updated 9/30/2011 10:05:03 AM ET 2011-09-30T14:05:03

Guests: Maxine Waters, James Peterson, David K. Johnston, Regina
Calderwood, Mike Papantonio>


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

Herman Cain moving in the polls -- and he thinks the vast majority of
black Americans are brainwashed to vote for Democrats? They`re not
brainwashed. They`re voting for the party that stands up for them. I`ve
got a lot to say about that.

This is THE ED SHOW -- let`s get to work.

(BEGIN VIDEOTAPE)

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: Many African-Americans have
been brainwashed into not being open-minded, not even considering a
conservative point of view.

SCHULTZ (voice-over): Tonight, Congresswoman Maxine Waters responds
to Herman Cain`s insult to African-American Democrats.

Rick Perry is trying to stop his slide by squeezing off a few rounds.

And Mitt Romney is flip-flopping on his flip-flops.

"Ring of Fire" radio host Mike Papantonio is here.

UNIDENTIFIED FEMALE: Forty-seven percent of all Americans don`t pay
any taxes.

UNIDENTIFIED MALE: Forty-three percent of households don`t pay any
federal tax.

UNIDENTIFIED MALE: Where does this end?

SCHULTZ: David Cay Johnston helps us expose the disgraceful right
wing attack on low income Americans.

And the real-life impact of the Republican war on the Post Office.
Tonight, we`ll talk to a small business owner who stands to have her
business crushed if someone doesn`t act.

(END VIDEOTAPE)

SCHULTZ: Good to have you with us tonight, folks. Thanks for
watching.

The rising star of the Republican Party believes African-Americans,
they can`t think for themselves. Herman Cain is on a roll after winning
the Florida straw poll on Saturday. The pizza man has become a hero of
right wing talkers all over America and is surging in the poll.

The latest FOX News poll shows that Herman Cain right on the heels of
Rick Perry and within striking distance of Mitt Romney. Cain is, I guess
you could say, the get interview of the week for the righties. And he
starred in "Psycho Talk" last night for making this comment --

(BEGIN VIDEO CLIP)

CAIN: Many African-Americans have been brainwashed into not being
open minded, not even considering a conservative point of view. I have
received some of that same vitriol simply because I am running for the
Republican nomination as a conservative.

So, it`s just brainwashing and people not being open-minded, pure and
simple.

(END VIDEO CLIP)

SCHULTZ: Not being open minded? Well, my radio audience went nuts
when they heard that, Herman Cain saying that kind of stuff about how many
African-Americans had been brainwashed by Democrats.

For Cain to broad-brush so many African-Americans I think is
offensive. And it shows really he`s an intellectual lightweight. Maybe a
good business guy, but he doesn`t have the pulse of the people.

You know, not all African-Americans are Democrats. Can we state that?

But most of them are because Democrats have fought for their rights.
It`s not just Civil Rights Act and affirmative action. Democrats fight for
social and economic justice for every American.

Republicans -- let`s put the cards on the table -- do they not have an
ugly history of racism? The Southern Strategy is all about race and
radical politics.

South Carolina Senator Jim DeMint reminded us about that with a
shocking comment about President Obama.

(BEGIN AUDIO CLIP)

SEN. JIM DEMINT (R), SOUTH CAROLINA: If we`re able to stop Obama on
this, it will be his Waterloo. It will break him.

(END VIDEO CLIP)

SCHULTZ: Break him is an old racist term in the South and Jim DeMint
knows it.

For the past three years, DeMint`s Tea Party has carried racist signs
all over the country. African-American members of Congress has been spit
on and called the N-word. And the most powerful Republican in America
spews this garbage every day.

(BEGIN VIDEO CLIPS)

RUSH LIMBAUGH, RADIO TALK SHOW HOST: We have to bend over and grab
the ankles, bend over forward, backward, whichever, because his father was
black, because this is the first black president.

How do you get promoted in a Barack Obama administration? By hating
white people.

In Obama`s America, the white kids now get beat up with black kids
cheering, yes, right on, right on, right on!

A triple-double Oreo -- it`s actually a biracial cookie. You wait, it
ain`t going to be long before it`s going to be called the Or-Bam-eo or
something like this.

Barack, the magic Negro, doo doo doo doo.

How many votes did Obama get because he was black? Shocking number,
folks. If Obama weren`t black, he`d be a tour guide in Honolulu.

(END VIDEO CLIPS)

SCHULTZ: Herman Cain has turned a blind eye to the ugly racism coming
out of his own party.

When it comes to the issues African-Americans care about, Cain`s
belief system falls right in line with DeMint and Limbaugh.

Where is Cain on minimum wage? Well, he was against it.

Where is he on universal health care? He`s against that, too.

Where is he on collective bargaining? Can`t stand it. In fact, he`s
a deregulator who wants to get rid of the EPA.

And he`s not at all mindful about shipping jobs overseas. He doesn`t
care about that.

