updated 1/3/2012 10:51:46 AM ET 2012-01-03T15:51:46

Guests: Richard Wolffe, Rick Green, Howard Dean, Joan Walsh, Ezra Klein, Jonathan Alter, Brad Woodhouse

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

First off, happy New Year. Hope you had a great weekend.

It`s down to the wire in Iowa, and candidates are scrambling for
support. I`m going to tell you tonight here on THE ED SHOW who`s going to
win the Hawkeye State tomorrow.

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

(BEGIN VIDEOTAPE)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I don`t think I`m going to
win. I think if you look at the numbers, I think that volume of
negativity`s done enough damage.

SCHULTZ (voice-over): Newt Gingrich is conceding a day early.

Michele Bachmann is damning the torpedoes.

UNIDENTIFIED MALE: Are you talking about putting our missile systems
on alert here? I mean --

REP. MICHELE BACHMANN (R-MN), PRESIDENTIAL CANDIDATE: Sure, put them
on alert.

SCHULTZ: And Ron Paul and Mitt Romney are feeling the Santorum surge.

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: Done all 99 counties. Did
that a while ago, and you know, which is a lot of that is paying off.

SCHULTZ: Tonight, we`re going to the Hawkeye State with Rick Green of
"The Des Moines Register" and former Vermont Governor Howard Dean.

The new Republican playbook to defeat the president is out. DNC
communications director Brad Woodhouse is here to tell us how Democrats
will fight back.

And Eric Cantor can`t handle the truth about his idol, Ronald Reagan.

UNIDENTIFIED FEMALE: Well, he raised taxes and it was one of his
principles not to raise taxes.

REP. ERIC CANTOR (R-VA), MAJORITY LEADER: Well, he also cut taxes.

UNIDENTIFIED FEMALE: But he did compromises.

CANTOR: Well --

PRESS SECRETARY: Well, that`s not true. And I don`t want to let that
stand.

SCHULTZ: Ezra K of the "Washington Post" is here to set the record
straight.

(END VIDEOTAPE)

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

The first votes of the Republican nomination are hours away from being
cast. I think we might see a big surprise in Iowa tomorrow. The latest
numbers from the Public Policy Polling have Ron Paul on top with 20 percent
of the vote in Iowa. Mitt Romney and Rick Santorum are right behind on his
heels.

And the comprehensive "Des Moines Register" poll has Romney at 24
percent, Ron Paul at 22 percent, Santorum in at 15 percent. But the devil
is in the details.

In the first day of the poll, Ron Paul was on top with 29 percent
support. Four days later, he was down to 16 percent. On the other hand,
Santorum polled at 10 percent the first couple days of the polling.

On days three and four, his numbers doubled to 20 percent. So what
does that mean? Santorum has real momentum. And he continues his brand of
retail politics on the road in Iowa.

He was so popular at a pizza restaurant in Boone, Iowa, the owner
renamed the chicken salad Santorum salad in honor of the candidate.

Santorum is a viable alternative for conservative voters. His
favorable rating is at 60 percent in Iowa and he`s gaining ground as the
anti-establishment candidate. Santorum played up his me versus the world
mentality on right wing radio today.

(BEGIN AUDIO CLIP)

SANTORUM: I`ve seen the media just completely try to shape this race.
And it`s not just the liberal media. I mean, it`s even FOX News. You
know, Bill O`Reilly has refused to put me on his program. I`m just not --
as far as I was concerned, I wasn`t a worthy enough candidate to be -- to
earn a spot to sit across from him and be on his program.

(END AUDIO CLIP)

SCHULTZ: Santorum knows a large piece of Iowa, that pie has not been
claimed as of yet. "The Des Moines Register" poll says 41 percent of Iowa
Republican electorate is still undecided. Those numbers give hope to
candidates that are, of course, back in the PAC.

One of them is Michele Bachmann. She`s still banking on a win in
Iowa. She also says she`ll put our missile systems on alert and possibly
start World War III.

(BEGIN VIDEO CLIP)

BACHMANN: I would engage with the current dissidents that we have in
Iran, but immediately, I would send our patriot missile systems, our Aegis
systems, our ballistic missile systems need to be deployed, not only here
in the United States but in the Middle East region.

UNIDENTIFIED MALE: Are you talking about putting our missile systems
on alert here? I mean --

BACHMANN: Sure, put them on alert but also what we need to do is --

UNIDENTIFIED MALE: What level?

BACHMANN: What we need to do is look at a function of potentially a
blockade as well of the ports in and near Iran, and have our missile
systems capable and ready to deliver.

(END VIDEO CLIP)

SCHULTZ: Just what Iowa voters are concerned about. Don`t you think?

Bachmann`s not the only desperate candidate in the race. Last month,
Newt Gingrich was confident that he was going to win the whole thing.

(BEGIN VIDEO CLIP)

GINGRICH: I don`t have to go around and point out the inconsistencies
of people who aren`t going to be the nominee. They`re going to be the
nominee.

UNIDENTIFIED MALE: You`re going to be the nominee?

GINGRICH: I`m going to be the nominee. It`s 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)

SCHULTZ: And, of course, now Gingrich is telling reporters, he
probably has no shot in Iowa.

(BEGIN VIDEO CLIP)

GINGRICH: I don`t think I`m going to win. I think if you look at the
numbers, I think that volume of negativity`s done enough damage. But the
other hand, if "The Des Moines Register" was right on its 41 percent
potentially -- who knows what`s going to happen.

