updated 10/8/2009 10:50:18 AM ET 2009-10-08T14:50:18

THE ED SHOW

October 7, 2009

THIS IS A RUSH TRANSCRIPT.

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

Guests: Kent Conrad, Roy Sekoff, Sherrod Brown, Joe Sestak, Sam Stein, John Feehery, Rep. Maxine Waters, Rep. Alan Grayson, Max Blumenthal

ED SCHULTZ, HOST: Good evening, Americans. Welcome to THE ED SHOW.

You see these three guys right here? Let's see, that's Harry Reid, Max Baucus and Chris Dodd.

Get to know them, because they are the biggest players in the country right now after today's developments when it comes to health care reform in this country. Now, that, of course, is unless the president decides to start drawing lines in the sand, which I'm not counting on.

The Congressional Budget Office score is $829 billion over the next 10 years that. That's the number that came in this afternoon on the cost of the Senate Finance Committee bill. That's not the number that I'm really all concerned about. The number I'm concerned about is two.

Harry Reid will sit Max Baucus and Chris Dodd at the conference table to finalize health care reform. That's who's going to represent the Dems from the Senate.

Here's Max on his bill from the Senate floor.

(BEGIN VIDEOTAPE)

SEN. MAX BAUCUS (D), MONTANA: Our balanced approach in the Finance Committee to health reform I think has paid off once again. Today, the Congressional Budget Office confirmed that America's Healthy Future Act-that is legislation of the Finance Committee-remains fully paid for it and reduces the federal deficit. And I am very pleased with that report, and it will help us as we move toward the next steps in emerging the bill with the HELP Committee bill.

(END VIDEO CLIP)

SCHULTZ: Oh, I'm just excited about all of that stuff.

You know, some big players are being sidelined. Tom Harkin, Jay Rockefeller, Kent Conrad, Ron Wyden, all these guys have been in the mix big-time.

Harry Reid is questionable, in my opinion, when it comes to the public option and a government plan. He's over here, over here. Not sure where Harry is.

Baucus is totally against it. We know that. He's bought and paid for.

So, Chris Dodd, I guess you can say, has to be our guy. He's our man of the hour. He's the guy lefties have to turn to and count on right now.

And oh, by the way, he's had kind of a tough year. He lost his sister, he lost his best friend in Ted Kennedy. He's had a bout with cancer. And now he has the fate of the public option on his shoulders coming from the Senate side.

Let me tell you what's going on here, folks. There is a big poker game that is starting to play right now. And the wildcard in all of this is the White House.

I want to know who's going to be sitting at the table from the White House. The story reads White House aides. What White House aides? And when will the president engage?

And why did Harry Reid just go with a couple of guys when there are so many people who have been involved in health care reform for so many years like Rockefeller and Conrad? And Conrad is the chairman of the Senate Budget Committee. He knows the numbers.

So, it's up to Harry.

Do you trust Harry?

I want you to get your cell phones out. I want to know what you think on this. Do you trust Harry Reid in a room with Max Baucus and Chris Dodd when it comes to the public option?

Text "A" for yes and "B" for no to 622639. We'll bring you the results later on in the show.

I'm surprised at this. Is this a big dis, or is there a reason why Harry did this because he knows where he really wants to go on this and he's heard enough, and maybe this will speed up the process?

Let's get to our first guest tonight.

Joining me now is North Dakota Senator Kent Conrad, a member of the Senate Finance Committee. And as I said, chairman of the Senate Budget Committee. And there's nobody in Washington that knows the numbers better than this man.

Senator, good to have you with us tonight.

SEN. KENT CONRAD (D), NORTH DAKOTA: Good to be with you.

SCHULTZ: Why so few senators after so many that have been involved in so many crucial negotiations? Why did Harry Reid do this?

CONRAD: This is the way it's typically done. The committees-chairmen of the committees of direct jurisdiction are typically the ones who are in the room at the end.

SCHULTZ: But you're not there, Senator. And you have been-and Jay Rockefeller's not there. This group could have been a lot bigger. You know that.

And how do you feel about not being at the table after doing all this work?

CONRAD: That's the way it works. Look, I am chairman of the Budget Committee, but the Budget Committee is not a primary committee of jurisdiction.

The two primary committees of jurisdiction are the Finance Committee and the HELP Committee. Those two chairmen are there.

Look, I'd be able to be there, but I wasn't invited, and I accept it.

SCHULTZ: Well, neither was Tom Harkin, neither was Jay Rockefeller. And tom Harkin is the chairman of the Senate HELP Committee. Now, of course, Chris Dodd ushered it through with Ted Kennedy before he passed away.

Senator, you have been openly against the public option. Does this Senate Finance Committee bill meet the test? Do you think it will get some Republican support?

CONRAD: Well, I'm certainly hopeful that it will, because I'm still not at all certain we can get the 60 votes necessary without some Republicans.

Look, at the end of the day, this is a good bill. It's a good beginning. It's paid for.

