updated 9/18/2009 11:26:37 AM ET 2009-09-18T15:26:37

Guests: John Harwood, Bernie Sanders, Joe Sestak, Wendell Potter, Rep. George Miller, Karen Hanretty, Jack Rice, Todd Webster, Jonathan Alter

ED SCHULTZ, MSNBC NEWS ANCHOR:  Good evening, Americans.  Welcome to THE ED SHOW on MSNBC.

Tonight, here is the magic number, it‘s 51.  It‘s time for the Democrats to start making some demands.  And if they‘re not met, just go to reconciliation.  That‘s what the people want.

Now, there are five health care bills of reform, real simple; three in the House, two in the Senate.  They have exactly zero Republican votes.  Got that?  That means nobody from the Republican Party is on board.  After all this discussion, what are we waiting for?

They‘re supposed to be helping the president solve the country‘s most urgent issue.  And 80 percent of the bills now have a public option; four out of five want a public option.  How can the president deny that?

There is one glaring exception.  It is the Baucus plan or what I like to call the triangle of death.  Not your death, the death of your wallet because here‘s how it‘s going to work.

The Baucus plan calls for the government to give subsidies to consumers, then consumers they‘ve got run over because they‘re mandated to buy insurance from the industry.  Then in return, all the new business they got from big insurance is going to help them line the pockets of those politicians in Washington and that is the vicious triangle of the Baucus Bill.  That‘s it in a nutshell.

Folks, that is not reform, because right here I‘ll tell you big insurance, they will still be calling the shots.  Those folks in big medical, they are the ones who are lobbying the Congress and controlling this whole thing.  But we got a chance here if we got guts.

The Republicans, you see, they‘ve got a new strategy.  Just pretend like they would have voted for reform, if only President Obama hadn‘t been so mean.  Here‘s what Chuck Grassley unloaded on today.

(BEGIN VIDEO CLIP)

SEN. CHUCK GRASSLEY, RANKING MEMBER, FINANCE COMMITTEE:  I‘ll tell you, there‘s some things that the president has said since then that I took very personally.  He gave some speeches during August in which he was associating me with efforts to make this a political document and with efforts other people in the country will make to give extremes like on the end of life situation.

(END VIDEO CLIP)

SCHULTZ:  Hold, hold, hold it.  I‘m sorry, senator.  Are you telling us that it would be dishonest to associate you with death panel talk?

(BEGIN VIDEO CLIP)

GRASSLEY:  We should not have a government program that determines you‘re going to pull the plug on grandma.  We should not have a government programs that determines you‘re going to pull the plug on grandma.  We should not have a government programs that determines you‘re going to pull the plug on grandma.

(END VIDEO CLIP)

SCHULTZ:  Everybody got that?  That was Senator Grassley at home in Iowa.  But the first sound cut was today.  Will the real Senator Grassley please stand up?  The Republican rhetoric about the president and the insurance reform has been absolutely disgusting.

Now, the suggestion that the president‘s tone has been anything like that is absolutely absurd.  But Grassley was honest about one thing...

(BEGIN VIDEO CLIP)

GRASSLEY:  I‘ve been very candid with the President of the United States, face-to-face.  Like when he asked me would I support a bill, a bill if there was three Republicans and 58 Democrats and I said that‘s not a bipartisan bill.

(END VIDEO CLIP)

SCHULTZ:  Well, there it is, that‘s the bottom line.  There‘s no way the party of Waterloo will vote for any reform to help this president succeed.  Chuck Grassley just put the nail and the call for the bipartisanship.  Democrats, wake up.  When are you going to get the message with these guys?

Today, the president once again offered tough talk about his critics.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I‘ve heard a lot of Republicans say they want to kill Obama care.  Some may even raise money off it.  But when you ask these folks what exactly my plan does, they‘ve got it all wrong.  When you ask them what their solution is, it amounts to the same old, same old.

I will not accept the status quo as a solution.  Not this time, not now.  The time for bickering is over; the time for games is past.  Now is the season for action.  Now is the time to deliver on health care reform for the American people.

(END VIDEO CLIP)

SCHULTZ:  I‘m all about it.  Let‘s hold it right there.  Now the president is going to be going out and talking to all the talking heads this Sunday, right?  And the White House doesn‘t want to talk about race and they don‘t want to answer those questions about what Jimmy Carter was saying and everything else.

Well, Mr. President, make some news, demand the public option, because in the five bills, four of them call for a public option, plus the health care providers are with you and 75 percent of the doctors.  Plus the American people are with you.  Enough with the speeches, you‘ve done all you can do.  The president said it himself.

Now is the time for action.  Let‘s see if he goes through with it.  Forget about Grassley and the Republicans.  The president, he didn‘t kill bipartisanship, they did.  It‘s time for the Democrats to say we are the party of change, we won the House and the Senate and the House, forget all the niceties, forget about the governance of what might happen over the next six or seven years.

It‘s what the people expect, the people elected the Democrats to implement change.  Now is our time.