(END VIDEO CLIP)

SCHULTZ: That`s probably the most honest thing Newt Gingrich has ever
said.

Gingrich says he`s going to spend the next week attacking Mitt Romney,
hoping to put a dent in Romney`s New Hampshire support. Remember, Gingrich
is the guy who said he wouldn`t go negative.

He`s also the guy who showed a softer side of himself last week when
he cried during a town hall event.

(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: Seems to use the word "real" a lot, doesn`t he? I wonder if
that is the real Newt.

I tell you the real Newt -- Newt`s crying all the way to the bank.
He`s still the same Newt Gingrich who wrote a memo to his colleagues at the
House telling him how to smear Democrats. The only candidates better pay
attention to his attacks especially Mitt Romney.

It would be bad news for Romney if he lost in Iowa and walked into a
Gingrich buzz saw in New Hampshire, don`t you think?

The polling momentum shows a very real chance of Romney and Ron Paul
being overtaken by Rick Santorum. Santorum is out there convincing people
that he is the guy. Santorum is running as the better conservative, and
the right wing voters in Iowa. Well, they`re listening to things like
this.

(BEGIN VIDEO CLIP)

SANTORUM: What President Obama wants to do, his economic plan is to
make more people dependent upon the government. To grow the government, to
make sure we have more food stamps and more, you know, more SSI, and more
Medicaid.

I don`t want to make people`s lives better by giving them somebody
else`s money. I want to give them the opportunity to go out and earn the
money, and provide for themselves and their families.

(END VIDEO CLIP)

SCHULTZ: That is the raw meat that he throws out on the campaign
trail.

For most of his career, Santorum has really appealed to the deepest
anxieties of social conservatives. He says that he will annul all gay
marriages as president. He says President Obama should oppose abortion
because he`s black. He does not apologize for being a member of the far
right wing and is very proud of it.

A win for Santorum, I guess you could say if he were to win in Iowa,
you could equate it to Pat Buchanan winning New Hampshire in 1996. But
there`s more to it than that. I`ve seen Santorum on the stump. You may
not like this, but he is very much like President Obama.

The crowd likes him. He pays attention to what the crowd says. He
does a great job of retail politics. When someone in a crowd asks Rick
Santorum a question, he looks right at that person and answers the question
and doesn`t give the bullet-point answers.

He goes face to face with people. It`s very effective. When people
leave the room, they say, gosh, I got to really to think about this guy.

The number of undecideds is very important here. And the social
conservatives being split three different ways. We know that Bachmann is
going to fall. We just don`t know how far.

We know Rick Perry doesn`t have the smarts. At least I don`t think he
does. Time and time again, he gaffes. But he`s got enough money to maybe
convince people that he`s got the chops to get the job done.

The bottom line is, is that, as I see it, Santorum has worked it
county by county. He`s done it the old-fashioned way. He hasn`t done it
with O`Reilly on his side. He hasn`t done it being in the clubhouse with
FOX.

He`s always been the guy at the end of the debate, but he`s been very
consistent. And he also throws out the red meat in a very personable way
to the folks in Iowa.

I think that he has been trending for more than a week and I think he
is ahead of his poll numbers. And I think that Rick Santorum is going to
win Iowa.

If that`s an upset, so be it. But I`ve seen the guy in action. And I
listen to what he says. I know what Iowa is about.

And the preachers were working the pulpit pretty hard on Sunday for
Rick Santorum. And if they come out in full force for him, it`s going to
be that portion of the electorate versus the young people that might come
out for Ron Paul.

Romney`s playing it smart so far. He`s acting like a winner, talking
a lot about President Obama, but he may not win Iowa. I think it is going
to be Rick Santorum.

Get your cell phones out. I want to know what you think. Tonight`s
question: Will Rick Santorum win the Iowa caucus tomorrow? Text "A" for
yes, text "B" for no to 622639.

Our blog is there for you at Ed.MSNBC.com for your comments. And, of
course, we`ll bring you the results later on in the program.

I`m joined tonight by Rick Green, president and editor of "The Des
Moines Register." And also, Howard Dean, former DNC chairman and founder
of Democracy for America.

Gentlemen, I couldn`t have two better people on with me tonight. I
appreciate your time so much.

Mr. Dean, let me ask you first. From your experience, what is the
strategy for these candidates in the final hours? Where we`re not very far
away. What`s it going to take down the stretch, you think?

HOWARD DEAN, FORMER DNC CHAIRMAN: Well, on the Democratic side, it`s
all about turnout and it`s all about deal-making which doesn`t go on so
much on the Republican side because we have a feature on our side that they
don`t have, which is, if you don`t get to 15 percent, you`re allowed to re-
caucus and vote a second time for a candidate that you may like. It`s an
automatic winnowing process.

Ed, I agree with you. I think Santorum is going to win tomorrow. I
think Paul is coming in second. I think Romney is coming in third.

I think that`s a problem for Romney because everybody knows that Ron
Paul is not going to get the nominee. Santorum could be the nominee,
because when they go to South Carolina, Santorum is a viable candidate,
which he will be if he wins tomorrow. Those conservatives, the 75 percent
of the people in the Republican Party who just are much too far right for
Mitt Romney are going to have somebody they can vote for it.

He doesn`t have a dime. He`s just done this on shoe leather. It`s
fascinating.

SCHULTZ: Rick, what`s your take on the details in your paper`s poll?

