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'The Last Word with Lawrence O'Donnell' for Monday, August 8, 2011

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Guests: Robert Reich, Rep. Jan Schakowsky, Howard Fineman, Jonathan Capehart

LAWRENCE O`DONNELL, HOST: The president today said that Standard &
Poor`s didn`t doubt America`s financial ability to pay its debts, quote,
"They doubted our political system`s ability to act." The president is
absolutely right, and Standard & Poor`s is absolutely wrong.

(BEGIN VIDEOTAPE)

(MUSIC)

UNIDENTIFIED FEMALE: If we go into a double-dip recession, I put the
bloods on the hands of S&P.

UNIDENTIFIED MALE: So, pretty darn (EXPLETIVE DELETED)

BILL MAHER, COMEDIAN: Ooh!

O`DONNELL (voice-over): Republicans are blaming Democrats, Democrats
are blaming the Tea Party, but the blame belongs to Standard & Poor`s.

ANDREA MITCHELL, NBC NEWS: Let`s talk about the S&P.

UNIDENTIFIED MALE: Blame the ratings agencies.

UNIDENTIFIED MALE: Politicians of all sides attacking them.

TIMOTHY GEITHNER, TREASURY SECRETARY: I think S&P`s shown really
terrible judgment.

AUSTAN GOOLSBEE, FMR. WHITE HOUSE CHIEF ECONOMIST: They`ve made a $2
trillion math error.

O`DONNELL: S&P is wrong -- totally, absolutely, wrong.

UNIDENTIFIED MALE: They missed the subprime mortgage crisis.

UNIDENTIFIED MALE: President today aims to dismiss the S&P rating
downgrade.

ROBERT REICH, FORMER LABOR SECRETARY: What`s the problem with the
economy?

O`DONNELL: Robert Reich joins me.

REICH: The super rich have 40 percent of the nation`s entire wealth.

UNIDENTIFEID FEMALE: So pretty darn (EXPLETIVE DELETED)

MAHER: Ooh!

O`DONNELL: But how will Washington get better?

GEITHNER: Congress ultimately owns the credit rating.

SEN. JOHN MCCAIN (R), ARIZONA: The House of Representatives had a
mandate.

SEN. JOHN KERRY (D), MASSACHUSETTS: This is a Tea Party downgrade.

UNIDENTIFIED FEMALE: Pointing the finger at the Tea Party.

REP. MICHELE BACHMANN (D), MINNESOTA: If only the United States
Congress would take a hint from Iowa.

UNIDENTIFIED FEMALE: So pretty darn (EXPLETIVE DELETED).

MAHER: Ooh!

O`DONNELL: And Michele Bachmann is getting competition in the race to
be Christian in chief.

JONATHAN ALTER, MSNBC POLITICAL ANALYST: Sources across the political
landscape are indicating that Rick Perry, the governor of Texas, will get
into this race.

GOV. RICK PERRY (R), TEXAS: You call us to repent, Lord.

BACHMANN: God bless each of you.

PERRY: For thy is the kingdom. He`s a wise, wise God.

BACHMANN: God bless the United States.

PERRY: Cry out for your forgiveness.

UNIDENTIFIED FEMALE: Rejoice in the Lord.

UNIDENTIFIED MALE: (INAUDIBLE) Jesus! I love men.

UNIDENTIFIED FEMALE: So pretty darn (EXPLETIVE DELETED).

MAHER: Ooh!

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: You know, I got 98
percent of what I wanted.

(END VIDEOTAPE)

O`DONNELL: Good evening from Washington.

John Boehner got 98 percent of what he wanted again today. The Dow
Jones Industrial Average dropped 634 points today. It is the worst one-day
point drop since December 2008. Ninety-eight percent of that drop would be
621 points, which, according to Boehner`s claim, are assignable to him and
House Republicans who say they got 98 percent of what they wanted in the
deficit reduction deal, which preceded the sharp decline in the stock
market that began last week.

Skittish investors, fleeing stocks, rushed to safer investments, and,
as is customary during a stock market collapse, they rushed to the safest
investment in the world, United States Treasury bonds.

That`s right. Shares of the federal government`s debt are still
considered the safest investment in the world by experienced investors on
the first trading day after Standard & Poor`s took the unprecedented
political action of downgrading Treasury`s long-term debt from AAA to AA-
plus.

The S&P downgrade was a purely political act taken by these two
leaders of the confederacy of dunces known as Standard & Poor`s.

John Chambers is the managing director of S&P and David Beers is ahead
of the sovereign credit rating division of S&P.

S&P has been egregiously wrong before, and they are wrong again.

