updated 5/25/2011 1:17:37 PM ET 2011-05-25T17:17:37

Guests: Michael Steele, Leonard Lenihan, Steve Israel, Gary Peters, Russ Carnahan

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

An hour after the polls have closed in New York‘s district 26, the Democrat ahead of the Republican by five percentage points.  And, of course, the Republican endorsed the Ryan budget.  We‘ll ask Michael Steele if Republicans would run on the Ryan plan to kill Medicare.  He said they would.

Tonight, Mr. Steele is back.  And I‘ll ask him what he thinks now of the results of this election.

THE ED SHOW is on.  Let‘s get to work.

(BEGIN VIDEOTAPE)

SCHULTZ (voice-over):  Tonight, all the latest from New York 26 with head of the Erie County Democrats and Congressman Steve Israel of New York.

In Missouri, they are still looking for survivors as Republicans in Washington start to play politics with the disaster.  You won‘t believe Eric Cantor‘s comments.

In “Psycho Talk”—the latest racist comments from a FOX News host.

And it‘s the pardon as governor of Minnesota that could stop the Pawlenty campaign in its tracks.

(END VIDEOTAPE)

SCHULTZ:  Great to have you with us tonight here on THE ED SHOW.

This is the story that has me fired up this evening.  At this hour, both parties have their eyes locked on New York‘s 26th district.  Polls closed about an hour ago with 66 percent reporting.  Democrat Kathy Hochul leads Republican Jane Corwin, 48 percent to 43 percent with Tea Party candidate Jack Davis bringing in 8 percent of the vote so far.

If a winner is declared in this hour, we‘ll bring you coverage of speeches and reaction live from district 26 and I‘m being told now that that race has been called and the winner is the Democrat Kathy Hochul.  And we should point out this is the first or only the fourth time since 1857 that a Democrat will hold this seat.

We‘ll have a lot to talk about this tonight.

The reason for tonight‘s special election, of course, is due to the abrupt resignation of Congressman Chris Lee.  After this topless picture surfaced, Lee used the picture to attract dates on Craigslist.  From the minute Lee resigned, millions of outside dollars poured into this race.  Early on, Democrat Kathy Hochul trailed by 20 points.  The numbers completely changed when Republicans passed Paul Ryan‘s budget plan.

Now, going into the election, Hochul led Republican Jane Corwin by six points.  Hochul and the Democrats have really made the Ryan plan the centerpiece of this election.

(BEGIN VIDEO CLIP)

KATHY HOCHUL (D), NY CONGRESSIONAL CANDIDATE:  My opponent has said she would have voted for the Ryan budget had she been in Washington.  Those are her words not mine.  So, you can check the record.

(END VIDEO CLIP)

SCHULTZ:  Paul Ryan is using tonight‘s election to raise money for Corwin. 

He sent out this e-mail through his PAC.

“This will come as no surprise to many of you but the playbook the Democrats and special interests have been using to attack me is being used right now in New York‘s 26th district.  You know the drill.  They spread all kinds of falsehoods about the path to prosperity and see what sticks.  Jane Corwin needs our help.”

Well, she didn‘t get enough help.  She lost tonight.  The race has been called.

Corwin has been doing her best going into this election to divorce herself from Ryan‘s radical plan by playing the victim.

(BEGIN VIDEO CLIP)

JANE CORWIN ®, NY CONGRESSIONAL CANDIDATE:  There‘s been a lot of lies and distortions about what my position on Medicare and it‘s scaring seniors, quite frankly, and I‘m shocked and appalled by that.  I think it‘s important the seniors understand that I‘m trying to save the program.

(END VIDEO CLIP)

SCHULTZ:  Corwin was so worried about tonight‘s outcome she‘s obtained a court order preventing officials in seven counties of the 26th district from certifying the winner before a Thursday morning hearing.

No matter what happens tonight and the race has been called the Ryan budget undoubtedly has Republicans scrambling.  Michele Bachmann was asked about this race earlier today and the Ryan budget on FOX.  Bachmann came through with this ridiculous answer as normal.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  Some Americans say they‘re not comfortable with the changes he wants to make to Medicare.  In fact, that whole issue seems to be a focal point at this special election today in New York‘s 26th congressional district.  Are you sensing some sort of public backlash now to the Ryan plan for Medicare?

REP. MICHELE BACHMANN ®, MINNESOTA:  I appreciate the fact that my colleague Paul Ryan has been serious about looking at this issue.  I put an asterisk on my support in that I think that at the same time that we‘re looking at reforming Medicare, we also need to let senior citizens know we‘re serious about cures for things like diabetes, Alzheimer‘s.  Israel is also working on these issues.

(END VIDEO CLIP)

SCHULTZ:  Really?  What kind of health care coverage does Israel have? 

Universal health care.  Are you for that, Michele?

And speaking of those breakthroughs and speaking of those cures, it takes research dollars to do that, and you Republicans certainly want to cut all of that.  As crazy as Bachmann sounds, she still makes more sense than most of the Republicans.