RICK GREEN, DES MOINES REGISTER: You know, there are two things you
have to remember here. First, Santorum`s numbers weren`t moving at all the
first two days of our polling last week. It was only after some of the
initial polls came out that we started seeing a big rise from him on
Thursday night, then an even bigger spike going into Friday night. So, we
got together on Saturday morning, we saw the final numbers. His numbers
just rocketed.

But here`s something that`s really important to remember, Ed, is that
his electability numbers where Republicans are saying who offers the best
shot at toppling the president next November are nowhere near Mitt Romney.
Mitt Romney is at 48 percent. Gingrich despite his incredible collapse in
the poll, is still polling in at about 13 percent. And Rick Santorum`s
numbers are only 7 percent, as it relates to electability.

So, I think there are a lot of Republicans -- I was going to say, I
think there are still Republicans looking closely at that.

SCHULTZ: Yes. Howard?

DEAN: I think that`s a good point. But let me just make a point
about the Republicans.

I don`t think -- that undid me in Iowa eight years ago. They just
felt John Kerry was more electable. His numbers surged in just the way
Rick is describing.

I don`t think the Republican voters in Iowa care that much about
electability. They`re more conservative. They`re deeply evangelical and
principled. They really want to send a message. And that`s the role of
Iowa in the Republican side.

I`m trying to remember a time when the Republican winner of the caucus
in Iowa went on to win the nomination. I can`t think of one off the top of
my head.

SCHULTZ: Rick, isn`t Rick Santorum going after the same voter that
Mike Huckabee went after in 2008? Except, the pie is just split three
different ways?

So as I said in my commentary, we know that Bachmann has fallen. We
just don`t know how -- is she going to fall far enough where Santorum is
going to pick that up?

And also, there`s a tremendous feels out there, and I picked this up
when I was in Iowa last week, there`s a lot of discontentment about Mitt
Romney, whereas your poll shows in a national election. But the people
that don`t like him, they really don`t like him. That`s what I got.

GREEN: Yes. There`s a little bit of that. But I`ll tell you, Mitt
Romney played this masterfully. He`s not done the complete ground game the
way that Rick Perry, I`m sorry, Rick Santorum, has done in terms of
devoting, you know, 380 campaign appearances in all 99 counties. He`s been
very strategic about when he entered it.

There`s a sense from the size of his crowds and what my reporters are
seeing on the field, there`s still some general enthusiasm with Mitt
Romney. It seems to be growing day-by-day.

Now, the same could be said certainly with Rick Santorum. Santorum`s
done an amazing job in terms of pressing the flesh. He`s kissed the
babies, he`s shaken hands. He`s answered questions in direct manners like
you just described.

The question here is, are there enough hands to be shaken before
tomorrow night at 7:00? He`s pushing incredibly hard. He`s going to split
the vote as it relates to Perry and Bachmann, undoubtedly. If there`s
enough of a split, there are enough supporters from either Perry or
Bachmann that jump ship over to Santorum, I think it gets very, very
uncomfortable for Romney and Paul tomorrow night.

SCHULTZ: And, Howard, I have to say that I think there`s a certain
amount of geniality (ph) about Rick Santorum. I mean, he`s affable. He`s
effective. But he comes across as a very genuine guy.

Does that matter in Iowa in your opinion?

DEAN: It does matter. I think -- I mean, he would be a horror for
the general voters. His views are very, very far right and very, very, you
know, frankly, anti a lot of minorities in this country, especially gay
people.

But that`s made to order for the conservative Republican electorate.
I think he`s going to find some real resonance there. He obviously already
has.

SCHULTZ: Rick Green, Howard Dean, great to have you with us tonight.
I appreciate your time so much. Thank you.

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

Ron Paul`s strategy to dog the Republican Party right through to the
convention, that`s coming up next. It`s quite interesting.

Later, the "Washington Post" reports on the RNC strategy to take on
President Obama by using his own words against him. DNC communications
director Brad Woodhouse on how the president can counteract that GOP
strategy. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Coming up, Ron Paul`s plan to grab hundreds of delegates in
caucus states. Joan Walsh, Richard Wolffe, on how it could affect the GOP
race in the long run. That`s next.

"Psycho Talk" coming up. Donald Trump says his ducks are in line for
a presidential run.

And faced with facts, Eric Cantor and his press secretary choose to
believe the fantasy about Ronald Reagan`s record on taxes.

Share your thoughts with us on Twitter using #EdShow. We`re right
back.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

Ron Paul is in the Republican race for the long haul. How do we know?
Well, he`s not going to fade away after Iowa -- win, lose or draw. And he
has a strategy to be a thorn in the side of the Republican Party
establishment right through to the convention.

Here it is -- a map put together by BuzzFeed.com showing 12 states
holding caucuses instead of primaries, as Republicans try to choose their
nominee. It gives Paul a path to racking up delegates with strong
organization and careful planning. This is what he`s doing. In 10 of
these caucus states, Paul could rack up more than 400 delegates out of the
2,300 needed for the GOP nomination.

So, if he can`t actually win the GOP nomination, at least he could
throw around as much weight as possible to the party`s national convention.
There will be a voice. His supporters are definitely there.

Today, Paul made a half dozen stops through Iowa with his son, Senator
Rand Paul. Paul`s poll numbers may be sagging a bit, but his passionate
supporters, they are still with him.

(BEGIN VIDEO CLIP)

REP. RON PAUL (R-TX), PRESIDENTIAL CANDIDATE: Tomorrow is a very
important day. Small in numbers, but a very big message. So you carry a
lot of weight in this state. To send a message on which way we`re going,
for the status quo.

