of this trash-talking.

And that's exactly what it is.

Now, in the middle of the country, where everything is supposed to be so wonderful, there s a battle raging between Democrats. Progressive groups are just hammering away at Senator Ben Nelson.

(BEGIN VIDEO CLIP)

MIKE SNIDER, RESTAURANT OWNER: For six years I've owned the Syzzlyn Skillet here in Ralston, Nebraska. Last week, my health insurance agent called. He told me my rates were going to go up 42 percent from last year. I can't afford that. I told him I may have to cancel the coverage. I'm just going to pray my kids don't get sick.

When President Obama proposes a public health insurance option that would force the private insurance companies to compete and lower rates, that's exactly what my family needs. Now I hear that Ben Nelson, the Senator that I voted for, is leading the charge to delay health reform this summer.

That's exactly what they want. The health and insurance companies that have given Senator Nelson over $2 million know that if they can stall reform, they can kill it.

I have to ask-Senator, whose side are you on? If you're on my side, stay at work. My family can't wait for reform.

(END VIDEO CLIP)

SCHULTZ: Lefties, this is a classic. And I'll tell you why.

Senator Nelson is a four-time statewide elected official. He was governor of the state of Nebraska. But the Senator is on such shaky ground, he has to fire back with this ad to straighten it all out...

(BEGIN VIDEO CLIP)

SEN. BEN NELSON (D), NEBRASKA: You've probably been hearing a lot about health care reform. And like too much stuff that comes out of Washington, it's hard to know what's fact and what's fiction. So I want you to hear my principles, straight from me.

First, any plan must keep spending under control, help our small businesses, improve care, control costs. And most of all, the plan needs to work for Nebraska.

I'm Ben Nelson, and I approved this message because you can count on me to always put Nebraska first, always.

(END VIDEO CLIP)

SCHULTZ: I can't be any more fair. We played both of those ads. And I want to point out four big points in that ad.

Keep spending under control. Everybody onboard with that? Help small businesses. Sure sounds good. Improve care. We all have got to be for that. And control costs.

May I point out that in the arena of fairness, Senator Nelson, President Obama addressed all of those things at town hall meeting in Portsmouth, New Hampshire, yesterday. It's called a public option. Exchange is what it's called if you want to use that terminology.

Senator, you say you want to do what's right for Nebraskans. Well, let's go inside the numbers.

In 2008, 270,000 people in the state of Nebraska were on Medicare, 460,000 were uninsured between the years 2007 and 2008. Let's check the numbers. That's nearly 30 percent of the people in the state of Nebraska without insurance. That's about one out of every three people?

Now, those are the folks that you ought to be talking to, Senator Nelson.

Now, the public option, the exchange, whatever you want to call it, helping small businesses, look, that's what it's all about. That's what the president wants to do.

Now, I don't understand why the conservative Democrats just can't pull their bootstraps up and say, I'm with the president, I'm with President Obama.

What is it about the heartland? Is it the money from big insurance? Is it the money from big medical? Is it pharma? What is it?

What is it from North Dakota to Texas, in the heart of the country, the silver-haired belt, that these geezers are so nervous in buying into what I'm now going to call Grassley garbage? Because that's exactly what it is.

Helping small businesses, gosh, that sounds awfully good. That's exactly what the public option and the exchange would do. It would give competition to the private sector because the private sector is running away with rates.

Ask yourself the question tonight, are you really happy with your insurance premium? I got a guy who's not happy with his insurance premium. We caught up with the small business owner who was in the ad that you just saw.

Joining me now is Mike Snider. He is the owner of the Syzzlyn Skillet restaurant in Ralston, Nebraska.

And folks, let me tell you something. There isn't anything more American than the Syzzlyn Skillet in Ralston, Nebraska.

Mike, good to have you with us tonight. I appreciate you coming on the program.

In that ad you said that your rates are going up 42 percent. Is that true?

SNIDER: That's correct. I got my notice right here in front of me. If you take this number that they're going to start charging me in September, compared to what I'm taiing now, it's a 42 percent increase.

SCHULTZ: OK. And you voted for Senator Nelson. That's what you said in that ad, correct?

SNIDER: That's absolutely correct, yes.

SCHULTZ: How do you feel about the Senator now based on this issue? Could you vote for him again?

SNIDER: It's going to be tough to do it again. It's just going to be real tough to vote for him another time.

