updated 5/21/2012 2:41:17 PM ET 2012-05-21T18:41:17

Guests: Richard Wolffe, Ben LaBolt, Sam Stein, Elizabeth Warren, Mayor Tom Barrett


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

A plan by Republicans to dust off the Jeremiah Wright story is blowing
up in Mitt Romney`s face. The Obama campaign is here to respond tonight,
and this rile up the liberal base. I love it.

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

(BEGIN VIDEOTAPE)

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: I`m not familiar precisely
what I said, but I stand by what I said, whatever it was.

SCHULTZ (voice-over): Mitt Romney doesn`t remember contributing to
the climate of racism that simmers beneath the surface of the Republican
Party. Today, a Republican PAC`s plan to once again use Reverend Wright to
smear the president is exposed.

ROMNEY: I read the article on the aircraft. I want to make it very
clear, I repudiate that effort.

SCHULTZ: The national press secretary for the Obama campaign, Ben
LaBolt is here to respond, the politics with MSNBC`s Richard Wolffe and Sam
Stein of the "Huffington Post."

The choice in November: Obama economics or Romney economics?

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: This selection is
going to create a stark and fundamental contrast -- a choice between two
different economic philosophies.

SCHULTZ: Nobel Prize-winning economist Paul Krugman on the two
different paths for our economy.

JPMorgan`s losses could be way bigger than expected. Senate candidate
Elizabeth Warren has some harsh words for the bank, and she`s here tonight.

In Wisconsin, Scott Walker is doing funny math with the job numbers.

GOV. SCOTT WALKER (R), WISCONSIN: It is literally a 57,000-plus
increase from where my opponents are claiming the numbers were last year.

SCHULTZ: Democratic recall challenger, Tom Barrett, is here.

(END VIDEOTAPE)

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

In an attempt to inject race into the presidential campaign like never
before was exposed today by the "New York Times" in all its pathetic,
desperate and ugly detail. It`s an organized hit job designed to achieve
the lowest form of character assassination against President Obama. It`s
called "The Defeat of Barack Hussein Obama: The Ricketts Plan to End His
Spending for Good".

We`ll get to Joe Ricketts in just a moment. But this was going to be
a $10 million advertising blitz funded by his super PAC. The plan would
bring back Jeremiah Wright the reverend in a big way.

"The world is about to see Jeremiah Wright and understand his
influence on Barack Obama. Our plan is to do exactly what John McCain
would not let us do."

The 54-page proposal for a five minute video would portray Wright`s
black liberation theology. The proposal, anticipated charges of race-
baiting. It suggested hiring an extremely literate conservative African-
American as a spokesperson who can argue that Mr. Obama misled the nation
by presenting himself as a metrosexual black Abe Lincoln.

Give me a break.

The proposal also suggested listing a group of black business leaders
to endorse the effort.

This morning, Mitt Romney said he hadn`t heard anything about it.
Once his campaign got their act together, he said this.

(BEGIN VIDEO CLIP)

ROMNEY: As I read the article, I want to make it very clear: I
repudiate that effort. I think it`s the wrong course for a PAC or a
campaign. I hope that our campaigns can respectively be about the future
and issues and about a vision for America.

I`ve been disappointed on the president`s campaign to date, which is
focused on character assassination. I just think we`re wiser to talk about
the issues of the day.

(END VIDEO CLIP)

SCHULTZ: Really? Back in February, on Sean Hannity`s radio show,
Romney had no problem bringing up Reverend Jeremiah Wright.

(BEGIN AUDIO CLIP)

ROMNEY: I`m not sure which is worse, him listening to Reverend Wright
or him saying we must be a less Christian nation.

(END AUDIO CLIP)

SCHULTZ: At his press today, Romney was asked about those comments.
Here`s what he had to say.

(BEGIN VIDEO CLIP)

ROMNEY: I`m not familiar precisely what I said but I stand by what I
said whatever it was. I`ll go back and take a look at what I said there.

(END VIDEO CLIP)

SCHULTZ: Certainly is refreshing, doesn`t know what he said but
whatever he said, he stands behind it.

Vice President Joe Biden was asked about the sleazy plan on the
campaign trail today.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: Guys like that so
misunderstand the state of the nation. They act like it`s 1942. I mean, I
think the public is so, so far beyond that. And then I heard, getting out
of the car, looks like they`re not going to do that now? Look, there`s
certain things that are so morally clear and straight and straight lines
about it. It almost doesn`t warrant a comment.

(END VIDEO CLIP)

SCHULTZ: White House spokesman Jay Carney also weighed in on the
issue today.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: To launch a multimillion
dollar divisive attack campaign is not what the American people want. I
think there are moments when you have to stand up and say that`s not the
right way to go.

(END VIDEO CLIP)

SCHULTZ: Joe Ricketts is the founder of TD Ameritrade and his family
owns the Chicago Cubs. But once the story broke the social media went into
action in this country, Mr. Ricketts was just tripping all over himself to
denounce it. He put out a statement through his super PAC saying he was
quote neither the author or thunder of the so-called Ricketts plan to
defeat Mr. Obama. It reflects an approach to politics that Mr. Ricketts
rejects.

