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'The Last Word with Lawrence O'Donnell' for Wednesday, October 12, 2011

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Guests: Howard Fineman, Mark McKinnon, Howard Dean, Bruce Bartlett, Jonathan Gruber

LAWRENCE O`DONNELL, HOST: Tonight, there`s a new NBC News/"Wall
Street Journal" poll and you`re not going to believe who the new Republican
front-runner is. Hint: 9-9-9.

(BEGIN VIDEOTAPE)

HERMAN CAIN (R), PRESIDENTIAL CANDIDATE: The 9-9-9 special.

Nine real size entrees for only $9.99. That is so cool.

CHUCK TODD, NBC NEWS: With surging poll numbers comes a little more
scrutiny.

CAIN: Someone once said simplicity is genius.

O`DONNELL (voice-over): Rich Republicans think it`s genius.

CAIN: It`s a package, 9-9-9.

CHRIS JANSING, NBC NEWS: 9-9-9.

CAIN: The 9-9-9 plan replaces payroll tax.

TODD: With a 9 percent flat income tax, the poor would pay more while
the rich would have their taxes cut.

ED SCHULTZ, "THE ED SHOW" HOST: The Democrats would never put a 9
percent sales tax on the poorest Americans.

CAIN: I`ve gone through the math.

UNIDENTIFIED MALE: I don`t think anybody in this town takes Herman
Cain seriously.

UNIDENTIFIED FEMALE: This tax plan doesn`t make sense to me.

UNIDENTIFIED MALE: The pizza guy who says 999, 999 times --

UNIDENTIFIED MALE: Flavor of the week. Herman Cain, flavor of the
month.

CAIN: Haagen-Dazs black walnut because it tastes good all the time.

O`DONNELL: Support for Mitt Romney won`t budge.

UNIDENTIFIED MALE: His number doesn`t move.

UNIDENTIFIED MALE: He can`t break 25 percent.

UNIDENTIFIED MALE: It is amazing that his number doesn`t move.

CAIN: (INAUDIBLE) I`m asking you to reconsider.

UNIDENTIFIED MALE: The other candidates decided Romney was going to
be the nominee, too.

CAIN: Governor Huntsman and Representative Bachmann were trying to be
cute.

UNIDENTIFIED MALE: Perry was clearly underprepared.

ANDREA MITCHELL, NBC NEWS: Rick Perry was tan and rested.

O`DONNELL: And things were looking up for the president.

MITCHELL: Favor the president`s proposals overwhelmingly by 2-1.

UNIDENTIFIED FEMALE: President put forth an idea.

MITCHELL: Poll numbers show that the public is solidly behind it.

UNIDENTIFIED MALE: Four hundred and forty-seven billion dollar
package.

MITCHELL: People also agree by large margins with the Democrats.

(END VIDEOTAPE)

O`DONNELL: In a just fully released NBC News/"Wall Street Journal"
poll, Herman Cain has rocketed to the top of the Republican field with 27
percent. Mitt Romney is now in second at 23 percent. Rick Perry slides to
third with 16 percent. Ron Paul is holding steady at 11 percent, followed
by Newt Gingrich at 8 percent. And the fall from grace for Michele
Bachmann has landed her at 5 percent.

It`s been a remarkable two months for Herman Cain. In the August
version of this poll, Cain was tied for fifth with that 5 percent that
Michele Bachmann now has. Rick Perry claimed the top spot at 38 percent
and Mitt Romney was in the same number two spot unchanged at 23 percent.

Whatever you do, don`t call Herman Cain the flavor of the week.

(BEGIN VIDEO CLIP)

CAIN: I`m feeling great because a lot of people are taking a second
look and then saying, maybe this long shot is not such a long shot. Flavor
of the week? No. Because there`s a difference between the flavor of the
week and Haagen-Dazs black walnut because it tastes good all the time.
Call me Haagen-Dazs black walnut.

(END VIDEO CLIP)

O`DONNELL: Haagen-Dazs black walnut went after yesterday`s front-
runner Mitt Romney in last night`s Bloomberg/"Washington Post" debate.

(BEGIN VIDEO CLIP)

CAIN: Can you name all 59 points in your 160-page plan and does it
satisfy that criteria of being simple, transparent, efficient, fair and
neutral?

(APPLAUSE)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Herman, I`ve had the
experience of my life of taking on some tough problems. I must admit that
simple answers are always very helpful, but oftentimes inadequate.

(END VIDEO CLIP)

O`DONNELL: In today`s "Daily Beast," Republican campaign consultant
Mark McKinnon writes, "Herman Cain is going to be around for a while and
people should start taking him seriously. If he`s not president, he could
be vice president or bet the under and just start calling him Mr.
Secretary."

