updated 5/15/2012 12:35:58 PM ET 2012-05-15T16:35:58

Guests: Mike Tate, Dave Foster, Bart Chilton, John Garamendi, Wendell Potter

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

There is a national battle for progressive values going on right in
the middle of the country right now. So, when are the national Democrats
going to join the fight?

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

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Do you solemnly swear or affirm the testimony you
give will be the truth, the whole truth and nothing but the truth?

UNIDENTIFIED MALE: Yes.

SCHULTZ (voice-over): Scott Walker`s divide and conquer bombshell is
causing major problems.

UNIDENTIFIED MALE: We never had such a conversation.

SCHULTZ: "The Washington Post" reports national Democrats aren`t
helping the state party in Wisconsin. Mike Tate of the Wisconsin Democrats
is here to tell his side of the story.

UNIDENTIFIED MALE: Bain Capital walked away with a lot of money that
they made off this plant. We view Mitt Romney as a job destroyer.

SCHULTZ: The victims of vulture capitalism are speaking out in a new
Obama campaign ad. We`ll speak to one of them tonight.

And JPMorgan $2 billion mistake proves Republicans just don`t get it.

UNIDENTIFIED MALE: You think we need less financial regulation
rather than more?

REINCE PRIEBUS, RNC CHAIRMAN: I think we need less.

SCHULTZ: Bart Chilton of the Commodities Future Trading Commission
on the regulation we need to stop another disaster.

(END VIDEOTAPE)

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

A new video of Scott Walker telling a billionaire donor about his
plan to divide and conquer labor might land him in hot water with the
United States Congress. The video of Walker talking with billionaire Diane
Hendricks in January of 2011 surfaced in a documentary late last week.

Take a look.

(BEGIN VIDEO CLIP)

DIANE HENDRICKS, CAMPAIGN DONOR: Any chance we`ll get to be a
completely red state and work on these unions and become a right to work?
What can we do to help you?

GOV. SCOTT WALKER (R), WISCONSIN: We`re going to start in a couple
of weeks with our budget adjustment. The first step is we`re going to deal
with collective bargaining for all public employee unions because you use
divide and conquer.

(END VIDEO CLIP)

SCHULTZ: The video is a damning look inside the governor`s head and
agenda less than one month before he staged an all out assault on public
workers in Wisconsin. At the time, Walker repeatedly lied about his
reasons for gutting the public sector. His biggest lie happened during
congressional testimony in April of 2011.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Have you ever had a conversation with respect to
your actions in Wisconsin in using them to punish members of the opposition
party and their donor base?

WALKER: No.

UNIDENTIFIED MALE: You`ve never had such a conversation?

WALKER: No.

(END VIDEO CLIP)

SCHULTZ: Let`s go back and take yet another look at what the he told
billionaire donor three months earlier.

(BEGIN VIDEO CLIP)

WALKER: The first step is we`re going to deal with collective
bargaining for all public employee unions, because you use divide and
conquer.

(END VIDEO CLIP)

SCHULTZ: Oh, yes, it`s so interesting, isn`t it?

Walker used his divide and conquer strategy to punish unions and
anyone that stood in his way.

Congress, you know you ought to do, you ought to haul this guy back.
He`s got plenty of attorneys. He`s got help. Ask him the question again.
His defense team might help him along on this one and bring him along a
little bit.

This is part of the reason why this is the most important election in
America. The Wisconsin gubernatorial recall election will have a major
impact on every race in America for generations to come. The June 5th
recall election is the first real first test case of Citizens United versus
boots on the ground.

Scott Walker has been all over conservative media begging for money.
The rookie governor has already raked in more than $25 million to smear his
opponents and pumped his weak record of job creation.

Walker raised 12 times more money than all four Democrats who
competed against one another in the primaries. Tom Barrett and the
Democrats -- they`re going to need all hands on deck if they pull this off
and see Walker go down the trail.

That`s why this headline -- I`m scratching my head when I saw this.
Greg Sargent points occupant the Wisconsin Democratic Party has asked the
DNC for $500,000 to help out with their field operation. So far the DNC
has declined.

I have a question for my friends at the DNC -- what in the hell are
you waiting for?

Democrats have less than 22 days to get boots on the ground, get
organized again, get people registered and get them out to the polls.
There`s no time to waste, wouldn`t you say?

When Howard Dean ran the DNC, he had a 50 state strategy which help
get Nancy Pelosi the speaker`s gavel and, of course, helped President Obama
win nine Bush states. I think that`s how it went down -- a national
effort.

I think it`s unacceptable for the national party to sit this one out.
Financially, it`s all about writing the check.

Walker has the support of -- who? Well, the Republican Governors
Association, Americans for Prosperity, the Koch brothers, Sheldon Adelson,
and all the free time he can gin up on FOX News and conservative talk radio
all across America. Why is that? Because they want him to win. They`re
in it to win. The conservatives and the righties understand what Wisconsin
means.

