updated 1/3/2012 10:51:05 AM ET 2012-01-03T15:51:05

Guests: Bob Shrum, John Nichols, Chris Moody, Erin McPike, Mike Papantonio, E.J. Dionne

ED SCHULTZ, HOST: Good evening, Americans. Welcome to THE ED SHOW
live from Minneapolis.

The Iowa caucus has turned into a three-ring circus. Santorum is
under attack. They`re worried about him. Ron Paul is slipping. And one
of the Romney boys is questioning the president`s birth certificate.

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

(BEGIN VIDEOTAPE)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I do policies -- I do
policies much easier than I do personal.

SCHULTZ (voice-over): With just four days to go in Iowa, Newt
Gingrich breaks down. Mitt Romney says he would consider releasing his tax
returns but only if he is elected president. And Michele Bachmann says her
favorite hunting weapon is an assault rifle.

Wow. It`s going to be a long weekend, everybody.

Democratic strategist Bob Shrum will help us make sense of it all.

GOV. CHRIS CHRISTIE (R), NEW JERSEY: If you don`t do what you`re
supposed to do on Tuesday for Mitt Romney, I will be back, Jersey style.

SCHULTZ: Chris Christie has a message for Iowans. Vote for Mitt or
he`ll return Jersey style.

As we head into the last weekend before the vote, our all-star panel
joins us. "Washington Post" columnist E.J. Dionne, "Real Clear Politics"
Erin McPike, and "Ring of Fire" radio host Mike Papantonio join me tonight.

We`ve tallied up the votes. Tonight, we`ll count down the top "psycho
talkers" of the year.

And my special thank you to those who made 2011 such a special year
and that includes you, the viewer.

(END VIDEOTAPE)

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

There are less than 100 hours before the first votes are cast in the
Iowa caucuses. It`s a mad dash to the finish line for the Republican
candidates. A new NBC News/Marist poll has Mitt Romney out in front with
23 percent, Ron Paul slipping a little bit in second at 21 percent, and
Rick Santorum continuing his rise with 15 percent.

Newt Gingrich has plummeted. Last month, he led the poll by eight
points. Now, he`s in fifth place with 13 percent and is hoping to get some
kind of momentum back.

Republican shill Frank Luntz tried to help Gingrich today when he set
him up with a sentimental question about his deceased mother.

(BEGIN VIDEO CLIP)

GINGRICH: My whole emphasis on brain science comes indirectly from
dealing -- see, I`m emotional -- but from dealing with, you know, the real
problems of real people in my family. And so, it`s not a theory. It`s, in
fact, you know, my mother.

(END VIDEO CLIP)

SCHULTZ: It remains to be seen whether the display of emotion will
translate to more support for Gingrich after a month of attacks.

Ron Paul is also seeing the effects of negative coverage. His numbers
have stalled since a newsletter controversy erupted last week. Paul
doesn`t even plan to be in Iowa this weekend. He returns on Monday with
his son, Senator Rand Paul, at his side.

Rick Santorum is clearly threatening the other candidates in Iowa.
The rest of the field has taken shots at him. That`s a good sign for him.

A radio spot in Iowa is calling him the pork barrel senator. It`s a
line of attack Rick Perry hammered again today.

(BEGIN VIDEO CLIP)

GOV. RICK PERRY (R-TX), PRESIDENTIAL CANDIDATE: Senator Santorum,
just to get a little more specific here, please tell me why you ask
taxpayers to support the bridge to nowhere in Alaska. Why did you ask the
taxpayers of Iowa to support a teapot museum in North Carolina? An indoor
rainforest in Iowa? And the Mountain Sheep Institute, Montana Sheep
Institute? Why?

(END VIDEO CLIP)

SCHULTZ: Santorum had no problem defending his earmark votes when I
spoke with him in Iowa yesterday.

(BEGIN VIDEO CLIP)

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: You know why I voted for
the bridge to nowhere? Because who am I in Pennsylvania to tell the folks
in Alaska, this is money going to Alaska. And Ted Stevens said, I want to
earmark for this purpose. This is money going to Alaska.

SCHULTZ: So, you went with your colleague?

SANTORUM: And I said -- no, I went with the federalist argument,
which is -- who am in Pennsylvania to tell Alaska what their highway
priorities should be?

(END VIDEO CLIP)

SCHULTZ: No, I said this yesterday and I want to repeat it tonight.
I think one of the reasons why Iowa voters are responding to Santorum and
he`s getting a late surge, is because the guy stands by his convictions.
He has an answer for everything he`s done which is impressive.

Now, whether you agree with him or not, that`s who he is.

The same cannot be said for Mitt Romney. And today, Romney`s own son
caused a whole heap of trouble when he was asked about his dad`s tax
returns.

(BEGIN VIDEO CLIP)

MATT ROMNEY: He`s certainly not afraid of anything. He`s not hiding
anything, but I heard someone suggest the other day that as soon as
President Obama releases his grades and birth certificate and sort of a
long list of things then maybe he`d do it.

(END VIDEO CLIP)

SCHULTZ: The younger Romney quickly went to Twitter to walk back his
comments, writing, "I repeated a dumb joke. My bad."

