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'The Last Word with Lawrence O'Donnell' for Wednesday, January 25, 2012

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Guests: Howard Fineman, Richard Wolffe, Bruce Bartlett, Tim Pawlenty, Steve Clemons

LAWRENCE O`DONNELL, HOST: The day after the State of the Union,
President Obama went to Iowa and then Arizona, where he got into a weird
argument with a weird governor, perhaps our weirdest governor.

Mitt Romney went to Miami and pretended to be normal.

And Newt Gingrich admitted he`s not normal, and then talked about
going to the moon.

All that actually happened today.

(BEGIN VIDEOTAPE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: You know, I know
there`s been a lot of excitement.

ANDREA MITCHELL, NBBC NEWS: President Obama taking his re-election
message to Iowa.

MARTIN BASHIR, MSNBC HOST: The president began his tour in Iowa
today.

OBAMA: Our businesses have created more than 3 million jobs over the
last 22 months.

BASHIR: And it is game on 2012.

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: He`s going to run as a
left-wing populist.

OBAMA: Asking a billionaire to pay at least as much as his secretary,
that`s just common sense.

ALEX WAGNER, MSNBC HOST: Mitt Romney, Mitt Romney.

UNIDENTIFIED MALE: The president was speaking as if Mitt Romney was
going to be the nominee.

OBAMA: This is not class warfare.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: He`s really trying to divide
America.

OBAMA: America`s not about handouts.

No bailouts, no handouts, and no copouts.

ROMNEY: And to try to say that Republicans are all about the rich
people.

BASHIR: Governor Romney blasted the president.

ROMNEY: I`m fighting for all middle class Americans.

BASHIR: That`s a bit rich for someone who pays a 14 percent tax.

ROMNEY: The banks aren`t bad people, they`re just overwhelmed right
now.

Corporations are people, my friend.

GINGRICH: Swiss bank accounts and Cayman Islands and automatic $20
million a year income with no work.

BASHIR: Is there anything that Newt doesn`t know?

CHRIS MATTHEWS, MSNBC HOST: No one has any idea why Mitt Romney`s in
public life.

UNIDENTIFIED MALE: Newt Gingrich taking the lead in the Sunshine
State.

GINGRICH: By the end of my second term, we will have the first
permanent base on the moon, and it will be American.

MATTHEWS: Newt Gingrich spinning his tryst with Callista.

GINGRICH: It may make me more normal than somebody who wanders around
seeming perfect.

BASHIR: Is he the superior species?

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

GINGRICH: I have confessed my weaknesses.

COULTER: No, I don`t like Obama, and this is going to be an historic
landslide if Gingrich is the candidate.

I get the last word! I get the last word!

(END VIDEOTAPE)

O`DONNELL: Today, the president took his message that the state of
our Union is getting stronger on the road. The first stop was Iowa and
then the second stop was Arizona, where he was given a very peculiar
welcome by Republican Governor Jan Brewer.

This photograph only adds to the collection of very strange Jan Brewer
moments caught on film.

(BEGIN VIDEO CLIP)

GOV. JAN BREWER (R), ARIZONA: I have -- done so much, and I just
cannot believe that we have changed everything since I have become your
governor in the last 600 days. Arizona has been brought back from its
abyss. We have cut the budget, we have balanced the budget, and we are
moving forward. We have done everything that we could possibly do.

We have -- did what was right for Arizona. I will tell you that I
have really did the very best that anyone could do.

(END VIDEO CLIP)

O`DONNELL: Joining me now with more on the president`s day after the
State of the Union and exactly what happened at the airport in Arizona is
Richard Wolffe, MSNBC political analyst, and author of "Revival: The
Struggle for Survival Inside the Obama White House," and Howard Fineman,
MSNBC political analyst and editorial director for AOL/"Huffington Post."

Thank you both very much for joining me tonight.

Howard, everything I know about what happened in that airport in
Arizona, I have learned from the "Huffington Post."

HOWARD FINEMAN, MSNBC POLITICAL ANALYST: Good, good, good.

O`DONNELL: I`ve just been reading every dispatch.

What explains this weird confrontation with the governor, shaking her
hand, fist, almost, at the president?

FINEMAN: Well, having talked to some White House people and some
Democrats familiar with it and having seen what Jan Brewer had to say,
here`s how I reconstruct the events.

O`DONNELL: All right.

FINEMAN: The president comes off the plane, the governor hands him a
letter and says, I -- this letter says, I would like to have another
meeting with you to discuss immigration and other important issues of the
day.

And the president says, well, Governor, I happen to have read excerpts
from the book that you wrote and the last time we had a meeting in the
White House in 2010, I thought it was a pretty cordial meeting. We all
said it was a cordial meeting. I read your book and you said you were
condescended to and we didn`t let you in the room and we took away your
cell phones. What`s going on here?

