updated 1/29/2010 12:30:38 PM ET 2010-01-29T17:30:38

Guests: Kelly O‘Donnell, Kent Conrad, Jim Moran, Dennis Kucinich, Jonathan Alter, Laura Flanders, Karen Hanretty, Cliff May, Markos Moulitsas

ED SCHULTZ, HOST:  Good evening, Americans, and welcome to THE ED SHOW from the nation‘s capital tonight.

Hitting my hot buttons right now?  Well, let‘s see—get it done. 

That was what was the president‘s message was on health care last night. 

But are the Democrats ready to do whatever it takes to get it done? 

I will ask budget chairman Kent Conrad of the Senate, the gatekeeper on reconciliation.  He‘s not a believer. 

How did the speech play with the progressive base?  I‘ll ask Daily Kos‘ Markos Moulitsas if they are sticking with the president and the Democrats in 2010. 

And Michael Bloomberg, mayor of New York, doesn‘t want the KSM trial to take place in New York, but the Obama administration is standing its ground on this one. 

I‘ll put Cliff May on the hot seat on this one tonight.  It could be a real good discussion. 

All right.  Last night, President Obama—today and he was last night

focused on jobs, and he won‘t stop until he gets this economy turned around.  That was the big story last night. 

That was his promise to the American people.  He laid out specifics. 

He wants to take $30 billion in repaid TARP funds and lend it to small business—I‘m all about it—so we can hire more workers in this country.  He went to Tampa today, promoting an $8 billion investment in high-speed rail paid for by the Recovery Act. 

The president seems to have found his second wind and his voice starting year two.  I thought his first State of the Union speech was just inspiring and genuine.  I was in the chamber last night, and I can say that the lawmakers were—they were captivated.  They were sitting on every word. 

The president had the room in the palm of his happened.  And I can tell, in the last five minutes of that speech, it was really riveting. 

He didn‘t throw any punches.  It was more like a polite scolding.  You know?  Hey, you Republicans, hey, you Democrats, too, now, and the Supreme Court. 

Once again, he extended not only an olive branch, but an olive branch the size of a redwood tree.  He promised to meet with Republican leaders once a month.  He is speaking at the House Republicans retreat tomorrow, and once again, he got a slap in the face from Republican leaders. 

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER ®, MINORITY LEADER:  There was nothing last night in the president‘s speech to indicate that there was any willingness to sit down and work together. 

(END VIDEO CLIP)

SCHULTZ:  Nothing?  I was there. 

Mr. Boehner, weren‘t you there? 

It‘s interesting to watch Republicans last night.  They still have an identity crisis.

They‘re against everything, because they don‘t know what the heck they‘re for.  They couldn‘t even applaud for middle class tax cuts. 

The president had some candid comments about bipartisanship today in Tampa. 

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I want the Republicans off the sidelines.  I want them working with us to solve problems facing working families.  Not to score points.  I want a partnership. 

What we can‘t do though—here is what I‘m not opened to.  I don‘t want gridlock on issue after issue after issue.  And I don‘t want an attitude, if Obama loses, then we win.  I mean, that can‘t be a platform. 

(END VIDEO CLIP)

SCHULTZ:  But, Mr. President, it is their platform, and I think the American people understand the Republicans want you to fail on every issue. 

They know this president is genuine and they are just having a real hard time accepting that today. 

Tell me what you think, folks.  Get your cell phones out tonight, telephone survey.  The number to dial is 1-877-ED-MSNBC. 

My question tonight is, did President Obama convince you that he‘s going to turn the economy around in 2010?  Press “1” for yes, press “2” for no.  I‘ll bring you the results later on in the show. 

Joining me now is North Dakota Senator Kent Conrad.  He‘s the chairman of the Senate Budget Committee. 

Kent, good of to have you with us tonight. 

And we‘re going to talk about the speech, but of course there‘s big news today.  You voted for Ben Bernanke.  This has been somewhat of a controversial issue. 

Why should he lead up the Fed again?  What‘s happened? 

SEN. KENT CONRAD (D), NORTH DAKOTA:  I believe he should lead the Fed, even though he made serious mistakes leading up to the crisis.  In the crisis, he prevented a global financial collapse by taking unprecedented action to provide liquidity to the markets. 

Absent that action, absent the action by this administration and this Congress, I believe we would have been in full-scale rout.  We would have had unemployment over 15 percent and increasing. 

SCHULTZ:  Senator, is this a victory for the White House?  Because there were a number of Democrats who were are really struggling with this, and then the White House came out full force supporting Ben Bernanke. 

Is this maybe what we could call a bipartisan victory on the part of the president and the White House?  What do you think? 

CONRAD:  Yes, I think it is a very strong vote today, and it was a fully bipartisan vote. 

SCHULTZ:  All right. 

Thirty billion dollars, this is what the president wants to do to take the repaid TARP money and put to small business.  Are you in favor of that? 

