updated 1/30/2012 11:42:10 AM ET 2012-01-30T16:42:10

Guests: Robert Wexler, Nancy Pelosi, Dr. Caroline Heldman, Ari Melber, Dr. James Peterson, John Nichols

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

Hurricane Newt continues to slam Mitt Romney in Florida, but the
Romney campaign`s biggest problem could still be offshore.

And tonight, the president of the United States is responding on
camera to this picture with Arizona Governor Jan Brewer. We`ll show you
what the president had to say.

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

(BEGIN VIDEOTAPE)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: He`s too desperate to be
president, he doesn`t think the truth matters.

SCHULTZ (voice-over): The mud is flying in the Sunshine State, and
now, they`re trying to smear Nancy Pelosi.

NARRATOR: Pelosi said she`ll leak information so secret, she once
asked her own husband to leave their bedroom so she could discuss it
privately on the phone.

SCHULTZ: Tonight, the Democratic leader responds in an ED SHOW
exclusive.

(on camera): There is a campaign commercial out from the Romney
campaign, not the super PAC, that says that you have a secret dossier on
Newt Gingrich. Is that correct?

(voice-over): Brand-new problems for the Romney campaign regarding
offshore tax shelters. We`ll have the latest.

GOV. JAN BREWER (R), ARIZONA: I thought that he was pretty thin
skinned.

SCHULTZ: Now, Governor Jan Brewer says she felt, quote, "threatened
by the president`s attitude"?

Dr. James Peterson is here to respond.

And major arrests related to the FBI investigation of former members
of Scott Walker`s administration. John Nichols of "The Nation" has the
report.

(END VIDEOTAPE)

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

The last man standing in Florida might be the one with the most cash.
Mitt Romney and his buddies have outspent Newt Gingrich and his allies by
about five to one in Florida. Romney`s campaign and the pro-Romney super
PAC have already spent $15.7 million in the Sunshine State.

Big money is having an impact. The latest average of all Florida
polls shows Romney with a five-point lead over Gingrich. The former
speaker can`t outspend his opponent, so he`s hitting even harder during
campaign events.

(BEGIN VIDEO CLIP)

NEWT GINGRICH (R), PRESIDENTIAL CANDIDATE: In 1994, he`s running for
the U.S. Senate to the left of Teddy Kennedy. Do you know how hard it is
to run to the left of Teddy Kennedy? And he says, you know, I don`t want
to go back to the Reagan/Bush years, I was an independent there.

He won`t tell you that now, because he`s counting on us not having
YouTube. That`s how much he thinks we`re stupid. And we`re not stupid.

The message we should give Mitt Romney is, you know, we aren`t that
stupid and you aren`t that clever.

(END VIDEO CLIP)

SCHULTZ: Romney`s campaign is doing most of its talking on
television. The Romney camp is using House Democratic Leader Nancy Pelosi
in an ad attacking the former Speaker Gingrich.

(BEGIN VIDEO CLIP)

NARRATOR: Nancy Pelosi served on the committee that found Newt
Gingrich guilty of ethics violations. Almost all Republicans voted against
him. Gingrich paid $300,000. Later, he resigned in disgrace.

Now, Pelosi says she`ll leak information so secret, she once asked her
own husband to leave their bedroom so she could discuss it privately on the
phone. Information so damaging, it would help Obama win.

Newt Gingrich, we can`t afford the risk.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I`m Mitt Romney and I
approved this message.

(END VIDEO CLIP)

SCHULTZ: I spoke with leader Pelosi earlier today. She gave us the
definitive answer about any information she has on Newt Gingrich.

(BEGIN VIDEO CLIP)

SCHULTZ: There is a campaign commercial out from the Romney campaign,
not the super PAC, that says that you have a secret dossier on Newt
Gingrich. Is that correct?

REP. NANCY PELOSI (D), CALIFORNIA: No, that`s not true. Let me tell
you what is the truth. Everything I`ve said or will ever say about Newt
Gingrich`s ethics is in the public record. I`ve said on and on, just read
the public record.

(END VIDEO CLIP)

SCHULTZ: We`ll have more of my exclusive interview with Leader Pelosi
later in the program. We talked about the Gingrich ethics violation and
much more.

Newt Gingrich also took some blows today from another former
Republican presidential nominee. Bob Dole got into the act and released a
statement. "I have not been critical of Newt Gingrich, but it is now time
to take a stand before it`s too late. If Gingrich is the nominee, it will
have adverse impact on Republican candidates running for county, state, and
federal offices."

Gingrich shot back at the Republican establishment.

(BEGIN VIDEO CLIP)

GINGRICH: Remember, the Republican establishment is just as much an
establishment as the Democratic establishment, and they are just as
determine to stop us. Make no bones about it!

(END VIDEO CLIP)

SCHULTZ: The pro-Gingrich super PAC, Winning the Future, is trying to
get some of its South Carolina mojo back. The PAC released a web trailer
for another documentary attacking Romney.

