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'The Last Word with Lawrence O'Donnell' for Thursday, July 28, 2011

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Guests: Jay Carney, Sen. Charles Schumer, Howard Fineman, Sam Stein, Ezra Klein

LAWRENCE O‘DONNELL, HOST: Obviously not ready—the House speaker—the Speaker of the House John Boehner delayed bringing his bill to the floor because he doesn‘t have the votes to pass it. Not yet, anyway. That‘s why “The New York Post” headline behind me says what it says.
White House Press Secretary Jay Carney and Chuck Schumer are here to explain what happens next.
(BEGIN VIDEOTAPE)
(MUSIC)
SEN. HARRY REID (D-NV), MAJORITY LEADER: As soon as the House completes its vote, the Senate will move to take up that message that they sent to us.
REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Let‘s pass this bill.
REID: It will be defeated.
REP. NANCY PELOSI (D-CA), SPEAKER OF THE HOUSE: The Boehner bill will not pass.
O‘DONNELL (voice-over): Win, lose, or drawing board. There‘s still no deal.
BOEHNER: We have a reasonable, responsible bill.
REP. STENY HOYER ®, MARYLAND: I predict there will be no Democrat for this bill.
PELOSI: Pulls the plug on progress.
UNIDENTIFIED FEMALE: Height of irresponsibility.
UNIDENTIFIED MALE: Why don‘t we just not pay members of Congress and their staffs?
O‘DONNELL: But there‘s still the Tea Party.
UNIDENTIFIED MALE: The Tea Party members are creating the economic downfall of the U.S. government.
REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: The people say “Michele, stand strong.” “Michele, don‘t cave.” I will vote against any proposal.
UNIDENTIFIED MALE: Their only mantra seems to be wanting to bring President Obama down.
BACHMANN: I‘m not fooled by President Obama‘s math.
(END VIDEOTAPE)
O‘DONNELL: House Republican leadership has delayed tonight‘s vote on the revised budget control act because they do not have the votes needed to pass that bill. Speaker Boehner is desperately trying to secure the votes of the Tea Party caucus, who, of course, do not believe that the bill cuts spending nearly enough. Boehner also finds himself working against right-wing groups like the Heritage Foundation, Club for Growth, and FreedomWorks, who oppose the Boehner bill.
The Boehner bill would raise the debt ceiling by $900 billion, and offset that with $917 billion in spending cuts over 10 years. It sets up another vote on raising the debt ceiling by another $1.6 trillion sometime next year. The president is strongly opposed to a two-step process to raising the debt ceiling.
If the Boehner bill passes, it heads to the Senate, where the Boehner bill‘s great adventure will come to an end. Senate Democratic Leader Harry Reid has the signed commitment of 53 Senate votes against the Boehner bill. Majority Leader Reid‘s spokesman tweeted, “Boehner‘s bill dies tonight forever.”
Republican senior strategist Rush Limbaugh is worried that the Democrats will find a way to use the Boehner bill to make the Republicans look bad once again.
(BEGIN VIDEO CLIP)
RUSH LIMBAUGH, RADIO TALK SHOW HOST: It will go to the Senate where it will immediately be pronounced dead on arrival, and then Dingy Harry will say, “But there‘s enough here, you know what, we can work with this. We didn‘t really realize all that was in this. There‘s some stuff in here, yeah, yeah.” So Reid will say, “We‘ll start plugging things from my bill into this and maybe I can get some Democrat votes on it after all.”
And then miraculously, the “Prince of Compromise,” Harry Reid, steals the day by compromising with just an outrageous dead on arrival bill, gets lots of credit for hard work and rolling up sleeves and that magic compromise and then sends it back to the House. OK, Republicans, ball‘s back in your court. Here‘s your bill with a few modifications.
(END VIDEO CLIP)
O‘DONNELL: I know. It is very difficult to make sense of what you‘re hearing, but it is Rush Limbaugh‘s strategic thinking at its very best.
(BEGIN VIDEO CLIP)
LIMBAUGH: The problem then becomes Republicans refuse to compromise, which is what the Democrats want all along. Meanwhile, the Republicans think, by dumping this thing in Reid‘s lap, that the Democrats are going to end up looking like they don‘t compromise. Democrats are a step or two ahead here.
(END VIDEO CLIP)
O‘DONNELL: Joining me now in THE LAST WORD exclusive interview, White House Press Secretary Jay Carney.
Thank you very much for joining me tonight, Jay.
JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Lawrence, thanks for having me.
O‘DONNELL: Jay, I share a bit of Rush Limbaugh‘s long-term confusion here about what it is the Democrats really want.