Joining me now: Mark McKinnon, former adviser to the Bush and McCain
campaigns and the Republican -- and adviser for nolabels.org.

And Howard Fineman, editorial director for the AOL/"Huffington Post"
Media Group and an MSNBC analyst.

Thank you both for joining me tonight.

HOWARD FINEMAN, MSNBC POLITICAL ANALYST: Hi, Lawrence.

O`DONNELL: Mark, I`m not sure if the world is ready for Herman Cain,
but Republican voters seem ready for Herman Cain. He didn`t rocket all the
way up to that now seems stratospheric 38 percent Rick Perry was at in this
poll last time around. This is an amazing move for Cain in this poll.

MARK MCKINNON, ADVISOR, BUSH & MCCAIN CAMPAIGNS: It is an amazing
move for Herman Cain, and I think it`s very possible he could sustain it.
He`s been in the race, he got in pretty early. He`s been pretty
disciplined about his campaign. He`s run a good campaign.

You know, he`s a very sunny, optimistic guy. He`s very confident.
He`s very bold. He`s very assertive, as you`ve seen in the debates. And
he absolutely dominated the debate last night.

I tell you, at least a third, maybe half of the debate was spent
either talking about him or talking about his plan, or he was defending his
plan or describing his plan. But it was all about Herman Cain.

And when the debate is all about you, then it`s not a surprise when
you wake up the next day and you`re sitting atop the polls. This race is
all about Herman Cain right now.

O`DONNELL: Howard Fineman, I want to talk about this poll we`ve just
released, NBC News poll. Many stunning things in it -- one of them being
the Mitt Romney number. The only number in the poll to hold steady,
absolutely unchanged at 23 percent. The front-runner status switches
around him. You know, Rick Perry drops out of that slot. Herman Cain
moves into that slot.

What`s going on with Mitt Romney?

FINEMAN: Well, his numbers don`t move any more than his hair does,
but if you talk to people in New Hampshire, when I was up there yesterday
and today, was at the debate, and then I heard Herman Cain before the New
Hampshire legislature which I want to tell you about.

But first on Mitt Romney -- somebody observed to me, a very shrewd
politician up there, observed to me that even though Romney`s numbers in
New Hampshire look good, and he`s in the low 40s in New Hampshire, the road
signs, the signs you see for Mitt Romney are on the public highways and
have been placed there by staff people. You don`t see any Mitt Romney
signs on people`s lawns. It`s the difference between paid staff on public
highways and personal commitment.

He just doesn`t have personal commitment. He has the establishment in
New Hampshire and that`s about it. That`s why he hasn`t moved up or down.

As far as Herman Cain is concerned, I can verify what Mark was saying.
I saw Herman Cain speak to the New Hampshire legislature today. He did a
much better job than any of the other candidates who spoke and there were
several others who did.

He was pure Ronald Reagan -- sunny optimism, simple ideas and faith in
the future of the country. He touched every base.

You know, he says I`m not -- I`ve never been a politician, I`ve never
been elected to office but it was a very shrewd speech that touched on
everything that core Main Street conservatives in New Hampshire care about
and he got a standing ovation at the end.

O`DONNELL: Howard, quickly, was it a scripted speech?

FINEMAN: No. It was -- it`s something that he`s honed. You know, as
Mark said, he`s run a good campaign. I don`t think he has a good
organization everywhere, but in terms of his message, he`s honed it, not
just on 9-9-9 but on -- which is problematic, by the way, because it would
involve a sales tax on milk and bread and beer and everything else.

But on immigration, on regulation, on foreign policy, it`s simple,
clear, direct and optimistic and enthusiastic about the future of
individual liberty in the country and even the Second Amendment, he
finished with a flourish about the second amendment which is very popular
in New Hampshire and gun rights. Talked about -- ended the speech with the
phrase "live free or die." It`s corny but it`s what the New Hampshire
people love. As I say, he got a standing ovation at the end.

O`DONNELL: Mark, I`m going to dig in to 9-9-9 later in the show in
real detail. And I think I`m not the only one. I think now that he`s the
front-runner, the details are going to matter. And it turns it`s not just
the tax plan. It is specifically an abolish Medicare, abolish Social
Security plan, not only stop the funding to them, actually abolish them.
There`s a lot there that`s going to hurt him as this campaign progresses if
-- if Mitt Romney decides to go after him.

I mean, Mitt Romney went after Rick Perry simply for calling Social
Security a Ponzi scheme which politically is bad enough. But Herman Cain
actually wants to abolish it.

Will Mitt Romney go after Herman Cain the same way that he went after
Rick Perry?