But what‘s going to happen?  Chuck Grassley and 39 of his friends are trying to kill reform and scare the hell out of the American people.  And if the Democrats fall for this and don‘t show some guts and go reconciliation, the joke‘s on us.

The time for talk is over.  I want him to draw a line just like this.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI, SPEAKER OF THE HOUSE:  I fully support the public option; a public option will be in the bill that has the half of the representatives.

(END VIDEO CLIP)

SCHULTZ:  Nancy Pelosi, can you send that script over to President Obama?  Because that‘s what the talking heads need to hear this weekend.  We need to get it on.

Get you cell phone out folks.  I want to know what you think.

Do Senate Democrats have the guts to use reconciliation to get the public option?  Text a for yes, b for no to 622639.  We‘ll bring you the results later on in the show.

Now, joining me now is Senator Bernie Sanders, a minute member of the Senate HELP Committee.  And Senator, we‘re now at the defining hour of who wants to stand up for reform and I know you want single payer.  That‘s not going to happen, but we might get something similar to it.

Senator, do you think the White House has the guts to tell the Senate leadership go reconciliation?

SEN. BERNIE SANDERS, (I) HELP COMMITTEE:  Well, I hope that the White House is going to work with the Senate leadership to make sure that we have real health care reform that all of us can be proud of and that absolutely must include a public option for all the reasons that you have been giving.

Without that public option, the private insurance companies will be able to raise their rates and raise their rates.  There will be no competition and the American people will not be able to have the choice that they need.

So I agree that a public option is absolutely necessary.  My hope is, and I‘ve been saying this for months, that you‘re going to have with Massachusetts‘ new senator that we hope, you‘re going to have 60 votes within the Democratic caucus and they have got to be firm and say to the Republicans, “Sorry, our health care system is disintegrating.  You just can‘t say no and no and no.  We‘re going to stand united.  We‘re going to pass strong health care.”

SCHULTZ:  All right, Senator Sanders, I don‘t have a telestrator here right now, but if I was in the broadcast booth doing a game, this is what I would draw up.  Here we have the government at the top, then the consumers down here on the left and big insurance over on the right and a back up to the government.  It‘s this triangle—it‘s this triangle of death.

SANDERS:  Yes.  Absolutely.

SCHULTZ:  You‘ve got the subsidies going to the consumers, you‘re forcing them to buy big insurance policies that gets a lot more people in the market and they‘re going to line the pockets of government.  Is that not the Baucus Bill in a nutshell?

SANDERS:  Well, in fairness to the Baucus Bill, there are some good things in it, too.  Like...

SCHULTZ:  There are good things in it.  But this is the workings of that bill.

SANDERS:  But here‘s the problem and I think you put your finger right on it.  What we are looking at is the possibility of funnelling billions and billions of dollars into the insurance companies who can then raise their rates over a period of years to any level that they want and the federal government is going to be bailing them out and subsidizing them big-time.

SCHULTZ:  That you‘re saying that the gouge, the grip is still going to be on.  It won‘t be true competition, but we‘re back to this.  Why are the Democrats so stuck on 60 votes?  Because right now if you have to go get Republican votes, it‘s going to get watered down so bad...

SANDERS:  (INAUDIBLE)

SCHULTZ:  ...the base of the Democratic Party is going to turn on the president.

SANDERS:  Ed, let me just say this, as somebody who as you indicated believes that a Medicare for all single payer system, a very, very strong public option.  The issue of reconciliation is you‘re dealing with a very complicated procedural process in the senate.  There are things you can do with it and there are things we must do.

But it doesn‘t give you the opportunity to do all that you or I want.  Reconciliation does not simply mean that we can do everything we want with 51 votes.  That‘s the problem.  But if we have to do that, there is a lot that we can do and that‘s what we should do.

SCHULTZ:  Well, it all surrounds the budget.  You have to pay for it, correct?  That you have to pay for it in a shorter period...

SANDERS:  You have to pay for it, that‘s correct.

SCHULTZ:  ...period of time, which means you have to raise taxes.

SANDERS:  And there are procedural problems with it as well.  You can do things with it.  It is an option.  The better option is back with me to get 60 votes to say no to the Republicans and go forward in a more comprehensive way.

But I want to underline the point that you made a moment ago.  With a disintegrating health care system, with a million people this year going bankrupt, with 18,000 people dying because they don‘t have health insurance and can‘t get to the doctor on time, it really is quite amazing that not one Republican has come forward to say, “Yes, I‘m going to support strong health care reform.”  That really is quite amazing.

SCHULTZ:  That is, it is amazing, on five different proposals and bills, not one, not one.  Senator Sanders, it‘s great to have you with us tonight.  Thanks so much.

SANDERS:  It‘s good to be with you.  Thank you.

SCHULTZ:  For more, let me bring in John Harwood tonight, CNBC Chief Washington correspondent and political writer for “The New York Times,” who had an exclusive interview one-on-one with Senator Olympia Snowe today who could be a Republican that could come over.