The downgrade was not based on some sophisticated analysis of the
numbers. Indeed, S&P got the numbers wrong, very wrong.

Friday afternoon, the Treasury pointed out to S&P that among the many
miscalculations it has been caught making over the years, it had
miscalculated our debt on Friday by $2 trillion. After S&P accepted
Treasury`s correction of its calculation, S&P went ahead with the
downgrade, couching it entirely in political terms.

"The political brinkmanship of recent months highlights what we see as
America`s governance and policymaking becoming less stable, less effective,
and less predictable than what we previously believed. The statutory debt
ceiling and the threat of default have become political bargaining chips in
the debate over fiscal policy.

John Chambers, who lives in Manhattan, and David Beers, who lives in
London, have no better understanding of the politics and policies of the
United States government than you do. In fact, they obviously have much
less of an understanding than you do, because they actually think that
within the foreseeable future, the next few years, the United States
government might actually default on its debt simply by failing to raise
the debt ceiling when and if it`s necessary.

"The statutory debt ceiling and the threat of default have become
political bargaining chips."

That`s what worries them. I have told viewers of this program that we
will always raise the debt ceiling. We always have and always will.

What John Chambers and David Beers, the most incompetent analyzers of
treasury debt in American history, fail to understand is that the debt
ceiling has always been a political bargaining chip. The political game of
the debt ceiling just has never been played quite as loudly as it was
played this year.

Almost half of the Congress almost always votes against increasing the
debt ceiling, the party out of power leaves raising the debt ceiling to the
party in power. That`s why Senator Barack Obama voted against raising the
debt ceiling when the Republicans had a majority in the United States
Senate. It`s not that Senator Obama was opposed to raising the debt
ceiling, he was just playing a political game with it, trying to highlight
Republican responsibility for the debt.

This year, we saw something we haven`t seen before, some Tea Party
members of Congress claiming that they would do anything to prevent an
increase in the debt ceiling, no matter what. It turned out, big surprise,
a lot of them were lying, and they did, in fact, vote for an increase in
the debt ceiling. In fact, last week`s vote for a debt ceiling increase
was the most bipartisan vote to increase the debt ceiling we have seen in a
very, very long time.

But still, the incompetent, politically illiterate John Chambers and
Londoner David Beers offer nothing as the basis of their utterly wrong
downgrade nothing but the political worry that maybe Congress won`t raise
the debt ceiling the next time it has to.

They will be proven wrong every day for the rest of their lives,
because the United States government, including the Congress, as currently
constituted, will never fail to pay its debts, and last week, it proved
that yet again. It proved it despite the utterly insane rhetoric of the
Michele Bachmann`s of the Congress who John Chambers and David Beers regard
as having something very important to do with our governing outcomes -- in
fact, Michele Bachmann has never once mattered in American government, nor
will she in the future. You have to know something about politics to know
that, to know she`s just one vote in the House of Representatives and her
vote never matters. And John Chambers and David Beers, the stupidest
political analyst in wreath history, they don`t know that.

John Chambers and David Beers` ignorance is more dangerous and
pernicious than the craziest of the Tea Parties. The ignorance of these
two men and of the rest of S&P has already done more damage to this country
than the most inane Bachmann utterance of American history ever go could.

They are a disgrace of their occupation which does not deserve the
more elevated term profession.

I leave it to you to decide if they are a disgrace to their country.

We have been struggling during the Obama presidency to emerge from the
most crippling recession since the 1930s -- a recession brought about in no
small measure by the willful, wanton, reckless conduct of the dunces, and
yes, perhaps criminals at Standard & Poor`s. S&P and other rating agencies
gave AAA ratings to mortgage-backed securities that turned out to be the
toxic waste of Wall Street, junk worth virtually nothing. S&P gave that
junk the same value as the safest investment in the world, United States
treasuries. S&P gave Lehman Brothers an A rating, right up to the month
that Lehman Brothers went bankrupt.

S&P was as wrong about Lehman Brothers as it is wrong about the United
States of America.

Congressional investigators looking into the causes of the financial
collapse found this instant message exchange between S&P employees:

"That deal is ridiculous." "I know, the model doesn`t capture half
the risk." "We shouldn`t be rating it." "We rate every deal. It could be
structured by cows and we would rate it."

One S&P senior manager put this in an e-mail to another senior
manager. "Lord help our F-ing scam. This has to be the stupidest place I
have worked at."

S&P is the stupidest place everyone at S&P has ever worked at. And
these two, John Chambers and David Beers, have now taken their places as
the worst political pundits in our midst.

Joining me now, former labor secretary under President Clinton and
professor of public policy at the University of California, Berkeley,
Robert Reich. He is also the author of "Aftershock," which is now in
paperback.

