updated 10/29/2009 9:59:02 AM ET 2009-10-29T13:59:02

THE ED SHOW

October 28, 2009

THIS IS A RUSH TRANSCRIPT.

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

Guests: Jan Schakowsky, Jack Rice, Ron Wyden, Rep. Dennis Kucinich, Bill Press, Steve McMahon, John Feehery, Scott Paul, Roy Sekoff

ED SCHULTZ, HOST: Good evening, Americans. And welcome to THE ED SHOW from the nation's capital tonight, where the conservative Democrats are giving me the cold shoulder. I'll wear that as a badge of honor. That means we are making progress.

All right. Dick Cheney's been out there shooting his mouth off about Barack Obama not keeping us safe. But let's look at the story tonight.

He may have broken the law, played politics with national security.

And where are the Republicans? They don't give a damn.

Hey, Nancy Pelosi was spot on months ago. She said the CIA lied to Democrats about torture during the Bush administration. Now an investigation may have proved the Speaker's case.

A probe by the House Intelligence Committee has concluded the CIA may have misled Congress five or more times since 2001? As subcommittee chairman Jan Schakowsky told "The Hill," "We're in the process of reviewing several instances where the executive branch may have violated the notification requirements that are in the National Security Act."

Wow. What does all that mean?

Now, we already know the CIA lied to Congress about a plan to assassinate al Qaeda leaders. CIA Director Leon Panetta has confirmed that.

The CIA lied to Congress because Dick Cheney told them to? Question mark. I really would like to know that because this is serious stuff. It's a major abuse of the law, a gross disregard for our law and Constitution.

But the Republicans, where have they been? Ominously silent and almost defenders of Cheney at every corner. They only get outraged when they can connect Nancy Pelosi to the whole thing and ask for her resignation.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER ®, MINORITY LEADER: She's made this outrageous claim. She's undermined our intelligence officials. I think had a chilling effect on their ability to do their job, which is to keep America safe.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: She said that the CIA lied to her, and lied systemically over a period of years. The Speaker needs to be held accountable and be held and be responsible for the actions and the statements that she made last week.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is an enemy of national security that holds the gavel on (ph) the Speaker of the House. It is outrageous, and the American people need to speak to their Democrat members of Congress and ask them to come up with a new Speaker.

(END VIDEO CLIP)

SCHULTZ: Oh, yes. You see, this is what I love to do. I love to save sound bites. We've got quite an archive.

I'm a commonsense guy. Nancy Pelosi has been completely consistent on this. She's never tried to walk back her comment that the CIA misled the Congress, even when Republicans launched a full-scale verbal assault against her saying that she's got to resign.

This was going on for several weeks. Remember that?

She is still standing strong and standing behind it. Today, her office said her May 14th comment speaks for itself.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: I am saying that they are misleading, that the CIA was misleading the Congress. And at the same time, the administration was misleading the Congress on the weapons of mass destruction in Iraq, to which I said, this intelligence does not support the imminent threat, to which the press asked the same question you just did now-are you accusing them of lying? I said, "I'm just stating a fact."

(END VIDEO CLIP)

SCHULTZ: Unlike the Republicans, Pelosi isn't afraid of an investigation. She wants a truth commission. She would welcome it. So would a lot of us.

All right. Number one, the Speaker's been consistent.

Number two, the Speaker isn't afraid of an investigation. The Republicans don't want one. I think it's pretty clear who has something to hide here.

And number three, Nancy Pelosi isn't using Dick Cheney and the Bush administration for any political gain. You see, she's not out there rehashing the past or making up old stories and trying to divert the country. She doesn't have time for that. See, she's too busy doing her job as Speaker of the House, working on stuff like health care reform and unemployment benefits.

You know, that's a problem the Republicans just don't have. They done have a single productive idea to contribute, and that's why they resort to tired old attacks like Democrats won't keep you safe.

You know, I want to know what kind of punishment the Republicans will demand if the Bush administration is found guilty of violating United States law. Here's where I really get my backup.

Progressives, why can't we just tell the White House to get after it on this?

I want you to get your cell phones out tonight. Get them out. I want to know what you think about this.

Is the Justice Department being aggressive enough on the Bush administration? Text "A" for yes, "B" for no to 622639, and we'll bring you the results later on in the show.

OK. So, what does all this mean?

Joining me now is Illinois Congresswoman Jan Schakowsky, a member of the House Intelligence Committee.

Congressman, good to have you with us tonight.

REP. JAN SCHAKOWSKY (D), ILLINOIS: So good to be with you, Ed.

SCHULTZ: You bet.

The straight-up question here in this city tonight is, do you believe that the Bush administration and the CIA lied to the Congress?

SCHAKOWSKY: You know, you like to save the clips. I like to save the quotes. Let me just read to you what the vice chair of the Intelligence Committee in the House, Mr. Hoekstra, said. "We cannot have a community that operates outside the law and covers up what it does and lies to Congress."