Cain`s policies don`t benefit African-Americans or any other working
class American. Cain isn`t the first black Republican to infer African-
Americans can`t think for themselves.

Here`s how Congressman Allen West put it.

(BEGIN VIDEO CLIP)

REP. ALLEN WEST (R), FLORIDA: You have this 21est century plantation
that has been out there where the Democrat Party has forever taken the
black vote for granted. And you have established certain black leaders who
are nothing more than the overseers of that plantation. And now, the
people on that plantation are upset because they`ve been disregarded,
disrespected and their concerns are not cared about.

So, I`m here as the Harriet Tubman to kind of lead them on the
Underground Railroad away from that plantation.

(END VIDEO CLIP)

SCHULTZ: Herman Cain and Allen West are free to believe what they
want. But if they are going to say their beliefs are better for an entire
minority group, they should point to some policy that proves it, don`t you
think? African-Americans have every right to think Republicans aren`t on
their side. They remember these pictures of the last Republican president
parting with John McCain when thousands of African-Americans in New Orleans
were trapped by hurricane Katrina. We can never forget.

Herman Cain is the first 2012 candidate to play the race card. And it
just might work. Cain is trying to divide Americans along racial lines.

And I think tonight that white Republicans love it.

Get your cell phones out. I want to know what you think. Tonight`s
question: are Herman Cain`s comments out of line? Text A for yes, text B
for no to 622639. And you can always go to our blog at Ed.MSNBC.com.
Results of the poll coming up later on in the show.

Joining me tonight is Congresswoman Maxine Waters of California.

Maxine, great to have you with us tonight. I appreciate your time.

REP. MAXINE WATERS (D), CALIFORNIA: Thank you.

SCHULTZ: What is your response to Herman Cain saying that African-
Americans are brainwashed to vote for Democrats?

WATERS: Well, you know, I think that he has been terribly
disrespectful. At the same time that he`s calling us brainwashed, then he
turns around and talks about one-third to 50 percent may be in support of
him. And I think that`s ridiculous. Not only are we not brainwashed, we
know how to act in our own best interest. That`s why most of us are
Democrats.

Who in their right mind, African-American, would belong to a party
that is as mean-spirited as we see coming out of the Republican Party.

They don`t care about poor people. They don`t care even about working
class people. They don`t care about senior citizens.

Just take a look at the legislation that was unveiled today that came
out of the labor, health and human services subcommittee where they`re
talking about taking away the subsidy from the elderly for heating
assistance, where they`re talking about cutting the Pell grant, where they
are talking about cutting public broadcasting, where they`re talking about
pulling the rug out from under the most vulnerable people in our society.

Who wants to belong to a party like that? And besides, this is a
party that he`s in that honors and respects a David Duke. I understand
he`s going to be their revered speaker at one of their events.

So, are we brainwashed or is he brainwashed?

SCHULTZ: Is he pandering to white Republicans?

WATERS: You know that he is, and this little temporary bump in the
road that he`s gotten, that`s gotten him believing that they`re going to
vote for him, he really is off base. They`re not going to vote for him.

And blacks are not going to vote for him either -- not simply because
he`s disrespected us so in these statements about us being brainwashed but
because, again, we act in our own best interest. We know what is best for
us. We all have to fight very hard to make sure that we get the most that
we can get in terms of good public policy for everybody and for African-
Americans.

But the Democratic Party, not only has demonstrated that it is
prepared to do the kind of public policy that will benefit most of the
people and certainly African-Americans.

SCHULTZ: Yes.

WATERS: And so, yes, he is pandering.

SCHULTZ: One final point. African-American unemployment is at 16.7
percent. Do you have any idea what the Republicans want to do for these
Americans to get them back to work other than give tax breaks to the rich?

WATERS: They don`t want to do anything. As a matter of fact, in this
same bill that I`m referring to, they just cut the job training programs
for the one-stop centers. They`re cutting jobs, as they make cuts
throughout this budget, which means that they are undermining our economy.

People don`t have jobs. They can`t invest in the economy. They can`t
spend money. They don`t want to do anything about the 16.7 unemployment.
And I don`t expect them do.

That`s why blacks are not voting for the Republicans and certainly not
going to vote for him.

SCHULTZ: Congresswoman Maxine Waters, thanks for your time tonight.
Appreciate it so much.

Now, let`s turn to Joe Watkins, MSNBC political analyst and Republican
political strategist; and Dr. James Peterson, director of Africana studies
and associate professor of English at Lehigh University.

Gentlemen, thanks for your time tonight.

Joe, let me ask you, do you think that African-Americans have been
brainwashed to vote for Democrats?

JOE WATKINS, MSNBC POLITICAL ANALYST: I think what Herman Cain said
is what a smart businessman who`s now a candidate would say. Remember,
here`s a guy who made his name in business by turning around failed
franchises. And he did it by getting people to take a second look at them.

He`s doing the same thing now as a candidate for the presidency. He`s
getting Republicans to take a second look at him. And now, he`s moving
into the top tier.