John did you get any encouragement that she‘s willing to move and negotiate at this point?

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT:  Well, she said

some positive things about President Obama to start with.  I asked if she considered like many of her Republican colleagues do, Barack Obama a big government liberal.  She said, “No, he‘s more of a moderate than a liberal, I think he‘s been reasonable on this.”

She said the cost controls were adequate in the Baucus Bill, she wants some changes in the bill and interestingly, Ed, she agrees with liberal Democrats like Jay Rockefeller.  To some degree, she wants more subsidies to let low income people buy health insurance.  Then the question is how you pay for it.

And I think the most encouraging signal of all, is Ed, that if Democrats as Bernie Sanders was just suggesting decide to go for 60 votes to have the unrestricted ability to pass a bill, once they get past a filibuster, they‘re going to need Olympia Snowe at least if they do that anytime soon.  And what she told me was the Republican Party has drifted away from her.

She said, “I‘ve always held traditional Republican principles, I haven‘t changed, my party has.”  That tells she me that she‘s not necessarily going to bound by party identity when it comes to that big party vote on filibuster.

SCHULTZ:  Well, that‘s interesting, because as Senator Sanders said, there‘s a lot of Americans who are hurting that could use a break and it cuts to the core of what these senators are all about.  Are they going to get hung up on what their party is all about and what‘s right for the people and you asked her something about that today in the interview.  Here it is.

(BEGIN VIDEO CLIP)

SEN. OLYMPIA SNOWE, ® FINANCE COMMITTEE:  I‘ve always been a Republican for the traditional principles that have been associated with the Republican Party since I became a Republican, when I registered to vote.  And that is limited government, individual opportunities, fiscal responsibility, and a strong national defense.

So I think that those principles have always been a part of the Republican Party heritage.  And I believe that I reflect those views and I haven‘t changed as a Republican.  I think more that my party has changed.

(END VIDEO CLIP)

SCHULTZ:  John, not one Republican has locked on to any of these bills at this point.  Are they trying to make a political point to keep their base together and they‘re going to break late in the game to get health care reform or do you really think they‘re this rigid?

HARWOOD:  Well, I think most of them are determined to oppose what President Obama is doing.  But I don‘t think you can put Olympia Snowe in that category.  She‘s been working closely with the White House.  She said she talked to the president last Friday.  She‘s had a very vigorous back and forth with senior members of the White House staff.

So I think Democrats have reason to be optimistic that what Olympia Snowe is doing is using the leverage she has as somebody that they need who might be with him to get the most changes that she wants.  And by the way, that Baucus Bill, as you know, has a co-op provision...

SCHULTZ:  Yes it does.

HARWOOD:  ...which many Democrats consider meaningless.  She supports a triggered public option.  I know you want a full public option.

SCHULTZ:  Yes.

HARWOOD:  But I think she‘s closer to your position than some Democrats are.

SCHULTZ:  Well, the only thing about the trigger is who‘s going to determine when it‘s not working and what‘s the time frame there?  And that would be kind of tough to watch with a lot of people still struggling in their lives when it comes to health insurance.

HARWOOD:  Yes.

SCHULTZ:  One final point I want to make with you, John, because you‘ve interviewed the president on numerous occasions.  Is he out to make news this weekend on the talking heads with all these interviews that he‘s going to be doing because of what Jimmy Carter said, to get that out of the news?  Maybe it‘s time to break and draw that line in the sand and the president be very definitive about what he wants in a bill.  What do you think?

HARWOOD:  I would expect Ed, that the president is going to do everything he can to deflect talk of race.  With all of the fights that he‘s taking on politically and there are a lot of them and they‘re big fights, I don‘t think he wants to get in a protracted race discussion.

SCHULTZ:  Yes.

HARWOOD:  I think he made most of the news he‘s going to make on health care in that speech last week, but who knows?  David Gregory may be able to get something out of him on “Meet the Press.”

SCHULTZ:  John, thanks so much, I appreciate your time tonight.

HARWOOD:  You bet.

SCHULTZ:  Great interview with Senator Olympia Snowe.

And by the way folks you can watch that entire interview tomorrow on the New York Times special edition it starts at 2:00 p.m. Eastern Time right here on MSNBC.

Coming up: the president‘s decision to shelve Bush‘s missile defense system and has enraged war mongers like John McCain and Joe Lieberman.  I‘ll ask the highest ranking military officer ever elected in Congress what he thinks in just a moment.

And new legislation means students will no long have to mortgage their future to get an education.  Righties call this another government take over.  House Education Chairman, George Miller is going to set the record straight in “Playbook” tonight.

Plus, whining tea baggers go off the rails in Washington.  I‘m calling them out in “Psycho Talk.”  Boy is there hypocrisy on the way.  Stay with us.

(COMMERCIAL BREAK)

SCHULT:  Up next, President Obama just deep-sixed Bush‘s missile defense plan.  Republicans say this empowers those we can‘t trust like Russia and Iran.  Now I don‘t trust them either, but I do trust the president.