SCHULTZ: So, when you hear "public option," and you hear the president say he wants to help small businesses, and you've got that bill in your hand, a 42 percent increase, what does that mean to you?

SNIDER: Well, public option is-I think it's just going to create competition. One of the things I noticed in Senator Nelson's ad is the term was missing was "competition." I did not hear that when he listed out his principles.

If we get competition in there, which by putting in the public option, that's going to be good for me, it's going to be good for small business. It's going to be good for all kinds of people that are getting these big increases, because it's going to kind of help reel in the insurance companies.

SCHULTZ: OK. So, moving forward, what are you going to do? Are you going to cancel your insurance and hope that your kids don't get sick like you said in the ad? Or are you going to suck it up and find the money somewhere in the business and get it done?

SNIDER: Well, I haven't decided exactly what I'm going to do yet. By going through this process, I found out that there's actually somewhat of a public option here in Nebraska. It's called Nebraska CHIP, and it's been around since 1985.

And I don't see the insurance companies going out of business, so I'm going to look at that option. I've been talking to a guy-and like I said, I never heard of it before, but once this got the attention, got brought up to it, then I found out about it.

SCHULTZ: And finally, Mike, in your restaurant, I know what it's like in the heartland and cafes. That's where people get together and come in and have a cup of coffee and talk about what's going on. What are you hearing? I guess you could say that your restaurant might be a daily town hall.

What are you hearing from your customers on this?

SNIDER: Well, I can tell you that since the ad broke, I've had people just walk in, come in and just shake my hand and say, "Thank you." I'm going to say the response has been about 90 percent-more than 90 percent positive.

People that understand what's going on want the public option. The people that are-that have said something negative about it to me, they're under the impression that I'm asking for free medical care. That's not what I'm looking for. I'm looking for fair, affordable, accessible health care for not only for me, but for everybody.

SCHULTZ: Mike Snider, good to have you on THE ED SHOW tonight. And thanks for standing up and being an American in the middle of the country, just telling like it is about small business. I appreciate your time tonight.

SNIDER: No problem. Thank you, Ed.

SCHULTZ: You bet.

I want to know what you think, folks. What's a bigger threat to health care reform, conservative Democrats who can't stand up or the town hall screamers? Text "A" for conservative Democrats, "B" for town hall screamers to 622639.

We'll bring you the results later on in the program tonight.

Now, Republicans are using every tactic they can to scare the living daylights out of seniors. And thanks to senators like Chuck Grassley, they're getting 'er done. They're still scared.

Listen to what he said in a town hall today in Winterset, Iowa.

(BEGIN VIDEOTAPE)

SEN. CHARLES GRASSLEY ®, IOWA: I won't name people in Congress or people in Washington, but there's some people that think it's a terrible problem that grandma is laying in the hospital bed with tubes in her. In a House bill there's counseling for end of life, and from that standpoint, you have every right to fear.

You shouldn't have counseling at the end of life. You ought to have counseling 20 years before you're going to die. We should not have a government program that determines you're going to pull the plug on grandma.

(END VIDEO CLIP)

SCHULTZ: I can't believe what I'm hearing, folks.

First of all, he's in the Senate, he's not in the House. And I'd like to have him raise his right hand and tell America that he's actually read the House bill. OK? I thought he was working so hard over there in the Senate Finance Committee.

Here's the deal. And listen, this is a key point. In the Senate HELP bill, and over on the House side, all this is, is reimbursement to the doctor who is working with you in dealing with your grandma, who may be close to dying. So, we're going to reimburse the doctor for talking to you about a family issue.

What is wrong with that?

Joining me now is Ohio Senator Sherrod Brown, a member of the Senate Health, Education, Labor and Pensions Committee.

Senator, good to have you with us tonight, Sherrod. Appreciate your time.

SEN. SHERROD BROWN (D), OHIO: My pleasure. Thank you, Ed.

SCHULTZ: Are you amazed at the misinformation that is out there in the town halls that's being thrown at you and other members of the Congress at the level that it's gotten to?

BROWN: In some sense I'm amazed, Ed. In another sense, I guess I've been doing this long enough I shouldn't be, because when you think the average executive of UnitedHealthcare is making $8 million a year, they kind of like that $8 million a year, and that's why these insurance industry people in Washington, these lobbying firms, are peddling all this fear-this "They're trying to kill grandma," to "socialism," to "They're taking over your health care system," to all the kind of things they're saying to scare people. And people should be ashamed of that.