It reduces the cost curve by $650 billion to $1.3 trillion over the second 10 years according to CBO in this latest report. That's going in the right direction.

It covers 94 percent of the American people. That's not quite where we'd like it to be, but it's a very good beginning. It's a significant progress over where we are.

It has all of the fundamental insurance market reforms, the end of using pre-existing condition as an exclusion, the end of knocking people off when they get sick, after they've been paying premiums for years. All of that's included in the package.

You know, certainly we could all probably do it a little differently and, in our eyes, a little bit better, but this is an awfully good beginning.

SCHULTZ: But Senator, this leaves 25 million people without insurance, and they are going to be a financial drag on the system. The conventional wisdom is the more people we get covered, that's going to bring down the cost.

Isn't that a high number? I mean, you're basically going to get half the people covered right now that aren't covered.

CONRAD: Well, my reading of the CBO report is this will expand coverage by another 29 million Americans, leaving us about 17 million. Of course, some of those are here illegally, and there's no political support for providing coverage to people who are here illegally. So, my number would be quite a bit smaller than the one I heard you reference.

SCHULTZ: OK. This is what we have gotten from the CBO report, but I'll take your word for it, obviously.

There are also tax credits in here for small businesses, but that is also going to be a drag on the system as well, going to cost the country $201 billion.

Are you for these incentives? Because basically these incentives, as I understand it, would raise the-you know, you would get a tax credit if you insure your employees. Correct?

CONRAD: Yes, but the-let me say, the small business tax credits, those are much more modest than the $201 billion. I think what you're looking at are the tax credits that are being used to provide assistance to those who could not otherwise afford to buy coverage. So, there is assistance here, and this is part of the government's role, to provide assistance to those who couldn't otherwise provide their own coverage. And that is a number somewhere over $200 billion, tax credits that are used for individuals who couldn't otherwise afford insurance.

SCHULTZ: And Senator, are you going along with the excise tax on the premiums that are pretty Cadillac programs? That's going to raise a couple of billion -- $201 billion would be raised with excise tax. That's a tax increase on people who have a Cadillac program.

Can you support that?

CONRAD: I can. I think it's essential to financing the plan. And I think it's also essential to improving the incentives for health care.

SCHULTZ: OK.

CONRAD: Virtually every expert before us told us that's an important element to bending the cost curve in the right way.

SCHULTZ: And Senator, in your own back yard in North Dakota, the North Dakota Democratic Party has been on record as of late saying they want universal health care coverage. That's not where you are, Senator. You're not with your party in North Dakota on this.

Can you respond to that?

CONRAD: Actually, I am for universal coverage. This legislation coming out of the Finance Committee makes an important progress toward universal coverage.

What I have questioned is a public option tied to Medicare levels of reimbursement. Since my state has the second lowest Medicare reimbursement rate in the nation, tying a public option to that formula would be very injurious to my state.

SCHULTZ: Senator, good to have you with us tonight. Thanks so much.

CONRAD: Always good.

SCHULTZ: You bet.

For more, let me bring in Roy Sekoff, founding editor of "The Huffington Post."

Roy, is Harry Reid doing the right thing, in your opinion, by just going with Chris Dodd and Max Baucus? Baucus is not where Democrats are in this country. He's leaning too far to the right on this, and he's all hung up on whether this thing is going to be paid for or not.

What do you think?

ROY SEKOFF, FOUNDER, "THE HUFFINGTON POST": Yes. Well, I think Reid knows that he's in a tough fight back in Nevada, and he knows where the momentum is coming from his own party. And I think he's shifted. And that's the big headline, you know, Ed. You know, a funny thing happened on the way to the funeral.

If you've noticed, last week we talked about how the momentum was changing. And that's really picking up now.

I think the most interesting thing that's happening for progressives and fans of the public option is what's happening in the House, where the Progressive Caucus has been doing a whip count to see how many people they can get lined up for a robust public option, exactly what the Senator was talking about, one that backs up-is key to the Medicare payments. And you know what? They are reporting, Open Left, Chris Bowers (ph), is reporting they're within under votes of passing that.

SCHULTZ: OK.

SEKOFF: Under 30 votes. And that's before Pelosi and Hoyer and everybody starts putting on the pressure. So I think that's a good sign.

SCHULTZ: And Maxine Waters is going to join us later to talk about that.

Roy, stay with us.

We want to go to Ohio Senator Sherrod Brown. He's a member of the Senate HELP Committee.

Senator, you were circulating a letter amongst Democrats, somewhat of a line in the sand for them to sign on as to whether they're going to get to go with the public option or not. Tell us about that.

SEN. SHERROD BROWN (D), OHIO: Yes. We're doing a lot of things.

We're circulating a letter that some 30 senators have signed already saying how important it is that the public option be included in the bill before it goes to the floor of the Senate. We're confident that more than 50 Democratic senators support the public option if it were to come to a vote on the Senate floor.

Four out of five committee, as you know, in the House and Senate support the public option, 70 percent of doctors. Overwhelming number of percentage of the public, 2-1.

