updated 10/20/2009 10:26:11 AM ET 2009-10-20T14:26:11

THE ED SHOW

October 19, 2009

THIS IS A RUSH TRANSCRIPT.

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

Guests: James Clyburn, John Podesta, John Harwood, Roy Sekoff, Bill Press, Ernest Istook, Rev. Al Sharpton, Cliff May

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

The White House going after Fox News. What for? Are they one of the 60 votes? Did I miss something? Do they really have an impact on health care reform in this country or creating jobs?

Here's where you have to focus on, folks, right here. Go left, young man, Harry Reid.

Now, I like Harry. You know I like Harry. He's done a lot for progressive talk, no question about it. But he is the man of the hour, and I don't think that he is representing his state or party if he caves in on a public option. This is it.

Right now the majority leader is holding, let's see, health care meeting number two with Max Baucus and Chris Dodd. It came out last week, only this is the second meeting.

Let's rev up the canoe a little bit, fellas. Let's put an engine on this thing and get going.

Leader Reid basically is deciding whether he's going to go against the president of the United States and the House of Representatives, and what the American people want and what they voted for. Harry Reid is in a tight race. In fact, if this race were to be held tonight, Harry would lose.

2010's coming fast. The Democratic majority leader is in real danger of losing his seat, if you believe the numbers.

His unfavorable rating in Nevada is now at 51 percent. Forty-seven percent of the people say, oh, we're OK with it.

That's too close for me. He should be at the 60 mark, where the president is. The president-a new "Washington Post"/ABC News poll out tonight has got a 57 percent approve rating. That's the number where Harry ought to be.

But Harry, it's this option thing. You know?

Look, the inside-the-beltway thinking is that anyone in a tight race, you've got move to the center, that the Democratic Party is too left for Nevada. It simply isn't true.

I'll say it again. That isn't true. Don't make this mistake.

President Obama won the state by 12 points. That's right, by 12 points. He got 55 percent of the vote in that state last November.

In Nevada, a majority of people, 52 percent, support the public option. And the numbers are getting better tonight. I'll tell you about that in a moment.

Voters like strong leadership. They don't like fence-sitters anymore.

This is where America is right now.

When they put 60 Democrats in office, they want 60 Democrats to line up and get after change. That's what this was all about. It's Reid's job to go out and get the votes. Don't lose focus of that.

But the White House wants to talk about Fox News. I'm a little confused on that one. John Podesta's going to be here to talk about that in just a moment.

Now, progressives are getting after it. They're putting the heat on Harry Reid in his own home state.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: For nearly 20 years I've taken care of patients who need critical care here in Nevada. I've seen private insurance companies cut off medical care for so many of my patients. And now it's happening to me.

I broke both my hips and my insurance company won't cover all the care I need. My family could soon be bankrupt. In 2010, I'll only be voting on one issue.

I'm watching to see if Harry Reid is strong and effective enough as a leader to pass a public health insurance option into law. Here in Nevada, the majority wants it.

Senator Reid, these insurance companies cannot be trusted with our lives. Nevadans want the choice of a public option.

(END VIDEO CLIP)

SCHULTZ: I'll tell you what, I'm sick of the excuses-Blue Dog Democrats, conservative Democrats, swing states, swing districts. Forget all that stuff. And here's your example, folks.

Remember this guy that hit the scenes about a month ago, Alan Grayson? He's from a swing district. His district in Orlando, Florida, voted for George Bush by 10 points in '04.

He's a proud member of the Progressive Caucus and he's calling out Republican obstructionists every chance he gets. He's not afraid of them, but the Republicans are.

Since Congressman Grayson made his "die quickly" speech about a month ago, five potential Republican challengers have said, I don't want anything to do with this guy. I'm out of here. They don't want to run against him in 2010.

Meanwhile, Grayson, this guy is a progressive hero on the left now. He's raised more than $100,000 in the day after the speech, and he's one of five top Democratic fund-raisers so far this quarter.

Do you think telling the truth works? A freshman Democrat from a swing district.

Senator Reid, that's how you get this thing done. Harry, I'm for you, buddy, and the base is for you. But you're not getting after it enough.

Look, if you want these House seats back over on the House seat, if you want to keep all them, it will overcome the cap and trade mistake. No doubt about it. Deliver the public option.

On the Senate side, progressive senators are getting fed up with it too. Here's what HELP Committee Chairman Tom Harkin had to say on a conference call.

The quote was this: "There are 52 solid Democrats for the public option. Only about five Democrats oppose it. Should the 52 give in to the five or should the five go along with the vast majority of the Democratic Caucus?"

He's got it right. Harry Reid needs to get his people in line and get moving.

Universal health care is the cornerstone and it is part of the platform of the Democratic Party. Non-negotiable. Talk like the way they think, Harry, and get after it.

And he needs to use his boxing skills on people like Joe Lieberman.

Now, here he is. He's holding a meeting today to go after the czars. Apparently trashing the public option wasn't enough, so Mr. Lieberman is out there trying to advance the right-wing czar agenda.