Thanks you very much for joining me tonight, Robert.

REICH: Good evening, Lawrence.

O`DONNELL: The Standard & Poor`s rating, as I read it, is nothing but
a political adjudication made by people who know nothing about politics and
who also happen to have an absolutely horrific track record at doing what
they are supposed to be doing for a living. What am I missing here?

REICH: I don`t think you`re missing anything. It`s actually
extraordinary. I mean, here we have Standard & Poor`s charging in the
political arena in a way that is so unique with regard to ratings agencies.
I mean, granted, they did a lousy job on what they were supposed to do,
that was rating Lehman Brothers and everything else on Wall Street.

But when it comes to sovereign debt, what they should pay attention to
is, obviously, the wealth of a country, the size of a country, the record
of a country like the United States on paying its debts. Instead, they say
not only do they believe that we are going to honor our debts, but in the
future they say we should get much more serious about, over the next 10
years, reducing our debt by a certain amount. We should have tax
increases. We should cut Medicare.

I mean, they are acting as if they are another branch of government,
and that is totally inappropriate. That is not what they are authorized to
do. And it looks like the markets said to them today, well, we`re rattled
certainly, the stock market was rattled, but if you look at the treasury
bill, the actual value of the treasury bill, which is the United States`
IOU, it looks like markets said to S&P, essentially, we are not going to
listen to you.

O`DONNELL: Yes. S&P`s record is absurd, and you wrote something
very, very important today, Bob, about Standard & Poor`s falling down on
the job in the past is actually part of what got us into this debt
situation. Of course.

You know, Lawrence, if you actually look at the record, had Standard &
Poor`s and Moody`s and Fitch, the three major credit rating agencies, had
they done their job in 2005, 2006, 2007, had they rated all of the junk
that was coming out of Wall Street, not just Lehman Brothers, but
everything else, the credit default swaps, the AIG -- everything else --
had they rated them what they should have been rated, that is way, way
below the ratings they got, because they are paid from Wall Street. I
mean, that`s where there money comes from.

And so, obviously, the issue is they don`t want to have bad ratings.
And there`s a conflict of interest.

Had they done that, we would not have had the huge debt bubble, the
housing bubble. When it burst, we would not have had the huge great
recession, the scale of which required the government bailout of Wall
Street, a stimulus package, a lot of things that are now contributing to
the debt we have today.

So, it`s a double irony, not only is Standard & Poor`s not doing the
job it ought to be doing today, it didn`t do the job it should have been
doing then, which got us into the trouble we are in today.

O`DONNELL: Robert Reich, former labor secretary, thank you very much
for joining me tonight.

REICH: Thanks, Lawrence.

O`DONNELL: Up next, Congresswoman Jan Schakowsky on the new pressures
put on the congressional super committee to reach compromise on the debt.

And later, "Politico" reports, Rick Perry is going to make a major
announcement on Saturday while everyone else in the political world is
concentrating on the Iowa straw poll.

And in the "Rewrite" tonight, why this country needs to be reminded
that it is still at war in Afghanistan.

(COMMERCIAL BREAK)

O`DONNELL: Coming up, the fall out from the debt ceiling debate and
the subsequent downgrade from the S&P, and do decisions of the all-
important super committee now become even more high stakes now? I`ll talk
with Democratic Congresswoman Jan Schakowsky.

And later, a weekend of tragedy in Afghanistan. Why does the
president have to remind this country that we`re a nation at war? That`s
in the "Rewrite."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I realize that after
what we just went through, there`s some skepticism that Republicans and
Democrats on the so-called super committee, this joint committee that`s
been set up, will be able to reach a compromise. But my hope that Friday`s
news will give us a renewed sense of urgency.

(END VIDEO CLIP)

O`DONNELL: That was President Obama today expressing some hope that
the U.S. credit rating downgrade will encourage the joint select committee
on deficit reduction to meet its mandate to agree before Thanksgiving to at
least $1.5 trillion in additional deficit reduction.

As for where that committee should find those savings, the president
offered this today.

(BEGIN VIDEO CLIP)

OBAMA: Last week, we reached an agreement that will make historic
cuts to defense and domestic spending. But there`s not much further we can
cut in either of those categories. What we need to do now is combine those
spending cuts with two additional steps, tax reform that will ask those who
can afford it to pay their fair share and modest adjustments to health care
programs like Medicare.

(END VIDEO CLIP)

O`DONNELL: Efforts at such reasonable tax reform will meet resistance
from the 274 congressional Republicans who have signed Grover Norquist`s
pledge to never raise taxes in any way, including by closing loopholes.