We know there's great support for the public option. And we're going to pass it.

SCHULTZ: OK. But you've got 30. You don't have 51. I mean, you don't have a simple majority on this.

BROWN: Well, we don't have-we're still working on the letter. The letter is not sent yet.

We're around 30 now. We're getting signatures all the time. A lot of people won't sign things, so we don't expect to get to 51 or 52 members actually to sign a letter saying, put it in, but we know when it comes to a vote, that we would get 50-plus.

SCHULTZ: And quickly, Senator-I know you've got to run to a vote here-do you have confidence that Harry Reid is going to have the best interest of liberals who supported Barack Obama on a public option?

BROWN: Harry Reid, yes, I do. Harry Reid believes in a public option. The entire leadership of the Senate believe in a public option.

They know what it does. They know it makes the insurance companies honest, it cuts costs. It gives people an option. That's why it's called a public option. It gives choice.

Harry Reid understands that. An overwhelming number of Democrats in the Senate understand it.

We're going to get it. By the time it gets to the president's desk, it's going to be a good bill with a strong public option.

SCHULTZ: Senator, good to have you with us tonight. Thanks so much.

BROWN: Thanks, Ed. Sure.

SCHULTZ: Back to Roy Sekoff, the founding editor of "The Huffington Post."

Now, if you want to take a look at the Senate Finance Committee bill that Max Baucus is just believing is the best thing since sliced bread, it's leaving 25 million people uninsured. It also calls for a tax increase on programs to the tune of $200 billion, with an excise tax on high-premium insurance plans. And it also reduces the number by 29 million.

It doesn't cover everybody. And it doesn't seem like it's got a mandate.

Where do you stand on this, Roy? Is this going to fly?

SEKOFF: No, Ed. This is the insurance companies' bill.

You know, I think what's going to happen is we've just got to get it out of the committee and get to where they're going to have, you know, like I said, Reid and Dodd get together, and what's going to come to the floor. That's where the fight is going to be, on the floor.

The other interesting development, Ed, I think really is happening is we're starting to see some Republicans not necessarily in the Senate, but Schwarzenegger and Bill Frist, and most importantly, today, Bob Dole, who said it was time for the Republicans to get on board for the health care reform. And Dole named names today.

He said that the Republicans, namely Mitch McConnell, they don't have any plan. They're just saying no. They're holding up a card that says no. And he said it's time to move off that, it's time to get this done. And I think that's where the momentum is shifting, not with the Baucus bill.

SCHULTZ: All right.

Where is the president in all of this? Roger Simon of "Politico" writes something very direct which I think is more than interesting. He says, "The president needs to be bold in backing the public option. The White House did not anticipate that the public would actually care about the public option, but it does. The public option is not the choice of left-wing America. The public option is a choice of mainstream America."

So, there are some Democrats who are going to sell out on this.

SEKOFF: Well, Ed, this is no question about it. That's what's so exciting, I think, about the shift that's happened over the last couple months.

Don't get me wrong, I think Harry Reid and Barack Obama would have been more than happy to let the public option go off to its little sad death. But the word has come, no, we don't want that.

Sixty-five percent of the American public wants there to be a public option because it's the only way we're going to really contain costs. And I think that's why Reid is hopping aboard now.

He knows that's the way the wind is blowing. And I think Obama sees it too, and I think he's not going to be the one who stands in the way. I wish he would be a little bit more aggressive in leading the charge.

SCHULTZ: And finally, Roy, doesn't Senator Chris Dodd carry a big torch now at this point, the way this is setting up?

SEKOFF: Yes. There's no question about it. Let's hope that he's got the spirit of Ted Kennedy on his shoulders whispering in his ear, because that's the Chris Dodd we need to come to the table with Reid and Baucus.

SCHULTZ: When does the greed stop? Absolutely.

Roy Sekoff, good to have you with us tonight. Thanks so much.

SEKOFF: Always good, Ed.

SCHULTZ: Coming up, Republicans have sunk to a new low. They're now attacking Nancy Pelosi for questioning General McChrystal's Afghanistan plan. They want the general to "put her in her place."

I'll ask Congressman Alan Grayson what he makes of that in "The Main Event."

Plus, Republican Congressman Louie Gohmert made a fool of himself on the House floor last night talking about "Don't Ask, Don't Tell." It lands him in the psycho zone.

And we're talking Afghanistan when we come back.

Stay with us. You're watching THE ED SHOW on MSNBC.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

We've got to get to "Psycho Talk" early tonight. This one is a dandy

the congressman from Texas, Louie Gohmert.

Last night, members of the Congress held a special session of floor speeches about repealing the military's "Don't Ask, Don't Tell" policy. Gohmert started out with the standard argument against getting rid of the rule.

(BEGIN VIDEO CLIP)

REP. LOUIE GOHMERT ®, TEXAS: The military is not a social experiment. It's not. And I think my friends know that. Whether it is heterosexual open acts or homosexual open acts, indications are it's a distraction.