MCKINNON: I think my suspicion is that he won`t right away. I think
that they see enough people rise and fall now that they`re going to give
this a couple weeks. They`re going to let you guys take a look at him, vet
him, which he really hasn`t been vetted.

His plan obviously is going to get a great deal of scrutiny. I don`t
think it purports to do what you`re suggesting it does.

But he`ll have an opportunity to defend it and we`ll have a lot of
time discussing it. Economists are poring over it. Arthur Laffer came out
and supported it today.

So, listen, the interesting thing is, at least he puts a plan out
there and it`s an interesting plan and it`s a bold plan. That`s what we
need right now. It`s good we`re having this debate. But my suspicion is
that Romney will give this a couple weeks then if he has to load up, he`ll
do it later.

But I think they see this as just another one who`s likely to lose out
over a couple of weeks.

O`DONNELL: Mark, later in the show, I`m going to read the part of
Herman Cain`s plan where he specifies how he wants to get rid of Social
Security and Medicare.

But, Howard, I want you to listen to what Herman Cain said this
morning to Chuck Todd and let`s just consider whether answers like this are
going to work as he goes further into the campaign. Let`s listen to this.

(BEGIN VIDEO CLIP)

TODD: How do you reassure voters that despite all the experience
you`re running on in the business community, your time on the Fed, you
missed the housing bubble and you missed the economic collapse?

CAIN: I will have people around me who are going to help me do deep
analyses on some of these things. OK? So, yes, I miss some of these
things. I`m not perfect. I`m very quick to say I made a mistake or I
missed it. I didn`t have sophisticated analyses helping me draw
conclusions that I was drawing at that time.

(END VIDEO CLIP)

O`DONNELL: Howard, I`m going to get better advisers. How is that for
an answer?

FINEMAN: Well, that was a pretty lame answer because he`s running on
business expertise, but he`s running on something besides that. And he`s
actually glorying in the fact and bragging about the fact he`s the only one
in the race who isn`t by any stretch of definition a politician. Meaning
he`s never been an elected official, he`s never served in public -- you
know, elected official, never served in elective public office. Yes, he
was on the Kansas City Fed.

And he brags about that. He says, I`m going to bring on outside fresh
managerial look that`s not been tainted by politics in the way Mitt
Romney`s experience or Jon Huntsman`s experience has been tainted by
politics. So, he`s bragging in a way about his ignorance of politics.

He said before the legislature today in answer to the notion that 9-9-
9 could never pass in the legislatures of the country, let alone in the
Congress. He said, you know what, I don`t propose things because I think
they can pass, I propose them because I think they are right.

And that, again -- that was a line that also drew huge applause. He
quoted from Ronald Reagan over and over and over again why other people in
the race aren`t doing it, I don`t know. It works for Herman Cain.

O`DONNELL: Howard Fineman, Mark McKinnon, thank you very much for
joining me tonight.

MCKINNON: Thanks, Lawrence.

FINEMAN: Thanks, Lawrence.

O`DONNELL: Coming up, I know you think you heard a lot about Herman
Cain`s 9-9-9 plan. You don`t know the half of it and the media doesn`t
either. We`re going to go inside the 9-9-9 plan and show you Herman Cain`s
not-so secret plan to abolish, abolish Social Security and Medicare. It`s
not just a tax plan.

That`s coming up.

(COMMERCIAL BREAK)

O`DONNELL: Coming up, don`t listen to anyone who tells you that
President Obama is in trouble with Democrats. He is not in trouble with
Democrats. The new NBC News poll shows that President Obama has more
Democratic support than Bill Clinton did at this point in his re-election
campaign.

And Herman Cain`s numbers do not add up in his 9-9-9 plan. But that
is just the beginning of the problems with that plan. The 9-9-9 plan
abolishes Medicare and Social Security. Abolishes. That`s coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: A lot of folks in
Washington in the media will look at last night`s vote and say, well,
that`s it, let`s move on to the next fight.

But I`ve got news for them -- not this time. Not with so many
Americans out of work. Not with so many folks in your communities hurting.
We will not take no for an answer.

(END VIDEO CLIP)

O`DONNELL: That was the president speaking today of the Republicans`
rejection of his jobs bill in the Senate last night. Twenty-four hours
after that vote in the Senate, the new NBC News/"Wall Street Journal" polls
shows overwhelming public support for the president`s bill.

When the specifics of the bill, taxing the wealthy, cutting payroll
taxes for working people and funding new road construction, were clarified,
63 percent favored it. While only 32 percent opposed it. Only 30 percent
were supportive of it before it was fully explained.

