updated 1/24/2012 10:26:21 AM ET 2012-01-24T15:26:21

Guests: Chris Matthews, Martin Bashir, Barney Frank, Richard Wolffe, Joan Walsh, Jonathan Alter

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

Breaking news -- this is the contract that Mitt Romney`s all uptight
about. So, Newt Gingrich just released it, we`ll go through it. The
Freddie Mac deal. It`s kind of a sweet deal. And Sheldon Adelson just cut
Newt Gingrich a $5 million check for a super PAC.

Mitt Romney is sinking in the polls, not only Florida but nationally.
And guess what the Republican Party is doing? I think they are drinking
tonight.

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

(BEGIN VIDEOTAPE)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: He was a failed leader. And
he had to resign in disgrace.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: We moved from Romney`s
pious baloney to Romney`s desperate baloney. The president, he`ll be able
to open a delicatessen.

SCHULTZ (voice-over): The fight for Florida is now exploding on the
campaign trial. And Newt Gingrich is now in front.

REP. BARNEY FRANK (D), MASSACHUSETTS: I did not think I had lived a
good enough life to be rewarded by Newt Gingrich being the Republican
nominee.

SCHULTZ: Tonight, Massachusetts Congressman Barney Frank and
"HARDBALL`s" Chris Matthews will help preview the debate.

Middle class Mitt is taking himself to the cleaners.

ROMNEY: We do our laundry at least once a week, because we`ll be on
the road for 30 straight days. Who else you think is going to do our
laundry?

SCHULTZ: We`re hanging Mitt`s glamorous life out to dry with Martin
Bashir, Joan Walsh and Richard Wolffe.

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: More spending, higher
taxes, more regulation. And if that`s what the president is going to talk
about Tuesday night, I think it`s pathetic.

SCHULTZ: And John Boehner is giving his opinion on tomorrow night`s
State of the Union. Tonight, I`ll give mine. Jonathan Alter is here to
preview the big speech.

(END VIDEOTAPE)

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

Don`t you get the feeling Washington is just thunderstruck that Newt
Gingrich is where he is right now? Mitt Romney wants to stop Gingrich`s
momentum but Florida is going to be a little trickier state to put an end
to the surge from this guy from Georgia.

There are three Republican voting blocs in the Sunshine State if you
want to break it down easily. First, the panhandle and northern part of
Florida. There`s a large population of evangelical Christian voters up
there. Newt Gingrich and Rick Santorum looking pretty good in that part of
the state, we`re told.

Then there is the central part of the state, which is the home of
actually a lot of people that aren`t from Florida, they are transplants
that live down there. I spoke with Alan Grayson today, a friend of mine,
the former congressman. He told me that 85 percent of the people in his
district, in the middle of the state, are from out of state. And Grayson
thinks that that region is probably going to Romney, probably solidly, too.

Finally, you have the southern part of Florida, and down in the
southern part of the Florida, you, of course, have a lot of diversity, you
have voting blocs made up of Cuban Republicans, and, of course, Jewish
Republicans. Mitt Romney did not farewell four years ago, McCain took the
Cuban vote down there and, of course, the Jewish vote, many people think is
going to be locked up by Newt Gingrich.

So you have a very diverse state, but also a state that has been very
fickle, that is subject to change. Rick Perry, he was the top of the
Quinnipiac Florida Poll back in September. A month later, Mitt Romney, he
was in the lead. A little more than a month later, here comes Newt, he was
leading by 13 points. And then Romney was back in the lead by 12 points at
the beginning of January, just a few weeks ago. Now, an Insider Advantage
poll today shows that Newt Gingrich back in the lead by eight points.

So, there`s been a lot of political movement down there and a lot of
attitudes and they`re changing. And don`t forget the early voting.

Gingrich also closed the gap nationally. I tell you -- this is really
what`s making the Republicans nervous. The daily Gallup tracking poll
shows Romney is what? One point ahead of Newt Gingrich who has this
terrible electability factor going against him?

Romney is going in the wrong direction. There is no question about
that -- which is why he`s out there blasting Newt Gingrich in Florida
today.

(BEGIN VIDEO CLIP)

ROMNEY: He said in a debate, actually, that people who profited from
the failed model of Freddie Mac and Fannie Mae ought to give back their
money. Well, the speaker made $1.7 million in his enterprises from
providing services to Freddie Mac, he ought to give it back. He`s got some
records which could represent an October surprise. We could see an October
surprise a day from Newt Gingrich.

Saying that Newt Gingrich is a lobbyist is just a matter of fact.

(END VIDEO CLIP)

SCHULTZ: Did we just hear one of the wealthiest guys in the history
of the country ever to seek the nomination say that somebody ought to give
their money back? Come on, Mitt! You don`t give money away.

Pretty strong talk from Romney. Sounds a lot different than he did
four days ago, don`t you think?

(BEGIN VIDEO CLIP)

ROMNEY: I guess also go back and take every moment I spent talking
about one of the guys on the stage, and spent that time talking about
Barack Obama.

