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'The Last Word with Lawrence O'Donnell' for Monday, July 18, 2011

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Guests: Frank Rich, Robert Greenstein, Alex Wagner, Sarah Ellison

LAWRENCE O‘DONNELL, HOST: We‘re two weeks away from the deadline on the debt ceiling and hours away from question time for Rupert Murdoch in London.
CHUCK TODD, NBC NEWS: Just 15 days until default day.
UNIDENTIFIED FEMALE: A lot of hurdles for us to cover between now and then.
TAMRON HALL, MSNBC ANCHOR: Placing more blame on Republicans.
Republicans are still playing games with the debt.
TODD: One-track mind, two-track plan.
UNIDENTIFIED MALE: It‘s a charade.
TODD: The real action will be behind the scenes.
UNIDENTIFIED MALE: Republicans are dealing in a dream world.
ANDREA MITCHELL, NBC NEWS: Can wishing, rather, for a balanced budget make it happen?
JARED BERNSTEIN, ECONOMIST: I‘m not sure what planet they are living on.
UNIDENTIFIED FEMALE: I find this whole discussion irresponsible.
TODD: And the no tax man cometh.
UNIDENTIFIED MALE: They are terrified of Grover Norquist.
UNIDENTIFIED MALE: He says it‘s a good deal.
UNIDENTIFIED MALE: The teenage boy asks the same question on a prom date. But the answer is no, no.
O‘DONNELL (voice-over): And for once, Republican presidential candidates have money problems.
TODD: And big money, big problems?
UNIDENTIIFIED MALE: GOP fundraisers staying on the sidelines.
TODD: Mitt Romney, 70 percent I believe maxed out contributions.
UNIDENTIFIED FEMALE: So many donors maxed out.
UNIDENTIFIED MALE: Is Newt aware he‘s running for president?
UNIDENTIFIED MALE: Gingrich‘s campaign is $1 million in debt.
O‘DONNELL: And the arrests continue as the British police close in on Rupert Murdoch‘s media empire scandal.
UNIDENTIFIED MALE: Every day, we‘re seeing more inconceivable things happen.
UNDENTIFIED FEMALE: In the last 24 hours, there have been two high-level resignations.
UNIDENTIFIED MALE: London‘s top cop.
MITCHELL: The head of Scotland Yard resigned yesterday.
UNIDENTIFIED MALE: Rebekah Brooks was released on bail.
MITCHELL: Rupert Murdoch, meanwhile, is supposed to face the scandal head-on tomorrow.
UNIDENTIFIED FEMALE: All eyes will be trained on parliament tomorrow.
UNIDENTIFIED MALE: They‘re going to grill him.
UNIDENTIFIED MALE: Now we move to Britain‘s Prime Minister David Cameron.
MITCHELL: Is cutting short a trip today to South Africa.
UNIDENTIFIED MALE: Order! When is “Dodgy Dave” is going to do the decent thing and resign?
O‘DONNELL: Congress now has 15 days to pass a bill to raise the debt ceiling before the United States government goes into a catastrophic default on August 2nd. Today, Senate Majority Leader Harry Reid announced the Senate will meet every day until the debt ceiling is raised.
Yesterday, David Rogers of “Politico” discovered and reported that House Speaker John Boehner and Majority Leader Eric Cantor held a secret meeting with Barack Obama at the White House. A Republican leadership aide said, quote, “The lines of communication are being kept open, but there‘s nothing to report in terms of an agreement or progress.”
Tomorrow, the House Republicans will hold a vote on the Tea Party‘s
preferred solution to deficit reduction, the “cut, cap, and balance” bill -
a bill that would slash spending and make raising taxes even more impossible than it seems to be now.

The head of the nonpartisan Center on Budget and Policy Priorities, Bob Greenstein, described the “cut, cap, and balance” bill as, quote, “One of the most id logically extreme pieces of major budget legislation to come before Congress in years, if not decades. It would go a substantial way toward enshrining Grover Norquist‘s version of America into law.”
Bob Greenstein will join me later to explain exactly how extreme this Republican bill is.
The Obama administration recognizes the partisan vote on “cut, cap, and balance” for what it is, nothing but a one-day stunt that has no chance of becoming law, so the Obama administration are still talking positively about the possibility of raising the debt ceiling.
