updated 9/17/2009 11:32:23 AM ET 2009-09-17T15:32:23

Guests: Senator Jay Rockefeller, Senator Kent Conrad, Bertha Lewis, Steven

A. Smith, Katrina Vanden Heuvel, John Feehery, Jeff Santos, A.B. Stoddard

ED SCHULTZ, HOST:  As I‘ve said all along, this is now a watered down bill stripped of a public option and who told us that?  A whistleblower from the insurance industry calling it a gift to the insurance industry. 

Here‘s Finance Committee chairman, Max Baucus, today with his announcement. 

(BEGIN VIDEO CLIP)

SEN. MAX BAUCUS, FINANCE COMMITTEE CHAIR:  We debated this thing, we‘ve met over 100 hours.  I forget what the total is.  There are no real policy deal breakers.  It‘s more—getting more comfortable with what all this is and I think that‘s what this comes down to, is helping, working with it, making this—helping centers in the country, the public be more comfortable with all this is. 

No Republican has offered his or her support at this moment, but I think by the time we get to file passage in this committee you‘ll find Republican support. 

(END VIDEO CLIP)

SCHULTZ:  The GOP doesn‘t think you‘re a happening dude, Max, at all. 

Baucus keeps saying the American people need to get comfortable with reform.  What people is he talking about?  Here are the numbers I‘ve been looking at.  And so have you as of late.  75 percent of doctors support a public option according to a new study published in “The New England Journal of Medicine.”  51 percent of business leaders support a public option according to a new research poll commissioned by Driving Business Forward. 

Fifty-five percent of Americans support a public option across the board according to the latest “Washington Post”/ABC News poll. 

So let me give you a comfort zone here.  The Republicans know they‘ll spend the next generation in political wilderness if this reform gets passed and Obama gets it done.  President Obama thought the gang of six was going to be bigger than politics.  The olive branches have been everywhere.  He‘s been wrong on that. 

The righties have shown their hand down the stretch.  Now I know the president, we‘ve talked about this as a consensus guy, wants everybody to get along and get on board, but folks, you can‘t do that if you‘re dealing with people that just want you to fail all the time.  He has to make the choice.  Reward the Republicans who aren‘t budging or cut bait like he promised. 

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I will not waste time with those who have made the calculation that it‘s better politics to kill this plan than to improve it.  Now is the season for action.  Now is when we must bring the best ideas of both parties together and show the American people we can still do what we were sent here to do.  Now is the time to deliver on health care. 

(END VIDEO CLIP)

SCHULTZ:  Well, he tried. 

Mr. President, I think now is the time that you‘ve got to be strong enough and make good on your promise.  Senator Baucus has made the case all along that we need to choose between being progressive or getting the bill passed.  In my world, that is a false choice.  I also think the finance chair has got kind of a math problem right now. 

(BEGIN VIDEO CLIP)

BAUCUS:  It can pass the Senate.  No Republican has offered his or her support.  It can pass the Senate.  No Republican has offered his or her support.  It can pass the Senate.  No Republican has offered his or her support. 

(END VIDEO CLIP)

SCHULTZ:  We have 59 Democrats.  You need 60 votes.  Unless you go with reconciliation then you need only 51.  The only Republican who‘s telling the truth in all of this is DeMint from South Carolina.  He‘s bullying Olympia Snowe, telling reporters that joining with the Democrats would be naive and foolish. 

The quote is, “It would be terrible if one Republican chose to basically sell out the whole Republican conference, particularly in return for some naive idea that we can get some compromise.” 

Folks, they have shown their colors across the board.  They don‘t want to do anything with the Democrats in any of this.  It‘s time to move forward.  Now, lefties, it‘s time for you to engage.  I‘m talking about e-mails, I‘m talking about phone calls, I‘m talking about jamming phone banks and letting your representatives and senators know what you want. 

Four out of the five bills in the Congress want a public option. 

Joining me now is Senator Jay Rockefeller who just got out of a meeting with the president of the United States. 

Senator, great to have you with us tonight. 

SEN. JAY ROCKEFELLER (D), FINANCE COMMITTEE:  Thanks, Ed.  Thanks for having me. 

SCHULTZ:  I know that you‘re an advocate and have been for a public option for a long time and you‘ve been on record saying that you cannot support this bill out of the Senate Finance Committee, which you are a member of. 

Did you tell that to the president tonight? 

ROCKEFELLER:  I did, I did.  And in fact, he already knew it and is probably one of the reasons he asked to talk with me.  I had about a half hour with him.  It was great. 

SCHULTZ:  Did he try to sell you on it or was he just asking questions? 

ROCKEFELLER:  Actually, there‘s a number of things beyond the public option that I have problems with, and I explained those to him as I have to others.  And I will to you if you want me to.  I‘ll do anything you want, Ed. 

SCHULTZ:  Well. 

ROCKEFELLER:  I really want to talk about the alternatives to public option because it doesn‘t exist.  And I think we ought to have—like an Easter egg hunt.  Somebody trying to find an alternative, doing the right thing which would be a public option. 