This shows that the more people know about the bill, the more they
like it. The more the president talks about the bill, the more popular it
becomes. Instead of seeking compromise with Republicans after last night`s
vote, today the president went on the attack.

(BEGIN VIDEO CLIP)

OBAMA: A Republican minority got together as a group and blocked this
jobs bill from passing the Senate. They said no to more jobs for teachers.
No to more jobs for cops and firefighters. No to more jobs for
construction workers and veterans. No to tax cuts for small business
owners and middle class Americans.

(END VIDEO CLIP)

O`DONNELL: As Republicans continue to shift loyalties almost weekly
to new presidential candidates whose popularity quickly fades, the
president continues to have extraordinary support from Democrats. Seventy-
three percent of Democrats believe the party should renominate President
Obama. Compare that to President Bill Clinton`s best polling to that very
same question which was 67 percent in 1995.

Joining me now, former DNC chairman and CNBC contributor, Howard Dean.

Thanks very much for joining me tonight, Governor.

HOWARD DEAN, FORMER DNC CHAIRMAN: Lawrence, thanks for having me on.

O`DONNELL: Things look awfully good for the president now among
Democrats and I`m one who never really felt that he had a problem with his
Democratic base. What should the president be doing now in trying to focus
that base on how they can make some kind of legislative progress on a jobs
bill?

DEAN: Well, I think there`s two reasons things are great for the
president right now, in his base.

The first is that the president really has had a total change of
tactics since the jobs speech. He`s been out there giving talks like he
just gave, just showed on the show. He`s in fighting form. He`s ready to
take on the Republicans. And he really is going to be a fighter which I
think most the Democrats believe you have to be.

The second is, we`re now coming into focus now, what the opposition
looks like. There`s nothing better than focusing the mind of a Democrat
who`s a little bit disenchanted than thinking about Rick Perry or somebody
like that in the White House.

So, I think the president is in good shape among Democrats.

Interestingly enough, I just saw a non-scientific online poll in
Muskogee, Oklahoma, because I was following politics in the Cherokee nation
before I came over, and the jobs bill in Oklahoma is about 50/50. And
that`s without necessarily explaining it. That is the most conservative
state in the United States of America, as judged in the last presidential
election.

So the president, I think the president is going to win this thing.
People are not that interested in Mitt Romney. Herman Cain I think is
going to eventually collapse because I don`t think he has a real campaign,
but he`s -- they`re looking around for anybody with strength and a message
and they don`t like Mitt Romney, who I think will eventually be the nominee
but will be pretty damaged.

O`DONNELL: The president is obviously going to keep the political
pressure on Republicans on the jobs bill and see if he can turn that
political pressure into legislative pressure. Let`s listen to more of what
he had to say about it today.

(BEGIN VIDEO CLIP)

OBAMA: Would we rather keep the tax code with its loopholes exactly
as they are for millionaires or billionaires or do you want construction
workers to have a job rebuilding roads and bridges and schools? Because
you know a lot of our kids in the community are learning in trailers right
now. In the end, this is a debate about fairness and who we are as a
country.

(END VIDEO CLIP)

O`DONNELL: Howard Dean, let`s sit on the other side of the aisle for
a moment and try to imagine we`re in the Republican cloakroom in the Senate
and we`re watching this polling go against us on this legislation and we`re
watching this president very effectively keep the pressure on us with
voters. What would Republicans need to do to try to change the subject or
somehow escape the pressure that the president is putting on them?

DEAN: Well, they`re almost out of tricks. They`ve thrown everything
at them over the last three years that they possibly can. The president`s
core message is exactly what it has to be for him to win a second term,
which is I`m for the middle class.

Here`s the Republicans` problem. Everybody knows they`re not for the
middle class. They`re mad at the president because the economy is in bad
shape even though they don`t blame him, they`re still mad because they have
got to be mad at somebody.

The president positioned himself now as a champion in the middle
class, a champion of ordinary working Americans. And that really is 99
percent.

So, I think the Republicans have got a tough road.

This president is on his game and has been since he gave that jobs
speech.

O`DONNELL: Howard, I thought one of the moments -- many moments in
the Republican debate last night indicated they were just completely out of
touch with realities on the street, especially on the street in the "Occupy
Wall Street" protests. There was Newt Gingrich saying these people don`t
pick up after themselves. They were all ready to offer some kind of
attitude or opinion about these protests and none of them have actually
visited the locations or seen any of these people.

When these people are fighting against foreclosures, are fighting
against the kinds of things that have hurt people across the board
politically in this country, real voters out there -- how does it help
Republicans to just kind of pretend they`re some kind of scruffy protesters
with nothing important to say?