This morning, President Obama said he, and Republicans leaders were, quote, “making progress in the negotiations.”
And Treasury Secretary Tim Geithner said this on CNBC this morning.
TIMOTHY GEITHNER, TREASURY SECRETARY: You‘ve seen the leadership of the Republican Party in the Senate and the House definitively take default off the table as leverage for a deal, and that‘s encouraging.
O‘DONNELL: Geithner remains adamant that revenues be part of any deficit reduction deal.
GEITHNER: It‘s also going to require, through tax reform, some modest changes in revenues so that we‘re not sustaining tax breaks for the most fortunate 2 percent of Americans, tax breaks we can‘t afford. We need to have a balanced package. Everybody who‘s looked at this recognizes we needed to have a balanced package. There‘s been no deficit reduction deal in recent history that needed to have a balanced package with some revenues as part of the deal.
O‘DONNELL: Late last week, the White House released a video of President Obama that it hopes will help explain to liberal Obama supporters why he has been open as he has been to compromise with Republicans. The video shows the president speaking to a round table of college Democrats, Republicans, and independents in Boston at Tech Boston Academy in Dorchester.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If you‘re only talking to people who you agree with, then politics is always going to disappoint you. Politics will always disappoint you. You know, you know, you think about some of the issues we‘ve worked on over the last couple of years—you know, I think that the college Republicans here would say that I was a pretty liberal president, right? But if you read “The Huffington Post,” you‘d think I was, you know, some right wing tool of, you know, Wall Street, right?
Both things can‘t be true, but I think that what has to do with is the sense of, you know, we take, you know, we have a position and we can‘t compromise on it. And so, one of the challenges of this generation is, I think, to understand that the nature of our democracy and the nature of our politics is to marry principle to a political process that means you don‘t get 100 percent of what you want. You don‘t get it if you‘re the majority, you don‘t get it if you‘re in the minority, and you can—you can be honorable in politics, understanding that you‘re not going to get 100 percent of what you want.
And that‘s been our history. I mean, you know, you think about—you think about our greatest presidents, and the Abraham Lincoln, here‘s a guy who didn‘t believe in slavery, but his first priority was keeping the Union. And I have the Emancipation Proclamation hanging up in my office, and if you read through it, turns out that most of it—most of the document is those states and areas where the emancipation doesn‘t apply because those folks are allied with the Union so they can keep their slaves.
Think about that. That‘s Emancipation Proclamation, right?
So here you got a war-time president who‘s making a compromise around probably the greatest moral issue that the country ever faced because he understood that right now, my job is to win the war and to keep—to maintain the Union.
Well, you know, sort of “The Huffington Post” would have reported on that, right?
OBAMA: I mean, it would have been blistering, right? I mean think about it. Lincoln sells out slaves, right? There would be protests and a lot of third party guys. And so, I think as you guys talk to your friends about getting involved civically, don‘t set up a situation where you‘re guaranteed to be disappointed. That‘s part of the process of growing up.
You know, we all—and that doesn‘t mean you‘re not principled. It doesn‘t mean that you‘re not focused on driving around a particular position or a particular issue. It means that you‘re sort of pushing the boulder up the hill and you get it a certain way, and other people are pushing it. Sometimes it‘s going to slip back, right?
O‘DONNELL: Joining me now is Frank Rich, writer at large for “New York Magazine.”
Frank, that sounded like a pretty good tutorial on the politics of governing.
FRANK RICH, NEW YORK MAGAZINE: I agree, I think he‘s—I think he‘s entirely right on that. The problem I think that he has now is—in these protracted negotiations with these intransigent Republicans, he can‘t make the best case for himself, he‘s fighting on their turf about deficits.
And my own feeling is, yes, there has to be compromises, and everything he said is true. On the other hand, every day that Obama is not talking about jobs and is talking about cutting spending, he‘s hurting himself basically—not in a political sense, but in a real sense because people are suffering in this country.
O‘DONNELL: Frank, your debut piece in “New York Magazine” was about this issue, and about how the White House seems to have veered away from jobs as the driving issue. It‘s hard to track when you sit where I sit and watch this on a daily basis, how that kind of swerve happened.
Where do you think they lost their way?