The administration started off wanting a clean debt ceiling increase at the beginning of this whole saga, a one-page bill, one sentence, the standard, which has been done countless times by Congress. You then found yourselves negotiating the biggest deficit reduction package in history—which every one of these packages would be, the $4 trillion, the $2 trillion, any one of them.
How did we get to the point where the administration thought just raising the debt ceiling clean is the best way to do this—the traditional way to do this—to where we are now, which is how big a deficit reduction package should accompany it?
CARNEY: Well, as I think the speaker of the House is discovering tonight and is the reality that we all live with here in Washington, Lawrence, which is that this is a divided government, a two-party system—nobody gets entirely what he or she wants.
And, yes, if we had been doing this in the normal way, as has been historically done, there would have been a clean debt ceiling vote, which has traditionally been an unpleasant vote often for members of Congress, but routine and noncontroversial and certainly not tied to any kind of deficit reduction package or any other measure for that matter.
What happened is, is that the speaker of the House made clear that—and Republicans in general—that they were linking the willingness to raise the debt ceiling to significant deficit reduction. As you know, for a long time, we rejected the link. But because we believe we need to reduce our deficits and get our debt under control, we also worked concurrently as we move through the spring and into the summer on proposals to do just that: reduce our deficit and lower—or get control over our debt.
Now, we‘re in a situation where, you know, these have become inextricably linked. And we don‘t have an alternative because our primary objective is to protect the economy, to protect the American people. We need to raise the debt ceiling. We need to remove the cloud that‘s over—hanging over our economy right now. And we need to reduce our deficit.
So, I couldn‘t really make out everything that Mr. Limbaugh was saying, but I do think that there is an opportunity here that once the Boehner bill is—either passes or doesn‘t tonight in the House, but dies in the Senate, that we can then move on toward finding a compromise, which is exactly what the American people want us to do.
O‘DONNELL: I couldn‘t make out exactly what Rush was saying either, Jay. I played it just so people could see how this situation is driving people crazy, who can normally follow the general shape of what‘s going on. I think you‘ve left Rush completely confused as the whole process has.
CARNEY: Well, I was going to say, Lawrence, it‘s a confusing process. And that‘s part of—one of the reasons why we are so insistent that we cannot link the further raising of the debt ceiling to more spending cuts, just four, five, six months down the road, is because the circus we‘re witnessing now would just be repeated, causing more problems for the economy, a darker cloud hanging over our economic future, more threats of going into default—which means lower growth, higher interest rates, and fewer jobs.
The American people don‘t want that. They want Washington to work.
They are fed up with this kind of partisan stuff. They want compromise.
O‘DONNELL: Jay, as you know, there is question out about exactly how insistent the president is and how insistent is he about what. There is nothing that clarifies presidential insistence more than a veto, either a veto threat that is specific or the actual issuance of a veto.
How insistent is the president on a single debt ceiling increase? Will he veto any bill that does not raise the debt ceiling to a level that gets us through 2012?
CARNEY: What I will say is that we have been absolutely clear, the president, I, and others, have been very clear what we are insisting on here. We‘re very clear about our opposition, to the Boehner bill, which will never get to his desk. But insistent on why we need to raise the debt ceiling, extend our borrowing capacity, so that we can pay bills that have already been rung up, and move forward with addressing our other economic problems.
You know, hypotheticals aren‘t worth getting into. One other thing is I have said from the podium that if we are on the—you know, in the closing stages of reaching an agreement, you could imagine a situation where for one or two days, perhaps, you would allow for an extension of the debt ceiling. But there is no two or three or five-month measure or anything that would bring us—revisit the need to raise the debt ceiling in 2012. That‘s unacceptable, not for a political reason, Lawrence, because I think it‘s pretty clear as a political matter, the public is very much with us in our approach to this, but for economic reasons.
This is terrible for the economy. We‘re seeing it in clear ways now, and it will only get worse if we continue playing these games.
O‘DONNELL: Jay, the president has taken months to make the case for what he calls the balanced approach, which is deficit reduction that includes spending cuts and tax revenue increases. He made that case at length Monday night in his speech to the nation. But at the same time, it seems the administration is accepting the Harry Reid plan as a possible way to go here, which includes no tax revenue increases. After all of this arguing for the balanced approach that includes tax revenue increases, is the president now prepared to sign a deficit reduction bill that has no tax revenue increases?
CARNEY: Well, Lawrence, what we have said all along, even before these final stages here, is that we believe—the president believes that we should be reaching for the best—biggest possible deal that achieves the most significant deficit reduction, and the $3 trillion to $4 trillion range over 10 years. That has always been his goal. And to reach that, you need a balanced approach.
We are also realistic. That grand bargain if you will is still on the table—the one that the speaker of the House walked away from. And while often Republicans don‘t like to admit it, they came very close to an agreement. And that agreement is still available.
