updated 2/2/2010 11:03:31 AM ET 2010-02-02T16:03:31

Guests: Anthony Weiner, Katrina vanden Heuvel, Jared Bernstein, Sen. Arlen

Specter, Steve McMahon, Bill Press, Ron Christie, Terry O‘Neil, Rep. Jared

Polis

Spec: Security; Trials; New York; Economy; Barack Obama; Andrew Breitbart

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

Hitting my hot buttons tonight, top of the show, Republicans.  Whatever happened to this tough-talking party you used to have about, “Bring it on,” “Dead or alive”?  And now the administration is kind of cowering. 

It looks like the administration is going to cave to Republican critics.  It‘s probably going to move the terror trial out of New York City, maybe even out of federal court. 

I‘ll ask New York Congressman Anthony Weiner about that in just a moment. 

It‘s bipartisanship, Waterloo style.  The president spends an hour and a half debating with the Republicans at the annual conference on Friday, only to get sandbagged on those famous talking show on Sunday.  Way to go, Republicans.

I think it‘s time for the president to get the ax out and just cut the olive tree down. 

Plus, Sarah Palin has just inserted herself into the fight over the controversial Super Bowl ad.  Details of that coming up tonight in my “Playbook.” 

But first, there‘s just all of this rhetoric about this trial in New York City and we just can‘t have it here.  Why not? 

The terrorists are allowing to watch us push aside and we‘re allowing them to win.  We‘re letting the terrorist dictate the American judicial process because we‘re scared again.  The White House hasn‘t announced anything officially, but it may be moving the terror trial out of New York City and maybe even out of federal court. 

Press Secretary Robert Gibbs left the door wide open on that. 

(BEGIN VIDEO CLIP)

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  Khalid Shaikh Mohammed is going to meet justice and he‘s going to meet his maker. 

JOHN KING, HOST, “STATE OF THE UNION”:  In a federal courtroom or in a military commission?

GIBBS:  He will be brought to justice, and he‘s likely to be executed for the heinous crimes that he committed in killing and masterminding the killing of 3,000 Americans.  That you can be sure of.

KING:  Will it be in a federal courtroom, or is there a possibility the administration will backtrack on that one and go to military...

(CROSSTALK)

GIBBS:  Well, the attorney general believes that the best place to do this is in an American courtroom.

(END VIDEO CLIP)

SCHULTZ:  All right.  I‘m not trying to pick a scrap with the White House, but I would really like the White House to say, you know what?  We‘re backing our attorney general.  This is the decision and we are sticking with it. 

Instead, they‘re running scared because Mayor Michael Bloomberg and Senator Chuck Schumer, well, they flipped.  And some Democrats are all too willing to run to the right on this, even Evan Bayh of Indiana on “Fox News Sunday.” 

(BEGIN VIDEO CLIP)

SEN. EVAN BAYH (D), INDIANA:  The attorney general is a good man.  None of us are perfect.  And I think the decision to have these trials in New York, as I said, sounded good in theory way back when, but in practice it was just not the right thing to do it. 

(END VIDEO CLIP)

SCHULTZ:  Hold it right there.  So we have now allowed this conversation to be reduced to whether Eric Holder is qualified, whether he‘s a good guy or not, whether he‘s a good man.  And oh, by the way, the righties are saying that, gosh, he ought to come down and testify in front of the Congress so we know exactly where Eric Holder is coming from.

My friends, the foundation of this country is the three branches of government.  Our moral commitment to the truth is in our court system.  I don‘t think it speaks well for the White House if they don‘t believe in our judicial system that we can‘t get a successful conclusion here. 

Whatever happened to bring it on, righties? 

Nothing could be better for this country than to have this trial in lower Manhattan, and our justice system on the pedestal of the world, for the entire world to see this is how America does it, to bring KSM to justice and to stay safe.  You know, I think that‘s how you win the war on terror.  But now we‘re afraid we‘ve got to move it. 

We can keep our people safe without compromising our principles.  Isn‘t that what President Obama ran on?  But to shrink and wine and hammering on, we can‘t do that because of security—and it‘s fear.  Whatever happened to all of these tough New Yorkers that were going to—whatever happened to that bullhorn moment that President Bush had standing down in the rubble talking about how we‘re going to bring these people to justice? 

Where was all of this consternation about the Moussaoui trial when it was in Virginia?  Oh, the citizens here in New York, they‘re just a lot more valuable than the ones down in Virginia.  Were we not a target there? 

Maybe I‘m wrong on this.  I don‘t think I am.  I think we‘re making the wrong decision to even entertain this.  It should be exactly where the crime was committed, and take it to them, and do it in civil court.

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

Text survey question is: Do you want to see the alleged 9/11 mastermind stand trial in New York City?

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

Joining me now is New York Congressman Anthony Weiner.

You know, Congressman, I don‘t even know where you stand on this.  If I‘m wrong on this, let me know.  And where do you stand?  Should we have the trial here in New York or should the trail be moved for all the things that have been stated by the conservatives? 

REP. ANTHONY WEINER (D), NEW YORK:  Well, not with the same volume as you, but I basically come down in a similar place.  Look, my view is that we politicize terror much too much in this country. 

