updated 8/17/2012 10:56:44 AM ET 2012-08-17T14:56:44

THE LAST WORD WITH LAWRENCE O`DONNELL
August 16, 2012

Guests: Lilly Ledbetter, Irin Carmon, Howard Fineman, Ari Melber

LAWRENCE O`DONNELL, HOST: In the case of the United States of America
versus Mitt Romney and his secret tax returns, the prosecution got in
exactly one question today, and Mitt Romney made the mistake of answering
it.

(BEGIN VIDEOTAPE)

CHUCK TODD, NBC NEWS: Day six of a political fight now dominated by
one issue.

REP. PAUL RYAN (R-WI), VICE PRESIDENTIAL CANDIDATE: The president,
I`m told, is talking about Medicare today.

TODD: Medicare.

UNIDENTIFIED MALE: Medicare.

UNIDENTIFIED MALE: Medicare.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: They want to turn
Medicare into a voucher program.

RYAN: We want this debate.

OBAMA: Their plan is to end Medicare as we know it.

RYAN: We need this debate. He will win this debate.

ALEX WAGNER, MSNBC HOST: Team Romney is embarking on a new strategy.

ANDREW MITCHELL, MSNBC HOST: Mitt Romney is playing professor Romney
on Medicare.

MITCHELL: This white board.

WAGNER: A white board.

KRYSTAL BALL, MSNBC HOST: White board Medicare antics.

MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: The plan stays the same.

TAMRON HALL, MSNBC ANCHOR: He`s got numbers and you`ve got white
boards.

UNIDENTIFIED MALE: I`m good. He`s bad.

BALL: Right. He`s also out with a new attack line.

TODD: The campaign entering a whole new phase.

BALL: Slash and burn.

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

JOAN WALSH, SALON.COM: That was the nastiest campaign ever. Oh my
God!

WAGNER: Nastier than any other campaign.

UNIDENTIFIED MALE: The nasty turn.

ROMNEY: Take your campaign of division, anger and hate back to
Chicago.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: If you`re still fired
up, we will win this election.

UNIDENTIFIED MALE: The president has personal likability.

UNIDENTIFIED MALE: I don`t think there`s a hateful bone in this
president`s body.

OBAMA: Over the next three months, the other side will spend more
money than we have ever seen.

UNIDENTIFIED MALE: People still don`t know what Mitt Romney is or
what he stands for.

MICHELLE OBAMA, U.S. FIRST LADY: We all know who my husband is, don`t
we? And we all know what he stands for.

(END VIDEOTAPE)

O`DONNELL: Paul Ryan once again today failed to completely distract
media attention away from Mitt Romney`s secret tax returns. Thanks to Paul
Ryan and his plan to end Medicare, Mitt Romney actually started the day on
defense, trying to convince America that Paul Ryan is not Medicare`s worst
enemy and Romney is not Medicare`s second worst enemy.

Romney got graphic with the traveling press corps in South Carolina
about Medicare.

(BEGIN VIDEO CLIP)

ROMNEY: This is a nice spot. I know there`s effort by some people to
try and bring as much confusion to the topic of Medicare as possible. But
I want to bring as much clarity as possible. So, I prepared a small chart
here which will describe differences in our respective plans for Medicare.

It gives all of the next generation retirees the option of having
either standard care, a fee for service-type government-run Medicare or a
private Medicare plan. They get their choice.

(END VIDEO CLIP)

O`DONNELL: Romney never used the word voucher, but his desperate
Medicare defense turned out to be just a warm-up to the most important
moment in the presidential campaign today when a reporter asked hem about
his secret tax returns.

Michael Finnegan of the "Los Angeles Times" began his tax question to
Romney by reminding him of this moment.

(BEGIN VIDEO CLIP)

REPORTER: Was there ever any year you maid lower than 13.9 percent?

ROMNEY: I haven`t calculated that. I`m happy to go back and look.

(END VIDEO CLIP)

O`DONNELL: Michael Finnegan then noted that since then, Romney has
refused to answer the question of whether he had ever paid less than 14
percent in his income taxes.

(BEGIN VIDEO CLIP)

ROMNEY: When you say I`ve refused to answer the question since then,
it hasn`t been asked since then.

