updated 8/16/2012 10:26:03 AM ET 2012-08-16T14:26:03

THE LAST WORD WITH LAWRENCE O`DONNELL
August 15, 2012

Guests: Chris Van Hollen, Wendell Potter, David Cay Johnston, Sam Stein

LAWRENCE O`DONNELL, HOST: And on this day in 2012, American politics
came to this. The most important political interview of the day was done
on "Entertainment Tonight."

(BEGIN VIDEOTAPE)

CHUCK TODD, NBC NEWS: The Romney campaign is going on offense now, on
Medicare.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The president`s cuts --

REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL CANDIDATE: Seven hundred
sixteen billion dollars.

ROMNEY: -- $716 billion.

RYAN: -- from the Medicare program to pay for Obamacare.

TODD: They leave out the fact that they`re for the same cuts.

UNIDENTIFIED MALE: The campaign of big ideas has degenerated into
sniping attacks.

KAREN FINNEY, MSNBC POLITICAL ANALYST: The issue of tax returns.

TODD: The tax return issue.

ANN ROMNEY, MITT ROMNEY`S WIFE: The more we release, the more we get
attacked.

ANDREA MITCHELL, NBC NEWS: Ann Romney --

ANN ROMNEY: There`s going to be no more tax releases.

MITCHELL: No more tax releases, period. Will that put an end to it?

MITT ROMNEY: John Kerry never released the returns of his wife.

TERESA HEINZ KERRY: You said something I didn`t say. Now, shove it.

MITT ROMNEY: Mr. President, take your campaign of division and anger
and hate back to Chicago.

TODD: Here we go again.

ROMNEY: This is what an angry and desperate presidency looks like.

UNIDENTIFIED MALE: Getting downright nasty.

CHRIS MATTHEWS, MSNBC HOST: Cotillion of nastiness.

ALEX WAGNER, MSNBC HOST: The strategy of demonization.

MITT ROMNEY: His campaign and his surrogates have made wild and
reckless accusations.

MATTHEWS: Is this the same Mitt Romney who eviscerated his primary
opponents?

UNIDENTIFIED MALE: People don`t like whiners in campaigns.

MITT ROMNEY: The president`s campaign is all about division and
attack and hatred.

UNIDENTIFIED MALE: People don`t like whiners in campaign.

MITT ROMNEY: This ain`t the bean bag.

TODD: It`s not full outrage. It feels like there`s true hatred.

UNIDENTIFIED MALE: It could escalate into nuclear and war.

TODD: Chicago and Boston, they`re going to have a war.

MITT ROMNEY: Reckless accusations that disgrace the office of the
presidency.

MATTHEWS: Some heated rhetoric.

UNIDENTIFIED FEMALE: Much tougher rhetoric.

MITT ROMNEY: This is what an angry and desperate presidency looks
like.

UNIDENTIFIED MALE: It`s really escalating.

UNIDENTIFIED MALE: Boy, that escalated quickly. I mean, that really
got out of hand fast.

(END VIDEOTAPE)

O`DONNELL: With 83 days until the presidential election, Mitt
Romney`s new campaign strategy is to launch personal attacks on President
Obama to distance himself from his new vice presidential candidate`s budget
plan.

President Obama responded to Romney`s attacks today in Iowa when he
sat for an interview with -- come on, who else -- it`s Iowa, it`s an
important state, an important day in the presidential election, Nancy
O`Dell of "Entertainment Tonight".

(BEGIN VIDEO CLIP)

NANCY O`DELL, ENTERTAINMENT TONIGHT: Romney just accused you of
running a campaign of hate and anger. How do you react to that? How do
you respond to that?

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Well, Nancy, you`ve
been on the campaign trail with me for a day and a half, and this is pretty
typical of what we do. We`re going around the country, talking about, how
do we put people back to work or how do we lower our debt in a responsible
way, and I don`t think you or anybody who`s been watching me campaign would
suggest that in any way, you know, we have, you know, tried to divide the
country. We`ve always tried to bring the country together.

(END VIDEO CLIP)

O`DONNELL: OK. Full disclosure. I`ve never done a day and a half on
the campaign trail with President Obama, so Nancy O`Dell is way ahead of me
in terms of campaign coverage out there in the field.

Today, Mitt Romney, who has the worst mid-summer personal favorability
rating of any presidential nominee since Walter Mondale, who, by the way,
lost 49 states, Mitt Romney said this.

(BEGIN VIDEO CLIP)

ROMNEY: The president`s campaign is all about division and attack and
hatred. If you look at the ads that have been described and the
divisiveness based upon income, age, ethnicity, and so forth, it`s designed
to bring a sense of enmity and jealousy and anger. These personal attacks
I think are demeaning to the office or the White House.

(END VIDEO CLIP)

O`DONNELL: But Mitt Romney had a whole different take on the whole
negative ad thing during the Republican primary.

(BEGIN VIDEO CLIP)

ROMNEY: We aren`t running any negative ads at that point, but we may.
This is, after all, politics. There`s no whining in politics.

