updated 1/6/2012 1:04:57 PM ET 2012-01-06T18:04:57

Guests: Eugene Robinson, Roger Simon, Jennifer Donahue, Michael Eric Dyson, Joan Walsh, John Nichols, Pat Bauer

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

Breaking news out of the Beantown: "The Boston Globe" is endorsing Jon
Huntsman for the GOP nomination. Apparently, they don`t like their former
Governor Mitt Romney anymore -- maybe because he`s not being straight with
the voters? You see, middle-class Mitt is trying to hide how rich he is.

Tonight, I`ll blow Romney`s cover.

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

(BEGIN VIDEOTAPE)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I spent my life in the
business world. People say, well, what difference does that make?

SCHULTZ (voice-over): The difference is Mitt Romney is the richest
presidential candidate in a decade, and he`s trying to keep it off the
radar.

ROMNEY: With regards to income taxes, that`s not something that`s
required by the law. I`m not planning on releasing my income taxes anytime
soon.

SCHULTZ: I`ll tell you what Mitt Romney`s trying to hide -- reaction
from Eugene Robinson of the "Washington Post."

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: I don`t want to make black
people`s lives better by giving them someone else`s money.

SCHULTZ: Rick Santorum is surging in New Hampshire. But he still
can`t explain his comment about black people.

SANTORUM: I`m pretty confident I didn`t say black.

SCHULTZ: MSNBC political analyst Michael Eric Dyson and "Salon`s"
Joan Walsh are here with reaction.

A top aide to Scott Walker has been arrested as the recall plows
ahead. You don`t want to miss the report from John Nichols of "The
Nation."

And the Republican attack on workers` rights is blowing up in the
Hoosier State. Democrats are fighting back. I`ll talk to their leader in
the state house.

(END VIDEOTAPE)

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

You can say at home, oh, there goes Eddie playing class warfare again.
No, I`m not.

Mitt Romney hopes to win the New Hampshire primary five days from now.
Establishment Republicans -- well, they`re out and about saying that, well,
he`s probably the nominee in waiting.

I don`t think so. Romney is going to have a real hard time selling
himself to middle-class Americans. The proof is in his bank account, my
friends. A financial consulting firm figured out the net worth of
presidential candidates from the past 20 years. Pretty lofty numbers.

Billionaire Ross Perot is the richest. Steve Forbes comes in second,
who by the way is endorsing Mitt Romney. Romney is third. That`s right.
He is the third richest candidate to ever run for president over the last
20 years. He`s worth -- ding, ding -- $250 million.

Now, let me give you another number -- 3,140. Mitt Romney is one of
the 3,140 richest people in America. Good for him. Nice to know he can
make a dollar.

Those 3,140 people are in the top .001 percent of all wage earners in
this country. And let me make something perfectly clear. I don`t have a
problem with anybody that makes a dollar. I just don`t want them picking
on people that don`t have that kind of success because that`s really an
elite group economically in this country.

But as president Mitt Romney will protect these folks, the richest
people in this country, while asking the poorest Americans to pay a little
bit more. That`s what I don`t like.

Now, if you call that class warfare, go right ahead. I think it`s
about fairness.

The Tax Policy Center crunched the numbers on Mitt Romney`s tax plan.
See, Mitt`s got a tax plan. This is what he wants to do if he`s president.

Romney`s plan would increase taxes on families making less than
$40,000 a year. Now, you tell me if that`s not class warfare. He wants to
pick on the little guy? American workers making less than $10,000 a year.
They`re going to see the biggest increase.

Now, you tell me what`s fair about that. People at the top, what`s
going to happen to them? Well, they`re going to pay less. That`s where he
comes from, the country club.

A millionaire will see his taxes drop by almost 5 percent. Keep in
mind, Romney will still not let you see how much he pays in taxes.

(BEGIN VIDEO CLIP)

ROMNEY: With regards to income taxes, that`s not something that`s
required by the law. I`m not planning on releasing my income taxes anytime
soon. But we`ll wait to see what happens. Never say never.

(END VIDEO CLIP)

SCHULTZ: Oh, yes, we`ll wait and see. Romney won`t even commit to
releasing his tax records if he wins the presidency.

(BEGIN VIDEO CLIP)

ANDREA MITCHELL, NBC NEWS: It`s not is 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, 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: You know what I think? I think that`s one of the most
revealing interviews so far in this entire campaign season, because if
you`re proud of where you came from and what you`ve done, you shouldn`t
have any reservations at all as a person if you want to lead to tell people
about it, because you want them to have the same kind of success that
you`ve had.

Now, that`s just a personal view on my part. Now, we know why Mitt
Romney won`t release his tax returns. His investment income is worth
millions. And he`s taxed, my friends, at a much lower rate than regular
wages.