(BEGIN VIDEO CLIP)

(MUSIC)

ROMNEY: There are a lot of reasons not to elect me.

(END VIDEO CLIP)

SCHULTZ: What`s the bottom line? Florida is turning into a knock-
down, drag-out fight between Newt Gingrich and Mitt Romney.

But Romney may have bigger things to worry about. A new report shows
that he didn`t come clean with the American people about his family`s
finances. The "L.A. Times" first reported, "At least 23 funds and
partnerships listed in the couple`s 2010 tax returns did not show up or
were not listed in the same fashion on Romney`s most recent financial
disclosure form."

Almost half of these funds were based in low-tax foreign countries
like Bermuda and the Cayman Islands. Remember, Mitt Romney said his
financial disclosure forms told us everything we needed to know about it.

(BEGIN VIDEO CLIP)

ROMNEY: The most extensive disclosure that I made was the financial
disclosure requirements under the law. We each had to do that, and I laid
out what my assets are and where they are, and people have been looking at
that as very similar to what it was four years ago.

(END VIDEO CLIP)

SCHULTZ: We must ask the question: did Mitt Romney break the law?
Romney`s campaign says it will make minor technical amendments to Romney`s
financial disclosure. You think?

Get your cell phones out. I want to know what you think. Tonight`s
question: will Romney`s hidden finances make Republicans less likely to
vote for him? Text A for yes, text B for no to 622639. Our blog is there
for you at Ed.MSNBC.com. We love it when you post something there. We`ll
bring you the results later on in the show.

Now, this is a big development. Joining me tonight is Robert Wexler,
former United States congressman from Florida`s 19th district.

Mr. Wexler, good to have you with us tonight on THE ED SHOW. I know
you`re also an attorney.

And I want to go right to the money here with Mitt Romney. Will Mitt
Romney`s failure to disclose financial information, is this a real
potential problem? And I ask this under two laws that have been passed.
One of them, the Ethics in Government Act, and also, the False Statements
Accountability Act, which really goes at people if they do not fully
disclose.

What about all this?

ROBERT WEXLER (D-FL), FORMER CONGRESSMAN: Well, Ed, thank you for
having me. And I wouldn`t pretend to be a legal expert on this matter,
but, certainly, if there is a discrepancy between the tax returns and the
financial disclosure forms, that would certainly pose a very serious
question. Both a legal question and also, most undoubtedly, a political
question in terms of why was this the discrepancy presented the way it was,
and was something being hidden for some reason?

SCHULTZ: How quickly do you think the Romney camp has to clean this
up?

WEXLER: Well, assuming that there is some kind of discrepancy, first
we have to learn for sure if there is, then I would imagine very quickly,
because you would not want, if you`re a Romney, in the Romney camp, you
would not want this discrepancy to be out there very long.

Now, they`re going to have to analyze this, I imagine, from both a
legal and a political point of view, and get both of them right.

SCHULTZ: Let`s look at the breakdown of the vote in Florida. There`s
the northern tier, there`s the central part of the state, and then there`s
a lot of cultural diversity down in the southern portion of the state.
Now, Romney is leading in Florida right now, but does Newt Gingrich have
what some are considering to be a very strong Republican Jewish vote? Does
he have that locked up?

WEXLER: Oh, I don`t think he has a lock on the Jewish vote any more
than Governor Romney does. I think where Governor Romney has his
advantage, most distinctly, is in the early voting. I believe close to 20
percent of the votes, maybe 400,000, were cast either on or before the date
that the South Carolina primary took place, when Mr. Gingrich`s star began
to soar. So I think that`s the biggest part of Romney`s advantage.

But Florida is known for very close races. So I suspect when all the
dust is settled and all the money is spent and all the accusations are
made, that it will probably be a very close race.

SCHULTZ: How big is the foreclosure issue in Florida? I know the
housing market has been a real issue for a lot of homeowners in that state,
a lot of foreclosures. It`s really hurt a lot of people. What about that?

WEXLER: It`s a huge issue. Florida is a real estate-based economy.
Of course, we are diverse state and we have many sources of economic
growth, but the real estate industry, both the residential and the
commercial side, have been particularly hard hit. And Floridians of all
political stripes are particularly sensitive on the real estate issue.

The other thing, Ed, that I think is important to point out, is the
issue of immigration. Florida is a very special mix. Of course, the Cuban
American community has a special place in the law, and the Puerto Rican
community, they`re citizens of the country.

But what we see in Florida right now is Governor Romney taking a very
different position than he took in Iowa and in New Hampshire. And, of
course, it would seem to be quite a hypocritical stance. Whereas, before,
he was strident. Now, all of a sudden, he`s expressing some kind of warmth
or sympathy with young people that are not citizens, but maybe would join
the military or go to universities.

This kind of discrepancy will not hold up in the general election.

SCHULTZ: Getting back to the foreclosures. Today, Newt Gingrich
linked Romney to home foreclosures in the state of Florida. Here it is.