(END VIDEO CLIP)

O`DONNELL: Today, Mitt Romney continued to whine and continued to
distance himself from Paul Ryan`s budget plan.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Are you running on his budget or your budget?

ROMNEY: Well, my budget, of course. I`m the one running for
president.

UNIDENTIFIED MALE: Can you tell us, then, how your budget is
different, governor?

ROMNEY: Well, we`re very much on the same page. I get us to a
balanced budget faster than the plan he originally put forward. My tax
rate is 28 percent, that`s my highest. His is 25. I mean, there are some
differences, but they`re very similar.

(END VIDEO CLIP)

O`DONNELL: The president took some shots at the Romney/Ryan plan
today in Iowa.

(BEGIN VIDEO CLIP)

OBAMA: They have been the trying to sell this trickle-down snake oil
before. And guess what? It didn`t work then, it won`t work now. It`s not
a plan to create jobs. It`s not a plan to reduce the deficit. It`s not a
plan to move the economy forward.

And, you know, secretly, I think they know this. I think they know
their plan`s not very popular. You can tell that, because they`re being
pretty dishonest about my plan.

(END VIDEO CLIP)

O`DONNELL: Paul Ryan has not increased Mitt Romney`s poll numbers,
according to the Gallup daily tracking. In the four days prior to Mitt
Romney`s V.P. announcement, Romney polled at 46 percent, President Obama at
45 percent. In the four days after the V.P. announcement, Mitt Romney
pulled at a statistically insignificant one point higher. That`s in the
margin of error, and the president remained at 45 percent.

Joining me now, MSNBC`s Joy Reid and Richard Wolffe, who I believe has
spent more than a day and a half. You`re ahead of Nancy --

RICHARD WOLFFE, MSNBC POLITICAL ANALYST: Two and a half days.

O`DONNELL: You`re ahead of Nancy O`Dell.

WOLFFE: Only in that regard. She beats me in the gravitas.

O`DONNELL: Richard, in the back and forth, where the dialogue is
right now is not where the Romney campaign expected it to be --

WOLFFE: No.

O`DONNELL: -- midweek after this V.P. announcement. Where did they
think they were going to be at this point?

WOLFFE: Well, they thought the excitement would be overwhelming, that
they would fire up the base to the point where they could lead this
conversation, and it would be a conversation connecting deficit cutting
with creating jobs. And that`s obviously not where we`re at. Because
we`ve never got beyond the scary parts of the Ryan budget, and the fact
that actually it doesn`t really balance the budget, at least not for 30
years or more.

So, you know, there`s a problem here with choosing someone who isn`t
clearly ready to step up to the number one job. That`s really the only
test for a V.P. pick. Can you imagine them as president? And instead, you
get this back and the forth.

You know, it`s not enough just to say the other side is being
negative. If you want to unite the country, you`ve got to do something
that hope and change stuff. And Mitt Romney seems congenitally incapable
of inspiring people.

O`DONNELL: Joy, I get the feeling that they just expected rave
reviews from conservatives, and Republicans, anyway, on the Romney -- on
the Ryan pick. And that they would then go in to carefully selected
interviews, FOX News, places like that, where it would just be very easy.
They clearly did not anticipate the degree of difficulty in dealing with
the difference between the Ryan plan, addition one, Ryan plan, addition
two, which a lot of people don`t even know happened, and then Romney plan
whatever that is.

JOY REID, THE GRIO: Right. And I think they also got taken in just a
little bit by kind of the Beltway media`s kind of enchantment with Paul
Ryan.

O`DONNELL: Yes.

REID: And Paul Ryan gets called serious, and he`s so thoughtful. And
I think they might have thought that the political press would give them
more of a break than they`ve gotten.

And I don`t understand how they possibly underestimated the power of
the Medicare argument, but they clearly did. They clearly weren`t ready
for the blowback and the immediate questions and demands for Mitt Romney to
explain to the American people, if there are any differences between Ryan`s
plan to turn Medicare into a voucher program and Romney`s.

O`DONNELL: Richard, the thought was, in the Romney campaign, who
better to handle discussion of the Ryan plan than Paul Ryan.

WOLFFE: Right.

O`DONNELL: It turns out, there wouldn`t have been as much discussion
of the Ryan plan if you picked Portman or Pawlenty or someone else who
wasn`t associated with it.

WOLFFE: Right. I do think you`ve got to ask yourself, they knew all
of this, right? They knew they`d be discussing the Ryan budget, but they
obviously thought the risks were worth it. Why would you take on that risk
if you were in a position of strength? They`re looking at the same
research that everyone else is. They`re look at the dramatic decline in
Romney`s favorability rating, the lack of confidence in him as a leader,
and they need to change the dynamic.

Really, this is a redux of the Sarah Palin pick. And that didn`t work
then, it`s not working now. But, of course, they thought they could avoid
the Sarah Palin trap, because here was someone who could do the policy
wonkish stuff that the think tanks love, which is where Paul Ryan came
from.