SCHULTZ: But does he believe that? Do you believe that black
Americans have been brainwashed?

WATKINS: I believe that black Americans are sophisticated voters and
that black Americans are loyal voters. I think Herman Cain is saying the
same thing, of blacks have been very, very loyal as Democrats. Before
that, we were loyal as Republican voters because we voted with the
Republican Party from the time of Lincoln, up until the mid-1950s.

So, he`s saying we have a history of loyalty and what he`s trying to
get voters to do is to take a look at him.

SCHULTZ: OK. Dr. Peterson, your thoughts on his comment. Do you
agree with Joe Watkins?

JAMES PETERSON, LEHIGH UNIVERSITY: No. Although Joe is doing a great
job of cleaning this up, this is absolutely insane on the part of Herman
Cain. Basically to say that black folk are brainwashed is a direct
commentary on the intellectual capacity. And it`s so sweeping and so
stereotypical. To me, I think it`s repulsive.

But, listen, you and Congresswoman Waters are absolutely right. Black
folk vote based upon the issues. Republicans are anti-Medicare, anti-
Social Security, anti-jobs act, anti the things that black folk take most
seriously --

SCHULTZ: Joe, what about that?

WATKINS: Herman Cain would say, take a look at my background. He`s a
son of a chauffeur --

SCHULTZ: I want you to answer what Dr. Peterson has said.

WATKINS: He`s saying, look at my tax policies, my 999 tax policy.

SCHULTZ: OK.

WATKINS: He says, I`m not an unfair or unsophisticated person. I`ve
got programs that you may like if you look at them. Don`t just -- you
can`t broad brush any party. You can`t broad brush and say, oh, Democrats
are bad and don`t know what they`re talking about. You can`t say, oh,
Republicans are bad and don`t know what they`re talking.

(CROSSTALK)

SCHULTZ: But, Joe, hold on a second now. We did see the Ryan plan
pass in the House. Now, are you saying that African-Americans are opposed
to that because they didn`t have the right information, because they were
brainwashed by Democrats?

I mean, the fact is that they want to vouch for Medicare and Medicaid
which obviously helps a lot of minorities in this country.

WATKINS: It depends on who you`re talking to. Of course, there are
some African-American people who are in business who feel that the health
care program that`s been advanced in the past by the president doesn`t help
small businesses. Not every small businessperson will say that. But many
will say that, including many African-Americans who happened to be in small
business.

And so, Herman Cain is saying, take a look, he`s somebody who has a
history in business. He had no advantage as an African-American. He grew
up in the segregated South. He`s somebody who was given values by his
parents and by his church, and went to college and graduate school and has
succeeded, I mean, incredibly successful --

SCHULTZ: So, you don`t think brainwashing goes too far? I mean, he -
- it`s not an intellectual shot at African-Americans, Joe?

WATKINS: Absolutely not.

SCHULTZ: OK.

WATKINS: What he`s saying is that African-Americans are loyal.
They`re loyal voters.

(CROSSTALK)

PETERSON: Herman Cain needs to hire you, Joe, because, again, you`re
cleaning this up really well.

They cheer the death penalty, which is one of the most racist federal
and state policies that we have. I mean, the things that the Republican
Party, especially now, represent are not the things the Republican Party
represented when I was a young man.

WATKINS: You remember, when you were a young man, you remember the
Republican Party was the party that sided with Lyndon Johnson to get the
civil rights bill passed, that get voting rights act passed.

PETERSON: That`s a little bit before my time.

(CROSSTALK)

PETERSON: Again, Joe, you can certainly clean this up. I don`t think
that we should be defending what Herman Cain is saying here. He`s out of
his mind.

The bottom line is black folk vote with the issues unless a lot of
those issues happen to reside been the Democratic Party.

WATKINS: Black people ought to take a second look at Herman Cain.
There`s a reason why he`s moving to the top tier of candidates. He has no
special advantage other than his intellect and his drive and determination.

SCHULTZ: Joe, is he pandering to white Republicans?

WATKINS: I don`t think so. I think he`s saying -- he`s a very blunt
guy. He says what he believes. Sometimes it`s popular, sometimes it`s
not.

SCHULTZ: If he says what he believes, he thinks that black Americans
are brainwashed.

WATKINS: He believes that African-Americans are loyal as voters.

SCHULTZ: OK.

(CROSSTALK)

PETERSON: He said brainwash. You`re saying loyal, which is a great
cleanup. But he said brainwashed.

And, listen, this is the politics of distraction. The Republican
Party has become much more homogenous and the dog-whistle racial, kind of,
politics of the Tea Party have been on display for well over two years now.

Black folk can see that. We are not dumb. We`re also not monolithic.
We`re nuanced and complex.

WATKINS: Absolutely. I agree with you.

SCHULTZ: Gentlemen, good discussion. Good to have both you with us.

Joe Watkins, and, Dr. James Peterson, thanks for your time tonight.
We`ll do it again.

Remember to answer the question right there at the bottom of the
screen, we want to know what you think. And tweet me your thoughts
@EdShow.