(BEGIN VIDEO CLIP)

GINGRICH: How can a guy who literally owned stocks in the Goldman
Sachs investment fund that forecloses on Floridians run the ads he`s been
running?

(END VIDEO CLIP)

SCHULTZ: Is that a soft spot for Florida voters? What do you think?

WEXLER: I think, you know, in that Governor Romney has predicated his
campaign on his business acumen, all of these issues are quite relevant to
his qualifications.

SCHULTZ: Sure.

WEXLER: I think it is ironic, I think we all must see the irony that
in a Republican primary, these kinds of issues seem to be at the forefront
-- issues of wealth, issues of fairness, all of a sudden, issues of how
Governor Romney made his money.

But the ultimate judge, of course, will be the people. It`s
interesting that Republicans seem to care a great deal about this. I think
when we get to the general, should Governor Romney be the nominee, that
independent voters in particular would be troubled.

SCHULTZ: Well, let`s talk about the Democrats, getting those
independent voters in Florida. Are Florida Democrats confident that they
can win the state in November? And I ask this with the backdrop of a
governor, Rick Scott, who is not very popular, some pretty outlandish
statements that have been made about President Obama, from this Tea Party
Congressman West. I mean, there`s been a lot of political activity in
Florida, and it all seems to show that the Democrats appear to be pretty
normal and behind the working folk of America.

Are you confident that the Democrats can win Florida?

WEXLER: I`m very confident that Democrats under President Obama`s
leadership will win Florida. That confidence, of course, is tempered by a
cautiousness because Florida, as you rightfully point out, has been hit
very hard in terms of the real estate industry. The unemployment rate in
Florida is higher than the national norm.

But the basic essence of the Obama economic message that 3.2 million
people have jobs that have been created in the private sector, 100,000 jobs
in the automobile sector. Great news that General Motors is now back as
the number one leading automobile manufacturer and seller in the world.
These are the kinds of issues that really are important in Florida.

But also, in Florida, national security and foreign policy plays a
particularly important role and the president`s extremely impressive record
on Israel and his strength in terms of Osama bin Laden and eliminating al
Qaeda, and we saw it just over the weekend in terms of his bold action in
Somalia, these are the kind of issues that play across the line in Florida,
from the Panhandle back to south Florida.

SCHULTZ: Robert Wexler, great to have you with us on THE ED SHOW
tonight.

WEXLER: Thank you.

SCHULTZ: Thanks so much.

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

And coming up, Nancy Pelosi gives Newt Gingrich a taste of his own
medicine about their time on the sofa.

President Obama strikes back at Republicans who are crying about class
warfare.

And our political panel weighs in on Romney screwing up his financial
disclosure form.

Lots coming up. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Coming up, Nancy Pelosi on Mitt Romney`s offshore bank
accounts and his tax rate. The president tonight told ABC News his
thoughts on the food stamp president charges made by Newt Gingrich. We`ll
show you what he said.

Jan Brewer, the governor of Arizona, said she felt threatened by the
president during this exchange. Now, a fellow Republican is questioning
the governor`s account of events.

And breaking news out of Wisconsin tonight: two more former Scott
Walker aides have been arrested. John Nichols of "The Nation" magazine
says this is going to have a big impact on the recall.

Share your thoughts on Twitter using the #EdShow.

We`re right back.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

I had an opportunity today to sit down with House Democratic leader
Nancy Pelosi earlier at the Democrats` retreat in Maryland. I asked her
about the Republican presidential field, the state of the race, and about
her starring role in a Romney campaign ad.

(BEGIN VIDEOTAPE)

SCHULTZ: How do you feel about being in a Romney campaign ad hitting
Newt Gingrich?

PELOSI: Well, it`s happened before. Welcome to the climate change
ad. So, you know, it`s so funny. Everybody makes it, oh, you sat on the
sofa with Nancy Pelosi.

The point is, we came together to talk about the climate crisis, which
I thought he had an interest in. I wasn`t particularly interested in
sitting on the sofa with him either, but the bigger issue of climate change
brought us together. And Al Gore bringing people who had been on opposite
sides of different issues together. And I thought it was powerful, it was
worth it.

I haven`t seen the ads, but you know what? This is more about what
President Obama`s going to do as he wins re-election. It`s about
reigniting the American Dream. That`s what Democrats are gathered here to
do in Cambridge, Maryland, is to talk about how we do the work that is
necessary to reignite the American Dream. To make it in America, build our
industrial and manufacturing base, to build the infrastructure of America,
to have the education and training necessary for our children and for
America`s competitiveness.

SCHULTZ: If the ad is inaccurate, should the Romney camp pull it?

PELOSI: You know what? I haven`t seen the ad. I don`t want to get
involved in that campaign. I have just casually mentioned that people
should read the public record, and much has been read into that.