We in New York, frankly, have terror trials all the time.  We have two going on right this instant.  And the question that I ask is that, why is that we‘ve had this guy, we‘ve held him for six years, and he hasn‘t been brought to justice, he hasn‘t been put to death?  And the reason is we‘ve been tying ourselves in legal knots trying to come up with some construct that allows us to put him on trial that have twice been struck down by the courts. 

We have the best prosecutors anywhere.  We have the best police force in New York that anyone could find. 

I don‘t believe we have to shut down the city in a ring of steel in order to have what is going to be basically a fairly run-of-the-mill trial.  He‘s already admitted to the crime.  We just need some place, some venue to take that pleading, and then, hopefully, a jury here in New York will put him to death. 

SCHULTZ:  Does it make the White House, the Obama administration look weak if they move this trial and move it out of civil court?  Because all of this has started after the righties started jawing about this.  And they‘re going to pick on Obama, the president, whatever he wants to do. 

What do you make of this? 

WEINER:  Well, it‘s going to be in criminal court.  But look, I think that the problem is that we have allowed the hysteria to overcome the debate here a little bit. 

I mean, I think that people have a right, frankly, to see their criminal justice system work.  I agree with—sit down for this one.  I agree with Rudy Giuliani when he said during the Moussaoui trial that it was a proud moment for our American justice system and that that guy was brought to justice. 

This notion that we are going to have to give up all of our freedoms here in New York in order to have a trial is just wrong.  We‘re having a trial right now on the driver and chef for Osama bin Laden. 

SCHULTZ:  Yes.

WEINER:  Most people aren‘t even where it‘s going on. 

I believe that this will be ultimately a good moment when the jury of New Yorkers decides the fate of the guy who masterminded this.  I don‘t want it to be in the international court in Haiti or someplace else.  I want it to be here in New York. 

SCHULTZ:  This is Senate Republican Leader—Minority Leader Mitch McConnell on this issue. 

(BEGIN VIDEO CLIP)

REP. MITCH MCCONNELL ®, MINORITY LEADER:  The only time this administration ever cites the previous administration for a precedent is to mention that some terrorists were tried in U.S. court.  We now know that that was a mistake.  That was a mistake by the previous administration. 

(END VIDEO CLIP)

SCHULTZ:  Really?  Is that true, Mr. McConnell?  Where was your criticism back then? 

We‘ll talk about that in a moment. 

Is this really a situation where we have seen, Congressmen, politics drive this ship? 

WEINER:  Well, I think it‘s the responsibility of government to keep people safe, but, you know, much too much—and this isn‘t just recently, it‘s going back years now—you know, we‘re using the hysteria and the fear that I think, frankly, makes our country look weak.  We‘re a powerful country.  We‘re not afraid to have a trial in New York or anywhere else.

I think what we should be doing as government officials, we should be saying to the citizens, look, we have the competent people to prosecute crimes.  The prosecutors at the Justice Department are going to get a conviction here.

And I would say to my colleagues who are criticizing this, let us take a step back and let the prosecutors do their job, let the judges do their job.  And to the police department here in New York City, I‘m sure they can keep us safe.

We protect when presidents come, visiting kings.  The United Nations General Assembly has both of the above here, and we have no trouble keeping people safe.  I don‘t believe we need to shut down our city in order to ensure that we have a fair trial. 

SCHULTZ:  Congressman, you‘re levelheaded on this issue.  Call the White House for me.  Great to have you with us tonight.  I agree with you 100 percent.

Thank you. 

WEINER:  Thank you.

SCHULTZ:  Congressman Anthony Weiner here with us on THE ED SHOW.

Now let‘s go to Katrina vanden Heuvel, editor of “The Nation.”  I‘m not sure where Katrina stands on all of this.

Katrina, should New Yorkers have a say in this, or should it just be what the Obama administration wants?  What do you think? 

KATRINA VANDEN HEUVEL, EDITOR, “THE NATION”:  Well, I go back to what Representative Weiner said, and I think that‘s right, that fear and hysteria have overcome facts and have overcome the idea that we can remain safe and secure while remaining true to our bedrock ideals.  This is strange moment, Ed, because Mayor Bloomberg, at first, said that it was fitting that New York be the venue. 

SCHULTZ:  What happened? 

VANDEN HEUVEL:  Well, the attacks were committed here and thousands killed.  Fitting that justice be done.  What happened? 

Based on the reporting I‘ve seen, I think a lot of pressure was put on the mayor and the police commissioner because of the real estate lobby in this city.  I mean, this—first of all, federal criminal court has handled 195 international terrorists since 2001, many of them in the Bush administration.  This city is equipped to deal with terrorist trials in federal criminal court.  Why, suddenly, there is a kind of hysteria about the costs, about the security needed to handle this trial is something to ask Mayor Bloomberg. 

I think the larger question, Ed, is not where it‘s going to be held this trial.  I do think for cathartic reasons and for reasons signaling to the world that we are resilient, tough people.

New York City is the place, but the key is the principle, Ed.  This must be done in federal criminal court, due process protections.  And that, to me, is the key, the principle, because we have violated our principles, Guantanamo became the great recruiting tool for terrorists around this world, and if we fail to uphold our principles, it looks like we‘re scaredy-cats. 