Romney pays a lower tax rate than the person driving the campaign bus.
He pays a lower tax rate than the janitor who cleans up after the campaign
events. He wants that guy to pay more than the rich folks proportionately.

You know, so where`s the break? What has Mitt Romney ever done for
the blue liners? Now, hold it right there. Think about that.

We use this graph a lot. I said months ago this is the only graph you
really need to know about going into 2012. Well, we`re here.

See, this is the blue liners. These are the middle classers of
America, the wage earners of America. They`re right down here on this
line. They haven`t gone too far in the last 30 years.

But here`s the country clubbers and the people who maybe don`t want to
reveal their taxes. The fact of the matter is Romney`s policies will
continue to separate working Americans from those at the very top. And
don`t take my word for it. The Tax Policy Institute did it.

If you were a wage earner, if you`re down here, you`re a wage earner,
you`re a blue liner, do you think Mitt Romney understands your struggle?
Check out this video from his campaign when he was running for Senate back
in 1994.

(BEGIN VIDEO CLIP)

ROMNEY: The lady of the house. How are you doing?

UNIDENTIFIED FEMALE: Just a worker.

ROMNEY: Just a worker. That`s what we all are.

UNIDENTIFIED FEMALE: Nice to meet you.

ROMNEY: Good to meet you. I`m Mitt Romney. How are you doing?

Good. Good to see you. How are you? Good to meet you. How`s
business?

UNIDENTIFIED FEMALE: Struggling.

ROMNEY: Struggling.

How are you doing? I`m Mitt Romney. Good to meet you. Thank you
very much. Appreciate it.

(END VIDEO CLIP)

SCHULTZ: Well, there it is. Romney never stops to ask the woman why
she is struggling. I thought he was into turning businesses around. He
could have given her a tip. Instead he presses the flesh and just moves
on. Just a snapshot of maybe who he is.

There is only one person in this race really trying to make the top
liners a little closer to the real folks of America. You know, or the blue
liners to get back up to the top and be with them to have a better life --
and I think his name is president Barack Obama. You will never convince me
that a guy who will not reveal his tax returns after a life of success is
really concerned about the folks down here.

I think that`s very revealing. I think there should be full
disclosure. You know, we can`t find out who the heck is bankrolling their
campaigns with these super PACs that are out there.

But can we at least, Mitt, know exactly where you are financially? We
know that you`re up there really high with Ross Perot and Steve Forbes.
You`re the third richest guy in the last 20 years to run for president.
You ought to be proud of that. So show us what you pay.

Get your cell phones out. I want to know what you think. Tonight`s
question: Percentage-wise, do you think Mitt Romney pays more or less than
you do in taxes? Text A for more, text B for less to 622639. You can go
to our blog and leave a comment there at Ed.MSNBC.com.

I have nothing against anybody doing extremely well. That`s what
capitalism is all about. That`s what America is all about.

I think the Republicans, what do they call it? Oh, American
exceptionalism. That`s what they call it.

Hey, go have at it. But when you get there and you want to be in a
leadership role, why is it that you want to give more to the top liners and
expect these folks down here to pay more taxes? And that is exactly what
Mitt Romney wants to do.

That is not where President Obama and the Democrats are.

Joining me tonight, MSNBC political analyst Eugene Robinson, also
associate editor and Pulitzer Prize-winning columnist for "The Washington
Post."

Eugene, great to have you with us tonight.

EUGEN ROBINSON, MSNBC POLITICAL ANALYST: Good to be here, Ed.

SCHULTZ: If Americans knew about the wealth -- and this story is
getting around. If every voter out there knew exactly what Romney`s wealth
was and just how much he pays in taxes, do you think that would affect how
people might view him as the president, or view him as the candidate or
maybe affect their vote? What do you think?

ROBINSON: Well, I think it`s something people would want to know.
Look, I`m with you. I have nothing against a guy making a dollar. And
that`s what, you know, this country`s economic system is all about. It
creates wealth.

You know, the problem is that that wealth has become increasingly
concentrated in just a few hands, and Mitt Romney is one of the, what,
3,140 top beneficiaries of what`s been happening to the economy.

Now, I know the answer to your question, I think. He almost certainly
pays a lower tax rate than your listeners do because he`s paying the
capital gains rate, which is 15 percent.

SCHULTZ: Well, you know what? Why doesn`t he just come out and say
that? I mean, it would seem to me it would be a credibility issue. Full
disclosure, if someone`s running for president, I mean, everyone`s going to
find everything out anyway, you might as well come forward and do it. So
what in the world he be hiding? Ah, probably a pretty nice rate.

Has Barack Obama, the president, do you think he`s positioned himself
well with this populist approach that he`s taking over the last few months?

ROBINSON: Yes. I think obviously he has. I mean, his numbers are
going up as the Republican Party`s numbers come down. And I think it`s due
to the fact that the president has more aggressively and more definitively,
I would hope, positioned himself as with the people, as with the 99
percent, or the 99.99 percent in this case.

