updated 6/30/2011 12:50:33 PM ET 2011-06-30T16:50:33

Guests: Alan Simpson, Alice Rivlin, Sen. Kent Conrad, Dana Milbank

LAWRENCE O‘DONNELL, HOST:  How do you know Congress is finally getting serious about the debt ceiling negotiations?  They‘re talking about canceling their vacation.

(BEGIN VIDEOTAPE)

(MUSIC)

BRIAN WILLIAMS, NBC NEWS:  We‘re on the air expecting the news conference from the White House.

TAMRON HALL, MSNBC ANCHOR:  First full-fledged news conference in three months.

O‘DONNELL (voice-over):  President Obama takes a stand on how to reduce the deficit.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  I think it‘s only fair to ask an oil company or a corporate jet owner that has done so well to give up that tax break.

UNIDENTIFIED FEMALE:  He won‘t commit to supporting gay marriage.

OBAMA:  I‘m not going to make news on that today.  Good try, though.

UNIDENTIFIED FEMALE:  And he came out very feisty today.

OBAMA:  Will, you know, give my base of voters further reason to give me a hard time.

O‘DONNELL:  Senate Republicans are already giving the president a hard time.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER:  We put the federal government and this kind of fiscal straitjacket for the future so that we cannot get into this position again.

O‘DONNELL:  Former Republican Senator Alan Simpson joins me.

OBAMA:  Alan Simpson, who co-chaired my bipartisan commission, he doesn‘t think that‘s a sustainable position.

O‘DONNELL:  And Republican candidates competed for attention.

UNIDENTIFIED MALE:  High levels of dissatisfaction on the Republican side.

UNIDENTIFIED MALE:  Michele Bachmann quickly moved onto New Hampshire and then South Carolina.

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE:  You love liberty here in South Carolina.

UNIDENTIFIED MALE:  Mama‘s got some magic.

BACHMANN:  Pro-growth tax cutting economy.

MITT ROMNEY ®, PRESIDENTIAL CANDIDATE:  I‘m for cut, cap and balance.  Absolutely.

HERMAN CAIN ®, PRESIDENTIAL CANDIDATE:  They have not used enough business principles in terms of how we run government.

BACHMANN:  We need to honor the estate of marriage.

UNIDENTIFIED MALE:  I don‘t think any of us want to see any mud wrestling.

SARAH PALIN ®, FORMER ALASKA GOVERNOR:  We‘re still thinking about that.

O‘DONNELL:  And 13 Democratic senators believe it gets better.

SEN. KIRSTEN GILLIBRAND (D), NEW YORK:  We‘re making it better.

SEN. RON WYDEN (D), OREGON:  We are making it better.

SEN. DIANNE FEINSTEIN (D), CALIFORNIA:  We are making it better.

UNIDENTIFIED FEMALE:  Oh, that‘s very nice.

(END VIDEOTAPE)

O‘DONNELL:  Good evening from New York.

The entire fight happening right now over the debt ceiling can be summed up in 60 seconds, specifically, this morning.  The president was holding a news conference which was being carried live on virtually every network, all the cable news networks, and CNBC, at 11:42.  The president was wrapping up his opening statement to reporters from all the major media outlets in the United States.

Here‘s what was happening on Capitol Hill at 11:42 a.m.

(BEGIN VIDEO CLIP)

MCCONNELL:  We understand the president‘s having a news conference at exactly the same time we are.  We expect that he will be pushing for tax increases, as a condition to get some kind of deficit reduction package.  Our view is a good first step is a balanced budget amendment to the Constitution.  All 47 Republicans are in favor of that.

(END VIDEO CLIP)

O‘DONNELL:  The balanced budget amendment that the Republicans were holding a news conference on has been described by former Reagan economic adviser Bruce Bartlett as, quote, “mindboggling in its insanity, quite possibly the stupidest constitutional amendment I think I have ever seen.  It looks like it was drafted by a couple of interns on the back of a napkin,” end quote.

No matter how stupid or smart a constitutional amendment may be, whenever you hear a senator proposing one, that senator is not serious.  That senator knows it is impossible to ratify a constitutional amendment because that requires approval of two-thirds of the Senate and two-thirds of the House of Representatives, and three-quarters of the state legislatures.

With sharply divided parties, that kind of bipartisanship has been impossible for decades now.

At the exact moment that the Republican senators were pitching that absurdist constitutional amendment, an amendment they know has absolutely no chance of passing either the House or the Senate, never mind the three-quarters of state legislatures required, President Obama was talking about what Congress should be doing instead of having phony press conferences about phony constitutional amendments.