RICH: I think they lost their way with health care. I‘m not talking about the merits of health care reform, which are enormous, but during that incredibly protracted discussion of health care, even the definition of the bill itself, jobs sort of fell by the wayside entirely. The Obama administration made not incorrect points that health care reform is tied to economic growth and in a sense to jobs, but those are sort of esoteric points and meanwhile, unemployment to climb.
There was a full year there on health care, and people were angry, and the anger was seized by the Tea Party movement during that hot summer, and I think that‘s where they dropped the ball.
They didn‘t even convene a nominal jobs council meeting until almost a year after the inauguration. When you think of the circumstances under which he entered the White House, that‘s just way tardy.
O‘DONNELL: And, Frank, I want to read a section of your piece, which I think sets the tone of the theme music for the Obama administration, if it was a movie or a TV series, and it‘s not a happy tone.
It‘s this, “What haunts the Obama administration is what still haunts the country, the stunning lack of accountability for the greed and misdeeds that brought America to its gravest financial crisis since the Great Depression. There has been no legal, moral, or financial reckoning for the most powerful wrongdoers.”
Expand on that, Frank.
RICH: Well, I think whether you‘re a Republican or Democrat, wherever you are on the political spectrum, unless, perhaps, if you work on Wall Street, you have to feel that the taxpayers stepped up to the plate in a bipartisan plan to rescue, essentially, the entities, the financial entities, that triggered this financial meltdown in 2008. Now, two or three years have passed, those people are having record profits, record bonuses, not a single banker has gone to jail, no one has been punished, reform has become weak and compromised.
And meanwhile, many of the taxpayers who helped foot the bill for saving them are on the ropes. Their homes are under water.
People are right to complain and to be angry, or at this point after such a long period of this, depressed and kind of a plague on all your houses with the political system, which I think is what we‘re seeing with the recent polls, particularly this week.
O‘DONNELL: And we saw today that the president could not choose Elizabeth Warren for the Consumer Protection Bureau that they established. But you say in your piece that he lost the battle over Elizabeth Warren long before this year.
RICH: He did. A lot of these fights should have been had before the so-called shellacking of the midterms, and there‘s been this kind of—you know, and I‘m hardly the first to say this—this tardiness, this slow response in terms of being proactive about things, whether it‘d be Elizabeth Warren or jobs or many other things we could list.
O‘DONNELL: And is that why the lesson he was trying to teach in that politics of governing seminar comes possibly a little late for the people he wants to hear it? Is that the administration‘s processes and responses and political instincts leading up to where we are now has disappointed that group enough that getting that lesson now is coming a little late?
RICH: Yes, it is coming a little late, although, I don‘t think it‘s necessarily tragically late, because once there is a Republican nominee and we assume there‘s going to be one, a Republican ticket, it may focus the president‘s base.
That said, I think a much, much bigger problem is not the tardiness of him saying that, but the tardiness still of focusing on jobs. The unemployment rate we know is going to be high when he runs, and when Election Day comes. And that‘s the lost time and that still isn‘t happening.
O‘DONNELL: Frank, before you go, I have to get a quick question in on Rupert Murdoch as having worked in New York media and the news media as long as you have and observed this scene for as long as you have—what are you hoping parliament asks him tomorrow?
RICH: Well, I think as many have said, this is almost in every way following the playbook of the Watergate scandal and we‘re in the sort of what did you know, what did James Murdoch know and when did you know it? I think the wheels are off of News Corporation. “The Wall Street Journal,” owned by Murdoch, with a editorial that I think shocked many because it blamed everyone else for their problems.
Only a week ago, Murdoch was saying we‘ve made a few tiny mistakes but everything—we‘ve handled the crisis times. Well, they haven‘t. And they got to find out what he knew.
I don‘t know what the penalty is for not telling the truth before parliament. But one would think he would be advised to tell the truth.
O‘DONNELL: Yes, “The Wall Street Journal” editorial today was amazing, because here it was trying to say, trying to hold itself up, as the great model of Murdoch property, us at “The Wall Street Journal,” aren‘t we great? And in the process, compromised himself completely with every paragraph.
RICH: Not only it blamed “The New York Times,” it blamed Paul Steiger, the very distinguished previous editor of pre-Murdoch editor of “The Wall Street Journal,” and ProPublica news organization that he runs. They are the problem. You know, we just didn‘t do a darn thing wrong.
O‘DONNELL: Right, and everybody does what those British newspapers are doing.
