updated 12/31/2009 11:41:16 AM ET 2009-12-31T16:41:16

Guests: Eric Massa, Roy Sekoff, Wendell Potter, Chris Van Hollen, Jack

Rice, A.B. Stoddard, Karen Hanretty, Lizz Winstead

ED SCHULTZ, HOST:  Good evening, Americans.  And welcome to THE ED SHOW from Minneapolis tonight.

Let‘s start with a 2010 New Year‘s resolution.  Here‘s a good one for the Democrats. 

Every time Dick Cheney opens his fat mouth about protecting this country, the Democrats send out a press release reminding Americans of the world that we got hit on his watch.  This week has been unbelievable to watch the news cycle. 

Republicans have wasted no time, no time politicizing the recent terror attempt on Flight 253 to Detroit.  It‘s gotten ugly, folks.  This is what it‘s going to be like in 2010.  And, of course, former Vice President Dick Cheney, he‘s leading the way. 

He went after President Obama for being weak on national security, saying in a statement again—comes out with a quote—“President Obama is trying to pretend we are not at war.  He seems to think that if he has a low-key response to an attempt to blow up an airliner and kill hundreds of people, we won‘t be at war.  He seems to think that if he gets rid of the words ‘war on terror,‘ we won‘t be at war, but we are at war.  And when President Obama pretends we aren‘t, it makes us less safe.”

You know, our son was home for the holidays, one of our kids, and got on an airplane this morning and went back home.  What did Dick Cheney do to protect my family today?  What did the Republicans do today to make sure that that flight that left Minneapolis was going to be totally safe and reach its destination with no problems? 

Do we understand, as Americans, how sick this thinking is?  Politicizing an attack that could have killed hundreds of people is flat-out despicable and dirty politics no matter who does it.  But it is completely unacceptable, I think, coming from a former vice president. 

Have you ever heard any other vice president talk like this?  And while Cheney, he comes out swinging at President Obama, you know, he didn‘t say a word about the actual terrorists, nor did he say a word about the civilians who was the hero of the day. 

Dick Cheney, and I‘ve said this before, he wants us to think that his line of thinking, his Republican cronies are more mindful of national security than President Obama and the Democrats will ever be.  And Dick Cheney isn‘t the only one trying to use this terrorism scare for political gain. 

You see, the Republican Party is back at it.  They‘re going after House Democrats.  They‘re using Homeland Security Secretary Janet Napolitano‘s awkward initial response to the terror attempt as an opportunity to target Democrats for not getting in line.

You see, the NRCC is basically pressuring swing seat  Democrats who sit on the House Homeland Security Committee to call for Napolitano to testify before Congress.  None of those Democrats will join me talking about any of this, but I‘ve got one of them will join me in just a moment.

Now, here‘s what I want you to do—get your cell phone out, folks.  Terrorism, is it your number one concern?  I want to know with tonight‘s text survey, is terrorism the number one concern for you in 2010? 

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

Now, the request has come out from the Republicans to get these folks, the Democrats who sit on the House Homeland Security Committee, to go testify and to go put pressure on Napolitano.  And she‘s got to resign, she screwed up, didn‘t say it right.

How about if we get Dick Cheney to come to Washington, D.C., and testify about everything he knows?  Are we really going to find out about the presidential daily briefing August 6, 2001? 

Hey, Dick, let anything slip through the cracks on that one? 

Joining me now is one of the Democrats being targeted by that NRCC campaign, former naval commander Congressman Eric Massa of New York.  He joins me tonight.

And you have to understand here, folks, the one thing the Republicans hate, they hate a Democrat who served successfully in the United States military.  This is one of the reasons why this gentlemen is going to be targeted by Republicans in 2010. 

Congressman, great to have you with us tonight. 

REP. ERIC MASSA (D), NEW YORK:  Good evening, Ed.

SCHULTZ:  What‘s your response—you bet, sir.  Great to have you on. 

Happy New Year.  We‘re talking security as we roll into 2010.

MASSA:  That‘s right.

SCHULTZ:  What is your response to Dick Cheney?  And what should be, in your opinion, Congressman, the proper Democratic response that every time this guy starts shooting his mouth off about security? 

MASSA:  Ed, let me get right to the point.  I don‘t want to mince any words.

I am sick and tired of the former vice president of the United States taking shots not only at this administration for problems that he was largely and personal responsible for, but by an extension, and those of us who served in the military and bring that experience, having everyone believe that, somehow, one political party—in his case, the Republican Party—owns the high ground on national security.  This man suffers from a horrible case of political Tourette‘s, and it‘s about time that we stand up and kick right back because I‘m sick and tired of him kicking us in our shins. 

We need to grow a spine and stand up and show America, exactly who did what?  Now, your predecessor in the previous half-hour said no Democrat has actually taken this on and highlighted the fact that it was Dick Cheney, personally responsible for the release of the masterminds of the Christmas airline terror plot who went to Yemen and actually made the explosives—and trust me, not just one set of explosives—that were given to this 23-year-old terrorist that posed a threat to this airliner. 