DEAN: It`s a disaster. Lawrence, it`s a disaster for them. I can`t
believe they`re doing this. The only people who poll worse than the
Republicans in Congress are people on Wall Street. I mean, it`s shocking
what they`re doing. I mean, just -- in terms of the political calculus, I
just can`t believe it. I think this is a disaster for them.

Now, they got a long time to recover. I tell you one thing about
Herman Cain`s candidacy -- it`s going to help Rick Perry a lot, because
they`re eventually going to realize that unless Herman Cain gets a real
organization together, he can`t win this, but is giving Perry breathing
room to recover. I was one of those that thought Rick Perry was dead, but
I think he is going to have a chance to recover now.

O`DONNELL: Former Vermont Governor Howard Dean -- thank you very much
for joining me tonight.

DEAN: Thanks for having me on.

O`DONNELL: Coming up: Herman Cain`s 9-9-9 plan is not just a tax
plan. It is a plan to abolish Medicare. It`s a plan to abolish Social
Security. And it`s not a secret plan. It`s written right there in Herman
Cain`s own campaign literature.

And, in the "Rewrite" tonight, Warren Buffett`s response to the
congressman who asked Buffett to release his tax returns. The Republican
congressman, big surprise, does not outsmart Warren Buffett. That`s coming
up.

(COMMERCIAL BREAK)

O`DONNELL: Still ahead in this hour: we keep hearing about Herman
Cain`s magical 9-9-9 tax plan. Did you know it will leave you without
Social Security or Medicare?

And Mitt Romney wants to distance himself from President Obama`s
Affordable Care Act, but that`s hard to do when his advisers had a dozen
meetings at the White House. One of those advisers, Jonathan Gruber, will
join us to discuss how Romney`s health care plan became a national model.
That`s next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: One thing I would
say is, when you take the 9-9-9 plan and you turn it upside down, I think
the Devil`s in the details.

(END VIDEO CLIP)

O`DONNELL: In the Spotlight tonight, Herman Cain`s media honeymoon as
the front-runner ends right here, right now. The truth about Herman Cain`s
9-9-9 America. Herman Cain`s 9-9-9 tax plan is the most vicious assault on
the middle class and the working poor, and the most lavish giveaway to the
rich that has ever been proposed by a presidential campaign front-runner.

We have issued a standing invitation take to Herman Cain to return to
this show and respond to everything you are about to hear about his 9-9-9
plan, much of which you will be hearing for the first time, like his plan
to abolish Social Security and Medicare.

You haven`t heard about that because his Republican opponents haven`t
bothered to actually read the 9-9-9 plan. Here`s what it says about Social
Security and Medicare. "For the generations of workers who have paid into
Social Security and Medicare, the federal government`s inevitable failure
to pay them as they retire is undeniably stealing. These are generations
who have worked and sacrificed to leave this country a better place for
their children and grandchildren, as they retire.

"The current behavior of an out of control federal government does
little to ease they`re minds. The federal government has imposed expensive
and often counterproductive social and welfare programs on the states and
the people. It is time to admit the mistakes and get the federal
government out of the way.

"This will allow states, cities, churches, charities and businesses to
offer a helping hand instead of a handout where they live. People closest
to the problems are the best ones to solve the problems effectively."

So Herman Cain wants to abolish Social Security and Medicare, and
suggests you can ask your state or your city -- you know, your city that
has all that extra money that it`s hiring extra teachers with, or your
church or your local charity to provide you with a pension and health care
when you`re over 65.

That`s his idea. Go to your local church and see what they can do
about your retirement income. Go to your local church and see if they can
provide you with health care. That is why Herman Cain is untroubled by the
fact that every estimate of the revenue his 9-9-9 plan would raise shows
that it would raise much less than the federal government needs to fund
Social Security and Medicare.

Cain`s plan is a nine percent tax on personal income, a nine percent
tax on corporate income, and a nine percent sales tax. This would result
in people in the top tax bracket, the richest among us, paying less than 18
percent of their income in federal taxes, compared to the minimum of 35
percent that they currently pay on salary income.

The biggest tax cut ever proposed for the rich in this country.

It would also mean the biggest tax increase on the working poor who
currently pay no federal income tax. They would now pay 18 percent in
federal taxes, nine percent in income taxes and nine percent on every
dollar they spend, which of course, is every dollar they earn.

Herman Cain is fond of pointing out that the working poor are already
paying 15 percent in payroll taxes to the federal government. So what`s
wrong with having them pay three percent more? The trouble is, of course,
they are not paying 15 percent in payroll taxes.

