updated 12/29/2011 11:50:42 AM ET 2011-12-29T16:50:42

Guests: Karen Finney, Steve Israel, Bernie Sanders, John Nichols, Joe Madison, Mike Papantonio, Lizz Winstead

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

President Obama says aloha to a completely dysfunctional Congress and
John Boehner is fighting for his political life. Well if, you`re a
Democrat, it`s beginning to look a lot like Christmas.

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

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: This is some good news
just in the nick of time for the holidays. Thank you, guys. Aloha.

SCHULTZ (voice-over): Tax relief is on the way for millions of
Americans while John Boehner is left licking his wounds.

REPORTER: What are you going for the holidays?

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: Somewhere warm.

SCHULTZ: Senator Bernie Sanders from Vermont and the DCCC chair,
Steve Israel, join me tonight on the latest victory for the Democrats and
the American people.

Plus, MSNBC contributor Karen Finney is here to discuss the Tea Party
mutiny.

Ron Paul`s newsletter scandal is exploding. Rick Perry is getting
creepier in his ads. And a gay robot invades a Bachmann campaign stop.

VOICE: Not only are you a homophobe, you are a robophobe.

SCHULTZ: "Ring of Fire" radio host Mike Papantonio and "Daily Show"
co-creator Lizz Winstead will try to make sense of it all.

And, Rex, the liberal watchdog, is now a rising media star. We`ll
have an update on where he`s spending Christmas.

(BARKING)

(END VIDEOTAPE)

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

The payroll tax fight was not just a victory for the Democrats and
President Obama and 160 million Americans. It may have started a civil war
within the Republican Party. Establishment Republicans are blaming the Tea
Party for being unreasonable. The Tea Party says that GOP leaders simply
are not doing their job.

And polls show Democrats are benefiting big time politically.
President Obama used the leverage from this political victory to push for a
full year long extension of the tax cut today.

(BEGIN VIDEO CLIP)

OBAMA: When Congress returns, I urge them to keep working without
drama and without delay, to reach an agreement that extends this tax cut,
as well as unemployment insurance through all of 2012. Last week, I said
that this should be a formality, and that`s still the case. So let`s make
sure that we extend this tax break and unemployment insurance for a full
year for our families but also for our economy.

It`s the right thing to do because more money spent by more Americans
means more businesses, hiring more workers.

(END VIDEO CLIP)

SCHULTZ: The victory in the payroll tax dispute also allowed the
president to continue his message of fighting for the American working
class.

(BEGIN VIDEO CLIP)

OBAMA: It`s about your lives. It`s about your families. You didn`t
send us to this town to play partisan games and to see who`s up and who`s
down. You sent us here to serve and make your lives a little bit better,
to do what`s right. And fortunately that`s how this week ended.

(END VIDEO CLIP)

SCHULTZ: All of this was so unnecessary. This fight came down to the
wire because the Tea Party is just flat out stubborn and ideologically
bent. Their members wanted to pay for the extension by cutting programs
that Democrats are going to protect, at least that`s what they`re saying.

And they didn`t get their way. So, now, they`re whining about it.

Freshman Tea Party Republican Allen West went on FOX News and didn`t
have much confidence in his party`s leadership.

(BEGIN VIDEO CLIP)

REP. ALLEN WEST (R), FLORIDA: Give me the opportunity to be in
leadership in Washington, D.C., and I think you`ll see something different,
because coming out of the military, we didn`t go home until the mission was
complete. And so, maybe that`s what the American people need to
understand, it`s about time that we take a chance with some of the young
leaders that we sent to Washington, D.C., and move away from this
establishment rhetoric and this game that they play in Washington, D.C.

This is not a 24-hour wound. We have some e-mail discussions back and
forth within the freshmen class. And we`re pretty let down, upset. But
that does not mean we`ll continue to fight against the business as usual
beltway two-step.

(END VIDEO CLIP)

SCHULTZ: Hold it right there. How many times have I told you it`s
always about them and not the people?

In the same interview, FOX News cited an anonymous Republican
congressional member who said John Boehner`s speakership was in jeopardy.
Boehner may have a mutiny on his hands. But on the other side of the
aisle, the Democrats appear to be unified.

I spoke with Senator Charles Schumer of New York last night on this
program and he explained the reversal of the fortune for the Democrats.

(BEGIN VIDEO CLIP)

SEN. CHARLES SCHUMER (D), NEW YORK: Since September we`ve done a lot
better.

SCHULTZ: Yes.

SCHUMER: Why? Well, we have focused on the economy, jobs, and income
inequality. We came out united, finally, for the tax on incomes over $1
million. We came out for a jobs program and we said, look, even if it
doesn`t pass, we`re going to put it on the floor of the Senate over and
over and over again.

(END VIDEO CLIP)

SCHULTZ: The blueprint he outlined is paying off for Americans. No
question about it.

