updated 10/23/2009 10:45:14 AM ET 2009-10-23T14:45:14

Guests: Arlen Specter, Brent Budowksy, Steny Hoyer, Tom Tancredo, Joan Walsh, Michael Graham, Jack Rice, David Walker, Jeff Merkley

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

Is it time for a victory lap?  Well, not quite.  But we‘re real close. 

Last night we didn‘t have the votes.  Tonight we do.  Nancy Pelosi has locked in 218 votes for a public option in the House. 

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER:  Let me just say this—I‘ve said this and I will say it again—we will have a bill that will go to the floor and it will have a public option in it.  And there is support in our caucus to do that.  I said that over and over again, and I stand by it. 

(END VIDEO CLIP)

SCHULTZ:  All right.  How did they get this done?  I‘m going to be asking the majority leader in the House, Steny Hoyer, in just a few moments. 

The people‘s House has delivered the mail, bottom line.  This wasn‘t so long ago that reporters on this show and Democrats are telling me on the program, Ed, you got to get over it now, this just isn‘t going to happen.  Blah, blah, blah.

Wait a second.  The tide‘s coming in on this one. 

North Dakota Senator Kent Conrad, Nebraska Senator Ben Nelson are now saying that the White House is pushing them on a public option.  This is a big development.  A paramount shift in momentum we‘re seeing here happen. 

Now, how did we get here?  Well, actually, I think two reasons. 

The first thing, the leadership of Nancy Pelosi and her role cannot be overstated in the House.  She was flexible, she compromised on single payer, she was willing to move on some details.  I guess you could say she negotiated. 

But she drew a line in the sand on the public option.  She never wavered.  She never caved in.  And she‘s a tough negotiator.  She got her caucus in line and got it done.  She deserves a lot of credit. 

That‘s what leadership is all about. 

Now, the second thing is you.  The people of this country spoke up. 

You spoke up at the polls.  Fifty-seven percent of the American people are now supporting it.  Organizing for America, the group known as Obama‘s army, has inundated Congress with phone calls. 

This is how we beat back on the town hall mobsters this past summer.  The pro-reform majority came out.  The majority of Americans have put it to the president, and also they put him in office, obviously.  And they said look, this is what we want, this is what we voted for. 

I think this cuts to the heart of the entire issue, standing up for what the American people want and what they voted for.  They voted for change.  Now it‘s time to deliver.

We are so close, not just in the House, but in a health care reform bill in the Senate with a strong public option.  There are some late developments this afternoon. 

All right.  Joining me now is Pennsylvania Senator Arlen Specter. 

Senator, great to have you with us on the program. 

I‘ll start off on a very positive note.  Congratulations on your Phillies for winning this thing last night and going to the World Series. 

SEN. ARLEN SPECTER (D), PENNSYLVANIA:  Ed, wasn‘t it all that power?

SCHULTZ:  It‘s fun to say.

Senator, can you tell our audience tonight that you unequivocally stand for a public option? 

SPECTER:  I do. 

SCHULTZ:  OK.  And does it mean anything that late this afternoon, Olympia Snowe says that she is not going to support immediate creation of a government-run insurance program?  All told right now—and she says it might not get done this year. 

What do you make of this development? 

SPECTER:  Well, we have 60 votes without Senator Snowe, so we can still invoke cloture and move to a vote on the public option.  We have flexibility. 

There may be some Democratic senators who will vote on the procedural motion to go ahead to cut off the filibuster and then may choose to vote against the public option.  But with 50 votes, plus the vice president—and my vote is going to be for the public option, a robust public option—we can get it passed, even without Senator Snowe.  I hope we have her, but we may be able to do it without her. 

SCHULTZ:  Senator, you‘re in a tight race in Pennsylvania.  Even with Joe Sestak out of it, the last Quinnipiac poll has got you and Mr. Toomey right there, very close. 

Does this affect your position on the public option?  Do you feel like you‘ve got to deliver for the majority of Pennsylvanians?

SPECTER:  No.  I‘m going to vote my conscience on the best public policy.  Listen, I approved the tough stimulus package earlier this year with all the political risk that that involved, that I was prepared to do what was in the best interest of the country without respect to an election. 

SCHULTZ:  So, this has absolutely no effect at all?  You‘re going to be there when the time comes? 

What about this conversation today about the opt out?  Do you think that that could be a way that would get 60 votes when the time comes to get a vote and avoid reconciliation, that if you go with allowing the states to opt out on the public option?

What‘s your take on that? 

SPECTER:  Well, I think that might be attractive to some people, but I don‘t think that will be necessary either.  My sense is, listen, you never know what the vote is going to be until the roll is called.  But I think the likelihood is prescient that there are 50-plus votes among the Democrats in the Senate to have a robust public option without an opt-out, without a trigger, without any condition. 

We‘ll have to see. 

SCHULTZ:  You would go along with reconciliation? 

SPECTER:  Only as a last, last, last resort.  I think it is highly undesirable to affect the institution of 60 votes on proceeding. 

You‘ve got a very difficult situation in the Senate today.  You have so much partisanship.  And in the House—Joe Wilson standing up and calling the president a liar. 

And it may be necessary to fight fire with fire, but that‘s a step I would not like to take. But listen, I‘m not going to negotiate on a sound bite on television.  I‘m going to resist reconciliation.  I don‘t think we need to get to it, I don‘t think we will get to it. 