It`s a smart political move on the president`s part, and I think a
sincere move because I do think if you think of his background, for
example, he did lead not a privileged upbringing. His family was on food
stamps for a while. He earned what he has in life. And I think he
appreciates that.

SCHULTZ: Well, I think there`s really something to what you`re saying
because I think people, when they have success, they have to remember where
they came from to help others also have the same kind of success,
especially if they`re in a leadership position. President Obama came from
the blue line. OK? He hasn`t forgotten, because his policies have helped
people on the blue line. There`s no question about it.

I`m going to spend more time looking into what Mitt Romney has done
for the blue liners of America, you know, because I think that is the
story. When we talk about income inequality in this country, and it is a
big issue. Its polling is a big issue with a lot of Americans out there.

This is the story about who they`re going to be electing. And I
really do think that if you`ve been there done that you can`t forget how
you did it. And I just think that Romney`s got some serious economic
questions to ask.

Now, establishment Republicans, I guess you can say are circling the
wagons. Karl Rove wrote this editorial in the "Wall Street Journal"
calling Romney`s eight-vote win in Iowa, quote, "a big victory."

And here`s what John McCain told CBS after endorsing Romney in New
Hampshire.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R), ARIZONA: Well, I think that it`s very much
timed to select our nominee and to move forward into the general election
mode.

(END VIDEO CLIP)

SCHULTZ: Well, will the establishment -- the establishment
Republicans, I guess we can call them, are they going to shut down any
threat to Romney? Is he really the guy?

ROBINSON: Well, you know this is what they`ve been saying for a
while, Ed, trying for months now to convince the party, the party faithful
just to say, OK, you know, accept Mitt Romney, you don`t love him but he`s
the best shot we`ve got. And people aren`t buying it.

I mean, I was out in Iowa, and I talked to a lot of Republicans, some
supporting Mitt Romney. Not a lot of passion. And some who told me they
wouldn`t vote for Mitt Romney under any circumstances, even if he were the
nominee. Now, that was a minority.

But there`s a problem there, that the Republican establishment is
trying its best to deal with. But they haven`t put out this fire, I think.

SCHULTZ: Yes. Well, a guy that bounces around on the social issue of
abortion the way he has, and he doesn`t want to reveal his taxes to you, I
don`t think that`s a way to kind of build up any trust in anybody.

Eugene Robinson, good to have you with us tonight. I appreciate your
time. Thanks for being with us on THE ED SHOW.

ROBINSON: Great to be here, Ed.

SCHULTZ: You bet.

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

Rick Santorum has reportedly raised $2 million in two days and he`s
gotten an endorsement of a major Catholic organization which is expected to
really help him. I think that this guy better be taken seriously.

And Santorum`s surge in popularity is putting him, well, under the
microscope, as it should. He`s denying making a racially charged comment
about social welfare programs. We`ll play you the tape and let you decide.

Stay with us. We`re right back.

(COMMERCIAL BREAK)

SCHULTZ: Coming up, George Will explains Rick Santorum`s appeal.
Roger Simon and Jennifer Donahue on whether Rick has a shot in New
Hampshire and beyond. That`s coming up next.

Herman Cain is back, and he`s got a new plan. We`ll tell you all
about it in "psycho talk," where it belongs.

And Indiana Democrats are doing all they can to keep their state from
becoming the next to work -- the next state that could be attacked when it
comes to labor. We`ll have that with Democratic leader Pat Bower. He`s
going to be joining us.

Share your thoughts with us on Twitter using the #EdShow.

We`ll be right back. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

I have to go back to the last segment for just a moment, if I may.
Think about this. There`s a guy who wants to be president of the United
States of America, and he wants people making $10,000 a year to pay more in
taxes but he doesn`t want to show you his taxes. He doesn`t want to do
full disclosure. He might if he`s elected someday -- never say never.

The middle classers, the blue liners, who he has in my opinion no
record of helping in his legislative career or in leadership, in fact, he`s
cut a lot of jobs in his private sector that he loves to talk about, he
wants to raise their taxes and he doesn`t want to show you his taxes --
doesn`t want to show you his tax returns.

I mean, I just -- I think it speaks volumes as to who Mitt Romney is.
You can tweet us using the #EdShow.

All right. Democrats, you know, don`t dismiss Rick Santorum. Many of
you accuse me of being his promotional guy on television. But let me tell
you something, I believe that this guy needs to be taken seriously. He can
be a dangerous contender. Even some conservatives are wondering what Rick
Santorum is all about.

But Santorum is the only candidate in the Republican field who has the
potential to tap into middle-class voters who are culturally conservative.

Columnist George Will, I think he may have said it best. He has
written, "White voters without college education, economically anxious and
culturally conservative, were called Reagan Democrats. Today, they are
called the Republican base. Who is more apt to energize them? Santorum,
who is from them, or Romney, who is desperately seeking enthusiasm?"