Look, the Intelligence Committee on both sides of the aisle knows darn well that time after time, we are not told the complete story. We're told it late. We read about it in the newspaper, or in some instances we've absolutely been told falsehoods.

That's particularly true in the case of this Peru shootdown. But we know that we have to tighten up the law, we have to hold people accountable, and we have to make sure that the notification process to Congress really works.

SCHULTZ: Do you think the CIA and the Bush administration-you wrote in your statement that the executive branch may have violated the National Security Act. Is that a yes or a no or a maybe, Congresswoman?

SCHAKOWSKY: The National-well, we may have to do some referrals to the Justice Department, but the National Security Act is very, very clear about fully informing the Congress about any significant or, Ed, an anticipated significant activity of the intelligence community.

SCHULTZ: And they didn't do that?

SCHAKOWSKY: No.

SCHULTZ: And they didn't do that?

SCHAKOWSKY: Not in every case, no.

SCHULTZ: OK, not in every case.

SCHAKOWSKY: Not in every case.

SCHULTZ: OK. So they operated outside the law. So where is the Justice Department? Have they kicked it in gear to your satisfaction?

SCHAKOWSKY: Well, one of the things we want to do in this investigation-and, you know, I'm not of the school that it doesn't pay to look back, because I don't know how we can go forward intelligently without understanding where the breakdowns were. So, we're going to look at all those cases that we know of where the CIA or the intelligence community didn't tell us the full story. And if there are reasons to refer to the Justice Department, then we'll see what happens. We may do that.

SCHULTZ: Does this vindicate-Congresswoman, does this vindicate Speaker of the House Nancy Pelosi? Was she accurate, and does this-in your findings, does this vindicate her?

SCHAKOWSKY: Well, one of the things that we have found is this whole gang of eight process, where just a few people in the Congress are notify notified, is a very, very flawed process where there's no transcripts, there's no recording of what went on, there's no staff, there's no notes, there's no nothing. And so, you know, we don't know exactly what went on.

I believe the Speaker of the House, and I certainly know from my experience on the committee, that we have actually been misled. And we certainly haven't been fully informed in a timely way.

SCHULTZ: You know, Congresswoman Schakowsky, I've always believed the Roverian tactic is to attack where you're weak. The conservatives and the Republicans have been absolute masters at this.

For two weeks, we had a conversation in the media in this country about whether Nancy Pelosi was going to resign because she said that the CIA wasn't telling the truth to the Congress. Now, you're coming out with this report saying, well, they did mislead the Congress five times since 2001.

So, it would seem to me, and I want your take on this, do you think these people that were yakking, all the talking heads, about her resigning, do they have some payback audio to give to Americans and take that back?

SCHAKOWSKY: I certainly think they do. Anybody who served with me on the committee-and I'm not even trying to start a partisan fight. I think in a bipartisan way that we, as the Intelligence Committee, who are really the eyes and ears of the American people, it's our obligation to keep them safe by overseeing the intelligence community, that we know that the intelligence community hasn't always been on the up and up with us. That's just a fact.

We want to make sure that the process works. I'm not saying that they lie to us all the time or-we know that there have been those instances. We want to make sure that we have a system that doesn't allow that to happen anymore.

SCHULTZ: Congresswoman Jan Schakowsky, appreciate your time tonight on THE ED SHOW.

SCHAKOWSKY: Thank you.

SCHULTZ: Thanks so much.

You know, I just really believe, folks, that when you take a look at this, we had a conversation in this country for two weeks in the media about whether the top Democrat in the House should resign. That's how strong the conservative media is in this country.

Former CIA officer Jack Rice with us tonight.

Your take on this? How serious is this?

JACK RICE, FMR. CIA OFFICER: I was in the room when Nancy Pelosi was speaking. She was angry, and then you saw this pushback from the Republicans.

She is absolutely vindicated by this. There is not a question about this.

Should she be angry? Yes. Should Democrats be angry? Yes. But exclude them.

Americans should be angry any time people use national security as a political tool. And that's exactly what the Republicans have done here.

SCHULTZ: Jack, you've got Dick Cheney out there always on the talking head trail, along with his daughter, beating up on the Obama administration. You know, they can't keep us safe, they don't know how to run a military, all this stuff.

And here they are in this report. They lied. They strong-armed the

CIA.

How did they strong-arm the CIA? How do you think did that?

RICE: I think it's easy when the vice president can pick up the phone and say, I'll come out to Langley and take a look and see what's going on. That changes something right there.

When you start demanding certain things, when you have someone who

says, you know what, you don't have to bring Congress on a particular issue

if there is an operation taking place and you get a call from the vice president's office that says you don't need to brief Congress, you tell me that doesn't play in to the National Security Act? Without question, it does.

SCHULTZ: So, is Eric Holder asleep at the switch on this one? Have they been aggressive enough? Is this going to shed new light on it and maybe put some steroids on this?

RICE: No. He has not. President Obama has not.