(END VIDEO CLIP)

SCHULTZ: Oh, boy. Of course we all know that was the same argument used to keep African-Americans out of the military.

But Gohmert wasn't done. The real psycho stuff came when he decided to switch topics and unleash a 45-minute-long attack on an unrelated hate crime act.

That's right. Here's as much as what he said.

(BEGIN VIDEO CLIP)

GOHMERT: This bill says, whatever you're oriented towards sexually, that cannot be a source of bias against someone. You'd have to strike any laws against bestiality. If you're oriented toward corpses, toward children, you know, there's all kinds of perversions.

In every country where federal law has adopted laws like this, it has an extremely chilling effect. It happened in 1920s and '30s. Germany, they gave up their liberties to gain economic stability, and they got a little guy with a mustache.

(END VIDEO CLIP)

SCHULTZ: There he goes, showing that Republicans can bring any argument back around to the Nazis.

Now, all of you folks in the 1st District of Texas, this a man representing you in Washington. Is that your best interest? Are you OK with that?

Whatever your feelings are about "Don't Tell, Don't Ask," Gohmert's appalling rant is unacceptable, highly-offensive "Psycho Talk."

Coming up, as the Senate plays poker on health care, the American public has gained the trust in the president. Right? House Chief Deputy Whip Maxine Waters will tell me who she's betting on in just a moment.

And, of course, the war in Afghanistan is now starting its ninth year. And we'll be talking to Congressman Joe Sestak about that in just a few moments.

The cost, when does it end? It's all coming up, here on THE ED SHOW.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

The war in Afghanistan has now lasted for eight years, more than 800 American soldiers have died. The public support is dropping.

A new poll found that just 40 percent of people favor the war. That's down four points from July. And 57 percent oppose it, four percent more than in July.

President Barack Obama had another strategy session this afternoon with his national security team, and they'll meet again on Friday, still trying to figure out the right way forward.

Let me bring in Democratic Congressman Joe Sestak of Pennsylvania. The congressman is a three-star admiral, retired, highest ranking military officer ever elected to the Congress.

Joe, what are they talking about? Is it strategy or is it just troop

what do you-or just a troop increase? What do you think their main focus of the conversation is in these meetings?

REP. JOE SESTAK (D), PENNSYLVANIA: I think there's three points that they're trying to get clear. What's the real goal? Second, explain how counterinsurgency is different than counterterrorism. And three, why more troops to do it?

And I think that goal is the most important, because it's no longer, Ed, about Afghanistan. It's Pakistan and the safe haven. And third, why more troops in Afghanistan if that safe haven is the objective?

That's where they are.

SCHULTZ: Well, in the Senate Foreign Relations Committee hearing today, that's exactly the same point that Senator Russ Feingold of Wisconsin brought up. Here it is.

(BEGIN VIDEO CLIP)

SEN. RUSS FEINGOLD (D), WISCONSIN: All we get is this simplistic notion, if we don't stay in Afghanistan for very long term, al Qaeda will be right back. And it begs the question of, what happens if they go to Yemen? What happens if they go to Somalia? What happens if they stay in Pakistan?

How can it be that an international strategy against a global network can be that heavily concentrated on one place on the assumption that they will reconstitute themselves in a way that is exactly the same that allowed them to conduct the 9/11 attacks? It's far too simplistic for something that important to our national security.

(END VIDEO CLIP)

SCHULTZ: Congressman, I ask you to put on your military hat tonight.

Respond to that.

SESTAK: Absolutely.

It really is not about Afghanistan and a safe haven there. Somehow we have to recognize that the radical Taliban in Pakistan, husbanding, guarding al Qaeda, where the leadership is right now, in a very tough area geographically, where they can hide among those who like them, is a place we just can't back away from.

That doesn't mean an open-ended commitment, however. What it means is we have to have some troops on the ground in Afghanistan that close the door as the Taliban try to go back and forth as we train the Pakistani army to do the job over there. It's Pakistan is what this is all about, and turning them to that safe haven.

SCHULTZ: So, we've made eight years of mistakes in Afghanistan?

SESTAK: We have, without a question.

Ed, when I was on the ground, because I headed the Navy's anti-terrorism unit for a short period of time at the beginning of the war, we had it. We had civil affairs forces, psychological operations forces, special affairs forces, not just with our military prowess of them, but building enough of an environment where people were trusting them and wanted not to have the Taliban back.

SCHULTZ: What happened? What did we do?

SESTAK: Iraq. We just pulled those troops out. We took the attention out.

And as the chairman of the Joint Chiefs of Staff said two years ago, in Iraq we do what we must, in Afghanistan we do what we can. No. We should have done what was required early on and left that nation with having eradicated the al Qaeda that were on the run, and left that nation with some semblance, which is too late now, of nation building.

Look, I don't want an open-ended commitment, but I think a measured strategy with measured troops that can do it, with exit strategies measuring success and failure, which, without it, we cannot put more troops there, is something we should see if we can do.

