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'The Last Word with Lawrence O'Donnell' for Wednesday, May 25th, 2011

Read the transcript to the Wednesday show

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Guests: Eugene Robinson, Rep. Debbie Wasserman Schultz, Joe Klein, John Heilemann, Mark

McKinnon

LAWRENCE O‘DONNELL, HOST:  It‘s been a rough 24 hours for the Medicare destroying Paul Ryan budget bill.  First, it lost Republicans a seat in Congress.  Then, it lost a big vote in the Senate.  Democrats‘ big hope now is that Paul Ryan will run for president.

(BEGIN VIDEOTAPE)

REP. PAUL RYAN ®, WISCONSIN:  This demagoguery is scaring seniors.

TIM PAWLENTY ®, PRESIDENTIAL CANDIDATE:  A very bright, courageous congressman from Wisconsin and he puts the plan on the table.

CHRIS MATTHEWS, “HARDBALL” HOST:  There‘s no saving Private Ryan.

O‘DONNELL (voice-over):  Paul Ryan is in denial that his plan to kill Medicare cost Republicans one of the safest Republican congressional seats in America.

UNIDENTIFIED FEMALE:  He actually blames the Republican loss in Upstate New York on Democrats demagoguing.

RYAN:  The president and his party have decided to shamelessly distort and demagogue Medicare.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  Every citizen deserves a basic measure of security.

SEN. HARRY REID (D-NV), MAJORITY LEADER:  Radical change is not something they want.

KATHY HOCHUL (D), NY CONGRESSWOMAN-ELECT:  And we can balance our budget the right way and not on the backs of our seniors.

(CHEERS)

UNIDENTIFIED FEMALE:  There‘s an ad out right now showing Paul Ryan pushing an elderly woman in a wheelchair off a cliff.

RYAN:  The ability to scare seniors is powerful.

REP. DEBBIE WASSERMAN SCHULTZ (D), FLORIDA:  It‘s the pot calling the kettle black.

O‘DONNELL:  Congresswomen Debbie Wasserman Schultz is here.

(CROSSTALK)

O‘DONNELL:  Republicans are now running from Paul Ryan.

CHRIS CILLIZZA, WASHINGTON POST:  This is a political problem for them that they have to figure out how to try and solve.

ANDREA MITCHELL, NBC NEWS:  Cracks in the Republican side.

CILLIZZA:  Cracks in Republican unity.  Scott Brown from Massachusetts, Olympia Snowe and Susan Collins from Maine.

MITCHELL:  So, is Medicare the Democrats‘ secret weapon?

REP. STEVE ISRAEL (D), NEW YORK:  We needed 25 seats to take back the House.  Now, we need 24.

O‘DONNELL:  And what about the Republican presidential candidates?

PAWLENTY:  The courage of Congressman Ryan on putting that forward should be noted.  But I‘m going to have any own plan.

WASSERMAN SCHUTZ:  Even Newt Gingrich called it radical.

UNIDENTIFIED MALE:  Seventy percent of the Tea Party members don‘t want to cut Medicare.

O‘DONNELL:  And Sarah Palin turns filmmaker and turns the camera on herself.

UNIDENTIFIED FEMALE:  Sarah Palin the movie.  It‘s going to debut soon.

UNIDENTIFIED MALE:  This is a film that turns out that Sarah Palin herself asked for.  Two hours and it includes her voice as the undefeated, which is one reason that she won‘t—she may not well run for president because it‘s unlikely that that title would stay true.

MEGHAN MCCAIN, SEN. MCCAIN‘S DAUGHTER:  I just really don‘t want to go home to Phoenix and run into her at the grocery store.

(END VIDEOTAPE)

O‘DONNELL:  Good evening from New York.

Former Republican radical Newt Gingrich tried to warn his party that the Ryan Republican budget bill is too radical for voters and in yesterday‘s special election, voters in New York‘s 26th congressional district, a heavily Republican district, tried to warn their party that the Ryan Republican budget bill is too radical for them.  They did so by electing Democrat Kathy Hochul who focused her campaign on her Republican opponent‘s support for the House-passed Ryan budget bill that would end Medicare.

(BEGIN VIDEO CLIP)

HOCHUL:  We are all future seniors.  That‘s for sure.

(LAUGHTER)

HOCHUL:  It‘s the future seniors they‘re going after.  We didn‘t like that, did we?

We will keep the promises that we made our seniors who spent their entire lives paying into a Medicare system so it‘d be there when they needed it.  It‘s that simple.

(END VIDEO CLIP)

O‘DONNELL:  Democrats are triumphant, at least for a day.  Senate Democrats called on their Republican colleagues to abandon the House Republicans‘ budget bill.

(BEGIN VIDEO CLIPS)

REID:  The number one, two and three issue in that congressional district, as is all over the country, is destroying Medicare as we know it.  Now, the question to my Republican colleagues is basically this: it‘s very simple—will you listen to the American people?  Because their message could not be clearer.