(END VIDEO CLIP)

SCHULTZ: OK, and Romney is trying to work on his attack dog skills.
Is that who he is? He just hired Michele Bachmann`s debate coach and
campaign released a television ad in Florida attacking Gingrich`s
electability.

(BEGIN VIDEO CLIP, CAMPAIGN AD)

NARRATOR: While Florida families lost everything in the housing
crisis, Newt Gingrich cashed in. Gingrich was paid over $1.6 million by
the scandal-ridden agency that helped create the crisis.

GINGRICH: And I offer advice, my advice as a historian.

NARRATOR: A historian, really? Sanctioned for ethics violation,
Gingrich resigned from Congress in disgrace, then cashed in as a D.C.
insider.

If Newt wins, this guy would be very happy.

ROMNEY: I`m Mitt Romney, I approve this message.

(END VIDEO CLIP)

SCHULTZ: Do you really think that people in Florida care about that,
Mr. Romney? I have to ask you that tonight. As we go from Georgia down to
Florida, Newt Gingrich, he`s carrying some baggage with him but that
doesn`t matter.

This guy has all the confidence in the world right now. He wins South
Carolina, he`s leading in Florida, and the pro-Gingrich super PAC just
wrote him another $5 million check, that`s coming from Adelson family.

And Gingrich, you know what he`s looking like? He`s looking like a
winner right now. The way he talks, the way he walks, the way he acts.
Confidence is just pouring off Newt Gingrich right now.

And on top of that, he`s making Romney look pretty weak.

(BEGIN VIDEO CLIP)

GINGRICH: I have been told by a variety of people that Governor
Romney has been saying unkind things. I prefer personally not to believe
it. But on the other hand, if you have been campaigning for six years and
you begin to see it slip away, you get desperate.

It`s such baloney. Now, he used to be pious baloney, but now it`s
just desperate baloney. So, that`s the succession of this campaign. We
moved from Romney`s pious baloney to Romney`s desperate baloney. The
president, he`ll be able to open a delicatessen.

(END VIDEO CLIP)

SCHULTZ: So, why is Newt Gingrich connecting with these conservative
voters? Is it because he`s got a better tax plan? Is it because what he
wants to do with health care? Is it because he`s got a better idea for the
economy?

Come on. Newt Gingrich just does a better job of selling his -- hate
is a really tough word. He does a better job of selling how upset we
should be with President Obama and how we`re just heading in the wrong
direction. He`s selling hard, isn`t he?

Gingrich is forcing Mitt Romney to go really against his own nature.
Mitt is not an attack dog, he never has been, he never will be. The
difference what we have here now is a guy who really wants to win and a guy
who says "I deserve it."

Where I come from you call that fire in the belly. Gingrich has got
it right now. Mitt Romney doesn`t.

Right now, Mitt Romney, he`s somewhere in Florida, and his GPS
political tracking system isn`t working very good right now. I guess you
could say that maybe he`s down in the Everglades, in the political
wilderness. If Gingrich continues to surge like this, it`s going to be
music to the Democratic ears of America.

Some Democrats like Barney Frank absolutely amazed it`s happening.

(BEGIN VIDEO CLIP)

FRANK: I did not think I had lived a good enough life to be rewarded
by Newt Gingrich being the Republican nominee. It still is unlikely but I
have hopes.

(END VIDEO CLIP)

SCHULTZ: And we have that congressman with us tonight, Barney frank.

Congressman, good to have you with us here on the program.

And I have to ask you, are you convinced you`ve lived a good enough
life to see Newt Gingrich as the possible nominee of the Republican Party?
How do you feel about that?

FRANK: Well, I`m going to have to divide the question as you can do
in a parliamentary situation. Leaving my life aside -- but yes, I think
there`s a very real chance he will be the nominee. And I think there`s an
analogy here, as odd as it may seem to some people, to the 1972 Democratic
race. And Mitt Romney is looking increasingly like Ed Muskie, who is a
very responsible guy, he was somewhat thoughtful, he was much more
substantive -- I don`t mean to dishonor Ed Muskie by comparing him, but
it`s appeared to people on the party.

But there is an anger there. And you`re right, Ed. Gingrich has made
himself the embodiment of that anger. And the people who are supporting
Gingrich are not persuaded by the electability issue because I have seen --
often when you have people who are very angry, who are very committed, they
believe that they represent the majority. And they will tell that, in
fact, there are, as we know, millions and millions of people who don`t
vote.

And what happens is the most passionately committed often claim the
non-voter as their supporters. And I guarantee you that there are people
there, the Tea Party people and others, who believe that if they can
nominate Newt Gingrich and they get this unvarnished, absolutely angry
conservatism, that a lot of people who don`t now get polled, who don`t now
speak out, will come out and vote.

And I guess this is in some ways going to be a test because a
Republican establishment is going to try to stop him just as Democrats
tried to stop George McGovern. Tip O`Neill, a great man, lost the primary
in his hometown of Cambridge, Massachusetts, to a McGovernite, to
(INAUDIBLE).

So, this is a question whether these angry people in the Republican
Party have the courage of their convictions. I think they are wrong and
that the country will not welcome them, but let`s have that test. Let`s
take that unvarnished conservatism, not just conservatism, these angry
white wing radicalism and let`s put it out there.