CONRAD:  Yes, strongly in favor of that.  In fact, I would go even further, I would go to $40 billion, because one of the things that is retarding the recovery, we heard from top economists today, is the flow of credit to our small businesses.  So, more needs to be done, and that‘s exactly what TARP funds should be used for. 

SCHULTZ:  Senator, when you take a look at the money that‘s being thrown around in Washington right now, and we just saw something unfold just a few days ago in the Senate, and now the president is going to go with an executive order to get a deficit reduction commission, you and another senator on your Budget Committee was going for that. And now the president has to go executive order on this because there were seven Republicans who were for it and then, all of a sudden, voted against it. 

If you could, explain their crazy position on this, why they switched their votes like that.  And just how important is it for this commission to be formed to address our financial situation in this country? 

CONRAD:  Well, I think it is important.  Look, you know, we have this unusual situation where, what‘s the right policy in the short run is very different than the long run. 

In the short run, we have got to add the deficits and debt to provide liquidity to help strengthen the economy.  Long term, we have got to pivot and help reduce the long-term debt. 

So, you know, we‘ve got to be able to walk and chew gum at the same time.  We have got to understand that in the short term, one set of policies is appropriate.  In the long term, we have got to deal with the burgeoning debt, because that, over time, will threaten the economic security and economic strength. 

We had seven Republicans who were original co-sponsors of the Conrad/Gregg Amendment.  And when the roll was called, they voted.  And if we would have had their votes, it would have passed, because it took a super majority, and we had a majority.  We had 53 votes. 

SCHULTZ:  Senator, this has been a tough year for the Democrats in trying to get the Republicans on board to do anything.  And the president, last night, addressed that.  And I think that we‘re going to see the White House get aggressive in the coming months, explaining just how the obstructionist process has worked. 

Do you think the president was aggressive enough on this issue last night? 

CONRAD:  Well, I thought it was a very good beginning.  I thought it was an excellent speech overall. 

I also think he laid out and helped to begin to explain to the American people what the Republicans in the United States Senate have been doing.  They have been requiring super majorities on vote after vote after vote in an unprecedented way. 

We have never seen it in all of Senate history, to have a minority insist on super majority votes on item after item, using the so-called filibuster.  And this has been done in a way we have never seen before. 

Look, this is pure obstructionism.  And they need to be called on it. 

SCHULTZ:  Senator, good to have you with us tonight.  I appreciate your time. 

CONRAD:  You bet. 

SCHULTZ:  Senator Kent Conrad with us. 

The president, last night, had this to say about health care.  He didn‘t get to health care until 32 minutes into the speech, but this is what the president had to say on that issue. 

(BEGIN VIDEO CLIP)

OBAMA:  Here‘s what I ask Congress, though—don‘t walk away from reform.  Not now.  Not when we are so close. 

Let us find a way to come together and finish the job for the American people.  Let‘s get it done.  Let‘s get it done. 

(APPLAUSE)

(END VIDEO CLIP)

SCHULTZ:  How are they going to get it done?  The White House telling me today that they recognize that reconciliation is a process, but I think that there is some real consternation over on the House side, obviously, and there is a number of House members that just aren‘t on board yet. 

So the sausage-making has been done and the sides have been chosen up, but we really don‘t know how we‘re going to get conclusion on this health care bill.  And the president says he is still going to be very focused on this, they haven‘t given up on health care at all.  And they are going to stay focused on it and get it done, but you get a real sense that it is jobs that is number one. 

For more on all of this, let‘s go over to House member Jim Moran, congressman from Virginia. 

Jim, good to have you with us tonight. 

I know you want to talk about jobs but I just want to touch on health care.  Where is the compromise here between the House bill and the Senate bill?  Where do you think there is an opening for them to finally cross the goal line on this? 

REP. JIM MORAN (D), VIRGINIA:  I think if the Senate gives us a national exchange, that everybody has to participate instead of individual state exchanges where the insurance companies can game the system, going after the young and healthy and putting all the old and sick into their state exchange, if we can have an inclusive national exchange, that‘s the best we can do.  We‘re not going to get the public option we ought to get, but if we can get a national exchange, I think we‘ll get the health insurance reforms.

It looks like it‘s going to have to go the reconciliation route, very tough but doable.  And trust the Speaker.  She says she‘s going to get it done.  I think she will.

SCHULTZ:  Is the Stupak coalition, those who have made abortion an issue, are they standing in the way of the 218 vote total?

MORAN:  Well, the reality is that there won‘t be any public funds paying for abortions.  It‘s going to be very difficult for young women to find access to reproductive services, but that‘s just the reality.  I think we have to look at the larger objective of getting health insurance reform, and then we‘re going to have to figure out how to make it right for the women of America in that area.

SCHULTZ:  All right.  Let‘s talk jobs.

Are you on board with $30 billion of TARP money ending up in job creation?  And is it feasibly enough to jump-start the economy?

MORAN:  Sure, I‘m on board.  And I completely agree with Kent.  But it probably needs to be more.

You know, Ed, if you‘ve got a starving cow, you can butcher it and have a few steak dinners, or you can nurture it back to health and then milk it for years to come.  That‘s what we need to do.