SEN. PATTY MURRAY (D-WA), DSCC CHAIRWOMAN:  Last night‘s results provide clear evidence that when voters learn about the Republican plan to end Medicare as we know it, they say, no.

SEN. KIRSTEN GILLIBRAND (D), NEW YORK:  The voters of the 26th district told Republicans in Washington what they think of the Ryan plan.  They told them exactly what they think about ending Medicare as we know it. 

I hope they got the message.

(END VIDEO CLIPS)

O‘DONNELL:  Late this afternoon, Majority Leader Harry Reid brought the Ryan Republican bill to a vote in the Senate where it was defeated decisively, with 40 votes in favor and 57 against.

Republican Senator Scott Brown, Susan Collins, Olympia Snowe, Lisa Murkowski and Rand Paul voted no on the House Republican bill.  Today, Republican presidential candidate Tim Pawlenty carefully and wisely distanced himself from the Ryan Republican proposal for Medicare.

(BEGIN VIDEO CLIP)

PAWLENTY:  As to Congressman Ryan‘s plan overall, I think in general, you know, the direction of it is positive.  But I‘m going to have any own plan.  And so, we‘re going to have some differences.

Our Medicare plan which will have out shortly in not-too-distant future will have some differences.  We‘ll be speaking about payment reform and paying providers not just for volume, but for quality and results as part of their composition.  We‘ll be offering a variety of choices to people where they can choose to stay on the current program or select from other options.

We‘ll be talking about incentivizing consumers so that they can make any number of choices that they‘d like.  But they‘ll be incentivized to make wise and good choices as it relates to quality health care outcomes and costs.  But it will be different than Congressman Ryan‘s proposal.

(END VIDEO CLIP)

O‘DONNELL:  House Budget Chairman Paul Ryan is sticking to his guns.  On “MORNING JOE,” Ryan blamed the results of last night‘s special election on a three-way race and political demagoguery.

(BEGIN VIDEO CLIP)

RYAN:  There is a Medicare story to be told here.  And the Medicare story that‘s being told here is the president and his party have decided to shamelessly distort and demagogue Medicare.

(END VIDEO CLIP)

O‘DONNELL:  Joining me now is the chairwoman of the Democratic National Committee, Congresswoman Debbie Wasserman Schultz.

Congresswoman Schultz, based on the New York 26 results, do you think that the Democrats now have a reasonable chance to win back the House?  Win back 24 more seats?

SCHULTZ:  Well, I think we‘re one down, 24 to go.  And it‘s going to be important for us to continue to stay focused and recruit great candidates like Kathy Hochul, make sure we‘re running fantastic grassroots campaigns like she ran and having a real strong field operation, and make sure that we continue to draw the contrast that Kathy so successfully did between the Republicans who want to end Medicare as we know it and Democrats who make sure, like President Obama has talked about and Kathy did, that we strike the right balance and not balance all the pain on the backs of our seniors and people who can least afford it.  That‘s how we‘re going to win the House back.

O‘DONNELL:  Congresswoman, even if you add the Republican vote there along with that Tea Party candidate vote, and you combine them, and you just give those to the Republicans, the Republicans have dropped 20 points in that district.  They won that seat in the last election in 2010 by about, what was it?  Like 74 percent of the vote?

SCHULTZ:  Seventy-four percent, yes.

O‘DONNELL:  Yes.  But this is by any measure a huge setback in that district on this issue.  And it seems to me it‘s one of those districts that speaks to a lot of America.  It‘s western New York.

It seems like that is a translatable campaign to at least 25 to 50 districts out there that you could succeed in.

SCHULTZ:  Lawrence, this is the 426th worst district for Democrats in the country.  There‘s only nine districts out of 435 that are worse than this one.  This district wouldn‘t have been part of our math to get to 25 to take the House back.

Now, we have the 61 seats that were won by President Obama or John Kerry, and 47 of those were won by both.  We need to win 24 of those to make sure that we can continue to—that we can take the House back and make sure that we can move the country in the direction that Democrats have been pushing to create jobs, turn the economy around, make sure when we address Medicare reform, that we do it in a balanced way.

I hope the message that Republicans go t from this election result yesterday is that they should come to the table with us, sit down around the negotiating table and let‘s work together to hammer out a reasonable compromise so we can preserve Medicare for the long term.  That‘s what the American people clearly support.  And they‘ve shown that in the result yesterday and the result from the Jacksonville, Florida, election last Tuesday where they elected a Democratic mayor for the first time in over 20 years.  A statehouse race in New Hampshire that hasn‘t been represented by a Democrat I don‘t think ever, or certainly not in a very long time.

All those races turned on Medicare.