That`s not going to change the dynamic. You`ve got to win this, in
your own right, as the top of the ticket, and this doesn`t answer the
questions about Mitt Romney. What is his budget? Where are his tax
returns?

There`s still this giant question mark that hangs over all of these
questions, where he says, oh, it`s not my -- it`s not his budget and I`m
not going to tell you what the answer is. You`re just going to have to
figure it out. That`s just not good enough.

O`DONNELL: Let`s listen to the way that Joe Biden handled the day
after this thing he said yesterday, where he used the notion that the
Romney people wanted to put you back in chains. He went off-script, ad-
libbed a little something.

Everyone said, hey, wait, that rhetoric`s going way too far. A lot of
crazy, fake outrage about it. Let`s see how Biden handled it today.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: I know I am sometimes
criticized for saying exactly what I mean. It`s not going to -- it`s not
going to change. But let me tell you something. Barack Obama does exactly
what he says he`s going to do. You don`t have to worry about Barack Obama
changing positions midstream.

(END VIDEO CLIP)

O`DONNELL: Joy, as much as Biden may have misspoke when he used that
phrase, the not backing down, the refusal of any of this crazy Romney talk
about apologizing and all of that stuff, I think is a message to the Romney
campaign, we are going to hit you as hard as we can. We may not have meant
to use that word, but we`re not going to back down from it.

REID: And I think it`s a message to Democrats. Democrats, I think in
the base, particularly, are not accustomed to Democrats fighting this hard
and being this kind of forthright and saying, look, we`re not going to back
down. We`re going to play the same as the Republicans do. We don`t back
down. We`re not going to back down, we`re not going to apologize, we`re
going to double down on attacking Mitt Romney.

Their job in the Obama campaign is to keep Mitt Romney`s favorables as
low as they are now. And you can tell that the Romney campaign`s response
is to try to turn around and bring Barack Obama`s favorables -- you know,
his favorables down to where Mitt Romney`s are.

So that`s the game these both are playing. Clearly, the Obama
campaign has been more successful. And I think, ironically, in part,
because Mitt Romney was such a rough, and I have to say, nasty campaigner
in the primaries.

We haven`t seen nice Mitt Romney. Mitt Romney played it really tough
in the primaries, and now he`s trying to say the other guy is mean and
nasty? It just doesn`t work.

O`DONNELL: Joy Reid and Richard Wolffe, thank you both for joining me
tonight.

WOLFFE: Thank you.

O`DONNELL: Coming up, the Ryan/Romney Medicare mess gets messier.
Wendell Potter will join us on that.

And Paul Ryan has failed to drown out talk of the Romney secret tax
returns. We have video of Ann Romney`s latest interview on the subject.
And now we know what Mrs. Romney looks like when she`s really angry.

And in the "Rewrite," more on Paul Ryan`s recent betrayal of his
former love, Ayn Rand.

(COMMERCIAL BREAK)

O`DONNELL: Paul Ryan is failing miserably at his job of diverting
attention away from Mitt Romney`s secret tax returns, which is making
Romney very upset. I mean, Ann Romney. The angry Mrs. Romney is coming
up.

And in the "Rewrite" tonight, episode three of Paul Ryan`s
relationship and his lying about his relationship with the Russian atheist
philosopher who he says shaped his thinking. He`s now pretending that he
didn`t know she was an atheist. Now, I, for one, really don`t think
there`s anything wrong with being Russian or an atheist, but Republicans
sure do.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This week, you`ve been criticizing the president
for cuts made to -- that the health care makes to Medicare. But
Congressman Ryan`s budget makes those same cuts to Medicare. How do you
square that?

ROMNEY: Well, first of all, Congressman Ryan has joined my campaign.
And his campaign is my campaign now. And we`re on exactly the same page.
And my campaign has made it very clear, the president`s cuts of $716
billion to Medicare, those can cuts are going to be restored if I become
president and Paul Ryan becomes vice president.

(END VIDEO CLIP)

O`DONNELL: That was Mitt Romney on CBS this morning, trying to avoid
talking about his running mate`s Medicare plan.

But as Romney tries to avoid it, Speaker John Boehner is embracing it.
On a conference call last night, Boehner encouraged House Republicans to
actively defend Paul Ryan`s Medicare plan, saying, "The best defense on
Medicare is a good offense, and Paul Ryan gives us the ability to play
offense."

Today, for the first time since Mitt Romney chose Paul Ryan as his
vice presidential candidate, President Obama took the time to explain,
piece by piece, the difference between his Medicare plan and Mitt Romney`s.

(BEGIN VIDEO CLIP)

OBAMA: My plan`s already extended Medicare by nearly a decade. Their
plan ends Medicare as we know it. My plan reduces the costs of Medicare by
cracking down on fraud and waste and subsidies to insurance companies.
Their plan makes seniors pay more so they can give another tax cut to
millionaires and billionaires.

That`s the difference between our plans on Medicare. That`s an
example of the choice in this election, and that is why I`m running for a
second term as president of the United States of America.