SCHULTZ:  OK.  Well, Senator, the 60 votes, I mean, Joe Lieberman said yesterday that he‘s not for a public option.  That would leave you short of 60 votes. 

SPECTER:  Well, Senator Lieberman has not ruled out the possibility of voting for cloture and then voting against the public option.  Ed, this is inside politics, but it‘s different when you vote for cloture, as opposed to when you vote on the substantive matter. 

SCHULTZ:  True. 

SPECTER:  And cloture is a procedural vote, and I think some people—very frequently, a senator will vote for cloture and vote against the bill.  That‘s been done repeatedly.  There is a difference. 

SPECTER:  In your opinion, will there be any Republicans that will step on and help the leadership out with health care reform?  I mean, you‘re looking at a party that you left, that is sitting right now at 20 percent.  Only 20 percent of the American people are willing to say and identify them selves with the Republican Party. 

Isn‘t that a message to Harry Reid that you might as well just go do it alone? 

SPECTER:  Well, I think you have to, Ed.  We faced this issue on the stimulus. 

And aside from Senator Snowe, Senator Collins and Arlen Specter, nobody would talk to the Democrats.  And you have, very plain, Senator DeMint is on the record that this is going to be President Obama‘s Waterloo, that they‘re going to use this to break him.  And this is the party of no, no, no. 

And I do not think it realistic to look for any support aside from Senator Snowe, and I think maybe Senator Collins.  Listen, I could be surprised by somebody, but I don‘t think so. 

SCHULTZ:  Senator, good to have you with us.  Hope you can come back on THE ED SHOW again.  Thanks so much. 

SPECTER:  Just invite me and I‘ll be here. 

(LAUGHTER)

SPECTER:  It‘s right on campus.  I hang out here in the rotunda all the time.  Just invite me. 

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

SPECTER:  Nice being with you.  Thank you. 

SCHULTZ:  All right.  Senator Arlen Specter of Pennsylvania with us tonight. 

Now, this health care fight is really a defining moment for Democrats, and I just can‘t believe that we‘re questioning whether the Democratic majority will support universal health care.  It‘s a cornerstone of the party platform.  If Democrats can‘t stand up at this point, what the heck do they stand for? 

And I got into a heated debate last night on this show with my friend, Democratic strategist Steve McMahon.  Take a look. 

(BEGIN VIDEO CLIP)

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  There are 48 members of the Democratic Caucus in the House who are from districts that John McCain carried.  John McCain beat Barack Obama in the districts of 48 members. 

SCHULTZ:  But they want health care. 

MCMAHON:  There are 84 members—I know they do.

SCHULTZ:  But they want health care.  But Steve, they want health care, and they want reform, and they are cowards is what they are!  They‘re political cowards. 

MCMAHON:  Ed, most of those people want health care reform but they don‘t want a public option. 

A Democratic majority is more important than a public option. 

SCHULTZ:  No.  No. 

MCMAHON:  Yes.  Yes.

SCHULTZ:  I respect you.  I do not buy that for a moment.  And I tell you...

MCMAHON:  Speaker Pelosi wouldn‘t be Speaker—she won‘t be Speaker. 

Eric Cantor will be speaker if 84 members go down on their swords. 

SCHULTZ:  No.  No.  All right.

(END VIDEO CLIP)

SCHULTZ:  There‘s all kinds of opinions out there.  I don‘t agree with that. 

I believe that Americans went to the polls because they wanted change, not because they wanted a Democratic majority.  This is a defining moment for leadership of the Democratic Party to realize that if they miss this opportunity and don‘t finish the lap on health care reform in this country, they‘re going to pay a price at the polls next year. 

People don‘t care about the majority.  This is all about getting something done. 

How about—do you think Yankee fans would be happy to see them win the World Series if they didn‘t have any all-star players?  What do you think Yankees fans want?  You think the Yankees—do you think they want them to win the World Series or just have a bunch of great players? 

Get your cell phones out.  I want to know what you think of this, folks.

What‘s more important, having a Democratic majority or a public option? 

Text “A” for a Democratic majority and “B” for a public option to 622639.  We‘ll bring you the results later on the show.

Joining me now is Brent Budowksy, longtime columnist for “The Hill” and former aide to Senator Lloyd Bentsen.  He‘s been around the Hill and knows this for a long time.

Great to have you back with us, Brent.

What‘s your take at this hour?  I mean, do you believe that the American people are just so happy to have a Democratic majority, or do they want health care reform that‘s really going to do something to change people‘s lives?

BRENT BUDOWSKY, COLUMNIST, “THE HILL”:  Ed, at this hour, we are within reach of a historic breakthrough and a defining moment in the Obama presidency.

First, let me give a standing ovation to the Speaker of the House, Nancy Pelosi.  She is a bedrock of honor and principle and fight.

Let me give a standing ovation to Steny Hoyer, who I guess is coming on soon.

And what‘s happening right now is the president is meeting as we speak, or very soon, with Senate Majority Leader Reid and the Democratic leadership.  If the president calls Senate Democrats and says your president needs you to end a filibuster on the public option, I predict we will get 60 Democratic votes to end it.  If Senator Lieberman chooses to vote against him, I suspect we ought to be talking about taking away his chairmanship, which was given to him by Democratic leaders for supporting the Democratic Party now, even though he attacked President Obama and defamed President Obama one year ago this week.