They've been talking about moving forward. It's a false dichotomy. You can still move forward and look back. If you don't understand the failures of the past, you could never possibly understand where you're going in the future.

SCHULTZ: Do you think CIA employees want this to come out?

RICE: Yes, they should.

SCHULTZ: Does this hurt the integrity of the agency?

RICE: No, absolutely not. If you push this under the rug, that hurts the integrity of the agency.

SCHULTZ: Another subject. You're going to Afghanistan in a few weeks. If I may-you're a friend of mine-what in the heck are you thinking?

RICE: You know what? There is a huge conversation in this country about what's going on in Afghanistan. And most people aren't understanding this.

SCHULTZ: You're brave to go.

RICE: Well, look, the people who are there serving, they're there for a long period of time. They're brave.

SCHULTZ: Yes.

RICE: And these people are protecting my life when I'm there. So I'm lucky in that sense.

SCHULTZ: What do you hope to find out?

RICE: Well, I'm trying to understand what it is that they're facing, the challenges that they face. Look, we see not just an inept government in Karzai, we're also seeing an illegitimate government in Karzai. If the American people and the American military is having to support an illegitimate government, then what we're seen as is either supporting that or simply as invaders.

Either way, that's a disaster for America.

SCHULTZ: Now, you're going to be with a combat unit?

RICE: Absolutely.

SCHULTZ: OK. And are you going to get a sense in one of your missions to get a sense of how the Afghan people feel about our presence there?

RICE: Without question. I've seen this and I've done this when I've been embedded multiple times in Iraq, when I was in Kosovo and a bunch of other places, too. So, going into Afghanistan, this is another way of being able to take the American people inside to see exactly what's going on in their name, because that's what this is about.

SCHULTZ: Best of luck to you, my friend. God bless you. Be safe.

Come back and join us.

When are you going over there, in a couple weeks?

RICE: Just a couple weeks.

SCHULTZ: All right. How long are you going to be there?

RICE: I don't know yet. We'll figure that out. We're still working that out right now. The logistics are pretty complicated.

SCHULTZ: All right. Jack Rice, good to have you with us tonight.

Thanks so much.

Coming up, traitor Joe Lieberman was for a public option before he was against it. We'll have reaction from Senator Ron Wyden in just a moment on that.

Plus, the effigy-loving psychopath is offering a prize to whomever sends him the best Nancy Pelosi and Harry Reid burn in hell video? I'll tell you who he is and how he can be stopped.

All that and so much more coming up on THE ED SHOW. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW from the nation's capital tonight.

Now, coming up here in this segment, we've got a couple of sound bites from two different politicians, but actually it's from the same guy.

Joe Lieberman is threatening to kill health care reform in this country. I mean, that is what it's come down to.

I know he's not only the Democrat giving Harry Reid an ulcer right now, of course there's Ben Nelson of Nebraska, Mary Landrieu of Louisiana. You've got Blanche Lincoln of Arkansas, Kent Conrad of North Dakota, all from red states, and they've always been opposed to a public option.

Now, Lieberman ran on the Democratic ticket in 2000. A lot of progressives loved him back then. Not the case right now.

His state of Connecticut is one of the bluest states in the nation. Sixty-eight percent of the people in Connecticut support a public option, including 73 percent of Independents.

Now, one of those people used to be a man named Joe Lieberman.

(BEGIN VIDEO CLIP)

SEN. JOSEPH LIEBERMAN (I), CONNECTICUT: And what I'm saying to the people of Connecticut, I can do more for you and your families to get something done to make health care affordable, to get universal health insurance.

(INAUDIBLE) a choice to allow anybody in our country to buy into a national health insurance pool like the health insurance that we federal employees and members of Congress have.

Medical malpractice reform, it will cover 95 percent of those who are not covered now, and it will reduce the pressure on rising costs for all the millions of others.

(END VIDEO CLIP)

SCHULTZ: Now, folks, that was Joe Lieberman on the campaign trail, before he took over $1 million from the health care industry.

This is what Joe Lieberman is saying right now, the new politician...

(BEGIN VIDEO CLIP)

LIEBERMAN: I'm against the public option of health care insurance, essentially a government-owned health insurance plan.

(END VIDEO CLIP)

SCHULTZ: You see, folks, this is what has me worried.

Joining me now is Oregon Senator Ron Wyden, member of the Senate Finance Committee.

And not only have we gotten some conflicting comments from some people in Congress, we have had conflicting reports, you know, from time to time. We've had reports out there, well, they're going to do this. Well, they're going to do that. You know, you can only take people at face value.

Now, this gentleman has undoubtedly been on the same page all along, Ron Wyden. He is for more choice and has claimed all along that's what we have to focus on.

Senator, at this hour, do you think that Harry Reid is going to get 60 votes to take this to the floor to begin the debate? What do you think?

SEN. RON WYDEN (D), OREGON: I believe Harry Reid will get those 60 votes.