House majority leader Eric Cantor reminded Republicans to stick to the
Norquist position today, sending a memo to his caucus reading in part, "I
firmly believe we can find bipartisan agreements on savings from mandatory
programs that can be agreed to without tax increases. I believe this is
what we must demand from the joint committee as it begins its work."

Joining me now, Democrat from Illinois, Congresswoman Jan Schakowsky.

Thanks for joining me tonight, Congresswoman.

REP. JAN SCHAKOWSKY (D), ILLINOIS: Thank you, Lawrence.

O`DONNELL: Is Eric Cantor right -- is it possible to, as he put it,
find a bipartisan agreement? That means you, Congresswoman, a bipartisan
agreement on savings from mandatory programs that can be agreed to without
tax increases?

SCHAKOWSKY: There`s no way. If we don`t put the millionaires and
billionaires and the corporations that aren`t paying any taxes or getting
breaks to put our jobs overseas or the oil companies and we go after
entitlement programs, Social Security, Medicare, Medicaid, you know, if
this doesn`t bring people to the streets, I don`t know what will.

They`re certainly bringing them to the phones because I`m already
getting calls. We`ve been getting calls this whole period, people sobbing
about not being able to rely on their Social Security check, are they going
to get cut, are they going to get it at all.

The gall of them to say that all of this ought to come from cuts that
fall most heavily on the seniors, middle class people, who people who
aspired to the middle class -- this is not the America that most people
want to see.

O`DONNELL: Now, we heard the president hoping the silver lining of
the S&P rating, politically, in terms of reaching an agreement on taxation,
is that it would open up this tax question, especially since in the S&P
report, they actually say that letting the Bush tax cuts lapse would
actually help the situation. Do you think there`s any chance that
Republicans will read that sentence of the S&P report and think oh, OK,
let`s follow Wall Street`s guidance on that?

SCHAKOWSKY: Yes, I mean, again, the chutzpah, the gall of Standard &
Poor`s to say -- well, they simply don`t believe that the president is
going to let the tax cuts for the rich lapse.

I mean, you know, if they are going to get into the realm of politics,
then they ought to talk to their buddies on Wall Street, hedge fund
managers that are paying 15 percent taxes while their secretaries are
paying at the top rate or paying more taxes than they do.

And, of course, since John Boehner and other leaders have said we`re
not going to appoint anybody to the committee who`s willing to raise taxes,
the outlook looks pretty grim. But, of course, as you know, there is a
trigger there that says if the super committee doesn`t make an agreement,
then there are cuts that go into effect automatically from defense, from
other spending, and from Medicare.

And so, you know, any way you look at it, if the Republicans don`t
turn around and the American people don`t make them turn around and put
revenue on the table, we`re in big trouble.

O`DONNELL: Congresswoman, there`s another way to get revenue on the
table, which, of course, is the lost point of this whole spending cuts as
the road to prosperity debate, and that is, of course, as you know, growing
the labor force, having more taxpayers out there, more people employed,
more payroll taxes actually being withheld every week.

Is there any prospect that there could be anything legislate by
Congress that could actually help the jobs situation?

SCHAKOWSKY: Well, first of all, let me emphasize your point. If you
listen just to Washington, you would think there are only two ways, and
that`s revenue or that we cut -- cut, cut, cut.

And the third and best way and the way we`ve always gotten out of
recessions is growth, growing the economy, and that spells jobs. That`s
why this week, I`m going to introduce a bill that, you know, if you want to
create jobs, create them.

And my legislation would actually hire, make sure that we can hire
over 2 million people at a very responsible price, all paid for by taxing
the wealthiest, the millionaires and billionaires, and put them to work
doing things that need to be done. And two to one, Americans say that jobs
is a more important issue than debt reduction, that we got to put Americans
to work in order to get them moving and get the economy moving.

I hope so. I hope that there`s some resonance to the idea in
Congress, something that`s supported by the vast majority of Americans that
we need to create jobs.

O`DONNELL: Congresswoman, I`ve read your bill and am actually
surprised at how, in relative terms, cheap it is to get those two million
people to work at jobs that we need doing.

Congresswoman Jan Schakowsky of Illinois, thank you very much for
joining us tonight.

SCHAKOWSKY: Thank you.

O`DONNELL: Coming up, seven miles from Rick Perry`s air-conditioned
prayer event, 100,000 Texans waited in line for donated school supplies.
Will Perry bring the same priorities to a presidential campaign?

And a country that has to be reminded it is at war. That`s in the
"Rewrite."