I warn you now that this audio and video quality is rough but I think you need to hear it.  This is how a Georgia congressman, Republican Paul Woodall, threatened one of his elderly constituents during a town hall event.  Here it is.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE:  The private corporation that I retired from does not give medical benefits to retirees.

REP. PAUL WOODALL ®, GEORGIA:  Hear yourself, ma‘am.  Hear yourself.  It‘s just a difference of opinion.  You want the government to take care of you because your employer decided not to take care of you.  My question is: when do I decide I‘m going to take care of me?

(END VIDEO CLIP)

SCHULTZ:  Did you hear that?  You know?  When I first heard it, I thought, you know, it‘s really good to hear the truth just for once from a Republican.  That‘s what they stand for.  That‘s what they want.

Now, regular folks out across America, you need to know you‘re on your own.  If you don‘t have contacts with the rich and the powerful in government, well, that‘s just too bad.  That‘s what Republicans want.  That‘s what all of their policies are all geared toward, favoring those with the big bucks.  If you‘re—you know, the head of an oil company, you‘re in pretty good shape, an insurance company, Halliburton, KBR, Blackwater, a big bank, pharmaceutical company, you name it.

They don‘t care about you.  It‘s not complicated.  Look at every policy they‘ve advocated since they‘ve take every over the House.

Take away health care from old people and kids.  Defunded federal agencies that look out for you the consumer whether big banks, oil companies, or those that make sure you have clean water and food—as well we have talked about many times before, we‘ll do it later none this show as well, that they really don‘t care about climate change, never have.  And when nature as we‘re seeing right now wipes out your family, by the way, unless we can cut some spending, you‘re on your own.

And I think that‘s worth more talk later in the show.  They‘ll tell you they‘re going to give tax cuts to the wealthy and that, well, you‘ll eventually get yours.

This conservative philosophy is no longer a theory.  George W. Bush cut taxes for the rich and look what happened.  Jobs were lost.  They didn‘t regulate banks and, of course, the housing market went to hell in a hand basket.  It took a huge surplus and turned it into the worst deficit in just eight short years.

And no matter how they put lip stick on this big pig, if you look closely at the policies of the Republican Party especially as of late, they don‘t care about the middle class in this country.  They never mention the middle class.  The middle class is a nonfactor with Republicans, so it‘s nice to hear one of these righties step up and finally tell the truth because that is what they‘re all about.

Get your cell phones out.  I want to know what you think.  Tonight‘s question: do the Republicans care about you if you‘re in the middle class?  Text “A” for yes, text “B” for no to 622639.  And, of course, you can always go to our new blog at Ed.MSNBC.com.  We got results coming up later on in the show.

Now, as we told you at the top, the race has been called in New York‘s 26th district.

For the latest, let‘s bring in Leonard Lenihan.  He is the chairman of Erie County Democratic Committee.

Leonard, this is a big night for you in that county.  How do you feel?  How did it come down?

LEONARD LENIHAN, ERIE COUNTY DEMOCRATIC COMMITTEE:  Ed, we‘re making history here tonight.  There‘s never been a Democrat from the 26th district to go to Congress.  Kathy Hochul is heading there tomorrow.

This is going to be a great victory here tonight.  We made history.  And I think have shaped the agenda for the next couple years in national politics.

SCHULTZ:  What do you think?  Was it Medicare?  Was it Medicaid?  Was it the Ryan budget that turned a lot of people against the Republican and Tea Party candidate?  What was it?

LENIHAN:  Well, what it was Kathy Hochul, gifted public servant, an incredible person with a passion to go to Congress, to represent working families.

The Ryan budget played right into her hands in that they tried to pass a budget in the middle of this campaign that took health care away from senior citizens.  And Kathy Hochul jumped on that immediately, attacked it.  Her opponent embraced the Ryan proposal.  Hochul chastised her for that, criticized her and said she would never do that and tonight she is going to Congress.

SCHULTZ:  Now, Corwin the Republican, tried to distance herself from the Ryan budget down the stretch.  Obviously, that didn‘t work.  Did it surprise you that she was going to do that?

LENIHAN:  No, it didn‘t.  Look, Kathy Hochul just was a perfect—not only is she a great public servant she was a perfect candidate.  She understands people.

Jane Corwin has had to be told from day to day, you know, what position to take, what to do, you know, every day a change.

With Kathy, she was consistent.  She stayed on the message and that was simple.  Let‘s protect working families against the Paul Ryan budget.  And, tonight, she‘s been rewarded for that.

SCHULTZ:  Leonard, how much money came into this district supporting Corwin versus the winner tonight, Kathy Hochul?  Give us the landscape of that.

LENIHAN:  I would say, Ed, $8 million to $9 million was spent against Kathy, $8 million to $9 million.  She didn‘t spend 25 percent of that.  She was outspent three to four to one, probably four to one.

But she just—she had enough to get her message across.  She had the right message.  She had the right views.  She was the right person for this job.

You know, I‘ve always said, Ed, the main job of a congressperson is the people look to their congressperson to protect them against special interests.  And Kathy Hochul made it clear she was going to protect the people from this district against the special interests.  Jane Corwin, you know, didn‘t do that.  And that‘s why we have a victory here tonight.