At which point she starts, you know, waving her finger. And the way
the Democrats say it is they were -- they were basically set up. This was
a stunt by her.

But I would also say, one of the cardinal rules of politics,
especially when you`re president is, don`t punch down. Jan Brewer`s Jan
Brewer. Barack Obama`s the president of the United States. I don`t know
that it was great for him to end up having his finger being waved at by
her. But that`s the way it worked out.

O`DONNELL: Any reporting on what she was saying during the finger-
waving moment?

FINEMAN: Well, the answer is, I don`t know specifically, except she
was saying, I think she was saying, according to the White House officials,
she then got upset when he said, your account in the book is inaccurate,
and she said, well, it is what it is. The book is what it is, whatever
that means.

O`DONNELL: Richard Wolffe, the president looks perfectly calm in that
situation, as he always does, looks perfectly gentlemanly. And it looks to
me to be one of those images of Republicans being unreasonable in the face
of the reasonable man.

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Yes. Well, look, for a
start, to pick up on Howard`s rule about never punching down, the president
about being president is the only way to punch is down. There is no
punching up from being president.

So if you are going to punch, you`ve got to actually try and do it in
a reasonable way. At least he`s not the one doing the finger wagging.

But the important thing here is that here`s a president who -- look,
he`s in a bubble, that`s for sure. He`s not used to people misinterpreting
what he says or being rude about him in books. In fact, when he wrote
about President Bush in "The Audacity of Hope," he wondered out loud
whether the president was really in touch with things and it all seemed
very strange.

Clearly, for Governor Brewer, she thought leaving their phones outside
the Oval Office was confiscating, some kind of police state. In fact,
everyone leaves their phones outside the Oval Office. That`s just a rule
of the place.

And there`s a bigger problem for the president, which is that he has
this record of being tough on immigration. Ask the Latino community what
his record is on deportations. He thought there would be reciprocation.
He thought people like Governor Brewer will be reasonable. Republicans
would be reasonable and therefore sign up to things like the DREAM Act.

They discounted everything he did and accused him of being weak and
pathetic on the border. And, hey, that`s how you get into a finger
wagging.

FINEMAN: That`s what this -- Lawrence, that`s what this was really
all about. What you saw today was a picture that`s a proxy for a very deep
argument about immigration. Don`t forget, the president was a
constitutional --

O`DONNELL: So, Howard, she wants the picture to say, look, I`m
fighting that guy about our border issue.

FINEMAN: Exactly. That`s what she wants and that`s what she got out
of it. I think the president -- the president`s not going to win Arizona
anyway, but he may win other states in part based on Hispanic vote, because
this is a very deep argument that`s now in front of the Supreme Court, the
Supreme Court`s going to decide the Arizona case probably some time this
summer.

Jan Brewer`s the main actor in it against the president. Very crucial
picture of what is really one of the main issues in the campaign.

O`DONNELL: But this is someone with no national credibility, Jan
Brewer, in a moment like this. So, it`s not like there`s going to be
anyone who`s outside of Arizona who`s voted for her and isn`t fanatical
about her, who kind of leans into it and says, oh, yes, we`re with her.

FINEMAN: Well, that`s my point. That`s why -- the picture, which
shows her waving the finger at the president, sells on the president`s
behalf in other places, in other states, where the Hispanic vote is really
going to matter. That was my point.

O`DONNELL: Now, the president has taken his, it`s not class warfare,
it`s common sense argument on the road. Richard Wolffe, all the polling
indicates that the public is with the president on fair income tax sharing
by the upper ends of the brackets, especially the super rich like Mitt
Romney. Here he is doing it with Mitt Romney`s tax returns now out there.
It seems like this is the moment where that argument is really getting
traction.

WOLFFE: Right. And it had traction with not just Democrats, but
crucially independents, a vast majority of independents, and the majority
of Republicans, siding with the issue on taxing the super wealthy here.

You know, the Romney campaign has been struggling with humanizing the
candidate. And in fact, they have managed to put a human face on what
would otherwise be a fairly abstract issue. And so, Romney has become the
personification of this problem, and even Mitch Daniels thinks that these
super wealthy people should not have the kind of deductions that middle
class folks have, that have reduced Mitt Romney`s tax rate to below 15
percent.

So, you know, there is -- there`s a real-life effect that Mitt Romney
has brought into the open here, which was otherwise a very nice loophole
for B.C. private equity guys just like him. I`m sure that lobby is now
regretting the fact that one of their own is in this prominent position,
running for president.

O`DONNELL: Howard, CBS News poll coming out, showing that 91 percent
of Americans approved of the proposals, approved of what they heard,
basically, from the president last night in that speech. I mean, that`s as
big a score as you can get.

FINEMAN: Yes, I thought it was a good speech.

O`DONNELL: Ninety-one percent. That`s most Republicans in this
country, agreed with what he said.