We are within reach of a big victory.  And where I disagree with Steve very, very strongly—and I worked for the House Democratic leadership, and I never lost an election in 19 years up there with anyone I ever worked for—is that 60 percent of the people support the public option.  The voters in Maine support the public option.  The voters in many of these districts that include Blue Dogs and include conservative Democrats support the public option. 

SCHULTZ:  What are they afraid of?  What are they afraid of?

I said last night they‘re afraid of the insurance industry and the medical industry because it‘s hard to raise political money in rural states.  And I think that has a lot to do with it.  They‘re protecting their own back yard. 

BUDOWSKY:  Ed, I‘ve got a column in “The Hill” tomorrow, you can read it on TheHill.com tonight, attacking what I call the Gilded Age Democrats.  It‘s one group or former liberal staff people who go out and raise money to support the insurance, the polluters, the price fixers. 

They basically sell out to make a lot of money, and then they go back to those guys on the Hill and raise money for them.  They try to persuade them. 

Now, where Steve is wrong is he‘s not counting the votes right in the House and he‘s not counting the votes right back home. 

SCHULTZ:  Well, quickly, one more thing.  This 218 votes in the House really sends a message to the White House—they are there, now it‘s time to put the heat on the Senate.  We‘re very close. 

Would you say that? 

BUDOWSKY:  We‘re on the five yard line, and if the president goes all out, we win. 

SCHULTZ:  All right.  Let‘s see who he calls to play. 

Brent Budowsky, appreciate your time tonight.  Thanks so much.

BUDOWSKY:  Take care. 

SCHULTZ:  Coming up, Nancy Pelosi says she always wants more when it comes to the votes for the public option, but some of those Blue Dogs won‘t stop barking. 

Majority Leader Steny Hoyer has the count when we come back on THE ED SHOW in just a moment. 

Plus, “Shooter” says President Obama is dithering over Afghanistan while armed forces are in danger?  Tom Tancredo back with us to duke it out at the bottom of the hour. 

We‘re right back on THE ED SHOW on MSNBC.  Stay with us. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

QUESTION:  You mentioned 218.  Are you aiming for—do you have a goal of a higher number of votes, like 230 or... 

PELOSI:  I always want more. 

(LAUGHTER)

QUESTION:  Is there any goal, a number, or 230? 

PELOSI:  Well, the goal will be where we have a comfort level in our caucus to go forward.  But we are at a place where the level of respect for everyone‘s point of view is increased, that people are listening to each other. 

Whatever it is, I think it will be a good vote.  We will send our negotiators to the table with a strong commitment for a public option. 

(END VIDEO CLIP)

SCHULTZ:  Nancy Pelosi holding the line on a public option.  She says the Democrats have 218 votes. 

For more on that, joining me now is Democratic Majority Leader in the House, Congressman Steny Hoyer. 

Steny, great to have you with us tonight.

REP. STENY HOYER (D), MAJORITY LEADER:  Hi, Ed.  Always good to be with you. 

SCHULTZ:  I do want to hear it from you.  Do you have 218 votes?  I heard it from Mr. Larson (ph) earlier today, but I would like to hear it from you and I know our audience would too. 

HOYER:  I think we have 218 votes.  We‘re still working, the bill is not completely done, as you know, Ed, but we‘re working, we‘re working hard.  And as we have in the past, we think we‘re going to pass this bill. 

SCHULTZ:  OK.  Now, what does this do to the Senate, if anything?  The psychology of the whole thing, the momentum of the whole thing, that you‘ve achieved this 218 mark and you can move forward with a public option, a robust public option, what does it do to the process?  It‘s got to be a great momentum shot.

HOYER:  Well, I certainly think that when the House passes a bill—and you know, Ed, we said we‘re going to give substantial notice to people, so we still have some days to go before we put this on the floor.  But clearly, when we pass this bill, it will give us momentum.  It will send a signal to the Senate that we believe the overwhelming majority of the American public want health reform. 

We think a significant majority want to support this bill.  And I think it will send a message to the Senate for movement.  I think it will help Senator Reid and the proponents of the bill in the Senate. 

SCHULTZ:  All right.  I‘m switching subjects.

I know you‘re aware of what Dick Cheney had to say last night at one of these right-wing gatherings.  And also, the Republican leadership has been very critical of the president on Afghanistan, almost to the point of saying that President Obama is making us weaker and isn‘t decisive and can‘t protect the country. 

Your response to that? 

HOYER:  Let me say something.  There are 28,000 more troops in Afghanistan right now than when George Bush was president of the United States.  George Bush took his eye off and the Republicans took their eye off.  Dick Cheney took his eye off the ball in Afghanistan, went over to Iraq, and didn‘t finish the job in Afghanistan. 

The reason President Obama is now considering what needs to be done in Afghanistan is because the former administration didn‘t complete the job they started to do.  The Taliban has been resurgent.  Al Qaeda is present. 

McChrystal is right, they pose a danger.  We‘ve got to stabilize that country.  It‘s critical from the standpoint of terrorism.  It‘s critical from the standpoint of Pakistan, which is critically important. 