Coming up: a new poll shows the Republican voters are more
enthusiastic than Democrats when it comes to the 2012 election. Why the
left needs to get motivated now. My commentary, next.

And the Postal Service is moving forward with a plan to close
thousands of Post Offices in all 50 states. This is a huge story. It will
affect small business. We will talk to a small businessperson tonight from
the middle of the country to tell you what she`s going to face.

We`ll be right back.

(COMMERCIAL BREAK)

SCHULTZ: The banks of this country, they just seem to get us coming
and going, don`t they? And it happened again today.

Bank of America announced it will charge a $5 monthly fee on its debit
cards if the card is used for purchases. This is the largest bank of the
country based on assets. But it`s complaining about the financial reform
bill, in particular, the Durbin Amendment, which limits the fees banks can
charge every single time you swipe a debit card.

The author of the provision, Senator Dick Durbin, said today, "It
seems that old habits die hard for Bank of America. After years of raking
in excess profits off an unfair and anti-competitive system, Bank of
America is trying to find new ways to pad their profits by sticking it to
the consumers. I hope their customers have the final say." Oh, they
might.

The good news, the transaction fee will take effect on October 1st.
That limit will be 24 cents per transaction for debit card purchases. It`s
not enough for Bank of America. So they`re adding in the monthly fee. So
good of them, huh?

You can bet other banks will do the same unless customers leave in
protest.

Coming up, a new poll shows Democrats just can`t get excited about
reelecting the president. I`ve got a message for them, next.

Bill O`Reilly`s conspiracy theory about muffins lands him in the zone.

And the Republicans have been attacking the poor with a malicious
talking point about the economy. We`ll straighten them out with the facts.

Stay with us. We`ll be right back.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

Every now and then in this business, there`s a story that hits me and
I just have to say a little bit more about it. A Gallup poll says
Democrats aren`t nearly as enthusiastic as Republicans about voting in the
next election. We`re talking 14 months from now, right?

Forty-four percent of Democrats are more enthusiastic than usual. But
58 percent of Republicans are more enthusiastic than usual about voting in
the 2012 election. This is the so-called enthusiasm gap. And it kind of
got my attention.

Now, I know it`s just one poll. But if this is anywhere close to
being true 14 months from now, let me just say something to my friendly
liberals out there across America -- we`re going to get our ass kicked if
we don`t wake up. Take this poll as a warning and change it.

Sitting on the sidelines is not an option when the other side is
actively engaged. And there shouldn`t be any doubt about what happens if
Republicans regain power across Washington. They have not been shy about
their targets, have they?

The big three are at the top of the list: Social Security, Medicare
and Medicaid. Now, can you just imagine what we`ve seen in Wisconsin, what
we`re seeing in Ohio? What would it be like if a Republican was in the
White House and they had the Senate and the House? Do you think these
three would be targeted at all?

They`d privatize all -- I think they`d eliminate Medicare. I know
they would go voucher system on -- they eliminate Medicare. They go
voucher system on Medicare because it`s already in their proposal of the
Ryan plan.

And targeting Social Security? You want to talk about Wall Street
getting fat pockets? This is what would help them get there. More tax
cuts for the wealthy, tax hikes on the working middle class and middle
class Americans. You`d get busted.

Republicans -- they like to call that broadening the base, broadening
the base?

Let me just tell you, more tax cuts for the wealthy. They would drop
it down to 25 percent. I bet they would drop the corporate rate, listen to
me, America, down to 15 percent. That`s the grand plan, to bring the
corporate tax rate to 15 percent, not 25 percent.

And, of course, tax hikes for the working class. They`d nail you one
way or another. You can`t trust them. If you think collective bargaining
has been under attack lately, just wait. It`s not just Wisconsin and Ohio
and New Jersey and other states with Republican governors.

National Republicans smell blood in the water. They see a chance to
finally bust the postal workers of America by bringing about the collapse
of the Postal Office.

And the two leading candidates for the Republican nomination, Mitt
Romney and Rick Perry, both say they support a national right to work law.

Think about that for a moment -- the two men who could very well be
the next president of the United States want to effectively bring organized
labor to an end. I believe it was Karl Rove not long ago who said that`s
really the last line of infrastructure that the Democratic Party has is
organized labor in this country. So now the Republicans are out there
saying, hell, let`s get right to work in every state. I think they`d go so
far as to make it a federal law.

And let`s not forget deregulation in the financial industry, cuddling
the insurance industry, they`re real good at that. Tax breaks for big oil,
oil will run wild with Republicans in charge. That`s the very minimum.

There are Republicans in office who scream about the most basic
consumer protections. These are the same people who have no problem
throwing this country into unfunded wars, the recklessness of the current
crop of Republicans is really nothing compared to what we`d get if they
were to ever regain the White House, because look at who`s running.

Well, let`s say Christie jumps in. He`d do all of this. Let`s say
Sarah Palin jumps in. She`d do all of that.