I will tell you, we're going to the grassroots of this country and saying this is the time. We've got a progressive Democrat in the White House, we've got allies in the House and the Senate. And what we're going to do is focus on the real issues. That's getting everybody covered, it's holding premiums down, and particularly holding insurance companies accountable.

SCHULTZ: OK. But you've got all these red state guys out there, these conservative Democrats that are threatening-you know, Mary Landrieu, you've got Ben Nelson-you know, what do they want? Do you know what they want? Do you know what could tip them over to get them into the pile of 60 to move this thing forward to make sure we get reform in this country?

WYDEN: Ed, I can tell you, this health reform debate is going to change every 15 minutes. And we've got 100 unique personalities in the United States Senate. And let's face it, there is something of a tradition in the Senate of folks saying no, then negotiating up until about five minutes before they get to yes.

What I want to do is make sure that we don't lose sight of the real issues. For example, one concern I have right now on the public option is the possibility that it could be a health care ghetto made up just of sick people. It's going to comprise less than 10 percent of the population. These are going to be folks who haven't had checkups, haven't had preventative care, haven't had good chronic care.

I want to make sure that we can really hold insurance companies accountable. Let's force them to put their whole customer base on the line. Let's open up these exchanges so that we can really promote choice and competition and get a good deal for the consumer.

SCHULTZ: That's kind of a rough term, Senator. A health care ghetto? I mean, everybody in this country pays taxes, don't they? Everybody that works. And we've got a lot of people suffering out there.

Do you think the public option is going to be strong enough? Because today, over on the House side, they're talking about not having a robust public option, which would open the door for conservative Democrats in the Senate to water this thing down even further. And the fear out there is that we're not going to get the reform that we once started out thinking that we were going to get.

Your thoughts on that?

WYDEN: Folks need to know that the public option can be a strong tool if people can get it. But what folks don't understand, Ed, is the way this is written, the only people who can get it are folks who don't have insurance coverage.

And I asked the Congressional Budget Office director, Doug Elmendorf, specifically about the numbers. It comes to less than 10 percent of the population.

These are going to be folks who have been sick, they're poor. You're not going to have a commercial insurer in the United States except a customer base like this made up primarily of folks who have had serious health problems. We have got to make sure, Ed, that there's a big risk pool and there's a healthy balance of the folks who are in it.

SCHULTZ: We are heading towards a big windfall for the insurance industry in this country. Are we not?

WYDEN: There is no question that they are slicing a fat hog today, and that's why I want to do what they fear most, which is promote real choice and real competition. I think everybody in this country ought to have public and private choices like members of Congress.

SCHULTZ: But Ron, as it stands right now, they're winning. The insurance companies are going to really gain by this reform. And the way it stands right now, we really don't know if there's going to be a lot of competition.

Is that a fair statement?

WYDEN: Ed, I will tell you, by and large, the forces of the status quo caucus, and they are led by the insurance lobby that is going to do everything they can to keep this country a competition-free zone. They are doing very well. And that's why I'm going to stay at it until all Americans have choices, not just something like 10 percent and folks that disproportionately are having health problems.

SCHULTZ: Congressman Ron Wyden of Oregon.

Good to have you with us tonight. Thanks so much.

WYDEN: Thank you.

SCHULTZ: Coming up, when Republican Congressman Tom Price isn't busy blocking health care reform, he's cooking up ways for Congress to officially congratulate and honor the TEA Partiers.

I'll set him straight in "Psycho Talk."

And Dennis Kucinich is going to be here saying, you know what? Maybe we need a third party.

Stay with us.

(COMMERCIAL BREAK)

BLITZER: Welcome back to THE ED SHOW, "Psycho Talk" tonight.

In our countdown to Halloween, Count Wacula (ph), Congressman Tom Price, is having some trouble with numbers, if you might see. He introduced a resolution in the House, along with 75 of his righty colleagues, to honor "the hundreds of thousands of 9/12 TEA Partiers." Hundreds of thousands he said.

Not even close. The D.C. Fire Department estimated the crowd to be at about 60,000 to 70,000, although this does show us what Republicans in Congress have been up to all along.

I mean, you know, they're not helping out on health care reform. They've been delaying extending unemployment benefits. And, of course, it turns out they've been working on officially honoring the crazy fringe of the GOP.

Now, let me read some of the resolution to you. And while I do, take a look at the kind of folks that they are honoring from the GOP side with this House resolution.

Going on to say, "American patriots who refuse to sit idly by as the federal government advances skyrocketing deficits, taxpayer-funded bailouts and a government takeover of health care. That's right, the dedicated group of freedom-loving Americans believe in open, accountable, responsible, constitutionally-based government. The House of Representatives expresses its gratitude and appreciation to hundreds of thousands of people who marched on Washington, D.C., on September 12, 2009, to show their love of liberty and their grievance with recent government actions."

How about that?

Well, with Nancy Pelosi in charge, I don't think we have to worry about this thing passing at all. But for 76 Republicans to honor these wackos, my friends, that is "Psycho Talk."

