updated 2/9/2011 7:15:13 PM ET 2011-02-10T00:15:13

Guests: David Cay Johnston, Laura Flanders, Erica Payne, Suhail Kahn, Dave

Weigel

           

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

These stories are hitting “My Hot Buttons” at this hour:

Americans are paying less taxes than at any time since the ‘50s?  Does it feel that way?  Well, it is a fact.  But President Obama is still under attack for being a tax-and-spend liberal, and for redistributing the wealth in America.  My commentary on that coming up.

A congressman says federal judges should be put on the endangered species list.  And an Alabama state senator talks about illegal immigration and tells Republicans to empty the clip?  OK.

And the Tea Party town hall convenes in Washington.  Just as a Colorado Republican calls it quits.  He says he‘s tired of the nuts.  So am I.

This is the story that has me fired up.  Tonight, we lead it of just reminding you: don‘t ever let any Republican lie to you about President Obama.

He is not a tax-and-spend liberal.  Income tax payments are at a 60-year low and conservatives won‘t give President Obama an ounce of credit, any credit at all.  See?  They want to defeat him.

The Republicans have created a tax narrative around this president right from the beginning.

(BEGIN VIDEO CLIPS)

           

SARAH PALIN ®, FORMER ALASKA GOVERNOR:  He‘s hiding his real agenda of redistributing your hard-earned money.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE:  The American people are asking the question, where are the jobs?  They‘re not raising their hand and asking the question, can I pay higher taxes?

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER:  I think it is outrageous to suggest that raising taxes in the middle of a recession is a good idea.

NEWT GINGRICH ®, FORMER HOUSE SPEAKER:  Raising taxes on the people who create jobs kills jobs and the American people know it even if the president doesn‘t.

RUSH LIMBAUGH, RADIO HOST:  He really believes his job is to return the nation‘s wealth to its rightful, quote-unquote, “rightful” owners.  And that means that he believes the people who have wealth have stolen it from those who have no wealth.  It‘s been unfairly achieved and accrued, and it‘s his job to take it and redistribute it.

(END VIDEO CLIPS)

SCHULTZ:  So, do you think they‘re all on the same page?  Let‘s see.  I started out saying that tax payments are at a 60-year low in this country.  It‘s the age of sacrifice.  We just don‘t want to make any sacrifices.

What those folks were saying right there, nothing could be further from the truth.  Conservatives, listen very closely—for the third year in a row—in a row—Americans will be paying less in taxes.  2010 federal revenues were 14 percent smaller than in 2008.  Individual income tax revenues were 27 percent less in 2010 than in 2001, the first year of the Bush administration.

Now, individual income taxes as a percentage GDP have dropped from 9.7 percent in 2001 to 6.2 percent in 2010.  Folks, that‘s a 36 percent drop.  Numbers haven‘t been that low since World War II.

Now, to be fair, many of those numbers really are low due to the economy and the recovery and the record job losses that we‘ve seen in this country, but President Obama has also made a habit out of cutting taxes, just what they wanted all along.  The president passed a making work pay tax cut.  He extended the Bush tax cuts for two years, and he passed a 2 percent payroll tax holiday on Social Security.

None of that matters to these guys over on the right—like Bill O‘Reilly, he asked the president about redistributing the wealth during the Super Bowl interview.

(BEGIN VIDEO CLIP)

BILL O‘REILLY, FOX NEWS:  Do you deny their assessment?  Do you deny that you‘re a man who wants to redistribute wealth?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  Absolutely.

O‘REILLY:  You deny that?

OBAMA:  Absolutely.  Bill, I didn‘t raise taxes once.  I lowered taxes over the last two years.

(END VIDEO CLIP)

SCHULTZ:  Hey, he didn‘t get interrupted when he said he lowered taxes over the past two years.  And just a reminder that tax payments are at a 60-year low.  Don‘t want to forget that.

The president—well, actually he was a little bit off base there.  He has raised taxes on cigarettes and indoor tanning—but, of course, unless you‘re John Boehner, you really don‘t have anything to worry about.  So, don‘t complain.

President Obama hasn‘t taken from the rich and given to the poor.  He‘s provided tax cuts for the super rich and the working poor.  And we‘re going to pay a price down the road if we don‘t buckle up and get to the bar and pay the bill.

Republican presidents, they are the real villains when it comes to wealth redistribution in this country.  During the Bush years—listen to this—the top 5 percent got 52 percent of the tax breaks in this country.  The bottom 20 percent, how did they do?  Well, they only got 8 percent of the benefits.

See?  Bush couldn‘t hold a candle to the highway robber of the poor back in the 1980s.

Back in the years when Ronald Reagan was president, income of the top

0.1        of 1 percent grew over 105 percent.  The bottom 90 percent only had a

1.2        percent increase.

           

Now, you tell me what the mission has been since the Reagan years.  That means the super rich income grew 100 percent faster than the rest of America.  And you want to know what the hell is happening to the middle class?  There are the numbers.