This is where it all started. Sixteen months ago, it went from
protests to petitions to nine recall elections and the Democrats won five.
But now, we`re down to the big one. This is the big one.

And can you believe it? The DNC is getting writers cramp when it
comes to writing a check for 500 grand. Have you ever been in business?
Gosh, I rate writing this check, but I got to do it.

DNC, you got to write it if it pains you, because this has really
national implications as to what can happen to this country. If we don`t
take stand against Citizens United, if we don`t give the people hope, if we
don`t give them the confidence that you can win, what does it say? Is
there any other bigger election that`s going to happen between now and June
5th? I don`t think so.

This has been on the radar screen for 16 months. So, the righties
are all in, but the DNC is -- well, I don`t know about the 500 grand.

End this story tonight. Pick up the phone, you folks at the DNC. I
won`t name names because I`m not looking to pick a fight, OK? I`m here to
motivate and make people understand what this means because if Walker wins,
if his agenda is allowed to prevail and the 14 senators that left the state
to draw attention to what was a radical plan, if they lose this battle at
the polls, after all of this, this is going to underscore every other
Republican governor in this country saying -- well, see that? The people
may be protesting and saying one thing but this is what we have to do if
we`re going to get our budget in order.

I`m asking Ed heads across America, you know what to do. The DNC
needs to step up and get it done for a candidate who will do a better job
than Scott Walker.

Now, Tom Barrett -- OK, he`s not the media darling when it comes to
the media in this country. He`s not the media darling when it comes to
unions in this country. But he is the guy that is going to be much more
level headed and restore the education cuts that have taken place in this
state and also will do a better job of job creation.

I do think that the Congress needs to call Scott Walker back and play
those two sound bites. It probably won`t happen because you see, Darrell
Issa calls the shots. If you`ve been seeing what Darrell Issa says about
President Obama and Joe Biden and the Obama administration -- I think you
know just how he plays. He plays to win.

Democrats, put it on the calendar. This is one we cannot lose. Get
your cell phones out, I want to know what you think.

Tonight`s question: Do national Democrats need to do more to help
recall Scott Walker? Text A for yes, text B for no, to 622639. And you
can go to our blog at Ed.MSNBC.com and leave a comment. We`ll bring you
results of the poll later on in the show.

Joining me tonight is a gentleman who`s in a tough spot, Mike Tate.
He`s the chairman of the Wisconsin Democratic Party. I know him. He`s a
good guy. He works hard, but he needs the cash.

And these folks have asked the DNC to step up. Right now, it seems
like, financially, they are on an island.

Mike, good to have you with us.

I want to know -- what`s happening with this story? How true is it?
Is it 500 grand? What do you need to get the boots on the ground to get
organizing to make this thing happen?

MIKE TATE, WISC. DEMOCRATIC PARTY: Well, Ed, thanks for having me
on.

And let me say that, you know, we`ve been working with folks like the
DNC and the DGA from the beginning on this race. I think everyone is clear
this is a priority. I believe, as you just said, that this is the most
important election in America right now and will be the most important
thing before we hopefully re-elect the president in November.

The DNC has been helping us mobilize their volunteers and are going
to be very active here. The Democratic Governors Association has been
spent millions of dollars here on television.

So, you know, we are continuing to work in partnership with our
friends at the DNC and are hopeful it will continue that strong partnership
and make a good financial investment here.

SCHULTZ: Is the story accurate? So far, they have not written the
check that you`ve asked for.

TATE: Well, you know, we`re still talking about that. Ed, I`m a
little reluctant to talk about specific numbers for campaign strategy
publicly. But we`re working with them on a regular basis.

I think that they know that this is an incredibly important
bellwether election that if we`re able to defeat Scott Walker here in
Wisconsin, it`s going to make it a lot easier for Barack Obama to win 270
electoral votes in November.

SCHULTZ: OK. If you`ve asked for $500,000 and the DNC doesn`t
deliver, what does that tell other progressives around the country? You`re
on your own and have to take care of your own backyard?

That`s not how the Republicans and the conservatives and the Koch
brothers are operating. I mean, there`s outside interest that are playing
to win right now.

So, can Barrett win without the help of the national party?

TATE: Well, we need all the help we can get. And, you know, we`ve
had hundreds of thousands of people give $5, $10 and $20. This really is
how we fight back against the powerful and the elite in a post-Citizens
United era. We would love to have the help of the DNC. It will continue
to add to the help they are providing us from an on-the-ground perspective.

SCHULTZ: It`s all about the money, though, Mike. It`s all about the
money.

You know it. I know it. Everybody knows it. And that`s why
millions of dollars have flowed in to support Scott Walker.

So, the bottom line here is the DNC can`t step up to the plate and
not get the writers cramp and write the check, it`s all for naught, isn`t
it?

TATE: We need all the help we can get. It`s tough watching TV
knowing we`re getting beat 20 to 1 in television spending. This is an
election where we see the electorate is ready to fire Scott Walker. We
just need to make sure we`re ready to get our voters out to the polls.

