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'The Last Word with Lawrence O'Donnell' for Monday, January 2, 2012

Read the transcript to the Monday show

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Guests: David Gregory, Andrea Mitchell, Randy Johnson, Rep. Barney Frank, John Heilemann

LAWRENCE O`DONNELL, HOST: Rick Santorum really said this in his
closing argument for why he should be president of the United States,
quote, "Sometimes the best isn`t that great, but it`s the best."

(BEGIN VIDEOTAPE)

ALEX WAGNER, MSNBC HOST: Who is a true conservative in this race?

MARTIN BASHIR, MSNBC HOST: I hate to break to it you Iowans, but the
good Lord himself is not running.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I believe in America. And
I`m running for president of the United States.

(CHEERS)

UNIDENTIFIED MALE: Mitt Romney in the lead with 24 percent.

UNIDENTIFIED MALE: There will be blood if Mitt Romney seems like the
guy that`s going to walk away with it.

UNIDENTIFIED MALE: None of us conservatives want Mitt Romney.

UNIDENTIFIED MALE: The more Iowans see of Mitt Romney, the worse he
does.

CHRIS MATTHEWS, MSNBC HOST: Why won`t Mitt Romney speak French? Does
anybody know?

ROMNEY: (SPEAKING FRENCH)

REP. RON PAUL (R-TX), PRESIDENTIAL CANDIDATE: I am a candidate for
the presidency in the Republican Party primary.

(CHEERS)

UNIDENTIFIED FEMALE: A new poll from the "Des Moines Register" shows
Paul is in second place.

BASHIR: Ron Paul wants to destroy virtually the entire government.

PAUL: They don`t care about your personal liberty.

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: I`m running for president
of the United States.

(CHEERS)

UNIDENTIFIED FEMALE: Rick Santorum has soared to third place with 15
percent, something a GOP strategist has called a bombshell.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I`m announcing my
candidacy for president of the United States.

TAMRON HALL, MSNBC ANCHOR: You bring up Newt Gingrich.

MATTHEWS: Gingrich said he`d been Romney-boated.

GINGRICH: I don`t think I`m going to win.

MATTHEWS: Newt is like Freddy Krueger, he keeps coming back.

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: I declare to you
today as a candidate for president of the United States.

BASHIR: Rick Perry would decimate various departments if he can
remember which ones.

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: To announce
formally my candidacy for president.

UNIDENTIFIED MALE: I think Michele Bachmann is going to have the
worst finish any winner of the Iowa straw poll has ever said.

UNIDENTIFIED MALE: I think she`s flop and pop.

HERMAN CAIN (R), FORMER PRESIDENTIAL CANDIDATE: I came her to declare
my candidacy for the Republican Party of the president of the United States
of America.

(CHEERS)

JOE SCARBOROUGH, MSNBC ANCHOR: As I predicted, crazy never wins in
the Republican Party and it doesn`t.

ANN COULTER: Well, if you don`t run Chris Christie, Romney will be
the nominee and we`ll lose.

(END VIDEOTAPE)

O`DONNELL: Today, one Iowan wanted to know why during the 2008
presidential campaign, Rick Santorum endorsed Mitt Romney instead of the
more conservative and eventual winner Mike Huckabee.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Isn`t it disingenuous to tell us not to settle
when you did four years ago?

SANTORUM: I think what I`m telling you to do is to pick the more
conservative of the candidates. And it`s not to settle for something less
than what you believe is the best. And yet sometimes the best isn`t that
great, but it`s the best.

And as I`ve said, I`m not a perfect candidate. But I would make the
argument that I believe that we`re the best alternative out there. In the
case of Governor Romney and John McCain, I settled for what I thought was
the best alternative out there.

(END VIDEO CLIP)

O`DONNELL: While Santorum was going after Romney for being too
liberal, Ron Paul and his senator son turned the liberal attack on
Santorum.

(BEGIN VIDEO CLIP)

RON PAUL: He`s very liberal.

REPORTER: Rick Santorum is liberal?

RON PAUL: Oh, have you looked at his record? Go look at his record.

REPORTER: What makes him liberal?

RON PAUL: He spends too much money. I mean, he wasn`t leading the
charge to slash the budgets and vote against big government.

SEN. RAND PAUL (R), KENTUCKY: He voted to double the size of the
Department of Education. He voted to expand Medicare and add free drugs
for senior citizens, and he`s voted for foreign aid. Those are not
conservative principles.

(END VIDEO CLIP)

O`DONNELL: Tonight, FOX News is aiming its big guns at Ron Paul.

(BEGIN VIDEO CLIP)

BILL O`REILLY, FOX NEWS: Even if the congressman does do well, he
will not, will not be the Republican nominee, because his positions on many
issues are simply outlandish. Ron Paul with his soft approach to Iran, his
gold standard madness and other extreme positions is not going to be
nominated by the Republican Party simply because President Obama would beat
Mr. Paul by a colossal margin.