Trickle down economics was an absolute, complete failure and it still is today.  The Bush tax cuts left us with the worst economic crisis since the Great Depression and President Obama is trying to clean up this mess that was 30 years in the making.  And we as Americans are sitting here saying, gosh, it doesn‘t feel like the taxes are as low as they‘ve been since the 1950s.

The Republicans undoubtedly have zero credibility on taxes.  But they‘ve convinced enough sheep to follow and keep following them right off the financial cliff over and over again.

Democrats need to reject any economic cuts John Boehner and Mitch McConnell put on the table.  The Republicans‘ number one goal is basically to systematically undercut the new deal right in front of our eyes.  If they get their way, it will be a full scale attack on middle classers, wage earners, veterans, seniors, the working poor, the middle class was forced to put the Bush tax cuts, the Medicare prescription drug bill, and a couple wars, stick it on the credit card.  Play with it on the plastic.  Let the next folks worry about it.

President Obama needs to level the playing field and ask the rich in this country to do some economic patriotism.  Yes, I think the Democrats need to take these numbers and go right back to the table and start asking Americans if they want to sacrifice.  You notice how no one—and we‘re going to do this story in the coming days—no one ever does a story in the media, no one does a graph out there of just exactly how would our finances be in this country if we were to go back to the old rates?  How long would it take us to get our fiscal house in order?

I mean, obviously, the Treasury needs more money if we‘re going to function.  But you see, the goal for the righties is to starve the beast.

Now, I know all of you just feel so good and warm inside tonight knowing that your taxes are as low as they‘ve been since the 1950s.  But ask yourself this about trickle-down economics—the feds don‘t fork out the money to the states, so ask yourself, how is that property tax thing working out for you as of late?

Any sales taxes been hitting you?  How about transportation costs?  How about education costs?  Don‘t tell me that your health care bill hasn‘t gone up since last year.  It has.

You see, when we all finish our schooling or get into the work force, there is this big funnel and all of these employees and workers go into this funnel.  And it only gets better for a few Americans as we go on in our careers.  And that funnel just gets a little bit smaller and a little bit smaller and a little bit smaller and the people that get down here, they can afford it.

But you see, the folks up here, they still have the same expenses as the folks here and the taxation is totally different.  So, this funnel changes as years go on.  And whereas some people excel in their careers they get lucky, they‘re at the right place at the right time—others are going this way because of out sourcing, because of taxation, because it‘s not fair.  All the breaks go to the top 2 percent.

And now, we‘ve got this thing known as greed.  And the president indirectly addressed it with the Chamber of Commerce just yesterday when he actually had to ask business people to do the patriotic thing in America.  Will you hire somebody?  You got $1.8 trillion sitting over there.

We have businesses in this country who have flourished.  They‘ve flourished because they decided to put the work overseas and they really have no regard for those who are falling out of the funnel.

So, we need to ask ourselves as Democrats, as liberals, and I‘m a professed liberal: are we willing to talk to our kids about sacrifice?  Because we haven‘t sacrificed anything for the last decade.  It‘s been take, take, take.

You know, we almost operate as if we really don‘t think there‘s going to be a tomorrow, that we don‘t even worry about the next generation.  And those sound bites that I played for you, this is where these people are.

In all of those people that I‘ve played in that sound bite tonight for you, that montage, what do they have in common?  They‘re wealthy.  They‘re wealthy and they have the microphone, and they are wealthy and they have the visibility and they can tell their story.

But the working stiffs of America, the middle classers, where‘s your microphone to say you‘re getting screwed?  Where‘s your microphone to talk about, hey, these property taxes are going through the roof because we didn‘t get the federal money to help our No Child Left Behind.

So, the president has the weight of the world and he has a bunch of hate merchants surrounding him who want to se him fail.  I commend the president for going to the Chamber of Commerce and telling it like it is.  Some others will disagree with me later in this broadcast tonight.

And we‘re also going to show you a segment later tonight about how people in the middle of the country think, that they just believe that the president is still and always has been a Muslim.  It‘s amazing.  It‘s amazing what you tell someone and then they believe it and then they go off into outer space and they just cannot change their thinking.

Well, that‘s where we are with our finances.  No one—no one is having the tough conversation with America right now about where we are with the finances and what we have to do to fix it.  And what they want to do is they want to go after seniors.  They want to go after veterans.  They want to go after public education.  They want to take down this health care bill.

These select few that have the money, these select few that have the microphone, these select few that can be media stars, they‘re really not telling the truth about the middle classers.  Notice how the Republicans never used the term “middle class.”  They‘re great at the two-word culture but they never talk about the middle class.

We need some real leadership in this country and I think we all can come to the conclusion that President Obama can‘t do it all.  You know what we‘re going to have in the next two years in government in this country?  More obstruction.  More obstruction.

Get your cell phones out.  I want to know what you think tonight.  Tonight‘s text question is: Should President Obama and Congress raise taxes to balance the budget?  Text “A” for yes, text “B” for no to 622639.  We‘ll bring you the results later on in the show.