FINEMAN: To get over 90 percent of the American people to agree on
anything is practically impossible.

I thought, actually, it was one of his better speeches. He was
criticized, to some extent, on the left, because it wasn`t grand enough, it
wasn`t aggressive enough.

I think he was proposing things that are unarguably sensible. It was
a very sensible speech by him, and yet delivered in a very sharp way. So
he`s basically saying to the Republicans, you won`t accept this sensible
stuff, then you go off in the corner and hide, because we`re going to take
the mainstream.

And I thought that was one of his best attempts to do it so far in his
presidency. Too bad he didn`t give that kind of speech at the beginning
instead of now.

O`DONNELL: Richard, some people thought it sounded combative. I
think it may have sounded combative if you were some Republican House
committee chairman. But to me it sounded as if he presented every one of
his positions that we know to be partisan, we know what the divides are
between the parties, but he presented them in the most reasonable sounding
way possible, and that`s how you get that 91 percent score.

WOLFFE: Well, let`s take his most combative, most confrontational
position, which was that if you don`t believe America is back, then you
don`t know what you`re talking about. So he turned to the most insulting
position on the most patriotic position possible.

I -- you know, there were moments when he got in their face, but these
were pretty outrageous idea. The idea of even someone reasonable on the
Republican side like Mitch Daniels, who say the economy has gotten worse
since this president took office, just not borne out by the facts.

O`DONNELL: Richard Wolffe and Howard Fineman, thank you both very
much for joining me tonight.

FINEMAN: Thank you, Lawrence.

WOLFFE: Thanks, Lawrence.

O`DONNELL: The president talked taxes last night and the Republicans
sat on their hands when they did. You could just feel them wanting to boo
when the president talked about the rich paying their fair share of taxes.

You`d never know President Obama used the same language, the same
concept that President Reagan used about the rich paying their fair share.

So, when did the Republicans become such an unreasonable, anti-tax
party and what makes them incapable of compromising on taxes the way
President Reagan did? We`ll answer that, next.

And more than once last night, President Obama steered his State of
the Union address straight at Mitt Romney. Former presidential candidate
and now Romney supporter Tim Pawlenty is here. We`ll find out just how
panicked the Romney campaign is after the big Gingrich win in South
Carolina.

And later, once again, the president secretly ordered Navy SEALs into
a dangerous mission, he got the word of their success just before the State
of the Union address last night. We`ll give you that dramatic story later.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JIMMY KIMMEL, COMEDIAN: Yesterday, Mitt Romney, who`s hoping to run
against President Obama, released his tax returns from the last two years.
And what we`ve suspected all along has finally been confirmed. He`s rich.

Romney and his wife earned more than $42 million over the last two
years and only paid about 15 percent in taxes, but in fairness, he has a
lot of expenses. His "just for sideburns" budget alone is like $300,000 a
year.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE H.W. BUSH, FORMER U.S. PRESIDENT: I`m the one who will not
raise taxes. Congress will push me to raise taxes and I`ll say, no, and
they`ll push and I`ll say no, and they`ll push again, and I`ll say to them
-- read my lips: no new taxes.

(END VIDEO CLIP)

O`DONNELL: You know, if you`ve only been following politics for the
last 20 years or so, you might think that Republicans have always been
adamantly anti-tax, always dug in against any increase in taxes in any way.
Not true.

If you`re wondering why the Republicans are now so dug in against
President Obama`s proposals, his proposals last night for higher tax rates
for the rich, it actually goes back to a lesson Republicans believe they
learned when Barack Obama was in law school. You just heard Vice President
George H.W. Bush in 1988 accepting the Republican Party`s nomination for
president at their convention in New Orleans and branding the Republican
Party as the anti-tax party more clearly and more emphatically than ever
before. Read my lips: no new taxes -- became the most memorable line from
that presidential campaign.

Two years later, just two years later, as president, George H.W. Bush
signed the Omnibus Budget Reconciliation Act of 1990, which increased the
top tax rate from 28 percent to 31 percent. It also increased the
alternative minimum tax from 21 percent to 24 percent. It increased the
gas tax by a nickel. The cigarette tax went up 8 cent cents a pack. And
in an affront to that mythical blue-collar voter all politicians want to
appeal to, Joe six pack, a six-pack of beer was taxed an additional 16
cents.

And finally, the budget act of 1990, signed by President Bush after
saying, "Read my lips: no new taxes," invented a whole new set of taxes,
luxury sales taxes on automobiles, boats, personal aircraft, and fur coats.

President Bush had simply done what President Reagan had done before
him. He reached a compromise agreement with Democrats to raise taxes as
part of a deficit reduction package, a package that included 70 percent
spending cuts that the Democrats didn`t like and 30 percent tax increases
that President Bush and the Republicans didn`t like, but the president
compromised on it.

That`s what bipartisan compromise used to look like in Washington.