(END VIDEO CLIP)

O`DONNELL: Tonight in Iowa, Mitt Romney is hoping that his public
confidence would be contagious.

(BEGIN VIDEO CLIP)

ROMNEY: You guys, I need you tomorrow night. I need every single
vote in this room and I need you to get a couple of other votes from your
neighborhood and get them to caucus. I need a great showing here at Cedar
Rapids.

We`re going to win this thing with all of our passion and strength and
do everything we can to get this campaign on the right track to go across
the nation and to pick up other states and to get the ballots I need, the
votes I need to become our nominee. That`s what we`re going to get with
your help.

(END VIDEO CLIP)

O`DONNELL: This weekend`s much-anticipated "Des Moines Register" poll
showed Huckabee and Obama leading on the eve of their victories in Iowa,
shows Mitt Romney narrowly leading Ron Paul by two points with Santorum
polling third.

When you only use the data from the last two days of polling in this
fast-moving race, Santorum jumps to second, three points behind Romney.
That`s within the margin of error. Paul drops to third with 18 percent
support.

A new American Research Group poll of likely Iowa caucusgoers shows
Romney with a more comfortable five-point lead over Ron Paul. Santorum
polls third in that one with 16 percent and Gingrich is running fourth in
that one at 15 percent.

Joining me now from the Polk County Convention Center in Des Moines,
David Gregory, moderator of NBC`s "Meet the Press," and Andrea Mitchell,
host of MSNBC`s "ANDREA MITCHELL REPORTS" and NBC News chief foreign
affairs correspondent.

David, the poll -- we`re beyond the polls now. And as we all know,
the voters continue to move after we stopped polling them. What is your
sense of where the movement is going since the pollsters stopped?

DAVID GREGORY, NBC NEWS: Well, I think Santorum does have a lot of
momentum right now. You see it out on the hustings with Senator Santorum.

But I think Romney, too, is showing a fair amount of strength. So,
we`re in the zone where we simply don`t know.

You know, on the Republican side, they`re doing callbacks, trying to
gauge that level of intensity. They`re doing a lot of crowd estimates and
trying to judge enthusiasm.

But there`s a great deal of both intensity but a lot of questions.
There are so many undecided voters, a lot of volatility. We`ve been
talking about it for weeks.

Look how many Republicans have been up and then down, all is that
alternative to Romney. But here`s the point of strength for Romney,
Lawrence, tonight -- and that is his opponent is not a candidate. It`s a
constellation of social conservatives. Nobody has yet totally emerged.
And then separate from that, you have Ron Paul.

So, I talked to a prominent Republican today who said, you trust that
Iowa poll because it`s been right in the past, it shows a combination of
Romney, Paul and Santorum being in that top tier. But this Republican also
cautioned, Perry could still make some noise here and defy some
expectations.

ANDREA MITCHELL, MSNBC HOST: That`s right.

O`DONNELL: Andrea, of all the campaigns that are working in Iowa
tonight, the Romney campaign was the one campaign of that group that
actually considered not even making an effort in Iowa, not really going in,
not looking, at least, like they were trying to win Iowa. Huntsman has
obviously stayed out of it.

But to see him tonight fighting for the lead in Iowa was something
that didn`t seem possible months ago.

MITCHELL: And predicting that he could win when they tried so hard
successfully to lower expectations, not coming in here, doing almost a
stealth campaign here. And then coming in with big guns, spending a lot of
time here, not doing as much, you know, bussing from county to county, 99
counties as both Rick Santorum, you know, did and some of the other
candidates.

But at the same time, he has built a very effective organization here.
He campaigned actively here even in losing four years ago. And he had a
lot of organizational strength.

The main thing that we`re seeing, though, is that Rick Santorum is not
only surging but he`s gaining his voice as a candidate. And tonight, we
see that there`s a tweet from Rupert Murdoch of all people saying that Rick
Santorum is the man. And that could be the first signal that
conservatives, movement conservatives are now going to try to get around
Santorum as perhaps a "stop Romney" movement.

O`DONNELL: David, conservative media mogul Rupert Murdoch has been
tweeting for three days now, starting on New Year`s Eve, and he`s already
found it to be contagious. He -- there was one I read this morning where
he said, "Good to see Santorum surging in Iowa. Regardless of policies,
all debates showed principles, consistency and humility like no other."

Not exactly an endorsement. And then Murdoch tweets later tonight,
"Can`t resist this tweet, but all Iowans think about Rick Santorum. Only
candidate with genuine big vision for country."

Now, when you say only candidate with big vision, that`s as close to
endorsement as you get.

MITCHELL: Right.