RICH: Everyone does it, but I took that editorial as not only being ridiculous on its face, but a sign of true panic that this virus is spreading to America and News Corporation, which is an American company, let‘s remember that, not British, really is facing some serious threats to its future now.
O‘DONNELL: Frank Rich, writer at large for “New York Magazine”—thank you very much for joining me tonight.
RICH: Thanks for having me.
O‘DONNELL: Coming up, a “News of the World” whistleblower is found dead as Rupert Murdoch prepares to appear before parliament.
And Rudy Giuliani says Rupert Murdoch is a honorable and honest man. And Rudy Giuliani said the same thing about a guy who‘s sitting in prison right now. That‘s in the “Rewrite.”
O‘DONNELL: Coming up, the latest developments in the “News of the World” scandal, why Rebekah Brooks was arrested yesterday and what they found in the trash today.
Plus, just how extreme is the Republican “cut, cap, and balance” plan for the budget? It makes the Ryan plan look reasonable. We‘ll break down this goofy legislative stuff, next.
O‘DONNELL: Reports now indicate that Congress is considering only two plans to raise the debt ceiling this week. One, a hopeless stunt that everyone knows is hopeless. The other, a last resort plan in which each side can claim some sort of victory.
Today, the president issued a rare Obama veto threat against the stunt House Republicans are calling the Cut, Cap, and Balance Act of 2011. It would cut fiscal 2012 spending by $111 billion, cap future federal spending at a fixed percentage of GDP, require Congress to pass a balanced budget amendment and send that amendment to the states for ratification before granting the president authority to raise the debt ceiling to $2.4 trillion.
The balanced budget amendment would also include a provision that any tax increase, any tax increase, must pass both chambers of Congress with a two-thirds super majority, rendering tax increases virtually impossible. House Republicans will vote on that bill tomorrow. It is expected to pass the House and then fail in the Democratic-controlled Senate.
Congress will then consider the last resort plan conceived by Senator Mitch McConnell, now known as the Reid-McConnell plan, which Harry Reid‘s involvement has made it the only bipartisan effort that‘s making any progress.
The Reid-McConnell plan would grant the president authority to raise the debt ceiling $2.5 trillion in three increments between now and the 2012 election. In each increment, Congress could vote on a resolution of disapproval of raising the debt ceiling. McConnell is hoping that that vote of disapproval, which would probably pass both in the House and the Senate will allow Republicans to blame the president for raising the debt ceiling, because all the president has to do to raise the debt ceiling is simply veto the disapproval resolution.
In McConnell‘s original draft of the plan, no spending cuts would be required. Now, they are negotiating the possibility of attaching a $1.5 trillion package of cuts to the Reid-McConnell plan and also creating a 12-member congressional committee to deliver deficit reduction recommendations to Congress by year‘s end.
Joining me now, the founder and president on the Center on Budget and Policy Priorities, Bob Greenstein. He is the recipient of the 2010 Moynihan Prize from the American Academy of Political and Social Science.
Thanks for joining me tonight, Bob.
O‘DONNELL: Walk me through cut, cap, and balance. I haven‘t studied it, Bob, because I don‘t spend a lot of time studying things that aren‘t going to—aren‘t going to become law.
GREENSTEIN: But it‘s very revealing, so the cut part has cuts so deep, so fast, starting October 1st, 75 days from now. They are so deep at a point when the economy is this weak that based on mainstream economic estimates, it would cost about 700,000 jobs in the fiscal year that starts October 1st.
The cap part is more severe than the cut part. The cap part would put a cap on the total amount of federal spending allowed each year for the next 10 years at precisely the level you get to if you do every one of the cuts in Paul Ryan‘s budget. It would lock in, it would effectively require future congresses and the president to do the Ryan budget in full with its Medicare, Medicaid, education, and other cuts.
And then the most extreme part is actually the balance part. As you mentioned a minute ago, it would hold the increase in the debt limit needed to avoid a default hostage to both houses of Congress by a 2/3 vote, passing an amendment to amend the U.S. Constitution to require for all time through the Constitution that federal spending be cut actually dramatically deeper than even the Ryan budget does and that it take 2/3 of the House and 2/3 of the Senate to pass any tax measure that raises revenue, including closing loopholes. So, you‘d need 51 votes, a majority in the Senate to 18 in the House to cut Social Security benefits or cut education or cut basic assistance for the poor or environmental protection.