But for Dick Cheney or any other Republican leader to criticize President Obama, who is thoughtfully and carefully trying to figure out with our military leadership, with his advisers, the best successful policy that we can pursue in Afghanistan, I think is totally unjustified from an administration, particularly a leader in the administration, that took their eye off the ball in Afghanistan and left us eight years later in the position we‘re now in. 

SCHULTZ:  The country is shifting on Afghanistan, Congressman Hoyer.  Will there be support from the House, majority of support from the House, if the president decides to send thousands more troops to Afghanistan?  Or how much will the Progressive Caucus fight this? 

HOYER:  Ed, I don‘t want to anticipate what the president is going to decide.  Therefore, I don‘t want to speculate on what the support will or will not be.  But I am confident that President Obama is looking at this very, very carefully to determine how we can be successful in not leaving an Afghanistan that then becomes an additional center or back to a center of terrorist activity and attacks in the United States. 

I think he‘s well aware of the sentiment in the party.  I think he‘s well aware of the sentiment in the country.  I think the president is absolutely committed to doing what he believes is in the best interest of the safety of our country. 

SCHULTZ:  And Mr. Majority Leader, I‘ve got to ask you—the Republicans are banging away at the Democrats and the Obama administration on job creation.  Do you think yesterday‘s development on getting TARP money to community banks, do you think that‘s going to have an impact?  And when do you think those job numbers are going to turn around because of that move? 

HOYER:  I think it will have an impact.  But let me say, the job numbers have turned around.  We‘ve lost a third less jobs—or two-third less jobs this past couple of months than we lost in December and November of last year. 

SCHULTZ:  So you‘re going in the right direction.

HOYER:  So we‘re going in the right direction.  We‘re not where we need to be. 

We need to create jobs.  We need to have a plus report on job creation.  We need to have jobs for people. 

We‘re going to take additional efforts to accomplish more jobs in America.  But hopefully the action that was taken yesterday and the actions the administration has taken, and that we will take legislatively in the days to come, will help us get there. 

SCHULTZ:  House Majority Leader Steny Hoyer.

Always a pleasure.  Great to have you with us, Steny.

HOYER:  Thanks, Ed. 

SCHULTZ:  Thank you.

Coming up, Michele Bachmann just spit out another dandy for us.  She‘s attacking fellow Republicans like Bob Dole, Bill Frist, for being non-pro-freedom?  I‘ll get to the bottom of this. 

You know what‘s coming up next.  It‘s “Psycho Talk.”  

(COMMERCIAL BREAK)

SCHULTZ:  And it‘s time for another edition of “Psycho Talk.”  

Back in “Psycho Talk” tonight, Michele Bachmann. 

She‘s teetering on the far right edge of the crazy cliff.  This is not Minnesota. 

Bachmann went on Laura Ingraham‘s radio show yesterday.  She just didn‘t rip on Democrats, she trashed members of her own party for supporting health care reform. 

Listen up. 

(BEGIN AUDIO CLIP)

LAURA INGRAHAM, RADIO TALK SHOW HOST:  Frist presided over a pretty disastrous situation in the Senate. 

REP. MICHELE BACHMANN ®, MINNESOTA:  They lost.

INGRAHAM:  They lost.  And Bob Dole lost how many times on a national level?  I mean, I guess I‘ve lost count.

That ideology and that Republican outlook has been a losing outlook. 

That‘s why President Obama wants more of us to be like them.

BACHMANN:  Because we want a pro-freedom agenda.  And he‘s trying to throw people around who he believes will increase a non-pro-freedom agenda.

(END AUDIO CLIP)

SCHULTZ:  A non-pro-freedom agenda.

Now, what could Frist and Dole have done to deserve that kind of label?  Well, let‘s see.

Frist has endorsed the Senate Finance health bill, which doesn‘t even have that socialist public option.  And Bob Dole had the audacity to admit that there is a health care crisis in this country and, you know what?  The Republicans ought to get on board and do something about it. 

Now, straying from the “just say no” GOP party line apparently is enough to qualify you as anti-freedom.  This confirms that Bachmann and her righty cronies have abandoned any pretense of rationality and all that‘s left is “Psycho Talk.”   

Coming up, speaking of “Psycho Talk,” Dick Cheney has got the nerve to say that the president seems afraid to make a decision on Afghanistan, that he‘s got to do what it takes to win the war. 

Well, Dick, you spent years getting us in this mess. 

Tom Tancredo and Joan Walsh will duke it out coming up on THE ED SHOW in a moment.

Plus, if you think listening to Britney Spears might be a little bit tough as times, you have something in common with the detainees at Gitmo, believe it or not.  A group of musicians are demanding the interrogation hit list.

Former CIA officer Jack Rice weighs in on that.

Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  OK, Dick Cheney is back at it.  Last night, he crawled out of his bunker to accept a Keeper of The Flame award from the Center for Security Policy.  And Shooter took the opportunity to slam President Obama and the White House for delaying a strategy decision on Afghanistan. 

(BEGIN VIDEO CLIP)

DICK CHENEY, FMR. VICE PRESIDENT OF THE UNITED STATES:  Having announced his Afghanistan strategy in March, President Obama now seems afraid to make a decision.  The White House must stop dithering while America‘s armed forces are in danger. 

