updated 1/20/2012 11:53:57 AM ET 2012-01-20T16:53:57

Guests: Jonathan Alter, E.J. Dionne, Jim Moore, Richard Wolffe, Joy-Ann Reid, Krystal Ball, John
Fugelsang

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

And we have some breaking news off the top. Based upon information
from the Iowa Republican, Chuck Todd, NBC News, will mark Rick Santorum as
the winner of the Iowa caucus. Well, I told you so.

I just have to say, if you are a Democrat, today is the best show in
the Republican race, wasn`t it?

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

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What will you do to support the 99 percent, seeing
as you`re a part of the 1 percent?

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: Let me change something.
America is great nation. America`s right and you`re wrong.

SCHULTZ (voice-over): America`s right, unless you want to put your
money in the Cayman Islands.

The disaster for Mitt Romney continues. Newt is now ahead in the
polls, even though his ex-wife is taking shots at him.

MARIANNE GINGRICH, NEWT GINGRICH`S EX-WIFE: He was asking to have an
open marriage and I refused.

SCHULTZ: E.J. Dionne and Jonathan Alter have all the latest on the
chaos in Carolina.

Rick Perry makes the announcement we`ve all been waiting for.

GOV. RICK PERRY (R), TEXAS: Adios, mofo.

SCHULTZ: Tonight, we bid farewell to the Texas governor.

Mitt Romney wanted to let General Motors go bankrupt. Today, the car
company is back to being number one on the planet.

Good news on the economy means good news for the president. And we`ll
tell you all about it.

And Stephen Colbert is at it again. We`ll bring you the latest.

UNIDENTIFIED MALE: I`ve had it with these money grubbing super PACs
messing with our Monday to Friday elections.

(END VIDEOTAPE)

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

All of a sudden, 24 hours has become an eternity in this presidential
campaign for the Republicans. Things are a lot different today than they
were when the candidates woke up this morning. Six new polls have been
released since the Republican debate on Monday night.

They all show a sizable bump for Newt Gingrich. Mitt Romney only
leads Gingrich by about one percentage point when you average all the polls
together -- three polls have Gingrich winning. Public Policy Polling gives
Gingrich the biggest margin with a six-point lead over Mitt Romney.

Gingrich`s debate performance clearly appealed to Republican voters in
South Carolina. Conservative outlets like the "Weekly Standard" are giving
the Tea Party credit for Gingrich`s turn around.

Today, one of the Tea Party`s favorite candidates got out of the race
and supported Newt Gingrich.

(BEGIN VIDEO CLIP)

PERRY: I`ve always believed the mission is greater than the man. As
I`ve contemplated the future of this campaign, I have come to the
conclusion that there is no viable path forward for me in this 2012
campaign. Therefore, today, I am suspending my campaign and endorsing Newt
Gingrich for president of the United States.

(END VIDEO CLIP)

SCHULTZ: I thought he said he`d never quit.

Perry`s endorsement is a big deal for Newt Gingrich. Newt already has
a sugar daddy. He got a $5 million donation from a billionaire casino
owner Sheldon Adelson. Now, he has potential access to Rick Perry`s big
donors. Sarah Palin gave Perry a thumb`s up on her Twitter page. She
called Rick Perry a true American patriot for what he did.

Well, the news didn`t get any better for Mitt Romney. One of his wins
turned into a loss. Rick Santorum actually beat Romney in the Iowa
caucuses by 34 votes once all the votes were counted. Santorum said Romney
called him today and finally conceded defeat in Iowa.

But Romney`s campaign tried to save some face saying the result was a
tie. The Romney camp said, "Governor Romney called Santorum to
congratulate him on the Iowa results."

Mitt Romney is now 1-1. His one victory, I guess you could say, was
when he was playing at home in New Hampshire. Romney is on the verge of
losing South Carolina.

So, what does all this mean? You can understand why Romney lost his
cool when a 99 percenter confronted him during a campaign stop today.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What will you do to support the 99 percent seeing
as how you are part of the 1 percent?

ROMNEY: Let me tell you something, America is a great nation because
we`re a United Nation. And those who try to divide the nation as you`re
trying to do and as our president is doing are hurting this country
seriously. The right course for America is not to divide America and try
to divide us between one and another. It`s to come together as a nation.

And if you got a better model, if you think China`s better, or
Russia`s better, or Cuba`s better, or North Korea`s better, I`m glad to
hear all about it.

America`s right and you`re wrong.

(END VIDEO CLIP)

SCHULTZ: Whoa!

The only actually good news for Mitt Romney today was a lady named
Marianne Gingrich. Newt Gingrich`s second wife told ABC News about details
of their marriage. She says her ex-husband does not have the character to
be president.

(BEGIN VIDEO CLIP)

M. GINGRICH: He was asking to have an open marriage and I refused.

BRIAN ROSS, ABC NEWS: He wanted an open marriage?

M. GINGRICH: Yes, that I accept the fact he has somebody else in his
life.

ROSS: And you said?

M. GINGRICH: No.

(END VIDEO CLIP)

SCHULTZ: What will Jerry Falwell say tonight if he were here?

ABC plans to air the full interview tonight. Newt Gingrich is trying
to win over hard core conservatives in South Carolina. These accusations
violate a lot of conservative values. How can Newt Gingrich overcome this?
Here`s how.

(BEGIN VIDEO CLIP)

PERRY: Newt is not perfect, but who among us is? The fact is, there
is forgiveness for those who seek God, and I believe in the power of
redemption, for it is a central tenet in my faith.