The Obama campaign had a little bit of fun with the remarks, saying
Romney must not have seen the Obama campaign mugs featuring the president`s
long-form birth certificate.

But the real problem for Romney is the spotlight his son put on the
candidate`s finances. Romney had to address the issue with MSNBC`s Andrea
Mitchell.

(BEGIN VIDEO CLIP)

ANDREA MITCHELL, MSNBC HOST: Can you commit that you would release
your tax returns if elected president of the United States?

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: You know, we`re getting a
bit ahead of ourselves in terms of what we`ll release when. I`ll certainly
follow all the laws. I do remember when --

MITCHELL: There`s no law. But there`s condition. There`s precedent.

ROMNEY: I do remember when I was running against Ted Kennedy. And he
ran for president. He wouldn`t release his tax returns. I kept on trying
to get him to do so, I said, I`d release mine if you release yours. I was
unable to get him to do that.

And we have a very full process for scoping out the various candidates
for president, learning about their financial assets. And with regards to
my tax returns, why, time will tell. That`s not something I`m planning
today, but never say never.

MITCHELL: But if you were president, it`s not that hard to make a
commitment that if you`re elected president of the United States, that you
would release the tax returns. Every president does.

ROMNEY: You know, if I become president, why, then I`ll consider
that. It`s a little premature for me to be talking about that at this
stage.

MITCHELL: Is there some secret? People know you`re wealthy.

ROMNEY: Yes, I understand.

MITCHELL: There`s nothing to hide.

ROMNEY: No, I agree, there`s nothing to hide.

(END VIDEO CLIP)

SCHULTZ: Mitt Romney knows his tax records could really help destroy
his candidacy. You know, he doesn`t draw a salary. In fact, he makes
jokes about being unemployed.

It`s very likely Romney -- very likely Romney is making big money off
capital gains which are taxed at a much lower rate than what income is of
the hardworking Americans. If Mitt Romney, you have to admit, has clever
accountants, it`s very possible the scenario could be played out that he
gets a rebate from the government.

But we will not know as the answers -- as long as Romney is not going
to answer this as a candidate. He will only consider releasing his tax
returns once he`s president.

We would be putting someone in the White House with a completely
unknown financial situation to the voters. This is Mitt Romney`s soft
underbelly in my opinion. I mean, he doesn`t want full disclosure? Would
you vote for a guy who wouldn`t let you know just how much he really pays
in tax?

And be honest about this, you conservatives out there tonight -- would
you take that as an answer from Barack Obama? I mean, don`t you think that
there`s some precedence set here that if you`re going to run for president,
you have to have full disclosure to the American people?

I mean, I think that answer right there that Mitt Romney gave Andrea
Mitchell, the arrogance just drips off this guy. And it fits the picture
that a lot of people have circulated in the media. It fits this picture
right here -- where all the money is just so happily being tossed around by
the boys in the corporate world. It`s arrogance is what it is.

I`m just guessing that he doesn`t pay any tax.

Get your cell phones out. I want to know what you think.

Tonight`s question: Is Mitt Romney trying to hide how much and how
rich he is? Text "A" for yes, text "B" for no to 622639. You can go to
our blog, leave a comment at Ed.MSNBC.com and we`ll bring you the results
later on in the show.

Joining me now is Democratic strategist, and NYU professor, Bob Shrum.

Bob, good to have you with us tonight. Happy New Year. This is our
final show.

BOB SHRUM, DEMOCRATIC STRATEGIST: Happy New Year to you.

SCHULTZ: So with nothing better to do than talk politics. You know,
is Romney going to be able to run away from this tax return issue all the
way to the White House? What do you make of this?

SHRUM: I don`t know that he`ll be able to. I think there will be
more and more pressure on him. I thought Andrea Mitchell there really got
him a long way down the road. We got to get him from consider to he`ll do
it to he`ll do it during the campaign.

You know, I was involved in both 1980 and 1994 with Senator Kennedy.
And my bet is that unlike Senator Kennedy, Mitt Romney`s assets are blind
trust, so that when he votes on issues in the Senate, he won`t know whether
he`s affecting anything he owns. That was a big difference here. We know
he`s still receiving a lot of money from Bain. We -- I think people have a
right to know what he is paying.

If he`s president and didn`t release his tax returns, it would be
absolutely extraordinary. I mean, it would be unprecedented. So, I think
there`s going to be a lot more pressure on him.

You watch him there, he`s got the body language right now of someone
who thinks he`s going to win these Iowa caucuses. In the few days before a
vote, that body language often tells you almost as much as the polls do.

SCHULTZ: Well, in the NBC News/Marist poll that we showed earlier,
Romney is at top with 23 percent, but that`s not even matching the 25
percent he got in Iowa back in 2008, when he came in second to Mike
Huckabee.

Should he be worried? I mean, does he have this sealed up?

SHRUM: Well, he should be worried only if there was a last minute
coalescence of the religious right and conservative voters around one
candidate. That`s why Rick Perry, example, is running negative ads against
Santorum.

He has to get by Santorum so that he can become the alternative to
Romney. He has the resources. He has the organization. He might give
Romney a run for his money.