Ricketts can`t hide from the truth. The hit job was based on the idea
that John McCain had missed an opportunity to attack Barack Obama with an
ad about Reverend Wright in 2008. The proposal opened with a quote from
Mr. Ricketts. "If the nation had seen that ad, they`d never have elected
Barack Obama."

You know who wants this story? Sean Hannity wants this story. Where
has Reverend Wright been for the last 3 1/2 years? Have you seen him in
the news?

Has he been doing any protests or testified on Capitol Hill? Has he
injected himself into the political process in this country? Was he around
when Barack Obama saved the automobile industry or signed off on the
stimulus package, or so many other good things when it came to health care.

Where was Reverend Wright when that was all happening? He wasn`t
anywhere to be found and he hasn`t been around the president.

This is low rent. It is sleazy. And it`s just like Romney. I think
Romney is lying when he stands up and says he doesn`t know anything about
it.

I like to know how often Mr. Romney has had dinner with Mr. Ricketts
or how often they had talked to one another on the phone? When was the
last time they had a face to face? You mean to tell me Romney went on Sean
Hannity`s radio show and brought up Reverend Wright and happens to distance
himself today? I don`t buy it.

And the good thing, this will rile up the liberal base in this
country, to go out and attack their guy, who once again being attacked with
sleaze.

Get your cell phones out, I want to know what you think. Tonight`s
question: Are Republicans getting desperate by bringing up Jeremiah Wright
again? Text A for yes, text B for no, to 622639. And you can always go to
our blog at Ed.MSNBC.com. We`ll bring you the results later on in the
know.

So, here`s what we have. Mitt Romney says he read it and he doesn`t
have anything to do with it. He repudiates that and everything. Does the
Obama camp believe that?

Joining me tonight is Ben LaBolt, national press secretary for the
Obama campaign.

Ben, good to have you tonight.

BEN LABOLT, OBAMA CAMPAIGN NATIONAL PRESS SECRETARY: Thanks for
having me.

SCHULTZ: Mr. Wright has not been in the news the last 3 1/2 years.
Can you tell our audience how much contact has Reverend Wright had with
Barack Obama, the president of the United States, since he took the oath of
office?

LABOLT: You know, they haven`t had any. The president was clear that
Reverend Wright`s views which were played again and again during the last
campaign didn`t reflect the president`s views.

You know, today, this was a moment that required moral leadership on
Mitt Romney`s part, to stand up to the extreme voices in his party.

And once again, Romney didn`t rise to the occasion. You know, you
went through the sequence.

One of the things that he tried to do today was try to equate this
sort of hateful attack with a simple discussion of Governor Romney`s
economic record that we`ve had in this campaign.

We`ve seen this from Romney before. The fact is he didn`t stand up to
one of the symbolic heads of the Republican Party, Rush Limbaugh, when he
made those hateful comments against Sandra Fluke.

We`ve been clear whether supporter of the president or person that
used this rhetoric like this. We`ve condemned them every single time. The
fact is Romney didn`t step up.

SCHULTZ: OK. Well, he said he repudiated this style of campaigning.
Do you believe him?

LABOLT: Well, then, he was -- he was asked later in the day about his
comments earlier in the year about Reverend Wright that you played not too
long ago. And he said he stood behind them.

Look, time and time again, he`s had the opportunity to stand up to the
extreme voices in his party. That`s something the president of the United
States has to do. Just this week in Virginia, we saw the legislature
reject a judge, a very well-qualified judge just because of their sexual
orientation. Governor McDonnell spoke out, but Mitt Romney certainly
didn`t.

SCHULTZ: All right. Mitt Romney is out there complaining about the
Bain Capital ads and he says that this all character assassination. Here
it is.

(BEGIN VIDEO CLIP)

ROMNEY: The purpose of the president`s ad are not to describe success
and failure but to somehow to suggest that I`m not a good person. I`m not
a good guy. And having a campaign focused on character assassination is
one of the things I find offensive among many others in the PAC description
that came in the "New York Times." If that`s accurate, obviously, that`s
something I repudiate.

(END VIDEO CLIP)

SCHULTZ: Well, I would have to say that the description that we`re
hearing from the employees of GST, that Mitt Romney is not a good guy.
He`s pretty heartless.

What is your response to that being character assassination?

LABOLT: Well, you know, Mitt Romney has put forward as his lead
qualification to run for the presidency of the United States his tenure as
a corporate buyout specialist. He said that represents his economic
record. So, we did what he asked. We went back and we took a look at the
economic record.

SCHULTZ: So, it`s not character assassination in any way, shape or
form?

LABOLT: It`s simply his economic record and in turns out that he
profited off of bankrupting companies and outsourcing jobs. The question
is, is that the type of economic philosophy, Romney economics, that the
American people want to see in the Oval Office?

SCHULTZ: All right. Ben, back to the Reverend Wright issue? Have we
heard the last of Reverend Wright? Or do you expect this plan to be
invoked -- I mean, this plan, talking about TV ads, billboards, even a
plane flying over the Democratic National Convention, at least according to
"The New York Times."