(END VIDEO CLIP)

SCHULTZ: Forgiveness and redemption carry a lot of weight with voters
in South Carolina. This is why Mitt Romney is in trouble. Romney is
trying to win over Americans while being Mr. 1 percent.

His tax records have become a liability on the campaign trail. Polls
show him slipping after a terrible debate performance on Monday. I think
the turning point was when Romney couldn`t provide a direct answer about
his income taxes.

(BEGIN VIDEO CLIP)

ROMNEY: I hadn`t planned on releasing tax records, because the law
requires us to release all of our assets, all the things we owned. That
I`ve already released, it`s a pretty full disclosure.

But you know, if that`s been the tradition, I`m not opposed to doing
that, time will tell. But I`m anticipating that most likely, I`m going to
get asked to do that around the April time period. And I`ll keep that
open.

(END VIDEO CLIP)

SCHULTZ: Don`t you get the feeling that this chaos in Carolina is
happening because Mitt Romney just can`t close the deal?

And he can`t wait to get out of that state fast enough. A week ago,
Romney -- everybody thought he was definitely going to be the nominee. And
that might be the case. But now, he could lose South Carolina and the door
could be open for Gingrich to win other states.

And notice how today in the news cycle nobody`s talking about Ron
Paul. He just seems to be the other guy in all of this. South Carolina
primary`s on Saturday. Things could still get worse for Romney.
Saturday`s a lifetime away in this campaign.


I`m joined tonight -- or get your cell phones out. We want to know
what you think. Tonight`s question, which is a bigger problem, Mitt`s
taxes or Newt`s infidelity bomb shell? Text A for Mitt`s taxes, text B for
infidelity bombshell, to 622639. Or you can go to our blog Ed.MSNBC.com
and leave a comment there. We`ll bring you the results later on in the
show.

I`m joined tonight by MSNBC political analyst and "Bloomberg View"
columnist Jonathan Alter. And E.J. Dionne, senior fellow at the Brookings
Institution and columnist for "The Washington Post."

Gentlemen, it`s been an eventful day in the world of politics.

(LAUGHTER)

SCHULTZ: Jonathan, what do you make of all of this, is it possible
for Mitt Romney to lose the nomination at this point? How big a day was
it?

JONATHAN ALTER, MSNBC POLITICAL ANALYST: Oh, yes, it`s possible if he
loses South Carolina and the momentum is not moving in his direction, then
you have a two-man race and you can say, all right, well, Gingrich isn`t
even on the ballot in Virginia and Romney has a better organization. But
as you indicated a few minutes ago, Gingrich has some access to some real
money, and he could make this into a real contest. A lot of Republicans
apparently are willing to see past his marital infidelities.

This open marriage thing is kind of mind blowing. Can you imagine
what would happen if this was a Democrat, what Rick Perry would be saying?

SCHULTZ: We talked in our Ed newsroom today about what if President
Obama had dropped a bomb shell on a news magazine saying that, well, you
know, Michelle and I have got an open marriage. I mean, come on, how low
are they going to drop the bar in this campaign?

I mean, E.J., what impact will the Marianne Gingrich interview have?

E.J. DIONNE, WASHINGTON POST: Well, the key is forgiveness and
redemption. I can`t resist, Ed, because I share your fascination, the Iowa
caucus results always felt like Florida 2000 to me, only this time, they
allowed a full recount of the votes, and we got the actual result.

I think that it ain`t going to help Gingrich, I think the question is
how much does it hurt him? John Heilemann on the Chris Matthews` show made
I thought the right point, which is Newt is already doing less well among
evangelical women than he is among evangelical men, surprise, surprise.

And the question is: does he sort of lose a lot of votes from this,
probably Santorum, or does he suffer a small loss and that gets made up for
by the momentum and the swing away from Romney?

Given how much people know about Newt, I bet on the small loss,
although in this campaign, I`ve given up making bets on anything.

SCHULTZ: Jonathan, how much has it helped Gingrich to have Perry out
of the race but also endorsing him. I mean, he can raise money. He`s got
access to oil money in Texas and he`s got some big donors. Will he get
them to engage? I mean, it would seem to me Gingrich would play that card
pretty fast.

ALTER: Well, he doesn`t have to have all of them engaged, all he
needs is a couple of Sheldon Adelsons and, you now, he`s in the chips. As
far as whether the endorsement actually makes that much difference, very
few endorsements do, but the timing of this was very good for Gingrich.

Perry actually had -- I don`t know what was it, 5 percent, 6 percent,
7 percent in South Carolina? If Gingrich gets 2 percent or 3 percent of
that, that ain`t bad.

SCHULTZ: Yes.

ALTER: So in a close race, and the polls are indicating a very close
race right now, that could end up being decisive. The big thing will be
what happens, I think, in this debate and if Gingrich scores again, as he
has so many times in the past, then Romney`s in a world of hurt.

SCHULTZ: E.J., what about the tax issues taking a toll on Romney in
the polls? I mean, it`s just not a Newt campaigning in South Carolina. I
mean, he`s taking a beating here and there seems to be a real disconnect as
far as Americans are concerned about money being offshore, not knowing how
much $375,000 is.

I mean, it would seem to me this state is taking a toll, or am I wrong
on that?

DIONNE: I have never -- I don`t think I`ve ever seen a candidate
close a campaign as badly as Mitt Romney has, and he really seems to have a
tin ear on this. I`ve been trying to think what else could go wrong, that
he`s going to go out there and say he roots for Mr. Potter over George
Bailey, bad banker over the good banker in "It`s A Wonderful Life"?