SCHULTZ: Well, it sure seems like Newt Gingrich is capitalizing on
this angry emotion that we`re seeing coming from Republicans, especially in
the South, who just cannot stand the president of the United States.

But let`s talk about if we can, the gentleman you just mentioned, Mr.
Muskie, versus Mitt Romney.

Mitt Romney, is it in his character, you know, he was your governor up
there in Massachusetts, is it in his character to be a political attack
dog? I mean, it seems to me that Newt Gingrich has got Mitt Romney out of
his wheel house right now.

FRANK: Well, I -- he will do it, but I will say this about Mitt
Romney. I should be very clear, Ed Muskie was a thoughtful, creative man.
I was for him. It demeans him. I don`t mean a comparison with Romney.

Romney does have one great advantage in this race. He`s totally
encumbered by any political principle. But if do you that to the extreme,
it becomes a disadvantage because there`s no core. I think the answer is
Romney will do anything to be president, not angry with Gingrich.

Romney has been running for office, he made enough money, he`s been
living off that money for 20 years and running for president for 20 years,
began by running for the Senate, governor, a very wise Republican moderate
of the old school in Massachusetts when asked about Romney said when he was
governor how did he behave? Look, some people when they become a governor
of a state get Potomac fever. Romney had Potomac Ebola virus.

(LAUGHTER)

FRANK: He just -- everything was presidential. So, the answer is he
will try. I don`t think he`ll be very good at it. But he will try.

SCHULTZ: Congressman, I have in my hand the contract Newt Gingrich
had with Freddie Mac. I quickly read through it before our program
tonight. It`s really favorable to Gingrich in the fact that he could be
retained at any time without him not even knowing it. They could extend
the deal. It`s got a nice rollover clause in it, although it`s got very
strict disclosure language in it.

Did you know that Gingrich was kind of tied at the hip for 25 grand a
month to Freddie?

FRANK: I did not. But that`s a very important point here, as a
broader political -- you know, I get attacked, and Chris Dodd and others,
oh, we stopped the regulation of Fannie and Freddie. In fact, as this makes
clear, the Republican Party controlled the House of Representatives from
1995 through 2006. It was during that period when no bill regulating
Fannie and Freddie became law. They had the Senate, one of those years --
it wasn`t until -- I was originally wrong on that but changed my opinion on
the facts.

In 2007, when the Democrats took over, that`s when Fannie and Freddie
got regulated. And I will bet, can I just make one point -- if you look at
that contract, I bet they stopped paying him when the Democrats came in
power and they paid him while the Republicans were in power.

And let`s look at the facts. He is getting paid by Freddie Mac. They
gave a lot of rhetoric about Fannie and Freddie. But during those 12 years
of Republican control, zero happens that Fannie and Freddie don`t want.

SCHULTZ: Yes. Well, this contract started on the first day of
January, 2006. It was the year that mid-terms obviously just before the
Democrats took over the House in the midterms. Whether that means anything
or not, I don`t know.

FRANK: When did they stop paying him? I thought they only paid him
for brief period.

SCHULTZ: Well, the commercial that Romney has taken out right now is
saying that it paid him $1.7 million. So, if you go 25 grand a month, my
math is telling me it`s a little over six years, isn`t it?

FRANK: That couldn`t work because we --

(CROSSTALK)

FRANK: I think that goes -- I think the contract was before that.
I`m pretty sure from what I read the contract was during the period of
Republican control. Gingrich is forced out of the House by his --
unsuccessful speaker.

SCHULTZ: Is this a problem for Gingrich, in your opinion?

FRANK: It would be by any normal standard and it will be, I think, in
November.

But again, Gingrich has got behind them people who are so angry that
all they want is that you be angry, and some ways more outrageous the
conduct, the better they feel, because that shows that your anger what is
counts. And I believe these people, you tell them he can`t be elect and
Romney can be, and they will say no, if we -- the right wingers said that
about Barry Goldwater. Some of my friends said it about George McGovern.

And I think this is a test of whether or not these people have the
courage of their convictions. They honestly believe that they in their
absolute anger and rejection of any kind of serious public governing, that
they are the majority. And if they really believe that, they`ll nominate
Gingrich.

SCHULTZ: All right. Congressman Barney Frank of Massachusetts, great
to have you with us tonight. Thank you for your time.

FRANK: Thank you, Ed. Appreciate it.

SCHULTZ: You bet.

Get your cell phones out, we want to know what you think. Tonight`s
question, it`s about the congressman we just had. Has Barney Frank lived a
good enough life to see Newt Gingrich be the GOP nominee? Text A for yes,
text B for no, to 622639. Have some with it. And, of course, you can
always go to our blog at Ed.MSNBC.com. We want to know what you think.

Coming up, you know, the stakes couldn`t be higher. What can we
expect from tonight`s NBC News Republican debate in Florida? Christ
Matthews will join me for a review when we come back.

And later, our political panel -- how much will Romney and Gingrich go
and tear each other apart on the way to the nomination. Stay with us.
We`ll be right back.