Three-star admiral, Congressman Joe Sestak will give us his intel take on this when we come back.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.

Another Bush administration policy bites the dust.  It‘s getting criticism.  President Obama announced today that he is scrapping Bush‘s plans for a long-range missile defense system in Poland and the Czech Republic.  Instead, Obama is shifting his attention to more urgent threats of short-range missiles from Iran.

Let me bring in Congressman Joseph Sestak of Pennsylvania.  He‘s a 3-Star Admiral in the Navy and the highest ranking former military officer ever elected to the Congress.

Joe, I want you to listen to this sound bite.  This is the president this morning explaining his reasoning for making this move.  Here it is.

(BEGIN VIDEO CLIP)

OBAMA:  This new Ballistic Missile Defense Program will best address the threat posed by Iran‘s ongoing ballistic missile defense program.  We will retain the flexibility to adjust and enhance our defenses as the threat and technology continue to evolve.

To put it simply, our new missile defense architecture in Europe will provide stronger, smarter and swifter defenses of American forces and America‘s allies.

(END VIDEO CLIP)

REP. JOE SESTAK, (D) PENNYSLVANIA:  He should have added just one more word, “and at less cost, more capability at less cost.”  The NIE, National Intelligence Estimate, that came out in June actually said it‘s not the long-range missile threat it‘s the short and medium range threat that threaten our troops in the Middle East, that threaten Israel and southeast Europe including Turkey.

The system President Bush was going to build, which would be in place in 2017, would protect none of that against those shorter or medium range threats.  By 2011, in only two years, we will have Aegis ships out there, upwards of 80 then we can move around like pucks on a hockey rink around the world to protect our troops and other nations from short or medium range threat.

Then by 2017 and ‘18, there is a four-step phase to have almost identical capability, long-range up against ICBMs, intercontinental ballistic missiles to protect America.  What a good move by this president.

SCHULTZ:  So Congressman, you‘re saying not only is it a good strategic move, but it‘s also a budget move as well?

SESTAK:  Absolutely.

SESTAK:  About over $4 billion is what we would have put into the system in the Czech Republic and Poland.  I would imagine it‘s easily less than a billion dollars that is going to have this upgrade of Aegis ships that already have a missile defense system on them and improvement (ph).

And second, if I could, this system that we were putting in there, which is going to have the same capability almost on the outside for long range, permits us to deal with Russia, to have Russia then pivot and put pressure economically by sanctions as well as diplomatically on Iran with a hope they‘ll stop building their nuclear weapon efforts.

SCHULTZ:  Joe, the conservatives are saying we‘re caving to the Russians.  That this is a weak move; that this isn‘t a strategic move at all and this is the weak side of the Obama administration.  What about that?

SESTAK:  Absolutely not.  They often said that when President Nixon and Kissinger actually dealt with the SALT talks, Strategic Arm Limitation Talks.  This is once more going back to a political military move where this president has retained the same capability, in fact enhanced it to protect Israel and our troops out there in the Middle East.

And at the same time, has a probability of now, with Russia, placing pressure on Iran, that if it doesn‘t pursue a nuclear weapon, we gain.  No, this is an act of strength.

SCHULTZ:  And quickly, one final thing.  You were talking about these ships that will be able to move around, more mobility.  Do you think this will force the Russians, maybe, to change their strategy on the open seas?  What do you think? 

SESTAK:  Absolutely not.  There is no Russian navy of any worth today.  By the way, these ships we have are already there today.  The president is just taking advantage of an already-built infrastructure with slight software upgrade and additional number of missiles.  That‘s it.  What a wonderful move by this president to enhance our security at less cost and protect an ally, Israel, that wouldn‘t have been protected otherwise. 

SCHULTZ:  Congressman, good to have you on tonight.

SESTAK:  Good to be here.  Thank you.

SCHULTZ:  Thanks so much for drawing on your experience as an admiral here on THE ED SHOW.  I appreciate it very much.

Coming up, those nut-job tea partiers are whining out of both sides of their mouth, again.  They want to cut government spending but they‘re mad that the government didn‘t spend enough on them for the D.C. protests.  They ride on the “Psycho Talk” express next on THE ED SHOW.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  We got a dandy in “Psycho Talk” tonight.  A little hypocrisy out there; you remember these TEA partiers that were in Washington, D.C.  last weekend, the 1.7 million?  Remember what they were hollering about?  Here it is. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  He‘s raising the taxes like crazy and we need freedom. 

UNIDENTIFIED MALE:  Communism, fascism, socialism. 

UNIDENTIFIED FEMALE:  Talking about less taxes, less government. 

UNIDENTIFIED MALE:  Spending a lot of money that‘s unnecessarily spent.

UNIDENTIFIED FEMALE:  We‘re tired of the spending. 

(END VIDEO CLIP)

SCHULTZ:  Is that right?  They were protesting socialism, taxation and government-run programs.