President Obama and the Republicans in Congress definitely aren`t
going to get together on everything. But a recent poll shows that
Americans in this country have more confidence in the president than in
Republicans by a margin of 19 percent -- and if you think about what we
went through a year ago this is a big difference from the 2010 midterms.
The payroll tax fight is just the latest political event showing one party
working, I think, on solutions and caring about the American people and
American workers. And another party that is all about power and getting
rid of this president and make sure he doesn`t get re-elected.

Now in the interview that we just played here just a clip a moment
ago, what did you hear Allen West talk about? He talked about him, talked
about his leadership, talked about what he wanted, talked about their
little group. They want to take this country in a very radical direction.

And I think what the Democrats have learned here throughout this
entire tax fight over the last several weeks and this two-month extension
is don`t cave in. There`s a lot of polls out there that showed the
Democrats have the American people with them. They can`t forget that.

Get some swagger. Fine, however you want to do it. But there`s going
to be another fight in the next two months. And as the Democrats held the
line this time, they`re going to have to hold the line again and protect
the big three.

What I think is going to get cut probably big time is agriculture.
There`s a lot of haircuts that can be given on the prairie as far as that
is concerned.

But here`s what the Tea Party is going to do: they`re going to get a
heck of a lot more belligerent. They`re going to get more determined and
they`re going to focus big time on spending. And they don`t care what they
cut. They want Obama out and they do not want to raise taxes.

And the president has as much said there won`t be a revenue component.
Let`s see where it all breaks down.

But right now, to focus even though it`s the holiday season on this
mutiny that`s taking place within the Republican Party, I find very
interesting. Will they go more radical? Or will they being more reasoned?

Get your cell phones out. I want to know what you think. Tonight`s
question: will the payroll tax fight cost the GOP the House and Senate in
2012? Put on your prognostication hat and give us an answer tonight.

Text A for yes, text B for no, to 622639. Our blog is there for you
at Ed.MSNBC.com. We`ll bring you the results later on in the show.

Now, communication is going to be a big thing for the Republicans.
So, let`s turn to Karen Finney tonight, MSNBC political analyst and former
DNC communications director.

Karen, it would seem to me that Republicans got to get behind closed
doors here and figure out how they`re going to talk to the American people
and deal with the Tea Party at the same time. Where is this all going in
the next couple months?

KAREN FINNEY, MSNBC POLITICAL ANALYST: Well, you know, Ed, I think
what`s interesting is if you take a step back -- I mean, the Republicans
are also really losing their argument as to why they are competent and
capable of leading this country. This is not the first time they brought
us to the brink. This is now the second time the government has almost
shut down under their, quote-unquote, "leadership," if you will. We almost
defaulted.

So, I mean, time and again, they`ve gotten themselves to the brink.
They can`t seem to get themselves together. John Boehner seems frankly
politically impotent.

So, I think what you`re going to see, though, is probably his
leadership challenged coming in the New Year. But that`s not going to
solve the problem. I think one of the key things for Democrats is to keep
the pressure on on this argument, frankly, that the Republicans are just in
competent in their ability to lead. And that when push comes to shove,
they`re about as you`ve been talking so much, protecting the millionaires
and billionaires and not the interests of middle class Americans.

SCHULTZ: Do you think Speaker Boehner is worried about his position
as speaker of the House? And who do you think would lead the charge
against Boehner at this point?

FINNEY: Well, I think if Boehner isn`t afraid for his job right now,
then he is living in a fantasy land. I think it`s pretty clear that Eric
Cantor has been nipping at his heels ever -- you know, ever since the
turnover happened in 2010. I think we`ll see some kind of challenge either
coming from Cantor or some part from that freshman Tea Party base, if you
will.

You know, a lot of people have talked about the fact that these guys,
I know you have, too, don`t seem to understand the difference between
campaigning and governing. It`s one thing to campaign and say, hey, we`re
going to go and we`re going to make change. But it`s another thing when
you get here to Washington and you say, OK, we`ve got to do the people`s
business and 90 percent of Americans want us to do one thing and yet they
keep trying to do something else.

SCHULTZ: Here`s more from President Obama today on the situation.
Here it is.

(BEGIN VIDEO CLIP)

OBAMA: I do want to be clear though. We have a lot more work to do.
This continues to be a make-or-break moment for the middle class in this
country. And we`re going to have to roll up our sleeves together,
Democrats and Republicans, to make sure that the economy is growing and to
make sure that more jobs are created.

(END VIDEO CLIP)

SCHULTZ: So where does the president go from here in the next 60
days? I mean, after the New Year, he`s going to the opportunity to make
the pitch to the American people about how important this is in the State
of the Union address. But the fact is, is that the Democrats are going to
have to hold the line on the big three, and they`re going to have to try to
get revenue. How is that going to work?

FINNEY: Well, that`s exactly right, Ed. And, look, I think part of
what Democrats need to do is they need to stay unified. I mean, one of the
reasons that this worked was because you had Democrats in lock step from
Congress to the White House, pushing on the same message. I think the
White House very effectively, part of why they outmaneuvered Republicans,
when you had people talking about what that $40 a month meant for them or a
paycheck meant for them really putting it in concrete terms. So, staying
the course in terms of staying unified is going to be critical.