Are we going to hear more about Reverend Wright?

LABOLT: You know, I think the American people absolutely rejected
this hateful attack when it surfaced today, whether you`re a Democrat or an
independent or a Republican. People on all sides to the aisle certainly
rejected this.

You know, Senator McCain spoke out against these sorts of attacks in
2008, made clear that this was off-limits for his campaign. His
communication director reaffirmed today --

SCHULTZ: Is it race-baiting?

LABOLT: -- that that was the right decision that he wouldn`t run
these sorts of ads.

SCHULTZ: Is it race-baiting? They wanted to get a conservative black
man to be the spokesperson for this. I think Larry Elder was the guy
mentioned in the ad, in the report. Is this race-baiting?

LABOLT: I think there`s no question that it was directed towards the
most extreme elements of the Republican Party and that Romney had an
obligation to speak out against those extreme voices.

SCHULTZ: So, is that a yes or a no? It is race-baiting?

LABOLT: Here`s the question I would ask, is whether Romney will speak
out against those extreme voices or whether he will lead and stand up to
that faction of the party, or whether he will actively court those extreme
voices in an attempt to win the presidency?

SCHULTZ: Well, it sure seems like race baiting to me.

Ben LaBolt, good to have you with us tonight. Thanks for your time.

LABOLT: Thanks for having me.

SCHULTZ: Remember to answer tonight`s question there at the bottom of
the screen and share your thoughts on Twitter and THE ED SHOW. We want to
know what you think, always.

It`s the right wing`s latest effort to play the race card. Next,
we`ll take a closer look at the man behind the $10 million hit job on
President Obama that he`s now distancing himself from -- right wing
activist, Joe Ricketts. Richard Wolffe and Sam Stein will weight in on
that.

And later, Senate candidate Elizabeth Warren joins me tonight. She`s
going to tell us how we can fix this mess on Wall Street and prevent the
banks like JPMorgan, from causing another economic meltdown and collapse.

We`ll be right back.

(COMMERCIAL BREAK)

SCHULTZ: Coming up, right wingers are losing on the issue and
resorting to the race card to attack President Obama. Our panel will weigh
in on the GOP`s desperate tactics.

Economist Paul Krugman has a plan to end the economic crisis and
Republicans, they are not going to like what he has to say. He is with me
tonight with details in his new book.

And Karl Rove weighs in on the Wisconsin recall. They`re all in.
While Scott Walker cooks the books on his job number numbers, Democrat
challenger Tom Barrett is here to respond

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

(COMMERCIAL BREAK)

SCHULTZ: Welcome back to THE ED SHOW.

The far right wing is holding the Republican Party hostage, for years,
right wingers have made it their mission to attack this president`s
character, question his patriotism and paint him as other.

Today`s bombshell from "The New York Times" illustrates what the new
Republican Party is all about, proving this is a 54 page proposal called
"The Defeat of Barack Hussein Obama" presented this week to the super PAC
funded by billionaire right wing activist, Joe Ricketts. Ricketts, the
founder of TD Ameritrade, has denied involvement in the reported $10
million hit job featuring the Reverend Jeremiah Wright.

Members of the Ricketts family who own the Chicago Cubs swiftly went
into damage control. Joe Ricketts son, Cubs` chairman, Tom Ricketts,
issued this statement, "I repudiate any return to racially divisive issues
in this year`s presidential campaign or any setting like my father has."

Meanwhile, daughter Laura Ricketts, who is an LBGT activist and Obama
campaign bundler said that she will continue to do "all I can to help get
President Obama re-elected."

The timing couldn`t be worse for the Ricketts family. They are
currently in negotiations with former Obama chief of staff and current
Chicago mayor, Rahm Emanuel, to secure government help to renovate Wrigley
Field. That`s right. Billionaire Joe Ricketts is hoping that the
taxpayers of Chicago, the Windy City, will pony up to the bar and pay for
all the improvements.

Well, "The Chicago Sun Times" reports Emanuel is absolutely livid over
Joe Ricketts` attack ads and refused to speak to the family.

Here`s what he had to say earlier.

(BEGIN VIDEO CLIP)

MAYOR RAHM EMANUEL (D), CHICAGO: You can have disagreements without
being disagreeable. If that`s the nature, America is too great a future
for the content they`re talking about. It`s insulting to the president and
it`s insulting to the country.

(END VIDEO CLIP)

SCHULTZ: Let`s turn to MSNBC analyst Richard Wolffe and "Huffington
Post" political reporter, Sam Stein.

Gentlemen, great to have you with us tonight.

SAM STEIN, HUFFINGTON POST: Thanks, Ed.

SCHULTZ: The plan -- is this a real deal or is this a fake? What do
you think?

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Oh, I think it`s one of
those plans if not done by Ricketts, will be done by someone else. It does
go to prove that you don`t have to be smart to be rich because he`s getting
shaken down here. This is -- this is a stupid plan not just because it`s
offensive, but because this president is known by the American people.

And people can disagree with him but they`re not discovering him for
the first time. It`s not like we never talked about Jeremiah Wright. This
stuff is new. This ad is proposed ad, goes after the president on
terrorism.