I mean -- because what`s striking here it`s not just stuff has come
out, it`s Romney`s own responses just haven`t been good, suggesting that
$370,000 is not very much money, the way they`ve sort of tried to say well,
yes, sort of on the Cayman Islands, but he`s not really taking any tax
breaks.

SCHULTZ: Yes.

DIONNE: He`s just -- I think it`s about his personality and how he
thinks about this as much as any of the specific revelations.

SCHULTZ: I mean, it just reminds me of the Clinton/Dole campaign back
in 1996 and after Bill Clinton won, he beat Bob Dole, Bob Dole did some
commercials, you know? And at the end of the commercial said, you know, I
just can`t win.

Well, in this case, it seems like Mitt Romney, you know, I just can`t
close. I mean, he just does not -- he`s not the closer that he needs to
be.

Jonathan Alter, E.J. Dionne, great to have you with us tonight.
Thanks so much.

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

Up next, Rick Perry had one of the most disastrous campaigns in
history. A couple of good old boys from Texas, Jim Moore and Kinky
Friedman are here to say adios.

And more good news for the economy today, it`s bad news for the
Republican candidates, and I`ll tell you why.

Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Coming up, we`ll say adios to the Texas governor after he
dropped his bid for the GOP nomination earlier today.

In "Psycho Talk," New Jersey Governor Chris Christie backs off his
Jersey style threat to Iowa voters after a recount gives Rick Santorum the
edge.

And Stephen Colbert`s super PAC launches an ad attacking Stephen
Colbert. OK, comedian John Fugelsang joins me later in the hour.

Share your thoughts on Twitter using #EdShow.

We`re right back. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Well, Rick Perry`s out of the race and the nation of Turkey
feels a lot safer tonight. Don`t you think?

The Texas governor is finally calling it quits after a disastrous
campaign. Perry was at 38 percent in an NBC News/"Wall Street Journal"
poll when he entered the race back in September. But by December, he fell
to 6 percent. And he only has himself to blame.

(BEGIN VIDEO CLIPS)

PERRY: Those of you that will be 21 by November the 12th, I ask for
your support and your vote.

Commerce, Education, and the -- what`s the third one there, let`s see.

We fought the revolution in the 16th century.

Commerce, Education, and the --

And you can always follow me on tweeter.

And let`s see -- I can`t, the third one I can`t, sorry. Oops.

There`s something wrong in this country when gays can serve openly in
the military.

To expand your tax footprint, you know what I mean. And then -- the
coolest thing happens.

That! Today has been awesome, girl!

First bite`s the best one.

UNIDENTIFIED MALE: I cannot wait for a medieval cookie, a cinnabun,
hot, yellow Kool-Aid, and save a pretzel for the gas jets.

(END VIDEO CLIPS)

SCHULTZ: And, of course, we had to cut down the highlight tape. A
lot of stuff hit the edit room floor. The campaign of Rick Perry just
never got on a roll.

Let`s turn to Jim Moore, "Huffington Post" contributor and writer at
MooreThink.com, and author of the book "Adios Mofo: Why Rick Perry Will
Make America Miss George W. Bush."

Well, it`s too late now, Jim. You can`t rename that title.

JIM MOORE, THE HUFFINGTON POST: You sure know how to embarrass proud
Texans.

SCHULTZ: It was a great book, but you should have told us it was
going to fall apart this fast.

MOORE: Well, I mean, it lived up to its title, "Adios, Mofo," he`s
out of here.

SCHULTZ: What happened, did people in Texas know something everybody
else in the states didn`t know?

MOORE: Well, you know, he on paper -- I think I told you this before,
Ed, when we talked. On paper, this guy checks all the boxes for
Republicans. I mean, he`s very good with his social conservatives. He`s
very good with evangelicals. He`s in the right place on gay marriage and
abortion and those things.

And the guy looks good and when he`s on a podium and unchallenged and
doesn`t have to answer questions or think analytically, he does very, very
well.

But one thing that didn`t work for him which is what the Republicans
decided to use to vet their candidate was a series of innumerable debates.

SCHULTZ: Yes.

MOORE: And that`s not Perry`s wheelhouse, and it served the purpose
of getting rid of some of these guys.

SCHULTZ: You know, I`ve been thinking about this today, did he show
loyalty to the conservative movement by stepping out and not splitting up
the vote and immediately endorsing another candidate, in this case, Newt
Gingrich? I mean, is he leading the anti-Mitt charge right now?

MOORE: Well, I think that`s the role he would like to play, but I
really think that this was a bit more pragmatic than that, Ed, because
truthfully, an endorsement from Rick Perry is like getting a lead life
jacket thrown at you off the Titanic or wherever. But I think what
happened is he sent out an e-mail, I don`t know if you saw it. He sent out
an email last night to his individual supporters asking for $5, $10, $75,
we`re going on to Florida, absolutely determined to press forward on this
thing.

So, the question is, did he get some phone calls from his big dollar
people and say, come on, Rick, you`re not moving any numbers in South
Carolina. We`re not wasting more money down there. You`re embarrassing
yourself. You`re going to have problems when you get back to the state,
just stop this.

I think that`s probably more what happened.

SCHULTZ: Yes. You mention he had some debate issues. Well, he was
weak during the debates. Here`s some of the examples.

(BEGIN VIDEO CLIPS)

BRET BAIER, FOX NEWS: Do you believe Turkey still belongs in NATO?