SCHULTZ:  It is the right thing, there‘s no question about it.  Well, several weeks ago the American people were being told that the public option is dead, so you‘ve become a big voice in this, Senator, being on the Senate Finance Committee saying that you can‘t support it. 

What is your biggest problem with the Senate Finance Committee bill?

ROCKEFELLER:  Obviously I want the public option, but more importantly I worry about the alternative to it because I don‘t think it exists.  But I have—you know, I want to protect my people in West Virginia.  That‘s what I‘m elected for. 

My coalminers, my seniors, the subsidies for low-income people, the fact that are insufficient, the fact the children‘s health insurance bill, which I—John Chafee, originally senator from Rhode Island, and I wrote together back in the mid-‘90s. 

That‘s 11 million children at stake now and that‘s been tossed in the Finance Committee bill into something called the exchange which is the farmer‘s market which means it loses all of its defined benefit qualities that children need. 

SCHULTZ:  Senator, what about. 

ROCKEFELLER:  So I got a lot of problems. 

SCHULTZ:  Yes.  What about no Republicans showing up?  Is this the moment that we‘re finding out that maybe the Republicans aren‘t going to come along because if they‘re saying no right now to get them to say yes the Democrats are going to have a make a lot of concessions and it‘s only going to get watered down even further. 

So is this the defining moment in your opinion? 

ROCKEFELLER:  The defining moment will come, actually, it won‘t—it will be start out as being in the amendment process, which starts next Tuesday in the Finance Committee.  And I‘ll have a lot of amendments that will try to solve a lot of problems I have and so will a lot of other people. 

And then that either gets out through the Senate, Finance, or it doesn‘t, but then there‘s the health bill.  There‘s the four other—three other bills from the House which are all better than our bill is now, and so there‘s—there are going to be various stages.  Amendments on the floor then conference, and I remain optimistic that we‘re going to have a bill. 

SCHULTZ:  Do you feel like the Republicans have negotiated in good faith, Senator? 

ROCKEFELLER:  No.  Look, I‘ve been chairman of the Intelligence Committee where that‘s—that was the rule of the day.  They agreed to nothing we ever wanted to do, even though it involved national security matters. 

And it‘s the same thing in the Finance Committee.  I mean, the Republicans have never as long as I can remember ever been for health care reform at any kind at any level. 

SCHULTZ:  And what about. 

ROCKEFELLER:  In any way. 

SCHULTZ:  And what about reconciliation?  Would you go along with that? 

ROCKEFELLER:  I would if I had to.  I‘d prefer to do it the other way and so we have to try first things first and see how much we can accomplish. 

SCHULTZ:  Senator Rockefeller, I appreciate your time tonight.  Thanks so much. 

ROCKEFELLER:  Thanks, Ed. 

SCHULTZ:  Reaction from progressive Democrats has been swift and severe today.  Nancy Pelosi put out this statement.  “We hope to see modifications that make the health care more affordable for all Americans and promote competition.  That is the key to keeping costs lower.  I believe the public option is the best way to achieve that goal.” 

John Sweeney, the head of the AFL-CIO, the union the president spoke to yesterday, said, “Despite months of painful negotiations the Senate Finance Committee proposal released today absolutely fails to meet the most basic health care needs of working families and it fails to meet the expectations we have set for our nation.” 

Folks, I have to tell you, the next gentleman we have coming up is Senator Kent Conrad, chairman of the Budget Committee and also a member of the gang of six, who I have taken issue with from time to time, and he is a dear friend of mine, but in fairness to all of that, is there anything in this bill that should really be taken seriously by those who don‘t want the public option? 

Senator, good to have you with us tonight, and I know one of your biggest concerns over the years has been the budget and paying for this.  Why is this a good bill, Senator Conrad?  Why is this coming out of the gang of six something that we should lock on to? 

SEN. KENT CONRAD (D), FINANCE COMMITTEE:  Let me put it in no particular order.  Number one, it has very significant insurance market reforms so we do away with the exclusion based on pre-existing condition.  We do away with lifetime caps.  Do away with annual caps. 

Very significant delivery model reform which may be the most significant thing of all in health care reform.  To move to the systems that really work and provide big incentives to move in that direction, systems like the Mayo Clinic, the Cleveland Clinic and others that are low cost, high quality. 

Third, it is paid for unlike any other plan.  Fourth, it bends the cost curve in the right way.  Nothing more important for families, for businesses, for the government, itself, than to get the cost explosion under control.  In addition, it has a whole series of other things that are going to make a big difference in terms of improving coverage.  94 percent of the people would get coverage.  Not 100 percent, but a dramatic improvement from where we are. 

SCHULTZ:  Senator, what about these exchanges that would be operating on a state level?  In the state of Alabama, in the state of North Dakota, your state, in the state of California, one provider does more than 90 percent of the customers that are there. 

How is this going to provide competition if it‘s administered by the insurance industry? 

CONRAD:  Well, it‘s not administered by the insurance industry.  The exchanges function much like the Federal Employee Health Benefits Plan which all members of Congress are part of.  And here‘s how it works. 