I mean, these insurance lobbyists and politicians that parrot it, it's the same crowd that's trying to play into Barack Obama wasn't born in the United States. They're just playing to people's fears. They're scaring people, and it's costing us in the polls.

We're going to get this bill done. We're going to do it right. But the reason we do these town hall meetings, and my roundtables all over the state and all, and you do this show, the reason is to correct this disinformation. And it's pretty outrageous, but we need to be patient and continue to fight back.

SCHULTZ: Outrageous is a good word.

Now, the numbers are starting to dwindle with senior citizens across the country. In the most recent NBC News poll, "Who opposes health care reform?" The numbers, 49 percent are over 65 years of age, 38 percent are under 65 years of age.

The president has clearly spoken to this, saying that we're not going to take your Medicare.

In fact, correct me if I'm wrong, Senator Brown. Are the Democrats not working very hard to increase the level of Medicare reimbursement rates? Yes or no?

BROWN: Yes, of course we are. And we're also-Democrats are working to keep prescription drug prices down. We want to see the drug-we want to see Medicare negotiate directly with the drug companies to bring prices down.

Yesterday, I was in Dover, Ohio, a community in eastern Ohio. I'm speaking with the Chamber of Commerce, actually, and a woman stood up who was not a Chamber of Commerce member. She was clearly in her 70s, maybe in her 80s.

And she said, "I don't want government in my health care. I'm against socialized medicine."

I did what you would have done, Ed. I said, "Are you on Medicare by chance?" She said, "Yes." I said, "How is it working out?" She said, "I love Medicare, it works just fine."

And she's one of the ones that-she's one of the opponents to the Obama health care plan because she doesn't want government doing health care. I mean, we've got an education job to do. That's why your show is important. That's why all that we're trying to do in August, leading back into September to pass this bill, all that work is so important.

SCHULTZ: And what do you make of Senator Grassley-and I'm not trying to pitch you against one of your colleagues in the Senate, but basically today, he endorsed Sarah Palin and the death panel. He says in the House bill you should be concerned that there is going to be a panel.

I mean, when you've got people of that stature in the United States Senate telling people this back in their home state, how the hell are you going to fight that?

BROWN: Well, I know. And the original provisions on this reimbursement of Medicare for counseling by a doctor, by a religious counselor, or social worker, the original language was written by, as President Obama said, Republican Senator Johnny Isakson. And now Republicans are making it out to be some sort of euthanasia.

You know, I'm waiting for Republicans, for national Republicans to stand up and say, you know, this is all fear tactics on euthanasia. And also, I'm waiting for national leading prominent Republicans to say something about this whole birther movement, that, you know, Barack Obama was born in the United States. There's no question about it.

The way Mike Castle, a gutsy congressman, Republican from Delaware did, I'm waiting on Eric Cantor and John Boehner and Mitch McConnell to say, you know, people-because it's a third of their base. A third of the Republican Party believes that.

SCHULTZ: Yes. You know, Senator, that takes leadership, and I don't think they've got it.

Great to have you with us tonight, Sherrod.

BROWN: Always a pleasure, Ed. Thank you.

SCHULTZ: I appreciate your time.

BROWN: Glad to do your show.

SCHULTZ: I have a request of the White House tonight. I would like President Obama to stop saying that Chuck Grassley is working on a bipartisan level to try to get health care reform done in this country. No he's not.

He said today, blame me for this delay. He wants to be known as the guy who stopped the Obama movement in this country when it comes to health care reform.

I thought we just had an election.

Coming up, what a surprise. Bush's brain has his fingerprints all over the partisan firing of U.S. attorneys. A key member of the House Judiciary Committee joins me to explain how she's not going to let him get away with it.

That's next on THE ED SHOW on MSNBC.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

Admit it, if you're over here on the good side, we've always known that Karl Rove is a sleazy political operative, but now we have more evidence confirming that Bush's brain was behind the unjustified partisan firing of nine U.S. attorneys back in 2006.

Thousands of internal e-mails and transcripts of congressional testimony from the turd blossom himself, they were just released, and they're very telling. They make it very clear that the Bush White House, quarterbacked by Karl Rove, played a big role in kicking those attorneys to the curb.