PERRY: Well, obviously, when you have a country that is being ruled
by what many would perceive to be Islamic terrorists --

The third one I can`t, sorry. Oops.

I`ll bump plans with you, brother.

On the side of against the Second Amendment before he was for the
Second Amendment, was it before he was before the social programs from the
standpoint of he was for standing up for Roe versus Wade before he was
against Roe versus Wade.

I`m kind of getting where I like these debates.

I hope I am the Tim Tebow of the Iowa caucuses.

(END VIDEO CLIPS)

SCHULTZ: The fact is, he never debated anybody in Texas and he came
into these debates on a national level not prepared because he didn`t know
how to prepare, he had never done it before, or is that an overreach?

MOORE: No, that`s absolutely true. He did do four debates, but none
of these were of this type of nature. I mean, that`s the thing about
parochial state politics, where, you know, you can -- your opponents are
often completely underfunded and inexperienced as well and in the office of
the governor standing up there and saying things, it`s hard to challenge
him.

One of his elections, there were four people in that race and the only
debate lasted like an hour. So -- and he literally winked at one of his
opponents, Chris Bell, that he was so comfortable and confident he wasn`t
going to have to say anything of any substance.

SCHULTZ: So we can clearly say this is probably one of the biggest
disappointments the GOP has seen in modern time. Jim Moore -- go ahead.

MOORE: I agree with that.

SCHULTZ: Thanks, Jim.

Jim Moore with us tonight here on THE ED SHOW -- thanks so much.

Governor Chris Christie warned crowds in Iowa there would be Jersey-
style consequences if they didn`t vote for Mitt Romney. But it turns out
he was just full of hot air.

Newt Gingrich`s second ex-wife breaks her silence. How will voters
react? Richard Wolffe, Joy-Ann Reid and Krystal Ball weigh in on that.

(COMMERCIAL BREAK)

SCHULTZ: And in "Psycho Talk" tonight, New Jersey Governor Chris
Christie made a big impression curvy couch on "FOX and Friends." Steve
asked the Romney supporter if the fact that Rick Santorum actually won Iowa
makes a difference.

(BEGIN VIDEO CLIP)

STEVE DOOCY, FOX NEWS: What does this change?

GOV. CHRIS CHRISTIE (R), NEW JERSEY: Nothing.

DOOCY: OK, thank you very much.

CHRISTIE: I mean, absolutely nothing. You know, we`ll never know who
exactly won that race, especially with eight precincts never reporting, did
they eat the ballots? I don`t know what happened.

I don`t think it really matters in the end. That will be for the
history books as to who actually won. But in the end, they`ll be writing
about it in the context of did President Mitt Romney actually win Iowa in
the first time or didn`t he? I think nobody`s going to really care.

(END VIDEO CLIP)

SCHULTZ: Really? Nobody is going to care.

Less than a month ago, there was one guy who cared about who won Iowa
in a big way.

(BEGIN VIDEO CLIP)

CHRISTIE: I`m thrilled to be in Iowa. New Jersey is watching you,
too. We`re watching you really closely. Let me tell you, you people
disappoint me on Tuesday, you don`t do what you`re supposed to do on
Tuesday for Mitt Romney, I will be back, Jersey-style, people. I will be
back.

(END VIDEO CLIP)

SCHULTZ: All right. So in December, Governor Chris Christie went all
Schwarzenegger on the crowd in Iowa, but now he`s brushing off Romney`s
defeat as no big deal. This guy is all bark and no bite. For Chris
Christie to say Romney losing Iowa doesn`t matter after his bully routine
in Iowa -- well, that is Jersey-style psycho talk.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: What brings us here
today, that`s creating jobs and boosting tourism.

(END VIDEO CLIP)

SCHULTZ: Up next, Richard Wolffe, Joy-Ann Reid and Krystal Ball on
today`s good news for the president.

And the interview Newt Gingrich called tawdry.

(BEGIN VIDEO CLIP)

M. GINGRICH: He said, yes, but you want me all to yourself. Callista
doesn`t care what I do.

(END VIDEO CLIP)

SCHULTZ: And the pizza man is not finished.

(BEGIN VIDEO CLIP)

HERMAN CAIN (R), FORMER PRESIDENTIAL CANDIDATE: South Carolina, send
Stephen Colbert a message. On January 21st, vote Herman Cain.

(END VIDEO CLIP)

SCHULTZ: John Fugelsang is here to preview the theatrics.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I am glad to be at
Disney World. And I confess, I am excited to see Mickey. It`s always nice
to meet a world leader who has bigger ears than me.

(END VIDEO CLIP)

SCHULTZ: Welcome back to THE ED SHOW.

President Obama has reason to be happy these days. While Mitt Romney
and Newt Gingrich are in a death match in South Carolina, President Obama,
well, he went to Disney World. He`s got reason to do it. His
administration is finding new ways to boost tourism and the economy. He
may be on a roll.

The facts, today after three years, General Motors is once again the
number one car maker in the world. Three years ago, President Obama
engineered an $80 billion loan for the automobile industry. He took a huge
risk, and it is paying off, and none of the Republicans went on board with
it.

Mitt Romney wrote an article entitled, "Let Detroit Go Bankrupt."
Good plan there, huh, Newt. Today -- Mitt. Today we`ve learned jobless
claims fell to a four-year low, the lowest levels since April 2008.
Jobless claims have fallen ever since President Obama`s stimulus package
went into effect.