The other thing that I think is important, though, Ed, is to remind
people that it wasn`t just that all the sudden the Republicans had a change
of heart and said, hey, two months isn`t enough. Now we want a year
extension. No, they wanted those writers. They had other objectives and
agendas going into this thing that had nothing to do with the middle class
and creating jobs. We`ve got to keep that message being pushed out as
well.

SCHULTZ: Karen Finney, Democratic strategist, MSNBC political
analyst, good to have you with us. Thanks so much.

Joining me now is Congressman Steve Israel of New York. He is the
chairman of the DCCC, Democratic Congressional Campaign Committee.

Happy holidays, Congressman. I know you`re feeling good about the way
this thing has turned --

REP. STEVE ISRAEL (D), NEW YORK: Happy holidays, Ed.

SCHULTZ: You bet. I know you`re feeling good about the way this has
turned out in the last 48 hours.

But moving forward, and I guess as snapshot in time here, are we
ending 2011 with the rejection of Tea Party politics? What do you think?

ISRAEL: Well, I think we are ending 2011 with a deep sense of buyer`s
remorse setting in across the country. It`s not just this fight for the
middle class that Democrats have led, this is cumulative. It started out
in March, Ed, when these Tea Party Republicans in Congress wanted to close
down the government over a woman`s right to go to Planned Parenthood for
health care. Then there was the Ryan budget that eliminated Medicare as we
know it.

Then there was a debt ceiling vote in August and failure of the super
committee in November and now, this.

At every step of the way, these Tea Party Republicans have chosen the
wrong priorities, which is why most of America right now is re-evaluating
who they voted for in the past. I believe this House is absolutely in
play.

SCHULTZ: Well, Congressman, it`s very clear that the American people
as far as the polls are concerned are with the Democrats on this issue.
The next big hurdle is going to be revenue.

Senate Majority Leader Harry Reid said this last night. He says,
"I`ve talked to Senate Republicans" -- plural, meaning more than obviously
-- "who think there should be a fair tax on rich people."

S the question is, will the Democrats take up the millionaire surtax
to get the one-year extension passed? Is that the avenue you`re going?

ISRAEL: Absolutely, yes. Clear and unequivocal.

Look, there is -- the big difference here is that these House
Republicans and the Tea Party who are asking the middle class to pay for
middle class tax cut. It`s House Democrats who say we want a one-year
extension of the middle class tax cut, but we don`t want the middle class
to pay for it. We don`t want to take it out of Medicare or increase
Medicare premiums. We want people who are earning over $1 million a year
to pay a slight surcharge on dollars over $1 million, not one $1 million
but the excess over $1 million.

SCHULTZ: Yes.

ISRAEL: That`s the difference. Every election is about who you`re
for. And that`s why I feel very confident going into this election.
People realize who we are for and who these Tea Party Republicans are for.

SCHULTZ: Well, people are recognizing that confidence, especially
"The Wall Street Journal." The conservative editorial page, they`ve been
pretty aggressive in recent days. After the Republicans, they said
Republicans in Congress might end up re-electing the president before the
2012 campaign even begins in earnest.

You may have the upper hand right now. What`s it going do to keep it?

ISRAEL: Well, we`re going to keep fighting for the middle class. I
mean, this is how screwed up it has become. These Tea Party Republicans
came to Congress promising that they were going to be for more defense
spending and for lower taxes. They are now in a position where they have
endorsed $500 billion in cuts to the defense budget because of their
failure with the super committee and they opposed a middle class tax cut.

This is like a bizarre political episode of "Star Trek". We`re in
their universe.

SCHULTZ: But "The Wall Street Journal" is saying that ball is in your
court to win it all in 2012. Keep the Senate, win the House back and re-
elect President Obama. And the Republicans are handing it to you.

Do you feel that way tonight? Do you feel the mojo going into 2012?

ISRAEL: We feel very strong. We have a realistic view of what we
need to do to win back the House. But I`m not going to wait for the
Republicans to hand us anything.

We will win by advocating policies and priorities that resonate with
the middle class. We will win by contrasting our priorities with their
priorities. Every time we`ve been given an opportunity to do that, the
American people side with us, which is why this majority for Democrats is
in play.

SCHULTZ: Congressman Steve Israel, great to have you with us tonight.
Have a great weekend, a great holiday. We`ll see you next week.

ISRAEL: Happy holidays.

SCHULTZ: Thanks so much. You bet.

Remember to answer tonight`s question there and share your thoughts on
Twitter @EdShow. We want to know what you think all the time.

Senator Bernie Sanders will join me next to discuss whether the
president can keep pressure on the Republicans to pass his middle class
agenda in 2012.

And Vice President Joe Biden rips into Mitt Romney in Iowa. Romney
responds by completely ignoring the facts. John Nichols and Joe Madison
weigh in.

Stay with us. We`re right back.