SCHULTZ:  We hold this trial in New York City, and we do it in federal court, we attain the moral high ground and demonstrate to the world exactly how we deal with this.  And I think it‘s a mistake.  I also believe that the Democrats, Katrina, are being played like a fiddle on this. 

VANDEN HEUVEL:  Well, they have—listen, so many of the Democrats have been played like a fiddle, because for too long, Ed, toughness has been confused with being hardheaded and unwilling to understand that when you stay true to your ideals—and to be soft on terror is not to say you can‘t have trials in federal criminal court, which have tried, convicted, imprisoned international terrorists.

SCHULTZ:  Yes.  Why would...

VANDEN HEUVEL:  To hear Jim Webb, though—this is striking to me.  Jim Webb, a senator from Virginia, is leading a commission to rethink our criminal justice system. 

He has been really courageous and smart about why we have one of the highest incarceration rates of African-Americans, of people in this country, but now he‘s running scared.  He‘s saying we need military tribunals.  That is a violation of due process and of the fundamental of ideals in our country.

And we send a signal, Ed, as you said so clearly, that we are strong people.  We are strong. 

SCHULTZ:  Why would the administration throw Eric Holder‘s decision under the bus?  And why would they kowtow to Michael Bloomberg just because he‘s changed his mind and just, all of a sudden, some Democrats have also changed their mind, and all of a sudden they are worried about how much is this going to cost?  Who cares how much it costs? 

What price are we going to pay when it comes to the moral high ground? 

I think it makes Mr. Holder look bad. 

VANDEN HEUVEL:  First of all, I think there has been an overstatement.  The cost number is being flown around.  There‘s some hysteria around that too.

But I come back to the fact that I do think that the real estate lobby in this city and some community groups have been frightened by the kind of fear mongering and hysteria about the costs associated, and statements about how this will become another site for a terrorist attack.  What becomes a site for a terrorist attack is if you don‘t show that you are strong and resilient.

The other problem is that you have mostly Republicans who are showing that they have no faith in our system, Ed. 

SCHULTZ:  Exactly. 

VANDEN HEUVEL:  When they talk about how we need military tribunals to be safe, no faith in a system which they claim day in and day out to uphold. 

SCHULTZ:  Yes.

VANDEN HEUVEL:  That is a violation.  So I think if this—listen, if we have trials on military bases, or in prison systems, the key again is the principle involved.  For too long over these last 10 years, the administration and the legacy that Obama inherited...

SCHULTZ:  Absolutely. 

VANDEN HEUVEL:  ... has been condoning torture.  Guantanamo, military tribunals—are we any safer?  No.

SCHULTZ:  No. 

Katrina, great to have you with us tonight.  I appreciate it so much.

VANDEN HEUVEL:  Thank you.

SCHULTZ:  And just a reminder, your text question tonight, folks, is:

Do you want to see the alleged 911 mastermind stand trial in New York City? 

Text “A” for yes and “B” for no to 622639.  Hope we get a big response on that tonight.

I may be wrong.  I don‘t think I am. 

Coming up, President Obama has done his part reaching out to Republicans, but the “party of no” hasn‘t changed its tune.  Former Republican Arlen Specter will tell us if his Grand Old Party, the one he used to be with, even knows how to say the word “yes.” 

And a Super Bowl ad starring Gator quarterback Tim Tebow has kicked off a fight between Sarah Palin and a powerful feminist group.  We‘ll settle that score in the “Playbook.”

All that, plus I‘ve got a dandy for you in “Psycho Talk” tonight. 

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

(COMMERCIAL BREAK)

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

This morning, President Obama rolled out his budget proposal for fiscal year 2011.  The $3.83 trillion plan includes cuts or changes that will help save $20 billion this year.  And it gets rid of the Bush tax cuts for the rich.  But it also puts the federal deficit at record levels. 

Today, the president tried to walk the line between acknowledging the importance of bringing down the deficit and emphasizing his commitment to helping Americans recover from the recession. 

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  We simply cannot continue to spend as if deficits don‘t have consequences, as if waste doesn‘t matter, as if the hard-earned tax dollars of the American people can be treated like Monopoly money.  I think it‘s very important to understand, we won‘t be able to bring down this deficit overnight given that the recovery is still taking hold and families across the country still need help. 

We will continue, for example, to do what it takes to create jobs. 

That‘s reflected in my budget.  It‘s essential. 

(END VIDEO CLIP)

SCHULTZ:  And, of course, the Obama White House has taken a bunch of heat for the deficit and how it blows that up.  But I do remember an interview with former Vice President Dick Cheney who once said that deficits don‘t matter. 

Joining me now from the White House is Jared Bernstein, the chief economist for Vice  President Joe Biden. 

Jared, great to have you on tonight. 

JARED BERNSTEIN, CHIEF ECONOMIST FOR VICE PRESIDENT BIDEN:  Thanks, Ed. 

SCHULTZ:  You bet. 

The American people really want to know one thing.  This $100 billion that is in this for job, where does it go, what does it do, how does this work? 

BERNSTEIN:  Three places, Ed—small businesses, clean energy and infrastructure investment.  Job growth in each one of those areas.  Thirty-three billion dollars of that is a new jobs hiring tax credit for small businesses which gives them a tax credit if they add new people or if they raise wages.  There‘s some other tax assistance for small business that‘s important now coming out of this downturn. 