And let me also remind people, it‘s people like Senator Jim DeMint who is personally responsible for placing you, the traveling American public, at risk, because he has refused individually placing a hold on the nominee of the director of the Transportation Security Agency, the TSA, that branch of our government which is primarily responsible for the security of the traveling American public.  People like Jim DeMint and people like Dick Cheney need to go away so we can solve the problems they‘ve created. 

SCHULTZ:  Congressman, you speak in truth to power in all of this.  We all, as Americans, have got to do more.  The due diligence of safety is never going to end.  We all realize we‘re living in a different age.

But I know that there‘s a lot of liberals and progressives across this country that are upset that Democrats don‘t talk the way you just spoke on this program, get aggressive and get after it, and put the Republicans in their place.  There are Democrats who are in Afghanistan right now.  There are Democrats who are in Iraq right now.  They have died for this country.  Dick Cheney had five deferments. 

What do we have to do to get the Democrats to be aggressive on security?  We got hit on their watch.  They were told that bin Laden was going to do this and they sat on their fat ass on vacation and did nothing about it.

That‘s my resolution.  Every time Cheney opens his mouth, this program is going to be dedicated in 2010 to kicking it right back at him.  He‘s a coward. 

In fact, Iowa Senator Tom Harkin said on my radio show that Dick Cheney is a coward.  And I don‘t think that it lowers the bar at all for the Democrats to come out and get after it and call it like it is. 

How do you feel about that?  What would be the political downside to that? 

MASSA:  Well, none.  Telling the truth—there‘s never a political downside to telling the truth. 

And by the way, I‘ve probably got to tell you what my parents tell me. 

Take a deep breath, we‘ve got a long 2010 ahead of us.

We are trying to solve tremendous problems that largely have been given to us.  You know, President Obama came out after 72 hours.  By the way, it took President Bush seven days to respond to the shoe bomber.

So, President Obama took some time to gather facts.  He came out and he said, as I said the day before him, we had a systemic failure.

He spoke truth to power.  He basically corrected Secretary Napolitano. 

And that wasn‘t good enough for former Vice President Dick Cheney.

It makes no difference what we do.  This man suffers from political diarrhea of the mouth.  And unless we stand up and call it as it is, he‘s going to keep on getting away with it. 

But let me change the paradigm.  This is not about Democrats and it‘s not about Republicans.  It‘s about Americans. 

This is not a political problem.  It‘s a national security issue.  And for the Republicans to come out swinging and make this a political issue is the height of absolute arrogance and the depth of incompetence.  And it‘s about time we stand up and push back on him. 

That‘s why I‘m the most targeted member of Congress, because I‘ll stand up and take it.  I don‘t want the president being diverted from his mission on this, having to deal with Dick Cheney.  I want Dick Cheney debate me, anywhere, anytime, anyhow.  And let‘s see how he stands up to the truth. 

SCHULTZ:  Well, he won‘t go on any other network but Fox.  We all know that.

MASSA:  Of course.  Then Ed, here‘s a proposition—I‘ll go on Fox and I‘ll debate Dick Cheney on his home territory, because he‘s standing on quicksand on this issue. 

SCHULTZ:  I‘d love to have both of you on.  Of course, Cheney won‘t come on this program, for sure.  And his daughter has dodged numerous times on this program.  They go where they‘re going to be safe, in my opinion. 

Congressman, you‘re a hero.  Let‘s have a great 2010.  Keep telling it like it is.  I appreciate your time tonight. 

MASSA:  Ed, the real heroes are out there trying to keep us safe.  God bless you.  Good health to you.  Have a great 2010.  See you on the rebound. 

SCHULTZ:  We will do that, my friend. 

Now, there‘s a guy in Congress, right there, Congressman Massa, who you can trust, who tells it like it is, that cares about this country.  It‘s not left, right, blue, green, center, whatever.  It‘s about the right thing to do.  We need more people in the Congress like that gentleman right there, military experience who will get right after it. 

Joining me now for more on this is Roy Sekoff, who‘s the founding editor of “The Huffington Post.”

And I think we all know that the lefty blogosphere in this country is going to have a huge role in 2010.

Roy, how should we respond as citizens when we see the right-wingers in this country coming out and politicizing safety, politicizing all the garbage that we‘ve seen in the last week?  What do you think, Roy?

ROY SEKOFF, FOUNDING EDITOR, “THE HUFFINGTON POST”:  Ed, we just got a lesson in it from the congressman.  That‘s how we‘ve got to hit back.  It was perfectly stated. 

Listen, you know, getting lectured on terrorism by Dick Cheney is like getting lectured on parenting by Jon and Kate or fidelity by Tiger Woods.  I mean, the man has absolutely no credibility on the issue, and we‘ve got to hit it and we‘ve got to make the facts known, as you said, that the two guys who were released who went back to Yemen and made the bombs, they were released by Cheney. 