But if this thing ends up Romney first, Santorum second and Paul who`s
flat lining and falling, third -- Romney is basically very close to sewing
up this nomination.

SCHULTZ: All right. Let`s talk about Gingrich, the emotional moment.
Is this going to have any impact at all?

SHRUM: I don`t think so. Look, Newt Gingrich is road kill from the
negative ads. I mean, I saw a figure today, 43 percent of all the
advertising run in Iowa has consisted of negative ads run against Newt
Gingrich. I mean, he has been whacked and whacked and whacked.

And maybe he was crying a little bit for himself today. But I don`t
think that will have a big impact. I think Newt will continue to fall. I
think conservative voters will move away from him.

Probably some of his voters go to Romney. Some of his voters go to
Santorum. Some go to Perry.

SCHULTZ: Yes.

SHRUM: But I think he`ll finish pretty far down.

SCHULTZ: You know, when Hillary Clinton had an emotional moment in
New Hampshire back in 2008, this is show Bill Kristol reacted on FOX News.
Let`s look.

(BEGIN VIDEO CLIP)

BILL KRISTOL, WEEKLY STANDARD: I don`t believe it was genuine. I
think no Clinton cries without calculating first. This -- and I think this
was -- if it was genuine, it was entirely solipsistic and narcissistic.
It`s all about her.

(END VIDEO CLIP)

SCHULTZ: Can we expect anyone on FOX to say the same thing about
Gingrich?

SHRUM: No. Not at all. And in fact, I thought that was one of the -
- you know what? I thought that was one of the most genuine moments that
Hillary Clinton had in that campaign. I think if she had gone on from that
to be -- to be unpackaged and to be herself, she might very well in the end
have won the nomination.

But she went -- right after she won New Hampshire, she went right back
to that tight, tiny box of running on experience. I think it was a big
mistake. People liked her when she was herself.

SCHULTZ: Quickly, they`re attacking Santorum. That`s got to be good
for him. He has to be making people nervous.

SHRUM: Everybody is looks at his polling. Everybody believes he`s
coming on. And as I said, Rick Perry who would be more dangerous to Mitt
Romney, who`s also come up, and you have to notice that he`s come up a
little bit, he needs to get Santorum out of the way. He needs to get those
votes to come to him.

I think they`re going to be fragmented. I think Romney is likely to
win with the lowest total anybody has won a contested Iowa caucus since,
say, in modern times, since 1976 or 1980.

SCHULTZ: Well, Huckabee got it with 40,000 votes, I believe.

Bob Shrum, great to have you with us tonight. Thanks so much.

SHRUM: Thank you, Ed.

SCHULTZ: Remember to answer tonight`s question there at the bottom of
the screen. You bet. And share your thoughts on Twitter @EdShow. We want
to know what you think.

Up next, Newt Gingrich is hurting so badly in Iowa, Newsmax will be
running 30 minute ads for him under the guise of a campaign special.

And Michele Bachmann, well, she professes her love for a semi-
automatic assault weapon. She tells an Iowa radio station the AR-15 is
great because it`s so accurate. Will this outlandish assertion help her
collapsing campaign, question mark?

Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Coming up, Newt slides in the polls but still refuses to
stoop to negative campaigning.

Chris Moody of Yahoo! News is on the bus with Newt. We`ll hear from
him.

And John Nichols of "The Nation" magazine will report from the
campaign trail.

Last year`s top "Psycho Talker" left FOX News in June. We`ve barely
heard from him sense. Find out who wins the title of "psycho talker" on
THE ED SHOW for 2011.

And a look back at 2011 -- radical Republicans took on workers, and
the middle class took to the streets to defend their rights.

And tweet us your thoughts using #EdShow.

We`ll be right back.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

Newt Gingrich simply does not have the money to counter negative ads
in Iowa. So, he looks like he`s calling in some favors. Newsmax will be
running 30-minute advertisement for Gingrich this weekend in Iowa`s major
television markets. Newsmax is calling it a campaign special and it`s
hosted by Michael Reagan, Ronald Reagan`s son.

Gingrich needs all the help he can get. In fact, the late Jerry
Falwell`s Liberty University is running 30-seconds ads in which Gingrich
promotes the university.

The former speaker has been offering his own explanation of why his
campaign often seems to falter.

(BEGIN VIDEO CLIP)

GINGRICH: We got off to a bad start for a variety of reasons. Part
of which is just the culture of modern politics. The fact it took us a
couple months to realize I can`t do modern politics. I wouldn`t do modern
politics.

And so I had to sort of clear out the underbrush and back to being
positive. I would say to all of you, I hope when you go to the caucus, and
I hope all of you will, I hope your friends and neighbors. If someone has
to try to frighten you and run ads that are false to get to be president,
why would you expect them to tell the truth when they are president?

(END VIDEO CLIP)

SCHULTZ: Well, the translation is please, please, please don`t pay
any attention at all to those negative ads running against me.

Let`s turn to John Nichols, Washington correspondent of "The Nation"
magazine.

John, great to have you with us tonight. Happy New Year. Thanks for
all your work on this show this year.