Joining me now is Congresswoman Linda Sanchez. She's a member of the House Judiciary Committee investigating the U.S. attorney firings.

Congresswoman, good to have you on tonight. Thanks so much for joining us.

REP. LINDA SANCHEZ (D), CALIFORNIA: Not at all. Thanks for having me.

SCHULTZ: Did you expect that these e-mails were going to surface and they would contain this kind of information?

SANCHEZ: Well, you know, when they dragged their feet for two and a half years in producing documents that we had subpoenaed and requested, you know, there had to have been a reason why they didn't want to turn that information over. And the reason they didn't is because it's very clearly damaging testimony that contradicts all of their statements that they had nothing to do with the firing of the U.S. attorneys until late in the process. The e-mails show very clearly that there was involvement very early on, and that most of the decision-making was driven by political consideration.

SCHULTZ: So the fact is, the way it's playing out, if we can view it this way, after Bush won re-election, there was basically an attack on the judiciary. And they were going to go after U.S. attorneys who were not prosecuting Democrats strong enough across the country. And there's also some comments within the White House-for instance, Harriet Miers says that she remembers that Karl Rove was so upset about one U.S. attorney in particular.

Do you feel that there were any laws broken here at this point? Could you point to anything that you really believe something-the laws were broken here?

SANCHEZ: Well, I think certainly that there was information contained in the e-mails which suggest that the U.S. attorneys were fired for improper reasons, and there may have been testimony in front of Congress that was false or misleading. So, obstruction of justice or possible perjury charges are still available.

There is a federal prosecutor right now who is investigating. We've turned all of those documents to her. She will be reviewing it to see if there are any criminal charges to be brought.

SCHULTZ: And there is some reaction from one of your colleagues on the

House Judiciary Committee. Congressman Lamar Smith has made this comment:

"Democrats need to stop wasting taxpayers' time and money on political investigations that are nothing more than the politics of personal destruction."

Can you respond to that?

SANCHEZ: Well, I find it quite amusing that they don't want investigations when it's their folks that are being under investigation for potential criminal activity, but yet, you know, when the shoe is on the other foot, they're alleging all kinds of things against Democrats. It's very clear to me they want this embarrassment behind them. They want to sweep it under the rug.

They don't want to deal with the fact that there's a very serious problem. And that is that the Department of Justice, which is supposed to dispense justice without fear of favoritism, was being used, strong-armed, by political operatives like Karl Rove to do potentially illegal things and corrupting our system of justice is a very, very critical and important thing we need to look at to make sure that it never happens again.

SCHULTZ: And finally, Congresswoman Sanchez, if you had to say something tonight to Attorney General Eric Holder about this, what would it be?

SANCHEZ: If I could just make a plea to the attorney general, it would be to not allow this to go uninvestigated, and to please make sure that the Department of Justice is never used for political-grubby political agendas like it was under the Bush administration.

SCHULTZ: So you want the DOJ-you want them to investigate this? You want them to get involved and go beyond the House investigation at this point?

SANCHEZ: Absolutely. And I want them to hold people accountable for their hidden, nasty, dirty little political agendas.

SCHULTZ: OK.

Congresswoman, I appreciate your time tonight. Thanks so much.

SANCHEZ: Thank you, Ed.

SCHULTZ: And she's back, Michele Bachmann. Her son helps the congresswoman put her foot in her mouth.

I've got all the details coming up on "Psycho Talk," next on THE ED SHOW on MSNBC.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Oh, yes. It's time for "Psycho Talk" on THE ED SHOW tonight.

You know, it's been kind of a while since we've heard from our friend from the North, Congresswoman Michele Bachmann out of Minnesota. But there's an update to a classic "Psycho Talk."

Remember when she went after the bill that expanded AmeriCorps? Let's refresh your memory.

(BEGIN AUDIO CLIP)

REP. MICHELE BACHMANN ®, MINNESOTA: I believe that there's a very strong chance that we will see that young people will be put into mandatory service. And the real concern is that there are provisions for what I would call re-education camps for young people, where young people have to go and get trained in a philosophy that the government puts forward, and then they have to go and work in some of these politically correct forums. As a parent, I would have a very, very difficult time seeing my children do this.

(END AUDIO CLIP)

SCHULTZ: Well, we are here tonight to inform you that a young man named Harrison Bachmann has just joined Teach for America. Yes, he is the congresswoman's son. Yes, Teach for America is part of AmeriCorps. Yes, she voted against supporting the bill named for Ted Kennedy that helped expand the programs like Teach for America.