We‘ve got to get this economy healthy again and then get some revenue and start balancing our budget.  But right now, it‘s all about jobs, it‘s getting people employed.

I think if we spend a good deal of money on transportation and infrastructure, for example, something people can see, they are going to be happy with their money.  They‘re not going to be complaining.  There are going to be jobs in America, and our country will be stronger as a result. 

SCHULTZ:  And Congressman, can you tell us tonight if the Republicans are going to be on board with getting money to community banks?  I mean, that is somewhat out of the Republican playbook, to get money to small businesses.  And yet, the silence is deafening from the Republicans when it comes to this issue of getting money to community banks and jump-starting small businesses. 

Your take on that? 

MORAN:  I think the president has cornered them.  I don‘t see any way they can oppose $30 billion coming back in TARP money, going back out to commercial banks, where that money will go out to businesses—credit to small businesses, creating jobs. 

I can‘t imagine how the Republicans can justify being opposed to that. 

It‘s exactly the way we ought to be using that money.

The big banks didn‘t do much for the economy.  They helped Wall Street a lot.  They gave out bonuses, but they didn‘t lend it to small businesses. 

We need community banks doing that, and I think that they will do that.  And I can‘t—if I were a Republican, it seems to me it‘s something that I‘d jump on board immediately.  But, you know, I can‘t answer them.  I can‘t even understand where they‘re coming from. 

(LAUGHTER)

SCHULTZ:  You can throw me in that fraternity as well, Jim.  Thanks so much. 

MORAN:  Thanks, Ed.

SCHULTZ:  Congressman Jim Moran of Virginia with us here on THE ED

SHOW.

Coming up, get this—the Fed chair and former Bush economic brain wizard Ben Bernanke was just reconfirmed for a second term. 

NBC‘s Kelly O‘Donnell will join me in just a moment on that. 

And Supreme Court Justice Sam Alito did his best Joe Wilson impression last night.  He was out of order. 

More on that at the bottom of the hour. 

Plus, New York City Mayor Michael Bloomberg just got cold feet about holding an alleged 9/11 mastermind, Khalid Shaikh Mohammed‘s trial, in New York City.  Cliff May and I are going to go head-to-head on that one. 

They should put the trial right where the criminal act took place, where the terrorist attack took place.  He‘s in the hot seat. 

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

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.

Ben Bernanke just clinched another four years as the chairman of the Federal Reserve.  Two hours ago, the Senate voted to confirm him for a second term, but it didn‘t come easily.  Bernanke‘s performance as Fed chair has come under fire in recent days from senators from all over the political spectrum, including Independent Senator from Vermont, Bernie Sanders. 

(BEGIN VIDEO CLIP)

SEN. BERNIE SANDERS (I), VERMONT:  While Wall Street became converted into the largest gambling casino in the history of the world, where was Mr.  Bernanke and the Fed, whose job is to protect the safety and soundness of our financial institutions?  They weren‘t there. 

Mr. Bernanke failed at his job.  He should not be rewarded with reappointment. 

(END VIDEO CLIP)

SCHULTZ:  Despite all the passionate opposition, the final vote was 70-30 in favor of Bernanke. 

For more on that, let‘s bring in NBC‘s Kelly O‘Donnell. 

Kelly, the president weighed in on this within the last week.  Did that really seal the deal?  Because up on Capitol Hill, there just doesn‘t seem to be any middle ground here.  I mean, you are either a Bernanke fan or you‘re against this guy. 

KELLY O‘DONNELL, NBC NEWS CORRESPONDENT:  Well, certainly, when the president stepped in by saying through his spokesperson that he thought that Mr. Bernanke should be confirmed, would be confirmed, that helped.  There was some gentle nudging to get the Senate majority leader to come out in favor of Mr. Bernanke‘s reappointment as well. 

And then we saw a photo opportunity, as we like to call it, one of those times where you get to see two people sitting together and chatting.  And that was with Dick Durbin, who is the senator from Illinois, a very close friend of the president. 

Those sorts of signals were certainly helpful from the White House, but they also understood what they were up against.  Because when you look at the numbers, Ed, the 30 who voted against, many of them—not in all cases, but many—correlate to people who are in an election battle, either seeking re-election to the Senate, or some are trying to run for governor in their home state.  We can match that up in a number of cases. 

And so for those people who will have to defend this vote in a much more direct way between now and November, voting against Bernanke seemed to have some political steam.  Some who voted in favor of it said, really, that the Fed chair was really being caught up in the populism of the moment, the firestorm that really erupted in Massachusetts and has tapped into anger and frustration among voters around the country. 

So, 70-30 sounds like a very comfortable margin.  But when you take a look back at a Federal Reserve chairmen who have been appointed and confirmed before, that margin stands out as being a close call.  For example, when we look back, Paul Volcker, he had a 98-0 margin of victory. 

In fact, the only time we see even something close was, again, Volcker, and this was during the Reagan administration, when the times were tough as well.  There were only 16 who voted against him. 