And you know the rest of the crowd will. They don`t like Mitt because
he`s too moderate. So they`re going to get somebody really radical.

So, does this motivate you at all knowing what the landscape is? Can
you sit on your couch tonight and say, Obama didn`t do everything I wanted
him to do? So, I don`t think it can get done.

So, there isn`t any question about what happens if Democrats and
liberals in this country don`t get engaged.

Now, you`re on the front lines. You have to get engaged. Every
family in this country that has wage earners in the household have to
realize exactly what in the heck is going on because this is a radical
agenda.

And that`s what it`s going to be like. It`s going to be worse than
the Bush administration, no matter who gets in there.

The attack on collective bargaining is coming up in Ohio. I believe
this is an opportunity for us to see how it`s done. You can`t tell me that
1.3 million people can sign a petition to get it on the ballot to recall a
radical Senate Bill 5 law and there not be enthusiasm.

Part of me believes that I think this is some kind of right wing
extremist movement out there trying to down-talk Democrats where we`ve been
in Portland, in Minneapolis, in Madison, in Toledo, in Columbus. We`re
overwhelmed with enthusiasm.

So don`t believe this poll, although it should be a wake-up call if
it`s true. We can beat these folks because they will, in my opinion,
destroy this country if they get the big three back. It will be worse than
it was before.

Bill O`Reilly says he doesn`t want to pay his taxes because of a phony
$16 muffin. He`s spinning his way right into the zone. The righties
always defend the rich, unless one of those rich guys tells the truth about
how good millionaires and billionaires have it when it comes to taxes.
Telling the truth about the super rich, coming up.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: And in Psycho Talk tonight, while I get passionate about the
economy and jobs, Bill O`Reilly gets passionate about baked goods. It all
started last week when he ranted about an allegation that the Justice
Department served 16 muffins dollars at a 2009 conference.

(BEGIN VIDEO CLIP)

BILL O`REILLY, FOX NEWS ANCHOR: The 16 dollar muffin now becomes a
symbol of how wasteful the feds are with our tax dollars. I`ve stayed in
some of the swankiest hotels on Earth. I have never seen a 16 dollar
muffin. I want to see that muffin. I want to taste that muffin? You know
why? Because I bought the muffin.

(END VIDEO CLIP)

SCHULTZ: But yelling about muffins on his own show wasn`t enough for
O`Reilly. He was back at it last night on "The Daily Show."

(BEGIN VIDEO CLIP)

O`REILLY: Sixteen dollar muffin, broke the story last week on "the
Factor." You were otherwise occupied, making your little wise remarks, not
reading what`s happening. They had a bunch of conferences for pinheads,
federal governments, and they ordered 250 muffins at 16 bucks apiece.

JON STEWART, "THE DAILY SHOW": That`s a lot for muffins.

O`REILLY: Yeah. And you know what? I paid for the muffin.

STEWART: I understand that.

O`REILLY: And so did you.

(END VIDEO CLIP)

SCHULTZ: Dude, give it a rest on the muffins, will you? First of
all, O`Reilly did not break the story. But more importantly, the story
itself is bogus. The 16 dollar amount was wrong. According to the folks
at the Hilton where the conference was actually held, the Justice
Department paid 14.29 per person, per day, which included all food and fees
for the workspace and conference rooms they used.

But leave it to Bill O`Reilly to keep hollering about a fake story.
Continuing to push the myth of the 16 dollar muffin is pinheaded Psycho
Talk.

O`Reilly isn`t the only one on Fox who is making things up to protect
the healthy? David K. Johnston will join me to expose the Fox lies about
low income Americans.

Chris Christie says he`s not running for president. Will a
conversation with George W. Bush change his mind? Mike Papantonio going to
weigh in on that with me and the week`s other big stories, coming up.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Let`s go back to the O`Reilly
moment again. During his "Daily Show" appearance last night, O`Reilly
continued his belly-aching about back-breaking tax burden that he`s got to
carry.

(BEGIN VIDEO CLIP)

O`REILLY: I`m paying now through the roof in taxes.

STEWART: You`re paying less than you paid in the `90s.

O`REILLY: That`s not true.

STEWART: Yes, it is.

O`REILLY: Property taxes are up. If you had a home, you`d know that.

(END VIDEO CLIP)

SCHULTZ: Of course, Jon Stewart was right. Bill O`Reilly`s tax rate
is four percent lower than it was back in the `90s. And property taxes
don`t go up just for you, Bill. Even the lowest income Americans pay the
same sales tax as you do. They pay the same tolls on bridges. And they
pay the same tax on gasoline.

Everyone pays their fair share on those taxes. What`s not fair is the
percentage guys like you, Bill, pay on income.

Let me give you an example. Let`s take a household that makes 68,000
dollars a year in taxable income; 25 percent of that would go to the
federal government. Another household with an income of 375,000 dollars
qualifies for the highest tax bracket; the government would take 35.5
percent.

