updated 11/11/2009 10:52:59 AM ET 2009-11-11T15:52:59

Guests: Eric Massa, Clint Van Zandt, Jack Jacobs, Peter Orszag, Rep. John Garamendi, Ernest Istook, Laura Flanders, Gen. Wesley Clark, Roy Sekoff

ED SCHULTZ, HOST:  Good evening, Americans.  Welcome to THE ED SHOW in New York tonight.

Today the president of the United States and the nation paid tribute to the 13 killed in the shooting rampage at Fort Hood last week.  More than a dozen people remain hospitalized tonight, including the suspected gunman, Army psychiatrist Major Hasan.  But there are disturbing details coming out today. 

Bottom line, the suspected killer was a ticking time bomb who all but announced that he might do something. 

In 2007, Hasan gave a presentation to senior Army doctors at the Walter Reed Medical Center where he was doing his residency.  It was supposed to be a medical presentation.  Instead, it focused on jihad and potential internal threats posed by Muslim soldiers. 

“The Washington Post” got a copy of Hasan‘s presentation.  Take a look at this.

Page 11 focuses on “Muslims in the United States Military.”  It includes this bullet point—very telling—“It‘s getting harder and harder for Muslims in the service to morally justify being in a military that seems constantly engaged against fellow Muslims.”  In conclusion, Hasan recommended, “The Department of Defense should allow Muslim soldiers the options of being released as conscientious objectors to increase troop morale and decrease adverse events.”

Decrease adverse events?  Hasan had previously cited the example of a Muslim Army sergeant convicted of launching a deadly grenade attack on the brigade in Kuwait at the start of the Iraqi war. 

According to The Post, people in the room were very upset, especially senior doctors, but nothing was done.  Hasan stayed in the program.  In July of this year he was transferred to Fort Hood in Texas as a practicing psychiatrist. 

Of course, Hasan, he is innocent until proven guilty, but the views he expressed are very disturbing, and so is the fact nothing was done about it. 

This afternoon, President Obama spoke at Fort Hood memorial service. 

He had this to say about the shooter... 

(BEGIN VIDEO CLIP)

BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES:  It may be hard to comprehend the twisted logic that led to this tragedy, but this much we do know—no faith justifies these murderous and craven acts.  No just and loving God looks upon them with favor.  For what he has done we know that the killer will be met with justice in this world and the next. 

(END VIDEO CLIP)

SCHULTZ:  Very emotional day today at Fort Hood, Texas. 

Officials at Fort Hood right now are going through the records of other soldiers.  Lieutenant General Bob Cone, the base commander, says they are looking for a history of personal or psychological problems not related to their religion. 

And joining me now to talk about what role the Congress can play in preventing another tragedy like this, New York Congressman Eric Massa, a member of the House Armed Services Committee and veteran. 

Congressman, good to have you with us tonight.  I know it was an emotional day down in Fort Hood.  But you know as a former military personnel and someone who served the country, the military will move on. 

They are trained to face adversity, and sometimes incidents like this and tragedies like this bring a bond together for our military personnel.  And moving forward, the tough questions have to be asked. 

Congressman, were—in your opinion, why were there so many signs that were passed over?  How can a man get reprimanded and then promoted?  The American people are struggling with that tonight. 

REP. ERIC MASSA (D), NEW YORK:  Well, as am I.  And first, thank you and good evening on a very sad day. 

You had a good point.  The Army, the United States military will move on.  It‘s what we always do. 

In Congress, we must be especially careful to do what will help and not will hinder this movement forward.  We received a briefing on the House Armed Services Committee that I found most helpful just before we left Washington, D.C., late last week.  And there, we heard what the details were that were known then.  And more will be known. 

I asked a very specific question.  I asked the United States Army to consider classifying these as combat deaths, combat fatalities. 

In the military, there are two different classifications between non-combat and combat fatalities, and I‘d like them to consider that particular classification.  But the Army and the Department of Defense—now, Ed, this is bigger than just the Army—has a duty now to look very carefully at its internal procedures and at the issue in general of individuals who are conflicted. 

Remember, we are a volunteer military, 100 percent.  And we have a duty now and a great introspection to do everything humanly possible to make sure this does not happen again. 

SCHULTZ:  So the vetting process has to change.  Do you feel comfortable that the military is capable of doing that, or should there be some outside oversight such as the Congress? 

MASSA:  No, I think the military is entirely capable of doing this.  I salute the new secretary of Army, Secretary McHugh, a former colleague of ours, a Republican, a man for whom I have a great deal of friendship and respect.  I think that he was very wise to immediately take his team to Fort Hood to establish a command presence. 

This is an issue that the Department of Defense can best deal with.  I would be very resistant to see the United States Congress, with its sometimes rather indiscriminate and heavy hand, make it harder.  We must be very careful to assist the Army and not make it worse. 