Often, they‘re voice votes, completely unanimous.  And even Bernanke had that himself last time around. 

So, based on his actions, based on his own testimony here on Capitol Hill, when he acknowledged mistakes, and based on the mood of the country, it was a tighter vote than some might have expected.  But, of course, he was confirmed.  It was just a painful process today—Ed. 

SCHULTZ:  This is really bipartisan.  We haven‘t seep too much bipartisanship at all.  Well, we saw a 97-1 vote on unemployment benefits, but this somewhat of a rare home in Washington.  This is some of the conversation today before the vote... 

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK:  Singling out Chairman Bernanke and the Fed for punishment might be temporarily satisfying to some, but it won‘t help a single business add jobs. 

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. CHRIS DODD (D), CONNECTICUT:  The chairmanship of Ben Bernanke has, in no small measure, made it possible for this nation to avoid a catastrophe that I think would have loomed as large as the Great Depression. 

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

SEN. JUDD GREGG ®, NEW HAMPSHIRE:  Strong, definitive leadership at a moment of acute crisis, that‘s what Chairman Bernanke gave our nation.  He deserves to be confirmed just for that action. 

(END VIDEO CLIP)

SCHULTZ:  And Kelly, what does this do for possible financial reform?  Do you think it enhances?  What‘s the feeling amongst lawmakers on Capitol Hill in the wake of this? 

O‘DONNELL:  Well, a quick backstory on the three senators, the clips you just showed. 

Chuck Schumer, of course, New York, Bernanke is from New York.  Chris Dodd is choosing not to run for re-election, head of the Banking Committee.  And his counterpart there, Judd Gregg, the Republican ranking member on that committee, also not seeking re-election.  So those are three gentlemen who have a lot of knowledge on the subject matter and had less politically to lose in this case. 

What does it mean for reform?  There is a big push to try to keep pressing Wall Street.  And that divide, one of the things we heard from many people who chose to vote for confirmation, was an expectation they believe they have been able to extract from Ben Bernanke that he will try to do more for Main Street, as opposed to Wall Street. 

And that has been part of the rhetoric and part of the policy that we are seeing take hold here, especially after what the president talked about last night in the State of the Union Address, where he made comments where he said everybody‘s finding those bank bailouts so unpopular.  Well, that mood certainly carries over, and Ben Bernanke has had to take tough questioning. 

And only yesterday, it was Timothy Geithner, the Treasury secretary, who had hours of discomfort being questioned and accused and asked for his resignation based on his stewardship at the Treasury Department.  So, it is a tough time to be a member of the president‘s economic team—Ed. 

SCHULTZ:  NBC‘s Kelly O‘Donnell on Capitol Hill tonight. 

O‘DONNELL:  Yes.  Yes.  So much to talk about, Ed. 

SCHULTZ:  You bet.  Thanks, Kelly. 

Coming up, the man who once bragged about a permanent Republican majority, well, he has actually got it twisted right now.  Karl Rove proves why Bush nicknamed him “Turd Blossom.”

That‘s next in “Psycho Talk.”  

Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  And in “Psycho Talk” tonight, Bush‘s former brain, Karl Rove, old “Turd Blossom.”

He was on “Fox and Friends” this morning to pick apart President Obama‘s State of the Union Address.  They asked him whether Obama should have referred to the train wreck of a country that Bush left behind. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Is it good politics, Mr. Rove, to bring up your predecessor and talk about your first year in office while looking back at his last year in office? 

KARL ROVE, FOX NEWS CONTRIBUTOR:  No, I think it makes you look weak. 

(END VIDEO CLIP)

(LAUGHTER)

SCHULTZ:  Interesting to hear you say that, old buddy, Karl, because that‘s exactly what your guy, George W. Bush, did in his first speech to Congress. 

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, FMR. PRESIDENT OF THE UNITED STATES:  Last year, government spending shot up eight percent.  That‘s far more than our economy grew, far more than personal income grew, and far more than the rate of inflation.  The people of America have been overcharged.  And on their behalf, I‘m here asking for a refund. 

(END VIDEO CLIP)

SCHULTZ:  I‘ll tell you what, those instant replays are something else, aren‘t they? 

And, of course, Ronald Reagan did the same thing in his first State of the Union Address.  Remember this? 

(BEGIN VIDEO CLIP)

RONALD REAGAN, FMR. PRESIDENT OF THE UNITED STATES:  To understand the state of the union, we must look not only as where we are and where we‘re going, but where we‘ve been.  The situation at this time last year was truly ominous. 

(END VIDEO CLIP)

SCHULTZ:  Uh-huh. 

Karl, are you telling me that Ronald Reagan was weak? 

President Obama went out and told the truth again last night.  When he took office last January, let‘s see, he inherited a recession, two wars, and a massive debt that your team left behind, all caused by Bush and company.  With the strategic help of the trusting (ph) man himself—that‘s you—“Turd Blossom,” Karl Rove. 