(COMMERCIAL BREAK)

SCHULTZ: Coming up: Mitt Romney slipped in the polls after two poor
debate performances. Can he recover tonight in Tampa? How crucial is this
debate?

Chris Matthews and I will preview it. Coming up next.

Chris Christie, governor of New Jersey, claims that Mitt Romney
created a lot of middle class jobs at places like Staples and Sports
Authority. Well, that puts them in the zone.

And, of course, Jonathan Alter will be here later an hour to preview
tomorrow`s State of the Union Address. It`s a big one on the economy.

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

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. We`re just minutes away from
the NBC News Republican debate live in Tampa, Florida.

If debates really are important, in this race, we`re going to look at
it. The latest from the Gallup shows Romney and Gingrich in a dead heat,
not just with Florida voters but nationwide.

So, what can we expect out of tonight`s debate?

To help answer that, let`s go to my colleague, friend, sometimes I
call him big brother, the encyclopedia of politics --

CHRIS MATTHEWS, "HARDBALL" HOST: Ha!

SCHULTZ: -- Chris Matthews.

Chris, good to have you with us tonight.

I mean, look at Newt Gingrich. He`s had two great debates. How does
he keep it going? I mean, what does he do tonight? What is his demeanor
tonight?

And he`s been very aggressive. I mean, he`s got fire in the belly.
He looks like the guy that wants to play the Super Bowl with Barack Obama.

What do you make of that?

MATTHEWS: Well, it looks to me like his whole game tonight is to lure
Romney in an attack. Romney makes an attack, he does the counter punch, he
wins.

Romney has to idea how to do that third attack, to come back to the
counter punch. He`s a man of limited spontaneity. Newt on the other hand
can hear the other guy`s attack and respond to the very words in real time.
The other guy is a character out of the hall of the presidents, one of
those mechanical people.

Mitt Romney can`t think on his feet. Newt can.

So interesting what Newt has to be careful is to wait for the best
punch thrown at him by Romney tonight, on any issue, and punch him back for
all he`s got and then he can win this election.

SCHULTZ: You think he can be the nominee? You think that Newt
Gingrich, after what he did in South Carolina and the way it`s trending in
Florida, that this just might be the tip of the iceberg for the former
speaker?

MATTHEWS: You know, progressives are uncertain what is going on, I
know they are. The right is angry, they have a very clear emotion. The
anger is contempt, anger against the president, against the establishment,
against everything.

This guy Newt is an opportunist, like we`ve never met a man who can
adapt to circumstances better than anybody I ever met. He knows the tone,
perfect pitch, it`s contempt, rage. He can voice it against us, against
this Republican establishment. He knows exactly how to fine tune it.

The other guy, Mitt Romney, may be able to memorize some lines that
Stu Stevens rights for him. He can mention the Kardashians without having
any idea what he`s talking about. or Lucille Ball or Bigfoot, but he
doesn`t know the tone.

And this guy Newt, in Philadelphia, there`s a good Philadelphia accent
-- attitude. This guy has got perfectly.

SCHULTZ: Well, Mitt Romney, how does he get back on his game if he`s
got one? I mean, I think he`s in the political wilderness. His GPS
tracking system ain`t working right now. He comes out and today he seems
to out of character, saying that Newt Gingrich is erratic and that he`s
going to have an October surprise and, oh, by the way, he does his own
wash. Are we going to believe that, too? He`s got a practicality problem.

MATTHEWS: Who was that British boxer, who is the guy -- Bayonne
Bleeder, he was a Jersey guy, Chuck Wepner?

SCHULTZ: Yes.

MATTHEWS: I just think he`s the Bayonne Bleeder. He doesn`t have any
moves, and any fluency with the language, nothing clever to say. He`s just
going to go out there and be stuck on his feet and I think Mitt is going to
get beaten tonight I think.

I may be wrong. It`s not about values, it`s ability right now. In
terms of the issues, I think Mitt still hopes he can find the American
middle, which means people who know these are not good times, would like to
make a adjustments, no matter how crazy the rhetoric goes. The image he
projects is a middle of the roader. And whereas Newt is not playing for
the middle of the road, he`s going for the hard right.

SCHULTZ: Yes.

MATTHEWS: This primary in Florida is all Republicans, no
independents, no Democrats. Democrats need not apply, independents need
not apply. So, it really is an opportunity for him.

And, by the way, one thing that bothered me personally as an American,
and you talked about it, I believe, and so is Al Sharpton, this idea of
talking about food stamps, which we all know is code. And to use that the
night he won here, Saturday night, coming in to the panhandle of Florida,
playing with the Southern people for the Southern tradition, white people,
trying to play them like a banjo, I think that`s what he`s up to.

And I couldn`t believe coming instead of being magnanimous, after
beating Romney, going after that angry white vote again. And I thought he
clearly did it to get apparently a third of the vote in this state is
Southern, meaning for the northern part of the state, and for the
Panhandle, he`s heading for that territory. It`s not nice to watch. It`s
not good at all.

SCHULTZ: Enormous show down tonight for both candidates.

MATTHEWS: Yes, sir.

SCHULTZ: Can you compel Newt Gingrich to go bigger and greater
things? We`ll see.