SCHULTZ: OK.

TATE: That`s all we`re spending our money. And we`re working pretty
hard.

SCHULTZ: All right. There`s a poll out there from some group called
We Ask America. It gives Walker a nine-point lead. Should you trust these
numbers? Who is We ask America?

I want our audience to understand, with so much money floating around
it`s easy to get a few jokesters to play with the telephone and say look
what we`ve got.

So, who is this group We ask America?

TATE: Earlier today, it`s reported it`s the Illinois Association of
Manufacturers. One would wonder why the Illinois Association of
Manufacturers has a strong interest in our governor`s race. For whatever
reason, they do and they decided to do a poll. It`s a robopoll. I don`t
think it`s an accurate reflection of we`re seeing internally and what we`re
seeing released even as recently about a week ago.

This is a very competitive race. We are neck and neck in the polls.
If we can get our voters to show up on June 5th, we`ll send a message
nationally that you can`t mess with working people.

SCHULTZ: That`s what it`s all about is who gets out the vote.
That`s what this is all about at this point. Who`s going to get out the
vote to get the deal done on June 5th.

Now, I want to ask you -- did Scott Walker lie to Congress? I mean,
the audio tape -- the videotape is right there. You saw his testimony in
Congress. You saw the videotape that came off the documentary when he was
talking to that billionaire.

How could you deny the fact? He lied to Congress, did he not?

TATE: I think it would be pretty hard to think he didn`t. I think
it would be pretty hard a guy as manipulative and calculating as Scott
Walker didn`t have a conversation about the devastating affect it would
have for working people to have a voice in the workplace and in government.

I think that`s clearly why he did it. You know, Ed, you`ve done a
lot of reporting on where this stuff comes from, from the Koch brothers,
from ALEC -- they`re trying to take apart any semblance of a voice that
average working people have by going after labor.

SCHULTZ: I hope the DNC does what they have to do, because this is
important for the country. It`s important for the Obama administration.

Mike Tate, great to have you with us. Thanks so much. Keep up the
fight.

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.

President Obama spoke out about the JPMorgan mess. We`ll tell you
what he said about the $2 billion risky bet.

And California Governor Jerry Brown wants to avoid massive cuts to
education in public safety. The Republicans are standing in his way.
Congressman John Garamendi joins me later.

Stay with us. We`ll be right back.

(COMMERCIAL BREAK)

SCHULTZ: Coming up, the human cost of Mitt Romney`s vulture
capitalism. The Obama campaign has a new ad is hitting Romney pretty hard.
One of Bain`s victims is here tonight.

Republicans are actually claiming that the JPMorgan disaster was
caused by too much regulation? We will correct the record on this show
this evening.

And governor`s like Chris Christie and other righties around the
country are playing politics with people`s lives when it comes to
implementing what they call Obamacare. Wendell Potter is ahead on the
latest Republican obstruction.

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

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE SHOW.

President Obama is going after Mitt Romney where it counts. Romney
claims to be the job creator. So, here is the Obama campaign`s ad about
Romney`s experience at Bain Capital.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: They made as much money off of it as they could.
They closed it down. They filed for bankruptcy without any concerns for
the families of the community.

UNIDENTIFIED MALE: It`s like a vampire. They came in and sucked the
life out of us.

UNIDENTIFIED MALE: It was like watching an old friend bleed to
death.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: As I look around at the
millions of Americans without work, it breaks my heart.

UNIDENTIFIED MALE: He`s running for president. If he`s going to run
the country the way he ran our business, I wouldn`t want him there. He`s
so out of touch with the average person many this country, how could you
care. How could you care for the average working person if you feel that
way?

(END VIDEO CLIP)

SCHULTZ: The ad tells the story of GST Steel. When Romney was at
Bain Capital, the steel company was loaded up with debt and then sent into
bankruptcy. Its workers lost their jobs and their pensions, were
devastated.

The Romney campaign countered with its own ad about Steel Dynamics
and how it was a big success under Bain Capital. The Steel Dynamics --
wait a minute now -- they got plenty of subsidies and tax breaks. Of
course, this is Mitt Romney`s second time around trying to defend his
private sector jobs record thanks to Newt Gingrich`s old super PAC.

(BEGIN VIDEO CLIP)

NARRATOR: This film is about one such raider and his firm. Mitt
Romney became CEO of Bain Capital the day the company was formed. His
mission: to reap massive rewards for himself and investors.

UNIDENTIFIED MAL: Mitt Romney, them guys -- they don`t care who I
am.

UNIDENTIFIED MALE: He`s for small businesses. No he isn`t.

(END VIDEO CLIP)

SCHULTZ: Let`s turn to Dave Foster, a former union representative
for laid off workers at GS Steel. Mr. Foster, good to have you with us.
You were there. Tell us what happened to GS Steel under Romney`s Bain
Capital. How did it unfold?