Saying that Obama is weak for pointing out all of that is hypocritical “Psycho Talk.”  

Coming up, Congressman Dennis Kucinich will take the president up on his kind invitation for a better idea on how to reform health care in this country.  You won‘t want to miss it.

And the Republican had their chance to respond, but now it‘s time to hear from the base, the Democratic base.  Markos Moulitsas, “Daily Kos,” will be here to tell us about the Net roots, how they took up the speech last night.  We‘ll put that in the “Playbook.” 

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  But if anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, let me know.  Let me know.  Let me know.  I‘m eager to see it. 

(END VIDEO CLIP)

SCHULTZ:  President Obama last night daring his critics to come to the table with a better plan for health care reform.  He wants Congress to get it done.  And today, House Speaker Nancy Pelosi promised that they would pass a bill by any means necessary. 

Joining me now is Ohio Congressman and former presidential candidate Dennis Kucinich.  Congressman, good to have you on tonight. 

REP. DENNIS KUCINICH (D), OHIO:  Ed, good to be with you. 

SCHULTZ:  Your thoughts on a way forward at this point?  It looks like there‘s going to have to be major concessions, even though there is a few issues here, on the Senate side or the House side, to finally get something going.  Give us that path.  What do you think, Dennis? 

KUCINICH:  Well, first of all, my own personal opinion, Ed, is that the Senate bill is a non-starter, that we should pay attention to what happened in Massachusetts, take a deep breath, take a step back, create millions of jobs, regain the confidence in the American people, and then come back with a bill that the president apparently asked for last night, which is Medicare for all. 

And I think that we need to take a step back though.  If we go forward into the breach here, we are risking further loss of confidence of the American people.  We know health care is a serious concern.  We have 47 million people under-insured—uninsured.  Why?  Because they can‘t afford it.  So what is the solution, to force them to buy private insurance?  I don‘t think so. 

SCHULTZ:  Here is President Obama last night taking after his own party and telling them to get it done. 

(BEGIN VIDEO CLIP)

OBAMA:  I know it‘s an election year, but we still need to govern.  To Democrats, I would remind you that we still have the largest majority in decades and the people expect us to solve problems, not run for the hills. 

(END VIDEO CLIP)

SCHULTZ:  Congressman, are there some House members running for the hills, thinking that they might not get reelected if they pass this Senate bill? 

KUCINICH:  The hill that we ought to be running for is Capitol Hill, with a health care bill that meets the needs of all the people, and isn‘t a giveaway to the insurance companies or pharmaceutical companies.  We can still do that.

But I will say again, Ed, in this political climate, I think we have to be aware of what happened in Massachusetts.  And it‘s demonstration that the American people feel that this bill was too complex, that it was not representing their interests.  Let‘s pull back, pass a big jobs bill, and then come back with a health care bill that really would represent a challenge to the established insurance companies here. 

I think people would support it.  But first, they want to see can we deliver on jobs?  We should be able to do that. 

SCHULTZ:  OK.  And, of course, you‘re a single-payer guy.  But you think at this point—there has been a lot of talk about letting heads cool here and everybody take a step back.  You think the jobs bill first and then health care is the best way for the majority party to go? 

KUCINICH:  I think it works politically.  I think it works economically.  We need to move the economy forward, get the people‘s confidence in the government again.  You know, people do care about health care.  Again, it is a major expense in most family budgets.  But when we understand that this bill we were looking at coming out of the Senate would have taxed people‘s health care plans, would have created a monopoly for insurance industry, gave them anti-trust—protection against antitrust laws, this was wrong. 

SCHULTZ:  But the White House says—but congressman, the White House says that there‘s going to be millions of people that get covered that would not normally have insurance and the preexisting condition.  Isn‘t that worth passing? 

KUCINICH:  How are they going to afford it?  That remains to be seen.  There‘s no controls on premiums.  The industry raise premiums four times in four consecutive years, double-digit increases.  No controls on premiums.  How are people going to afford it?  That is one of the big questions that has not been answered.  You can‘t shove this down the throat of the American people.

Look, I led the effort on health care for a dozen years through Democratic conventions.  I am telling you, Ed, that people all over the country are ready for a dramatic change in health care.  This bill didn‘t deliver.  It was a giveaway to the insurance industry. 

I want to support the president.  I want to make sure this economy works.  But we got to make sure it works for everyone, not just for a few. 

SCHULTZ:  Congressman, good to have you with us tonight.  Thanks so much.  Congressman Dennis Kucinich from Ohio. 

Let‘s bring in—joining me now, should I say, is “Newsweek‘s” Jonathan Alter.  He‘s also an MSNBC political analyst. 

Before we get started, Jonathan, I want to play this sound cut from Mary Landrieu, responding to the president last night.  And it is—“I think it‘s on life support,” she says.  “I think the president should have been more clear about a way forward, and I‘m hoping that in the next week or two, he will be, because that‘s what‘s going—what it‘s going to take to get this done.” 

Your response to that?  And I sense, being here in Washington the last few days, Jonathan, there is more negativity around—around this now than there ever has been.  Your thoughts? 