Coming up, at this hour we're hearing that Speaker Pelosi plans to present a bill without a robust public option tomorrow? I don't like that.

We'll get reaction from a true crusader for reform. Congressman Dennis Kucinich is with us in just a moment.

Plus, I've got a warning for you about someone who belongs behind bars, in my opinion. A dangerous anti-abortion activist is having some Halloween fun by encouraging people to burn Speaker Pelosi and Senate Majority Leader Harry Reid in effigy.

That's coming up at the bottom of the hour. It's a sad moment.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. 10:00 a.m. tomorrow, that's the time. That's when House Speaker Nancy Pelosi and Democratic leaders will unveil the House health care bill. I can't wait. But it probably won't have a robust public option. Doesn't make me happy.

We have 256 Democrats in the House, but we can't find 218 votes for it? Progressives are furious. Some are saying they won't vote. They will not note for a watered down bill. I can't believe we're having this conversation right now.

Universal health care is the cornerstone of the Democratic party platform. Now, I think Congressman Dennis Kucinich has it right. He issued this challenge to his fellow House Democrats today: quote, "if this is the best we can do, then it's time to ask ourselves whether the two-party system is truly capable of representing the American people or whether the system has been so compromised by special interests that we can't even protect the health of our own people."

Congressman Dennis Kucinich of Ohio and former presidential candidate joins us here on THE ED SHOW tonight. Congressman, what are you saying with that statement? Is it time to break away from the Democratic party on this one issue, on health care? Are you ready to make that move?

REP. DENNIS KUCINICH (D), OHIO: It's time for all of us to redouble our efforts to insist that we take a stand for a robust public option. That's the least we can do. Many of us started with a single payer proposal. And, of course, I've tried to get in the bill a guarantee that every state would be able to have a single-payer option. That's been taken out of the bill.

Now we're left with this negotiated rates, which, by the time they get through a conference committee, will end up being a trigger, which ends up being a total capitulation to the insurance industry. Democrats ought to take a stand. What are we here for?

SCHULTZ: Well, you have rural conservative Democrats out there who want these negotiated rates, and they want the power to go to the states, and want 50 different associations. You say that's a victory for the insurance industry. You couldn't go along with that. Would you vote against that?

KUCINICH: I have great trouble voting for anything other than a robust public option because that saves money. It provides more health care for more people. Otherwise, what we're looking at, Ed, is we're looking at the poor having to pay more, we're looking at the government having to pay more. This ends up being a larger bailout to the insurance industry. I don't think that's what Democrats should stand for. I'm hopeful that even in this-at this late moment, that the leadership will calculate again, take that count again, and be willing to roll the dice and take a stand to see if you can get 218 Democrats to stand for a robust public option.

SCHULTZ: What role does the president of the United States play in this, in your opinion, right now? Is this the time for him to step up? If tomorrow at 10:00, and we're hearing it's not going to be a robust public option, what the heck did we work for Obama for? I have to ask that question. How do you feel about that?

KUCINICH: First, this starts with a Congressional process. It would help if the president made a statement on this, of course. We can't get away from our responsibility as members of Congress who have pledged to deliver health care to the American people. And we have to make sure it's health care, not insurance care. We have to make sure that the American people know that we want everyone covered with the best plan we can possibly have. And, frankly, I think that we're selling ourselves short by not going forward with a robust public option.

SCHULTZ: OK. Congressman, I want to be very clear tonight. Do you think that there are liberals in the House that will say no to any kind of reform unless it has the kind of public option they want? I'm talking about you and Lynn Woolsey and maybe even Congressman Weiner from New York. I mean, there are staunch lefties there that have worked hard for health care reform. If you don't get a robust public option, would you vote against the bill? Do you think there will be maybe 30 or 40 that could screw this whole thing up?

KUCINICH: We're not talking about screwing it up, but talking about unscrewing it, to make sure that the insurance companies are not going to raid the American tax payers coffers. I want to see how this bill reads tomorrow. Then tomorrow, I'll be able to give you an assessment as to how I'm going to vote.

SCHULTZ: OK. We may be calling you tomorrow. I think, you know, you've been a solid voice on this all along. Congressman, appreciate your time.

KUCINICH: Thank you very much, Ed Schultz.

SCHULTZ: I'm a single-payer guy. I am. I think the Congressman is exactly right. We have capitulated too much. Bill Press, radio talk show host, with us tonight. Also Steve McMahon, Democratic strategist, and John Feehery, Republican strategist.

I'll go with you first, Bill, if I can. Is this a defeat? If it comes out what we're hearing tonight about no robust public option coming out of the House side, is this a defeat?

BILL PRESS, RADIO TALK SHOW HOST: Looks like it. I'll tell you one thing, Ed, to me, I'm with you. I'm a single-payer guy. I think this shows the mistake of not starting with the single payer. If they had started with a single payer, then they could have worked their way down. Instead, they started out with a public option. And now it looks like they're even going to water that down.

Here's what I don't get, Ed. Democrats are the majority party.