And there`s more, U.S. factories are roaring back from the depths of a
recession. Factory output is up, and oh, by the way, since 2009, the stock
market has risen more than 50 percent, and yes, the stock market is part of
it all.

But Newt Gingrich says President Obama wants to be the food stamp
president. Obviously, the economy is not yet where everybody wants it to
be, but we have to admit that President Obama, as he says it all the time,
says that, but it`s getting there, isn`t it? And with no help from the
Republicans. Despite consistent GOP obstruction, President Obama is
getting the economy back on track. There are plenty of indicators.

Let`s turn to Joy-Ann Reid, MSNBC contributor and managing editor of
thegrio.com. Also tonight with us MSNBC political analyst, Richard Wolffe,
and Democratic strategist Krystal Ball.

Great to have all of you with us tonight. You know if the economy
keeps rising, Richard, what happens to the Republican challenger? I mean
aren`t they kind of hoping on bad news economically?

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Could be.

SCHULTZ: A lot of good stuff is out there right now.

WOLFFE: Could be a little bit awkward. Especially if you built your
entire premise of your candidacy on beating Obama on the economy, and
that`s the position of Mitt Romney. You know, if you`re Rick Santorum,
maybe there`s something else you`re going to go for, after what he could
do. Manufacturing critique, you can go after the social values, but for
Romney, the whole premise is, I understand about the economy, this guy`s
never even seen the working economy.

So, you know, the economy turning around doesn`t just affect the
underlying numbers, it`s the fundamental premise. And you got to think
back to the 2008 election. Barack Obama started out thinking that Iraq was
going to be the all and end all. By the time he got to the general
election, it wasn`t Iraq, people didn`t care about Iraq, they cared about
the economy.

So if the story changes over time, which it surely will, it`s not just
because politics never stays the same, but because the economy doesn`t
either. If this story changes, these candidates, especially Mitt Romney,
has got nowhere else to go.

SCHULTZ: The GOP crowd, of course, has always been downplaying good
news. They actually sound like they`re betting against America right now.
Today the Obama campaign said this about Romney`s offshore accounts. "Why
doesn`t he just tell voters in South Carolina, Florida, and other primary
states exactly what he`s been paying in taxes and what his investments are?
It`s clear he doesn`t want the American people to see these things."

Joy-Ann, this really has been a problem for Mitt Romney. How`s he
going to overcome this?

JOY-ANN REID, MSNBC CONTRIBUTOR: Yes, I think for Mitt Romney, the
biggest problem is the empty narrative. You know, Mitt Romney has really
offered no other reason for running for president, no affirmative reason to
elect him other than, I am Mitt Romney, I am a businessman, so that means
the focus naturally goes to his business background, to what he did in the
biggest business he ran, Bain Capital.

And then you have this narrative of the 99 percent versus the 1
percent, and because he so embodies it, everything that advances that
narrative fills in the gaps. So right now Romney has a problem. As
Richard said, if the economy gets better, then we`re really just going to
focus on who are you, Mitt Romney, and all we`ve got right now is this 1
percent narrative.

SCHULTZ: And staying on the economy, you know, Krystal Ball, the
Republican nominee, unless I`m missing the news, they all seem to be
pushing the same doggone policies that Bush did that got us into this mess.
I mean isn`t this easy picking for President Obama?

KRYSTAL BALL, DEMOCRATIC STRATEGIST: I think you`re absolutely right,
Ed. I mean one of the things that I will say about the Obama
administration is I don`t think they`ve done a good enough job of
cheerleading for their own policies, which have been incredibly successful.
So as a result, you have a president who`s very personally popular and his
policies not as popular as he is.

But with Mitt Romney, you have someone who is not personally popular
and when Americans actually start digging into the fact that his economic
policy is basically to give himself and his friends another huge tax cut at
the expense of the middle and working class people, they are not going to
be happy with what they find. So I do think the president is very well set
up, and as Richard pointed out, previously we were worried that the
president would have to argue with counterfactual that things would have
been worse if it were not for him.

Now the Republicans are having to argue the counterfactual, that
things would have been better if not for President Obama, and that`s a very
difficult place to be in.

SCHULTZ: I mean, President Obama is like a super computer. I mean
this guy has got phenomenal recall. His debating skills are just
fantastic. He is going to be able to pick apart the Republican economic
plan and put it to where we were and to where we are.

Richard, it would seem to me that that would be the homerun right
there and would convince a lot of people. Where am I wrong?

WOLFFE: Even if the economy doesn`t pick up, say this thing runs out
of steam, gas prices breakthrough $5, people don`t feel that great. When
you go back and say, what went wrong with the economy? Why are we in this
hole? The polls have been really consistent, the facts are really
consistent.

It wasn`t because Wall Street was overregulated, it wasn`t because,
you know, there was a President Obama there, it all happened beforehand.
People blame the Bush administration, they blame Wall Street being out of
control. They know why this economy went into the tailspin it did.

They may want it to get better quicker, but the root causes of this,
the policies that were behind that, the kind of reckless behavior from
people who are supposed to defend capitalism, that`s all out there. People
understand it. That`s what Republicans have to push against if they want
to convince people they can make it better.

SCHULTZ: And there is news tonight Newt Gingrich just released his
2010 federal income tax return. He reported over $3 million in income.
Time for Mitt Romney to release his taxes, Joy-Ann? I mean -- does it
matter? Do we have to wait until tax season at this point? What`s his
best move?

