updated 1/26/2012 2:14:43 PM ET 2012-01-26T19:14:43

CORRECTION:As Rachel Maddow explains in the 1/26/12 show, references to the CBS poll in the opening segment of this show are erroneous.

Guests: Celinda Lake, Steve Kornacki, Scott Pelath

ED SCHULTZ, "THE ED SHOW" HOST: THE RACHEL MADDOW SHOW starts right
now.

Good evening, Rachel. Great job again last night. Thank you.

RACHEL MADDOW, HOST: It was great to have you at the rotunda, Ed.
Thanks a lot, man.

SCHULTZ: You bet.

MADDOW: See you when you`re back.

All right. And thanks to you at home for staying with us for the next
hour.

Here`s something you don`t see ever. This was -- look, this was
posted by CBS News by their polling unit. CBS was polling approval or
disapproval of the proposals made by President Obama in his State of the
Union speech last night.

Poll results like this aren`t usually found in nature. But this was
apparently the response if you can`t see it there, the disapproval rate was
9 percent, and the approval rate was 91 percent.

Today, the White House did what White Houses do now after a State of
the Union speeches, what presidents do after they give the State of the
Union, is they go out on a barnstorming tour to reinforce the messages from
the speech. So, this morning at 10:00 a.m., President Obama boarded Air
Force One in D.C. and headed to Cedar Rapids, Iowa. He landed in Iowa at
12:15. He gave a speech at a manufacturing plant there.

Then got back on the plane, the president then flew from Iowa to
Phoenix, Arizona. He touched down in phoenix at about 5:45 p.m., gave a
speech at an Intel processing plant. Then he was back on the Air Force
One.

The president left Arizona. He`s now due to land in Las Vegas,
Nevada, within the hour where he will be speaking at a UPS facility
tomorrow morning.

Mr. Obama will also be traveling to Colorado and to Michigan to close
out the week.

As the president is out on the road, consider this -- there was
something that surfaced in the news just before Christmastime that I think
pretty much got buried in the news thereafter. It is something that
doesn`t ever get talked about in the political coverage now. But seeing
the president`s State of the Union speech last night and seeing how he`s
trying to sell the messages from the speech thereafter, I think it`s
something that the White House understands, and I think it`s much more
central to what is going on in presidential politics than anybody is giving
it credit for.

It`s this -- just before Christmas, Pew Research came out with a
stunning poll. According to Pew, 77 percent of Americans think there is
too much power in the hands of a few rich people and large corporations in
the United States. Seventy-seven percent of Americans believe that. a
majority of Democrats, a majority of independents and a majority of
Republicans think there`s too much power in the hands of a few rich people
and large corporations in America.

So, if you have it in the forefront of your mind that the country
feels that way, it should not be a surprise when the president talking
about that issue as a problem, talking about that not just as status quo
but as a problem that should be fixed and talking about things that could
be done to fix that, it should not be a surprise that that sort of thing is
very satisfying to people. That CBS News poll we showed earlier, that
surveyed voters before and after the president`s speech last night, before
the speech, 53 percent of people said they approved of the president`s
plans on the economy. After the speech, that number shot up to 82 percent,
from 53 to 82.

Just before the speech, 45 percent said they approved the president`s
plan to tackle the deficit. After, the number jumped to 80. It went from
45 to 80.

The reason I think this concept is key, this populist idea, right, the
system is rigged against regular people in favor of the wealthy, that
mindset, another way you can tell that this is important in presidential
politics right now is because of the stuff that the president chose to
highlight in the State of the Union, stuff that on its face probably didn`t
make a whole lot of sense to the Beltway media.

These policy issues, these bread and butter, economic, let`s give
everybody a shot middle class policies, that are not the kind of thing that
get high profile fights on Capitol Hill. These are not things that devolve
until Republican versus Democrat easily, things that don`t translate in
Beltway ease.

But if you`re trying to communicate to the country that you want the
system to work more for regular people, you want the system to stop being
tilted toward the rich, then yes, you talk about things like people`s
mortgages.

Nobody has gone to jail for the final collapse of 2008, for the
implosion of Wall Street, right, for the thing that necessitated all the
bailouts and caused the recession and everything. Nobody has gone to jail
for that.

But did banks and mortgage lenders act criminally? When they
destroyed the American economy and turned people`s houses in casino chips
essentially?

The way they created and traded and bet on and got rich on other
people`s homes, leaving behind millions of foreclosures, a destroyed
economy and their whole industry saved only by the grace of the U.S.
taxpayer, was any of that illegal?

A number of state attorneys general have said, yes, they have been
frankly champing at the bit to go after the banks and mortgage holders for
what they did. I mean, think about it, nobody has gone to jail for the
financial catastrophe in 2008. And these state attorneys general have been
eager to prosecute.

After all sort of in recent months there would be get-out-of-jail free
settlement for the banks to try to make all the lingering controversy go
away, last night, President Obama unveiled something new.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And tonight, I`m asking
my attorney general to create a special unit, federal prosecutors and
leading state attorney general, to expand our investigations in the abuse
of lending and packaging and risky mortgages that led to the housing
crisis. This new unit will hold accountable those who broke the law, speed
assistance to homeowners and help turn the page on an era of recklessness
that hurt so many Americans.