And, you know, this is the outrageous thing.  You know, we‘ve just got to prove, using facts, not over-emotion, that we remained less safe by Bush and Cheney, and Obama has actually been very effective, because he didn‘t take his eye off the ball like they did and make all the focus on Iraq. 

He‘s focusing on al Qaeda.  He‘s doing it with drone attacks in Pakistan.  We killed the guy in Kenya.  He got the main guy from the Taliban.  He‘s being very effective in this way. 

SCHULTZ:  Let me ask you, Roy, do you think that the White House should talk about Janet Napolitano‘s first comment and then a follow-up comment on about how this whole thing was handled?

Let‘s play it and get your response to it.  Here it is. 

(BEGIN VIDEO CLIP)

JANET NAPOLITANO, HOMELAND SECURITY SECRETARY:  One thing I‘d like to point out is that the system worked.  Everybody played an important role here.  The passenger and crew of the flight took appropriate action. 

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

NAPOLITANO:  Our system did not work in this instance.  No one is happy or satisfied with that.  An extensive review is under way. 

(END VIDEO CLIP)

SCHULTZ:  Now Roy, the point in all of this is that any time there‘s a secretary of any department in the administration that speaks and then turns the corner and goes in a different direction, obviously there‘s going to be room for criticism. 

Do you think that she should come up and testify?  Has it gotten to that point?  And do you think that maybe she may not be the right person for the job?  What do you think? 

SEKOFF:  No, I think it‘s a quick mea culpa and you say, look, I‘ve got to take a remedial PR course.  You know, I‘ve got to have Think Before You Speak 101.  And that was clearly a bad mistake on her part. 

But what Obama did was the right thing.  He came out and he said, look, this is a systemic failure.  And I think it‘s a big mistake if we try to point the finger at the secretary alone. 

I mean, if we want to point fingers, as the congressman said, Jim DeMint is a perfect person who—think about that, Ed.  He‘s blocking the person to be the new head of the TSA, a guy who was an FBI agent.  And you know why?  Because he might want to unionize the TSA workers.

Think about that, Ed.  Because the workers might want to get together and band together and get better services for themselves and better benefits.  That‘s why we don‘t have somebody at the head of the TSA right now.  And that‘s why when your son got on the plane and when I‘m going to get on the plane on Friday, we‘re at a little bit more risk than we might be otherwise.

SCHULTZ:  Yes, no doubt.  Roy, great to have you on.  Have a great New Year.  Thanks for joining us.  And we‘ll do it again, my friend.  Thanks so much. 

SEKOFF:  Happy New Year, Ed.  Happy New Year.

SCHULTZ:  You bet.  And to you.

Coming up, when it comes to speaking the ugly truth about the insurance industry, no one has shown more guts or been more forthright about the money and power when it comes to this industry than the former Cigna executive himself.  Wendell Potter is going to join me in just a moment. 

Plus, Republican fear monger Pete Hoekstra is raising money and scaring folks?  The chairman of the DCCC, Congressman Chris Van Hollen, is going to deliver the counter-punch on all of that at the bottom of the hour. 

“Psycho Talk” coming up.  And, of course, “Daily Show” co-creator Lizz Winstead is here to recap the year and the current events. 

That‘s happening on THE ED SHOW.

Stay with us.  We‘re right back.  Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.

2009 has certainly been a tough year for a lot of Americans, but that‘s not the case for the health insurance companies.  Their stocks are finishing the year on a very high note.

Aetna is up from a year ago this time nine percent.  UnitedHealthcare is up 14 percent.  And WellPoint is up 35 percent.  But that‘s nothing compared to the next stock. 

The winner of the year, Cigna.  Holy smokes.

They finished up 117 percent for the year.  On this date last year, Cigna closed at $16.50 a share.  Today, almost $36 a share. 

Gosh, it must have just been great management, huh? 

For more on this, let‘s turn to a guy who‘s been telling it like it is on this program and other programs throughout this entire health care debate.  I have tremendous respect for this man, former Cigna health care executive Wendell Potter.

Mr. Potter, good to have you with us tonight. 

WENDELL POTTER, FMR. HEALTH CARE EXECUTIVE:  Thank you.

SCHULTZ:  You know, barring any major flap down the stretch here, it looks like we‘re going to get this health care reform for good or worse or whatever, and how many Americans it‘s going to cover, and there‘s some positive things.  The fact is, the insurance industry is getting a boatload of new customers. 

Give us some insight if you could, Mr. Potter.  Once this bill passes, what is 2010 going to be like for the insurance industry?  What do you think is up their sleeve?  What do you think their next move is going to be in the coming year?

POTTER:  Well, the next move will be, after some bill passes, they‘ll be looking for two things.  They‘ll be, number one, trying ton influence the way the regulations are written that will result from this law, this new law that we passed.  And then they‘ll be focusing their attention on the state legislatures, where a lot of the implementation will take place.