Now, I don't know whether to congratulate you for raising a son that is willing to be unselfish and pitch in and help teach kids, or to commiserate with you, Congresswoman, because it seems your son has fallen prey to your so-called Democratic conspiracy, the one you ripped last year.

(BEGIN AUDIO CLIP)

BACHMANN: They want Americans to take transit and move to the inner cities. They want Americans to move to the urban core, live in tenements, take light rail to their government jobs. That's their vision of America.

(END AUDIO CLIP)

SCHULTZ: So, a big congratulations to Harrison Bachmann for stepping up to help our education system.

And I don't know if this is your way of rebelling, but I want to applaud you all just the same.

And to Congresswoman Michele Bachmann, I will make sure that we will not investigate your son for any anti-American views. And congratulations for staying in Psycho Talk.

Now coming up on THE ED SHOW, the politics of hate. In the past 24 hour, we've witnessed a loaded gun at a presidential town hall, hateful threats towards illegal immigrants, and a Swastika in front of a Congressman's office.

Come on. What is next? A leading expert on tracking the whackos joins me at the bottom of the hour.

And later, I've got some tough love for my former neighbors up there in North Dakota. They've got a lot of nerve carrying on in what they are talking about a town hall meeting in Castleton (ph), North Dakota today, they're sitting at the trough taking so much government money. That's next on THE ED SHOW.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Some scary stuff going on around the county. There is a portion of our population that is pretty nervous. And they're coming out of hiding, I guess you could say, with guns in hand.

Last year, the Department of Homeland Security warned that, quote, "white supremacists and militias are more violent and thus more likely to conduct mass casualty attacks on the scale of the 1995 Oklahoma City bombing."

There's a new report out that backs up this prediction. Joining me now is the man who wrote that report, Mark Potuk of the Southern Poverty Law Center.

Mark, good to have you with us tonight. Appreciate your time. If you had to roll back the clock, what would you compare this to, say, yester-year, when and what situation?

MARK POTUK, SOUTHERN POVERTY LAW CENTER: Well, what it really is is a kind of rebirth of the militia seasons of the 1990s. This is a very white hot movement back in the middle '90s to the late '90s, that produced a lot of domestic terrorism or attempted domestic terrorism.

I would say the difference this time is that it has a much stronger racial element, because, at the end of the day, these groups see their primary enemy as being the federal government, and, of course, the federal government today, the face of that government is black. So there's a lot of feeling about that.

SCHULTZ: When Alcohol, Tobacco and Firearms comes out and says, all it's going to take is is a little spark, how are viewers supposed to take that tonight, when they hear that?

POTUK: Well, I think it's really an accurate assessment. I don't think that is hyperbole. I think that there are a great many of these groups out there that have formed recently. Some of the older groups have been reenergized. There's a lot of evidence to suggest that people are collecting arms, creating arms caches and so on.

And now we have this huge amount of white hot rhetoric, which stretches all the way from the bonified militia and so-called patriot groups to the Michele Bachmann's of the world, to the protesters at the various town hall meetings and so.

I think we're in a situation that really is very worrying.

SCHULTZ: Some of the postings that are on the Internet, one on them in particular on Youtube has had over 60,000 views. Let's listen to it out of the state of the Ohio.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: America, this is your wake-up call from the Ohio militia. You people need to wake up, start buying some of these. See? Ask yourself: why do you not have one of these? Go out and buy a gun, OK? They're not that expense, OK? You can get a gun. Buy lots and lots of ammo for these guns, OK?

(END VIDEO CLIP)

SCHULTZ: Now mark, what's causing this? Is it a black president? Is it the Democrats having the White House, the House and the Senate? Is it health care reform? What really is the steroid here that's making this happen with these groups?

POTUK: I think it's definitely each one of those things you mentioned. It's the bad economy. And it is probably ultimately, above all, the changing demographics in this country. You know, it is-there's been heavy non-white immigration for the last seven or eight years. And we have seen a real vigilante movement, a nativist movement grow up around that.

So one of the remarkable aspects of the militia movement today is how much it has kind of sucked in all of those people, who used to be single issue people, worrying about border crossers and so on.

SCHULTZ: Mark Potuk, appreciate your time tonight, from the Southern Poverty Law Center. Thanks so much for your insight on this.