Lieberman is bucking his party. These conservative Democrats are bucking the party. Olympia Snowe isn't a member of the party.

We've got 60. We should have all of them on board.

Now, a "Washington Post"/ABC poll tonight comes out and shows that the president, among Democrats, strong approval of his handling on health care, has dropped 15 percent since the middle of September. Now, the president's got a high approval rating at 57 percent, but he's dropped 15 percent in dealing with this. So, it's going to come down to the man of the hour, Harry Reid.

Get your cell phones out. I want to know what you think.

Does harry Reid have the leadership to get health care reform correct? Text "A" for yes and "B" for no to 622639. We'll bring you the results later on in the show.

Now, joining me now is South Carolina Congressman Jim Clyburn, the majority whip.

Congressman, great to have you on tonight.

You know, you're smiling. You know I'm correct.

REP. JAMES CLYBURN (D), SOUTH CAROLINA: I like your style, Ed.

SCHULTZ: Well, you know, look, we're about ready to take some prisoners on this. Or should I say take no prisoners? We're getting down to the 11th hour on this.

And Congressman, I want to ask you, because you've been around for several decades and then some, have you ever seen progressive groups go after leadership like this before? And what kind of effect do you think it's going to have?

CLYBURN: Well, you know, it's all about style, Ed. I've been in a lot of meetings with Senator Reid, and I can tell you he favors a public option very much.

And I think that when you're in the process of negotiating, you tend to use a style to negotiate that you don't want to embarrass anybody or insult anybody. And so I think that Harry is in a negotiating mode. But as far as substance, he is exactly where you and I are on the public option. And I do believe he will get us to where we want to be.

SCHULTZ: OK.

Now, over on the House side, if you and Nancy Pelosi and Steny Hoyer weren't being strong on public option, they'd be running ads against you. Do you think the progressive organizations that are doing this kind of stuff and targeting leadership, do you think it could backfire, or is this really just part of the game?

CLYBURN: Well, I think that there's a circumstance under which it could backfire. But in the climate that we're currently in, you just talked about a poll that shows some other things I think is very interesting.

One of them is the support for the public option is now up to 57 percent. And that is up from 52 percent just a few weeks ago. And I think that the momentum is building for the public option. And, but for that 15 percent of Democrats who have a problem with style, support for the public option I think would be up around 62 percent.

So, the public option support is exactly where we want it to be. And I think that when these numbers sink in, this evening and tomorrow, it's going to be a much better climate here on Capitol Hill for us getting this public option done.

SCHULTZ: Does it hit the gas pedal to make things move a little bit faster? I mean, the American people are speaking. The numbers you put out were the "Washington Post/"ABC poll out just tonight. You're right, 57 percent, up five percent since the town hall crazies had it going back in August.

So, the question begs, what's the holdup at this point?

CLYBURN: Well, there is no holdup. We're going through the legislative process which is slow and deliberate.

We want to do this in such a way that the American people can stay engaged with us as we go. We don't want anybody to be hasty here.

People kept talking all back in August about us moving too fast. And now some people think we're moving too slow. I think to go slow and deliberate, keeping the American people engaged, informing all of our membership what we are doing, making sure we're on pace to get this thing posted on the Internet 72 hours before we start voting, all of that is factored in to how we're doing this.

SCHULTZ: Well, you've got a clear signal now.

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

All the negativity that's been out there is turning on the antis. No question about.

Joining me now is John Podesta, president and CEO of Center for American Progress and former chief of staff during the Clinton years.

Great to have you with us.

JOHN PODESTA, PRESIDENT & CEO, CENTER FOR AMERICAN PROGRESS: Good to be with you, Ed.

SCHULTZ: I want to talk about this strategy that some progressive groups are really going after Harry Reid and putting the smoke on him and trying to push him.

Is this a good strategy in your opinion?

PODESTA: Well, look, I'm for the public option and I think Reid's fighting for the public option. But I think we are as close as we've ever been. We've been fighting for this thing for 60 years, to get comprehensive health care reform so we can cover 30 million people, make sure that they stay healthy, cap insurance rates and how much people have to spend. And I think we're going to get a public option.

Now, which public option we're going to get-the state-based one that Schumer's put forward, the trigger public option, the full-blown one that Congressman Clyburn and that I agree with? I don't know.

Reid's got a tough row to hoe in that. He's got to get the 60 votes. He's doing his best to do it. I know I'm sounding like a beltway insider here, Ed, but he's got to find 60 votes, and we can't cut off our nose to spite our face here.

SCHULTZ: So no reconciliation? You don't think he'll go down that road if he doesn't get the 60?

PODESTA: I think-you know, I thought for the first six months of this year that maybe the best way to go was reconciliation. But we're at a moment now where I think the Senate has within its reach 60 votes for a good bill.

SCHULTZ: But John, I-OK. Ben Nelson, Max Baucus, Kent Conrad, Lincoln from Arkansas, I mean, do you actually think these senators would stand in the way for change because of a public option and Medicare reimbursement rates? They'd be foolish to do that.