SCHULTZ:  Congressman, there are two things that I think go hand in hand here.  It seems to me that military officials are afraid to call this a terrorist attack, yet there are many Americans who call it like they see it—premeditated, went after fellow military personnel, motivated by an ideology that undoubtedly what was certainly well publicized and warning signs were missed.  In the midst of all of that, there‘s discussion in this country about political correctness in the military. 

Are you concerned about that?  Are we being too soft on terror?  What do you think? 

MASSA:  Here‘s what I‘d like to say, because I do not want to incorrectly steer the Department of Defense.  They need to have some measure of focus without, as I mentioned, an overburdensome congressional oversight. 

SCHULTZ:  Yes.

MASSA:  We need to get answers, but we‘ve got to give them some time to get into this.  I do believe that this was a combat action and that these lives were lost in the defense of their country, whether it‘s here or abroad. 

SCHULTZ:  Would you call it a terrorist attack?  Congressman, would you label it a terrorist attack? 

MASSA:  So, on the surface it certainly appears that way, but when a guy like me jumps in and says that, without having all the facts, big mistakes can be made.  And so I want to be a very calming leader in this terribly emotional time and let the Department of the Army do what it must do and then report those facts before I make any kind of statements.

You know, I spent my life in the U.S. military.  I have great confidence in their ability, even when mistakes are made.  And I think that that experience of being in the military is what gives me the ability to sit in Congress today and have confidence that the Army will answer these questions before I start making what could potentially be explosive statements. 

SCHULTZ:  Sure.  Thank you, Congressman Massa.  I appreciate your time tonight, your insight on all of this. 

MASSA:  Thank you. 

SCHULTZ:  You bet. 

Let me bring in Clint Van Zandt, a former FBI profiler and MSNBC analyst, and retired Army Colonel Jack Jacobs, an MSNBC military analyst. 

Clint, let me ask you, you know, when you look at this whole thing, was the military too soft?  Do we have some political correctness playing out here?  Your thoughts. 

CLINT VAN ZANDT, MSNBC ANALYST:  Absolutely.  Well, you know, let me put the rest of my chips in here. 

I‘m also a Vietnam veteran and a former Army intelligence agent.  So I‘ve kind of seen both sides of this. 

But first of all, what we‘re dealing with—as far as I‘m concerned, I won‘t tap dance around a word.  I think this guy is a terrorist.  I think he is a radicalized Islam fundamentalist.  He‘s a terrorist, just like Timothy McVeigh was a terrorist, a domestic terrorist.  This guy was the same thing.

Ed, what‘s going on here?  Political correctness.

We invested a ton of money, paying to get this guy through med school, and we wanted to get our money‘s worth out of it.  We didn‘t want to offend Muslims and we wanted to get psychiatrists overseas to help our troops.  And that‘s what‘s going on here.  And everything else, it looks like the military, the FBI, and other people wore blinders because they wanted to drive those other points forward. 

SCHULTZ:  Is this a PR issue with the American military and the American people right now, Colonel Jacobs?  If the American people start thinking political correctness has entered our military, obviously they‘re going to think we‘re not as strong as we used to be. 

Respond to that. 

JACK JACOBS, MSNBC MILITARY ANALYST:  Well, they are going to think that, and it‘s very difficult to avoid the conclusion that either poor leadership, ignorance or political correctness or, perhaps, all three played a part in this.  There‘s no excuse for ignoring the obvious signs when the man is going through his certification procedure and he gets a very small number of patients because his supervisors are concerned about his ability to perform his job.  And then he gets certified, nonetheless, and then is certified to deploy overseas.

We‘ve got a big problem.

SCHULTZ:  Colonel, what should the military have done when he gave that presentation in 2007?  Obviously, a lack of oversight, but it also takes some people to stand up to power and say, look, this guy, do you know what he said in this presentation?  I mean, these were views that any American would say, what the heck is going on here?  Common sense has got to prevail here.

JACOBS:  Well, it actually didn‘t—would not have taken a great deal of courage to do so.  Don‘t forget that the people who are in charge of him and are in charge of the program in which he was enrolled have every authority to yank him out of the program, further investigation, determine whether or not he‘s a threat.  Is he serious?  Is there something wrong with him?  And then if there‘s nothing wrong with him, they‘ll reinsert him into the program.

Don‘t forget, he worked for people of higher-ranking grade than he.  And they‘re fully capable of yanking him out of the program, and they did not despite the fact that they should have.

SCHULTZ:  Clint, what about the FBI?  They say they checked this guy out.

VAN ZANDT:  Well, they checked him out.  They checked him out based upon an exchange of e-mails he had with a radicalized imam overseas.

SCHULTZ:  Well, that—doesn‘t that raise the level of intensity at all? 

VAN ZANDT:  Well, of course it should.  You know, realize, we‘ve got so many things.

We‘ve got premeditation.  This is a guy whose family says he doesn‘t like guns.  He said, I don‘t want to go to war, I don‘t want to hurt anybody, I don‘t want to carry a gun. 

Ed, he goes out on August 1st and he buys a 5.7-milllimeter semiautomatic pistol with a laser side (ph) that‘s known as a “cop killer” because drug dealers south of the border use these guns to shoot through the bulletproof vests that police officers wear. 