For more, let's turn to our panel tonight. Founding editor of "Huffington Post" Roy Sekoff is with us. Also cNBC chief White House-chief Washington correspondent and political writer for the "New York Times," John Harwood is here. And distinguished fellow of the Heritage Foundation, and former Republican Congressman Earnest Istook is with us here tonight.

Congressman, let me go to you first. How do you take this information when Alcohol, Tobacco and Firearms comes out and says that we're on a heightened alert, pretty much, for such an activity like this. What do you make of it?

EARNEST ISTOOK, FORMER CONGRESSMAN: I don't think that's a correct statement from ATF. I do know that we've always had instances of extremism, both on the left and on the right. Homeland Security has warned about both.

Remember the Uni-Bomber. He was on the fringes of the left. Remember the big protest of the left wing anarchists, the thousands of them running wild in the streets in Seattle. And remember all the threats against Bush's motorcade in Portland, Oregon, saying about the same kind of stuff as you're now condemning from the town hall protesters.

SCHULTZ: OK. Well, what do you think is causing this right now, congressman?

ISTOOK: I think you've always got people that are upset on the left or the right. And the people, whoever they see as in power, they'll see, you know-you'll have the people that are in opposition to them will come more to the surface. But they're both there on both sides all the time.

That is not a reason to discount the justifiable concerns of the vast majority of the people turning out at town hall meetings.

SCHULTZ: John Harwood, what's White House reaction to this, if anything? I would think that-a two-part question. I would think that when the representatives and senators come back after all these town halls, they might have their eyes opened to what's going on across America?

JOHN HARWOOD, CNBC ANCHOR: I think so. Look, a lot of these officials are pretty experienced at dealing with extremists who, as the congressman said, have been out there for a while. And I do think, you know, a lot of us who are in the media industry, Ed, as you know, are giving a lot of attention to some of these people who are just idiots at these town halls, saying stuff that doesn't make any sense. You know, the kind of people who are raising the specter, is this going to become Russia or communist China?

It's just idiot stuff. I make a distinction between those garden variety morons and the people who belong in mental hospitals, who are carrying guns and organizing militias. Fortunately, I think that number is quite small.

SCHULTZ: Roy, the Internet obviously is a super-highway for all of these groups. It's easy for them to connect, communicate, organize, all of these things. But it is also-it seems to be the health care debate that has launched it to a new level. I just find amazing. How many of these militia folks don't have health care or have health care? What's your take on it?

ROY SEKOFF, FOUNDING EDITOR, "HUFFINGTON POST": Exactly. What we're seeing her, it's a perfect storm, you know, coming together for the lunatic fringe. We have a half black president with a Jewish chief of staff, and he nominated the first Latina Supreme Court justice. That's like the haters trifecta, right?

Then you throw in the bad economy and you throw in the fear that the guns are going to go away, and suddenly you have this ticking time bomb. I think you have to admit, though, that the Obama administration has played a little bit of a part in this. They're handling the bank bailout and of the health care debate I think has thrown fuel on the fire.

You know, there's a big portion out there who think that-they buy into Reagan's perception that, remember, the government is the problem. I think when you have a bank bailout, when the banks get trillions of dollars, and the average guy is losing his job, and he's going bankrupt, and when you have a health care debate, you're giving big Pharma a great deal behind doors-I think people start thinking the fix is in. And I think that helps raise the anger.

HARWOOD: On the other hand, what if the bank bailout kept us from going into a Depression? That might make things a little worse.

SEKOFF: It's a perception of fairness, I think, is the question. And it's the fact that it's behind closed doors and the lack of transparency. I think that's what fuels this conspiracy. And like John said, it doesn't help that we're giving all this air time to the birther movement, which is now locked hand in hand with the deather movement.

SCHULTZ: Let me take it an extra minute here. Congressman, what would be your advice to calm the fears of these groups that seem to be going over the edge with their Internet rhetoric and some of the things that we've seen? What would you say to them? Keep going? Would you say keep going?

ISTOOK: No, I would say to everybody, you know, people that have legitimate concerns, you need to listen to them, rather than making accusations that may radicalize people more. I think Roy was making that point.

I remember when I had a death threat when I was in Congress. Someone that was actually prosecuted and sent to prison for threatening to kill and dismember me. What side was he on? He was upset because I would not support legalizing marijuana. So you have extremists all over the place.

