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'The Last Word with Lawrence O'Donnell' for Tuesday, January 17, 2012

Read the transcript to the Tuesday show

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Guests: Howard Fineman, Wendy Schiller, David Cay Johnston, Robert Reich, Cami Parker, Caressa Kisses, Dennis Hof

LAWRENCE O`DONNELL, HOST: So the richest guy running for president
pays the lowest tax rate of all the candidates, including the other rich
guys. And after the evangelical meeting last weekend where Rick Santorum
emerged as the favorite of social conservatives, pimps and prostitutes have
now chosen their favorite Republican candidate for president, and they`re
here tonight to give him their official endorsement.

And later, we`ll talk to Michelle Kosinski at the scene of the Italian
cruise ship disaster.

(BEGIN VIDEOTAPE)

CHRIS MATTHEWS, "HARDBALL" HOST: Mitt Romney`s tax rates.

TAMRON HALL, MSNBC ANCHOR: He told reporters this morning that if he
was the nominee, then he would release his tax documents, but not now.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: What`s the effective rate
I`ve been paying? It`s probably closer to the 15 percent rate than
anything.

DAVID CORN, MOTHER JONES: He says he`s paying close to 15 percent?
Maybe he`s paying underneath 15 percent.

UNIDENTIFIED MALE: There is a suggestion that he`s not paying the top
35 percent rate.

UNIDENTIFIED MALE: There`s a reason that these been loathe to do so,
because we now know it is going to show him paying a lower tax rate than
certainly lots of people who is significantly more wealthy than, and that`s
not going to sit well.

UNIDENTIFIED MALE: It`s going to be hard for him to defend in the
campaign going forward. That`s the reason he doesn`t want to disclose it.

ROMNEY: If I become our nominee, and what`s happened in history,
people have released them in about April of the coming year.

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: I think it was a tradition
that was nominated by then presidential candidate George Romney.

ROMNEY: That`s probably what I do.

UNIDENTIFIED MALE: Romney seemed a little rattled.

ALEX WAGNER, MSNBC HOST: It was clear in my mind he was uncomfortable
answering it.

UNIDENTIFIED MALE: Will he end up releasing those tax returns by
April and what will he end up releasing, one year, five year, 10 years`
worth?

HALL: There`s not guessing. We know this guy has cash. Come on.

ROMNEY: And then I get speaker fees from time to time, but not very
much.

MATTHEWS: Not very much? That not very much amounted to about
$374,000 a year. About 9 1/2 times what an average American makes.

UNIDENTIFEID MALE: He just showed the old Romney we`ve seen time and
time again.

CORN: He`s the total 1 percent package.

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

(END VIDEOTAPE)

O`DONNELL: Today, Democrats announced that President Obama`s
convention speech in Charlotte, North Carolina, on September 6th has been
upgraded from the Time Warner cable arena to the 74,000-seat Bank of
America stadium. This will be the president`s second open air stadium
presidential nomination acceptance speech.

Sources close to God report that he was inundated today with
Republican prayers for rain in Charlotte on the evening of Thursday,
September 6th.

Also today, Republican front-runner Willard M. Romney spent the day
talking about taxes, as Republicans want to do, but not in the way
Republicans want to.

(BEGIN VIDEO CLIP)

ROMNEY: In the prior races for president, the tradition has been the
nominee releases his tax returns in tax season, in April, and I know that
if I`m the nominee, people will want to see the most recent year. So
they`ll want to see the tax returns that come out in April. So rather than
sort of have multiple releases of tax returns, why, we`ll wait until the
tax returns for the recent year are completed and then release them.

(END VIDEO CLIP)

O`DONNELL: So, Romney is talking about releasing only his 2011 tax
return, which has not yet been written. That means he can write that tax
return with political convenience in mind. He can manipulate it to pay a
higher tax rate than he has been paying to make it look like he`s paying
more of his fair share.

That`s why White House Press Secretary Jay Carney said this.

(BEGIN VIDEO CLIP)

CARNEY: I think going back to 1976, this has been a very standard
tradition. And, obviously, we think it`s a good tradition, and that`s why
then-Senator Obama released his tax records going back, I think, six or
seven years when he was a candidate for president in the 2008 election
cycle. I think it was a tradition that was initiated by then presidential
candidate George Romney back in 1968, who released 12 years` of tax
records.

(END VIDEO CLIP)

O`DONNELL: You can expect Romney to make the mistake of trying to
release only his newest tax return, written with political intent, which
will then allow Democrats to continue to bash him for not releasing 12
years` of tax records like his father did in 1968 or at least the same
number of tax returns that President Obama has released.