Building off some of the infrastructure successes of the Recovery Act

you know, we‘ve got two million jobs saved or created thus far through the act.  Lots of those are guys fixing the nation‘s infrastructure. 

That‘s important, too.  And then on the clean energy side, that obviously

complements the president‘s agenda, and there is real work to be done there

weatherization, retrofits, getting folks back to work right away. 

SCHULTZ:  OK.  Now, there have been—well, there‘s really only been one tax increase, and that was on smokers in this country for SCHIP.  But it‘s clear that the Bush tax cuts are going to be gone.  And are you going to raise taxes—the American people want to know, are you going to raise taxes on the top two percent?  Does this budget do that? 

BERNSTEIN:  This budget does that.  It was also in our last budget. 

And let‘s be very clear.

The parts of the Bush tax cuts that are expiring in this budget are those that, as you correctly noted, affect only the top two percent, the wealthiest of households.  And, by the way, that ends up generating almost $700 billion of revenue almost 10 years, some of the real winners in the economy over the past period. 

But there are other measures here that help to balance—that help us get back on the path towards sustainability, as the president mentioned.  For example, a $90 billion fee on large financial institutions to ensure that the benefits they got under the TARP program are paid back. 

SCHULTZ:  All right. 

Does the White House feel, Jared Bernstein, that you‘re going to be able to corral Democrats on this?  I mean, Democrats have been all over the place.  It‘s an awfully big tent in the last year. 

Are you going to be able to corral Democrats and get this thing through?  What do you think? 

BERNSTEIN:  We‘re confident in that, Ed.  I think that this budget does two things. 

This budget, in the immediate term, something that resonates a lot, I think, with Democrats, really with any politician who‘s thinking about that 10 percent unemployment rate, this budget immediately helps with some targeted jobs movement programs to get people back to work quickly, to build on some of the successes of the Recovery Act, and does it quickly. 

But in the medium term, this budget—and I don‘t care if you‘re a Democrat or a Republican.  You‘ve got to resonate to the kind of the things the president was just saying in that tape you played.  In the medium term, the budget puts us on a path towards fiscal sustainability.

This budget saves $1.2 trillion—that‘s outside of war savings—over 10 years.  And believe me, that ain‘t easy when you‘re trying to boost the components of the budget that complements the president‘s agenda, whether it‘s education, whether it‘s clean energy, whether it‘s health care reform.  So I think this is a budget that artfully balances those two imperatives—jobs and, in the longer term, fiscal sustainability. 

SCHULTZ:  Well, you‘re going to have the cons out there talking about the budget deficit and everything else.  I think the White House gets it.  The folks in Michigan, in Ohio and Indiana, they lost their job.  They‘re looking for a job.  They‘re not talking about the deficit. 

People at a higher pay grade are going to have to worry about that.  It is about jobs.  I hope this $100 billion package in the budget is the real deal. 

Jared Bernstein, good to have you with us. 

BERNSTEIN:  And Ed, remember the president said, “I want that jobs package on my desk as soon as possible.”  Let me tell you, he meant. 

SCHULTZ:  Yes.  No doubt. 

Jared, thanks a lot.

BERNSTEIN:  My pleasure. 

SCHULTZ:  Coming up, a right-wing whacko just said that he‘s so scared of the unions, he‘s going to start packing heat. 

OK.  We‘ll talk about that next in “Psycho Talk.”  

Stay with us. 

(COMMERCIAL BREAK)

SCHULTZ:  And in “Psycho Talk” tonight, we‘re starting out February with a bang, let me tell you.

Righty conspiracy theorist Andrew Breitbart—now, this is the wing nut who threatened the Justice Department, saying he‘d mess with the 2010 elections if they didn‘t investigate ACORN.  Now the paranoia may be really setting in with this guy.  He‘s saying he needs to arm himself against the unions. 

(BEGIN VIDEO CLIP)

ANDREW BREITBART:  I need to get a gun.  I need to get a gun.  I‘m

going to probably get arrested in L.A. for having it, but I need it.  I

need it these days with SEIU and ACORN

(END VIDEO CLIP)

SCHULTZ:  Oh, yes.  They‘re dangerous people. 

Buddy, you‘ve got plenty of reasons to be afraid of both of those groups, because they have the truth on their side.  Those folks, along with most of America, are smart enough to see through your ridiculous rhetoric.  And for you to say that you need a gun to fight off the working men and women in this country, that is “Psycho Talk.”  

Coming up, Republican word twister Frank Luntz has a game plan to help the GOP protect its cronies on Wall Street.  Former Republican-turned-Democratic Senator Arlen Specter will respond in just a moment. 

And “Caribou Barbie” is going head to head with a feminist group over a Super Bowl ad.  More on that in the “Playbook.”

Plus, an investigative report on a possible John Edwards sex tape.

Please say it isn‘t true, John.

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

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA:  I want you to stand up for your beliefs, and, knowing this caucus, I have no doubt that you will.  I want us to have a constructive debate.  The only think I don‘t want—here I am listening to the American people and I think they don‘t want either—is for Washington to continue being so Washington-like.  We‘ve got to close the gap a little bit between the rhetoric and the reality. 