(BEGIN VIDEO CLIP)

OBAMA:  There are also a number of steps that Congress could be taking right now on items that historically have had bipartisan support, and that would help put more Americans back to work.

(END VIDEO CLIP)

O‘DONNELL:  But what weighed most heavily on the president‘s mind today is how quickly the clock is ticking down to August 2nd.

(BEGIN VIDEO CLIP)

OBAMA:  By August 2nd, we run out of tools to make sure that all our bills are paid.  So that is a hard deadline.  And I want to—I want everybody to understand that this is a jobs issue.

This is not an abstraction.  If the United States government for the first time cannot pay its bills, if it defaults, then the consequences for the U.S. economy will be significant, and unpredictable.  And that is not a good thing.

(END VIDEO CLIP)

O‘DONNELL:  The president insisted that a legislative deal to raise the debt ceiling is necessary by August 2nd and that legislation should include both spending cuts and tax revenue increases.

He explained that he does not mean raising income tax rates.  Instead, he wants to reduce or eliminate some of the corporate and personal loopholes in the tax code.

(BEGIN VIDEO CLIP)

OBAMA:  The tax cuts I‘m proposing we get rid of are tax breaks for millionaires and billionaires, tax breaks for oil companies, and hedge fund managers and corporate jet owners.  I think it‘s only fair to ask an oil company or a corporate jet owner that has done so well to give up that tax break that no other business enjoys.  I don‘t think that‘s real radical.  I think the majority of Americans agree with that.

(END VIDEO CLIP)

O‘DONNELL:  The president seems to believe that some Republicans can be persuaded to accept some of those tax revenue increases.

(BEGIN VIDEO CLIP)

OBAMA:  If everybody else is willing to take on their sacred cows and do tough things in order to achieve the goal of real deficit reduction, then I think it would be hard for the Republicans to stand there and say that the tax break for corporate jets is sufficiently important, that we‘re not willing to come to the table and get a deal done.  Or we‘re so concerned about protecting oil and gas subsidies for oil companies that are making money hand over fist, that‘s the reason we‘re not going to come to a deal.

I don‘t think that‘s a sustainable position.  And the truth of the matter is, if you talk to Republicans who are not currently in office, like Alan Simpson, who co-chaired my bipartisan commission, he doesn‘t think that‘s a sustainable position.

(END VIDEO CLIP)

O‘DONNELL:  Joining me now is former Republican Senator Alan Simpson, the co-chairman of President Obama‘s National Commission on Fiscal Responsibility and Reform.

Thank you very much for joining me tonight, Senator.

ALAN SIMPSON, NATIONAL COMMISSION ON FISCAL RESPONSIBILITY AND REFORM: 

You bet.  I look a little tacky out here in Aspen with the ideas festival.  It‘s nice to finally get together and try to respond when you‘ve tried to contact me.

O‘DONNELL:  I‘m glad we could get you, Senator.

Senator, President Obama cited you today as a Republican who, in the luxury of being out of office anyway, is willing to talk about possible revenue increases through the tax code.  Do you recognize any real legitimacy in the Grover Norquist argument that reducing a tax loophole, reducing a tax credit of some kind is actually a tax increase that all Republicans should oppose?

SIMPSON:  There‘s a word for it.  And Tom Coburn named him for it. 

It‘s called ludicrous.

Here we are 180-plus of these tax expenditures, which is really nothing more than tax spending.  They‘re spending by any other name.  They‘re really earmarks if you want to use that terrible word.

And if you got rid of all of them, we can give the folks a new tax code.  You know, we can take them down say from zero to 70,000 bucks you pay 8 percent.  From $70,000 to $210,000, you pay 14 percent.  Everything over $210,000 you pay 14 percent.  Take the corporate rate to 26 percent until 36 percent.

If that‘s a tax increase, then Grover is smoking more than I ever dreamed they ever produced in the trees and the weeds.

O‘DONNELL:  Senator, you‘ve been in Republican caucuses where you‘ve decided to vote for tax increases during President Reagan‘s eight years.  There were 11 tax increases that President Reagan agreed to.

SIMPSON:  That‘s right.

O‘DONNELL:  Signed onto.  I believe you voted for most or all of those.

What do you say to these Republicans today who say, as Grover Norquist has said publicly, there are absolutely no circumstances, none, conceivable, that justify any kind of tax increase in any form?

