updated 1/21/2010 10:37:06 AM ET 2010-01-21T15:37:06

Guests: Robert Gibbs, Arianna Huffington, Katrina Vanden Heuvel, A.B.

Stoddard, Todd Webster, Sam Stein, Lanny Davis

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

I‘ve kind of been sick to my stomach all day today because of the results last night.  The unthinkable happened in Massachusetts, at least from my perspective. 

Republican Scott Brown, Dick Cheney Jr., won Ted Kennedy‘s seat, surprised a lot of folks.  And today,  Harry Reid put the icing on the cake for the Republicans and announced that, hey, what do you say we just stop everything on health care until Scotty shows up?  What is going on here? 

They‘re going to let him be the 41st obstructionist.  They‘re not going to do anything until Scotty Brown shows up. 

It is amazing to me that this is happening. 

This morning, on “The Today Show,” Brown was asked why he thought he won.  Listen to what he said. 

(BEGIN VIDEO CLIP)

MEREDITH VIEIRA, “THE TODAY SHOW”:  Do you think your victory was the result of missteps by your opponent, or did you tap into something that the Democrats didn‘t get about the voters.

SEN.-ELECT SCOTT BROWN ®, MASSACHUSETTS:  Well, I didn‘t really think about what she did.  I just focused on what I did.  And that is to just talk about the issues.

You know, terror and taxes and the health care plan.

(END VIDEO CLIP)

SCHULTZ:  Oh, Scotty, you forgot torte reform.  You should have thrown that one in there.

I mean, the first thing out of this guy‘s mouth is terror?  Are we not safe? 

Scott Brown won by using the Dick Cheney strategy of fear-mongering.  Here we go again.  And it worked because people respect—people respect a very strong message and a strong position.  And I think right now when you look at the Democrats, do you really see strength? 

Senate Majority Leader Harry Reid is getting beat up big time in the polls, against everybody.  Two long-term senators, stalwarts like Chris Dodd and Byron Dorgan, they‘re retiring. 

Wait a minute.  Time out.  We‘ve got to do some change here, guys. 

Well, that‘s the way it goes.  They‘re going to move on. 

President Obama, I think, needs to get tough here, and he‘s got to solidify his base.  If you can‘t ignite your base and give a clear direction of where you‘re going to go, you‘re not going to instill any confidence in the Independent voters.  They‘re going to waver.

And Independents made a big difference in Massachusetts last night.  The fact is, they‘re not confident that this White House has a clear path for the country. 

Now, I think this is a defining moment for President Obama.  He‘s got to realize that this is about power.  It‘s about power. 

You have the majority.  Ram, change through.  It‘s not about bipartisanship and nice guys running around saying, oh, he‘s my real good friend.  No. 

The Republicans get it.  When they had the power, they went for the jugular.  But the Democrats, they just don‘t do that.  We‘re too nice. 

And I think President Obama and his political team miscalculated how serious the righties were to derail his agenda.  I think they all underestimated the power and the intent of Jim DeMint‘s Waterloo comment.

(BEGIN AUDIO CLIP)

SEN. JIM DEMINT ®, SOUTH CAROLINA:  If we‘re able to stop Obama on this, it will be his Waterloo.  It will break him and we will show that we can, along with the American people, begin to push those freedom solutions that work in every area of our society. 

(END AUDIO CLIP)

SCHULTZ:  Now, let‘s see.  That was back in July.  Then we went through the vacation and the town halls in August.  And then it was the stall of September, the obstruction of October, and the “no” in November and the destruction in December.  That‘s where we are, although everybody says we‘re just so close to a great bill. 

Did you hear that?  Republicans want to break Obama.  They‘ve made it clear from day one.

But the president was so intent on getting a bipartisan health care bill for a while, I think he was at fault for tap dancing along the Olympia Snowes of the world.  Today they didn‘t stop.

DeMint took it a step further today and basically claimed credit for Massachusetts results.  He said, “I‘m not looking for vindication, but I do believe that was a call to arms early in this race.  I was one of the first who was willing to take the president on directly, on an agenda that I thought was out of control.  So I certainly don‘t regret saying it.  If the president and the Democrats don‘t get the message from Massachusetts, it will be their Waterloo.” 

They just love that word, don‘t they?  But they are challenging to their credit. 

Mr. President, you‘ve got to wake up on this one, buddy, big time.  The Republicans are not going to work with you on anything.  You need to go to your base and get more support.  You need to reset the button.

And Independent voters will get a message, hey, this president is strong.  He wants to take us in the direction where Americans get health care.  Imagine that, health care for all Americans. 

That is just too big for the Republicans to wrap their arms around. 

It‘s all about the money with them. 

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

Tonight‘s tech survey is: In his first year—in his first year, has President Obama delivered change you can believe in? 

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

Moments ago, about an hour ago, I visited with White House Press Secretary Robert Gibbs.  And we kind of got into it.  I kicked things off by asking him about Senator DeMint‘s latest Waterloo comments. 

(BEGIN VIDEOTAPE)

SCHULTZ:  Good evening, Mr. Gibbs.  Good to have you tonight on THE ED SHOW.  I appreciate your time.

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  Happy to be here.

SCHULTZ:  You bet.

I‘d like you to address the comments from South Carolina Senator Jim DeMint today.  He referred back to his “Waterloo” comments, says he wasn‘t looking for vindication, but he does believe that he gave the call to arms to the Independent voters of Massachusetts.  And he went so far to say that, “If the president and Democrats don‘t get the message from Massachusetts, it will be their Waterloo.” 