They're dealing and they're operating like they're the minority party. They're not using their power, particularly in the House. There's no reason, in my judgment, for the House to come in with anything other than the strongest possible bill, because you know damn well, when it gets to the Senate, that's when they're going to have to compromise.

So to start out weak in the House I think is a defeat and it's sort of a repudiation of all the work progressives have done for the last nine months.

SCHULTZ: Do you think lefties are going to turn on this?

STEVE MCMAHON, DEMOCRATIC STRATEGIST: I don't. I think for people like me who came to Washington-I worked for Ted Kennedy for a long, long time. Ted Kennedy, to him, health care reform was all about getting everybody health insurance and getting everybody basic health care. This may not be the bill that makes the progressives happy. I'll freely acknowledge that.

But it is a bill that moves 45 million more people into health insurance and gives those people health care. They haven't had it before. I actually think this is a situation where if Speaker Pelosi is bowing to pragmatism-she wants to get a bill passed. She did the vote count. She's done the arm twisting. This is what she thinks she can get done.

You know what? It may not be perfect, but it's pretty damned good.

SCHULTZ: Victory for the conservatives, John?

JOHN FEEHERY, REPUBLICAN STRATEGIST: Not necessarily.

(CROSS TALK)

SCHULTZ: You knew reform was coming. I mean, you knew something was going to get done. This is watered down.

FEEHERY: Ed, how many times have I come on this show and said I want reform? I don't want the public option. I want something that's not going to bankrupt the country. I think they're bowing to reality, which I said last week, that Nancy Pelosi said they want a robust option. Steny Hoyer said, we'll see what we can do. Now they're seeing what they can do, and they can't do what they want to do.

This is-to Bill's point, they can never get single payer done. They can't even get a public option done. They're trying to get incremental reform. I think we should get incremental reform. I wish they would do something that would bring down costs and competition, which would be interstate, allow across state lines, those kind of reforms, something with malpractice reforms, those types of reforms that actually bring down costs and not bankrupt the country.

SCHULTZ: Unless you force it. I'm not going to go into your territory. You're not going to come into my territory. That is how the industry has worked in recent years. That's wrong. This idea that the rural folks are winning on this Medicare Reimbursement Rate, so they're going to hold up reform because of it-why don't they just pass this thing, Bill, and then go back in the next few years and work on the Medicare Reimbursement Rates. Heck, we got money for everything else.

PRESS: Absolutely. Do it at the same time. This is the tail wagging the dog. If the Medicare system is broken, and it is when it comes to some of the reimbursement rates in some of these rural states-Kent Conrad talks about North Dakota. Then fix it in North Dakota. But don't make the rest of the country suffer because of the Medicare rates there.

Again, Ed, I've been around the legislative process a long time. I started in the legislature in Sacramento. I know you have to compromise at some point. What bothers me here is they're compromising before they get to the vote. You compromise at the end of the process. To me, you don't start out with a compromise.

MCMAHON: If you started with a single payer, it would have been a non-starter. It wouldn't have gotten this far. This-the Obama administration stands out there every day and says, it's amazing how far we've gotten; we're so close. They're absolutely right. It's never come this far.

You can argue maybe they compromised early or maybe they compromised too much. But we're going to get a health care reform bill. People are going to get health care and they're going to get health care coverage they haven't had before.

FEEHERY: Let me give you one little suggestion. I wrote a piece in the "Politico" today about it. Have an open process in the House where everyone votes on the thing. No backroom deals. Have it incremental, have all kinds of amendments, and see what happens. You might get a public option that way. You might get what we want that way.

(CROSS TALK)

FEEHERY: They want a lot of stuff.

MCMAHON: Where's the plan?

FEEHERY: Where's the Democrat-

(CROSS TALK)

FEEHERY: Have you seen the Democrat plan?

PRESS: There are five bills. You have none.

FEEHERY: We have, like, eight bills.

MCMAHON: Where's Eric Cantor's plan? He promised it, what, six months ago. Where is it? Where is it?

FEEHERY: Where is Nancy Pelosi's plan? I want to see Nancy Pelosi's plan. I haven't seen it. You're talking about it. We haven't seen it. It's a backroom deal.

(CROSS TALK)

SCHULTZ: We do have it. Chuck Grassley told a guy to go to work for the federal government. Remember that? That was a highlight.

PRESS: Alan Grayson told us what the Republican plan is: don't get sick.

SCHULTZ: Gentlemen, good discussion. And we're going to be talking later on about the ad that the Chamber of Commerce is taking out against health care reform. I mean, the forces out there against reform are very strong. We have to keep fighting.

Coming up, for the first time since President Obama took office, a majority of Americans think the country is headed in the wrong direction? But a new report shows that the stimulus may finally be turning things around. I'll tell you where all the jobs are next in my playbook.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. In my playbook tonight, in the nation's capital, here for a conference on building the new economy. We're going to try to figure out how to avoid repeating the mistakes that led to the recession. Meanwhile, reports of the impact of the stimulus bill on job creation are starting to roll in. States are reporting the stimulus funds have created or saved more than 388,000 jobs so far this year. But a new NBC News poll shows that Americans are more pessimistic about the state -- the things in America.