(END VIDEO CLIP)

MADDOW: A special unit of federal prosecutors and state attorneys
general. The most crusading of all the crusading state attorneys general
on this, is the one who has been put in charge of hunting the banks down
and the mortgage holders down for what they did to the economy. That is
something that has essentially no Capitol Hill resonance, that has nothing
to do with, you know, Eric Cantor backstabbing John Boehner, or Harry Reid
playing chess when everybody else is playing checkers, or Nancy Pelosi
counting the votes.

It has no Beltway media, Beltway politics resonance essentially
whatsoever.

But if you were not playing that game and instead you were trying to
speak to an America that believes, Republican, Democrat and independent,
that there`s too much power in the hands of too few rich people and large
corporations in the United States, the system is rigged against regular
people and there`s no accountability for the rich and powerful, if instead
of playing Beltway media games, you are trying to talk to that mindset of
the American people, if you put something like this mortgage thing in your
State of the Union address, it is the sort of thing that has resonance.

Before last night`s speech, 42 percent of swing voters who were dial
tested by a research firm called Democracy Corps, 42 percent said they
thought President Obama was for the middle class. After the speech, the
number who thought President Obama was for the middle class shot up to 66
percent, from 42 to 66.

Before the speech, also, 42 percent of those swing voters said the
president understood issues important to them. After the speech, that
number jumped from 42 to 62 percent.

And so, for a president heading into a reelection year, those were
exactly the kind of numbers you want to see. Now, of course, everybody
knows that it`s really hard for a president to get reelected when the
economy is bad, right?

But look at these numbers. These are from the new NBC News/"Wall
Street Journal" poll that was just released tonight. So, these -- in terms
of when the polling was done, these don`t even take into account the State
of the Union address last night.

But look at this -- over the course of the last month, not including
the State of the Union, the percentage of people who think the country is
now on the right track has gone up by eight points. The percentage of
people who approve of President Obama`s handling of the economy has gone up
by six points. The percentage of people who think the nation`s economy
will get better over the next year, that`s up seven points over the last
month.

The White House in planning a reelection strategy for President Obama
obviously hoped that the economy would be getting better by now, which it
is. They probably could not have anticipated at this point people would be
feeling more optimistic and feeling like things in the economy overall were
getting better.

But the thing that they truly could never have dreamed of, the biggest
optimist of the world, the thing they never could have dreamed for, dreamed
of, let alone hoped for, was that in the country where the economy was
getting better, where the president was seen as being on the side of the
middle class, at a time when people are angry about the system being rigged
against them in favor of the rich and powerful, what the White House and
the Obama reelection campaign could not have dreamed of, what they could
have not begged for was a likely Republican opponent who was essentially a
walking billboard for the central message of the president`s reelection
campaign.

When the president last night started talking about his one really
specific economic proposal, that millionaires should no longer pay a lower
tax rate than their secretaries, that if you make over a million bucks a
year, you ought to pay something approaching what middle class pays instead
of the little mini-tax rates that all these millionaires and billionaires
pay. When President Obama proposed that in his speech last night,
apparently, the focus group dials went nuts.

According to that Democracy Corps focus group of swing voters, the
dials spiked when the president made that stopping populist pitch with the
Democrats exceeding 80 on our zero to 100 scale, and both independents and
Republicans moving above 70.

That policy about millionaires paying roughly what middle class people
pay in terms of their taxes is, of course, called the Buffett Rule. But it
could just as easily be called the Romney rule.

And so, it is a blessing to the Obama reelection campaign on the day
of the president`s State of the Union, Mitt Romney was forced to release
some of his personal tax returns, which showed that he makes $57,000 a day
for not working, and that by virtue of the fact that he makes all his money
from not working, his tax rate is way, way lower than yours likely is.

He pays a mini-tax rate that is reserved specifically for the richest
people in the country, who do not have to work. Who have no wage income,
right? It is a blessing that the White House could never have arranged, to
have the man they see as their likely opponent in the presidential race put
that tax return on the table the day of the president`s State of the Union.

But I don`t think it`s a blessing, I think it`s rather a calculation
by this White House that they should build the central message of the
president`s reelection campaign and the central focus of his administration
for this part of his term in office around the fact that 77 percent of
Americans think there`s too much power in the hands of a few rich people
and large corporations in the United States.

That is the American mindset right now. Republicans keep calling that
assertion divisive, but it represents the majority view of Democrats and of
independents and of Republicans. In good economy or bad, whoever the
candidate is who comes up with the way to speak to that problem and calls
it a problem and talks about ways to fix that problem, will win the
election.

Joining us now, one of the Democratic Party`s leading political
pollster, Celinda Lake.

Celinda, thank you for being here. It`s nice to see you.

CELINDA LAKE, DEMOCRATIC POLLSTER: Nice to be here, thank you.

MADDOW: You saw the CBS dial test that we are just talking about, 91
percent approval for State of the Union.

LAKE: I know.

MADDOW: I feel like that`s a number not really seen in nature.

As a pollster, does that strike you as strange?

