updated 1/12/2010 11:00:04 AM ET 2010-01-12T16:00:04

Guests: James Clyburn, Al Sharpton, Jack Rice, Michael Eric Dyson, Larry

Harris, Stephanie Miller, Michael Medved, Joe Courtney, Wendell Potter, Ron

Christie

ED SCHULTZ, HOST:  Good evening, Americans, and welcome to THE ED SHOW tonight from New York.

These stories are on “My Hot Buttons” tonight.

Harry Reid is hitting back at critics who want him to resign over racial comments he made about President Obama back during the campaign in 2008.  I‘ll ask Majority Whip Jim Clyburn and the Reverend Al Sharpton if Reid can hang in there, politically as well.  That‘s coming up in just a moment.

Big labor wants Democrats to remember just who put them in office.  Labor leaders went to the White House late this afternoon to tell President Obama they don‘t like this flip-flop, this whole thing that‘s going on right now when it comes to the taxing of health care benefits.  OK? 

And also tonight, we‘re going to be—remember when the Republicans say that the Democrats won‘t keep you safe?  Well, John McCain says Sarah Palin, who, of course, was a heartbeat away from the presidency if they had won, even though she didn‘t understand the difference between North and South Korea, I‘ll show you the shocking interview with McCain‘s former campaign manager, plus my thoughts on Palin‘s new gig across the street, coming up in just a bit. 

But first, we want to talk about Harry Reid tonight. 

Democrats are doing what they need to do at this hour for the good of the country.  They are circling the wagons around Harry Reid.

The Democratic majority leader is under fire for comments he made during the 2008 campaign about Barack Obama‘s race.  Now, the whole deal in this is that we‘ve got a lot of sensitive people out there.

What Harry Reid said was wrong, but the reaction from the right wing is even worse.  “He was wowed,” in the book, of course, that has been coming out, “Game Change.”  “He was wowed by Obama‘s oratorical gifts and believed that the country was ready to embrace a black presidential candidate, especially one such as Obama.”  Reid went on to say, “A ‘light-skinned African-American with no Negro dialect, unless he wanted to have one,‘ as he later put it privately.”

That‘s an excerpt from “Game Change.”

Now, the response to this, as it always is by the right wing, is to attack.  First of all, they don‘t like Obama.  They don‘t want him to succeed.  And they want friction in the Democratic camp.

So here‘s a guy who‘s had all the problems in the world, Michael Steel.  He, all of a sudden, is an expert on exactly what people ought to do.  Here it is. 

(BEGIN VIDEO CLIP)

MICHAEL STEELE, RNC CHAIRMAN:  There has to be a consequence here if the standard is the one that was set in 2002 with Trent Lott. 

DAVID GREGORY, NBC NEWS:  Is the consequence that Senator Reid should step down as majority leader? 

STEELE:  I believe it is.  Well, from my perspective, whether he steps down today or I retire him in November, either way, he will not be the leader in 2011. 

(END VIDEO CLIP)

SCHULTZ:  We‘ve got all kind of predictions out there, don‘t we? 

Here‘s the bottom line.  The Republicans are in total disarray.  They‘re going to jump on anything they possibly can to drive a stake between the Democrats at a very critical time in this country‘s history. 

We have got to get some kind of health care bill done.  We‘ve got to address the energy issues.  We also have to make sure that we get it right on national security. 

The Republicans, throughout all of this, have offered absolutely nothing.  And now they think that if they can get to Harry Reid, if they can show that the leadership of the Democratic Party is weak, they might be able to make some inroads.  That‘s what this is all about. 

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

Tonight‘s tech survey is: Do you think Harry Reid‘s remark about Barack Obama was racist?  Plain and simple.

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

Joining me now is South Carolina Congressman Jim Clyburn, who is the House majority whip, the highest ranking African-American in Congress. 

Congressman, there‘s a racial element to this, obviously, but there is also a very strong political element to all of this.

What do you think the Republicans are up to?  Are they just looking for any opening they possibly can get, or do you think that they are really concerned about racial insensitivity? 

REP. JAMES CLYBURN (D), SOUTH CAROLINA:  You‘re absolutely right about this. 

First of all, let me put in my vote—tap down “A” for me.  When it comes to this man‘s—that is, Senator Reid‘s record—with the NCAAP, as far as the question you put out tonight, put down “B” for me, absolutely not.  There‘s nothing racial about this. 

I would ask all of your listeners to take a look at Title VII of the 1964 Civil Rights Act.

Title VII prohibits discrimination in employment on the basis of race and color.  Title VII recognizes that we do sometimes have treatment in this country based upon skin color.  Everybody knows that. 

And I don‘t know why people are making such a fuss about this.  What is the big fuss about the word “Negro”? 

I support the United Negro College Fund.  I support the National Council of Negro Women.

We still use those two terms because they have been a part of our history for a long time.  And so I don‘t know what all of this fuss is about. 

Harry Reid is one of the most standup guys I have ever met in my life.  You look at his record, he has a record that I think all of us in the African-American community can be proud of and can support.  And this has absolutely nothing to do with what may have happened in 2003 as with regards to Trent Lott.