Signals of indecision out of Washington hurt our allies and embolden our adversaries.  Waffling while our troops on the ground face an emboldened enemy endangers them and hurts our cause. 

(END VIDEO CLIP)

SCHULTZ:  Joining me now is editor in chief Salon.com, Joan Walsh, and former Republican Congressman from Colorado Tom Tancredo.  Before we get our discussion going, I want to play this sound cut from Robert Gibbs, communications director of the White House.  This was his response today to Mr. Cheney‘s appearance at the big banquet last night. 

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE COMMUNICATIONS DIRECTOR:  It‘s a curious comment, given, I think it‘s pretty safe to say, that the vice president was, for seven years, not focused on Afghanistan.  What Vice President Cheney calls dithering, President Obama calls his solemn responsibility to the men and women in uniform and to the American public. 

I think we‘ve all seen what happens when somebody doesn‘t take that responsibility seriously. 

(END VIDEO CLIP)

SCHULTZ:  Mr. Tancredo, is the vice president correct?  What should the president of the United States do on Afghanistan? 

TOM TANCREDO, FMR. CONGRESSMAN:  Indecision is probably one of the worst things that you can have evidenced in the persona of a commander in chief.  And that‘s exactly what we‘ve got.  And that‘s exactly what he was pointing out.

Remember, comprehensive strategy, that was what they used—that was the term they used to describe the policy that they adopted in March.  It happened to be, by the way, the Bush policy.  Now we find that out today, even though, of course, Rahm Emanuel said that wasn‘t true.  In fact, it was the Bush policy.  It was passed on to them in the transition.  They accepted it and pronounced it the comprehensive policy strategy—

SCHULTZ:  Tom, OK, I got you. 

TANCREDO:  Six months later—

SCHULTZ:  I hear what you‘re saying.  But how did the situation in Afghanistan deteriorate, Tom?  I mean, come on, Obama got elected.  It was a mess over there.  Does the Bush administration do everything right in Afghanistan? 

TANCREDO:  Well, listen, things change on the ground, that‘s absolutely true.  But what you do is you give your commanders on the ground the responsibility to implement the strategy you say you‘ve adopted. 

SCHULTZ:  Joan Walsh, what‘s your response to this? 

TANCREDO:  We need more troops.  That was his responsibility.  

JOAN WALSH, SALON.COM:  May I talk? 

SCHULTZ:  Go ahead, Joan. 

WALSH:  I think it‘s ridiculous.  I think the vice president is an expert in dithering.  That‘s why he‘s talking about dithering, because they dithered for seven years in Afghanistan, and let the Taliban come back, and let an insurgency, unrelated to the Taliban, spring up because we took our eye off the ball and we went into Iraq for an unnecessary war. 

So this is what President Obama inherited. 

As to the question of whether he simply implemented the Bush/Cheney strategy, that is ridiculous.  If they had a strategy, why didn‘t they implement it? 

There was a troop increase request sitting on the president‘s desk when he came in.  It had been sitting there for eight months.  Why didn‘t Mr. Cheney come out of his bunker—

SCHULTZ:  Tom, respond to that.

WALSH:  -- send the troops that were requested.

SCHULTZ:  Why was it sitting on the desk for eight months, Tom? 

TANCREDO:  I can‘t tell you what they were talking about at that time.  All I can tell you about is that now there‘s general agreement that, in fact, when the transition team was in effect, when they were transferring power to the Obama administration, they gave him a very, very comprehensive policy to follow.  He then looked at it.  He looked at it for a period of time, and in March essentially adopted it.  It was the plan that the Bush team gave to him. 

WALSH:  They should have implemented it a few years ago.  This is ridiculous. 

TANCREDO:  Hey, listen, all they‘re telling him is here are your options, you take it.  He did take it.  He accepted the policy.  Now he‘s saying, not sure, I don‘t know where to go. 

SCHULTZ:  Well, the conditions in the country have changed, Tom. 

WALSH:  He put in an additional 21,000 additional troops.  He did not accept the whole policy.

TANCREDO:  The president needs a war czar, somebody he can—

WALSH:  I think that‘s disrespectful and ridiculous. 

TANCREDO:  Because he can‘t make it himself, evidently.  You keep saying everything is ridiculous.  Just because you say it doesn‘t make it that way. 

WALSH:  Well, it is ridiculous. 

TANCREDO:  You keep saying it that way.

WALSH:  He‘s our commander in chief. 

(CROSS TALK)  

SCHULTZ:  Joan, let me ask you—

TANCREDO:  You sound ridiculous. 

(CROSS TALK)

SCHULTZ:  All right, Tom.  Joan, I want to ask you about the election.  Obviously, the election has had something to do with all of this, with the strategy.  But now the White House has said that they want a partner going in.  How does that change the dynamic? 

WALSH:  Of course it changes the dynamic, enormously.  He did not know who he‘s partnering with yet.  There is going to be a runoff, and we have no reason to even trust or feel confident in the result of the runoff.  We have to cross our fingers and hope that there‘s a clear victor. 

So for that reason alone, the president needs to pause before implementing any strategy.  And for the vice president to say anyone is afraid when he spent his entire vice presidency in a secret bunker, when he had five deferments from Vietnam, because he had other priorities—

TANCREDO:  That‘s ridiculous. 