Well put, Mr. Will, and on target I think.

The Santorum surge is really very real -- very real when it comes to
social conservatives. If he has any problem drawing a contrast between
himself and Mitt Romney, he should take this John McCain ad from four years
ago out and play it over and over again and attach his name to it.

(BEGIN VIDEO CLIP)

(MUSIC)

ROMNEY: I believe that abortion should be safe and legal in this
country.

I will preserve and protect a woman`s right to choose and am devoted
and dedicated to honoring my word in that regard.

I am pro-life and favor that legislation.

You will not see me wavering on that or be a multiple choice, thank
you very much.

You can go back to YouTube and look at what you I said in 1994. I
never said I was pro-choice. But my position was effectively pro-choice.
I said that time and time again.

(END VIDEO CLIP)

SCHULTZ: There is no doubt New Hampshire is in an uphill battle for
Santorum. In the latest New Hampshire poll, he has moved into third place
behind Romney and Ron Paul but still at just 8 percent but he`s heading in
the right direction.

But he has raised $2 million since Tuesday. It`s getting better.
He`s gotten the endorsement of a major Catholic group, CatholicVote.org.

I`m joined tonight by Roger Simon, chief political columnist for
"Politico", and Jennifer Donahue, "Huffington Post" contributor and fellow
at the Eisenhower Institute at Gettysburg College.

Great to have both of you with us tonight on the program from New
Hampshire.

You know, New Hampshire really is a tough one for Santorum. But does
he have the potential to do well here? I guess it`s all about mojo at this
point.

Jennifer, what do you think? You know that part of the country as
well as anybody. Do you think that the social conservatives and the
Catholic endorsement is going to take him into double digits before next
Tuesday?

JENNIFER DONAHUE, HUFFINGTON POST: At this point I`d be surprised if
he didn`t get into double digits. He`s had events here all day. He did
especially well at the Tilton Diner, which was a pure retail event, where
he was hand holding and talking to people and looking in their eyes. They
were kicking the tires, trying to get to know him.

But 60 percent of New Hampshire is Catholic. And I think that a lot
of people in New Hampshire have really continued to feel anybody but
Romney. And these are the early primary voters. These are the people who
are going to go out no matter what the weather is on Tuesday and they`re
going to cast their vote. A lot of them are single-issue voters based on
abortion.

I think Rick Santorum has the potential to capture the non-
independents in the race.

SCHULTZ: You know, Roger, I`ve always been one to believe that no
part of this country has a lock on great people. There`s great people
wherever you go in America. I don`t think the folks are any different in
the middle of the country from the east or the west coast when it comes to
assessing qualities of people. And Santorum is well-entrenched in the
social conservative movement of this country and the Catholic vote.

How do you think it`s going to play for him?

ROGER SIMON, POLITICO: The Catholic vote will definitely help him
here. It would also help him in a general election if he gets that far
because Catholics are truly swing voters in America. They`ll vote social
issues in one election. They`ll vote pocketbook issues in the next.

But the problem for Santorum here is not getting in double digits. He
will. The problem is how we in the media define Romney`s success or
failure here.

If Santorum can keep Romney`s margin of victory below 10 percent, that
is, if he can keep Romney to a single-digit victory, Santorum will claim
that he had a very good night. And I think the media will agree with him.

However, this is a tough state to do that in. Romney lives here,
neighboring governor. The polls show him 27 percentage points up. This is
a tough second state for Santorum after a very impressive tie in Iowa.

SCHULTZ: What do you make of his money coming in, Jennifer? Is that
a lot? Not enough? You never have enough in this day and age.

But is $2 million a pretty good number this close after Iowa?

DONAHUE: I think $2 million`s pretty good in two days. I think what
you`re seeing is what Santorum has in his back pocket is a man named Mike
Bandeau (ph), who orchestrated Pat Buchanan`s win against Bob Dole in 1996.

They`ve been able to hit the ground running yesterday and today, while
Romney has left the state to go to South Carolina to try to build some kind
of firewall and protect himself against Rick Perry down there.

But I think Santorum is trying to capitalize on his ability to connect
on a retail level, something that Romney has yet to do in New Hampshire
even though he`s been campaigning here for five years. He`s really capped
by his own lack of retail connection.

And I think when he comes back from South Carolina tomorrow night,
that`s Romney`s biggest challenge. He may have all the money in the world
to spend on this race, but nothing will replace that grassroots hand
holding that voters in New Hampshire are used to seeing and expect to see.

SCHULTZ: And, Roger, what do you think about Mitt Romney`s strategy?
Will he go negative on Rick Santorum, or does he just have too much of a
lead right now to think about that?