Now, I want everybody to look back then.  I made statements back then about Trent Lott when I was vice chair of the Democratic Caucus, and I said then what Trent Lott said was not deserving of his resignation.  I said it then and I still believe that. 

SCHULTZ:  Well, Congressman, there was a difference then.  The White House actually wanted Trent Lott out, so the Republicans were piling on as much as anybody else.  I think that needs to be pointed out. 

CLYBURN:  Absolutely.  That‘s the point I wanted to make. 

Not only did the White House want him out, but Senator Frist wanted his job.  They had been fighting over that job for two or three weeks before the statement was ever made.  So his statement had nothing to do with his resignation. 

It was the fact that the knives were drawn and we made this statement.  They sharpened up their knives and they cut his legs out from under him, and that‘s why Trent Lott resigned. 

It had nothing to do with the statement.  The statement itself, though it played into some other things about our history, the States‘ Rights Party, Strom Thurmond‘s candidacy in 1948, all of that may—he may have played into it.  But Trent Lott making a statement did not cause his resignation, no Democrat called for him to resign.  It was his Republicans that wanted him out of there so Frisk could have the job. 

SCHULTZ:  And Congressman, are you offended that this story has been play so hard by the media?  The 24-hour news cycle has been all over this, it‘s my lead story tonight, it‘s what people are talking about.  Race is a hot issue in this country with the first African-American president, the first black American president.

And you know—you mentioned Harry Reid‘s record, but is this the way it‘s going to be every time somebody makes some kind of a comment?  Of course, we‘re also in the culture now, nobody can apologize anymore.  We never apologize enough.

Harry Reid couldn‘t have been any more gracious about this.  In fact, let‘s play this piece of tape.  This is Harry Reid today speaking more on the issue. 

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER:  I am very proud of the fact I can still remember the meeting that took place in my office with Senator Barack Obama, telling him that he‘ll be elected president.  I‘ve apologized to the president.  I‘ve apologized to everyone that I could have used a better choice of words, and I‘ll continue to do my work for the African-American community.

(END VIDEO CLIP)

SCHULTZ:  And finally, Congressman, does that work for you, what Harry Reid said?  And this is just going to be a bump in the road and the Democrats will be able to move on as they have been?

CLYBURN:  I appreciate Harry Reid‘s words.  But once again, I will say, as a son of a fundamentalist, born and raised in the process, I learned very early, it is not their words that we ought to be cognizant of, it‘s their deeds. 

SCHULTZ:  Their actions.  Yes.

CLYBURN:  And when I look at his deeds, Harry Reid‘s deeds, he doesn‘t have to speak words to me.  His work speaks for him. 

SCHULTZ:  Congressman, great to have you with us tonight.  I appreciate your time.  Thanks so much. 

Joining me now is Reverend Al Sharpton.  He‘s the president of the National Action Network. 

Reverend, good to have you on tonight.  Thanks for your time. 

REV. AL SHARPTON, PRESIDENT, NATIONAL ACTION NETWORK:  Thank you.

SCHULTZ:  The congressman made a very interesting point.  The word “Negro” years ago was a respected word.  It was one that was not offensive. 

What‘s changed?  Is that a word that we can‘t use, and does that signal that there‘s something wrong in the climate and vernacular, being used where there could be an offensive remark? 

What do you think? 

SHARPTON:  Well, I think that a lot of people today do not use the word in the African-American community.  I think that when Senator Reid called me on Saturday, as he did Congressman Clyburn, I said that I had discomfort with the term “Negro dialect.”  But whether it reaches to the level that the right wing has now brought it, even with this discomfort, it doesn‘t reach near the level they‘re talking about. 

What I‘m outraged about, Ed, is for them to try to compare—and you just played Michael Steele saying that—that they are trying to compare Trent Lott saying that, I voted for Strom Thurmond, who had left the party in order to run on another ticket that supported apartheid in this country.  That‘s really what it was, they supported segregation.  The only reason he left the party was they were fighting the party over integration.

How you compare saying, I supported apartheid in America, I think that it would have been better had he won for president, or a man saying some things that he could have chosen to say better is an insult.  And I think it will backfire on the right wing. 

A lot of people that on Saturday night, like me, that were uncomfortable with what Senator Reid said, that we know his record and said, well, he‘s earned the benefit of the doubt, are outright outraged now in what they‘re trying to do.  And I think it will energize some support for Senator Reid, even in Nevada. 

SCHULTZ:  This book that is now out, Reverend Sharpton, “Game Change,” has gotten some pretty electric comments in it, different things about the campaign that took place in 2008. 

One of them revolves around Bill Clinton and after the Iowa caucus. 

The day after Iowa, they write, “Clinton phoned Ted Kennedy and pressed for

an endorsement making the case for his wife recounting the conversations

later to a friend.  Teddy fumed that Clinton had said, ‘A few years ago,

this guy would have been getting us coffee.‘”

I think we have to take this and match this up with the story that he

after the South Carolina primary, where Bill Clinton made a comment about Jesse Jackson.  What do you make of this?