WALSH:  When he‘s the coward who sent other people‘s children in to war to die in Iraq is—

SCHULTZ:  All right, Joan Walsh, Tom Tancredo, appreciate your time tonight.  Thanks so much.  We will continue the discussion later on. 

All right, let me also bring in former CIA Officer Jack Rice on this, and WTKK radio talk show host Michael Graham is with us tonight. 

MICHAEL GRAHAM, WTKK RADIO TALK SHOW HOST:  Glad to be here.

SCHULTZ:  You bet.  Good to have you with us.  Jack, what is the call of the president?  Whose fault is it, at this point, that Afghanistan is where it is?  How much responsibility does President Obama have to bear on this for what has happened in the last eight, nine months? 

JACK RICE, FMR. CIA OFFICER:  Come on, Afghanistan was a disaster before he took office.  I don‘t give much credibility to Vice President Cheney.  Let‘s face it, I have about as much trust in him here as I would having him teach a gun safety class. 

So under those circumstances, what‘s the point?  There is no credibility from this guy. 

SCHULTZ:  What‘s the right call, Mr. Graham?  What do you think? 

GRAHAM:  The right call isn‘t talking about Dick Cheney‘s Vietnam problem when you‘re talking about guys getting shot at right now.  I love the fact we have a commander in chief who is unable to command.  Hey, chief, you got the troops on the ground in Afghanistan.  All they need is a strategy.  It is hilarious watching this. 

SCHULTZ:  Michael, are you—

(CROSS TALK)

SCHULTZ:  Wait a minute.  Michael, you‘re saying that the election really shouldn‘t matter.  We should just throw troops in there right now and have at it? 

GRAHAM:  Are you saying that if the wrong guy wins, Abdullah Abdullah or Karzai, that we‘re going to pull our troops out based on who wins the election? 

RICE:  No.

SCHULTZ:  I‘m asking you what you want the president to do?  We have all these right wing experts running around talking about what the problem is, but they sure as hell couldn‘t solve the problem for eight years under Bush.  So what do you want President Obama to do? 

GRAHAM:  Well, actually, we had a successful election in Afghanistan under President Bush.  And the reason why the Taliban came back—al Qaeda came back to Afghanistan is because we kicked their asses out of Iraq.  That‘s when the problem started.

SCHULTZ:  You still haven‘t answered the question.  You‘re ripping on President Obama for no strategy, but you can‘t tell us what you want him to do. 

GRAHAM:  First of all, my answer is either pick counter-insurgency or counter-terrorism.  He hired a guy, McChrystal, McChrystal who loves counter-terrorism, said nope, in this case it‘s counter-insurgency.  Listen to your general. 

Can I point something out, Ed?  I won‘t shock anybody.  I‘m not president of the United States.  I didn‘t spend a year running for president and then show up in January and go, Afghan who?  What?  Huh?  Come on, he has no strategy now.  He had time to go beg for the Olympics for his hometown.  He doesn‘t have time to—

I was in Cape Cod when he should have been reading the report from McChrystal and refused to do it. 

SCHULTZ:  Jack Rice, I want you to counter this.  What are your thoughts?  Is the president being too slow in making a decision on Afghanistan?  Is there room for criticism here? 

RICE:  Not even close.  Under the circumstances—by the way, Ed, you‘re absolutely right when it comes to the question of the election.  If what we have seen here is a third of the votes, a full third, were apparently fraudulent.  You see an incompetent regime that very could be illegitimate. 

You tie those two things together, that means the Americans are doing one of two things.  They‘re either supporting an illegitimate regime, that‘s one option.  The other option is that they‘re simply invading on behalf of America.  Either way, that‘s a disaster. 

SCHULTZ:  All right. 

(CROSS TALK)

SCHULTZ:  Hang on, Mike.  I want to go to this now.  If Dick Cheney keeps going out, is he hurting the party talking like this?  He‘s been doing it for months on end.  The Republicans are now at 20 percent.  Only 20 percent of the American people say that they want to be identified as Republicans right now.  How is this a good strategy? 

GRAHAM:  I think the more that anybody articulates the obvious common sense of having a commander in chief who commands, you‘re going to win.  Dick Cheney, this is arena.  He‘s not out talking about social policy. 

He‘s talking about foreign policy.  It‘s his bailiwick.  

RICE:  Really?  It‘s gone really, really well in Afghanistan so far. 

Those first seven years, fantastic, great work. 

GRAHAM:  Actually, if you compare it to what we‘ve had in the last nine months, it was great work.  The fact that things change on the ground because of our success is one thing.  I still don‘t understand this point.  You‘re saying that if Abdullah Abdullah or Karzai, one of the wrong guys, wins, we‘re going to get out?  We‘re going to leave?  Is that why you‘re saying the elections are determinate? 

Why wouldn‘t we have a policy based on America‘s interest in the region?  I don‘t understand.

RICE:  Because the only way we can have a legitimate effort in there -

·         if we‘re supporting the government that‘s in power, if they‘re seen as illegitimate by the people of Afghanistan—if you‘re talking about insurgencies, and you want to go down this path, fine. 

If we‘re going to support an insurgency, if we‘re going to support the people to stop an insurgency, if we‘re ever seen as incompetent and illegitimate, we cannot win.  By the way, those are McChrystal‘s words. 