At the beginning of the year, you‘re given a series of choices.  You can pick Blue Cross & Blue Shield, you can pick Aetna, you can pick Wellpoint, you can pick, under my proposal, a cooperative plan that is not run by the insurance industry at all, that‘s not for profit competitor, does not run by the government either. 

SCHULTZ:  But we‘re. 

CONRAD:  So people would be presented with a series of choices. 

SCHULTZ:  Yes.  But, Senator, wouldn‘t we see insurance companies competing against one another?  And of course, they‘ve been known not to compete in each other‘s backyard.  How can you guarantee to the American people that they‘re going to be honest brokers after they have been gauging us for years? 

CONRAD:  I don‘t think you can count on them being honest brokers, personally.  That‘s why I think it‘s critically important that you do inject a not-for-profit competitor up against the for-profit insurance companies. 

SCHULTZ:  Well, there‘s four out of five bills that have gotten the public option.  Is it still a possibility?  I mean you‘re outgunned by—and the polls are showing the people want a public, government-run option here. 

CONRAD:  You know, anything is possible here because this is the beginning of a legislative process.  You know, we‘re going to have chances to amend. 

SCHULTZ:  Yes. 

CONRAD:  . in the committee, on the floor, in the conference committee, so there are going to be lots of opportunities to see where the votes lie. 

SCHULTZ:  Senator, all these meetings, all these hours and no Republicans.  Why?  What—they just don‘t want any reform at all or what? 

CONRAD:  You know, I would say this about the Republicans that participated in this group of six effort.  I think they exhibited good faith. 

Look, at the end of the day there are things here they‘re uncomfortable with, and, you know, at the end of the day we sort of ran out of time in the sense that the chairman felt it was critically important to go the markup next week. 

I think before we‘re done we will have Republican support and, you know, it‘s going to be critically important to have Republican support if we‘re going to get 60 votes. 

SCHULTZ:  Yes, but the American people are going to want to know what you‘re going to have to give up to get those 60 votes and we‘ve given up an awful lot already.  Single payer and—so we‘ll see. 

Senator Conrad, good to have you with us tonight.  I appreciate your time. 

CONRAD:  Thanks for having me. 

SCHULTZ:  Get your cell phones out.  With what you know right now about the Baucus plan, could you support it?  Text A for yes, B for no to 622639.  We‘ll bring you the results later on in the show. 

Coming up, Jimmy Carter says an overwhelming amount of animosity directed toward the president of the United States is because he‘s a black man.  Republicans say Carter is playing the race card.  Steven A. Smith weighs in on that at the bottom of the hour. 

And the nutty senator from Alabama, Richard Shelby, says that ACORN is corrupt across the board?  We‘ll get into that.  Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  Coming up, the righty nuts versus ACORN.  They‘re going for the jugular, trying to choke off the group‘s funding.  ACORN CEO will deliver a counter-punch.  Next, right here on THE ED SHOW.  Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  The GOP is ramping up their campaign against the anti-poverty group ACORN.  On Monday, the Senate voted to strip them of housing funding and the Census Bureau already severed ties with ACORN.  But that‘s not enough for Republicans.  They don‘t want the group to get any kind of federal funding. 

Now I know what‘s going on here.  Look, the fact is the conservatives just don‘t want ACORN to be a part of anything.  Where was their outrage when Halliburton was overcharging the government and electrocuting American soldiers? 

Now that‘s no excuse for ACORN‘s behavior.  But I‘m not here to defend them.  They need to fix their problems fast.  But Republicans are trying to broad brush this.  And it‘s just not that simple. 

Let me bring in the CEO of ACORN, Bertha Lewis. 

Miss Lewis, good to have you with us tonight.  Let me ask you straight up, do you run an honest organization?  The conservatives are out there saying that everything about ACORN is dishonest. 

BERTHA LEWIS, CEO OF ACORN:  Well, first of all, just because you repeat a lie over and over again doesn‘t make it true.  Of course we run an honest organization.  We‘ve been running this organization since 40 years, and we have been doing our core work of protecting people against foreclosures, absolutely making sure that people have affordable housing and affordable health care. 

SCHULTZ:  What do you say about the videotape that‘s floating around out there about the sting operation that showed obviously your employees were doing things they shouldn‘t have been doing? 

LEWIS:  Well, first of all, for FOX and the right wing to have to stoop to a made-up scenario is one thing, but as you know and as I‘ve said over and over again, they did—those people were reprehensible.  It was indefensible, and I don‘t care if it was a one-minute conversation. 

In our organization, that does not meet our professional standards.  And guess what?  Those people were terminated immediately, but let me add, not one shred of paper application, tax form, anything was prepared. 

SCHULTZ:  OK. 

LEWIS:  . because our quality control does kick in.  And. 

SCHULTZ:  Senator. 

LEWIS:  . if we need to improve, we will. 

SCHULTZ:  OK.  Senator Shelby says that there‘s corruption all throughout ACORN.  That‘s why I‘m doing the story tonight, because now a United States senator has gone on record saying your whole organization is corrupt. 