SHARPTON:  You know, this is very disturbing.  I have not heard whether President Clinton has said he did say this or not.  I‘ve not talked to him as I did Reid.  But this is a much more disturbing comment, if it is true, than what Senator Reid has said.

And the fact that the right wing is not jumping on that shows this has nothing do with racism.  They‘re not fighting racism or bigotry.  They‘re fighting to try to change the power equation so they can stop health care, so they can stop job creation. 

If they were about race, why aren‘t they upset about the Clinton statement or the Blagojevich statement in the book?  They are not trying to fight race.  They are trying to turn around the political landscape in Washington by misusing the grievances of people that have always had to fight bigotry. 

SCHULTZ:  Al Sharpton, always a pleasure.  Thank you, Reverend. 

Appreciate your time tonight. 

SHARPTON:  Thank you.  Thank you.

SCHULTZ:  Coming up, Cheney Jr. is twisting the facts again.  She launched a hypocritical ad attacking the president on national security.  Former CIA officer Jack Rice will call her out on that in just a moment. 

And big labor just gave President Obama an earful for leaving working men and women out in the dust when it comes to health care.  Taxing benefits, that‘s coming up in the “Playbook.”

All that, plus, a “Psycho Talk” tribute to the new media employee. 

And, of course, a former “Bushy” is going to be on the hot seat. 

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

(COMMERCIAL BREAK)

SCHULTZ:  And welcome back to THE ED SHOW tonight.  Thanks for watching. 

The Cheney father-daughter attack squad is out in full force again slamming President Obama‘s response to the attempted Christmas Day plane bombing.  Dick Cheney kicked things off last week with a statement accusing President Obama of making us less safe as a country. 

Now, Liz Cheney, following up, hammering the message home with an attack ad put together by her organization, Keep America Safe.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  But what already is apparent is that there was a mix of human and systemic failures that contributed to this potential catastrophic breach of security. 

NARRATOR:  How long did it take you to realize that the system failed? 

(END VIDEO CLIP)

SCHULTZ:  Well, let‘s me bring informer CIA officer Jack Rice.  He joins us tonight. 

Jack, the politics of terror, the politics of security, apparently this is going to be a big theme in 2010.

You, as a former CIA officer—and I know you still have connections inside the agency—how is this playing with the people who are tasked with the job of making sure we are safe?

JACK RICE, FMR. CIA OFFICER:  Let‘s face it, facts matter.  And obviously they don‘t matter to the Cheneys, they don‘t matter to the GOP right now.  But facts matter in this case.

The president absolutely addressed this.  His secretary of homeland security addressed this.  His spokesperson addressed this.  And of course it ignores a whole series of other things, including, if we go back to a comparable case of Richard Reid, where President Bush decided not to mention this at all for more than six days. 

But there‘s really a broader question here, Ed, that I think we have to talk about.  It‘s that what‘s really is going on, I think, is that the GOP is desperate to try to take back this national security as their own.  But it‘s going to be a very difficult thing for them to do, ,because what they have to overcome is the reality that they invaded at least Iraq when they didn‘t need to.  They really started the morass in Afghanistan.  And they have to deal with that in 2010. 

So that‘s part of what is going on with the neocons. 

SCHULTZ:  Politically, it seems like a lot of liberals in this country are going to push back on the Cheneys any chance they possibly get. 

This is Liz Cheney avoiding the question about Bush‘s response on ABC‘s “This Week” yesterday. 

(BEGIN VIDEO CLIP)

GEORGE STEPANOPOULOS, “THIS WEEK”:  As many Democrats and others have pointed out, President Bush waited I think six days before doing much about Richard Reid, the shoe bomber. 

LIZ CHENEY, DICK CHENEY‘S DAUGHTER:  Well, I think that you‘ve got to go back here and look at the way that this president has dealt with terror since he‘s been in office.  And the point of that ad was this notion that you cannot win a war if you‘re treating it as sort of an inconvenient sidelight.

(END VIDEO CLIP)

SCHULTZ:  Outside of a political activist, what security qualifications does she have? 

RICE:  You know, I‘ve been wondering that very same thing, Ed.  I keep thinking about how it is that all of the Sunday shows bring this woman on.  And based upon what?  She“ the lineage of the “Shooter”?  I mean, really, I mean it.  I‘m still trying to understand what it is that she has that she brings to the table here.

But sadly, we‘re dealing with two wars right now, we‘re ramping up a third in Yemen.  We‘re dealing with things going on in other parts of the world.  And her argument is to use false facts and then make arguments that actually don‘t even hang together? 

I mean, that‘s the best that the GOP has?  It‘s a very, very strange thing right now. 

SCHULTZ:  Yes.

Jack, do you think that President Obama and the Obama administration should be concerned about what kind of contacts or what kinds of associations that Dick Cheney still has with people inside the CIA?  I mean, if he‘s got some loyalists over there at the CIA, personally, I think they ought to be fired, because if there‘s one thing that Dick Cheney and his daughter are right now, is disloyal to the security of this country.  And it would seem to me that the president should be pretty concerned about just what kind of associations he has with inside the agency right now. 