Romney did offer something of a sneak peek at his tax returns today
when he addressed the question of what income tax rate he`s been paying.

(BEGIN VIDEO CLIP)

ROMNEY: What`s the effective rate I`ve been paying? It`s probably
closer to the 15 percent rate than anything, because my last 10 years, I`ve
-- my income comes overwhelming from investments made in the past rather
than ordinary income or rather than earned annual income. I got a little
bit of income from my book, but I gave that all away. And then I get
speaker`s fees from time to time, but not very much.

(END VIDEO CLIP)

O`DONNELL: The fact that Romney finds his speaking fees laughable is
yet another indicator of how big an income we would discover in his tax
returns. The speaking fees that he calls, quote, "not very much," are what
the rest of the world calls wicked huge.

Romney financial disclosure forms already show that Mr. Romney earned
$374,327.62 in speaker`s fees from February of 2010 to February of 2011 at
an average of $41,592 per speech, or to put it in hourly wage terms,
$41,592 per hour.

Newt Gingrich saw something to be thrilled about in Romney`s claim
that he pays about 15 percent in income taxes.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: Since my flat tax is 15
percent, I`m thrilled at the idea that Mitt, I assume, will endorse my flat
tax and have every American pay at the rate he pays. I think that will be
terrific.

(END VIDEO CLIP)

O`DONNELL: Joining me now, Brown University associate professor of
political science and public policy, Wendy Schiller, and AOL/"Huffington
Post" editorial director and MSNBC political analyst, Howard Fineman.

Thank you both for joining me.

Howard, we`ve seen an awful lot of politicians go down this road,
discovering that they had to release their tax returns. Romney now has
more than a toe in the water, at least about his 2011 returns. How is this
going to turn out?

HOWARD FINEMAN, MSNBC POLITICAL ANALYST: Well, it`s going to turn
out, I think, the way you predicted, Lawrence. I think on April 15th or
thereabouts, maybe a little after, Mitt Romney will release the best
possible version of this year`s taxes that he can, politically, and just as
you say, everybody will say, where are the rest? Let`s see the rest of it.

I`m constantly amazed at how lucky Barack Obama is, as a politician,
and now as a president. You could not find a more central casting person
or a more central casting issue for a lot of what Barack Obama wants to say
in the campaign, because one thing that Mitt Romney`s going to have to
explain is this whole business of why he only pays 15 percent. And the
reason is that under the law, if you`re in a partnership in an investment
firm, you get to pretend that you own the assets that you`re managing, and
therefore you only have to pay a capital gains tax rate. That is a dodge
that I think once explained, tens and tens of millions of Americans will
understand and be even more upset about than the rate itself.

We`re really opening all the envelopes and all the doors behind the
world of hedge funds and investment firms on Wall Street, which is not a
pretty sight, and one that Barack Obama, ironically, who got a lot of that
hedge fund money in `08, is going to be going after in this campaign.

O`DONNELL: Wendy Schiller, what is the history of this tax return
release? There isn`t a legal requirement that they do it. It`s talked
about as a tradition.

How far back does it go and how much trouble have different
politicians gotten into with the revelations of what`s in their tax
returns?

WENDY SCHILLER, BROWN UNIVERSITY: Well, I think it goes back, I think
as the president`s spokesman said, you know, to the mid-1970s,
approximately even the 1960s.

But I think when people get in trouble, it`s really not so much the
rate, although Romney`s really caused a lot of trouble with the rate. It`s
sort of where they get their income from, how they made their money.

And I think this is where the Romney narrative with capitalism is
running into the biggest problem, because he didn`t make his money
inventing anything, creating anything. He`s living off literally dividends
and interest and capital accumulation. I mean, he hasn`t really worked --
I mean, a real job, like most Americans have, in a very long time. So,
he`s been running for president.

So this is even more difficult for most Americans who are trying
desperately to scrape by and thinking about filing and paying their taxes
in April and that isn`t even money that`s coming from creating anything.
It`s simply living off wealth. And not paying a lot of taxes on wealth.

So, it`s just sort of the worst of all financial crimes for somebody
who`s running for president.

And let`s put this in perspective. He made about $41,000 per speech.
The median income for most persons is $50,000 a year, and Romney made that
in about an hour.