DAVE FOSTER, FORMER GST STEEL UNION REP.: Thanks a lot for having me
here, Ed. I appreciate the opportunity to tell what happened to the steel
workers, GST Steel in Kansas. This was a game of heads I win, tails you
lose.

When Bain Capital went in in 1993 put very little of their own money
down, borrowed the rest to buy the GS steel plant. They turned around and
paid themselves back their own investment with borrowed money and proceeded
over a course of years to lever the company up with unsustainable amounts
of debts so that by the end of the 1990s, the company had $500 million in
debt. It simply couldn`t survive. It was an example of terrible
management on the part of the business.

SCHULTZ: OK. So when Mitt Romney is out on the campaign trail and
he says it breaks his heart when he sees these unemployed people, you have
a different opinion of that?

FOSTER: I have a completely different opinion, Ed. I was the person
that went down in the union hall and stood with hundreds of steel workers
with steel worker retirees and spouses in their 70s and 80s. I was the one
to tell them the company was this bankruptcy, that their retiree health
insurance, $100 million of it was gone. Their pensions were being reduced.

I heard their stories of how kids were dropping out of college, how
pensioners didn`t know if they could get operations or leave money to their
widow.

SCHULTZ: And Bain walked with the cash?

FOSTER: There was no one from Bain around.

SCHULTZ: OK. But they walked with the cash? I mean, they
underfunded pensions. They changed benefits.

They made it so the company would go bankrupt. They took theirs and
left you guys hanging.

FOSTER: That`s exactly right, Ed. When Bain bought GST steel, they
bought it for cash and the assumption of obligations. Among those
obligations was $100 million in accrued retiree benefits that were owed the
hundreds of GST steel workers and those who have retired for them.

Romney walked in knowing he obligated to pay that money. But when
the going got tough, he walked away and took his own quick profits up front
and left the steel workers behind, cratered their jobs, cratered their
community.

SCHULTZ: And now, you know the rest of the story.

Well, today, President Obama`s former economic advisor on the
automobile industry, said that Obama`s Bain ad was unfair because it wasn`t
Bain`s mission to create jobs. That really is the point isn`t it? What`s
your response to that?

FOSTER: That really gets under my skin, Ed. The fact is you judge a
businessman by the values and record of the businesses that they own and
run. The case of GST Steel was one of an extremely poorly managed
business.

It was one in which smart people in the steel industry know it`s a
cyclical business. They know you don`t lever up a company like that with
debt so in the hard times you can`t pay your bills. But that`s exactly
what Mitt Romney did. It was bad management and a story of bad values.

SCHULTZ: David Foster, thanks for your story tonight here on THE ED
SHOW. We`ll do it again. Thank you. Appreciate it.

Up next, what President Obama had to say about the nation`s biggest
bank making a huge $2 billion bet that failed miserably?

Will the Democrats back Marco Rubio`s version of the DREAM Act? Not
if it doesn`t include a path to citizenship. Stay tuned.

(COMMERCIAL BREAK)

SCHULTZ: Another bank debacle, another bank story.

Today, President Obama addressed the $2 billion loss the biggest bank
suffered because of a risky bet gone bad?

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: JPMorgan is one of the
best managed banks there is. Jaime Dimon, the head of it is one of
smartest bankers we have, and they still lost $2 billion and counting --
precisely because they were making bets in these derivative markets. We
don`t know all the details yet. It`s going to be investigated.

But this is why we passed Wall Street reform. This is the best or
one of the best managed banks. You could have a bank that isn`t as strong,
isn`t as profitable, making those same bets and we might have had to step
in. That`s exactly why Wall Street reform is so important.

(END VIDEO CLIP)

SCHULTZ: The chief executive officer of JPMorgan resigned, but its
chairman Jaime Dimon is still in damage control. Here he is on "Meet the
Press."

(BEGIN VIDEO CLIP)

JAIME DIMON, JPMORGAN CHASE CEO: We made a terrible, egregious
mistake, there`s almost no excuse for it. In hindsight, we took far too
much risk, the strategy we had was badly vetted. It was badly monitored.
It should never have happened.

(END VIDEO CLIP)

SCHULTZ: Well, why aren`t heads rolling? I mean, a lot of heads. I
mean, there`s nothing to stop Jaime Dimon and JPMorgan Chase from going
right back down the same road and do in this whole over again tomorrow.
Because it`s perfectly legal.

It`s further proof that Dodd-Frank didn`t go far enough. When RNC
chairman Reince Priebus was asked if we needed more regulation or less,
here is what he said.

(BEGIN VIDEO CLIP)

PRIEBUS: I think we need less. I mean, the fact of the matter is
Dodd-Frank didn`t work.

(END VIDEO CLIP)

SCHULTZ: Always less. No Dodd-Frank didn`t go far enough.

Let`s turn to Bart Chilton, commissioner of the Commodities Futures
Trading Commission.

Bart, good to have you with us.