O‘DONNELL:  Congresswoman Schultz, the Senate today had a vote.  Harry Reid made sure he got 40 Republican senators on the record voting for this dead proposal, the Ryan proposal, to abolish Medicare as we know it.  The handful of Republican senators ran away from it.

How will you in running the party take that vote into the Senate elections?

SCHULTZ:  Well, there are a number of seats that are up for election this next election cycle.  It‘s really shocking to me that anyone after yesterday‘s outcome would actually vote again to end Medicare as we know it.  Seniors and Americans have sent a very strong message and we‘re going to make sure that we hold Republican candidate accountable for their vote.

We do have an opportunity to reform Medicare.  The president has talked about the need to do that.  Democrats have talked about the need to do that and address deficit reduction—not do it on the backs of seniors.

O‘DONNELL:  DNC chair, Debbie Wasserman Schultz, thanks for joining me tonight.

SCHULTZ:  Thank you.

O‘DONNELL:  Trying to keep his plan alive, Congressman Ryan released a new video defending his proposal to end Medicare today.  And Ryan called for Republicans to hold the line in an interview en route to a fiscal summit he attended along with former President Bill Clinton.

(BEGIN VIDEO CLIP)

UNIDNENTIFIED MALE:  What do you say to these maybe weak kneed Republicans?

RYAN:  It‘s not the time to go wobbly.  They‘re going to run attack ads at us regardless.  This is a time for leaders to be leaders.

(END VIDEO CLIP)

O‘DONNELL:  Joining me is Eugene Robinson, an MSNBC analyst and columnist for “The Washington Post.”

Gene, I want to take a look at some more video.  This is captured by ABC News of President Clinton having a conversation with Paul Ryan today.

(BEGIN VIDEO CLIP)

WILLIAM J. CLINTON, FORMER U.S. PRESIDENT:  I‘m glad we won this race in New York.  But I hope the Democrats don‘t use it as an excuse to do nothing.

RYAN:  My guess is it‘s going to sink into paralysis is what‘s going to happen.  You know the math.  I mean, it‘s just—we knew we were putting ourselves out there.  But you‘ve got to stat this.  You‘ve got to get out there.  You‘ve got to get this thing moving.

CLINTON:  If you ever want to talk about it, give me a call.

RYAN:  Yes, I‘ll give you a call.  Thanks.

(END VIDEO CLIP)

O‘DONNELL:  Gene, that the is eavesdropped sound of total defeat.  Paul Ryan‘s position on what he did now is simply—you know you‘ve got to put something out there.  You know you‘ve got to do something to get it started.  And whenever they start talking about going wobbly and this is not the time to go wobbly, you know everyone‘s going wobbly.

EUGENE ROBINSON, MSNBC POLITICAL ANALYST:  Everyone‘s going wobbly.  He‘s saying hold the line.  Meanwhile, Tim Pawlenty is doing a Michael Jackson impersonation moon walking away from the idea of a voucher program and saying, well, one of my options is to be stay in the Medicare program as it is.

This is a dog that won‘t hunt, obviously.  You called it a dead proposal.  I think it‘s maybe deader than that.

And, you know—I kind of amazed that they managed to get 40 votes for it in the Senate today.  A lot of those senators are up for re-election.  But still 40 votes, that‘s a lot.  Good luck.

O‘DONNELL:  Gene, it‘s my sense that Harry Reid actually had to move fast because if he did it a week from now, it could have been 30.  If he did it two or three weeks, it could have been 10 or 20, that he wanted to get as many Republicans recorded as a yes vote as he possibly could.

And we‘re living in a political world where just a few days ago, Newt Gingrich was getting scolded for walking away from the Paul Ryan plan and now, senators are literally just walking away from it on the floor of the Senate.

ROBINSON:  Absolutely.  You know, I was up on the Hill last night just talking to some House Democrats.  And there was—you know, I sensed frankly a kind of energy and sense of mission that we haven‘t seen or felt up there in a while.  They were playing offense.

Democrats were defining an issue and defining the language in which that issue was discussed.  And if you look at the numbers, as far as we know them so far in New York 26, they were attracting the votes of working class white voters.  Who seemed to—who certainly voted Republican in November and who seemed to have voted Democratic this time.

This is—this is big stuff.

O‘DONNELL:  Gene, you were tracking this movement in New York 26 over the Medicare issue before this election last week.  It does seem like the kind of district that showing that kind of movement on that kind of issue is something that you could easily reproduce in other congressional districts.

ROBINSON:  Right.  As Congresswoman Wasserman Schultz said, districts don‘t come much more Republican than this district.  This is—John McCain won this district during the landslide Democratic victory of 2008.  You know, if Republicans can‘t win in New York 26, they really can‘t win, period.

O‘DONNELL:  Yes, reporters were getting Republicans coming out of the voting booth yesterday saying I‘ve never voted Democratic before in my life.  This is the time.  We‘ve never seen anything quite like it.

ROBINSON:  Not a good sign.