So I just don`t understand how he doesn`t think this is all going to
be very damaging in trying to connect to voters when he`s running for
president of the United States. Is this the best the Republican Party can
do in terms of people who can understand what it`s like to try to work for
a living?

O`DONNELL: Also joining the panel now is Pulitzer Prize-winning
"Reuters" columnist David Cay Johnston, one of the best tax reporters I
know out there.

David, let`s see what you can divine from what we know so far. Talk
about what it might mean that Mitt Romney thinks he`s paying an effective
rate of near 15 percent.

DAVID CAY JOHNSTON, REUTERS: Well, he probably is. He probably gives
away a good deal of his earned income, like those fees, as tithing to the
church. As a good Mormon, I`m sure he gives the church at least 10 percent
of his income.

I think, Lawrence, the real problem is that he probably still has some
carried interest, that is, he has money he made on which he has never paid
taxes. And so, I think we have a reasonable issue here in saying -- well,
where is your money? Is it parked offshore, and how much of it have you
not yet paid taxes on? Those would be very crucial issues.

And, by the way, I would expect Romney to love the Gingrich plan,
because he says he lives mostly off dividends. Under Gingrich`s plan,
dividends would be tax free.

O`DONNELL: Let`s listen to what Bill O`Reilly had to say about this
tonight. This is a rich guy, Bill O`Reilly, who no doubt pays a higher
income tax rate than Mitt Romney since so much of his income comes from FOX
News salary.

Let`s listen to O`Reilly`s take.

(BEGIN VIDEO CLIP)

BILL O`REILLY, FOX NEWS: Romney has nothing to be ashamed of. He`s
paying what the law requires and it`s a smart law. What liberal America
does not seem to realize is that risk/reward. You invest, you might lose.
If your winnings are taxed at a higher rate, fewer people will invest.

Are we all getting this? Even you, Warren Buffett?

(END VIDEO CLIP)

O`DONNELL: David, Warren Buffett says that the tax rate has never had
anything to do with his investment decisions. O`Reilly seems to think it
has everything to do with.

JOHNSTON: Well, Bill O`Reilly`s not a capitalist, he`s an
entertainer, and he does pay the highest rate, which seems to grieve him a
great deal. I don`t know any of the businesspeople I know, CEOs, owners of
companies who tell me that tax rates determine what they`re going to do.

As Paul O`Neill, who was the treasury secretary at the beginning of
the George W. Bush administration said, you make the profit and then you
worry about the taxes.

But in Romney`s case, he wasn`t creating a business. He was -- in
many cases -- he was reaching into companies, putting a small amount in,
borrowing, and then pulling out a big dividend and leaving a weakened
company behind. That`s going to dog him. The fact that one of the steel
companies ended up with a failed pension is going to dog him.

And I really think the most important question is: how much of that
money went offshore without ever being taxed?

O`DONNELL: Well, we`ve all seen what the Republican super PACs have
started to do to Mitt Romney in South Carolina.

Let`s take a look at what the Democratic super PAC, Priorities USA,
has done with what it now knows about Mitt Romney`s tax returns.

(BEGIN VIDEO CLIP)

NARRATOR: Romney is worth as much as $250 million, but he only paid
about 14 percent in federal taxes last year. That`s less than what many
middle class Americans families pay -- American families who are struggling
to make ends meet.

And while Romney doesn`t want millionaires like him to pay a nickel
more, he doesn`t see the big deal with letting taxes go up by $1,000 for
hard-working Americans.

That`s the Romney rule -- lower taxes for millionaires like Mitt, more
pain for middle class folks like us.

(END VIDEO CLIP)

O`DONNELL: Howard Fineman, we`re obviously going to see a lot more of
that if Mitt Romney`s the nominee, but if David is right and there`s some
offshore element to add into that kind of advertising campaign, what do you
judge the effect of that to be in a general election?

FINEMAN: Well, that will deepen the criticism. I see the point here.
There are two questions. There`s the one I was talking about in terms of
carried interest, in terms of being part of the partnership, but not really
being the owner of the asset, which allows you to claim capital gains, tax
rate. And the other might be the offshore stuff.

Look, this is what, this is what all the other Republicans,
ironically, have put themselves in the position of saying. If you nominate
this guy, they`re speaking to the Republican voters -- this is going to be
a defining issue, if not the defining issue.

And, of course, the other thing with Mitt Romney, having covered him
going back to `94, when he ran for the senate against Ted Kennedy and
covering him on the campaign trail, he`s not really, at least as a public
figure, the most personable and warm of characters, Lawrence. So maybe
some other political personality could either lessen or soften or somehow
talk his or her way out of being Richie Rich.