When he went out and bought these weapons, three and a half months in advance, he had a plan, he had a purpose.  He knew what he was doing.  And somehow between the FBI monitoring these e-mails and saying, well, he‘s doing some type of research, between him standing up, the major standing in front of military doctors and making these outrageous statements that are associated with him, up to and including that he was happy when an American recruiting sergeant was killed in Arkansas by an Americanized Islamic person, all of these things should have had the FBI, the military, CID, CIA should have sat down and say, you know, notwithstanding, we‘ve got a lot of money invested in this guy.  What do we have here? 

And Ed, last point.  I would have loved as an FBI agent so sit this guy down and say, you know, we‘ve got all these statements attributable to you, we‘ve got these e-mails back and forth.  Please explain to me what‘s going on.  Who are you?  Where are you going with this?  And does our government and my Army have a reason to fear you? 

I would have loved to ask him that. 

SCHULTZ:  Yes.

And quickly, Colonel Jacobs, are you convinced—confident that the military can handle this without outside interference or oversight from the Congress?  Is this a military issue that can be solved?  And what can they do? 

JACOBS:  In short, yes.  They have all the plans, procedures and guidance already in place to take care of it.  And I think the congressman is absolutely right.  Although the Congress has the authority under the Constitution to do anything that it wants to do, the best thing it can do right now is stand back and let the military take care of it. 

SCHULTZ:  Clint Van Zandt and Colonel Jack Jacobs, appreciate your time tonight.  Thanks so much on this issue. 

JACOBS:  Thank you.

VAN ZANDT:  Thank you.

SCHULTZ:  Coming up, the White House is facing a revolt from Democrats who say the president broke his promise to lower health care costs.  Office of Management and Budget Director Peter Orszag will respond in just a moment. 

Plus, Barney Frank and I got into it last night for Washington‘s failure to reel in Wall Street bonuses.  Today, the Senate sprung into action.  Senator Chris Dodd is dropping the hammer.  We‘ll talk about that. 

All that, plus General Wesley Clark on the situation in Afghanistan.

And you know who lands into “Psycho Talk” zone tonight?  The boss at Fox. 

You‘re watching THE ED SHOW.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.

Skyrocketing insurance premiums are symptoms of a bigger disease, the out-of-control costs of health care.  Now some Democratic senators are openly questioning if the current health care bills on the table do enough to change the for-profit system where doctors are getting paid for giving more care, not necessarily better care.  Is there a fight in the White House? 

Joining me now is director of the Office of Management and Budget, Peter Orszag. 

Mr. Orszag, good to have you with us tonight.  I want to refer to a...

PETER ORSZAG, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET:  Great to be here. 

SCHULTZ:  You bet.

I want to refer to a “New York Times” story that there seems to be some kind of split in the White House, difference of opinion when it comes to cost containment. 

Are you convinced that there will be cost containment when we get the health care reform in any bill that is passed? 

ORSZAG:  Absolutely.  If you look at the key drivers of health care costs, both the House and Senate are tackling that problem. 

For example, you mentioned senators.  The Senate finance legislation includes a variety of changes from a Medicare commission, to an excise tax on high-cost insurance plans, to incentives for hospitals to avoid unnecessary readmissions that will lead to higher quality and lower costs over time. 

SCHULTZ:  Mr. Orszag, do you believe that maybe we‘re trusting the insurance industry a little bit too much here?  Is there any concern in the White House that the industry that‘s been gouging American consumers is all of a sudden going to play fair and do what the American consumers want?  And that‘s keep premiums down. 

I mean, I‘ve read a lot of this House bill, and I don‘t see any real mechanism in place that‘s going to hold premiums down.  It‘s all in theory. 

ORSZAG:  Well, the legislation includes a whole variety of things that takes on the insurance companies.  For example, one of the biggest provisions in both the House and Senate legislation takes back the unwarranted payments that are being made to private insurance companies now.  They‘re being overpaid to cover Medicare Advantage beneficiaries.  The bills walk that back. 

In addition, I already mentioned that excise tax on high-cost insurance plans.  That will help to create more efficiencies in private insurance.  And the House bill, as another example, includes a constraint on what‘s called the medical loss ratio to make sure that insurance companies are actually paying out in benefits a sufficient share of their overall activity and not just reaping lots of profit. 

SCHULTZ:  Mr. Orszag, would you admit that if you make $90,000 a year or more in a household, that this bill doesn‘t really do much when it comes to any kind of subsidy?  It really doesn‘t do much for the consumers.  They just have to wait and see if their premiums hold and their coverage is good. 

ORSZAG:  Well, even for those households, though, remember, there are a whole series of protections.  For example, you‘ll no longer be discriminated against because you have a pre-existing condition. 

SCHULTZ:  True.

ORSZAG:  You‘ll have access to a health insurance exchange if you‘re not with an employer that offers coverage.  You‘ll have an affordable place to go which you‘re currently lacking.  And again, a lot of the provisions are also aimed at producing the health care system of the future where the emphasis is on quality rather than on quantity.  And that will help you, too. 