I get a feeling that Washington, D.C., though, is thunderstruck by
where Newt Gingrich is right now. Chris, great to have you with us. Thank
you so much.

MATTHEWS: As always, Ed, thank you.

SCHULTZ: You bet.

MATTHEWS: Next in "Psycho Talk," I`ll take down Chris Christie`s
delusional view of the American middle class.

Newt Gingrich is appealing to voters who really can`t stand this
president. We`ll tell you how he`s taking advantage of it.

(COMMERCIAL BREAK)

SCHULTZ: And in "Psycho Talk" tonight, New Jersey Governor Chris
Christie, he`s trying to get Mitt Romney`s campaign back on track after
their disastrous loss in South Carolina, so he goes on offensive. Christie
is ignoring the thousands of jobs Mitt Romney destroyed as head of Bain
Capital and instead he`s pretending Mitt Romney created just a bunch of
middle class jobs.

(BEGIN VIDEO CLIP)

CHRIS CHRISTIE (R), NEW JERSEY: This is a guy who has shown the
American free enterprise system can work, can work to create jobs across
America. You look at places like Staples and Sports Authority, everybody
who works at those places today has Mitt Romney to thank for it. That`s
his greatest contributions to conservative movement, to show that the
American free enterprise system, which is under attack by the Obama
administration, does work for real people, middle class people -- because
let me tell you the people working at Sports Authority and Staples, David,
those aren`t the elite. Those are middle class Americans using those jobs
to put food on the table and keep a roof over their heads and send their
kids to college.

(END VIDEO CLIP)

SCHULTZ: Did he say they are middle class Americans when it comes to
the economy? Chris Christie, now get this -- a top surrogate for Mitt
Romney passing off jobs as Staples and Sports Authority as middle class
jobs.

Folks, we need to talk about this. Now, these are hard hit working
Americans, but if this is your only income, let`s face it, it`s barely a
living wage.

Many people who work at either of these stores are hourly employees,
check out workers, folks who stock shelves, warehouse workers, they`re
making 8, 9, 10 bucks an hour, which is less than $20,000 a year. A good
chunk of these jobs are part-time as well with limited benefits, if
benefits at all.

This is, I guess you could say, the Republican view of the middle
class. These are people living paycheck-to-paycheck, working a couple jobs
to put food on the table and keep a roof over their head. A lot of them
are just one sick kid or broken down car away from a real financial
problem.

Forget about saving for college and retirement. Yes, these are jobs.
But many of them are not careers. And they are not middle class. Yet,
this is Chris Christie`s idea of a middle class America?

For Governor Christie to say that Mitt Romney created a bunch of
middle class jobs I think is economic Psycho Talk.

(BEGIN VIDEO CLIP)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: We do our laundry at least
once a week, because we will be on the road for 30 straight days. Who else
do you think is going to do our laundry?

(END VIDEO CLIP)

SCHULTZ: Coming up, our political panel on middle class Mitt`s
glamorous life.

And the Gingrich-Romney slug fest.

(BEGIN VIDEO CLIP)

ROMNEY: He has been working as a lobbyist. Yes, he has been working
as a lobbyist.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I was not a lobbyist, I
was never a lobbyist. I never did any lobbying.

(END VIDEO CLIP)

SCHULTZ: And John Boehner is giving his take on the State of the
Union and lying through his teeth.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R), HOUSE SPEAKER: It`s the president`s policies
that have actually made our economy worse.

(END VIDEO CLIP)

SCHULTZ: Jonathan Alter is here to preview tomorrow night`s big
speech.

(COMMERCIAL BREAK)

SCHULTZ: Welcome bank to THE ED SHOW. The carnival continues. Mitt
Romney`s son Tweeted out this picture of dad and mom doing the laundry the
day of the South Carolina primary. There he is, pouring laundry detergent
into the washing machine. Well, here`s the aftermath.

Oh, it`s the political season. We`re just having fun with it here.
But look, the Romney campaign -- basically, they made a choice. They
decided to send out a picture of the candidate doing his own laundry.

Romney says he does it every week. Take a look at the picture again.
I guess it`s supposed to portray him as a regular guy, middle classer just
like you. Romney is a vulture capitalist, millionaire, who was hiding his
tax returns until he ran in this buzz saw, this place called South
Carolina.

Do you think that picture lends him in a common touch kind of manner?
Let`s bring in Martin Bashir, host of "THE MARTIN BASRIH SHOW" here on
MSNBC, Joan Walsh, editor at large, Salon.com, with us tonight, and MSNBC
political analyst Richard Wolffe.

Richard, it just sure seems to me that Mitt Romney is doing everything
he possibly can to tell America, you know, I got a lot of money, but I`m
just like you. Is it working?

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Well, you know, when you
live on the real streets, as he does, you know how to use those little
coin-operated things that give you those small boxes of detergent. But if
you actually did your laundry every week, you might actually have a bigger
box of powder. So, I don`t find the photo very convincing.

Maybe it was because it was so extraordinary that the son Tweeted it.
It`s a nice try. It`s funny. But his efforts to be middle class, just
like everyone else, they just seem hollow.

