updated 6/28/2012 5:57:49 PM ET 2012-06-28T21:57:49

Guests: Bob Filner, Jon Tester


HAROLD SCHAITBERGER, IAFF: And in fact, that`s what we`re doing
through the SAFER program, $1.3 billion, 13,000 firefighters.

ED SCHULTZ, "THE ED SHOW" HOST: All right. Mr. Schaitberger, great
to have you with us tonight. Thanks so much.

SCHAITBERGER: Always good to be with you.

SCHULTZ: You bet.

We want to make a quick correction before we go. We misidentified
Governor Hickenlooper of Colorado as a Republican. We here at "THE ED
SHOW" know that he`s a Democrat in good standing, and we apologize for that
error. I should have caught that. I`m sorry about that.

That`s "THE ED SHOW." I`m Ed Schultz.

THE RACHEL MADDOW SHOW starts right now. Good evening, Rachel. I`m
trying to be perfect, but I`m not there yet.

RACHEL MADDOW, HOST: You know, the on-air correction is an
underappreciated art. And you just did it perfectly.

SCHULTZ: How come newspapers just get to put it in the corner where
nobody can see, but we have to come out here and do all this. That`s what
unfair about --

MADDOW: The closest we can do is we can mumble, and that makes it
into fine print.

SCHULTZ: RACHEL MADDOW SHOW starts right now.

MADDOW: Thank you, Ed. That`s awesome.

SCHULTZ: You bet.

MADDOW: Thanks.

And thanks to you at home for joining us this hour.

A big news day.

It was last week when "Bloomberg News" reported that the Mitt Romney
for president campaign had asked the governor of Florida to please stop
talking about the economy getting better in Florida. Citing two sources,
"Bloomberg News" said the Romney campaign, quote, "asked Florida Governor
Rick Scott to tone down his statements heralding improvements in the
state`s economy because they clash with the Romney message that the nation
is suffering under President Barack Obama."

In the last few years since the financial crisis, Florida unemployment
did get up over 11 percent. Now it`s getting better. Still bad in
Florida, still 8.6 percent, but it`s better than it had been. If you`re a
governor in a state where things are getting better, you want to talk about
that, right? You want to take credit, even if it is off message for the
Republican who`s running for president who is depending on nobody thinking
things are getting better anywhere.

After that "Bloomberg" report came out, the Romney campaign denied it
vehemently. And after that denial from the Romney side, then the Rick
Scott folks started denying it, too.

But what nobody really noticed at the time, and the little kerfuffle
around that news story was that Rick Scott in Florida was not the first
governor who was reported to be having this same problem with Mitt Romney.
Just a week earlier, "The Wall Street Journal" had reported the same
problem in a bunch of other Republican states.

Mitt Romney campaigning in Virginia, talking about how terrible
President Obama has been for the economy in Virginia. But the state of
Virginia has a 5.6 percent unemployment rate. That`s ninth lowest in the
nation, lowest in the southeast. The Republican governor of the state is
out countering the Mitt Romney message about how awful everything is by
saying actually, Virginia is doing well.

Same deal in Ohio. Mitt Romney going to Ohio to campaign saying how
terrible President Obama has made the Ohio economy. But the Ohio
unemployment rate is now below 6 percent, and the state`s Republican
governor was telling the same crowd that Mitt Romney was talking to that
Ohio has made a lot of progress. In fact, when the governor of Ohio was
asked by a reporter if it bothered him if President Obama got credit for
this uptick in jobs in Ohio and the improving economy there, the governor
responded by saying, "Bother me? I hope he gets all of the credit."

Things are getting way better in terms of jobs in this important swing
state of Ohio. I hope President Obama gets all of the credit for that.

That`s not the kind of thing that`s supposed to come out of the mouth
of a top Romney surrogate at this point in the campaign.

Then last month in Iowa, Mitt Romney was campaigning in Iowa saying
again how terrible Barack Obama has made the Iowa economy. He even put out
a four-minute long web ad showing how terrible things are in Iowa because
of President Obama. But in reality, in Iowa, the unemployment rate there
has falling to 5.1 percent, the seventh lowest in the nation.

The Republican governor of Iowa went out on the occasion of Mr. Romney
coming to Iowa and talking smack, went out and did an interview with the
"Wall Street Journal" to counter what Mitt Romney was saying there, to
counter Mitt Romney`s message that Iowa was a horrible mess because of
President Obama.

The state`s governor said, actually, we`re doing very well. We`re
seeing significant growth.

So, all these Republican governors in the states where things are
getting better are told by the Republican presidential campaign things are
not getting better. Our candidate is going to come to your state and talk
about how awful everything is, grin and bear it.

Today on the Democratic side, Vice President Biden was in Iowa. He
gave a barnburner of a speech there. And again, there was the Romney
campaign doubling down on the Iowa sucks message, putting out a press
release saying the economy is terrible in Iowa because Barack Obama is
president.

These poor Republican governors like Terry Branstad in Iowa, they are
essentially being told to shut up and take it, while Mitt Romney slags off
their state and counteracts all their messaging as governors about how
their states are coming back and doing OK. And that is the cost to these
Republicans generally of the overall message of the Mitt Romney for
president campaign.