And wherever there‘s an opportunity for a state legislator to either -

or a legislature to either opt in or opt out, they will try to make sure that the insurance companies are protected at the state level.  So that‘s what they will be doing.  They‘ll be focusing, moving their attention away from Washington, to the state capitals, and they‘ll be looking at the regulatory writing process. 

SCHULTZ:  OK.  Now, from your professional opinion, your standpoint, why would Cigna have such higher profits than the other companies?  Do they just have more customers, did they deny more claims?  What do you make of these stocks going up the way they have and one company outdistancing the others by quite a bit? 

POTTER:  Well, I think, in particular, for Cigna‘s stock, it was trading lower than some of the other companies were at the beginning of this year.  One thing to keep in mind though is that a low point for Cigna was on March the 5th, which was the date that the president had the health care summit at the White House in which he invited representatives of the big special interests to come to the White House.

And it was at that point that investors and analysts and executives of these insurance companies got the message that the administration and Congress was going to be willing to work with these guys, give them a seat at the table.  And from that point on, the stock prices just kept climbing up and up and up all through the spring, the summer, and the fall. 

SCHULTZ:  So, they‘ve gamed this process pretty good.  And I have a feeling that when they knew that the public option was going to get knocked out, that they felt a lot more easier throughout all of this.

But as we move forward to 2010, you think their concentration is going to be on more of a state level.  Do you think that they will target and will they support those who support them more so than ever in the midst of this climate?  And will they actually target those folks even more that they think are going to be a problem for them down the road?

POTTER:  Oh, absolutely.  They‘ve been doing this for many years and they know precisely how to do it.  They will contribute a lot of campaign money to those that they like and they will provide campaign money for the opponents of those they don‘t like. 

SCHULTZ:  What can consumers do?  Mr. Potter, what can consumers do?

POTTER:  You know, consumers need to become, honestly, more educated about how the system works, about how the political system works in particular, to get more engaged in the political process.  There‘s no other way to do it except to get more actively involved in the process, otherwise the imbalance will just continue to grow.  The special interests will just continue to gain an influence.

SCHULTZ:  Mr. Potter, great to have you on.  And you‘ve been a great resource for us throughout this entire battle.

We still have a conference committee coming up, a lot more health care news along the way in the coming months.  If there‘s one thing I want in 2010, more so than ever, is people that come on this program to tell it like it is.  You‘re one of those guys.  Great to have you with us. 

POTTER:  Thank you. 

SCHULTZ:  I appreciate your time. 

POTTER:  Happy New Year. 

SCHULTZ:  You bet. 

Coming up, 2009 has been an awfully tough year for the middle class. 

And I‘ll tell you what I think the folks have to look forward to next year.

That‘s coming up in a commentary in the “Playbook.”

“Psycho Talk” as well, and Lizz Winstead in the house. 

It‘s all coming up on THE ED SHOW.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  And welcome back to THE ED SHOW.

In my “Playbook” tonight, now, you just heard in the last segment Wendell Potter explain how the world turns with the insurance industry, and nothing is going to change.  They will fight reform at every level.

The majority party will be making a severe mistake to trust the very industry that has been gouging the public for years.  Now, in the next session of Congress, more heavy lifting has got to take place.

Show us the fine print of the pre-existing conditions and how you plan on reeling in the rates.  That‘s what I think the Congress has to do.

How is government going to monitor companies who deny claims, change rates, place stipulations on policies head by policyholders without any warning whatsoever?  And by the way, what‘s the penalty going to be for these companies that play dirty pool on the American consumer?

You know, one thing that has frustrated me in recent months is that this right-wing bullet point about companies selling over state lines, it‘s an absolute joke.  That would mean that infrastructure expansion would have to take place and the companies would have to make a major investment with inside the companies.

Look, big companies, they are about cutting expenses and maximizing profits.  They don‘t care about consumers.  They‘re not about expansion.

And believe me, these lunch deals between insurance company executives, they‘re still going to exist.  Betty (ph), why don‘t you just stay out of my back yard and I‘ll stay out of yours?  Oh yes.  That‘s how they‘ll play the game. 

Now, here‘s what we have to do.  We‘ve got to pay attention. 

Just like Wendell Potter just said, we‘ve got to pay attention to the flow of the campaign contributions more so than ever before, call them out along the line in kind of the off-season, not just when the legislation is being made.  Because you‘re going to be getting your increases in the first quarter of this year. 

Here is my benchmark in all of this.  I will only support a candidate on this show who convinces me that they will be a real reformer for the middle class. 

Now, it‘s a little generic, I know.  But you know what?  If you ask the right questions, you can find out where they really stand. 

If this country has no middle class, we have no economic recovery whatsoever.  We need elected officials that understand just that—insurance reform would be a great place to start. 

This health care bill, it‘s going to pass, it‘s going to be good.  But the fact is, the fine print, we‘ve got to watch it.  And the next section of Congress, when it comes to health care reform, is going to be just as important as what we have gone through in this recession. 