(COMMERCIAL BREAK)

SCHULTZ: And there`s a breaking news out of South Carolina tonight.
The Department of Justice has rejected a new voter ID law saying minority
voters in the state would be significantly burdened by the law. It would
have required voters to show photo identification to cast their vote. The
Department of Justice said the data provided by the state showed that
minorities were nearly 20 percent more likely to lack a Division of Motor
Vehicle-issued ID and thus be disenfranchised.

The same assault on democracy is going on in dozens of states across
the country. And as I`ve said before, it seems like the Republicans are
spending as much money trying to stop people from getting out to the polls
as they are spending money trying to turn them out.

Make no mistake: the Justice Department is standing up for democracy
on this one. I think this is a big move tonight by Eric Holder. We talked
a lot about voter suppression in recent days on this program. This is the
first big move by the attorney general.

And so, tonight, we`re reporting that the Justice Department has
rejected the new voter ID law in the state of South Carolina.

Coming up, I`m going to talk to Vermont Senator Bernie Sanders about
this, about the Justice Department`s decision and the payroll tax cut
extension.

Stay tuned. We`re right back.

(COMMERCIAL BREAK)

SCHULTZ: Breaking news tonight, the United States Justice Department
rejects a new voter ID law in South Carolina saying it`s harmful to
minority voters. Republican-controlled states are working overtime to
change election laws around the country. Many of these states are key
battleground places in the 2012 election.

Attorney General Eric Holder said earlier this month that the
department would investigate these new laws to make sure that they are not
violating the rights of voters. Is today`s decision just the tip of the
iceberg? A lot of these laws have been passed in five of the 12
battleground states.

Tonight, I`m joined by Vermont independent Senator Bernie Sanders.

Senator, good to have you with us tonight. This is undoubtedly the
first big move by the Justice Department since a number of states have
passed some laws which many people are interpreting to be voter
suppression.

Will the voter ID laws and other states be overturned? Is this a tip
of the iceberg? How do you view this tonight, Senator?

SEN. BERNIE SANDERS (I), VERMONT: Well, I think what the attorney
general did in South Carolina is important. It is a first step. He has
got to go further. The president has got to start speaking out on this
issue.

You know, if anybody is involved in voter fraud, Ed, that`s a serious
problem. The good news is that we don`t have much voter fraud in America.
What many of these right-wing governors are doing is really clear. They`re
trying to disenfranchise low income people, senior citizens, making it
harder for them to cast a ballot.

And to me, that is not only an outrage, it`s something they should be
profoundly ashamed of. We all win elections and sometimes we lose
elections. But if you don`t have the guts to let people participate fully
in the democratic process, you should get another line of work.

I will also add that many of the same Republicans think Citizens
United is a great idea. Corporations are people. But if you`re a low
income person in South Carolina, I guess you can`t participate in the
political process.

SCHULTZ: And, Senator, I have to ask you, what kind of progress is
being made on your amendment in dealing with Citizens United?

SANDERS: Well, we at this point, over 105,000 signers of the
petition. We`re going to beginning to work right here in my home city of
Burlington, Vermont. A resolution was passed asking Congress to go forward
for a constitutional amendment on overturning Citizens United.

I think you`re going to see that grassroots effort all over the
country, Ed.

SANDERS: I hope so. Let`s talk now about the payroll tax cut. I
know you`re not a big fan of it. Of course, the unemployment benefit
extensions.

President Obama set the agenda for this fight in September, way back
when. Here it is.

(BEGIN VIDEO CLIP)

OBAMA: I know some of you have sworn oaths to never raise any taxes
on anyone for as long as you live. Now is not the time to carve out an
exception and raise middle class taxes, which is why you should pass this
bill right away.

(END VIDEO CLIP)

SCHULTZ: Senator, are you happy the way this played out? And what
can we expect in the next -- in the coming months?

SANDERS: Well, clearly, in the middle of the term, the middle class
does need tax relief. I support that. It should be funded progressively
by asking the wealthiest people in this country to pay more in taxes.

As you know, I have a problem with cutting the payroll tax
substantially because that is money directed into the Social Security Trust
Fund and I worry very much about the future of Social Security.

Having said that, Ed, it appears that the Republicans finally are now
on the defensive. The Democrats have got to raise the ante. They`ve got
to go back and I intend to play an active role in that and say jobs is what
we have got to talk about, millions of jobs.

We have to rebuild our crumbling infrastructure. We have to transform
our energy system. We`ve got to rethink our disastrous trade policy.

But what we have to do is tell the American people, we are on the side
of working families who are desperately hurting right now in this
recession, almost 25 million unemployed or underemployed. And we`re going
to take on the big money interests and the corporate interests for much
more concerned about their profits than the well-being of our country.

SCHULTZ: And, finally, Senator, I have to ask you, the Democrats have
had a hard time in the last three years drawing a line in the sand. What
lessons were learned through all of this? And has the mentality of the
caucus changed somewhat that now the game has changed and it`s time to be
aggressive?