SIMON: I would be shocked if Mitt Romney goes negative on anybody. I
think he would be delighted if Newt Gingrich and Santorum and others become
-- especially in the case of Gingrich, a human hand grenade at the debates
this weekend and try to blow him up. He will sit there or stand there and
take the punches. It makes him look good.

He is sitting on top of a fat lead in this state, and I doubt if he
can really blow it.

SCHULTZ: And, Jennifer, the table is set for a barn burner on both
Saturday night and Sunday morning. Do you think it will get as pointed as
it has been, some of the comments coming from Newt Gingrich? I mean, is
this going to be a Republican debate that we`ve never seen before?

DONAHUE: I think it has that potential. I think what`s happened is
Newt Gingrich really has those negative ads from Romney under his skin.
It`s the old Newt Gingrich. He`s angry. He`s bitter. I think we`re going
to see that coming out.

I think Ron Paul has shown the capacity to go really negative, and
he`ll do that. Huntsman I doubt will go negative, but he`s drawing sharper
and sharper contrasts with Romney.

Romney has to try to remain steady and keep his -- himself cool under
all this pressure. But what you could see on Tuesday night is you could
see the independent vote sort of splitting between Romney, Ron Paul, and
Jon Huntsman. And then the conservatives going toward Santorum, that could
bring Romney`s numbers way down to earth.

I would not at all be surprised if Romney got a 12-point lead, a 10-
point lead. And I do think that would be perceived as a loss for Romney
because then how does he land in South Carolina where the field gets even
bigger with Perry?

SCHULTZ: A wounded leader. Great to have both of you with us. Roger
Simon, Jennifer Donahue, thank you so much.

Mr. 9-9-9 is back with a huge announcement. Herman Cain`s news is so
big it`s going in the zone tonight.

A former aide to Scott Walker is arrested for stealing money from a
veterans` charity. What does it mean for the governor and the recall
effort? John Nichols will have the latest and explain it all. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: And in Psycho Talk tonight, Herman Cain is back. The pizza
man went on Hannity`s show last night with a blockbuster announcement.

(BEGIN VIDEO CLIP)

SEAN HANNITY, FOX NEWS ANCHOR: It`s not an endorsement.

HERMAN CAIN, FORMER GOP PRESIDENTIAL CANDIDATE: No.

HANNITY: You`re not getting back in the race?

CAIN: Nope. I`ve started a new movement. The biggest comment that I
got when I ended my candidacy was "keep 9-9-9 alive." That`s what this is
about. And I`m going it keep it alive with what I`m calling Cain`s
Solutions Revolution. And the first solution we`re going to promote --

HANNITY: You have a bus.

CAIN: Yes, sir. Got a bus with my picture on it. The first solution
we are going to promote actively is 9-9-9, the revolution.

(END VIDEO CLIP)

SCHULTZ: Great get, Hannity. That`s some breaking news if I ever saw
it. You`ve got Herman Cain to get on your program to talk about some bus
tour. Hmm. Herman Cain. You think he wants to be another Sarah Palin?
Oh, yeah, he really wants a reality show. That`s what it is.

The pizza man`s going to travel around the country begging members of
Congress to vote for his 9-9-9 plan, which would raise taxes on most low
and middle-income households. I was thinking, you know what he ought to do
is take a page out of Grover Norquist`s playbook and get them to sign one
of those pledges. All of the congressional members are for 9-9-9. See how
that works out for you.

Herman Cain is optimistic, though. He released a promotional video
for his new venture.

(BEGIN VIDEO CLIP)

CAIN: They think we are stupid. Well, you know what comes after a
Tea Party? A revolution. It`s time for history to repeat itself. We the
people are coming. And we want our power back. Welcome to the Solutions
Revolution.

Victory.

(END VIDEO CLIP)

SCHULTZ: He`s back. Good luck, dude. You`re going to need it.
Herman Cain`s big announcement, just another steaming slice of Psycho Talk.

Rick Santorum is -- well, he`s in damage control mode after pushing an
ugly racial stereotype on the campaign trail. He`s denying it ever
happened. But we have the tape. You can be the judge. Joan Walsh and
Michael Eric Dyson will join me next.

And Indiana Governor Mitch Daniels joins John Kasich and Scott Walker
in attacking unions. Will it work in the Hoosier State? State Democratic
Leader Pat Bauer will join me and explain the GOP`s latest assault on
workers in the Hoosier State. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Rick Santorum is scrambling to spin his way out of trouble
over a racial comment he seemed to make during a recent campaign event.
Santorum was talking about his opposition to programs like Medicaid and
food stamps. Then he said this.

(BEGIN VIDEO CLIP)

SANTORUM: I don`t want to make black people`s lives better by giving
them somebody else`s money.

(END VIDEO CLIP)

SCHULTZ: It sounds like he said "I don`t want to make black people`s
lives better by giving them somebody else`s money." The following day,
Rick Santorum, he didn`t deny it.