(END VIDEO CLIP)

SCHULTZ:  Folks, is it too much for us to say that the president has extended more olive branches to the opposing party than probably any other president in a contemporary time?  He‘s doing everything he can.  The president talked to the House Republicans for 90 minutes on Friday.  By the way, no teleprompter.  He talked about bipartisanship.  This is what he got in return over the weekend.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Many of the proposals the administration has put forward are jobs killers.  They have taken an agenda to the left. 

UNIDENTIFIED FEMALE:  The Obama administration appears to have a blind spot when it comes to the war on terrorism.  And because of that blindness, this administration can not see a foreign terrorist, even when he stands right in front of them, fresh from an attempt to blow a plane out of the sky on Christmas day. 

REP. JOHN BOEHNER (R-OH), MINORITY LEADER:  The president is—he was the most liberal member of the United States Senate.  You don‘t get there by accident.  If you look at the policies that we‘ve seen over the course of this year from the administration and his Democrat colleagues in Congress, there are all of these leftist proposals. 

(END VIDEO CLIP)

SCHULTZ:  And he just happened to win nine Bush states.  I think it‘s pretty clear the Republicans are just giving lip service to the word cooperation.  They have no desire to work with the Democrats and this administration, I don‘t think.  It‘s an election year.  And their strategy is still Waterloo. 

Joining me now is Pennsylvania Senator Arlen Specter.  Senator, good to have you with us tonight. 

SEN. ARLEN SPECTER (D), PENNSYLVANIA:  Thank you.  Nice to be here tonight. 

SCHULTZ:  You bet.  Seeing where you were a year ago and where you are tonight, I thought you‘d be a perfect person to ask.  Is the president wasting his time?  What do you think? 

SPECTER:  No, he is not wasting his time.  We have to keep trying.  When there were 60 Democrats in the Senate, Republicans could say, you‘ve got enough to do it all yourself.  When the number will be reduced to 59, then the American people will be know that there has to be at least some Republican cooperation to get anything past. 

Ed, what I think we have to do—I heard the quote that you just had from the Republicans.  And that‘s a lot of political rhetoric.  What I think we have to do is take specific legislative proposals to the Republicans, and there are some who I think would be willing to talk.  And it‘s pretty plain to everybody that the American people are fed up with gridlock in Washington.

SCHULTZ:  Senator, is it low-level political rhetoric to have 112 filibusters? 

SPECTER:  Well, it‘s political rhetoric, Ed.  I wouldn‘t call it high level.  I chose my words low-level political rhetoric with calculations.  They want to make a splash.

Let‘s get specific.  Let‘s get specific with concrete legislative proposals.  Let‘s take to the Republicans the idea for a 5,000 dollar tax credit for each new employee who is hired.  Let‘s take to them a proposal for a vacation on the payroll tax.  And let‘s see what they say.  And when we deal in specifics, I think if they continue to say no, no, no, they‘ll pay a political price. 

SCHULTZ:  In the meantime, they‘ve commissioned Frank Luntz to come up with another study.  He‘s got a 17 page memo out to stop financial reform.  They talk good game about getting along.  But then he comes and says, “if there is one thing we can all agree on, it‘s that the bad decisions and harmful policies by Washington bureaucrats that, in many ways, led to the economic crash must never be repeated.  Washington incompetence is the common ground on which you can build support.” 

So apparently the game plan is to show how incompetent everybody else is, except the way they think.  Correct me if I‘m wrong, Senator Specter, but it just appears to me that everything the Republicans are talking about, even to this day, are exactly what they tried for the last eight days before President Obama got in.  What do you think? 

SPECTER:  Well, Ed, that‘s one of the typical Frank Luntz memoranda.  I think he ought to be a little more careful how he distributes it, so it doesn‘t get right to the news media.  But all of the Republicans don‘t follow what Frank Luntz had to say.  I used to get his memos and didn‘t pay much attention to them.  So we can circumvent Frank Luntz.  I think we have tougher opponents than that guy.

SCHULTZ:  Senator, great to have you with us tonight.  Thanks so much. 

SPECTER:  Thank you, Ed.  Always a pleasure. 

SCHULTZ:  You bet.  Thank you. 

Senator Arlen Specter with us here tonight.  For more on this, let‘s go to Democratic strategist Steve McMahon.  I‘m taken by Susan Collins‘ comment.  I mean, on the heels of the president going over and having an open and honest discussion with the Republicans, trying—clearly trying to make some headway, and then she comes back and blindsides him with that, on something that happened over a month ago.  Is the president wasting his time?  I‘ll ask you the same question? 

STEVE MCMAHON, DEMOCRATIC STRATEGIST:  He may not be wasting his time.  But it‘s what the American people expect, ed.  And the American people are not stupid.  Ninety one percent of them want Democrats to work with Republicans.  But most of them understand that Republicans have a political strategy of saying no.  And most of them are holding the Republicans responsible for that. 

The latest NBC News poll suggests that 47 percent of people blame the Republicans for gridlock, and only 21 or 22 percent blame President Obama.  So he‘s doing the right thing.  Whether or not it gets results remains to be seen.  It‘s what the American people expect.  It‘s what he said he‘s going to do and it‘s what they really want him to do.