But now they‘re complaining that the Washington Metro System wasn‘t good enough for them.  That‘s right.  The Washington metro, of course, is public transit, that means it‘s run by the evil government which is exactly what these nut jobs were protesting.

Congressman Kevin Brady—here‘s the interesting twist—he‘s from Texas, he sent an angry letter to the Washington Metropolitan Transit Authority about it.  He wrote, “These individuals came all the way from southwest Texas to protest the executive spending and growing government intrusion.  These participants, whose tax dollars were used to create and maintain this public transit system, were disappointed that our nation did not make a great effort to simply provide a basic level of transit for them.”

Well, actually, this summer, Congressman, I thought you voted against a bill that would have funded the D.C. Metro System.  So these folks, who are out there complaining about government spending, are upset that the government actually didn‘t spend enough money so they could have their TEA party.  Bubba, let me tell you something, that‘s nothing but “Psycho Talk.”  Take a taxi.

Coming up, House Speaker Nancy Pelosi got all choked up today when addressing how heated the political climate is.  So she wants us to all curb our enthusiasm for the good of the country.  I‘ll show you the tape in a moment.

And you know how the Righties keep saying that the president‘s policies are bad for the economy?  Well, it turns out that they may not know what they‘re talking about again.  Home prices are up and American‘s net worth has grown by a couple of trillion dollars this year.  Some good news coming up in the “Playbook.”

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  The Baucus plan; progressives don‘t like it; Republicans, well, actually, they‘ll never like it.  In fact, the only group that seems to like the Baucus plan is the health insurance industry themselves.  How about these insurance stocks, just getting up there the last couple days, after the Baucus plan was announced?  How about that? 

Joining me now is Wendell Potter, former vice president of the insurance giant CIGNA.  He is now a senior fellow on health care for the Center for Media and Democracy.

Well, Mr. Potter, I wanted to bring you back again this week.  Don‘t mean to bother you too much.  But you did call it.  You said this was a gift to big insurance.  Is this the tip of the iceberg, what do you think? 

WENDELL POTTER, CENTER FOR MEDIA AND DEMOCRACY:  I think so.  I can‘t believe that we‘ve got a bill that gives so much a gift to the insurance industry as this is.  You‘re right, I think the only people anywhere in Washington who appreciate this bill are the people who work for America‘s Health Insurance Plan, the big trade association, and around the country illegal aliens, because they‘re the only people who can escape being forced to buy the insurance products that we would have to buy under this plan.  

SCHULTZ:  With the mandate and with people that can‘t afford to buy the insurance, they would be subsidized by the government, go over and buy the insurance policy, fatten the pockets of the big insurance companies, who would be able to line the pockets of the politicians to make sure that there‘s no more reform.  Is that too much of a stretch or is it the way it‘s going to be? 

POTTER:  Not, that‘s how the bill is—how it‘s designed, how it would be implemented.  Your tax dollars and mine would help subsidize those who don‘t have enough money to pay the money they would be required by law to buy the insurance from these private insurance companies.  That would send your tax dollars and mine, those policy holders money, straight into the pockets of investors. 

SCHULTZ:  Mr. Potter, you and I have talked a lot about how much money and how much effort and how much orchestrated attempts that they‘ve had, a game plan to fight off the public option and anything that would compete against the private sector.  Well, now we‘ve got four out of the five bills have got a government-run insurance program that would compete against the private sector. 

What can we expect down the stretch here?  I mean, is the hammer job coming?  Is this the tip of the iceberg?  What are we going to see from big insurance the rest of the way? 

POTTER:  Big insurance will try to keep making the case that the public option is dead or dying.  And that‘s why you‘ve been seeing the stock price go up.  Over the past three months, the stock price of the company I used to work for, Cigna, has gone up 50 percent.  This is part of the insurance industry strategy to try to make people think and try to discourage the advocates of the public option, just give up, it‘s not going to happen. 

You will see I think that people will start rebelling against this Baucus bill.  And I think senators like Jay Rockefeller, who has been a champion of health care reform longer than any living senator, he doesn‘t like this bill.  I think he will try to seek to amend this so that it will resemble more of the bill that came out of the Health Committee in the Senate or the House bill. 

SCHULTZ:  But these lobbyist will really be twisting arms right now, won‘t they? 

POTTER:  Absolutely.  They have focused their attention on Senator Baucus and on Senate Finance because they know that‘s where the current action is.  That‘s why the bill looks as it looks right now.  So they will be in full force, spending millions of dollars over this next stretch of time. 

SCHULTZ:  Do you think we could come to the political conclusion that if Barack Obama, the president of the United States, gets the public option, that he really will have defeated the lobbyists the way he said he was going to do or attempt to do, and get them out of the White House, get them out of the influence, as he said in the campaign? 

I mean, four out of five, 80 percent of the legislation has a public option in it.  So this is the defining moment now, is it not? 

POTTER:  It really is.  He needs to have the public option in there. 