LEWIS:  Well, just because he‘s a United States senator doesn‘t make his mouth a prayer book.  And some of these people need to get their mouths washed out with soap.  Listen. 

SCHULTZ:  So do you feel like you‘re being targeted by the Republicans? 

LEWIS:  Of course.  Listen, this goes way back all the way to the Bush White House.  A couple of weeks ago we saw Karl Rove‘s e-mails specifically targeting us and him firing U.S. attorneys because they wouldn‘t come back and do a political conviction against us.  We know. 

SCHULTZ:  And you‘re convinced that ACORN is worthy of taxpayer dollars to continue the work you‘re doing? 

LEWIS:  I am the new CEO.  I‘ve worked at ACORN for over 20 years now, and I can tell you, unequivocally, you know, we compete for those dollars.  We deliver and we‘re effective and we are just the target of this right-wing Republican. 

SCHULTZ:  And you‘re going to fight back, is that correct?  I‘m hearing. 

LEWIS:  Absolutely.  We will not stand for this modern-day McCarthyism and we will prevail. 

SCHULTZ:  Bertha Lewis, I appreciate your time tonight on THE ED SHOW. 

Thanks so much. 

LEWIS:  Thank you. 

SCHULTZ:  Coming up, my favorite righty talker.  Psycho Michele Bachmann is usually smiting venom.  But guess what brings her to the softer side?  Joe Wilson. 

Michele, I had no idea.  You‘re next “Psycho Talk. 

(COMMERCIAL BREAK)

SCHULTZ:  Oh, American “Psycho Talker” tonight, again, our favorite Minnesota (INAUDIBLE) Congresswoman Michele Bachmann.  She went on News Max TV after President Obama‘s speech last week and they asked her about Obama extending an olive branch of tort reform.  Here‘s her response. 

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN ®, MINNESOTA:  He said that he would instruct Kathleen Sebelius, his health and human services secretary, to implement some demonstration projects.  Well, we‘ve already had demonstration projects that have proved wildly successful in the state of Texas, for instance.  They have imposed tort reform.  It‘s done wonders for Texas. 

(END VIDEO CLIP)

SCHULTZ:  It‘s all about Texas, isn‘t it?  That‘s nice, Michele.  But you‘ve forgotten that the one state where costs are going up the fastest is Texas. 

Now, in Michele‘s defense, she may have been distracted during that interview.  It seemed like Joe Wilson‘s rude outburst during the president‘s speech really effected her.  Here she is a couple of days ago at a tea party in her home district. 

(BEGIN VIDEO CLIP)

BACHMANN:  Thank God for Joe Wilson. 

(CHEERS)

Joe Wilson is my friend.  He‘s the last person I talked to before I left Washington, D.C.  He is the sweetest, most mild mannered, loving guy.  You‘ve never seen such a huge heart. 

(END VIDEO CLIP)

SCHULTZ:  Michele, you‘re not hitting on Joe, are you?  What‘s going on here?  You know they maybe just perfect for each other, although Joe Wilson has got his work cut out for him if he wants to get caught up with Michele‘s level of craziness.  Because saying stuff tort reform has done wonders in Texas is “Psycho Talk.” 

Up next, in my “Playbook,” two black teens beat a defenseless white schoolmate on a bus.  Only someone as twisted as a drugster can find a way to blame it on the president of the United States. 

Plus Jimmy Carter says a lot of criticism aimed at President Obama is racially charged.  Steven A. Smith‘s in the house tonight.  His take on that.  It‘s just a moment away.  Stay with us.  You‘re watching THE ED SHOW on MSNBC. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JIMMY CARTER, FORMER PRESIDENT:  I think an overwhelming portion of the intensely demonstrated animosity toward President Barack Obama is base on the fact that he is a black man, that he‘s African American. 

(END VIDEO CLIP)

SCHULTZ:  Wow.  Bold statement from former President Jimmy Carter in his interview with “NBC Nightly News” anchor Brian Williams.  It‘s sparking strong emotions on both sides.  Republicans are pushing back very hard on it.  Michael Steele is accusing the Democrats of playing the race card. 

But a lot of people are looking at these right wing protests, ginned up by righty talkers across the country, who have openly called the president a racist, and saying if it walks like a duck, it‘s a duck.  Here‘s more on what President Carter said. 

(BEGIN VIDEO CLIP)

CARTER:  I‘ve live in the south.  And I‘ve seen the south come a long way.  And I‘ve seen the rest of the country that shared the south‘s attitude toward minority groups, at that time particularly African-Americans—that racism still exists.  And I think it‘s bubbled up to the surface because of a belief among many white people, not just in the south but around the country, that African-Americans are not qualified to lead this great country.  It‘s an abominable circumstance and grieves me and concerns me very deeply.   

(END VIDEO CLIP)

SCHULTZ:  Joining me now to share his thought on this, journalist and commentator Steven A. Smith tonight.  Steven A., the level of conversation certainly comes up when a former president says this.  Is Jimmy Carter correct?  What do you think? 