SCHULTZ:  What happens, moving forward, if the Republicans don‘t work with him on a jobs bill, and they complain about everything that is in there?  If you look at this jobs bill, it‘s got tax credit for hiring people.  It‘s got tax cuts for the middle class.  How could the Republicans not embrace at least some of what the president is trying to do when it comes to jobs? 

MCMAHON:  That‘s when the rubber is going to hit the road, Ed.  As you point out, that jobs bill the president is talking about does everything the Republicans have been saying they want to do.  They say they want to create jobs.  Well, a jobs bill does.  They say they want to cut taxes for small business.  This jobs bill does that.  They want us to spend capital gains on small business so that there is capital flowing for people to create jobs.  This bill does that.

I think Senator Specter‘s idea to take specific policies, and not talk to the Republicans, but put it in front of them and make them vote on it.  Do the Republicans really want to vote against tax credits for small business?  Do they want to vote against a payroll tax holiday for small business?  Do they want to vote against a cut in capital gains cuts for small business?  I don‘t think they do.  And I don‘t think they will, at the end of the day.  But we‘ll see whether the political strategy wins or whether they do the right thing here. 

SCHULTZ:  Are core Democrats to believe what Rahm Emanuel was quoted as saying, that it‘s time to focus on jobs and financial reform, and health care is going to have to take a back seat?  What do you think?  Is health care dead at this point?  What do you think? 

MCMAHON:  I don‘t think it‘s dead at all.  I think they are trying to figure out a strategy, and the strategy probably is going to be some sort of pass the Senate bill in the House, and have a companion bill, at the same time, to address some of the issues that people object to. 

But I do think the American people expect the president and the Congress and the Republicans to focus on job creation.  I think the administration has gotten that message.  It‘s not clear to me the republicans have.  They still seem to be the party of say no, not so fast, not so much, not so quick, not right now, not any time in my lifetime. 

SCHULTZ:  Not ever.

MCMAHON:  I don‘t think that‘s a very good strategy. 

SCHULTZ:  Steve, great to have you on.  Thank you so much. 

MCMAHON:  Thank you very much, Ed. 

SCHULTZ:  Now, the White House wants to turn, as we know, the focus to jobs and the economy, but it‘s also facing a major blow up regarding the KSM trial here in New York City.  I think it would be a huge mistake for the Obama administration to back pedal on this, decide with Mayor Bloomberg over their own attorney general. 

For more, let‘s bring in our panel tonight on this discussion and more, Bill Press, nationally syndicated radio talk show host, and Ron Christie, Republican strategist and former special assistant to Vice President Cheney. 

All right, I‘ve stated my piece here tonight.  I think that it‘s a sign of weakness.  Bill Press, where do you stand on this?  Should the president back his attorney general?  Maybe we shouldn‘t be viewing it that way.  What do you think?

BILL PRESS, RADIO TALK SHOW HOST:  I‘m afraid that he‘s already caved in.  I think the administration‘s made that decision.  I agree with you.  I think it‘s the wrong decision.

I blame it on Mayor Bloomberg.  I also blame it on a lot of cowardly Democrats in New York State, politicians that I thought would stand tough and tall.  Instead, they are letting one terrorist dictate—or alleged terrorist—dictate where we hold a trial in this country.  There‘s no reason that this trial cannot be or should not be held in New York. 

And I want to point out, under eight years under George Bush and Dick Cheney, 119 cases of terrorists were brought to trial in federal courts, including Richard Reid, the shoe bomber, in Boston, Zacharias Moussouai, the terrorist—al Qaeda guy in Alexandria, Virginia.  No disruptions.  They worked.  They are in prison now.  We can do it with KSM too.  And we should, because of who we are as nation. 

SCHULTZ:  I think as a moral high ground this is the way to go. 

PRESS:  Absolutely. 

SCHULTZ:  What happened to all this New York toughness, and the expertise of security is here in this city far more than it is anywhere else?  But I think the last two guys that tried to hit us—one guy tried to put his shoe on fire and the other guy tried to set his pants on fire.  So they haven‘t been very successful in trying to hit us. 

Let‘s go to Ron Christie.  Ron, where do you stand on this?  Why is it the right thing, in your opinion, to move the trial out of New York City? 

RON CHRISTIE, REPUBLICAN STRATEGIST:  Ed, I think it‘s the right reason to move it out of New York City for a variety of reasons.  First of all, I think the safety and security of the citizens of New York is paramount.  You‘re talking about a 200 million dollar price tag for security in the city of New York.  That‘s very important.  We can‘t afford it in these times.  In fact, the police commissioner said he couldn‘t guarantee the safety.

Why spend 200 million dollars a year when we spend about that much on the detention facility in Guantanamo Bay, where we can try them without that expensive American tax payer.  That‘s the first point. 

SCHULTZ:  Can the police commissioner guarantee our safety tonight?  Can we ever have our safety guaranteed at all?  Ron, if this is about grabbing the moral high ground, and putting our judicial system on showcase for the rest of the world on how we fight terrorism, doesn‘t this make us look week and afraid and scared and running? 

CHRISTIE:  Absolutely not.  I think the United States president has to take a look and say, what is in the best safety and security interests of this country.  Don‘t forget, Ed, we passed the Military Commission Act back in 2006 that specifically labels individuals as unlawful enemy combatants if they have an affiliation with al Qaeda.  We have the facilities and military institutions not just in Guantanamo, but around the world, where we can try on a military facility. 