GRAHAM:  So if Karzai wins and he wasn‘t supposed to, do we leave?  That‘s what I‘m trying to ask you.  If you‘re going to put America‘s future in the region fighting terror and trying to keep Pakistan from going the wrong way on the outcome of some goat herder voting in the outskirts of Kabul, then we don‘t need a president.  We‘ll just sit back and let the people of Afghanistan—

SCHULTZ:  So the final word here, Michael, is that no matter what happens with the Afghan people, damn it, the United States is going in there because we think that if we‘re not there we‘re going to get hit again.  That‘s basically where you are? 

GRAHAM:  What I‘m saying is this points out the nonsense of saying our strategy in the region depends on the outcome of a local election, one of two candidates.  What is the wrong outcome? 

SCHULTZ:  You‘re not the host.  You‘re just supposed to give us a take.  I‘ll ask the questions.  Good to have you was tonight.  Some day you‘ll get your own show.  You never know.  Thank you. 

Coming up, the Obama administration may be scaling back the salaries of Wall Street‘s top earners, but that doesn‘t mean those suits are going to change their stripes any time soon.  The former comptroller general of the United States will join me to talk about it in my playbook coming up.  Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  In my playbook tonight, can we stop all this crying foul over bonuses.  What did you think Wall Street was going to do?  I don‘t want to hear it anymore.  Here‘s what the president had to say about it today. 

(BEGIN VIDEO CLIP)

OBAMA:  I have always believed that our system of free enterprise works best when it rewards hard work.  This is America.  We don‘t disparage wealth.  We don‘t begrudge anybody for doing well.  We believe in success. 

But it does offend our values when executives of big financial firms, firms that are struggling, pay themselves huge bonuses, even as they continue to rely on taxpayer assistance to stay afloat. 

(END VIDEO CLIP)

SCHULTZ:  It‘s about your conscience, isn‘t it?  Of course they‘re paying themselves huge bonuses.  The government gave them a lump sum of money and didn‘t tell them what to do with it.  They just said OK, go save yourself because we can‘t have you fail.  You‘re too big to fail.

This is how Wall Street operates.  They‘re about making money.  Now, I understand it‘s a moral issue.  And a lot of people are upset about it, but it‘s really ridiculous, I think, for the Obama administration to come out and start pointing fingers when it was the Bush administration and the Obama administration that didn‘t do the due diligence on this on exactly where the money was going to go. 

Joining me now is David Walker, former U.S. comptroller general.  He is now the president and CEO of the Peter G. Peterson Foundation.  Mr.  Walker, good to have you with us tonight. 

DAVID WALKER, FMR. COMPTROLLER GENERAL:  Good to be back with you, Ed. 

SCHULTZ:  You bet.  What does it mean that these bonuses are taken away?  Could it fundamentally change how Wall Street works and how profit could be put out to stockholders in these companies?  What do you think? 

WALKER:  Look, here‘s the big deal, Ed.  You got it right.  The Bush administration, nor the Obama administration laid out clearly defined objectives, set out criteria as to what should—who should get the money, what the conditions are for the money. 

There‘s no question that there‘s a problem with executive compensation.  There‘s no question there ought to be some reasonable limits on executive compensation for people who are getting taxpayer money.  But frankly, they don‘t make most of their money in base pay.  They make it in equity compensation.  So you need to change the incentives, not just for those that are receiving assistance.  We need to change incentives across the board.  And that‘s the job of board of directors.  That‘s what they‘re supposed to do. 

SCHULTZ:  And they, of course, are out there trying to make money.  Unless they‘re regulated on how they‘re operating, it‘s going to be business as usual.  So really, the Bush and Obama administration, they did what they had to do to save it, but they didn‘t give them any marching orders on exactly, OK, this is how you‘re going to operate. 

So the fundamental question now is, once they get this straightened out, do you think, Mr. Walker, that the money will eventually come back to the Treasury and the taxpayer will be on the positive end of the deal on this because of the five percent?  What do you think? 

WALKER:  I think we‘re going to end up recovering part of our investment, there‘s no question.  Do I think we‘re going to recover all of our investment?  No, I don‘t.  Do I think there ought to be some reasonable limits on compensation for people getting money from taxpayers?  Yes. 

But we‘ve got a bigger problem.  The bigger problem the executive comp overall.  And, in addition, we need to learn, if you‘re going to pass out a bunch of money, you need to have clearly defined objectives, criteria and conditions established up front. 

We didn‘t do it.  We need to do it in the future. 

SCHULTZ:  That‘s right.  OK, yesterday the president came out and is allocating Tarp money to community banks.  He wants to stimulate job growth and create jobs in this country.  Do you think this is a formula that can work, the Tarp money going to community banks at three percent to hopefully create jobs?  Will this work? 

WALKER:  It‘s hard to say.  Do they have conditions?  Do they have criteria?  Do they have clearly defined objectives?  Are they measurable on an outcome basis?  Are the people that are getting the money, do they need the money?  Do they want the money? 

You know, what‘s the answer to these questions?  I don‘t know. 

SCHULTZ:  Good to have you with us, Mr. Walker.  I appreciate your time. 

WALKER:  Good to see you. 

SCHULTZ:  You bet.  Thanks so much. 

