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'The Last Word with Lawrence O'Donnell' for Wednesday, May 18th, 2011

Read the transcript to the Wednesday show

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Guests: Howard Fineman, Chris Hayes, Rich Galen, Phil Bronstein

LAWRENCE O‘DONNELL, HOST:  Tonight, the president talked health care reform in Boston and thanked former Massachusetts Governor Mitt Romney for leading the way on the individual mandate.  Republicans would be attacking Romney right now for that same thing if they weren‘t still busy destroying Newt Gingrich.

(BEGIN VIDEOTAPE)

(MUSIC)

UNIDENTIFIED MALE:  With this pixie dust, I christen the candidate, Newt Gingrich.

ANDREA MITCHELL, NBC NEWS:  What a week it has been.

UNIDENTIFIED MALE:  The worst week ever.

O‘DONNELL (voice-over):  Republican attacks on Newt Gingrich won‘t stop.  So, of course, he blames the liberal media.

UNIDENTIFIED FEMALE:  Gingrich tried to pass the blame.

NEWT GINGRICH ®, PRESIDENTIAL CANDIDATE:  It‘s a hypothetical baloney question.  But I frankly don‘t want to play the gotcha games in Washington.

MITCHELL:  There were no gotcha questions.

DAVID GREGORY, MEET THE PRESS: I think he knows that that‘s quite silly.

JOE SCARBOROUGH, MSNBC HOST:  I‘m sorry.  Come on, man.  Come on, man. 

He tried to blame this on “Meet the Press”?

GREGORY:  He was on for his 35th time and he said I look forward coming back for number 36.

GINGRICH:  We can have an honest conversation.

MITCHELL:  Let‘s have an honest conversation.

UNIDENTIFIED MALE:  It was a straightforward question.

TINA FEY, ACTRESS:  I hope tonight the lamestream media won‘t twist my words by repeating them verbatim.

O‘DONNELL:  Newt‘s troubles shift the campaign focus to candidates who actually have a chance.

CHUCK TODD, NBC NEWS:  The warning for Mitch Daniels.

REP. MICHELE BACHMANN ®, MINNESOTA:  People are saying, Michele, jump in, we want you to run.

UNIDENTIFIED MALE:  You like her.

O‘DONNELL:  While Republicans fight amongst themselves, the president is back on the campaign trail.

The debate over the debt continues to divide the Senate.

MITCHELL:  Another big obstacle to a bipartisan compromise.

UNIDENTIFIED FEMALE:  To the country‘s debt.

TODD:  Senator Tom Coburn has dropped out of the gang of six negotiations.

UNIDENTIFIED FEMALE:  I‘m going to call it group of six minus one.

O‘DONNELL:  And not even to Stephen Colbert can talk sense to the Tea Party leader.

UNIDENTIFIED FEMALE:  We‘re (INAUDIBLE) people.

STEPHEN COLBERT, COMEDIAN:  Is there any situation in which we should raise taxes?

(END VIDEOTAPE)

O‘DONNELL:  Good evening from New York.

Newt Gingrich is preparing for a packed schedule of campaign events tomorrow in Iowa, where he‘ll meet with activists in five cities.  Last night, Gingrich went on Greta Van Susteren‘s show on FOX News to try to control the damage of what was surely his career-ending interview with David Gregory on “Meet the Press.”

Gingrich‘s mission impossible is to satisfy Republicans who accuse him of, quote, “shooting at Congressman Paul Ryan from behind,” telling House Republicans to, quote, “drop dead,” and being, quote, “an embarrassment to the Republican Party.”

Gingrich was ordered to do the following by House Majority Leader Eric Cantor.

(BEGIN AUDIO CLIP)

REP. ERIC CANTOR (R-VA), MAJORITY LEADER:  He can come out and say he misspoke and get back on board with what we‘re trying to do.

(END VIDEO CLIP)

O‘DONNELL:  So, here‘s what Gingrich actually did.  First, he reached for the teachable moment.

(BEGIN VIDEO CLIP)

GINGRICH:  Because I want to set a precedent for a new kind of presidential campaigns.

(END VIDEO CLIP)

O‘DONNELL:  Then he paid his respects to some of the conservatives who have criticized him.

(BEGIN VIDEO CLIP)

GINGRICH:  I thank Bill Bennett and Ed Fulmer (ph) for helping me walk through what people were hearing, which is not what I intended to say.

(END VIDEO CLIP)

O‘DONNELL:  And as was inevitable, he apologized to Congressman Paul Ryan.

(BEGIN VIDEO CLIP)

GINGRICH:  I made a mistake and I called Paul Ryan today, who is a very close personal friend and I said that.  The fact is I have supported what Ryan‘s tried to do on the budget.  The fact is my newsletter strongly praised the budget when he brought it out.  The budget vote is one I‘m happy to say I would have voted for, I will defend and I‘ll be glad to answer any Democrat who attempts to distort what I said.