Your thoughts on that? 

RICE:  I think the most important thing is that those in the agency, in the intelligence community in general, that they don‘t have an agenda.  If they are driving this issue based upon some philosophical belief, left or right, frankly, then we have a serious problem.  Their job is...

(CROSSTALK)

SCHULTZ:  But is Dick Cheney making this stuff up, or has he got some inside “Deep Throat” that‘s telling him, man, we‘re really screwed up over here, we‘re not as safe as we were when you guys were around, this thing is really screwed up?  I mean, I think the American people want to know who Dick Cheney‘s associations are inside the CIA and should the president be concerned about it. 

RICE:  Well, I would always concerned if Dick Cheney is driving this. 

We have seen this in the past.

The president and the vice president have the ability to impact what happens inside of the agency itself.  If Dick Cheney is still pulling those strings, then the American people should find out and not just stop it, but figure out what‘s going on and how it‘s changing policy, how it‘s changing analysis, how it‘s changing acquisition of information.  If that‘s still happening, this is a bigger disaster than we are already facing now. 

SCHULTZ:  I just find them to be very, very curious.  I mean, I don‘t know what mission that family is on. 

Cheney has been on record saying that he has no political aspirations. 

Who knows where she wants to go. 

I will say that she is more qualified than Sarah Palin just because I think she‘s probably got more brains.  But, I mean, I‘m just...

RICE:  Maybe she knows where Russia is. 

SCHULTZ:  Yes, maybe so. 

Jack, always a pleasure.  Good to have you on.  Thanks for your take tonight. 

RICE:  Thank you, Ed.

SCHULTZ:  Coming up, McCain/Palin campaign insiders, well, they have finally validated a lot, haven‘t they?  They have finally spilled the beans about Caribou Barbie.  Let‘s just say her tendency to go rogue was the least of their problems. 

A very special “Psycho Talk” tribute when we come back on THE ED SHOW.

Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  And tonight, well, we have a moment of “Psycho Talk” validation, confirmation from deep inside the gut of the McCain campaign that Sarah Palin truly belongs right here just about every night.

McCain‘s former campaign manager, Steve Schmidt, has revealed that they knew from the beginning that making Palin a viable candidate was an uphill battle. 

(BEGIN VIDEO CLIP)

STEVE SCHMIDT, FORMER CAMPAIGN MANAGER FOR JOHN MCCAIN:  In the immediate aftermath of her selection, it was clear to us that we had a lot of work to do. 

ANDERSON COOPER, CNN:  What sort of information did she not know?

SCHMIDT:  A broad scale of national security issues.

(END VIDEO CLIP)

SCHULTZ:  John Heilemann, one of the authors of the new book about the 2008 campaign, was more specific.

(BEGIN VIDEO CLIP)

JOHN HEILEMANN, CO-AUTHOR, “GAME CHANGE”:  Her foreign policy tutors are literally taking her through, this is World War I, this is World War II, this is the Korean War.  A week later after the convention was over, she still didn‘t really understand why there was a North Korea and a South Korea.

(END VIDEO CLIP)

SCHULTZ:  Wow.

Understandably, the guy in charge of prepping Palin for the vice presidential debate was very concerned.

(BEGIN VIDEO CLIP)

SCHMIDT:  He told us that the debate was going to be a debacle of historic and epic proportions.

(END VIDEO CLIP)

SCHULTZ:  But the fact that Palin knew less about foreign policy than the average middle schooler wasn‘t even the biggest problem.  No, no, no.

It turns out she couldn‘t even say Biden‘s name properly.  You know, the guy that she was going to be debating.  She kept saying, “O‘Biden.”  So the campaign figured out a way to avoid her having to say that very tricky name at all. 

(BEGIN VIDEO CLIP)

SCHMIDT:  It was really multiple people, and I wasn‘t one of them, who

all said at the same time, “Just say, ‘Can I call you Joe?‘”

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SARAH PALIN ®, FMR. ALASKAN GOVERNOR:  Nice to meet you.  Hey, can I call you “Joe”? 

(END VIDEO CLIP)

SCHULTZ:  Doggone it, those Republicans tactics, they work every time, don‘t they?

Unfortunately, when you‘re dealing with a maverick like Palin, you can‘t expect her to stick to that plan all night.

(BEGIN VIDEO CLIP)

PALIN:  Barack Obama and Senator O‘Biden, you said no to everything...

(END VIDEO CLIP)

SCHULTZ:  Well, there you have it.

With all that working against her, why didn‘t John McCain put his foot down and just cut Palin loose?

(BEGIN VIDEO CLIP)

SCHMIDT:  We needed to do something bold to try to win the race.

(END VIDEO CLIP)

SCHULTZ:  That‘s right, win at all costs.

What does that say about John McCain‘s leadership?  His motto, let‘s see, what was it?  Oh, yes, “Country first.”

But he didn‘t have the guts to get rid of the person his own campaign knew wouldn‘t be good enough for the country. 