(COMMERCIAL BREAK)

O`DONNELL: Former Republican Senator Mark Hatfield of Oregon died
yesterday at age 84. He was a mainstream Republican who became a moderate
Republican and then a liberal Republican without ever changing his
position. Republican politicians simply changed around him, becoming more
and more conservative. He was, until his retirement in 1997, one of the
most-respected of our senators.

And former Democratic governor of New York, Hugh Carey, died
yesterday. The two-term governor vetoed six attempts to reinstate the
death penalty in New York. There is no prominent Democrat left with the
courage to stand against the death penalty.

Liberals no longer recognize opposition to the death penalty as an
important element of liberalism in America. Republicans have beaten
Democrats into silence or acquiesce about the death penalty, but they could
not do that to Hugh Carey.

Carey once said, "I would like to be remembered as somebody who cared
a great deal about people." Hugh Carey was 92.

Still ahead, what`s wrong with that photo of Michele Bachmann on the
cover of "Newsweek?" And is Rick Perry going to challenge Michele Bachmann
as the choice for the true believer`s vote?

O`DONNELL: And in the Rewrite, why this country needs to be reminded
that it`s at war.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R), TEXAS: He is a wise, wise God. And he`s wise
enough to not be affiliated with any political party. Or for that matter,
he`s wise enough not to be affiliated with any man-made institutions.

(END VIDEO CLIP)

O`DONNELL: That was Republican Texas Governor Rick Perry speaking to
an estimated 33,000 people who filled up half of Houston`s Reliant Stadium
Saturday for Perry`s prayer event called the Response.

The event was mired in controversy, especially for its inclusion of
bigoted mega-church pastor John Hagee. The original schedule had Hagee
speaking immediately after Governor Perry. But that was reshuffled at the
last minute.

Instead, Hagee and a Spanish translator took to the stage an hour and
18 minutes after Governor Perry had finished. But that didn`t stop Hagee
from mentioning his friend, Rick Perry.

(BEGIN VIDEO CLIP)

JOHN HAGEE, PASTOR, CORNERSTONE CHURCH: We pray for our governor,
Rick Perry, who has had the courage today to call this time of fasting and
prayer, just as Abraham Lincoln did in the darkest days of the Civil War.

(END VIDEO CLIP)

O`DONNELL: Hagee was not inspired to repeat his previous statements
about Hitler following God`s wishes by killing Jews or that Catholicism is,
quote, "a Godless theology of hate."

Perry has yet to explain why he likes to hang with a fake preacher
like Hagee who thinks Hitler was doing God`s work and that Catholicism is -
- I repeat -- quote, a "Godless theology of hate."

"Politico" reports Governor Perry plans to admit he`s running for
president during his speech at the Red State Conference in Charleston,
South Carolina, this Saturday, the same day that America`s political
attention was supposed to be focused on the Ames Straw Poll in Iowa.

Joining me now is Howard Fineman, editorial director for "the
Huffington Post" and MSNBC political analyst. Howard, thank you very much
for joining me tonight.

HOWARD FINEMAN, "THE HUFFINGTON POST": Great to be with you.

O`DONNELL: Is he running?

FINEMAN: Yes, I think so.

O`DONNELL: Is this official breaking news from Howard Fineman?

FINEMAN: No, this is Howard Fineman talking into a very plugged in
senior Republican who said yes.

O`DONNELL: This is not Mario Cuomo, not the engines running, plane
set to go to New Hampshire, and he decide he`s not going?

FINEMAN: Put it this way, this guy is almost never wrong. I`ve never
known him to be wrong in this kind of think. He said he`s definitely
running. He`s got close ties to the Perry campaign but is not part of it.
He said he`s running.

And the logic of it is pretty clear, Lawrence, because, number one,
Mike Huckabee of Arkansas is not running. Haley Barbour of Mississippi is
not running. Newt Gingrich of Georgia is a million dollars in debt.

There`s a big, gaping hole there for a southern appeal to the Bible
Belt, which is what that rally was, and to the secessionist Tea Party
mentality. You couldn`t have more stark symbolism than Rick Perry
admitting his intentions in Charleston, South Carolina, which was John
Calhoun`s home turf when he said leading up to the Civil War, let`s secede.

O`DONNELL: For me, I mentioned Cuomo because ever -- 1992, when
Cuomo, literally with an hour or so left to file papers in New Hampshire,
decided not to fly to New Hampshire to file the papers -- I don`t believe
you`re running until you`re running.

So I`ll --

FINEMAN: I think that`s true.

O`DONNELL: Who does this candidacy hurt the most? It feels like it
hurt all of them.

FINEMAN: It does. Let me explain the hesitancy there, because
there`s lots of questions about Rick Perry`s record in Texas. And he`s a
Texas-only guy. Yeah, he can draw 03,000 people in Reliant Stadium. But
does he really think that he can play nationally?