SCHULTZ:  And it looks militaristic.  It looks militaristic and strong handed. 

CHRISTIE:  Ed, that was the law of the land that was passed by an overwhelming majority of Republicans and Democrats, that said, this is the law of the United States.  So it‘s not militaristic.  It‘s following the law of the land.

PRESS:  Ed, let‘s get a word in here.  Look, we either believe in the American system of justice or we don‘t.  Again, I don‘t know why Ron didn‘t resign when he was on Dick Cheney‘s staff if he‘s so against this policy when they followed it for eight years.  It is the right policy for America.  It makes us look tough and just to the world.  We believe in due process or we don‘t. 

Why are we afraid of this one guy.  And if security was a problem in New York City, what about Alexandria, Virginia?  What are we afraid of? 

SCHULTZ:  Why don‘t we all move out of New York?  Let‘s get the hell out of here.  We‘re going to get hit again. 

CHRISTIE:  You guys are hitting the fundamental point.  The fundamental point—and I think this is also illustrated by Scott Brown‘s victory in Massachusetts.  The American people don‘t want Miranda and Constitutional provisions afforded to unlawful enemy combatants.  Why are we giving unlawful enemy combatants, who are trying to kill Americans, civil rights and civil—and constitutional protections?  It‘s absurd. 

PRESS:  If I may jump in, I think you‘re missing the fundamental point, which is who we are as Americans.  And you want to throw away the Constitution because we were attacked on September 11th.  The American people don‘t want to do that.  Be proud of who we are. 

SCHULTZ:  Bill Press, Ron Christie, stick around, fellows.  We got more coming.  Stay with us.  Great discussion. 

Coming up, when it comes to John Edwards, we know about the sex.  We know about the lies.  But there might be a videotape.  Say it ain‘t so, Johnny.  That‘s next in my playbook.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  In my playbook tonight, Sarah Palin is running defense for Florida quarterback Tim Tebow.  Tebow and his mother are starring in a pro-life Superbowl ad sponsored by conservative group Focus on the Family.  CBS is airing it on Sunday, despite a traditional policy of banning advocacy ads.  Several women‘s rights groups are urging the network to scrap the Tebow ad.  And that‘s where Sarah Palin comes.  She addresses these organizations, in a Facebook post, with some very strong language.

For reaction to all of that, let‘s go to the president of the National Organization of Woman, Terry O‘Neil.  Terry, great to have you with us tonight.  Wouldn‘t your issue be more with—at this particular juncture, be more with CBS running the ad than anything Sarah Palin would say?  What do you think?

TERRY O‘NEIL, PRESIDENT, NATIONAL ORGANIZATION OF WOMEN:  Sure.  We were shocked when CBS—when we learned that CBS was going to air a Focus on the Family ad.  It‘s not just pro-life.  It is anti-abortion rights for women.  And it went against CBS‘ policy—it seems a little bit hypocritical then for CBS, when called out on that, that they changed their policy so they could then justify running the ad. 

It‘s highly controversial.  It‘s not the right—the Superbowl is not the right place to be having that ad there. 

SCHULTZ:  What kind of response did you get from the network when you called them out on the gay dating service ad that they wanted to run in the Superbowl and that was rejected? 

O‘NEIL:  Yeah, they haven‘t backed down on anything.  It‘s a real shame.  We are still hoping that CBS will pull that ad.  Focus on the Family is about as extreme as you can get.  They have an agenda of overturning Roe versus Wade and their ad advances that agenda. 

SCHULTZ:  So is NOW going to run an ad in the Superbowl.  Why don‘t you run an ad in the Superbowl?  Why don‘t you counter it? 

O‘NEIL:  I tell you what, if I had 2.5 million dollars, I would be putting it into achieving women‘s rights and not giving it over to CBS.  I don‘t think that would be a good use of my members‘ money.

SCHULTZ:  Do you have think it would be effective for them? 

O‘NEIL:  The ad—you know, I haven‘t seen the ad.  I don‘t know what it is.  I will tell you that when I first heard about it, one of my first thoughts was wouldn‘t we celebrate that Pam Tebow had the ability to make that decision for her own health, and for her own future?  But don‘t we know that Focus on the Family would not want a woman in the same situation to make a decision for herself and her family? 

SCHULTZ:  President of NOW Terry O‘Neil with us tonight.  Thank you, Terry.  Appreciate your time.  

One last page in my playbook tonight; just when you think John Edwards can‘t sink any lower, we find out that there‘s a sex tape.  NBC‘s Lisa Myers has the details. 

(BEGIN VIDEOTAPE)

JOHN EDWARDS, FMR. PRESIDENTIAL CANDIDATE:  To everybody, we need a movement. 

LISA MYERS, NBC NEWS CORRESPONDENT:  This latest episode pits Edwards‘ former mistress, Rielle Hunter, against Edwards personal aide, Andrew Young, whose tell-all book describes his elaborate effort to help Edwards cover up his affair.  At this lavish home in California, Young lived with and helped hide Rielle Hunter for months, while Edwards was in the thick of a presidential campaign.