LAKE: Oh, I thought it was unbelievable. I mean, that poll probably
has an error rate of plus or minus 5 percent. So, basically, 3 percent of
the people said I disapprove of the policies. That means 90 percent of
Republicans, 90 percent of Democrats, 90 percent of independents, and 90
percent of Ron Paul supporters like those plans.

MADDOW: In terms of the match up here -- obviously, the White House
considers Mitt Romney to be their likely opponent. We`re going to be
talking about the fact they have been totally ignoring Newt Gingrich a
little later on in the show.

But when you look at the way that that breaks the electorate down,
obviously, Republicans made big gains with blue collar white voters in the
2010 elections, that crowd was a big source of support for President Obama
in 2008. The new "Washington Post"/ABC poll shows Mitt Romney`s
favorability rating among white voters who make less than 50 grand a year
has dropped 20 points in the last month. And his unfavorables are really,
really high with them.

How do you think that these economic issues are shaping the likely
2012 match-up all in all?

LAKE: Oh, it`s fundamentally shaping it. And you mentioned that you
couldn`t hope for a better juxtaposition than have to release your
millionaire taxes at lower rates than secretaries pay, but also you have
revealed the whole Bain Corporation problems. This is a man who made those
millions, that he now doesn`t have to pay taxes on and has by the way an
offshore accounts, Benedict Arnold accounts, he made it by firing people,
and by costing people their pensions, by laying off people.

So you could not have a bet metaphor, a better example, and it`s why
he can`t even consolidate the Republican primary.

MADDOW: When you call the offshore accounts, Benedict Arnold
accounts, do you mean to suggest that Democrats will essentially attack
that as a traitorous decision by Mr. Romney to put his money offshore?

LAKE: It`s certainly disloyal to America and it`s deliberately
designed to avoid taxes.

MADDOW: One of your battle ground polls released back in November
showed more than half the people polled were unsure if President Obama will
be reelected. Biggest concerns were the economy and jobs, government
spending and the deficit.

In terms of what you see as the main worries for the president`s
reelection prospects, what did you here in his speech last night and his
messaging since the State of the Union to get at those core concerns?

LAKE: I heard a powerful president. I think the president has often
used the power of the executive internationally but not necessarily
nationally. He`s left too much to Congress, he said, no. I`m ordering my
administration to do this, do this, do that, enough waiting. But you
should join me.

I heard a president with a clear economic plan and an understanding of
how that economy works for middle class Americans, that kitchen tables and
work places across the country.

I heard a president who said I`m going to change Washington, enough
insider trading, enough of the kinds of things that are corrupting
decisions. And I heard one of the most powerful endings of any speech I
have ever heard, where instead of trying to saying let`s unite with the Tea
Party who have already said, we wouldn`t unite with you about the time of
day, because all we want to do is beat you, he said, let`s unite team
America, let`s watch each other`s backs, let`s move forward, just as our
military has done. I thought it was an extraordinarily powerful metaphor.

MADDOW: I`d say that was more than 91 percent positive.

LAKE: That`s right.

MADDOW: Celinda Lake, Democratic strategist and pollster -- Celinda,
thanks for being with us tonight. I really appreciate it.

LAKE: Thank you for having me.

MADDOW: All right. Do you ever imagine making $20 million a year
without working? Yes, I know, right?

But it is important to remember that $20 million work-free dollars in
a year do not protect a person from having terrible, horrible, no good,
very bad days. Like the one Mitt Romney has had today. That`s coming up.

(COMMERCIAL BREAK)

MADDOW: Mitt Romney had a bad 48 hours.

(BEGIN VIDEO CLIPS)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The banks aren`t bad people,
they`re just overwhelmed.

Banks are scared to death, of course. They are feeling the same thing
that you`re feeling.

(END VIDEO CLIPS)

MADDOW: At this point, if Mitt Romney can`t stop talking about how
much he loves firing people and how corporations are people and banks are
people, too -- you know how every time we talk about Fred Thompson we play
this. "The Law and Order" sound effect, and that`s like the signifier.
OK. Now, we`re talking about Fred Thompson.

I think if Mitt Romney keeps this whole banks are people, too, thing
up for a while, we`re going to have to use the monopoly guy top hat, right?
So, just be like our Fred Thompson signifier.

Yesterday, Mitt Romney said banks aren`t bad people. I think this is
going to stay.

Mitt Romney had a very, very bad day. That`s coming up.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIPS)

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

Banks are scared to death, of course. They are feeling the same thing
that you`re feeling.

(END VIDEO CLIPS)

MADDOW: You know the bank people.

Mitt Romney campaigning in Florida where the primary vote is less than
a week away. Florida has one of the worst foreclosure problems in the
country. Bad every where but it is horrendous in Florida -- worse than
anywhere else.

Mitt Romney was standing in front of a foreclosed home in Florida when
he made his banks aren`t bad people comment yesterday.

And that`s not going to help him on this housing issue -- an issue
which he really already needs political help.

(BEGIN VIDEO CLIP)

ROMNEY: Don`t try and stop the foreclosure process. Let it run its
course and hit the bottom.

(END VIDEO CLIP)

MADDOW: President Obama in last night`s State of the Union never said
the name Mitt Romney exactly. But when he said this, everybody knew who he
was talking about.