GRETA VAN SUSTEREN, FOX NEWS:  When you say -

(END VIDEO CLIP)

O‘DONNELL:  So far, so good.  And that‘s when it all fell apart.

(BEGIN VIDEO CLIP)

SUSTEREN:  When you say you made a mistake, are you saying you chose the wrong words or that‘s not what you thought or—I‘m not sure I understand—are you speaking about using the words as right wing social engineering, because that seems to be what has really sort of lit your party on fire.

GINGRICH:  Look, I made two mistakes.  First of all, if you go back and listen to the question David Gregory asked me, I should have said I‘m not going to answer it.  It‘s a hypothetical baloney question that had no hope of happening.

(END VIDEO CLIP)

O‘DONNELL:  Hypothetical baloney question had no hope of happening.

OK.  Here is the question David Gregory asked Gingrich.

(BEGIN VIDEO CLIP)

GREGORY:  What about entitlements?  The Medicare trust fund and stories that have come out over the weekend is now going to be depleted why 2024, five years earlier than predicted.  Do you think that Republicans ought to buck the public opposition and really move forward to completely change Medicare, turn it into a voucher program, where you give seniors some premium support and so that they can go out and buy private insurance?

(END VIDEO CLIP)

O‘DONNELL:  Nothing hypothetical there.  Hypothetical baloney question

that is exactly what House Republicans have already voted to do.  This was Gingrich‘s response to that question.

           

(BEGIN VIDEO CLIP)

GINGRICH:  I don‘t think right wing social engineering is any more desirable than left wing social engineering.

(END VIDEO CLIP)

O‘DONNELL:  So then, Gingrich told Greta that introducing right wing social engineering into the “Meet the Press” interview was his second mistake.

(BEGIN VIDEO CLIP)

GINGRICH:  The second was some of the words I used.  But I was trying to say something that is really important.  We are at the beginning of a process, of solving the entitlement problems in the United States.

What Paul Ryan has done is he has started that process.  He has begun the opportunity, something which President Obama failed to do, to have an honest conversation to go to the American people, to share with them his current ideas.  And he agreed, and he said publicly, obviously, things are going to change some.

We‘re going to look for improvement.  We‘re going to look for alternatives.  We‘re going to try to make sure the country feels comfortable.

(END VIDEO CLIP)

O‘DONNELL:  Newt so doesn‘t get it.

Paul Ryan is not trying to make the country feel comfortable.  Eric Cantor is not trying to make the country feel comfortable.

(BEGIN AUDIO CLIP)

CANTOR:  Medicare won‘t exist as we know it under any scenario going forward unless we make some changes.

(END AUDIO CLIP)

O‘DONNELL:  What is comforting in that?  A Republican house leader telling Americans Medicare won‘t exist as we know it under any scenario?

From across the aisle, Democrats see an opportunity and they‘re taking it.  They are using Newt Gingrich to double underline their message—that the House Republican approach to Medicare is in Gingrich‘s phrasing, “radical change.”

Here‘s Senator Chuck Schumer on a conference call with reporters today.

(BEGIN AUDIO CLIP)

SEN. CHUCK SCHUMER (D), NEW YORK:  Newt and I are considered political opposites, but I couldn‘t agree more with what he said Sunday about the House Republicans‘ plan to end Medicare.  He is the Republican canary in a coal mine.  When that canary speaks truth, he is snuffed out.

(END AUDIO CLIP)

O‘DONNELL:  And White House communications director Dan Pfeiffer tweeted this afternoon: the biggest take away from the Gingrich flap ending Medicare as we know it is the new GOP litmus test.

Joining me now is Rich Galen, a veteran Republican strategist and a former Newt Gingrich press secretary.

Thanks for joining me tonight, Rich.

RICH GALEN, REPUBLICAN STRATEGIST:  Hi, Lawrence.  How are you?

O‘DONNELL:  First of all, my condolences.  I know how it must feel to have gone through this—once a press secretary, always a press secretary.  When your guy is out there doing live interviews, you‘re sitting on your hands in fear that something could do wrong.  Something has gone terribly, terribly wrong.

Did you imagine that it could go this wrong for Newt so fast?

GALEN:  Well, I don‘t think anybody could imagine it.  Before you get there, I saw your PSA this morning, Lawrence, on immigration.  That was one of the most powerful 30 seconds of television I‘ve seen maybe ever.  I just think that if there was an Emmy for public service announcements, you should get one.

OK, let me put that aside.

O‘DONNELL:  By the way, that was not part of the deal of having you on tonight.

GALEN:  No.  It was just brilliant.