STEVEN A. SMITH, COMMENTATOR:  I think to some degree he is, when you‘re talking about a small portion of the populous out there that obviously have some very harsh feelings for our president of the United States, Barack Obama.  I definitely think there‘s a small segment out there that feel that way.  I don‘t think that‘s the majority.  I think when you are Barack Obama and you received over 69 million votes, 52 percent of the popular vote, I don‘t think you can sit there and label a strong majority of Americans to feel that way about him. 

But clearly there‘s a small minority who feel that way.  And they are making sure their voice is heard. 

SCHULTZ:  What do you make of Michael Steele saying that the Democrats are playing the race card? 

SMITH:  I definitely think there‘s some validity to his statement as well, because I think there are some people within the Democratic party that don‘t mind politicizing something.  Obviously, never let—

SCHULTZ:  Was Jimmy Carter politicizing something? 

SMITH:  No, I don‘t believe he would be one of them.  He obviously has reasons for feeling that way.  Some people would disagree with him.  It‘s just his opinion.  But he is a man that is nearly twice my age.  He‘s the former president of the United States.  He was born own raised in the south.  When he speaks about that, I will tell you this, I‘m definitely going to listen to him. 

SCHULTZ:  How do you think the president should handle this conversation that‘s going on now, now that it‘s a political football?  He has addressed the race issue in the past. He‘s given speeches.  Should the president just back out of this one this time, or should he comment on it? 

SMITH:  I don‘t think so.  I think he should comment on it, simply because he‘s at the heart of the matter.  The fact is, he addressed race when it came to Reverend Wright, while he was campaigning.  This is a man that is not afraid to speak on sensitive issues.  Not to mention the fact that he campaigned on galvanizing America, mobilizing America, and being a united—being a unifier. 

You can‘t then run away from a situation like this, especially when you‘re at the center of attention, because it pertains to you. 

SCHULTZ:  How do you think young black Americans are going to receive this kind of conversation?  We‘ve got a former sitting president, Jimmy Carter, saying this.  A former president, Jimmy Carter, saying this.  Now it‘s all over the media.  The White House, it‘s a hot potato for them.  They don‘t want to deal with it.  They want to move forward, look to the future.  They don‘t think it‘s going to advance anything. 

But what about young folks in this country that hear this conversation still going on?  I ask that because I‘m a product of forced busing for racial equality in the early ‘70s, OK, at Mari High School in Norfolk, Virginia.  They bus kids for the color of their skin.  Here we are, how many years later, still having this conversation? 

SMITH:  I tell you this, Ed, this answer may shock you.  I think it‘s going to be shrugged right of their shoulders.  They‘re not going to be phased by it, simply because there‘s a vast majority of African Americans within the United States of America that anticipate racism, racial insensitivity or bigotry wherever they go and whatever challenges are standing in front of them.  So it comes as no surprise.

What is surprising is a lot of god-fearing white Americans out there who have stood up in an absolute uproar because they‘re appalled by some of the things they‘re seeing.  It is nice to see people like yourself, Keith Olbermann and so many others be highly sensitive to situations like this, because that‘s what African-Americans have been waiting for quite some time.  Even though there‘s always been people in white America that has been supportive of the black race, by in large, that hasn‘t been the case to a lot of African Americans. 

SCHULTZ:  I want to ask you about the bus incidents, Steven A.  The bus incident where a white kid was beats up by a couple of black kids.  Disciplinary action has been taken place within the school system.  Rush Limbaugh was saying that this is Obama‘s America, black kids beating up white kids on a bus. 

SMITH:  That‘s ridiculous.  That‘s utterly ridiculous for him to say that.  It really has nothing to do with Barack Obama.  This kind of nonsense was happening long before Barack Obama ever came along.  Obviously, there‘s racism in America.  But there‘s also a situation where you have a lot of black kids on far too many occasions that feel the need to be violent and putting their hands on people of a different ethnicity.  There‘s no excuse for that. 

Those black kids should be punished, because they had no business putting their hands on that white individual.  You do the crime, you do the time.  Whatever that time is and whatever fashion it is, plain and simple.

SCHULTZ:  Steven A. Smith, great to have you on tonight.  Thanks so much.

SMITH:  No problem.

SCHULTZ:  For more, let‘s bring in our panel, Jeff Santos, radio talk show host, WWZ and in Boston streaming on RevolutionBoston.com, A.B.  Stoddard, associate editor for “The Hill,” and also John Feehery, Republican strategist.  Good to have all of you here tonight.

John, let me start with you.  Actually, I want to play this sound cut from Bill Cosby, who just did an interview.  He was talking about the behavior of the Congress toward President Obama.  This is Bill Cosby.  I want you to respond to this. 

(BEGIN VIDEO CLIP)

BILL COSBY, COMEDIAN:  I‘ve seen politicians disagree with each other and call each other by the name of mister, wait their turn, and then speak.  I‘ve seen people who couldn‘t stand each other have manners.  And this does not exist. 