Believe me, you don`t have to worry about the choice if you choose
another candidate, because the others represent the status quo.

(END VIDEO CLIP)

SCHULTZ: Now, last week in Newton, Iowa, I didn`t see him ask for the
way he did right there.

By the way, another candidate once used caucus to his advantage. His
name is President Barack Obama.

Let`s turn now to Joan Walsh, editor at large, Salon.com. And MSNBC
political analyst, Richard Wolffe.

Great to have both of you with us tonight.

Let me ask you first. Joan, is this an effective strategy? Is this
his best way to shake things up? Because the conventional wisdom is that
he`s not going to get the nomination.

JOAN WALSH, SALON.COM: Well, yes. I mean, I think it`s an intriguing
strategy, but it`s also possible to kind of overstate the comparison with
Barack Obama, Ed, because obviously, Barack Obama, he -- one of the best
things, smartest things his campaign did was organizing those caucus
states.

And one of the dumbest things Hillary Clinton`s campaign did was not
take the caucuses seriously. So, I see why there`s that comparison.

On the other hand, Obama had a great national organization. He had
the love of the media. He had Ted Kennedy and mainstream figures.

So, we don`t want to go too far with that.

But it is a way for him to stay and be both a problem for Romney, but
also for the conservative wing. Because if there`s still hope that, say,
Rick Santorum could really unify that conservative wing of the party, Ron
Paul pulls from that. So, it`s not necessarily a terrible thing for
Romney. It still splits that right wing vote.

SCHULTZ: Well, the comparison I`m making with Ron Paul and the
president is that Paul is doing things in caucus states that the other
candidates are not doing.

WALSH: Right.

SCHULTZ: All the way out to Idaho.

And basically that was a roadmap that none of the other Democratic
candidates had followed. That was the point I was making.

WALSH: Absolutely.

SCHULTZ: What is the end game here, Richard?

I mean, could he get enough to have enough people -- and I`ve seen the
Paul people around him, I mean, they`re passionate. They love the guy.
They want him not only to get the nomination. They want him to be
president.

Would he be forced into maybe an independent run?

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Well, that is an open
question. But I think before you get to that point, he wants to have an
influence on the struggle for the soul of the Republican Party. And he has
had an influence.

Things that would have seemed really way outside of the mainstream of
Republicans may still be way outside of the mainstream of American politics
but now are center stage in the Republican debate. And that`s really
thanks to people like Ron Paul and Rick Santorum on the social conservative
side.

I do think you got to look at the professionalism of the Ron Paul
campaign. You know, appearances can be deceptive. He does this whole
shambling routine. And maybe the candidate and his ideas are -- they just
that, shambling.

But his ads have been professional. He, as well as Mitt Romney`s
super PAC, have done the damage to Newt Gingrich.

SCHULTZ: Yes.

WOLFFE: And this organizing thing is powerful. It`s not going to
take him to the nomination, but he can have an influence.

SCHULTZ: Well, Richard, let me ask you. If he gets 400 delegates or
a little bit more through this structure of doing what he`s doing with the
caucus states and he gets a big speech position at the national convention,
what effect would that have on the Republican Party?

WOLFFE: Well, I think you`re going to see things like closing down
whole departments in the federal government will become mainstream. We`re
already seeing Steve Forbes` crazy idea of flat tax go mainstream for
Republicans -- again, not for Americans, but for Republicans.

Ron Paul is having that effect right now. He can take that through to
the convention.

SCHULTZ: Yes.

You know, Joan, the Paul supporters I met, they`re all or nothing.
They want him or don`t want anybody else. What about that?

WALSH: They are. I think that makes it hard to imagine what he would
do with his, you know, hundreds of delegates when he got to the convention,
Ed. You know, there`s not really -- there`s not a lot for him to bargain
on. Certainly -- I mean, eliminating whole departments of government is a
possibility. The others are open to that already if Rick Perry could
remember them. He would want to abolish a lot of them.

(LAUGHTER)

WALSH: So, you know, we see that. But, you know, are they going to
bargain on cutting off all aid to Israel? Are they going to bargain on
actually some of the things in his platform that are anti-war and anti-
militarist -- anti-militarism that I think really light up his supporters?
No, none of that is negotiable.

So, it`s hard to see what the end game would be. What he would do
with that influence.

SCHULTZ: Let`s listen to part of Paul`s stump speech in Iowa today.
Here it is.

(BEGIN VIDEO CLIP)

PAUL: Listen to some of the other candidates. They`re willing to
start bombing Iran right now. You know --

(BOOS)

PAUL: The one thing for certain, this country does not need another
war. I`ll tell you that.

(APPLAUSE)

(END VIDOE CLIP)

SCHULTZ: This is a consistent theme, Richard, and, of course, he`s
referring to the remarks that were made this morning by Michele Bachmann.
He`s consistent. That`s what people like about him.

But the isolationism is something that the Republican Party would
never go along with. What do you think?

WOLFFE: Well, I think the other candidates, frankly, have been
trigger happy. The way they are talking about military action against
Iran. The bar is so low that they think, you know, just saying boo to
America when it came to the drone getting captured, that was enough to
trigger military action. That`s what most of the candidates said in that
last debate.

So, for all of this wackiness, for all the isolationism and the anti-
war sentiment, which won`t fly with the Republican elites, I think
actually, mainstream American opinion would say, we don`t really have that
much appetite for another war right now.