But here‘s the deal with Newt.  And this is what—I mean, this isn‘t new news, everybody‘s been saying this for months now, is—does Newt have the discipline, the message discipline to stick to a line of a message and not drift off message, off-script, because something new came into his head?

And that‘s what always happens with Newt and it always happens with Newt on shows like “Meet the Press,” because the adrenaline gets going.  He starts thinking about new ways to say things you haven‘t talked about before.  And before you know it, something like that happens.

The whole rollout of the campaign has been a little odd.  I mean, the video that he did on YouTube, I thought was—I thought was a little strange for Newt.  He does such a good job, Lawrence, as you know, in front of a live audience.

You may not agree with him, but Newt is a college professor at heart.  And he doesn‘t give speeches, he gives lectures.  And when he does, they‘re enthralling.  You may not agree with it, but you just love the way he puts it together.

But that was not done in front of a live audience, sort of fell flat.  Everything after that has just sort of kind of been in neutral.  And then he has this event on Sunday and, frankly, it took him a day and a half before they realized what trouble they were truly in and they finally have, you know, tried to do damage return.

Will this be the end of the campaign?  I don‘t know.  You know, geniuses like me were counting John McCain out every 3 ½ weeks four years ago.

O‘DONNELL:  Right.  Well, how long—I mean, he‘s offered the House Republicans, who get attacked by Democrats who use Newt Gingrich words on “Meet the Press” to attack them, he‘s offered to help them in their campaign.  When he hears himself saying that, doesn‘t he realize how impossible that political transaction is and how hopeless this is?

GALEN:  I don‘t know—I don‘t know whether he realizes it‘s impossible.  But here‘s the thing about the House Republicans—an overwhelming majority of 200 or whatever it is, 238, or whatever the number is, House Republicans never served with Newt.  Remember, he hasn‘t been in office since December 1998 or thereabouts.

O‘DONNELL:  Right.

GALEN:  And so, they don‘t have any particular affection for him other than what seeing him on TV.  The rest have served with Newt and I‘m not sure they have very much affection for him either at this point.  So, I think Newt is just going to have to go back, and if he can, reboot the campaign, literally say, OK, that didn‘t work, we‘re going to retool this thing, we‘re going to go dark for about—you have to go through the Iowa stuff—go dark for a week or so and retool it and see if he can come back out and start the whole thing again.

O‘DONNELL:  Rich, how can he raise money in the face of the Romney $10 million a day machine and then this kind of performance?  People investing in campaigns at this stage are looking for a sharp performance out of the gate.  How long can he raise money and stay in the race if the can‘t raise money?

GALEN:  Well, to the second part of that, if you can‘t raise money, you can‘t stay in the race.  And a Newt construct has been over the years, that politics really is an entrepreneurial endeavor.  If people like what you say and how you say it, they give you money, so you can keep saying it.  If they don‘t, then you don‘t have any money and you have to stop.

What we don‘t know is how well he did in those first few literally hours after he announced last week.  I think it‘s a little bit like the Arthur Conan Doyle, Sherlock Holmes story “Silver Blaze” you remember that Sherlock Holmes solved the case because the dog did nothing in the night time.  And the fact the Gingrich campaign hasn‘t talked about a big influx of money in the first few hours, even Ron Paul said he raised $1 million one day last week or a week and half ago, I think that may tell us something.  I don‘t know if that‘s true or not, but it certainly is suspicious that the campaign hasn‘t talked about how much money has come in the door.

O‘DONNELL:  Republican strategist and former Gingrich aide, Rich Galen

I want to thank you very much for joining us tonight.  I know this is a difficult train wreck for you to watch.  Thanks for joining us, Rich.

           

GALEN:  I really like Newt and wish him well.  But this is a tough road.

O‘DONNELL:  Thanks, Rich.

Joining me now is Howard Fineman, senior political editor for “The Huffington Post” and MSNBC political analyst.

Howard, thanks for joining us tonight.

HOWARD FINEMAN, MSNBC POLITICAL ANALYST:  Hi, Lawrence.

O‘DONNELL:  Basically, I think, what we‘re seeing here is clearing of the Republican field.  We got the Trump joke out of the way.  The Huckabee mirage, he was never going to run.  I don‘t know why the press didn‘t understand that on March 2nd when Roger Ailes ordered the FOX players to declare whether they were running or not, and Sarah Palin and Huckabee said, no, no, we like this paycheck, Roger, we‘re staying here.

So, you know, there‘s no Palin, there‘s no Huckabee, there‘s no Trump. 

Now, there‘s no Gingrich.  I mean, we could talk about him for a while. 

We‘re watching him peter out here.  But there‘s no Gingrich.

