updated 7/14/2011 11:54:12 AM ET 2011-07-14T15:54:12

Guests: Jonathan Alter, Sam Youngman, Sen. Bernie Sanders, Judson Phillips, Leo Gerard,

Elyse Hogue, Jim Conklin

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

A very tense meeting this evening between President Obama and congressional leaders on the debt ceiling.  There are reports that Eric Cantor, the majority leader, was acting like a juvenile.  Apparently, the president told Republicans enough is enough.  He said he‘s willing to risk his presidency for a debt ceiling deal.

The stakes have never been higher for this president, for this country, and they‘ve never been higher for the American people.

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

(BEGIN VIDEOTAPE)

(MUSIC)

           

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE:  I‘m no on raising the debt ceiling right now.

SCHULTZ (voice-over):  Republicans are at war with each other.  Major developments on the latest debt ceiling negotiations.

Bernie Sanders, Leo Gerard and Jonathan Alter are here.

Today was the worst day yet for Rupert.  There is now a bipartisan call to find out whether News Corp hacked American phones.  And you won‘t believe which Republican wants Rupert Murdoch investigated.

And the government shutdown in Minnesota means the state is almost tapped out.  There‘s a beer crisis in the heartland and this is serious stuff.

(END VIDEOTAPE)

SCHULTZ:  Good to have you with us tonight, folks.  Thanks for joining us here on THE ED SHOW.

Huge news, the debt limit negotiations this evening.  President Obama had a very tense encounter with House Majority Leader Eric Cantor tonight.  Democratic sources are telling THE ED SHOW Cantor interrupted the president three different times trying to push for a short term deal.

The president refused to agree, and an anonymous Republican aide told “Reuters” the president said, “I‘ve reached the point where I say enough, would Ronald Reagan be sitting here?  I‘ve reached my limit?  This may bring my presidency down, but I will note yield on this.”

The president then wrapped the meeting and told the members that he would see them back in the White House tomorrow.  Cantor ran out to the press and claimed that the president stormed out of the meeting.

A senior legislative aide to a Democrat who was in the room tells us Cantor‘s account of tonight‘s meeting is completely overblown.  That same aide also denied the report that the president has set a Friday deadline.

But grasping where we are right now from the Republican side.  For decades, the Republicans have tried to chip away at the New Deal—Social Security, Medicare, Medicaid.  In fact, Bush tried to reform Social Security.  That was the first thing he tried to do in January of 2005.  And it failed.

Now they have a Democratic president at the table willing to make major changes in the big three, to the tune of $4 trillion across the board, and the Republicans won‘t take the deal.  It‘s rather amazing.

Why?  Are they afraid that President Obama might do well with independent voters?  Are they miscalculating the fact that the base would be furious with the president if he were to cave in on the big three?

And President Obama tonight, in my opinion, is emerging as the most honest broker maybe Washington has seen in a long, long time.  He openly states he‘s willing to put his presidency on the line to bring both sides together to get a deal, and the only way he believes that can be done is if some revenue from the wealthiest Americans comes into the Treasury.  And the Republicans won‘t budge.

It‘s amazing.  It really is amazing.  President Obama truly is trying to make a difference in Washington.  He is trying to be an honest broker.  He needs all sides at the table.

But the Republicans won‘t do it.  And generationally speaking, this is what the Republicans wanted for decades.  They wanted to reverse the New Deal.  And now, they‘ve got a Democratic president who‘s willing to do it and they walk?  Because of revenue?  Amazing.

For more on tonight‘s meeting, Sam Youngman, White House correspondent for “The Hill” joins us.

Thanks for your time, Sam.  Appreciate it very much.

You‘ve been briefed by the White House tonight on exactly what took place at that meeting.  What can you tell us?

SAM YOUNGMAN, THE HILL:  Well, it‘s right out of an Aaron Sorkin “West Wing” script, except this, of course, has horrifying real world consequences.

What the White House is saying is that these reports of an abrupt walkout by a president are overblown.  They‘re saying, look, the president is obviously quite frustrated.  I don‘t know any—how you can be human and not frustrated by how this is going.

But that he said what he had—he said what he wanted to say.  He got up and walked out.

One source familiar with negotiations told me that the president flatly told the people in the room that they are confirming what everybody likes about Washington—by political posturing and sound bites instead of actually trying to solve the problem.

SCHULTZ:  Are the big three on the table in a big manner right now? 

Is the president willing to negotiate away benefits and major changes? 

What do you know?

YOUNGMAN:  Well, he‘s willing to talk about it, which I think, you know, going back to what you‘re saying earlier—I mean, a Democrat president willing to talk about all three of these things.  I mean, goodness, the only thing that‘s missing, I think, is Roe versus Wade—if he could somehow throw that into the deal.

So, I don‘t know - I mean, a source I talked to the other night said what they‘re talking about especially when it comes to Medicare is raising the enrollment age to 67.  But that would be in 2036.  So, I think the president is definitely willing to move on these.