(END VIDEO CLIP)

O`DONNELL: Joining me now, Wendell Potter, former executive of Cigna,
one of the nation`s largest health insurance companies, and Democratic
Maryland congressman, Chris Van Hollen.

Let`s listen to Paul Ryan speaking tonight at his alma mater
University of Miami -- what is it, Miami University of Ohio, about
Medicare. Let`s listen to that.

(BEGIN VIDEO CLIP)

RYAN: The president, I`m told, is talking about Medicare today. We
want this debate.

(APPLAUSE)

RYAN: We need this debate. And we will win this debate.

What I don`t think he`ll be telling people is that the president took
$716 billion from the Medicare program, he raided it to pay for Obamacare.

(END VIDEO CLIP)

O`DONNELL: Wendell Potter, what do you think Paul Ryan won`t be
telling people about the Ryan Medicare plan?

WENDELL POTTER, AUTHOR, "DEADLY SIN": Well, you know, I did agree
with him that we do need to have a debate about this. But we need to have
a debate about what`s actually in his proposal, which would be to privatize
Medicare, to hand it over to the private insurance companies, and the CEOs
of those companies are among the millionaires who would benefit from this.
And at the expense of Medicare beneficiaries, who would be seeing that more
and more of the cost of health care would be shifted to them. And that`s
what Paul Ryan will not want us to know about.

O`DONNELL: Chris Van Hollen, I think most people watching this show
understand the difference between what President Obama did in the
affordable care act, in terms of trying to keep Medicare more solvent and
find some efficiencies in it. Democrats have done that with Medicare
throughout the history of the program. Bill Clinton pulled about $200
billion in savings out of Medicare in his very first year in office, so the
Democrats know how to do this.

But your challenge, politically, is explaining to voters who say to
you, wait a minute, what are you complaining about Paul Ryan and Romney
for? They say President Obama cut $700 billion from Medicare.

What is your clear, quick, effective political response to that in
town halls?

REP. CHRIS VAN HOLLEN (D), MARYLAND: Well, the quick and effective
response is, we made savings in Medicare by cutting overpayments to
insurance companies. The Ryan/Romney plan saves -- makes cuts to Medicare
by cutting Medicare beneficiaries, some immediately.

So for -- in the immediate term, if you have high prescription drug
costs, you will see your costs rise. Not 10 years from now, now. If you
get preventative health care services under Medicare, under the Romney/Ryan
plan, you will see your costs rise now.

And as Wendell said, when they phase in this new plan, the Romney/Ryan
approach doesn`t reduce costs to the program overall, as the president`s
plan does. The president does it, as I said, by cutting back on
overpayments to insurance companies.

Romney/Ryan does it be by simply transferring those costs on to
seniors and in doing so, they give seniors a much-worse deal than members
of Congress give themselves under the members of Congress insurance plan,
because members of Congress have a plan that makes sure that as health care
costs go up, they continue to get an equal proportion of support. It`s a
fixed percentage. Whereas the Romney/Ryan plan for seniors, actually saves
Medicare money by making sure that the voucher that seniors get does not
keep pace with the rising costs.

So, under their plan, seniors have to eat that cost while members of
Congress are protected. And I think when you boil it down in that personal
way, that what they`re offering to seniors is something that they don`t
have for themselves, and that they`ve got a much better plan, I do think
that can cuts to the quick.

O`DONNELL: Wendell Potter, you`ve always been great about showing us
exactly how to health insurance companies you used to work for benefit from
different kinds of legislation in their area. What would they like about
the Paul Ryan plan?

POTTER: Well, they would like it that they would have this the
guaranteed stream of income, that they don`t have now. It would be
billions of dollars that would go straight to them, because the way the
Ryan plan is structured, those premium support payments would go straight
to the insurance companies.

And also, they, as the congressman said, the premium support would not
keep up with inflation and with medical inflation. So people would be
paying a lot more out of their own pockets, which is a continuation of what
insurance companies are having us -- we`re experiencing in the private
market. They`re shifting more and more of the cost of care to us.

Keep in mind that Medicare beneficiaries only make $22,800 a year.
They can`t afford that.

O`DONNELL: Yes, and the increase costs I`ve seen are about $6,500 a
year of a typical beneficiary.

Quickly, congressman, before we go.

VAN HOLLEN: Well, that`s right, and of course they want to provide
tax breaks for people like Mitt Romney and off-load additional costs on
seniors in Medicare.

But there`s another really important point where the insurance
companies benefit, and that`s this: when we reduce the overpayments to the
private insurance companies in Medicare, that reduces the cost to the
overall program and saves seniors money. Romney wants to put those
overpayments back in. Medicare beneficiaries have to share in the cost,
through premiums and co-pays. So he`s essentially saying seniors should
pay higher premiums to restore the overpayments to private insurance
companies and Medicare.

And no one has really talked about this issue. It`s another immediate
effect, about $300 on average, per year, if you do the Romney approach.

O`DONNELL: Thanks for pointing that one out, Congressman.
Congressman Chris Van Hollen and Wendell Potter, thank you both for joining
me tonight.

POTTER: Thank you.