JONATHAN ALTER, “NEWSWEEK”:  There is.  I think they need to ram it through and complete it, complete what was started last year.  I think Congressman Kucinich is wrong to try to kick the can down the road.  That‘s heading for the hills, as the president said it. 

Mary Landrieu‘s not relevant anymore.  The good news for progressives is that Ben Nelson, Mary Landrieu, they are not relevant.  As long as you have 51 senators for a bunch of progressive fixes, done through the budget reconciliation process, then they can patch this bill, do a lot of good things. 

They could even extend Medicare down to age 55, as they were talking about a few weeks ago, a lot of other good things. 

There‘s only one way to get there, though, that is for the House to pass the Senate bill.  Then—you know, it is a bank shot.  They need—they need to have some—some understanding, maybe even on paper, that these—these Senate reconciliation amendments would then be applied with 51 votes.  But if they get that, then they should go ahead and pass the Senate bill, which then would make health care law.  And that would advance the process, and they could proceed to fixing it.

But the idea now of saying, oh, oh, we have got to do all these other things first; let‘s just wait, that‘s what the president was speaking against last night.  And it is as much the responsibility of liberals like Kucinich as it is of conservatives to keep their eye on the ball and ram this sucker home. 

SCHULTZ:  Well, this is—it appears to be the only way this is going to get done.  But it looks like the most influential person in this right now would be Nancy Pelosi. 

ALTER:  Yes.  She wants to do it. 

SCHULTZ:  She is the most influential.  How do you deal cut?  How do you deal cut your way to passing this and then reconciliation on the Senate side?  How do you deal cut? 

ALTER:  What you have to do is have a kind of a game plan that says, OK, here‘s what we all agree on, that the Senate leadership and the House leadership is a list of particulars that will be used with reconciliation, only requiring 51 votes.  They have to relate to the spending or the taxing parts of this legislation, but there are big chunks of it that do relate to that.  And—

SCHULTZ:  Yeah. 

ALTER:  Kucinich is just wrong that, you know, somehow there is no cost savings in this.  That‘s not right.  But if there are problems with the Senate bill, they can be fixed through reconciliation.  Remember, this was done as an insurance policy by Rahm Emanuel and the White House last June.  They put this in, this power to use reconciliation. 

Now is the time to use it.  That is the whole reason they went for that authority last June in the first place.  So to leave that on the ground now, let this wither on the vine, it would just be a tragedy. 

SCHULTZ:  It also, through reconciliation, it narrows the window on having to pay for it, which I believe it is a five-year window. 

ALTER:  Right. 

SCHULTZ:  It kick a lot of things in the process. 

ALTER:  It is perfect. 

SCHULTZ:  If you want a health care bill, I think this is the only route that‘s available right now.  Thank you, Jonathan.  Appreciate your time tonight. 

ALTER:  Thanks, Ed. 

SCHULTZ:  You bet.  For more, let‘s bring in our panel tonight.  Laura Flanders is the author of “Blue Grit” and the host of GritTV.org, and Karen Hanretty is the Republican strategist.  Karen, let me ask you, first of all, how did the president do last night? 

KAREN HANRETTY, REPUBLICAN STRATEGIST:  Boy, if I was a moderate Democrat, I would be pretty worried.  He wants to continue fighting for a health care reform package that people don‘t seem to support.  He still likes cap and trade.  He‘s going to continue deficit spending.  These are all things that Republicans ran against in Virginia, New Jersey and Massachusetts.  And it‘s the reason we are seeing poll numbers go down in a lot of state, and we‘re seeing Democrats retire instead of run for reelection. 

If I was looking out for moderate Democrats, I would say the president didn‘t do too good of a job.  From my perspective, I think we are going to take over everything in November.  So I guess he did a good job. 

SCHULTZ:  Hold it, now.  Hold the phone on that one.  I agree with you.  I don‘t think there is any doubt that there has been somewhat of a shift prioritizing what is going on.  Obviously, it is the jobs.  Laura Flanders, much of what Karen just said I agree with, as far as the moderate shift there.  The president—I mean, he is talking about drilling offshore.  He is talking about nuclear power plants.  He is talking about more coal.  What about that?

LAURA FLANDERS, GRITTV.ORG:  You come back to the health care subject, you have Republican strategists saying drop it.  I think Democrats need to listen to that.  I mean, listen to it from the point of view that they should keep going.  I mean, I‘m with Kucinich in terms of you want another idea—and the president asked for ideas—single-payer would be that other idea. 

But Democrats have a problem, in that those who have come out in favor of health care reform, and many have already, they are—that‘s not going to be forgotten, not by their critics, nor by their friends.  So if they shift course right now, they are just going to alienate their friends and they‘re not going to win over their critics. 

So I think keep going and get what you can get, like Jonathan said, if you‘re a Democrat right now.  And, frankly, on the outside, I‘d say we have to keep arguing that single-payer will actually get us where we want to go in the end. 