How far he‘s willing to move on these, I don‘t know how dramatic it would be.

SCHULTZ:  And the president, tell us about the deadline.  Is there really a Friday deadline?

YOUNGMAN:  Well, I think just for a matter—just from a point of practicality, there has to be a Friday deadline.  If you‘re talking about doing this before August 2nd, before August 2nd, which the White House insists and most economists insist is a very real deadline, then you‘ve got to give Congress time to actually write the stuff, to pass it, to pass it back and forth and then give to the president to sign.

So, I think he really is setting his foot down.  And, you know, one of the popular refrains from this White House during the health care debate was nothing gets done in this town without a deadline.  And I think that that‘s what we‘re seeing here.

SCHULTZ:  And what about Eric Cantor‘s role in this.  He seems to be overshadowing John Boehner at this time.  Your take?

YOUNGMAN:  Well, I think that‘s certainly the perception that‘s out there, is that Speaker Boehner wanted to go for the larger deal.  And that Eric Cantor, speaking more on behalf of House conservatives, has sort of taken over the reins.  And since that happened, talks have broken down.

I‘m not in the room.  I feel like Speaker Boehner is probably still trying to help bring parties together like President Obama is, and it‘s tough for me to say not being in there, but it certainly sounds like there‘s been some fireworks between—more between leader Cantor and the president than between the president and Boehner.  But there again, leader Cantor wasn‘t in the golf game.

SCHULTZ:  Sam Youngman from “The Hill,” good to have you with us tonight.  Appreciate your time.

YOUNGMAN:  Thanks for having me, Ed.

SCHULTZ:  For more, let‘s turn to Senator Bernie Sanders of Vermont.

Senator, great to have you on with us.  Thanks for the work you‘re doing sticking up for the little guy in this country.

The president said he‘s willing to stake his presidency on this deal? 

How does that reach you tonight?

SEN. BERNIE SANDERS (I), VERMONT:  Well, I think what the president is saying is, the Republicans are giving us two offers.  Number one, if we don‘t give them everything that they want, they‘re prepared to—for the first time in the history of the United States—default on our debts in the midst of a very fragile world economy, raise interest rates in this country, cost us a significant number of jobs, and perhaps deny benefits to the elderly and many other people who are waiting for those benefits.

And the second option that they‘re giving us is, they‘re going to slash Social Security, Medicare, Medicaid, nutrition, education, environmental protection, and not ask the wealthiest people of this country who are doing phenomenally well, whose tax rates have gone down.  Not ask corporations who are earning huge profits and in some cases not paying any taxes.  They don‘t have to participate in deficit reduction.  It‘s simply on the backs of working families.

SCHULTZ:  It seems like President Obama is willing to put the politics aside of all of this.  He‘s willing to turn to his base as he said at the press briefing the other day.  He‘ll take the political heat and the political down side of it all.  He must be serious, big time, because if he‘s willing to put his presidency on the line and put his base in jeopardy to maybe pick up a few independent voters for being the honest broker in the room, this is a big political gamble, is it not?

SANDERS:  Well, I will tell you what I think, Ed, I maybe wrong on this.  But I think at the end of the day, our good friends on Wall Street who helped cause this recession in the first place—a lot of the other very big businesses who fund the Republican Party are saying to our Republican friends, you know what, enough is enough.

SCHULTZ:  But Cantor is not listening to that.

SANDERS:  Cantor is not, but Mitch McConnell is, and John Boehner is.

SCHULTZ:  So, do you think there‘s enough Republicans out there that would take the McConnell deal?

SANDERS:  I think being pressured by big business and Wall Street, there may well be.

And what we will have then is not an optimum situation.  In many ways, it‘s simply kicking the can down the road.  But compared to the other two options of defaulting or making savage cuts on programs that working people desperately need, it is probably the preferable option at this moment.

SCHULTZ:  All right.  Moody‘s investor services placed the AAA bond rating of the government of the United States on review for possible downgrade given the rising possibility that the statutory debt limit will not be raised on a timely basis.

What‘s your take on this?  Are we turning the hourglass on the American economy?

SANDERS:  Absolutely.  Look, everybody knows the economy is in disastrous shape right now.  If we default, if interest rates go up, if there‘s turmoil in the international economy—this will make a very bad situation much worse.

And I think people like John Boehner and Mitch McConnell and corporate America are beginning to catch on to that reality.

SCHULTZ:  And, Senator, what was your response to the president when he told an anchor in an interview that he couldn‘t guarantee that the checks would be there on April 3rd?  That he couldn‘t guarantee the Social Security checks would hit people‘s bank accounts if we don‘t take action?  What‘s your response to that?  Is that true or false?

SANDERS:  Well, there are differences of opinion about that.  There are some who would argue, and I would tend to agree, that given the fact that Social Security has a $2.6 trillion surplus, that you can figure out a way and you must make sure that seniors and disabled vets get their checks.