PODESTA: Well, you know, I've seen senators be foolish in the past,

and I'm sure I'll see senators be foolish in the future. But I think what

if these progressive groups want to go after people, they ought to go after the people who are opposing what they stand for. And I actually think Harry Reid is not that target.

SCHULTZ: Well, but Harry has got to get after it. I mean, he's telling everybody he's for it, but he doesn't seem to be laying down the law on this.

PODESTA: Look, he's the Leader and he knows he's got that special responsibility.

SCHULTZ: OK.

PODESTA: And I think people are looking for him to see what he can produce. But I think he's going to produce a solid bill. I think President Obama's going to sign a comprehensive health care reform bill.

And we've been fighting for this for a very long time. I'm-you know, I served in the Clinton White House, where we couldn't get the job done. You know, so I think, you know, we are at the 11th hour. You're right about that. We ought to keep fighting for the best bill that's possible.

SCHULTZ: All right. It's about leadership at this point. This is an exchange that Senator Rockefeller had with a reporter on leadership. Here it is.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Going back to the public option, again, do you feel like you can get the 60 votes on the floor for a public option?

SEN. JAY ROCKEFELLER (D), WEST VIRGINIA: Don't know.

UNIDENTIFIED FEMALE: Because a lot of moderate Democrats were not...

ROCKEFELLER: Yes. But you see, this is where the question of leadership comes in. Sometimes leaders have to act like leaders and then follow through on their will, and other people follow.

(END VIDEO CLIP)

SCHULTZ: I think there's some frustration there. I really do. I mean, I think that there are some progressive senators in there that are saying we're not pushing hard enough, and you can't let four or five Democrats screw this whole thing up and hold it short of 60.

PODESTA: Well, you know, I think we've got to try to get to 60. And I think Reid has got to put the wood to some people. You know, you can't let the president off the hook on this either.

SCHULTZ: No. No. I'll get to him in a minute.

All right. I want to know-speaking of which...

PODESTA: But there's a lot of good stuff in the bill.

SCHULTZ: Oh, there's no doubt about it.

PODESTA: I'm up here with you tonight because the...

SCHULTZ: But I want the whole enchilada. I know how these righties are, and they're going to fight it any way they can.

John, I want to ask you, what is the White House strategy going after Fox News?

PODESTA: Well, I guess sometimes it just feels good to tell the truth.

(LAUGHTER)

PODESTA: And maybe they just couldn't resist feeling good for just one moment.

SCHULTZ: Is that a play to the base? Hey, the White House really knows Fox is bad? Is that the play to the base?

PODESTA: It shouldn't have taken them 10 months to figure that out.

SCHULTZ: Well, it shouldn't, but why are they doing it? They don't vote on anything, they don't do anything on health care reform, they're not going to be creating any jobs. Everybody knows on the left and the center where the heck Fox is.

PODESTA: Well, look, you know, I think they should be spending their time trying to get a strong health care bill passed right now, but, you know, sometimes, as I said, sometimes you just can't resist because it feels too good to tell the truth.

SCHULTZ: All right.

You and the Center for American Progress are working on A Woman's Nation, illustrating women's issues and politics, health, and American life. There's some pretty interesting facts that are coming out of this as far as who the breadwinners are and how women are so strong in the workplace.

PODESTA: Yes, absolutely. We put out over the weekend the Shriver report. We're doing this in cooperation with Maria Shriver, who's been a tremendous leader on this.

And I think what the report shows, we took a look because we are about to have a majority of workers in America are women. Two-thirds of households in America either have a woman as a primary breadwinner or as a co-breadwinner in their household. So, women's wages are really fundamental to the well-being of American families, and, yet, I think business, government, others haven't adjusted.

To take this back to health care, a woman going back into the private health insurance market, individual health insurance markets, has to pay an average 48 percent more than a man. That's wrong. And that's one of the things this bill would outlaw.

So, I think that whether it's providing more flexibility in the workplace, trying to provide for more childcare, trying to change the way we create social insurance so that women are protected, I think this report will be a very strong statement that business needs to change, government needs to change, media needs to change, and, you know, all the institutions of the United States have to think about this so that we can build a strong society for the future.

SCHULTZ: John Podesta, Center for American Progress. Your organization does great work.

PODESTA: Thanks, Ed.

SCHULTZ: Good to have you with us.

Coming up, the president is finally fired up and ready to go after the insurance industry. CNBC's John Harwood will outline the White House battle plan next.

Plus, Liz Cheney's got a bone to pick with, of all people, me? Except she won't come on the program to talk it over.

Got that story at the bottom of the hour. You won't want to miss it.

It's a dandy.

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: The insurance industry is rolling out the big guns and breaking out their massive war chest to marshal their forces for one last fight to save the status quo. They're filling the airwaves with deceptive and dishonest ads, they're flooding Capitol Hill with lobbyists and campaign contributions, and they're funding studies to mislead the American people.

It's smoke and mirrors. It's bogus.

(END VIDEO CLIP)

SCHULTZ: I love it. That's President Obama finally taking on the insurance industry the way we have for a long time. Now we're getting into the detail.