They are paying half that. Their employer pays the other half of
their Social Security and Medicare tax contributions to funding those
programs. Now, no doubt, some of the campaign staff for the other
Republican candidates are learning right now, for the first time, as they
watch this program, that Herman Cain`s plan includes abolishing Social
Security and Medicare, not just abolishing the payroll taxes that fund both
of those programs, but abolishing the programs, themselves.

Now that they know that, you can expect Mitt Romney and other
Republican candidates who have attacked Rick Perry for calling Social
Security a Ponzi scheme, to start to point out that the new front-runner,
Herman Cain, is far more of a threat to Social Security than any of the
other Republican candidates.

Herman Cain is the Republican candidate who has declared, in writing,
in his 9-9-9 plan, that he wants to abolish Social Security and Medicare,
and to leave it to the states, to cities, to churches and to charities.
Herman Cain doesn`t mention how much state taxes would have to go up in
order for a state to cover Social Security.

He doesn`t mention how much taxes would have to go up in states and
cities for them to cover Medicare. He doesn`t mention those things because
it would highlight the utter absurdity and complete impossibility of his
idea.

Herman Cain`s America would be a cruel place. It would be a return to
the pre-Social Security America, where our poverty rates were highest among
the elderly, where the elderly were left to fend for themselves when they
fell ill. The pre-food stamp America, where if you and your children
couldn`t afford enough to eat, you could always go door to door and beg for
food.

That mythical America where all you had to do to get ahead was pull
yourself up by your boot straps, the only thing standing between us and
Herman Cain`s America is the sanity of our democracy, which as of tonight
still holds.

Joining me now for a look inside the 9-9-9 plan is Bruce Bartlett, who
analyzed Cain`s plan in "the New York Times`" Economix blog. He is a
former senior policy analyst in the Reagan White House and a deputy
assistant secretary at Treasury, and the author of the new book "The
Benefit and the Burden: American Tax Reform, Why We Need It and What It
Will Take."

Bruce, thank you very much for joining me tonight.

BRUCE BARTLETT, FORMER REAGAN WHITE HOUSE POLICY ANALYST: Happy to be
here.

O`DONNELL: I want to get into some of the tax details of this. And
let`s start with, we know it doesn`t raise enough revenue. There are
questions about exactly how much revenue it raises in order to keep the
federal government funding the programs it has now.

But let`s consider a nine percent sales tax, for example, on all new
goods. That would be a nine percent federal tax, basically a nine percent
price increase on every automobile sold in America. That would pretty much
-- that would be the most destructive thing anyone could think of for the
American automobile industry, isn`t it?

BARTLETT: Well, it`s not just that. Since there`s no mention in
Cain`s plan about any exemptions, we have to assume that if you go to the
hospital and you have a 100,000 dollar operation, you`re going to have to
pay 9,000 dollars more on top of that.

All food, all clothing, rent would have to be covered. But I`ve heard
him say at the same time -- I didn`t read this in his plan. I heard him
say this, that used goods would somehow or other would be excluded. That`s
just going to make a massive complication of our whole consumption system.
And of course, the national sales tax will be on top of state and local
sales taxes.

Many people are going to be paying 20 percent at the checkout.

O`DONNELL: So, for example, in the housing industry, new housing
would cease in America. There would be no more building of new housing,
because it would be subject to the Cain tax when you sold new housing. All
used housing, which is what we all live in now -- all of that could be sold
and escape the Cain tax, no matter how much the housing was involved.

I mean, this notion that he can tax only -- you know, have an
effective sales tax that was really going to raise revenue and not crimp
the economy, not crush consumer demand, taxing only new goods -- not clear
at all whether he taxed services in the 9-9-9 plan. Did you see him taxing
services in there?

BARTLETT: Well, there`s no mention of it being excluded. So
presumably all services, including medical services, legal services,
anything you can imagine including a great many things that the states
don`t even attempt to tax, would be included in the Cain plan.

O`DONNELL: And in other areas of the Cain manifesto, there are all
sorts of reference to how all -- all social spending should be abolished.
Any kind of social safety net spending should be abolished, which he would
have to do if he was going to switch over to this plan, which would very
likely crush the economy in so many ways.

Let`s get to the nine percent income tax, how that works throughout
the income structure. Obviously at the bottom, it hurts very badly. At
the top, it is just an incredible windfall.

BARTLETT: Well, that`s right. The -- keep in mind that the tax base
under Cain`s plan on the income side is not remotely like the income tax
people are familiar with. There would be no personal exemption, no
standard deduction, no deduction for mortgage interest, no child credit, no
Earned Income Tax Credit.

So basically you can take your total gross income, including some
things like municipal bond interests, that are not even part of gross
income. And you can just take nine percent of that. So anybody paying
less than nine percent of their gross income in taxes is going to have a
big tax increase.