But it would take 67 votes in the Senate and 290 in the House to close any tax loophole for any powerful individual, a corporation that ships jobs overseas, the corporate jets, the Wall Street traders, loophole where they pay lower tax at a lower rate than many upper income families do. All that would essentially become impossible to ever pass because you would never get 2/3 of the House and 2/3 of the Senate for any revenue measure.
So, it‘s designed to use the Constitution to—well, it‘s designed first, to blacken the Ryan budget, but over time to use the Constitution to lock in permanently the Grover Norquist/Tea Party vision of what this country should be.
O‘DONNELL: Bob, we‘ve seen this before where a party needs to cast a particularly partisan vote that has no chance of becoming law so that later, and in this instance, maybe very soon after, some of them at least can vote for something that is much less than that, some of them can vote for the McConnell-Reid version and then always hold up this other thing and say I wanted to do something much more extreme but they wouldn‘t let me.
What‘s striking about is how extreme they are willing to go in this kind of document, including what they would end up doing to Social Security and Medicare, they insist on their Website, oh, don‘t worry, this doesn‘t touch Social Security and Medicare, but you can‘t do that to the federal budget without affecting Social Security.
GREENSTEIN: For sure. Their budget cuts are so severe that the only way you could hit their targets and not hit Social Security and Medicare hard would be, you know, you basically are dismantling things from protecting the food supply to protecting the borders to, you know, running veterans hospitals, air traffic control, and the like.
Moreover, you know, Lawrence, as you know, we do have a long-term fiscal shortfall in Social Security we have to close and we need to do it through kind of a mix of revenue and other changes, benefit changes.
Under their proposal, you‘d have to do 100 percent of the Social Security solvency through benefit cuts because you wouldn‘t be allowed effectively to do any tax measures.
O‘DONNELL: Bob Greenstein, president of the Center on Budget and Policy Priorities, thank you very much for joining me tonight.
GREENSTEIN: My pleasure.
Still to come, a dramatic development in the Murdoch tabloid scandal:
a whistleblower in the case has been found dead.
Plus, Republican presidential candidates get a surprise. Why is the party of the wealthy having so much trouble raising money?
O‘DONNELL: Millions of school children across South Africa took time today to join the world-wide tributes for Nelson Mandela, who celebrated his 93rd birthday with his family, including his former wife, Winnie, his grandchildren and great grandchildren.
You will notice many of them are wearing shirts that read Nelson Mandela Day. That is the name of a project now in its third year, something you can be a part of. The idea is to take 67 minutes and do something—something that‘s going to help someone, 67 minutes in honor of the 67 years Mandela devoted to service of the people of South Africa, including his nearly three decades as a political prisoner.
Today, people across the world did their part, from planting gardens
and donating books in South Africa, to painting benches in New York‘s
Central Park. The choice of what to do is up to you, but if you‘re looking
for inspiration, you can read some ideas on our blog,
Up next, the Sarah Palin promotional video disguised as a documentary hit theaters this weekend. And you‘re not the only one who didn‘t see it.
And the real Republican candidates for president are struggling for cash. And Rudy Giuliani praises Rupert Murdoch, but not as much as he praised his former police commissioner who now lives in a federal prison. That‘s in the Rewrite.
O‘DONNELL: In the Spotlight tonight, Republicans find that their brand is failing to raise the kind of money it once did. Let‘s start with the opening weekend numbers for the “Undefeated,” a documentary that celebrates Sarah Palin. It turns out Sarah Palin is no match for Harry Potter. The Palin nonsense grossed 75,000 dollars. That‘s right, 75,000 dollars.
It averaged about 7,500 per screen. For a comparison of documentaries, Michael Moore‘s “Fahrenheit 911” averaged 27,558 dollars per screen on its first weekend.
We‘re also getting more information about presidential candidate Mitt Romney‘s fundraising numbers. Romney is currently leading all of his Republican rivals in fundraising, though badly trailing President Obama. Romney took in 18 million, versus the president‘s 46 minute, in the second quarter.
Most of Romney‘s money came from big donors on Wall Street, such as Goldman Sachs and Morgan Stanley. Seventy percent of those donors maxed out and cannot give another penny. Only six percent of his total came from donors giving less than 250,000 dollars; 47 percent of the president‘s total came from donors giving less than 250 dollars.