I mean, he`s not running on his time as governor of Massachusetts.
He`s not really running on his time at Bain Capital as a private equity
financer. He`s running on the basis that the economy right now is bad so
you should fire the president. That`s his message, never mind the details
about the guy you get if you fire the president, just fire the president.

And the message from the other side, from the president`s reelection
campaign is that you should pay attention to this new guy who you would get
if you fired the president. The message from the Obama campaign is that
what Mitt Romney has to offer, particularly on the economy and jobs, is the
opposite of what the country needs right now.

(BEGIN VIDEO CLIP)

NARRATOR: President Obama`s first 100 days creating thousands of new
jobs.

NARRATOR: But would it? "The Washington Post" has just revealed that
Romney`s companies were pioneers of shipping U.S. jobs overseas, investing
in firms that specialized in relocating jobs done by American workers to
new facilities in low wage countries like China and India. Does Virginia
really want an outsourcer-in-chief in the White House?

(END VIDEO CLIP)

MADDOW: The Obama campaign releasing that ad today, specific to
Virginia, where Mitt Romney was campaigning today in Virginia. They also
released another version of it specific to Iowa where a lot of this fight
played out today in Iowa, and where that Iowa ad message was designed I
think to dovetail with this barn burning speech by Joe Biden.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: Give Mitt Romney
credit. He`s a job creator in Singapore, China, India.

(END VIDEO CLIP)

MADDOW: The overarching narrative of the presidential campaign, the
overarching narrative, so encompassing both campaigns is that, no, the
economy is not back from the depression yet. And Mitt Romney says he would
do better in bringing the economy further back.

President Obama on the other hand says that right now, the White House
is doing their best and bringing us in the right direction. There is
further to go, but Mitt Romney`s idea and his track record are awful. So,
even if you`re not happy with the economy yet, you definitely don`t want to
switch to that guy.

One level below that overarching message from both presidential
campaigns, there`s a whole high stakes world of politics that is separate
from, even in opposition to what is going on in the presidential race.
There`s some really interesting substantive stuff going on here.

The Democratic Party today reserved more than $5 million in TV ad time
to support Senator Sherrod Brown in his re-election effort in Ohio. He`s
running against the Ohio state treasurer, a guy named Josh Mandel. That
race is expected to have more outside money spent against the Democratic
incumbent senator than maybe any other race in the country.

Sherrod did an interview with "Talking Points Memo" today in which he
weighed in on the presidential campaign. He said in Ohio, the Obama
campaign should absolutely keep talking about Mitt Romney`s record at Bain.
He said that message about Mitt Romney is devastating for Republicans in
the industrial Midwest.

Even so, some other Democrats, particularly conservative Democrats,
are essentially divorcing themselves from presidential politics all
together. Senator Claire McCaskill of Missouri today is saying that she
will not go to the Democratic convection this fall in North Carolina. That
follows similar announcements from Democratic Senators Joe Manchin, and Jon
Tester.

Jon Tester is going to be our guest later on this hour.

But it`s in races at this level, races like these, not just with
conservative Democrats, but any of the races where the presidential race
isn`t maybe the dominant issue, where something really important is going
on, and you can see in these races, a bunch of really substantively
interesting cross currents in our politics right now, you get a whole
different sense of who is getting listened to who, about who has respect,
about who has a message that voters ought to listen to.

I want you to look at this one thing from the Jon Tester race in
Montana. Jon Tester is running against a Republican named Denny Rehberg.

This is fascinating. Jon Tester is not going to the Democratic
convection this fall, as I said. Denny Rehberg, the Republican, is not
going to the Republican convention this fall.

In this Senate race in Montana, both candidates, both sides are
separating themselves from their parties in that way. They`re both running
apart from the presidential race. And so, look what you`re seeing right now
in Montana.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I served with the Montana Army National Guard in
Iraq. I served and came home safely. Over 1,000 have left limbs in Iraq
and Afghanistan weren`t so lucky.

But Congressman Rehberg voted against additional critical funding for
prosthetic research. Millionaire Rehberg voted to give himself a pay raise
but voted against additional funding to help wounded vets?

Now, Congressman Rehberg wants us to call him senator? No way.

Vote Vets is responsible for the content of this advertising.

(END VIDEO CLIP)

MADDOW: That`s an ad from Vote Vets against Denny Rehberg, the
Republican Senate candidate in Montana, who is running against Jon Tester.

That same group, Vote Vets, is also running pro-Claire McCaskill ads
in Missouri.

(BEGIN VIDEO CLIP)

UNIDENTIFEID MALE: When some tries to make cuts to V.A. hospitals,
like Truman, where I go, she fought them.

UNIDENTIFIED MALE: She pushed the new G.I. bill through and now, I`m
earning my degree here in Missouri.

UNIDENTIFIED MALE: Claire has got our back.

UNIDENTIFIED MALE: And, Senator, we`ve got yours.

(END VIDEO CLIP)

MADDOW: Vote Vets is a Democratic-leaning group of post 9/11
veterans. They`re also supporting Iraq and Afghanistan veterans themselves
who are themselves making runs for Congress, like Tulsi Gabbard, who`s a
candidate running as a Democrat in Hawaii.