The White House is really trying to make partners with big insurance. They tried to do that, then they got stabbed in the back big-time. I think the president should have gone this route a long time ago.

For more, let me bring in John Harwood, CNBC chief Washington correspondent, political writer for "The New York Times."

That's a different gear, is it not, John?

JOHN HARWOOD, CNBC CHIEF WASHINGTON CORRESPONDENT: There's no question about it, Ed. And there are a couple of reasons for it.

The first is, the health insurers play ball with the administration, and the administration played ball in return. And the health insurers said that their principal objection was what you favor the most, which is the public option.

Well, the public option is not in the Finance Committee package. And yet, they're going after it anyway. The White House is angry about that.

The second thing that's going on is that the first rule of politics is you can't run against yourself. You've got to have an opponent, and especially in wake of the insurance companies changing their tactics. Barack Obama needs somebody to smack around, and he's picked the insurance companies.

SCHULTZ: Well, and the Chamber of Commerce is no ally right now.

They've come out with a new ad. Let's take a look at it. Here it is.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Washington can help in times of trouble, but free enterprise is what America's counting on to create jobs and growth for the long haul. And that's what free enterprise does best. Free enterprise is the unlimited potential of the American people.

(END VIDEO CLIP)

SCHULTZ: Now, $34.7 million, in my world, that's a heck of a lot of money. That's how much the Chamber of Commerce has spent lobbying the Congress in the third quarter alone.

Is the White House-do they have the proper strategy to push back? It seems like Rahm Emanuel says any time we've got a problem, we just send the president out to sell hard, he was selling hard this weekend.

Is that going to do it?

HARWOOD: Well, look, I think you can't second-guess the White House strategy at this point because they've now gotten the bill out of all the committees, they're headed for a floor debate in both the House and Senate in a couple weeks. And I think they're on track to get a very significant bill.

Now, the question is going to be, what do you judge significant? I know you favor the public option. A lot of people on the left favor that.

They're not likely to get it, in my view. So if that's the standard, then you could say their strategy is off. But if your standard is trying to get essentially near universal coverage, get everybody in the system, reform the insurance market, I think they're on track to get that.

SCHULTZ: John, when do the numbers matter? "Washington Post"/ABC News poll out today, 57 percent of all Americans now favor a public insurance option while 40 percent oppose it.

Now, that's up five percentage points since August. I mean, the momentum is definitely going.

Why can't the Democrats just get what they want?

HARWOOD: You know, I think polling in health care only gets you so far because the issues are so complicated. And once you join the issue, depending on how the question is framed in the poll, you can get very different answers.

You say you want a public option on health care, that's one thing. If you say you want government takeover of the health care system, that's quite another.

SCHULTZ: All right. I want to talk about jobs just quickly here.

"The New York Times," a comment by Mr. Axelrod. "There are a lot of small businesses, creditworthy businesses around the country who still can't get the capital they need to grow, which is important for our economy. And you've seen these same institutions spend tens of millions of dollars lobbying Congress to try to stop financial regulatory reform."

It's tight credit, it's hard to get money to small businesses. What can the administration do about this?

HARWOOD: Well, what they're doing right now is, I talked about wanting to slap somebody around on health care. They need to stop around these financial industry players, because you've got record bonuses coming out so quickly after the taxpayers bailed them out.

Taxpayers didn't like the bailout in the first place. They like it even less when you've got these big bonuses being paid. And the White House has a real need to take them on and make that case as they try to push financial regulation.

SCHULTZ: John, good to see you.

HARWOOD: You bet.

SCHULTZ: Thanks so much.

Coming up, Senator Jon Kyl's psycho babble over health care has got me wondering if he needs to have his head examined.

I'm calling him out next in "Psycho Talk."

Stay with us. You won't believe this one.

(COMMERCIAL BREAK)

SCHULTZ: Oh, yes, another edition of "Psycho Talk" tonight, the Monday edition.

Senate minority whip and fervent opponent of health care reform, Jon Kyl of Arizona. On "Meet the Press" this weekend, he said that Republicans had a lot of very good ideas for health care reform. Then, of course, he failed to mention any of them.

But the real psycho part came when he said this...

(BEGIN VIDEO CLIP)

SEN. JON KYL ®, ARIZONA: I'm not sure that it's a fact that more and more people die because they don't have health insurance, but because they don't have health insurance the care is not delivered in the best and most efficient way.

(END VIDEO CLIP)

SCHULTZ: He's not sure it's a fact that people die because they don't have health insurance.

Well, Senator, believe me, it is a fact. And if you don't take my word for it, just last month, in case you missed it, Harvard University released a study showing that almost 45,000 deaths a year are connected to people who do not have health insurance. OK?

And the uninsured Americans have a 40 percent higher risk of death than people who have insurance.

So, Senator Kyl, either you're not paying attention to what the heck is going on with all these important studies, or you just choose to ignore them.

Either way, it's "Psycho Talk."

Coming up, "The Drugster" may have met his match when he fired away at Reverend Al Sharpton. And this one might have to be settled in court. The Rev is going to be here to talk it over in my "Playbook" coming up. Can't wait to talk to him.