It happens to be his strongest card. This is the president who
ordered the hit on Osama bin Laden, and they still think they can order the
whole playbook? You know, I`m not surprised that Mitt Romney tied himself
in a pretzel in dealing with this because this doesn`t come out in nowhere.
There are a lot of conservatives who have propagated this stuff for the
last three years. It`s the logical result of three years of politics that
we`ve seen out of people like Sean Hannity.

SCHULTZ: Richard, who do you think put it together?

WOLFFE: Well, we know that Fred Davis put it together. But, you
know, this is not an out of mainstream political consultant. He has some
wacky ideas but he`s perfectly representative in terms of other candidates
he`s represented.

SCHULTZ: All right. Sam Stein, you alerted the Twitter world today
of what Mitt Romney said on the Sean Hannity show not too long ago about
invoking Reverend Wright`s name.

Now, let me ask you -- do you think that Romney made a good case today
in distancing himself from this plan?

STEIN: Well, he started to, but then he fumbled a bit when asked
about the Hannity comments. He said he stands by them but wasn`t exactly
sure what they were, which was confusing to say the least.

You know, Richard`s right. They want to get as much distance from
this as possible, primarily because it`s a big giant waste of money and it
also diverts from what they want to be talking about which is the economy.

You know, $10 million spent attacking Obama on Reverend Wright will
move the dials very little, despite the conventional wisdom within some
conservative circles that that`s all that was needed to win John McCain the
election in 2008.

Obama is a known quantity. People generally like him. They may not
like his policies but like him as a person.

And if they want to spend $10 million trying to associate him with
Jeremiah Wright, it would do very little political damage.

So, Mitt Romney needs to distance himself from that. But he tried to
but when he had to explain why he brought up Reverend Wright himself, he
really fumbled it.

SCHULTZ: Sam, is it race-baiting?

STEIN: You know, it`s tough to call it anything like that. I
understand what people would say that it`s race-baiting. I understand when
people say that it`s not. My opinion is that it`s just politics. I think
-- you know, it`s gutter politics. I think Fred Davis, the notorious ad
man, is trying to get his hands on $10 million so that he can, you know,
make some money.

But it`s pretty much, you know, lowest common denominator politics.

SCHULTZ: Richard, what about the Obama campaign response today? It
was pretty swift, they got after it.

WOLFFE: Yes, they did, because they wanted to. You know, when you`re
a nominee, when they`re looking at a nominee on the other side, although a
presumptive one, he doesn`t get to duck away from these kinds of things as
he did in the primaries. You know, he could say, oh, it was the super PAC.
I didn`t know what was going on. That was his position. I haven`t read
the papers yet, was his first respond to this one.

SCHULTZ: Early this morning, yes. That plane flight turned
everything around.

WOLFFE: Someone finally delivered him a "New York Times."

SCHULTZ: He got some altitude and figured it out.

WOLFFE: I can`t figure out the English language, right? I don`t
remember what I said, but I stand behind it. That`s someone who reversed
himself in the space of a sentence.

You know, as a candidate you have to make calls, what`s fair and
what`s foul, and that`s what they actually managed to bounce him in a way,
albeit he tried to back out of, as he said it.

SCHULTZ: Sam, Jeremiah Wright versus Mormonism. Does this take us
down the road of faith and beliefs of a leader that could be leading this
country? What do you think? I mean, if they`re going the Jeremiah route,
what about the liberals in this country really going after Mormonism and
what it`s about?

STEIN: Well, you did hear some of that talk immediately after the
report from the "New York Times" today. I sense that that won`t happen
primarily because the Obama campaign likes to have a tight message.
Remember, they had all the money Democrats are donating sent through their
campaign in 2008. They`re allowing their PAC to get funded this time
around.

But by and large, they tried to have a very tight message that doesn`t
veer off in that direction and they`ve said that Mormonism is not going to
be something that they touch. But, you know, we have to wait and see
because, this, remember, is six months before the election. There is going
to be someone out there who still believes bringing up Reverend Wright is
the right thing to do. They will fund that ad and remains to be seen what
people do in response.

SCHULTZ: Richard Wolffe, Sam Stein, great to have you with us
tonight. Thank you.

WOLFFE: Thank you.

SCHULTZ: Economist Paul Krugman says, we can end our economic crisis
now. He joins me next. And Mitt Romney is not going to like what he has
to say.

Facebook`s Eduardo Saverin spits in the eye of the American people by
renouncing his citizenship. Who said that? Find out, later in the show.

Stay with us.

(COMMERCIAL BREAK)

SCHULTZ: Vice President Joe Biden back on the campaign trail. On the
stump today, he told Ohio autoworkers now is not the time to elect a
vulture capitalist like Mitt Romney.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: It`s not their job to
create jobs. It`s their job to create wealth for the investors. That`s
true. If it creates jobs in the process -- good. If it costs all the jobs
in the process, OK.

It`s to make sure their investors get a return on their investment.
But that`s not the job of a president of the United States of America.

(END VIDEO CLIP)

SCHULTZ: Want a good example of what Vice President Biden is saying,
just take a look at the Fortune 500. The 500 largest companies announced
record profits in 2011 despite the sluggish economy. Someone should ask
these companies -- where are the jobs?