Coming up, it‘s bad enough that Republicans are scaring the heck out of everybody over this attempted plane bombing, but now they‘re actually making money off it.  DCCC Chairman Congressman Chris Van Hollen is going to talk about it next, right here on THE ED SHOW.

Stay with us. 

And we‘ve got “Psycho Talk.”   It‘s all coming up.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  Thanks for watching tonight.  2009 has been, I guess you could say, one of the most hateful years in politics we‘ve seen.  It‘s all coming to a real head here in December, in the recent developments this past week.  Dick Cheney‘s been attacking every move President Obama makes.  A former vice president has never acted so vindictively. 

Then there‘s, of course, Glenn Beck tea partiers showing up with Hitler signs.  People are showing up armed at rallies.  Folks are stockpiling ammo.  For what? 

And it‘s not just private citizens.  A sitting member of Congress heckled the president during a joint session of Congress.  Remember this?  

(BEGIN VIDEO CLIP)

OBAMA:  The reforms—the reforms I‘m proposing would not apply to those who are here illegally.

REP. JOE WILSON ®, SOUTH CAROLINA:  You lie.

OBAMA:  Not true.

(END VIDEO CLIP)

SCHULTZ:  Let‘s not forget that we had a United States senator plotting the president‘s failure.

(BEGIN VIDEO CLIP)

SEN. JIM DEMINT ®, SOUTH CAROLINA:  If we‘re able to stop Obama on this, it will be his Waterloo.  It will break him. 

(END VIDEO CLIP)

SCHULTZ:  And another senator was out there telling people Democrats were going to kill old folks. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  We should not have a government program that determines you‘re going to pull the plug on grandma. 

(END VIDEO CLIP)

SCHULTZ:  As if all of that isn‘t enough hatred for one year, I don‘t know what is.  You‘ve got Republicans making money off recent attempted terror attack in Detroit.  They will stoop to anything, won‘t they? 

Michigan Congressman Pete Hoekstra is running for governor in that state.  He sent out a fund-raising letter that attacked the Obama administration for being weak-kneed liberals.  The letter concluded with this quote: “if you agree that we need a governor who will stand up to the Obama/Pelosi efforts to weaken our security, please make a most generous contribution of 25, 50 or 100, or even 250 dollars to my campaign.” 

The Democratic National Committee responded, calling that stunt, a shameful tactic, which it is.  And I don‘t see this stopping in 2010.  This is just kind of a preview of how dirty it‘s going to get.  In fact, I think it is going to get worse.  The Republicans, well, they may just make this midterm election about national security. 

Joining me now is congressman from Virginia and chair of the Democratic Congressional Campaign, Chris Van Hollen.  Congressman, great to have you with us tonight. 

REP. CHRIS VAN HOLLEN (D), MARYLAND:  Ed, great to be with you.  I‘m a proud Marylander, from the other side of the Potomac River. 

SCHULTZ:  Did I say—I thought I said Maryland. 

VAN HOLLEN:  Virginia.  That‘s all right.  We‘re on the other side of the Potomac River. 

SCHULTZ:  I‘m so sorry.  I apologize for that.  I know you‘re from Maryland.  I‘ve got a lot of things cooking through my head tonight. 

VAN HOLLEN:  I know you do.  No problem.

SCHULTZ:  -- pissed off at Cheney and the Republicans, if you know what I mean.

VAN HOLLEN:  I feel your pain.

SCHULTZ:  But a very parochial comment here I‘ve got to make off the top.  I know that you have better soft-shell crabs in Maryland than in Virginia.  So I hope that gets me back in the family quickly with you.  All right? 

VAN HOLLEN:  You‘re on.  I hope you just boosted sales for Maryland. 

Thank you, Ed. 

SCHULTZ:  All right, in 2010, it‘s going to be about security.  Is it or is it not?  What do you think? 

VAN HOLLEN:  Well, it should be about American security, generally, both our national security and our economic security.  And that‘s why we‘ve been working hard from day one to try to get the economy around. 

But, as you said in your statements, the Republicans would like to turn this into some kind of fight about a national security.  And from the Democratic perspective, we need to say, bring it on.  Because as you and others have said, when it comes to national security, you look at the record of former Vice President Dick Cheney and the fact that he had misled the country on many different times when it came to the situation in Iraq, and was responsible for diverting important resources and attention away from fighting in Afghanistan and Pakistan, and towards Iraq, and essentially cost us years in the fight against al Qaeda. 

We should have that debate.  But I think the American people would be appalled to find out the information you just provided. 

SCHULTZ:  Yeah. 

VAN HOLLEN:  It‘s not just Pete Hoekstra.  But the National Republican Campaign Committee—that‘s the House Republicans and the Senate Republicans—are also sending out fund-raising material, trying to raise money off an attempted terrorist attack against Americans.  It‘s shameful.  And the American people need to know about it. 