SCHULTZ:  So you would take issue with the president on that statement, that he may have been fearmongering in a sense?

SANDERS:  What he is saying is look, there‘s not enough money here to pay our debts, that‘s true.  I think in fact, we can pay Social Security.  But, look, let‘s be clear—if we default, it is a disaster.  No sane person wants that to happen.

SCHULTZ:  Are we getting closer to the question of a real possibility and a constitutional move by the president?

SANDERS:  That‘s another option that‘s out there.  The president has kind of not put that front and center.  I happen to believe that at the end of the day because of the impact of the business community, all the money they raise for the Republicans, I think some of our Republican friends will see the light and, in fact, we will not default.

SCHULTZ:  Are the Republicans as arrogant as they seem, Senator?

SANDERS:  I think you got a group of them who in their hearts believe that government should not be involved in Social Security, in Medicare, in Medicaid, education.  Certainly, they want to—even after the Wall Street fiasco, do more deregulation there, deregulation of the energy companies and so forth.  That is it what they believe and they believe it passionately.

SCHULTZ:  But they have the very president at the table willing to do that, and they won‘t take the deal because there might be some more revenue involved.  I find this amazing.

SANDERS:  Well, you know, the columnists, the conservative columnist from the “New York Times,” Brooks, made the point that these guys can‘t take yes for an answer.  They‘ve won.  They already have Obama making far more concessions in my view, than he should have made.  But it‘s still not good enough for them.

SCHULTZ:  And finally—and finally, did the president do the right thing tonight from the reports that you‘ve heard the way he handled that meeting and his stance right now?

SANDERS:  Absolutely.  I think the American people are catching on that Republican obstinacy, saying it‘s their way or the highway, just is not what American government is supposed to be about.  So, I think the president did do the right thing.

SCHULTZ:  But if the president has the Republicans taking this deal at that fat number, I don‘t know how he gets re-elected.  I don‘t know how those basers go out there and write the $25 checks.  I don‘t know how they go door to door.  I don‘t know how to keep the confidence.

SANDERS:  But, Ed, I don‘t think that‘s the end result going to be.  I think, in fact, you‘re not going to see that.  I think what you‘re going to see is kind of a stalemate, no significant action on deficit reduction right now, but in fact, no default—probably the best option at this moment.

SCHULTZ:  And it just seems like Mitch McConnell is willing to fight the president on another day and concede this fight.  That‘s what it seems like.

Vermont Senator Bernie Sanders, great to have you with us.  Thanks for your time.

Don‘t forget to answer tonight‘s question, text question.  Should the president risk his job for a debt ceiling deal?  Text A for yes, text B for no to 622639.  You can always go to our blog and comment at Ed.MSNBC.com.  We want to know what you think.

More on the debt ceiling talks coming up with MSNBC analyst Jonathan Alter, Leo Gerard, United Steel Workers international president, and Judson Phillips of the Tea Party Nation with his take tonight.

And, later, News Corp phone hacking scandal keeps getting worse for Rupert Murdoch.  One of the most outspoken conservatives in the Congress is asking the FBI to investigate.

We‘ll be right back.

(COMMERCIAL BREAK)

SCHULTZ:  Coming up: Mitch McConnell tries to take bag his deal to give President Obama the power to raise the debt limit after feeling the heat from his fellow Republicans.  Heated discussion coming up, all different opinions.

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

(COMMERCIAL BREAK)

SCHULTZ:  Welcome back to THE ED SHOW.

House Republicans are furious at Mitch McConnell‘s back door effort to pass the buck on the debt debate gutting the big three are getting major changes.  McConnell is in major damage control mode.  So, the Senate minority leader ran to the safe haven of right wing radio today to save his plan.

(BEGIN AUDIO CLIP)

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER:  Just like we knew

shutting down the government in 1995 was not going to work for us—it

helped Bill Clinton get re-elected.  I refuse to help Barack Obama getting

re-elected by marching Republicans into a position where we have co-

ownership of a bad economy.

(END AUDIO CLIP)

SCHULTZ:  Co-ownership?  Republicans don‘t have co-ownership of the bad economy.  They have sole ownership.  Bush tax cuts, endless wars, unfunded mandates.  They own it all, folks.  That was what was handed to this president.

McConnell is desperately trying to make President Obama look like the bad guy so that he can sell his own party his deal.  McConnell says the president isn‘t giving him any good choices.

(BEGIN AUDIO CLIP)

MCCONNELL:  One is that the Republican Party becomes a tax collector for the welfare state.  And no Republican Party I‘ve ever had the privilege to serve is going to take that deal—I‘m certainly not.  Or that we sort of have a bipartisan agreement to accept a smoke and mirrors deal and call it good, not on my watch.

(END AUDIO CLIP)

SCHULTZ:  McConnell can spin that garbage all he wants, but it will never convince the radical Republican House to take the deal.