So, there`s Vote Vets on the left. There`s Iraq Veterans Against the
War who are on the farther left.

There`s also Vets for Freedom, which is a Republican joint on the
right. They mostly seem to be running their own Vets for Freedom guys for
office. But they`re associated with all these big name, brand name
Republicans.

They`ve got a congressional candidate running in a New York
congressional primary tonight. They almost got a U.S. Senate candidate in
Minnesota this year.

But those are just the partisan or the ideologically identifiable
post-9/11 veterans groups.

There`s also the big one, right, IAVA, Iraq and Afghanistan Veterans
of America, the first and largest post-9/11 veterans group. They`re
totally nonpartisan, aggressively nonpartisan.

And they are not just influential in politics. They`re actively
feared on Capitol Hill and more broadly in Washington, D.C.

I don`t spend a lot of time in Washington, but whenever I do, I`m
usually talking to people about national security stuff. You talk to
people in Washington about anything that touches IAVA`s political turf and
I swear you can take it from me, you can see people retract physically when
they start talking about those topics, worried that they might potentially
be crossing IAVA.

It`s better sometimes to be respected and feared than it is to be
liked, particularly in Washington, particularly when you`ve got a long-term
horizon on the stuff you`re advocating for. And for the interest of Iraq
and Afghanistan veterans, seeing that physical reaction on both sides of
the aisle, in the administration and out of it, when you bring up IAVA
stuff, I`ve got to think for veterans` interests, that is a good thing.

So, yes, hey, it turns out if you spent 11 years and trillions of
dollars fighting two of the longest wars in American history simultaneously
and uprooting the lives of 2 million American families to do that, yes, it
turns, you change politics. You create a powerful new political force in
the process of doing that -- a powerful new political force with a heck of
a lot more moral suasion, persuasive power on their side.

This is a respected powerful interest group now that we didn`t have
before. They have a lot of pull. And so, given that, how can it be that
on the public policy issue most directly affecting those veterans as
veterans, we have a total disaster on our hands? We`ve got nearly 900,000
veterans with outstanding claims, disability claims to the V.A.; nearly a
million veterans waiting to hear.

The V.A. starts counting the claims in a backlog once somebody has
been waiting more than four months just for an answer. There are hundreds
of thousands of veterans in the backlog right now.

In places where the issue is being dealt with particularly poorly,
like Oakland, California, and the San Francisco Bay Area, people are
waiting a year to even hear back about whether or not they are getting what
they are owed by our country.

Think about that. You come back from how many tours of duty over how
many years? Let`s you`ve got a combat related disability, and maybe that
means you can`t work. And you don`t even hear for a year whether you are
getting anything to pay for your living expenses, whether your disability
claim is getting approved? What do you do for that year? What do you do
in the meantime?

You`re home from combat and you can`t work. You wait a year to hear?
This is a disaster.

When the Veterans Administration`s inspector general looked at the
department`s mental health care, they found the V.A.`s own data on how long
veterans were having to wait, they found it to be of no real value. So, in
other words, you can`t believe the V.A.`s answers when you ask them how
poorly they`re doing.

Now, The V.A. for its part says it has a plan to clear the disability
claims backlog by not this year, not next year, not the year after that,
but by the year after that. By 2015, they have a plan for that. That`s
what they`re aiming for. That`s their best case scenario, and that led --
hearing last week to the ranking Democrat in the veteran`s committee in the
House, frankly just letting loose.

(BEGIN VIDEO CLIP)

REP. ROBERT FILNER (D), CALIFORNIA: You`ve hired, what, in the last
few years, 10,000, maybe 12,000 employees. You`ve got 40 so-called
transformational things going on. I don`t know where the name
transformation comes, doesn`t do anything. What have we done in the last
few years? Doubled the backlogs, rate of inaccuracy, recent report, up to
25 percent.

This is disgraceful. This is an insult to our veterans.

(END VIDEO CLIP)

MADDOW: That`s Congressman Bob Filner from San Diego. He`s a
Democrat. He`s also running for mayor of San Diego.

Congressman Filner is proposing that the V.A. change its system to
actually be more like the IRS. In this sense, when you file your tax
return with the IRS, unless something is obviously wrong, the IRS assumes
it`s fine and they approve it. They keep people honest by watching for
unusual things that warrant checking and tax returns. But also by auditing
a percentage of what people turn in.

So the system goes pretty fast. It`s pretty reliable, and people
mostly don`t cheat because they`re afraid to be audited, because if you get
audited and you get caught cheating, it`s a really bad thing.

Bob Filner says the V.A. should blow up the way it is doing things now
and go to a system like that instead. Assume the veterans aren`t lying.

The idea has been proposed at Book Link from a Harvard economist as
well.

Now, veterans groups are not in favor of this change. They are not in
favor of the V.A. changing like this. But broadly speaking, veterans
groups are pretty furious about how badly the system works right now, and
it works really, really badly. And maybe at least debating this, make it
like the IRS idea and putting this on the table, maybe that puts a
spotlight on the problem. But this problem needs a spotlight.