SCHULTZ:  Well, at the top of the show, congressman, I asked that—for 2010 that the Democrats would have a New Year‘s resolution and punch back on Dick Cheney.  And I‘ll be dog gone if I didn‘t get it fulfilled right away, within the last half hour, because the White House has put out a statement on Dick Cheney. 

I want to read it.  It‘s rather lengthy, but it‘s to the point.  They write: “to put it simply, the president is not interested in bellicose rhetoric.  He is focused on action.  Seven years of bellicose rhetoric failed to reduce the threat from al Qaeda and succeeded in dividing this country.  And it seems strangely off key now, at a time when our country is under attack, for the architect of those policies to be attacking the president.  Second, the former vice president makes a clear untrue claim that the president, who is the nation‘s commander in chief, needs to realize we are at war.  I don‘t think anyone realizes this very hard reality more than President Obama. The difference is this: President Obama doesn‘t need to beat his chest to prove it.  Unlike the last administration, we are not at war with a tactic, terrorism.  We are at war with something that is tangible, al Qaeda, and its violent extremist allies.  We will prosecute that war as long as the American people are in danger.”

Hallelujah.  This—I think the White House has smack them right back.  Is it going to be different.  Is the approach, in your opinion, congressman, in 2010 going to be different when we keep hearing all of this rhetoric from righties in this country that we‘re not safe unless we vote for them. 

VAN HOLLEN:  I think we have to go right back at them, Ed.  Look, the former vice president has had a chronic problem with truth telling.  We all remember when he continued to insist that somehow Iraq was tied up with the attacks of 9/11, which know for a fact to be untrue.  And on and on and on again. 

The fact of the matter is, it‘s good to see the White House coming out swinging.  The fact is that this administration, the Obama administration, has been on the offense against al Qaeda far more than the previous administration, whether it‘s in Afghanistan and Pakistan, or Somalia and Yemen.  After all, we lost years by diverting resources and attention away from the Afghan-Pakistan border and into Iraq. 

The American people need to be reminded of that fact.  It‘s unfortunate that we have to go about setting the record straight.  We should, as the president has said, be focusing all of our time and attention on trying to make sure that we strengthen our Homeland Security system.  It‘s very ironic that the same people who are trying to raise money off of this voted against the recent Homeland Security appropriations, which was to provide more resources to the Department of Homeland Security.  Pete Hoekstra and the Republicans voted against that.  That included funds for increased detection of explosives. 

So let‘s do what the president said.  Let‘s focus on strengthening our country.  Unfortunately, we‘ve had to spend the next 36 hours setting the record straight.  It‘s important to do, for the reasons you‘ve said, because we can‘t allow these falsehoods to sit out there on the table unanswered.

SCHULTZ:  Congressman, great to have you on.  You have a great holiday.  Appreciate your time. 

VAN HOLLEN:  Thanks. 

SCHULTZ:  And to make up for that faux pas I had, go Terrapins.  Does that work OK? 

VAN HOLLEN:  That and the Maryland crabs.  You‘re back in here, Ed. 

Thanks. 

SCHULTZ:  All right.  Thank you. 

All right, Chris Van Hollen with us tonight on THE ED SHOW.  Al Qaeda in Yemen has taken responsibility for the attempted terror attack in Detroit.  Yemen‘s foreign minister told the BBC that there are up to 300 more al Qaeda operatives just itching to follow that guy‘s example.  We have Yemenis in our custody down in Gitmo.  But the Obama administration has been planning to send some of them back to their homeland. 

Senators Joe Lieberman and John McCain and Lindsey Graham have already asked the president to cancel those plans.  That might not be a bad idea.  Who knows those detainees know and what they could come out with?

So for more on all of that, joining me now is former CIA agent Jack Rice. Jack, this is another hot potato for the Obama administration.  What is the most effective way?  Forget the politics, forget who we may or may not be rooting for, or how we want this thing to come out politically.  What is the correct thing to do?  Do we even know what the correct thing to do is at this point? 

JACK RICE, FORMER CIA AGENT:  The correct thing we need to do right now is determine if these are bad guys.  I mean that.  That‘s how simple this is.  The president‘s decision to close Guantanamo Bay was the smart move once he faced the inauguration, once he said he was going to do that.  It is the wise thing to do, Because what it does then is it basically will establish, and very clearly establish, transparently establish, that we will determine who are the good guys and who are the bad guys.  If they are bad guys, we prosecute them.  We prove to ourselves and to the world that they are bad guys.  If they are not bad guy, then we find some way to release them. 

We have released more than 600 people from Guantanamo Bay.  We have released tens of thousand of people held in both Iraq and Afghanistan.  To actually turn to one person who may be on the battlefield and say, OK, because he‘s a bad guy, we should keep all the people that we took inadvertently, by mistake, we should keep them too?  That‘s illogical.  Frankly, it‘s foolish. 