VAN HOLLEN: Thank you.

O`DONNELL: Coming up, Ann Romney`s flash of anger at NBC`s Natalie
Morales for daring to ask her about the Romney secret tax returns. It only
makes you wonder, once again, what the Romneys must be hiding in those tax
returns.

And I think it could be, it really could be, a felony. Seriously.

And in the "Rewrite" tonight, Paul Ryan, Ayn Rand, and Johnny Carson.
We`ll show you the video Paul Ryan`s former love, Ayn Rand, when she did
"The Tonight Show" with Johnny, when she did it right here in this building
at 30 Rock.

(COMMERCIAL BREAK)

O`DONNELL: You want to see Ann Romney really, really angry? Just ask
her about the Romney`s tax returns. Wait until you see what happened when
Natalie Morales did exactly that. That video is coming up next.

(COMMERCIAL BREAK)

O`DONNELL: In the Spotlight tonight, the angry Mrs. Romney. Paul
Ryan continues to fail totally at his primary job of making journalists
forget about Mitt Romney`s secret tax returns. Natalie Morales did not
forget about the tax returns when she sat down with Ann Romney in an
interview for "Rock Center" with Brian Williams that will air tomorrow
night.

And Mrs. Romney didn`t like that one bit.

(BEGIN VIDEO CLIP)

NATALIE MORALES, NBC NEWS: I know it`s not a question that is
welcomed, but must be asked, because a lot of people still are asking, why
not be transparent and release more than the 2010 and the estimates for
2011 --

ANN ROMNEY, WIFE OF MITT ROMNEY: Have you seen how we`re attacked?
Have you seen what`s happened?

MORALES: It`s been in the press quite a bit. Now, are you angry that
it`s been in the press? Should you not be questioned about your finances?

A. ROMNEY: We have been very transparent to what`s legally required
of us. But the more we release, the more we get attacked, the more we get
questioned, the more we get pushed. And so we have done what`s legally
required and there`s going to be no more -- there`s going to be no more tax
releases given.

And there`s a reason for that. And that`s because of how -- what
happens as soon as we release anything. Mitt`s financial disclosures, when
he was governor, are huge. If people want to really look and see, any
question they have. The other thing they have to understand is that Mitt
is as honest -- his integrity is just golden.

(END VIDEO CLIP)

O`DONNELL: Well, no, Mrs. Romney. That`s the problem. His integrity
is not just golden. He is not honest. It is hard to think of a nominee
for president who has done more public lying on his way to that nomination
than Mitt Romney. He lies about himself. He lies about what he has said.
He lies about positions he has taken, and then contradicted.

He lies about his opponents. He has lied relentlessly about the
president. He has lied about what the president has said. And so he has
left America with absolutely no reason to think that lying about his money
and lying about his taxes and even lying to the Internal Revenue Service
about his money is somehow beneath Mitt Romney.

The angry Mrs. Romney wasn`t finished.

(BEGIN VIDEO CLIP)

A. ROMNEY: We pay our taxes.

(END VIDEO CLIP)

O`DONNELL: Notice -- and this is very important, notice that she
said, "we pay our taxes." She did not say, we pay our income taxes, our
federal income taxes. Of course they pay property taxes on their mansions.
Of course they pay sales taxes on their cars. Of course she pays gasoline
taxes when she fills up her Cadillacs with gas.

What we don`t know is whether Mr. and Mrs. Romney pay any income taxes
at all. Senator Harry Reid says he has reason to believe that they haven`t
paid income taxes for 10 years. Mitt Romney, like his wife, is very
careful to never, ever, ever use the phrase "income taxes" when he talks
about them paying taxes.

The Romneys are so careful not to use the phrase "income taxes," so
lawyerly coached on that, that they have now entered a zone of reasonable
suspicion that their accounting shenanigans have really left them paying
nothing in federal income taxes, nothing in the tax returns that Mrs.
Romney just angrily promised to continue to hide.

(BEGIN VIDEO CLIP)

A. ROMNEY: We pay our taxes. We are absolutely -- beyond paying our
taxes, we also give 10 percent of our income to charity.

(END VIDEO CLIP)

O`DONNELL: I`m sorry, but I don`t believe you, Mrs. Romney. I don`t
believe you give 10 percent of your income to charity. What income? Your
gross income? Your net income? As defined by you or Mitt or your adjusted
gross income? I don`t believe you give 10 percent of your income to
charity. And the only way you can prove you give 10 percent of your income
to charity is by releasing your tax returns.

I know that the Mormon Church expects you to give 10 percent of your
income, but I have no reason to believe that you do. And how embarrassing
would it be for you and Mitt to release tax returns that revealed that you
did not consistently keep your promise to the Mormon Church of donating 10
percent of your income.

Is that one of the pieces of ammunition that you`re so afraid that we
will get if you release your secret tax returns?

(BEGIN VIDEO CLIP)

A. ROMNEY: The only reason we don`t disclose anymore is, you know,
we`d just become a bigger target.

MORALES: So it`s because you`ll just continue to face more questions?