And in the latest quarterly reports, the FEC documents—in documents in which campaigns actually have to tell the truth about fundraising, we discover Mitt Romney‘s big lie. Remember back in May when Romney claimed to have raised 10 million in a one-day phone-a-thon? The political media was really impressed with that haul.
It‘s the kind of fact that makes them bet on Romney to win the Republican nomination. The truth? Turns out the lie Romney told that day was exactly 20 percent true. The campaign did not raise 10 million dollars that day. It raised only two million dollars.
So please rewind all those comments from pundits impressed with Romney‘s 10 million dollars in one day and see how their statements sound when the number turns out to be one fifth of that.
Former House Speaker and big spender Newt Gingrich ended the quarter over a million dollars in debt, without the campaign buying any jewelry at all. The Gingrich campaign owes nearly a million dollars for the use of private jets—owes a half a million dollars for the use of private jets. The name of the company Gingrich uses for renting private jets is—this is not a joke—Moby Dick Airways.
Joining me now is Alex Wagner, MSNBC analyst and social impact reporter for the “Huffington Post.” Alex, you‘re the only LAST WORD guest who could follow Moby Dick Airlines.
ALEX WAGNER, “THE HUFFINGTON POST”: It‘s quite a lead-in, Lawrence.
O‘DONNELL: Just go with it. You‘ve got three minutes on Moby Dick Airlines. When I say we talked to the owner of Moby Dick Airlines, of course I mean the staff of THE LAST WORD today. And we find out he bought the company in 2006, has no idea why it was named Moby Dick Airlines. He should maybe tonight be thinking of something more jet-like.
WAGNER: Yeah, there are a lot of question marks over the Gingrich campaign at this point. And Moby Dick Airlines, I think, is high up there, if not in the top five. I think overall, if we‘re talking about Republicans and fund raising prowess, I think one of the most telling metrics that was revealed today by the FEC in an analysis of those numbers was that only one in five of the top Republican donors who gave to the McCain campaign in 2008 gave to this current GOP—this current cycle of GOP fundraising.
What does that point to? We‘ve said it before and I‘m sure it will be said again. It‘s a hugely unsettled field. And for someone like Mitt Romney, whose basic—his candidacy is sort of predicated on the notion that he can make it rain. The fact that his numbers are nowhere near—they‘re not even close to where they were in the last election cycle—is cause for really consternation.
And to your point, Lawrence, the fact that, you know, 70 percent of these donors have maxed out means that, look, Republican fat cats that want to donate to his campaign are going to have to either do that through his PAC, Restore Our Future. Or they‘re just going to have to do it to the number of conservative leaning super PACs that have mushroomed up in this election cycle. But that doesn‘t necessarily help Romney in the primaries.
O‘DONNELL: Now, this kind of situation is bad for the people who are trying to get that establishment money, the McCain money, the people who are regular contributors to these campaigns. But it would seem to be good for Michele Bachmann, because it seems to me that she would be shaking a different money tree than the kind of McCain world of money, the Pawlenty, Romney world of money.
WAGNER: Sure. Michele Bachmann is someone in her 20010 reelect campaign, I think it was 90 percent of the 13.5 million that she raised came from small donors. It speaks to her appeal. She has a lot of grassroots support. She‘s really speaking to Evangelical conservatives, who feel like she‘s preaching a political gospel that no one else out there is.
But look, if we‘re looking at this in terms of the national race and the general election, President Obama is just far outpacing the Republicans. And it bears mentioning that yes, 47 percent of his fundraising and his alone came from small donations. But he also has a joint committee with the DNC that raised a fair share from top bunglers.
So he basically has both sides of the coin. And short of rolling Mitt Romney and Michele Bachmann up like Tur-Ducken and creating one candidate - - I mean, you have two very opposite—their strengths are at the opposite ends of the spectrum.
O‘DONNELL: Alex Wagner of the “Huffington Post,” who has never flown on Moby Dick Airlines.
WAGNER: Never say never, Lawrence.
O‘DONNELL: You knew it was coming again, Alex. Thanks very much for joining me tonight, Alex.
WAGNER: Thanks, Lawrence.
O‘DONNELL: Rupert Murdoch‘s biggest crisis just keeps growing, after the arrest of his former British newspaper chief, Rebekah Brooks. Someone who spoke out about the hacking scandal is dead. That‘s ahead.