(BEGIN VIDEO CLIP)

OBAMA: Responsible homeowners shouldn`t have to sit and wait for the
housing market to hit bottom to get some relief.

(END VIDEO CLIP)

MADDOW: That was not the only moment in the speech where the
president used as a punching bag the man who he presumes will be his
Republican opponent this fall.

(BEGIN VIDEO CLIP)

OBAMA: If you make more than a million dollars a year, you should not
pay less than 30 percent in taxes. When Americans talk about me paying my
fair taxes it`s not because they envy the rich.

On the day I took office, our auto industry was on the verge of
collapse. Some even said we should let it die.

(END VIDEO CLIP)

MADDOW: Mitt Romney famously writing the op-ed in "The New York
Times," let Detroit go bankrupt. G.M. now the number one automaker in the
world because nobody took his advice.

After taking that beating yesterday in the State of the Union, Mr.
Romney`s campaign today tried to get away from another of their campaigns
headaches right now, a spokesperson for Mr. Romney saying of his tax
returns which we released yesterday, quote, "as far as we concerned, we put
it to bed."

I understand why the Romney campaign may want to be done with the
amazing issue of his tax returns, but saying it is over does not make it
over. Just ask Mr. Romney`s rival, Newt Gingrich.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: I think you have to live
in a world of Swiss bank accounts and Cayman Island accounts and automatic,
you know, $20 million a year income with no work to have some fantasy this
far from reality.

(END VIDEO CLIP)

MADDOW: If that weren`t bad enough, Mr. Romney today also got the
news that Mr. Gingrich`s super PAC has bought up time for $6 million worth
of anti-Mitt Romney TV ads in Florida.

One of the reasons Mitt Romney was seen as the inevitable candidate on
the Republican side is because of the so-called money primary. That`s the
way the Beltway talks about it, right? There`s the primary and then
there`s the more important money primary -- a candidate showing the ability
to build a base of donors and raise a lot of money from those donors for
his campaign.

Mitt Romney, of course, won the money primary this year, early and
hugely. But now, it turns out -- thanks to Citizens United -- there is no
money primary anymore, it`s been cancelled.

Newt Gingrich doesn`t have a donor base, he doesn`t have to. He
hasn`t proven any ability to raise money in state after state, event after
event. Newt Gingrich it turns out only has to raise money with one family
in Nevada. The Adelson family, casino money, who now has given $10 million
to Newt Gingrich`s super PAC.

After Citizens United, the money is on tap. Anybody can level the
playing field in terms of money. All you need is one funder. You don`t
have to prove yourself to anybody else.

And money buys results. It`s not sufficient to buy results, ask Rick
Perry, but it is necessary and it does work. New polls showing Mr.
Gingrich broadening the lead nationally over Mr. Romney to seven points.
Mr. Gingrich also eliminating what used to be Mr. Romney`s lead in Florida.
The two men just separated by two points in Florida.

But maybe the worst pickle that Mitt Romney is in right now is that
he`s getting piled on from the right by Newt Gingrich, but the Democrats
won`t take Mr. Gingrich seriously enough to direct any of their fire at
him. So, even as Gingrich surpasses Romney in the polls, Gingrich takes no
heat.

There was nothing in the State of the Union address about Newt
Gingrich, are you kidding me? It was all about Mitt Romney. All of the
attacks in it were all about Mitt Romney.

Gingrich on the right attacking Mitt Romney and beating him.
Democrats on the left attacking Mitt Romney, too, and they can`t be
bothered to take any other shots at Newt Gingrich.

That`s Mitt Romney`s political reality right now. He`s getting it
from all sides. And because of that, whether or not the banks are bad
people, today was another bad day in politics to be Mitt Romney.

Joining us now is Steve Kornacki, the political news editor at
Salon.com.

Steve, thanks for joining us. It`s good to see you.

STEVE KORNACKI, SALON.COM: You, too.

MADDOW: What do you make of the Democrats` decision on the national
level and the state level in Florida to never mention Newt Gingrich ever,
to go pure Romney?

KORNACKI: Well, I think it is true Romney is still more likely to win
this than Gingrich. There`s a little of that. But I think clearly they
would much rather run against Newt Gingrich in the fall because there`s
really no public figure in America who has a better feel for the self
destruct button than Newt Gingrich.

So, you know, if he ends up winning the nomination, you don`t need to
have spent six months going after the guy and laying the foundation for
general election attack. All the information is there. And even if you
forget that, he`s going to make six mistakes in the first six hours he`s
the nominee.

With Mitt Romney you have to work a little harder to sort of get the
stuff out there, and I think you`re seeing that in the past month. The
perfect example is the tax returns. You know, Mitt Romney ran for office
in 1994, in 2002, and in 2008. In all three of those campaigns, he didn`t
release his tax returns.

But the Democrats in the White House sort of helped make that issue,
they are not the only reason that`s became an issue lately, but they helped
push it along, they helped get that into the discussion, they helped draw
attention to the issue by talking about the Buffett Rule and things like
that. They forced the situation where Romney had to talk about it and have
to put them out.