SCHULTZ:  Leonard Lenihan, what do you say about the Tea Party candidate?  Was that candidate the Tea Partier, Jack Davis, was he the spoiler in all of this for the Republicans and is that why Hochul has won?  What about that?

LENIHAN:  No.  I just think Jack petered out.  You know, he held the attention of the public for a while, attacking both political parties.  That resonated somewhat but in the end he couldn‘t make the case.

They wanted somebody who made it clear they were going to protect working class families and protect seniors against Medicare cuts.  Protect Social Security against people who wanted to come in and privatize it.

Kathy made that argument.  She did it beautifully.  And tonight, she is going to Congress.

SCHULTZ:  Leonard, do me a favor and get Kathy Hochul for us on there tonight.  We want to talk to her before the broadcast is over tonight, all right?

LENIHAN:  All right.

SCHULTZ:  We want to talk to the winner.  I appreciate your time.  Thanks so much and congratulations.

LENIHAN:  Thanks so much.

SCHULTZ:  OK.  I know you worked awful hard up there.  Well, those are the numbers.  It is amazing.  The race has been called.  It‘s going to go to Kathy Hochul.

Joining me now is New York Congressman Steve Israel.  He is the chairman of the Democratic Congressional Campaign Committee.

Congressman, I guess you could say this is a shocker to many people.  The Democrats haven‘t exactly made a habit of winning this district.  What do you think?  I know you‘ve been up there.  What do you think the difference was in tonight‘s election?

REP. STEVE ISRAEL (D), NEW YORK:  Ed, I think there were three reasons why a Democrat has been elected to Congress in one of the most conservative Republican congressional districts in America and they are in alphabetical order—Medicare, Medicare, and Medicare.

Kathy Hochul made a statement.  She said that she refuses to support the proposition that we should terminate Medicare in order to fund tax cuts for big oil companies, independents, Republicans, and Democrats agreed with that proposition and that‘s why she won.

And I‘ll say one other thing.  Tonight, we served notice on the Republican Party that in any district in America, East Coast, West Coast, Lake Erie, where there is a Democrat who is willing to defend Medicare, we will fight in that district despite the conventional wisdom and despite the odds.  That‘s what makes us Democrats.

SCHULTZ:  Congressman Israel, are we seeing a sea change?  Is this the beginning of a sea change?  Do you think that the Democrats could win the House back on this issue?

I mean, if they can win there, imagine what‘s going to happen in some close districts across the country.  Was this election a litmus test for the Ryan budget?  What do you think?

ISRAEL:  Well, yes it was.  In fact, we had our drive for 25.  We needed 25 seats to take back the House.  Now, it‘s only—we need only 24 more to take back the House.  So, it has diminished the difference.

And let me say one other thing.  If the Republicans had to spend about $3.5 million to defend one of the most Republican conservative districts in America and lost, imagine what that says for the 97 additional congressional districts that are more moderate than New York 26.  There are 97 Republicans who are losing sleep tonight.

SCHULTZ:  OK.  On the heels of that answer, do you think that there will be some Republicans back away from this and what about this vote that‘s going to be coming up later this week in the Senate?  Do you think that this election would be a wakeup call for some of those senators who are wavering on this?  There are 10 Republican senators who are up for re-election.  What about that dynamic?

ISRAEL:  If a Democrat elected in New York 26 is not a wakeup call, then I don‘t know what is.  This is not just a win for Democrats and it‘s not just a win for Kathy Hochul, who will be an extraordinary and independent member of Congress.  It is a win for Medicare.

And it is a very serious warning sign to Republicans who would continue this reckless scheme to terminate Medicare in order to fund those tax cuts for big oil companies.

SCHULTZ:  Do you think that this was going to be a wakeup call to Speaker Boehner?

ISRAEL:  Well, again, I don‘t think that anybody would have predicted early on—I can tell you when I was asked to make the decision on whether Democrats should participate in this election, because it was such a strongly Republican district, there were many people who said Democrats could never win it.  Kathy Hochul won it.  She won it with the support of independents, Republicans, and Democrats, and I think this sends a serious message to Republicans throughout the Congress, throughout the country.

SCHULTZ:  Congressman, do you think this changes the landscape of debate for the Democrats?  I mean, there‘s a big conversation about what should be on or off the table when you go to the table to negotiate with those people that want to change the landscape of Medicare and Medicaid and Social Security.  Should this be a game changer when it comes to strategy for the Democrats?

ISRAEL:  I believe that we proved tonight why we‘re Democrats, and where we‘re willing to fight.  We will strengthen Medicare.  We will improve Medicare.  We will reform Medicare.  We will not allow Republicans to end Medicare.  That‘s what happened tonight.

SCHULTZ:  But does it take it off the table as a bargaining chip in your opinion?

ISRAEL:  There was never—the termination of Medicare was never a negotiating position.  It is nonnegotiable for every Democrat.  But we will not accept the termination of Medicare.

SCHULTZ:  Steve, what about the—Democrats have said that, you know, we‘ve got to look at the long term here and we got to make cuts.  Eighty percent of the people don‘t want that.  And now that we‘ve seen this tonight in 26 -- does this change things?