SCHULTZ:  Are you on the same page with Rahm Emanuel? 

ORSZAG:  Absolutely.  Yes. 

In fact, you mentioned that “New York Times” article earlier.  Sometimes I do wake up in the morning and just have to laugh over a couple coffee reading some of the things that are in the press. 

SCHULTZ:  Because the appearance is that there‘s some infighting in the White House as to how this is going to pencil out for the American people and for the budget. 

ORSZAG:  Not at all.  Everyone...

SCHULTZ:  And you can tell us unequivocally tonight that you‘re confident that this is going to pencil out and over time save the American taxpayer money? 

ORSZAG:  The president has been very clear, Rahm Emanuel has been very clear, the entire White House bill has been very clear.  The bill—the final legislation on health reform has to be deficit-neutral over the next decade, or the first 10 years.  It has to be deficit-reducing thereafter. 

And I‘m confident that‘s what we‘re going to wind up with.  There are no differences of opinion there. 

SCHULTZ:  Well, Mr. Orszag, it would seem to me that the insurance industry would love this bill because they‘re just going to get 40 million new customers out of this deal. 

ORSZAG:  And they‘re going to—fair enough, but they‘re also going to face a whole series of new constraints against discrimination, and also no longer be overpaid for Medicare Advantage. 

SCHULTZ:  All right.  Mr. Orszag, appreciate your time.  Thanks so much. 

ORSZAG:  Thanks for having me.

SCHULTZ:  Coming up, in case you wondered how Glenn Beck got away with calling the president a racist, well, here‘s your answer.  His boss is crazy enough to back him up on this.  Rupert Murdoch makes his “Psycho Talk” debut, next on THE ED SHOW.

(COMMERCIAL BREAK)

SCHULTZ:  And in “Psycho Talk” tonight, how about the grandaddy of Fox News, Rupert Murdoch? 

Now, in an interview last week, Rupert stood by the man who lost him 81 advertisers, Glenn Beck.  Murdoch was asked about “The Beckster” calling President Obama a racist.  Remember that? 

(BEGIN VIDEO CLIP)

GLENN BECK, FOX NEWS:  This president, I think, has exposed himself as a guy over and over and over again who has a deep-seated hatred for white people or the white culture.  I don‘t know what it is.  This guy is, I believe, a racist. 

(END VIDEO CLIP)

SCHULTZ:  Now, I think and most Americans think that is indefensible.  But Uncle Rupert Murdoch showed that his network “Psycho Talk” tendency goes all the way to the top when he defended his boy, Glenn. 

(BEGIN VIDEO CLIP)

RUPERT MURDOCH, CHAIRMAN & CEO, NEWS CORP:  On the racist thing, that caused a—but he did make a very racist comment about, you know, blacks and whites and so on, which he said in his campaign he would be completely above.  And, you know, it was something which, perhaps, shouldn‘t have been said about the president, but if you actually assess what he was talking about, he was right. 

(END VIDEO CLIP)

SCHULTZ:  No agenda there. 

The next time Fox News complains that the Obama administration is treating them unfairly by saying they‘re not a news network, I‘m pulling out that clip again and again. 

You can‘t pretend you‘re fair and balanced when your founding father is saying the president is racist.  This just confirms that at all levels, Fox News is just full of “Psycho Talk.” 

Coming up, don‘t let the spin on the health care bill get you twisted. 

This is anything—this is anything but a government takeover. 

Insurance executives, you know where they are?  They‘re behind closed doors in the boardroom.  They‘re high-fiving one another. 

Former insurance commissioner, lieutenant governor of California, and now congressman, John Garamendi, tells it like it is next on THE ED SHOW. 

Also, we‘ve got General Wesley Clark coming up and “Huffington Post” founding editor Roy Sekoff talking about Afghanistan tonight. 

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

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  All right, this House health care bill—may I make this declarative statement tonight?  This is anything but a government takeover.  It is not a government takeover.  In fact, insurance executives are high fiving one another in the board room.  They just got, what, 40 million new customers? 

The bill mandates—mandates—if this passes, it mandates that every American buy insurance.  But the public option is only going to be open to a few, like six million Americans.  The rest of them, Americans, will be forced to buy private insurance.  And many are going to get a government subsidy to do it.  It‘s going to be a handout.  I don‘t care how you look at it. 

This is how the vicious cycle works for the insurance industry.  The Congress tells Americans to buy insurance.  Congress gives Americans money to help them buy insurance.  Most Americans can‘t choose the public option, so their business and the taxpayer money goes to—you got it—the private insurance industry.  And they just love having 40 million new paying customers, which I can‘t get anybody in the Congress to deny is going to happen. 

And, of course, there‘s the kick.  There‘s the finders fee back to the lawmakers in Congress who have done what?  Fight the public option. 