But up next in the Rewrite, Rudy Giuliani tells us that Murdoch is an honest man, which is exactly what Giuliani said about Bernard Kerik before Kerik went to prison.
O‘DONNELL: Time for tonight‘s Rewrite. Rupert Murdoch has a character witness.
RUDY GIULIANI ®, PRESIDENTIAL CANDIDATE: He‘s a very honorable, honest man. This can‘t be something he would have anything to do with.
O‘DONNELL: Well, that wraps it up, I guess, case closed. I mean, a former U.S. attorney comes out and says you‘re clean, you‘re clean, right? Let‘s see the rest of that interview about Murdoch.
CANDY CROWLEY, CNN ANCHOR: As you know, “News of the World,” owned by Rupert Murdoch, who has been a friend and supporter of yours for a long time, there are now allegations that News Corp journalists or those working for News Corp tried to hack into the answering machines or the phones of 9/11 victims or their families.
Should there be an investigation?
GIULIANI: Well, there is an investigation. I‘m sure. Intercepting communications like that is a crime. It has to be investigated.
I think what there shouldn‘t be—and we‘ve learned recently with a bunch of criminal cases of different kinds, don‘t rush to judgment, give people the presumption of innocence. I think that just how high up it goes is a big question. And it‘s one we shouldn‘t be jumping to conclusions about.
CROWLEY: Have you spoken to Mr. Murdoch?
GIULIANI: No, not in the last couple of weeks.
CROWLEY: Are you confident knowing him --
GIULIANI: I will probably see him at some point in the next couple of days or weeks. I see him all time at various functions.
CROWLEY: Are you confident enough in him?
GIULIANI: Oh, Gosh yes. He‘s a very honorable, honest man. This can‘t be something that he‘d have anything to do with.
O‘DONNELL: OK, here‘s why Giuliani is not Murdoch‘s greatest character witness. Number one, Giuliani, like most Republican politicians in New York, has been in Murdoch‘s pocket for years. I‘ve seen this up close back in my days working in New York politics. And I can tell you the New York Republican relationship to Murdoch is as ugly as you‘d imagine it to be.
Now you might expect Giuliani to be a little more—I don‘t know—animated, about the criminal exploitation of 9/11 victims. He is the biggest political exploiter of 9/11 we‘ve ever seen, trying to base a hopeless and ridiculous presidential campaign on the simple fact that he was mayor of New York City during 9/11.
The accusations that the FBI is now investigating involve hacking into phones of the families of 9/11 victims in New York City. If the investigation follows a similar pattern to what we‘ve seen in London, it will include examining the possibility of criminal involvement of the police at the highest level.
In this instance, the New York City Police and the New York City Police Commissioner. The New York City Police Commissioner at the time in question was Bernard Kerik, Giuliani‘s personal choice to be police commissioner. He certainly was no one else‘s choice to be police commissioner.
There have been fewer New York City police commissioners than there have been presidents of the United States. It is the single most prestigious police appointment in the country. And Rudy Giuliani decided to give it to his former chauffeur, an utterly unqualified high school drop out.
How corruptible was Bernie Kerik? He‘s spending tonight in the Cumberland Correctional Institution in Cumberland, Maryland, serving his sentence for eight felony charges, including tax fraud and lying to White House officials. Bernie Kerik was also a tool of Rupert Murdoch. Nothing would stop Bernie Kerik from doing anything Murdoch or his lieutenants wanted him to do.
Bernie Kerik was and is a criminal. And he was Rudy Giuliani‘s choice to be the police commissioner of the city of New York. There is no doubt tonight that Bernie Kerik is at the top of the list of people the FBI is going to want to interview in the investigation into what exactly Murdoch‘s phone hackers may have done to the families of 9/11 victims in New York City.
And if the FBI can find any dirt on Bernie Kerik in this case, then Kerik will crack and tell them everything he knows about Rupert Murdoch and his empire. If Murdoch needs Kerik to stay quiet, then he needs to find a way to get the word to Bernie that Murdoch can do more for him in whatever is left of his future than the FBI can.
Murdoch and his New York team know how weak Bernie Kerik is. If they have to count on him to keep their secrets, they must be very, very worried tonight.