SCHULTZ: Joan, I can`t let you go without asking you about Rick
Santorum. What do you make of his polling in the last week? Is he the
real deal in Iowa?

WALSH: You know, I think he is the real deal in Iowa. Looking --
with hindsight, Ed, it`s like what took them so long? He does have a lot
to appeal to that conservative base. He really is one of them.

On the other hand, to see him go beyond Iowa, that`s hard for me. He
doesn`t have any money. He doesn`t have any organization anywhere else.
He`s banked his whole campaign on Iowa.

If he really wins it spectacularly, maybe you`ll start seeing donors
open their wallets. But I think it`s hard to see him go much farther than
this.

SCHULTZ: But if he wins Iowa, if he wins Iowa and goes right to South
Carolina -- I mean, I`d take him to beat Mitt Romney in South Carolina, as
many people that feel so much discontentment about Romney down South.
We`ll see. Going to be interesting.

Great to have you on, Joan and Richard. Appreciate your time tonight.
Thanks so much.

Donald Trump is our first 2012 "psycho talker." Just when you thought
he was gone, he here comes dangling the possibility of a third party
presidential run in front of our noses -- well, actually the noses of "FOX
and Friends" on the couch.

And later, the president`s re-election strategy takes shape, attacking
a do-nothing Congress. We`ve seen that before from Harry Truman. Will it
work for this president?

We`re right back.

(COMMERCIAL BREAK)

SCHULTZ: And in Psycho Talk tonight, well, we`re kicking off the new
year of 2012 with good old Donald Trump. Never fails us, does he? The
Donald is still trying to convince us that he`s going to run for president.
Apparently there`s a crack pipe group of folks down there in Texas who are
trying to get Trump to get in the race as an independent.

This morning, Trump responded with his trademark arrogance.

(BEGIN VIDEO CLIP)

DONALD TRUMP, "THE APPRENTICE": Certainly, there are millions of
people that would like to see me do something, not because of me, but
because I want to protect this nation. I`ve been saying from the beginning
that if the Republicans pick the wrong candidate, somebody that`s going to
lose, which is certainly possible, I would certainly consider it.

I would be able to do it. As you know, I switched to an independent.
Because if I didn`t do it by the first of January, I wouldn`t be able to do
it. I do have my ducks in line. If I wanted to do it, but I`d love to see
the Republicans pick somebody that was going to win and take over this
country.

(END VIDEO CLIP)

SCHULTZ: Did you hear what he said? Millions. So Donald Trump has
his ducks in a line. But he doesn`t seem to have any campaign operations
in the works. So his ducks must be something else.

(BEGIN VIDEO CLIP)

TRUMP: I`m worth many, many billions of dollars because of my genius,
OK? It`s this. It`s not my salesmanship.

UNIDENTIFIED MALE: It`s what?

TRUMP: This. You know what that is? It`s the brainpower.

(END VIDEO CLIP)

SCHULTZ: Well, last April, the only thing Donald Trump`s brainpower
had to offer was a bunch of half-baked Birther conspiracy theories.
Remember that? We`re still waiting for a report from his investigators in
Hawaii. For Trump to say that he has his ducks in a line to run for
president is nothing but self-serving, here we go again Psycho Talk.

The Republicans have their playbook for defeating President Obama.
Mitt Romney is already using it on the campaign trail. The communications
director for the Democratic National Committee, Brad Woodhouse, strikes
back next.

House Majority Leader Eric Cantor, well, I tell you what, he just
can`t stand the facts. His hero, Ronald Reagan, he did raise taxes 12
times during his eight years in office. And that`s just tough to listen
to, isn`t it, Eric?

(COMMERCIAL BREAK)

SCHULTZ: No matter which Republican candidate comes out on top, the
GOP establishment already has their election strategy in place:
relentlessly attack President Obama. The "Washington Post" reports
Republican operatives have compiled a video library of everything the
president has said. They plan to use his own words against him, with
particular emphasis on the quote from in February 2009, where President
Obama talks about fixing the economy.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If I don`t have this
done in three years, then there`s going to be a one-term proposition.

(END VIDEO CLIP)

SCHULTZ: Today in Des Moines, Iowa, well, it appeared Mitt Romney has
already gotten onboard with the Republican playbook.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I`ve looked at some of the
tapes on Youtube of President Obama, then-candidate Obama going across Iowa
campaigning. And I`ve listened to some of the promises. And then I`ve
looked at the performance.

And there`s a pretty big gap between what he promised and what he
performed. This president`s failed. He went on "The Today Show" shortly
after being inaugurated and he said, if I can`t get this economy turned
around in three years, I`ll be looking at a one-term proposition.

I`m here to collect.

(END VIDEO CLIP)

SCHULTZ: If Romney wants to get into what people said several years
ago, the Democrats, well, they already beat him to the punch.

(BEGIN VIDEO CLIP)

ROMNEY: Look, I was an independent during the time of Reagan/Bush.
I`m not trying to return to Reagan/Bush.

The principles that Ronald Reagan espoused are as true today as they
were when he spoke them.

We put together an exchange. The president is copying that idea. I`m
glad to hear that.

Obama-care is bad news.

(END VIDEO CLIP)

SCHULTZ: Joining me now is Brad Woodhouse, communications director
for the Democratic National Committee. Brad, good to have you with us
tonight.

BRAD WOODHOUSE, DEMOCRATIC NATINOAL COMMITTEE COMMUNICATIONS
DIRESCTOR: Thanks, Ed.