Now, this is a gift.  Hear me, folks.  This is a gift to the insurance industry.  Look at your television set tonight.  Check it out.  Have you seen any industry commercials out there opposing the House bill?  I mean, these folks, they can put up a commercial in lightning speed.  They‘ve got a war-room.  We documented that with Wendell Potter on this program, time and time again.  When they want to put an ad up and go after somebody, they can do it in lightning speed.  Have you seen ads out there just saying this House bill is terrible?  No. 

They have 40 million new customers on the way.  And it should be pointed out, one of the reasons why a lot of this isn‘t going to start until 2013 is that they‘ve got to get ready for this influx of new folks who are going to be getting insurance.  How can the infrastructure of the insurance industry right now handle 40 million new customers?  They can‘t.  They‘re going to have to do capital improvements and they‘re going to have to expand their infrastructure to make this all work. 

Joining me now is Congressman John Garamendi of California. He‘s the state‘s former insurance commissioner and lieutenant governor, just recently elected to the United States Congress.  He went to Washington last week and voted for the House bill. 

Congressman, congratulations on your victory.  Good to see a good Democrat can keep on moving for the people.  You have been an advocate for the people.  You have been, John.  How does this shake down for the consumers, in your opinion?  I know there‘s some good things in it.  But, you know, there‘s a gift here for the insurance industry, is there not? 

REP. JOHN GARAMENDI (D), CALIFORNIA:  Well, you hit at least part of this squarely.  There‘s part I disagree with.  You‘re right.  There are 40 million new people that are going to enter the insurance market.  If there is no public option, you‘ve simply thrown those 40 million people to the sharks, to the insurance companies.  I know those characters and they are all about one simple thing, and that‘s profit. 

In fact, their very first commandment is thou shalt pay as little, as late, as possible.  What we absolutely have to have here are two things, Ed.  First of all, we have to a very robust, open public option, so that all of us can get into it that want to get into it.  If those—if any of us want to play with the sharks in the pool, that‘s fine.  Go do that.  Keep that public option available for everybody. 

Secondly, you have to have an enforcement mechanism on all of those insurance reforms, because every one of these reforms are diametrically opposed to the bottom-line profits of the insurance companies.  And they will do everything they can to avoid carrying out those reforms. 

Now, they are a bunch of sneaky folks and can do it in ways that are not ready discernible by the public and by the regulators. 

SCHULTZ:  They are sneaky.  And they have a way of making a dollar.  I‘m not against making a dollar, but we have seen rates go through the roof.  I‘m getting a lot of e-mail from people right now that states are double digiting consumers at this hour, and have been in recent weeks getting prepared for this, raising premiums up. 

John, I don‘t see anything in this House bill that guarantees to me, a consumer—and I make over 90,000 dollars a year—that this is going to do anything for a lot of Americans.  I think there‘s going to be at least 150 Americans who are going to see no change at all, just hoping that the mechanism of the free market, and these new things put in place are going to affect the market enough that these, as you say, sharks are going to keep their rates down.  I don‘t see it. 

GARAMENDI:  Well, Ed, there are three parts to this bill.  One is the public option. which in my view is not robust and open enough.  Hopefully it will be by the time this thing is finished.  Secondly, the insurance reform issues, take all comers, things you talked about a few moments ago.  And the third are a whole series of things that deal with the way in which health care and insurance operates in the United States, issues about quality of care, the issues of technology and medical services, patient record keeping.  All kinds of things that are very, very important and extremely important in bringing about better and lower health care costs in the future. 

SCHULTZ:  You voted for the bill, Congressman. 

GARAMENDI:  Yes, I did. 

SCHULTZ:  Are we now, the progressive movement, at a point where we have to take what we can get right now?  Because there are a lot of antis out there. 

GARAMENDI:  No, not at all.  The very first part of this process has been won by the progressives because now we have, out of the House of Representatives, a very comprehensive reform of the health insurance system.  That‘s important. 

Now there are things in that I would like to see tougher.  First, you really need to make that public option available to all, because that is your principle—

SCHULTZ:  It‘s only going to cover six million people. 

GARAMENDI:  Well, that‘s why I say it‘s got to be made more open and available.  That‘s how you really discipline the insurance companies, is to give them a very good competitor. 

SCHULTZ:  True competition. 

GARAMENDI:  That way you keep them under control. 

SCHULTZ:  Congressman Garamendi, congratulations on your victory. 

Appreciate your time tonight.  Thanks so much. 

GARAMENDI:  Always, Ed.  Take care.

SCHULTZ:  A controversial 11th hour anti-abortion amendment is threatening, actually, to blow up the next stage of health care reform.  Nancy Pelosi allowed the amendment to win the vote roughly of a dozen of conservative Democrats.  It infuriated a lot of Democrats in her caucus and in the Senate.  Senator Barbara Boxer told me today that she secured the votes to block the amendment in the Senate, but that could jeopardize the votes of Ben Nelson and some other holdouts. 