One more thing.  We found out today that Palin just signed on as a contributor to Fox News, which means we‘ll probably be seeing a lot more of her right here in “Psycho Talk.” 

Coming up, Senate Majority Leader Harry Reid is taking fire from Republicans, but his troubles only start in Washington.  It‘s not looking real good that he‘ll survive the fight out West, in his own back yard.

We‘ll cut to the chase in just a moment.

And Michael Steele sure is one to talk, isn‘t he?  He‘s calling for heads to roll.

Hey, Michael, guard your own back yard, will you, guy?  I think you‘ve got your own problems.

We‘ve got a former Bush/Cheney aid who‘s going to defend him and go head to head with me in the hot seat, coming up.

All that, plus I‘ll give you the best reason to cheer for Brett Favre.  That‘s right, nobody likes the Cowboys after what they‘ve done to the Vikings in past years.

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

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to “THE ED SHOW.”  Thanks for watching tonight.  Of course, the big story tonight is all about Harry Reid.  He has apologized to the president of the United States.  The president has accepted his apology.  Reid will survive this.  No Democrat, as far as we can tell, is calling for Harry Reid to resign his position as Senate Majority Leader. 

In my opinion, there is no comparison between what is happening with Reid and what happened with Trent Lott, the Republican Senate Majority leader back in 2002.  He was the minority leader at the time.  Lott publicly praised Strom Thurmond, and suggested segregation would have made the country better.  And the Bush White House wanted Lott gone. 

Joining me now is renowned author and Georgetown professor, Michael Eric Dyson.  Professor, nice to have you with us tonight. 

PROF. MICHAEL ERIC DYSON, GEORGETOWN UNIVERSITY:  Always good to be here, brother. 

SCHULTZ:  I want to put this conversation in a generational perspective.  Years ago, the term Negro was different from the way it is—it was accepted back then the way—it may not be as acceptable today. 

DYSON:  Absolutely. 

SCHULTZ:  Harry Reid is 70 years old.  Is there a generational gap here?  Is there maybe a learning curve that just isn‘t going to catch up with some senior white folks in this country? 

DYSON:  Well, there‘s no question that there is a different learning curve, if you will, from one generation to another.  Although being 70 years old, I‘m sure Senator Reid has been exposed to the fact that Negro is not au courant, that we don‘t use that term in publicly polite discourse and conversation. 

But, at the same time, of course, if he‘s 70 years old, he grew up during a time when Negro was the acceptable term to denote African American culture.  He may be out of step, so to speak, and certainly needs to be brought out of the—literally the ‘60s, back to the 2010s now, the Twenty Dime, as they are calling it.  I think he needs an update on that.

Now, the concern would be whether or not his language was a reflection of his social policy.  Thank god that the issues he‘s been supportive of have been rated 100 percent A of the NAACP, versus the kind of retrograde language that he‘s been deploying recently. 

SCHULTZ:  Now, how do you feel about Barack Obama‘s performance?  When we went down this before in somewhat similar fashion, the White House jumped all over Trent Lott.  And obviously their political motive was to get rid of him and get Bill Frist in there.  But President Obama has said apology accepted.  Let‘s move on. 

In fact, President Obama never even gave an opinion on what he thought of it, whether it was offensive or not.  He said, I accept your apology.  Let‘s get to the next page.  We got work to do.  How do you feel about that? 

DYSON:  It‘s a huge mistake.  I think the Obama White House is loathe to deal with the issue of race, Ed.  Here‘s the point: I understand them not wanting to be ghetto-ized as the black president.  I get that.  I understand that he doesn‘t want to be constricted in his conversations to issues of race. 

But I don‘t expect him as a black man to deal with this issue.  I expect him as the American president to deal with the central issue that defines American culture, which is race. 

So I think they missed an opportunity to say, look, we accept Harry Reid‘s apology.  We know he had no malicious intent in his heart.  Yet, here is why light skin versus dark skin is a problem in black America and in the broader culture.  Lighter skinned blacks were treated to better privileges because they were closer in approximating white culture.  They were more acceptable and tolerable. 

Number two, a Negro dialect, meaning that you spoke in a way that was identifiably black, made you less intelligent than a person who didn‘t speak that way.  Mr. Obama, as the recipient of those kudos, should have been gracious enough to accept the apology, but to reject the assumption about identity of black people, that they were token.

And I think this is where this White House could do us a big favor.  Don‘t let the Republicans have an upper hand in being able to address the issue of race.  And, therefore, we can put this issue to bed. 

SCHULTZ:  Professor Dyson, always a pleasure.  Great to have you with us tonight.  Thanks so much. 

Even before this dust up, Harry Reid was in trouble in Nevada.  A new round of Mason-Dixon polls show the Democratic Majority Leader losing to three—three different possible potential Republican challengers.  Former State GOP Chairwoman Susan Lowden, she beats Reid 50-40.  Former UNLV basketball star Danny Tarkanian beats Reid, 49-41.  And former Assemblywoman Sharon angle beats Reid 45 percent to 40 percent.