What‘s the White House response to that? 

GIBBS:  Well, look, one of the things that happened yesterday as this election was going on in Massachusetts, health insurance stocks gained $4 billion in market capitalization as a result of yesterday‘s election.  So, understand clearly that Jim DeMint and others have positioned themselves lock, stock, and barrel, if I can use that reference, working on behalf of insurance companies to prevent people from getting the type of reforms and the type of affordable health care that they need. 

That‘s one of the arguments that we‘re going to have going forward—are you on the side of big insurance companies forbidding children from getting access to health insurance that have pre-existing conditions, or are you on the side of that family?  I think Senator DeMint and everybody is going to have to answer to the voters on that question next year. 

SCHULTZ:  So why didn‘t the Independent voters in Massachusetts get that message?  What happened? 

GIBBS:  Well, I think there‘s plenty of blame to go around for what happened yesterday in Massachusetts.  The White House will take its portion of that blame. 

I think campaigns matter.  We‘ve got to run stronger, better campaigns.  And we‘ve got to put these choices directly to the American people.

SCHULTZ:  Does the White House shoulder any responsibility for losing the seat that Ted Kennedy held for over 40 years? 

GIBBS:  I don‘t think there‘s any doubt, Ed, as I said earlier, that we bear some responsibility.  I think there are many people that do—the Coakley campaign, other Democratic organizations in this town. 

We all bear some responsibility because, as I said yesterday in the White House, the president was surprised and frustrated to be at this point because we always believed that we would win this seat.  And we didn‘t. 

SCHULTZ:  Mr. Gibbs, the White House has taken a great deal of criticism from the Democratic base for not being tough enough or strong enough on health care reform and playing into this stall game that the Republicans have enacted that started back in July, actually.  And then today, the late news was that Senator Harry Reid says that nothing else is going to be done on health care until Scott Brown, the senator from Massachusetts, is seated, when he has been advertised as the 41st vote to block health care reform. 

Does the president go along with this strategy to wait for an obstructionist to show up at the United States Senate?  Why not move forward? 

GIBBS:  Well, Ed, we‘ve got a bill that‘s passed the United States Senate.  And one of the ways that is being discussed to get health care reform, to make it a reality, is to have the House work on the Senate bill. 

But, Ed, the president agrees that the people in Massachusetts have spoken, whether we endorse that candidate or not, and health care reform legislation isn‘t going to go through the Senate until Senator-Elect Brown becomes Senator Brown.  But that doesn‘t have to stop health care reform, Ed. 

The president understands the anger and the frustration that the American people feel about the economic situation that this country is facing, that we have 10 percent unemployment, that millions of people have lost their jobs over the course of the last two years in a recession.  And even before that they felt economic insecurity. 

The president understands that anger, but that doesn‘t mean that we‘ll stop fighting for middle class families and that we‘ll stop fighting to make college more affordable to create clean energy jobs.  That‘s not the message from this election.  That‘s certainly not what the president says. 

SCHULTZ:  Does the president feel like his base is with him?  Because there‘s a lot of criticism from the left.  And even after this election, he‘s going to be closely watched on which way he goes, that there‘s a sellout to big pharma, that this deal with big insurance is nothing but a gift to the insurance industry... 

(CROSSTALK)

GIBBS:  Now, hold on, Ed.  Hold on, Ed.  Hold on, Ed.  Let‘s call a quick timeout here.  I‘ll just take a 20 second timeout. 

SCHULTZ:  OK.

GIBBS:  The insurance companies are fighting what we‘re trying to do. 

SCHULTZ:  Well...

GIBBS:  No, no, no, no, no.  Hold on.  I know it‘s THE ED SHOW, but it‘s Robert‘s time for just 20 seconds.

SCHULTZ:  Exactly.  OK.

GIBBS:  But if what happened yesterday caused insurance stocks to increase in a market cap by $4 billion, and the guy they elected wants to stop health care, how is it—I don‘t understand the math that it would make what we‘re trying to do to make pro big health insurance.  Look, Ed, I hear that as a criticism, but I know there are smart people like you, there are smart people like me all across the country that understand that‘s simply not the case.  And I think to continue to say that does a tremendous disservice for all of those who have, through blood, sweat and tears, gotten health care this close. 

Ed, let‘s not do what we‘re really good at in the Democratic Party.  Let‘s not get a big room, right—let‘s not get a big room, get in a big circle, and fight with each other.  Let‘s pass health care reform. 

Let‘s make sure that that family in Waterloo, Iowa, who can‘t get health insurance reform because their child has a pre-existing condition because a big insurance company in this country said your child can‘t get covered because we determined he has a pre-existing condition.  If we get this bill passed before the ink dries on that paper, Ed, that child in Waterloo, Iowa, will be able to get health care reform because that insurance company won‘t be able to say no.  And if you think the insurance companies are for that, let me tell you, I‘ve got a bridge I‘ll sell you for cheap. 

SCHULTZ:  Well, I‘ll tell you what, I might take you up on that offer because the left-wing base of this country that supported this president does not believe that the White House fought hard enough for a public option or for a mechanism that would give direct competition to the insurance industry.  Now, whether the stocks went up yesterday or not, the fact is...