SCHULTZ: Here is Romney on the economy. Let`s listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: How do you answer the president`s argument that
the economy is getting better in a general election campaign, if you
yourself are saying that it`s getting better?

ROMNEY: Of course it`s getting better. The economy always gets
better after a recession. There is always a recovery.

The question is: has it recovered by virtue of something the president
has done, or has he delayed the recovery and made it more painful? And the
latter is, of course, the truth. The president`s policies have made this
recession deeper.

UNIDENTIFIED FEMALE: Isn`t that a hard argument to make? Is that a
stark enough contrast?

ROMNEY: Have you got a better one, Laura? It just happens to be the
truth.

(END VIDEO CLIP)

SCHULTZ: Joan Walsh, kind of twisting in the wind there, isn`t he?

JOAN WALSH, SALON.COM: I mean, I`m not a big Laura fan, but that was
a little bit snippy. It`s sort of like how dare you challenge on this,
Laura? Going back to the laundry picture, both things are kind of similar,
in that every time he tries to do something normal, he looks like an
anomatronic robot imitating a normal human being.

So it`s just not working. I think the other thing he doesn`t get, Ed,
is that we don`t expect him to do his laundry. We really don`t begrudge
him his wealth, either. It`s really about both fairness and justice and
the fact that he`s participated in the hollowing out of the middle class.

And that is why he`s having a problem. It`s not that he`s wealthy.
We have had lots of wealthy politicians. As long as they work for the
people, we`re fine with it.

SCHULTZ: Let`s talk about the debate. Martin, how will Romney`s
debate performance tonight compare with South Carolina?

BASHIR: If you think about how he performed last week, I think he was
a bit like a door-to-door salesman working for Avon. He would go door-to-
door and try to sell you some cosmetics.

Then Newt Gingrich turns up and New Gingrich is a mobster. He`s
running a racquet. He comes and tells you, if you don`t pay him, he is
going to take your house. So what he does is he tells you that the country
is going to be taken from you, that the United States is going to become a
socialist Europe.

The problem for Romney is he has to go from having been a door-to-door
salesman, a very nice man who is trying to be a friend of yours, to being
someone as nasty and as virulent and as nefarious as Newt. And that is the
challenge for tonight.

SCHULTZ: What do you make of it, Richard? It seems to me that Romney
is out of his game right now. He`s in the political wilderness. He`s
doing things that he`s -- in a very uncharacteristic manner. And I think
it diminishes him a little bit. Your thoughts?

WOLFFE: Well, so far, he has actually been able to hide the attacks
behind other people. His super PAC has been out there. He has been able
to stay positive.

Now he`s having to do it himself. And the problem for him is that
he`s going after something that actually Republicans don`t care about.
He`s trying to say Newt is bad because he is a lobbyist. You know, the Tea
Party didn`t care that Dick Armey was a lobbyist.

The Republican voters voted Dan Coats in, who was a lobbyist, to be
senator from Indiana. And Haley Barbour, who ran his own lobbying shop,
was one their saviors who didn`t run for president. So I think he`s on to
the wrong thing.

If he`s testing character, which is where he really stumbled on tax
returns, if he`s testing whether Newt can take the pressure in these
debates, Newt can take the pressure. So I don`t know that their strategy
is going to work for him.

SCHULTZ: Joan, does it matter if Newt Gingrich was a lobbyist or not,
that he had a personal services contract with Freddie Mac. I read the
contract. It`s pretty standard stuff. He was a consultant.

WALSH: Well, you know, it should matter. It does matter to us. It
should matter to other people. But Richard is right. It seems not to
matter. Now, I guess he could hit him harder or someone could hit him
harder on the fact that he`s basically lying about what he did.

But again, it seems not to be resonating with a very angry Republican
base who desperately want someone to stick to it President Obama and
demonize President Obama even further. I don`t think it`s working.

SCHULTZ: He`s just selling fear, is what he`s doing. Martin Bashir,
Joan Walsh, Richard Wolffe, stay with us. We`ve got so much more to talk
about.

Newt Gingrich is simply better than Romney at hating President Obama.
That is what it`s coming down to.

We`ll talk about his dog whistle politics, next.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. Let`s face it, one of the
reasons Gingrich won Saturday was because he is better than Mitt Romney at
vilifying President Obama.

(BEGIN VIDEO CLIP)

GINGRICH: President Obama has been historically the most effective
Food Stamp president in American history.

(END VIDEO CLIP)

SCHULTZ: Congressman James Clyburn of South Carolina talked about the
coded language Gingrich is using.

(BEGIN VIDEO CLIP)

REP. JAMES CLYBURN (D), SOUTH CAROLINA: Newt Gingrich is really
throwing red meat to the base, saying little words and phrases that we are
very familiar here in the south.

I`m saying that he`s appealing to an element in this party that will
see President Obama as different from all other presidents that we have
had.

(END VIDEO CLIP)

SCHULTZ: Gingrich responded to Clyburn`s criticism shortly after.

(BEGIN VIDEO CLIP)

GINGRICH: I think it`s unfortunate that liberal leaders, whatever
their ethnic background, can`t have an honest, open debate about policies
that fail. The fact is far more whites than blacks are on Food Stamps.
And liberals shouldn`t get away with hiding the consequence of their bad
policies by yelling racism.