The poster child of the McConnell problems is Michele Bachmann.  She thinks President Obama is holding the United States hostage.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE:  President Obama is holding the full faith and credit of the United States hostage so that he can continue his spending spree.  We‘re saying, President Obama, is your spending spree really that important to you, that you would put at risk, the full faith and credit of the United States?

(END VIDEO CLIP)

SCHULTZ:  No doubt, Republicans are all over the place on this issue, and they are at each other‘s throats politically, no doubt.

Joining me now is MSNBC political analyst and “Bloomberg View” columnist, Jonathan Alter.

Judson Phillips is the founder of the Tea Party Nation.  He‘s here with us tonight.

And also, Leo Gerard is the president of the United Steelworkers International of America.

Gentlemen, great to have you with us tonight.

Mr. Phillips, I‘ll start with you.  You have been very critical of the Republican leadership.  The reports from the White House tonight make it seem like Eric Cantor has taken over negotiations for John Boehner.

Is that a good thing in your opinion?

JUDSON PHILLIPS, TEA PARTY NATION:  I think it‘s a good thing in my opinion because in that way, if Cantor takes over, Boehner can‘t raise his freshly laundered white flag of surrender again.

SCHULTZ:  And is this what you want?  Do you want Eric Cantor going in there, holding the line on taxes, when you got a president who is willing to do something on entitlements?

PHILLIPS:  Absolutely.  We have a spending problem.  We don‘t have a taxing problem.  Americans are taxed too much as it is.

Spending is what is out of control.  You know, this is not the unknown country, something we‘ve never seen before.  Look at what‘s happening over in Greece, in Portugal, in Spain.  We see the end result.  We‘re not nearly as far along as they are.  We can stop now—but not if we go the Barack Obama route.

SCHULTZ:  Mr. Gerard, the president says he‘s willing to put his presidency on the line.  What does that mean to you and workers in this country?

LEO GERARD, UNITED STEELWORKERS OF AMERICA:  I think what we‘re dealing with is a recalcitrant Republican Party and a Republican Party that refuses to deal with reality.  What Michele Bachmann said is just totally, inappropriate, wrong and fundamentally dishonest.  The same as what Mitch McConnell said.

This deficit was brought to us by George Bush.  It was brought to us with excessive tax cuts from billionaires and millionaires.

We don‘t have a spending problem in this country.  We‘ve got a jobs crisis.  We‘ve got to get people back to work.  And we‘ve got to get people back to work.

This whole debt ceiling thing is a mirage.  They raised the debt ceiling seven times for George Bush.

And George Bush brought us from a surplus—let‘s not get amnesia here.  We had a surplus when Bill Clinton left the White House.  George Bush spent that surplus in the first few weeks, and then he took us into these wars.  He gave away the tax cuts that amounted to trillions of dollars.

Now, this president is trying to do the honorable thing, and we watch these right wing Republicans fight each other and stab each other in the back verbally.  I think that what we‘ve go is we‘ve got to show America—we‘ve got to show America that these guys aren‘t serious, that the only serious adult in the room is President Obama.

SCHULTZ:  Jonathan Alter, the play the president made tonight and what he said, what do you make of it?

JONATHAN ALTER, MSNBC POLITICAL ANALYST:  I think the president is in a very strong good position right now.  The Republican Party is divided.

He is about to be able to go out on the campaign trail in 2012 if they move forward with some variation of this McConnell kicking the can down the road idea, which is very likely to happen.  He‘s going to be able to go out there and say, look, I wanted to cut $4 trillion and put this country on a sound fiscal basis.  The Republicans said no, because they were interested in protecting corporate jets and their wealthy backers.

And so, he will look like the budget cutter, the person who is fiscally responsible in the 2012 election.  That‘s a pretty good place to be.  They‘re the ones who blew up the deal.  They walked out four times.

SCHULTZ:  But Cantor has—is not going to warm up to any kind of deal that Mitch McConnell cuts.

(CROSSTALK)

ALTER:  McConnell is a powerful guy—not just on the Senate side.

SCHULTZ:  Yes.

ALTER:  But on the House side as well.  They don‘t have the votes to pass any deal.  They don‘t want to get blamed for default.  That‘s not very clear.  The Republicans know that that will destroy their party.

So, they‘re going to come up with some fig leaf along the lines of what Mitch McConnell proposes.

SCHULTZ:  Mr. Phillips, will a fig leaf work for the Tea Partiers in Congress?  Will they have struck this deal?

PHILLIPS:  A fig leaf is not going to work.  What we have said, what the Tea Party has said, is we want this problem solved.  And there‘s a really simple way to solve this problem.  We‘re spending way too much money.

GERARD:  That‘s baloney.

(CROSSTALK)

GERARD:  The problem we‘ve got is we inherited a Bush mess.  That‘s the problem.

PHILLIPS:  N, we inherited a mess from Nancy Pelosi, Harry Reid and Barack Obama.