SIMPSON:  Well, when he testified for our commission, I asked him, I said, Grover, he said my hero is Ronald Reagan.  He almost had violin music in the background and drum rolls with it.  And I said, well, I said, Ronald Reagan raised taxes 1 times in his eight years, Grover.  He said, I know.  I didn‘t like that a bit.

I said, that‘s not the question.  Why did he do it?  He said, I don‘t know.  I‘m very disappointed.

He did it to make the country run.  It‘s a sick idea.

Now, let me tell you f the president is going to take me putting my sacred cows, I want the president to tell me what his favorite cow personally is and let‘s get all the sacred cows and, boy, I don‘t think oil and coal and all those things are, I want to the president to tell me what his favorite cow personally is.  Unless you get all of the sacred cows on the table and not play that everybody—you know, this business of class warfare, millionaires, kids, as if Republicans don‘t care about kids and old people and veterans, that is the most disruptive, disgusting thing.  You can‘t say bipartisanship like a press conference and then go have a fundraiser in L.A. and rip Paul Ryan to shreds and rip the Republicans to shred.

What does he think he didn‘t poisoning the well?

O‘DONNELL:  Senator, how would you suggest to the president that these discussions go forward?  And how would you suggest to the Republicans that they go forward?  I get the feeling your suggestion might be keep all your comments private for a while until you can get to some sort of agreement.

SIMPSON:  Well, let‘s remember what the Founding Fathers did in Philadelphia.  They wouldn‘t allow the media within a hundred yards of the building.  That would be a good thing to start with.

And, of course, the cry would go up.  Oh, Simpson is at it again.  He hates the media.  Forget that stuff.

If everything if media does is involved in conflict, controversy and confusion and not clarity, nothing will get done.  You better pray for Joe Biden and that gang of six, because if they can‘t get it done and if this country and these Congress people are in thrall, that‘s two words, in thrall, Lincoln used it, t means bondage of the mind.  If they‘re in thrall to the AARP and Grover Norquist, this country hasn‘t got a prayer.

O‘DONNELL:  Senator, let me add one point to your notion about how closing the doors actually helps gets this done.  It‘s not—it isn‘t even so much the media that is the big interference.  I remember when we were working together at the Senate Finance Committee that we tried to keep the door closed because we didn‘t want the lobbyists to find out what we were talking about because they close in on the system and make any movement impossible if you are touching anything that any of the lobbyists were paid to preserve.

SIMPSON:  Oh, don‘t forget that when we went into these tax expenditures, we found that only 10 percent of the American public, the wealthiest people in America, use them, because they‘re the ones that can hire the best lobbyists, go to the finance committee.

The little guy had no idea of what they are.  It meant nothing to him. 

He does the standard deduction and walks away.

We found the top 400 income earners in the United States paid an average of 16 percent income tax.  And it‘s absolutely absurd.

Buffett was right.  I paid less income tax than my secretary.

O‘DONNELL:  When President Reagan found himself in the position where he decided that the responsible decision was to go along with a tax increase, sometimes, some of these tax increases he wasn‘t particularly crazy about, but he saw it as the responsible outcome to compromise and move forward.

What do you stay to Republicans who are facing the debt ceiling coming August 2nd, who are actually saying, we don‘t think we really have to raise it?  You went through several increases in the debt ceiling in your time in the Senate.  I don‘t remember ever hearing someone actually taking the position, it might not have to be raised.  We might just be able to crash right into it and not worry about it.

SIMPSON:  Well, I never heard anybody say that either.  And I see one of the candidates for president on the Republican ticket said debt means nothing.  We‘ll just pay the interest.

Well, in the year 2020, if we do nothing, the interest will be 1 trillion bucks a year, which is totally unproductive—doesn‘t go to education, kids, veterans, all the stuff the violin music is used.

Let‘s get serious.  You cannot—you can‘t get there without hitting everybody.  So I want to hear—I want to hear whose cow is being slain while all the people that are babbling into the vapors.

Let‘s find out where Grover gets his bucks.  Who supports him?

And anybody that would sell their soul and sign a piece of paper before they got to Congress that said I will or will not do this has sold part of his soul.  That‘s an absurd situation.  Why would a person ever do that?

And so, now, here we are, and let me tell you, it will be a blood bath.  As I say, pray for Joe Biden and the gang of six because they‘re going to talk about getting rid of tax expenditures and if Grover wants to call that a tax increase, I‘m out of here.