The real world now is Pawlenty.  It is Romney.  And then you‘re going to have that permanent player on the stage in Ron Paul, who will always be there, firing those libertarian shots.  Santorum—I guess he can hang around and run for vice president.  But Huntsman will be coming in.

And we will soon have a real playing field of real candidates, won‘t we?

FINEMAN:  Yes, I think you‘re right.  I think it‘s all going according to the Lawrence O‘Donnell scenario, leaving only boring candidates but serious candidates.  I mean, you went down the list.  What a colorful bunch of people but what a bunch of people not ready for primetime.  I mean, the Donald Trump non-candidacy was only equaled in its ineptitude by the Newt Gingrich candidacy.

I mean, one of the things Newt didn‘t understand is that the world has changed since ‘98, people actually listen to exactly what you‘re saying and it goes around the Internet and it goes on YouTube and it goes over cable television, and it can consume you if your angle of entry isn‘t right, like, you know, like a reentry of the space shuttle, if you don‘t have the angle right, you burn up.  That‘s exactly what‘s happened to Newt.

So, you‘re right.  It‘s going to be Romney.  It‘s going to be Pawlenty.  It may be Daniels.  It‘s always Ron Paul.  It looks like it‘s going to be Jon Huntsman.

The only opportunity for entertainment left is Michele Bachmann, who I think is probably going to get in it because there‘s a wide open space among evangelical Christians in Iowa and she‘s like six generation Iowan by background.  So, she‘ll probably get in it and provide some entertainment.

O‘DONNELL:  Is there—is there a rational motivation for Michele Bachmann to get in it?  She cannot become president.  She cannot get the nomination.  She will not be chosen as anyone‘s vice president.

But is there something else for her to achieve within the party by getting in and running at some kind of—I don‘t know what would be considered an acceptable level of performance?

FINEMAN:  Lawrence, that is a hypothetical baloney question.  No, just kidding.

O‘DONNELL:  That‘s what we do here at NBC, those David Gregory hypothetical baloney questions.  Yes.

FINEMAN:  Hypothetical baloney question.  No, the question answers itself.  She‘s going to get in it because she wants to get in it because she‘ll get a lot of attention.  She‘ll tell herself she‘s bringing spotlight to the cause of pro-life, that she is the pro-life person, that she is the true Tea Party candidate more than any of the others.

And she‘ll get attention and she‘ll tell herself she‘ll get a lot of attention in Iowa.  Now, whether she can get from here to there is a question, because, like a lot of these other candidates, when she gets out there and is asked questions with unscripted answers, who knows what will happen?  She could just as easily get attacked by FOX and Rush Limbaugh as Newt Gingrich was.

One thing we should acknowledge here is that Newt was even too much for Rush Limbaugh and FOX.  And that‘s been true of some of the other players that have gone on here.  You mentioned Roger Ailes, he and FOX are sort of playing a gatekeeper function here and we only get to cover the candidates they take seriously.

O‘DONNELL:  MSNBC‘s Howard Fineman of the “Huffington Post”—thanks for joining me tonight.

FINEMAN:  Thank you, Lawrence.

O‘DONNELL:  Coming up: why did Senator Tom Coburn walk away from the table as the gang of six tries to come up with a budget plan?  Was he pressured?  We‘ll look at who might have told him to jump ship.

And Stephen Colbert takes on the Tea Party and I‘ll explain how in less than 12 months the Democrats went from expanding government health care programs to desperately trying to save Medicare.

(COMMERCIAL BREAK)

O‘DONNELL:  The gang of six trying to come up with a budget plan just became the gang of five.  Why did Tom Coburn walk away?  Has a Senate Ethics Committee investigations limited Coburn‘s options?

And later, what the Obama White House needs to learn about my hometown.  There is no bigger mistake they could possibly make than trying to control the “Boston Herald.”  That‘s in “The Rewrite.”

(COMMERCIAL BREAK)

O‘DONNELL:  Yesterday, a Senate bipartisan working group lost one of its six members trying to put together plan to reduce the deficit and debt.  When Republican Tom Coburn walked out, the group had rejected his proposal to make immediate and deep cuts to current Medicare beneficiaries.

According to “The Washington Post‘s” Greg Sargent, Senator Coburn and Democratic Dick Durbin got into a, quote, “heated yelling” match over cuts Durbin thought would destroy Medicare.  An unanimous aide told Sargent, “Coburn came in on Monday and said, ‘I want $130 billion.‘  The conversation was heated, there was yelling.  Durbin said, ‘I am not doing this.  That destroys Medicare, that goes even further than Paul Ryan. 

We‘re not doing it.‘”

For months now, Coburn has also been in a public feud with a member of his own party after he voted for the president‘s fiscal commission plan and recommended ending subsidies for ethanol—a position that conservative Grover Norquist called a tax increase.  Norquist accused Coburn of breaking his Americans for Tax Reform pledge to never raise taxes in any form.  Coburn has also recently come under the scrutiny of the Senate Ethics Committee for the role he played as a negotiator in former Senator John Ensign‘s sex scandal.