Mitt Romney has a very hard time doing that kind of thing. And so,
he`s just put himself into a tighter straitjacket than he can perhaps stand
over the next six months.

O`DONNELL: Wendy Schiller, I want you to consider an element in a
"Washington Post" poll that was released today. It asked voters: what do
you think is the bigger problem in this country -- unfairness in the
economic system that favors the wealthy or overregulation of the free
market that interferes with growth and prosperity?

Fifty-five percent say that unfairness in the economic system that
favors the wealthy is the worst problem, overregulation, only 35 percent
saw that. Those numbers do not bode well for Mitt Romney going into a
general election with this kind of tax return information out there.

SCHILLER: No, I don`t think they do, but they don`t bode well for
this Republican message, which is to get the government out of the economy.
We shouldn`t have people making investment decisions based on the tax code.
You and I have heard that many, many years. No decision on the tax code.

If this is free enterprise, you want capitalism, pure capitalism? And
then don`t rig the tax code to let rich people get richer. I mean, there`s
an inherent contradiction in this Republican Party message that is not just
Romney`s message, it`s the House GOP`s message, it`s the Republican`s and
the Senate`s message.

It`s the Republican Party message. And I don`t know when they`re
going to wake up and figure out that it`s not going to resonate, because if
the government can`t actually help people find a job or the government
shouldn`t, because the federal government shouldn`t be so big, then what is
it that they`re going to do for the American people when they gain control
of the White House.

O`DONNELL: Wendy Schiller, Howard Fineman, and David Cay Johnston --
thank you all very much for joining me tonight.

FINEMAN: Thanks, Lawrence.

SCHILLER: Thank you.

O`DONNELL: Last weekend, evangelical leaders chose to back Rick
Santorum. Tonight, here on the last word, the favorite presidential
candidate of the legal pimps and prostitutes of Nevada will be revealed by
America`s most famous pimp and a couple of his employees.

But up first, Stephen Colbert`s super PAC may be a joke, but Robert
Reich is dead serious about trying to stop the super PAC abuse that the
Citizens United ruling has unleashed.

And later, Michelle Kosinski will join me from the scene of the
Italian cruise ship disaster. You`ll hear the chilling audiotape of the
captain refusing to return to the ship when he was ordered to do so.
That`s coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JON STEWART, COMEDIAN: I`m now running Stephen Colbert`s super PAC
and the vast fortune that that entails. But here`s the problem: I don`t
know what to do with the money, and Stephen Colbert, by law, cannot
coordinate with me. Do I use all this money that individuals and/or
corporations who believe deeply in Stephen Colbert have donated to create
an advertising campaign around Colbert`s strengths? Or do I buy this from
the estate of Elizabeth Taylor? Both are legal! Both are legal, but only
one brings out my eyes.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

NARRATOR: The people of South Carolina are frustrated. It`s less
than a week before the election and there`s still no candidate for us.

Plus, the economy.

Thankfully, there is one name on the ballot that stands for true
Americanimity, Herman Cain. Americans for A Better Tomorrow Tomorrow
believes that a vote for Herman Cain is a vote for America.

(END VIDEO CLIP)

O`DONNELL: And a vote for Herman Cain is a vote for Stephen Colbert.

Now, try to follow this. That is an ad paid for by Stephen Colbert`s
super PAC, which is now run by Jon Stewart, A Better Tomorrow Tomorrow,
urging voters to vote not for Stephen Colbert, but for Herman Cain, because
it is too late for Stephen Colbert to get on the ballot in South Carolina,
and because Herman Cain`s name is on the ballot in South Carolina, the
Colbert super PAC is urging a vote for Herman Cain as a way of expressing
support for Stephen Colbert`s possible run for the presidency.

This ad comes after Colbert gave his super PAC to Jon Stewart.

Stephen Colbert`s super PAC has been a joke from the beginning and is
now building absurdity on absurdity, but super PACs have had a deadly
serious impact on this presidential campaign already. So far, they`ve
spent more than $27 million this campaign season, according to the Federal
Election Commission filings.

During last night`s debate, Rick Santorum confronted the man with the
biggest super PAC, Mitt Romney, over this ad.

(BEGIN VIDEO CLIP)

NARRATOR: And he even voted to let convicted felons vote.

(END VIDEO CLIP)

O`DONNELL: Santorum called that line a lie and Romney responded in
what has become his typical super PAC rebuttal.