How do you pay somebody back for agreeing to serve in a war and risk
being killed because the country has asked them to do that?

Personally, as citizens, we all need to work that out for ourselves.
But in a country that has been at war for 11 years with 99 percent of the
population not fighting in those wars, we have all got to figure those
things out -- individually and as civilians, we have to figure out what our
responsibility is, how we pay back.

As a country, though, as an institution, it`s a less esoteric thing.
As a country, we make some really specific promises to veterans in exchange
for their service, including promising them their health needs are now
going to be covered. We`ve got them covered for their health care needs.
That is our end of a deal. That`s our promise, and we`re breaking our
promise.

And while that has ethical implications for all of us since we`re the
civilian side of the deal that is breaking the deal, in this political
climate we`re in, in this political climate we are in with the political
power and respect afforded to this generation of veterans, this problem
ought to incur some real political costs for the people who ought to be
able to fix it but who haven`t and it ought to mean real political benefits
to those who do step up and take it on.

This is not B.S., tit-for-tat partisanship. This is not some
messaging thing. This is not some fight for the sake of fighting.

This is supposedly what government is for. This is about real
obligations. This is a real thing.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

FILNER: What have we done in the last few years? Doubled the
backlogs, rate of inaccuracy, recent report, up to 25 percent. This is
disgraceful. This is an insult to our veterans.

(END VIDEO CLIP)

MADDOW: The was Congressman Bob Filner of California suggesting not
all that delicately that America has failed in our treatment of wounded
veterans coming home from Iraq and now Afghanistan. Mr. Filner telling a
congressional hearing a couple days ago that the system we have in place
now is so bad we frankly ought to blow it up, and do the V.A. totally
differently. We ought to do it more like the IRS.

He was not kidding. He said the current system is so bad, we`ve got
hundreds of thousands of vets waiting up to a year to even hear back about
whether they`re going to get the benefits they should get.

Joining us now is Democratic Congressman Bob Filner of California.
He`s a ranking member on the House Committee on Veterans Affairs. I should
also mention he`s currently running for mayor of the city of San Diego.

Congressman Filner, thank you very much for being here to help us talk
about this.

FILNER: Thank you, Rachel. It`s an honor to be on the best show in
television.

MADDOW: That`s very kind of you to say. Flattery will get you
everywhere here.

You are a Democrat. You`re not one of these people who is
ideologically committed to the idea that government gets everything wrong.

Why do you think we`re getting this so wrong? When it comes to
handling this basic thing for veterans, why is this so screwed up?

FILNER: By the way, I just want to go one step further about how bad
it is. You know, people die before they get that final adjudication or
they may commit suicide. I mean, it is so bad that these things occur.

And I think, you know, it`s a bureaucracy that has been in charge for
decades that doesn`t want to do anything any differently. It`s veterans
groups who sort of have -- they drank the Kool-Aid of the bureaucracy.
They say, well, let`s just play around the edges of it. And they`re afraid
to take on the system also.

And I think what`s really going on, Rachel, is that we want to talk
about the glory of war. How patriotic it is, and we don`t want to focus on
the cost of war, what happens when the young men and women come back.

We don`t want to pay too much attention to it because it undercuts
what every government wants and that`s support for the wars it carries out.
And I think Democrats particularly who are anti-war like myself, have to be
very pro-veteran and say no matter what we thought about the war, we`ve got
to make sure every young man and woman who gets back gets all of the care,
the attention, the love, the dignity that a nation can give.

MADDOW: When I have been looking into the issue and monitoring really
dramatic hearings in your home state of California about this, people
talking ability not being able to get -- not even get an answer, let alone
get approved for their disability claims. And California has some of the
worst V.A. centers in terms of dealing with this, waits up to a year long.

When I`ve been looking into this, it seems to me that from the
veterans group side, that they are all very angry about this, that they are
all upset about this. Obviously, you have a difference with them about
whether or not your proposed change is the way to fix the problem.

But I wonder if that disagreement is the end of a conversation or if
that`s the beginning. It seems to me that their anger on this issue is a
starting place given how much political power they`ve got in a country that
really does respect what they have done particularly since 9/11.

FILNER: Right. You would think so. But there`s a disconnect between
the grassroots veterans and the people in Washington who supposedly
represent them. The people in Washington have drunk the Kool-Aid. They
just want to tinker around the edges because they`re tied into an
inefficient system. They figure as long as the system is so bad, veterans
will come to them for help rather than say let`s really have a radical
change.

You know, you mentioned the IRS. Twenty-years ago or so, the IRS was
completely dysfunctional. You didn`t know where your return was, or when
you would get your refund. Now, when you file your 1040 on April 15th, and
if you have a refund coming, you get it back in three weeks guaranteed.

How did they change from one dysfunctional agency to a very modern and
efficient one? They said, look, we`re going to accept your claim, subject
to audit. And that`s what keeps us honest. We can do the same thing with
veterans claims.

When we have certified veterans officers all over the country, the
American Legion, VFW, states, counties, the V.A., if they are helpful to
the veteran in filling out the forms, we should accept it subject to audit,
then they get their check, and get their life together, and move on right
away.