(END VIDEO CLIP)

O`DONNELL: Because Michael Finnegan was not miked, you can not hear
him asking these questions on the video. So I`ll just read word for word
what Michael Finnegan actually said and show you how he kept pushing Romney
as Romney tried to evade the question and how Michael Finnegan actually
tricked Romney into actually answering the question.

Question: If you and President Obama are debating what the tax rate
should be for Americans, why shouldn`t voters know what you yourself paid,
in particularly in 2008 and 2009 when many high-income Americans had
capital losses which were enough to bring their taxes to zero?

(BEGIN VIDEO CLIP)

ROMNEY: I have already described my view on --

(END VIDEO CLIP)

O`DONNELL: Question: many high-income Americans in 2008 and 2009
reported net capital losses to bring tear tax rates close to zero, so I`m
wondering why voters shouldn`t know what your tax rates were in those
years?

(BEGIN VDIEO CLIP)

ROMNEY: You know, I just have to say, given the challenges that
American faces, 23 million people out of work, Iran about to become
nuclear, one out of six Americans in poverty, the fascination with taxes I
paid I find to be very small-minded compared to the broad issues we faced.

But I did go back and look at my taxes and over the past 10 years, I
never paid less than 13 percent. I think the most recent year is 13.6
percent or something like that.

So, I paid taxes every single year. Harry Reid`s charge is totally
false. I`m sure waiting for Harry to put up who it was that told him what
he says they told him. I don`t believe it for a minute by the way.

But every year, I paid at least 13 percent. And if you add, in
addition, the amount that goes to charity, the number gets well above 20
percent.

(END VIDEO CLIP)

O`DONNELL: No, no, no, Mitt, you don`t get to add the amount you give
to charity to the amount you pay in taxes when answering the question how
much do you pay in income taxes. None of us get to do that. In fact, the
amount we give to charity reduces how much we pay in income taxes.

Now, if the Romneys are intent on never releasing their tax returns as
Mrs. Romney angrily demonstrated here last night, then it is a big
strategic mistake to give any answers to questions about what is in those
tax returns.

And, Mitt, if you`re going to stone wall, you`ve got to stone wall.
You can`t open the door just a little bit and say I`ve never paid less than
13 percent, because that`s going to make more questions come out about the
details in your secret tax returns. You don`t have to go all the way back
to Nixon to learn how to stone wall with the press when you have something
big to hide like your tax returns.

Just request the angry Mrs. Romney how to do it.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I know it`s not a question that is welcomed but
must be asked because a lot of people are asking, why not be transparent
and release more than 2010 and the estimates for 2011.

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

UNIDENTIFIED FEMALE: It`s been in the press quite a bit. Now, are
you angry that it`s been in the press? I mean, should you not be
questioned about your finances?

ANN 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. 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.

UNIDENTIFIED FEMALE: It`s because you`ll continue to face more
questions?

ANN ROMNEY: It will just give them more ammunition.

(END VIDEO CLIP)

O`DONNELL: I know it ain`t pretty, Mitt, but that`s how you stone
wall. And yes, she shouldn`t have used the word ammunition since that`s
what comes out of smoking guns and your tax returns really are the new big
smoking guns of this campaign, but she didn`t make the stupid amateur
mistake you did by mentioning Harry Reid`s accusation that you`ve paid no
income taxes at all for many years. At least Ann had the good sense not to
remind people about that.

Harry Reid issued this statement today after Mitt Romney`s unprovable
claim that even if true is embarrassing enough that he hasn`t paid less
than 13 percent in income taxes in the last 10 years.

"We`ll believe it when we see it. Until Mitt Romney releases his tax
returns, Americans will continue to wonder what he`s hiding. Romney seems
to think he plays by a different set of rules than every other presidential
candidate in the last 30 years, all of whom live up to this standard set by
Mitt Romney`s father and release their tax returns."

The Obama campaign released this statement. "There is substantial
reason to doubt his claim. We have a simple message for him. Prove it.
Even though he`s invested in foreign tax havens, offshore shell
corporations and a Swiss bank account, he`s still asking the American
people to trust him. However, given Mitt Romney`s secrecy about his
returns, coupled with the revelations in just the one return we have seen
to date, and the inconsistencies between this one return and his other
financial disclosures, he has forfeited the right to have us take him at
his word."