O‘DONNELL:  Alan Simpson, former senator from Wyoming, former member of the Senate Finance Committee—thank you very much for joining me tonight.

SIMPSON:  Thank you very much.

O‘DONNELL:  Coming up, how to break the impasse with Republicans promising to protect even the corporate jet tax break.  Former Clinton budget director Alice Rivlin will be my next guest.

Plus, Sarah Palin and Michele Bachmann and Republicans like them get a lecture from the place they like to call the real America.  That‘s in “The Rewrite.”

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O‘DONNELL:  Coming up, what the Republicans‘ dangerous ideas about the debt ceiling and spending will actually do to the economy.  Alice Rivlin is next.

(COMMERCIAL BREAK)

O‘DONNELL:  Democrats have come up with their answer to Republican ads attacking President Obama on the economy, picking apart the Republican deficit reduction plan proposed by Congressman Paul Ryan.

(BEGIN VIDEO CLIP)

NARRATOR:  We are Americans.  We know right from wrong.  And we know the ads blaming President Obama for the economy are politics at its worst.  The Republicans have opposed economic reforms at every turn, and now, they have a plan that would essentially end Medicare for future retirees, slash education while giving huge tax breaks to big oil and the wealthy.  We can‘t rebuild America if they tear down the middle class.

(END VIDEO CLIP)

O‘DONNELL:  Today, Treasury Secretary Tim Geithner responded to a plan being proposed by Republican Wisconsin Senator Ron Johnson, a Tea Party freshman in the Senate, filled with wildly irresponsible ideas.

Senator Johnson wrote a letter to President Obama in may signed by 22 other Republican senators who should know better, insisting the estimated $2.6 trillion revenue the government is expected to receive next year would be enough to continue functioning if the government hits the debt ceiling.

Secretary Geithner‘s response today says, “Your suggestion that the government operate for some indefinite period within a $2.6 trillion debt ceiling budget is unworkable.  Your proposal would require cutting approximately 40 percent of all government payments.  Abrupt cuts of the magnitude you propose are neither feasible nor responsible, and they would risk throwing the economy back into recession.”

The International Monetary Fund also issued this ominous warning today: “The federal debt ceiling should be raised expeditiously to avoid a severe shock to the economy and world financial markets.”

Joining me now is Dr. Alice Rivlin, who served as budget director for President Clinton and as the founding director of the Congressional Budget Office.  She is also a winner of both the McArthur prize and the Moynihan Prize.

Thank you very much for joining me tonight, Dr. Rivlin.

ALICE RIVLIN, FORMER CLINTON BUDGET DIRECTOR:  Happy to be here.

O‘DONNELL:  Alice, can you explain to Senator Johnson what might happen if we tried to live within the tax revenue we will collect without raising the debt ceiling?

RIVLIN:  Yes, I think I can.  What happens is that the government simply can‘t pay its bills, the bills that it is obligated already under legislation to pay.  We don‘t get all the revenue in at once.  We get some revenue every day, and we have to pay some bills every day.  That is the secretary of the treasury does.

So, there will be bills that he cannot pay.  About 40 percent of what the government spends.

And furthermore, the debt that the government has has to be rolled over—it‘s short-term debt, medium-term debt.  And about half a billion dollars will have to be rolled over in August.

That means that the secretary is going to the markets and saying: lend us some more money to pay off the bills that are coming due here.  And, by the way, of course, we aren‘t paying our bills.  We haven‘t paid Social Security.  Or we haven‘t paid veterans or we haven‘t paid military contractors.  But go on and lend us the money anyway.

Now, that‘s not a very plausible story.  And if you‘re secretary of the treasury, you know that you can‘t get our creditors to go on lending us money at low interest rates if we‘re not paying our bills.

And that will be true in the first week of August.  We don‘t have much time to experiment with this.

O‘DONNELL:  President Obama mentioned something six times today in his speech actually talking about this corporate jets tax loophole.  Let‘s listen to what he said.

(BEGIN VIDEO CLIP)

OBAMA:  If everybody else is willing to take on their sacred cows and do tough things in order to achieve the goal of real deficit reduction, then I think it would be hard for the Republicans to stand there and say that the tax break for corporate jets is sufficiently important, that we‘re not willing to come to the table and get a deal done.

(END VIDEO CLIP)

O‘DONNELL:  Dr. Rivlin, strategically, what I‘m worried about now is that the Republicans say, okay, we‘ll give you the tax break for corporate jets and that‘s it on tax revenue and the Obama deal will have picked up, I don‘t know, $2 billion in tax revenue over 10 years.