Otherwise it will be a great flip-flop from the campaign, first of all.  But the public option is the best hope.  There‘s a new study released today out of Harvard that 45,000 Americans die every year because they lack insurance.  That doesn‘t count the people who are under-insured.  Another 25 million people are under insured. 

He said in his speech that he wants to have a plan that will ensure that no American will ever be going bankrupt because of a lack of insurance.  This bill, this Baucus bill will guarantee that more and more of us will be going bankrupt, will be joining the ranks of the under-insured. 

SCHULTZ:  Mr. Potter, good to have you with us tonight.  Thanks so much for your time.

POTTER:  Thank you very much. 

SCHULTZ:  For more, let‘s bring in our panel tonight.  Todd Webster, Democratic strategist, is with us.  Also, Jack Rice, former CIA officer and radio talk show host.  And Karen Hanretty, Republican strategist. 

Another story that‘s out there with our panel tonight that I want to bring up there is this rhetoric that is out there across the country on talk radio and, of course, at these tea parties that are going across, the hateful signs, the talk of racism.  What former President Carter has been talking about, not only last night in a speech, but in an interview with Brian Williams the other night, about how there is so much hatred towards the president. 

It has really rekindled a lot of memories of House Speaker Nancy Pelosi.  She addressed it today, the level of rhetoric and how scared she is. 

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D), SPEAKER OF THE HOUSE:  I have concerns about some of the language that is being used, because I saw—I saw this myself in the late ‘70s in San Francisco, this kind of rhetoric.  It was very frightening.  And it gave—it created a climate in which we—violence took place. 

Our country is great because people can say what they think and they believe.  But I also think that they have to take responsibility for any incitement that they may cause. 

(END VIDEO CLIP)

SCHULTZ:  Karen Hanretty, I would like to get your response to this first tonight.  The White House doesn‘t want to respond to it.  So they just turned it over to Nancy Pelosi.  Is she being a little too emotional about this or this a genuine move here?  What do you think? 

KAREN HANRETTY, REPUBLICAN STRATEGIST:  No, there‘s nothing genuine about Nancy Pelosi, first of all. 

HANRETTY:  Yes, look, reporters didn‘t even know exactly what she was talking about.  So they asked more staff, was she referring to the murder of Harvey Milk, you know, and they said yes.  Harvey Milk wasn‘t murdered by a Republican who was a homophobe.  He was murdered by a guy who was disgruntled.  It had nothing to do with politics or ideology.

She‘s trying to just drag this in so they can create this narrative.  The Republicans are just a bunch of racist, homophobes.  Let‘s just throw in misogynistic while we‘re at it.  This is just a distraction. 

SCHULTZ:  Todd, your thoughts on this political move?  Is it political or is it just a genuine moment by the speaker of the House? 

TODD WEBSTER, DEMOCRATIC STRATEGIST:  Let‘s try to be objective about this.  Republicans have been running and winning campaigns on these wedge issues of race for 30 or 40 years.  It goes back to Nixon‘s southern strategy.  As recently as a few years ago, Bob Corker won a Senate race against Harold Ford tapping into racism and the fear of a black man. 

Look, there are still crackers in this country.  And it‘s unfortunate.  But it‘s what it is.  Hold on a second.  But this is the base of the Republican party.  Whether it‘s the tea baggers or the birthers or these other efforts to undermine the legitimacy of Barack Obama as president because he‘s a black man. 

Now, the vast majority of Americans I think have moved on.  And we are a tolerant and a pluralistic society.  But there are still politicians and campaigns that will try to use these wedge issues and try to drum up race to score political points. 

SCHULTZ:  OK.  Jack, your thoughts on Nancy Pelosi‘s emotion today?  But also the president is going to be doing a lot of interviews this weekend on the talking heads, hitting all the major shows.  And the issue of race is going to come up.  Do you think he should address it or brush it off and leave it where it is? 

JACK RICE, RADIO TALK SHOW HOST:  I don‘t think he can actually brush it off.  But what he does have to do is focus in on what it is the American people need. 

I mean, he‘s been very smart when it came to Jeremiah Wright, when it came to Gates, when it has come to this.  Robert Gibbs said just yesterday, you know what, he doesn‘t see this as a racial issue.  I think there is a racial component to this, without question. 

However, the president is smart to focus in and say what the American people need desperately right now is health insurance reform.  So he‘s going to focus in on that issue.  He will acknowledge that it exists.  I think he‘s essentially pushed it away in this instance. 

However, I think his focus is the appropriate one and we‘ll see what happens. 

SCHULTZ:  Karen, I‘ll give you a quick comment there. 

HANRETTY:  Those crackers that Todd referred to—a lot of those crackers were voting in the Democratic primary.  You‘ll recall that President Obama referred to Bill Clinton as being racist in some of how Hillary Clinton was running her campaign. 

SCHULTZ:  We‘ll leave it there. 

HANRETTY:  Yes. 

WEBSTER:  Extreme progressives don‘t shoot people, OK, like you have at the Holocaust museum.

HANRETTY:  You mean like the Weather Underground that Barack Obama—one of his supporters was associated with? 