SCHULTZ: And finally, would it be apropos for someone in a high position in government to address this under-current that's going on in America. Would it get to that level, do you think?

HARWOOD: It depends. You know, you'd have to talk to people in the administration and the ATF as to what they think would inflame the situation, versus tamping it down. I do think-again, maybe I'm Polly-Anna. Mark, certainly, from the Southern Poverty Law Center, knows a lot more than I do about it. I've got to think that those real extremists out there, arming and militias, and the kind of people that made that video you showed before is a pretty small number of people. And I don't know. Coming out of the 2008 elections, it didn't quite feel to me like the country was a tinderbox ready to explode. But we'll see.

SCHULTZ: It didn't. This is all within the last six months.

Gentlemen, stay with us. We've got more coming up.

And coming up, I'm going to be putting Ron Paul, Congressman, in the hot seat. We'll see what he has to say about one of his supporters who brought a loaded gun to an Obama health care rally in New Hampshire yesterday. That's next in my playbook.

(COMMERCIAL BREAK)

SCHULTZ: Tonight's playbook, one protester at Obama's town hall meeting got a lot of attention when he showed up at the rally with a loaded gun, a sidearm. Quite an interview on "HARDBALL" last night with Chris Matthews. But he mentioned that he was a Ron Paul supporter and that piqued my curiosity. I want a reaction from the Congressman.

He joins us on the line now, deep in the heart of Texas. Congressman, thank you for your time tonight. I appreciate it.

What's your response to people showing up at a town hall meeting where the president is with a loaded gun?

REP. RON PAUL ®, TEXAS: I think it proves a couple points. One thing, I think it really shows a remarkable restraint on the president and his Secret Service, because they didn't overreact. They recognized what the state law was, and that this man didn't break any laws, and that he was just, you know, practicing a right that he had. So I think this is very good and Obama deserves credit for this.

But I also think what this demonstrates is that it's-it's the old conservative argument. It's not the gun that's the danger. It's the person that's dangerous. He's a peaceful person. He obeyed the law. He was not a man of violence. And it went quite well. So I think it's a remarkable demonstration, when you compare to what 19 individuals could do with razor blades, versus one man with an armed pistol that happens to be a law-abiding citizen.

SCHULTZ: So Congressman, we know what the law is. He was perfectly legal. He was on private property. But doesn't it somewhat defy common sense to show up where the president is with a loaded gun, just to prove a point.

PAUL: Well, to him, it didn't. I wouldn't. I don't even own a gun.

I wouldn't be interested in doing that. But no, he was expressing himself. Don't you think sometimes people use the First Amendment and say terrible things and dumb things. And when the American Civil Liberties Union comes in, they will defend people-even defend radical, violent people, who are saying bad things.

So I would think to demonstrate that he has a right to do this-and he believes, as many people believe, that an armed society is a more peaceful society. And he proved his point. He was remarkable in proving his point that he was a peaceful man, and caused no trouble.

SCHULTZ: I don't have a jaded opinion, because I'm a gun owner. I don't have a pistol, but I have deer rifles and shotguns and stuff like that. But we have had a situation in this country where a prisoner came up and overtook a guard, and ended up shooting a judge and some other people in a courtroom.

So I don't know how good that guy was in defending the fire arm, if somebody wanted to go nuts in a crowd when they saw a gun. I'm not trying to overplay this, because it has happened in this country.

PAUL: Can I comment on that? You're describing something where the government is in charge of the courtroom. They should provide the safety. In private property, the individual provides the safety. You just demonstrated that the government failed on that part. The government had a chance to react here, and I think they reacted rather remarkably.

SCHULTZ: OK. Well, but the same situation was apparent here, is that something could have happened if someone had seen that and decided to go off the handle and take the gun and do something. I mean, I'm surprised at I understand the freedom of speech and all this stuff and gun ownership. But it just defies common sense to pull a stunt like this to get some attention. I want to move the discussion to-

PAUL: I don't think he was doing it for attention getting. That's the way he lives. That's the way a lot of people live up there.

SCHULTZ: OK, All right. Well, I don't know if he carries a gun to work every day or not. But he sure showed up at that town hall meeting with the president with a fire arm on.