RIVLIN:  Well, I was worried when the president used the corporate jet example too frequently, too, because it‘s trivial.  It‘s a very small amount of money.

As Senator Simpson said earlier in the program, we need in the long run to change our whole tax code, get rid of most of the special spending through the tax code and bring the rates down.  Now, corporate jets are a trivial example.  And the president had a couple of other small examples.

But we need to look at the whole tax code and get rid of the spending through the tax code so that we can have a fairer, simpler tax code with much lower rates.

Both the Simpson-Bowles commission and Domenici-Rivlin commission recommended that, and I think we‘re going to have to go there if we are to solve this problem of the rising debt.

O‘DONNELL:  I know you‘re not a constitutional lawyer, but there is -- 

RIVLIN:  No, I‘m not.

O‘DONNELL:  -- but there is now a discussion for the first time I‘ve ever heard it about the constitutionality of the ceiling and that the 14th Amendment is—makes it an unconstitutional notion in the first place, saying the validity of the public debt of the United States authorized by law shall not be questioned, so says the 14th Amendment.

I ran a couple of debt ceiling increases through the Senate in my time in the Senate Finance Committee, and no one ever raised this constitutional point.  It fascinated me.

Have you ever heard it raised before?

RIVLIN:  No, I haven‘t.  We‘ve lived with the debt ceiling for many decades.  We‘ve got one in law.  And I think within the next few weeks, we‘ve got to figure out how to raise the debt ceiling and make a downpayment on the rising debt.

O‘DONNELL:  Alice Rivlin, founding director of the Congressional Budget Office, thank you very much for your time and expertise tonight.

RIVLIN:  Thank you.

O‘DONNELL:  Coming up, the chairman of the Senate Budget Committee, Kent Conrad, says he has a budget plan with more deficit and debt reduction than the Simpson-Bowles plan.  Senator Conrad will be my guest.

And a takedown of the current Republican Party that didn‘t come from a left or right coast media outlet.  It came from the heartland, from what the Republicans like to call the real America.  That‘s in “The Rewrite.”

(COMMERCIAL BREAK)

O‘DONNELL:  It has been six months since I announced on this program our unique partnership with UNICEF, through which we created the KIND Fund.  Kids In Need of Desks.  The KIND Fund is my outgrowth and a professionalization of my own modest effort last summer to deliver desks to school children in Africa.  You can go to our website to see the story that I‘ve already told about going to Malawi last year, not quite sure of what I was doing, and managing finally to deliver desks for one classroom. 

Since I shared this story with you, your generosity to the KIND Fund has now multiplied those 30 desks that I delivered into thousands more, thousands more than I dared to imagine we could deliver. 

Today, I can report to you that we have reached our first goal, having now raised 2.3 million dollars, enough to deliver desks to every classroom in our first four target districts in Malawi.  That‘s 46,604 desks. 

We‘ve already delivered over 12,000 desks to 50 schools in Malawi.  I‘ll be going there next month to see the jobs we‘ve created in the small factories that are making these desks, and the tens of thousands of students we have already picked up off the floor in their classrooms. 

I‘ve received countless moving e-mails and Tweets from people who have struggled to contribute 48 dollars to buy one of these desks, including people who are now unemployed in this tough economy. 

Yesterday, we were 3,500 dollars short of our 2.3 million dollar goal when we told our largest contributor, Miles Nadal, how close we were.  And he immediately closed the gap for us.  His generosity has been extraordinary.  But every desk counts.  Every one of these desks will change students‘ lives for the better. 

There are still over two million more students who will never sit at a desk in Malawi if the KIND Fund does not keep growing.  If you would like to help us build and deliver more desks in Malawi, you can go to our website LastWordDesks.MSNBC.com or call 1-800-For-Kids. 

You can change the lives of the families of the workers who make these desks by lifting them out of poverty.  And you can change the lives of African students by lifting them off the floor. 

Coming up, President Obama has a simple challenge to Republicans: if Sasha and Malia can get their homework done on time, so can members of Congress.  I‘ll ask Democratic Senator Kent Conrad if that‘s really possible next. 

And you had to know something was up when Lindsay Lohan Tweeted about the Federal Reserve.

(COMMERCIAL BREAK)

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BARACK OBAMA, PRESIDENT OF THE UNITED STATES:  Malia and Sasha generally finish their homework a day ahead of time.  Malia is 13.  Sasha is 10. 