Joining me now is Pulitzer Prize-winning journalist, David Cay Johnston.  He‘s the author of “Free Lunch: How the Wealthiest Americans Enrich Themselves at Government Expense and Stick You with the Bill.”  And he‘s a professor at Syracuse University College of Law.

Great to have you with us tonight, Professor.

How do we turn the—

DAVID CAY JOHNSTON, AUTHOR, “FREE LUNCH”:  Thank you for having me, Ed.

SCHULTZ:  You bet.

How do we turn this around?  How does America turn this around?

JOHNSTON:  Well, number one, I think people need to recognize that the Republicans have created a system that is redistributing income and wealth upward.  The growth rate you talked about during the Reagan era wasn‘t 100 percent more for the people at the top, the growth rate was 100 times more, 105 percent versus 1.2 percent.

And since 1980, all of the income growth has been going to the top.  At the same time, in December—remember the Republicans raised taxes on everybody in America who has a job, who makes $20,000 or less if they‘re single, $40,000 if they‘re married—none of the news reports talk about this.

The Republicans keep saying they cut taxes.  No.  They cut taxes on the well-to-do.  They raise taxes on people who make, whether they‘re single or married, under $20,000 or $40,000 because they killed President Obama‘s making work pay tax credit.

SCHULTZ:  But he‘s a tax-and-spend liberal isn‘t he?  That‘s the narrative that‘s out there.

JOHNSTON:  Well, you know, his budget deficit was—his first one was smaller than George Bush‘s last one and he was on a path to have smaller and smaller budget deficits going forward.  The reason the budget deficits are so big is we‘re still living in the era of spend-and-borrow Republicanism.

Remember, Ronald Reagan promised 30 years ago that if you elected him, he was going to balance the budget within three years.  And instead, he ran up record, record deficits.  And this is continued.  This is clearly a fundamental tenet of the Republicans, and people need to start learning this kind of information so that they can counter what are just flat out lies, particularly the claim by Republicans that they are not raising taxes on anybody.

They raise taxes on the working poor.

SCHULTZ:  And isn‘t much of our economy run on how people feel?  It‘s hard for the president to make the country feel good and feel confident when there‘s this constant narrative that‘s out there that, well, he doesn‘t understand business.  And there‘s uncertainty out there.

He can put the cat‘s meow on the table when it comes tax packages and it won‘t mean anything because he‘s fighting a narrative that is almost an insurmountable sound chamber that can‘t be challenged, the sound clips that I played earlier.

So, until we feel a little better, can we expect the economy to turn around the way we really want it to?

JOHNSTON:  Well, it‘s not more than feeling to turn the economy around.  So long as we have these systems that concentrate income and wealth at the top, we can‘t have the economic growth that we need to have.

SCHULTZ:  Yes.

JOHNSTON:  And people need to recognize things like the fact that President Obama is not taking on these issues.  He keeps accommodating.  He keeps making deals.  He keeps—he said he would never raise taxes on people who make under $200,000 if they‘re single, $250,000 if they‘re married.  And then he signed this bill in December that raised taxes on the working poor.

And until we get a policy that‘s aimed on American jobs, on keeping jobs here, not helping companies move their capital out of the country, so that basically they can go after labor that‘s well-paid and replace it with very minimally paid labor in China and Vietnam, we‘re going to continue to have this same problem.

SCHULTZ:  David Cay Johnston, always a pleasure.  Great to have your insight tonight on THE ED SHOW.  Thanks so much.

Remember to answer tonight‘s text question there at the bottom of the screen.  I want to know what you think.

(BEGIN VIDEOTAPE)

SCHULTZ (voice-over):  One month after the Arizona shooting, and the murder of Judge John Roll, Montana Congressman Denny Rehberg‘s shocking threat against a federal judge.

REP. DENNY REHBERG ®, MONTANA:  How can we put some of these judicial activists on the endangered species act?  I‘m still working on that.

SCHULTZ:  So much for civility.  Just the facts on FOX.

UNIDENTIFIED FEMALE:  I believe that Barack Obama‘s religious beliefs do govern his foreign policy.

UNIDENTIFIED MALE:  And what are his religious beliefs?

UNIDENTIFIED FEMALE:  I believe that he is a Muslim.

UNIDENTIFIED MALE:  You do?

UNIDENTIFIED FEMALE:  Yes.

SCHULTZ:  You won‘t believe how many agreed with her.

And, Republicans just can‘t stand success.  Now, they‘re mad about the Chrysler Super Bowl ad—an ad that touted the company‘s comeback from the brink.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

SCHULTZ:  An Alabama state senator tells his fellow Republicans to empty the clip and do what has to be done.  Now, he says he was taken out of context.  Well, we‘ll take a look at the context.

And I think that President Obama did the right thing by going to the Chamber of Commerce and asking for the order.  And AFL-CIO President Richard Trumka defended the president‘s speech, but some progressives think that the president capitulated.  That‘s next.