REID: Yes, I don`t -- I don`t understand the Romney strategy. It`s
just excruciating. Just release them already. We already know that Newt
Gingrich himself is rich, too. So it`s all -- it`s sort of funny listening
to him talk about rich people when he`s one of them. But for Romney it
just exacerbates the problem of us not knowing so much about him
personally, so we`re interested in his wealth and his business background.

It`s natural. If he would just release them and get over it, people
can vet them and move on, but he`s dragging this out in a way that makes it
looked like he has something to hide.

SCHULTZ: Well, Newt`s pretty cagey, he`s going to sit there and say,
well, I am a millionaire, at the top 1 percent, too, but at least my money
is not offshore.

Krystal Ball, we`ll come back to you, along with Joy-Ann Reid and
Richard Wolffe. Stay with us. We`ve got a lot more coming up.

Newt Gingrich`s second ex-wife says the former House speaker wanted an
open marriage. The party of family values is rushing to his defense.

Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Up next, Newt Gingrich`s ex-wife says he doesn`t have the
moral character to be president. I`ll ask our panel if that matters to
voters. Not only in South Carolina but everywhere.

Don`t forget to tweet us using #Edshow. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: More with our political panel in a moment, but first, a
brief guide to Newt Gingrich`s marital history. Gingrich left his first
wife, Jackie, for his second wife Marianne. He left his second wife,
Marianne, for his third wife, Callista. Now his second wife Marianne is
telling all. She tells the "Washington Post" Gingrich asked her to
consider either an open marriage or a divorce at the same time he was
giving speeches about family values and attacking President Clinton for his
indiscretions.

She elaborated further in an interview with ABC News.

(BEGIN VIDEO CLIP)

MARIANNE GINGRICH, NEWT GINGRICH`S FORMER WIFE: I said to him, Newt,
we`ve been married a long time, and he said, yes, but you want me all to
yourself. Callista doesn`t care what I do.

BRIAN ROSS, ABC NEWS: What was he saying to you, do you think?

M. GINGRICH: He was asking to have an open marriage, and I refused.

ROSS: He wanted an open marriage?

M. GINGRICH: Yes, that I accept the fact that he -- he has somebody
else in his life.

ROSS: And you said?

M. GINGRICH: No. No. That is not a marriage.

(END VIDEO CLIP)

SCHULTZ: Newt`s defenders are out in full force. Rick Perry endorsed
Gingrich while preaching the power of forgiveness and Sarah Palin took the
opportunity to defend Newt and attack the media.

(BEGIN VIDEO CLIP)

SARAH PALIN (R), FORMER ALASKA GOVERNOR: I call them dumbarses, they
-- thinking that by trotting out this old Gingrich divorce interview that`s
old news, all this does, Sean, is incentivize conservatives and
independents who are so sick of the politics of personal destruction,
because it`s played so selectively by the media that their target, in this
case, Newt, he`s now going to soar even more.

(END VIDEO CLIP)

SCHULTZ: Interesting. The politics of personal destruction. Isn`t
that what the Clintons used to say?

Newt says his mistakes were for the greater good.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: We knew we`d get beaten
up, we knew we`d get lied about, we knew we`d get smeared, we knew we`d get
nasty attack ads, and we decided the country was worth the pain.

(END VIDEO CLIP)

SCHULTZ: Well, as for South Carolina voters, well, they don`t seem to
care. One woman telling Talking Points Memo, "I think after the blue dress
and Clinton, it doesn`t matter anymore, you know?" Another voter saying,
"I think Romney keeping $100 million in the Bahamas is more important."

I`m joined again by MSNBC contributor Joy-Ann Reid, MSNBC contributor,
Richard Wolffe, and Democratic strategist, Krystal Ball.

Krystal, does this really mean anything to any of the voters today?
We know that the bar has been lowered in society and when it comes to
acceptability about someone`s personal life, when it comes to serving in a
public office, but at this point and juncture in this heated campaign, do
you think this will have an impact on either candidate?

BALL: Well, let me start by saying that this is far from my biggest
concern about Newt Gingrich, but you know we`ve kind of seen this play
before in the Republican primary, and I think the response to Gingrich and
to this interview from his ex-wife is going to be very similar with what
happened with Herman Cain.

There was a -- a rallying of the conservative base. There was a very
loud defense of Herman Cain from the right. There was very little erosion
in his poll numbers, particularly among men. Meanwhile, women sort of
quietly drifted away from him. So I think we`ll see a similar thing, a
loud reaction, a loud defense of him, a lot of blaming of the media, and
women sort of quietly looking for another alternative.

SCHULTZ: His ex-wife says it`s about character. Here`s how Newt
defended his character.

(BEGIN VIDEO CLIP)

N. GINGRICH: I think that my two daughters are very credible of my
character. I think the people who have known me a long time are credible
of my character. I`m a 68-year-old grandfather, they see how close I am to
my wife Callista. They see how close I am to my daughters and my son-in-
laws.

(END VIDEO CLIP)

SCHULTZ: Joy-Ann, does that work?

REID: Well, you know, I think that the response of particularly
evangelical voters to Newt will say a lot more about them than it will
about him. I think that evangelicals have been very proactive about saying
the way that people should behave. The way that people should behave vis-
a-vis gay marriage and abortion. And that they should uphold traditional
marriage.

If this is ignored, I think it says a lot more about the sincerity,
shall we say, of social conservatives on that issue, and I`ll just leave it
at that. I think for Newt Gingrich, no, I think what the base in the
Republican Party likes to see is Newt Gingrich attack anyone who raises
this issue. They like to see him put Juan Williams in his place. That
makes them feel good. They want to know that this guy is going to tear
apart Barack Obama if he becomes the nominee. I don`t think anything else
matters to the base.