I mean, let`s cut right to the chase here. You have got the biggest
banks doing whatever they want to do and until we break them up, it`s going
to be business as usual, because the climate in Washington is there`s not
going to be anymore regulation put on Wall Street.

What do you think?

BART CHILTON, CFTC COMMISSIONER: Well, Ed, in general, I think, you
know, as regulators we were are sort of chumps. We keep thinking the banks
are going to do what`s expected but really what we know they`ll do is only
what`s inspected. That`s why we need to put the meat on the bones of Dodd-
Frank.

They passed the law two years ago, but we still, two-thirds of the
regulations aren`t even in place. So, the things that JPMorgan was going
doing, as you say, they were totally legal, but regulators didn`t have a
view of what it was. That needs to change.

SCHULTZ: All right. So, what can the CFTC do, if anything, right
now about this? And I think it`s very little, am I correct there?

CHILTON: Well, I mean, they have done nothing illegal. I mean, all
regulators will take a look at losses. I mean, it`s free enterprise. They
can lose money.

The thing is, that sometimes these things can impact consumers,
impact average customers, and these very large banks can have a residual
impact on the rest of the economy. And heretofore, before Dodd-Frank, we
had hundreds of trillions of dollars in trading in these over-the-counter
markets, they call them. I call them "dark markets" as we talked about
before. That was totally off of our radar.

So Dodd/Frank put that onto our radar, but we haven`t put the rules in
place to actually get the reports from the banks, to actually look at these
things, Ed. So we need to put the hammer down, put the regulations in
place to protect markets and consumers.

By the way, I think it`s exactly the opposite of what the chairman
said, the RNC chairman said. I think the Dodd/Frank law, it can actually
help create jobs. It`s putting all sorts of space in between the
regulation where there`s tremendous amount of competition. I see it
happening all the time.

So we have to get these rules into place, one, to protect people, but
also to fuel inject the economic engine of our democracy.

SCHULTZ: The irony here is that Jaime Dimon, who -- I want to play
this soundbite. This is a guy who really led the fight against any kind of
regulation whatsoever. And now here he is saying we were just a little bit
sloppy. That`s all. Here is Jaime Dimon.

(BEGIN VIDEO CLIP)

JAMIE DIMON, JP MORGAN CHASE CHAIRMAN AND CEO: We support too big to
fail. We want the government to be able to take down a big bank like JP
Morgan, and it could be done. We think Dodd/Frank, which we supported
parts of, gave the FDIC the authority to take down a big bank.

When it happens, I believe compensation should be clawed back. The
board should be fired. The equity should be wiped out. And the bank
should be dismantled and the name should be buried in disgrace.

(END VIDEO CLIP)

SCHULTZ: Whatever happened to boring banking, when the investments
banks and the commercial banks, they were separated? Back in the time it
was boring banking, we had Glass-Steagall, we wouldn`t have had to worry
about this kind of stuff. He talks I think a very good game.

But when he was asked about this risky bet a few weeks ago, he said it
was just a tempest in a teapot. It`s like he`s going to say whatever he
can say until they get caught and something happens. Then he comes back
and says, hey, we really did some bad stuff here. We got loosy goosy with
the whole thing.

So one person`s let go. Bernie Sanders has been on this for a long
time. He said today "the New York Fed is in charge of both regulating JP
Morgan Chase and deciding whether or not to provide billions of dollars in
virtually zero interest loans to this too big to fail institution, if it
needs another bail out. This is a clear example of fox guarding the hen
house."

Amen. I mean, unless these big banks are broken up, I don`t know how
this problem is ever going to be solved. And it`s going to take Congress.
And guess what, the banks own the Senate. Your response, Mr. Chilton?

CHILTON: Well, there are ten lobbyists, final lobbyists, Ed, for
every single member of Congress. So they have a big, heavy influence.
It`s the consumers who don`t have the big influence in Congress. But the
one thing that Dodd/Frank did -- I mean, it did a bunch of things that were
very good. But one thing that JP Morgan and Mr. Dimon themselves argued
against was this Volker Rule.

Not to get into the weeds, but essentially it would go back pre-Glass-
Steagall. That is, if you`re a bank, you`re a bank and you look out for
your customers. Right now, what we allow, because we did away with this
Glass-Steagall law, is that there`s a troublesome duplexity within the
banking industry.

They`ve got their own interest, their bottom line, and they`ve got
their customers. We know who is always going to win out. As a matter of
fact, we have seen it. Goldman Sachs and Citibank set up these fake out
funds. They set up funds. They pushed their customers into it. Then the
banks took the other side of it.

And they have been fined. They`re having settlements. There --
people are getting in trouble for it. But again, back to what I said at
the beginning, we can`t just expect that the banks are going to do
something. They need to be inspected to ensure they are upholding the law
and protecting markets and consumers alike.

SCHULTZ: Betting against house money, where you know where all the
cash is. It`s amazing. Bart Chilton, great to have you with us tonight.
Thanks so much.