And then, the worst thing in the world happened.

Well, the worst thing for the future possibility of tax compromises
between Democrats and Republicans. President Bush lost his re-election bid
to the Democrat, Bill Clinton, who campaigned on a middle class tax cut.
That`s right, the Democrat got to campaign against a tax-raising Republican
president, claiming that he, the Democrat, would cut taxes when he was
elected president.

Bill Clinton won and then instead of cutting taxes, he actually
proposed and the Democrats in Congress passed the biggest tax increase in
history.

Clinton`s campaign promise of a middle class tax cut disappeared, just
like President Bush`s campaign promise, "Read my lips: no new taxes."

And from President Bush`s defeat, modern Republicans took the lesson
that we Republicans must never, ever, ever again compromise with Democrats
on raising taxes. Never again, not one penny, not ever -- read my lips: no
new taxes.

Every Republican who has made that promise since George H.W. Bush
broke that promise, has really meant that promise. They have kept that
promise. Not one Republican vote has been cast for an increase in federal
taxation of any kind since 1990.

Joining me now is Bruce Bartlett, who served as executive director of
the Joint Economic Committee, as a senior policy analyst in the Reagan
White House, and as deputy assistant secretary of the treasury during
George H.W. Bush`s administration. He is now a columnist for the "Fiscal
Times" and a contributor for "the New York Times," and he`s the author of
the new book "The Benefit and the Burden: Tax Reform, Why We Need It and
What It Will Take."

Bruce, thank you very much for joining me tonight.

BRUCE BARTLETT, FORMER REAGAN POLICY ANALYST: Happy to be here.

O`DONNELL: Bruce, what do you make of think theory that the worst
thing that happened to reasonable tax policy in this country is that
President Bush was defeated in his re-election after agreeing to a tax
increase compromise with Democrats?

And let me just stipulate, on a personal level, Bill Clinton beating
President Bush was one of the best things that ever happened to me in my
own career. I was instantly elevated to running the finance committee in
the Senate under a Democratic president and was very much a part of working
hard to do that big tax increase that we did.

So this is leaving my personal benefit aside, from President Clinton`s
win, and there`s all sorts of other benefits to President Clinton`s win
from a Democratic perspective. But for the future of tax policy and the
tax dialogue between the parties, it seems to me that President Bush
getting defeated after reaching a compromise with Democrats on taxation has
eliminated, for as long as we can now see, any possibility of another
Republican/Democrat tax compromise.

BARTLETT: Well, it certainly looks that way, as of right now. And as
you recall, Bush got virtually no Republican votes in the House or Senate
on that 1990 legislation. I think there were a couple. You may remember
better than I do.

But I think there`s a story to this, which is -- 1990 was the last
time you had a leading Republican figure or president who cared about the
deficit. I mean, that`s the other part to this, is that Republicans simply
-- they talk, you know, a good line, but in their mythology, deficits are
never caused by lower revenues, only by higher spending. And that`s just
complete nonsense.

A huge part of the deficit right now is the fact that we have among
the lowest taxes as a share of the GDP in our history. And I don`t think
very many people know that.

O`DONNELL: Bruce, in your book, you have a passage that is dead on to
where our politics are today on this. You say, "People used to be incensed
when the rich paid tax rates lower than those barely in the middle class.
Today, they don`t seem to care. Why, I don`t know. I think it may have to
do with the decline of the balanced budget as an expected norm in budget
policy."

It seems to me that the budget rule -- the Buffett Rule as being
pushed by the president, Mitt Romney`s release of tax returns at the same
time, seems to have possibly raised this issue to the point where people
will care.

BARTLETT: I hope so. But the point I was trying to make is that if
you assume that deficits will lead to higher taxes, then it makes sense
that if somebody else is cheating on their taxes, it comes at your expense.
You may have to pay higher taxes in the future because this guy`s cheating.

But if you take the Republican idea that deficits don`t matter, as
Vice President Cheney once said, then it doesn`t really matter if somebody
else is cheating on their taxes. It doesn`t come at your expense.

So I think that`s what -- that`s the point I was trying to get at.

And also, if you believe that higher spending leads to higher taxes,
then you`re going to want to restrain spending. But if deficits don`t
matter, then higher spending never has any cost. So I think the Republican
policy of never raising taxes has, ironically, led to higher spending.

O`DONNELL: Bruce, you point out something that I didn`t notice in the
book. You mention that we all know that President George W. Bush was a big
tax cutter. But it`s also true, you say here, that he was the only
president since we`ve invented the tax code who never raised a single tax
in any way.

BARTLETT: Well, at least since Hoover. I don`t think Coolidge raised
any taxes, but every president since Herbert Hoover has raised taxes to
some degree or another. And -- but George W. Bush never did. And there`s
a footnote in my -- to a treasury document that explains that.