It is impressive.  They don‘t wait until the night before.  They‘re not pulling all nighters.  They‘re 13 and 10.  You know, Congress can do the same thing.  If you know you‘ve got to do something, just do it. 

(END VIDEO CLIP)

O‘DONNELL:  But what if Malia and Sasha could not finish their homework until they could convince a majority of their classmates to finish their homework too?  Then they just might be pulling all nighters. 

Such is the predicament of the responsible senator or representative who is ready to do his or her work without deadlines forcing them to.  But unlike Malia and Sasha, senators can not do their work alone.  They must drag other reluctant senators into an agreement. 

Without deadlines, those agreements might never be reached.  With deadlines, they are usually reached only at the last minute.  Joining me now, a man with two decades of experience leading senators to difficult agreements, chairman of the Senate Budget Committee, Kent Conrad.

Thanks for joining me tonight, Mr. Chairman.

SEN. KENT CONRAD (D), BUDGET COMMITTEE CHAIRMAN:  Always good to be with you, Lawrence.

O‘DONNELL:  Senator, how did the Malia and Sasha comparison go over on Capital Hill today, especially in the Senate? 

CONRAD:  That‘s always hard to know.  You‘ve made the point very well.  Look, it is so much more difficult when you have 100 people to persuade the United States Senate, 435 in the House, and lots of differences of opinion. 

What is so clear is that this is something that must be done.  These are commitments that we‘ve already made.  I think in the American public, there‘s a misunderstanding about extending the debt limit.  I think many people think this means we‘re going to be taking on more obligations. 

It‘s not that.  It‘s a question of whether we keep the obligations we‘ve already made.  It‘s like you bought the car.  The question is now whether you keep making the payments. 

And let me say one other thing, if I could, Lawrence.  You know the situation very well.  The revenue of the country, as a share of our national income, is the lowest it‘s been in 60 years.  Spending, as a share of national income, is the highest it‘s been in 60 years. 

That‘s why we have record deficits.  That‘s why it is so important that we come up with a comprehensive plan to deal with this debt, and not kick this can down the road one more time. 

O‘DONNELL:  Senator, there are breaking news reports late today that you have reached an agreement with the Democrats on your committee, on the Senate Budget Committee, on a budget plan that would reduce the deficit by the president‘s target numbers over the next 10 to 12 years.  What can you tell us about that plan? 

CONRAD:  I will release that plan next week.  Obviously, as you know, Lawrence, we have a lot of work to do to prepare it for release.  But we achieved a break-through this afternoon, an agreement among all of the Senate Budget Committee Democrats to support the plan. 

It‘s a big plan.  Frankly, it has more savings than the fiscal commission did.  So I think it‘s very significant.  I hope very much it will help influence the debate and the discussion among the leadership. 

O‘DONNELL:  So you have a plan that includes the full range of Democrats on your committee, which includes Bernie Sanders, at one edge of the party, and others to go forward.  That would sound to me like a plan that would get over 50 votes in the Senate. 

CONRAD:  Yeah, I believe it would.  The important thing here is that is another plan that would really make a difference with respect to the debt.  It would change the trajectory on our debt.

In fact, it would have more debt reduction than the House Republican plan.  It would have a lower deficit at the end of 10 years than the House Republican plan.  So I think it‘s going very much in the right direction. 

O‘DONNELL:  Senator, you, virtually alone among leaders in the Democratic side of the Senate, have been trying to work with Republicans this year in your famous gang of six.  You‘re now moving into working exclusively with Democrats on your committee. 

How do you expect to get an agreement among Democrats on your committee that you can get across a 60 vote threshold on the Senate floor, where you would require some Republican votes? 

CONRAD:  Remember, with a budget resolution, we would only need 51 votes.  Number two, I continue to work with the group of six.  So I have at least two horses out on the track, maybe three if you count the commission that I participated in. 

I think the more horses we have on the track, the better chance we have that one will finish the race.  So I have a responsibility to the Budget Committee.  And we‘ve been working for months to get a plan that everyone could agree on. 

I‘m still working with the group of six in hope that they will soon announce a plan.  They‘re very, very close there as well.  And, of course, the fiscal commission did produce a plan, four trillion dollars of savings, comprehensive, everything on the table. 

Revenue, yes, Spending cuts, yes, In the trillions of dollars.  And something that would get the country back on track. 