ISRAEL:  I think tonight proves to Democrats and Republicans throughout the entire country that we have better priorities.  We don‘t need to reduce Medicare.  We need to reduce the tax subsidies to the big oil companies.  That‘s the choice that we‘ve presented to the American people and the voters of New York‘s 26th congressional district agree with our choices and our priorities.

SCHULTZ:  Congressman Steve Israel, I have to say congratulations undoubtedly is in order.

ISRAEL:  Thank you.

SCHULTZ:  You‘re the chairman of the Democratic Congressional Campaign Committee.  Way to start out with a victory, dude.

ISRAEL:  Thank you.

SCHULTZ:  All right.  Good to have you with us.  Thanks for your time tonight.

Remember, to answer tonight‘s question there at the bottom of the screen. 

I want to know what you think.

And more good news, because Republicans were against this all along.  Today, Chrysler repaid its government loan six years early and the United States auto industry is coming back big time.  But Republicans predicted failure.

And Michael Steele is here tonight here on THE ED SHOW.   I‘ll talk to him about Chrysler and New York 26.  You won‘t want to miss our latest face-off.  And we are waiting for comments from Kathy Hochul.

(COMMERCIAL BREAK)

SCHULTZ:  Big news: Democrat Kathy Hochul has won the special election in New York‘s 26th district.  You are looking live at Hochul headquarters in the 26th district.  Former RNC Chairman Michael Steele joins me to talk about these results.  What does it mean for the budget talks?  What does it mean for the Republicans moving forward?

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

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.

We have a decision in New York‘s district 26.  Kathy Hochul, the Democrat, has been declared the winner by “The Associated Press” with 48 percent of the vote, Jane Corwin, the Republican with 42 percent of the vote, and Jack Davis in at 8 percent of the vote.  All of the precincts are not in.  We are waiting.

You‘re seeing a live shot of the 26th district.  We‘re going to take Kathy Hochul‘s comments.

But joining us right now is former RNC chair, Michael Steele, who is now a political contributor here at MSNBC.

Michael, great to have you with us tonight.

MICHAEL STEELE, FORMER RNC CHAIRMAN:  Good to be with you, Ed.

SCHULTZ:  I appreciate your time.  Your thoughts off the top on the results tonight.

STEELE:  Well, I think the results are very telling and I think it‘s consistent with what we‘ve seen beginning back really in 2009.  The voters are restless.  They‘re looking for leadership that is going to speak to the issues and concerns that they have.

And so, if you put something out like Medicare, if you‘re talking about health care as we did in 2010, you‘ve got to be prepared to really drill down on these issues so the voters understand exactly what you want—and to the extent they don‘t appreciate it, don‘t like it, or don‘t really get what you‘re saying, you are going to see these results.  I think that‘s what tonight is all about.

The voters out there are saying that everything is still on the table for them and that for Democrats and Republicans—and this is my take—that you can‘t take any of this for granted.  So, I get the high fiving tonight for Democrats.  Folks who are high fiving after this Scozzafava race in New York 23 a year ago, two years ago, but that was not necessarily played out in the fall of 2010 when it was time for the actual vote to count.

SCHULTZ:  Yes.

STEELE:  So, we got to keep it in balance I think.

SCHULTZ:  Well, Michael, we had all kinds of indications from people on the ground, through polling and in the debates, that it really was about the Ryan budget.  That this race was about Medicare and Medicaid and the radical changes that have been proposed in the Ryan budget.  Is this not a one-upmanship for the Democrats tonight?  And, seriously, because -- 

STEELE:  Yes, no.

SCHULTZ:  This does not go traditionally to the Democrats.  This is a rare victory for liberals tonight.

STEELE:  That means—but not—but I would—I would even caveat a little bit more than that.  Not just for liberals but for conservatives and independents in that district as well.  Because to get a 48 percent win in a significantly, you know, large Republican community, you‘re going to have to have some Republicans vote with the Democrats on this issue.

SCHULTZ:  So, why did that happen?

STEELE:  Well, I think because, and this is something that I find very fascinating, that in the run up to this, that the party never took the time to get out in front of the messaging on this issue.  Very much like what we saw in Wisconsin where you made those points dramatically over the last—the early part of this year about what this meant to the progressive movement and how progressives felt about collective bargaining.  The same was true here in terms of the Medicare issue.

SCHULTZ:  Yes.

STEELE:  How progressives felt about this.  You did not hear a countervailing point of view from Republicans that articulated and supported the candidate in this case in Ryan‘s efforts more broadly.

SCHULTZ:  But, actually, down the stretch, Jane Corwin tried to distance herself from the Ryan plan and said that she wasn‘t married to it.  And so, obviously, she seems that there was some damage being done.

STEELE:  Right, right.

SCHULTZ:  But you—as you, I think you are correct in pointing out that there had to be a lot of independents and Republicans that also went with Kathy Hochul on this to turn it the way it did.  But I want to ask you, are we seeing tonight the Tea Party do damage to the Republican candidate?  Jack Davis in at 8 percent.  You take him out of the race, you may have a different outcome.

Would you agree with that?