For the first time since Barack Obama has taken office of the presidency, a majority of the American people, 52 percent, think the country is on the wrong track; 36 percent think we're headed in the right direction.

Let me bring in Scott Paul, executive director of the Alliance for American Manufacturing. On the jobs fronts, do you think we're making progress? Good to have you with us tonight. Are we making progress?

SCOTT PAUL, ALLIANCE FOR AMERICAN MANUFACTURING: Great to be with you, Ed. I think we have a ways to go. I think that's one of the challenges. Young people are wondering where the jobs are going to be. People who have worked in factories wondering when they're going to get back to work.

We're facing 10 percent unemployment on the horizon. I think that people look at the stock market, they say the Dow's at 10,000, but what does that mean to me? Not a whole lot right now.

SCHULTZ: You wrote in "Huffington Post" last week that we need a national manufacturing strategy. How do you come about doing that?

PAUL: Well, it's not hard. We've done it before. We've had one since Alexander Hamilton was our Treasury secretary, and Ronald Reagan actually had somewhat of a manufacturing strategy too. We got to balance trade. We got to make smart public investments. We got to continue buy-America policies. We got to invest in the right kind of education. If Germany can train people for the workforce in manufacturing, so can we. But we do a really lousy job of it right now.

More than anything else, we need bold ideas. We need to focus on job creation. And an issue I know you pointed out, we have to get credit flowing to small and mid-sized businesses that are creating most of the jobs that we're going to see.

SCHULTZ: I think there's an attitude out there too. The latest poll, how satisfied are you with the state of the U.S. economy today? You've got 80 percent of American people right now very or somewhat dissatisfied. People aren't in the mood to borrow when they got that kind of an attitude out there. Something has to change here. Numbers are very important. Has the economy hit the bottom? Is there a ways to go? And 29 percent say we've hit the bottom. And 58 percent say there's a ways to go. How do you turn that around?

PAUL: Well, it's tough. It takes more than we've done so far. I think a lot of people viewed the stimulus as a one-shot deal at the beginning of the year. It stopped the bleeding. It stopped the bleeding. That's about all it did. We obviously have to do some work at Wall Street to get the money flowing back to main street.

But we need to make fundamental changes to our economy, otherwise we're just going to have this new bubble economy. We're going to see it pop up somewhere else. And we're going to continue to see jobless recovery.

SCHULTZ: Is there a time frame now where the Obama administration has to turn these numbers around, to the point where wage earners would lose confidence in the Obama administration? Is it three months? Is it six months? Does he have a year?

PAUL: Clearly, there's a political imperative here, too, Ed. We're going to be going into an election year. The top of mind issue for voters is going to be the economy. They're on a timetable that's set by the political calendar, as well as set by the economic calendar.

I think most people still think that these are issues that were inherited by the Obama administration. They have a limited number of weeks and months to turn this thing around.

SCHULTZ: Scott, good to have you with us. Scott Paul, Alliance for American Manufacturing, here on THE ED SHOW.

One last page in my playbook tonight. I want to talk about these pilots who missed their landing spot in Minneapolis and just flew right on by for more than an hour. They said they were working on their computers.

But I think those pilots-I think they were asleep. I mean, I find it hard to believe that professional pilots were distracted for over an hour because they were on their laptops, which they weren't supposed to be anyway.

That's hog wash. They missed radio calls. They missed engine checks. And they missed safety advisories, not to mention that they put the passengers' lives in jeopardy that they were responsible for. These guys fell asleep.

Now the general public knows what? Pilots do nap. It happens. The air traffic controllers deserve a lot of credit. They did one hell of a job responding. You know, those vilified union workers stepped up and guided traffic around them to a safe conclusion.

These pilots have been grounded by the FAA, after violating numerous federal regulations.

Stay with us, because coming up, we have a fire-breathing right-wing whack job serving up advice for a sick Halloween trip. Be safe and have fun, while burning Nancy Pelosi and Harry Reid dolls? "Huffington Post" founding editor Roy Sekoff on that when we come back, sounding the alarm.

(COMMERCIAL BREAK)

SCHULTZ: Folks in the conservative fringe getting a little flat-out scary out there. It's one thing to disagree on health care reform. But the far righty activist and radical pro-lifer Randall Terry is encouraging people to protest by burning Nancy Pelosi and Harry Reid in effigy this Halloween.

(BEGIN VIDEO CLIP)

RANDALL TERRY, CONSERVATIVE ACTIVIST: Nancy Pelosi and Harry Reid-burn in hell-want us to pay for child killing, abortion, and health care. Health care. Oh, they will burn in hell for this.

That's an idea. Halloween is coming.

Burn in hell if you support child killing. Nancy Pelosi and Harry Reid will be waiting for you in hell.