Joining me now is Mason Dixon‘s Larry Harris, pollster.  Mr. Harris, good to have you on.  Can Harry Reid recover from this?  In your opinion, how much of a problem is this story going to be for him in his home state? 

LARRY HARRIS, MASON DIXON POLLING:  It‘s a terrific problem for him.  We did some checking.  The last time a candidate came back from this far down this early in a race was Jesse Helms.  And that was based on his campaign that many called just flat out racist.  And he went nuclear, as they say.  He‘s got a tough nut to track. 

SCHULTZ:  OK.  Now the numbers against all three of the Republican candidates, the possibles out there, isn‘t that really damaging?  If it was one candidate—but it you‘ve got three of them, wouldn‘t that make the voters, when they see these numbers out there, saying, Harry is really in trouble.  We didn‘t know he was in this kind of trouble.  How can the campaign deny and being down and positive spin down on—behind on all three possibles?

HARRIS:  It‘s really tough.  And two of the three are not particularly well known.  One is the son of the former basketball coach at UNLV, Tarkanian.  Danny Tarkanian has run for office state-wide a couple times and not been successful.  But Harry Reid‘s not barely pulling 40 percent against these three republican candidates.   

SCHULTZ:  You mentioned Jesse Helms.  Can you put a number, if you recall, how much money he spent to turn those numbers around?  I‘m sure there might be some folks in the Democratic party saying, Harry, why don‘t you do what Chris Dodd did.  Let‘s get this health care thing done, step aside, and let‘s try somebody new.  Or poor a whole bunch of money to make sure that the majority leader doesn‘t end up like Tom Daschle.  What do you think? 

HARRIS:  It‘s going to be a ton of money.  As majority leader, he can raise that money.  But he‘s got to make the decision himself, does he want to go really hyper negative, which is probably his best shot at this risky strategy at best.  And I don‘t know that Senator Reid wants to run that type of campaign. 

SCHULTZ:  Mr. Harris, good to have you on tonight.  Thank you so much. 

Interesting polling numbers, no doubt about it.

How much friction is there between President Obama and Vice President Joe Biden?  The new book “Game Change” says that candidate Obama was furious about Biden‘s gaffes on the campaign trail, especially after Biden Said Obama would be, quote, “tested by a major international crisis in his first six months, like the young JFK was.” 

Obama‘s  reaction was, quote, “how many times is Biden going to say something stupid?” 

For more, let‘s bring in our panel tonight.  Nationally syndicated radio talk show host Stephanie Miller with us tonight, and also radio talk show host Michael Medved back with us tonight in 2010, also the author of “The Five Big Lies About American Business, Combating Smears Against the Free Market Economy.” 

Lots to talk about tonight.  We‘ll take it down the serious road first.  These numbers for Harry Reid, does this bring conversation into the Democratic arena that maybe Harry ought to just step aside and maybe get some fresh blood in there to try to save that seat.  What do you think? 

STEPHANIE MILLER, RADIO TALK SHOW HOST:  Well, Ed, I don‘t think he should step down over this.  Interesting you bring up Biden, too.  I think they have that old white man disease, where they are trying to say something complementary and it‘s just—it makes you go, oh, grandpa, no. 

My mom is an old white woman, Ed, and she used to do that thing where she whispered when she was trying to be polite.  She would say, oh, they are black.  Just meaning to be polite, not meaning to point out the difference. 

But I certainly don‘t think over this he should resign.  I think he‘ll weather this, like you said. 

SCHULTZ:  Michael Medved, just how close are Barack Obama and Vice President Biden?  How much friction do you think is really there?  They are different on Afghanistan.  We know that. 

MICHAEL MEDVED, RADIO TALK SHOW HOST:  Well, they do.  And I‘m sure that President Obama remembers that it was Vice President Biden, as Stephanie Miller says, that had that old white man‘s disease when he referred to President Obama as articulate and clean and a good looking guy, as you‘ll recall. 

By the way, as far as Harry Reid is concerned, I spent all day on the radio defending him.  I‘m wild about Harry.  I don‘t want him to do what Chris Dodd did.  As a Republican, I want him right where he is, quarterbacking health care and providing a juicy target in Nevada.  I like the odds. 

SCHULTZ:  All right.  Stephanie Miller, you can tee it up now.  Isn‘t Sarah Palin going to work for Fox News a God-send to anybody who wants to have comedy on the radio? 

MILLER:  What are they going to call it winky?  It‘s the winky moment.  What can you even say about that?  The stuff that came out in the book today, Ed—I mean, in some ways comical but in other ways terrifying.  This is the woman that John McCain tried to put a heartbeat away from the presidency.

SCHULTZ:  That‘s the point, right there, Michael Medved.  You talk about leadership, you talk about responsibility and making decisions; what in the world was John McCain thinking after they had gone through the vetting process of these upcoming debates with O‘Biden, and then allow it to get to this level?  Would it have been better off—Monday morning quarterbacking here—if McCain had made a change?

MEDVED:  No, you can‘t make a change.  George McGovern tried that with Tom Eagleton and took then took Sargent Shriver.  That‘s a terrible thing for a candidate to do because it throws his own judgment into question.