Now, if we are not able to achieve that in the next several days, we still need—we have no other alternative, we have to take action to ensure that we do not default. And we have to take action to reduce our deficit because that is also a very positive thing. And there are cuts that we can agree on.
The measure that Senator Reid has put forward includes within it a mechanism by which a joint committee would go to work right away, examining ways that we can reduce our deficit further through tax reform, including revenue, and through entitlement reform.
The very issues that are the toughest ones that were the focus of the negotiations between the speaker of the House and the president of the United States. We would want to push forward on that.
Whatever agreement we get that removes this cloud from our economy for the foreseeable future will not be enough—will not be the only thing we will do to address the need to reduce our deficits in a responsible way and to get our long-term debt under control. We‘ll keep pushing that. And that will include revenue.
O‘DONNELL: Jay, nothing could add clarity to this process more than a set of possible presidential veto points. Is there anything you see that you could—that the White House is prepared to say that is within the realm of what‘s moving in Congress, that the president would veto—if you could lay down any veto markers tonight in any legislation that‘s moving out there?
CARNEY: Lawrence, we‘ve already said that the White House chief of staff made clear that—or he said, rather, on Sunday that the president would veto the Boehner bill. There was this formal thing you‘re familiar with called a statement of administration policy that we put out a day or two ago that said with regards to that measure, that the senior advisers to the president recommended that he would veto it.
All of that is moot, because whether it passes or not tonight in the House, and we‘ve been working under the assumption that it will pass, totally partisan success, but will pass the House that, it dies in the Senate. There are already, as you said in the beginning of the show, 53 -- all Democratic senators have said they would not support the Boehner measure, and Republican senators who have said they would not support it.
So, it‘s—you know, the relevance, if you will. And what we now have to do, once we go through this political sideshow, we need to get to the business of finding a compromise that can garner Democratic and Republican votes. And pass both chambers and be signed into law by this president.
And there‘s an easy—there are avenues for compromise here. And we believe that if we can‘t achieve the grand bargain in the next five days that Senator Reid‘s measure is a good thing to start with to find compromise.
O‘DONNELL: Jay, as we approach midnight on Monday night, if we can‘t achieve a grand bargain or a little bargain or a bargain of any size on any version of deficit reduction, will the president demand that Congress send him on Monday night toward midnight a one-sentence, one-page bill as it has done many, many times, as Congress knows how to do—in minutes through both bodies, will the president demand the one-page, one-sentence clean debt ceiling increase on Monday night?
CARNEY: Well, you know, the way these hours and days have been progressing, Lawrence, I can‘t even imagine with that kind of specificity what that night will look like. But I don‘t think it will look like that.
We believe still that in the end, and we‘re getting towards the end—but in the end, cooler heads will prevail. Sanity will prevail in the United States Congress. And they will reach a compromise that is acceptable to a majority of folks in the House, to a majority in the Senate, a mix of Republicans and Democrats, which is required to get anything big done, and that can meet the approval of the president of the United States. And that is what the American people want.
If there is any lesson that we have learned through this process, it is that by overwhelming majorities, the American people, Democrats, independents, and Republicans want compromise. They do not want their politicians to do—to take absolutist positions.
O‘DONNELL: White House Press Secretary Jay Carney—thank you very much for joining me tonight.
CARNEY: Thank you, Lawrence.
O‘DONNELL: Coming up next, the Senate watches and waits as John Boehner tries to get the votes together in the House. Senator Chuck Schumer of New York joins me.
And who wins and who loses as the negotiations drag into the night and the weekend?
(COMMERCIAL BREAK)
O‘DONNELL: That‘s our favorite “New York Post” headline since Anthony Weiner was in Congress.
Coming up, if the Republicans were really worried about deficit reduction, there‘s a very simply way to do it. But that is not what the Republicans really want to do. Ezra Klein will explain.
And the senate‘s straight-talking John McCain becomes double talking John McCain as soon as he goes on FOX News. That‘s in “The Rewrite.”
(COMMERCIAL BREAK)
O‘DONNELL: We‘re continuing our breaking news coverage of tonight‘s events on Capitol Hill.
I‘m joined now by Democratic Senator Chuck Schumer of New York.
Thank you very much for joining me tonight, Senator.
SEN. CHUCK SCHUMER (D), NEW YORK: Good morning, Lawrence.
O‘DONNELL: Senator, earlier today
SCHUMER: Good evening, Lawrence. It feels like morning, the next morning.
O‘DONNELL: I know. I know what those hours are like down there.
Earlier today you said publicly that you had the feeling that John Boehner had the votes. You worked in the House of Representatives. You‘re experienced about how these votes get put together. This is extraordinary having to delay a vote, usually as you know, the speaker has this lined up well in advance.