(END VIDEO CLIP)

SCHULTZ: All right. This nut job is holding a contest to see who can make the best Nancy Pelosi and Harry Reid burn in hell video. The winner gets a trip to the Washington, D.C. for the anniversary of Roe v. Wade. Let me bring in the founding editor of "Huffington Post." Roy, I wanted your response to this, because Randall Terry has said that-he has encouraged people and said that they would commit acts of terrorism if they don't get their way. Your response to that.

ROY SEKOFF, "THE HUFFINGTON POST": Ed, this is clearly political pornography. It's a page right out of the Glenn Beck school of hate-filled buffoonery. It's easy to sort of mock when you look at it. They've got all these things. Kids, don't burn Nancy Pelosi in effigy unless your parents say it's OK.

But then you think of George Tiller. You think of the doctor who was shot down in cold blood by somebody who was following the likes of Randall Terry. That's when it gets really scary.

SCHULTZ: Freedom of speech is going a long way in this country to give this guy a lot of latitude, when we see the violence that you just mentioned that has happened, within the last year. He is out there encouraging people to do these kinds of acts. And then he goes to far as to take the leadership of a political party, and encourage people to do an act of burn in hell, which, obviously, is playing with a lot of people's emotions, who might act on-you know, against the law.

SEKOFF: Yes. Here's the thing-

SCHULTZ: Where do you draw the line on this?

SEKOFF: Here's the thing they're missing. They're doing this in the name of Jesus, theoretically. If you recall in Matthew, Jesus said that we had to take care of the least among us. Who is the least among us if not the 46 million people who don't have health insurance? So if by trying to help the 46 million people who don't have health insurance, you deserve to burn in hell, I think they're not really getting the message of what Jesus was trying to put out there.

SCHULTZ: Roy Sekoff, good to have you with us tonight.

Earlier in the show, I asked our audience about our text poll tonight.

Is the Justice Department aggressive enough on the Bush administration?

Six percent of you say yes; 94 percent of you say no.

Let's go back to our panel tonight. Still with us, Bill Press, Steve McMahon, also John Feehery. I want to ask about the new information that's coming out, that Jan Schakowsky had with us earlier tonight, that the Congress was lied to, Bill Press, possibly five times by the CIA. When does the Justice Department kick it in high gear? Round table, what do you think?

PRESS: Tonight. They ought to. When should they ought to? Tonight. Of course we know they lied. They lied to the American people, Ed, about the buildup to the war in Iraq, because the White House told them to. Now we have the information. I think it's imperative that Eric Holder move and start a criminal investigation.

SCHULTZ: Is Holder and the Obama administration, Steve, purposely soft on the past administration because they have so many other things going on?

MCMAHON: Yes.

SCHULTZ: Plain and simple?

MCMAHON: Listen, I think they don't want to deal with it. They have a lot of things on their plate, and they have said that they don't want to look back, they want to look forward.

Listen, I think Bill's right. I think the CIA did lie. I think the White House told them to lie. I don't see what we're going to gain-we already know. Unless we're going to prosecute-

SCHULTZ: Prosecution.

MCMAHON: I don't think there's any willingness at the Justice Department even to prosecute these people. Unless there is, I don't think they should investigate for the sake of investigating. If they're going to investigate, they better be ready to indict people.

SCHULTZ: Well-

FEEHERY: Can I give a conservative view?

MCMAHON: I thought mine was pretty conservative.

SCHULTZ: What resulted in this was conservatives out there saying Nancy Pelosi needs to step down. She needs to resign. They must have thought it was important. John, what about that?

FEEHERY: Let me-I think the Obama administration does not want to look back because, A it's bad for national security. The CIA morale is already low morale, and they don't want to make it worse.

B, it's bad politically. As we found out, beating up on the CIA is not good politics for liberal Democrats. It might excite the liberal base. But it's not good for the middle of the country, especially when we're in the middle of two wars.

SCHULTZ: So it's OK for Dick Cheney to come out-well, there's no counterpunch of legal justice in this country by the Obama administration? They're going to let Cheney go out there and create this vernacular that we're weak on terror and we don't know how to fight? And oh by the way, you're not going to do anything to me?

MCMAHON: Listen, the best thing for the Democratic party and for the Obama administration is for former Vice President Cheney to be out there prattling on about what it is they're doing wrong. Every time he's out there, he's defining the Republican party in a way that makes it harder for them to win. I think we should just all buy him plane tickets to go around and campaign for everybody.

PRESS: I agree with that. Ed, I think the problem is, I know Obama wants to move forward. I don't think you can move forward until you hold people responsible for the sins that they committed in the past. By turning away, that's exactly what they're doing.

SCHULTZ: Progressives are not having a good day. We're going to lose the robust public option and we can't get any-

(CROSS TALK)

SCHULTZ: I'm Ed Schultz. For more information, go to WeGotEd.com. "HARDBALL" with Chris Matthews is next, right here on MSNBC. We'll see you tomorrow night.

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

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