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

(COMMERCIAL BREAK)

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

A lot of progressives around the country are angry that President Obama even met with the United States Chamber of Commerce.  After all, the Chamber is one of the most well-financed critics of the Obama administration.  Sometimes you wonder whose side they‘re on.

The Chamber has taken an aggressive role in defeating policy that would help working Americans.  It‘s very clear.  And it spent a record amount of money in the midterm elections to defeat the Democrats, with the bulk of its donations coming from only 45 companies.

Why should the president extend an olive branch to a group that has repeatedly attacked him and the progressive agenda?

To help us answer that question tonight, Laura Flanders, host of “GRITtv”; and Erica Payne, president of the Agenda Project.

Great to have both of you with us tonight.

I think the president—because he‘s the president of the United States—is obligated to do this stuff.  And I think some of the sound bites that he put out in front of him was very telling about where we have to go as a country.

Laurie, you agree or disagree?

LAURA FLANDERS, HOST, GRITTV:  You know, I disagree.  I mean, he may have his own reasons for going and talking to them.

I thought this old sort of Peanuts cartoon is very hackneyed.  Lucy, is she going to let the president kick the ball this time?  No.  She‘s not.  She‘s going to whip it away and what she whips away is American jobs, jobs in our community.

What did you hear the president say?  He said, he, the government is going to work to eliminate obstacles to competition in trade, already buying into their language.  He then said he hoped that they‘re going to, you know, respond to his call to their patriotic duty.

That‘s not in their nature.  They‘re global companies with global boards.  This is not your mom and pop shop.  It‘s Dow Chemical.  It‘s BP.  It‘s companies who—

SCHULTZ:  No doubt.

FLANDERS:  -- have their interests overseas and their business overseas—and overseas works where things are at for them.  It‘s not their job to worry about America.

SCHULTZ:  All right.

FLANDERS:  It‘s the president‘s.

SCHULTZ:  Erica Payne, your organization, Agenda Project, was so anti-president meeting with the Chamber, you took out this commercial.

ERICA PAYNE, PRESIDENT, THE AGENDA PROJECT:  Right.

SCHULTZ:  Here it is.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  You deserve to know when you‘re elected officials are meeting with lobbyists.

SUBTITLE: Today, President Obama is meeting with the Chamber of Commerce.  What is the Chamber of Commerce?  The biggest lobbyist in the United States.

OBAMA:  You deserve to know when your elected officials are meeting with lobbyists.

SUBTITLE: The Chamber lobbies for corporations like BP, which destroyed the Gulf.  And the big banks at the center of the financial crisis.

OBAMA:  You deserve to know when your elected officials are meeting with lobbyists—are meeting with lobbyists—are meeting with lobbyists.  You deserve to know.

SUBTITLE: You deserve to know.

(END VIDEO CLIP)

SCHULTZ:  Erica Payne, there are some Americans, liberals who supported the president that think that that maybe goes too far.  What do you think?

PAYNE:  I don‘t even think it comes close to going far enough.  Here‘s the thing: two weeks ago, President Obama said, you deserve to know when your elected officials are meeting with lobbyists.

Yesterday, the president said he was speaking to the U.S. Chamber of Commerce.  What he failed to mention is that the U.S. Chamber of Commerce is the biggest lobbyist in the United States of America.  The Chamber of Commerce, half of their budget comes from 45 companies as you said earlier.  They are the biggest spender of lobbying money in this country.

And so, rather than saying that he‘s going to talk to business, implying he‘s talking to small businesses and local chapters of Chambers of Commerces, and even big business, he was, in fact, going to talk to lobbyists for 45 companies, and those 45 companies are exactly the companies that are standing in between us and winning the future, which is what the president said he wanted to do.

SCHULTZ:  So, is the president a hypocrite?  I have to ask you—do you think the president is a hypocrite, Erica?

PAYNE:  I think that the president needs to be very straightforward about what he‘s doing and why he‘s doing it.

SCHULTZ:  But he just asked the—he asked the biggest companies in the country that operate, and they‘re international companies as well, he asked them to get in the game and hire people.  What‘s wrong with that?

PAYNE:  Do you know how pathetic it is that the president of the United States went to stand in front of 45 lobbyists who are holding this country hostage?

SCHULTZ:  What do you think, Laura?

PAYNE:  That he begged them in essence—oh, please, please hire some of our people.  Come on.

FLANDERS:  One of the things that stuck in my craw when I listened to his speech was, you know, he says that the sort of more equal distribution of the spoils of a thriving economy can‘t be legislated.  We can‘t really legislate that you guys share more of your spoils.

Not true.  He went on to list how government in the past has legislated to defend collective bargaining and labor law—to defend, you know, union rights, to legislate wages and hours in the eight-hour day.  I mean, we have had governments in the past who said, we‘re going to stand up for Americans.

(CROSSTALK)

FLANDERS:  These profit-seekers are seeking profit and we‘re going to do it whatever you say.  That‘s what the president should do today.