Joining me now is Christopher Hayes, MSNBC political analyst and Washington editor of “The Nation” magazine.

Thanks for joining me tonight, Chris.

CHRIS HAYES, THE NATION:  Also member of gang of one.

O‘DONNELL:  Gang of one.

All right, Chris, two theories I have here.  I want to start with the Senate ethics theory I observed in the Senate many times, when a senator comes under scrutiny of the ethics committee, he tends to then get very tight with his party on everything, because he needs all the friends he can get.  Do you see that as part of the dynamic with Coburn at this point?

HAYES:  Well, that seems plausible except it‘s hard to square that theory, which seems a totally plausible theory from the account from the unanimous aide which, again, we can‘t sort of necessarily verify, which is that he was too far to the right and that‘s what blew up the negotiations.

So, if the issue was that Coburn was going to come out and like his vote for the presidential, you know, fiscal commission and his feud with Grover Norquist, if he was going to come out in support of tax increases, that would put him at odds with the Republican Party.  But deep cuts to Medicare don‘t necessarily do that.  So, I‘m not sure that those two things square.

O‘DONNELL:  But that‘s what I mean.  I mean, he goes into a meeting where they‘re trying to find a bipartisan solution.  He takes such an extreme Republican position he knows everyone will say, no, no, we can‘t do that.  That‘s crazy.

And so, he leaves the room as the extreme Republican, the loyal Republican, who‘s basically doing what Mitch McConnell would have done, if Mitch McConnell walked into the room, and he walks back into the warmth of his Republican Caucus and everyone says, hey, Tom, good work.

HAYES:  Well, yes—no, that seems plausible.  I will say having covered Coburn a fair amount in Washington that, you know, I‘ve always been struck by the fact he really is a genuine ideologue.  I mean, he‘s comported himself in that way.  In terms of his voting record, he is a hard right ideologue.

And I actually have a kind of grudging respect for the fact that while his politics are terrible in my estimation, he never seems to be, you know, particularly corrupt—no more corrupt than generally senators are by our dysfunctional system.  Coburn does seem to have a set of beliefs he pursues and they‘re, I think, in my estimation again, terrible beliefs.

I don‘t know if this is him trimming his sails for those political purposes.  But he has been someone whose record so far has been someone who does, you know, pursue what he believes in.

O‘DONNELL:  That would be not corrupt unless he‘s negotiating agreement packages between senators and members of the senator‘s staff with whom he has had affairs.

HAYES:  That‘s right.  Yes.  Outside of the—outside of the mistress payoff domain of corruption, I should say—an important parenthetical.

O‘DONNELL:  And has he finally gotten gun-shy of Grover Norquist? 

That would be my other question.

Did Norquist‘s pressure force his hand in this gang of six?

HAYES:  I thought—I thought the Norquist-Coburn showdown was really fascinating, because, you know, the existential core of sort of post-1985, post-1990 Republicanism is a singular fidelity to cutting taxes at all times.  In all permutations, taxes are always too high, they must be cut, they can never be raised.

And this is the ideological crusade that Grover Norquist has waged very successfully with the thought being that you can strangle, you can squeeze the oxygen out of the welfare state if you do this long enough.  And Coburn is someone who had the kind of—he‘s sort of had the sort of ideological validity to take that on, right?  Which is to say if you actually care about these other things—deficit, debt and spending—then taxes have to be on the table.

And I think Norquist winning this signifies the fact that is still the dominant catechism of the Republican Party.

O‘DONNELL:  Grover Norquist, the most powerful man who does not work in the White House.

HAYES:  Yes.

O‘DONNELL:  Chris Hayes of “The Nation” and MSNBC—thanks for joining me tonight.

HAYES:  Thanks, Lawrence.

O‘DONNELL:  Still to come: I‘ll track how Ronald Reagan‘s “starve the beast” strategy is now working better than he ever imagined it would.

And, did a conservative newspaper go too far in its coverage of President Obama?  Or did the Obama press team go too far in trying to restrict their coverage?  That‘s in “The Rewrite.”

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

STEPHEN COLBERT, “THE COLBERT REPORT”:  Here‘s the situation.  Nuclear bomb somewhere in New York.  We don‘t know where it is.  The only way we can find out where the bomb is and save eight million people is to raise the tax rate on the top two percent of Americans from 33 to 36.9 percent.  Do we do it?  Eight Million people—

AMY KREMER, TEA PARTY EXPRESS:  Or—

COLBERT:  Wait.  Ticking time bomb.  You have 30 seconds.  The bomb is about to go off.  Do you raise taxes to save eight million people?