GERARD:  You guy are busy protecting millionaires and billion areas. 

You‘re busy protecting folks who are paying 15 percent on their tax.

PHILLIPS:  No, we‘re busy people who work for a living.

(CROSSTALK)

GERARD:  -- people like and I‘m privileged to represent are paying 30 percent.

PHILLIPS:  The union workers you would like to put out of jobs with your attack on -- 

(CROSSTALK)

GERARD:  -- if tax cuts created jobs, Bush should have left office with full employment.

PHILLIPS:  Tax cuts did create jobs.  Hey, five years ago, there was full employment, 5 percent employment.  We have 9.2 percent unemployment now.

Hello.  Beam me up, Scotty.  Which was better?

(CROSSTALK)

GERARD:  -- than Bush did in his whole term.

PHILLIPS:  You‘re just making stuff up.

GERARD:  That‘s reality.  You are the one making stuff up.

SCHULTZ:  Hold on.  Jonathan Alter?

ALTER:  I want to make a couple points to Mr. Phillips.  First of all, the massive fax cuts at the beginning of the Bush administration did not create jobs in this economy.  There were very few jobs created during these eight years.

SCHULTZ:  Would you agree with that, Mr. Phillips?

PHILLIPS:  Tax cuts didn‘t create jobs.  Please tell me why in 2004 and 2005, we had full employment?  We were down below 5 percent unemployment.

GERARD:  We never had full employment.

PHILLIPS:  Yes, we did, go look at the history.

(CROSSTALK)

ALTER:  Another point, this is central, because I think that Mr.  Phillips is out of touch with his own voters.  If you go and talk to Tea Party supporters around the country and you ask them -- 

PHILLIPS:  Funny, I actually talk to them probably more than you do.

ALTER:  Excuse me?  Could I finish my sentence?  And you ask them a choice, would you like to cut $4 trillion from the debt or would you like to protect loopholes for wealthy corporations?  Would you accept a deal that closed those loopholes and cut 4 trillion from the deficit?  They all will take the deal.  It‘s only their leadership.

PHILLIPS:  No, they won‘t.

ALTER:  People like you and some of the folks on Capitol Hill who don‘t realize where the real mainstream Republicans are on this issue.  They‘re not -- 

PHILLIPS:  Jonathan, that‘s an amazing amount of creative writing on your part.

GERARD:  And the fact of the matter is, Ed, we have a jobs crisis.  We don‘t have a spending crisis.  We have a jobs crisis.

And this Republican Party has been in office now.  This leadership in the House has been in f or seven months, they haven‘t brought forth one proposal.  They haven‘t passed one bill that will put people back to work.

SCHULTZ:  All right.

GERARD:  All they want to do is protect tax breaks for millionaires and billionaires and hedge fund job closers.  We have a number of hedge funds take over our plants and close our plants and walk away with hundreds of millions on their pocket.

SCHULTZ:  All right.

GERARD:  We got to put an end to that stuff.

SCHULTZ:  Mr. Phillips, I‘d like your response to Moody‘s warning the United States credit rating could be affected if no deal is reached by August 2nd.  Do you agree with their assessment?  And are the Tea Partiers willing to cast that assessment aside and just go for broke?

PHILLIPS:  Well, Moody‘s has said they‘re worried about our debt, our credit rating.  That doesn‘t mean they‘re going to downgrade us, but it does mean they‘re worried about it.  So, what I would like Barack Obama to do is pay attention to what the American people said in this last election when the Republicans got put in charge of the House of Representatives, in historic proportions, running on the planks of cutting spending and no new taxes.

SCHULTZ:  Well, he‘s willing to cut $4 trillion.  And your Tea Partiers are standing in the way of it, because you won‘t give up any more revenue from the wealthiest Americans.  I mean, Mr. Phillips, that‘s where we are tonight.

PHILLIPS:  It‘s not the wealthiest Americans.  It‘s entrepreneurs.  It‘s small businesses.   It‘s the people who create the jobs in this country.

The gentleman said there‘s a job crisis.  Yes, there is a job crisis. 

You want to create jobs, let‘s make it easier for people to create jobs.

Let‘s cut the taxes.  Let‘s cut the regulations.

GERARD:  Ed, let me calm down and make this one point.  We just extended the Bush tax cuts last year.  Coming on the heels of 10 years of those massive tax cuts that have helped create this huge deficit and they haven‘t created any jobs.  Trickle down doesn‘t trickle down.  All it does is line the pockets of the already rich and powerful.

And what we need now, is we need jobs, we need a jobs bill.  If people were going back to work, the deficit would come down.

SCHULTZ:  All right.  Gentlemen—

PHILLIPS:  I‘m just curious who you think creates jobs?  Who creates jobs?

(CROSSTALK)

PHILLIPS:  Or do you create jobs?  I think the rich people of this country do create jobs?

Let‘s sample people.  Create jobs.  You don‘t create jobs.  You create a lot of hot air, but that‘s about it.