And you alluded to that poll, you know, now that shows a 20-point jump
in the past month in terms of Romney`s unfavorable numbers among these
white blue collar voters.

MADDOW: Yes.

KORNACKI: This is an important swing constituency in the fall. If
Obama is going to get reelected, he has to make in-roads with that group,
from where they voted in 2010. And you look at the past month, you look at
Romney`s standing with those voters, this is important progress that the
White House has made, and you`re not going to do that just by letting Mitt
Romney be Mitt Romney. You have to press him, you have to force the issue
a little bit, they`ve done that.

MADDOW: And in South Carolina, looking at the same group of under
$50,000 a year white voters, Newt Gingrich beat Mitt Romney by something, I
think it was 20 points in terms of the way he performed there. So, not
only is Romney`s unfavorables going up and that is something that can stick
no matter who he runs against, but in competition with other Republicans,
people are picking anybody but him.

KORNACKI: Well, and the extraordinary thing to me about the
Republican numbers is not just what happened in South Carolina, because you
could say, you know, Gingrich drew attention to Bain Capital and the tax
thing was an issue. We could say, well, that`s why Romney had trouble with
blue collar voters in South Carolina.

But we saw the exact same thing in New Hampshire. We saw the exact
same thing in Iowa. There`s a direct relationship between enthusiasm for
Romney among Republican voters and their income levels.

When you get over $200,000, he`s absolutely cleaning up. When you get
to that 30 to 75, he`s getting his clock cleaned. So, that tells me that,
you know, Republicans have been watching this guy closely for years and I
think there`s just this disconnect, basic disconnect between blue collar
Republican voters and Romney, and I don`t see any reason necessarily why
that`s not going to extend to the general elections when those voters start
paying attention to him.

MADDOW: We actually have a specific THE RACHEL MADDOW SHOW branded
effect we have to do whenever we talk about Mitt Romney`s popularity, among
$200,000 earners and up. If I put it on, it makes me look like some sort
of horrible transversion of Abraham Lincoln.

KORNACKI: Right.

MADDOW: So, I`m not going to do that because it will start a whole
different conversation, but --

KORNACKI: Is that left over from the billionaires for Bush?

MADDOW: Oh, no, I just had this laying around for when I do a trans-
Abe Lincoln act.

But, anyway, the one thing I wanted to ask about the tax return
things, is that one of the things that we`ve learned about this disclosure
in Romney, as you said, he didn`t want to release those tax returns in
previous campaigns, but we do know that he released two John McCain when
John McCain was looking for vice presidential running mate, 23 years of
Mitt Romney tax returns.

Here I have them ready to go, here you are, sir. John McCain
apparently looked at those and said actually, I`ll take Sarah Palin.

Does that undermine Romney`s case about disclosure, hasn`t his case
for disclosure sort of been like it`s hard for him to get all that stuff
together and it`s nobody`s business?

KORNACKI: It`s been that. It`s been the Democrats who will use it
against me in the fall. I think that one actually drew some derision from
a Republican audience. It`s been, you know, confronted directly about his
father releasing 12 years, back in the 1960s, saying, well, I`m not going
to do that, that was too much, that`s something I disagreed with my father
on.

I mean, that gets to the heart of sort of the message that he used
against Romney both within the Republican Party and if he`s the nominee in
the general election, that this is not a guy who`s ever really telling you
what he`s thinking, why he`s thinking it. This is a guy who is very
calculated, you know, who`s going to give you whatever he thinks he needs
to say and then he`s going to work backwards from there and come up with a
justification.

MADDOW: Yes.

KORNACKI: And it`s easy to poke holes in that. And when you get that
reputation, that`s very damaging no matter who the audience is.

MADDOW: What I want to know from the John McCain campaign is, did you
guys keep copies when Mitt Romney gave you all that stuff? And how come
you when you looked at all that, you didn`t pick him? Just asking.

Steve Kornacki from Salon.com, the news editor there -- thanks for
being here. Appreciate it.

KORNACKI: Sure.

MADDOW: All right. The rare but important Venn diagram overlap
coming up between Lemony Snicket and the Republican Party. That`s next.

(COMMERCIAL BREAK)

MADDOW: Last night, ahead of the State of the Union, the Washington
bureau chief for Yahoo News sent out this tweet. "Per Democratic source,
Biden in State of the Union preview called to Democrat officials summed up
where things stand. `Bin laden is dead and General Motors is alive.`"

Which is true. And which is politically potent. G.M. at this point
not only not left for dead like it was going to be, but it`s now the number
one car company in the world.

And Osama bin Laden, definitely dead. Dead as a door nail.

The president hit the killing of Osama bin Laden twice in the State of
the Union, once at the very beginning.

(BEGIN VIDEO CLIP)

OBAMA: For the first time in two decades, Osama bin Laden is not a
threat to this country.

(APPLAUSE)

(END VIDEO CLIP)

MADDOW: The president also came back to killing bin Laden at the end
of the State of the Union with a long anecdote about the Navy SEAL team
that conducted the operation and the unifying force of purpose, that`s how
a military team like that get things done.

The point was that it should be an inspiration for all of us,
particularly for the lawmakers in D.C. to find a unifying force of purpose
for us all to try to improve the country together.