Plus, I've got a special thank you message for Arianna Huffington regarding the balloon boy hoax.

You know, all that and so much more coming up.

You're watching THE ED SHOW on MSNBC.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Liz Cheney, like her dad, isn't much of a fighter. I guess that's because he had five deferments. You know, look, she won't come on this program and talk to me about any of the issues. Instead, her new group, Keep America Safe, threw up an ad on the web attacking me, and some of the colleagues here at MSNBC. Let's take a look at it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What are they so afraid of?

CHRIS MATTHEWS, MSNBC ANCHOR: Another one of these neocon front groups with the same old right wingers, same old propaganda. She's joining the team.

KEITH OLBERMANN, MSNBC ANCHOR: Legion of right wing off spring rides again, calling themselves, wait for it, Keep America Safe.

SCHULTZ: She's dangerous.

ROY SEKOFF, "THE HUFFINGTON POST": Oh, yes, there's no question. She is a chip off the old block.

UNIDENTIFIED MALE: Why don't they want to talk substance? Why are they panicked? Why don't they want to debate the issues? What are they so afraid of?

(END VIDEO CLIP)

SCHULTZ: Well, for the record, our team reached out, again, to Liz Cheney, directly, today. We've done it before. And to her group. But they don't want to come talk to me more some reason. I guess I'm not up there in the big time yet. This really is how they're going to operate. They're going to go where they are going to get friendly questions.

Joining me now is a fellow Liz Cheney target, Roy Sekoff, founding editor of the "Huffington Post." Look, comfortable media is the thing. You attack where you're comfortable. But this group, Keep America Safe, does it not send a message that Obama, if we get hit again, we should have known all along? That's the message I take from these groups.

SEKOFF: Do we get a residual for that ad running? You know, you and me had a little exchange there. I'm wondering if we get a cut of what they raise off of us.

SCHULTZ: Probably not. Go ahead.

SEKOFF: To answer your question, Ed, of course that's what they're trying to do. They're trying to set the table that if we're attacked again, it's all about Obama.

I'll say something, Ed, they are right. I am afraid of them. I'm not afraid of the power of their ideas, but I'm afraid the decrepitness of their ideas. You know why? I remember the last eight years. I remember how we alienated our allies and we emboldened our enemies and how made the world and our country less safe.

I remember that. So I am afraid for that reason.

SCHULTZ: Since when did she become an expert on security?

SEKOFF: Exactly right. Look at the whole team there. You got Bill Kristol, couldn't have been more wrong about everything. You got Liz Cheney, who had actually some very high-ranking jobs, you know, nepotism from her dad. You know what? Failed at them all. Failed at them all. So, yes, suddenly she's an expert.

If we need to remember, though, Ed, nine months into the Obama presidency, we know where we stand in the world. Nine months into the Bush/Cheney presidency, I recall there being a thing called 9/11.

SCHULTZ: OK, no question about that. Looking at Afghanistan, this sets the table for criticism, in my opinion, Keep America Safe, pressuring the president to put 40,000 troops back in to Afghanistan. If it doesn't, it's groups like this that set up the narratives that we're not safe. Believe it or not, there are some numb skulls out there that actually believe this kind of stuff.

SEKOFF: Ed, you hit the nail on the head. This is the entire agenda. Let's not forget, these are the same neocon people who said we should forget about Afghanistan, take our eye off Afghanistan, because we had to go into Iraq, because that was the central place in the war on terror. Now they're telling us that Afghanistan is the central front on the war on terror, and they're forgetting about Pakistan.

And they are just pushing. They want more troops. That's the real dangerous thing, Ed. That's what they're about. You put your finger right on it.

SCHULTZ: On an unrelated matter, is everything OK with Arianna Huffington now? Is she still mad at me because I had to cover the balloon story when it was breaking the other night? I see it's still on the news and I actually see it's still on your website. I just thought I'd bring it up.

SEKOFF: Ed, actually, there's never been anything but love for you at the "Huffington Post." I will say, we have about 30 other stories there. It wasn't that it was being covered. It was just sort of the wall to wall nature that Arianna objected to. But nothing but love for you.

SCHULTZ: Roy, only in America. I appreciate your time. Thank you.

Roy Sekoff with us.

For more on the Cheney story, let's go to our panel, radio talk show host Bill Press, and distinguished fellow at the Heritage Foundation and former Congressman, Ernest Istook.

Ernest, let me ask you, what's the political motivation here, to get a group, Keep America Safe, and then try to portray to the American people that Obama doesn't care about it? That's basically what this group is doing. What's to gain out of this?

ERNEST ISTOOK, HERITAGE FOUNDATION: I think the challenge was, the first thing you did was you made a bad impression with them. You went out and attacked them personally. I was on the show with you that night. They're talking about a legitimate point of view, concerned about American security, concerned about al Qaeda-

SCHULTZ: How did I attack them personally?

ISTOOK: Oh, I was on the show. You had the same people on there.