What do you think is going on over there? Well, obviously, the hard right people in his caucus are resisting. I hear amazingly enough one of the things they don‘t like is the Boehner bill plusses Pell grants—allows Pell grants to go forward, helping kids go to college. I mean, if most Americans knew exactly what was going on in that Republican caucus, they‘d be amazed. They‘d say, “They don‘t represent me.”
O‘DONNELL: Senator, at the same time, you Democrats are contemplating the single biggest deficit reduction package ever passed by Congress, in even Harry Reid‘s version of it. And yet, this is being put together without any hearings, without any real evaluation that the public has any chance to look over your shoulders.
That‘s no way to do giant packages like this, is it?
SCHUMER: Well, it shouldn‘t be. And what we should have done right from the get-go is done what has been done I believe it is 39 times in the past, which is raise the debt ceiling. But this is the first time we‘ve had a group of people, it‘s not a majority of the House, it‘s not a majority of the Congress, not a majority of the American people, but a small group of hard right people who are demanding certain things be done before they raise the debt ceiling.
And we have realized, of course, the election did say cut and remove waste from the budget. But it didn‘t say—it didn‘t say hold America hostage.
You know, what‘s happening over there, Lawrence, is very simple. The speaker continues to throw piece after piece after piece of red meat to the hard right lion that‘s controlling his caucus. It‘s about time he started timing the lion. That‘s what speakers are supposed to do.
But you have a small group of people who are way at the extreme who are dominating the process. And that‘s just hurting everybody.
But I have a message for them. And I have a message for all of the Republicans, whether they be in the House or Senate: we will not agree to a short-term deal and go through this again in another three or four months. We absolutely will not.
You know, they think that if they just throw us this short-term proposal that we‘ll accept it. Well, that‘s not what‘s going to happen. Fifty-three Democrats already sent a letter saying we‘re not going to vote for the short-term deal. And what will happen at the end of the day is Harry Reid‘s proposal, which is more balanced and more reasonable and certainly gets us past 2012, will be the last piece of legislation on the floor of the Senate.
It will be the last train leaving the station. And a yes or no vote on that proposal will be a yes or no vote on whether you want America to default. That‘s going to happen over the next several days. And I hope my Republican colleagues will think twice about voting against it.
O‘DONNELL: Well, Senator, that last proposal strategy is always the way the debt ceiling has gotten raised in the past when it‘s under pressure, is we‘re going to bring up the bill that can do it so late in the game that it‘s too dangerous to block it or we‘ll go into default. If the Reid bill was blocked, there would presumably still be time on the clocks are since it only takes minutes, to bring up the one-page, one-sentence version of the debt ceiling that we have used so many times—in fact, that‘s the way it‘s been raised more times than any other way. And that could be run through the House and the Senate, if we get to that panic moment, and every other bill has been rejected.
SCHUMER: Well, of course, by Senate procedures, it couldn‘t be brought up that quickly, as you know.
But here is the bottom line. The president feels very strongly about this. Senate Democrats to a person feel very strongly about this. And we believe that the Reid bill will be the final train leaving the station.
And here‘s what else I believe. That some of my Republican colleagues in the Senate who have really shown an understanding that defaulting would be a disgrace will join us. We‘re waiting for Senator McConnell to start taking more of a prominent role. He showed by what he did two weeks ago that he realizes the danger of default, both politically and substantively, and he has to step up to the plate as well.
O‘DONNELL: Chuck Schumer, the senior senator from New York. Thank you very much for joining me tonight.
SCHUMER: Nice to talk to you, Lawrence.
O‘DONNELL: Coming up: who‘s winning, who‘s losing, and who‘s staying under the radar at this point in the negotiation. Howard Fineman and Sam Stein both of “The Huffington Post” are my guests.
And this debt ceiling fight is not about the deficit or the debt. It has never been about deficit or the debt. It has all about starving the beast, reducing the size of government, and reversing the last century of progress.
(COMMERCIAL BREAK)
O‘DONNELL: Still to come tonight—oh, wait. Is it—it‘s still there. I don‘t know. We can‘t seem to get this “New York Post” headline out of the monitor. We‘ll work on that.
Right now, the speaker is trying to drum up the votes to pass his bill. Howard Fineman and Sam Stein join me with the latest.
And courageous war hero John McCain retreats when faced with the overwhelming force of Sean Hannity. That‘s in “The Rewrite.”
(COMMERCIAL BREAK)
O‘DONNELL: In the Spotlight tonight, Team Huffington is here to tell us who‘s winning, who‘s losing, and what happens next. Joining me now is MSNBC political analyst Howard Fineman, editorial director at “the Huffington Post,” and Sam Stein, political editor and reporter at “the Huffington Post.”