The number of jobless claims in the United States went unchanged last
week at 370,000. So much for the wealth trickling down.

Meanwhile, Mitt Romney is still saying the president spends too much
money.

(BEGIN VIDEO CLIP)

ROMNEY: The president, instead of cutting back on spending, has grown
spending. Instead of getting America to a balanced budget -- oh, yes, that
was the other promise, remember? He was going to cut that huge deficit.

(END VIDEO CLIP)

SCHULTZ: I`ll tell you -- that is simply not true to say President
Obama has grown spending. Government spending has actually decreased since
the president took office in 2009, which might be a big part of the
problem.

That`s right. "New York" columnist Paul Krugman published this chart
today. It shows this year`s growth for major advanced economies around the
world. Japan is the top performer mostly due to increased spending after
the devastating tsunami.

I`m joined tonight by Princeton University economics professor, Paul
Krugman, winner of the Nobel Prize in economics and author of the new book,
"End This Depression Now."

Mr. Krugman, good to have you on THE ED SHOW tonight. Thanks so much.

What is the remedy for the economy as you see it right now?

PAUL KRUGMAN, PRINCETON UNIVERSITY: First and foremost, we need more,
not less government for the time being. We can talk about cutbacks later
on, when you`re in a depression, which is what we`re in, when you`re in a
state where the economy is way below capacity, when the biggest problem is,
in fact, not enough job us out there -- now is the time for the government
to be spending more. It`s time for the government to be adding to public
investment not slashing it. It`s a time to be hiring more schoolteachers,
not laying them off.

So, that`s the answer. It`s actually amazingly simple. We could, if
we could only -- if we would only do the right thing, we`d be out of this
faster than anyone imagines. We would end this depression maybe not now,
today, but now meaning in a year and a half or two years.

SCHULTZ: Why do you call it a depression? It seems all sectors of
the economy seem to be steady right now. We`re just not having the growth.
Or am I wrong on that?

KRUGMAN: Yes. So a recession, the usual term -- a recession is when
things are going down. A depression is when things are down. We call the
Great Depression, which is a period of more than a decade, there was a
recession at the beginning, then a partial recovery, then another
recession, then another partial recovery.

But unemployment was high, times were hard the whole way through.
That`s what we`re living through right now. We`ve been technically or
officially in recovery for almost three years now. But it doesn`t feel
very good, does it? There is 13 million people out of work, almost four
million Americans who have been out of work for more than a year.

This is a very depressed economy. It is a depression. And the fact
that we`re not actually plunging, at the moment, that we`re growing a
little bit should not be cause for satisfaction. We have -- this is an
intolerable situation, especially because it would be so easy to fix.

SCHULTZ: So you think that public sector jobs could help stimulate
the economy. Now we have got fewer public sector jobs under the Obama
administration than we did under the previous administration. I noticed a
chart from your book shows what happens without public sector jobs. State
and local government jobs should have grown with the population. Instead,
jobs have been cut.

How do we reverse this when Republicans have said, you know, so be it
when it comes to the public sector job losses?

KRUGMAN: Well, the first thing -- I mean, there`s a possibility, it`s
not the most likely outcome, but imagine that President Obama is re-elected
and Democrats actually not only hold the Senate, but retake the House,
which is still a possibility, not the most likely outcome but could happen.
Then they can do it. Then they get a chance for a do-over and provide aid
to state and local governments that will make it possible to rehire those
school teachers, to get this going on.

By the way, the typical public employee is a schoolteacher. So if you
think, you know, government bureaucrats, no, you`re actually talking about
school teachers.

If you can`t do that, then what the president needs to do is he needs
to hammer on it. He needs to say the reason this economy is not doing
better is because those people are blocking the job creation measures I
have. I know what to do. Economists know what to do. It`s just those
guys over there are standing in the way.

SCHULTZ: And Mitt Romney keeps hammering President Obama over the
national debt. But you show how our current debt is not at a crisis level
compared to other countries in other points in history. Is Romney --

KRUGMAN: That`s right.

SCHULTZ: What about that?

KRUGMAN: So Romney is acting -- he talks about big numbers. Of
course the numbers are big. Everything about America is big, right. We`re
a big country, a big rich country. I don`t like the level of debt. I wish
we hadn`t had those roughly three trillion dollars of unfunded tax cuts and
unfunded wars that Bush did, which left us with higher debt than we should
have right now.

But compared with the United States at the end of World War II,
compared with Britain through most of the 20th century, our debt burden is
not that bad. Compared to Japan right now, it`s trivial. And Japan -- you
know, there are lots of things wrong with Japan, but they can borrow at
incredibly low interest rates still.

So the idea that we are facing some sort of debt crisis, that`s just a
figment of the imagination. And it`s worth mentioning, by the way, that
Romney`s own plans, whatever he may say, would actually increase the
deficit, not reduce it.

SCHULTZ: So we ought to be very aware and somewhat scared of the
austerity measures based on what`s happening across the globe. That`s what
I`m taking from you tonight.