Meanwhile, pro-choice groups are considering political warfare next year on Democrats who voted the other way.  Joining me now is Congresswoman Nita Lowey from New York, who is the former co-chair of the Pro-Choice Caucus.  Congresswoman, thanks for your time tonight. 

REP. NITA LOWEY (D), NEW YORK:  Thanks, Ed.  Good to be with you.

SCHULTZ:  Have we hit a major stumbling block when it comes to reform? 

Can this be, in your opinion, resolved? 

LOWEY:  I want to make one thing very clear at the outset.  Current law now prohibits any federal funding going for abortion.  That‘s it.  No federal funding can go for abortion.  So what was outrageous is that, at the last minute, after more than 90 hours of briefings, discussions, the Speaker was bringing into her office, in a very courageous way, all parts of the caucus.  She got consensus.  And at the last minute, the anti-choice extremists said, current law is not good enough, and they brought up the Stupak Amendment. 

Now, we‘re going to work with the president, with the Speaker, with the Senate, to make sure we have a compromise that will pass.  Look, this is not the way to deal with the pro-life, anti-choice movement.  We should be working together, be excited about the health care, providing prenatal care, providing all kinds of care for women who need it to prevent unneeded abortions. 

SCHULTZ:  All right.  This is the president last night in an interview.  I want to get your reaction to this.  Here‘s how he sees this situation. 

(BEGIN VIDEO CLIP)

OBAMA:  This is a health care bill, not an abortion bill.  And we‘re not looking to change what is a core principle that has been in place for a very long time, which is federal dollars are not used to subsidize abortions.  And I want to make sure that the provision emerges meets that test, that we are not, in some way, sneaking in funding for abortions, but on the other hand, that we‘re not restricting women‘s insurance choices. 

(END VIDEO CLIP)

SCHULTZ:  Congresswoman, are you satisfied with that answer?  Do you think the president is strong enough or is he fence riding? 

LOWEY:  The president must be strong enough.  The men and women who have been fighting for the right to choose for a long time are going to work together, House and Senate and all the people out there, all the supporters out there have the right to choose, to make sure that the language in this bill continues to prevent federal funding for abortion, but does not restrict a woman‘s right to choose an elective abortion without federal funds. 

SCHULTZ:  If it comes out of conference committee the way it left the House, how will you vote? 

LOWEY:  We‘re going to work as hard as we can to create a compromise, because the language that is currently there in the Stupak Amendment is unacceptable. 

SCHULTZ:  Compromise and abortion, that would be a first. 

LOWEY:  No, I didn‘t say compromise and abortion.  Compromise on language that prevents federal funding for abortion.  That‘s not a compromise, but does not prevent a woman to choose to terminate a pregnancy. 

SCHULTZ:  Congresswoman Lowey, appreciate your time tonight.  Thanks so much.

LOWEY:  Thank you very much, Ed.

SCHULTZ:  Let‘s bring in our panel tonight.  Laura Flanders, author of “True Grit” and host of GritTV.org, and Ernest Istook, former congressman and distinguished fellow at the Heritage Foundation. 

I‘m going to have a little fun with this first, Ernest.  Are there any undistinguished fellows over at the Heritage Foundation?  I read that when you come on this program.  I‘m glad to know you‘re one of the distinguished ones, by the way. 

ERNEST ISTOOK, HERITAGE FOUNDATION:  As I tell people, I started as a visiting fellow, then I became a visiting fellow.  But I hope some day to become a jolly good fellow. 

SCHULTZ:  You‘re OK on this program.  I want to ask you first; have we hit a major stumbling block when it comes to health care reform?  How serious do you think the conservatives are on this in the House? 

ISTOOK:  Let me make something very clear up front.  For several years, I chaired the House committee that provides the money for federal health care insurance.  It‘s through the Federal Employees Health Benefits plan, insures millions of federal workers, insures members of Congress, themselves.  The law has been since 1996 not only is it a case of federal dollars don‘t pay for abortions, but also federal programs, federal insurance does not cover abortion. 

It‘s explicit in the law.  And the only exceptions, of course, are to save the life of a mother, or in the case of rape or incest.  President Obama is not promoting the status quo.  He is promoting a shift backward, saying that federally sponsored insurance now would provide abortion coverage that just pretends—

SCHULTZ:  Laura Flanders, where do you stand on that?  Is the president softening his position and going in a different direction? 

LAURA FLANDERS, “GRIT TV”:  I‘m not hearing the leadership I really want to hear.  But I think your important earlier is important, Ed.  It wasn‘t just the CEOs who were high fiving in the board rooms.  The bishops who are now saying, this wasn‘t any shift in the status quo, this amendment, were, Saturday night—I guess it was Sunday morning—also high fiving, in bishops high five like that.  They were declaring to their supporters that they massively shifted the territory.  They had scored a major victory.

And they had.  They scored a major jump back toward back-alley abortions for women, in particular, poor women, who we don‘t want to see marginilized off into a separate group. 

SCHULTZ:  What do you want to see progressives do?  If it comes back to the House the way it left, we have some trouble in Denmark on this health care reform. 