Coming up, in order to create jobs in this country, the president has got to get some skin in the game, make capital available to small businesses, what we‘ve been talking about in recent shows.  Senator Jeff Merkley, he‘s the man with the plan.  He‘ll join me in my playbook next.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  Yesterday, President Obama announced a plan to get credit flowing to small businesses.  A major part involves redirecting TARP funds to smaller community banks, to engage them in increasing lending to small businesses. 

All right, so Senator Jeff Merkley and Barbara Boxer introduced legislation yesterday that would do just that.  Senator Jeff Merkley of Oregon joins me now here on THE ED SHOW.  Senator, good to have you with us.

I think we need a number of dynamics to come into place here.  Got to have demand.  Got to have credit.  And you‘ve got to have banks that are willing to do this.  Is the table set to match your legislation with this? 

SEN. JEFF MERKLEY (D), OREGON:  Ed, the table is set.  This legislation is the result of many discussions held with community banks.  Community banks want to make loans, but they don‘t have the capital that gives them the sufficient ability to make those loans. 

Meanwhile, small businesses have long-term relationships with community banks.  They‘re going to community banks, saying hey, to create jobs and put our company back in the economy, we need to borrow.  And the banks are saying, we‘re sorry, we‘re maxed out, we can‘t do it. 

MERKLEY:  Meanwhile, a third piece of this, very important; let‘s take some of those funds that would otherwise go to Wall Street, and just a third of the funds that went in to Bank of America would fund equity for 1,900 community banks across this nation, make loans to small businesses, put people back to work. 

SCHULTZ:  Is there fine print here that‘s going to slow the process?  The Obama administration needs to get job numbers turned around pretty quickly.  I‘ve had a lot of small people tell me they‘ve got great credit but they can‘t get money.  Is this going to alleviate all of that? 

MERKLEY:  I don‘t think there‘s any magic wand that will alleviate all of it.  But it will seriously help what has become a real Catch 22.  The community banks want to raise capital, but the folks who might invest say, hey, we want to know this community bank is going to be here in a year. 

So what this plan does is it puts the community banks through a stress test, gives confidence to the individual investors, then matches those investors dollar for dollar in order to recapitalize these community banks.  I think that would really get rid of a major log jam. 

SCHULTZ:  How confident are you that these community banks are going to participate in this?  There are a number of banks that they don‘t want anything to do with the Tarp money.  Life was good.  They were making money, not as much as they were before, but they were stable.  Why do they want to get involved in this? 

MERKLEY:  I think the reason they want to get involved is they want to make money.  They make money by making loans.  If they don‘t have enough capital, then they‘re stuck.  So they can raise more capital through this partnership. 

SCHULTZ:  All right, that‘s my next point.  Why do they have to raise capital?  Why can‘t the government just guarantee the loan?  And why doesn‘t the government say, look, we‘re going to give you this money to be the facilitator.  We‘re giving it to you at three percent.  You can‘t charge more than 3.5.  That would really get it going, would it not? 

MERKLEY:  Here‘s the thing, if the government simply guaranties the loans, then we lose all the value of the judgment that those community banks have.  They understand who is running the local businesses.  They understand the local economy.  They know a good investment versus a bad investment. 

I don‘t think what we want to do is take away the situation where the banks have skin in the game.  They need to know that their profit is at stake on their judgment. 

SCHULTZ:  Why is this happening now?  Why wasn‘t this happening six months ago? 

MERKLEY:  Oh, that‘s a great question.  I wish I had put this bill together together six months.  It makes all the sense in the world.  I‘m glad to have the package now and be advocating for it.  To your point, it would have been great six months ago. 

SCHULTZ:  I have to tell you, senator, nothing to do with you, but it makes me a little nervous about the Obama economic team.  We‘ve been talking about this for months on end.  The American people have been talking about it.  I think this is shooting from the hip reaction to all of this.  I know they‘ve had other programs involved.  But the tight credit and the tight money has set the table for no job creation.  They saved jobs with the stimulus package, but they have not created the jobs. 

And I think this will work.  I do, if there‘s no fine print to hold people up and I commend you on this bill.  I commend you on this bill.

Quickly, I know you just came off the floor.  What‘s the latest on the public option? 

MERKLEY:  Yes, I was over on the floor, advocating for the public option.  We were doing a kind of group of senators talking together, Tom Udall, Sherrod Brown, Ted Kaufman, Sheldon Whitehouse.  And the points we were making is the public option is all about competition.  We don‘t have competition in health care insurance. 

And in addition, therefore, it‘s about individual choice.  Each of us has had dozens of stories—

SCHULTZ:  Do you give it 50/50, a 75 percent chance, a 90 percent chance, quickly? 

MERKLEY:  Ninety five percent. 

SCHULTZ:  I love it. 

MERKLEY:  The momentum is there.  We‘ve got to keep pushing this.  It is so critical to bending the cost curve and giving citizens choice.  We just—it‘s within reach. 

SCHULTZ:  Senator, great to have you with us tonight.  Appreciate your time.  Thank you.  Earlier I asked our audience what is more important, having a Democratic majority or a public option?  Seven percent say a Democratic majority; 93 percent say a public option. 

You just heard it right off the floor.  We‘re almost there.  And I was told on this program, give it up, Ed.  Never.  That‘s THE ED SHOW.  “HARDBALL” with Chris Matthews is next.  We‘re back tomorrow night.  Have a great one.

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