GREGORY: Yes. I think it`s significant. And if you`re Rick Santorum
and you`re canvassing the state and you`re going to the pizza barn and FOX
News is playing at the bar, you know, that kind of thing matters because,
you know, remember, what`s different about Iowa, as you well know, is that
these are real party stalwarts. These are activists. These are folks who
are actually going to the lengths of caucusing. That`s a lot of work.

So, something like that can have some impact because I again, I go
back to the point that there has been no reliable alternative to Romney.
Santorum may be catching the wave at exactly the right time.

But here`s what the Romney folks say. OK, fine, do you really think
that Rick Santorum is going to be the nominee of the party? I mean, this
is a guy who`s worked Iowa incredibly hard, gone to all 99 counties. He
can`t have 500-plus town hall meetings in Florida, right?

So, if this is a game that lengthens a little bit, it`s more to
Romney`s advantage.

The reality is, first, second or third, if Romney succeeds in
exceeding expectations here, which everybody says is the name of the game
here and he seems to have already done that, then this is going to be a
good night for him.

O`DONNELL: Andrea --

MITCHELL: And Romney has the money. Santorum doesn`t have the money
to go the distance.

O`DONNELL: Well, Andrea, what about the money case? Here is Romney
trying to make the case backstage to all of us, the Romney campaign and
publicly that, look, Santorum -- no matter how well he does, doesn`t have
the money or the resources to go all the way. I, Romney, do.

Now, he`s doing that. In the middle of a campaign where someone came
in with a massive amount of money from Texas and collapsed completely, Rick
Perry came in with more money than anybody could count and it hasn`t
mattered a bit.

MITCHELL: Well, money has mattered in terms of the commercials
because the commercials have been very effective. They certainly, the
super PAC supporting Mitt Romney did in Newt Gingrich.

Gingrich contributed to his own failure as a candidate, which he
acknowledged here in Iowa today, even though he says he`s going on. And he
has two debates coming up in New Hampshire. And debates have been his good
form.

But he`s short on money, short on strength. He looks almost like a
stricken man in the way he`s been conducting his candidacy in the last
couple of days. So, Gingrich has certainly been hit hard by the money
factor.

This Iowa caucus has not been like past Iowa caucuses. It hasn`t been
small and folksy. We`ll see what happens tomorrow night when people
actually get together and vote.

But up until now, it has had a lot of the apparatus of a big primary
campaign with all this money and these big ads.

GREGORY: And can I just add to that, Lawrence, that the dynamic of
Perry falling short of expectations almost right away completely reshaped
this race. This was supposed to be a Romney/Perry race. And it has not
turned out to be that at all.

But the note of caution about Romney, there`s plenty of room for
surprise in Iowa and as we move forward. The reality is that Romney is
still a weak front-runner. He may not have a solid number two that he`s
running against, but he`s still a weak front-runner which is why he has
good potential scenarios coming out of Iowa. But it doesn`t change the
fact that the floor beneath him is still a little bit fragile.

O`DONNELL: David, you bring up a good point about the Perry collapse.
The front-runners are the front-runners tonight in Iowa because of a series
of collapses that you couldn`t see coming -- Rick Perry coming into Iowa
and collapsing quickly, despite all the money, Michele Bachmann winning the
Iowa straw poll and then collapsing, and then with this final collapse that
we saw in December with Newt Gingrich.

Let`s just listen to Newt Gingrich exactly one month ago, December
1st, talking about his prospects in a way that made sense at the time.

(BEGIN VIDEO CLIP)

GINGRICH: I`m going to be the nominee. It`s very hard not to look at
the recent polls and think that the odds are very high I`m going to be the
nominee.

(END VIDEO CLIP)

O`DONNELL: And now, let`s listen to the way Newt Gingrich is talking
about his prospects of winning now.

(BEGIN VIDEO CLIP)

GINGRICH: I don`t think I`m going to win. I think you look at the
numbers, I think that volume of negativity`s done enough damage. Whatever
I do tomorrow night will be a victory because I`m still standing.

(END VIDEO CLIP)

O`DONNELL: Andrea, have we seen a candidacy like this, that in 30
days goes from "I`m going to be the nominee" to "if I`m still standing,
that`s the best I can hope for"?

MITCHELL: I can`t recall one. You know, Gallup pointed out today
that there have been seven changes of lead in this race since May. That`s
extraordinary.

And what we`ve seen, I mean, I think you could have predicted the
collapse of Herman Cain and after that first debate, the Rick Perry
collapse. Newt Gingrich was a little bit more unpredictable. He had ha
near-death experience with his campaign last spring. And then came back
and resurrected himself.

And this past month, it really has been amazing to see what`s
happened. But he`s his own worst enemy in many cases. We`ve known that
over the decades. He isn`t a man that his former colleagues say, you know,
has 100 ideas and maybe several of them are actually good ideas.