HANRETTY:  Well, you—

SCHULTZ:  Hold on a second.  I want to make sure we get this in tonight.  I want to get your thoughts on what happened last night when the president brought up the recent Supreme Court ruling on election spending.  Let‘s take a look at this. 

(BEGIN VIDEO CLIP)

OBAMA:  Last week, the Supreme Court reversed a century of law that I believe will open the flood gates for special interests, including foreign corporations, to spend without limit in our elections. 

I don‘t think American elections should be bankrolled by America‘s most powerful interests, or worse by foreign entities.  They should be decided by the American people.  And I‘d urge Democrats and Republicans to pass a bill that helps correct some of these problems. 

(END VIDEO CLIP)

SCHULTZ:  Now that cut-away of Supreme Court Justice Samuel Alito, let‘s see that again.  What did he say?  He says—

HANRETTY:  Not true. 

SCHULTZ:  That is not true.  Is Justice Alito suggesting that the president of the United States is a liar?  Panel, reaction to this.  Karen? 

HANRETTY:  Maybe he is just wrong.  Although, you know what?  I agree.  I don‘t think special interests like big labor unions should be able to take over control of campaigns either.  Because, look, they are really going to come out ahead with this ruling, right?  They are going to come out great. 

But this whole thing is so disingenuous.  President Obama took a lot of big dollar donations.  Democrats in Congress get a lot of money from banks and insurance companies, just like Republicans get from banks and insurance companies. 

SCHULTZ:  You side with Alito on this?  You think Justice Alito was correct on this?  Obviously, he had the vote. 

HANRETTY:  I think it‘s great that Justice Alito just couldn‘t hold back what he knew was just a factual inaccuracy. 

FLANDERS:  I think the whole spectacle here is just shameful.  I mean, last week, it was judicial activism.  This week, it‘s sort of juvenile pranks and disrespectful behavior, frankly.  I have to say, I sat there thinking of—

HANRETTY:  -- disrespectful to George Bush for eight years.  Give me a break. 

(CROSS TALK) 

FLANDERS:  -- this country from the bottom up.  You‘ve got a lot of powerful people there showing their disdain for the people.  And I think it is something we have to look at very closely. 

SCHULTZ:  OK.  I think our videotape hit a nerve there.  We should point out that Senator Feingold put out a statement today saying that he didn‘t think it was very judicial to do something like that.  But it was certainly a rare moment at the State of the Union. 

Thanks so much for joining us.  Appreciate it. 

Coming up, New York Mayor Michael Bloomberg has flip-flopped on holding KSM‘s terror trial just blocks away from Ground Zero.  I think he is dead wrong.  My next guest thinks he is dead right.  Cliff May sits in the hot seat in just a moment.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  New York Mayor Michael Bloomberg no longer—no longer supports holding the trial of 9/11 mastermind Khalid Shaikh Mohammed in downtown Manhattan.  He was gave in favor of that plan back in November, saying, “it is fitting that 9/11 suspects face justice near the World Trade Center site where so many New Yorkers were murdered.”  But the mayor reversed his position yesterday. 

(BEGIN VIDEO CLIP)

MICHAEL BLOOMBERG, MAYOR OF NEW YORK:  The federal government could find a site that didn‘t cost a billion dollars, which using downtown will, and it will also impact traffic and commerce and people‘s lifestyles downtown.  And it would be great if we didn‘t do it. 

(END VIDEO CLIP)

SCHULTZ:  Congress is also pressuring the Obama administration to move the trial out of New York.  Congressional Republicans are working to financially block the trials, and a handful of senators have sent a letter of opposition to Attorney General Holder. 

For more, let me bring in the president of the Foundation for Defense of Democracies, Cliff May.  We are on opposite sides of this, my friend.  Good to see you. 

CLIFF MAY, FOUNDATION FOR DEFENSE OF DEMOCRACIES:  Good to see you. 

SCHULTZ:  Why not do this?  I mean, Mayor Bloomberg obviously would have some concerns.  You could move the trial to Fargo, North Dakota, and people would have some concerns.  You got to do it somewhere.  Why not do it where the acts were committed? 

MAY:  As a group of senators—and it‘s a bipartisan group that wrote and said it shouldn‘t be done.  They said, let‘s do it, for example, on a military base.  The problem with doing it in New York City is, one, national security.  It makes the whole island of Manhattan, all of New York City a target for terrorists.  They blow up something anywhere, it is a very powerful signal. 

Secondly, it will cost a billion dollars.  Do you think that is the best use of taxpayers‘ money? 

And third, because of the news media there, it just makes a huge stage for Khalid Shaikh Mohammed to spout his propaganda.  Why not do it some place safe?  And a military base would send a message, this is a combatant who is fighting a war against the United States, not a common criminal. 

SCHULTZ:  All right.  On your third point, you‘re taking up arms with Lieberman, McCain, Lincoln, Collins, and Virginia and Graham. 

MAY:  Bipartisan. 

SCHULTZ:  Here it is.  They say that “you will be performing one of the most visible platforms in the world to exalt their past acts and to rally others in support of further terrorism.” 