I said all along, if the Democrats stand with workers at the Democrats
stand with middle class families, you can`t lose. You get that power back
in the House.

SANDERS: You`re exactly right, Ed.

Let`s hope -- let`s hope that momentum has shifted. In the last three
or four negotiations, Republicans have won. This time, the Democrats have
won. And the Democrats do need to draw a line in the sand. That line is
we are not going to cut Social Security, Medicare, and Medicaid.

SCHULTZ: Yes.

SANDERS: We are going wealthiest to pay their fair share of taxes.
We are going to create the millions of jobs the economy desperately needs.
If Republicans say no, let the American people make their decision about
whether or not they want to support Republicans.

SCHULTZ: Senator Sanders, you are a tireless worker. I hope you have
a good holiday weekend. And appreciate all you have done this year
fighting for the working families of this country.

You`re one of my favorites, no question about it. I admire you. You
speak up. You tell it like it s I appreciate working with you. I
appreciate you being on the program tonight.

Thanks so much.

SANDER: Thank you.

SCHULTZ: "FOX and Friends" are waging war on Christmas. And I`ll put
a lump of coal in Doocy`s stocking next.

Why is Rick Perry doing this in his latest TV ad? Lizz Winstead and
Mike Papantonio are here to explain.

Stay tuned. You`re watching THE ED SHOW on MSNBC.

(COMMERCIAL BREAK)

SCHULTZ: And in "Psychotalk" tonight, "FOX and Friends" normally
loves Christmas. Think usually defend the holiday to the point of
insanity. But today things changed.

Talking Points Memo points out the kids on the curvy couch, they spent
a lot of time this morning exploiting Christmas. First, they used
Christmas lights to bash the EPA.


(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Next year, come Christmas time, it could cost you
a lot more to plug in those lights because it sounds like the EPA is
cracking down on coal.

UNIDENTIFIED MALE: Somewhere Clark Griswald is crying.

UNIDENTIFIED MALE: You`re going to really hurt some communities and
some people that you`re so concerned about. Because remember how hard you
worked to get them another 1,000 dollars? You`re taking it right away come
Christmas time if you want your blow up Santa.

UNIDENTIFIED MALE: And who doesn`t?

(END VIDEO CLIP)

SCHULTZ: Better enjoy your blow up Santa this year, because
apparently it`s going to cost you 1,000 bucks in 2012. But Steve Doocy and
his buddies were just getting warmed up. Turns out there is a more serious
threat at Christmas time than the EPA.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Tis the season to be jolly. But be careful
because you could get sued.

UNIDENTIFIED MALE: You don`t want grandma getting run over by a
reindeer or by this great snow plow, which is safe, unless you put your
hands in it. A dozen deaths a year. More deaths --

UNIDENTIFIED MALE: From a Christmas tree?

UNIDENTIFIED MALE: Make sure you get the proper insurance in place.
Absolutely critical. Let`s move to the egg nog. Be careful of social host
liability.

You have to be careful. Make sure you have the right insurance.
Let`s have the right insurance. And let`s act like the great Americans
that we are.

UNIDENTIFIED MALE: Yes, Fox News! Merry Christmas!

(END VIDEO CLIP)

SCHULTZ: Yeah, you better watch out and see what the righties put in
the egg nog. Anyway, according to "Fox and Friends," you`ll be lucky to
make it through the holiday season without dying, killing someone or
getting sued. Just make sure you have insurance.

For a group of people who spent the last month hollering about the war
on Christmas, their nonstop negativity about this holiday is unseasonal
Psycho Talk.

The Republican ghosts of Christmas past are haunting the voters in
Iowa. Vice President Joe Biden is setting them straight. John Nichols of
"The Nation" will respond next.

And later, we`ve got a Rex story to tell you. Rex rescue. The Beagle
story coming up. This guy is so cute even right-wingers loved him. Stay
tuned.

(COMMERCIAL BREAK)

SCHULTZ: Good to have you back with us. Thanks for watching tonight.
In this holiday season, you have to admit there`s no question that
Republicans are the Scrooges of the holiday season. I mean, from
Washington to Iowa, the message has been very clear. The GOP is looking
out for the wealthiest Americans.

Vice President Joe Biden lays out the stark contrast between the Obama
administration and Republicans in an op-ed appearing in the "Des Moines
Register."

Biden specifically targets Mitt Romney`s writing. "Romney appears
satisfied to settle for an economy in which fewer people succeed while the
majority of Americans are left to tread water or fall behind. His proposal
would actually double down on the policies that caused the greatest
economic calamity continues the Great Depression and accelerated a decades-
long assault on the middle class."

Mitt Romney responded today at an event in New Hampshire.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDDATE: You wonder, in some respects,
what fantasy land he lives in. He needs to get out and meet with people.
He seems to think that he and the president have made things better. They
haven`t made things better.

This president and his policies have made it harder on the American
people and on the middle class. And I don`t think they get it. I don`t
think they understand from fantasy land what`s happening in real America.