That`s why some people think he`s hanging back, I`m told he`s in.

Now, what`s the advantage? There`s a big gaping hole there. If you
look at the latest polls, Rick Perry, who really has done very little
campaigning around the country, has done, with the tease he`s been on for
the last month or six weeks, done a very god job of making himself a major
player, even though he hasn`t announced yet.

O`DONNELL: How did he do that? Because it`s not a household name.
This isn`t Bush. This isn`t George Bush running after his father was
president.

FINEMAN: As a matter of fact, the Bush people don`t particularly like
him. I had one Bush advisor tell me that Rick Perry`s big problem is he
only cares about sound bytes. He doesn`t really drill down to the issues,
which given the comparisons really is telling you something.

The Bush people aren`t for him. But the Bush people aren`t for
anybody. And there`s still a big hole out there where nobody is truly a
frontrunner. Mitt Romney is not a frontrunner. He`s a slow walker. In
the latest polls, he`s still only getting in the mid 20s or something like
that.

It`s not like he`s the overwhelming favorite everywhere. And if Rick
Perry can establish himself in the south and in the Bible Belt, and with
the Tea Party people, where he`s running neck and neck with Michele
Bachmann, even though he`s not officially in the race, then he has a chance
to boomerang that back to Iowa.

And he`s playing it very shrewd with Iowa. You got the straw poll
coming up. I`m going there. A lot of political people are going there.
He`s going to be on a split screen down in South Carolina, appealing to
that base, of which there are many brethren in Iowa. Don`t forget; maybe
30, 40 percent of the vote in Iowa in the Republican caucuses is
Evangelical Christians.

O`DONNELL: Now this does remind me of last time around. When the
Republicans were not terribly happy with their field, Rush Limbaugh was
very anti-John McCain -- a lot of people were anti-McCain because he had
taken positions that were not classic Republican positions in the past,.
And there came to save the party Fred Thompson, the later entry in to the
field. Wait until you see Thompson, he`s going to be amazing.

Is this Fred Thompson?

FINEMAN: I think Rick Perry is a little more energetic than Fred.
And I think that -- who everybody loves, by the way. All the reporters
like Fred Thompson because he was good with a quip and so forth. But I
covered Fred Thompson`s launch in Iowa and he barely wanted to get on the
stage he was so against doing it.

I think Rick Perry -- the only thing that`s holding him back is
whether he wants to undergo the national scrutiny. But he`s hungry for it
in a way Fred Thompson never was.

O`DONNELL: Howard Fineman, editorial director for "the Huffington
Post" and MSNBC political analyst, thanks very much for coming in tonight.
>

FINEMAN: Thank you, Lawrence.

O`DONNELL: Over the weekend, the war in Afghanistan roared back into
the news, after 30 U.S. soldiers were killed in a helicopter crash. Why
did the secretary of defense say it is a reminder that we are at war in
this country? That`s in tonight`s Rewrite.

And later, Michele Bachmann supporters are outraged over a "Newsweek"
magazine cover they think makes their candidate look, quote, their word,
"crazy." That`s coming up.

(COMMERCIAL BREAK)

O`DONNELL: Time for tonight`s Rewrite. This weekend saw the worst
single loss of life in the 10 years of the Afghan war. A CH-47 Chinook
helicopter crashed while on a mission to reinforce troops trying to capture
a Taliban leader in a long-time Taliban stronghold. The crash killed 38
U.S. and Afghan service members.

Twenty two of those killed were Navy SEALs from the SEAL Team Six, the
same unit that killed Osama bin Laden, though there is no confirmation that
any of the dead participated in the bin Laden raid.

Pentagon officials say that the remains of the Americans killed are
scheduled to arrive tomorrow at Dover Air Force Base in Delaware and will
be handed over to their families once they are positively identified.

President Obama had this to say today.

(BEGIN VIDEO CLIP)

OBAMA: Ultimately, the reason I am so hopeful about our future, the
reason I have faith in these United States of America is because of the
American people. It`s because of their perseverance and their courage and
their willingness to shoulder the burdens we face together as one nation.

There is no one who embodies the qualities I mentioned more than the
men and women of the United States armed forces. And this weekend, we lost
30 of them when their helicopter crashed during in a mission in
Afghanistan.

Their loss is a stark reminder of the risks that our men and women in
uniform take every single day on behalf of their country. Day after day,
night after night, they carry out missions like this in the face of enemy
fire and grave danger.

They come different places and their backgrounds and beliefs reflect
the rich diversity of America. But no matter what differences they might
have as individuals, they serve this nation as a team. They meet their
responsibilities together.