SCHULTZ: That comment from President Obama, could it come back to
haunt him? I mean, 8.6 percent unemployment. It is true the number is
trending upwards. The arrow is going in the right direction. But is that
going to be enough? Could that comment come back to hurt him?

WOODHOUSE: Well, look, Ed, it was no surprise that the RNC has a
video archive and that they`re going to run a campaign against the
president. I was a little surprised anyone wrote such a story.

But look, the president is -- has put policies in place and begun to
turn the economy around. You know the statistics. We`ve had 21
consecutive months of private sector job growth, to the tune of three
million private sector jobs. We were losing jobs at 750,000 a month when
he took office.

SCHULTZ: So what`s the strategy to counterpunch this? I mean, if
Romney`s going to go out there, going take this 500-page playbook and all
the comments that President Obama made and the promises, is he just going
to blame it on the Congress? Is that it?

WOODHOUSE: Well, look, the Congress has been an impediment, Ed, as
you know, over the course of the past year. I mean, Republicans in
Congress, especially in the House, set out on a strategy of tanking the
economy, if that meant they could win an election.

So we can`t let them get away with that. But I would say in terms of
strategy, I would say three things. I`d say, one, the president is going
to build a campaign person by person. That`s what we`ve done in Iowa,
4,000 one-on-one meetings, 350,000 calls, 1,200 house meetings or
trainings.

We`re going to talk about the president`s record. We`re going to talk
about the opponent. And in Mitt Romney`s case, he`s here talking about the
president`s record. As you indicated, we`re perfectly ready to talk about
his as he emerges.

SCHULTZ: Does it matter to the Obama campaign what happens tomorrow
in Iowa? What do you want to see happen?

WOODHOUSE: Well, look, I tell you, on our side, what we want to see
is a good organizing opportunity. I mean, we`re having caucuses around the
state. We`re not trying to turn out a lot of people. What we`re trying to
do is get our voters motivated.

The most important thing coming out of the Iowa Caucuses for us is
that we are staying in Iowa when these candidates leave, and that we wind
up --

SCHULTZ: But, Brad, isn`t a surprise winner good for the Obama
campaign? Because they`re going to keep going back and forth at one
another. It`s going to give you an opportunity to trip up Mitt Romney
again, who many people think is going to get this thing.

But it would seem to me that a surprise winner would be good for your
campaign.

WOODHOUSE: Oh, sure. Look, I mean, we`ve made no secret of the fact
that we think the longer this Republican contest goes, the better. The
polling shows that. The approval ratings, for example, favorability
ratings for Mitt Romney has declined across the board in all the
battleground states the longer he`s been a candidate.

He`s been just kind of stuck at 20, 25 percent. Other candidates in
the field have seen their favorability drop the longer they`re in the race.
Look, we`d like for this thing to go on for a while.

SCHULTZ: Are you going to answer to some of the outlandish things
that some of the candidates have said? I was in the room when Rick
Santorum said that the Obama administration is against abstinence when it
comes to birth control.

WOODHOUSE: Look, we`re certainly not going to respond to the most
outlandish charges. What we`re going to try to focus on -- I mean, we`ll
respond when necessary. But we want to focus on issues about the economy
and the middle class.

We fundamentally think that this race is about security for the middle
class. Republicans don`t have a clue what that means. They want to go
back to the same failed policies that nearly tanked the economy. You have
Mitt Romney, corporate buyout specialist. We had Randy Johnston here, I
think has been on your show, talking about the impact of those types of
policies and what Mitt Romney did in the private sector.

So, you know, that`s largely what we`re going to talk about, is who`s
better for the middle class. On that score, President Obama will win every
time.

SCHULTZ: Brad Woodhouse, pleasure to you with us. Thanks for joining
us. Good luck. Thank you.

WOODHOUSE: Thank you, Ed.

SCHULTZ: President Obama versus a do-nothing Congress. Is it a good
strategy to win re-election? Jonathan Alter, Joy-Ann Reid will weigh in on
that and much more, coming up. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: President Obama`s re-election strategy is taking shape. As
"the New York Times" reports, after three years in office, Mr. Obama is
gambling on a go-it-alone approach. The president will pit himself against
an unpopular do-nothing Congress, a strategy that worked for Harry Truman
in 1948.

But can it work in 2012? The president`s poll numbers, well, they`re
on the rise, while the Congress has hit a new low. The latest polling from
the right wing firm Rasmussen shows only five percent of likely voters
approve of the job Congress is doing. "The Times" reports the president
will spend less time fighting congressional Republicans and will focus on
economic justice for ordinary Americans instead.

White House Deputy Press Secretary Josh Earnest confirms, "in terms of
the president`s relationship with Congress in 2012, the president is no
longer tied to Washington, D.C."

What does that mean? In fact, the only legislation on the White
House`s must-do list is a full-year extension of the payroll tax cut.
According to "the Times," the president will showcase measures he is taking
on his own to revive the economy.

"Associated Press" reports that he will unveil at least two or three
directives per week. The president will continue to take the populist tone
he adopted late last year. Gosh, that was just a few days ago.

In his weekly address, President Obama tapped into middle class
frustrations over the payroll tax fight and income inequality.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: It was good to see
members of Congress do the right thing for millions of working Americans.
But it was only possible because you added your voices to the debate. As I
have said before, we`re at a make or break moment for the middle class.

As president, I promise to do everything I can to make America a place
where hard work and responsibility are rewarded, one where everyone has a
fair shot and everyone does their fair share.