Howard, you‘re in the Capital. It‘s all happening around you. Where are we? What‘s going on?
HOWARD FINEMAN, “THE HUFFINGTON POST: Well, it takes two reporters from “the Huffington Post,” Lawrence, to cover the fact that absolutely nothing is happening right this—at this very minute, at least publicly. You know, behind closed doors, John Boehner—and big crowds of reporters have been outside his office for hours, looking to see people coming in and, you know, see whether they have had their rear ends realigned by John Boehner, as they try to get the votes that they need.
This is crucial, because if Boehner can pass the Republican plan in the House, they will at least—that is the Republicans—will at least be able to say, hey, we put something in the table. And in the physics of blame, and in the last phases of negotiations, that would mean something.
But he‘s having a terrible time getting the votes. I just talked to one Tea Party guy who said, look, if not me, when? If not us, you know, who? The way the Tea Party people view it, they are sort of like the guy in Tiananmen Square standing in front of the tank of run away deficit and debt. And they‘ll be darned if they are going to go along with Boehner.
And that‘s the problem that Boehner is having, person by person, as he tries to round up the votes.
O‘DONNELL: Sam, as we all know the truth of how governing is done in Washington, is that when nothing seems to be happening to us, or nothing is happening in front of our cameras, that‘s when something interesting is happening, because it all happens in the room behind closed doors.
Sam, I want to go to you on the issue—there‘s a group that has not been heard from lately at all. And that is House Democrats. They are the ignored force in this dynamic. What are they feeling as they watch the president reach out and accept the possibility of a Reid bill moving that has absolutely no balancing tax revenue in it to balance the spending cuts?
The debate seems to move and shift every day in a way that doesn‘t ever consult with House Democrats.
SAM STEIN, “THE HUFFINGTON POST”: Yeah. And it‘s ironic, because in the end, they‘re—or a portion of that caucus will end up making the deciding vote in all likelihood. One of the points that‘s worth—we don‘t want to lose this because this is probably the overwhelming point, which is that while the Democrats may seem poised to win this last-minute standoff with John Boehner—and he‘s having all these troubles with members of his own party—in the broader theme, in the broader war, it‘s very much a war drawn on Republican turf.
And regardless of what actually gets passed, it‘s going to be a bill that slashes about one trillion dollars, plus or minus three hundred billion, from the government spending roles in the next 10 years. It is going to be a bill with no revenues in it. It will be a bill that if you‘re Keynesian economics, or just a general economic observer, you would think would actually hinder the recovery effort.
So let‘s not—let‘s not overplay the Democratic victory that seems possibly at hands at the last moment here, because this legislation is very much a Republican drawn bill.
O‘DONNELL: Well, I for one cannot see any Democratic victory in them legislating the biggest deficit reduction package in history with no tax revenue in it, and without ever having had a public hearing on any of the contents of it.
Howard, to that point, how would the president explain accepting a bill, if he chose to do that, that had no tax revenue in it, after going to the American people this week to talk essentially about nothing else? The need for what he called the balanced approach?
FINEMAN: Well, that speech that he gave, Lawrence, was really about positioning himself for saying, hey, here‘s what I had wanted to do, but I couldn‘t do it. The problem that the president has—and Sam kind of alluded to it—is that repeatedly he has given ground on the question of revenues, on the question of the types of budget cuts and so forth.
Not just in this negotiation, but look back. He‘s given away the store on tax cuts, on the Bush era tax cuts now a couple of times. And he had a hard time defending that position here. And that‘s why, as Sam says, as dramatic as this thing is here tonight with Boehner—and it‘s a test of Boehner and whether the Tea Party will go along, et cetera—this is all the Republicans‘ argument right now.
O‘DONNELL: Sam, it seems to me there is—there may well be an opportune moment somewhere in this process for the president to actually issue some specific veto threats. There is nothing that strengthens the image of a president more clearly than saying, this is what I will not accept. It is also an absolutely necessary guide post for legislating.
Knowing what the president will veto is crucially important to the legislative process.
STEIN: Yeah. I don‘t think it‘s going to happen in this debt ceiling debate. But keep in mind, we have a government shutdown debate impending in about a month and a half when the continuing resolution runs out. And after that, we have, in a year and a half, the expiration of the Bush tax cuts.
By all stretches of the imagination, they‘re not going to get tax reform done right now. So we‘re going to have to deal with this when they set up this super Congress deficit reduction commission.
So yes, I think the one thing that progressives can take from this debate is that, in the past week, week and a half, they have seen the White House use the bully pulpit and use it very effectively. Public opinion is swaying towards the president right now in this debt ceiling standoff. Perhaps that instructs his thinking going forward.
You‘re right, nothing says leadership more than ruling out what you absolutely will not do.