GERARD:  Not the billionaires that are sitting on a trillion dollars on their bank accounts and not spending it.

PHILLIPS:  What did these people do, win the lottery out of the blue? 

No, they got out there, they became successful and they created jobs.

SCHULTZ:  All right.

GERARD:  You tell me the head of the insurance industry that paid himself 400 million created jobs -- 

(CROSSTALK)

ALTER:  But that doesn‘t mean they have to back every stupid loophole for every wealthy corporation to encourage small business to create jobs.  So, you can have incentives for job creation in the private sector and also have revenue increases to help bring down the deficit.  They‘re not mutually exclusive.

SCHULTZ:  Gentlemen, I‘ve enjoyed it.  I hope our audience has as well.

Jonathan Alter, Judson Phillips, and also Leo Gerard, thanks for your time tonight.

PHILLIPS:  Thank you for the invitation.

SCHULTZ:  Beer is drying up in Minnesota because of the state government‘s shut down.  Watch out lawmakers.

And the psycho trio of Michele Bachmann, Louie Gohmert and Steve King held a joint press conference to attack President Obama over the debt ceiling.  But only Bachmann wins a trip to the zone.

(COMMERCIAL BREAK)

SCHULTZ:  Now it‘s getting serious in Minnesota.  The Minnesota government is shut down, the only one in the nation.  It‘s threatening to choke off summer itself, fishing and beer drinking. 

The land of 10,000 lakes has not been issuing new fishing licenses since the shutdown began on July 1st.  The problem is starting to wreak havoc for popular fishing communities that depend on the recreational dollars.  The website for the state‘s Department of Natural Resources says that just licensed anglers can continue to fish.  But reportedly the DNR told some individuals they can fish on the honor system, and get a permit when the shutdown ends. 

No confirmation from the DNR on that one. 

Now, more important, the state‘s licensing system for beer and alcohol is slowly killing off sales and really hurting businesses.  Mega-beer company Miller Coors has been told to remove all 39 brands from store shelves over the next few days because it didn‘t renew its license before the shutdown began. 

You see, they have to get their license from the government, but they‘re shut down.  On top of that, the licenses for about 300 bars, restaurants and liquor stores across the state have expired.  More will expire in the month of August. 

The Minnesota Twins will be back on Thursday, but for baseball fans, who knows how much beer is actually going to be left.  This is a domino effect to the government shutdown in Minnesota‘s economy.  It will continue to hurt. 

There are no new talks scheduled between the state‘s Democratic Governor Mark Dayton and the Republican legislative leaders. 

A major business deal falls apart on Rupert Murdoch.  Now there‘s word he‘s looking to sell off his U.K. newspapers, as members of Congress call for investigations.  The latest on News Corp scandal next. 

And later, your donations to the National Association of Free Clinics have helped put on seven health care clinics throughout the country that have helped thousands of people.  Our guest tonight has volunteered his time and will tell you all about it.

(COMMERCIAL BREAK)

SCHULTZ:  I guess you could say it‘s not a good day to be Rupert Murdoch, when a conservative Republican starts calling for federal investigations into News Corp.  Congressman Peter King of New York wants the FBI to find out if News Corp journalists bribed a police officer to access voicemail accounts of 9/11 victims. 

King says the news Corp employees should face felony charges if the allegations are true.  Senate Democrats are also asking the Justice Department and the Securities and Exchange Commission to investigate.  Senator Robert Menendez and his New Jersey colleague, Senator Frank Lautenberg, are concerned the bribery accusations violate federal law. 

The Senate Commerce Committee Chairman Jay Rockefeller and Senator Barbara Boxer also called for federal investigations.  This comes on the day News Corp announced it is dropping a lucrative bid to take over satellite company BSkyB. 

And Murdoch‘s own paper, “The Wall Street Journal,” reported that News Corp is looking to sell its entire U.K. newspaper unit.  Joining me to explain what this means for Murdoch and News Corp is Elyse Hogue, and she is the senior adviser at Media Matters.  Great to have you with us tonight, Elyse.  Thank you. 

ELYSE HOGUE, MEDIA MATTERS:  Great to see you. 

SCHULTZ:  Will any of these investigations come to fruition?  Do you think that Congress will go down this road? 

HOGUE:  If you had told me two weeks ago that these senators and congress people would be calling for investigations, I would say, I hope you‘re right, but I‘m not sure. 

This story is gathering steam every day.  I think what the call of Representative King shows us is that even a media mogul like Murdoch has limits on his political influence.  If Americans are forced to choose between Rupert Murdoch and the families of 9/11 victims, the choice is clear. 

SCHULTZ:  How big a deal is it that Murdoch is actually thinking about selling off his newspapers?  That‘s his culture.  That‘s his family.  That‘s been his power? 