O`DONNELL: Bruce Bartlett, thank you very much for joining me
tonight. We`re going to continue to dig in to 9-9-9. It is remarkable
what is in there and what is not in there, the details that he leaves out.
Bruce, thanks very much for joining me.

BARTLETT: Thank you.

O`DONNELL: Coming up, a Republican congressman criticizes Warren
Buffett for not releasing his tax returns. But the Oracle of Omaha gets
THE LAST WORD. That`s next in the Rewrite.

Later, Mitt Romney is having a tough time distancing himself from
President Obama`s Affordable Health Care Act, especially because some of
his former advisers actually attended a dozen meetings at the White House
to consult on the president`s health care act. One of those advisers will
join me coming up.

(COMMERCIAL BREAK)

O`DONNELL: Time for tonight`s Rewrite. Congressional Republicans
continue to show more fidelity to their oath to anti-tax lobbyist Grover
Norquist than to the oath of office. And billionaire Warren Buffett
continues to humiliate them for that.

In August, Warren Buffett wrote this piece for "the New York Times."
"I paid only 17.4 percent of my taxable income. And that`s actually a
lower percentage than was paid by any of the other 20 people in our
office."

That provoked President Obama to propose the Buffett Rule to eliminate
the possibility that super rich would pay lower tax rates than the middle
class. Kansas Republican Congressman Tim Huelskamp had this reaction to
the Buffett Rule.

(BEGIN VIDEO CLIP)

REP. TIM HUELSKAMP (R), KANSAS: I`m saying if we`re going to shape an
entire nation`s tax policy based on one man`s claim, show us the proof. If
Mr. Buffett came before my Budget Committee, we`d expect him to show us the
information under oath. And that`s a reasonable expectation if we`re going
to change our entire nation`s tax policy based on his claim.

I`ll tell you what, I`ll trade my tax returns for his tax returns.
And we`ll compare them. Then we`ll make a discussion about tax policy
after we see them.

(END VIDEO CLIP)

O`DONNELL: Congressman Huelskamp followed that up with a letter to
Warren Buffett with his I`ll show you mine if you show me yours proposal.
That earned him this return letter from Warren Buffett, which Buffett and
Huelskamp publicly released today. Buffett directed the congressman`s
attention to the statistics published by the IRS.

These are statistics assembled by the Congressional Research Service,
available to every congressman, which show that the 400 highest income
Americans -- the 400 highest income Americans, whose income averaged 227
million dollars each, paid only 21.4 percent in federal income taxes.
That`s 14 percent below the actual top tax bracket rate.

The federal government has the numbers proving Buffett`s point. The
Congressional Research Service has those numbers. And Congressman
Huelskamp doesn`t even seem to know that. In his letter, Buffett specifies
the key points in his tax return.

"To be specific, my adjusted gross income, line 37, was 62,885,038
dollars. My taxable income, line 43, was 39,814,784 dollars. And my
federal income tax, line 60, was 6,923,494 dollars.

"In addition, my payroll taxes were 15,300 dollars."

And to the congressman`s I`ll show you mine if you show me yours dare,
Buffett replied, "after the `Wall Street Journal` suggested I publish my
return, I stated that I would be happy to do so the next morning, if their
boss, Rupert Murdoch, one of my ultra rich colleagues, would similarly make
his return available. So far, the `Wall Street Journal` employees have
apparently had no luck in getting their boss to participate."

Do we have any volunteers for the next Republican congressman who
wants to try to outsmart Warren Buffett? Good luck with that.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

PERRY: Governor Romney, your chief economic adviser, Glenn Hubbard,
who you know well, he said that Romney-care was Obama-care.

ROMNEY: The truth is our plan is different. And the people of
Massachusetts, if they don`t like it, they can get rid of it. Right now,
they favor it three to one.

But I`m not running for governor of Massachusetts. I`m running for
president of the United States. As president, I will repeal Obama-care.

(END VIDEO CLIP)

O`DONNELL: That was Mitt Romney`s latest attempt to distance himself
from the Massachusetts health care reform law and from President Obama`s
2009 Affordable Health Care Law. Romney`s comments follow a report from
NBC News Michael Isikoff released yesterday, that revealed the extent to
which the Obama administration consulted with the architects of Romney`s
health care law when developing their legislation.

"The records gleaned from White House visitor logs reviewed by NBC
News show that senior White House officials had a dozen meetings in 2009
with three health care advisers and experts who helped shape the health
care reform law signed by Romney in 2006. One of those meetings, on July
20th, 2009, was in the Oval Office and presided over by President Barack
Obama, the records show."