There`s a lot more coming up in the next half hour of THE ED SHOW.
Stay with us.

(BEGIN VIDEO CLIP)

GOV. JERRY BROWN (D), CALIFORNIA: We can`t fill hole a hole of this
magnitude with cuts alone without doing severe damage to our schools.

(END VIDEO CLIP)

SCHULTZ: The republican wrecking crew wants to claim another victim
in California. But the governor is fighting back. California Congressman
John Garamendi is here with reaction.

President Obama`s health care law is under attack in Republican state
houses around the country. Tonight, Wendell Potter on how to stop the
assault.

Senator Marco Rubio wants everyone to go along with his imaginary
Dream Act. Tonight, Democrats are calling him out.

(COMMERCIAL BREAK)

SCHULTZ: This story is happening all over the country, but right now
it`s in California. The world`s eighth largest economy is in big trouble.
California faces deep cuts in education. Where have you heard that before?
Public safety, social services, due to a massive budget gap. Now the state
estimated a 9.2 billion dollar budget shortfall in January.

This weekend, it was revealed, well, that`s going to be 16 billion
dollar gap. Tax collections were not as high as expected in April.
Democratic Governor Jerry Brown wanted to extend the tax revenue levels
from the Schwarzenegger administration, but Republicans blocked his efforts
to put tax revenue on the ballot.

The California legislature is at a stand still. So, Brown took his
pitch to the voters.

(BEGIN VIDEO CLIP)

BROWN: We can`t fill a hole of this magnitude with cuts alone without
doing severe damage to our schools. That`s why I`m bypassing the gridlock
and asking you, the people of California, to approve a plan that avoids
cuts to schools and public safety.

(END VIDEO CLIP)

SCHULTZ: What the governor of California wants to do -- he is
proposing raising the state sales tax by a quarter of a percent for four
years. He also wants one to three percent increase on income tax for those
earning more than 250,000 dollars a year. The rate increase would last
seven years. Then it would sunset.

Without the tax revenue, the school year will be cut by three weeks.
College tuition rates -- we`ve had a lot of talk about interest on loans --
would those rates would go up six percent. And funding for courts, well,
that would be cut. There are also unspecified cuts to social welfare
programs.

Republicans in Washington have -- they have run huge deficits on the
unpaid wars, Iraq and Afghanistan, that were off budget, the tax cuts of
the Bush years. Nobody figured out or added anything up on how that was
going to affect the Treasury. And of course the hand outs to the
pharmaceutical industry.

There`s no federal money to invest in the states. We are gutting our
infrastructure in this country. The result is that what we`ve seen is
happening in Wisconsin, Ohio, Pennsylvania, New Jersey, and other states
across the nation, all where these Republican governors have been elected
and hanging out.

Governor Brown has plan to avoid cutting vital services in California.
But it requires everyone to share the pain. He`s at the table with the
solution. Now it`s up to the people.

Joining me tonight is Congressman John Garamendi of California. John,
great to have you with us. This is just playing out all over the country
like this. We are shorting our infrastructure. We don`t have the money.
The governors are even making the ruthless cuts or turning to the people.
What`s going to happen here?

REP. JOHN GARAMENDI (D), CALIFORNIA: What`s going to happen is
California is going to come back. California is going to do what it has to
do to get back on track. Education is fundamental. It`s the most
fundamental of every investment. I was with a bunch of venture capital
folks in the Silicon Valley over the weekend. They are building new
companies. They are looking for the next opportunity. In every case,
they`re looking for workers. They want the people to work in their shops,
in their new businesses.

So we need this education system. The governor is absolutely correct.
We need a balanced approach. You cannot do it with cuts. You`re going to
have to raise the tax revenue. His plan is out there. It`s the plan that
we`re going to have to pursue.

SCHULTZ: Do you think the people of California will go down this
road, of a quarter percent sales tax -- sales tax draws a lot of money
fast. And of course, if you make over 250,000 a year, it would be three
percent with a sunset on it.

GARAMENDI: Well, the three percent comes if you`re over a million
adjusted gross income, per person. So for a family, it would be much
higher. For 250,000, it would be a small percentage increase. But the
point here is we have to do this. We have to move this state forward.
That means you have got to make these investments in the fundamental
ingredients of economic growth, education, infrastructure, research,
manufacturing.

That`s where you generate the wealth. That`s how you generate the
future.

SCHULTZ: I know that you want to be positive and you. And you are.
You`re a positive guy. I`ve known you for a while and you`re business
friendly. But 32,000 teachers in your state have been let go in the last
year.

GARAMENDI: That`s correct.

SCHULTZ: We are in the middle of making decisions with our priority
list in America right now. And every state is going through this. You
can`t tell me that all 32,000 teachers were lousy.

GARAMENDI: No, they were very good teacher. My daughter`s a second
grade teacher. Her class size went from 22 to 35. You tell me how a
teacher in the second grade is supposed to get the kind of performance out
of those kids. Very, very serious mistake being made here.