O‘DONNELL: Howard, just watching the characters in this drama, the lead characters, the one who seems the weariest to me is John Boehner. He is the guy who, it seems to me, even more than the president, at least secretly, doesn‘t want to have to go through this again. It has ripped him apart.
It seems to me—Howard, is it your sense that he would love to be able to get a single vote on the debt ceiling and get rid of it and get it out of his operational area for next year?
FINEMAN: Yes. And I think it was Jon Stewart who said upon seeing a picture of John Boehner recently that he looked like the world‘s saddest tangerine. But, yeah. I mean this exposes John Boehner‘s weakness. This is what he—political weakness. This is what he wanted for years, to be the speaker.
He got the speakership because of the tidal wave of Tea Party people coming in. But be careful what you wish for. Having gotten that majority, he can‘t govern that majority.
And he‘s downstairs here. And we are all standing around, waiting to see what happens, one by one, pleading with people to try to get the votes he needs. And he is short. According to the people I have talked to, he‘s short. It‘s humiliating for him. He doesn‘t want to go through it again.
I think he is going to be challenged at some point soon, whatever happens on this vote.
O‘DONNELL: “The Huffington Post‘s” Howard Fineman and Sam Stein, thank you very much, you both, for joining me tonight.
FINEMAN: Thank you.
STEIN: Thanks for having us.
O‘DONNELL: Coming up, the Republicans say they want deficit reduction. What they really mean is government reduction. Ezra Klein joins me.
And an epic battle between Tea Partiers and hobbits is raging. Inside the mind of one U.S. senator, John McCain. The Rewrite is next.
(COMMERCIAL BREAK)
O‘DONNELL: Coming up—hey, wait a minute now. Hey, this—we‘re done with that. Can we—Brian, can you get that thing off the screen? Because this script here, what we‘re going to do has nothing to do with any Raging Boehners. It‘s not—we‘re—can you—has the Murdoch gang hacked our monitor thing and they control it?
All right. I‘m just going to do what we have here, which has nothing to do with that “New York Post” headline, our favorite one of today.
The epic battle of John McCain versus Sean Hannity. That‘s in the Rewrite. See, it has nothing to do with that headline. And Republican deficit reduction proposals aren‘t really aimed at the deficit. They are aimed at something much bigger. They don‘t want to end Medicare as we know it. They want to end government as we know it. It‘s a little bit closer to that thing. OK.
Ezra Klein is going to join me.
(COMMERCIAL BREAK)
(BEGIN VIEO CLIP)
UNIDENTIFIED MALE: Don‘t you let go. Don‘t let go.
(END VIDEO CLIP)
O‘DONNELL: That is the most of “the Lord of the Rings” I have seen so far.
Time for tonight‘s Rewrite. Straight-talking John McCain is at odds with another prominent Republican, double-talking John McCain. It all started after John McCain delighted many of us by reading from a scathing “Wall Street Journal” editorial on the Senate floor, challenging the prevailing logic among many House Republicans, and calling House Tea Party Republicans hobbits.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN ®, ARIZONA: The idea seems to be that if the House GOP refuses to raise the debt ceiling, a default crisis or gradual government shutdown will ensue, and the public will turn en masse against Barack Obama.
The Republican House that had failed to raise the debt ceiling would somehow escape all the blame. Then Democrats would have no choice but to pass a balanced budget amendment and reform entitlements and the Tea Party hobbits could return to Middle Earth having defeated Mordor.
This is the kind of crack political thinking that turned Sharron Angle and Christine O‘Donnell into GOP Senate nominees.
(END VIDEO CLIP)
O‘DONNELL: Who‘s Mordor? Well, that triggered the ire of Sharron Angle, who after a series of late night Tweets aimed at Senator McCain, released a proper statement, saying, “this man campaigned for Tea Party support in his last re-election, but now throws Christine O‘Donnell and I into the harbor with Sarah Palin. As in the fable, it is the Hobbits who are the heroes and save the land. This lord of the Tarp actually ought to read to the end of the story and join forces with the Tea Party, not criticize it.”
Christine O‘Donnell mounted her defense on Facebook, saying McCain should stop, quote, “attacking his own party and the very grassroots folks who can help drive a real solution.”
Then, straight-talking John McCain took the fight to Sean Hannity. It was a preposterous mismatch. John McCain, combat veteran, prison camp survivor, war hero, versus Sean Hannity, the paper tiger, who‘s never met a war he didn‘t support, and who‘s never met a war he was brave enough to participate in?
Indeed, Hannity‘s combat cowardice is so controlling of his behavior that he has never even considered spending one minute of his life in military service. Over air conditioned television studios are the most inclimate work environments Sean Hannity has ever experienced.