FLANDERS:  There‘s no question.  This is what we have to remember, that changes never come easy to Washington, D.C.  You either have to have enormous amounts of cash or enormous amounts of clout and street heat.  What I‘m hoping is that people who are the pro choice majority in this country, the folks who got this administration elected, will not turn away in a huff, but rather turn up the heat. 

SCHULTZ:  Go right ahead, Ernest. 

ISTOOK:  Sure.  First of all, the latest polls show the majority is pro life, not pro choice. 

SCHULTZ:  In the House. 

ISTOOK:  I‘m talking about in the country.  In the House of Representatives, also, this was not just a matter of conservatives.  You had progressives and liberals, people like Dave Obey of Wisconsin, Jim Oberstar of Minnesota, James Langevin of Rhode Island, Richard Neil of Massachusetts, people like that who voted pro life. 

SCHULTZ:  Ernest—

ISTOOK:  It cuts across the normal political lines. 

SCHULTZ:  Do you think that this is your ticket to stopping what many of you on the right have said is a government takeover of health insurance? 

ISTOOK:  Well, I will—

SCHULTZ:  This plays right into your hands. 

ISTOOK:  Many people say that, you know, this is an opportunity to exploit division.  I won‘t disagree with you about that. 

SCHULTZ:  Good to have you with us. 

ISTOOK:  There‘s a major principle here.  They‘re trying to change the federal policy that cuts across all lines, saying federal dollars and federal programs are not involved in abortion, except like I said—

SCHULTZ:  This discussion is not going away.  Ernest and Laura, thanks so much. 

Coming up, the pressure is on for the president to call the play on Afghanistan.  Former Supreme Allied Commander General Wesley Clark will weigh in with the battle plans next in my playbook.  Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  In my playbook tonight, yesterday, there were reports that President Obama had finally made a decision on Afghanistan.  But the White House insists they‘re not true.  The president has another meeting with military and civilian advisers tomorrow. 

Joining me now is General Wesley Clark, former NATO Supreme Allied Commander and senior fellow at the UCLA Berkeley Center for International Relations.  General, good to see you again.  Good to have you with us. 

Thanks, Ed.  Good to be with you. 

SCHULTZ:  If the report was true and if it‘s in the neighborhood of 40,000 troops, what does that mean outside of the fact that it‘s a major commitment?  How would you view that? 

CLARK:  It‘s already a major commitment.  The real problem, Ed, is everybody is talking about troop numbers and what we should be talking about is what‘s the mission and then what‘s the strategy to get there?  We really are not quite clear on the mission. 

It‘s pretty clear we can‘t make Afghanistan the 51st state.  So what‘s the mission there?  I thought the mission was to go after al Qaeda, but al Qaeda is in Pakistan.  We keep talking about Afghanistan.  I keep asking, what‘s going on in Pakistan?  They say the Pakistanis are committed to this offensive.  There‘s 38,000 Pakistani troops.  That‘s great. 

They have an army of 400,000 people and they are not about to be attacked by India.  We already have 68,000 Americans in Afghanistan.  Why can‘t they do the same thing in their own country?  It‘s their country.  I‘m worried about Pakistan. 

SCHULTZ:  Based on what you know about Afghanistan, no one militarily has had any measurable success there for a long, long time.  How big a gamble is this, in your professional opinion? 

CLARK:  I‘m very concerned about it because I see a lot of similarities to Vietnam.  There are ways you can win in a counter-insurgency.  We concentrated those troops in Baghdad and that‘s where the surge was.  It was small enough.  We had enough force dominance there, with the intelligence and so forth, and a lot of the fighting had been done. 

But Afghanistan‘s totally different.  And we don‘t—I haven‘t been on the inside to ask all the tough questions I‘d like to ask to the generals and to the diplomats and to the economists.  But you have to succeed in this by diplomacy, by economics, by politics, and by the military. 

What we know is that this is a very big country.  The Taliban is all through it.  So 40,000 troops represents, even though a bigger investment, still a compromise.  I mean, this country‘s three times larger than Vietnam.  It‘s got twice the population.  And we had 550,000 Americans in Vietnam at the height of the commitment there. 

So this does not seem like a big troop commitment compared to the size of the country and the task.  The real question is, what‘s the mission and what‘s the strategy? 

SCHULTZ:  General Wesley Clark, always a pleasure.  Great to have you with us tonight. 

CLARK:  Thank you.

SCHULTZ:  You bet.  Coming up, Barney Frank and I didn‘t see eye to eye last night.  But I just want people to know that there are—there‘s a double standard going on here, folks.  Some of the Senate know it.  Senator Chris Dodd is the man with the plan.  He‘s going to bring in some regulation.  The main event coming up.  Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SCHULTZ:  We dished out billions of dollars to Wall Street and they‘re doing the bonus dance right now—that wasn‘t in the fine print, Barney, you know that. 

REP. BARNEY FRANK (D), MASSACHUSETTS:  Ed, don‘t condescend to me.  I disagree with you. 