The governor has come forward with a proposal that would add about six
billion dollars to the K through 12 system. Now you have to change the
system also. You have to change and reform. Otherwise you`re going to get
stuck in the mud.

California can do it. This nation can do it. But you`ve got to make
the critical investments. You can`t do what the Republicans are doing in
Congress with their austerity budget on steroids, while giving tax breaks
to the super wealthy and letting the oil companies have our money, so they
can even have a bigger profit.

We need good public policy here.

SCHULTZ: We`re getting our infrastructure in this country because we
didn`t -- because of the Bush tax cuts, because of the unfunded wars,
because of where we are. We`re borrowing money from China like crazy. So
here we have -- we`re making these decisions to cut education, to cut --
and put it on the backs. They say that they are worried about the deficit
and everything else because it`s going to affect the next generation.

They are affecting the next generation by shortchanging the
infrastructure and their opportunity.

GARAMENDI: I heard some of these characters speak the other day.
They are saying, oh, we got to protect the next generations; we can`t put
the burden on them. I said, what about these kids? These kids are in
school today. You`re taking away their ability to perform and to be
productive tomorrow. Not the next generation, but the generation today
needs that education.

They need the health care. They need the food. School lunch programs
are being cut. Meals on Wheels for seniors. . This is not America. This
is not the America we have. We need to invest in those things, in our
kids, in our infrastructure, in manufacturing, in the research, make those
investments.

You tell me one company out there, anywhere, that`s going to succeed
by shortchanging its investments, its investments in research, its
investments in manufacturing. That company will fail. And a country that
fails to make those investments will also fail. We cannot let that happen.

SCHULTZ: Governor Brown is doing the right thing, asking the right
questions?

GARAMENDI: He`s putting it to the California people. And he`s also
putting it to America. We`ve got to make these investments.

SCHULTZ: Congressman John Garamendi, great to have you with us
tonight. Thanks for joining us.

Senator Marco Rubio claims that he has big plans for immigration
reform, but none of those plans include a path to citizenship. That`s
next. Stay tuned. You`re watching THE ED SHOW on MSNBC. We`re right
back.

(COMMERCIAL BREAK)

SCHULTZ: Mitt Romney believes the key to immigration reform is self-
deportation. Now the man hoping to be Romney`s running mate, Senator Marco
Rubio of Florida, is accusing the White House of sabotaging his reform
efforts. The Dream Act offers children brought to the United States
illegally by their parents a pathway to citizenship, if they go to college
and serve in the military.

The legislation died in the Senate two years ago. And surprise,
surprise, Republicans are still unwilling to cooperate. President Obama
wants Congress to act now.

(BEGIN VIDEO CLIP)

HILDA SOLIS, SECRETARY OF LABOR: He`s ready and willing to sign a
Dream Act, immigration reform act, if we can have cooperation on the other
side of the aisle. I don`t hear any members except for Senator Rubio maybe
coming forward talking about a proposal that`s half cooked.

(END VIDEO CLIP)

SCHULTZ: That half cooked proposal from Senator Marco Rubio of
Florida doesn`t offer a path to citizenship. Instead, it offers non-
immigrant visas. Even though Rubio has yet to put his idea on paper, the
Tea Partier is accusing the White House of trying to sabotage him.

(BEGIN VIDEO CLIP)

SEN. MARCO RUBIO (R), FLORIDA: One of the things that`s already been
documented is that the White House has been -- and the articles have been
written, two or three now. The White House has been calling in Dream Act
advocates and asking them, almost ordering them not to work with me on this
issue, because they have been counting on using this issue as a wedge issue
in October to drive up turn out.

(END VIDEO CLIP)

SCHULTZ: Already been document? Of course, Rubio offered no
specifics to back up his allegations. Rubio is desperately trying to raise
his national profile. He knows his party won`t go for immigration reform.
The next test -- next best thing is to offer up a watered down plan and
blame the Democrats for its failure.

But Majority Leader Harry Reid said he would be happy to work with
Rubio.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D), MAJORITY LEADER: I`m glad that Marco`s doing
something. I think that`s significant. But the problem is, right now,
there has not been a single word put on paper, not a word. And remember in
anything we do in life, the devil is in the details.

Let`s stop this nonsense of talking about it. He talks to one group
this way, another group another way. Put it in writing.

(END VIDEO CLIP)

SCHULTZ: Ninety percent of the Latino voters support the Democrat`s
version of the Dream Act. This could have a big impact on millions of
lives. All Senator Reid needs is a few Republicans to step up to the plate
and be on the right side of history.

(BEGIN VIDEO CLIP)

REID: I`ve got 90 percent of my Democrats. I need a handful of
Republicans to work with me on this. I`ve spoken to the Dreamers. They do
not want another failure. They do not want another failure.

That`s why I`m begging Republicans come forward on this. It`s the
fair thing to do.