EDWARDS:  If you want to live in a moral and just company—

MYERS:  Young claims he later returned to this house in North Carolina, also shared with Hunter, where he found a sex tape, which he described as “John Edwards and a naked pregnant woman, photographed from the naval down, engaged in a sexual encounter.” 

In a legal filing, hunter now says I authored a personal video that depicted matters of a very private and personal nature.”  But she says she shot it in September 2006 before she became pregnant.  What does the tape tell us about John Edwards? 

UNIDENTIFIED MALE:  John Edwards was completely out of control.  Allowing yourself to be videotaped in a compromising position in the middle of a presidential campaign speaks to someone who has really lost touch with reality. 

MYERS:  Hunter says she had decided to get rid of the tape, but was concerned about people searching her trash.  “So I decided to instead store the remains of the mini DV tape in a hat box with other important items.”  She says she later asked Young to go into the box to get her passport and subsequently realized he had taken the video and other items. 

But Young claims he found the tape, labeled special, in a box of trash Hunter left behind.  So far, a North Carolina judge is siding with Hunter and issued an order for Young to turn over all copies of the video and other items to hunter. 

UNIDENTIFIED MALE:  Both John Edwards and Rielle Hunter are afraid that somehow this tape will make it on to the Internet, and that perhaps the Youngs would be willing to sell the tape.

MYERS:  Also, police documents reveal new details about the tumultuous relationship between John and Elizabeth Edwards after his affair.  In October 2008, sheriff deputies were called to their estate, after a domestic dispute triggered a 911 call from Elizabeth, claiming that John stole her wallet during an argument. 

(END VIDEO CLIP)

SCHULTZ:  That‘s why we have a vetting process in this country. 

Coming up, Robert Gibbs says that health care is on the five-yard line.  Some House Democrats want to reverse and get the public option into play again.  The congressman who is calling that play is with us next on THE ED SHOW.  Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JOHN KING, CNN ANCHOR:  You were on the one yard line five weeks. 

Where are you and what is next? 

ROBERT GIBBS, WHITE HOUSE PRESS SECRETARY:  We‘re still inside the five yard line.

KING:  You really believe that?

GIBBS:  Absolutely.  We‘re one vote away in the House of Representatives from making health care a reality—health care reform a reality. 

(END VIDEO CLIP)

SCHULTZ:  Well, you need to call a bootleg.  It‘s called reconciliation.  The White House not giving up on health care reform.  Today, the president said he wants a bill not just this year but soon.  And with reconciliation a possibility, at least some parts of the bill, the public option, could be back on the table, believe it or not.  Two democrats in the House are leading the charge to  resurrect the public option.  One of them is Colorado Congressman Jared Polis.

Congressman, good to have you with us tonight.  How in the world are you going to get the public option back on the playing field?  What‘s the game plan?   

REP. JARED POLIS (D), COLORADO:  Well, you know, Ed, we in Colorado are accustomed to fourth quarter comebacks.  We‘re the state of John Elway.  We know how to get this kind of thing done.

SCHULTZ:  He‘s been gone ten years.  How are you going to get this to work? 

POLIS:  You know, we‘re keeping the legacy alive.  Look, it‘s a whole different ball game.  When we needed 60 votes, the truth was that any one senator, two senators, could hold things up, got rid of the public option.  Now we‘re going with simple majority rule reconciliation, the regular process of the Senate.  All we need is 51 senators to stand up and say yes, let‘s have a public option.  We now have over 93 signers for Representative Hindery and my letter in the House of Representatives supporting the public option.  It‘s the fiscally responsible thing to do.  It‘s one of the most popular things in the health care bill. 

SCHULTZ:  You‘re getting a lot of help from the Progressive Change Campaign Committee.  They got over 350,000 members across the country.  What I think  you need—and tell me what you think—be nice to have the White House come out and make a strong statement, if you think you can go down this road and get reconciliation.  What do you think? 

POLIS:  You know, everybody in the Washington—sort of the favorite parlor game now—they‘re sitting around saying how do we get to 218 in the House, how do we get to 51 in the Senate? I think the public option—and the American people have known this all along.  The public option is one of the best ways to do that.  It saves taxpayer money, between 25 and 110 billion dollars.  If we have the public option, we can reduce the deficit.  We can cut some of the taxes that were in the bill that people don‘t like.

It‘s a more popular bill overall.  I think that‘s what we need to take away from Massachusetts.  Some of the thing that the Senate has stripped out of the bill, like the public option, has made it less popular.  If there is a mandate, people want to be able to choose a public option, and not go back after the same insurance companies they were choosing.  So the public option is picking up momentum every day. 

SCHULTZ:  I hope so.

POLIS:  We have a real shot at getting it in the bill.

SCHULTZ:  Congressman Polis, good luck to you.  We‘ll follow the story.  We‘ll visit again.  Thanks so much. 

Tonight in our text survey I asked, do you want to see the alleged 9/11 mastermind stand trial in New York City?  Seventy seven percent of you said yes; 23 percent Of you said no.  A reminder that the National Association of Free Clinics will be in Hartford, Connecticut this Wednesday, February 23rd.  Health care will be provided for everyone who is not insured.  I‘ll be broadcasting live from the clinic with our show.  Volunteer.  You can do it.  Send a contribution as well.  Go to Ed.MSNBC.com.

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

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