And some of them, like the 30 Americans who were lost this weekend,
give their lives for their country. Our responsibility is to ensure that
their legacy is an America that reflects their courage, their commitment
and their sense of common purpose.

(END VIDEO CLIP)

O`DONNELL: And the secretary of defense, Leon Panetta, added this.

(BEGIN VIDEO CLIP)

LEON PANETTA, DEFENSE SECRETARY: This is a reminder. It`s a reminder
to the American people that we remain a nation still at war.

(END VIDEO CLIP)

O`DONNELL: What kind of nation would need to be reminded that it is
still at war? A nation in which everyone is not required to do military
service or some alternative community service, a nation in which roughly
99.5 percent of us choose not to serve in the military, a nation in which
most people are not related to anyone serving in the military.

A nation in which most people do not know anyone who has been killed
or wounded in our last 10 years of war, a nation where it is impossible to,
in any way, experience a country at war, a nation where not a single
deprivation has been suffered because the country has been at war for a
decade, a nation where no one has to wait in line for bread or wait for
fuel or for anything else in short supply because of war.

A nation in which not dollar of tax, not one dollar has been raised to
pay for 10 years of war, a nation whose news media is more troubled by the
loss of credit ratings than it is by the loss of human life, and yes, a
nation in which television news coverage of the war gets lower ratings than
the latest irresponsible antics of the Tea Party, that parenthetically put
soldiers` paychecks in jeopardy.

That is a nation that needs to be reminded it is at war.

There will be other nights for us to discuss the way forward or the
way out of Afghanistan. Tonight is not that night. Tonight is for
reminding this nation that it is, indeed, at war. And tonight is for
reminding the nation of the price of war, the ultimate sacrifice.

Though the Pentagon has not released a full list of those lost in the
helicopter crash, some families have confirmed some of the deaths. Thirty-
year-old Army sergeant Patrick Hamburger of Grand Island, Nebraska, had
been in Afghanistan for less than two weeks.

Twenty five-year-old Petty Officer First Class Michael Strange from
Philadelphia became a Navy SEAL about two years ago.

Air Force Technical Sergeant John Brown of Arkansas was, in his
mother`s words, "a gentle giant."

Aaron Carson Vaughn of Union City, Tennessee, was a 30-year-old member
of SEAL Team Six. Aaron Vaughn leaves his wife, Kimberly, his two-year-old
son, Reagan, and his two-month-old daughter, Chamberlin (ph).

Thirty two-year-old Chief Petty Officer Robert James Reeves served on
SEAL Team Six and had earned four Bronze Stars. Robert Reeves grew up in
Shreveport, Louisiana.

With Jonas Kelsall. Lieutenant Commander Kelsall was a member of SEAL
Team Seven.

Kraig Vickers was on the Maui High School football team in Hawai and
was a member of the Navy Bomb Disposal Team. Kraig Vickers lived in
Virginia Beach, Virginia with his wife, who`s now pregnant, and their three
children. Kraig Vickers would have turned 37 later this week.

Thirty five-year-old Jon Tumilson always wanted to be a Navy SEAL. He
was a wrestler in high school. And a neighbor told the Associated Press,
"he was going to be a Navy SEAL since I can`t remember when.`

Brian Bill graduated from Vermont`s Norwich University in 2001, then
joined the SEALS. A high school teacher of Brian Bill`s at Trinity
Catholic High School in Stamford, Connecticut, said, "Brian just wanted to
do his best to protect other people. Challenge did not deter him, Ever."

Most of the names of the people lost in the helicopter crash are not
yet known to us. But we do know none of the families and friends of anyone
on that helicopter needed to be reminded that we are a nation at war.

(COMMERCIAL BREAK)

O`DONNELL: Michele Bachmann has made the cover of "Newsweek" at the
same time that a "USA Today"/Gallup poll now shows her in fourth place,
behind Mitt Romney, Rick Perry and Ron Paul. Bachmann comes in with 13
percent, Romney nearly doubles that.

The cover of "Newsweek" calls her "The Queen of Rage." Bachmann was
asked about it today during a campaign stop in Iowa.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You`re on the cover this morning of what`s left of
"Newsweek" magazine. Have you seen it today?

REP. MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: I haven`t.

UNIDENTIFIED MALE: OK, it`s a big close-up, sort of a wild-eyed
photo, with the headline, "Queen of Rage."

BACHMANN: We`ll have to take a look at that, won`t we?

UNIDENTIFIED MALE: Are the media letting us hear your voice? And
what really is the power behind your campaign? Is it rage?