The inconsistencies the Obama campaign is talking about there is that
in the one partial -- and it`s only a partial Romney tax return that we
have seen -- that revealed $100 million trust, nine overseas holdings and
12 partnership interests, including the Swiss bank account that were never
reported on any of the other financial disclosure forms that Romney had to
submit as a two-time presidential candidate and as governor of
Massachusetts.

Joining me now are Karen Finney and Chris Hayes.

And I want to go to a key word that I brought up last night in this
discussion. And that is income. Income taxes.

Neither Mr. nor Mrs. Romney ever, Chris, ever used the phase income
taxes when they talk about paying their taxes. So yes, they paid sales
taxes on the Cadillacs.

CHRIS HAYES, MSNBC HOST: I`m sure they pay a lot of property tax in
La Jolla. I`m sure they`re paying --

O`DONNELL: They`re carefully avoiding that word, income taxes.

HAYES: Yes. And it jumps out at you every time they say it, but they
don`t qualify it as income taxes. It leaves them the wiggle room to deny
the charge and say we paid because obviously, if you take people who have a
lot of money and you start adding in state tax and sales tax, Lord knows
how much sales tax you pay and property taxes you pay, you can start to get
the number up higher and higher.

But that`s the big question, is income taxes.

The other thing about this is so remarkable. We`re at the point where
are we supposed to stand up and applaud 13 percent? Oh, my God, thank the
Lord, good sir, that you have paid 13 percent over the last 10 years.
That`s a remarkably, remarkably low number. He`s just saying it casually.
Don`t worry, I`m paying above 13 percent.

KAREN FINNEY, MSNBC POLITICAL ANALYST: An I love the new part of the
talking point is legal. We did it legally. Nobody is talking about
whether or not it was illegal, necessarily.

O`DONNELL: I am.

FINNEY: You are.

O`DONNELL: I strongly suspect there`s a tax felony in his tax
returns.

FINNEY: But most of --

O`DONNELL: He did not disclose -- the one thing he did not disclose
with the return he did disclose was the document about reporting foreign
accounts. He specifically withheld that. That is the area in which he is
at this point, I think it`s fair, not to completely assume, but very
strongly suspect that he is susceptible to a federal felony charge on not
having reported his foreign accounts, and then he sought and obtained an
amnesty, which these returns would show, because most people with his kinds
of accounts were lying about them to the federal government. And most of
them, the IRS had virtually given up on them.

FINNEY: Unless he`s got very good tax lawyers, so that now if you saw
it, you wouldn`t like it, but it`s technically legal.

O`DONNELL: He legally sought an amnesty for criminals like him that
was set up specifically for tax criminals like him.

HAYES: Well, I think -- what this speaks to, I like getting into the
weeds of policy generally, and even I find myself really suffering through
tax law. I mean, it is an incredibly arcane area of law. It`s arcane on
purpose. And that complexity and opaqueness benefits the people who have
the most money and benefits the people that have the most resources to use
it.

And what you`re seeing here is that the window this gives you on the
tax returns of the top filers is an extremely ugly picture. And whether or
not there`s things that are legal, illegal, whether he sot the amnesty or
not, the picture that it shows you and the picture that 10 years show you,
they know full well, they want to say this is a personal attack on me.

No, no, no, no. This is a symbol of how the system currently works.

FINNEY: But that`s also part of what I find so outrageous. You know,
Michael Finnegan asked him a very fair question. You see what everybody
else`s tax rates are. You see their taxes. Why can`t we see your taxes?

That`s so small mind.

It`s small minded? How dare you to say that something that 63 percent
of the American people say you should show your tax rates and your tax
records were being small minded? It`s not small minded. It`s a fair
question.

O`DONNELL: And Romney`s father didn`t think it was small minded. Is
it small minded to take a $77,000 tax deduction for your dancing horse,
Mrs. Romney, on the one tax return that we`ve seen?

HAYES: Right.

O`DONNELL: They couldn`t afford to get a horse into the Olympics
without the tax deduction?

HAYES: I can`t come up with the proper characterization for the
existence of the dressage. The whole story -- if you were going to have
say let`s come up with the worst caricature of an out-of-out plutocrat
who`s dodging taxes, you`d come up with a dancing horse that also is a tax
write-off.

O`DONNELL: You have until Saturday morning to come up with that.