But now imagine the same household has an annual investment income of
one million dollars, which would not be unusual for an executive who gets a
lower salary in exchange for capital gains. The government only takes 15
percent of that million.

So the family with 68,000 will give 25 percent to the feds, while the
household with 1,375,000 dollars will give less than 21 percent to the
government. Got it, Bill?

No matter how you slice it, this is not shared sacrifice. Bill and
his friends over on Fox, they know this is true, which is why they created
another bogeyman to blame their higher taxes.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Forty percent of the country does not pay any
tax.

UNIDENTIFIED MALE: Forty three percent of households don`t pay any
federal tax.

UNIDENTIFIED MALE: Forty seven percent of households pay not a single
dime in taxes.

UNIDENTIFIED FEMALE: Forty seven percent of all Americans don`t pay
any taxes.

GLENN BECK, RADIO TALK SHOW HOST: Forty nine percent don`t pay any
tax.

UNIDENTIFIED MALE: Fifty one percent of the country isn`t paying any
taxes at all.

SEAN HANNITY, FOX NEWS ANCHOR: Half of Americans now don`t pay taxes.

Fifty percent of people aren`t paying taxes, households; 50 percent
of households are. Fifty percent of the American people, households in
America, don`t pay taxes anymore.

Fifty percent of American households no longer pay taxes.

Fifty percent of Americans no longer pay taxes. They don`t pay income
taxes.

UNIDENTIFIED FEMALE: Wow.

(END VIDEO CLIP)

SCHULTZ: You know, they talk over on Fox as if they do their own
taxes. First things first; the idea that almost half the country pays no
taxes is an outright lie. They pay federal payroll taxes on Social
Security and Medicare. They pay state taxes. They pay local taxes. They
pay taxes, period.

But the recession pushed 47 percent of households below the minimum
federal income tax level. Most of these families make less than 30,000
dollars a year. The fact that we have 47 percent of households living
below the minimum tax level is a disgrace. It is a national shame.

But the millionaires at Fox don`t want you to see it that way. They
want you to believe half the country is nothing but a bunch of lazy
moochers. If you need a better illustration of the difference between
liberals and conservatives when it comes to fiscal policy, I don`t think
you`re going to find it out there.

Joining me tonight is Pulitzer Prize winning journalist David K.
Johnston. He`s the author of "Free Lunch, How the Wealthiest Americans
Enriched Themselves at Government Expense and Stick You With The Bill."
He`s also a columnist for Reuters.

David K., great to have you with us tonight. I want to be fair here.
OK? Tell me if I`m wrong about any of this. Tell me if Bill O`Reilly has
a point.

DAVID K. JOHNSTON, AUTHOR, "FREE LUNCH": Well, I O`Reilly feels that
he`s taxed too heavily. When I was on his show once years ago, I suggested
to him when were done that he should get a better tax lawyer if he`s paying
the rates he claimed to pay, because they were higher than the actual tax
rates.

But what you just heard in all of those news clips is really an
unbelievable big lie. And Roger Ailes should be ashamed of himself. The
fact is the bottom 50 percent or 47 or 49, whatever number you want to use,
who don`t pay federal income taxes because they don`t make enough money to
pay them, include lots of families with children. And who is it who said
we`re going to take these families with children off the payroll? The
Republicans, with the Child Tax Credit.

So it was the Republicans whose idea this was, George W. Bush and
before him the Republican leaders in the House, to remove a large number of
people, about 12 percent of the population, from the income tax. Poor
people in America are much more heavily taxed than rich people. And let me
give you the most classic example.

In Alabama, the poorest fifth of families who make less than 13,000
dollars a year pay state and local taxes that are about 10 or 11 percent of
their income. But the richest people in Alabama pay state and federal
income cases that are less than five percent of their income.

SCHULTZ: So you`ve explained well how the bottom 47 percent pay no
federal income tax. That was all set up by the Republicans. So how do the
conservatives manage to turn Warren Buffett into some kind of socialist
left winger for saying that, you know, maybe we should pay a little bit
more up on this end of the income scale?

JOHNSTON: Well, this is an astonishing development here because,
again, Warren Buffett pays very low taxes because the Republicans got low
taxes on capital. And so you create a problem. It`s sort of like the
national debt, right? The national debt was run up mostly by Reagan, Bush
and Bush, who all said they were fiscal conservatives and they were going
to behave prudently.

Then they spent wildly. And now you have this complaint of, oh, we`re
deeply debt. If it hadn`t been for their debt, we wouldn`t have a problem
now dealing with the economy by borrowing money to create temporary demand,
so the economy would recover.

Clearly, there`s a pattern going on here with the Republicans: create
the problem and then blame it on other people, poor people, Democrats,
Obama, anybody but the people who created it.

SCHULTZ: O`Reilly and others on that network always push the flat
tax. Would America gain doing that?

JOHNSTON: I call it the Steve Forbes never pays taxes again tax.
What people need to know about the flat tax is it applies to wages. But if
your income is from capital gains, from royalties of certain kinds, from
interest, you pay no taxes. You would live tax-free.