(CROSS TALK)

SCHULTZ:  Coming up in our next segment, huge news for college kids today.  Thanks to Congress, student loans will no longer be run by private banks.  Right wingers are accusing this as another government takeover.  It‘s not.  Congressman George Miller next in my playbook to explain all the advantages.  Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  In my playbook tonight, the GOP‘s government takeover.  Play on health care riled up their base so much that they‘re using it again to target education reform.  So far, though, it‘s not working. 

Today, the House of Representatives passed a bill that would end government subsidies to private student lenders.  Instead, that money would go straight to the students.  But apparently Republicans don‘t think that would help Americans afford a college education.  Here‘s what they had to say about the bill. 

(BEGIN VIDEO CLIP)

REP. JOHN KLINE ®, MINNESOTA:  This is indeed a government takeover of an industry. 

UNIDENTIFIED MALE: This measure before us usurps even a modicum of private sector involvement. 

REP. VIRGINIA FOXX ®, NORTH CAROLINA:  This bill is another government takeover of parts of our lives.  It is an insidious intrusion into education at all levels by the federal government. 

(END VIDEO CLIP)

SCHULTZ:  Oh, sound familiar, huh?  Joining me now is the sponsor of the bill, chairman of the House Education and Labor Committee, Representative George Miller of California.  Congressman, great to have you with us tonight. 

REP. GEORGE MILLER (D), CALIFORNIA:  Thank you, Ed. 

SCHULTZ:  Doesn‘t this just cut out the middleman?  Isn‘t that all this legislation does? 

MILLER:  That‘s what this legislation does.  Right now, under the program as it currently exists, we took money from the Treasury, we gave it to the banks, we gave them the subsidy.  If there‘s any default, we guaranteed that loan. 

What we now understand is that we can take that money, save the taxpayers over the next ten years 87 billion dollars, and we could give that money to benefit students and families that are borrowing money to reduce the cost of the loans, to help the lowest income people who are qualified to go to college, and make campus based loans available to help students who run into economic trouble during the school year. 

SCHULTZ:  So Congressman, you‘re telling us that this will save money, and it will make it easier for students to get money to go to college.  I looked at the vote this afternoon, 253-171.  You only got six Republicans to vote yes on this.  What‘s their problem on that, other than the sound bites we just heard about it being a government takeover?  What‘s their problem? 

MILLER:  Well, the lobbyists from the lending institutions have been in full flight for the last couple of months, pounding on legislator‘s doors, telling them that somehow they were still entitled to a subsidy.  As these banks—as these lending institutions became some of the wealthiest and most profitable corporations in America, they insisted they were entitled to a subsidy at the same time. 

We said no; no longer are you entitled to that.  What we‘re going to do is take that money and put it out on behalf of students who have to borrow money to pay for their education, families that have to borrow money to pay for their education.  We‘re going to make it more affordable.  We‘re going to lower the interest rate.  And we‘re going to make sure that people can complete their college education. 

SCHULTZ:  OK.  Congressman, I also want to ask you about the controversial issue surrounding Acorn.  There was another vote in the House today and it was 345-75.  And that is to cut all funding to Acorn.  Your thoughts on this?  First, how did you vote?  And what do you make of this? 

MILLER:  I voted for that resolution, so we could move this bill to the conference committee with the Senate.  I‘m not going to lose the opportunity to provide America‘s students and families that this bill provides, to take those subsidies away from the bank and help them.

On Acorn, we have on-going investigations in the House.  I think the Senate voted once or twice already to strip Acorn of its funding.  We‘ll see what the results of that investigation in the House are and other investigations, and the Congress will make its mind up. 

SCHULTZ:  Yesterday, Senator Shelby said on this network he thought Acorn was corrupt pretty much across the board, that they‘ve been doing this for years, they got problems everywhere.  Do you agree with that? 

MILLER:  I don‘t agree with that at all.  I think they‘ve had some very irresponsible people working for them that made some terrible decisions.  But Acorn has been very, very important over many decades of empowering poor people, helping people register to vote, all kinds of economic activities on behalf of those who are many times disenfranchised in this society. 

But they‘ve made some horrendous mistakes.  I don‘t know whether or not they can survive it.  We‘ll see what the investigations say.

SCHULTZ:  Congressman George Miller, great to have you with us tonight.  Thank you so much. 

MILLER:  Thank you. 

SCHULTZ:  One last page of my playbook.  We got some good economic news this afternoon.  Americans‘ net worth grew by two trillion dollars in the second quarter of this year.  That‘s the first time it‘s gone up since 2007.  Home prices are up as well.  Real estate values rose 1.8 percent.  That‘s the first rise in home prices since the end of 2006.

Looks like the Republicans might have a hard time explaining this one.  And they might be arguing—having it tough to argue against President Obama‘s policies now that we‘ve got some really good economic news. 