You went after her. You made fun of her.

SCHULTZ: I don't think she's credible. Wait a second, Ernest, I don't think she's credible. I don't think she's an accredited journalist, number one. I think she got the job at the State Department because of her daddy. Now here she is going out rabble rousing. What is the political motive here? What is her mission? For the country to get hit again? I'm asking the question.

ISTOOK: She doesn't want the country hit again. As you know, the other night, you went after her on her background and bio. You didn't talk about the substance. It was kind of like you wanted to discredit her like the White House wants to discredit Fox News.

SCHULTZ: Well, that's a hell of a lot easier to do I think.

(CROSS TALK)

SCHULTZ: You're not answering my question. Are we getting to the point now where we can't ask questions about what people's qualifications are? We know she was the daughter of the vice president. What qualifications does she have to, number one, work in the State Department? And why does she keep getting this talking head time? She's out there raising money that's anti-Obama. OK, big deal. What's the political motivation here?

ISTOOK: People can say the same thing about you. The problem is that was all you talked about, rather going into the substance and have a legitimate debate.

SCHULTZ: Let me tell you something. I will debate Liz Cheney on any topic, any time, anywhere. OK? She goes away from liberals who have the facts. That is one thing for sure. Bill Press, your thoughts on this. I think that if we don't stand up to groups that are trying to portray this president as weak, we're going to get run over by the right. That's what I think.

BILL PRESS, RADIO TALK SHOW HOST: You know what I think, Ed? This is another balloon hoax. This whole thing is a total hoax, this Keep America Safe thing. It is. It's a whole total media creation. You're right about Liz Cheney.

What about Bill Kristol? This is a guy that brought the country Dan Quayle and Sarah Palin. Bill Kristol, who wanted Bill Clinton to invade Iraq back in 1997. What credentials? I'm sorry, Ernest, but the credentials of the people who represent-lead the organization, do say a lot about the organization.

You've got Liz Cheney and Bill Kristol, neither of them knows squat about security. We're supposed to believe them? By the way, I think the American people are-

ISTOOK: You're not talking about the issues.

PRESS: -- as who was going to keep America safe? The American people looked at Barack Obama, looked at John McCain, and they figured Barack Obama's going to keep this country safer, which he will and which he is.

SCHULTZ: Ernest, focusing on the issues, what issue are we addressing when we show videotape of somebody holding up a sign of Adolf Hitler and putting him to Barack Obama? What is it when we hear that the president is a racist and has a deep-seated hatred for white people? Is that addressing the issues? Is that what you're talking about?

ISTOOK: What are you going to do when Jimmy Carter says that he thinks, you know, people who oppose President Obama are doing it on the grounds of racism?

SCHULTZ: He can back that up. He speaks from experience. I'll let you talk. Go ahead.

ISTOOK: OK. That's fine, Ed. You know, on Afghanistan, there's legitimate issue about Obama just slow walking the decision on Afghanistan, while American lives are at risk and go down. General McChrystal's report is gathering dust right now. So President Obama, himself, says-

(CROSS TALK)

ISTOOK: Now he's backing up on that.

SCHULTZ: All right. You want to-go ahead, Bill.

PRESS: If I may, this is the most important decision that any president makes. We're being asked to send 45,000 more troops into a country that, today, the UN commission said one-third of the votes that Karzai got were illegitimate. They disqualified one-third. We don't have a partner there. We don't have a governor there. You want to send 45,000 of our young men and women into a country which is basically anarchy?

It does, indeed, change our security interest. If those people cannot count on the cooperation and partnership of the Afghan government, then definitely we ought not to be there.

(CROSS TALK)

SCHULTZ: Stay with us. We have more coming up.

Up next, the reverend versus Rush. Al Sharpton is demanding an apology from the Drugster. If he doesn't get it, he's going to sue. Reverend Al Sharpton joins me in the playbook. Stay with us. You're watching THE ED SHOW on MSNBC.

(COMMERCIAL BREAK)

SCHULTZ: In my playbook tonight, the Drugster's race-baiting rhetoric may end up getting him sued. Rush wrote an op-aped in the "Wall Street Journal" whining about the left wing conspiracy that supposedly came between him and the St. Louis Rams. He wrote, "the media elicited comments from the likes of Al Sharpton, who played a leading role in the 1991 Crown Heights Riot. He called neighborhood Jews, quote, 'diamond merchants.' And 1995 Freddy's Fashion Mart riots."

Reverend Sharpton is threatening to slap Limbaugh with a defamation lawsuit, unless he gets an apology. Reverend Al Sharpton, president of the National Action Network, joins us tonight. Reverend, great to have you with us.

REV. AL SHARPTON, NATIONAL ACTION NETWORK: Glad to be with you.

SCHULTZ: I want to just make sure that younger people who have started to follow you within the last decade-let's go back to 1991. He claims that you played a leading role in the 1991 Crown Heights Riot. Respond to that.

SHARPTON: First of all, the Crown Heights Riot started when a young man was hit by a car. Ambulance came from a Jewish community, left him there. Community erupted. I didn't know about it until the next day.