Look, I think Sarah Palin—now we see why it made sense for her to resign as governor of Alaska.  She has a great career.  She has the number one book in the country.  Her book is a huge hit.  People respond to her. 

I‘ve just been going out and doing book signing myself.  The affection for Sarah Palin by literally millions and millions of Americans is very real.  And I think that Fox News has done something very smart.  They put on somebody who connects with the American people, which is what you do, Ed, which is what Stephanie does and I do.  And I think she will be great at it. 

SCHULTZ:  OK.  Great to have you with us today.  Coming up, a top union leader just warned that the—just warned that the president of the United States, the Democrats are facing a loss of historic proportion.  Congressman Joe Courtney is on a crusade against taxing your benefits. 

He‘ll tackle this one in the playbook.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  In my playbook tonight, labor leaders are tired of getting ignored in the health care debate.  Today, they met with President Obama to voice their disagreements with the Senate bill, especially one major sticking point is the tax on high cost—whatever they are—Cadillac insurance plans.  The president supports it.  This is a flip.  Union leaders say that it‘s going to hit the middle class families pretty hard.  AFL-CIO President Richard Trumka went after the tax in a speech earlier today at the National Press Club. 

(BEGIN VIDEO CLIP)

RICHARD TRUMKA, AFL-CIO PRESIDENT:  This is a policy designed to benefit elites, in this case insurers, hospitals, pharmaceutical companies, and irresponsible employees—employers—at the expense of the broader public.  And I can assure you that the labor movement is fighting everything—with everything that we‘ve got to win health care reform that is worthy of the support of working men and working women. 

(END VIDEO CLIP)

SCHULTZ:  For more, let me bring in Congressman Joe Courtney of Connecticut, who has got 190 congressional signatures, and sending this to the speaker of the House, opposing any kind of tax on health care benefits.  Joe, good to have you on tonight. 

REP. JOE COURTNEY (D), CONNECTICUT:  Great to be here, Ed. 

SCHULTZ:  This is the battle down the stretch, is it not? 

COURTNEY:  It is.  And Richard Trumka was doing God‘s work today, putting a public spotlight on the issue, and then going to the White House and reminding the White House that this was a critical issue in 2008.  John McCain was the one who came out and supported taxing health benefits and the Obama campaign and Democrats vociferously opposed it.  It really demonstrated to the middle class that we‘re on their side.

SCHULTZ:  What do you make to the president and the shift on this?  There is clearly a flip flop on this by President Obama if he‘s going to go with taxing benefits.  And it‘s going to hit the middle class families.  Your thoughts on that.  What do you make of Obama doing—the president doing this?

COURTNEY:  There‘s no question that within the Senate, there‘s a dynamic there that is very challenging.  And to be charitable, that maybe that‘s the logic, in terms of getting a bill through that chamber first.  But there‘s no question that the House bill, which has no tax on health benefits, is on the side of the American people.  Every poll shows that.  And certainly you know what I think labor is out there talking about right now, that it will be tens of millions of Americans, not just union families, but middle class families that will be impacted by this. 

SCHULTZ:  Congress, he put it in historical perspective today in his speech at the National Press Club.  And Mr. Trumka, the head of the AFL-CIO, said this—he referred back in 1994.  He said, “we swallowed our disappointment and worked to preserve a Democratic majority in 1994 because we knew that the alternative—we knew what the alternative was.  But there was no way to dissuade enough working Americans to go to the polls when they couldn‘t tell the difference between the two parties.  Politicians who think that working people have it too good, too much health care, too much Social Security and Medicare, too much power on the job, are inviting a repeat of 1994.” 

Now if this doesn‘t signal a warning—and you consider how many boots are on the ground labor did, how much social networking they did, and how much money they raised for Democratic candidates—if this isn‘t a shot over the bow officially, at the National Press Club—I thought this was the meat of the speech today.  This is saying, hey, fellas, Democrats, we‘re not going to be there in 2010.  We‘re walking right down the road for a repeat of ‘94.  What‘s your response to this? 

COURTNEY:  I think he‘s right that there‘s a lot riding on how we strike a balance in the conference process.  And if you create a health care plan where middle class families feel like they are going backwards rather than forwards, that‘s a recipe for trouble.  We saw it when the Medicare bill was passed in 1988, and it was repealed within a year for the same reason.  And the Clinton health care plan I think really failed for that same reason. 

SCHULTZ:  And finally, congressman, I‘m told that they are working on a compromise, that they would tax the top two percent income tax, and then they would not go after taxing the health care benefits as much as they thought they would.  Would that fly with you? 

COURTNEY:  I mean, really, this is an issue that I‘ve worked on very hard over the last two or three years.  I would really like to look at any plans very closely.  We‘ve got to make sure that middle class families—

SCHULTZ:  You‘re working on a compromise?  You‘d take a compromise on that?  The unions are not going to take a compromise on this.  I mean, they told the president today, this is where—this is where it‘s at.  And you‘re opening the door a little bit. 