JOHN NICHOLS, THE NATION: Thank you, Ed.

SCHULTZ: You`re on the campaign trail -- you bet. You`re on the
campaign trail, you see how Newt Gingrich is handling all this.

How would you characterize his position right now? Is this damage
control?

NICHOLS: I was with Newt this morning. In fact, I hadn`t planned to
cover him. It turned out he was at my hotel. So, when I came down to get
coffee, I ran into him and walked into his event with him.

We talked for a little while. He let me know he`d be glad to come to
Wisconsin and campaign for Scott Walker if he`s asked.

But the reality was I watched Newt`s body language very closely today.
I watched his style. The truth is he looked like a man who understands
he`s got to do this for about, you know, 72 more hours and then he can go
home to Virginia.

SCHULTZ: This Newsmax 30-minute special is going to be costing a
bundle, but Gingrich was the first to sign on with the now defunct Trump
debate. So, maybe they feel a little bit loyalty there.

Is this going to have an impact? This is really a commitment that
none of the other candidates have gotten.

NICHOLS: No, it is not going to have an impact, Ed. Look, Newt
Gingrich has done a little bit better than some people expected in holding
a total in a double digits. But he`s now in the low double digits, heading
downward. The likelihood is that he finishes fifth in Iowa, ahead of
Michele Bachmann whose campaign has degenerated to something close to
tragedy. But not getting to where Rick Perry or Rick Santorum are.

I just don`t see Gingrich getting much beyond where he`s at. I don`t
think a TV ad is going to help him.

SCHULTZ: John, stay with us. I want to bring in by telephone right
now Chris Moody, political reporter for Yahoo! News. He is on the Newt
Gingrich campaign bus right now somewhere between Council Bluffs and
Shenandoah, Iowa.

And we apologize in advance. It`s in rural America. And the cell
phone connection isn`t all that great. But we want to try this.

Chris, good to have you with us tonight. I want to know, what`s the
reaction of the Gingrich campaign with the polls that are out, especially
the one from NBC News, confirming that he`s on the slide? Where`s the
confidence level right now, Chris?

CHRIS MOODY, YAHOO! NEWS (via telephone): Well, Newt is really
blaming the attack ads that are gone against him over the past several
days. You certainly notice them up. You know, obviously, you can`t watch
TV in Iowa without hearing something bad about Newt Gingrich.

And so, he`s fighting back against them. He`s really trying to
continue his push for a positive campaign. But you can tell, it`s really
beleaguering him.

SCHULTZ: Beleaguering him. What`s his demeanor? Does he look like a
beaten man or is he still upbeat?

MOODY: Well, he`s very tired, I think you can tell. He`s coming and,
you know, he`s staying on message. He`s being very careful about what he
says. But he does seem like he`s waning thin just a little bit.

SCHULTZ: And what about the -- how about the crowds? Are the crowds
thinning? Or are they enthusiastic? How are they responding to Newt
Gingrich now?

MOODY: No, I think they`re still very interested in him. Wherever he
goes, you still do have a full room that shows up. People are not losing
complete interest in him. I think they`re still willing to give him a fair
shake.

But, again, with these polls coming down, these attack ads are just
killing him. It`s really, really showing on him. So, you know, his pitch
is, look, anything can happen, so --

SCHULTZ: Chris Moody, good to have you with us. Go ahead.

Chris Moody, thanks for joining us tonight. I appreciate your time.

I want to go back to John Nichols.

John, conservative evangelical radio show Steve Deace who we`ve had on
this radio show a few times is endorsing Newt Gingrich based primarily on
Gingrich`s position on liberal judges. What are your thoughts on that?

NICHOLS: It`s a silly endorsement. Santorum has the same position,
perhaps even a little more extreme, and frankly Santorum is on the rise.
Gingrich is not. So I think it`s a badly chosen endorsement at this point.
Right now, we`re getting flurry of endorsements coming from evangelical
media types, some of them are going to Rick Perry, some to Gingrich, some
to Santorum.

At the end of the day, the failure of all the evangelicals, the
conservatives, the hardcore conservatives to coalesce behind one candidate
is ultimately going to be the problem here, because if you keep polling
that base apart, it doesn`t work. Roughly, 45 percent to 50 percent of
caucusgoers fall into that evangelical, harder right conservative base.
But if they`re polled in three, four, five ways, they`re not going to cause
Mitt Romney all that much trouble.

SCHULTZ: John Nichols, great to have you with us. You know, when I
was down in Iowa the last few days, I was really struck by the intensity of
the people that are at these candidate offerings, so to speak.

These town hall meetings. They`re not rallies. I mean, they`re a
very intense crowd. I`m sure you seen the same thing.

Good to have you with us, John. Have a great New Year.

Next up, THE ED SHOW unveils our 2011 "Psycho Talker" of the year.

And later, Chris Christie threatens to go Jersey on a crowd in Iowa?
E.J. Dionne, Erin McPike and Mike Papantonio, they`ve got a lot of things
to say tonight.

Stay with us. We`ll be right back.

(COMMERCIAL BREAK)

SCHULTZ: And in "Psycho Talk" tonight, we`re bringing you the top
"Psycho Talkers" of the year. This is pretty tough. I mean, we had
arguments in the office over this.