SCHULTZ: You didn't play a leading role?

SHARPTON: I didn't play any role. I didn't know anything about it until the next day, when the family of the young called me. I came out and helped to prepare them for the wake and the funeral. I did lead a march after the funeral five days later, and there was no violence.

We filed this lawsuit. We will bring the police records and investigators. I talked to one of the DAs on the case today, who is willing to say on the record. When the same statement was said by Republican chairman in 2000, we sued Jim Nicholson, who was chair then, who has to say, no, I withdraw that. He never involved himself in criminal activity.

Mr. Limbaugh has the right to call me any name he wants. He cannot fabricate a crime. It is a crime to play a role in a riot.

SCHULTZ: And the '95 Freddy's Fashion Mart Riot?

SHARPTON: First of all, there was no riot. In '95, there were protests that I was part of in the summer. Protesting the eviction of a long-standing businessman. In the winter of that year, a man who was critical of the protests, saying I disagree with non-violence; these marches don't mean anything, went in, weeks after the marches, burnt up the store with himself in it, killed himself. That is not A, a riot, and B, he was critical of us.

Let me say this for the record. Not only was I not involved in those incidents, I haven't been involved in any riot. '91, the year he accused me of, I was stabbed-it happened to be by a white guy-leading a non-violent march in Brooklyn, where not only didn't I ask for retaliation. I went to court, testified for the guy, asked for leniency for him. He was put in jail for nine years. I visited him in jail.

It's an insult to my non-violent tradition to accuse me not only of a crime I didn't commit, but accuse me of violence, when I have gone out of my way, even when I was the victim, to try to keep violence down.

SCHULTZ: Are you going to sue Rush Limbaugh?

SHARPTON: He's not apologizing, I intend on to sue him. I intend to then let my attorneys, when he is deposed, have to let him answer real crimes that he was accused of.

SCHULTZ: What's your timeframe on this?

SHARPTON: This week.

SCHULTZ: So I don't think he said anything about it today.

SHARPTON: He didn't address it, which is interesting. He could have certainly answered me today. He didn't answer one way or another. If he does not apologize by the end of the week, I told my lawyers to proceed and file. So we can go ahead and-he can depose me on all that. And we certainly will depose him on his history.

SCHULTZ: He also says you referred to neighborhood Jews as, quote, diamond merchants.

SHARPTON: Well, that was printed yesterday. What I said in the eulogy is that we have to deal on what's going on in Crown Heights on all sides, blacks that are mugging people, those are that are like Oppenheimer, I said, dealing with diamonds in South Africa. This is Apartheid South Africa, '91. Mandela was not out. It was not '94. It was '91. Those that are diamond merchants with South Africa or those mugging, we must stop.

That is not calling all Jews diamond merchants. The mayor, the police, everybody sitting there at the eulogy.

SCHULTZ: Reverend, what kind of an apology would you want? How far does Limbaugh have to go? Does he have to call you personally? Do you want it on the air? Do you want it in writing?

SHARPTON: I want him to say publicly, since he wrote this publicly, that he was wrong. I did not engage in those crimes. He can say he thinks I'm a demagogue, say whatever else he wants. But say that I cannot accuse him of a crime. That is defamation.

SCHULTZ: You're solid on this?

SHARPTON: As solid as a rock. Also-

SCHULTZ: Wouldn't it be fun suing Limbaugh?

SHARPTON: It would be fun to watch his deposition. It would be more, in my opinion, responsible to let's clear the record. I did not use Mr. Limbaugh's questionable behavior. I used his quotes. You call him the Drugster. I haven't even used any of that.

 

 

SCHULTZ: I call him that because he went after a guy that I enjoyed and that was Jerry Garcia, who had some issues in his life and died and fought drugs all his life, and Limbaugh trashed him big time. And then he turns around and has his issue. What goes around comes around. I've never forgotten that.

SHARPTON: I could have used that, which he admitted to some things, I understand. We've definitely kept this on the high road, only on his words on the NFL. He decides to fabricate things. That he has to be held accountable for.

To try to revive some black/Jewish tensions-I've been to Israel since then as a guest of the state of Israel. We work very closely. so it seems like nothing is off base with him when he doesn't get what we wants.

SCHULTZ: We'll see you later in the show.

SHARPTON: Thank you.

SCHULTZ: Reverend Al Sharpton.

One last page in my playbook tonight; a funny thing happened on my way to work this morning. I got all the latest information on the balloon boy non-story from "Huffington Post." Turns out the homemade flying saucer supposedly carrying the six-year-old was all a hoax. We know that. The kids' parents made it up. They're trying to get a reality show.

The local sheriff has announced that he is seeking felony charges against them? All the details on the example of the tele-voyeurism came directly from Arianna Huffington's website. Thank you, Arianna. It was a good call to make sure you covered the entire story. I love them too.