HOGUE:  I think it‘s an enormous deal, not only in terms of the

culture and the shape of the company, but in terms of his legacy.  I think

it raises a really significant question.  Should this guy actually be able

to call himself a newsman?  Look

, he has entertainment nailed.  Fox Entertainment is very, very profitable.  And Fox News is basically entertainment.  So I think what we‘re going to see is if he has to sell off the U.K. news outlets, the newspapers there.  The Australians have launched an investigation. 

If there is evidence of wrongdoing there in the newspapers and any evidence of wrongdoing here, this guy can‘t be trusted to run journalistic outlets. 

SCHULTZ:  How significant is it that Peter King—and he probably won‘t be the last conservative to step out and say this—obviously, Fox a big presence in New York.  Maybe he‘s the guy that‘s got to take the lead on this.  How significant is it that Peter King would go down this road and say the FBI should get involved? 

HOGUE:  I think it‘s hugely significant.  Look, whether or not we can prove the allegations about the 9/11 victims, we have to connect the dots.  The very same man who headed up “News of the World,” who was executive editor at the time all of this misdoing was going on, was then promoted by Rupert Murdoch to be CEO of Dow Jones, which controls “Wall Street Journal.” 

“News of the World” had stringers here.  “New York Post” has been under Murdoch‘s influence.  The allegations against the 9/11 victims should be the final point that we can wait no longer to investigate.  We cannot afford for this scandal to get as widespread and brutal as it has in the U.K. before we do our due diligence. 

I think Representative King, particularly because he‘s from New York and particularly he himself has wrapped himself up with the 911 families, saw the writing on the wall. 

SCHULTZ:  We had a big conversation in this country about the Patriot Act, and listening in on conversations and all the discussion about the legalities and the parameters and the guidelines of the FISA court. 

The Democrats were up in arms over that, very concerned about oversight.  The word oversight was the most used word on talk radio in America for about three months. 

HOGUE:  Absolutely. 

SCHULTZ:  Why aren‘t the Democrats going—why only just three Democrats going at this right now, when Fox has been not only the nemesis, but if they‘re listening in on conversations and wiretapping and doing such stuff as this, are the Democrats a little slow to the punch on this? 

HOGUE:  Well, you know, we feel like all of the lawmakers have been slow to the punch.  Again, this has been going on for five, six years in the U.K.  And all of the evidence pointed to the fact that Murdoch‘s influence was global.  Why weren‘t these practices global? 

Then again, after Senator Rockefeller came out last night, we have five senators, two Democratic Congress people already calling for investigations.  And we‘re just thinking it will start to snowball from here. 

You‘re absolutely right.  Americans do not even want to tolerate irresponsible privacy breaches with regard to national security.  The idea that the most powerful media man in the world could do it just to sell a newspaper is beyond reproach. 

SCHULTZ:  What does this mean for Roger Ailes?

HOGUE:  That is a great question.  And that is the question everyone wants answered.  You know, I think it‘s too soon to tell.  But one of the things we do know is that Ailes is not above this kind of behavior on his own.  He was caught misappropriating News Corp resources, on his own time, to have investigators from News Corp tail a small town newspaper editor that Ailes thought was bad mouthing him. 

Now Ailes is notoriously paranoid.  But the question we need to ask is why did nobody raise an eyebrow that he was using private investigators?  Is it because it was commonplace? 

SCHULTZ:  It‘s interesting how the conservative media is not paying too much attention to this story.  Elyse Hogue, thanks for joining us tonight from Media Matters. 

HOGUE:  Thank you, Ed. 

SCHULTZ:  This just in from Senator Lindsey Graham of South Carolina on the debt ceiling.  This quote will appear in the “New York Times” tomorrow.  The senator said “our problem is we made a big deal about this for three months.  How many Republicans have been on TV saying, I am not going to raise the debt limit?”

Mr. Graham included himself among those who have been talking to the media and basically lying when they said there is a debt ceiling crisis.  “We have no one to blame but ourselves,” is his quote. 

For those of you who have been watching this program, you know that we have been saying this is a made up crisis.  And now we have a Republican senator from South Carolina confirming it in the “New York Times” edition tomorrow? 

Much more on that tomorrow for sure. 

Congresswoman Michele Bachmann has spent the last two years telling Americans President Obama is destroying the country.  Now she‘s saying it‘s the president who‘s scaring the American people.  That‘s coming up in Psycho Talk next.

(COMMERCIAL BREAK)

SCHULTZ:  In Psycho Talk tonight, Congresswoman Michele Bachmann and her Tea Partying buddies, Louie Gohmert of Texas and Steve King of Iowa.  They got together today to hold a blockbuster psycho press conference.  The crazy club took to the microphone to weigh-in on the debt ceiling fight. 

Bachmann got right into her psycho groove, criticizing President Obama for saying the government may not be able to pay out Social Security checks if Republicans don‘t step up and lift the debt limit. 

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN ®, PRESIDENTIAL CANDIDATE:  We were all shock and appalled that President Obama dangled out in front of the cameras that senior citizens may not get their checks.  That‘s a very dangerous statement to make. 