The competition was tight. The top tier is only separated by just a
few appearances. So, we had to go by a number of appearances.

In fifth place, we have Sean Hannity and Rick Perry, who have each
made five trips to the zone.

The kids on the curving couch over on "FOX and Friends" -- well,
they`re in fourth place. They have seven appearances this year.

Third place -- oh, I thought she was going to win it, but no. Third
place goes to Congresswoman Michele Bachmann. She`s an eight-time "Psycho
Talker" on THE ED SHOW.

In second place, it`s the pizza man, Herman Cain. His foreign policy
gaffes and his 9-9-9 plan left him one entry shy of the top spot.

(BEGIN VIDEO CLIP)

HERMAN CAIN (R), FORMER PRESIDENTIAL CANDIDATE: O, shucky duckie as
the man would say.

(END VIDEO CLIP)

SCHULTZ: Yes.

But now, it`s time to crown the winner. The "Psycho Talker" of the
year. It`s the Drugster, Rush Limbaugh, with 10 trips to the zone this
year.

Here`s a sample of how he got there.

(BEGIN VIDEO CLIP)

RUSH LIMBAUGH, RADIO HOST: Liberal women have feminized politics to
such a degree that politicians, male politicians, can`t even be men, which
may explain why politicians as a group are often caught in these sex
scandals.

Isn`t it due to ignorant and uninformed voters that we got Obama?

There isn`t any quantifiable, empirical evidence that Obama is smart.
Herman Cain could be our first authentically black president.

Talk radio is not made up of angry white hosts.

In the end, Powell will vote for Obama. Melanin is thicker than
water, folks.

The triple double Oreo. You wait -- it isn`t going to be long before
it`s going to be called the Orbameo or something like this. Well, it`s a
biracial cookie here.

(END VIDEO CLIP)

SCHULTZ: Now, who the heck can beat that? Congratulations, Rush. Of
course, the guy who got this honor last year has dropped off the map. He
was even too crazy for Fox News. He lost his TV show and is rapidly fading
into obscurity.

I wonder what fate awaits this year`s honoree.

(BEGIN VIDEO CLIP)

GLENN BECK, RADIO TALK SHOW HOST: (BARKING)

(END VIDEO CLIP)

SCHULTZ: And there it is, folks. Another year of Psycho Talk.

Next up, Michele Bachmann is trying her best to avoid a last-place
finish in Iowa. Her latest attention-grabbing stunt? Discussing her deep
affection for a semiautomatic assault weapon. E.J. Dionne and Mike
Papantonio and Erin McPike will join the conversation.

2011 was the year when the middle class Americans stood up to a
radical Republican onslaught. I`ll show you why Scott Walker and John
Kasich might have a worse 2012.

(COMMERCIAL BREAK)

SCHULTZ: Things are not looking good for Michele Bachmann. She`s run
out of cash. She can`t attract a crowd. And her staff is leaving the
ship. Just four and a half months after her Iowa straw poll victory,
Bachmann is on track for an embarrassing finish in a state she has devoted
all of her time, money, energy and resources toward.

And Bachmann`s desperation is definitely showing. In her latest
outlandish assertion, the congresswoman told an Iowa radio station, WHO,
her gun of choice is a semiautomatic assault weapon.

(BEGIN VIDEO CLIP)

REP. MICHELE BACHMANN (R), PRESIDENTIAL CANDIDATE: I learned how to
hunt here in Iowa from my dad. I went through gun safety when I was 12.
And my favorite gun is an Ar-15, because you can be so accurate with it.
And I scored the best in my class of any of the men, too, in that class.

UNIDENTIFIED MALE: The AR-15 --

BACHMANN: It`s a rifle.

UNIDENTIFIED MALE: That`s a combat weapon.

BACHMANN: I love if.

UNIDENTIFIED MALE: It can be made automatic --

BACHMANN: it`s a great gun.

UNIDENTIFIED MALE: It`s a semiautomatic .222 I think.

BACHMANN: I like being accurate. That`s a great gun.

UNIDENTIFIED MALE: Accurate and apparently lots of firepower and
many, many shots. How big is your magazine?

BACHMANN: You really want to know?

UNIDENTIFIED MALE: Is it a legal magazine?

BACHMANN: Yes, of course it is.

(END VIDEO CLIP)

SCHULTZ: Joining me now, Erin McPike, reporter for "Real Clear
Politics." Mike Papantonio, host of "the Ring of Fire" radio show, and E.J.
Dionne, senior fellow at the Brookings Institution and "Washington Post"
columnist.

Well, Mike, let`s start with you on this. I don`t know anybody that
hunts with an AR-15. What do you make of this story? Is she lying?

MIKE PAPANTONIO, RADIO TALK SHOW HOST: We`re going to hear her good-
bye speech at the end of Iowa, Ed. Look, there`s a different kind of
excitement. There`s carnival excitement, sideshow excitement that seems to
follow Michele Bachmann. And then there`s the genuine kind of excitement
that follows a candidate who really has hope and possibility of being a
president of the United States.