That is a theory, OK.  We have had trials on American soil, the last administration, civil court.  I find it very interesting that Governor McDonnell was talking about this.  I believe the 20th hijacker, Moussaoui, he was prosecuted on Virginia soil.  There was no terror attack there.  It cost money there to have t.  Why not do it where the act took place? 

MAY:  First of all, we are talking about a billion dollars.  We do want—if you were—

SCHULTZ:  It is about the money? 

MAY:  I think it‘s also about national security.  Khalid Shaikh Mohammed is special because he was the mastermind of the 9/11 attacks.  He is the highest level al Qaeda official we have ever captured.  To put him on trial there and give him that platform—and again, if you are al Qaeda anywhere in the world, want to show your solidarity with them, how do you do it?  I think you do it by an act of terrorism.  And New York City is the media hub.  That‘s why you live there. 

SCHULTZ:  That is one of the reasons why I live there.  But here‘s the deal with this.  It‘s gonna cost tax money no matter where you go, number one.  They‘re going to try to hit us no matter where the trial is.  This is a theory, and I don‘t understand how Michael Bloomberg, all of a sudden, it is about the money.  I mean, the things that he cited in that sound-bite he could have said months ago. 

MAY:  Here is the other thing, which you will appreciate.  New York City, compared to Fargo, compared to—is kind of a congested place anyhow.  Do you know what it is going to be like when you have this trial and this kind of security in that city, just to get around?  Michael Bloomberg thought, at first, this is not a bad idea.  Symbolically, it‘s near the world trade center.  Then he thought it through.  And when he thought it through, he decided this is a bad idea.  All points of view—

SCHULTZ:  The Republicans are hypocritical not to complain about the Moussaoui trial in Virginia and, all of a sudden, this one has just got a big problem with it. 

MAY:  Two things, one is there is bipartisan discontent with this idea. 

SCHULTZ:  So what? 

MAY:  Secondly, let me say this, I think, in retrospect, having the Moussaoui trial as a civilian trial, having it in Virginia was probably a bad idea.  I don‘t think Obama should make the same mistakes that Bush made.  How about that for a fair statement?  Give me credit for that. 

SCHULTZ:  I will give you credit for that.  You didn‘t say anything in the Moussaoui trial when it was going on in Virginia, that they should have moved it.  You are saying about this one.

MAY:  Here is what I did say. 

SCHULTZ:  We will have Cliff May back.

Coming up, “Daily Kos” founder Markos Moulitsas tells us if the president is in trouble with his base.  That‘s next on THE ED SHOW.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  In the playbook tonight, nobody believed in change more than the progressive base, but they have been somewhat demoralized by this long debate and sausage-making when it comes to health care.  The president needed to make them believe again tonight.  He won‘t succeed next time around if he doesn‘t have the base behind him. 

For more on that, let‘s bring in Markos Moulitsas, founder and publisher of the “Daily Kos.”  Markos, good to have you on tonight.  How did he do last night?  Did he satisfy those who came out of the woodwork to vote for him in 2008?  What do you think? 

MARKOS MOULITSAS, “THE DAILY KOS”:  I think, overall, it was a positive speech.  Sure, you had the stuff about offshore drilling.  But I think, in large part, the stuff about Don‘t Ask, Don‘t Tell, the student loan stuff, that was all very positive stuff. 

And I think what was really important for me was to hear the president say that he had made some tactical errors, because I think there are a lot of us who realize that we are not ready to give up on Obama just yet, but we‘re realizing that, you know what, if you are going to be successful, you are going to have to change your game plan a little bit.  What did he last year in 2009 clearly did not work. 

SCHULTZ:  OK.  When you look at the job—the focus on jobs that he is coming up with right now, what role would the net-roots play in creating jobs in this country?  Because—and the reason why I ask that is because it takes a positive mind-set, just like there was a positive mind-set when you guys were supporting Obama.  Now he needs you.  He needs that support.  He needs that base out there saying, this guy can get the job done when it comes to the economy. 

MOULITSAS:  Well, what we can do is we can try to prod Congress, and especially the Senate—because we all know that the Senate is a broken institution that does not work.  Hopefully, we can prod those senators to do the right thing.  I mean, we saw during the stimulus debate last year—we were arguing that it was not big enough. 

Yet, you had Obama and some Republican—Democrats obsessing about bipartisanship.  And they basically watered this thing down, larded it up with tax cuts that are not stimulative to the economy in order to get, what, one Republican vote so they can call it bipartisan?  We need to get away from making bipartisanship the goal and actually making good policy. 

SCHULTZ:  Markos, good to have you with us tonight.  Appreciate your time. 

MOULITSAS:  Thank you. 

SCHULTZ:  Earlier tonight, in our telephone survey, I asked you, did President Obama convince you he was going to turn the economy around?  Seventy nine percent of you said yes; 21 percent said no.  “HARDBALL” with Chris Matthews is next.  We‘ll see you tomorrow night. 

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