MADDOW: Congressman Bob Filner of San Diego, running for mayor of San
Diego -- sir, thank you for venting your spleen the way you did in this
hearing. It put a spotlight on the issue that otherwise would not have
been there.

FILNER: Thank you for taking it -- thank you for taking this up. You
know, the American people have got to understand that we send the kids to
war. You`ve got to take care of them when they come home.

MADDOW: Thank you, sir. And I appreciate your time tonight. Thank
you.

You know, this policy that Congressman Filner is proposing, without
the veterans groups onboard with it, I`m not sure it`s going to be the way
that we proceed in trying to fix this, right? People who -- all of the
different stakeholders need to be on board. But you know what? All of the
different stakeholders need to get on board with something, because this is
an unsustainable ethical problem that we`ve got us a country.

This is a problem we made. This is a problem that we created, a
promise we broke. This has to be fixed. Left, right and center, it has to
be fixed.

All right. Coming up at the end of the show tonight, we have
discovered a way to expose to the light the rage that is lurking inside the
most soft-spoken man in Washington. It involves flooding and a libertarian
from Kentucky and a lot of flying spittle. That`s coming up.

(COMMERCIAL BREAK)

MADDOW: You know, for a while, it looks like Montana might be the
country`s only hope for something in American elections surviving beyond
the reach of Citizens United and this flood of dark money into our
politics. Montana was going to be our only hope. And then Montana lost at
the Supreme Court yesterday.

And, boy, is Montana mad about it. That`s the interview tonight.
That`s coming up.

(COMMERCIAL BREAK)

MADDOW: All right, are you ready? This is not at all about a
candidate. This has no message at all for you about any particularly
candidate or politician.

(BEGIN VIDEO CLIP)

NARRATOR: President Obama`s agenda promised so much.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: We must help the
millions of homeowners who are facing foreclosure.

NARRATOR: Promise broken.

(END VIDEO CLIP)

MADDOW: That`s an ad that has nothing to do with some politician
named President Obama. This is an ad that has nothing to do with any
particular candidate either.

(BEGIN VIDEOI CLIP)

NARRATOR: Senator Claire McCaskill was a key Obama adviser in passing
his failed $1.18 trillion stimulus.

(END VIDEO CLIP)

MADDOW: See, that ad has nothing at all to do with Democratic Senator
Claire McCaskill of Missouri. Nothing to do with her.

And now, here is an ad that has nothing to do with Sherrod Brown.

(BEGIN VIDEO CLIP)

NARRATOR: No surprise he voted for Obama care. He supports Obama`s
agenda 95 percent of the time. In Sherrod Brown`s Washington, talk is
cheap. In Ohio, it`s costing us a fortune.

(END VIDEO CLIP)

MADDOW: That has nothing to do with Sherrod Brown. These are all ads
by one of Karl Rove`s, it`s a group Crossroads GPS. That particular Karl
Rove group is a dark money group. They do not disclose where they get
their money from. They don`t have to because of this rule that says if
you`re running ads that aren`t about a candidate, then all your money can
be totally secret. And up until now, that has essentially been a self-
policing rule.

So the way that groups like Karl Rove`s group say that ads like that
aren`t about any candidates is that they put little tags on the end that
say things like tell Claire McCaskill this, or tell President Obama that.

So, we`re not advising you how to feel about these particular
politicians, we`re just helping you deliver to them a message about an
issue because we`re an issues group. We don`t care at all about
candidates.

Honestly, that`s the one rule we have left in campaign finance in this
country, and it`s a farce. But there was a court ruling earlier this month
that said if there is going to be that rule, actually, these groups
shouldn`t just be policing themselves. The federal elections commission
should make the decision about whether or not these ads are about candidate
or are about issues, and therefore whether you should be able to keep where
all your money comes from a secret.

Once that ruling came down, the Obama campaign`s top lawyer, a man
named Bob Bauer, wrote to the FEC and said, you know what, given the court
ruling, if you are responsible for looking at groups and enforcing this
rule where you have to disclose your donors if you really are talking about
candidates, please look at Karl Rove`s group because we think he`s
advocating for candidates so he shouldn`t be allowed to keep his donor
secret.

Karl Rove was asked about that on FOX News Channel, and here was how
he responded. He`s responding to that complaint about his group going to
the FEC about secret donors. This was his response.

(BEGIN VIDEO CLIP)

KARL ROVE, AMERICAN CROSSROADS: This is an attempt to intimidate the
people who might otherwise contribute to GPS. And this is frankly thuggish
behavior.

You know, earlier, we were talking about the time that I went up to
the Congress. To testify, one of the accusers was Bob Bauer, who was the
attorney for a woman named Dana Jill Simpson who alleged I had encouraged
her to investigate -- a woman I never met in my entire life, that I asked
her to investigate the sexual shenanigans of Democratic Governor Siegelman
of Alabama, and you know, Bob Bauer was her attorney, got her on "60
Minutes" big ho-ha about it. This is the kind of guy, Bob Bauer, he is. I
know what he`s doing.