PAUL: I did a little campaigning up there. And it was sort of a little bit of a surprise to me-I don't think shocking, but-and I live in Texas. You know, there's a lot of guns hanging on gun racks in pickup trucks. But it was a little surprising to me.

SCHULTZ: Great to have you on, Congressman Paul. I appreciate your time tonight.

PAUL: All right.

SCHULTZ: Coming up, the town hall brawlers won't quit. Senator Dorgan just faced down a contentious crowd of health care reform haters. Hey, North Dakotans, listen up, quit taking that government handout. I've got something for you when we come right back on THE ED SHOW. Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: -- does want to kill people like myself. I'm 73. I'm one of those throw-aways we've heard so much about. OK?

UNIDENTIFIED MALE: Say it with me; 99 trillion dollars that you get and your cohorts on Capitol Hill. How are you going to look at my children?

CROWD: Just say no! just say no!

SEN. BYRON DORGAN (D), NORTH DAKOTA: I understand that some of you have already made up your minds.

(END VIDEO CLIP)

SCHULTZ: I tell you what, I said on this program the other night, this crowd, in many respects, is dumber than Joe the Plumber. How many pieces of videotape have we seen where people show up; they don't know what the heck they're talking about.

Let's bring back our panel tonight, Roy Sekoff, also John Harwood, and former Congressman Earnest Istook.

It is amazing how far misinformation goes in our society, and how it gets picked up, and it becomes folklore, and it spins out into outer space. The next thing you know, everybody starts to believe it.

John Harwood, this is a special set of circumstances and a real issue for the White House at this point. I want you to speak to how they're going to reverse the thinking of some of these seniors who are falling off the president, when you look at the numbers. What do you think?

HARWOOD: Boy, Ed, I think it's really, really tough to do. The president has taken this on directly several times. And we see all the administration officials trying to refute this idea of death panels and that sort of thing. It's a fact that end of life care consumes an awful lot of health care expenditures, that doesn't really improve people's lives and longevity even.

So some of that needs to be reduced. How do you talk about that? That's why the whole rationing discussion is so politically toxic and difficult. I think the administration is going to have to push back as well as they can. Then, in the end, rely on Democrats, and not a lot of the Republicans, whose constituents and whose voters are voicing this stuff in the town halls.

SCHULTZ: Former Congressman Istook, I want you to distance yourself tonight from this talk about a death panel, because there is no death panel. Do you embrace this kind of conversation by the GOP, or do you decry your former colleagues for talking that way?

ISTOOK: Well, I think there are people on both sides engages in disinformation.

SCHULTZ: I'm not talking-wait a minute, now.

ISTOOK: I'm going to make your point, Ed. There are people on both sides that are engaging in disinformation. Concerns about this particular panel are based in part upon the fact that two Oregon lawmakers, Earl Blumenauer and Ron Wyden, are the chief proponents of it. And that's coming from the state that sponsors assisted suicide. So there's an inter-relationship.

When you talk about the misinformation, the "Washington Post" this weekend called the president's hand, in an editorial on Sunday, for trying to condemn the profits of health insurance companies. They pointed out that the latest ratings of industries show that health insurance companies are 35th in the level of profits, with an average profit margin of-

SCHULTZ: It's not about profits, Congressman. It's not about profit.

It's about people's lives. It's about people being denied coverage.

ISTOOK: I'm just quoting Obama.

SCHULTZ: I'm quote Obama, too. He's for a public option and we've got to have it in this country. And finally, Roy, let me ask you: what should the Obama administration do at this point to turn these numbers around?

SEKOFF: Well, they've got to do what they should have done in the beginning, which is come out stronger about specifically what they're talking about. There's too many diffuse things. Because of that, when you open the door, you open the door to the crazies, Dr. Chuck Norris coming in and saying that we're going to come in and tell our kids about Jesus. It's craziness when you leave that kind of void.

SCHULTZ: It's all about disliking the president of the United States.

Earlier tonight-Thanks, fellows, for joining us.

Earlier, I asked you what you thought. Who's a bigger threat to health care reform: 83 percent said conservative Democrats. That means I'm going to keep hammering them on this show every night on MSNBC, THE ED SHOW. And 17 percent think the town hall screamers are going to actually have an effect.

The conservative Democrats, I got you in my cross hairs when it comes to commentary. You're wrong. You've got to support the president on a public option. That's THE ED SHOW. "HARDBALL" is next. I'm back tomorrow night. Have a great one.

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

END

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