KREMER:  How about—

COLBERT:  Babies, orphan, nuns, your own family saying please, raise taxes. 

KREMER:  How about call up the Defense Department and tell them to stop creating—

COLBERT:  They‘re the one on the phone with you saying, please raise taxes.  The guy has called me, will save all these lives, raise taxes one dollar.  Raise it one dollar and you‘ll save the life of eight million babies. 

KREMER:  Tell them to stop creating the second engine for the F-35 and save three billion dollars and then the nuclear bomb won‘t go off. 

COLBERT:  I love you. 

(END VIDEO CLIP)

O‘DONNELL:  That was friend of the show, Stephen Colbert, trying to get friend of the show Amy Kremer of the Tea Party Express to agree to raise taxes one dollar.  She wouldn‘t, of course, but she did at least throw in one minor defense spending program she was willing to cut rather than raising taxes.  Amy clearly has done work on spending since she was on this show. 

(BEGIN VIDEO CLIP)

O‘DONNELL:  Now, tell me the program, Amy, you would stop. 

KREMER:  That‘s exactly—this is the thing—

O‘DONNELL:  Name me the program, Amy. 

KREMER:  Are you going to let me answer the question? 

O‘DONNELL:  Yes.  If you name a program.  If you don‘t, I have to move on to someone else? 

KREMER:  I am not an expert on the U.S. budget, but we cannot spend more than we make. 

O‘DONNELL:  Amy, we are going to leave it and—the way we‘re going to leave it with you—and you can reconsider for the rest of the show.  You can think it over the rest of the show about any government program that you want to stop. 

As of now, I have got you down as not opposed to a single government program.  Now, I am going to move through the group. 

(END VIDEO CLIP)

O‘DONNELL:  In the Spotlight tonight, starve the beast.  Republicans have not always been the party of tax cuts, tax cuts, tax cuts.  In ancient times, when they finally got the presidency back, after World War II, they were the party of the balanced budget. 

When Dwight Eisenhower was president in the 1950s, he refused to cut taxes even though the top tax rate was 92 percent.  No one actually paid 92 percent.  They had deductions and other things that brought it down to an effective rate of something much lower.

But the actual statutory top tax rate was 92 percent.  But Republican President Eisenhower thought balancing the budget was more important than cutting taxes.  At a press conference in 1953, President Eisenhower said, “the fact is there must be balanced budgets before we are again on a safe and sound system in our economy.  That means, to my mind, that we cannot afford to reduce taxes, reduce income until we have insight a program of expenditures that shows that the factors of income and outgo will be balanced.” 

Now, that is just, to my mind, sheer necessity.  Balancing the budget to the Republican presidential mind in the 1950s was sheer necessity.  The next Republican presidents, Nixon and Ford, like Eisenhower before them, resisted tax cuts well into the 1970s.  Both Nixon and Ford actually supported some tax increases. 

Then in 1976, the late Jude Wanisky (ph), who I had the pleasure of befriending in his final years, wrote this bit of economic coaching for Republicans in the “Wall Street Journal.”  “The political tension in the marketplace of ideas must be between tax reduction and spending increases.  As long as Republicans have insisted upon balanced budgets, their influence as a party has shriveled, and the budgets have been unbalanced.  The political tension in the marketplace of ideas must be between tax reduction and spending increases.” 

Guess which side Jude wanted the Republicans to be on?  After President Ford‘s defeat in his re-election campaign, the Republican party was wide open to the new ideas driven by thinkers like Jude Wanisky.  And so the idea of starve the beast took hold. 

The beast, of course, being government, starving it meaning cutting its revenue by cutting taxes.  Here‘s how Alan Greenspan, who had worked for President Ford, described the purpose of tax cuts in a Senate Finance Committee hearing in 1978.  “Let us remember that the basic purpose of any tax cut program in today‘s environment is to reduce the momentum of expenditure growth by restraining the amount of revenues available and trust that there is a political limit to deficit spending.” 

Then the most famous presentation of the starve the beast approach came three years later from President Reagan, shortly after he was inaugurated in 1981. 

(BEGIN VIDEO CLIP)

RONALD REAGAN, FORMER PRESIDENT OF THE UNITED STATES:  Over the past decades, we‘ve talked of curtailing government spending, so that we can then lower the tax burden.  Sometimes we have even taken a run at doing that. 

But there were always those who told us that taxes couldn‘t be cut until spending was reduced.  You know, we can lecture our children about extravagance until we run out of voice and breath.  Or we can cure their extravagance by simply reducing their allowance. 