And he doesn`t have the intellectual discipline to stick to the themes
that are really most compelling to the people, especially here in Iowa.

All of this said, Lawrence, this is a year where you see it, you feel
it, everywhere we go, people are angry, they`re upset. They feel
completely abandoned by both political parties in Washington and Congress
in particular. And there`s a real hunger for answers.

And I think you may see more turnout than we all expect. Certainly,
the Republican Party is seeing a big registration increase, upwards, more
than 30,000 new registrants. You may see independents coming and
registering on the spot tomorrow night.

Then when they begin talking and listening to the speeches, people may
be influenced and still are saying that they could be persuaded to change
sides. So, this is very unpredictable but it`s very meaningful in that
these are the first votes that are going to be cast and people want change.

Look at the debates and the people who are watching shows like David`s
on "Meet the Press" and the debate that David is doing on Sunday in New
Hampshire. All of the debates have had extraordinary viewership.

I think this is a time when Americans know this is serious business.

GREGORY: And we`re reminded of how little we know, Lawrence, as an
undecided voter in Newton, Iowa, said to me today, I probably won`t decide
until the very last minute. Why would you decide anytime before then?

So, it underscores what we don`t know and how volatile this race still
is.

O`DONNELL: And why would that voter want to make it easy for us?

Andrea Mitchell and David Gregory, thank you both very much for
joining me tonight from Iowa.

MITCHELL: You bet.

GREGORY: Thanks.

O`DONNELL: Coming up, how do you sell yourself as someone who knows
how to create jobs when your career was built on outsourcing or getting rid
of jobs? Our next guest was laid off by Mitt Romney.

And the GOP presidential candidates are making promises on the
campaign trail that are impossible to keep because the Constitution says
they`re impossible to keep. What the candidates pretend not to know about
governing. Congressman Barney frank is going to join me on that one.

And full coverage of the Iowa caucuses starts tomorrow night at 6:00
p.m. Eastern, right here on MSNBC.

(COMMERCIAL BREAK)

O`DONNELL: Mitt Romney wants you to believe he knows a little
something about job creation. But his history as an investment banker
tells a very different story. A worker who lost his job because of Mitt
Romney will join me next.

And we`ll tell you what more Americans than ever before chose to put
under their Christmas trees this season. Sales of this product were up 100
percent this Christmas. Try to guess what it is. That`s in the "Rewrite."

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SCARBOROUGH: Are you proud of your work at Bain capital?

ROMNEY: Absolutely. We helped create tens of thousands of jobs. I`m
proud of the private sector. There`s no question but that Speaker Gingrich
and much more significantly, the DNC, and President Obama are going to put
free enterprise on trial.

(END VIDEO CLIP)

O`DONNELL: The recurring Bain of Mitt Romney`s campaign, Bain
Capital. While Romney says he helped to create tens of thousands of jobs
as CEO of the private equity firms, others, including some of the laid off
workers, say that`s not the case.

The Democratic National Committee has flown in one of those dissenters
to Iowa this week. And we`ll talk to him in just a moment.

Full disclosure here. Bain Capital and NBC Universal are part owners
of the Weather Channel. How that impacts this segment, I have no idea.
But it`s stuck in all of our prompters whenever Bain Capital comes up now.

In 1992, Bain Capital bought American Pad and Paper, AMPAD it`s
called, an office supplies company. By 2000, AMPAD was bankrupt. Hundreds
had lost their jobs and Romney and the rest of the investors were $100
million richer.

For a candidate who touts his private sector experience, this history
may be a tough sell for some voters, especially with the national
unemployment rate at 8.6 percent. Layoffs at AMPAD helped Senator Ted
Kennedy squash Mitt Romney`s 1994 senatorial campaign.

Here`s a 1994 anti-Romney ad featuring workers who had lost their job
after Romney`s firm bought their company.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: He`s cut our wages to put money back into his
pocket.

UNIDENTIFIED FEMALE: You`re not creating jobs. You`re taking them
away from us to put money in your pocket.

UNIDENTIFIED MALE: He just wants to take money out of your pocket and
put it in his.

UNIDENTIFIED FEMALE: Right.

UNIDENTIFIED FEMALE: I`d like to say to the people of Massachusetts,
if you think it can`t happen to you, think again.

(END VIDEO CLIP)

O`DONNELL: Joining me now is Randy Johnson, who lost his job at AMPAD
plant in Indiana after Bain Capital bought the company. He was flown into
Iowa this week by the Democratic National Committee.

Thanks for joining me tonight, Randy.

RANDY JOHNSON, FORMER AMPAD EMPLOYEE: I`m glad to be here.

O`DONNELL: Randy, I remember that 1994 Senate campaign in
Massachusetts that Romney was doing very well until Ted Kennedy started
concentrating on what he had actually done as an investment banker and the
way people lost their jobs, not just the number of jobs, but the actual
style of it.