KRUGMAN: Gosh. Yes, we`ve done a massive -- I would say a massive,
unethical human experiment in Europe. People said slash government
spending, good things will happen, confidence will come, it will grow the
economy. What`s actually happening is what`s happening in Greece and in
Spain and in Ireland, unemployment of more than 20 percent, unemployment
among youth of more than 50 percent, a collapse in political system in
Greece, Spain probably next down that road.

So we`ve just seen -- the kinds of policies that the current
Republican majority in the House wants, we`ve just seen what they leads to
in Europe. And the answer is that they leads to catastrophe.

SCHULTZ: Paul Krugman, great to have you on THE ED SHOW. Thanks so
much.

There`s a lot more coming in the next half hour of THE ED SHOW. Stay
right here.

(BEGIN VIDEO CLIP)

KARL ROVE, FOX NEWS CONTRIBUTOR: It is going to be a all out war
between now and the election day. Millions -- tens of millions of dollars
will have been spent in this contest.

(END VIDEO CLIP)

SCHULTZ: National Republicans are dead serious about the Walker
recall. And Walker`s job numbers are too good to be true. Democratic
recall candidate Tom Barrett will join us tonight.

Problems are piling up for JP Morgan. And Mitt Romney thinks it`s no
big deal. Elizabeth Warren on the JP Morgan disaster next.

Senator Check Schumer is going after Facebook co-founder Eduardo
Saverin. He`s introducing legislation to keep him from ever setting foot
on American soil.

(BEGIN VIDEO CLIP)

SEN. CHUCK SCHUMER (D), NEW YORK: Eduardo Saverin wants to de-friend
the United States of America just to avoid paying taxes. We aren`t going
to let him get away with it.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

SCHULTZ: JP Morgan`s mess keeps getting bigger. And the bank shows
no intention of cleaning it up. The "New York Times" reported the bank`s
losses may grow by at least another billion dollars. But JP Morgan has no
reason to change its ways. The bank will earn four billion dollars in the
second quarter.

JP Morgan is big enough to bring down the entire economy. But
lawmakers like House Financial Services Committee Chairman Spencer Bachus
says now is not the time for preventing risky bets.

(BEGIN VIDEO CLIP)

REP. SPENCER BACHUS (R), ALABAMA: No law can do that, nor should a
law attempt to prohibit a company from taking risk. In fact, that`s just
an impossibility.

(END VIDEO CLIP)

SCHULTZ: Mitt Romney also says JP Morgan should be able to gamble
with deposits backed by the federal government.

(BEGIN VIDEO CLIP)

ROMNEY: This was not a loss to the taxpayers of America.

UNIDENTIFIED MALE: Right.

ROMNEY: This was a loss to shareholders and owners of JP Morgan. And
that`s the way America works.

I would not rush to pass new legislation or new regulation. This is -
- in the normal course of business, a large loss, but certainly not one
which is crippling or threatening to the institution.

(END VIDEO CLIP)

SCHULTZ: Of course, the Dodd-Frank law was supposed to prevent risky
betting. But bank lobbyists and friendly lawmakers put a stop to it. The
Volcker rule is tied up in legislative red tape. Lobbyists turned it into
a 530 page monstrosity, according to the "New York Times."

One of the leading advocates for Wall Street reform is Senate
candidate Elizabeth Warren. Warren isn`t just focusing on the Volcker
rule. She wants Congress to go back to the original law intended to stop
banks from gambling with our money.

In a statement, the candidate wrote, "I`m calling on Congress to put
Wall Street reform back on the agenda and begin by passing a new Glass-
Steagall act."

I`m joined tonight by Elizabeth Warren, Harvard Law School professor
and Massachusetts Democratic senatorial candidate. Professor, good to have
you with us on THE ED SHOW tonight.

There is so much conversation in America right now about our financial
situation. And cutting right to the chase to your statement, is a renewed
Glass Steagall Act really the remedy for Wall Street from what we`re seeing
right now?

ELIZABETH WARREN (D), CANDIDATE FOR U.S. SENATE IN MASSACHUSETTS:
Well, let`s put it this way, a new Glass-Steagall is what`s the first step
toward making banking boring. And I think that`s just really the key,
because it separates commercial banking, you know, savings accounts and
checking accounts and that sort of thing, from the trading and risk taking
that occurs on Wall Street.

The notion is both of those are fine activities, but they ought to be
separated from each other in order to reduce the risk to the American
taxpayer.

SCHULTZ: So where are we right now, professor, as far as a real risk
to our economy if this system continues to stay in place? Because if you
look at what Mitt Romney has said as of late, he says that JP Morgan`s loss
is just, quote, "a normal course of business, and the way America works."
I mean, there are two seriously different philosophies on how Wall Street
should be handled between the Republicans and the Democrats.

Your thoughts on his comments, your response?

WARREN: Actually, let`s go back to what he was saying before this
crisis, this latest version of the crisis unfolded. Remember, Mitt Romney
is the one who said that if he gets to be president of the United States,
he will lead the charge on the first day to repeal all of the financial
regulations. This plays directly into the hands of what the largest
financial institutions are doing, and JP Morgan Chase is the latest
example.