(BEGIN VIDEO CLIP)

ROMNEY: I did not have a super PAC run an ad against you. That`s the
-- as you know, that`s something that`s completely out of the control of
candidates.

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: What he`s saying is the ad
that says that I said -- or that I voted to allow felons to vote is
inaccurate. And it is inaccurate. And if I had something in the super PAC
that was supporting me that was inaccurate, I would go out and say, stop
it. That you`re representing me and you`re representing my campaign, stop
it.

(END VIDEO CLIP)

O`DONNELL: Joining me now from Berkeley, California, a man who takes
super PACs very seriously, Professor Robert Reich, the chair of the Common
Cause National Governing Board.

Bob, thank you very much for joining us tonight. This is all the
product -- the predictable product, I guess, of the Citizens United ruling
by the United States Supreme Court, this out-of-control super PAC
environment. Do you think Stephen Colbert is helping by showing how crazy
this has become or is he letting people relax about it and thinking it`s
just kind of funny and turning it into something too light?

ROBERT REICH, FORMER LABOR SECRETARY: Well, Lawrence, never
underestimate the affect of satire in politics. I think it does have a
positive effect, but when you come right down to it, this is not a joke. I
mean, super PACs, money in politics, completely out of control right now.
And it all does go back, not just to what the Supreme Court did two years
ago, 5-4 majority, Citizens United against the Federal Elections
Commission, saying essentially that corporations are people, and then also
combined with the prior Supreme Court case that said money is speech.

Well, if corporations are people and money is speech, the net effect
is to open the floodgates to money in politics right now in a way that we
haven`t seen in this country for over 100 years. And given that we are
also in a country right now where a very, very large percentage of total
income and wealth is going to a smaller and smaller number of people in
this country, they have an open invitation. And you`ve seen in the
Republican primary some of them have taken up that invitation to pour as
much must be as they want into these super PACs that are secret.

I mean, right now, nobody knows who is actually putting the money
where and run countless, a huge amount of the negative advertising. Well,
if you`ve seen it in the Republican primaries, wait until the general
election. You ain`t seen nothing yet.

I mean, essentially -- essentially we`re losing our democracy. I
don`t want to be overly dramatic about it, but that is the only thing that
I can say. We are -- we have to take our democracy back, Lawrence.

O`DONNELL: And Colbert has handed the PAC over to Stewart so he can
say that Romney line, "I have no control over this super PAC." I mean,
he`s doing everything that highlights what`s wrong with these super PACs.

Where do we begin to try to get control of this? When you talk about
taking the country back, how would you begin that?

REICH: Well, Common Cause, the organization of which I am chairman of
the board, and other organizations, grassroots organizations, are now
launching a citizens` movement across the country to have states really use
referenda, initiatives, instructions to congress to get a constitutional
amendment to reverse Citizens United and also to make sure that money can
be restricted in campaigns.

We probably do need a constitutional amendment. That`s the conclusion
that many lawyers and constitutional experts have come to.

The Supreme Court -- unless we get a radically different Supreme Court
soon, and we`re probably not all that soon, the way to do it, the most
direct way to do it, it`s going to take some time, but the most direct way
to do it is to have a constitutional amendment.

O`DONNELL: Constitutional amendment takes a long time, but someone
has to take that first step.

Robert Reich, thank you very much for joining us tonight.

REICH: Thanks, Lawrence.

O`DONNELL: In tonight`s "Rewrite," we`ll examine the shocking
revelation by the "Associated Press" today that the strongest opponent of
government spending in the Congress, Ron Paul, has been flying first class
at government expense. The story`s more shocking than you think.

Also ahead, as the death toll in the cruise ship disaster off the
coast of Italy nearly doubled today, we will hear the shocking audiotape of
the captain after the accident. Michelle Kosinski is covering the story in
Italy at the scene and she`ll join me, coming up.

(COMMERCIAL BREAK)

O`DONNELL: The search for survivors continued off the Tuscan coast in
Italy today, inside the sunken hull of the Costa Concordia, which ran
aground Friday. But only more victims were found. The death toll nearly
doubled, as Italian naval divers discovered the bodies of five more people,
all wearing life vests.

More than 20 are still missing. The captain, who is being blamed for
the deadly accident, appeared in court today on charges of manslaughter.
And for the first time, we`re getting a clearer picture of that captain`s
actions the night the ship ran aground, through newly released audiotapes.

NBC`s Michelle Kosinski joins me from the site of accident. Michelle,
what is the latest development there?