SCHULTZ:  Erica, didn‘t he play to the American patriotism and the senses of economic patriotism, and almost try to shame them into doing something to help the economy?  What‘s wrong with that?

(CROSSTALK)

PAYNE:  Ed, first of all, do you remember that story about the scorpion and the frog?  The frog takes the scorpion across the river and when they cross the river, the scorpion stings the frog and he says, well, that‘s in my nature?

Let‘s be clear.  I just want to be very specific about the point I‘m making, which is not that the president is reaching out to business.  That‘s great.

You know, I ran a small business for eight years.  I have an MBA from business school.  I studied business for two years.

This is not about the president speaking to business.  This is about the fact that the president of the United States just went and kowtowed to a bunch of lobbyists—

SCHULTZ:  OK.

PAYNE:  -- who were standing in between us and the future.

FLANDERS:  A whole lot of small businesses he could be talking to and if people want to know more about the Chamber, we‘ve done a series on this on our program.  I recommend they check it out.

SCHULTZ:  All right.  Laura Flanders, host of “GRITtv”; Erica Payne, president of the Agenda Project—

PAYNE:  Thanks a lot.

SCHULTZ:  -- thanks for your time tonight.  Appreciate it.

Iowa Republican caucus?  Well, the voters think that President Obama is a Muslim.  This is the crowd that will be picking the next GOP presidential nominee.  The lies about President Obama, they just will not stop.  We ask the question, why?

The biggest hit during the Super Bowl was the Chrysler ad celebrating something fantastic.  The American worker!  So, conservatives question why Chrysler is spending money on a Super Bowl ad.  I thought it was good business.

A Montana congressman running for the United States Senate makes this outrageous statement about federal judges.  How can we put some of these judicial activists on the endangered species list?  Wow!

That‘s next.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  It‘s been one month since six people were gunned down and killed in Tucson, including Federal Judge John Roll.  While Congresswoman Gabby Giffords recovers in a rehab facility, her colleague, Republican Congressman Denny Rehberg of Montana, takes this whole civility thing I think to a new low, a new level. 

In a prepared speech to the Montana Legislature—a prepared speech -

Rehberg questioned a federal judge‘s decision to put the Gray Wolf on the endangered species list. 

(BEGIN VIDEO CLIP)

REP. DENNY REHBERG ®, MONTANA:  When I first heard that decision, like many of you, I wanted to take action immediately.  I asked, how can we put some of these judicial activists on the Endangered Species Act?  I‘m still working on that. 

(END VIDEO CLIP)

SCHULTZ:  And what does that mean?  His office is not apologizing for those remarks.  Quote, this is the statement, “this hand-wringing is nothing but an attempt to distract Montanans from the substance of the speech.”  Really? 

And we can expect more of that kind of substance.  Mr. Rehberg will challenge Democratic Senator John Tester in 2012.  Meanwhile, down in Alabama, the subject matter was different but the rhetoric was the same.  Over the weekend, State Senator Scott Beason spoke to a group of local Republicans on immigration. 

Beason told the group that allowing undocumented workers to continue in their area will lead to economic ruin.  Fortunately, Mr. Beason, well, he had a solution.  Quote, “empty the clip and do what has to be done.”  Now Mr. Beason is backtracking. 

(BEGIN VIDEO CLIP)

SCOTT BEASON, ALABAMA STATE SENATOR:  It was taken out of context.  It was a metaphor.  I think it‘s nothing more than that. 

(END VIDEO CLIP)

SCHULTZ:  Oh, yeah.  That‘s what it was, a metaphor.  Beason says his speech also included a joke about shooting a mugger.  Democrats, he said, would talk to the mugger, while others, presumably Republicans, would take action and shoot the guy. 

Therefore, Mr. Beason concludes, action is needed to solve illegal immigration.  Alabama republican Party Chair Mike Hubbard admits Beason could probably have phrased things better.  You think? 

But these two stories connected, it‘s a mindset that is coming from the right wing in this country.  And I asked the question tonight: where‘s the leadership in the Republican party?  Where‘s the leadership on the right side of the aisle in the Congress, reeling this guy in in Montana, talking about putting federal judges on the Endangered Species List.

And I know he‘s a state senator in Alabama and doesn‘t get the big national pub, but he is tonight because what he said was so outrageous.  So I ask the question: have things changed since Tucson?  No.  It‘s the same garbage.  And it‘s coming from the right wing.  And it‘s documented.  The sound bites tell the story. 

Well, it‘s the kind of comeback story that every American should celebrate; the survival of the nation‘s automobile industry.  But conservatives, you see, they would rather see Chrysler get no government loan or no taxpayer help and just go belly up, hurt a bunch of Americans, because we got to bust the unions. 