SCHULTZ: So, former military naval admiral Joe Sestak, your recommendation to the president would be don't send 40,000 troops?

SESTAK: No. I believe you'll see approximately about 20,000 to 25,000 placed over there. But if the president does not provide that the goal is al Qaeda, number two, that there is an exit strategy based upon metrics by which we are able to measure success and failure, we shouldn't do it. Because if they can't provide that, then why should we trust the strategy?

And if we are failing, fall back to a containment strategy. No open-ended commitment.

SCHULTZ: Congressman, great to have you with us tonight.

SESTAK: Thanks for having me, Ed.

SCHULTZ: Thanks so much.

Congressman Joe Sestak of Pennsylvania with us here on THE ED SHOW.

Coming up, late-breaking news about a possible compromise among Democrats on the public option? Sam Stein, "Huffington Post," is going to be bringing us that next.

Plus, white male Republican senators side with Dick Cheney's old company today on the Senate floor. Congressman Alan Grayson joins me coming up on THE ED SHOW to comment on that.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Breaking news tonight here on MSNBC. Is there a compromise that's going to take place over in the Senate with the Democrats? For more on that, let's go to "Huffington Post" reporter Sam Stein and also Republican strategist, John Feehery will join us just in a minute.

Sam, tell us, what are you hearing on Capitol Hill about a possible compromise over on the Democratic side? What's happening?

SAM STEIN, "HUFFINGTON POST": For a while now, they've been trying to figure out how to get 60 votes in favor of a public option. One of the many solutions that's being bandied about right now is to set up a national public plan that state governments can then opt out of. It's called the opt out compromise.

The reason that this actually works where others don't is that it pacifies both progressive and conservative Democrats. Progressives are all right with it because you start with a robust national plan. Every state will adopt it. If a state doesn't want in it, for say, they're upset of-what it would do to the private market, they can opt out.

Conservative Dems might like it because it punts the vote on the public option to the state governments. So people like Kent Conrad or Ben Nelson, who have big-time private insurance interest in their states, can say well, listen, you can fight this at the state government level. We can set up a system within Nebraska, within North Dakota, whereby there isn't a public option.

What we get from that is a situation where you have about 45 states that actually have a public option, five states that don't. And you have a real social experiment on your hands, what works, what doesn't? From there, you take it down the road.

SCHULTZ: So we're going to turn this public option over to the states, where many states are controlled by Republicans in both houses-in the house and the Senate, and maybe even a Republican governor. I certainly don't trust Tim Pawlenty in Minnesota on this. I can tell you what the political climate is in North Dakota when it comes to dealing with the righties. They're not going to budge on this.

By the way, Blue Cross/Blue Shield has got 90 plus percent of the market. This is a major cave on the part of the Democrats.

STEIN: There are big concerns about this proposal. One is that, as you mentioned, there's huge lobbying interest in state government, not to mention federal government. But state government is, you know, subject to all the lobbying interests that the federal government has, but on a much localized level.

Secondly, how would you determine if a state can opt out? Is it by governor's decree? Is it by the state legislature?

SCHULTZ: By the legislature, I would imagine, a vote of the legislature.

STEIN: These details have not actually been finalized yet on this compromise proposal. That's to be determined.

Like you mentioned, you are leaving it in the state's hands. So you have a governor like Rick Perry down in Texas, who would do probably whatever he could to get out of a public option, which leaves a lot of communities in Texas without access to insurance coverage.

The only reason this is being bandied about is because they're looking for 60 votes. There's a lot of skepticism in the Senate right now that they just don't have the votes to get a public option passed. This is better than a trigger option, progressives say. This is better than a opt-in option, which would mean states set up the public plan. But it doesn't get to the point where you have a national public plan that is robust and mandatory from day one.

SCHULTZ: You know what this tells me, folks? Harry Reid would sell his soul for 60 votes. Whatever happened to the reconciliation talk? What ever happened to going to the firewall for a full public option? These are the folks who supported the president of the United States to get him in office.

What you're seeing at the bottom of the screen there, it shouldn't be reading what it's reading, Senate compromise-it should be sellout, Because that's exactly what it is.

John Feehery, let me bring you in. I want to present you with the golden turkey that you can carve up right now, because you can feast on this one, my friend. You can feast on it.

JOHN FEEHERY, REPUBLICAN STRATEGIST: Ed, I hate to agree with you, because that's not my general personality. You are right, it's a complete turkey. If you are in favor of a Blue Cross/Blue Shield monopoly, you would be in favor of that compromise.

I happen to not be in favor of a Blue Cross/Blue Shield compromise. I believe that there should be competition between the states and take away all monopolies. That's where I'm coming from. I think that's the best way to drive down costs.

This thing is a disaster. I think if they want to go with a compromise like this, it's not going to do anybody any good.

STEIN: Why is it a disaster, John?