(END VIDEO CLIP)

SCHULTZ: For more, let`s turn to Jonathan Alter, MSNBC political
analyst and "Bloomberg View" columnist, and MSNBC contributor Joy-Ann Reid,
also managing editor of "The Grio." Great to have both of you with us
tonight.

JONATHAN ALTER, "BLOOMBERG VIEW": Hi, Ed.

SCHULTZ: Joy-Ann, is this a winning strategy?

JOY-ANN REID, "THE GRIO": You know, it`s hard to come across as an
outsider when you`re the sitting president of the United States. But I
think if anyone has done it, President Obama has sort of managed it,
between the unpopularity of Congress, particularly the House of
Representatives, which has come across as almost sort of insane, and his
sort of calm demeanor -- he has managed to make himself look like he`s in
Washington, but he`s still not a part of the club.

So I think it`s a smart strategy, because couldn`t get more unpopular,
right? So you may as well run against them.

SCHULTZ: Jonathan, is this just a no brainer for a strategy? His
poll numbers are going up. The economy is better. Unemployment is going
down, at 8.6 percent. More job numbers coming out later this week.

Of course, Congress, not only in this polls, but in numerous polls
they have just stunk the joint out. Is this a no brainer?

ALTER: Well, it`s necessary but not sufficient. So they have to do
it, but it`s not enough. He`s also going to need a big, bold second-term
agenda, to lay out a vision later this month in his State of the Union
Address about where he would take the country if he was re-elected.

So it`s just not enough to bash the Congress. He has to be very
careful that he always put that word "Republican" before Congress, because
a lot of the Democrats on the Senate side -- remember, they control the
Senate still. They don`t want him just attacking the do-nothing Congress.
They always want that word, "do nothing Republican Congress" in there.

And they get really annoyed at the White House when the president
doesn`t attach that word to Congress.

SCHULTZ: Will that attract independent voters?

ALTER: That`s the big question. And Obama still wants independents
and even some Republicans who voted for him the last time. And he`s very
leery of being too partisan in his tone.

So he`s going to have to both be partisan in order to execute this
strategy, but not take it so far that he alienates the independents that he
needs to win the election.

SCHULTZ: Does the middle class card work? I mean, saying he`s a
fighter for the middle class, income inequality, does that work?

REID: Well, I think it does. I think, in a way, the best thing that
could have happened to Barack Obama in terms of his re-election chances is
2010. I mean, 2010, that Tea Party wave really showed Americans, middle
class Americans, some of whom were voting Republican, the sort of Reagan
Democrat types and independents who lean Republican, just what it means to
let these people govern the country.

I think when people think about the do-nothing Congress, they don`t
think about the Senate. Nobody thinks about the Senate. People think
about the House. That`s where sort of the fisticuffs are happening.

So I think when the president sets himself against them and says,
look, I`m fighting for the middle class, these guys are saying we`re not
going to allow rich people to get a dime for their tax increases. It`s a
stark contrast that`s amplified by things like the Occupy movement. And
it`s amplified by the polls that show people want to raise taxes on the
rich.

So he`s on the right side of the issues.

SCHULTZ: Instead of battling Congress, the president will take
executive action. Why didn`t he do that earlier?

REID: Well, I think before, the president really did believe -- I
think, coming in -- I`m one of those who thinks that he did think that he
could forge consensus in Washington. I think having been a senator, that`s
sort of the mindset of a senator. He has now found out that that`s not
going to happen. No legislation is going to pass.

So he doesn`t want to look like the presidency is weak. So it`s
important to show that there is a possibility of executive action.

SCHULTZ: Is it going to have to be a different song if the -- let`s
say the Democrats get the House back. And it`s going to be a tough lift
for them to --

ALTER: Very heavy lift.

SCHULTZ: Very heavy lift to keep the Senate. But do you think
President Obama has to say, look, I`ve dealt with these guys for four
years. Record number of filibusters, obstruction galore. I`m not going
through this again. You put me in the White House, we get our team back,
this is where we`re going. Is that too much of a heavy hand?

ALTER: Well, I do think that he needs to lay out in the State of the
Union and throughout this year what he would do differently in his second
term. Would he have a different attitude toward the filibuster, for
instance? Would he seek changes in the rules of the Senate? Will he use
what they call recess appointments to get some of his people in there?

They`re not confirming anybody. They had a guy they put up to be head
of the Printing Office, totally uncontroversial. Republicans are blocking
it. Why? Because it`s a Barack Obama appointment.

And they`re blocking the head of the Consumer Protection Bureau, who`s
a very well-credentialed guy.

SCHULTZ: Does he sell that on the road?

ALTER: They`ve got to -- he`s got to go into more of a
confrontational mode and say, you know what, if you don`t like it, lump it.
And just take it right to them.

SCHULTZ: Confrontational. That`s a big word for this president.

ALTER: It`s a big challenge for him because it`s not in his nature to
act that way. So part of 2012, Ed, is going to be whether Barack Obama
wants to get re-elected enough that he can do some political things that
don`t come naturally to him.

SCHULTZ: Joy-Ann Reid, Jonathan Alter, great to have you with us.
Thanks so much.

REID: Thank you.

ALTER: See you, Ed.

SCHULTZ: You have to see what happens when Eric Cantor is confronted
with the truth about Ronald Reagan. That`s next. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: THE ED SHOW survey tonight I asked, will Rick Santorum win
the Iowa Caucus tomorrow? Forty four percent of you agree with me; 56
percent of you say no.