GIBBS:  Again, Ed, and if that were the case, why are the insurance companies buying ads fighting health insurance? 

SCHULTZ:  It‘s a nice show game they‘re playing, Mr. Gibbs.

GIBBS:  Why are they doing it? 

SCHULTZ:  It‘s a nice show game they‘re playing.  The fact is...

GIBBS:  No.  Ed, you‘re a smart guy. 

SCHULTZ:  Now wait a minute.  Now let me ask the questions.  Let me ask the questions. 

GIBBS:  Somebody is going to ask you a couple of questions.  You‘re a smart guy. 

SCHULTZ:  I am a smart guy.  And I know that 40 million customers are going to be handed to the insurance industry.  Is that reform? 

GIBBS:  Well, Ed, what we‘re going to do is make sure every person is covered.  That‘s been the progressive dream. 

SCHULTZ:  That‘s a good part.  That‘s a good part of it. 

GIBBS:  But understand, Ed, we‘re going to make health insurance companies do what they don‘t want to do. 

SCHULTZ:  OK.

GIBBS:  If you think they want to give health insurance to that child who they say has a pre-existing condition...

SCHULTZ:  Well, then why is your base disgruntled, Mr. Gibbs?  Mr.

Gibbs, why is your base disgruntled?

GIBBS:  Ed, let‘s have a conversation. 

SCHULTZ:  Let‘s do it.

GIBBS:  I won‘t talk over you, you won‘t talk over me. 

SCHULTZ:  That‘s right. 

GIBBS:  Let me make my point.

SCHULTZ:  But you‘ve filibustered me twice, but that‘s OK. 

GIBBS:  OK.  Well, I don‘t want to use the term “filibuster” because, let‘s just be honest, you and I don‘t have the votes to do a filibuster now.  OK?

SCHULTZ:  That‘s true.

GIBBS:  So let‘s understand this—if you think health insurance companies want to cover that child, why do they keep saying no to covering him now?  Why will they be forced to cover him when we pass this bill? 

They don‘t like this bill, Ed.  You know they don‘t like this bill. 

SCHULTZ:  No.  I think that they do like this bill.

GIBBS:  Let‘s tell people not what they want to hear, but what they need to know, which is the truth about the fact that health care reform is this close, Ed. 

SCHULTZ:  All right. 

GIBBS:  What you wanted for 40 years and what everybody else has is that close.

SCHULTZ:  All right. 

GIBBS:  The health insurance companies don‘t like it. 

SCHULTZ:  They do like it.

GIBBS:  We‘re going to close this gap.  No they don‘t.  We‘re going to close that gap, we‘re going to cover everybody in this country, we‘re going to cut costs for millions of Americans.  And that child, right now, that has to sit on the other end of the phone, their mother has to listen to an insurance company decide the health of their child, that is never going to happen again. 

SCHULTZ:  Mr. Gibbs, OK.  I‘m out of time with you tonight.  I wish I could have asked you why there‘s no public option.  And why is your base leaving this president?  I think that that‘s something the White House needs to address. 

I really appreciate your time tonight.  And there are some...

GIBBS:  I‘m happy to come back and do this often. 

SCHULTZ:  Let‘s do it.  Well, you can do it tomorrow night if you want to.  I‘ve got time for you any time.  I appreciate your time.

GIBBS:  I will see you tomorrow night. 

SCHULTZ:  All right.  Thanks so much. 

(END VIDEOTAPE)

SCHULTZ:  All right.  I might have just hit a little too close to home there.  I look forward to tomorrow night‘s interview, because I want to know what the White House reaction is to the base that is disgruntled. 

Are they going to be able to navigate through their agenda with the base all upset? 

Coming up, Arianna Huffington believes yesterday‘s blow to the Democrats is actually a blessing in disguise.  She‘ll respond to that interview you just saw in just a moment.

And Congressman Anthony Weiner has drawn his own line in the sand on health care reform.  He‘s flat-out rejecting the Senate version and rolling the dice on Scott Brown.

All that, plus “The Beckster” has got a dandy in “Psycho Talk.”  

And Lanny Davis is in the house.  He says the lefties are going too far.  I can‘t wait to talk to him.

You‘re watching THE ED SHOW on MSNBC. 

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.

Scott Brown‘s win for the GOP—have you thought about this, Mike?  There‘s another Scotty.  There‘s another Brownie.  We‘ve got another Brownie, and this one‘s in the United States Senate. 

Look, I just can‘t get away from this story. 

He‘s got many on the left a bit shaken and questioning, hey, where does the party currently stand on a lot of issues?  But this could be a lesson learned to prevent a much bigger problem in the upcoming November elections.

Joining me now is editor-in-chief of “The Huffington Post,” Arianna Huffington.

Arianna, nice to have you on tonight.  Appreciate your time.

Holy smokes, there‘s another Brownie in the house.

Arianna, the one good thing about this, there‘s always another election.  And between now and November, it can be a political eternity.

How do you see it?  How do the Democrats recover from this? 

ARIANNA HUFFINGTON, EDITOR-IN-CHIEF, “THE HUFFINGTON POST”:  Well, Ed, that‘s why I think that it can be a blessing in disguise, because, as you said, there‘s a long time between now and November in political terms.  And the thing about the job of the president, Ed, is that you can never really prepare for it.  So, you have to learn on the job.