STEELE:  You may have a different outcome.  That‘s absolutely true.  But again, this goes back to something I learned very early on in New York 22 and New York 23, my first year in office, is that you‘ve got to be cognizant of the ground troops.  You‘ve got to be focused on how the base is feeling about these issues about these candidates.  And you‘ve got to be able to massage that and work and keep everybody in play.

That did not happen here and very much like what we saw two years ago in Scozzafava‘s race in New York 23, the third party, if you will, candidate upended the Republican.

SCHULTZ:  OK.  So, putting your former chairman hat on right now and as a strategist moving forward, how should the Republicans deal with this outcome tonight?  What do you think?

STEELE:  Understand what it means in the context of this moment.  You have the Ryan plan that‘s been voted on by the House.  You have the Senate now poised to do the same.  You‘ve got an uneasy feeling out there.

SCHULTZ:  Yes.

STEELE:  Some would say even, you know, dramatic feeling about the plan.  The party‘s got to get out and begin to understand exactly what this is about.  This is not about killing Medicare.  This is about reforming and changing it.  That‘s where the debate lies.

SCHULTZ:  OK.  True.  And it looks to me like there‘s a lot of Americans that don‘t want to reform it the way the Republicans want to reform it.

I do want to ask you one final question: will this affect any Republicans in the Senate with that vote coming up, up-or-down vote on this?

STEELE:  I think you‘ve already begun to see that with Senator Brown.  I think you certainly have our Maine senators that have some concerns there.  And I think that, yes.  It will have sort of a dampening effect on any Senate vote that Republicans have to take.

You even saw Mitch McConnell this past weekend say, well, you know, I personally will vote for it.  But the other senators I‘m not going to corral the caucus to get in line behind that vote.

SCHULTZ:  OK.  All right.  Michael Steele, this is the first time you‘re on THE ED SHOW since signing up with MSNBC.

STEELE:  Good to be with you, Ed.

SCHULTZ:  Congratulations.  Great to have you with us.

STEELE:  Thank you.

SCHULTZ:  I hope you‘ll be on THE ED SHOW quite a bit.  Thank you.

STEELE:  You know I will.

SCHULTZ:  OK.  Very good.  I look forward to it.

STEELE:  All right.

SCHULTZ:  We are still watching the Hochul headquarters awaiting a victory speech.  We‘ll bring that to you live here on THE ED SHOW tonight.

Also, more than a thousand residents of Joplin, Missouri, are still missing after Sunday‘s storm.  Today, House Republican leader Eric Cantor decided to play politics with Joplin‘s relief money.

Today, Chrysler repaid its government loan six years early and the United States auto industry is coming back big time.  But Republicans, of course, predicted failure.

We‘re right back.  Stay with us.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW here on MSNBC.  Let‘s go live now to the Hochul headquarters.  This is the winner, Kathy Hochul, in her victory speech in District 26 in New York. 

(BEGIN COVERAGE)

KATHY HOCHUL, CONGRESSWOMAN ELECT FROM NEW YORK:  I am so incredibly humbled tonight, truly.  And I am so looking forward to representing the people of the 26th District and fight for the issues that I know they care about in Washington.  So thank you.  Thank you. 

But first, and this—like the Oscars, you just got to listen.  OK?  My husband of 27 years -- 17, right, honey? 

My husband of 27 years, Bill, my rock, my inspiration, the love of my life. 

Thank you. 

(APPLAUSE)

HOCHUL:  My son Billy and my daughter Katy. 

(APPLAUSE)

HOCHUL:  Thank you so much.  My sister Sheila, who has been an amazing influence in my life and has been there with me.  Sheila.  A few of my four brothers are here, Mike and Paul.  Thank you so much for being here for me.  Thank you. 

I really want to thank my parents, Jack and Pat Courtney, for the lasting influence they had on my life, which was to teach each of us that you have to give of yourself, give back to your community.  And I try to live that every day, mom and dad.  So thank you for your influence. 

I got to give my mom some extra thanks.  You may not know this, but for the last few months, my mom and dad have been making nonstop phone calls from their home in Florida.  I‘ve actually met voters in diners as far as Dansville who said I was talking to your mother and she said I had to vote for you. 

I learned like these people did, you just don‘t say no to my mother. 

Len Linehan (ph), we‘re here in Erie County, my home base.  You‘ve been such a great influence, longtime supporter of mine.  You and the other six county chairmen, Dan Rivera (ph) from Niagara, Joe Morelli (ph), Monroe, Laurie Longaney (ph), Genesee, awesome, Judith Hunter (ph) from Livingston County, Gini Crane (ph), Orleans, and Harold Bush—you have all been so instrumental in bringing home, this election. 

I could not have gotten this far without your grass roots support.  So thank you.  Thank you so much. 

(END COVERAGE)

SCHULTZ:  Kathy Hochul.  Her victory speech thanking everybody in New York‘s district 26.  The president of the United States putting out a statement tonight.  “I want to extend my congratulations to Congresswoman-Elect Kathy Hochul for her victory in New York‘s 26th Congressional District.  Kathy and I both believe that we need to create jobs, grow our economy, and reduce the deficit in order to out-compete other nations and win the future. 