(END VIDEO CLIP)

MADDOW: The question was about whether or not you`re going to reveal
who is giving you all that money to run the anti-Obama ads you have been
running, and the answer was: President Obama`s lawyer was the lawyer for a
woman who said I was involved in a sexual shenanigans investigation in --
what are you talking about?

This happened on FOX News last week. We have been keeping an eye on
it ever since, wondering if there was going to be another shoe that
dropped, what it could have meant. But there has been no other shoe
dropped by Mr. Rove.

So, you should just know this is happening because there is something
weird going on now. In this fight over all of the dark money being spent
against Obama this year.

I mean, Karl Rove does have a long history in Alabama politics. There
was a scandal about an Alabama Republican operative saying Karl Rove, when
he was working in the Bush White House, essentially had sent her to go try
to get dirt on this Democratic governor in Alabama, try to catch him
cheating on his wife or something. She did go on "60 Minutes" and make
that allegation.

But this is something that allegedly happened more than ten years ago.
This has absolutely nothing to do with this year`s campaign or secret money
or the FEC or any of these things.

But Karl Rove`s response to the Obama campaign asking them to disclose
their donors, his r response was essentially the Obama campaign, their
lawyer was a lawyer for this woman in Alabama 11 years ago when she went on
"60 Minutes" -- completely bizarre. One of the strangest and bluntest and
most non-sequitur diversionary tactics I have seen on any subject on this
whole campaign season.

The only reason I think it might be important is because I think Karl
Rove is supposed to be a slick guy, right? The weirdest thing about this
is, that he`s obviously and factually totally wrong in his assertion.
President Obama`s campaign lawyer is a guy named Bob Bauer. Karl Rove said
on FOX News that Bob Bauer was the lawyer for this woman, Dana Jill
Simpson.

After Karl Rove went on FOX News last week and made this weird
allegation out of the blue, President Obama`s campaign lawyer Bob Bauer
wrote a letter to Karl Rove which we have. The letter says, "I have never
represented Dana Jill Simpson nor had anything to do with her allegations
about you or any appearance by her on `60 Minutes`. I have never met Ms.
Simpson or spoke to her on the phone or crossed her path in any other way.
The identity of her lawyer is a matter of public record, a lawyer I have
also never met, but whom you can find through the search engine of your
choice."

That`s true actually. You can Google who the lawyer was. We did that
today and we spoke with the lawyer today. We asked her about the weird
thing that Karl Rove said on FOX News about President Obama`s campaign
lawyer, Bob Bauer.

And this is what she told us. She said, quote, "Bob Bauer was totally
unknown to everybody down here. There were a lot of other lawyers on the
periphery, but Mr. Bauer was nowhere to be seen. He was not involved in
any way nor was his firm. I think Karl Rove is delusional. I think he`s
lying."

We contacted Mr. Rove`s office today to ask what in the name of sweet,
whoopee pie non sequiturs he is talking about, why did he bring this up
when he was asked about campaign donors on FOX News? And what about the
fact it was totally made up what he said?

We`ve as yet had no response from Mr. Rove. If we got one, we`ll let
you know.

But in the meantime, what is most interesting about this strange thing
that happened on FOX News a few days ago, this very unexplained eruption
from Karl Rove, the most interesting thing about this is the reason why he
did it, which was to avoid answering the question to him about who is
paying for all of those ads against President Obama that he`s been running.
And why shouldn`t he have to disclose who those people are.

One of the targets of Karl Rove`s wrath, although it`s totally not
about the candidates, one of those candidates targeted by Karl Rove joins
us next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIPS)

NARRATOR: Tell Jon Tester, Obama`s way is the wrong way for Montana.
Tell him to say no to Obama`s proposed trillion dollar deficit.

NARRATOR: Remember when Jon Tester said --

SEN. JON TESTER (D), MONTANA: Is this a time we make the Senate look
a little more like Montana?

NARRATOR: Well, now, Tester is looking a little more like Washington.
Tester called himself a dirt farmer.

(END VIDEO CLIPS)

MADDOW: Tester is a dirt farmer.

Those are ads that are being run against Montana Senator Jon Tester.
And those are ads that are supposedly not at all about Montana Senator Jon
Tester. They`re just issue ads that happen to mention him. And because
they`re supposedly issue ads that just mention him, the Karl Rove unlimited
donation group that`s running those ads does not have to say where they`re
getting their money from, because they`re not all about Jon Tester.

The post-Citizens United money in politics situation is pretty
disgusting everywhere. But in the state of Montana, the pre- and post-
Citizens United difference is particularly stark because Montana had been a
lone state hold-out, retaining their anti-corruption laws, at least for
their state level elections, even as the Supreme Court handed federal
elections over to unlimited and corporate spending.

Then, yesterday, the court ruled that Montana couldn`t hold out any
longer. Montana`s own state laws are overruled by Citizens United, too,
and it`s open season on Montana elections.

Joining us now for the interview is U.S. Senator Jon Tester of
Montana, facing re-election in November, in a race that is saturated with
over $300 million in ads from outside groups.

Senator Tester, thank you for being here.

TESTER: Hey, it`s great to be with you, Rachel. Thanks for having
me.