SCHULTZ: Because it allows the states to continue their monopolies. I don't think that's something that we should allow. I think we should have competition across state borders, allow associated health plans, allow small businesses to band together, allow real competition through negotiation in the private marketplace.

All these-if you leave it to the state insurance commissioners, I guarantee you, you'll leave the monopolies for the states.

STEIN: That's not necessarily the gist of the proposal. I mean, what would happen is every state would start off-or everyone in a specific state would have access to a public plan. There, after that, the state legislature or the governor-again, there's no finalized deal here-would have a determination to put it to a vote whether they wanted to continue this proposal.

(CROSS TALK)

SCHULTZ: Hold on a second, fellows. Here's what this is on the quick read. The quick read on this is that they're not going to get 60 votes. The fact is that the Republicans standing together is going to possibly ruin health care reform. It is time now for the president to step up and say, this is where we're going.

Now, fellows, stay with us. This just in from the conservative blog, Red State. "I am told, quite reliably, that a meeting today on Capitol Hill, Republican senators began to rapidly move toward concessions on health care, because they are afraid they cannot hold their members together. Some Republicans are now thinking of supporting a government program."

I will you what, it's flying fast and furious right now. You got some Republicans over there who are reading the polls, because the public wants a public option. You've got Democrats who are afraid to take the Republicans to the firewall and stand tall and tell them we're going reconciliation. You've got-this is the most action in the last six hours that we've seen in a long time. John, go ahead.

FEEHERY: Ed, can I tell you, I've been in a lot of these kind of fire fights. I've been in Congress for 15 years when I saw rumors flying all over the place, rumors from blogs, rumors from all over the place about supposed deals, not supposed deals.

This is all part of the process. It makes it very exciting. We still don't know where this ends up. I wouldn't put any predictions on if this is going to pass or not.

SCHULTZ: Well, Maxine Waters is going to be joining us in just a few moments. I can't believe that anybody in the House would buy into this on the Democratic side. We'll see.

All right. Gentlemen, stay with us. Let's go to Maxine Waters with us now on Capitol Hill.

Maxine, Congresswoman, are you prepared to compromise on the public option and turn it over to the states? Because that's what they're talking about over on the Senate side. What do you think?

REP. MAXINE WATERS (D), CALIFORNIA: No, I'm prepared to do that. I have told you from the beginning I am for public option. I will not bend on it. I will not do anything that will not give our citizens competition and the right to have a public option, and to choose that above and beyond those insurers who have been ripping them off for so long.

So I'm holding firm. What's interesting about what is happening is this: Schwarzenegger came out and Jindal came out, and both of them said, come on, Republicans, work with the Democrats. We have to have health care reform.

That's very interesting. As you alluded to, they are reading the polls and they're hearing the people. The people want health care reform with the public option. So these guys are beginning to move.

SCHULTZ: Congresswoman Waters, can you tell us-do you know with confidence who these aides are from the White House that are going to be involved in these negotiations?

WATERS: No, I don't know who they are. I do know this: as of the last few days, we're hearing that the president of the United States is quietly pursuing public option with the opposition. So I don't know what that means, except something is going on. Even though he has not come out in the public and made a hard fight for public option, it seems as if there's some kind of light in the tunnel here, and that he's going after them one by one.

SCHULTZ: OK. The president's job approval rating in the midst of all

this negativity of the Olympics and all of the activity that's gone on in -

last August, his numbers look good, 56 percent approval rating, and only 39 percent disapproval. Is the Congressional progressive caucus ready to ask the president to step out and get engaged now that we're moving into the-the clock is going to strike 12:00 here pretty soon. What do you think? Or is it too soon?

WATERS: Absolutely. We think those improved ratings are because people better understand what this health care reform initiative is all about. In the beginning, we were preempted by those people out there who were basically lying about what this plan is and what it is not. So I think the work that you and others have done have helped to bring some truth to what we're trying to do. And I think that has a lot to do with the ratings change.

SCHULTZ: I do, too. Congresswoman Maxine Waters, you're a fighter. You're on the frontlines doing the work for the people. I appreciate it very much.

WATERS: Thank you so much. I appreciate you. We will be fighting for this.

SCHULTZ: I want to remind our MSNBC viewers tonight that Keith Olbermann is going to devote his entire show to a special comment tonight. I promise you it's going to be a must-watch situation if you've been following this health care issue on MSNBC.

Let's go back to our panel quickly. All right, Sam. Compromise, but

but the compromise here is that there's going to be a lot of Democrats over in the House that are going to say, hold the phone. You heard Maxine. Hold the phone on this going to the states and letting them run their own gig. That isn't going to work.

STEIN: Yes, well, we need to understand the context of the compromise. We're talking about a very short-term compromise to get a bill out of the Senate. Then you have to go through conference, get it back to the Senate. And now you're dealing with a whole new ball game.

I talked to a progressive member of the House today, who said there's absolutely no way he and I think it was 60 to 70 colleagues would vote for anything that did not include a robust national public option. What that says to me is yes, you can give the power to the states, which might be palatable in the Senate, but when you get that thing in conference, you have a whole new game.