O‘DONNELL:  Eugene, thank you very much for joining us tonight.  We‘re out of time for this segment.  Thanks, Gene.

ROBINSON:  Good night, Lawrence.

O‘DONNELL:  Coming up, Mitt Romney is attacked from the right as conservative groups weed out the candidates they don‘t want.

And what sparked the hysteria over President Obama‘s speech about the future borders of Israel?  That‘s in “The Rewrite.”

(COMMERCIAL BREAK)

O‘DONNELL:  Still to come this hour, conservative groups are working overtime to attack candidates, specifically Republican candidates.

And the Justice Department has given the go ahead to federal prosecutors to indict John Edwards.

And I‘ll tell you some of the secrets of America‘s relationship with Israel.

(COMMERCIAL BREAK)

O‘DONNELL:  In 1965, California‘s state Republican chairman, Gaylord Parkinson, was faced with a messy feud between the moderates and conservatives in his party.  California Republicans, one of them, then-actor Ronald Reagan, were attempting to stop Democratic Governor Pat Brown from getting his third term.

As “Time” magazine wrote, the following spring, Chairman Gaylord Parkinson handed the troops an 11th commandment, “Thou shall not speak ill of any Republican,” he ruled, and to everyone‘s surprise, Parkinson‘s law began holy writ.

Reagan would, of course, go on to win that election on his way to the White House.  But the Republican 11th commandment has not endured.  One of the nation‘s most powerful Tea Party groups, Dick Armey‘s FreedomWorks, is setting its sights on 2010 candidate Willard M. Romney.

Today, two of the group staffers talked to “The Huffington Post.”  One of them said, “Romney has a record and we don‘t really like it that much.”

The other even went even further, saying, “You can‘t divide the vote in the primary and end up with, you know, who?  Newt Gingrich?  Mitt Romney?  Somebody‘s got to beat those guys.  I think it‘s important that we point out the flawed candidates and brand them as much and point out who are the people we consider unacceptable.”

Meanwhile, the conservative economic group, the Club for Growth, put out one of its white papers analyzing candidate Tim Pawlenty, concluding, quote, “We struggle to identify the real Tim Pawlenty.”  The paper also states, “Pawlenty has some simply inexcusable tax hikes in his record.”

So what‘s with all the Republican on Republican attacks here?

Joining me is the author and “Time” magazine political columnist, Joe Klein.  The 11th commandment was first revealed in your magazine, “Time” magazine.  What‘s happened to it?

JOE KLEIN, TIME MAGAZINE:  Well, this ain‘t your father‘s Republican Party.

O‘DONNELL:  It ain‘t.

KLEIN:  I mean, you know, when a party goes as far to one end of the ideological spectrum, as the Republicans have gotten, you know, purity tests abound.  And so, you‘re seeing a lot of that now.  And, you know, they‘re not going to get Robespierre as a candidate this year.  They‘re going to get someone who is trying to pretend to be Robespierre as Mitt Romney has been trying to do for many years.

Or they‘re going to get someone like Michele Bachmann or Sarah Palin at the other end of the spectrum who may be more acceptable to the, you know, firing squad leaders, but aren‘t going to get many votes.

O‘DONNELL:  It‘s getting really nasty.  Mike Murphy, Republican strategist, firing off angry tweets to “The Wall Street Journal” editorial board because they‘re attacking Mitt Romney.  But there might there be some something in this?  I mean, if Romney is a flawed candidate, with all of this flip-flop, if he‘s the guy who brought the individual mandate to health care in America, aren‘t they right to try to get him out of the way so that they can send a nominee who can actually campaign against what Barack Obama has done?

KLEIN:  Well, sure, if they don‘t want to win—I mean, that‘s exactly what you should be.  You should be absolutely pure.  But the fact is that Romney‘s uniform health care plan, which is a carbon copy of Barack Obama‘s, is working.

O‘DONNELL:  Obama was the copy of his.  His was the original.

KLEIN:  That‘s right.

O‘DONNELL:  Right.

KLEIN:  It‘s working, you know?

And can I just point out in all of this talk of what happened last night in New York 26?

O‘DONNELL:  Please.

KLEIN:  That it was a victory for socialism.

O‘DONNELL:  Oh, you have the floor, sir.  Yes.

KLEIN:  I mean, you know, for the last two years -- 

O‘DONNELL:  Indeed it was.

KLEIN:  -- Republicans have been lambasting Barack Obama who is right in the middle of the political spectrum, a mild liberal, as being a wild-eyed socialist.  Well, anything that he has proposed that is as purely socialistic as our Medicare program, a single-payer program run by the government.  The folks love it.

O‘DONNELL:  And the conservative Republican voter in that district is saying don‘t touch my Medicare.  And they know what they were doing.  When you read those exit conversations where they‘re saying, “I never voted for a Democrat before”—I mean, they knew what they were choosing.