(END VIDEO CLIP)

O‘DONNELL:  “Simply reducing their allowance.”  So in the 28 years between the Eisenhower inauguration and the Reagan inauguration, Republican presidents went from balancing the budget and favoring tax increases where necessary to do that, to simply cutting taxes and hoping that the resulting deficits would force cuts in spending. 

Balancing the budget would no longer be an article of faith for Republicans.  Reagan‘s aura as a tax cutter is so strong that his modern day fans of the Sean Hannity stripe have no idea that although Reagan talked a good game on tax cuts, he never achieved anything close to tax cut purity. 

Both as governor of California and as president, Reagan raised taxes.  In 1982, he signed into law the Tax Equity and Fiscal Responsibility Act, which included what was then the largest peacetime tax increase in history. 

But Reagan, and the starve the beast Republicans who followed in his footsteps, soon discovered that cutting taxes was a lot easier politically than cutting spending.  So the deficits piled up and our debt increased. 

And now, 30 years after Reagan‘s inauguration, the starving of the beast is finally working the way Reagan and the Republican authors of that idea had hoped.  Our deficits and debt are so enormous now that everyone—everyone in Congress and everyone in the liberal Democratic White House believes we must cut spending. 

Republicans can confidently declare that tax increases are, in John Boehner‘s phrase, a non-starter.  Never mind that we could solve our fiscal problems by simply allowing tax rates go back to where they were in the first term of the tax hating presidency of Ronald Reagan, a period when Republicans thought the tax burden wasn‘t so bad. 

When you regard government as “the beast” that must be starved of revenue, then tax rates can never ever be too low.  And any ground won in that march toward lower and lower tax rates must never ever be given up.  So John Boehner‘s and Mitch McConnell‘s singular task now is simply to keep tax rates out of the political reach of Democrats.

As long as the Republicans keep hiding the tax rates ball, the Democrats will only be allowed to play with the spending cuts ball to try to reduce the deficit.  And that is why, in this, the first 21st century round of the deficit reduction game in Washington, the Republicans have already won.  Ronald Reagan never dreamed that the Republicans could initiate a debate and actually vote on a bill that dismantles Medicare, and be applauded as serious for doing so. 

The political question is no longer how much will we cut Medicare.  The political question now is will we dismantle Medicare?  Will we repeal it?  It was a little over a year ago that Democrats passed the single biggest expansion of Medicaid in its history as part of a health care reform bill that increased health care spending for the population that is not eligible for Medicare.  And now the Democrats‘ health care fight is about whether they can keep Medicare alive, the most popular health care program the government has ever run. 

Can Democrats even keep it alive?  No Democrat thought they were ever, ever going to have to fight that fight.  Not until this year did Democrats notice how well the starve the beast strategy was working.  Many of them did not realize how much they had participated in it themselves, some who voted for the Bush tax cuts, the single most effective starve the beast vote ever cast, are now fighting to save Medicare. 

Their vote to starve the beast under George W. Bush was easy.  But they have by now discovered that saving Medicare will not be so easy. 

Still to come, in preparation for President Obama‘s visit to Boston tonight, the conservative leaning “Boston Herald” asked the White House if they could send one of their own reporters to cover the president‘s event.  The White House denied their request.  That‘s in tonight‘s Rewrite.

(COMMERCIAL BREAK)

O‘DONNELL:  In the Rewrite tonight, Boston‘s conservative leaning newspaper the “Boston Herald” is accusing the White House of playing favorites with the local media.  The president is in Boston for fundraising events today and tonight.  And the Herald says its reporters were not given access because of an op-ed written by Mitt Romney that the Herald published on its front page in March.

That op-ed, entitled “Obama Misery Index Hits a Record High,” ran on the same day President Obama was in Boston for a previous fund-raiser.  The Herald says it made a request to send a pool reporter to today‘s events.  Pool reporters provide information to the rest of the media when there‘s limited access at a press event. 

The Herald said in turning down their request, White House Spokesman Matt Lehric (ph) mentioned the Romney op-ed from the last time President Obama was in town.  Lehric‘s email to the Herald said, in broken English, “I tend to consider the degree to which papers have demonstrated to covering the White House regularly and fairly in determining local pool reporters.” 

Good luck trying to diagram that sentence. 

“My point about the op-ed was not that you ran it, but that it was the full front page, which excluded any coverage of the visit of a sitting president of the United States to Boston.  I think that raises a fair question about whether the paper is unbiased in its coverage of the president‘s visits.”

OK.  White House, let‘s get something straight here.  The “Boston Herald” is not unbiased.  Let‘s get something else straight.  The “Boston Globe” is not unbiased.  “The New York Times” is not unbiased.  “The Washington Post” is not unbiased. 

There are now maybe no more than ten cities left in America that have more than one newspaper.  Boston is one of those lucky cities.  “The Boston Globe,” the dominant paper in the region, likes you guys in the Obama White House.  The “Boston Herald” doesn‘t like you. 