SCHULTZ: You know, Richard Wolffe, you could make the case that South
Carolina is one of the, if not the most, conservative state in the south.
I mean if Gingrich can get past this in South Carolina, he may be home free
and this might be behind him, what do you think?

WOLFFE: Well, I think if he can sell his character to evangelicals in
South Carolina, then the Florida evangelicals will buy the same thing, Ed.
And here`s the thing, general voters -- a columnist far smarter than me
cited this, but general voters prefer a sinner who has found redemption
than someone who has never sinned at all. And that`s Mitt Romney`s
problem.

You know, can you imagine him ever doing such things and finding a way
out of it? That`s the narrative we don`t know about Romney. His mistakes
are, you know, having caffeinated drinks. And Newt Gingrich, you can
discount all of this, we certainly can enjoy the rich irony of someone who
pursued impeachment against Bill Clinton, going through this kind of mess
and creating such havoc in his personal life.

But if you are an evangelical, you do believe in redemption and maybe
voters prefer it to someone who`s squeaky clean.

SCHULTZ: Joy-Ann Reid, Richard Wolffe, Krystal Ball, great to have
you with us tonight. Thanks so very much.

Next up, Herman Cain reveals who he`s endorsing for president.
Stephen Colbert`s super PAC, well, they`re at it again. You won`t want to
miss this, stay with us.

(COMMERCIAL BREAK)

SCHULTZ: THE ED SHOW survey tonight, I asked you, which is a bigger
problem, Mitt Romney`s taxes or Newt Gingrich`s infidelity bombshell?
Eighty-seven percent of you say Mitt`s taxes, 13 percent of you say Newt`s
infidelity bombshell.

Coming up, comedian John Fugelsang joins me to discuss the latest
Colbert PAC ad and Herman Cain`s unusual endorsement.

(COMMERCIAL BREAK)

SCHULTZ: And the "Big Finish" tonight, Stephen Colbert`s quest to
become president of the United States of South Carolina is picking up
steam. His super PAC, run by Jon Stewart, has already spent $65,000 on ads
in South Carolina, and his candidacy was the subject of a focus group run
by Frank Luntz. Some voters, however, were not amused.

(BEGIN VIDEO CLIP)

FRANK LUNTZ, POLLSTER: Give me a word or phrase to describe Stephen
Colbert.

UNIDENTIFIED FEMALE: I think he`s a dandy.

LUNTZ: A dandy.

UNIDENTIFIED FEMALE: He`s a Charleston dandy.

STEPHEN COLBERT, HOST, THE COLBERT REPORT: A Charleston dandy. Oh,
oh, my, lord, lord have mercy.

(END VIDEO CLIP)

SCHULTZ: Now a dandy that when we`re fishing we call that a big fish.
Well, whatever. Nevertheless, the latest Public Policy Polling shows
Colbert with a higher favorability rating than other Republican candidates.

Colbert`s surging popularity prompted Colbert`s super PAC to release a
new ad attacking Stephen Colbert. Take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: America is in crisis, and Stephen Colbert is
turning out election into a circus. This East Coast, Hollywood elite is
exploring a run for president of the United States of South Carolina.

And come on, why is the T in his name silent? What else is he silent
about? Letting murderers out of jail?

Now a super PAC that he founded is running attack ads against him.
Just so we`ll think they`re not coordinated.

Enough is enough. I`ve had it with these money-grubbing super PACs
messing with our Monday to Friday elections.

South Carolina, send Stephen Colbert a message. On January 21st, vote
for Herman Cain, because we can`t afford to have a leader like this.

COLBERT: Look, I just think that Rosa Parks was overrated.

UNIDENTIFIED MALE: Americans for Better Tomorrow Tomorrow was
responsible for the contents.

(END VIDEO CLIP)

SCHULTZ: And joining me now is comedian and writer John Fugelsang.
He is also a part of the Sexy Liberal Comedy Tour and will be performing
his award-winning solo show, "Guilt: A Love Story" on January 28th at the
Queens Theater in New York City.

John, great to have you with us tonight.

JOHN FUGELSANG, COMEDIAN/WRITER: It`s good to see you, Ed. Slow news
day.

SCHULTZ: Well --

(LAUGHTER)

SCHULTZ: Actually it`s a very heavy news day, I know what you`re
saying. But this ad, I mean, these guys are doing us a favor to get us
away from the political exhaustion so we can laugh at all of this but also
illustrating the absurdity of it all. What do you make of the ad?

FUGELSANG: Well, the ad is historically unique as it is the first
presidential ad to feature Samuel L. Jackson paraphrasing his own dialogue
from "Snakes on a Plane." So right away we`ve made history. But it`s
unique for three reasons. Billy Wilder said if you`re going to tell people
the truth, make it funny or they`ll kill you.

And that`s what we`re seeing right here. We news nerds and politics
junkies can talk about super PACs all day. The average folks aren`t really
aware of how outrageous Citizens United is. So number one, this entertains
us, number two, it educates people as to what`s going on. Number three,
what he`s really doing, I think, is prolonging the Republican struggle.

Mitt Romney wants to tie it up this weekend and Herman Cain is now
signing on to a comedic agenda to keep this race going on even further.
And the fact that Colbert`s own PAC is attacking him shows that it`s
married to Jon Stewart but it`s an open marriage.

SCHULTZ: Isn`t it mean to low-information voters?