Could you tell your story about how you lost your job once Bain took
over?

JOHNSON: Yes, quickly, AMPAD is a subsidiary of Bain. And they
bought my plant in `94. It was called an asset sale. They come in, bought
the assets and they did not have anything to do with the employees.

If you wanted to work for us, you had to fill out on application.
They brought in guards and walked us out of the building. It was a really
bad time.

O`DONNELL: And the personal communication that some of you got from
Mitt Romney as you were being laid off, wasn`t there?

JOHNSON: Actually, there was a letter sent to me when they decided to
close the plant back then. It was kind of apologetic but by the same token
it was on the day the plant closed, so it was a little late to help us.

O`DONNELL: When you see Mitt Romney making hundreds of millions of
dollars over the course of his career doing this kind of business, you can
reasonably say in effect that his presidential campaign has been launched
on the lost jobs of all those workers that were laid off and these kinds of
transactions so that his company could take hundreds of millions of dollars
in profit out of these deals. That`s how these deals were done.

This seems to me to be a very strange year for a candidate like that
to be a front-runner in either party, where you`re basically running on the
money you saved and the money you earned and put away and took home by
laying people off in this economy.

JOHNSON: Right. It was really a bad time because as they basically
put us out of work and they put the company out of business, they also sold
stock in the company. They made a fortune.

And we were like, why can`t we have this for American workers? Why
can`t we have jobs? And they took the money and what we did it, we don`t
even know. I mean, that`s not disclosed.

O`DONNELL: Going back to the Kennedy campaign because I think that`s
one of the models that we`re going to see, especially if Romney is the
nominee against President Obama, that campaign, I think, very effectively
framed this issue in a way that wasn`t anti-capitalist, it wasn`t anything
that was against the way money is made in this economy so much as what is
the responsibility to workers in this country from the employer`s
standpoint.

Isn`t that the best way to frame this discussion?

JOHNSON: I think it is. And the fact of the matter is -- what is the
right thing? What is morally right? What is fundamentally right? What
kind of future do we want for this country and is that the kind of person
you want leading?

It`s a big difference. And Kennedy framed that up very well in `94.

O`DONNELL: They`ll be watching those Kennedy tapes at the Obama
headquarters. Randy Johnson, thank you very much for joining us tonight.

JOHNSON: Thank you.

O`DONNELL: Coming up, the must-have gift of Christmas 2011. Did you
get one? It`s not what you think, except it`s probably maybe exactly what
some of you think and it does not require batteries. That`s in "The
Rewrite".

And Barney Frank will be my guest as we look at the kinds of promises
the Republican presidential candidates keep making and cannot keep when
they get into office.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

SARAH SILVERMAN, COMEDIAN: If you`re having a baby, you`ve got to
figure out like how you want to raise your baby or whatever, you know?
Which wouldn`t even -- still not be an issue for us because we`d be honest,
you know, and just say -- you know, like, mommy is one of the chosen
people. And daddy believe that is Jesus is magic.

(END VIDEO CLIP)

O`DONNELL: And now for the best Tweet of the year. Sarah Silverman,
who is not known for parental wisdom, recently Tweeted: "Don`t tell kids
girls can be anything. They wouldn`t have thought otherwise. Just raise
them strong, dummy."

I registered my full agreement by re-Tweeting Sarah Silverman`s Tweet
without comment. That provoked Kenneth Drexler to Tweet this today: "Sarah
Silverman, Lawrence, you are annoying."

That is the first and only time I have ever been equated with Sarah
Silverman in any way. And so thank you, Kenneth Drexler, for the best
Tweet I`ve received so far this year in 2012.

And the most read story in the British newspaper "the Telegraph"?
What Americans bought each other for Christmas. That story also tells us
Americans why we should be more afraid of each other than we were before
Christmas. That`s in tonight`s Rewrite.

And there`s a lot the Republican candidates don`t know about
governing, including stuff that every high school student in America is
supposed to know. Barney Frank knows it and will explain it next.

(COMMERCIAL BREAK)

O`DONNELL: This country lives in denial during a presidential
campaign. The leaders of that denial are the presidential candidates. The
cheerleaders of that denial are the political news media. They deny the
most important aspect of the design of our government for pretty much every
minute of the two years that we drown in presidential campaigning.

Today, one brave truth-teller tried to break the spell of denial that
has gripped the country.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: It`s constitutionally
impossible to govern without Congress.

(END VIDEO CLIP)

O`DONNELL: Presidential candidates, Democrat and Republican, never
say that, never. They never admit it. They always say what they are going
to do as if they are running for king. And the press lets them get away
with it, day in and day out.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I will get the government
out of your health care by repealing Obamacare.

I will repeal Obamacare.

I`m going to get rid of Obamacare on day one.