O`DONNELL: It hasn`t always been this way. Bruce Bartlett, your new
book is "The Benefit and the Burden" -- thank you very much for joining us
tonight.

BARTLETT: Thank you.

O`DONNELL: Coming up, today Mitt Romney said he would consider
putting Newt Gingrich in the vice presidential slot on his ticket, which is
very bad news for Chris Christie and my next guest, Governor Tim Pawlenty.

But up next, a rare moment of bipartisanship on Capitol Hill today as
Gabby Giffords made her resignation official.

(COMMERCIAL BREAK)

O`DONNELL: Today, Gabby Giffords performed a bit of a miracle in
Washington. She brought the House of Representatives together in a rare
moment of bipartisanship. Kelly O`Donnell has the report.

(BEGIN VIDEOTAPE)

KELLY O`DONNELL, MSNBC CONGRESSIONAL CORRESPONDENT (voice-over): A
truly extraordinary day. Party and politics simply did not matter.

REP. STENY HOYER (D), HOUSE MINORITY WHIP: Gabby, we love you. We
have missed you.

REP. NANCY PELOSI (D), HOUSE MINORITY LEADER: The brightest star
among us, the brightest star Congress has ever seen.

K. O`DONNELL: Gone were the usual fiery passions.

REP. DEBBIE WASSERMAN-SCHULTZ (D), FLORIDA: No matter what we argue
about here on this floor or in this country, there is nothing more
important than family and friendship.

K. O`DONNELL: So many wanted to honor Gabrielle Giffords` grace and
resilience.

REP. ERIC CANTOR (R), MAJORITY LEADER: Gabby`s courage, her strength,
and her downright fortitude are an inspiration to all of us and all
Americans.

K. O`DONNELL: Giffords` year-long, hard-fought recovery brought her
back here. And continuing that work is the reason that she will not stay.

WASSERMAN-SCHULTZ: "My district deserves to elect a U.S.
representative who can give 100 percent to the job now."

K. O`DONNELL: With her Arizona colleagues of both parties gathered
round, best friend, Congresswoman Debbie Wasserman-Schultz, read the letter
of resignation for Giffords.

WASSERMAN-SCHULTZ: I will recover and will return. And we will work
together again.

K. O`DONNELL: Giffords was determined to deliver the letter herself,
each step a challenge.

Speaker Boehner caught her briefly, then let his own tears flow.
Giffords` last vote was on a bill that she co-wrote. It passed. And like
all the tributes, it was unanimous.

PELOSI: She has brought the word dignity to new heights.

K. O`DONNELL: The good-byes, from that joyful bear hug from President
Obama last night, to co-workers who hate to see her go.

UNIDENTIFIED FEMALE: I`m so proud of you! I`ll miss you.

GABRIELLE GIFFORDS, FORMER CONGRESSWOMAN: I miss you.

(END VIDEOTAPE)

O`DONNELL: That was Kelly O`Donnell reporting. We`ll be right back
with Governor Tim Pawlenty.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

JON STEWART, "THE DAILY SHOW": How in the world do you, Mitt Romney,
justify making more in one day than the median American family makes in a
year, while paying an effective tax rate of the guy who has to scan your
shoes at the airport.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I pay all the taxes that are
legally required and not a dollar more. I don`t think you want someone as
the candidate for president who pays more taxes than he owes.

STEWART: No, but you might want one who thinks that`s wrong.

(END VIDEO CLIP)

O`DONNELL: While Mitt Romney continues to defend his right to pay a
lower tax rate than his secretary, President Obama continued to push for
the Buffet Rule again today.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Let`s follow the Buffet
Rule, named after Warren. If you make more than a million dollars a year,
you should pay a tax rate of at least 30 percent. On the other hand, if
you make less than 250,000 dollars a year, which is 98 percent of you, your
taxes shouldn`t go up.

And I just want to make clear, the reason I`ve proposed this is not
because we begrudge financial success in this country.

(END VIDEO CLIP)

O`DONNELL: Joining me now, national co-chair of the Romney campaign
and former Minnesota governor, Tim Pawlenty. Governor, thank you very much
for joining me tonight.

TIM PAWLENTY, FORMER GOVERNOR OF MINNESOTA: Good evening, Lawrence.
Thanks for having me on the show.

O`DONNELL: Now, I know you`re here to speak for candidate Romney.
But I want candidate Romney to speak for himself, just for a second, on
video, with Larry Kudlow today, talking about the Buffet Rule. Let`s just
listen to what he had to say.

(BEGIN VIDEO CLIP)

LARRY KUDLOW, CONSERVATIVE COMMENTATOR: Is this Buffet tax designed
to come at you?

ROMNEY: Well, it`s designed to come at me if I`m the nominee. If I
happen not to be the nominee, he`ll still take the 99 versus one attack.
He`s really trying to divide America, and to try and say that Republicans
are all about the rich people.