We need to get our act together here in Washington, D.C., so that we‘re serving the American people, not scaring them. 

(END VIDEO CLIP)

SCHULTZ:  Michele Bachmann is accusing the president of scaring the American people?  This Michele Bachmann? 

(BEGIN VIDEO CLIP)

BACHMANN:  They used the U.S. Census information to rounds up the Japanese and put them in the internment camps. 

There are provisions for what I would call reeducation camps for young people. 

I want people in Minnesota armed and dangerous.  This has the potential of changing the dynamics of freedom forever.  So bureaucrats will decide if you get in to see a doctor. 

Now we‘ve moved into the realm of gangster government. 

Gangster government. 

That takes us to gangster government. 

The government has a pistol.  And they put a bullet in every chamber. 

And they want you to play a game of Russian Roulette. 

Turning our country into being a nation of slaves. 

(END VIDEO CLIP)

SCHULTZ:  Michele Bachmann has made a career out of dangerous statements.  For her to turn around and accuse the president of the United States of scaring the American people is reckless Psycho Talk. 

Coming up, the National Association of Free Clinics has helped thousands of people receive free health care at the clinics around the country.  We‘ll talk to a man who‘s donated his time to the organization.

(COMMERCIAL BREAK)

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

Just another reminder that MSNBC and THE ED SHOW are teaming up with the National Association of Free Clinics.  And let me tell you something, folks, these are great people.

Together, we will hold a clinic on August 29th, in New Orleans, Louisiana.  And it‘s only possible because of your help, your help in the past and your help this time as well.

The organization has previously held seven clinics.  Those clinics have helped thousands of folks get health care. 

To make a donation or to learn more about volunteering at the New Orleans clinic, visit their website at FreeClinics.US.  You can also text the word HEALTH to 50555 to make a 10 dollar donation by phone.  It would be greatly appreciated. 

I want to talk more about the volunteer effort.  Joining me now is retired schoolteacher Jim Conklin.  Jim is a free clinic volunteer, and will be meeting and greeting the folks at our upcoming free clinic in New Orleans. 

Thanks for your time tonight, Jim.  I appreciate it.  Why did you choose this organization and this event to help out? 

JIM CONKLIN, FREE CLINIC VOLUNTEER:  I chose this organization 18 months ago.  After Katrina, I volunteered with Habitat for Humanity.  And New Orleans became a special town to me.  The people of New Orleans became very special to me. 

And when I heard on MSNBC 18 months ago that there was going to be a health clinic in New Orleans.  I said to my wife, let‘s go back, and let‘s get involved with this. 

And when I went there, I met Nicole Lamoreaux and met the National Association of Free Clinics.  And I found my niche in retirement. 

SCHULTZ:  Well, they‘re great people.  And you have found that out.  But the people that come to these free clinics, what do you see, what do you hear, what do you learn? 

CONKLIN:  I‘ve seen the face of the underinsured and the uninsured.  I‘ve seen the face of unemployment.  I‘ve seen the face of poverty in America.  And I‘ve learned that the importance of keeping this discussion going cannot be overstated. 

SCHULTZ:  You don‘t have to have a medical background to be a volunteer.  I want our viewers to know that tonight.  If you‘re sitting at home wondering, how do you be a part of it, we‘ll give you that information. 

I‘ve seen these clinics.  I‘ve been to a number of them.  It‘s amazing the stories that unfold right in front of your eyes.  What kind of impact has this had on you, Jim? 

CONKLIN:  I shook a hand—the hand of a man in Washington, D.C. who told me that he had not seen a doctor in 30 years.  We are absolutely changing lives with what we do at the National Association of Free Clinics. 

SCHULTZ:  I remember being at some of them last year.  You‘ll run into people who are working two jobs just to keep their head above water.  They don‘t have health care.  They haven‘t seen a doctor in several years.  And they just want to go there to get their blood work done, to get their blood pressure done, to get some advice, to get a checkup.

And it‘s amazing what they find out.  And it‘s amazing how they are helped.  And I guess I have never seen Americans donate to something and then right in front of your eyes, have it be so rewarding. 

I mean, we have saved lives.  I have seen the National Association of Free Clinics save lives at these clinics.  And I‘m sure you‘ve seen the same thing. 

CONKLIN:  I saw in I forget which clinic, a man was getting an EKG and he was having a heart attack while the EKG was happening. 

I saw an appendicitis come in, that was happening while he came to our clinic.  We‘ve absolutely saved lives.  We‘ve saved lives on more than a few occasions. 

SCHULTZ:  No doubt.  Jim Conklin, thank you for joining us tonight.  And thank you for your volunteer effort.  Look forward to seeing you down in New Orleans. 

Once again, for more information about volunteering or making a donation, go to freeclinics.US.  You can also text the word HEALTH to the number 50555 to make a 10 dollar donation by phone.

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