I think it takes away the focus of what is really serious here -- the
risk that President Obama pointed out in his State of the Union address,
the risk to the middle class. How crucial this time is to the middle
class. And how we have to make decisions, which are a stark contrast to
what the Republicans have put forth.

SCHULTZ: We are having a big discussion in this country right now
about income inequality and taxation, the president brought up, challenged
the tax code in the State of the Union address. And we have one of the
candidates over on the Republican side who has money in a Swiss bank or had
money over there and money in the Cayman Islands.

Does that present a problem, do you think?

PELOSI: I think it presents a problem. But the issue of income and
equity equality, it`s not just about what people earn, it`s about what they
can own -- their home, their small business and the rest. It`s about
fairness.

And this income inequality is immoral. It`s an immorality. I wish
that some of our faith-based groups would speak out about this as well.

SCHULTZ: Is it immoral that Mitt Romney pays 13.9 percent at least
one of the years he released?

PELOSI: Well, you know what? You`re better versed on his tax returns
than I am. All I`m saying is that we need to eliminate the tax cuts for
the wealthiest people in our country, that we have to have fairness and
simplicity in our tax code and we have to do it in a way that encourages
the entrepreneurial spirit of America, that encourages small businesses,
that is fair to wage owners and earners, as well as those who want to start
their own business or be self-employed.

So, the imbalance of it all is not good for the country, and many
people who are high income earners know that. They don`t subscribe to the
Romney route.

SCHULTZ: Well, the Romney route is to have money offshore. The
Romney route is to have accounts offshore. What message does that send to
the American people?

PELOSI: You know, Republicans are going to have to make a judgment.
I think they have a contest without a winner. That`s how I would describe
the Republican.

We`re calling it primary, caucus, whatever, their nominating process.
I think it`s a contest without a winner. Just -- and it will be
interesting to see what values they choose, one over the other, in terms of
is it more important to have money, can I bring money offshore and unfair
taxes? Can I ignore what Newt Gingrich --

SCHULTZ: Where do you think the American people will come down on
that?

PELOSI: Well, you know what? That`s the Republican Party. I have no
doubt that President Obama will be re-elected president of the United
States. He is a person of vision, of knowledge, of judgment -- a person
who thinks in a strategic way, with a plan to get things done for the
American people.

SCHULTZ: The president seems to be getting rave reviews from
Democrats, from his State of the Union address. But he also said in the
State of the Union address that somebody`s going to have to take a hair
cut. We can`t have it both ways as far as the tax cuts and cutting
programs and budgets.

How essential is it, in your opinion, that the Democrats don`t let
Social Security, Medicare, and Medicaid become a punching bag financially
to allow the Republicans to get what they want? And this really is
something that is very important to the Democratic base.

PELOSI: Well, it`s not only important to the Democratic base, any
measure of public opinion will show you that whether it`s the Democrats,
Republicans, independents, young people or old people, women in particular,
know that Social Security and Medicare are essential to their wellbeing.

SCHULTZ: Will you protect it?

PELOSI: Yes, we will.

Let me also say this. The president has been clear. We`ve made the
discretionary cuts that we`re going to make. You know, when they try to
keep a tax break at the high end and say, now you have to cut some place,
we`re not going there.

In terms of the mandatories, which is different from the
discretionary, forgive me talking --

SCHULTZ: Sure.

PELOSI: -- that language. The fact is, if there`s a way to make
Social Security solvent for a longer period of time, let`s put that on the
table and keep that money in the Social Security trust fund.

The message has to be clear that Social Security is not a slush fund
or an ATM machine for tax cuts for the rich. And so, if you want to talk
about Social Security and strengthening it, let`s talk about that, but not
to take money from it. It has not contributed to the deficit and it`s not
going to underwrite tax cuts for the rich.

SCHULTZ: Citizens United playing a big role in the campaign. Will
the Democrats be able to compete against the corporate money that is just
flowing in to Romney, Gingrich, even Governor Walker in Wisconsin, where
there is going to be a recall election?

I mean, how do you view Citizens United playing out and affecting
2012?

PELOSI: Well, as you well know, last Saturday was the two-year
anniversary of this most unfortunate Supreme Court decision. I understand
a lot about government and politics. I`ll never understand why they
thought that that was a good idea, that you could have unlimited,
unidentified special interest money, drowning --

SCHULTZ: We`re seeing that now.

PELOSI: -- deluging the political system in our country.

And that`s why when we talk about reigniting the American Dream and
building ladders of success, you cannot have opportunity and fairness in
our country as a policy unless you have openness and transparency in the
political system. So, we`re talking about a new politics, free of special
interest money. Chris Van Hollen has taken the lead on the Disclose Act,
something that we can put forth now, disclose.

When we win, we will reform. We have to have clean campaigns. The
status quo cannot exist.

And at the same time, we will work to amend the Constitution, to
eliminate this travesty of justice.

(END VIDEOTAPE)

SCHULTZ: Coming up, President Obama responding to the charge that
he`s America`s food stamp president. And he`s setting the record straight
on his meeting Jan Brewer.