John McCain has never faced a weaker opponent than Sean Hannity. What was left of Hannity after he stepped up to fight John McCain? Let‘s take a look.
(BEGIN VIDEO CLIP)
SEAN HANNITY, FOX NEWS ANCHOR: Joining me now is Arizona Senator John McCain. Senator, I—you know, I read “the Journal” editorial. And I‘m against the editorial. I read “the Weekly Standard” today. I‘m angry at them.
The Tea Party didn‘t cause the debt crisis we have. The Democrats and Obama did. They didn‘t spend all this money to bring us on the brink of default, losing our credit rating. The Democrats, the president brought us to this point.
Why not attack—why are you attacking the Tea Party?
MCCAIN: Well, first of all, I was reading from a “Wall Street Journal” editorial, not exactly—
O‘DONNELL: Well, one that was attacking the Tea Party.
MCCAIN: No. It was basically attacking the idea that somehow if we shut down the government, that then Obama would get the blame and Republicans would triumph. I disagree. I think that the fact is that if we don‘t act in the Republican House—and I believe, by the way, that they will—at least I certainly hope that they will—then the ball will be in President Obama‘s court, and Harry Reid, who has, as you pointed out, one of the most flimsy, transparent, phony spending cut things that I have ever—proposals that I have ever seen.
So I wasn‘t attacking the Tea Partiers or anybody. What I was trying to point out, as the “Wall Street Journal” was, that we need to act with our own spending cuts, with our own legitimate spending cuts, and that way then all the pressure will be on the president and the Democrats under Harry Reid.
(END VIDEO CLIP)
O‘DONNELL: What did he say?
(BEGIN VIDEO CLIP)
MCCAIN: So I wasn‘t attacking the Tea Partiers or anybody.
(END VIDEO CLIP)
O‘DONNELL: Yeah. That‘s—that‘s what I thought he said. And that‘s funny, because this really sounds like attacking the Tea Party.
(BEGIN VIDEO CLIP)
MCCAIN: And the Tea Party Hobbits could return to Middle Earth having defeated Mordor.
(END VIDEO CLIP)
O‘DONNELL: Yeah. That is definitely attacking the Tea Party. But double talking John McCain was suddenly afraid to admit to Sean Hannity, who‘s got sort of a Hobbit thing going on himself, that straight-talking John McCain actually briefly summoned the courage to attack the Tea Party.
Hannity knew he had McCain on the run, and he did not let up.
(BEGIN VIDEO CLIP)
HANNITY: I take a different position. I see the Republicans, you know, literally work—competing against themselves, which infuriates me a little bit. This president has not put forward a plan. The Tea Party is saying, wait a minute. This is why we hired you guys.
And you‘re just saying, we want to cut, cap, and balance, a reasonable, responsible bill. And they are asking, you know, for the Republicans to stand firm on it.
So it—I found this as an attack on the Tea Party. And if you‘re agreeing with it, and mentioning Christine O‘Donnell or Sharron Angle, it sounds like an attack on the Tea Party.
MCCAIN: No. Primarily, if you read the whole editorial, it was an attack on President Obama and the way that they are trying to shift the blame onto Republicans. And that‘s also what I said on the floor of the Senate.
The president has not come forward with a plan. That‘s unconscionable. That‘s the worst aspect of leading from behind. But that does not mean that Republicans are relieved of their responsibilities.
(END VIDEO CLIP)
O‘DONNELL: OK. So McCain is capable of briefly making sense on the Senate floor, of telling Republicans the sad truth about Christine O‘Donnell on the Senate floor, that she never should have been the Republican nominee for Senate from Delaware. He can say that sort of thing on the Senate floor.
But get him in a Fox News studio, have him face down Sean Hannity, and he immediately looks like the guy who could do something as dangerous for America as picking Sarah Palin as a vice presidential candidate. Hannity never let up on McCain, showed no mercy on the senator, enforcing him to Rewrite himself on the Tea Party.
So much for straight-talking John McCain.
(BEGIN VIDEO CLIP)
HANNITY: Look, I—I just want to make sure that we‘re on the same page in this regard: the president caused this problem, not the Tea Party.
MCCAIN: I agree.
HANNITY: The Tea Party supported cut, cap, and balance.
MCCAIN: I agree.
HANNITY: This president is not leading.
MCCAIN: The Tea Party I admire, respect, and appreciate. And they‘re the ones that gave us a majority in the House of Representatives so we can get something done. I‘m proud and appreciative of them.
Then Democrats would have no choice but to pass a balanced budget amendment and reform entitlements. And the Tea Party Hobbit could return to Middle Earth having defeated Mordor.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
REP. NANCY PELOSI (D), MINORITY LEADER: This isn‘t about deficit reduction. This is about dismantling the public sector. This is dismantling of the public sector, which is an ideological goal long held by our friends.