BACHMANN: Well, I think the power behind our campaign is hope and a
future. That`s all I believe in.

(END VIDEO CLIP)

O`DONNELL: Joining me now, MSNBc contributor Jonathan Capehart, an
opinion writer for "the Washington Post," Thanks for joining me.

JONATHAN CAPEHART, "THE WASHINGTON POST": Thanks, Lawrence.

O`DONNELL: Let`s start with the cover of "Newsweek." The National
Organization for Women has come out in defense of Bachmann. They are
calling that cover "sexist." Tina Brown, who runs "Newsweek," Tweeted
"Michele Bachmann`s intensity is galvanizing voters in Iowa right now and
`Newsweek`s cover captures that.

Who is right? Tina Brown says it`s intensity. And National
Organization for Women says, no, no, this is sexist.

CAPEHART: Everyone can be right in this -- in this little argument
here. Tina Brown, you know, she`s an editor of "Newsweek." She`s trying
to pull that magazine up off the mat. This is not the first controversial
cover, if you will, that "Newsweek" has had under Tina Brown`s leadership.

We are talking about it. People have seen the cover all day long. I
used it in a piece I wrote today. But there are legitimate questions to be
asked about whether it`s proper, or I should say fair, for a female
politician to be, one, called "the queen of rage," and two, to be made --
not to be made to look crazy or look sort of unattractive, as she is in
that photo.

I mean, she posed for that photo. They just -- "Newsweek" being they
-- chose to use a rather unflattering picture to go with the headline that
they used.

O`DONNELL: You know, that upward angle could be ambition. You know,
she wants to rise. She wants to go up.

CAPEHART: Yes, it could. But everyone`s focused on the eyes. You
can look up and look towards the heavens and the stars and the sky. But on
that cover there, I mean, just her eyes are what pull you in. And they
don`t look -- they don`t make you feel comfortable.

O`DONNELL: One of the lessons that handlers in politics have known
for a very long time is you never, ever trust photographers on cover
photos, because they actually are always looking for a shot that you`ve
never seen before. They are always looking for this, a thing that will
make you talk about it. I don`t care whether it`s "New York Times Sunday
Magazine," wherever it is. Her handlers should have known that.

They just should have said, no, she`s just going to do this, nothing
else. You have three minutes and get out of there.

CAPEHART: Right, they could have limited that time. The amazing
thing about the Bachmann campaign -- she is so driven, so focused, so
disciplined on everything else, including in that clip that you just showed
of her response to whether she had seen the response.

O`DONNELL: That was the perfect response.

CAPEHART: It was fantastic. Yet when it comes to something like
this, as you said, she dropped the ball.

O`DONNELL: She`s now slipping in these polls. What happens with Rick
Perry entering? Howard Fineman assures us now that Rick Perry will be
entering. How does she maintain that kind of poise in the face of a real
challenge, at least in the polls anyway, from Rick Perry, who`s going to
step into her territory?

CAPEHART: Well, she`s just going -- I think she`s going to remain
disciplined, remain focused, maybe turn up the heat of attacks on Rick
Perry. But she`s going to have to do something to distinguish herself from
him and to, you know, maintain the hold that she has on the same voters
that would be attracted to a Rick Perry.

O`DONNELL: Now, the Republicans have hated doing this so far.
They`ve been really reluctant to take shots at each other. She`s been
willing to do it a little bit with Mitt Romney.

But Perry is a whole different thing. They are going right into the
same zone, and does that -- does that constituency want to see those two
fight?

CAPEHART: You know, I don`t know. I think we will see and we will
find out. Remember, Perry`s the governor. He`s been in Texas. He hasn`t
been on the campaign trail. He`s gone to Iowa maybe a few times.
Bachmann`s in it. And she has been in it for months now.

As we`ve seen, since the CNN debate in New Hampshire in June, right
through to right now, she wants this. And Iowa is going to be where she is
going to make her stand. So if that -- if taking out Rick Perry is what
she needs to do to get it done, I wouldn`t be surprised to see her do that.

O`DONNELL: Actually, the trickier challenge is how does Perry contend
with her.

CAPEHART: Right, because, I mean, she`s a female candidate, fellow
conservative. How do you go after her without stepping on your own message
and ruining your own candidacy?

O`DONNELL: The National Organization for Women is watching every word
that Rick Perry says for the rest of the campaign.

CAPEHART: Absolutely.

O`DONNELL: Jonathan Capehart of MSNBC and the "Washington Post,",
thank you very much for joining me tonight. And you can watch Jonathan
tomorrow afternoon, filling in for Martin Bashir at 3:00 p.m. Eastern. I
will be glued to the TV.

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

END

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