Next up, the main event.  I have some advice for the president.  When it comes to health care reform, the time has come, lay down the law on the public option.  I have a feeling “Newsweek” Jonathan Alter isn‘t going to agree with me on that.  That‘s coming up with I guess you could say an altercation in just a moment on THE ED SHOW.  Stay with us. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PELOSI:  I fully support the public option.  A public option will be in the bill that passes the House of Representatives. 

(END VIDEO CLIP)

SCHULTZ:  Nancy Pelosi laid down the law again today.  I would like to hear the president have that kind of toughness coming up on this media tour.  I want him to say, quote, I support a public option and it must be in any bill that I sign, end quote. 

If Democrats in the Senate can‘t get 60 votes, do it with 51.  And I‘m all for reconciliation.  I don‘t think Jonathan Alter is, “Newsweek Magazine.”  What do you think? 

JONATHAN ALTER, “NEWSWEEK”:  Actually, I am too.  I think it‘s fine to split the bill in two and do part of it through reconciliation.  I‘ve got no problem with that. 

My only problem is drawing lines in the sand.  I don‘t think it‘s productive.  It doesn‘t get you closer to an end result.  You have to play your cards close when you‘re negotiating, which is the position that the president is now going into. 

But I‘m very disappointed that the Baucus bill did not have a more robust co-op plan.  If they‘re not going to do a public option, as the president said in his speech, you have to have some way to keep the insurance industry honest.  And the alternative was a co-op plan.  But it‘s a very wimpy one.  If they were going to do something other than a public option, they need to do it soon.

SCHULTZ:  You‘ve been consistent all along Jonathan about the way you want the president to play this.  No lines in the sand and everything else.  But aren‘t we at a new level?  All the bills are in.  Four out of five call for a public option.  The polls are swinging his way, despite being beaten up through the month of August. 

The public wants this.  Why can‘t the president come out and say, time for the old veto pen, got to have a public option? 

ALTER:  Because those sorts of threats don‘t get you—

ALTER:  In other words, what you want to look for is what can he do that will actually advance the cause that you and I believe in, which is a big, important, historic bill with a public option.  How do you get from here to there?  Not with going on TV, and making threats at people who don‘t want to do it your way?  My way or the highway.

That‘s politics, Ed.  Just playing to the base.  I‘m not interested in playing to the base.  I‘m interested in a bill.  OK?  Those are two different things. 

SCHULTZ:  If he gets a bad bill, that‘s going to hurt his base. 

ALTER:  The satisfaction of being able to be out there posturing for what everybody wants is in a different category than actually doing the nitty gritty negotiating to get you a bill.  Whether you‘re Lyndon Johnson negotiating Medicare, or Franklin Roosevelt negotiating Social Security, you don‘t do that.  You don‘t go out and draw lines in the sand. 

SCHULTZ:  Yes, you do. 

ALTER:  None of them did it. 

SCHULTZ:  First of all, the Democrats did draw a line in the sand on single payer.  They threw it out the door, wouldn‘t even let it at the table in the first discussion. 

Here‘s the point I want to make.  We‘re at a point now where the people that voted for Barack Obama have clearly stated that they want a public option.  Four of the five bills are in saying that.  What‘s wrong with the president moving the envelope, telling the Republicans, who have not been honest brokers, according to Jay Rockefeller on this show last night—they haven‘t negotiated in good faith—let‘s get it on.  We have to get it going. 

SCHULTZ:  I agree with that.  I think it‘s time to cut the Republicans loose.  They‘re not negotiating in good faith.  And all these concessions in the Baucus bill, the Republicans, they should get rid of all of them.  All the give-aways to the insurance industry, get rid of all of them when they mark up this bill. 

But there still are a number of Democrats in the Senate who are not sold on a public option, unfortunately. 

ALTER:  We‘ll see.  Right now, they‘re counting heads.  Before you draw lines in the sand, you better make sure you got the votes.  So give them a little leeway to negotiate.  That‘s all I‘m saying.

We‘re in agreement.  This bill, because the co-op thing is a big fraud, you got to have a public option. 

SCHULTZ:  We only have a minute left.  I got to get your take on the media tour this weekend.  He just gave a speech last week.  What‘s going on here? 

ALTER:  He‘s all in.  He is going to use whatever political capital is necessary to get there.  All that I would urge people is that they let him be a bit of an operator.  And operators need a little bit of running room.  Pressuring him, I don‘t think it gets you closer to a bill in this particular case.  It‘s not like he doesn‘t know on the merits that this should be a public option. 

SCHULTZ:  You‘re OK with this maneuvering so far?  I want him to be a little more aggressive.  Jonathan, great to have you with us. 

Earlier in the show, I asked you what you thought; do Senate Democrats have the guts to use reconciliation to get the public option?  Fifty seven percent said yes, 43 percent of you said no. 

That‘s THE ED SHOW.  I‘m Ed Schultz.  For more information on THE ED SHOW, go to Ed.MSNBC.com, or check out my radio website, WeGotEd.com.  “HARDBALL” with Chris Matthews starts right now, right here on the place for politics, MSNBC.

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