“Kathy has shown through her victory and throughout her career that she will fight for the families and businesses in western New York.  And I look forward to working with her when she gets to Washington.” 

A big win for the Democrats tonight.  No doubt about it.  Kathy Hochul declared the winner in New York‘s District 26.  Obviously the Ryan Budget and the attack on Medicare and Medicaid played heavy on a lot of the voters.  She is in with 48 percent of the vote.  Republican Jane Corwin in at 42 percent of the vote.  And also Tea Party candidate Jack Davis in with eight percent of the vote.

And all of those votes have not been counted, as of yet.  But there you see the winner, Kathy Hochul.  Our coverage will continue. 

Today, Chrysler repaid its government loan six years early.  And the United States auto industry is coming back big time.  But republicans, of course, predicted failure and wouldn‘t go along with the president on the loan.  That‘s next.

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.  Thanks for watching tonight.  I love this story.  The auto industry is making a big comeback.  It‘s good for the industry and it‘s good for the United States of America.  Democrats are on the winning side of the issue.  And they‘re going to take advantage of it, as they should. 

Here‘s part of an ad from the DNC. 

(BEGIN VIDEO CLIP)

MITT ROMNEY, FORMER MASSACHUSETTS GOVERNOR:  If you write a check, they‘re going to go out of business. 

TIM PAWLENTY, FORMER MINNESOTA GOVERNOR:  Why can‘t they get a loan if that‘s what they‘re seeking from the private sector? 

GRETA VAN SUSTERAN, FOX NEWS ANCHOR:  Mr. Speaker, the most radical president in American history. 

NEWT GINGRICH, FORMER SPEAKER OF THE HOUSE:  I think that‘s clearly true. 

Look at what they did with General Motors and Chrysler. 

PAWLENTY:  It‘s a slippery slope.  Where does it end? 

UNIDENTIFIED FEMALE:  It is a banner day for the resurgent U.S. auto industry.  Less than two years after coming out of bankruptcy, General Motors announced today it is adding 4,000 American jobs. 

BRET BAIER, FOX NEWS ANCHOR:  Chrysler will pay off its remaining debt to the U.S. Treasury Tuesday. 

(END VIDEO CLIP)

SCHULTZ:  And that is the bottom line, a victory for the president who was standing alone with no bipartisan help.  Let‘s bring in Congressman Gary Peters of Michigan.  Congressman, good to have you with us tonight. 

REP. GARY PETERS (D), MICHIGAN:  Great to be here. 

SCHULTZ:  The word “radical” now goes out the window, doesn‘t it? 

PETERS:  It certainly does.  Success is pretty clear.  We‘ve got Chrysler paying back their loan and paying it back six years early, creating jobs, keeping the American auto sector healthy and American manufacturing in the process. 

It wouldn‘t have happened without President Obama stepping up to the plate. 

SCHULTZ:  Why do you think so many Republicans were against this?  What information did they have or do you think they were working from that made them think that there was just no way that the American worker could succeed? 

PETERS:  It just—blind ideology, Ed.  It isn‘t—there is no faith in the American workers, as you mentioned.  We had John McCain a year and a half ago saying if anybody believes Chrysler is going to survive, I‘d like to meet that individual. 

Well, I‘d love to take him to Auburn Hills now, and show that the American workers believed in Chrysler.  They‘re making it a success.  They‘re paying back the taxpayers the loans.  And jobs are being created.  It is what makes America great.  When you believe in American workers, that is going to be a success and home run any time. 

SCHULTZ:  How could Mitt Romney be from Michigan and not believe in the American workers?  Your take on that, because he was pretty adamant, as you saw in that ad that was put out by the DNC.  It‘s on record where he stood. 

PETERS:  Well, it is.  He comes from Michigan.  Actually, his father was in the auto industry.  To have that view  is really incredible..  Again, he is appealing to the real far fringe, the right wing base, and not looking at practical common sense of standing behind American workers. 

President Obama did.  He stepped forward, made a very unpopular decision.  But it‘s paying back in really great rewards to the American workers and to the American economy, because of his courage. 

SCHULTZ:  All right.  The comment from Mitt Romney was if General Motors, Ford, Chrysler get the” what he called bailout their chief executives asked for yesterday, “you can kiss the American automobile industry good-bye.” 

How aggressive should the Democrats be with this in campaigning?  And what does this really illustrate? 

PETERS:  Well, we have to be very aggressive in this.  This is a great success story.  You had General Motors and Chrysler, because of the crisis on Wall Street and the lack of financing—you had these companies nearly disappearing, and in the process hundreds of thousands of jobs. 

But because the president stepped up and said I‘m not going to give up on the American workers, on American companies, these companies were able to turn things around.  They‘ve got great products and are now competitive and saving not only the jobs with General Motors and Chrysler, but all of the suppliers. 

These are hundreds of thousands of jobs across America and good paying middle class jobs.  This is about the American middle class and believing in the American middle class.  It‘s very clear the president believed in the American middle class and the Republicans did not. 