Look, Republicans are about middle class Americans. I`m fighting to
help middle class Americans get better jobs and better incomes.

(END VIDEO CLIP)

O`DONNELL: So Governor Pawlenty, what was the panic level today
inside the Romney campaign when that CBS poll came out showing that 91
percent of the public agreed with the president`s proposals in the State of
the Union Address last night?

PAWLENTY: Well, I don`t think there was any panic at all, because I
think as this debate unfolds, we take great solace in the wisdom of the
American people and history, Lawrence. And you know this. Class warfare
rhetoric and arguments almost never works, in fact, doesn`t work in
American politics.

Barack Obama should be focusing on growing the pie, not inciting
people to fight with each other over ever-shrinking pieces of the pie.

And if I just might offer one moment of tutorial on taxes; Mitt
Romney`s taxes, when he earned the money before he actually invested it,
was taxed as income initially. At today`s rate, the highest marginal rate,
35 percent.

O`DONNELL: Governor, we don`t know that. I don`t want to interrupt
you, but we don`t know that. He`ll have to show us 20 years` of tax
returns to prove that.

PAWLENTY: But presumably --

O`DONNELL: -- that he was taxed at that much lower rate that
investment bankers manage to benefit from.

PAWLENTY: Hang with me just for a second, because I know you and your
audience. So let`s say that he earned the income. He got taxed at a high
marginal rate. It`s currently 35 percent. Then he invests it. It`s a
capital gains. It`s not income. He pays another 15 percent on that gain.

And by the way, the companies, in most instances, if they`re formed as
sub-chapter C companies, they`re paying taxes before they distribute the
proceeds to the shareholders.

so it`s a lot more complicated than just saying, you know, he only
paid 14 percent or 17 percent. And beyond all of that -- beyond all of
that, the main point is this: Barack Obama should be focused on growing the
economy, not pitting American versus American to fight with each other over
shrinking pieces of the pie.

O`DONNELL: Well, the president says what he`s advocating is common
sense, not class warfare. But I want to go to one other piece of the State
of the Union Address last night, governor, where President Obama went
directly at Mitt Romney on the auto bailout. Let`s listen to that.

(BEGIN VIDEO CLIP)

OBAMA: On the day I took office, our auto industry was on the verge
of collapse. Some even said we should let it die. With a million jobs at
stake, I refused to let that happen.

In exchange for help, we demanded responsibility. We got workers and
auto makers to settle their differences. We got the industry to retool and
restructure.

Today, General Motors is back on top as the world`s number one auto
maker.

(APPLAUSE)

(END VIDEO CLIP)

O`DONNELL: The General Motors is number one after President Obama
bailed them out -- Mitt Romney said that General Motors should be allowed
to die, that we shouldn`t do that auto bailout. Pretty bad call for Mitt
Romney on that one.

PAWLENTY: Well, not at all, Lawrence. Let`s look at the facts. Mitt
Romney said we live in a nation that has the rule of law. So you don`t get
special treatment just because you`re General Motors or you`re, you know,
fans of the president.

So Mitt Romney called for a structured, pre-planned bankruptcy of
General Motors, under existing law. And the result would have been a
successful result. You know what Barack Obama did? He also oversaw a
structured bankruptcy of General Motors. But guess what he did? He then
took special goodies and parting gifts and gave them to his buddies, the
UAW.

So the main difference between those two approaches, Mitt Romney, on
the rule of law, equal playing field, go use the same system as everybody
else; Barack Obama did that to a point, but then he gave away the political
parting gifts, the crony capitalism gifts to the UAW and others involved in
the transaction.

O`DONNELL: So your argument on the auto bailout is that President
Obama somehow made General Motors much less efficient by giveaways to
labor, but then, miraculously, General Motors becomes, again, the number
one and most successful auto maker in the world? Not just the United
States, the world.

PAWLENTY: They went through a structured bankruptcy and became more
efficient, became more streamlined. They did that themselves. To suggest
that Barack Obama`s gifts to the unions that, you know, supported him
during the campaigns and his parting gifts to them, as part of the heavy
hand of government and the crony capitalism he used, is what turned around
General Motors is ludicrous.

I mean, that is outrageous. Barack Obama, by the way, has no history,
no connection, no executive leadership, no experience in the
entrepreneurial economy, the private economy. His entire life has been in
government or government-related activities. That`s in direct contrast to
Mitt Romney, who spent the bulk of his life as an entrepreneur, a serial
entrepreneur, starting, investing, growing businesses, and providing jobs.

That`s a big difference. And that`s the kind of experience I want in
the next president, in these times.

O`DONNELL: Can you point to me, in our presidential history, to the
great businessman who turned out to be the great president of the United
States?

PAWLENTY: Well, I think there has been a number of people who have
been in business in one way. Ronald Reagan was a businessman, also an
actor, obviously primarily.