(END VIDEO CLIP)

SCHULTZ: Mitt Romney is the one living in a fantasy land. We have
seen, for the record, 21 straight months of private sector job growth. Now
Mr. Romney, is that a good thing or a bad thing? This week, we found out
the unemployment rate fell in 43 states in the month of November. Forty
five states in this country have lower jobless rates than they did a year
ago.

I would say President Obama`s policies are working pretty good. But
the Republican Scrooges will keep accusing President Obama of hurting the
economy. They have to keep the negative narrative going through 2012.
They know it`s the only shot they have at a victory, is to go on its stump,
like Romney just did there, and say things that simply aren`t true.

And they never give facts. I mean, if Romney were to get in front of
a crowd and say, you know what, we haven`t had private sector job growth
for 21 months, OK. But that`s not the truth. We have had private sector
job growth for 21 consecutive months, on the heels of the worst economic
situation any president has had to inherit.

I`m joined tonight by John Nichols, Washington correspondent of "The
Nation Magazine," and Joe Madison, Sirius-XM radio host. Both of these
gentlemen are absolute experts at identifying the Scrooges in the right-
wing.

Gentlemen, great to have you with us tonight.

JOE MADISON, XM RADIO TALK SHOW HOST: Good evening.

JOHN NICHOLS, "THE NATION": Merry Christmas.

SCHULTZ: John, you wrote a piece recently comparing Newt Gingrich and
Mitt Romney to Scrooge. What was the reasoning here?

NICHOLS: Well, Ed, when you start out by suggesting that you fire
school janitors and replace them with children, you`re getting pretty close
to a Dickensian model right there. To be honest, I haven`t read all of
Dickens` canon recently, but I`m pretty sure he had a character named Newt.
And if he didn`t, he should have.

As for Romney, the tragedy of Romney is that while he doesn`t go to
those stark places that Newt reaches, if you look at what Romney`s been
saying in this last week, it`s just this dark, kind of crude image of this
country. And to attack Joe Biden for, you know, pointing out that, in
fact, there has been economic growth -- why would you want to be the guy
that Mitt Romney is at Christmas, the guy who tells that you, you know,
things are going bad, things are awful and you probably shouldn`t get the
kids presents?

SCHULTZ: You know, when you look at the tax plan, Joe Madison, that
Mitt Romney has put out there, it overwhelmingly benefits the wealthiest
Americans. The other GOP candidates have pretty put out the same kind of a
plan. Are they hoping that nobody`s going to notice this stuff? What do
you make of it.

MADISON: Not only are they hoping they`re not going to notice, but
they`re hoping that individuals like John, yourself and I and others, who
have a voice and a microphone or a camera, won`t be able to figure it out.

You know, I think we need to give the American people a great deal of
credit. I`m glad President Obama didn`t gloat today. He put it right
where it needed to be; 160 million people understood it, because we broke
it down. We broke it down to a simple, simple message.

And that`s what we have to keep on doing. But let me flip the script
for a moment, Ed. Do you remember how they used to say that if the wealthy
really was concerned, they could write a check to the U.S. government and
bring down the deficit? Well, everybody who doesn`t want that 1,000 or
1,500 dollars a month, these Tea Party folks, here`s what can you do in
January: write a check.

Write a check. Do what you ask the rich to do. Write a check and
send it and pay down the deficit. See how many checks the government gets
from these folks.

SCHULTZ: Speaking of writing checks and paying down debt, I see that
Mitt Romney says he will not release his tax records. John, what about
that?

NICHOLS: Well, that`s a very big deal. Barack Obama has released his
tax records. And they always comb through them and try to make a big hit
on it. But the problem with Romney, in refusing to release his tax
records, is we already know that he is still taking a great deal of money
that he gained really from his relationship with Bain Capital, the robber
baron corporation that he was involved in.

And that`s a significant thing. Because here you have a company that
-- an operation that was all about going into corporations, ripping them
apart, taking the profitable parts and then shutting down factories,
shipping jobs overseas. When you look at Mitt Romney`s tax returns, you
see those connections.

I think that`s a big part of the reason why he doesn`t want to release
them, along with the fact that he`s a very, very rich man.

SCHULTZ: And Joe Madison, Ron Paul is under fire for a mailer he
supposedly sent out in 1993 advertising his newsletter. In the mailer, he
notes his newsletter "have laid bare the coming race war in our big cities"
and warned of "a federal homosexual cover-up on AIDS." I mean that and
then, of course, some other questionable stuff dealing with race, where is
this going to take his campaign? Is this going to affect him at all, Joe?

MADISON: It has to affect him, absolutely. Not only is he not ready
for the 21st century Republican party, he`s not ready for the 21st century
America. We have been so far from that. But really what I think irritates
most people is that he says I didn`t know about it. It had my name on it,
but I really didn`t know about it. I didn`t write it.

But he doesn`t identify who wrote it. Look, anything Ed Schultz has
his name on, "The Nation Magazine" has their name on, I have my name on, we
better know about it and we better be able to explain it.