If the president can actually learn from what happened last night, if he‘s willing to course-correct, then it could really be an amazing transformation.  He could be the great president that we all expected him to be when there was this incredible excitement about his election and his inauguration exactly a year ago today.  But now he has to move beyond words.

I think what Robert Gibbs was telling you today was all the right words about caring for the people who are left behind, the struggling middle class families.  But words are not going to cut it right now, Ed.  It has to be action. 

He is the president.  His party is in charge of the House and the Senate.  There is an enormous amount he can actually do, as oppose to say. 

You know, you and I can talk and complain and talk about how frustrated and angry we are.  But he‘s the president.  And there‘s a whole list of things that he can do, starting with some personnel changes. 

If he really means it, if he really hears what the voters said last night about the fact that they believe that the White House and the Democrats are more on the side of Wall Street than Main Street, this is not just the base.  This is not just progressives.  This is Independents, unlikely voters and Republicans. 

If he really heard that, it means he has to replace Larry Summers.  He has to bring in next to him, day in, day out, somebody like Elizabeth Warren, the bailout watchdog head, who can actually fight for the middle class. 

SCHULTZ:  I‘ve always been a believer, Arianna, that most middle-classers are Independents.  I mean, you‘ll find more middle-classers than Independents than you will in either other party. 

So, looking at the results last night of where the Independent vote went, was this just a signature moment for the Obama White House that, hey, we‘re not connecting with the middle class and we‘d better get it in gear, which in turn might bring them to the conclusion that they have to pass health care reform? 

What do you think? 

HUFFINGTON:  Well, I hope it doesn‘t bring them to that conclusion, because the kind of bill that at the moment would become law is not the bill that Independents or, indeed, the majority of the American people want.  I mean, it‘s clear.

Over 50 percent of the American people don‘t want the Senate bill.  So what are they going to do, just have a health care bill which has all these giveaways, as you were telling Robert Gibbs, from the pharmaceutical companies and the health insurance companies, no matter what they say? 

SCHULTZ:  They don‘t want to believe that.  You know, Arianna, they don‘t want to hear that. 

The White House does not want to hear that it‘s a giveaway to the insurance industry.  He interrupted me when I was asking that question.  And they are thin-skinned about that. 

HUFFINGTON:  I know, they are.  But it‘s the truth.  And often, the truth hurts.  And that‘s why, right now, they‘ve got to be ruthlessly honest with themselves.

You know, the president really needs to take a little time to understand what happened and to course-correct.  And to stop saying, as he said today to George Stephanopoulos, that this is a communications problem. 

It‘s not a communications problem.  It‘s a substance problem.  He‘s been communicating nonstop since he became president that people do not believe that he really has their best interests at heart, in terms of what he‘s doing, not in terms of what he‘s saying.

Look, for example, that‘s what‘s happening with the banks.  Right now Citigroup, the government is a majority shareholder.  We own 20 percent of Citigroup.  He could actually break up that bank, separate commercial from investment banking, and force it to stop charges these ridiculous rates, to modify mortgages, and to do the things that will help the middle class families that are hurting right now. 

SCHULTZ:  No doubt about it.

I want you to comment on Jim DeMint‘s comment about Waterloo, the comment that was made back in July.  He responded to that today, saying that that was really a rallying cry, and that if the White House doesn‘t get it together, they‘re going to have another Waterloo in November. 

We asked our audience last night on this show if the election was a referendum on President Obama.  Sixty-five percent of the respondents said yes, it was.

But what about—I mean, is this White House going to get any Republican on board?  And why do it if it‘s always a constant giveaway? 

HUFFINGTON:  Well, you know, when Obama got elected, nobody thought that he basically meant, yes, we can, provided Olympia Snowe will come along.  You know, that‘s not the “Yes, we can” spirit.

But the great thing—the thing that makes me optimistic, Ed, despite everything, is if you read the David Plouffe‘s book on the campaign, there were moments in the campaign when they lost track of their message, and they course-corrected.  And the great thing about modern communication is that you can course-correct much faster than in the past.

So, the question is, are they going to do it?  Are they going to simply change rhetoric? 

SCHULTZ:  Yes.  Well, I want to leave you with this one survey tonight. 

Our poll question was, “Will President Obama be a successful president?”  Thirty-seven percent of the people said yes, 21 percent of the people said no, but 40 percent were not ready to make a judgment.

So, we have a long way to go.  That means that there‘s a lot of people out there that are waiting to see what this president is going to do between now and the midterm. 

Arianna Huffington, “Huffington Post.”

Great to have you with us tonight.  Thank you. 

HUFFINGTON:  Thank you, Ed. 

SCHULTZ:  Coming up, in his victory speech, Psycho Talker-Elect Scotty

Scotty Brown said something that seemed to really mortify his teenage daughters.  That lands him in the zone next. 

(COMMERCIAL BREAK)

SCHULTZ:  And in “Psycho Talk” tonight, ooh, we‘ve got a dandy, a double-header for you, starting off with the next senator of the state of Massachusetts, centerfold model Scotty Brown. 

Last night he gave us a preview of just how classless he‘s going to be as a senator.  He used part of his victory speech to solicit dates for his daughters. 

(BEGIN VIDEO CLIP)

SEN.-ELECT SCOTT BROWN ®, MASSACHUSETTS:  And as always, I rely on Gail‘s love and support and that of our two lovely daughters.  And just in case anybody who is watching throughout the country, yes, they‘re both available. 