A. ROMNEY: That -- well, it will just give them more ammunition.

(END VIDEO CLIP)

O`DONNELL: Ammunition. Ann Romney is saying right there that she
knows there are things in the Romney`s tax returns that are ammunition
against them. There are things in their tax returns that are bad, that are
politically disastrous, that America will not accept as reasonable. She
calls it ammunition. Ammunition is what comes out of a smoking gun. And
the Romneys have decided that that smoking gun is so dangerous to them that
they would rather go through another 83 days of questions about hiding
their tax returns.

They`d rather do that then reveal their tax returns, because of that
smoking gun. They have clearly made that calculation. Releasing the tax
returns would be more damaging to them than hiding the tax returns. And
hiding the tax returns has been very, very damaging and will continue to be
very damaging to them.

But the Romneys are absolutely resolved about this.

(BEGIN VIDEO CLIP)

A. ROMNEY: There`s going to be no more tax releases given.

(END VIDEO CLIP)

O`DONNELL: That`s it. That`s final. The Romneys have spoken. It
continues to be perfectly reasonable and becomes increasingly reasonable to
now suspect that the Romney tax returns contain the political disaster, the
political ammunition of a tax felony in them.

He is one of the precious few Americans who hold Swiss bank accounts
and other foreign bank accounts. So many of them were violating the law by
not reporting those bank accounts that the government, the IRS, gave up and
they came up with a special amnesty program to allow them to finally get
straight with the government and report those accounts that they were
illegally hiding for years without being subject to felony charges.

They created a tax amnesty program for people like Mitt Romney with
accounts like Mitt Romney. Mitt Romney is exactly the kind of person,
exactly the kind of foreign bank account manipulator, exactly the kind of
tax filer who has taken advantage of that amnesty program and avoided
felony charges.

That process, if he did that, would show up on precisely the tax
returns he is hiding. The years of tax returns that he is hiding would
have that amnesty in there, if he used that amnesty to avoid felony
charges. It would show him, in effect, confessing to a felony and then
being granted amnesty for that felony.

Mitt Romney`s candidacy could not survive the revelation of that tax
felony, not for one day. He would be denied the nomination at the
convention if he released tax returns now showing us such a felony. The
Romneys know that. The Romneys are absolutely right to hide their tax
returns, if there is a felony that would be revealed in those tax returns,
even one they got amnesty for.

And they may be right politically to hide those tax returns if Harry
Reid is right, and they have paid zero in federal income tax for 10 years.
If what Ann Romney calls the ammunition in their tax returns is that bad,
then they are politically absolutely right that they must -- they must
continue to hide those tax returns in order to continue the viability of
their presidential campaign.

(BEGIN VIDEO CLIP)

A. ROMNEY: There`s nothing we`re hiding. You know, we`ve had a blind
trust for how many years. We don`t even know what`s in there. It`s been
managed by a blind trust since before Mitt was governor.

(END VIDEO CLIP)

O`DONNELL: Oh, Mrs. Romney, you remember what Mitt taught you about
blind trusts, don`t you?

(BEGIN VIDEO CLIP)

ROMNEY: The blind trust is an age-old ruse, if you will, which is to
say, you can always tell the blind trust what it can and cannot do. You
give a blind trust rules.

(END VIDEO CLIP)

O`DONNELL: Joining me now is David Cay Johnston, Pulitzer Prize-
winning reporter, a tax columnist for "Reuters" and a professor at Syracuse
Law School.

David, on the blind trust, those are, to my eye, the phoniest things
that politicians ever try to hide behind.

DAVID CAY JOHNSTON, SYRACUSE UNIVERSITY LAW SCHOOL: Well, they are.
And notice how she slips off the question of the tax returns by going to
the blind trust. But what I see in this, Lawrence, is a preemptive
defense. If those tax returns come out, the return -- the response you`re
going to get from the Romneys is, the blind trust did it. We didn`t do it,
the blind trust did it.

O`DONNELL: Ah, I see it. I see how they would try to play that. I
don`t think it would work, David. I don`t think -- if -- I believe now
that we`re at the point in this story where the Romneys know there is
something in those tax returns that is so politically explosive, they
couldn`t survive it. I mean, they take political hits. They know how to
take political hits.

They`ve made a calculation. Those tax returns will destroy us.

JOHNSTON: Yes. I agree with you about that. I think that`s very
clear. I`m also struck by Ann Romney`s taking the position that we have
met the minimum standard. When I was a Mormon elders quorum president, I
taught people Doctrine and Convenience 5826. "He who must be commanded in
all things is a slothful and not a wise servant."

And I was instructed to teach that that applied to every aspect of
your life. You were not to do the minimum, you were to do the right. You
were to choose the right. In fact, there`s a Mormon song for little
children, "Choose the Right." Well, this is not choosing the right, by any
stretch of the imagination.

O`DONNELL: And let me just say, I see no evidence so far in anything
that the Romneys have done with their tax returns that would in any way be
a problem for them legally or otherwise, if they were not involved in a
presidential campaign, if they were not involved in a political campaign.
The point you were just making, David, is that you live to a totally
different standard there.