That is they didn`t learn from the crash. What they learned was to
keep pushing Congress, to keep lobbying, to keep trying to weaken the laws
and weaken the oversight, while they load up on the risk. I`ll tell you, I
think people are really getting tired of this.

I pushed for a renewed Glass Steagall -- a new version of Glass
Steagall. And right now, I`m working with the Progressive Change Campaign
Committee. I`ll get that right, PCCC. The PCCC has been out there
circulating a letter. We have had more than 75,000 people who have signed
up and said enough of this.

SCHULTZ: Last night on this program, Senator Bernie Sanders,
independent from Vermont, told us that the banks run the Senate, that the
Senate -- that the banks run the Congress. Is it politically feasible or a
bridge too far to think that we`re ever going to get to a point where we`re
going to be able to separate the commercial banks from the investment
banks?

WARREN: You know, I look at it this way. It`s true. Washington is a
town where money talks. And the biggest financial institutions have plenty
of money to spread around and they have hired an army of lobbyists.

But you know, the American people have gotten wise to the game. They
now see what`s happening. And so I think there`s a real push back and a
real push to say, enough of this; we`re not doing this anymore.

SCHULTZ: Is this a focal point of your campaign? Is this a focal
point of your campaign?

WARREN: Very much. Yes, this is very much a part of the campaign.
I`ll tell you why. As I see this, ultimately, it`s a real question of
whose side do you stand on here? You know, back during the financial
reforms, when they were being debated in 2010, Scott Brown, my Republican
opponent, is the one who held the deciding vote on the financial
regulations.

Do you know what he traded the deciding vote for? To weaken the
Volcker rule and to take 19 billion dollars in costs and shift them from
the biggest financial institutions to the taxpayers.

It`s no wonder that he was named one of Wall Street`s favorite
senators. They`re getting a real return on investment from that kind of
payment.

SCHULTZ: He made that move and commitment, no doubt. But his
campaign right now seems to be focusing on one issue, claims about your
heritage. Your response to that.

WARREN: Right. You know, I think it`s clear that Scott Brown and the
Republican party would rather talk about anything than the real issues that
are going on in this country. They don`t want to talk about how the
financial regulations have not been adequate to keep banks like JP Morgan
Chase from loading up on risk.

They don`t want to talk about the votes last week to double the
interest rate on student loans. They don`t want to talk about how
America`s families are getting hammered. They don`t want to talk about how
it`s not a level playing field. They just want to find something else to
talk about.

SCHULTZ: Professor Elizabeth Warren, good to have you with us tonight
on THE ED SHOW. Thanks so much.

Coming up, Facebook goes public tomorrow. We have got the status
update on Eduardo Saverin and his attempt to dodge taxes. That`s next.

(COMMERCIAL BREAK)

SCHULTZ: Just how much does a guy have to make? Welcome back to THE
ED SHOW. Fair Share, it`s on the minds of folks all over this country.
And the Democrats are taking notice.

Tomorrow, Facebook is going to go public. The folks behind the
company stand to do -- well, we`d all say pretty well, including co-founder
Eduardo Saverin, who recently relinquished his U.S. citizenship and will
avoid paying taxes on billions of dollars in capital gains on money that he
made in this country.

Saverin told the "New York Times" that this had nothing to do with
taxes. I was born in Brazil. I was an American citizen for about 10
years. I thought of myself as a global citizen.

Not so fast, say Senators Chuck Schumer of New York and Senator Bob
Casey of Pennsylvania. The two have introduced legislation that would
penalize folks like Mr. Saverin, who would forbid them from setting foot
back in this country ever again. If the IRS believes a person has
renounced citizenship to avoid taxes, under this proposal, that person
would be subject to a 30 percent capital gains tax on future investment
gains in the United States no matter where they live.

(BEGIN VIDEO CLIP)

SCHUMER: Saverin has turned his back on the country that welcomed him
and kept him safe, educated him and helped him become a billionaire. This
is a great American success story gone horribly wrong.

(END VIDEO CLIP)

SCHULTZ: In other financial news, Senator Bernie Sanders wants the
head of JP Morgan Chase, Jamie Dimon, to step down to step down as the
board member of the New York Fed. Sanders says the two billion dollar
trading loss highlights the need to make changes, and is working on
legislation to end conflicts of interest.

Tonight in our survey, I asked are Republicans getting desperate by
bringing up Reverend Jeremiah Wright. Eighty eight percent of you said
yes; 12 percent of you said no.

Coming up, Scott Walker compares himself to a legend on the gridiron.
Cut me some slack, will you, dude? We`re coming right back with that one.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

ROVE: It is going to be a all out war between now and the election
day. I think Governor Walker is well-positioned to win. The question is
by how much. The bigger the victory, the bigger the impact.

(END VIDEO CLIP)

SCHULTZ: Bigger the impact? Karl Rove and the rest of the Republican
party know exactly how important the Wisconsin recall election is.
Democrats have only 18 days to round up the votes to elect Milwaukee Mayor
Tom Barrett and send Scott Walker packing.