KLEIN:  See?  So, when you get a party making the kind of leap that the Republicans have made over the last few years.  I mean, a few years ago, Newt Gingrich, Tim Pawlenty and a lot of the others were in favor of cap-and-trade.  When you have to go to the extreme, it opens the door for weirdoes to take potshots at the people who are more responsible politicians.

O‘DONNELL:  It‘s going to be hard to get a Republican nominee who won‘t have some flip-flopping in his background here somewhere.

KLEIN:  It‘s usually hard to get any nominee who doesn‘t.

O‘DONNELL:  Joe Klein, thank you very much for joining and pointing out the great victory for socialism last night in New York‘s 26th congressional district.  Thanks, Joe.

Coming up: an indictment could come within days for John Edwards who‘s accused of illegally using campaign money to cover up his extramarital affair and out of wedlock child.

And why is Sarah Palin releasing a movie about her very few years, her year and a half as governor of Alaska?  And why is she releasing it in Iowa?  And why, why, why is it called “The Undefeated”?

(COMMERCIAL BREAK)

O‘DONNELL:  Still ahead in this hour, the Justice Department has authorized prosecutors to bring charges against John Edwards from misusing campaign money to cover up his affair with Rielle Hunter.  That‘s coming up.

And at the State Department last wee, President Obama said, quote, “We believe the borders of Israel and Palestinian should be based on the 1967 lines with mutually agreed swaps.  If you‘re wondering what all the fuss was about in reaction to the president‘s speech, I‘ll explain it all in “The Rewrite.”

(COMMERCIAL BREAK)

O‘DONNELL:  In the Spotlight tonight, the Justice Department has authorized prosecutors to bring criminal charges against John Edwards, two time presidential candidate.  Since 2009, a federal grand jury in North Carolina has been investigating whether Edwards misused measure a million dollars from political donors to cover up an affair with videographer Rielle Hunter, who became pregnant and delivered Edwards‘ child during the 2008 presidential campaign. 

Edwards‘ attorney, Gregory Craig, denied any lawbreaking today.  Craig said “John Edwards has done wrong in his life, and he knows it better than anyone.  But he did not break the law.  The Justice Department has wasted millions of dollars and thousands of hours on a matter more appropriately a topic for the Federal Election Commission to consider, not a criminal court.” 

Joining me now is John Heilemann, national affairs editor of “New York Magazine.” and author of “Game Change.” 

John, what is Greg Craig getting at there when he says whatever went wrong here, whatever the Justice Department‘s investigating would be better left to the Federal Election‘s Commission? 

JOHN HELIEMANN, “NEW YORK MAGAZINE”:  You‘ve got a situation here, Lawrence—the facts of the case are that Bunny Melon and Fred Davis, the late Fred Davis, who used to be Edwards‘ finance chair, gave a bunch of money to Edwards and—

O‘DONNELL:  Around a million dollars. 

HEILEMANN:  Around a million dollars.  That money got used to try to pay for homes for places to keep Rielle Hunter out of the spotlight, private planes and so forth.  I think the illegal government that Greg Craig is driving at is the notion that these were personal gifts that were made to Edwards that he used in a personal way, and that they don‘t, in fact, constitute campaign contributions of any kind, and that even if they did constitute campaign contributions, that his use of them was not necessarily a misuse of those funds. 

If you want to litigate that, it could be litigated in front of the FEC.  But there‘s not a law that has been broken here.  The Justice Department obviously disagrees. 

O‘DONNELL:  If they were campaign contributions—and the campaign contribution theory is he couldn‘t have a campaign if it was revealed that he has a pregnant girlfriend while he‘s running for president.  So keeping the pregnant girlfriend hidden and having her deliver her baby is part of allowing the campaign to succeed.  But on that theory, a million dollars violates campaign contribution limits. 

HEILEMANN:  Yes, it does.  That is—that theory that you just put forward if you were a Justice Department lawyer pursuing this case, that is exactly the way they would frame it.  And that is the way it appears they are going to frame it going forward with this indictment, which we now expect any day now. 

O‘DONNELL:  And so John Edwards‘ defense on this would be a technical defense? 

HEILEMANN:  It certainly sounds like that‘s how they‘re going to try to frame it, along the lines that I just said, which is to say this is not a political contribution of any kind. 

O‘DONNELL:  The character of John Edwards, the public perception of his character has changed dramatically.  But people close to him watched the change happen earlier. 

There‘s a passenger in your great book about the last presidential campaign about Edwards.  It says “some of his friend started noticing a change after he was nearly chosen by Al Gore to be his running mate in 2000.  The sudden interest in superficial stuff to which he had been oblivious before, from the labels on his clothes to the size of his entourage.  But the real transformation occurred during the 2004 race.  He reveled in being inside the bubble, the Secret Service, the chartered jet, the press pack following him around, the swarm of factotums catering to his every whim, and the crowds, the adoration.  He ate it up.” 