In case that point of emphasis from the president was not clear
enough, there was the head of Special Ops, the part of the military that
coordinates groups like SEAL Team 6, Admiral William McRaven, sitting with
the first lady in her box seats at the speech itself.

So, you get the two mentions of the bin Laden raid using example of
U.S. troops accomplishing that goal as the inspiring rhetorical hook for
the entire speech. You got the pride of place for the head of JSOC, the
Special Ops command, and still if the point wasn`t clear enough, then there
was also this.

(BEGIN VIDEO CLIP)

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

(END VIDEO CLIP)

MADDOW: The president saying, "Leon, good job tonight," good job to
his secretary of defense, Leon Panetta.

We know what Mr. Obama meant by that when microphones caught him
saying that.

It turns out as the president was heading in the State of the Union,
Navy SEALs had just wrapped up a rescue of two hostages in Somalia. An
American and a Danish relief worker who had been kidnapped in Somalia back
in October. Approximately 20 members of elite SEAL Team 6, once again,
parachuted in Somalia, around 1:00 a.m. local times, a couple miles from
where American Jessica Buchanan and Poul Tisted of Denmark were being held.
The SEALs charged to the kidnappers armed encampment, and in a brief
firefight, they killed all nine of the people holding the two hostages.
The SEALs and the hostages reportedly sustain no injuries themselves.

U.S. military Blackhawk and Cobra helicopters then flew the freed
hostages to a U.S. military base in Djibouti.

So, mission successful, mission just completed, Defense Secretary
Panetta made it over to Capitol Hill in time for the speech and for the
good job tonight, that from the look on his face, he seems not have totally
expected to hear from the president.

As we prepared for last night`s coverage, we tried to figure how long
it generally takes the president to leave the chamber after he finishes
talking. I thought I saw Mr. Obama at one point ask the sergeant at arms
for directions, like he might be in something of a hurry to get out of the
chamber after the speech.

Then, today, the White House posted this photo. This photo, as you
can see, President Obama and the first lady, obviously, still dressed up
for the State of the Union, they are still at the Capitol Building, they
had been rushed to a private room to call Jessica Buchanan`s family to tell
them that she was safe and free.

(COMMERCIAL BREAK)

MADDOW: Did you know the Lemony Snicket books? Remember we had
Lemony Snicket here on the show once? That was very cool.

The whole idea of the Lemony Snicket books is that they are books for
kids and about kids that are also about tragedy and terribly horrible,
horribleness. The whole series is called "A Series of Unfortunate Events."
Just to give you a sense of what it`s like. The dedication of the first
book, to Beatrice -- darling, dearest, dead.

Here`s how the very first book starts. Chapter one, "If you are
interested in stories with happy endings, you would be better off reading
some other book. In this book, not only is there no happy ending, there is
no happy beginning and very few happy things in the middle. This is
because not very many happy things happened in the lives of three kids the
book is about."

It goes on to describe them, "They were extremely unlucky and most
everything that happened to them was rife with misfortune, misery and
despair. I`m sorry to tell you this, but that is how the story goes."

It`s awesome, right? Does it remind you of anything?

(BEGIN VIDEO CLIP)

GOV. MITCH DANIELS (R), INDIANA: We drift quarrelling and paralyzed
over a Niagara of debt we will all suffer.

(END VIDEO CLIP)

MADDOW: That was Indiana Governor Mitch Daniels giving the Republican
response to the State of the Union last night. If you were watching our
coverage, you might have seen Chris Matthews and I have a different
reaction to the speech from one another to the governor`s speech.

Chris loved the speech and identified correctly that Governor Daniels
did show a little possible Republican softening on whether or not really
rich people should get special favors in the tax code. And I love Chris
Matthews, I love talking with politics with him, and he was absolutely
right to identify that, which I glossed over.

In my own defense, the reason I glossed over it was hard for me to
hear those kind of specifics in the midst of the terrible, horrible series
of unfortunately events that Lemony Daniels found himself mired in.

(BEGIN VIDEO CLIP)

DANIELS: When President Obama claims the state of our union is
anything but grave, he must know in his heart this is not true, facing
economic catastrophe, the dead end of debt, choking off growth and
unprecedented explosion of spending, radically worse. No nation, no
entity, large or small, public or private, can thrive or survive intact,
mindless piling on. Moments of national danger. The mortal enemies, no
feature of the Obama presidency has been sadder. We`ll fall for the con
job that the dead end of debt. It`s not fair, no one more tragically
harmed than the young people of this country.

(END VIDEO CLIP)

MADDOW: Yes, those are lines taken out of context in this address and
no, he was not speaking in black and white in front of a stormy sky.

But it does give you a good idea of the overall tone of the Republican
address last night. The tone is -- be afraid! Thunderbolt.

Different people have different reactions to different speeches.
Personally after seeing that speech, I stopped understanding why
Republicans long for a Mitch Daniels presidential candidacy. And I say
that as a person who loves Lemony Snicket.

But whether or not they do persuade their eventual candidate to pick
Governor Daniels for vice president, or whether the clamor continues for
him to belatedly join the presidential race himself, all that may depend as
much on what happened in Governor Daniels home state today as it does on
the terrifying horror movie of a speech he gave last night as the response
to the State of the Union.