People who seem to know that they were going to be on camera, they seem to be acting, yawning, texting, pretending that they were falling asleep and having pieces of paper they were waving.  I have am not seen this. 

(END VIDEO CLIP)

SCHULTZ:  John, want to get your comment on that. 

JOHN FEEHERY, REPUBLICAN STRATEGIST:  I‘ve been on the House floor when President Bush gave the speech.  And I do think that, at the end of the day, there was plenty of times where there was bad activity on both sides.  I think that what Congressman Joe Wilson did was unacceptable.  He apologized immediately to the president.  I think it was the right thing for him to do.  I think we need to move on. 

Putting my strategic hat on, the president and his team want this subject over with, because they want to talk about health care.  I don‘t think they want a continual conversation about all this stuff.  I think it really gets them off their game.  I think from the president‘s standpoint, the best thing for him is move on to talk about health care. 

SCHULTZ:  A.B. Stoddard, what about that?  Jimmy Carter must have not gotten the memo to move on to other subjects. 

A.B. STODDARD, “THE HILL”:  This is true.  Obviously, Jimmy Carter is just not some Democrat and his comments won‘t be ignored.  They‘ll carry tremendous weight, particularly among Obama supporters who believe that race is connected to all of this sort of anti-Obama sentiment and the kinds of signs we‘re seeing at rallies, et cetera. 

For this White House, this is quick sand.  They‘re going to stay away from this, as well they should.  The people they are focused on right now are the people who voted for Barack Obama, who they are losing right now on this health care debate, or any other issue that‘s come up this year that involves government spending and government intervention. 

They are watching the polls, not for the people who turn out to these rallies with posters of Obama as Hitler, anything like that.  People who voted for Barack Obama and are turning away, that middle of America, those independent voters.  They‘re the people they need to get back there, focus on them.  They don‘t want any conversation about race. 

SCHULTZ:  Jeff Santos, is there an up side, if the Obama White House is aggressive and answering these people who are throwing these kinds of slurs out there and these kinds of comments? 

JEFF SANTOS, RADIO TALK SHOW HOST:  Thank you, Ed, for having me.  It‘s simple.  They have to be strong.  If you noticed yesterday, Barack Obama was in Pittsburgh, Pennsylvania, addressing his crew, the people who basically helped elect him, the AFL-CIO.  He said very quickly that I feel home in the house of labor more than I do in White House of the United States.  The reason is that he feels that he can talk to those people.  And he has to be strong and he has to talk what he got elected for. 

The fact is is that there are—a majority of American people are able to deal with the fact that the man is an African-American.  They are able to deal with the fact this is a guy who wants a health care plan with a public option.  And they‘re able to deal with the fact that they want somebody to lead.  He has to lead.   

SCHULTZ:  John Feehery, is this really a shot at the Republican party from the former president?  What do you make of that? 

FEEHERY:  Well, I think Jimmy Carter has—I was thinking back to my father, who just absolutely hated Jimmy Carter with all his heart, because of what Jimmy Carter did in his policies.  I think to myself, he hated Jimmy Carter because of his policies. 

SANTOS:  Why did he hate Jimmy Carter?  What did Jimmy Carter ever do to him? 

FEEHERY:  Jimmy Carter did a lot of things to him. 

SANTOS:  What did he do? 

FEEHERY:  The worst economy in probably 50 years, except for the last four years. 

SANTOS:  Thank you, George Bush.  Did he hate George Bush too? 

FEEHERY:  He didn‘t hate George Bush, because he agreed with his policies.  He completely disagreed with Jimmy Carter‘s policies.  Jimmy Carter was a horrible president, which you seem to forget.  Jeff, do you think Jimmy Carter was a good president?  He was one of the worst presidents in history. 

SANTOS:  Jimmy Carter was a great president in comparison to George W.  Bush, in comparison to Ronald Reagan, who destroyed the economic basis of the country.  You know it.

FEEHERY:  Jimmy Carter was terrible. 

SCHULTZ:  A.B., I want to ask you, did the former president put the White House in an untenable position?  Everybody is talking about this right now on the heels of yesterday‘s House action.  You know, where‘s the good news here? 

STODDARD:  There‘s not a lot of good news on health care today, as you know, Ed.  It‘s really—today was a momentum killer, as we‘d like to say. 

SCHULTZ:  Wait a minute, A.B., four out of the five bills out of the House—or out of the Congress are for the public option.  So I will say that we‘ve got great momentum.  Finish your answer. 

SANTOS:  Not over yet. 

FEEHERY:  OK.  In terms of getting votes for a bill that actually becomes law, that will be a different question, Ed.  Now, back to Jimmy Carter.  Obviously Jimmy Carter is an important person and they‘re not going to come out—Robert Gibbs, the president‘s spokesman, did try to come out and disagree politely with that statement.  It is exactly what they do not need.  It fuels the fire.  After this week of—one solid week of Joe Wilson, they really want to move on.  And this is exactly what they don‘t need. 

SCHULTZ:  Panel, great discussion tonight.  A.B., we‘re going reconciliation.  We‘re going to get this done.  Public option is going to be there. 