(LAUGHTER)

BROWN:  Only kidding.  Only kidding.  Arianna (ph) definitely is not available, but Ayla is.

(END VIDEO CLIP)

SCHULTZ:  Well, even Glenn Beck thinks that was a bad idea.  He said as much on his radio show today, but “The Beckster” still made it into the zone tonight, doggone it.

While he was criticizing Brown for offering up his daughters to the men of America, he went off onto a tangent about men and women. 

(BEGIN AUDIO CLIP)

GLENN BECK, RADIO TALK SHOW HOST:  Every dad has done stupid things that you get home and your wife says, why the heck (INAUDIBLE).  You cannot figure women out.  You can‘t—you don‘t know the psychosis that is chickdom.  Guys, you can figure out food, sex, that‘s it.  We‘re simple.  Women are psychos.

(END AUDIO CLIP)

SCHULTZ:  Now, Glenn, I‘m not going to argue with you when you say you don‘t understand women.  That was clear actually when you read your journal out loud to Sarah Palin.  But using Scott Brown, just a respect for his daughters, as a jumping point for an even more sexist rant, that‘s “Psycho Talk.”

Coming up: today, the president hits the one-year mark in the White House.  A new NBC News Poll shows that Americans are losing patience with him.  In my playbook, I‘ve got some advice for how he can get back on track with the middle class.

All that—plus, Katrina Vanden Heuvel‘s take on Massachusetts and Lanny Davis is warming up for his turn in the hot seat.  He says the leftists have gone too far.

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

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW and thanks for watching tonight.

Less than 24 hours after the polls closed in Massachusetts, we‘re already seeing how Scott Brown‘s victory is affecting health care reform.  Senate Majority Leader Harry Reid sounded like a Republican today when talking about health care.  He said, quote, “We‘re not going to rush into anything.”  OK.  “The bill is not going to move forward until the Senate sits Scott Brown.”  OK.

But here‘s still a very strong possibility that House Speaker Nancy

Pelosi could try to pass the Senate version of the bill without changing it

which would mean it would go straight to the president‘s desk without another Senate vote.  But a lot of progressives really aren‘t on board with that plan right now.

           

For more on the Massachusetts election, let me bring “The Nation‘s” Katrina Vanden Heuvel tonight.

Katrina, great to have you with us.  I don‘t think we were shock by Brown‘s victory last night, but the independent votes are a concern for a lot of progressives right now.  How do you read what happened last night and what has to take place for the Democrats moving forward?

KATRINA VANDEN HEUVEL, THE NATION:  You know, elections really have a simple single explanation.  But there isn‘t any establishment anger coursing through this country, Ed, partly because the view that this White House has done more for Wall Street than hurting communities on Main Street, fueled by right winger government attacks.

I think the Democratic Party needs to stand, fight and deliver.  It can no longer be a managerial technocratic party.  I think going populist, progressive Democratic populist is smart politics, smart policy.  This White House needs to take action, action now to stand on the side of the working people in this country and to show that they are committed to creating jobs and addressing the pain in this country.

Good congressmen in a tough district in Virginia, western Virginia, Tom Perriello said something smart the other day.  He said, we‘ve got to stop worrying about protecting our jobs in Congress and start worrying about protecting American jobs.

And I think that‘s a message this White House needs to play closer attention to.  President Obama has a—you know, has a chance because elections like this are also wake-up calls.  And if had counsel for President Obama, it would be, hey, year after being knifed by this Republican Party, give up.

SCHULTZ:  That‘s a great term, by the way.

VANDEN HEUVEL:  . give up the polite post-partisanship, bipartisanship.

SCHULTZ:  Yes.

VANDEN HEUVEL:  Maybe go transpartisan, but stop with wooing these Republicans who want to create your waterloo every evening.

SCHULTZ:  Yes.

VANDEN HEUVEL:  And, you know what?  The only thing you have to fear, President Obama, is caution itself.  Stand tall.

SCHULTZ:  A lot of people on the left, the progressive movement, think that the president hasn‘t been tough enough, that after the game plan was spilled out by Jim DeMint, it‘s almost like the White House was tone deaf to all of that.  And I think that struck a nerve with Robert Gibbs tonight.  I want to know, does the White House fill their bases with them?  Because if they say yes, they‘re totally out of touch and if they say no, then it tells us that they‘re willing to make a calculated risk to try to get more Republicans on, I guess for the good of the order.  It doesn‘t make any sense to me.

I don‘t—and I think the base is really wavering with president. 

What do you think?

VANDEN HEUVEL:  Well, you know, we‘re one year into the Obama presidency.  I think exactly as we speak tonight.  The thing that strikes is, what an extra ordinary campaign he ran.  But I don‘t get it.  I am not a political strategist, but why demobilize the base and start playing inside baseball, beltway governance when you demobilize the base by doing that.

Of course, you need to the issues and the action.

SCHULTZ:  Yes.

VANDEN HEUVEL:  But he has to remobilize the base because this country

let‘s do a little bit of power structure analysis.  The history of our country is the ongoing history of the struggle between organized money and organized people.  And this White House, you know, they fail—they face a wall of money.  They played with money too much, the pharmaceutical insurance industry—moving forward, those industries have no—they don‘t have use for reform.

           

SCHULTZ:  No.

VANDEN HEUVEL:  If this president wants to go down as a historic president, a reformed president—stand with the people, trust the people.

SCHULTZ:  Well.