REP. MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: I will cut
spending. I will repeal Obamacare. I will reduce the size of the federal
government. And I`ll abolish the federal tax code. And I will get rid of
crony capitalism that contains the special interest carve-outs.

(END VIDEO CLIP)

O`DONNELL: Joining me now is Massachusetts Congressman Barney Frank,
the ranking member of the House Financial Services Committee. Congressman
Frank, I have to tell you, these presidential campaigns drive me crazy when
they say these things, these simple declarative sentences, as if they`re
going to be king or queen; "I will do this."

And they completely ignore Congress` role, which is the definitive
role in virtually all of domestic governing. It drives me nuts and I`m not
even a member of Congress. What is it like for you to listen to these
people pretend they live in this fantasy land of governing?

REP. BARNEY FRANK (D), MASSACHUSETTS: I have to be honest, Lawrence,
when I listen to things that the Republican presidential candidates are
saying that seem to be, to use a technical term, wacky, I don`t always get
to that one. But I think the paradox is this -- I think you`re absolutely
right about the misstatement.

And you blame the candidates and you blame the media. And I agree
with both those. But you have to throw in one other party that`s party
responsible. And that`s the voters.

The problem is this: being good at working with the Congress,
understanding how to get the government to function, knowing how to make
things work is an important qualification for the job. But in the
atmosphere in which we live today and probably have always lived, in which
politics is a bad word and Congress is -- especially after the Tea Party --
people talk about how unpopular Congress is.

Let`s be very clear. The biggest single event that happened after
which there was this enormous decline in Congress` popularity was the
domination in the House of Representatives by people who are either in the
Tea Party or were afraid of losing a primary to someone who`s in the Tea
Party. But the public does not want you to talk about one of the most
important parts of the job.

So that`s one of the reasons why you don`t hear more honest discussion
about, here`s what I would do and here`s how I would work with Congress. I
have to say, that`s kind of a theme of mine. I know the public is, I`m
told, unhappy. Well, there were aspects of the public`s behavior I`m not
that crazy about myself.

I mean, I didn`t decide in 2008 to vote for one group and then in 2010
to vote for another group, and then be puzzled when you have put two very
different groups of people into a position of sharing power, and they don`t
get along with each other.

O`DONNELL: Just to give the full frame to Gingrich`s comment, he
wasn`t suddenly unburdening himself of this truth voluntarily. It was
really an attack on President Obama, where he was responding to something
that emerged in "the New York Times" this weekend. I`m going to read you
the quote from "the Times," where it says, "in terms of the president`s
relationship with Congress in 2012, the president is no longer tied to
Washington, D.C. Winning a full four-year extension of the cut in payroll
taxes as the last must-do piece of legislation for the White House. After
three years in office, Mr. Obama is gambling on a go-it-alone approach. In
the coming weeks, he will further showcase measures he is taking on his own
to revive the economy."

So that is the context in which Gingrich was commenting about the
president can`t do these things alone.

FRANK: Not surprisingly, coming from Newt Gingrich, it`s totally
hypocritical, because, frankly, he was the one who pioneered the notion
that you got political advantage by denouncing the institution, by trying
to tear it down, by demonizing it.

So -- and he did it from within the House. That`s clearly how he --
he was explicit about that. He would gain power by changing this notion in
which we -- on different sides of issues where decent people who differed
with each other -- but to him, your enemy is always somebody evil.

As far as the president is concerned, frankly, my answer to that is,
it`s about time. The one -- I have two criticisms to make of President
Obama, about whom I`m generally very enthusiastic, and who I think has done
an excellent job in these circumstances. Particularly, he`s made a bad
economy better. And if it hadn`t been for Tea Party obstructionism, it
would have been better still.

One, I think he`s been too reluctant to break with this decades of
American expansion militarily for -- beyond what`s needed. But secondly,
he was too trusting of the Republicans. You know, when he ran, he said he
was going to govern in a post-partisan manner. Now, that`s an ideal. But
knowing how right wing the Republican party has become, as we`ve seen from
these presidential debates -- I told one of his aides when he said he was
going to govern in a post-partisan manner, I got post-partisan depression,
because I knew it wasn`t going to work very well, that you were going to
simply have these really, really extreme, anti-government, anti-public
opinion kind of people in charge.

So what he`s saying now is simply a recognition of the fact. Look,
Rick Santorum is being attacked by Rick Perry. This Republican
presidential primary campaign is wonderful to watch. I have to say, I`m
undecided. I heard David slip. He said Newton, Mass instead of Newton,
Iowa, about the undecided voter.

I`m here in Newton, Mass, right now. I`m an undecided voter in the
Republican primary. But the -- Rick Santorum gets attacked by Rick Perry
because he voted to raise the debt limit. Raising the debt limit is a very
routine thing that every sensible person understands we have to do. It`s
only in this context of this extreme right wing takeover of the Republican
party that that becomes controversial.