(END VIDEO CLIP)
O‘DONNELL: That was House Minority Leader Nancy Pelosi earlier today. She says Republicans aren‘t interested in reducing the deficit. They are interested in reducing the government. If Congress‘ objective were strictly deficit reduction, there is one simple way to do that, let the Bush tax cuts expire, as they are scheduled to.
That would save four trillion dollars or more over 10 years, as much or more than the Obama-Boehner grand deal at its biggest point, and far more than either the Reid or Boehner proposals currently being floated.
And it could be done legislatively by doing absolutely nothing. Joining me now is “the Washington Post‘s” Ezra Klein, also an MSNBC analyst.
Ezra, it‘s the strangest legislative situation I have ever seen. Here is the solution to the declared problem, sitting in front of all of them. The action necessary to make it happen is their favorite thing, doing nothing. And no one talks about it.
EZRA KLEIN, “THE WASHINGTNO POST”: It would let Congress do what it is very best at. And it‘s instructive to compare that situation to this one. In that situation, if Congress does nothing, if they can‘t come to an agreement they are happy with, well, we go back to Clinton era tax rates, and the deficit improves by about four trillion, which brings us roughly into the path we need to be on.
If we do nothing here, if we don‘t come to an agreement tonight or in the next couple of days, we go into another recession or, if we don‘t get it together shortly thereafter, even worse than that, a financial crisis.
So if you cared about deficit reduction, it‘s clear which path you choose. If all you cared about was using leverage to impose an ideological agenda, well, then you get where we are now.
O‘DONNELL: And especially where we are in this economy with the fragile recovery. All this talk, this loose talk, I will use the phrase, of just cut spending, cut spending, cut spending, in an economy that needs spending—the beauty of this tax situation is, as you approach it on the calendar, you could look at it and say, the economy is still too fragile to raise all of these rates.
Let‘s just raise the top rate or the top two, top three, something like that. You could tailor it if you had to when you got to it. But if the economy has reached the strength that it had in 1993, when it was also coming out of a recession at that time, you could let those tax rates go up.
KLEIN: And let‘s be clear. Alan Greenspan, who was a big advocate of the original Bush tax cuts, has said, it‘s time to let them go. It‘s time to let all the Bush tax cuts expire.
The remarkable thing about Washington when it comes to this particular issue is that in 2000, we had a big surplus. We seemed to be having economic growth for the foreseeable future. So we made a policy based on that. George W. Bush was very clear. We had a surplus. That surplus was the people‘s money. He was going to return it to the people.
We now have exactly the opposite situation. We have a giant deficit. We‘re in a totally economic position. And yet they are saying we need the same policy.
At some point, we need to learn some lessons, right? At some point we need to agree that this is a different situation than we were in 1999 or 2000, and change. But as of yet, you have this now more than ever-ism. Whatever is going on, well, now more than ever tax cuts and shrinking government is the answer to it.
O‘DONNELL: And rarely do we have this laboratory experiment that we can show you, which is, hey, this is exactly what life is like under these tax rates. We can show you from 1993 to 2001, this is what it was. How do you like the look of that economy?
KLEIN: And this an incoherence in the Obama administration, to be clear about. They will say that. Obama uses almost that exact line you just used, Lawrence, on the stump. But then you actually look at their policy, and they say, well, we want to get rid of the fifth of the Bush tax cuts that go to the very rich, the 250,000 and above, and extend all the other ones permanently.
That puts you at a level or revenue far below what you had in Clinton and far below what you need going forward into the future, with the retirement of the Baby Boomers. It‘s a huge tax cut compared to what you do if you do nothing.
And it is, I think, one of the real big problems for them and for folks who believe the government can play an active role going forward. If the Democrats give up this opportunity in 2012 to raise revenues by letting a lot of these tax cuts expire, the Republicans are not going to give them another chance. Over time, you‘re just going to have to do massive cuts to government spending.
O‘DONNELL: The political defense of the president on that tax position is it was born in a presidential campaign. And to my eye, it was brave enough for a Democrat to go into a presidential campaign and say I‘m willing to raise at least one tax rate. Bill Clinton didn‘t say that. He ran on the so-called middle class tax cut, which he then reversed himself on when he got elected.
So a Democrat being willing to campaign for president, being willing to raise one bracket is about as much as you could ever ask for politically. MSNBC contributor Ezra Klein, thank you very much for joining me tonight.
KLEIN: Thank you.
O‘DONNELL: You can have the Last Word online at our blog, thelastword.msnbc.com, and you can follow my tweets @lawrence. “THE RACHEL MADDOW SHOW” is up next, with tonight‘s and this week‘s guest host, Melissa Harris Perry. Good evening, Melissa.
END
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