VANDEN HEUVEL:  Independents, Ed—I mean, middle, part of what‘s going on in this country is people are fed up with big banks, big business.  I think you ruin independents if you showed you‘re on their side.  Go into the communities and show that effective, smart, not big government.

SCHULTZ:  Yes.

VANDEN HEUVEL:  . has a role to play in improving the actual decisions of people‘s lives.

SCHULTZ:  OK.  Nancy Pelosi still a very big player in all of this.  This is what she said at the conference of mayors today in dealing with health care and what the next move is going to be.  I want your reaction.

(BEGIN VIDEO CLIP)

REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE:  Heeding the particular concerns of the voters of Massachusetts last night, we heard, we will heed, we will move forward with their considerations in mind, but we will move forward for health care.

(APPLAUSE)

(END VIDEO CLIP)

SCHULTZ:  Now, I‘m not sure really what that means, they‘re going to move forward mean they‘re going to pass the Senate bill?  Does she think that there‘s going to be some liberal Democrats that aren‘t going to make any waves?  What‘s going to happen?

VANDEN HEUVEL:  Well, I mean, Ed, here‘s the reality check again.  You know, the power structure analysis in the way our system configured.  You‘ve got to abolish the super Democratic, any Democratic filibuster, but we‘re here.

I think you pass—if you pass the Senate bill, you got to move within hours to reconciliation, this budget process.

SCHULTZ:  Yes.

VANDEN HEUVEL:  . to fix it, because that‘s one way.  It has to be fixed.  But I do think that if the Democratic Party, after a year, doesn‘t pass a bill, it is not a good sign moving forward for other reforms and actions that need to be taken.  So.

SCHULTZ:  Yes.  Katrina, great to have you with us.

VANDEN HEUVEL:  Thank you.

SCHULTZ:  I think you‘re right on that as well.  Thanks so much.

VANDEN HEUVEL:  Katrina Vanden Heuvel of “The Nation.”

Let‘s go to our panel tonight.  Democratic strategist Todd Webster is with us, and associate editor and columnist for “The Hill,” A.B. Stoddard.

A.B., let me take your temperature on this tonight.  OK.  I‘m surrendering, no public option.  Let‘s make it official here.

But this is—this is not a shot over the bow.  This is a direct hit to the Democrats.  If they lose independent voters across the country the way they did last night, we‘re going see a sea change in this country.

A.B. STODDARD, THE HILL:  Absolutely.  I think that if you can‘t win independents in Massachusetts, after these gubernatorial elections where Democrats are defeated in New Jersey and Virginia, also losing independents.  You‘re just looking at a very, very difficult year.  The economy is not going to turn around that much, Ed, and this is all those elections just few months away.  You look at those marginal districts, those swing states, and it really spells trouble for Democrats.

I think they—the national party apparatus and the White House really share the blame with Martha Coakley for losing Massachusetts, though, and the Ted Kennedy seat, because they really could have seen this coming.  Half the state is unaffiliated voters.  They knew this was—that independents were leaving the Obama coalition and they ignored it, at their peril.

SCHULTZ:  Todd Webster, you‘ve got a base that‘s grumbling a lot.  You got independent voters who were peeling off.  What‘s the next move for the White House?  I mean, how do you politically put this thing back together?  Is passing health care the correct thing to do?

TODD WEBSTER, DEMOCRATIC STRATEGIST:  Without question.  Let‘s be clear about one thing.  The independents and every voter in Massachusetts already has health care because they passed it at the state level.  So.

(CROSSTALK)

SCHULTZ:  Some polling show that they want a public option, you know.

(CROSSTALK)

SCHULTZ:  The perception is that the president and the White House didn‘t fight hard enough for that in this bill.

WEBSTER:  Well, that may well be.  But I—as I was watching returns last night and this morning, the question I was asking is, what would Tom DeLay do?  And what Tom DeLay would do if here in Nancy Pelosi or Steny Hoyer‘s shoes, with this bill on the one-yard line, it‘s not perfect, but it does expend coverage to 35 million people, it does clean up the insurance companies, force them in the competition, require them to abandon their discriminatory practices, it will cut cost over the long term, you got this bill on the one yard line.  You call it a quarterback sneak, a quarterback hold, Nancy Pelosi drives this thing over the goal line and you have a bill.  It goes to the White House desk and you move to the jobs bill.

SCHULTZ:  Well, Harry Reid says today, we‘re not going to do anything until we sit Scottie Brown in.  I mean, if that isn‘t sign of weakness, he‘s doing exactly opposite of what the Republicans would do.  Maybe they‘re afraid somebody is going to call them arrogant.

But this seems to be a benchmark of this White House, A.B., is that they just can‘t put the hammer down.  They want everybody to love ‘em and people are becoming impatient, the ones that supported them.  What do you think?

STODDARD:  I understand that, Ed.   I think that you are right, that President Obama‘s first year in office has really been shaped by his caution.  He is a common ground, middle ground, risk-averse president.  I don‘t know if he‘ll change in the years to come but that certainly defined his first year.  I understand your frustration as a progressive.

But I think that—the troublesome scenario for health care is this:

there will be no more Senate vote no matter what Harry Reid says.  There‘s not 60 votes for it.  Even if Martha Coakley was here, you couldn‘t ask those wavering Democrats in the Senate Caucus to take that vote again that they took on Christmas Eve morning.  It wouldn‘t happen.