And next, New Jersey`s radical governor needs a lesson on the civil
rights movement. Chris Christie, he`s going in the zone.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: And in "Psycho Talk" tonight, I don`t if there`s any humor
in this at all, because there isn`t. Governor Chris Christie of New Jersey
says people would have been better off putting civil rights on a ballot
down in the South in the 1960s. Christie made the outrageous comment when
he was talking about putting gay marriage in a state referendum. He said
he would veto a gay marriage bill from the legislature.

But then he said this --

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE (R), NEW JERSEY: The fact of the matter is that I
think people would have been happy to have a referendum, you know, on civil
rights rather than fighting and dying in the streets in the South. OK?

(END VIDEO CLIP)

SCHULTZ: Yeah, OK? There`s a guy out of touch, folks. Reaction to
Governor Christie`s remark was very swift. From New Jersey Assembly
Speaker Sheila Oliver, "governor, people were fighting and dying in the
streets of the south for a reason. The majority refused to grant
minorities equal rights by any method."

From Assemblyman Gordon Johnson, he says, "the governor apparently
doesn`t even understand that minorities likely would have been blocked from
voting on a civil rights referendum in the south in the 1960s. You know
why? Because they didn`t have civil rights!"

And from Newark Mayor Cory Booker, "I shudder to think what would have
happened if the civil rights gains, heroically established by courageous
lawmakers in the 1960s, were instead conveniently left up to popular votes
in our 50 states."

If only we could ask Reverend Martin Luther King Jr. if civil rights
should have been put on a ballot in the 1960s.

For Governor Christie to say people would have been happy to have a
referendum on civil rights is just flat-out clueless, indefensible Psycho
Talk.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Bill Gates said he
agrees with me.

(END VIDEO CLIP)

SCHULTZ: The president is on the stump. The Romney campaign is on
the ropes in the fair share conversation. We`ll get the latest with Ari
Melber and Professor Caroline Heldman next.

(BEGIN VIDEO CLIP)

GOV. JAN BREWER (R), ARIZONA: I felt a little bit threatened, if you
will.

(END VIDEO CLIP)

SCHULTZ: Now Jan Brewer says she felt threatened by the president on
the tarmac in Phoenix? James Peterson on the racial aspect of that remark.

(BEGIN VIDEO CLIP)

GOV. SCOTT WALKER (R), WISCONSIN: I will continue to be a good
steward of the taxpayer`s dollar.

UNIDENTIFIED FEMALE: Liar!

(END VIDEO CLIP)

SCHULTZ: And a bad night last night turned into a worse day today for
Scott Walker. There have been two more arrests made. John Nichols has the
latest.

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW. President Obama has been
forced to bat down ridiculous attacks from the right on income inequality.
Today in Las Vegas, he talked about so-called envy.

(BEGIN VIDEO CLIP)

OBAMA: When Americans talk about folks like me paying their fair
share of taxes, it`s not because they envy the rich. Just yesterday, Bill
Gates says he agrees with me that most -- that Americans who can afford it
should pay their fair share. I promise you, Bill Gates does not envy the
rich. He doesn`t envy wealthy people.

This has nothing to do with envy. It has everything to do with math.

(END VIDEO CLIP)

SCHULTZ: Republicans are nervous about losing this argument. Income
inequality and taxes are issues where Americans are clearly siding with the
Democrats. So Republicans cry class warfare. Today, Warren Buffett had a
few words to say about that.

(BEGIN VIDEO CLIP)

WARREN BUFFETT, BILLIONAIRE INVESTOR: So, if this is the war -- I
wouldn`t call it a war. I`d call it a struggle. But if this is a war, you
know, my side has had the nuclear bomb. We`ve got K Street and lobbyists.
And we`ve got money on our side in terms of contributions. We`ve got money
on our side in terms of lobbyists.

(END VIDEO CLIP)

SCHULTZ: And Mitt Romney seems to be the poster boy for an unfair
system that`s stacked against the middle class. He can`t even get his
offshore accounts straight on a financial disclosure form.

Let`s turn to our panel tonight. Let`s bring in Ari Melber, who is a
correspondent for "The Nation" magazine, and also Professor Caroline
Heldman, professor of politics at Occidental College. Great to have both
of you with us.

Ari, let me ask you first. Romney, is he just in the wrong place at
the wrong time, with the wrong tax reform and the wrong financial
disclosure sheet? Isn`t this a huge problem?

ARI MELBER, "THE NATION": It is a big problem. Usually being really
rich is a huge advantage in running for office. And we know about people
who self-fund, which he has done some of. So it`s a great thing to have
that much money to spend.

But, boy, he is caught in the buzz saw of this debate. And I thought
it was most striking not with Warren Buffett or Obama, but in the
Republican debate when he turned to the Newt and said, well, under your
plan, someone like me would pay nothing, meaning someone who makes as many
millions as he does.