She`s over. It`s over for this woman. We`re going to hear good-bye
speech after Iowa. I don`t care how hard she tries. She just can`t come
back. It`s getting ridiculous by the day.

SCHULTZ: Erin, Bachmann has visited -- I mean, she`s worked the land.
She visited every county in a Iowa. She talks about her Iowa roots. But I
don`t know if we`ve seen a bigger flame-out in a primary after someone had
won the straw poll. Is this almost embarrassing in your opinion?

ERIN MCPIKE, "REAL CLEAR POLITICS": A little bit. Her support is
collapsing. It`s certainly true. Rick Santorum is actually picking up a
lot of her support. So she`s bleeding to him. That`s been going on now
for about a month. But it`s becoming very clear right now that Rick
Santorum is getting that support.

I actually went to several of her events a couple weekends ago around
the state, sort of even in central Iowa. She was only getting about a
dozen people at each of those events. She just sent out her schedule for
tomorrow, and she only has two events. One is a lunch with undecided
voters. It`s closed to the press, which means obviously there`s something
they don`t want us to see there, which might be another very small crowd.

SCHULTZ: E.J., yesterday I spoke with Rick Santorum. And here`s what
you wrote about him. This caught my attention. You wrote this today.
"Only one thing can stop the former Pennsylvania senator from doing
exceptionally well in Tuesday`s caucuses. And that is Texas Governor Rick
Perry hanging on to the support he now has."

It is a fight between those social conservatives to see who they`re
going to support. What do you make of it?

E.J. DIONNE, "THE WASHINGTON POST": Well, I think that what Rick
Santorum has done is started consolidating the votes of the religious
conservatives. They were the folks who gave Mike Huckabee his big victory
four years ago. But he hasn`t completely consolidated them because Rick
Perry has spent a lot of money. He has worked hard in the state. And he
has probably run the most Christian campaign since the Reverend Pat
Robertson back in 1988.

So I think a lot will depend on what happens in Evangelical churches
this Sunday. I think the drift is towards Santorum. He has a lot of
support from -- important support from Evangelical leaders. If he can
consolidate that, take it away from Perry, he could actually threaten Ron
Paul and Mitt Romney.

And that`s why Perry has gone negative on him. As you mentioned at
the beginning of the show, Perry knows he`s in a dog fight with Santorum
for third place now, but also to see if either of them can get in
contention.

SCHULTZ: Mike, what do you think of the Evangelical vote? Is it
really going to matter?

PAPANTONIO: I think it`s relevant, just like E.J. says. It matters
in Iowa. , But the real question is how does it convert to cash for
Santorum, who`s out of cash? How does it convert to enough excitement for
a ground game in places like New Hampshire and South Carolina and Florida?
It simply doesn`t convert to that type of excitement.

And that`s what he needs right now. But I believe E.J.`s right on.
He`s going to do well. I think he`s going to cut into Perry`s votes in
Iowa. He has a great message there. He`s a very convincing message there
in Iowa. But it doesn`t leave the state lines, is the way I see the
Santorum situation.

SCHULTZ: Erin, is Ron Paul really slipping? What do you see out
there?

MCPIKE: He`s taking the weekend off, as you may know. So is he
slipping? I think he`s always had about a 20 percent ceiling or so. He`s
getting up to 22, 25 here and there. But I think he`s taking the weekend
off because the attacks have been escalating.

And he kind of wants a break from those to stave off some of that, to
see if he can really get a victory. He needs to stay out of the line of
attack.

SCHULTZ: There`s one other event today. Here`s Newt Gingrich tearing
up. Here`s the sound bite.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: My whole emphasis on brain
science comes indirectly from dealing -- see, I`m emotional -- but dealing
with, you know, the real problems of real people in my family. And so it`s
not a theory. It`s, in fact, you know, my mother.

(END VIDEO CLIP)

SCHULTZ: E.J. Dionne, what does this do? Is this a Hillary moment
where he might get a bump?

DIONNE: You know, call me a softy. I thought that was actually
authentic. I think he really felt that. I don`t know if crying helps you
in a Republican primary the way choking up helped Hillary in a Democratic
primary. But I think one thing about what`s happened to Gingrich that we
have to pay attention to for the long haul, he has been sort of hammered by
millions of dollars in totally unaccountable advertising.

This is not advertising from a candidate saying, I`m paying for this.
This is money through these shadowy groups. We`re going to see a lot of
that for the rest of the year.

SCHULTZ: Welcome to Citizens United. Erin, Mike, E.J., stay with us.
We want to talk some more.

Coming up, Sarah Palin as secretary of energy. It could happen with
Newt Gingrich in the White House. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Mitt Romney is aiming for an upset on Tuesday. To help him
secure some last minute votes, the candidate brought out the big guns
today, Chris Christie of New Jersey.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE (R), NEW JERSEY: I`m thrilled to be in Iowa. New
Jersey`s watching you, too. We`re watching you really closely. And so
listen, I want to tell you something. I want to tell you something real
clearly. I`m in a good mood this morning. I`m feeling happy and upbeat.