O`DONNELL: Oh, that`s a stretch.

PAWLENTY: Well, in the private sector.

O`DONNELL: Private sector, OK. He was the president of a union. He
was president of the Screen Actors Guild. He`s one of those labor thugs.

PAWLENTY: All right. Well, how about Abraham Lincoln. He was a
lawyer and had some investments.

O`DONNELL: Businessman? I don`t think --

PAWLENTY: George Washington. George Washington was --

(CROSS TALK)

O`DONNELL: that`s what makes me laugh about the businessman model.

PAWLENTY: How about George Washington?

O`DONNELL: He was a general!

(CROSS TALK)

O`DONNELL: We`ve never had one. A businessman has never made a good
president of the United States yet. If we have one, we can maybe some day
point to that.

PAWLENTY: Here`s what it does take -- and I think many people who
have been around this president -- look, he has his strengths and
weaknesses, as we all do.

But it is fair to say that he did not have a very deep understanding,
appreciation, or experience in private enterprise, the private economy, the
entrepreneurial economy, or for that matter, even basic executive function,
executive leadership, executive seasoning.

And people who have been around him have said the presidency and his
leadership has suffered as a result. He gives a great speech. But when
you put somebody who hasn`t really run anything, hasn`t really done
anything in terms of executive function, and put him in the most powerful
position in the world, that`s a bad combination.

O`DONNELL: Governor Tim Pawlenty, with the Romney campaign and still
at the top of my short list for Mitt Romney`s candidates for vice
president, thank you very much for joining me tonight.

PAWLENTY: Not going to happen, but thank you.

O`DONNELL: OK, thanks.

Coming up, first Newt Gingrich says something no one can disagree with
-- he`s not normal -- then in the same interview, he says he is more normal
than the other candidates for president because -- he said this -- his life
has included normal things like marriages, divorces, affairs, you know, all
that normal stuff. And that, of course, lands him in tonight`s Rewrite.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GINGRICH: I`m different than a normal politician. I`m different than
a normal politician. I`m different than a normal politician.

(END VIDEO CLIP)

O`DONNELL: He`s right. He`s not a normal politician. Nothing normal
about Newt. The first thing a normal politician does is maintain a very
strict limit on the number of wives on his resume. One was the maximum
number of wives thought possible for a successful presidential candidate,
until 1980, when Ronald Reagan went all the way to the White House with his
second wife, while his first wife presumably watched the Reagan
Inauguration on TV.

Since Reagan, running for president with your second wife at your side
has become so routine, it passed without comment when Bob Dole did it,
followed by John McCain, and John Kerry.

Now, I, for one, could vote for someone who -- for president who had
three wives at the same time or a new husband every year, if I agree with
that candidate on policy. But at the beginning of this presidential
campaign, I wrongly adjudged the conservative Christian Republican primary
voter to be so intolerant of Newt`s marital resume that his campaign for
president was laughable.

I cannot believe that I overlooked the all-important Christian
doctrine of forgiveness, forgiveness of sins, and how that would actually
play to Newt`s advantage, which we have all knew seen.

(BEGIN VIDEO CLIP)

JOHN KING, CNN ANCHOR: She says you asked her, sir, to enter into an
open marriage. Would you like to take some time to respond to that?

GINGRICH: No, but I will.

(APPLAUSE)

GINGRICH: I think -- I think the destructive, vicious, negative
nature of much of the news media makes it harder to govern this country,
harder to attract decent people to run for public office. And I am
appalled that you would begin a presidential debate on a topic like that.

(END VIDEO CLIP)

O`DONNELL: Amazing. And here is Newt today, telling the Christian
Broadcasting Network why he now thinks that his flamboyantly adulteress
lifestyle, punctuated by three marriages, is actually a selling point to
conservative Christian voters, at least against a super rich robot like
Mitt Romney.

(BEGIN VIDEO CLIP)

GINGRICH: It may make me more normal than somebody who wanders around
seeming perfect and maybe not understanding the human condition and the
challenges of life for normal people.

(END VIDEO CLIP)

O`DONNELL: So there`s Newt, in the same interview that he began by
saying he`s not a normal politician, Rewriting himself into being more
normal than that stiff, rich, out of touch, one-wife guy, who seems perfect
and doesn`t understand the human condition.

(BEGIN VIDEO CLIP)

ROMNEY: Rick, I`ll tell you what, 10,000 bucks? Ten thousand dollar
bet?

GOV. RICK PERRY (R), TEXAS: I`m not in the betting business, but,
I`ll --

ROMNEY: OK. I wrote the book.

UNIDENTIFIED MALE: What`s the effective rate you`ve been paying?

ROMNEY: What`s the effective rate I`ve been paying? It`s probably
closer to the 15 percent rate than anything, because my -- the last ten
years, I`ve -- my income comes overwhelmingly from investments made in the
past, rather than ordinary income.