You don`t really want to be cast in that role in this kind of climate.

SCHULTZ: Professor, what about income inequality? Can the Democrats
ride this conversation all the way to November?

PROFESSOR CAROLINE HELDMAN, OCCIDENTAL COLLEGE: I think they can. If
you look at polls, three quarters of Americans want the wealthy Americans,
meaning the top one percent, to pay more in taxes. And it`s no surprise.
I mean, look at Mitt Romney. He`s making 60,000 dollars a day, and he`s
not -- he`s making money off of money. He`s not making that off of labor.

And he`s only -- he`s paying less than 15 percent, which is far less
than your working class Americans are paying in taxes. So it makes a lot
of common sense for Obama to really hammer away at this in the general
election.

SCHULTZ: How much of a problem, professor, do you think this is for
Mitt Romney, when it comes to ethics in government, some regulations about
being forthcoming under a number of different laws? What do you make of
it?

HELDMAN: Well, I think back to 2008 when John McCain looked at 23
years of Mitt Romney`s returns, and he chose Sarah Palin as his vice
presidential choice. So I think there`s actually a lot there that he is
very afraid to release. Otherwise, he would have done it already.

SCHULTZ: Here`s President Obama on whether Gingrich`s Food Stamp
president has an undercurrent of race. Let`s play it.

(BEGIN VIDEO CLIP)

OBAMA: I think the American people are going to make a judgment about
who`s trying to bring the country together and who`s dividing it; who
reflects sort of the core values that help create this country, values of
hard work and responsibility, but also looking out for one another, and who
is, you know, tapping into some of our worst instincts.

UNIDENTIFIED FEMALE: Is that what he did?

OBAMA: No, I`m just saying they`re going to be making these
decisions.

(END VIDEO CLIP)

SCHULTZ: Was the president a little hesitant there, Ari?

MELBER: I think he was. The White House doesn`t want to carry the
water on this, and we know why. It`s really up to us -- I mean us as
citizens -- to decide whether we`re going to stand for this garbage. I
will note that there has some stuff like this around the edges last time.
It didn`t work against the president.

Newt Gingrich may not end up being the nominee, but he`s making
racially motivated attacks that I think the American people will reject
when we get out to a general electorate.

SCHULTZ: Ari Melber, Caroline Heldman, professor, great to have both
of you with us tonight. Thanks so much.

Up next, Jan Brewer said she felt threatened by President Obama during
her finger-pointing session yesterday. We have the president`s response.
Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Arizona Governor Jan Brewer has spent the last 24 hours
trashing the president of the United States to just about anybody who will
listen. This photograph of Brewer pointing her finger at President Obama
in Phoenix yesterday was the governor`s ticket to a series of media
appearances. She seemed to be on a mission to portray the president as a
menacing guy.

(BEGIN VIDEO CLIP)

BREWER: I was trying to be very gracious to him. And he just reacted
in a very negative manner of which took me back. And he immediately took
umbrage, if you will, with my book that I wrote, "scorpions for Breakfast,"
and was somewhat of -- disgruntled, if you will.

In my opinion, it was a terrible encounter. I don`t know why he was
surprised by my book. But he evidently is. And he was very thin skinned
in regards to it.

I felt a little bit threatened, if you will, in the attitude that he
had.

(END VIDEO CLIP)

SCHULTZ: Threatened. That`s the word she used to describe the
encounter. Their conversation took place on the tarmac in front of the
president`s security team and the entire press corps, but she was
threatened -- felt threatened.

The president apparently told Brewer a passage in her new book about
an Oval Office meeting between the two of them, well, it was inaccurate.
Brewer was the one jabbing her finger in the president`s face. But she
wants us to believe that she felt threatened. Here`s President Obama`s
side of the story.

(BEGIN VIDEO CLIP)

OBAMA: I think it`s always good publicity for a Republican if they`re
in an argument with me. But this was really not a big deal.

UNIDENTIFIED MALE: Were you tense?

OBAMA: You know, Diane, I`m usually accused of not being tense
enough, right? Too relaxed.

UNIDENTIFIED FEMALE: So you weren`t?

OBAMA: No.

(END VIDEO CLIP)

SCHULTZ: I`m joined by Dr. James Peterson, director of Africana
Studies and associate professor of English at Lehigh University.
Professor, good to have you with us tonight.

PROFESSOR JAMES PETERSON, LEHIGH UNIVERSITY: How you doing, Ed?

SCHULTZ: Good.

She said that she felt threatened. Two questions here; what`s your
reaction, first of all, to the picture? And what`s your reaction to her
response, saying that she felt threatened?

PETERSON: First, the picture is absurd. It`s pretty offensive. I
mean, this is not the way that you interact with the president of the
United States. And we know the context of this. We haven`t seen this kind
of disrespect directed at any of the presidents during my lifetime.