So, the only choice is to pass that Senate bill through the House and you are looking not only at liberals there not happy about that, the conservatives as well.  I think that they don‘t have the numbers to pass that bill through.  And I agree with you, it will look like a failure to governance if they don‘t pass health care reform.

But the Democratic caucus is really up in arms over the results from last night.

SCHULTZ:  Yes.

WEBSTER:  But the rules of the House allow for a—you know, the majority to rule.  They could push this thing through.  It would be the right thing to do for the country.  It would be the right thing to do politically.

SCHULTZ:  Yes.

WEBSTER:  And it will allow the White House and the Democratic Party to move on to other big issues, like the jobs bill, like holding big banks accountable.

(CROSSTALK)

SCHULTZ:  Todd, to do all that, it‘s about power.  It‘s not about get along when they‘ve already advertised they want waterloo.  There isn‘t one Republican at this juncture after what happened last night that‘s really willing to help Barack Obama be a success as a president of the United States.

WEBSTER:  Well, and the irony..

SCHULTZ:  They‘ll go back to the Limbaugh mentality.  They want to see him fail and they‘ll think up anything they possibly can.

I got to run.  I‘m short on time.  Great to have with you us, Todd Webster and A.B. Stoddard, tonight.  Thanks so much.

Coming up: he‘s only at the end of the first quarter but the crowd isn‘t exactly going wild.  My advice for how the president can call it audible.  That‘s next in the “Playbook.”

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  It‘s not too late to let us know what you think.  One year ago today, President Obama took the oath of office and promises change.  Tonight‘s text survey question is: in his first year, has the president delivered change you can believe in?  Text A for yes and B for no to 622639.  We‘ve got the results coming up.

(COMMERCIAL BREAK)

SCHULTZ:  And in my “Playbook” tonight, we‘re one year into President Obama‘s presidency and it seems that the American folks out there losing their patience with this administration.

In the new NBC News/”Wall Street Journal” Poll, 48 percent of Americans approve of the job that President Obama is doing, compared to 60 percent this time last year.  That‘s a drop of 12 percent.  And when asked about the direction of the country and the direction it‘s headed, 34 percent now think we‘re on the right track, which is down from 41 percent in February of 2009.

For more on that, let‘s bring in Sam Stein, “Huffington Post.”

And, Sam, there‘s a couple of more numbers I want to throw out tonight.  The president‘s handling on health care is at 38 percent, and also, the congressional Republican‘s handling on health care is at 26 percent.

What do you make of these numbers?  Who‘s winning, who‘s losing, and what‘s the next move?

SAM STEIN, HUFFINGTON POST:  Well, I mean, clearly, the Obama administration is lagging a bit here.  Obviously, you don‘t want to see your numbers go down.  And if you look at enthusiasm among Democrats and those who are supportive of Obama, those are down as well.

I think the administration is in the tough position right now because they‘re really arguing a sort of a negative scenario.  They‘re saying to the American public, well, things would have been so much worse off if we haven‘t done X, Y, Z.  It‘s primarily the stimulus package.

But, you know, unemployment is still around 10 percent and they‘re not going to have any popular with that.  And health care reform, after 11 months, hasn‘t been achieved and you only get popularity when you can show to the American people that you‘d made political progress.  That‘s the argument coming from the White House.  I think there‘s actually credence to it.

SCHULTZ:  Sam, why did Scott Brown win Massachusetts last night?  And did health care have anything to do with it if everybody in Massachusetts has got an option?

STEIN:  Well, you know, that is one thing that I think has gone sort of unreported.  Everyone who voted essentially yesterday has health care.  When we look at the health care bill, we‘re talking about helping 31 million folks who don‘t have health care.

So, I don‘t know what that played in the election.  I‘m doing some reporting to find out.  You see a lot of poll numbers that suggest, on one hand, health care did play a role.  But there‘s a Republican pollster who said today that, actually, health care, it wasn‘t a referendum on health care, that it was more about anti-incumbency, anti-Washington.

I think there‘s a perception right now that the Obama administration is doing too many backroom deals.

SCHULTZ:  So—yes.

STEIN:  . and Scott Brown rode that into the sea and they got—the Obama administration has to cut its ties to Wall Street, has to adopt, you know, populist tone.

SCHULTZ:  Did this guy do a good job of masquerading?  I mean, if you listen to him.

STEIN:  Yes.

SCHULTZ:  . you watch his record, I mean, this guy is Dick Cheney all over again.

STEIN:  Well, not any—listen, there‘s a weird post-up on the “National Review” saying that this was a referendum on waterboarding, which I just find hard to believe.

But this, you know, Scott Brown was very much Dick Cheney on foreign policy, but never overtly saying that he is a Republican.  He cast himself as an independent.  He drove a truck.  You know, if you wanted to date his daughter, he was letting her to be available.  So, you know, he was very much, you know, your guy next door.  He campaigned with Doug Flutie, you know, things that people like.

But he didn‘t give you much substance.

SCHULTZ:  Yes.

STEIN:  . and certainly didn‘t tie himself to the Republican Party.

SCHULTZ:  Sam Stein, always a pleasure.  Good to have you on again. 

Thank you.

STEIN:  OK.  Thanks, Ed.