MADDOW: You have said that the Supreme Court ruling rolled Montana
back 100 years. Back to when the zillionaires just bought the elections
outright. What do you think the immediate effect is going to be on your
state?

TESTER: Well, I think it`s going -- what you`re seeing at the
national level in Senate races and House races, Montana is going to see it
in the state-wide races, too. I think it`s very unfortunate.

You know, about 100 years ago, back in 1912, the voters of Montana got
tired of folks like William Clark buying their state, buying their
government, and becoming a government that serves corporations. And they
said enough is enough, and in 1912, they changed it.

Unfortunately, the Supreme Court, I don`t think, used good judgment or
common sense when they made this decision to make corporations like people
to give corporations more rights than people. And now, what we`re going to
see in Montana is corporations and their big money controlling elections a
lot more than people and their ideas.

And people and ideas are what elections should be about. That`s a
Montana value.

MADDOW: You have never been a particularly ideological guy. You`ve
always been a pretty independent, centrist Democrat in Washington in your
career before that.

When you talk to people in Montana about this, does it have an
ideological cast? Do people have an opinion on this based on where they`re
coming from on other political issues or is this something on which
Montanans you think can see eye to eye, even across the aisle?

TESTER: I think it cut party lines for sure. I have people come up
to me all the time, and I guarantee they`re not all Democrats, they`re not
all Republicans, they`re not all libertarians, and they say, what`s going
on with Citizens United? Is Congress going to be able to do anything about
it?

Because they understand -- I mean, Montanans understand what a
negative impact this is going to have on elections. It really is a kick in
the teeth to our democracy, and I think Montanans understand it. And I
think it does cut party lines.

Interestingly enough, my opponent in the race believes the Citizens
United decision was a smart decision. He said that in a debate a few weeks
ago. And he`s endorsed by Citizens United.

So, the differences between me and my opponent on this issue are very,
very stark. But, you know, he`s you now, he`s -- you`ve said, has nearly
$4 million they have spent all on negative ads, trying to make me into
something I`m not and if they`re able to do that and have fiction trump
fact, they`ve got a chance of winning this election. We have been holding
our own pretty well even though the amount of money coming from third
parties, secret money you talked about in the previous segment, is
ridiculous. No transparency, no accountability, and not good for
democracy.

MADDOW: When you have run in previous races, in a political climate
that was not like this in terms of there being dark money around, can you
give us what the difference is? Obviously, you have done well raising
money. You have raised more in your campaign fund than Denny Rehberg has
raised in this. It`s just that there`s all that outside money going to
support him.

How do you have to run differently given the outside money that you
don`t know the source of?

TESTER: Well -- I mean, we`ve got to be smarter. We have got to run
better ads, we have to outwork them. I mean, just up and down the line,
we`ve got to do a better job.

The unfortunate part is, and, Rachel, and your viewers, Montana has
been a very transparent state. Their government is very transparent. I
think that`s a good thing. I think that`s the way it should be in
Washington, D.C., too, as transparent as possible.

What ends up with the secret dark money is there`s no transparency,
there`s no accountability. We don`t know where this money is coming from
at all, and there`s absolutely -- could be from out of foreign corporations
that are putting the money into this thing. It really -- it really allows
itself for a high level of corruption.

And that`s not how -- that`s now how the government should work and
certainly not how a democracy will work over the long haul. There`s got
to be change.

MADDOW: Do you think that Congress can do anything to stop it?
Obviously, the bar got a lot higher with this Supreme Court decision?

TESTER: Yes, well, I think the only way it can be done is a
constitutional amendment. Hopefully, people will get sick of this in short
order and understand they need to take their government back. I they think
they will.

I think this cycle is going to show them what it`s like. If it`s not
repealed by 2014, I think it will be shortly thereafter. Obviously, the
court isn`t going to help us with it.

MADDOW: Montana U.S. Senator Jon Tester, thanks very much for your
time tonight, sir. I know you`re a busy man. I really appreciate it.

TESTER: Thank you, Rachel.

MADDOW: All right. Up next, acting.

(COMMERCIAL BREAK)

MADDOW: OK. Acting, coming up. I promise.

The Republican Party`s agenda in Congress hit a big snag in the Senate
today. The Republican Party`s agenda in Congress is, of course: jobs,
jobs, jobs -- by which I mean abortion. Their laser-like focus on jobs,
jobs, job-abortion has produced a ton of legislation already this year.

They tried to amend the House spending bill to restrict access to
abortion under the health reform law. They expedited a bill to the House
floor that would require doctors to investigate women`s motives for seeking
an abortion. They introduced a U.S. Senate bill to make it harder for
young women to get abortions. They pushed a bill in the House to limit the
time during which women can get abortions in Washington, D.C.

And speaking of D.C., after threatening last year to shut down the
entire federal government over Republicans` desperate need to ban D.C. from
using its own money to fund abortions for low-income women, House
Republicans this year have already put the local D.C. abortion funding ban
into this year`s budget. And a bill that would have given D.C. more
control over its own money and its own budget died an unceremonious death
in the Senate today.