So if you`re Steve Forbes or someone like that, you take one dollar in
salary and you take the rest as dividends.

SCHULTZ: But it would make it hit lower income people harder. Would
it not?

JOHNSTON: Absolutely. It would be a disaster for everybody but the
super rich.

SCHULTZ: David K. Johnston, always a pleasure. Thank you for
clearing the sky on that one.

Coming up, thousands of Postal facilities are in danger of being
closed down. This is the real deal, folks. If this happens, entire
communities are really going to feel the effects. So let`s go to a small
business owner whose local post office might disappear and what`s going to
happen to her two businesses. That`s next. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: From gay rights to gun control, Mitt Romney has flip-flopped
on so many issues, even he can`t keep his position straight. He`s the
unemployed father of five, defending his every changing record at the
latest GOP debate. Here he is.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I`m going to stand by my
positions. I`m proud of them. One reason to elect me is that I know what
I stand for. I`ve written it down. Words have meaning. And I have the
experience to get this country going again.

(END VIDEO CLIP)

SCHULTZ: All right. Less than a week later, Romney`s changing things
up again. This time, he`s flip-flopping on flip-flopping. Now, you just
heard him say he stands by his positions. Yesterday, at a town hall in New
Hampshire, Romney walked that statement back.

(BEGIN VIDEO CLIP)

ROMNEY: It`s not that every single issue I`ve looked at in my entire
life I`ve never changed my view on. In the private sector, if you don`t
change your view when the facts change, well, you`ll get fired for being
stubborn and stupid.

(END VIDEO CLIP)

SCHULTZ: Well, the fact of the matter is Romney went from governing a
blue state to chasing down Tea Party support. So the facts didn`t change
for Mitt Romney. His constituency did.

Coming up, the Republican plan to kill the Post Office will hurt --
will butcher rural America. I`ll talk to one small business owner about
how the change will impact her. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: In the Playbook tonight, towns and cities in all 50 states
are in danger of losing their local Post Offices. Now this week across the
country, folks are getting surveys like this one from the Postal Service.
This was obviously from a New York resident here in New York that was given
to me. And they`re asking questions like just -- they`re trying to find
out how often people use their Post Offices.

Well, hold it right there. In New York, maybe not as much, maybe so.
But in a rural area, I tell you what, they live by them. The survey is all
part of a plan to close as many as 3,700 postal facilities to help solve
budget shortfalls.

But remember, these budget problems have been manufactured by the
Congress. They were created by a law Republicans passed during the lame
duck session of the Congress in 2006, forcing the postal service to fund 75
years worth of pensions within a ten-year window. What business has to do
that?

And to make it worse, Congresswoman Darrell Issa has a plan to bust up
the Postal Workers Union, kill jobs, and hand Postal Service business to
the private sector.

Meanwhile, no final decisions have been made about closures. But
communities are getting nervous. Thousands of jobs are on the line. And
the effect, well, it will be felt far beyond the postal workers. Rural
communities, local newspapers, small businesses -- folks, I`m telling you,
they`re going to be hurt. This is the infrastructure of America under
attack by the conservative agenda.

So the conservatives love to talk about how they are fans and
proponents of small business. Well, let`s leave politics out of it
tonight. And let`s just talk about business.

Let me bring in Regina Calderwood, the owner of two small businesses
in Cosby, Missouri, which is one of the communities in danger of losing its
Post Office. Great to have you with us tonight, Regina.

You own a restaurant, Gina`s Cafe and Catering, and a wedding rental
business, The Best Seat in the House.

What will happen to your businesses if the Post Office closes?

REGINA CALDERWOOD, SMALL BUSINESS OWNER: Well, our business on the
wedding side relies heavily on our Post Office. We have to ship things
back and forth between our branches. We also have a branch in Oklahoma and
a branch in St. Louis. And we need to be able to ship things quickly back
and forth between our branches in order to get things in a timely manner
for brides.

You definitely don`t want to not get something on time for a wedding.
And so that right there will affect that business greatly. Not to mention
the foot traffic that the Post Office brings into our community every day
will directly affect the amount of people who are coming into my cafe on a
daily basis.

SCHULTZ: What are you going to have to do business-wise for your
wedding company, The Best Seat in the House -- very clever name, I might
add. What are you going to do? Are you going to have to go UPS? Are you
going to have to go Fedex? And what`s that going to mean to your bottom
line?

CALDERWOOD: Of course, to the bottom line, it`s going to be more
expensive. Therefore, we will have to put those expenses on to our
customer, unfortunately. And in a recession, things have been tight enough
right now for us to continue our business, as it is, without having to
worry about extra expenses and things like that.

But the newest -- pardon me, the nearest UPS store is a good 20-minute
drive for us. We don`t have one near our community.

SCHULTZ: And what if they were to close your Post Office in your town
there in Missouri? How far would you have to go to the next Post Office?
Do you know?