SCHULTZ:  Is Yemen as big a threat as Lieberman wants us to believe they are?  Are they any more of a threat than any other country that might be housing terrorists that want to hit us?

RICE:  No, not necessarily.  The problem is, if we decide that it‘s Yemen—what Lieberman is doing is potentially opening up Yemen as the third war.  This is the third assault after Iraq, after Afghanistan.  If we‘re really going to make this argument, fine, then you know what?  We also need to go into Somalia.  We also probably need to go into parts of Sudan. 

Are we going to start occupying those countries, too?  Let me get this right.  We have about 180,000 US troops on the ground in both Iraq and Afghanistan.  How many more should we put in Yemen?  How about Somalia?  How about Sudan?  any place else?

If we start following Lieberman when it comes to foreign policy, this is a disaster.  By the way, McCain too.

SCHULTZ:  How do you think President Obama has handled this week‘s events.  A couple days in a row he came out and took the bull by the horns.  They canceled a press conference with some secretaries.  Then he came out and decided the second day in a row to make a statement on this.  Do you think he‘s handled it well, Jack? 

RICE:  I actually think he‘s doing a fantastic job, especially with what he did yesterday.  I saw him come out clearly angry.  And, you know what, there‘s been a fundamentally failure when it comes to the intelligence community on this question of this 23 year old Nigerian.

The real problem we have is this: we find that there was a lot of specific intelligence.  I‘m not just talking about he paid cash in Ghana.  I‘m not just talking about him getting on the airplane with only a carry-on bag.  What I‘m also talking about is an NSA report that apparently they knew there was a Nigerian who may be attacking who had connections to Yemen. 

If they had taken that issue, in combination with these other things -

I mean, the problem is they weren‘t connecting the dots.  With hundreds of billions of dollars being spent, with tens of thousands of lives taken by the Americans over the last eight years, this is something we fundamentally had to learn.  And it appears that we haven‘t. 

SCHULTZ:  You know, I want to ask you from your experience of being a CIA officer.  We‘re in the culture of news in this country right now.  Hell, we can‘t do anything right.  Somebody is going to find something wrong with everything that takes place.  My dad used to say this, before he passed away.  He‘d say, you know what, if this was the kind of news coverage that was going on back in WWII, I don‘t know if we would have won it.  He‘s talking to me about that kind of stuff.

But this is at a high pitch level, like we‘ve never seen before.  What can the president do?  Because he is the focal point of all of this.  He‘s the commander in chief.  What can he do for guys like you, who used to be boots on the ground, to get the message that, damn it, we‘re going to fight these people; we‘re in this together; forget all this political rhetoric and motivate the troops?  Or is that unnecessary?  Is that a bridge too far?  What do you think?

RICE:  No, there are things that this president can do.  In fact, there‘s one thing that he did do that I thought was brilliant.  When he was in Cairo and he gave that speech to the Muslim world, what he did is he was reaching out to 1.5 billion Muslims.  The whole point is that we can‘t do this by ourselves.  You bring in those people who are just trying to live their lives and feed their families and take care of their kids—that‘s one issue.

The other issue is that you reach out to the people who are effective, who are good at what they do, who work at the NSA and the bureau and the agency and others, and say, I know what you‘re doing.  I‘m going to provide you the background and the support and the capability to do the good work that must be done.  You combine those two together.  That‘s what is effective.  And that‘s what‘s fundamentally different than what we saw from Bush and Cheney. 

SCHULTZ:  Jack, great to have you on.  Appreciate your time.  We‘ll see you again, my friend. 

SCHULTZ:  Now let‘s turn to our panel tonight, associate editor and columnist for “The Hill” A.B. Stoddard, and Republican strategist and former communications director for the Republican Congressional Committee, Karen Hanretty.  

Karen, what are your thoughts of the Republicans using terror to raise money?  Is this just the climate we live in or is that low-ball politics, in your opinion?

KAREN HANRETTY, REPUBLICAN STRATEGIST:  Protecting Americans is not partisan.  But I think there are definitely ideological differences between how Republicans and Democrats approach the war on terror.  I think there‘s nothing wrong if Republicans are out there saying, look, here is how we would do it.  Elections matter.  If you believe in our philosophy, then fund our campaigns, put more of us in office.  I think that‘s perfectly reasonable. 

SCHULTZ:  A.B. Stoddard, I just read a statement a moment ago from White House communications Dan Pfeiffer, who was obviously responding to former Vice President Dick Cheney.  This is somewhat new territory.  Do you think the White House is going to be doing more of this?  As we turn to the midterms, and, of course, with the story of terrorism and the attempt in the last week, it looks like a lot of political battle lines are being strong.  Here‘s the White House jumping in.  What do you think? 

A.B. STODDARD, “THE HILL”:  I think the White House is learning that they need to be a little more bold.  It‘s not the Obama style to be bold.  It‘s not the Obama style to be angry.  His response, which was initially, Ed, I think, disastrous before he came out yesterday and acknowledged systemic failures, really was late and it was measured.  It did not match the outrage that Americans were feeling over these severe lapses in the system, and how insecure we all felt as a result of this story. 