SCHULTZ:  I‘m not condescending to you.  I‘m trying to get to the bottom of the story. 

FRANK:  I disagree with you that recovering a large percentage of that taxation is wrong.  I think liberals are missing a vote here, because we ought to be pushing for the surtax.  We shouldn‘t be letting them get away with this. 

SCHULTZ:  You can tax anything. 

FRANK:  Yes, and we should tax things.  And I think you‘re making a mistake by pooh-poohing taxation that‘s a major -- 

(END VIDEO CLIP)

SCHULTZ:  That was Congressman Barney Frank on this program last night, challenging me on what I see is Congress‘ inability to do anything about the 30 billion dollars of bonus money that is being paid out to Wall Street this year.  By the way, that‘s a 60 percent increase over last year. 

Today, Senate Banking Committee Chairman Chris Dodd proposed a bill that would crack down on Wall Street atrocities like those bonuses by stepping up regulation of the banking industry.  The legislation would create a new independent agency to oversee banks, taking regulatory power away from the Federal Reserve. 

Joining me now is founding editor of the “Huffington Post,” Roy Sekoff.  Roy, I want to make one point.  During my radio show today, my wife handed me this note in the heat of the battle of the discussion.  What would conservatives say if General Motors line workers got a 60 percent bonus?  What do you think they‘d be saying about that? 

ROY SEKOFF, “THE HUFFINGTON POST”:  Ed, first of all, I thought you needed a referee and a cut man.  I was ready to bring that in.  I thought it was good that Barney at least didn‘t compare you to a dining room table, like he did to that woman at the town hall.  The real point is that I think you made a great point.  The bottom line is that we gave trillions of dollars, what amounted to trillions of dollars, to Wall Street and asked very little in return.  As you say, the White House is still coddling them. 

It was just the other day when Tim Geithner said that we weren‘t going to let them go back to business as usual.  As you point out, 60 percent increase in bonus.  It‘s not business as usual.  It‘s better than ever for them. 

SCHULTZ:  I think it‘s a double standard.  I think if the car industry had done something like this with their workers—you know, of course I would have liked that, because it would have been for the working folk of America.  But I think there‘s a double standard here.  There‘s a Wall Street, there‘s a main street. 

I want to talk about the health care quickly.  This is developing, abortion.  The funding of abortion and all of the nuances that go with it.  Where—is this going to be the road block to health care, you think?  Is there a compromise?  Do you think this is going to stop reform in this country? 

SEKOFF:  As you said earlier, compromise on the word abortion, that‘s not easy to get.  I think as the Congresswoman said, it‘s all about the language.  If we stick to what we already have, which is no federal funding for abortions, that‘s fine.  You can‘t be making the women not be able to have a choice in their insurance. 

So in that way—I think, Ed, going back to Chris Dodd and what he did today, he‘s really swinging for the fences.  I think that is a great thing, because as we look at what happened with health care, the Democrats gave away, right?  They gave away everything right before the game even started.  We ended up with this very, very narrow kind of reform. 

I think it‘s great that he‘s swinging for the fences.  I think he learned the lessons from the health care.  I think we‘re going to see a better thing with this financial reform bill that he puts forward. 

SCHULTZ:  As it looks right now, the consternation that‘s taking place over in the Senate, how do you think this is going to play out, Roy?  In the blogosphere, there‘s a lot of frustrated progressives right now that the Democrats didn‘t come out with a strong enough bill on the House side, that this is 40 million customers going to be mandated to go to private insurance.  Tell me how this is reform.  Where‘s the deal? 

SEKOFF:  Ed, I‘m scared.  I‘m with you.  You know, it‘s like we‘re trying to be happy and satisfied with a crumb and say that‘s a meal.  I don‘t see the robust plan.  When it first came out, the public option was going to cover 100 million people.  Now we‘re talking about less than 10 million people.  How is that going to keep costs down.

As you said, we need arm twists.  I don‘t know if Bill Clinton going up to the Hill is enough. 

SCHULTZ:  I was going to ask you about that.  Is Clinton going to have an effect?  What do you think?

SEKOFF:  I think he carries some prestige.  I think he‘s still got some sizzle.  Is he going to be able to do it to Nelson?  Is he going to be able to do it to Blanche Lincoln?  That‘s the question.  I don‘t think they‘re going to be that impressed by the star power. 

SCHULTZ:  Roy, I don‘t think he has to have lunch with the entire caucus.  He ought to just have lunch with the delegation from Arkansas. 

SEKOFF:  Get a two-fer. 

SCHULTZ:  Roy Sekoff, always a pleasure.  Great to have you with us. 

Earlier I asked the audience tonight, can Bill Clinton convince any senator to vote for health care?  Eighty three percent of you said yes; 17 percent said no.  That is THE ED SHOW.  I‘m Ed Schultz.  “HARDBALL” with Chris Matthews starts right now on the place for politics, MSNBC.  We‘ll see you tomorrow night, right here, 6:00 Eastern time, for THE ED SHOW.  Have a great one. 

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

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