If he were just a regular businessman, took advantage of the amnesty,
as so many of them have done with his kinds of money, that would be no big
deal. The guy`s running for president. That changes thing.

JOHNSTON: That`s exactly right. In the case of Timothy Geithner, all
he had to do was pay the penalties as well as the taxes and interest when
he cheated, and in my view, he had met the standard of the law. In this
case, clearly the Romneys, if they were not involved in running for office,
you get an amnesty program, you can take advantage of it. But if they come
out with that is, in fact, what they did -- and we don`t know, but if that
is what they did, yeah, that`s the end of any candidacy.

O`DONNELL: David Cay Johnston, thank you very much for joining me
tonight.

Coming up in the Rewrite, the next episode in the bad romance between
Paul Ryan and Ayn Rand.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RYAN: What`s unique about what we`re -- what`s happening today in
government, in the world, in America, is it`s as if we`re living in Ayn
Rand novel right now. If Ayn Rand were here today, I think she would do a
great job in showing us just how wrong what government is doing is, not the
quantitative analysis, not the numbers, but the morality of what is wrong
with what government is doing today.

(END VIDEO CLIP)

O`DONNELL: Well, that was then, just a few years ago. In tonight`s
Rewrite, episode three of Paul Ryan`s relationship and lies about his
relationship with that woman who is not his wife. In April, we showed you
how Paul Ryan instantly turned against Ayn Rand when Catholics United
issued a statement questioning, quote, "why Ryan as a self-professed
Catholic would put the teachings of ultra-capitalist Ayn Rand, of who she
has spoken glowingly, before the teachings of Jesus and the church."

That`s when Paul Ryan, who had made reading Ayn Rand`s books mandatory
for his staff -- that`s when he started saying, quote, "I reject her
philosophy, it`s an atheist philosophy."

Here`s how he put it to Brit Hume yesterday on Fox News.

(BEGIN VIDEO CLIP)

RYAN: It`s something I completely disagree with. It`s an atheistic
philosophy.

(END VIDEO CLIP)

O`DONNELL: Here`s what he used to say about his hero.

(BEGIN VIDEO CLIP)

RYAN: I grew up on Ayn Rand. That`s what I tell people. I -- you
know, everybody does their soul searching in trying to find out who they
are and what they believe. And you learn about yourself. I grew up
reading Ayn Rand and it taught me quite a bit about who I am and what my
value systems are and what my beliefs are.

The reason I got involved in public service, by and large, if I had to
credit one thinker, one person, it would be Ayn Rand.

(END VIDEO CLIP)

O`DONNELL: In 1967, when late-night TV truly was great, the greatest
of them all, Johnny Carson dropped the jokes one night and introduced Ayn
Rand to America. Johnny did his show in those days in a studio just three
floors above me, above where I`m sitting right now. It`s where are Jimmy
Fallon does his show now.

(BEGIN VIDEO CLIP)

JOHNNY CARSON, "THE TONIGHT SHOW": Welcome, please, miss Ayn Rand.

(APPLAUSE)

AYN RAND, AUTHOR: The basic principle of objectives is that man must
be guided exclusively by reason. Reason is the faculty that identifies and
integrates the material provided by his senses. That`s the formal
definition.

That reason is man`s only tool of knowledge, his only guide to action,
and his only guide to the choice of valors.

(END VIDEO CLIP)

O`DONNELL: All of Rand`s writings, all of her books were very clear
on this. Reason is the only guide to values. Religion should have no role
in forming values in Ayn Rand`s world. Paul Ryan now claims he had no idea
he was following the teachings of an atheist, and that her philosophy was
purely atheistic.

He is, of course, lying about that. But since you can`t be a good
Republican and an atheist, Ryan is now locked into that lie. Johnny Carson
certainly understood what Ayn Rand was saying.

(BEGIN VIDEO CLIP)

CARSON: It`s a belief, which you do not believe in, I assume, the
existence of a supreme being or God or creator?

RAND: No, I do not.

(END VIDEO CLIP)

O`DONNELL: The discussion with Johnny went on for half an hour. And
Johnny`s sidekick, Ed McMahon, a distinguished graduate of Catholic
University, chimed in with this.

(BEGIN VIDEO CLIP)

ED MCMAHON, "THE TONIGHT SHOW": In our culture, it seems that
everything springs from family relationship, the little tiny individual
groups of husband, wife, child, or whatever. How does that grouping fit in
with your philosophy? In other words, how do you share --

RAND: Optionally. I don`t think that family is the necessary unit of
society.

(END VIDEO CLIP)

O`DONNELL: So doctrinaire Republican Paul Ryan has shaped his
thinking, has based his career on a Russian atheist writer who says she
doesn`t think the family is a necessary unit of society. Imagine! Imagine
if Barack Obama had been a devoted follower of a Russian atheist who
insists that the family unit is unnecessary.