HEILEMANN:  He went from being a guy who everybody who knew him described as being one of the genuinely nicest, most tethered to reality people that they had ever met in American publics to being an egomaniacal kind of caricature of a deluded politician. 

And you get to a place in this campaign where the delusion got to be so great—and it‘s one of the thing we reported in the book that most astonished Mark Halperin and I when we wrote the book, was that in the Spring of 2008, even after he was out of the race, even after his child with Rielle Hunter was in the world, he still believed he could be on the ticket with Barack Obama or be Barack Obama‘s attorney general. 

I‘ll tell you if that delusion continues to keep him gripped, he might end up in jail if he pursues this case, if he‘s that deluded still. 

O‘DONNELL:  If you‘re not an egomaniac going into politics, there‘s a very good chance we can make you an egomaniac if you stay in politics. 

John Heilemann of “New York Magazine” and author of “Game Change,” thanks for joining us tonight. 

HEILEMANN:  Thanks, Lawrence. 

O‘DONNELL:  Last week, Israeli Prime Minister Benjamin Netanyahu feigned outrage over President Obama‘s suggestion that Israel and Palestinian‘s borders should be based on 1967 lines, with mutually agreed and negotiated swaps.  In Netanyahu‘s congressional address yesterday, he made exactly the same suggestion.  That gets him and President Obama in the Rewrite. 

And Sarah Palin will soon unveil a film about her days as the governor of Alaska.  Its title is “the Undefeated.”  John Wayne called.  He wants his movie title back.

(COMMERCIAL BREAK)

O‘DONNELL:  In tonight‘s Rewrite, by popular demand, I will address the hysterical reaction to President Obama‘s speech last week at the State Department about the Middle East.  By hysterical, I don‘t mean funny. 

And by popular demand, I mean the two or three friends who emailed me saying they don‘t understand what all the kerfuffle is about over President Obama‘s speech. 

In fact, they don‘t understand much about U.S./Israeli relations.  In general, they tend to tune out that section of the news.  It‘s my sense that those two or three emails represent at least about a two thirds majority of Americans, if not a majority of the audience of this program. 

And so a little explainer on the history of White House public tensions with Israel seems in order.  Here‘s what President Obama said that provoked outrage in some quarters. 

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  We believe the borders of Israel and Palestine should be based on the 1967 lines, with mutually agreed swaps, so that secure and recognized borders are established for both states. 

(END VIDEO CLIP)

O‘DONNELL:  This provoked outraged editorial comment based on a lie, based on the refusal to hear half of the sentence the president said.  The outraged reaction—every bit of the outraged reaction was a reaction to this—

(BEGIN VIDEO CLIP)

OBAMA:  we believe the borders of Israel and Palestine should be based on the 1967 lines -- 

(END VIDEO CLIP)

O‘DONNELL:  The outraged reaction was not based on this—

(BEGIN VIDEO CLIP)

OBAMA:  we believe the borders of Israel and Palestine should be based on the 1967 lines, with mutually agreed swaps, so that secure and recognized borders are established for both states. 

(END VIDEO CLIP)

O‘DONNELL:  That‘s right.  All of the outrage was based on the lie that President Obama said that he believes the solution is to go back to Israel‘s 1967 borders, which he never, ever said.  Israel‘s prime minister pretended to be outraged, even though he heard the entire sentence and knew that the Obama position was identical to his own position. 

He did that for a very simple strategic reason, first privately annunciated by President Richard Nixon, when he told an aide that Israel always has to feign outrage at initial peace proposals because the Palestinians will never consider a plan they think Israel might like. 

Decades ago when the current prime minister was a junior member of the Israeli government, he told a visiting American official privately, we want to negotiate with these bastards, but you‘ve got to force us to. 

Meaning, for domestic political purposes within Israel, and for strategic purposes within the negotiations, Israel must always seem to be pressured by the United States to take a position that could advance the peace process.  Most American comment on such episodes does not include any comprehension of this not so terribly complicated backstage dynamic to the Israeli‘s dealings with Washington. 

(BEGIN VIDEO CLIP)

SEN. ORRIN HATCH ®, UTAH:  He certainly think made a mistake in this comprehensive speech about the Middle East.  Everybody knows that the 1967 lines are just not tenable.  The U.S. ought not to be trying to push Israel into a deal that‘s not good for Israel. 

(END VIDEO CLIP)

O‘DONNELL:  Notice the lie.  Yes, everyone does know that the ‘67 borders are not tenable for Israel, including Barack Obama, the president of the United States, who specifically says it won‘t be the 1967 borders.  It will be the 1967 borders plus negotiated changes to those borders. 

Criticism also came from Republican presidential candidate Mitt Romney, who said Obama, quote, “has thrown Israel under the bus.” 