CALDERWOOD: Well, the problem with that is our community is not the
only one that`s being affected. Our neighboring community, Helena, is up
for being closed as well. And several other local Post Offices near us are
also being up for closure.

So we would have to drive into St. Joseph. And I believe that`s
probably 15 to 20 miles for us to drive in.

SCHULTZ: Regina, I don`t want to put words in your mouth. But do you
think your community would be taking a big step backwards if you lost the
Post Office?

CALDERWOOD: Well, I feel like we started these two businesses about
18 months ago in our town to help reverse the economic situation of our
town. Basically, we have four businesses in town now. And closing that
Post Office will kind of take us a step backwards when we`re trying to
propel forward. Not only that, those postal workers will lose their
positions. And that`s just more losses for the community.

And I think it just shows the community a negative spot, that, hey,
they don`t even feel like you`re important enough to even have a Post
Office here now.

SCHULTZ: Well, I hope you folks down there in Missouri know that it
was a law that was passed by the Congress that is doing this. It has
nothing to do with the operations of the Post Office. Regina Calderwood,
thank you for joining us tonight.

Rick Perry`s how-to manual on weekend fun. All you need is a sniper
rifle. Mike Papantonio up next with me. You`re watching THE ED SHOW.
Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Survey tonight, I asked our audience, are Herman Cain`s
comments out of line. Ninety two percent of you said yes; eight percent of
you said no.

Coming up, Rick Perry, Chris Christie and more. The week in review,
Mike Papantonio with me next. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Time to call in my friend,
radio host and that -- "Ring of Fire" radio host Mike Papantonio. Mike,
Rick Perry`s had a tough week. He`s slipping in the polls. Is he going to
be able to recover?

MIKE PAPANTONIO, RADIO TALK SHOW HOST: I doubt it. He`s come up with
this new gun ad. You can understand it on a lot of ways. First of all,
golf -- he says he doesn`t play golf. He shoots his gun instead. Golf
takes a little bit of intellect. It takes a little bit of focus. It takes
a little bit of concentration.

It`s really for smarter people. I can see why Perry would not have
any interest in golf.

Second of all, Perry, with this new campaign, Ed, it`s absurd. What
he`s tried to do is set himself as a populist, almost as if he is not the
guy that met with the Koch brothers and had all those billionaires and
millionaires say, hey, if you`ll be our boy, Mr. Perry, we`ll stand behind
you and give you millions of dollars.

He`s a fraud. This is another fraud, Ed. He`ll continue to fall in
the polls. People are seeing the guys` a fraud. Unfortunately, the
Republicans will put him up there anyway.

SCHULTZ: So you think he`ll get the nomination?

PAPANTONIO: I think so. I think they can`t help themselves. He
represents what the new Republican party is.

SCHULTZ: What about the news today that Chris Christie -- George W.
Bush, Nancy Reagan, Henry Kissinger, what about all that? They want him to
jump in.

PAPANTONIO: Seen an interesting development. You hear Fox carry the
story. This is very interesting, Ed. Fox carries the story that they
think Chris Christie is too heavy and too big to be president. What
they`re really doing is they`re trying to can him right now. They`re
trying to say -- that`s code talk.

It`s code talk that he`s too unhealthy to be the president. They`re
trying to intimate that he`s this 5`10", 320-pounder with a high stress
environment, who really might start looking like a flat line cardiac case.
That`s not me talking. That`s Fox News.

If you take a look at what Fox News -- it`s a full attack. It`s a
coded attack. But they keep saying that Christie is heavy and he`s a big
man. And they don`t know if he can make it through this is basically what
they`re suggesting. And you have to wonder why. I`d suggest they`re doing
it because their pal, of course, works right there at Fox News, Sarah
Palin.

SCHULTZ: Do you think he`ll jump in? Do you think he`ll get in this
race?

PAPANTONIO: No. I genuinely believe-- I genuinely believe, Ed, that
he honestly understands that he does not have the health to do this. Not
only that, he`s smart enough to know this is not the time for him to do it.
If he`s serious about it, he waits for 2016. The billionaires and
millionaires who he is their boy, they`re saying -- they want him in now.
But truthfully, he`ll be around in 2016.

It would be a big mistake for him to jump in right now. Obama is much
stronger than the Republicans think he is.

SCHULTZ: And in 20 seconds, can you tell us why the Democrats aren`t
all over this postal story and supporting the House bill that would reverse
what is going to take away 120,000 jobs?

PAPANTONIO: I mean, for the Republicans, it`s part of the plan. Shut
down government, drown government in the water that you could fill up the
bathtub with.

That`s part of the story. It`s just --

SCHULTZ: But the Democrats aren`t there. Don`t they need to get on
top of this?

PAPANTONIO: The Dem -- it`s the same reason they weren`t in
Wisconsin, Ed. It`s the same problem. Democrats need to find their fight.

SCHULTZ: Thanks, Mike. That`s THE ED SHOW. I`m Ed Schultz. "THE
LAST WORD" with Lawrence O`Donnell starts right now. We`ll see you back
here Monday night.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

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