SCHULTZ:  All right.  Congressman, before you leave us tonight, I‘ve got to ask you, what do you think of the results in New York‘s 26th district?  So much made about the Ryan Budget, the attack on Medicare and Medicaid.  How do you read it tonight? 

PETERS:  Well, I read it as that, that the American public is understanding now that there is very clear differences between Democrats and Republicans.  And they particularly do not like this plan that will dismantle Medicare, which is critical for American seniors.

And they‘ve spoken loud and clear tonight in New York. 

SCHULTZ:  Will this back off the Republicans? 

PETERS:  Well, it may.  But they‘re pretty much tied into this ideology.  And I think they‘re going to continue to move forward.  But it‘s not something that the American people are buying.  They‘re going to continue to resist.

And they certainly do it I believe at their peril, if the Republicans keep moving this way.

SCHULTZ:  You bet.  Going to be interesting to look at that Senate vote coming up. 

PETERS:  Right. 

SCHULTZ:  Thanks for your work with the auto workers and for American middle class families. 

PETERS:  Thank you. 

SCHULTZ:  You are a big part of it. 

Coming up, they are still searching for survivors after the tornado that hit Missouri.  Republicans are playing politics, if you can believe it, with emergency funds.  I‘ll tell you all about it next.  Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

TAYLOR BURTON, TORNADO SURVIVOR:  Yesterday was supposed to be happy.  It was supposed to be the beginning of the rest of our lives, was what was said at graduation.  And now the rest of our lives are going to be starting from zero and beginning our lives that way. 

JOHN DEGRAFF, TORNADO SURVIVOR:  I don‘t know.  I don‘t know what the insurance company will do on something like this.  I guess I‘ll be staying with family.  Right now, I only have one relative out of all my family members that has electricity. 

UNIDENTIFIED FEMALE:  At least we have each other. 

UNIDENTIFIED MALE:  That‘s all that matters. 

UNIDENTIFIED FEMALE:  Yes. 

(END VIDEO CLIP)

SCHULTZ:  The anguish, it‘s unbelievable.  Survivors of the Joplin, Missouri tornado tell their stories as the death toll rose to 122.  As many as 1,500 people are still missing.  The storm devastated a city where the median household income is just over 30,000 dollars, and where nearly 15 percent of the population lives below the poverty line. 

But this morning, House Majority Leader Eric Cantor said Congress wouldn‘t approve federal relief funds for Joplin unless the money was offset with spending cuts to other programs.  Later Cantor went on Twitter to praise the House Appropriations Committee for giving Joplin a billion dollars in emergency funds, but only after cutting a green energy program. 

Let‘s bring in Democratic Congressman from Missouri, Russ Carnahan.  Mr.

Carnahan, good to have you with us tonight.  I want your reaction to Mr.

Cantor. 

REP. RUSS CARNAHAN (D), MISSOURI:  You know, we have a long history in this country of backing up people when they‘re at their worst, when they‘ve gone through natural disasters.  Missouri has certainly had our fair share.  Floods, we‘ve had tornadoes in St. Louis. 

But to have that debate in the face of the suffering we‘ve seen in Joplin is just plain wrong. 

SCHULTZ:  Are we making a moral mistake in this country by even having this conversation? 

CARNAHAN:  Well, we need to have a great conversation about our debt and our priorities here, you know.  But when you talk about cutting clean energy programs versus cutting subsidies for big oil, let‘s have that debate here in Washington. 

But let‘s not have that on the backs of the people in Joplin.  We have a rich history in this country of standing up for folks when they‘re—when they are at their worst, in a natural disaster.  But folks in Missouri, we know how to come together.  This country is going to come together.

And we‘re going to be sure their needs are met.  And we‘ve seen such an outpouring down there.  We know what this country is made of. 

SCHULTZ:  Yes. 

CARNAHAN:  And our country needs to reflect that. 

SCHULTZ:  Congressman, it seems that the country is only going to come together conditionally, is the way the Republicans are looking at it.  Shouldn‘t disaster funding be immediate?  I mean, without needing to offset the cuts? 

I mean, even Tom Delay called for immediate disaster spending after Hurricane Katrina. 

CARNAHAN:  We do.  There needs to be no question that we‘re going to step up as a country to meet the needs of the folks in Joplin, in Alabama, you name it, where these disasters hit.  You know, we expect that to happen.  What happens to our communities, when it happens across this country, people need to than that national help is going to come, that people are going to stand up for them. 

SCHULTZ:  Congressman, I know this is a tough moment for you.  But can you tell us, what are you hearing from your constituents?  What are they saying in the scope of the disaster? 

CARNAHAN:  Well, we‘ve been following this very closely.  This is on the southwestern part of the state.  And just the devastation is just hard to even wrap your mind around.  The fact that this tornado was up to almost a mile wide and six miles long and just virtually wiped out entire sections of the town. 

To have so many hundreds of people still missing, it‘s a serious disaster recovery effort going on there for the immediate aftermath.  And we need to be sure we‘re there for the long term as well. 

SCHULTZ:  Congressman, if I may impose upon you to take a turn to the events tonight, I want to get your reaction to the big election tonight.  Here is the winner of the special election in New York‘s 26th district, Kathy Hochul.  Here it is. 