Hillary Clinton was similarly attacked in 1998 when as First Lady she said, “I think that it will be in the long-term interest of the Middle East for Palestine to be a state.” 

That provoked bipartisan criticism.  Democrat Chuck Schumer, then in the House of Representatives, said, “when voices in the White House say there ought to be a Palestinian state before there are guarantees of security, they do not set the peace process forward.” 

Republican New York Senator Al D‘Amato said “the Clinton-Gore administration has chosen to align itself with the Palestinians and Yasser Arafat against the people of Israel.” 

At that time, you see, it was against the unwritten rules of American politics to use the phrase Palestinian state or anything like it.  But just six months later, the president of the United States could actually go to Gaza, to Gaza City, and deliver a speech to the Palestinian National Council, the Palestinian parliament of sorts. 

(BEGIN VIDEO CLIP)

WILLIAM JEFFERSON CLINTON, FORMER PERSIDENT OF THE UNITED STATES:  Mr.  Speaker, Mr. Abula (ph), Chairman Arafat, Mrs. Arafat, members of the Palestinian National Council, today the eyes of the world are on you.  I am profoundly honored to be the first American president to address the Palestinian people in a city governed by Palestinians. 

(END VIDEO CLIP)

O‘DONNELL:  OK, stop.  Take in that scene.  Rewind your Tivo if you have to.  Imagine—imagine what the Obama haters would do if President Barack Obama delivered a speech in Gaza, in that same place to the same people.  Imagine what you‘d be hearing now. 

A little over two months—with a little over two weeks left—yes, just about two weeks left in Bill Clinton‘s presidency, he became the first president to actually say the phrase “Palestinian state” in public.  He said what everyone knew, that the conflict could not be resolved without creating, quote, “a sovereign viable Palestinian state.” 

George W. Bush as president was allowed to use the phrase “Palestinian state” freely without objection from any of those who take it upon themselves to police thought and speech about Israel in this country.  When he said it the first time in October of 2001, Secretary of State Colin Powell was quickly able to calm reporters that there was, quote, “nothing new, nothing new in what Bush had just said,” all thanks to the Clinton president—Clinton precedent of having said it the first time in January of that same year. 

So do you begin to see the pattern here?  The thing that you absolutely can‘t ever say about Israel and the Palestinians becomes eventually nothing new.  It is all a matter of timing.  It includes a series of winks and nods backstage between the Israelis and the Americans, and the unthinkable, the unsayable, the indefensible one day becomes nothing new. 

The Americans who fill the air with outrage at the first mention of a Palestinian state or 1967 borders plus swaps are trying to find the thing to say that they think is the most clearly and uncritically supportive of the current Israeli government.  They are never aware that Israelis themselves are all much more critical of their own government than any American ever dare be of the Israeli government. 

If you know that the current Israeli prime minister is the head of a party that holds only 27 of the 120 seats in the parliament, you know the simple fact that most Israelis disagree with him frequently.  Indeed, polling shows that 57 percent of Israelis would have preferred the prime minister to immediately say he agreed to a path to a two-state solution as outlined in President Obama‘s speech. 

Fifty seven percent of Israelis agreed with President Obama and disagreed with their own prime minister.  But you would never learn that in the American press.  Prime minister knew it before he feigned his outrage over President Obama‘s words.  When it was the prime minister‘s turn to give his speech to Congress, just five days after President Obama‘s speech, he used slightly different language, but he said exactly the same thing President Obama said. 

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER:  In any real peace agreement, in any peace agreement that ends the conflict, some settlements will end up beyond Israel‘s borders.  Now the precise delineation of those borders must be negotiated.  we will be generous about the size of the future Palestinian state. 

But as President Obama said, the border will be different than the one that existed on June 4th, 1967.  Israel will not return to the indefensible boundaries of 1967. 

(END VIDEO CLIP)

O‘DONNELL:  OK, let‘s carefully review the text of what the prime minister said.  “In any peace agreement that ends the conflict, some settlements will end up beyond Israel‘s borders.” 

What borders is he referring to there?  The 1967 borders, the same borders President Obama was referring to.  The prime minister is saying there will be some settlements that will be beyond those borders that will have to be included in the new border that defines Israel.  That is exactly what President Obama was saying when he referred to using the 1967 lines with mutually agreed swaps. 

The president meant swaps of land that are currently beyond Israel‘s borders.  How does the prime minister believe the new borders will get drawn?  He said, “the precise delineation of those borders must be negotiated.”  The Obama phrase for that was “mutually agreed swaps.”

How do you get a mutual agreement?  By negotiating.  So both of them are saying use the 1967 borders, then mutually negotiate some changes to those borders.  The president‘s position and the prime minister‘s position are identical. 

You would never know that by listening to the hysterics who wrongly believe they are rising in Israel‘s defense.  Ed Koch, the 86-year-old former mayor of New York City, wrote this in his “Jerusalem Post” blog—he wrote that “he simply doesn‘t trust Barack Obama.”  And he doesn‘t think that supporters of Israel should trust Barack Obama as much as they trusted George W. Bush. 