And in terms of Mitt Romney`s tax returns, again, yeah, he`s going to
have to release them. And the American people want to see this. But, you
know, they`re exposing themselves. And that`s why I think come February,
we`re going to -- the American people are going to have a different
attitude than they have had leading up to this fight.

SCHULTZ: Well, identifying the Scrooges of the Republican party, a
very easy assignment for all of us. John Nichols, Joe Madison, great to
have you with us. You guys have a great weekend. I appreciate your time
tonight.

Michele Bachmann is confronted by a gay robot in Iowa. What does this
mean? Lizz Winstead and Mike Papantonio will help figure all that out.
That`s next.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Many of her views seem to come
from outer space. So it would be of little surprise that at a campaign
stop in Iowa, Michele Bachmann got a visit from a robot. Take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I am a gay robot. I am a gay robot. Do you
support equal rights for gay robots? Not only are you a homophobe, you are
a robo-phobe.

Michele Bachmann, I will not rest until you support equal rights for
human and robot gay people. Not only are you a homophobe, you are a robo-
phobe.

CROWD: Get out of here! Get out of here!

UNIDENTIFIED MALE: I was programmed to do this. I can not help
myself. I am gay.

UNIDENTIFIED MALE: If you go back in there, you`ll be facing some
(INAUDIBLE)

UNIDENTIFIED MALE: I understand. Mission accomplished.

(END VIDEO CLIP)

SCHULTZ: Let`s turn to Mike Papantonio, host of "Ring of Fire Radio,"
and Lizz Winstead, co-creator of "The Daily Show" and author of the
upcoming book "Lizz Free or Die." We want to tell you that Lizz is
performing her year in review show, "Bang the Dumb Slowly," New Years Eve
at the Parkway Theater here in Minneapolis. For tickets, you want to go to
BrownPaperTickets.com.

Mike, I got to say that the extreme views of the righties bring out
extreme protests. Do we need more robots out on the campaign trail?

MIKE PAPANTONIO, RADIO TALK SHOW HOST: Ed, it wouldn`t surprise me if
that was her husband, Marcus, dressed up like that robot, just to bring a
little excitement to her campaign. But I`ll tell you what it does do. It
shows the distinction between the Republicans and Democrats.

Yesterday, we saw a president, Ed. We saw a president who could speak
in complete sentences. He was intelligent, intelligent analysis,
motivational, inspirational.

Contrast that now with what we see coming from the Republican party.
It more looks like scenes out of "Beavis and Butthead" or "South Park,"
when you really compare what the two sides are doing here.

Every time we see the Republicans -- every day, we wait for that Kim
Kardashian disaster moment coming from the Republican side. You know what?
We`re never disappointed. We`re never disappointed.

LIZZ WINSTEAD, COMEDIAN: I just want to know how long it took them to
figure out that that freak dressed up as a gay robot was in their midst?
Because there are so many nut bags that attend a Michele Bachmann function
that that guy probably blended in for a good 20 minutes before they even
noticed.

SCHULTZ: Well, Lizz, what percentage of Republican primary voters do
you think are robo-phobes?

WINSTEAD: I don`t know. But I have a feeling there are a few, you
know, gay robo-phobes that walk amongst Michele Bachmann and -- you know,
like Mike said, that Marcus sure seems fun.

SCHULTZ: Turning now to the latest Rick Perry ad. It`s a great ad
because it doesn`t feature Rick Perry. That is until the end. Take a look
at this.

(BEGIN VIDEO CLIP)

ANITA PERRY, WIFE OF GOV. RICK PERRY: I`m Anita Perry. When Rick`s
tour of duty as a captain in the Air Force ended, he returned home to farm
with his dad and asked me to marry him. We grew up in small towns, raised
with Christian values, values we still believe in.

We know that Washington, D.C. could use some of that.

GOV. RICK PERRY (R), PRESIDENTIAL CANDIDATE: I`m Rick Perry and I
really approve this message.

(END VIDEO CLIP)

SCHULTZ: He really approves it, mike. Does that make a big
difference.

WINSTEAD: When he popped into that ad, I thought I was watching a
trailer for "The Hobbit." It was like Gollum just pouncing behind. It`s
like -- look at them. Hi. Hi. Here I am. Hi.

PAPANTONIO: We`re seeing these 30 second sound bites. This is what`s
so bizarre. We`re seeing 30 second sound bites where the candidates are
telling who is the holiest, who has been married the longest, who has the
most children and who is the least goofy.

That is what the discussion has come down to. It is I`m less goofy
than you are. Unfortunately, that`s what they`re left with. You know, the
real story here, Ed, is that Karl Rove and Fox News has got to be
scrambling around to figure out how they`re going to reverse this disaster
they brought on America.

They brought the robot. They brought Perry. They brought these
clowns, the philandering fraud, the uppity Wall Street millionaire, the dim
wit Perry, who should have been named Giggles as a child. He`s so
ridiculous.