About half of the people in a Fox News focus group think that President Obama is a Muslim.  Funny thing, since they probably got this nonsense from watching Fox News.  That‘s next.  Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  I can‘t trust Obama.  I have read about him and he‘s not—he‘s a he‘s an Arab.  He is not—

SEN. JOHN MCCAIN ®, ARIZONA:  I want to be president of the United States and obviously I do not want Senator Obama to be.  But I have to tell you—I have to tell you, he is a decent person and a person that you do not have to be scared as president of the United States.  Now, I just—

(END VIDEO CLIP)

SCHULTZ:  That was John McCain on the campaign trail back in October of 2008.  Now, almost two and a half years later, conservatives worry more than ever that President Obama is a Muslim.  Here is Republican pollster Frank Lutz last night on Fox News, talking to a group of Iowa Republicans about the president of the United States. 

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  I believe that Barack Obama‘s religious beliefs do govern his foreign policy. 

FRANK LUNTZ, FOX NEWS POLLSTER:  And what are his religious beliefs? 

UNIDENTIFIED FEMALE:  I believe that he is a Muslim. 

LUNTZ:  You do? 

UNIDENTIFIED FEMALE:  Yes. 

LUNTZ:  How many believe that here? 

(END VIDEO CLIP)

SCHULTZ:  All right.  We got to see this again.  Hang on here.  Let‘s see that piece of tape again and let‘s count how many hands went up.  OK.  Quite a few.  Three?  Six, seven, eight, ten? 

Ten people in that small focus group?  Ten out of the 25 people there?  And the scary part is that‘s lower than the national average.  A “Time Magazine” poll last year found 46 percent of Republicans believe President Obama is a Muslim.  Almost one in four Americans think the president is outright lying when he says he‘s a Christian. 

Now let‘s take a few seconds to look at some of what these folks are watching on TV every day.  Where would they get this? 

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Why didn‘t anybody ever mention that that man right there was raised—spent the first decade of his life raised by his Muslim father, as a Muslim, and was educated in a madrassa. 

UNIDENTIFIED MALE:  Malik Obama tells the “Jerusalem Post” that if elected his brother will be a good president for the Jewish people, despite his Muslim background. 

UNIDENTIFIED FEMALE:  The president deliberately put this as a logo to try and continue his outreach to Muslim nations in a positive way. 

UNIDENTIFIED FEMALE:  Obama could be doing more than Bush.  He is specially situated that way, as having gone to madrassas as a child. 

UNIDENTIFIED FEMALE:  A fist bump?  A pound?  A terrorist fist jab? 

(END VIDEO CLIP)

SCHULTZ:  Where do you think those folks in Iowa got the idea that President Obama is a Muslim?  And of course there‘s no right wing radio anywhere in Iowa, is there? 

Joining me tonight is Suhail Kahn, a former Bush administration official and a senior fellow for Christian/Muslim understanding at the Institute for Global Enlightenment. 

Mr. Kahn, good to have you with us tonight.  You‘re a Republican. 

SUHAIL KAHN, INSTITUTE FOR GLOBAL ENLIGHTENMENT:  Right. 

SCHULTZ:  And a Muslim.  What do you tell your fellow Republicans when they say President Obama is a Muslim?  What would you say to that group in Iowa? 

KAHN:  Well, thanks, Ed.  I would—having lived in Iowa and gone to school in Iowa—tell my friends there that, you know, I am a life long conservative, Reagan conservative, who opposes the president on a host of issues, including health care and his management of the economy. 

But there are some areas that are really off grounds for attack.  And that includes his race, his family, and his faith.  He has, time and time again, professed that he is a Christian.  Most recently last Thursday at the National Prayer Breakfast, where he talked about his journey to come to Jesus.  And I think as Americans, we can have policy disagreements, but I don‘t believe we should get personal and question the president‘s faith. 

SCHULTZ:  So, Mr. Kahn, who should carry the blame, shoulder the blame for this narrative that continues to come out from the right wing that has influenced a good number of people in Iowa, judging by that focus group?  Who gets the blame for this? 

KAHN:  Well, I just think those that would seek to stoop to use such tactics, to question the president‘s faith or motivations, that is beyond the pale. 

SCHULTZ:  And those people are? 

KAHN:  Well, you showed a clip of folks—some of the popular media or on talk radio that are doing that.  And I would warn folks again from doing that and from—you know, if you want to talk about the issues, let‘s engage in political debate. 

SCHULTZ:  As a conservative Republican, you would call out the conservative media, at least in your view, if I‘m hearing you correctly, that you think that they are erroneous in their positions, and that they should back off.  Is that what I‘m hearing? 

KAHN:  Well, as a conservative, I‘m not going to condemn the entire conservative media.  But I will definitely warn those within any media that would question somebody‘s faith or try to use their background in a nefarious or negative way to scare people—

SCHULTZ:  They‘re wrong. 

KAHN:  They‘re wrong.  Absolutely. 

SCHULTZ:  They are simply wrong and it‘s over the top. 

KAHN:  Absolutely. 

SCHULTZ:  You have character for admitting that. 

KAHN:  Thank you. 

SCHULTZ:  Because the president is a Christian.  Have public attitudes towards Muslims in this country changed since President Obama has taken office? 