(BEGIN VIDEO CLIP)

SANTORUM: I`ve seen that quote. I haven`t seen the context in which
that was made. And yesterday I talked, for example, about a movie called -
- what was it? "Waiting For Superman." which was about black children.

(END VIDEO CLIP)

SCHULTZ: So Santorum fully acknowledged it was something he could
have said. But after his success in the Iowa caucuses, he rethought his
position. Last night, he gave a new response.

(BEGIN VIDEO CLIP)

SANTORUM: I`m pretty confident I didn`t say black. What I think -- I
started to say a word and sort of blew -- sort of mumbled it and changed my
thought. I don`t recall saying black. What I started to say is a word and
then sort of change and it sort of blew -- came out. People said I said
black. I didn`t.

I don`t use the term black very often. I use the term African-
American more than I use black.

(END VIDEO CLIP)

SCHULTZ: Blew isn`t what I heard. Let`s play it one more time.

(BEGIN VIDEO CLIP)

SANTORUM: I don`t want to make black people`s lives better by giving
them somebody else`s money.

(END VIDEO CLIP)

SCHULTZ: I`m not buying Santorum`s excuse. And neither is Reverend
Jesse Jackson. Today he released the following statement: "Santorum`s
comments are not accidental. They are a calculation to target immigrants
and now blacks. He is appealing to the fear vote that will take us
backward, not the hope vote that will take us forward."

We`re joined tonight by Joan Walsh, editor at large Salon.com, and
Michael Eric Dyson, MSNBC political analyst and Georgetown University
professor. Great to have both of you with us.

Joan, are you buying his answer at this point?

JOAN WALSH, SALON.COM: It sounds so clear and he didn`t deny it. And
you know, Ed, if I said to you, hey, Ed, you know what? On your show last
night, it sounds like you might have said something kind of racist about
black people, you would say, Joan, you must have misheard me, because I
would never say a thing like that. That`s not in my thinking. It`s not in
my language.

You wouldn`t say, well, I don`t know; maybe I did. So, I mean, that`s
the first tell.

And the second is that this really is the kind of dog whistle politics
that the Republican party has used to lure our people, the white working
class, over to their party, to tell them over and over that money`s being -
- their money`s being given to black people, when, in fact, as we all know,
it`s been given to rich people. So it`s hard to take this seriously.

SCHULTZ: Michael, do you buy Santorum`s excuse? And is this going to
be a problem for him?

MICHAEL ERIC DYSON, GEORGETOWN UNIVERSITY: I don`t buy it at all. I
think Joan is absolutely right. Not only is it dog whistle politics; it`s
the politics of divisive, cynical Republican ideology here. Because if
you`re talking about government funding through tax dollars, you`re talking
about Social Security, Medicaid, Medicare, veterans` benefits.

You`re speaking about unemployment benefits, bailouts for corporations
and the like. And as Joan said, the redistribution of money upward to rich
people. So why in the world would you single out African-American people,
who are a small percentage of those who receive the benefits, by the way,
of their tax dollars? It`s their money as well.

So you`re not giving black people who are on welfare somebody else`s
money. You`re giving them part of the money that they`ve contributed as
members of this society. So all across the board, in every score, Rick
Santorum is wrong. And his racist politics I think are pretty clear.

SCHULTZ: Well, let`s say he didn`t say it. His follow-up has been
terrible. Santorum is also trying to play up his work with historically
black colleges. Here it is.

(BEGIN VIDEO CLIP)

SANTORUM: There`s no one that`s worked more in -- when I was a
senator from Pennsylvania in the urban communities, both black, Hispanics,
as well as whites. Every year, I used to bring all the historically black
colleges in to Washington, D.C. to try to help them. I helped to try to
introduce them to people in the Department of Education, so they could have
more resources. We had two historically black colleges in Pennsylvania.

The Congress, in fact, had a summit every year for historically black
colleges, not just in Pennsylvania, of which we have three. So I`ll match
my record against any Democrat or Republican in working in African-American
communities.

(END VIDEO CLIP)

SCHULTZ: Joan, does Santorum`s record with African-American
communities hold up?

WALSH: Well, you know, if you have to spend the day talking about all
the good things you`ve done for black people, Ed, you`re in a little bit of
trouble. I don`t think it holds up. I think the people know that he has
consistently been a voice for the rich and powerful. He`s Mr. K Street.
He has -- he talks a good game in terms of Catholic morality, but he
ignores Catholic social teaching about the poor of every color.

I just don`t -- I just don`t think this is going to work for him.

SCHULTZ: Well, he`s not alone. Gingrich is also quick to connect
programs like Food Stamps to the African-American community. Listen to
this sound bite from Gingrich.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: More people are on Food
Stamps today because of Obama`s policies than ever in history. I would
like to be the best paycheck president in American history. I am prepared,
if the NAACP invites me, I`ll go to their convention and talk about why the
African-American community should demand paychecks and not be satisfied
with Food Stamps.