Joining us now from Indianapolis where the Republicans in the
legislature where able to pass Governor Daniels bill radically stripping
union rights in Indiana is Democrat, Scott Pelath, who is assistant
Democratic leader in the Indiana House.

Mr. Pelath, thank you very much for being here.

STATE REP. SCOTT PELATH (D), INDIANA: Hi, Rachel. Love the Lemony
Snicket tie in.

MADDOW: Is Governor Daniels always such a bummer? I mean, as
Republicans look at Indiana and they start thinking about Governor Daniels
being on the ticket in November, is he always like that?

PELATH: Oh, goodness, yes, he is. What a toxic brew we have in the
state for workers right now, and for regular everyday folks.

You`ve got people got swept in office in 2010 with this radical
ideology -- and, frankly, the governor is one of them -- that believes a
solution to every economic problem is to make people work for less. You`ve
got this intoxicant of big corporate campaign cash donations. And then you
mix in Mitch Daniels who is really trying to show off for the far right,
it`s about as much as we can put up with.

MADDOW: Well, back, in terms of him showing off -- I mean, back in
2006, Governor Daniels not only did not support stripping union rights like
this, going right to work in Indiana, he actually said he thought it would
be a bad idea to pursue it. He said that multiple times over the time of
his governorship in Indiana.

Why do you think he change his mind and is supporting this now?

PELATH: Well, one more thing, he said it would cause a civil war in
the state if he went forth with the idea.

I frankly don`t know why he changed his mind, why he did flip-flop of
that degree, but it seems pretty clear it has something to do with his
ambitions on the national level, to make himself attractive as a number two
pick for vice president. You know, you`ve got to please those guys. He
needs to be a hero to them.

MADDOW: Democrats had been denials the Republicans in the state
legislature a quorum so they could not vote on this issue. I know that`s
how you held it off last year as well. Why did it finally pass today, what
changed?

PELATH: Well, look, we can`t kill the bill through delay. But we can
make it miserable for them by extending it, deciding when we`re finally
going to have votes on these things and giving the public a chance to weigh
in. That`s exactly what we did.

The good news is this still hasn`t become law. It`s going to go over
the Indiana Senate, where they had a preliminary vote last week, but they
are only four votes shy from throwing right to work in the dust bin of
history, putting it in the trash can where it belongs.

These senators over this are not used to putting up with heat, they
have another week they will hear outcries from the public, and they`re
going to hear more about why is it so important to drive down wages, not
just for union workers but for everybody in the state.

MADDOW: In terms of the civil war that Governor Daniels said might
ensue if this were pursued, it sounds like at least on a small scale, at
least in political Indiana, that is happening.

What do you think the prospects are for four senators changing their
mind on this, for being stopped in the Senate, how hopeful are you?

PELATH: Well, as long as you`re fighting you`re alive in this
business. I tell you what? The Senate has shown more signs of being
enlightened on this. We already saw a more bipartisan opposition over in
the Senate side.

Those guys like to sit over there and not be bothered, and when the
protesters start turning their direction, it will be interesting to see how
some of them react, because we`ve seen an outpouring of the most intense
opposition that really we`ve seen in a generation here in the state.

MADDOW: Do you think it`s going to be evident when the eyes of the
nation turn to Indianapolis to watch the Super Bowl in a couple Sundays, is
it likely that this is -- I know the NFL Players Association has been vocal
on your side of the argument, saying that they do not want this right to
work legislation passed in Indiana. Do you think it`s going to surface
around the Super Bowl?

PELATH: Well, I think it is. This is a gigantic embarrassment for
the state. The eyes of the nation are going to be on us. Not only have
the NFL players, but you have, you know, the regular rank and file from
around Indiana, not just the union leaders themselves, but the people that
benefit from unions -- I have no doubt they are going to be exercising
their First Amendment rights and they`re going to have a national stage to
do that.

MADDOW: Scott Pelath, Indiana state representative -- thanks so much
for joining us tonight. I love to stay in touch with you over the next
couple weeks as this keeps unfolding, sir. Would you mind coming back and
joining us again?

PELATH: Oh, I`d love -- love to do it, Rachel. Any time.

MADDOW: All right. Thank you, sir. Appreciate it.

All right. The best new thing in the world is still on deck. That`s
ahead.

Also, I need to have a little talk with PolitiFact again. It`s not
going to be a happy conversation but it is necessary. That`s all coming
up.

(COMMERCIAL BREAK)

MADDOW: I`m sorry to say that the book you are holding in your hands
is extremely unpleasant. It tells an unhappy tale.

I think I want to make Lemony Daniels a thing now. Are you with me?

All right. Best new thing in the world straight ahead, with 100
percent less politics.

(COMMERCIAL BREAK)

MADDOW: America, behold! An empirical statement of fact from the
president of the United States.

(BEGIN VIDEO CLIP)

OBAMA: In the six months before I took office, we lost nearly 4
million jobs. And we lost another 4 million before our policies were in
full effect. Those are the facts.

But so are these -- in the last 22 months, businesses have created
more than 3 million jobs.