STODDARD:  Mistake, big mistake. 

SCHULTZ:  No, no, no, no, no.  We‘re playing for keeps.  We‘re playing for keeps on this deal. 

FEEHERY:  Not going to happen. 

SCHULTZ:  It‘s a winner take all.  We‘re playing for keeps.  We‘re going to change this country.  Great to have all of you on. 

Coming up, two African-American teenagers beat up a white kid on a school bus while others watch and laughed.  I think the president should make this a teachable moment.  I‘ll explain next.

(COMMERCIAL BREAK)

SCHULTZ:  In my playbook tonight, I want to address this school bus beating everybody is talking about, where a white kid was beaten up by black students on a bus.  I have a plan for how President Obama can have a positive impact on this situation.  First, here‘s what the most hateful man in America, the Drugster, Rush Limbaugh, said about it. 

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO TALK SHOW HOST:  Obama‘s America, is it not?  Obama‘s America, white kids getting beat up on school buses now.  I mean, you put your kids on a school bus, you expect safety.  But in Obama‘s America, the white kids now get beat up, with the black kids cheering, yes, right on, right on.  Of course, everybody said, the white kid deserved it.  He was born a racist.  He‘s white. 

(END VIDEO CLIP)

SCHULTZ:  That‘s beyond psycho talk.  Kids have been getting beat up on school buses for a long, long tile.  In this case, the police concluded that it was a bullying issue, not race related.  But it could have been.  I think Rush Limbaugh wants a race war.  I really do.  Anybody that talks like that is deranged, in my opinion.

Even though President Obama clearly has nothing to do with this incident, I do think that he can do something really positive about it. 

Here‘s the play, Mr. President.  Bring these kids to the White House.  Counterpunch your critics by using it as a teaching moment when you‘ve got everybody paying attention to it.  Get in the mix.  You did it during the campaign.  You had to make a tough decision on Reverend Wright, when he did some things that didn‘t match up anymore, right? 

The last press conference, you put yourself in the Gates controversy.  Last week, you spoke to school kids and talked about something like this, about taking responsibility.  What a teaching moment.  If you can save one kid on the heels of an incident like this, it would be worth the time of the president of the United States.  And it would make a big statement. 

Bring them to the White House.  Sit them down and talk to them like a man, and ask them if that‘s the kind of American they want to be.  Do it, Mr. President. 

Up next, in the main event, Max Baucus put out his bogus health care plan today.  Anthony Weiner says bipartisanship is the equivalent of a child looking for a unicorn.  He‘s right.  “The Nation‘s” Katrina Vanden Heuvel will be here in just a moment for a total debrief on the issues.  Stay with us. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BAUCUS:  I know this bill will pass.  This certainly is a bill that can pass.  And the choice now is up to those on the other side of the isle whether they want to vote for it or not.  No Republican has offered his or her support at this moment.  But I think by the time we get to final passage in this committee, you‘ll find Republican support. 

(END VIDEO CLIP)

SCHULTZ:  The Republicans on the Gang of Six won‘t even vote on their own plan, after how many hours of meeting?  Over 100.  I don‘t know how much clearer they can be.  The righties have no interest in bipartisanship. 

Joining me now from “The Nation,” Katrina Vanden Heuvel, editor, owner of “The Nation.”  Great to have you with us.  Thank you very much. 

Four out of five bills call for the public option.  Three in the House, two in the Senate.  Is this new life into a government-run insurance plan? 

KATRINA VANDEN HEUVEL, “THE NATION”:  On the Baucus bill, what‘s so infuriating, Ed, is that we have seen Baucus sacrifice critical Democratic priorities and time.  Think of the time lost if he hadn‘t been playing footsie with these Republicans, who made pretty clear early on they didn‘t want to do bipartisanship.  We would have gone into August.  But we do have four or five bills.

If the president is truly a consensus seeker, he has the possibility here to do that with these four bills. 

SCHULTZ:  The guy that‘s been telling the truth the whole time is Jim Demint from South Carolina, Waterloo, failure, all that stuff.  Now he‘s threatening other people in the Republican caucus.  Don‘t go over there and do anything with this guy. 

HEUVEL:  I think it was Ronald Reagan who once said it takes two to tango.  This Republican party, it don‘t want to dance.  It wants to sit on its hands.  It wants—you know, the fundamental struggle here, Ed, the health care debate is a critical one for our country.  But it‘s also a proxy.  As you said about Senator Demint, from that great state of South Carolina, they want to take down President Obama and they want to delegitimize him.  That‘s something—we‘re going to get to this.  That‘s what President Carter was also talking about. 

They see the opportunity here to have the president fail.  And that‘s what this health care fight is largely about on the Republican side. 

SCHULTZ:  Does President Obama have it in his innards—he says he‘s a fighter—to move forward and say, OK, it‘s time to move on?  We gave you a chance.  When does that time come? 

HEUVEL:  Now.  Now.  It‘s a defining moment.  It‘s a defining moment for President Obama, for his presidency, for the future of reform, for the future of the Democratic party.  And the for sake of the nation, the stakes are high, Ed. 