O‘DONNELL:  Senator, to get the kind of plan you‘re talking about, it seems you would have to have—obviously have revenue raisers in there, which I would assume are in that territory that the president is talking about, where you‘re limiting certain deductions, certain loopholes, but also very, very significant spending cuts, which would have to come in the Medicare territory. 

Do you expect to find resistance among Democrats for any kind of changes in the cost structure of Medicare, Given that they have the republicans now in such a vulnerable political position on that with the Ryan Plan? 

CONRAD:  You know, I don‘t expect a plan on the Democratic side is going to revisit the Medicare debate we just completed last year.  As you know, there were very substantial savings in Medicare last year.  So that‘s already in train.

Obviously, many of those savings have yet to be implemented.  So that‘s something that is still in the works, in terms of legislation that‘s already been passed, but much of it not implemented until further years. 

The interesting thing is, without touching Social Security, without having any significant reductions in Medicare, you can still achieve these significant savings and get the debt under control.  That‘s what is so encouraging. 

O‘DONNELL:  Senator, my mind is racing here on how you could put together a package in that committee that could get Bernie Sanders‘ support and the more moderate Democrats‘ support on that same committee.  I‘m just going to stay up all night trying to figure out what‘s in that plan. 

Senator Kent Conrad, thank you very much for joining us tonight. 

CONRAD:  Good to be with you, Lawrence. 

O‘DONNELL:  In an editorial on Sunday, a newspaper in the heartland mourned the loss of the Republican party as we once knew it.  That‘s in tonight‘s Rewrite.

(COMMERCIAL BREAK)

O‘DONNELL:  In our Whitey Bulger update tonight; as you already know, I grew up close to where Whitey Bulger committed most of his crimes.  And I discovered that he was living out his older years very close, steps away from where I live now. 

I also discovered last week that a friend of mine has an apartment in that same building that Whitey has been hiding out in all these years.  No amount of persuasion could get that friend to go public with memories of the great man in that apartment building.  And so that‘s about as far as I can go with my friend‘s experience. 

I wish I could tell you more.  There isn‘t actually that much more to tell.  Turns out Whitey was a pretty private tenant of that building, as we now know. 

We‘ll be back.

(COMMERCIAL BREAK)

O‘DONNELL:  In the Rewrite tonight, we will hear from the real American.  Well, all of America is really the real America.  But in the right wing world, they like to pretend that where I am at this moment, in the heart of Manhattan, is not the real America, that the real America is to be found away from the coasts, out there in the great middle, in places like Missouri. 

The Sean Hannitys and Ann Coulters of the world like to pretend that that‘s where the real Americans live, real Americans who like the flag more than northeasterners do, and hate taxes more and hate everything liberal, and like everything that‘s Republican. 

Here is some Heartland thinking that Hannity world would not recognize as coming from their notion of the real America.  It‘s from an editorial in Sunday‘s “St. Louis Post Dispatch,” that mourns the loss of the party of Lincoln, and as the editorial put it, “the party of lesser mortals, like George H.W. Bush of Texas, Bob Dole of Kansas, and Jack Danforth of Missouri, statesmen who put country before party.” 

“In today‘s Republican party,” the editorial said, “we have the spectacle of smart patriotic men and women putting their brains and integrity on ice to please a party dominated by anti-intellectual, social Darwinists and the plutocrats who finance and mislead them.  Consider the mythology that makes up GOP orthodoxy today. 

“Imagine the contortions that cramp the brains and souls of men and women of intelligence and compassion who seek state and national office under the Republican banner.  They must believe, despite the evidence of the 2008 financial collapse, that unregulated or at most lightly regulated financial markets are good for America and the world. 

“They must believe economic growth can be attained only by reducing corporate and individual tax rates, especially among the investor class, and by freeing business from environmental rules that have cleaned up America‘s air and water, and labor regulations that helped create America‘s middle class. 

“Republican candidates for office must deny that health care is a basic right and resist a real attempt to change and improve the system.  GOP candidates must scoff at scientific consensus about global warming. 

Blame it on human activity, bad.  Cite Noah‘s Ark as evidence, good. 

“They must express at least some doubt about the science of evolution.  They must insist, statistics and evidence to the contrary, that most of the nation‘s energy needs can be met safely with more domestic oil drilling, clean coal technology, and greater reliance on perfectly safe nuclear power plants. 

“They must believe that all 11.2 million undocumented immigrants living in the United States can be rounded up, detained, tried, repatriated and kept from returning at a reasonable cost.  GOP candidates should at least hint that unemployment benefits keep people from seeking jobs. 