Get used to it.  And understand that the Herald can do you no harm.  You won Massachusetts by nearly 26 points.  You are going to win Massachusetts again no matter what the Herald says about you.  If the Herald had the power to change minds in Massachusetts, John Kerry would not be a senator and Deval Patrick would not be a governor. 

The faithful adherents to the Herald‘s view of politics did not vote for Barack Obama and will not vote for Barack Obama, but they deserve to read firsthand accounts of Obama events as seen through the biased eyes of “Boston Herald” reporters and editors. 

And if you think Mitt Romney‘s Herald front page op-ed was a little tough on President Obama, you got to read the Herald more often.  You should have seen what they used to do to Teddy Kennedy, day in and day out.  Senator Kennedy didn‘t like the Herald, but he didn‘t try to hide from it. 

He knew the Herald had a job to do, and they were going to do a job on him.  Teddy was always tough enough and good natured enough to take it.  He joked with me many times about Herald stories that hit him hard.  The headline for Mitt Romney‘s piece about President Obama was “Why He‘s Failing and How To Get It Right.”

If that‘s the worst headline Barack Obama gets in “the Boston Herald,” he will be very, very lucky.  When Senator Kennedy made the mistake of causing trouble for the Herald by trying to enforce an FCC rule against the same ownership of a broadcast station and a newspaper in the same city, the Herald put its star columnist Howie Carr (ph) on the front page, where Howie Carr began his column with the glaring headline “Was It Something I Said, Fat Boy?”

(COMMERCIAL BREAK)

O‘DONNELL:  New issues emerge on day two of the media frenzy surrounding the news of Arnold Schwarzenegger‘s admission that he fathered a child outside of his marriage.  Eric Bowman, vice chair of the California Democratic Party, is now calling for an investigation to find out if any state or campaign resources helped keep the secret. 

Joining me now, Phil Bronstein, editor at large of the “San Francisco Chronicle.”  Thanks for joining me tonight, Phil. 

PHIL BRONSTEIN, “SAN FRANCISCO CHRONICLE”:  Thanks for having me. 

O‘DONNELL:  There‘s a lot of reports out today indicating that back in 2003, when Arnold Schwarzenegger was running for governor for the first time, the opposition, Gray Davis‘ campaign, had some of this information about a possible out of wedlock child.  The media had it, had some of the information. 

What has changed in the elements of this story between then and now that allowed this story to come out now? 

BRONSTEIN:  Well, I think what‘s changed is whatever unknown chemistry is going on and has gone on between Arnold Schwarzenegger and Maria Shriver.  I think, first of all, he‘s no longer governor.  He‘s going back in the entertainment business.  We don‘t really know what the dynamic is with this other woman, or other women, because there have been stories about other women.

I think during the initial campaign in 2003 there were stories about involving a stewardess, which may or may not have been true, but had nothing to do with a housekeeper.  So I think that, you know, what goes on with these couples really is a function of what goes on between them. 

Because you may recall in 2003, they had their Jennifer Flowers moment, where Maria stood there and very cautiously, in terms of the language she used, defend her husband against these allegations. 

But I also think there‘s a little bit of a feeding frenzy anyway about the sex lives of public officials.  I mean, are we really shocked about this?  These kinds of things, they go back to Jefferson, Hamilton, Grover Cleveland, Woodrow Wilson, you know, up through Bill Clinton. 

So I don‘t think it‘s a big shock.  I think the question is, you know, what‘s of interest at this moment and what can the particularly cable news, which has a 24/7 mandate, what can they glom on to.  Now we‘re bleeding out the tributaries of this original story. 

O‘DONNELL:  Right.  Phil, there‘s always this presumption that if someone enters politics and goes into a high-profile campaign like a governor, certainly a presidential campaign, that they better be ready because everything about them is going to be—is going to become public.  This is yet another proof that that simply isn‘t true. 

BRONSTEIN:  Well, I think it has become public.  Sometimes it‘s—timing is the issue.  The most—what‘s shocking about this, Larry—what‘s shocking about this is that it was kept a secret for so long.  It‘s not shocking that it happened.  I mean, if you know Arnold Schwarzenegger, you can‘t claim to be shocked if you have seen “Pumping Iron.”  That is Arnold. 

He‘s boisterous.  He‘s like a frat guy.  I think the shocking thing is that it took so long to come out. 

O‘DONNELL:  Well, I don‘t know Arnold, but I‘ve seen “Pumping Iron.”  Phil Bronstein, editor at large of the “San Francisco Chronicle,” thanks very much for joining us tonight. 

BRONSTEIN:  Thank you.

O‘DONNELL:  “The Rachel Maddow Show” is up next.  Good evening, Rachel.

END   

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