Walker showed up on Fox News to push a new set of job numbers which
put a positive spin on his terrible job record. Earlier on Wednesday,
Walker released raw data from quarterly census figures that show a 23,000
job gain in his first year as governor.

On the very same day, he released this highly produced television
commercial.

(BEGIN VIDEO CLIP)

GOV. SCOTT WALKER (R), WISCONSIN: I have some bad news for Tom
Barrett but good news for Wisconsin. The government just released the
final job numbers. As it turns out, Wisconsin actually gained -- that`s
right, gained more than 20,000 new jobs during my first year in office.

Add the jobs created this year and the total grows to over 30,000.

(END VIDEO CLIP)

SCHULTZ: Walker cooked the books, is that what he`s doing? The job
numbers? Released a new commercial, did a national TV interview and had
Karl Rove back him up all in the same day. You think they`re coordinated?

Face it, folks, the Republicans are in this to win it. Democrats need
to get it together and fight back. Walker is flat out lying about the
numbers.

Today, the Bureau of Labor Statistics released Wisconsin`s April job
numbers. Walker`s policies lost yet another 6,200 private sector jobs last
morning. It`s the second straight month of private sector jobs and pushes
Walker`s job loss total to over 30,000 for this term.

So who`s telling the truth? Let`s turn to Milwaukee Mayor Tom
Barrett, Democratic candidate for governor in Wisconsin. Tom, good to have
you with us tonight. More bad news for Wisconsin. You bet, 6,200 jobs
lost in April.

But answer to what Walker is saying in that commercial. He says that
he has a positive jobs record.

TOM BARRETT (D), CANDIDATE FOR GOVERNOR OF WISCONSIN: He`s cooking
the books, Ed. There`s no question. These are figures that he just dreamt
up 30 days before this election. Because for decades, this state, like
every other state, like the federal government, like the media, have used
those Bureau of Labor Statistics.

And Scott Walker knows he cannot defend his record that under his
leadership, Wisconsin lost more jobs in 2011 than any job in this entire
country. So he is desperately trying to do anything he can, 18 days before
this election, to change the subject and to come up with these new numbers
that he knows can`t even be verified until after the election.

SCHULTZ: So he basically went on television and lied about his jobs
record, is that right?

BARRETT: He doesn`t have any interest at all in having the media
follow this, because he`s pouring tens of millions of dollars into paid
media. That`s where all his money is going, paid media from outside the
state of Wisconsin. That`s where the money is coming from.

So he doesn`t care what the editorial writers think. He doesn`t care
what the newspaper writers say, because he`s putting so much money behind
this in commercials.

And you nailed it. He produced that commercial. That commercial came
out about five hours after I saw the headline where he talked about these
jobs. Five hours. This wasn`t coordinated? You have to be dreaming to
think this was not coordinated.

SCHULTZ: What numbers is he using?

BARRETT: He used these numbers. You described them accurately. But
there`s no way we can verify them. And he doesn`t have any interest in
having anybody verify them. He just wants to throw them out there and then
put advertising behind them to muddy up the waters. That`s what he`s
trying to do.

SCHULTZ: The Republican Governor`s Association is all in. PAC money
is floating in. Karl Rove is pushing it hard. You know what`s happening
here. How are you going to fight back? And there`s a lot of conversation
about the DNC. Are you getting the support you need to win this?

BARRETT: Just today, the DNC and Democratic Party of Wisconsin issued
a release together. So they`re starting to work much more closely
together, which is a great, great sign. We are going to have the chair,
Debbie Wasserman Schultz, is going to be in the state next week. We`re
pleased with that.

But we do want this to be a grassroots effort. We want people to be
involved in this, to go to our website at BarrettForWisconsin.com, because
we really want this to be a grassroots effort. But of course, we welcome
the support from the DNC, just as the Republican National Committee is
helping the other side.

SCHULTZ: All right, well the money, the request from the Democratic
party in Wisconsin was 500,000 dollars. Do you need that? Do you need the
DNC to write the check?

BARRETT: I can tell you this, that Scott Walker, again, has raised
over 25 million dollars. We have raised maybe a million and a half
dollars. So we are being outspent heavily. We are being heavily outspent.
Of course we need the resources. And we welcome the resources.

But we know, at the end of the day, that Scott Walker can have all the
money in the world, but we are going to have the ground game that will get
our voters out. That`s what we have to focus on for these last 18 days?

SCHULTZ: Quickly, 39 percent of union families are voting for Walker.
That`s what a survey said. Do you believe that?

BARRETT: I don`t believe it. Because last weekend -- I think you`ve
talked about this -- the video surfaced that showed that he wanted to
divide and conquer the state. And that sends shockwaves through the
private sector unions. And again, I`m hearing a lot more from people who
are members of private sectors.

They`re coming to my website, again, at BarrettForWisconsin.com, and
we`re getting a lot more private-sector union members that are now signing
up because they see what`s going to happen to them.

SCHULTZ: All right, Tom Barrett, good to have you with us tonight.
We`ll do it again. That`s the "ED SHOW." I`m Ed Schultz. Ezra Klein
filling in for Rachel Maddow tonight. Good evening, Ezra.

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.>