KAHN:  They have changed for the worse, unfortunately, Ed.  After the sad days of 9/11 and the tragedy where we lost 3,000 Americans in a tragic attack in New York, Pennsylvania, and Washington, D.C., we had real leadership in President Bush, and he stood up and reminded Americans that this was not the act of a fate. 

SCHULTZ:  True. 

KAHN:  I think we need that.  Those voices, they‘re out there.  But also, Americans just need to take a deep breath and stand for freedom for all Americans. 

SCHULTZ:  Would you admit that there is a political goal to defeat President Obama, and one of the tactics used is to make people like those folks in Iowa believe that he is a Muslim?  And they said it with conviction.  They think he‘s a Muslim.  Isn‘t this the political goal of the conservative movement? 

KAHN:  It‘s not a political goal of the conservative movement, Ed.  I‘d warn against making such blanket statements.  But there are some, you know, in the rough-and-tumble arena of politics who will seek to use any advantage.  And if they think people are afraid, particularly after 9/11, of Muslims and Islam, they might try to use them.  They are obviously. 

That‘s wrong.  And we saw this in the ‘60s election -- 1960 election with Kennedy.  It was wrong then and it‘s wrong now. 

SCHULTZ:  Suhail Kahn, great to have you with us tonight.  Appreciate your honesty. 

KAHN:  Thank you. 

SCHULTZ:  Thank you. 

The Tea Party holds its first ever Washington town hall.  And Senator Orrin Hatch shows up to try to get on the good side?  Good luck with that, buddy.  Especially when it‘s Michele Bachmann they love so much. 

The right says they love capitalism, but they seem to hate the fact that Chrysler is making a comeback.  The comeback so good that they even took out an ad to brag about it during the Super Bowl.  And by the way, they‘re selling a ton of cars. 

Yeah, you see Chrysler took that government money—that government loan and they turned it around and that‘s socialism.  And the righties just can‘t stand it. 

And your last chance to answer tonight‘s text poll.  That‘s next. 

Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

EMINEM, RAPPER:  This is the Motor City.  And this is what we do. 

(END VIDEO CLIP)

SCHULTZ:  That commercial was the dude, was it not?  But they still can‘t get over the fact that Chrysler‘s success story is a great American story.  See, the righties are all twisted about it.  A government loan saved the American auto industry and, look out, preserved union jobs, after the union boys took a hair cut. 

And now right wingers just can‘t stand the fact that their money is being used to advertise the comeback story.  On Fox today, radio host Lars Larson was just fired up about the ad.  And he still can‘t get over the loan. 

(BEGIN VIDEO CLIP)

LARS LARSON, RADIO TALK SHOW HOST:  Companies should have gone bankrupt the way they normally do, wiped out the union contracts, preserved the bond holders.  And it should have been owned by an American company, not by Fiat. 

(END VIDEO CLIP)

SCHULTZ:  You know, Lars, dog gone it, it‘s one of those things about jobs.  It‘s good to have a job in America.  Isn‘t it?  But you see, the “Detroit Free Press” sees it differently than you, Lars.  They say that, you know, “the two-minute-long ‘Imported From Detroit‘ Chrysler 200 ad was a run away hit.” 

A run away hit.  And here‘s the thing that I can‘t gather that what the righties—why they have such a disdain for the American worker.  One of the quotes of the article was “in just two minutes, Chrysler lit a fire under its reputation, made hard working Detroit feel cool again.” 

You and me, we‘re taxpayers.  We decided to take money and give it, a loan, to American workers, because they said they could build a better car.  They said that if they were given a chance to retool their industry, retool their business plan, that they could come back and get the job done. 

And the commercial says this is what we do.  You see, the righties again are on the wrong side of the issue.  And I ask the question again, what righties are going to stand up for the American worker?  Where is the pride in made in America? 

It‘s void over on the right.  They just don‘t have the feeling.  I commend Chrysler.  That was a great ad.  And I‘m glad that they‘re squawking about it, because it really shows who they are. 

The Federal Election Commission has reportedly asked Congresswoman Michele Bachmann to explain some contributions from her last campaign.  That‘s next. 

Plus, the results of our text survey.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Finally tonight, “Roll Call” is reporting that the Federal Elections Commission has asked Congresswoman Michele Bachmann out of Minnesota to itemize  nearly 1.5 million dollars in individual campaign contributions from last year.  Her deadline is Thursday.  And it could lead to legal or financial penalties. 

That may explain why she came late and left early to tonight‘s first ever Tea Party town hall in Washington.  Representatives Alan West and Steve King joined Michele Bachmann, Senator Mike Lee and Senator Rand Paul at the National Press Club tonight. 

And look at this, Utah Senator Orrin Hatch crashed the party.  Well, Hatch saw his moderate buddy Bob Bennett get primaried and beaten by Mike Lee last year.  Hatch voted for the bank bailout, the SCHIP, and so he might face a Tea Party primary of his own coming up in 2012. 

And if you can‘t beat them, join them.  So Hatch spoke to the Tea Partiers tonight and stole some of Michele Bachmann‘s material on Obama-care. 