It took Dick Cheney to get the White House all fired up.  But I think the Democratic party has their first test here.  They have not governed in the age of terror, post-9/11.  This is their test.  They may fail it if the American public deems that the response has been inadequate in this administration.  I think what you‘re going to have to see in future days is some tough talk, Ed.  I know it‘s not Obama‘s style. 

His policies might be tough.  He may have increased drone attacks in Pakistan.  He  might have helped coordinate these air strikes in Yemen on al Qaeda strongholds there.  He might be doing what it takes, tripling down in Afghanistan.  But does he talk about it enough?  That‘s what Americans are used to.  And I think, actually, it poses a real political problem for him if he doesn‘t start talking about like the Bush administration talked all those years.  

SCHULTZ:  Karen, what do you think?

HANRETTY:  Yes, here‘s the thing, though, that I think is really interesting about Obama is I think he thinks sees the rhetoric inflames people—I don‘t agree with this—but I think he thinks the rhetoric that A.B. is talking about inflames people that don‘t like us.  In other words, if he can use his strengths, which is the soaring rhetoric, a good speech, a calm, cool attitude, reaching out to the Middle East, and somehow convince them, look, we don‘t hate you; you shouldn‘t hate us.  That is not how this works.  They, being the terrorist, do hate us. 

SCHULTZ:  Got to run.  Great to have you with us tonight.  Appreciate your time. 

Coming up, I‘ll name the psycho talker of the year.  Stay tuned. 

We‘ll be right back.

(COMMERCIAL BREAK)

SCHULTZ:  And in psycho talk tonight, psycho talker of the year; how in the world do you beat this?

(BEGIN VIDEO CLIP)

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

Obama controls the message through the media he holds in his pocket.

Communist revolutionary.

March to socialism. 

System of fascism. 

A socialist communist.

Obama is apologizing to the Frenchy French for our arrogance.

President Obama, why don‘t you just set us on fire.

I‘m not a journalist.  I‘m just a guy who cares. 

I‘m turning in to a freaking televangelist. 

I‘m sorry.  I just love my country. 

(END VIDEO CLIP)

SCHULTZ:  And it gets more psycho.  A new poll shows that lot of wing nuts out there actually look up to this guy.  Two percent of the people say Glenn Beck is the man that they most admire in the world.  Beck?  Let‘s see, he‘s right up there getting two percent with the Pope.  That‘s scary stuff.  Glenn Beck and the Pope get as much respect, as one of the world‘s leading religion leaders?  How is that possible? 

There‘s a lot of other words we could use to describe Glenn Beck.  Admirable is not one of them.  From accusing our first black president, to being the biggest racist, to shedding crocodile tears of love of country—you know, that‘s really what I probably should have done when it came to the health care debate: cried more.  We‘re right back on THE ED SHOW.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  It‘s time for Club Ed with Lizz Winstead, co creator of “The Daily Show” and the brains behind “Wake Up World.”  We got a gig here in Minneapolis tomorrow night.  Looking forward to that. 

Lizz, who‘s the psycho talker of the year?  Who is your psycho talker of the year? 

LIZZ WINSTEAD, “WAKE UP WORLD”:  You‘re was pretty good, Ed.  But I have to say, after looking through stuff, it has to be Laura Ingraham when she was at that tea party rally and she was using the Holocaust analogy of, you know, first they came for me and I was not blank.  She was equating it to the wealthy, in reference to health care reform.  The Laura Ingraham bite is absolutely the most offensive thing in the world. 

SCHULTZ:  What we got?  Full body going to take place for the Dutch? 

What do you think? 

WINSTEAD:  Dud, now when you leave Amsterdam, if you‘re on a flight to the United States, you‘re going to get a full body scan.  And I think we‘re going to be heading that way in America pretty soon.  So why don‘t we go full force, replace the TSA workers with gynecologists, and have health care reform, we can have screening all at the same time.  The TSA can be OB/GYN TSA.  It‘s the only way we‘re going to get any kind of health care reform.  I say combine the two things.  It‘s a win-win. 

SCHULTZ:  Quickly, Karl Rove‘s divorce.  He‘s available.  You wouldn‘t be interested, would you? 

WINSTEAD:  Well, it‘s his second divorce, Ed.  And it‘s hard to be in a relationship with Karl Rove, because I‘m sure his wives said, there‘s just too many people in this marriage.  We can‘t have you and Satan in this house every night at the same time. 

SCHULTZ:  Liz, we‘ll see you tomorrow night. 

WINSTEAD:  You will.

SCHULTZ:  Is terrorism your number one concern in 2010?  Nine percent of you say yes; 91 percent of you say no.

That‘s THE ED SHOW.  Chris Matthews and “HARDBALL” is next right here. 

Have a happy New Year.  We‘ll see you Monday night from New York.

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

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