(LAUGHTER)

FUGELSANG: It`s brilliant to low-information -- no, I totally
disagree, it`s hilarious. Because he`s putting himself for it as a protest
vote. Herman Cain is on the ballot, so a lot of conservatives and many of
our conservative brothers and sisters are really fed up with King Romney
and the knights of the trickle down table, it`s a protest vote for them.

SCHULTZ: Colbert is joining forces with Herman Cain tomorrow. The
two will hold a rally in Charleston, good idea?

FUGELSANG: It`s a great idea. You know Herman Cain is a guy who is a
lobbyist for the fast food joints, trying to keep minimum wage down, so we
know he understands comedy. And you know to see him doing this, really,
it`s a slap in the face to Mitt Romney. It shows he doesn`t really want a
cabinet position all that bad.

SCHULTZ: But does it really prove that Herman Cain was never really
interested in running for president? It was just a damn good PR pizza
tour?

FUGELSANG: I think it proves that Herman Cain may become the first
black man to ever get another black man reelected president. And that`s
all he`s doing, is helping Obama.

SCHULTZ: Earlier Herman Cain announced who he`s endorsing for
president.

(BEGIN VIDEO CLIP)

HERMAN CAIN (R), FORMER PRESIDENTIAL CANDIDATE: My unconventional
endorsement is the people. We, the people, of this nation are still in
charge. That`s who I`m endorsing.

(END VIDEO CLIP)

SCHULTZ: Following that, he was asked about endorsing an actual
candidate.

(BEGIN VIDEO CLIP)

WOLF BLITZER, ANCHOR, CNN`S THE SITUATION ROOM: The American people
would be helped the most by which of these four remaining Republican
candidates?

CAIN: Whoever gets the nomination.

BLITZER: So you`re not going to endorse anyone?

CAIN: I didn`t say that, I still might endorse an individual, but
don`t know yet.

(END VIDEO CLIP)

SCHULTZ: Now at one time, this guy was the Republican frontrunner. I
mean does this just illustrate and demonstrate to everybody what a joke the
Republican Party is?

FUGELSANG: Exactly right, Ed, because what they keep saying is Mitt
Romney is the flip-flopper. Mitt Romney is not a flip-flopper, he`s been a
consistent human wind sock his entire career. Whatever he needs to believe
and to get elected, he`ll believe in. The GOP base has gone through seven
frontrunners since the summer and they want to call gay guys promiscuous?
Give me a break.

SCHULTZ: All right. Let`s just say Mitt Romney gets the nomination,
OK? It`s going to be hard for you comedians. He`s a stiff shirt, I mean,
he`s like wall paper watching it dry. I mean, come on, Mitt Romney is not
a happening dude.

FUGELSANG: I see the argument you`re making and Stephanie Miller and
I discussed this on the tour every night.

SCHULTZ: Yes.

FUGELSANG: But the thing is, Mitt Romney is hilarious. Now
obviously, as a comedian, I`m donating heavily to possibly a Cain/Bachmann
ticket coming out of the convention. I would love to see that happen. But
Mitt Romney is really comedic gold. You know, I tell the liberals and I
tell the conservatives, he`s not the GOP nominee you wanted, but you`re
stuck with him, comedians, so make the most out of it.

SCHULTZ: Well, how much of a bummer is it that Rick Perry is out?
There goes half your material.

FUGELSANG: There`s a guy who thought Arab Spring was a Saudi
deodorant, you know? The best thing about Rick Perry was seeing how much
he hated Mitt Romney. These guys hate each other so much they could sing
lead for the Eagles. I mean it`s like a just-for-men ad gone horribly
wrong. And comedy had a great blow today.

SCHULTZ: Well, you got to give him credit for at least someone who`s
getting into a scrap with Turkey.

FUGELSANG: Yes, right. Well, he finally got to secede from
something, too, Ed, by the way. That`s a dream come true for Rick.

SCHULTZ: All right. What about Newt in this interview with his ex-
wife?

FUGELSANG: It`s pretty fascinating, because she`s not really
revealing anything we haven`t heard before. As much as I understand it,
this is mistress -- mistress number one, wife number two, talking about
mistress number two, wife number three, who wants to be first lady, I
think.

SCHULTZ: Let`s not forget the kids.

FUGELSANG: Well, yes, I mean, look, Newt Gingrich couldn`t find the
high ground with a shirt butt, all right. So it`s not really a huge
surprise. I don`t think it will hurt him all that much. I`d love to see
Newt get the nomination because I`m a comic.

SCHULTZ: Like that line in the movie where Tom Hanks said, we`re an
American family.

FUGELSANG: Exactly. And that`s what we got.

SCHULTZ: Maybe that`s his -- maybe that`s his best play right now.

John Fugelsang, you guys are doing great on your tour, I hear great
things about it. Good luck to you on the 28th.

FUGELSANG: Yes, Ed, I want to bring you on stage.

SCHULTZ: That won`t happen, but thank you for the invitation.

That`s THE ED SHOW, I`m Ed Schultz. You can listen to me on the
radio, Sirius XM Channel 127, Monday through Friday, noon to 3:00. Follow
me on Twitter @edshow and like THE ED SHOW on Facebook. Rachel Maddow,
that shows right now. She`s the best and she is here again tonight.
Rachel.

RACHEL MADDOW, MSNBC ANCHOR: Thank you, Ed. That`s very kind. This
is getting so good.

SCHULTZ: Well, it`s the truth, too.

MADDOW: All right, thanks, man.

SCHULTZ: You bet.

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

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