SCHULTZ:  They are high.  If they go reconciliation in the Senate, only go 51 votes, the Democrats are going to have to raise taxes. 

HEUVEL:  Well, but that budget reconciliation process you talk about, the Republicans are being hypocritical.  They have talked about using that in the past on tax process and others.  A major reform enacted by a Democratic majority is still a meaningful and real reform. 

Yes, they will have to increase taxes on the top tier, the ones who have made out, as middle class Americans have suffered. 

SCHULTZ:  Can they go home and sell that?  Can the Democrats go home in the midterm and sell that? 

HEUVEL:  I think if they make clear they‘re doing it to those who have made out like bandits in the Bush years, not on the middle class—they‘re raised it now to 1.5 million and above—taxes are tough.  But I think if you can say this is a reform for the future of this country and that you are going to help the economy recover, I think they can do it. 

SCHULTZ:  Katrina, it would be momentum for the Democratic party and the liberal base.  And I think a lot of independents would go with this too.  They want health care reform.  You see the most recent Kaiser family reports.  Health care costs are still going up.  They will continue to go up until there‘s reform. 

Go reconciliation.  Do it with Democrats alone.  And suffer the political consequences if there are any. 

HEUVEL:  That‘s right.  I think—listen, the lesson from Clinton in ‘94 was that they didn‘t pass a health care plan that could improve the conditions of millions of people‘s lives.  Go into 2010 with a health care plan that is real, that disciplines insurance companies.  You‘re going to still have terrible unemployment.  I think President Obama needs a targeted job creation program.  But they‘re in better shape, the Democrats, with a real health care plan. 

SCHULTZ:  If he does that, the lefties will be there in the midterm. 

And if he doesn‘t—

HEUVEL:  If he doesn‘t, I think he‘s in trouble.  I think the base and the liberals and the progressives who supported him, saw a reform leader, will be disillusioned.  The independents will sit back.  He needs to mobilize the base that elected him and bring in the independents. 

SCHULTZ:  Did President Carter—switching subjects now—did President Carter put this White House in an untenable situations? 

HEUVEL:  No, I don‘t believe so.  I think what President Carter did was show us that he may not have been our greatest president, but with his candid, honest and courageous statement about race and racism in America, he showed he‘s the greatest living president. 

I do think, Ed, there‘s always a backlash in history when people try to reform.  But it‘s infused with a racism that Americans will now see.  I don‘t think the White House wants to own it.  I think they need to move forward and mover forward vigorously on legislation. 

SCHULTZ:  This is the kind of stuff that the Obama White House is putting up with.  This is coming from organized right wing websites.  The new face—the new face of government health care reform in this country.  This is what they‘re doing to the president of the United States.  The new face of government health care. 

HEUVEL:  If that doesn‘t have a racist element to it, I don‘t know what to say. 

SCHULTZ:  Does the White House ignore this? 

HEUVEL:  I think the White House needs to move vigorously now and expose again and again, as President Obama started to do in his speech, that there is misinformation, that there‘s a funded campaign to take down his presidency, and it is infused with racism. 

He has messengers.  He doesn‘t need to be at the forefront of it.  I think there are those in this country who should start speaking clearly about this issue. 

SCHULTZ:  Acorn‘s got some issues, but are they being unfairly targeted? 

HEUVEL:  Acorn has issues.  The leadership has—they fired people. 

They‘re doing an internal audit to really clean up.  This was problematic.  But these are isolated incidents, Ed.  I think what you‘re seeing again with Acorn is a group that has helped thousands of people with foreclosures, low income, middle income, people of color. 

It‘s a sustained, aggressive right wing campaign to take down progressive institutions.  You saw it with Van Jones.  You‘re seeing it with a tax on people of color in this administration.  I think the stakes are high.  And we need to step up and fight back, because it is a sustained, well-funded campaign.  This isn‘t out of the blue. 

SCHULTZ:  So there‘s a place for Acorn with tax dollars? 

HEUVEL:  There is a place for Acorn.  It‘s the oldest community organizing group.  It has problems, but it is taking actions to deal with those problems.  You mentioned Halliburton.  Why isn‘t Blackwater out of Iraq?  It has killed people.

The double standard‘s at work.  This isn‘t to excuse the problems Acorn has had.  But it is cleaning it up.  And it has helped so many thousands.  The predatory financial institutions need a counter. 

SCHULTZ:  They do. 

HEUVEL:  And the right wing needs to be taken on aggressively if we‘re going to have a more humane democratic country. 

SCHULTZ:  Katrina Vanden Heuvel, thanks so much, editor of “The Nation,” here tonight on THE ED SHOW. 

Earlier, I asked you for your thoughts of the Baucus bill.  With what you know about, could you support it?  Seven percent said yes; 93 percent of you said no.  That‘s THE ED SHOW.  I‘m Ed Schultz.  Back tomorrow night with you.  For more information on our program, go to WeGotEd.com.  “HARDBALL” with Chris Matthews is next, right here on MSNBC.

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