MICHELLE KOSINSKI, NBC NEWS CORRESPONDNET: Hi, Lawrence. Today,
searchers blasted their way through the hull, determined to get to every
cabin, but there was no joyful rescue. In fact, no sign of life on board.
At the same time, the ship`s captain was being criminally charged.

The man who while passengers were still fighting for their lives to
get off that ship, was ordered to get back on, but it seems he never did.

(BEGIN VIDEOTAPE)

KOSINSKI (voice-over): A loud blast midday was not an accident. But
the fastest way inside the Concordia`s hull. This video was shot by divers
this afternoon, urgently making their way through holes they punched. Then
deep inside, the murky silence that Friday night was the start of a
vacation.

They hammer their way through the dim maze of rooms, under 30 feet of
water at times, searching for victims.

Today, they found them, four men and a woman beneath the water, all
wearing life vests. The number of missing still more than 20, including
Jerry and Barbara Heil from Minnesota. Their family says they put four
kids through college, retired, and finally had the means to see the world.
Beyond excited about their dream Mediterranean cruise that lasted only
three hours.

As the search continued, the ship`s captain, Francesco Schettino, was
in court, charged with manslaughter, causing the wreck, abandoning ship,
which an audio recording now reveals. In a heated conversation from off
the ship Friday night, a few hours after the accident, with a furious Port
Authority Captain Difalco (ph).

(FOREIGN LANGUAGE)

KOSINSKI: Schettino gave several reasons why he says he`s staying put
near the ship, quote, coordinating.

(FOREIGN LANGUAGE)

KOSINSKI: Schettino claims he`s going, but prosecutors say he never
did return, even as passengers fought to escape that stricken ship.

(END VIDEOTAPE)

KOSINSKI: After spending days in jail, today the captain was released
and placed under house arrest. And his attorney claims he may have saved
dozens of lives if not more by working quickly to move the ship on to the
beach. And otherwise it might have sunk into deeper water.

So it could have been a bigger tragedy, according to his attorney.
But prosecutors say otherwise. Lawrence?

O`DONNELL: Michelle, it all seems to come down to this captain. Were
there any witnesses of his behavior immediately afterwards, when he was
onshore? Any indication of drunkenness or anything like that?

KOSINSKI: Well, today there were reports in the Italian press. And
there are all kinds of reports and speculation and stories about things
that may have happened in his past, on other ships. None of that`s really
confirmed at this point.

We kind of go by what prosecutors tell us. We don`t really know how
much of this is substantiated. But we`re told, according to these reports,
that he will be drug tested. So far, you know, we haven`t had any
indication that that has actually happened. But there`s a reasonable part
of any investigation of this type, of this magnitude.

But as for his behavior, it seemed like when you listened to those
tapes, he`s saying that he`s right at the base of the ship, that he got
off, but he stayed with the vessel, which was obviously not the right thing
to do. But he`s claiming he did not abandon the ship. We haven`t really
had too many accounts, though, of, you know, passengers speaking with him.

His attorney says that he`s distraught over all this. Really sickened
by the loss of life.

Lawrence?

O`DONNELL: And Michelle, what are the rescuers saying now about the
possibility of those 20 or so who still remain missing? This is a long
time to remain missing in a situation like this.

KOSINSKI: It is. You know, it`s tough to say this. It`s tough to
hear it said. It`s tough to report it, but they are of the mind-set now
that they think it`s unlikely that anybody will be found alive. Just
because they`ve been on it for days. They`ve gotten in there.

They haven`t seen any signs of life. That said, look at the size of
this thing, more than 1,500 state rooms. Air pockets could be all over the
place. It`s been so difficult to get in there, a lot of it is submerged.
It`s dangerous to get on there. And the waves keep moving the ship.
There`s always that possibility, they say, you know, always wanting to hold
out that shred of hope that somebody might be alive in there.

And as we`ve seen in other tragedies of enormous magnitude, sometimes
victims are found a week, two weeks later. So I guess you never know. But
it`s really upsetting for people on this tiny island, who work so hard to
save those coming to shore,, to still see that sitting there.

And you look at it, and you just think, is it really possible that all
of this could have been caused by one decision by one person.

O`DONNELL: It`s an extraordinary image behind you, Michelle, to know
that there are those missing 20 still out there in that hulk, tilted over
there in the ocean. It is just an extraordinary thing to see. And your
reporting on it has been extraordinary. Thank you very much, NBC`s
Michelle Kosinski, for joining us tonight.