This thing is far from over. CBO scores, who cares? It doesn't matter. This is going to be debated for another few weeks. I'm guessing, at the end, right before Christmas break is when finally get a vote.

SCHULTZ: My read on this is that the Democrats are breaking down. They've already compromised when it came to single payer. Now they're caving in on public option, trying to turn it over to some Republican governors and legislative sessions.

STEIN: Not Dems in the House. Dems in the House-

(CROSS TALK)

SCHULTZ: The Dems in the House are going to have to save this thing at this point, the way the Senate Democrats are caving in on this deal.

FEEHERY: Ed, can I jump in?

SCHULTZ: Go ahead, John.

FEEHERY: Let me say, Ed, this is one of the times I actually agree with Sam Stein. I don't like to do that, either.

STEIN: Come on now.

FEEHERY: The fact of the matter is that this is going to change a lot. I think they are doing a short-term compromise to try to get through the process, which is why Republicans don't trust the process. I think Some Republicans do want to get a deal. I know a lot of Republicans that want to be part of a deal that actually works.

SCHULTZ: I know a lot of Republicans that have said they want to see Obama fail and they want this be his Waterloo. I'll be damned if the Democrats aren't helping him get there. I'm bothered by it. I'm not buying you a cocktail yet, John. This fight isn't over yet.

FEEHERY: I'll buy you a cocktail right now.

SCHULTZ: Fellow, good to have you with us.

Coming up, Michele Bachmann says that she sees no problem with Rush Limbaugh being the voice of the Republican party. You know what, Michele? I agree with you on that one. I'll get into it coming up on our playbook.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: In my playbook tonight, the GOP crazy train is off the rails. Let's just look at what they've been doing. They've been yelling at members of Congress in the town halls, hollering at the president of the United States during a joint session of the Congress, fear mongering about death panels. The list goes on and on. Rooting against the Olympic games.

The rightie fringe has made its way into the mainstream of the Republican party. I have the perfect guy to talk about that from the "Daily Beast," Max Blumenthal, who has written the book-he is the author of, quote, "Republican Gomorrah, Inside the Movement That Shattered the Party." Good to have you with us.

MAX BLUMENTHAL, "THE DAILY BEAST": Great to be here.

SCHULTZ: Why did you write this?

BLUMENTHAL: I wrote this because for six years I've been covering the movement that I think took over the Republican party and drove it to the radical fringe, pushing it outside of the mainstream of the American public.

SCHULTZ: Which was?

BLUMENTHAL: Which was mainly the Christian right, along with radical right anti-government groups, the kind of groups you see on the national mall on 9/12.

SCHULTZ: What has happened to the Republicans? Is that-are we going to get more of the same? We haven't seen this kind of vernacular used before.

BLUMENTHAL: Yes. Well, I think we have become accustomed to rhetoric like we saw from Louis Gohmert, talking about necrophilia on the House floor, and the man with the little mustache. Every time we see these histrionics, when we see these displays of resentment, it confirms the narrative of my book, about how the Christian right was welcomed by the Republican establishment and soon became the Republican establishment, supplanting the Republican party with this movement that is filled with people that can't handle individual freedom and the pressures of democracy.

SCHULTZ: Max, where is the GOP right now? What do you say in your book?

BLUMENTHAL: The GOP is the movement. That's why, although there's this fight over Sarah Palin among Republican consultants, Sarah Palin was the only logical choice as the Republican vice presidential candidate in 2008, because she was the archetype of the right-wing woman, and sort of a figure who comes from the Christian right, the movement that controls the party. It's why she's the only major national Republican leader right now.

SCHULTZ: So she's the only major national Republican leader right now?

BLUMENTHAL: Who has a viable-I mean, it's going to be her or some mannequin like figure like Mitt Romney or Tim Pawlenty, who are going to have to pander to the base, but who will appear inauthentic. Sarah Palin's appeals are authentic. That's why she's propelled continually onto the national stage by this movement, at the peril of the Republican party.

SCHULTZ: Is the Republican party going to have to address these crazies eventually and say we're not a part of them?

BLUMENTHAL: It's really unfortunate I think for someone like Steve Schmidt or Mike Murphy, who are complaining about the crazies. These consultants may not have a future in the this party right now because the crazies are the party.

SCHULTZ: The crazies are the party.

BLUMENTHAL: Where's John McCain to denounce the death panel meme? John McCain the maverick, the moderate. Where's Mitt Romney, who used to be sort of a moderate Republican?

And where are the moderates? They've all been voted out. It's an interesting statistic, pointed out by Christie Todd Whitman, who was basically cast out of the Republican party. John McCain in 2008 received 20 percent less moderate Republican votes than George W. Bush did in 2004. The moderates have all come to the Democratic party. The Republican party is now a southern party of birthers, deathers and Civil War re-enactors.