GIULIANI: My choice ultimately was and is Bernie Kerik. Bernie is a
has been an exceptional commissioner of the Department of Corrections.
He understands the job of being a police officer. Most importantly, he understands the job of being a leader. And he brings a quality of leadership that I believe can give us the opportunity to build on a record that is a very, very difficult one to match.
O‘DONNELL: It is Tuesday in London, and Rupert Murdoch is now just hours away from testifying to the British parliament. And “Bloomberg News” is now reporting that the News Corp board is considering elevating COO Chase Carrie to CEO to succeed Rupert Murdoch, if necessary. The outline of the Murdoch media empire‘s pattern of criminal conduct expands, as the phone hacking scandal just keeps growing and the arrests and resignations keep coming.
Assistant Police Commissioner John Yates resigned from his position today, following criticism of his refusal to reopen the phone hacking investigation in 2009. Yates is reported to have spent just eight hours reviewing 11,000 pages of evidence.
His resignation came as British police confirmed today that a second former “News of the World” employee was employed by Scotland Yard, while the editor of the Irish edition of “News of the World,” Alex Morinchuck (ph), was also employed by police as a Ukraine interpreter, with access to highly sensitive police information between 1980 and 2000.
Yesterday, it was revealed that former “News of the World” executive Neal Wallace worked as a public relations advisor to the police department. That news forced Britain‘s top cop, Sir Paul Stevenson, to announce his resignation as police commissioner.
Former News International CEO Rebekah Brooks made more news today when detectives found a computer, paperwork, and a phone in a trash bin near her home. Her husband claims a cleaner must have mistaken it for trash and put it in the bin.
Rebekah Brooks was arrested and questioned for nine hours Sunday, but no charges have been filed as of yet. Brooks, who resigned from her post Friday, is also scheduled to testify with Murdoch and his son James before parliament.
And in a bizarre and cinematic twist, scandal whistle blower Sean Hoare was found dead in his home today. The former “News of the World” reporter was the first named journalist to allege former editor Andy Coulson was aware of phone hacking by his staff.
Andy Coulson, of course, being the then “News of the World” editor who went on to work for Prime Minister David Cameron.
Joining me now, Sarah Ellison, contributing editor at “Vanity Fair,” and author of “War at the Wall Street Journal.”
Sarah, “The Wall Street Journal” today wrote a very defensive editorial for the whole Bloomberg—the whole Murdoch empire. How did you read that editorial?
SARAH ELLISON, “VANITY FAIR”: Well, I was sort of surprised that they took such a defensive stance, given that “The Wall Street Journal” doesn‘t have anything to explain at this point, and it‘s not really the edit page‘s role, in my view, to defend its corporate parent. So I thought that was actually something—after having spent so many years at “The Wall Street Journal”—that was unnecessarily putting the reputation of “The Wall Street Journal” on the line, given everything that‘s been going on outside “The Wall Street” and the rest of News Corporation, at the “News of the World” and in other parts of the company.
O‘DONNELL: What do you make of this Bloomberg report that they are actually making plans for what happens if Rupert Murdoch cannot remain in his position?
ELLISON: I think that is one of the many unthinkable things that has become very thinkable lately. It used to be that Rupert Murdoch and News Corporation were very much one in the same. No one could imagine the company without him. I think now the fact that members of the board are questioning his judgment and his handling of this affair are very much part of the whole puncturing of the myth of Rupert Murdoch that we‘ve seen going on for the past two weeks.
And I think it really is part of the broader question of whether or not he has the kind of judgment that‘s necessary to lead the company into the future, which is again one of those things you never thought you‘d be saying about somebody like Rupert Murdoch.
O‘DONNELL: Are there members of his board who would be willing to take an action against him?
ELLISON: Well, it‘s been a very captive board for a long time.
They‘ve all pretty much fallen into line with exactly what he wants to do. But we‘ve heard recently people like Tom Perkins have raised question about his judgment. I think that the reputation crisis is so bad at the company right now that people realize they have to take some kind of action, because it‘s either their own personal reputation on the line or that of Rupert Murdoch and News Corp.
So you have people like Joel Kline who are now over there working for News Corp trying to contain this scandal. If they don‘t do that, it‘s their credibility that‘s going to be shot too.
O‘DONNELL: Sarah Ellison, thank you very much for joining me tonight.
ELLISON: Thank you.
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