KOSINSKI: Thank you.

O`DONNELL: Up next, if there`s one thing Ron Paul has been consistent
about, it is his intense opposition to government spending. Than why has
he been flying first class at government`s expense? There`s a lot more to
this story than has been reported so far. And that`s next in the Rewrite.

And if Evangelical leaders can unite to support one candidate in the
Republican party, why can`t prostitutes and pimps? It turns out they can.
They`ve made their choice and America`s most famous pimp and two of his
employees are here to tell us who they`re endorsing for the Republican
nomination for president of the United States.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

REP. RON PAUL (R), PRESIDENTIAL CANDIDATE: On both sides of the
aisle, they like to spend money, but for different reasons. And they have
been bipartisan too often. They get together and spend all this. They
should be bipartisan and cut each of their own little programs that they
like.

But there`s an addiction here. I don`t think anything`s going to
happen until a lot of these people down here are willing to go into rehab.

(END VIDEO CLIP)

O`DONNELL: For the whole of his political career, Congressman Ron
Paul has been arguing for massive cuts in federal government spending. His
consistency, but not his reasoning, on government spending has been
flawless. He`s voted against every unbalanced budget and every increase in
the debt ceiling throughout his career in the House of Representatives.

But his anti-government spending consistency was broken today by this
Associated Press headline: "Paul`s flights fly in face of cut-spending
theme."

The Associated Press report says, "Ron Paul has been spending large
amounts on airfare as a congressman, flying first class on dozens of
taxpayer-funded flights to his home state. The practice conflicts with the
image that Paul portrays as the only presidential candidate serious about
cutting federal spending."

The AP goes on to present a detailed study of Ron Paul`s flights to
and from Washington at government expense. "Paul flew first class on at
least 31 round-trip flights and 12 one-way flights since May 2009, when he
was traveling between Washington and his district in Texas, according to a
review by the Associated Press of his congressional office expenses."

well, that`s it. Case closed. Time to Rewrite the image of Ron Paul
from an anti-government spending fanatic to an anti-government spending
fanatic who is in favor of lavish government spending on his first class
air travel. That`s what I intended this Rewrite to be, until our crack
research team here at THE LAST WORD contacted Congressman Paul`s
congressional office for more detail.

The congressman`s chief of staff, Jeff Dice, e-mailed us a few more
details. Congressman Paul "doesn`t purchase first class tickets for
congressional travel. He buys a refundable coach ticket at the federal
government rate. This fact was lost in the headline of the AP story."

It wasn`t just lost in the headline of the AP story. It wasn`t
anywhere in the AP story. Anyone who read the AP story was led to believe
that Congressman Paul was buying first class tickets using congressional
funds. Paul`s chief of staff continued, "changes in the congressional
voting schedule are frequent. And if he bought a non-refundable ticket and
then didn`t use it, he would incur the expense or change fee personally.
That is, the U.S. House would not allow him to be reimbursed for a flight
he ultimately didn`t take."

I can attest from personal experience that that is the standard
practice in the Congress, in both the House and the Senate in both parties.
The government rate for official travel, which is available for purchase at
any time, up to and including the day of travel, is usually lower than
other airfares, except the fares that require advanced purchase and are
non-refundable.

Congressman Paul`s chief of staff said, quote, "he absolutely needs
the flexibility of a changeable ticket."

And I can tell you, that is absolutely true. Every member of Congress
does. Every member of every congressional staff does. New congressional
staff members are discouraged from looking at the calendar for the recess
dates and then buying advanced purchase non-refundable tickets for the day
after the scheduled recess date, because Congress almost never recesses on
the day it is scheduled to recess.

Watching 24-year-olds in a senator`s mail room have to throw away
their non-refundable plane tickets home after the Senate stays in session
as Christmas Eve approaches is always a sad thing to behold. And what
about all those first class seats Ron Paul has been enjoying?

His chief of staff explains, "he upgrades to first class when
available, not always, using his frequent flyer miles with Continental
Airlines, which he flies frequently from Houston to Washington, thus
generating many such miles."

So the first class seats don`t cost the government one additional
penny above a regular government coach rate.

I so wanted the Associated Press take on Ron Paul`s first class travel
to be true. It`s nothing personal about Ron Paul. I just love to find
inconsistencies in the behavior of anti-government spending conservatives,
like Michele Bachmann`s family making hundreds of thousands of dollars in
farm subsidies, the ultimate in unjustifiable government handouts.