SCHULTZ: Max Blumenthal, way to go, from the "Daily Beast." His book is "Republican Gomorrah, Inside the Movement that Shattered the Party." Thanks for joining us.

BLUMENTHAL: Thanks so much.

SCHULTZ: Coming up, Republicans are calling for General McChrystal to put Nancy Pelosi, quote, in her place for questioning his plan for Afghanistan. Lefty hero Congressman Alan Grayson, he is going to respond to that and so much more coming up in the main event. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. The Republicans are attacking Nancy Pelosi on Afghanistan because she doesn't want a troop surge. The NRCC put out a statement calling for General Stan McChrystal to, quote, "put her in her place." The Republicans got called out on it, rightfully so. Now they're crying about being called sexist.

Get this, if the Republicans want to talk about sexism, look at what happened in the Senate yesterday. Senator Al Franken of Minnesota offered an amendment that would cut off-cut off government funds to military contractors who refused to allow employees to report being raped to police.

Franken told a story about a 19-year-old woman who went to Iraq to work for KBR, the arm of Halliburton, and was gang raped by her male co-workers. The company said her contract forbid her to seek prosecution for the crime. Thirty male Republican senators voted against Franken's amendment, the same party that is complaining about being called sexist.

That is pretty unbelievable, isn't it? Joining me now is Congressman Alan Grayson of Florida. Congressman, you're-I think it speaks to a culture, does it not? Your response to what happened over in the Senate on that deal.

REP. ALAN GRAYSON (D), FLORIDA: Well, it's shocking. I prosecuted war profiteers in Iraq, including KBR, for years, with no help at all from the Bush administration. Time after time, KBR made the same sorry excuse, go arbitrate. Go arbitrate rape cases, go arbitrate corruption cases, go arbitrate murder cases. Whatever they possibly could, they sent to their kangaroo courts called arbitrators, instead of having justice served by their peers.

SCHULTZ: Congressman, you took heat last week when you got after it and described the Republicans. I told our staff on THE ED SHOW-I said, you know what, this guy speaks the truth. We have to get him back on the air the next time somebody says something really goofy. I'll be dog gone it if it didn't take less than a week to find something.

This is Congressman Gohmert form Texas. Listen to this. I want you response.

(BEGIN VIDEO CLIP)

GOHMERT: When you have economic chaos, it is tragic, but people have always been willing to give up their liberties, their freedoms in order to gain economic stability. It happened in 1920s and '30s.

Germany, they gave up their liberties to gain economic stability, and they got a little guy with a mustache who was the ultimate hate-monger.

(END VIDEO CLIP)

SCHULTZ: Congressman, we could go on for hours on that one. Your initial response? I think this one vindicates what you were saying last week.

GRAYSON: This shows what they're really about. Anatole France said that the law in its majesty allows both the rich and the poor to sleep under bridges. That pretty much summarizes the Republican philosophy that you just heard. They just don't care. They don't care if you're unemployed. They don't care if you're jobless, if you're homeless. They don't care if you're begging in the streets. They don't care if your children aren't taken care of, as long as they can wave the flag.

SCHULTZ: This is how the national Republican Campaign Committee spokesman has described you, congressman, "narcissistic personality disorder comes to mind. So does one-term Congressman. This circus act is getting tiresome." Your response to that?

GRAYSON: Look, they always call the ones they hate crazy. That's the way they are. But look, I might just be the lunatic you're looking for, as Billy Joel said.

SCHULTZ: What should we do about Afghanistan? If the president were to come out and say we're going to go with 40,000 more troops, follow what General McChrystal wants to do, would you support that?

GRAYSON: No, listen, McChrystal is way out of line. He should remember what happened between Truman and MacArthur, another big Mac. He's pushing his luck here. Obama needs to be the commander in chief. That's what the Constitution says. Article II, Section II, that's what it says. He's the boss, not McChrystal.

McChrystal should know better. He saw what happened. I think history may repeat itself.

SCHULTZ: Well, the Vietnam war lasted 102 months. The American Revolution 100 months. We are now in month number 96 in Afghanistan, if you're scoring at home. This is going to cost a lot of money. Finally, quickly, Congressman, they're talking about a compromise on health care. Is that what the Democrats should do in the House?

GRAYSON: We need to pass a bill that saves lives and saves money. That's what we're here. There's no reason to compromise. Nobody elected Olympia Snowe president of the United States.

SCHULTZ: Congressman, great to have you with us. Keep speaking the truth. You're always welcome on THE ED SHOW.

GRAYSON: Thank you, Ed.

SCHULTZ: Earlier, I asked our audience, do you trust Harry Reid in a room with Max Baucus and Chris Dodd when it comes to the public option? Sixteen percent of you say yes; 84 percent of you say no. I'm with you on that one, 84 percenters.

That's THE ED SHOW tonight. Chris Matthews and "HARDBALL" is coming up next, right here on the place for politics, MSNBC. We'll see you back here tomorrow night. Watch "COUNTDOWN" tonight with Keith Olbermann and a special comment on health care.

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

END

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