(END VIDEO CLIP)

SCHULTZ: Michael, your reaction. Is the NAACP looking for Newt
Gingrich to teach them about Food Stamps?

DYSON: I don`t think we need Newt Gingrich`s pedagogy in the NAACP.
I think that this is condescension at its most poignant. And as with Rick
Santorum, when you have pet Negro causes, you tend to treat Negroes like
pets. So the reality is that they begin to isolate these racial strata
that they`ve contributed to, overlooking the broad sweep of history, which
is what Newt Gingrich`s supposed strength is.

And what they end up doing is reinforcing stereotypical thinking about
black people that dismisses the overwhelming empirical evidence that black
people are a lot more complicated than they seem to understand.

SCHULTZ: Joan Walsh, Michael Eric Dyson, always great to have you
with us. Thanks so much.

WALSH: Thanks, Ed.

SCHULTZ: Scott Walker preaches to a choir at a right-wing think tank.
John Michael -- or John Nichols will join me with the latest on the recall
effort. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Well, here`s another chapter for you. With the recall
effort in Wisconsin moving right along, Governor Scott Walker had no choice
but to leave the state today and rub elbows with Washington insiders and
GOP fund-raisers. Walker explained his war on unions to the folks at the
American Enterprise Institute, a right-wing think tank.

(BEGIN VIDEO CLIP)

GOV. SCOTT WALKER (R), WISCONSIN: Collective bargaining in the public
sector`s not a right. It is an expensive entitlement.

(END VIDEO CLIP)

SCHULTZ: Walker also told the group he`s not afraid of losing a
possible recall election, but is bothered by the out-of-state money pouring
into the effort.

(BEGIN VIDEO CLIP)

WALKER: People ask me who my opponent`s going to be. I said the
person doesn`t matter. It will be the big government union bosses here in
Washington who will pour probably limitless amounts of money into our
state, and will try to influence our vote.

(END VIDEO CLIP)

SCHULTZ: And as "The Huffington Post" reports, Walker`s appealed for
some out-of-state money, "of his own meeting with Republican donors at the
Capitol Hill Club."

Meanwhile, potentially more trouble is brewing for the governor in
Wisconsin. Three people were arrested today earlier as part of a secret
criminal John Doe investigation. One of them is a former top aide of Scott
Walker`s. Here`s the report from WTMJ TV.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Tim Russell was charged in court with three counts
of theft. He`s accused of stealing money from a military charity fund for
families of Wisconsin soldiers killed in Iraq and Afghanistan. The fund
was part of then County Executive Scott Walker`s Operation Freedom events
at the zoo.

It was Walker`s administration who asked prosecutors to investigate
allegations of missing funds.

UNIDENTIFIED MALE: We go where the evidence leads and partisan
politics plays no role in any decision made by this office.

(END VIDEO CLIP)

SCHULTZ: Let`s turn to John Nichols, Washington correspondent of "The
Nation" magazine. John, what`s the latest on this investigation?

JOHN NICHOLS, "THE NATION": Well, Ed, it is a very serious
investigation. And one of the things that`s been revealed today is that
this charity, which had been run very effectively by an American Legion
Post, was shifted to control by Governor Walker`s political aide, the guy
who`s been arrested, by Walker himself when he was serving as county
executive.

So he`s not coming out looking particularly well in this. And
remember, this investigation follows upon a broader investigation. It`s
part of a broader investigation that has seen the FBI raid the home of a
top Walker aide, that has seen Governor Walker`s press secretary take
immunity, and that has seen one of his top donors plead guilty to felony
violations of campaign finance laws.

So it`s really adding up to a lot of concern for Wisconsinites.

SCHULTZ: No matter how you look at this, it is not good for Scott
Walker. And certainly not in condemning him or indicting him here, but it
would seem to me that he would want to distance himself from this as much
as he possibly can. What has his reaction been?

NICHOLS: He hasn`t distanced himself in nearly the way you would
expect. He said he would be disappointed if these charges turned out to be
true. That`s a lot different than saying that something really bad is
going on and you`re shocked by it.

The fact is that with all of these investigations playing out, so many
of them related to campaign finance issues, you really begin to get a sense
of a Peyton Place (ph) situation going around this governor, where even if
he`s not personally tied to the wrongdoing, he seems to have very bad
judgment in the people he hires and trusts.

SCHULTZ: What do you think this does to the support for his recall
effort, both ways?

NICHOLS: I think it feeds into it, Ed. Because across Wisconsin,
there are many, many people that are concerned about the collective
bargaining issues that you and I have talked about for a whole year now.
But there are also folks in the middle who might not be that concerned
about union rights, but are concerned about whether their governor is an
ethical person, whether he`s working within the law, and frankly whether
he`s hiring people that are ethical and work within the law.