But this is not that. Ron Paul has done nothing inconsistent with his
rhetoric in his congressional travel. It`s the Associated Press story that
needs to be Rewritten. In place of the headline "Paul`s Flights Fly in the
Face of Cut Spending Theme," it should say something like, "Paul`s
Congressional Flights Home Just Like Everyone Else`s."

But I, for one, never would have read that story. And the AP probably
wouldn`t have published it.

(COMMERCIAL BREAK)

O`DONNELL: Evangelical leaders held an urgent summit at a Texas ranch
this weekend and threw their support behind Rick Santorum as the
conservative alternative to Mitt Romney. Meanwhile, the pimp and
prostitute coalition has found their favorite among the Republican
presidential candidates.

(BEGIN VIDEO CLIP)

CHRIS WALLACE, FOX NEWS ANCHOR: Are you suggesting that heroin and
prostitution are an exercise of liberty?

REP. RON PAUL (R), PRESIDENTIAL CANDIDATE: Well, you know, I probably
never used those words. You put those words someplace. But, yes. In
essence, if I leave it to the states, it`s going to be up to the states.
Up until this past century, you know, for over 100 years, they were legal.

What you`re referring, there are strict rules on freedom of choice of
this sort. Because you can`t hurt other people. You can`t defame other
people. But, yes, you have a right to do things that are very
controversial.

(END VIDEO CLIP)

O`DONNELL: Joining me now from the Moonlight Bunny Ranch in Nevada,
owner and proprietor and HBO star Dennis Hof and two women who work for
him, "Hustler" centerfold Cami Parker and Miss Caressa Kisses.

Dennis, thank you very much. And women, thank you for joining me
tonight. Dennis, while the Evangelicals were having their discussion down
at that ranch in Texas, at your ranch, you were discussing with your
employees who you want to support for president. And who is that?

DENNIS HOF, MOONLITE BUNNY RANCH OWNER: Well, here`s what happened.
You know, the girls love a good caucus. And I polled all the girls, all
500 girls, and it came up with this. We are in the sex business, so we
don`t want anybody to tell us who to sleep with or what to read or watch.
So typically we have to vote for Obama.

But when Obama signed the bill where you could start with the
legalization of consumption of horses, they lost them all. They`re not
going to vote for Obama unless Hillary`s on the ticket.

So we polled the girls. Went down the Republicans. Newt Gingrich, we
like Newt, even though he`s a cheater. He`s a big cheater, in fact. But
we can`t vote for him. We can`t trust him. In fact, we do have a Gingrich
party here. When you`re with your bunny, our lawyers will file a lawsuit
and divorce your wife. So we`re doing that.

So we went for Ron Paul. And because Ron Paul is for state`s rights,
and that`s why prostitution is legal in certain parts of Nevada. And so we
went for Ron Paul. And we`re pimping for Paul, meaning we are supporting
Ron Paul.

O`DONNELL: And Caressa, I know pimps can be very persuasive people.
Did you come to this decision to support Ron Paul on your own?

CARESSA KISSES, MOONLITE BUNNY RANCH: Yes, I did. I love, on a
national level, that he served in the Air Force and his medical background.
I really believed that he cares genuinely for people`s lives. He takes
them in his own hands.

On a personal level, he wants to back the Internet staying free, which
could definitely cost me and the industry I`m in. And again, state rights,
I have a job because of state rights. So there`s so many interests that he
has.

He`s from Texas. I`m from Texas. I think that he is a valiant man of
honor and integrity. And I think he`ll do a wonderful job for this
country.

O`DONNELL: And Cami, he may be in favor of the states legalizing
prostitution. But he also said this in 1990. And I wonder if it shakes
your support for him. He said about Martin Luther King Day, "boy, it sure
burns me to have a national holiday for that pro-communist philanderer,
Martin Luther King. I voted against this outrage time and time again as a
congressman. What an infamy that Ronald Reagan approved it. We can thank
him for our annual hate whitey day."

Does that bother you at all, Cami?

CAMI PARKER, MOONLITE BUNNY RANCH: Well, of course. And you know,
nobody`s ever going to agree with everything that somebody says, and every
point that he says. But I feel really strongly about his support for
states` rights and freedom of choice.

O`DONNELL: All right. Dennis, Cami, and Caressa, thank you very much
for joining us from the ranch in Nevada. Thank you very much.

(CROSS TALI)

OK. You can have THE LAST WORD online at our blog,
TheLastWord.MSNBC.com.

END

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