They created this mess. Now, you know what, they can scramble all
they want, but they`re not going to be able to correct this thing that
they`ve made, that is now the new Tea Party Republican Party.

(CROSS TALK)

WINSTEAD: It`s like Willow Brook. It`s like whoever was left at
Willow Brook is just out now and running for president under the GOP
ticket. It is completely absurd at this point. But what were you going to
say, Ed? I interrupted.

SCHULTZ: Who wins Iowa, do you think? Of all the crazies, who wins
Iowa, Lizz?

WINSTEAD: Usually, you know, because Iowa has been so helpful to the
Republicans in the past with, you know, Huckabee and Pat Buchanan, so my
guess is that Rick Santorum is going to take this win and just ride it all
the way home to his amazingly Christian marriage.

SCHULTZ: What do you think, Mike?

PAPANTONIO: It`s going to be a guy like Perry or Santorum. While the
rest of the country is worried about the economy and Wall Street stealing
money from us and the deficit, they`re worried about family values.
Santorum is playing into that. Perry is playing to that.

You know, Iowa is always wrong. So whoever they come up with doesn`t
really mean much anyway.

SCHULTZ: Mike Papantonio, Lizz Winstead, great to you have with us
tonight. Have a great weekend.

WINSTEAD: Merry Christmas.

SCHULTZ: You bet. Merry Christmas to you, Lizz.

Coming up, Rex the rescued Beagle. I tell you what, he was a holiday
hit with ED SHOW viewers last night. We got an update on furry friend.
Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: ED SHOW survey tonight, I asked you will the payroll tax
fight cost the Republicans the House and Senate in 2012? Ninety seven
percent of you said yes; three percent of you saying no.

Coming up, I`ll give you an update on last night`s special guest, Rex
the rescued Beagle. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Last night we introduced you to our liberal guard dog Rex.
Isn`t he a dandy? Rex, a rescued Beagle from a shelter in New York, joined
me on the program last night to help explain the right wingers uproar over
President Obama`s dog Bo.

Bo was featured on the White House Christmas card and, of course, went
Christmas shopping with the president. Pretty harmless stuff, if you ask
me.

But that didn`t stop the Republicans from just hammering the president
for taking his dog shopping for the holidays. Well, Rex the good liberal
watch dog, he didn`t like that too much.

(BEGIN VIDEO CLIP)

SCHULTZ: Now we just played some sound bites of Republicans there.
He doesn`t like them. Look at that. Well, settle down. No. No. I know.
We have to work with them, Rex. You can`t work them over all the time.
All right.

I feel the same way sometimes. Democratic dogs, don`t you think they
deserve love? They have feelings too. Have a heart for Bo and my friend
Rex. It`s the holiday season.

(END VIDEO CLIP)

SCHULTZ: I thought Rex was pretty dog gone cute. And so did many of
our viewers of the program. Doug Stover (ph) of Media Matters e-mailed us
this picture of his dog watching Rex last night. He says, "looks like Ed
gained another viewer."

The blogs, they took it pretty nice, too. Here`s a headline from
Mediate: "Even Glenn Beck`s Website Covered It, The Blaze."

And Fox Nation is now aware there is a liberal watchdog out there.
Look out. Although I`m not sure where they got the idea that Rex hates
Republicans. He just lets you beware, OK?

He`s just a little suspicious of the righties, that`s all. Well, we
are happy to report that the good folks who have been caring for Rex at the
Shawn Casey Animal Rescue in New York got more than 100 phone calls from
viewers wanting to adopt this beautiful pup.

Now they tell us that Rex should be in a loving home just in time for
Christmas.

Now this holiday season, if your dog is anything like our dog Buck, a
black lab at home, he`s always roaming through the kitchen, he might be
sniffing around looking for some extra treats this holiday season.

Here`s a clip of a dog sitting next to his master, just hoping for
something yummy in the holiday season. Instead, this is what he gets.

(BEGIN VIDEO CLIP)

UNIDENTIFED MALE: Food. You know, I just couldn`t stop thinking
about it. So, yeah -- so, you know, I went to the fridge and I opened up
the meat drawer. You know what the meat drawer is, right?

UNIDENTIFIED MALE: Yes, what was in there?

UNIDENTIFIED MALE: Well, I`ll tell what you was in there. You know
that bacon that`s like maple. It`s got maple flavor.

UNIDENTIFIED MALE: The maple kind, yeah.

UNIDENTIFIED MALE: Yeah. So I took that out. And I thought I know
who would like that. Me. So I ate it.

UNIDENTIFIED MALE: No.

(END VIDEO CLIP)

SCHULTZ: My advice, don`t do that to your pup this holiday season.
Feed them whatever they want. On behalf of THE ED SHOW staff and my dog
Buck, I hope you have a great holiday weekend. There`s the Buckster
fishing with the old man.

That`s THE ED SHOW. I`m Ed Schultz. "THE RACHAEL MADDOW SHOW" starts
right now. We`ll see you next week.

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

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