And absolutely, let me just say one other thing about the picture.
There is no grace in pointing your finger in someone`s face. However she`s
trying to characterize her side of the interaction, it gets sort of erased
by the fact that you have your finger waved in the president`s face.

Now in terms of this whole idea about threatening, we`ve had sort of
an ongoing conversation, Ed, with you, myself and other folk on your show
about the ways in which Republicans and other folk on the right are coding
some of their language around issues of race.

Now obviously, if you go back even to the Ron Paul letters, where they
talked about these 13 year old boys as menacing black thugs, this idea that
somehow a black man, just by being a black man, is going to be threatening
is really, really problematic. The bottom line here is this is one of the
most mild-mannered, moderate folk that people have ever known.

Anyone who`s interacted with him has said as much. So the idea that
he would be menacing or trying to intimidate the governor simply doesn`t
make sense.

SCHULTZ: Well, when you look at her history, and some of the things
that she has advocated for, as far as illegal immigration, do you think --
and coupling with that picture, do you think Jan Brewer has a problem with
race?

PETERSON: Well, if we judged her by her policies -- remember, this is
what`s strange about this as well. Because from the left, the president
has been fairly conservative on immigration issues. Obviously, from the
right, they feel like he`s been to the left, which is the mark of a good
moderate.

But there should be no beef between Governor Brewer and the president
based upon some of these issues. What the attorney general`s office did
was they realized that Governor Brewer was willing to racially profile
Latino and Hispanic folk and anyone who looked like them throughout the
state of Arizona.

That is unacceptable. We live in a free country. So there`s no --
you know, from my mind, the policy here is really, really important to
consider as well.

SCHULTZ: The interaction was about a disagreement over the way Brewer
portrayed a meeting that took place with the president back in 2010. It
was in her new book. Here`s what Brewer had to say about her Oval Office
meeting, right after it happened.

(BEGIN VIDEO CLIP)

BREWER: It was a very cordial discussion.

UNIDENTIFIED MALE: What was the tone like?

BREWER: Very cordial. Very, very cordial.

(END VIDEO CLIP)

SCHULTZ: Very cordial. Well, Brewer`s book tells a different story.
She calls the president "condescending and patronizing." So which one do
you believe, the book or that comment, the day that meeting took place?

PETERSON: Yes, I`ll take the comment the day the meeting took place.
Listen, someone here is lying. And it`s not the president of the United
States.

SCHULTZ: She`s lying?

PETERSON: Yes, clearly. She came out and said that it was cordial,
that the interaction was cordial. She repeated that there. But she had to
write something different, because her book is more about policy and
politics than about the truth.

SCHULTZ: And do you think that she actually used this moment to get
visibility and to sell a book?

PETERSON: Well, I think that all people in the public eye, especially
those folk on the right, but the folk on the left do this as well, use
books as leveraging tools to promote themselves. They use photo ops like
these as leveraging opportunities to promote themselves.

This is just a little bit more seedy than what we normally see.
Because, one, she`s playing on issues of race and that`s completely
unnecessary. And two, she`s not telling the truth. She didn`t tell the
truth in the book about the -- about the interaction. Obviously, she`s not
telling the truth about this finger-wagging interaction she just had
recently.

SCHULTZ: Mayor Scott Smith of Mesa, Arizona, was there during the
conversation in Phoenix. He disputes Brewer`s story about President Obama
being tense and running off after the conversation, cutting her short.
"Talking Points Memo" reports Mayor Smith said, "there was no sense that he
was running to or from anything. In fact, he said the president stayed and
had a pleasant conversation with Smith, who`s a Republican, and Phoenix
Mayor Greg Stanton, a Democrat."

What does this tell you?

PETERSON: Again, it tells us that Governor Brewer is trying to play
with the facts in order to enhance this photo opportunity.

SCHULTZ: And then she does the media tour.

PETERSON: Exactly.

SCHULTZ: She`s doing the grandstanding and the media tour, gaming on
all of this. That picture, I think, is despicable. And I don`t care who
the president is. No president deserves to be put in that position. And
for her to say that she felt threatened right next to Air Force One and all
of the security teams and all of the media -- she felt threatened? What
did she think President Obama was going to do?

PETERSON: Right, what is he going to do? Exactly. What is the
president going to do? Is he going to hit you? Do you think he`s going to
smack -- it`s insane. It is insane.

But again, this is where we are in politics right now, Ed. Where we
are in politics right now is people play the race card to the bases
instincts of some folks` humanity. People will manipulate imagery in the
public sphere to try to tell lies.

The bottom line is with we`ve got to improve the public discourse
around politics.

SCHULTZ: Dr. James Peterson, good to have you with us tonight. Thank
you so much.

Former associates of Governor Scott Walker are facing jail time as a
Republican election scandal in Wisconsin heats up. I`ll tell you what,
they`ve got it all in the Badger State.

(COMMERCIAL BREAK)

SCHULTZ: ED SHOW survey tonight, I asked you will Romney`s hidden
finances make Republicans less likely to vote for him? Sixty three percent
of you said yes; 37 percent of you said no.