“They must believe that the founding fathers wanting to guarantee individuals the absolute right to own high capacity rapid fire weapons that did not exist in the late 18th century.” 

The “St. Louis Post Dispatch.”  Those east coast Ivy League elitists

at “the New York Times” could not have said it better

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O‘DONNELL:  Today, Lindsay Lohan was freed from 35 days of house arrest for stealing a gold necklace.  If you‘re wondering how she‘s been paying her bills while she had the ankle bracelet on, you might want to check her Tweets. 

On Monday, she Tweeted, “have you guys seen food and gas prices lately?  U.S. money will soon be worthless if the Fed keeps printing money.” 

Of all the worries Lindsay has in this world, you would think the Fed printing money would not be one of them.  And you would be right.  Her Tweet was bought and paid for by a group called the National Inflation Association, a front group for two guys who, according to the “Wall Street Journal‘s” Market Watch, pump up unknown stocks that deal in gold and silver. 

In fact, one of the guys, Jonathan Lebed (ph), knows something about the vulnerabilities of young people in trouble with the law, like Lindsay Lohan.  He made history himself by becoming the youngest person in the nation‘s history to be accused of securities fraud when he was all of 16. 

In response to a fan who was disappointed that Lindsay Lohan was Tweeting out ads instead of what she‘s actually having for lunch or something such, Lohan explained “I actually do care about gas and food prices, so whether it‘s an ad or no, it‘s an important for people to be aware of it.” 

Joining me now is Dana Milbank, columnist for the “Washington Post.” 

Thanks for joining me tonight, Dana. 

DANA MILBANK, “THE WASHINGTON POST”:  Good evening, Lawrence. 

O‘DONNELL:  Dana, Lindsay Lohan has 2,130,187 followers.  It seems there‘s money to be made with those followers.  How does this work?  How much do they pay her to do this stuff? 

MILBANK:  Lawrence, look, when a lot of ex-cons get out of prison looking for work, it‘s not easy.  She can type 140 key strokes and make 3,500 dollars, which is—you know, it‘s good work if you can get it.  It‘s not as good as Kim Kardashian, who can get 10,000 dollars for a single tweet. 

I‘m extrapolating from this.  And I would say that you could earn about 50 bucks per Tweet.  Perhaps you would even get a premium because you don‘t wear an ankle monitoring bracelet. 

O‘DONNELL:  I‘m going to start Tweeting right now.  So how many Tweets

do we have any sense of how many for cash Tweets people like Lindsay and the Kardashians are doing every day? 

MILBANK:  It‘s hard to quantify, but there are websites designed just for this, to line people up to do the tweets.  Michael Vick, if you care about what products he‘s endorsing, you can get him to Tweet your product for 700 bucks. 

It‘s spreading quite a bit.  Down to about three dollars, which I think is where I would be.  I could probably get paid 10 dollars if I wouldn‘t endorse something.  But Lindsay Lohan has been doing—she did 1-800-Muffin.  She did a Temptations sweepstake to win a trip to Las Vegas.  My very favorite one was for Fashion Bay.  She tweeted “OMG!  An LV bag for a dollar at Fashion Bay.  Maybe I can get lucky and win something cool here.” 

O‘DONNELL:  You know, Dana, she follows 245 people.  And only one in government.  That would be Barack Obama.  And so her Tweeting about the Fed, when you look at who she‘s following, does seem to be a little surprising, and I think a little easy.  Isn‘t this the kind of thing that people knew, as soon as they read it, this is just a money making Tweet of some kind? 

MILBANK:  Right.  You think that if you want an authority on the end is near and the financial system is collapsing and we‘re printing money, you would get that from Glenn Beck.  You know, if you want information on jewelry or fashion bags, you might just tune into Lindsay Lohan‘s Tweets.  I suspect she‘ll be piling up some more. 

O‘DONNELL:  The “Washington Post‘s” Dana Milbank, thanks very much for joining me tonight, Dana. 

MILBANK:  Thanks, Lawrence. 

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

“THE RACHEL MADDOW SHOW” is up next.  Good evening, Rachel. 

I have some very bad news for you. 

RACHEL MADDOW, MSNBC ANCHOR:  Oh, no.

O‘DONNELL:  I think Lindsay Lohan is the only actress in Hollywood who does not follow Rachel Maddow.  She is not one of your 1,877,976 followers.  And I don‘t understand why. 

END   

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