(BEGIN VIDEO CLIP)

HOCHUL:  You know, if I had my way—and I hope I do—we will keep the promises we made to our seniors who spent their entire lives paying into a Medicare system so it would be there when they needed it.  It‘s that simple.  It‘s that simple. 

And I will tell you—

(END VIDEO CLIP)

SCHULTZ:  Congressman, what do you make of the event tonight, the results of that?  Is it the Ryan Budget, in your opinion? 

CARNAHAN:  You know, this is a real—I think a real wake up call for Republicans who have been trying to dismantle Medicare as we know it.  But I also think it‘s a wakeup call for Democrats who have sometimes been too timid to stand up and say we‘re going to fight for seniors.  We‘re going to fight to keep the Medicare program strong and whole for a long, long time to come. 

So I think that‘s what tonight is all about. 

SCHULTZ:  Congressman Russ Carnahan, appreciate your time here on THE ED SHOW tonight.  Thank you so much for joining us. 

CARNAHAN:  Great to be with you. 

SCHULTZ:  We have lots more coming up on THE ED SHOW.  Coming up, Rush‘s ratings.  That‘s Rush Limbaugh.  They‘re tanking.  Details ahead.

(COMMERCIAL BREAK)

SCHULTZ:  The survey techniques in talk radio are different today because of technology.  The numbers are in.  And for Rush Limbaugh, well, folks, they‘re just not as good as they used to be.  It‘s not just a bad week for el-Rushbo, or a bad month.  Hell, it‘s a downright downward trend.

The April Arbritron (ph) report shows that the grand poobah of right wing talk radio, hate radio, has taken a hit in the ratings.  Limbaugh has seen a 33 percent slide since the midterm elections.  Sean Hannity, a Rush wannabe, was down almost 30 percent on his radio show. 

Now let‘s be fair about this.  If any liberal talker lost 30 percent of his or her audience, well, folks, we wouldn‘t hear the end of it from the big time talk radio experts, who are all righties.  Part of the problem is Limbaugh‘s audience happens to look like the Republican party: old, out of touch, and real white. 

Tell us, Rush, what are you for?  We know you‘re against President Obama.  We know you‘re against collective bargaining.  We know you‘re against public education.  We know you‘re against universal health care. 

Against, against, against, against. 

What are you for, other than making sure that the rich people in this country don‘t pay more taxes?  That‘s why you‘re going down, Rush.  Nobody knows what you‘re for anymore.  We‘re right back on THE ED SHOW.

(COMMERCIAL BREAK)

SCHULTZ:  In Psycho Talk tonight, Fox Business host Eric Bolling goes to the zone tonight.  His name has been floated as a possible replacement for Glenn Beck when he leaves his TV show.  And Bolling sure sounds like he‘s auditioning to be Fox‘s chief new nut job.  He‘s pro-torture.  In fact, on his show a couple weeks ago, he read a list of people his viewers wanted to see waterboarded, including President Obama. 

And he also tried his hardest to keep the Birther nonsense going even after the president released his long form birth certificate.  Now Bolling has jumped on the Fox News bandwagon of folks who are criticizing President Obama for having a pint of Guinness in Ireland this week. 

Gosh they didn‘t say that when Reagan had a beer.  But he put his own racial spin on it, Tweeting, “Obama chugging 40s in Ireland while tornadoes ravage Missouri.  Very intense show tonight.” 

Bolling followed through with his promise of an intense show, kicking the racist language up a notch. 

(BEGIN VIDEO CLIP)

ERIC BOLLING, FOX NEWS ANCHOR:  Where‘s the leadership, on the golf course or entertaining rappers in the East Room of our White House?  And now tornadoes devastating the heartland, killing scores and leveling just about every building in Joplin, Missouri.  Mr. Obama, you‘ve decided that chugging a few 40s and rediscovering your Irish is more important than a presidential visit to a community trying to figure out what just hit them. 

(END VIDEO CLIP)

SCHULTZ:  Chugging a few 40s?  Entertaining rappers?  He‘s not even trying to hide his racial subtext.  Bolling is well on his way to filling Glenn Beck‘s shoes.  Pretty soon he‘ll be talking about President Obama‘s deep seed hatred for white people.

But his rhetoric is already bad enough to earn him a ticket to Psycho Talk. 

Recapping tonight‘s top story, Democrat Kathy Hochul won a ruby red district in northern New York tonight.  When former Congressman Chris Lee won that seat in 2008, he won it with over 70 percent of the vote. 

MSNBC political analyst Michael Steele, thanks for your time tonight.  We appreciate your take on all of that.  Tonight in our survey I asked, do the Republicans care about you if you‘re in the middle class?  Four percent of you said yes; 96 percent of you said no. 

That‘s THE ED SHOW.  I‘m Ed Schultz.  You can listen to me on Sirius XM radio channel 127, Monday through Friday.  And I‘ll tell you what I‘m for and how positive America is. 

That show noon to 3:00, Monday through Friday. 

“THE LAST WORD” with Lawrence O‘Donnell starts right now. 

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

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