Coming up, two of Wisconsin Governor Scott Walker`s former staffers
are arrested as part of an ongoing John Doe investigation in the state.
All the details, the dynamics, and the nuts and bolts with John Nichols
next.

(COMMERCIAL BREAK)

SCHULTZ: In the Big Finish tonight, Big trouble for Governor Scott
Walker of Wisconsin. Two staffers who worked for Walker when he was
Milwaukee county executive have been charged with illegally doing campaign
work while being paid by the county. It`s all part of an ongoing John Doe
investigation involving Walker`s staffers, his former staffers.

Today, the Milwaukee County district attorney filed a complaint
directly connecting illegal activity to Walker`s campaign for governor in
2010. Darlene Wink, a former constituent service coordinator, was charged
with two misdemeanors for using county resources to raise money for
Walker`s campaign.

Also, Scott Walker`s former deputy chief of staff, Kelly Rhineflesh
(ph), was charged with four felony counts of misconduct in office. And the
way these Walker staffers allegedly broke the law is unbelievable.

The district attorney`s complaint reveals the existence of a secret e-
mail system used by insider staffers to conduct fund-raising and other
political activities on taxpayer time. Thousands of e-mails were allegedly
exchanged between county workers and Walker`s campaign staffers. Secret e-
mails were also exchanged with campaign workers for then-State
Representative Brett Davis, who was running for lieutenant governor.

Davis is now Governor Walker`s state Medicaid director. But there`s
more. The secret e-mail system was allegedly set up by former Walker
Deputy Chief of Staff Tim Russell, who has already been charged with
embezzling 60,000 dollars from a veterans` fund-raising event.

So the big question: what did Scott Walker know and when did he know
it, if anything? Here`s what we know from the D.A.`s complaint: the secret
e-mail system -- the secret e-mail system was set up through a wireless
router housed in an office 25 feet away from Scott Walker`s office. Also,
Darlene Wink, one of the two individuals charged today, resigned from her
county position in May of 2010, after admitting she was doing campaign work
on county time.

Shortly after her resignation, Scott Walker sent this private e-mail
to Tim Russell: "we cannot afford another story like this one. No one can
give them any reason to do another story. That means no laptops, no
websites, no time away during the work day, et cetera."

Governor Walker has not commented on the most recent charges and
canceled a scheduled event today, citing bad weather. For more on this,
let`s bring in John Nichols, Washington correspondent of "The Nation"
magazine. He is live tonight from Madison, Wisconsin.

John, how bad is this for Walker?

JOHN NICHOLS, "THE NATION": It`s pretty bad. Remember, this is the
day after the governor`s State of the State Address. He was supposed to do
a triumphal tour of the state, stops all over, emphasizing the points that
he made in his speech.

Instead, he was avoiding the cameras. And his press secretary, Cullen
Wearwy (ph), was not able to put out a statement responding to this --
these charges, these criminal complaints that have come out, because Cullen
Wearwy is listed in the criminal complaint. He was one of the people who
was communicating with this secret, illegal campaign operation within the
county executive`s office.

Among the other people communicating was Reince Priebus, who went on
to become the chairman of the Republican National Committee.

SCHULTZ: OK. So the scope broadens here. But we really, right now,
are at a point of asking a Nixonian type question. What did he know? When
did he know it? How involved is Walker? How could he not know if his
office is 25 feet away from alleged illegal activity?

NICHOLS: Well, and remember also, we`re talking about Tim Russell
here, who was in so much trouble a week or so ago, and is listed in this
complaint. His name`s all over it. Tim Russell was, for a decade, Scott
Walker`s wingman, the guy who was at his side in everything that he was
doing.

Another person who`s listed in this, all over it, is the guy who went
on to become Governor Walker`s chief of staff. And the woman who was
charged with four counts of misconduct in office went on to serve as a
fund-raiser for Governor Walker`s campaign and was working for that
campaign right up until recent days.

(CROSS TALK)

NICHOLS: So it`s hard to imagine the governor didn`t know about this.
I think it --

SCHULTZ: Yeah, how does it affect the recall?

NICHOLS: It becomes a much bigger story. You know, most of your
viewers have watched the debate about what Governor Walker did with the
labor unions. They`re very conscious of that as a central issue. But in
Wisconsin, a state that has always set a very high ethical standard, these
sorts of issues are devastating.

SCHULTZ: OK. We`ll do more on this in the coming days. It just is
as thick as it gets politically in Wisconsin. John Nichols, thanks for
your time tonight.

That`s THE ED SHOW. I`m Ed Schultz. You can listen to me on Sirius
XM Radio, channel 127, Monday through Friday, noon to 3:00. Follow me on
Twitter @EdShow and like THE ED SHOW on Facebook. Thank you so much for
doing that.

"THE RACHEL MADDOW SHOW" starts right now. Rachel, good to see you
tonight.

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

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