So what President Obama said was, in effect, you know what -- I
suggested that maybe the Democratic slogan this year should be, we`re not
perfect, but they`re nuts. And essentially that`s what the president was
saying. There`s no reason to expect a party that has been so taken over by
the most extreme right wing elements in America to be able to cooperate
with them.

O`DONNELL: Going to print the bumper stickers now. "We`re not
perfect, but they`re nuts." Barney Frank, joining us from Newton,
Massachusetts, thank you very much for joining us tonight.

FRANK: Thank you, Lawrence.

O`DONNELL: And sales of what Christmas gift went up 100 percent this
Christmas season? Hint, you couldn`t get one at an Apple store.

And it`s more American than apple pie. And it`s next in the Rewrite.

And more on Iowa later.

(COMMERCIAL BREAK)

O`DONNELL: Good news from the Christmas shopping front; sales were up
for the Christmas retail season 4.7 percent over the year before. The big
winners were gift card sales, up 18 percent, and Internet sales, up 15
percent.

But guess what was up 100 percent? Come on. You can figure this out.
Think about it. What`s more thrilling than a gift card? And yes, way more
thrilling than some self-help book delivered to you by Amazon? Hint, we`re
the only country in the world where this could happen.

Nowhere else on Earth did people buy 100 percent more of this thing as
a Christmas gift this year. In fact, this kind of shopping spree would be
illegal in most countries. Come on. What`s more American than apple pie?

Apple pie sales were not up 100 percent this year. OK. Time`s almost
up. I`m going to restate the question for you. What category of Christmas
sales was up 100 percent this year?

And here`s your final hint: it is the only Christmas shopping product
category mentioned in the Constitution of the United States of America.
There you go, you got it.

That`s right. "The right of the people to keep and bear arms shall
not be infringed." And it is so not infringed in this country that gun
sales were up 100 percent this season. It was the biggest gun sales
Christmas season ever.

On the first big day of Christmas shopping, the day after
Thanksgiving, Black Friday, we set a new one-day record of nearly 130,000
requests for background checks on gun buyers. And that background checks
number understates the number of guns that were sold that day, because one
background check allows you to buy several guns in the same store and
because many, many guns are legally sold without any background checks at
gun shows and elsewhere.

No word yet when business reporters are going to rewrite the name of
Black Friday to Gun Friday. December 23rd then became the second busiest
gun-selling day of all time, with over 100,000 background checks being run
that day. One-third of the 1.5 million background checks run in December
were requested in the final six days prior to Christmas.

The good people at the National Rifle Association lobbying group that
works hard to make sure that Americans can continue to kill each other with
guns whenever they feel like it tried to put a rational spin on American
gun madness, saying that an increase in gun sales "might be linked to an
increase in fear of crime," even though the latest FBI data show a six
percent drop in violent crimes.

So in the unique logic of the National Rifle Association lobbyists, a
six percent drop in violent crime would logically lead to a 100 percent
increase in the purchase of guns.

Nothing complicated there, just simple NRA lobbyist math.

On a brighter Christmas shopping note, in the same country where we
ran 1.5 million background checks on gun buyers in December, in that same
December, we also raised 1.5 million dollars for the permanent cause of
this show, the KIND Fund, Kids in Need of Desks. That additional money
will allow us to fund and build 32,654 desks, using African resources,
African factories, African workers in Africa, and deliver those desks to
schools in Malawi, where the students and teachers have never seen desks.

The Brady Campaign to Prevent Gun Violence tells us that all the
research shows that fewer and fewer people are actually owning more and
more guns. So many of the gun sales this Christmas season simply added to
the stockpiles of arms people already have in their homes.

To those people, the people with many guns, I would like to remind
you, you can only fire one gun at a time. You already have enough guns to
defend yourself and kill anyone you want to kill. Next Christmas, why not
buy a kid a desk?

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: You`re not going to Iowa, huh?

JON HUNTSMAN (R), PRESIDENTIAL CANDIDATE: People are going to forget
about Iowa. Yes.

(END VIDEO CLIP)

O`DONNELL: Jon Huntsman was the only Republican candidate not
campaigning in Iowa today. Iowa`s governor, Terry Branstad, tried to
convince 49 other states yesterday that Iowa really does matter.

(BEGIN VIDEO CLIP)

GOV. TERRY BRANSTAD (R), IOWA: Iowa has always winnowed the field.
So it`s all about beating expectations here. If you`re not in the top
three in Iowa -- and I told Jon Huntsman that -- you`re making a big
mistake. And he made a tragic mistake by not coming and campaigning here.