SCHULTZ:  Turning now to a final page of my “Playbook,” an update on the situation in Haiti.  An aftershock measuring of 6.0 rocked Haiti this morning.  But thankfully, no significant casualties has been reported.  Today, it was announced that the United States has issued deployment orders to 4,000 additional sailors and marines for assistance in the relief efforts.  U.S. State Department now says that 4,800 Americans are still unaccounted for at this time.

Stay tuned to MSNBC for news as this story develops.

Coming up: I‘m putting former White House special counsel Lanny Davis on the hot seat.  He‘s pointing finger again.  You better not be pointing fingers at me, Lanny.  We‘re getting into it right after this.

Stay with us, folks.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.

Scottie Brown goes to the Senate.  I‘m putting Lanny Davis on the hot seat tonight.  Lanny, a former special counsel of President Clinton and columnist for “The Hill.”

Let‘s see, tonight, we‘ve got—independents our pealing off, we‘ve got Democratic base that is disgruntled, and you‘re blaming the good lefties.  What‘s going on here, Lanny?  Good to have you on.

LANNY DAVIS, FMR. WHITE HOUSE SPECIAL COUNSEL:  Well, first of all, I always thank you for having me on.

And we agree, we both support national health care.  We both support the public option.  Where we always disagree and where I wrote in the “Wall Street Journal” I disagree with my friends on the left, is that we‘ve got to recognize that we have a by partisan health care bill that makes progress even if it‘s only incremental and that Barack Obama never campaigned on the public option.  He wasn‘t in favor of a mandatory requirement, for everyone to have insurance.  We need to let him reach out to the John McCains, to the Orrin Hatches, to the Lindsey Grahams, and especially, Olympia Snowe and Susan Collins and say, “What can we pass that you support.  Let‘s take one step down a journey of a long, long road, but we need to do incremental reform now and not give up and have nothing.”

SCHULTZ:  OK.  So, the base, and, you know, the Congressional Black Caucus is in there, the unions, the wage earners of America, a lot of middle-class folks that were counting on change.  You‘re suggesting that they just have to be patient and take what they can get.

DAVIS:  Well, put me in the category of being in the liberal base, I don‘t think there‘s an issue that you can name that I‘m not a liberal on.  But I do think.

SCHULTZ:  Well, then, why are you cutting in?

DAVIS:  Because I want.

SCHULTZ:  I mean, why do you want to just cave in on everything?

DAVIS:  Because I want something better than nothing.  If we can‘t get 100 percent of the 31 million uninsured who are suffering without health insurance, and if we can get 50 percent or 25 percent, and we can get John McCain and Lindsey Graham and thoughtful Republicans to be part of a consensus, let‘s get something pass that gets us down the road of reform.

SCHULTZ:  So, how do you motivate how do you motivate the base to come back and say, “Gosh, we really got change here”?

DAVIS:  We got to have the base, people like you and me, who care about poor people, who care about working class people who don‘t have insurance to say, we can‘t get everything this year.  The polls are against us.  The mood is against us.  This is about jobs.  We have to go back to the basics and.

SCHULTZ:  OK.

DAVIS:  . focus on jobs and get health care done incrementally.

SCHULTZ:  I agree with that, Lanny.  But how are you supposed to work with a mentality and a mindset that‘s out there with the Republicans, it‘s waterloo, it‘s Obama failure?  These people, you can‘t work with them, Lanny.

DAVIS:  That‘s the best concern that I have about my position and, as usual, you strike the most problem with my situation.  And the answer is, that represents a small portion, I think, of the Republican Senate and the Republican House.  If I‘m wrong, then we tried and we fail.  But we never welcome John McCain, Lindsey Graham or Orrin Hatch, those are the three that I always count as thoughtful, constructive Republicans, who don‘t want to just say no and have a waterloo.

Let‘s try.  And I think Barack Obama ran on that basis.  He is representative of a new politics in this country.  Let‘s give him a chance and not as liberals.

SCHULTZ:  OK.

DAVIS:  . prevent him from compromising to get incremental change.

SCHULTZ:  All right.  So, single-payer never on the table, public option is out.

DAVIS:  Out.

SCHULTZ:  Forty million customers to the insurance industry.  There

really is no mechanism for competition.  So, what we‘re down to really, s

the substance of it is, is we would have a subsidy for people under

$90,000, we would have the pre-existing condition in there and we can close

the loophole in Medicare.  And maybe they‘ll get to the drug reimportation

prescription drug thing and maybe they can work on that.

           

You think that‘s a lot.  You think that that‘s worth—I mean, we‘re playing cards now.  You‘re taking that deck.  That‘s enough.  You‘re ready to go with that.

DAVIS:  I have insurance and you have insurance.

SCHULTZ:  And mine is going up, by the way.

DAVIS:  If I didn‘t have insurance—if I did have insurance.

SCHULTZ:  Yes.

DAVIS:  . and I was worried about bankruptcy, if one member of my family gets sick, or if my child has a fever, I had to go to a public hospital to have him taking care of, I‘d be in favor of going to John McCain and saying, Senator McCain.

SCHULTZ:  Got you.  I got to run, Lanny.

DAVIS:  . what will you support?

SCHULTZ:  All right.  Great to have you with us tonight.  Appreciate you being on.

DAVIS:  Thank you, Ed.

SCHULTZ:  Text survey tonight, I asked: in his first year, the president has delivered change you can believe in, 21 percent said yes, 79 percent of you said no.

That‘s THE ED SHOW.  Chris Matthews is next with “HARDBALL.”  We‘ll see you tomorrow night.

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