(END VIDEO CLIP)

SCHULTZ: Gingrich knows exactly what he`s doing and he`s trying to
have it both ways. I`m joined again by MSNBC host Martin Bashir of "THE
MARTIN BASHIR SHOW," also Joan Walsh, Salon.com, and MSNBC political
analyst Richard Wolffe.

Martin, does that fly?

BASHIR: Well, it`s interesting. Gingrich lies repeatedly. First of
all, we know today that more people were collecting Food Stamps under
George W. Bush than are under President Obama. So that is the first,
something like a difference of about half a million people.

But the second point that he makes in this kind of ethereal, beautiful
Newt Gingrich way -- I couldn`t possibly be using this language. He`s an
expert at use thing this language.

We traced back an editorial from the "New York Times" in 1994 where
they accused him of using coded language in exactly the same way. He`s
doing exactly the same thing. It`s almost 20 years. He`s the expert at
this. He barely conceals a nasty, virulent racism, and then he points it
repeatedly at both the president and also at those who are picking up Food
Stamps who need them.

SCHULTZ: Joan, does the Republican base just gravitate to this kind
of visceral attitude towards the president? Is this what the Republican
party is going to come up with as far as a nominee?

WALSH: I really hope not. I desperately hope not. But it looks
like, for now, it`s working.

I mean, we have a really interesting case study in the Republican
party in these two candidates, because Mitt is the candidate of vulture
capitalism that hollowed out the middle class and represented and enriched
the top one percent.

But Newt is the face of the politics of resentment and racism and
angry white male rage that let guys like Mitt do that to the economy. They
work hand-in-hand. We have seen it for 30 or 40 years now, Ed.

It`s working for now. I hope people wake up.

SCHULTZ: It seems like it`s a Republican habit, when somebody stands
up and says something about President Obama, everybody seems to just get
quiet and let the words be spoken and not challenge. Here is an example,
Santorum at a town hall today.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: He is an avowed Muslim. And my question is why
isn`t something being done to get him out of the government? He has no
legal right to be calling himself president.

RICK SANTORUM (R), PRESIDENTIAL CANDIDATE: Well, I`m doing my best to
get him out of the government.

(END VIDEO CLIP)

SCHULTZ: Richard, notice the candidate made no effort to correct the
woman and allowed that just to go out there. And there may be people
consuming it, believing it.

WOLFFE: And compare that to John McCain in 2008 who, when confronted
with this kind of thing, said actually, you`re wrong. There is -- there is
something that they are condoning implicitly. Rick Santorum may feel that
he hasn`t got enough support that he can turn away any voters at all.

But what this speaks to is the sort of underlying judgment that the
president is some interloper. He doesn`t look like the kind of people that
they associate with the presidency. Therefore he doesn`t deserve to be
there.

There is some kind of conspiracy or he`s an amateur. That is why
Gingrich is so good at this stuff. It`s not because it`s subtle at all. I
don`t think he does dog whistle politics. He does fog horn politics.

and the point is that he is channeling not just resentment but
victimhood, that there is something that is pushing them down. And that
thing that is pushing them down is embodied by this alien president who
doesn`t deserve to be there.

SCHULTZ: Finally, Martin, you know, they keep saying that President
Obama wants to make us a socialist country and wants to be the European
model.

BASHIR: Ed, this is the most wonderful irony at all, simply for this
reason: Boehner, Cantor, Gingrich, Romney all describe the president as
wanting to transform or translate American life into a socialized European
state.

Guess what? Do you know what they are doing in Europe? They are
doing austerity. They are doing the very thing that Cantor, Boehner,
Romney and Gingrich and want. Do you know what`s happening? In Spain, you
unemployment is over 40 percent. In the United Kingdom, it`s into a second
double dip recession. And Italy is on the border of recession.

It`s the most beautiful irony, that these people accuse President
Obama of wanting to create a European socialized state. And yet the very
strategies, policies that they want are being deployed in Europe to
disastrous effect.

SCHULTZ: At least the president has got Mitt Romney admitting that
the economy is getting better. That is pretty good. Martin Bashir, Joan
Walsh, Richard Wolffe, great to have you with us tonight. Thank you.

House Speaker John Boehner is using bogus talking points to rip into
the president ahead of tomorrow night`s State of the Union Speech.
Jonathan Alter will help me set him straight. That`s coming up next, with
a good preview.

(COMMERCIAL BREAK)

SCHULTZ: THE ED SHOW survey I asked has Barney Frank lived a good
enough life to see Newt Gingrich be the GOP nominee? Eighty one percent of
you said yes; 19 percent of you said no.

Coming up, we`ll preview the president`s State of the Union with MSNBC
political analyst Jonathan Alter.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BOEHNER: I`ve read a lot about what the president`s going to talk
about Tuesday night. And it sounds to me like the same old policies that
we`ve seen: more spending, higher taxes, more regulations. The same
policies that haven`t helped our economy, they have made it worse.