(END VIDEO CLIP)

SCHULTZ: Senator Rubio, put it on paper, dude. Tonight in our
survey, I asked you do national Democrats need to do more to help recall
Governor Scott Walker. Ninety seven percent of you said yes. Three
percent of you said no.

Next up, Chris Christie is one of many governors, just the latest
Republican governor, to stall on implementing the health care bill that was
passed by Congress, the one they love to call Obamacare. What can be done?
Wendell Potter will join me next. Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: In the Big Finish tonight, the GOP is waging a full on
assault on health care in this country. At the federal level, Republicans
in Congress are trying to defund it. And at the state level, Republicans
and legislatures are dragging their feet on implementing it.

Governor Chris Christie of New Jersey is just the latest Republican
governor joining the club. Christie recently vetoed a bill from the
Democratic state legislature that would have created a state health
insurance exchange. The exchanges are a key part of the health care law
because they expand access -- expand access to health insurance, which is a
good thing.

The health care law will provide millions unable to get coverage
through an employer with federal subsidies to buy a plan through the
exchange. It`s going to get more people covered. Christie now says that
he won`t act until the Supreme Court makes a decision.

It`s not just states with Republican governors that are in trouble.
As the "Washington Post" reports, in states with Democratic governors, such
as New Hampshire and Minnesota, it`s often Republican dominated
legislatures that are causing the hold up. And in six states where
Republicans hold both branches of government, including Kansas and South
Dakota, state assemblies haven`t even considered laws to establish the
marketplaces.

Millions of Americans are waiting to be helped by this bill that we
spent so much time on as a country. And republican lawmakers are playing
political games and hurting a lot of people. In the meantime, how many
people will go in debt because of medical bills? How many people will go
bankrupt because of it?

Republicans are literally playing politics with people`s lives. And
it is mean-spirited to say the least.

Let`s turn to Wendell Potter, who is the Center for Public Integrity,
and is a former communications director and vice president of Cigna and the
author of the book "Deadly Spin."

This is obstruction at all levels. Mr. Potter, great to have you with
us tonight. It`s mean-spirited. This is an all out assault to stop
anything President Obama was able to accomplish. How else do we read it?

WENDELL POTTER, CENTER FOR PUBLIC INTEGRITY: There`s no other way to
read it, because the exchanges are a no brainer. As you pointed out, they
expand coverage. But they also enable the citizens of every state to be
able to shop for coverage and compare policies one to another. You can`t
do that now.

This was a great idea when Republican governors had it before the
Affordable Care Act was passed. There`s an exchange in Utah. When Mitt
Romney was governor of Massachusetts, he created an exchange there. It`s
been very successful in both states. They had different approaches.

But what we`re seeing now is nothing but politics. They`re wanting to
make sure that they can keep this going as political rhetoric as long as
they can.

SCHULTZ: They are using obviously the Supreme Court to hide behind
them. How long does it take to set up a good exchange to be implemented.
If they -- if you get a favorable ruling, if the country gets favorable
ruling on the health care bill from the Supreme Court, they would have,
what, maybe five and a half to six months to set this up. Wouldn`t they?

POTTER: They would. And it`s not enough time. In fact, the
Affordable Care Act requires states to be able to show by the first of
January next year that they have taken enough steps to be able to get their
exchanges up and running. If they haven`t, then the federal government
will step in and run them for those states. And that undoubtedly will
probably happen in a lot of states.

SCHULTZ: Which is going to cost a lot of money, isn`t it? More money
than it would if the states did it.

POTTER: Exactly right. And you will have people far removed from the
states calling the shots. So it`s not necessarily at all a good thing for
the residents of the state. But these politicians are not thinking and
acting in the best their citizens, by any means.

SCHULTZ: One of the reasons why the Republicans really don`t want
this is because this -- they are so afraid that this is going to end up
being the public action. Are they not?

POTTER: That`s one thing. I think it`s -- like you said, it`s more
fundamental than that. They just want to use it as a campaign issue. They
have done such a successful job of criticizing the Affordable Care Act and
misleading people about it, that this gives them another campaign issue for
a while.

SCHULTZ: And it -- so workers who work for company that don`t have
health care benefits, this is their chance, through a state exchange, to
get some coverage, to get a better outcome. And in the long haul, it will
bring down expenses for the nation. That`s really the model that the
exchange was all about.

POTTER: That`s right. Many people can`t get coverage through their
employer because their employer doesn`t offer coverage. So it`s for
individuals who are in that boat, but also for people who work for small
businesses. More and more small businesses just simply cannot afford to
offer coverage. This would enable more small businesses to be able to back
into the business of -- or into the game of offering coverage to their
employees.

SCHULTZ: And in the meantime, it`s depriving millions of Americans an
opportunity to get coverage by stalling. They will do anything to get the
victory.

Wendell Potter, great to have you with us tonight. Good to have you
back on THE ED SHOW. Thanks so much. That`s THE ED SHOW. I`m Ed Schultz.
"THE RACHEL MADDOW SHOW" starts right now. Good evening, Rachel.

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

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