Imagine what Mitt Romney would be saying about that foreign
philosophy. Imagine what the Fox News players would be saying. Fox News
will never ever, ever, ever let Fox News viewers see Paul Ryan`s favorite
philosopher saying what she just said.

How disappointed would Ayn Rand be in her formerly devoted public
disciple Paul Ryan? Well, she wouldn`t miss his devotion very much.
Because his recent betrayal just wouldn`t surprise her. Because Paul Ryan
was never true to Rand`s philosophy. Right-wing hero Ayn Rand couldn`t
stand Ronald Reagan. She urged people not to vote for Ronald Reagan and
insisted that Reagan clearly did not believe in freedom and respect for the
rights of the individual, because, among many other reasons, Reagan opposed
the right to choose abortion.

That`s right, Paul Ryan, a Republican anti-abortion fanatic, has until
very recently been publicly proclaiming his philosophical hero to be a
woman who was a relentless champion of a woman`s right to choose. And
Ryan`s pro-war stance in the Congress on every issue and every funding
issue involving the Iraq War and the Afghanistan War would have
disappointed Rand too.

Here she is telling Johnny her opinion of the American war of choice
at that time.

(BEGIN VIDEO CLIP)

RAND: But I am against the war in Vietnam, because it is a useless
and senseless war, and it does not serve any national interest.

(END VIDEO CLIP)

O`DONNELL: Ayn Rand was a much clearer and much more consistent
thinker than Paul Ryan could ever be. And she would have seen through Paul
Ryan`s phony devotion to her long before Catholics United and vice
presidential politics made him turn on her.

Ayn Rand was smart enough to know that Paul Ryan used her. Used her
to appeal to wacky conservatives who oppose every abortion and support
every war, and then delude themselves into thinking they are devoted
followers of Ayn Rand. Citing Ayn Rand was the right wing`s cheap way to
sound intellectual, trying to sound like a thinking conservative.

Ryan was using Rand to label himself that way. Paul Ryan couldn`t
have disappointed Ayn Rand, because she would have always known he was just
using her. And despite all those pretty words he said about her for years
and years, she knew he never really loved her.

(COMMERCIAL BREAK)

O`DONNELL: Just two hours after Paul Ryan was named the republican
vice presidential nominee, the National Republican Congressional Committee
sent out a directive advising candidates on how to address Ryan`s budget
plan for Medicare in their own campaigns.

"Do not say entitlement reform, privatization, every option is on the
table," the National Republican Congressional Committee said in an e-mail
memo. "Do say strengthen, secure, save, preserve, protect."

Predictably, the NRCC wrote, "Democrats are already blasting Mitt
Romney`s selection of Congressman Paul Ryan as his vice presidential
running mate. Expect your boss to get questions from reporters on how this
selection of a fellow House member impacts your race."

Joining me now is Sam Stein, political editor and White House
correspondent for the "Huffington Post."

Sam, Republicans are running away from the Ryan thing everywhere. I
want to run a quick ad from the Montana Senate race. This is the
Republican ad, Danny Rehberg`s Republican add up there. Let`s listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Rehberg refused to support a Republican budget
plan that could harm the Medicare plan that so many of Montana`s seniors
rely on. In a very partisan town, Denny Rehberg stands out and that`s good
for Montana.

(END VIDEO CLIP)

O`DONNELL: That`s about as hard as you can run away from your party.

SAM STEIN, "THE HUFFINGTON POST": Yes. I think they realize the
toxicity of this and that they don`t want to be attached to anything that
has a voucherized system to it. The alternative tack that they`re taking
is preemptively strike Obama. So you see ads today from this group 60
Plus, from a conservative health care organization that`s saying it was
actually Obama that changed and ended Medicare as we know it.

So there`s a two-pronged attack that they`re using. One is to run
away and the other one is to accuse Obama of doing exactly what they`ve
done.

O`DONNELL: And the House has actually, obviously, taken an organized
response to it. What about on the Senate side. How much worry is there on
the Senate side for Republican candidates?

STEIN: Well, I think it`s a worry across the board to the extent that
Democrats can nationalize this. I talked to Steve Israel, the Democratic
campaign chair for House races, and he says, listen, by choosing Paul Ryan,
you can nationalize the issue. You can make it a Senate and a House thing.
We think we can run on that.

So I think it applies across the board. Obviously, in certain states,
it`s more than others. In Florida, it`s going to have a big impact. Even
in Montana and Ohio, it will have a big impact, just because the have
elderly populations.

O`DONNELL: Crazy Linda McMahon in Connecticut, who would normally
support anything crazy, has said Linda McMahon will never support a budget
that cuts Medicare. She`s even running away from this.

STEIN: Yes. And listen, it`s easier to say what you won`t do than
what you would do. And I think in this case, what Paul Ryan did was he
forced a lot of people on the record. There`s only ten House Republicans
that voted against this budget. He forced a lot of people on the record
against their wishes. And now people who weren`t in Congress, like Linda
McMahon, they`re not going to jump and in endorse something that they don`t
have to. So they`re going to stay as far away as they.

O`DONNELL: We`re out of time.

END

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