If that is what the president is going to talk about Tuesday night, I
think it`s pathetic.

(END VIDEO CLIP)

SCHULTZ: House Speaker John Boehner playing dirty again, ahead of the
president`s State of the Union Speech tomorrow night. In addition to
calling the president`s policies pathetic, Boehner came out with a scary
movie trailer previewing the president`s speech.

(BEGIN VIDEO CLIP)

(MUSIC)

(END VIDEO CLIP)

SCHULTZ: Well, of course, the facts show that Boehner is completely
wrong. The economy has improved, which President Obama pointed out in his
State of the Union preview.

(BEGIN VIDEO CLIP)

OBAMA: An economy that was shrinking is now growing again. And we`ve
created more than a million jobs over the last year. The stock market is
back up. And corporate profits are healthy again. We`ve still got a lot
more work to do.

My number one focus is going to be making sure that we are
competitive, that we are growing, and we are creating jobs, not just now,
but well into the future. And that`s what is going to be the main topic of
the State of the Union.

(END VIDEO CLIP)

SCHULTZ: Let`s turn to Jonathan Alter, MSNBC political analyst and
columnist for "Bloomberg View."

Twenty two months of private sector job growth, fewest unemployment
claims since April of 2008, General Motors back as the world`s largest
automaker. I think the president is pretty bashful about the stock market,
which, of course, has everybody`s retirement or 401(k) or something. Most
Americans are in it.

And it was I think just over 6,000 in March of 2009. And it`s over
12,000 now. How can you argue with that success. What does he have to do
tomorrow night?

JONATHAN ALTER, "BLOOMBERG VIEW": I think he has to layout some of
where we were and where we`ve come to in order to just put the lie to this
lie. I hate to be so blunt about it, Ed. But if you say, as the speaker
of the House just did, that the economy has gotten worse, that`s a lie.

If he said we`ve had anemic, disappointing growth; we need to do much
better; the president should be fired for not doing well -- that would all
be fair political comment. But he actually says something that is
factually untrue.

So the president has to layout a story that explains that things have
gotten better. There is tremendous misunderstanding about his
accomplishments. People don`t understand that the Recovery Act -- the
stimulus actually worked.

They don`t understand that the auto bailouts worked. There is some
educating that he needs to do. And then after that, he needs to pivot to a
second term agenda. He`s not going to get reelected if he doesn`t tell the
voters what to expect in a second Obama term.

SCHULTZ: Should he hit on 25 or 30 things? Or focus in on three or
four and get detailed? What -- most State of the Union Speeches are very
broad and what not. But we`re at a real critical point right now.

This speech tomorrow night and probably the convention are probably
the two big platforms the president is going to have, in terms of millions
of people listening to what he`s saying. So how he uses it tomorrow night
is pretty important.

ALTER: It is. He needs to draw a road map for the middle class, for
the survival of the middle class, for the hopes of those who are below the
middle class to get into the middle class. That means a lot of talk about
education, about closing the skills gap, so that we train the workforce of
the 21st century.

And he needs to tell a story -- and he`s good at that when he focuses
on it. But he hasn`t done enough of that as president so far. He needs to
bring the people along in what is called a narrative.

SCHULTZ: You know, the president, two years ago, called out the
Supreme Court on Citizens United. Took a lot of heat for it People said
it was political. Does he in the speech tomorrow night say look, I`ve had
to put up with a record number of filibusters. You know, we`re moving the
economy in spite of you guys sitting over here that haven`t really partaked
in moving the country forward? Does he do that?

ALTER: He has to be careful about seeming to whine.

SCHULTZ: It is a fact.

ALTER: It is a fact. But he has a lot of facts to cover. I think a
smarter thing would be to be positive and to start to build a movement for
a Constitutional amendment to say that money is not speech. And even if
we`re not going to get that for a few years, to put himself on the side of
that. That is how change happens.

If a president comes out for a big reform in the State of the Union,
you can then build support for it over time. I don`t expect him to do
that, but I think he should.

SCHULTZ: All right. Of course, what about income inequality? We`ve
had a big discussion about that. Does he hit on that? Does he hit on the
middle class?

ALTER: He does have to talk about that, and explain how that is
getting worse and how all he`s asking is for the wealthy to pay their fair
share, nothing more, and that it`s not right.

He`s going to talk about the Buffet Rule, that it`s not right for
Warren Buffet to be paying a lower tax rate than his secretary. You can
expect him to hit that point.

SCHULTZ: This is a stage where the president really performs
extremely well. This is not training camp time. I mean, he knows how to
do this and -- but does he -- quickly, does he go after Republican
opponents in any way, shape or form? Or does he take the high road?

ALTER: He will take the high road. He`s speaking in front of them.
But he will challenge those Republicans to invest in this country. They
are voting against things that they voted for in the past, like
infrastructure. And he will put to it them on that.

SCHULTZ: Jonathan Alter, always a pleasure. We`ll see you tomorrow
night.

That`s THE ED SHOW, I`m Ed Schultz. I`ll be in the Rotunda tomorrow
night, reporting from Washington.

"THE RACHEL MADDOW SHOW" show starts right now. Good evening, Rachel.

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

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