(END VIDEO CLIP)

O`DONNELL: In another interview today, Newt tried out some new
campaign slogans that have a little more punch, more punch than, you know,
more normal. And yeah, they sure are different than what a normal
politician would say.

(BEGIN VIDEO CLIP)

GINGRICH: I have never lied under oath. I have never committed
perjury. I have never been involved in a felony.

I have never lied under oath. I have never committed perjury. I have
never been involved in a felony.

I have never lied under oath. I have never committed perjury. I have
never been involved in a felony.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

OBAMA: Leon, good job tonight. Good job tonight.

(END VIDEO CLIP)

O`DONNELL: President Obama congratulated Secretary of Defense Leon
Panetta just two hours and seven minutes after being told that the Navy`s
famous SEAL Team Six had completed yet another daring mission. Tonight,
we`ve learned that as the president prepared to speak to the nation, he was
also authorizing the rescue of Jessica Buchanan, an American aid worker,
and her Danish colleague, Paul Thisted (ph).

They were held hostage for three months by Somali kidnappers. Late
Monday night, the president was told that Jessica`s health was
deteriorating. That`s when he authorized the same unit that killed Osama
bin Laden to act.

Just after 5:00 last night, almost 20 Navy SEAL.s parachuted in two
miles from the camp in northern Somalia, shot and killed the nine heavily
armed kidnappers, then flew the hostages via helicopter to a U.S. base in
the African nation of Djibouti.

The entire operation took about an hour. After the State of the Union
Speech, the president called Jessica Buchanan`s father to tell him his
daughter was safe.

Joining me now is Steve Clemons, Washington editor at large for "The
Atlantic" magazine and senior fellow at the New American Foundation.

Steve, when the president was congratulating Leon Panetta last night,
we had no idea what that was about. He was very specifically talking
about, good job tonight, the job that the Navy SEALs pulled off.

STEVE CLEMONS, "THE ATLANTIC": Well, I just think, you know, anytime
President Obama is giving a big speech, bad guys better watch out, because
this reminds us all about, you know, the White House Correspondents Dinner,
where a lot of the planning before the president`s White House
Correspondents Dinner on getting Osama bin Laden was under way. And that
next morning, they launched the operation to get him.

It was another remarkable night. I remember seeing Leon Panetta and
Tom Donilon, the president that night. And I saw Tom Donilon leaving a
party early and him telling me he needed to -- he had an early morning the
next day. So they`ve really demonstrated an ability not just to play
Rambo, but to play it cool.

I saw one of the president`s senior legal advisers tonight, who said
the media is going to jump on the fact that this is like a Tom Clancy act.
But he says it`s really so much more than that. There are layers upon
layers of diplomatic negotiations, multilateral support.

And what the president is doing is demonstrating that you can work
with a lot of moving pieces and do something that`s quite legitimate, and
still take decisive action. This isn`t John Wayne or Rambo or a unilateral
action. There`s a lot of other stuff here.

And they`re demonstrating how to be very effective and still hold all
these moving pieces together.

O`DONNELL: From a political perspective, which maybe the president
just excludes this from his mind when he`s making these decisions, this was
more risky than anything else in the sense that if this had gone wrong, as
with we have had rescue missions in Somalia go wrong under President
Clinton, for example -- if this had gone wrong, it would have exploded on
him while -- basically, when he`s going into the State of the Union
Address, the world would know that we lost Navy SEALS in Somalia on this
kind of mission.

CLEMONS: I mean, it could have ended -- it could have ended the
election for him. I think many people, depending on the biases they bring
to next year`s election, find defining moments, framing moments through
which they think about what they want to see their leaders do.

So this was a huge gamble. If it had lost like Mogadishu and Black
Hawk Down or the efforts that Jimmy Carter undertook to try to get Iranian
-- American hostages held in Iran out -- you know, we`ve had bad stories.
They don`t always turn out good.

But I think that we`re seeing very complex movement and great
leadership decisions. There are risks, but we`re also seeing a military
that`s been at war for more than a decade, that`s learned how to do stuff
and apply intelligence in capacities in such a way that we`re not -- that
we haven`t really seen up-front.

It is like watching movies from 10 years ago about what the future was
going to look like. And the future is here now.

O`DONNELL: I think the timing of this one is as close to a proof as
you could ask for that this president simply puts the political risk
calculation out of his mind and makes nothing but a military tactical
decision. Steve Clemons, thank you very much for joining us tonight.

CLEMONS: Thank you, Lawrence.

O`DONNELL: You can have THE LAST WORD online at our blog,
TheLastWord.MSNBC.com. You can follow my Tweets @Lawrence.

A quick guest not for tomorrow, the big get; I`ll be joined by
Elizabeth Warren, the Democratic candidate for Senate in Massachusetts.

"THE ED SHOW" is up next.

END

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