Coming up, not only are Republicans trying to raise taxes. They also
won`t believe that President Reagan did. Ezra Klein joins me. Stay with
us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Let`s get right to it. This
is what happens when House Majority Leader Eric Cantor is confronted with
the truth.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: But, you know, your idol, as I`ve read, anyway,
was Ronald Reagan, and he compromised.

REP. ERIC CANTOR (R), HOUSE MAJORITY LEADER: He never compromised his
principles.

UNIDENTIFIED FEMALE: Well, he raised taxes, and it was one of his
principles not to raise taxes.

CANTOR: Well, he also cut taxes.

UNIDENTIFIED FEMALE: But he did compromise.

CANTOR: Well, that`s not true. And I don`t want to let that stand.

UNIDENTIFIED FEMALE: And at that point, Cantor`s press secretary
interrupted, yelling from off camera that what I was saying wasn`t true.

(END VIDEO CLIP)

SCHULTZ: Eric Cantor`s press secretary steps in when Cantor is
confronted with some facts about Ronald Reagan. The guy actually
interrupted the interview? Of course, Reagan is praised by republicans for
his tax cut, but Reagan also raised taxes 12 times during his eight years
in office, including a three-year 100 billion dollar tax hike, the largest
since World War II.

Reagan even agreed to tax hikes during the 1982 recession. In 1986,
he signed the largest corporate tax increase in U.S. history. We`re joined
tonight by Ezra Klein, MSNBC policy analyst and columnist for the
"Washington Post."

How come we don`t hear this enough? What do you -- let`s set the
record straight. Reagan didn`t just cut taxes, he often raised them.

EZRA KLEIN, "THE WASHINGTON POST": He raised them a number of times,
in fact. As you said, about a dozen. I`m actually surprised that Cantor`s
press secretary went in to interrupt that, because it`s a fairly well-known
fact that Reagan did this. Look, it`s exactly the situation we`re in now.
Reagan passed a very large tax cut in 1981. That led to very large
deficits in 1982.

And progressively over the next decade, as they began to try to deal
with those deficits, he agreed to packages that raised taxes. Right now,
we had the Bush tax cuts passed in 2001. We have large deficits now. So
the argument is Republicans should agree to, among other things, tax
increases that don`t quite roll back the entire Bush tax cut, but begin to
take care of the deficit some.

But they have a much more dogmatic stance on taxation than Ronald
Reagan did.

SCHULTZ: So why aren`t the Democrats saying Ronald Reagan, your hero
-- not yours, but the Republicans` hero -- raised taxes on the job
creators?

KLEIN: I think they actually largely are. I mean, there was a "New
York Times" article earlier this year about how Barack Obama had a sudden
affection for quoting Ronald Reagan left and right on taxes and on other
things.

So I do think you`re hearing that. And I think you`re hearing it
particularly from the president. But the myth on Ronald Reagan is often
stronger than the reality.

SCHULTZ: I mean, the myth -- you know, this myth making about Ronald
Reagan by today`s Republican party has gotten so out of whack that Cantor`s
press secretary actually interrupts an interview with a major network,
arguably one of the most watched shows for news on all of television. And
he sits there and didn`t say, hey, just hold off, back off here. I find
that amazing.

KLEIN: It was surprising I think, too, that Cantor didn`t have a
stronger answer to that. But let`s talk about the myth making, right? The
head of the Reagan Legacy Project, the folks who are basically trying to
name a schoolyard or a post office or a tree or whatever in every county in
America after Ronald Reagan, is Grover Norquist. It is the Republican
party`s chief anti-tax enforcer.

So there is sort of an interesting coalition of interests here around
making Ronald Reagan into a paradigm of anti-tax doctrine, because the very
same people who are pushing that doctrine, they have conscripted Ronald
Reagan in that as the chief icon for them in their pursuit.

SCHULTZ: Was he trying -- Eric Cantor trying to file off a few edges
in this interview?

KLEIN: You know, I can`t say because I haven`t seen the rest of the
interview.

SCHULTZ: Well, it sure seemed to me like he was. This was a new
image that he was trying to portray. Is he going after John Boehner`s job?

KLEIN: I don`t know if he is yet. But John Boehner certainly looks a
bit weaker. Over the last four months or so, Republicans from Mitch
McConnell to John Boehner to Eric Cantor have been trying to put forward a
more conciliatory tone, in part because the ratings for Congress are so
incredibly low now.

They ended -- Gallup said Congress ended this year with the lowest
ratings ever, 11 percent, which is lower even than the Democrats in 2010,
before they lost 60-some seats. So I think Eric Cantor and John Boehner,
more so than they`re even too worried about jockeying for one another`s
jobs, are just trying to keep their majority right now, which is you look
at the betting markets, they give them about a 35 percent chance of losing
the House to Nancy Pelosi and the Democrats in 2012.

SCHULTZ: Ezra Klein, always a pleasure. Thank you for joining us
tonight.

That`s THE ED SHOW. I`m Ed Schultz. You can listen to me on Sirius
XM Satellite Radio 127. That`s the channel, Monday through Friday, noon to
3:00.

Follow me on Twitter @EdShow and @WeGotEd. There`s this guy in Iowa
named Rick Santorum and Rachel Maddow -- her show is starting right now.
She has been saying all along that Rick Santorum, you got to watch out for
this guy.

So here it is. I mean, he is just surging. I think he`s going to win
it, Rachel. I really do.

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

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