(APPLAUSE)

OBAMA: Last year, they created the most jobs since 2005.

(END VIDEO CLIP)

MADDOW: In the last 22 months, businesses have created more than 3
million jobs. Last year, they created the most jobs since 2005. That`s
what he said.

So the self-proclaimed fact-checking news site, PolitiFact, decided to
fact check this claim by the president. PolitiFact describes itself as a
nonpartisan journalism enterprise. They fact check what politicians and
public figures say and then they rate the statements with this thingy.
They call it the truth-o-meter or the truthometer, potato, potato.

So PolitiFact looked into this part of the president`s speech. "In
the last 22 months, businesses have created more than 3 million jobs. Last
year, they created the most jobs since 2005."

They went to the Bureau of Labor Statistics to figure this out, I
don`t know if they looked at this specific report from the Bureau of Labor
Statistics, but within about 15 seconds of Googling, we found this and
you`d find it too. From a couple weeks back, January 6th, 2012, in this
report, the bureau says, since February 2010, quote, "The private sector
has added 3.2 million jobs." So that`s 22 months. In 22 months,
businesses added more than 3 million jobs.

PolitiFact came to the same conclusion. So, put a check mark next to
that part. It checks out. What the president said is true.

PolitiFact then went on to say, OK, the second part of Obama`s
statements, the fact that businesses made more jobs last year than any year
since 2005. It turns out, that`s true too.

Quoting PolitiFact here, "As for whether 2011 was the best job-
producing jobs since `05, he`s right, if you`re counting private sector
jobs." They go on, "The increase in 2011 represented the highest one-year
total since 2005."

So to sum up, president says thing A and thing B. PolitiFact looks
into it and decides that thing A and thing B as stated by the president,
both true.

So, on their truth-o-meter, they rate the statements half true. How
did two trues add up to a half true.

Quoting PolitiFact, "Obama is correct on both counts, when using
private sector jobs numbers." That`s probably why he said businesses,
right? Right. "But he went too far when he implicitly credited his
administration`s policies. So we rate the statement half true."

When he implicitly credited his administration`s policies?

(BEGIN VIDEO CLIP)

OBAMA: Businesses have created more than 3 million jobs.

(END VIDEO CLIP)

MADDOW: PolitiFact, what is wrong with you? You think the president
calls himself businesses, like it`s a nickname for himself. You think he
look himself in the mirror and says, hey, businesses, looking good.

(BEGIN VIDEO CLIP)

OBAMA: Businesses have created more than 3 million jobs.

(END VIDEO CLIP)

MADDOW: What are you talking about?

After the economist Jared Bernstein and half of the English-speaking
Internet L so OL at PolitiFact for screwing this up today, PolitiFact went
back and revised their initial finding. They said this, "Our initial half
true rating was based upon an interpretation that Obama was crediting his
policies for the jobs increases. But we`ve concluded that he was not
making that linkage as strongly as we initially believed."

OK. So, now, we`re back to something that calls itself PolitiFact,
fact checking the president saying thing A and thing B, both of which
PolitiFact says are true. What is their chastened revised new rating for
their fact check of the president saying two things that they admit are
true? What`s their new rating?

Mostly true! Mostly true.

PolitiFact, you are fired. You are a mess. You are fired. You are
undermining the definition of the word "fact" in the English language by
pretending to it in your name. The English language wants its word back.

You are an embarrassment. You sully the reputation of anyone who
cites you as an authority on fact-ishness, let alone fact. You are fired.

(COMMERCIAL BREAK)

MADDOW: May I introduce you to Rob Katko. Rob is the director of
this show. He is calm and sharp and funny. He does not let anyone push
him around, and he likes rum.

Hi, Rob! Hello.

This is Rob`s 17-year-old son, Avery, who is a robotics genius, which
all of us here at this show have long known since proud Papa Rob keeps up
on son Avery`s progress in the robotics world.

But this week, we got word that Rob son Avery is a robotics genius,
and we got that word not from Rob, but from NASA. NASA and MIT sponsored a
competition for high school students to control two of these volleyball-
sized spherical satellites in microgravity on board the International Space
Station. The teenagers wrote the software for these flying robots and then
astronauts on board the space station let `em rip -- 150 schools in the
running.

But a group called Alliance Rocket, Avery`s group, won. So, for Avery
and for his dad and for those of us who work with his dad, this is
obviously very, very cool.

But for all of us in this country, the fact that our space agency is
getting high school kids to program robots that operate on microgravity in
the space station, that they`re inspiring the next generation of
computational thinkers and engineers for all of us, that is the best new
thing in the world today. Congratulations, Alliance Rocket, the geeks
shall inherit the earth.

Now, it`s time for "THE LAST WORD" with Lawrence O`Donnell. Have a
great night.

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

Copyright 2012 CQ-Roll Call, Inc. All materials herein are protected by
United States copyright law and may not be reproduced, distributed,
transmitted, displayed, published or broadcast without the prior written
permission of CQ-Roll Call. You may not alter or remove any trademark,
copyright or other notice from copies of the content.>


WATCH 'THE RACHEL MADDOW SHOW' WEEKDAYS AT 9:00 P.M. ON MSNBC.