(END VIDEO CLIP)

O`DONNELL: Just half of Iowa winners since 1976 have gone on to win
the GOP nomination; Gerald Ford in 1976, Bob Dole in 1996, and George W.
Bush in 2000. Only once was the Iowa Republican winner elected president,
George W. Bush.

Joining me now from Des Moines, Iowa, is John Heilemann, national
affairs editor for "New York Magazine" and MSNBC contributor. He joins us
live from Des Moines, Iowa.

John, the -- the record, especially on the Republican side of the Iowa
caucus in delivering a nominee, is not good. What remains the case for
campaigning in Iowa?

JOHN HEILEMANN, "NEW YORK MAGAZINE": Well, Lawrence, I think actually
Governor Branstad has kind of a point. I mean, we have -- there is a
process here by which the field does, in fact, get winnowed. We`ve seen in
a lot of those races, even ones that didn`t ultimately produce a president
or produce a nominee, the Iowa caucuses have had knock out effects in the
contests that followed.

I think the case -- there`s no -- there is no nominating system that
is a perfect nominating system. And the one that we currently live with is
one where there`s an attempt at geographic diversity, by having the first
four early states be Iowa, New Hampshire, South Carolina and Nevada. This
year, Florida kind of skipped the line a little bit.

But to have a system where you have four early states that are all
small enough that candidates can compete who don`t have enormous financial
resources. There`s a case for that, for why you would want to do that. A
lot of people say, it would be better if you had more demographic
diversity, more racial or ethnic diversity.

But the main places in America where you have racial and ethnic
diversity would cost you many, many, many millions of dollars. If you
tried to campaign in California, it would be a 100 million dollar campaign.
That would be the most diverse state you could have, but it would also
exclude all but the richest candidates.

So there is a case for why you want a state that is small and cheap to
start the field -- to start the contest off.

O`DONNELL: And an even smaller state is New Hampshire, which we all
in the media love to go to because it`s so small. And we can run around
and see the entire campaign in one day. Let`s listen to how Jon Huntsman
compares Iowa and New Hampshire.

(BEGIN VIDEO CLIP)

HUNTSMAN: They pick corn in Iowa. They actually pick presidents here
in New Hampshire.

(END VIDEO CLIP)

O`DONNELL: John, 24 hours from now, we`re all going to have shifted
our focus to New Hampshire already, by the time we get to 11:00 p.m.
tomorrow night. Is Huntsman right about this?

HEILEMANN: Well, I think historically speaking, it`s been the case
that winners in New Hampshire have gone on to win nominations and have gone
on to win the presidency more often than winners from Iowa. So I think
he`s factually, just as a matter of history -- I think he`s right about
that.

I don`t necessarily think it`s going to be the case -- that it`s going
to work out that well for Jon Huntsman. But I think he`s making a
historically accurate observation.

O`DONNELL: John, what are the signs we should be looking for tomorrow
as the day wears on, before we get into the real vote-counting that takes
us out of guesswork?

HEILEMANN: Right. Well, I think, Lawrence, one real -- the first
thing everyone will wake up tomorrow and do is look at the weather. It has
been -- apart from the last 24 hours, it`s been unseasonably warm here for
the last week or so. And it`s supposed to be pretty nice tomorrow.

That bodes well for a candidate like Mitt Romney, who is presumed to
have a broad base of support, relatively broad, whatever support he has,
but not deep and not passionate. These are not people who would walk
through a wall for him. So on a very snowy, blustery, bitterly cold day,
Romney might be at a disadvantage. If it`s nice, he probably has some
advantage.

I think people will be looking at turnout numbers. I`ve been hearing
all day long from people who know much more about this than I do that
people are expecting historically high turnout tomorrow. I keep hearing
figures as high as 140,000 people. You remember, four years ago, it was
about 115,000 or 120,000 on the Republican side.

Again, if turnout numbers are that high, that could also favor Mitt
Romney, in the sense that if more mainstream Republicans, less hard-core
Republicans -- more mainstream Republicans coming out.

I think another key thing that people will be looking for is what`s
the proportion of independents who show up, not Republicans at all. That
could help Ron Paul a lot. He polls very well among non-traditional
Republicans, the people who are independents, who will show up and call
themselves Republicans for the day. If there`s a high percentage of them,
it might be -- it might auger very well for a Paul resurgence here at the
last minute, maybe even being able to put himself in the top one or two
spots.

O`DONNELL: And it is only fitting that John Heilemann gets THE LAST
WORD on Iowa on Iowa Eve here on THE LAST WORD on MSNBC. John, thanks for
joining us.

HEILEMANN: Thank you, Lawrence.

O`DONNELL: Our MSNBC coverage of the Iowa Caucuses begins Tuesday
evening at 6:00 p.m. Eastern. You can have THE LAST WORD online at our
blog, TheLastWord.MSNBC.com. And you can follow my Tweets @Lawrence.

"THE ED SHOW" is up next.

END

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