He says if President Obama does not change his position, he cannot vote for his re-election.  Such is the hysteria of the faux Israel defenders.  Here is one of them, Ed Koch, demanding President Obama change his position in order to get his vote for re-election, obviously, completely unable to comprehend that the position of the president of the United States on Israel‘s future borders is identical to the position of Israel‘s current prime minister. 

The faux defenders of Israel always look ridiculous in the rear view mirror.  Their fear of the words “Palestinian state” has been proven ridiculous.  And their lies—their lies about what President Obama has said about Israel‘s future borders and their personal distrust of Barack Obama as an ally of Israel is a disgrace to their cause. 

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE:  Entire global financial system would meltdown. 

UNIDENTIFIED FEMALE:  We would stimulate the economy.  You know why?  Because we‘d go out and pay off bill, pay off the excess, create jobs and buy stuff that we need. 

(END VIDEO CLIP)

O‘DONNELL:  The man who made that propaganda film for the Tea Party is now behind a two-hour coming attraction featuring former Alaska Governor Sarah Palin.  Conservative film maker Steven Bannen (ph) plans to show the movie wrongly entitled “The Undefeated” in Iowa next month. 

According to “Real Clear Politics,” the film focuses on Palin‘s triumphs as governor, and tries to put a positive spin on her run for the vice presidency, probably by not reporting the actual vote count in that election. 

Joining me now, former adviser to President George W. Bush and Senator John McCain, and co-founder of the No Labels Movement, Mark McKinnon. 

Mark, thanks for joining me tonight.  There‘s much, you know, rumble today about oh, boy, a Sarah Palin film opening in Iowa, must mean she‘s running for president.  I don‘t see it that way.  Do you see any possibility of that?

MARK MCKINNON, “NO LABELS”:  She‘s not going quietly into the night.  We know that.  She‘s going to be a factor no matter what.  Nature abhors a vacuum.  And there‘s a vacuum right out there right now in the Republican presidential campaign conservatives and Tea Party folks.

And Mike Huckabee getting out has left a big gap there.  And somebody‘s going to fill it.  And Sarah Palin is brilliant.  You guys are like crack when it comes to Sarah Palin.  She‘s going to keep feeding you dope. 

O‘DONNELL:  Mark, assuming she doesn‘t run, what is her endorsement worth?  I would think that there‘s a positive side to her endorsement and a negative side to her endorsement. 

MCKINNON:  I think it‘s mostly positive in a Republican primary particularly people who are trying to appeal and rally the Tea Party, social conservative base.  There‘s a huge opening there.  There‘s an establishment sector, which Romney takes up.  There‘s sort of a progressive sector, which Huntsman takes up. 

But nobody really occupies that social conservative space.  So whether it‘s Palin or not, she can have a big impact and a big influence on whoever that‘s going to be. 

O‘DONNELL:  Is Pawlenty the one who has the best biography and the best position to try to get into that social conservative space? 

MCKINNON:  I think he‘s trying, but I think they‘re suspect.  The Tea Party people, they‘ve just got an antenna about people.  I don‘t think it‘s spinning right with Pawlenty. 

So I think that‘s why I think there‘s a lot of talk about Rick Perry maybe getting in this deal.  People—social conservatives love Perry.  He‘s about to finish a legislative session in Texas.  He‘s got nothing to do for the next two years. 

O‘DONNELL:  What should the candidates—you‘ve been in these presidential campaigns.  You‘ve got a Republican Congress who‘s causing them a real dilemma.  What should they do about the Paul Ryan budget plan? 

MCKINNON:  My view is that the straighter you stand, the harder the wind blows.  I don‘t think Republicans should run from the Ryan plan at all.  I think we should double down. 

I think that when it‘s properly communicated—and obviously that‘s a challenge.  We saw that last night.  And we know what the consequences are.  But I think it would be exactly the wrong thing to do to run from this plan. 

I think we need to get smarter and better about communicating what is.  And what is, Lawrence, is it‘s the same plan that Congress has.  It‘s not about your system.  And it doesn‘t affect anybody 55 on younger. 

When we get the facts out—it‘s going to take a while, but my view is the Republicans shouldn‘t shrink from it at all. 

O‘DONNELL:  We will patiently await the Republican presidential candidate who embraces that plan.  Mark McKinnon, former adviser to President George W. Bush and Senator John McCain, thanks for joining me tonight, Mark. 

MCKINNON:  Thank you, Lawrence. 

O‘DONNELL:  You can have THE LAST WORD online at our blog, TheLastWord.MSNBC.com.  You can follow my Tweets @Lawrence. 

“THE RACHEL MADDOW SHOW” is up next.  And she interviews the winner in New York 26, Kathy Hochul. 

END   

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