I love being with Mitt and Anne. Let me tell you, you people
disappoint me on Tuesday, you don`t do what you`re supposed to do on
Tuesday for Mitt Romney, I will be back Jersey style, people. I will be
back.

(END VIDEO CLIP)

SCHULTZ: Let`s bring back our panel, "Real Clear Politics" reporter
Erin McPike with us tonight. Also "Ring of Fire" radio host Mike
Papantonio and "Washington Post" columnist E.J. Dionne.

Well, does tough talk like that entertain the crowd. What do you
think, Erin?

MCPIKE: Chris Christie is beloved here in Iowa. Yes, it has worked
for him everywhere he has gone. When he was campaigning for lots of
candidates in the midterms, it worked very well for him. So I think it`s
great for Mitt Romney that Chris Christie is out here. He might really
help him get over the edge over the next few days.

SCHULTZ: Turning to one of Romney`s other surrogates, his son brought
up President Obama`s birth certificate today. How is this going to impact
Romney, Mike? I mean, this isn`t all that good, is it?

PAPANTONIO: I think you`re going to have more and more of that.
Romney right now -- Romney is the guy. I mean, Chris Christie`s message
there is that the establishment Republicans want Romney to be their guy.
But Romney needs discipline. He certainly doesn`t need his child, his
family, anybody out there speaking for him.

He`s bad enough on his own, Ed. Any time he picks up a microphone,
Mitt Romney is just an inch away from a disaster. Now, you give that same
microphone to his son and to his family and people who are undisciplined,
people who have no vision about what the message is, it is the makings of a
disaster. Take -- get the son out of it. Get the family out of it.

And do what establishment Republicans are telling him to do. Beat the
creepy side of the Republican party out there. All this -- the fringe
edge, beat them. That`s what the Mitt Romney message is. They have to win
with Romney.

SCHULTZ: At a tele-town hall, Gingrich said that he`d be open to the
idea of choosing Sarah Palin as his running mate or for a cabinet position.
Here it is.

(BEGIN VIDEO CLIP)

GINGRICH: There are also some very important cabinet positions that
she could fill very, very well. I can`t imagine anybody who would do a
better job of driving us to an energy solution than Governor Palin, for
example.

(END VIDEO CLIP)

SCHULTZ: E.J. Dionne, is this just a play for her supporters at this
point by Newt Gingrich?

DIONNE: I think that`s exactly what it is. Although we could see the
big drill, baby, drill sign hanging from the Energy Department. But that`s
about as likely to happen as Newt getting elected president. But if I go
back to that Romney thing, I think the real mistake the son made was to
bring back to life the whole question of why won`t Mitt Romney release his
tax returns?

You know, he may be able to make that work, but people who are his
critics are going to keep asking that question. And that`s not an issue he
wanted brought up at any moment. I don`t think it`s going to make a big
difference now, but it`s going to be out there.

SCHULTZ: Well, I think there`s a very real possibility that he`s not
paying any tax at all. Mike, I mean, that is possible. He could be
playing all the loopholes in the world and who knows what`s out there for
Romney.

PAPANTONIO: Tax-free municipals can generate millions. That could be
what he`s -- but look, E.J. hit it right. Right now, he can slide by with
ridiculous, non-responsive answers like that, not in a real race. Not when
you really ask those questions. Some of this ties into where his
investments are.

Where is he putting his money? Those stories tire out. It`s like a
spider web. Any time you have all the investment information on a guy like
Romney, the spider web is endless. That`s what he`s afraid of. At this
point, he probably shouldn`t release them. But they`re going to come out.

SCHULTZ: Erin McPike, the next 72 hours, who do you think is the
candidate to watch?

MCPIKE: It`s Rick Santorum. I covered a couple of Rick Santorum`s
events today. He had one in Ames. He had another one in Marshalltown, not
very far away from Des Moines. He`s getting huge crowds, hundreds and
hundreds of people. You know, that`s where the Evangelical Christians are
starting to look.

So as we go into this weekend with lots of events and, as E.J.
mentioned, church on Sunday, he`s a candidate who`s going to fire up that
kind of crowd. So I think he`s the candidate to watch.

SCHULTZ: And quickly, E.J., I don`t think he has much resources
beyond Iowa. He`s put all his eggs in this basket. What do you think?

DIONNE: What he`s got up in New Hampshire is an organization made up
mostly of the Right to Life Movement. But he does have something going up
there. But the Romney people think, in the long run, Perry would be harder
to beat, still, because Romney has not traditionally been strong in the
south. And so if one of them is going to emerge, I think they`d prefer
Santorum.

But I think he`s got an outside shot at doing well if he gets to New
Hampshire.

SCHULTZ: Mike, make the call. Who wins the caucus?

PAPANTONIO: It`s going to be Mitt. Mitt`s going to take it. Ron
Paul, he`s way, way too crazy. Way too crazy.

DIONNE: I feel like going all in on Santorum, just because I like
long shots.

SCHULTZ: All right. Erin, you want to make a call?

MCPIKE: I don`t know. I mean, I think it`s anybody`s game right now.
It really is very fluid. So I don`t want to make a call, actually.

SCHULTZ: All right. Erin McPike, Mike Papantonio, E.J. Dionne, great
to have you with us tonight, dissecting the whole thing.