Hours before last night`s debate, a reporter asked Romney to respond
to the report that his aides advised the Obama administration on health
care reform.

(BEGIN VIDEO CLIP)

ROMNEY: Actually I don`t believe they were aides. They`re people who
were consultants and so forth. But I`m sure the president got lots of
ideas. But the one person he should have talked to that he never talked to
was me. If he had talked to me, I would have told him that the plan he was
crafting wouldn`t work.

(END VIDEO CLIP)

O`DONNELL: One of Governor Romney`s health care reform consultants
was MIT economist Jonathan Gruber. He attended five of the 12 meetings at
the Obama White House in 2009, including the meeting with the president.

Joining me now, professor of economics at the Massachusetts Institute
of Technology, Jonathan Gruber. Thanks for joining me tonight, professor.

JONATHAN GRUBER, MASSACHUSETTS INSTITUTE OF TECHNOLOGY: You bet,
Lawrence. Good to be here.

O`DONNELL: All right. Come on, come clean. You were in the room
with President Obama discussing health care reform. And you did, in fact,
work with the Romney administration in Massachusetts. Come on, professor,
you have to tell us the truth.

GRUBER: The truth is that the Affordable Care Act is essentially
based on what we accomplished in Massachusetts. It`s the same basic
structure applied nationally. John McDonough (ph), one of the other
advisors who worked in both Massachusetts and advised the White House, said
it`s the Massachusetts bill with three more zeros.

That`s basically a good description of what the federal bill did.

O`DONNELL: It is kind of laughable that we`ve actually reach the
point where we have the great investigative reporter Michael Isikoff
actually going in there to get these kind of diary facts in the White House
to sort of prove what we all know.

I want you to listen to what Mitt Romney had to say when he was
signing the bill in Massachusetts.

(BEGIN VIDEO CLIP)

ROMNEY: I want to thank the many, many people in this room who were
critical to crafting and coaxing the bold health care initiative that I`m
about to sign. Jonathan Gruber at MIT devoted hours and hours to an
essential econometric model.

(END VIDEO CLIP)

O`DONNELL: That`s for the econometric model, professor. He didn`t
mention you last night in his answer, when he was asked about, you know,
who helped him and who helped President Obama?

GRUBER: I`m hurt, Lawrence. I think I`ll live.

O`DONNELL: What is -- the truth here is as simple as we make it, that
there was one model in the country, really, to look at, an individual
mandate model that the president ended up adopting, after, by the way,
campaigning for the presidency against the individual mandate. Hillary
Clinton was the individual mandate candidate. Barack Obama was against it.

So obviously the Massachusetts experience with it was part of what
moved him in the direction where he ended up.

GRUBER: You know, when I was advising both the Obama administration
and Congress throughout 2009, the number of times I got asked how did you
do it in Massachusetts, what made it work in Massachusetts -- it was the
administration and Congress are taking a big leap into unknown territory.
The fact that they had that example to lean on was so I think comforting
for them in taking that step.

O`DONNELL: Well, the big leap was done without a single vote to
spare. So it is my considered opinion, having watched a great deal of
congressional legislation moved, that the bill would not have passed if
there had not been a real world model to point to answer many of the
questions, especially about the individual mandate, that House members and
senators were asking, both in hearings and in panicked last minute voting
decisions on the floor.

How is the individual mandate working in Massachusetts?

GRUBER: It`s working exceptionally well. In Massachusetts, we`ve
covered about two-thirds of our uninsured. And our nongroup -- our
individual insurance market, which was really broken, we`ve cut the
premiums in half. So we`ve fixed a broken insurance market and covered
most of our uninsured.

O`DONNELL: And Massachusetts had a pretty high rate of coverage
before you even went to the mandate. Romney makes a very strong point
about the Obama bill is full of taxes to pay for it. And the Romney bill
did not have tax increases in it to pay for it.

GRUBER: Yeah. I mean, that`s just technically true but
intellectually not really straightforward. Basically in Massachusetts, the
financing for our bill came half from the federal government and half from
an existing tax that former Governor and presidential candidate Michael
Dukakis had put in 1988, to finance care for the uninsured.

So we didn`t have to raise tax in Massachusetts because the money was
already there. At the federal level, we didn`t have that luxury. It
wasn`t like China was going to come pay half the cost of the Affordable
Care Act. There was no bigger government coming to help us out. So we
needed to raise taxes to finance it.

O`DONNELL: Professor Gruber, you just called it our bill. Now Mitt
Romney is not going to want you to use that phrase again, now that he knows
you went into the Obama white house and brought our bill to show the Obama
administration how to do this.

Jonathan Gruber, professor of economics at MIT, thank you very much
for joining us tonight.

END

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