It was removed from the schedule after Republican Senator Rand Paul
tried to add a host of amendments to force on D.C. his own chosen gun laws,
his own chosen rollbacks of union rights, and, of course, because abortion
is job one, he insisted on a doubling down on that ban on using local D.C.
funds for abortion.

The Republicans are focused. The Republican focus on jobs, jobs,
jobs, by which I mean abortion, has just been exhaustive this year. They
don`t get that much credit for it, but it`s really most of what they`re
working on.

But if you are a member of Congress, even if you are a Republican
member of Congress who is singularly dedicated to the very important issue
of creating jobs, by which I mean restricting abortion rights, sometimes
you still simply have to work on something else. You have to work on other
issues that happen to be important to the running of the country, besides
abortion. Things like infrastructure, keeping the nation`s highways
running, or emergency preparedness, or maybe, for example, extending the
country`s flood insurance program, which covers 5.6 million properties in
flood-prone areas.

The flood insurance program is set to expire at the end of next month.
And as if to remind us all how important that is, big swaths of the state
of Florida are underwater right now.

Tropical storm Debby has been dousing the western coast of Florida.
One Florida County near Tallahassee has seen more than two feet of rain in
the last few days. Residents stranded there by flooding had to be rescued
by boat. Parts of the interstate along a 50-mile stretch of Florida
between Jacksonville and Tallahassee were shut down because of all the
flooding.

So, great, sounds like a good time to make sure the nation`s flood
insurance program doesn`t expire, right? Well, what had been a bipartisan
effort in the Senate to extend that program suddenly became a partisan
disaster today, because today, the flood insurance bill came face to face
with the Republicans` abortion above all else agenda.

They couldn`t help themselves. They couldn`t let a totally unrelated
bill with broad bipartisan support about flooding, they couldn`t let that
pass without turning it into some way to go after abortion rights.

Republican Senator Rand Paul, who`s theoretically a small government,
get the government out of my business guy, he is pushing for a personhood
amendment to the flood insurance thing. Rand Paul wants to add to flood
insurance a personhood measure, like the one that was defeated, even by
voters in Mississippi last fall. A measure that declares a fertilized egg
is a person, declares a woman to have become two people, essentially as
soon as she has had sex, thereby banning all abortion as well as some
common forms of hormonal birth control.

That`s what Rand Paul wants to do with the flood insurance bill.

This kind of thing has been happening all session. Jobs, jobs, job-
abortion. But this time, this time, Senator Harry Reid on the Democratic
side has had enough. The Rand Paul personhood amendment to the flood thing
seems to have aroused real genuine anger in the mild-mannered Senate
majority leader.

In responding to the personhood amendment, Senator Reid lost his
temper today. He lit into Republicans on the Senate floor.

Here`s the thing about harry Reid losing his temper, though, and
lighting into Republicans. Harry Reid is so soft-spoken, so mild-mannered,
so beyond calm and collected, his demeanor so politely unperturbed, that
even when he is saying mean, angry, fed up, even sarcastic words, he does
not sound mean, angry, fed up, or sarcastic. He sounds nice.

For example, about two-thirds of the way through his tirade about the
anti-abortion personhood amendment to the flood bill, Senator Reid says, "I
think this is outlandish." only, here`s how he says it.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D-NV), MAJORITY LEADER: I think this is outlandish.

(END VIDEO CLIP)

MADDOW: Outlandish. The substance of Senator Reid`s speech was
compelling and important and fiery if you read it on the page, but the
delivery was --

(BEGIN VIDEO CLIP)

REID: Outlandish.

(END VIDEO CLIP)

MADDOW: Outlandish.

So in order that you may fully appreciate the substance of Harry Reid
inveighing against the Republican jobs, jobs, job-abortion agenda today,
Kent Jones has translated it for us, translating Harry Reid`s angry-looking
words into actually angry-sounding words.

KENT JONES: I have been very patient working with my Republican
colleagues, in allowing amendments, that are relative amendments on issues,
and sometimes we even do non-relevant amendments. But, really, on flood
insurance?!

The big pushers of this bill are Republican senators, veteran
Republican senators! And they better work on their side of the aisle --
because I am not going to put up with that on flood insurance!

I can be condemned by outside forces. My friends can say, let them
have a vote on it! There will not be a vote on that in flood insurance.
We will either do flood insurance with the amendments dealing with flood
insurance, or we won`t do it!

MADDOW: Harry Reid`s "rant" against the Republican effort to attach
an anti-abortion personhood amendment to the flood insurance bill, as
translated for our non-sleeping viewer by the great Kent Jones. Kent, I
have never loved you more than I love you in this moment and I have loved
you for a long time.

JONES: I`m still pretty angry.

MADDOW: I have a cough drop if you need it.

JONES: I will.

MADDOW: All right. A quick programming note before you go. Tomorrow
night, our guest for the interview is going to be Massachusetts Democratic
Senate candidate Elizabeth Warren. Obviously, we would love to have her
opponent, Republican Senator Scott Brown on this show as well, but he never
returns our phone calls.

We are always excited to have Elizabeth Warren here.

Scott Brown, call me, anytime.

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

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

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


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