Next on THE ED SHOW, I`m going to show you why 2011 is a year this
broadcaster will never forget.

(COMMERCIAL BREAK)

SCHULTZ: ED SHOW survey tonight, is Mitt Romney trying to hide how
rich he is? Ninety eight percent of you say yes; two percent of you say
no.

You know what, I don`t think he pays any tax. I mean, I think he`s
got it worked out where very cleverly, and by the law, he`s not paying any
tax. I mean, if he was paying tax, he`d probably want everybody to know
it.

Coming up, some of my favorite moments of this past year. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Well, this is it for 2011. I`d like to take a few moments
to reflect back on this year. It`s been a heck of a year. I want to say a
few thank yous tonight for those of you who watch this show. I know it`s
been a roller coaster ride. THE ED SHOW this year earlier was on at 6:00,
then on at 10:00. Now we`re -- have the task of doing the 8:00 hour here
on MSNBC.

They actually asked me to do a 3:00 a.m. in the morning show, but I
told them I was too busy delivering papers. But it`s been a -- it`s been a
year to remember for us anyway. I really appreciate you watching the show
and following the show.

And we certainly couldn`t do it without you. And we couldn`t make all
this happen without your support.

But from a political viewpoint, I`d like to thank six radical
governors who have kicked and awakened a sleeping giant in this country,
the American worker. Governors who were escorted into office by the Tea
Party crowd and disgruntled voters who forgot to ask about the details of
their overreaching and radical agenda.

The Ed team has been on a journey this past year that took us to
Michigan, Indiana, Florida, New Jersey, Ohio and Wisconsin. You know,
wherever we went, we found American workers who felt like they were under
attack and being scapegoated, vilified and blamed for the financial
condition of the country.

Well, in 2011, workers have really had their wages attacked, their
pension, their health care and their voice put on a table for a negotiating
chip. Workers who don`t often get into the fray, don`t get caught up in
the political garbage because they`re just too dog-on busy trying to make
ends meet.

I think 2011 changed all that. They are paying attention now. I know
a lot more about firefighters today than I did a year ago. They are one
tough bunch. And they are dedicated. Their involvement in Ohio really was
a game changer.

I have renewed respect for teachers. And I believe now more than
ever, voices in the workplace are vital to saving the quality of life in
this country.

And a special thank you tonight to the people of Wisconsin. I want to
thank them for standing up to the radical Republican Scott Walker and his
allies, the Koch Brothers, who have attacked teachers, firefighters, cops
and other public sector employees.

You know, these are the people who teach our kids, save lives, protect
our cities and towns, and make sure our roads and bridges are safe in all
kinds of weather. You know, the folks of Wisconsin welcomed us with open
arms. It was really a highlight for us. They allowed us to tell their
story with passion and commitment.

They showed it every night. And let me tell you, they made a hell of
a difference. The thousands of marchers, I`ll never forget those senators,
the Wisconsin 14. You all were such fantastic people and you made a
difference.

As the fight continues, we look forward to standing with you in 2012
for the Walker recall election.

In Ohio, the firefighters, they were as generous as anybody could have
been. Jack Rial (ph), president of the Local 67, was passionate, committed
and advocating for his men and women in almost an amazing way. It was
workers like Jack Rial and Jim Gilbert who made the difference in the
repeal of Senate Bill 5.

We took THE ED SHOW to my high school in Norfolk, Virginia. That was
a proud moment for me. Would you like to do that if you had a TV show? It
was really surreal.

We met a young teacher there named Alex Vizier (ph). She exemplified,
in my opinion, the commitment of teachers throughout this country, young,
energetic. She gets up early in the morning, stays late. Teaches not only
classes but extracurricular activities.

You know, the students at Mari (ph) High School, they love her
dedication and passion. These are the kinds of workers who get assailed by
Republican governors all over the country just to make sure their budget
works.

At the federal level, we saw what Republicans really want for the
elderly in this country. It was a real eye opener to me. The Ryan Plan
will gut Medicare and force seniors to take a voucher and wage battle with
insurance companies. Here in America? Are you kidding me?

This is an outrageous and radical plan. The Republicans actually want
70, 80 and 90-year-old seniors to negotiate with insurance companies who
only care about one thing, and that`s making a profit, not making a
difference. We`re better than this, folks.

To the people of Wisconsin and Ohio, I hope you realize what you`ve
done for America. In the middle of the country, every time I went out
there, I got that bold handshake from people who were ready to fight, to
stick up for what they believed in. I saw the tears in their eyes because
of what they were going through.

And I felt the passion of the people. They were and are determined to
right a wrong. No doubt about it. Yes, the people of Wisconsin and Ohio
set an example for workers all over this country. I think they showed the
world.

They showed the world that nothing`s lost if you don`t give up. It
doesn`t matter how much money and media they throw at you, they can`t take
your heart, your soul, your desire and passion.

As workers, I want you to know, from THE ED SHOW, we`re in this
together in 2012. Let`s get to work.

That`s THE ED SHOW for 2011. "THE RACHEL MADDOW SHOW" starts right
now. We`ll see you next year.

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

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