COURTNEY:  Well, my position was there before, frankly, even a lot of labor was, back in October on this issue, and put a big red flag up for the Speaker.  And to her credit, we passed a bill with no tax on health benefits.  That‘s still my position. 

Look it, Ed, I‘m certainly someone who is willing to look at anything that they are working on.  At the end of the day, the test has to be, does it protect the middle class. 

SCHULTZ:  Congressman, good to have you with us tonight.  Well, if it goes through, it‘s going to tax the middle class.  That is for sure.  Good to have you with us. 

COURTNEY:  OK. 

SCHULTZ:  Let me turn now to Wendell Potter, a senior fellow at the Center for Media and Democracy.  He‘s a former vice president of insurance giant Signa.  Mr. Potter, always a pleasure.

There‘s three things that the insurance industry is getting: the broker compensation rates, thanks to the two Nelson senators and Bennett from Colorado, these state level management of exchanges, and anti-trust.  Where‘s the victory here, my friend?  Tell us?

WENDELL POTTER, CENTER FOR MEDIA AND DEMOCRACY:  Where is the victory for consumers?

SCHULTZ:  Yes.

POTTER:  You have to look pretty hard to find the real victory.  But some of the new regulations on the industry is important.  What we need to be careful and mindful of are some of the ways the insurance industry will be trying to game the system.  They will be willing to give up the use of preexisting conditions.  But they will want to be using other ways that they can make up that revenue that they would lose by not—by being able to exclude people because of preexisting conditions.

SCHULTZ:  Now, Mr. Potter, state level management of exchanges; doesn‘t this put the power right in the hands of the insurance companies? 

POTTER:  It does.  Because they really control a lot at the state level, more so than at the national level.

SCHULTZ:  And if that provision stays in the final bill, and this is the framework that they are using, I don‘t know how this is going to bring down rates. 

POTTER:  It‘s hard to see how it would.  You really need to have a federal exchange.  You need to have federal oversight, more than we have now.  The regulation of insurance companies at the state level already is very spotty.  Some states do a better job than others, certainly.  No state is adequately resourced to do the regulation as necessary. 

SCHULTZ:  Mr. Potter, always a pleasure.  Great to have you on tonight. 

POTTER:  Thank you, Ed.

SCHULTZ:  Coming up, Michael Steele is calling for Harry Reid‘s head.  I‘m calling for him to cool it, will you?  Ron Christie is locked and loaded.  That‘s next on “THE ED SHOW.”

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  Harry Reid and Trent Lott, are they similar situations?  Former adviser to Vice President Cheney and Republican strategist Ron Christie on the hot seat tonight.  Tell us, Ron, do you really see a parallel between what Trent Lott went through and what Harry Reid is facing today? 

RON CHRISTIE, FORMER CHENEY ADVISER:  I do, to a certain degree.  I think when a Senate Majority Leader makes racially insensitive comments, I think they need to own up and recognize what they said was wrong and step aside.  I did not agree with one word of what Trent Lott said several years back, and I thought his stepping down was the right thing to do.  And I think, in this particular case, it would be the right thing for Senator Reid to step aside from his leadership post. 

SCHULTZ:  President Bush was very critical of Trent Lott.  He described the comment, said it was offensive and wrong.  President Obama didn‘t do that with Harry Reid.  He just said, I accept your apology, let‘s go to business. 

CHRISTIE:  Big mistake, Ed.  I think if you look at the crux of what the majority leader had to say—“he didn‘t speak with a Negro dialect”—what in the world is a Negro dialect?  That‘s racist.  And to suggest that America was ready for a light-skinned president, but does that mean, on the other side, that they weren‘t ready for a dark-skinned president? 

President Obama—and my friend Michael Eric Dyson said this a few moments ago—this would have been an opportune time for the White House to have taken those comments on directly.  They passed.  I think that was a big mistake.

SCHULTZ:  So the president is as much at fault as Harry Reid is for the way he‘s handled this?

CHRISTIE:  I think the president could have come out and been a lot more forceful.  Of course, Senator Reid made the comment, not President Obama.  President Obama had an opportunity to show leadership on this issue.  He always seems to dodge the sensitive racial issues.  He could have addressed this head on, and he decided to pass. 

SCHULTZ:  Ron, do you think—I think Harry Reid, this is really going to sink him in Nevada.  What do you think? . 

CHRISTIE:  I think you‘re right, Ed.  I think this is the final nail in his coffin.  I think that the voters—if he won‘t step down on his own, I think the voters back in Nevada will send him packing.  I think his days in office are numbered. 

SCHULTZ:  Ron, good to have you on the program tonight.  Thanks so much. 

Tonight, our text survey, I asked the viewers, “do you think Harry Reid‘s remark of Obama was racist?  Seventeen percent said yes; 83 percent watching said no. 

That‘s THE ED SHOW.  I‘m Ed Schultz.  “HARDBALL” with Chris Matthews is starting right now on the place for politics, MSNBC.  You can check out my radio website at WeGotEd.com.  We‘ll see you right here tomorrow night on THE ED SHOW.

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

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