(BEGIN VIDEO CLIP)

SEN. ORRIN HATCH ®, UTAH:  If we go that far, that makes the United States government can do anything to you that it wants to.  And there are no limitations.  Liberty is built upon limitations.  And, frankly, when there are no limitations, liberty is gone. 

REP. MICHELE BACHMANN ®, MINNESOTA:  No one is really quite sure if we will successfully transfer that torch of liberty to the next generation.  Can we truly say that today we are truly free? 

(END VIDEO CLIP)

SCHULTZ:  Well, I tell you what, folks; Orrin Hatch, I don‘t know how much lake room there is out in Utah, but you ought to try wind surfing.  You know? 

Joining me now is a man who was in the room tonight, “Slate” political reporter and MSNBC contributor Dave Weigel.  Dave, good to have you with us tonight. 

DAVE WEIGEL, “SLATE”:  Good to be here. 

SCHULTZ:  First of all, the Bachmann story.  How much of a problem is this going to be?  Is this standard operating procedure?  Her treasurer is downplaying the FEC request.  What do you make of it? 

WEIGEL:  These kind of corrections are not unheard of.  And Bachmann raised a lot of money very fast.  She stepped up her operation.  Her star just took off.  It didn‘t stop taking off throughout 2009-2010.  So I‘m going to reserve judgment until we see what the problem is and whether they can coordinate it. 

Because this happens sometimes.  I mean, Scott Brown raised a ton of money in a very short amount of time.  And they—I don‘t think they had a problem quite like this.  But being popular can be a problem. 

SCHULTZ:  But this is the second time it‘s happened with Michele Bachmann.  It happened previously as well.  Kind of habit forming, it seems like.  All right, Orrin Hatch, what‘s he doing at the Tea Party town hall? 

WEIGEL:  He is begging for them not to run a candidate against him.  It‘s pretty clear.  The Tea Party Express hosted this event.  And they‘ve actually had a public disagreement about whether they should go after Orrin Hatch in 2012 or not. 

I should say, it was other Tea Party groups—and I won‘t go too deep into the weeds to point out who did what.  Other Tea Party groups really marshaled Bob Bennett out of the Senate.  Tea Party Express came in a bit later. 

But Hatch actually told reporters that he had been invited.  Andy Kramer (ph), who runs Tea Party Express, said that he had kind of invited himself.  So even at this event, I think he did a very good job of giving people the rhetoric they wanted. 

He wasn‘t booed.  He wasn‘t heckled.  You can see it on the tape. 

Everyone was very polite to him. 

But it‘s tough for Tea Partiers to get over the idea that they can actually just kick this guy out.  Ask a shark sometime if you‘re in a feeding frenzy, it‘s very tough to stop if you keep devouring everything in site.

SHCULTZ:  I understand Congressman Steve King talked about eliminating the IRS.  I also understand that newly elected Alan West said that we got to get rid of the Department of Education.  These are old conservative banners that have been put out there before.  How was that received tonight? 

WEIGEL:  Rapturously.  This is—there really wasn‘t a lot that was new here.  What was interesting to watch for me, because I‘ve been going to these things really since February 2009, when the Tea Party started, was the movement—people in the movement are not very angry.  They‘re not demanding a whole lot of their leaders. 

For example, the Patriot Act vote went down merrily tonight.  Everyone who was there on the House side had voted for the Patriot Act Reauthorization, which if you‘re worried about the government is a thing you might be worried about.  You know, looking into phone records, looking into library records, things like that. 

SCHULTZ:  I thought we got to keep the country safe.  That‘s why we had the Patriot Act.  The conservatives have been saying we got to make sure we protect the country.  Now all of a sudden they‘re voting it down. 

WEIGEL:  Well, not all of them, but the guys at this event were.  That was fine.  This crowd is still I think in a honeymoon mode.  Like I was saying, they‘re still interested in defeating Orrin Hatch.  They don‘t care what he says.  They really—worshipful is not the right world.  They really see themselves reflected in somebody like Alan West.

SCHULTZ:  Did you get a sense that Michele Bachmann is the leader?  Is she the ring leader?  Did you get that sense tonight?

WEIGEL:  She was the most popular person in the room.  But a thing about Bachmann is that she keeps taking a lead and making herself a target for the rest of the media.  Case in point we‘re here right now.  And the Tea Party is very good at moving from person to person, finding a new hero. 

Whoever takes the lead on an issue.  I think Pat Toomey is a hero right now for the bill he has introduced to get around the debt limit.  And Alan West is a hero.  They are tough to pin down.  That is a real strength in the movement. 

SCHULTZ:  Good to have you with us tonight.  Dave Weigel of Slate.com, thank you so much. 

Tonight in our phone poll survey, I asked should President Obama and Congress raise taxes to balance the budget?  Seventy seven percent of you said yes; 23 percent of you said no. 

That‘s THE ED SHOW.  I‘m Ed Schultz.  Thanks for watching tonight here at our new time slot.  And hopefully we‘ll see you back here tomorrow night.

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