So it does broaden the concerns about Scott Walker.

SCHULTZ: John Nichols, great to have you with us. It`s a story to
follow. And it`s just another chapter in Wisconsin politics. It just
never stops. Thanks so much.

Governor Mitch Daniels is hoping to take out unions in Indiana. State
Democratic Leader Pat Bauer is frying to stop the radical governor. It
never stops in the Midwest, does it? He joins me next.

(COMMERCIAL BREAK)

SCHULTZ: Well, it`s already happened in Wisconsin and Ohio. And now
Republican Governor Mitch Daniels in Indiana has his eye on killing unions
in that state. What stands between Daniels and his goal? Well, about 40
Democratic lawmakers.

It`s the same old story. The latest story out of the Hoosier State is
part of a nationwide effort to attack workers, weaken unions, and
ultimately put a Republican in the White House. Mitch Daniels and
Republican state lawmakers are doing their part by making so-called right
to work legislation a top priority.

Currently, 22 states have right to work laws. These laws prohibit
businesses and unions from requiring workers to pay dues to a union. Now,
a right to work bill was introduced last year, but stalled as Democrats
fled the state for five weeks. Yesterday was supposed to be the first day
of a new legislative session.

Instead, the Democratic minority managed to stall business once again
by staying away from the House floor. And today they did it again. Here`s
the report from WTHR.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: For the second consecutive day now, Democrats in
the House of Representatives have prevented a quorum call on the floor of
the House. Speaker Brian Bosma (ph) tried to convene lawmakers for
business twice today, to no avail. It takes 67 members in all to conduct
business on the floor of the House. And only 64 are showing up.

Some Democrats did show up for various committees. But once again,
not enough to conduct business.

(END VIDEO CLIP)

SCHULTZ: Joining me now is Pat Bauer, Indiana House Democratic
leader. Mr. Bauer, good to have you with us tonight. How long --

STATE REP. PAT BAUER (D), INDIANA HOUSE DEM. LEADER: Hi, Ed.

SCHULTZ: You bet. How long can you keep this up? I mean, will you
continue to stall this until people put pressure on lawmakers, telling them
they`re doing the wrong thing? What`s the game plan here?

BAUER: We can only try, Ed, one day longer, one day stronger. But
there`s a lot of pressure on my members. They manage to do it for five
weeks. But that cost them quite a bit in fines and other trouble.

But we`ve had a time for the people to learn about our right to work.
But at least still 50 percent don`t understand it. But the way their
schedule is now, they want to ram it through the House in one short week,
and do likewise in the Senate. And that`s -- for a controversial bill like
this, that`s probably not only unprecedented, but it sure shows they`re
afraid of public -- the public getting to know what right to work stands
for: less pay and less workplace safety and maybe no health care.

SCHULTZ: OK. Where do you think the people of Indiana stand on this?
I mean, have there been any measurements taken, any polls out there? Do
you have a good grip on where the public is in your state?

BAUER: The most impartial poll by Ball State University showed that
50 percent of the people don`t even know what right to work is. And once
they learn about it, most of them are against it. But that`s why we want
to have time so the people can understand what will happen --

SCHULTZ: So --

BAUER: It will make Indiana one of the least attractive places to
have jobs in the country. We`re now the fifth most attractive in the
country.

SCHULTZ: Sure.

BAUER: And they want to make us like Mississippi, which is the 50th,
least attractive.

SCHULTZ: I mean, that`s very telling. Half the people in your state
don`t even know what right to work means, although you`ve got a bunch of
lawmakers that think that they just absolutely have to have it that way.

BAUER: Yes, sir.

SCHULTZ: Would you call for a full walkout? Are you willing to do
that?

BAUER: Well, that`s very difficult to do. I think what we have to do
is try to slow down the process, and continue to try to draw attention to
what the bill is. And that`s what we`re doing. And find other ways to
bring the public involved.

We are going to have voluntary local hearings on our own, because we
asked them to have hearings around the state and they refused. They are on
this very fast track. So we`re going to have our own this weekend, to try
to do it on our own.

SCHULTZ: OK. Well, what is happening around the country I think is
that you have got all these right to work legislation laws being put up,
proposed in many of these states. They`re just trying to deplete the
infrastructure of all of the unions, deplete their funds, and of course
hurt the Democratic infrastructure.

And of course it will deplete wages as time goes on. Pat Bauer --

BAUER: The rich get richer.

SCHULTZ: You know it. Thanks, Mr. Bauer. Appreciate your time.

That`s THE ED SHOW. I`m Ed Schultz. You can listen to my radio show
at Sirius XM Radio Channel 127, Monday through Friday, noon to 3:00 p.m.
Follow me on Twitter @EdShow and @WeGotEd.

Rachel Maddow, her show starts right now. Rachel, good evening.

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

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