Coming up, my next guest just returned from Pakistan, which endured four major terror attacks in the last week. Cliff May is a conservative. He'll tell us what's going on over there when we come back, and what the president needs to do in the region. That's in the main event, next on THE ED SHOW. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. The controversial election in Afghanistan may delay President Obama's strategy decision in the war. Today, United Nation-backed auditors threw out almost a million fraudulent votes for Afghan President Karzai, increasing the likelihood of a runoff election.

Across the border in Pakistan, the Pakistani military launched an offensive against the Taliban, trying to curb escalating terror attacks. My guest just returned from a speaking tour in Pakistan. Let me bring in Cliff May, president of the Foundation for Defense of Democracies, a nonpartisan group. Cliff, good to have you back with us.

CLIFF MAY, FOUNDATION FOR DEFENSE OF DEMOCRACIES: Thanks, Ed.

SCHULTZ: I think what Americans want to know, can the Pakistani government and military work in cooperation with the United States to weed out al Qaeda? Because that's where, of course, al Qaeda is, in Pakistan. Can they be a good partner in this?

MAY: Yes, they can. They just need the will to do so. Look, everybody knows that 3,000 Americans were killed on 9/11. Most people don't know more than 5,000 Pakistanis have been killed since 9/11 by the Taliban, which is absolutely hand in glove with al Qaeda. They're closer than they ever were before.

As you point out, during the eight days I was in Pakistan, there were four terrorist attacks. The most consequential was on the general headquarters of the military, essentially the Pentagon. This wasn't just one guy trying to run in. This was 22 hours of battle with grenades, and with automatic weapons, senior Army officers killed, commandos killed. It was serious.

I'm hoping that the military now realizes they have to stop indulging the various terrorists they have on their soil, and they have to go after them, and that we have common enemies, and we have common interests, and we can and should work together.

SCHULTZ: This is Senator Kerry talking about the situation in Pakistan. I want to play this. I want your response.

(BEGIN VIDEO CLIP)

SEN. JOHN KERRY (D), MASSACHUSETTS: Al Qaeda is not essentially here, today. It is in northwest Pakistan and in some 58 or 59 other countries in the world. We need to also guarantee the Taliban and our own presence don't become a destabilizing factor with respect to Pakistan. They are, as we recall, a government with nuclear weapons, a government with a major number of troops lined up on the border with India, and a government that, for a number of other reasons, I think has national security interests for the United States.

(END VIDEO CLIP)

SCHULTZ: Your response to that, Cliff? What do you think?

MAY: Yes. I think Kerry's pretty much on target with that. Pakistan is a very consequential country. Not at least because it has nuclear weapons, not least because it's the third largest Muslim country in the world, not least because it does have al Qaeda's command and control operations. Al Qaeda is not the same as it used to be. But it is still a danger, almost for sure on Pakistani soil.

I should tell you, a lot of Pakistanis don't like when we say that.

They say, how do you know that al Qaeda is there? I think we do know that.

The Taliban is a bad influence on Pakistan and obviously on Afghanistan. So I can't say I really disagree with anything Kerry said.

SCHULTZ: How do you view the possibility of sending more troops to Afghanistan? Based on your connections over there on this particular trip, would that be received favorably, if the president were to increase the troop presence?

MAY: I think it would be received favorably in Afghanistan. Pakistanis would be somewhat divided on it. Pakistanis-I had trouble with this when I talked to people. In a way, they don't want us to stay and, in a way, they don't want us to leave. They don't quite know, exactly, I think, what they do want.

I think the only way to have a coherent counter-insurgency strategy is to increase the force levels, as General McChrystal has recommended. I kind of think that is necessary if we're to defeat al Qaeda and defeat the Taliban on that front. I think that's very important, that we see Afghanistan and Pakistan as one front in a global conflict.

SCHULTZ: Here's Senator Kerry and Chief of Staff Rahm Emanuel talking about it yesterday. Here it is.

(BEGIN VIDEO CLIP)

KERRY: It would be entirely irresponsible for the president of the United States to commit more troops to this country when we don't even have an election finished, and know who the president is, and what kind of government we're working with.

RAHM EMANUEL, WHITE HOUSE CHIEF OF STAFF: It would be reckless to make a decision on U.S. troop level if, in fact, you haven't done a thorough analysis of whether, in fact, there's an Afghan partner ready to fill that spaces that the U.S. troops would create, and become a true partner in governing the Afghan country.

(END VIDEO CLIP)

SCHULTZ: Cliff May, the word reckless is pretty clear there. What do you think?

MAY: We have a very impoverished partner in President Karzai and the current government in Afghanistan. That doesn't mean it couldn't be worse. It could be. Worse would be if, after eight years, the Taliban were to take over that country once again. The Taliban hosted al Qaeda. The Taliban is very close with al Qaeda.

SCHULTZ: Got to run, Cliff.

MAY: OK. Thanks, Ed. Good to be with you.

SCHULTZ: We'll have you back. Appreciate it. You bet.

SCHULTZ: Earlier I asked, does Harry Reid have the leadership to get health care reform correct? Twenty three percent of you said yes; 77 percent said no. We're back tomorrow night 6:00 Eastern on THE ED SHOW. "HARDBALL" with Chris Matthews is next.

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

END

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