Chris Hayes and Karen Finney, thank you both very much for joining me.

Coming up, Paul Ryan`s first week on the vice presidential campaign
trail could not have gone much worse. We`ll review the Ryan-Romney first
week failure. And in the "Rewrite", Rush Limbaugh is attacking, and I
mean, attacking, the presidential debate moderators before they`ve asked a
single question. He`s trying to force them to go easy on Mitt Romney, and
he`s actually using a strategy that has worked before.

(COMMERCIAL BREAK)

O`DONNELL: Paul Ryan has done everything he can to make the gender
gap in polling even worse for Mitt Romney. Coming up: how Paul Ryan will
lose more women voters for the Romney-Ryan ticket.

And in the "Rewrite" tonight, the presidential debates -- Rush
Limbaugh thinks he knows how to force the debate moderators to go easy on
Romney and be tough on President Obama.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: When it comes to a
woman`s right to make her own healthcare choices, they want to take us back
to the policies more suited to the 1950s and the 21st century.

(END VIDEO CLIP)

O`DONNELL: And that was before Mitt Romney chose a running mate who
is more right wing than Romney on a woman`s right to choose. Paul Ryan
opposes a woman`s right to choose, even in cases of rape and incest. Ryan
is in the radical Rick Santorum wing of the right wing on these issues.

This weekend, the Obama campaign sent out an e-mail to supporters,
highlighting Paul Ryan`s record on women`s issues and calling on women to
tell Mitt Romney and Paul Ryan we won`t go back.

In a 2010 interview with "The Weekly Standard," Paul Ryan said, "I`m
as pro-life as a person gets."

According to NARAL Pro-Choice, Paul Ryan voted 59 times against
women`s reproductive rights. The National Right to Life committee gave
Paul Ryan 100 percent pro life record.

He co-sponsored the Sanctity of Human Right Act, a personhood bill,
that would give legal rights to fertilized eggs. Not only would that bill
pave the way to banning abortions and some forms of birth control, but it
could also outlaw in vitro fertilization, a process used by at least three
of Mitt Romney`s own children to deliver him grandchildren. Paul Ryan also
voted to defund Planned Parenthood.

Aside from women`s health and reproductive rights, Paul Ryan`s
signature budget would cut child care and related assistance for the
working mothers of 4 million children, and he voted against the first bill
President Obama signed into law, the Lily Ledbetter Fair Pay Act, giving
women more protection to sue their employers for gender discrimination.

Joining me now, equal pay advocate, Lilly Ledbetter, and Irin Carmon,
a reporter for Salon.com.

Lilly Ledbetter, did it surprise you that with Mitt Romney and polling
trouble showing a very big gender gap with the women`s vote in favor of
President Obama, that he would choose someone so far to his right on all of
these issues?

LILLY LEDBETTER, EQUAL PAY ADVOCATE: I was shocked. I could not
believe it that he chose Paul Ryan. I really could not -- simply because
they`re having a hard time now getting on the same page.

Mitt Romney has to point out at the media -- well, I`m the one running
for president. They can`t agree on the plan. They get on the air, one-on-
one station, one on another and different question. They can`t even get on
the same page.

But Paul Ryan is very pleased with himself that he voted against the
Lily Ledbetter Fair Pay Act. And what that is, that`s for families.
That`s voting against American families and American families the right to
get what they`re legally earning and entitled to under the law.

And he`s also going to do away with Medicare, Social Security, and
that is two of the main items that I depend on, because I lost my case. I
have to have my Medicare just like it is. I need my Social Security each
month, when that check comes in.

And I`m the tip of the iceberg, Lawrence. There`s millions of
families across the nation that`s depending on that. A lot of them that is
only income that they have.

Paul Ryan scares me to death. I did not like to hear him when he was
just a congressman. The way he would talk about cut, cut, cut. We
Americans in this country, in middle class and down, we will not survive.
There is no way, with these two on this ticket.

Mitt Romney is going to cut. That`s all he talks about, if he gets
elected, while he`ll cut out the first day and from then on. Everything is
cut.

And all the programs he`s cutting belong to the middle class and lower
Americans. And this is not right.

They`re wanting to cut school funding, women`s rights -- and the
president is exactly right. They`re taking women back to the `50s, because
I go back and remember how it was.

O`DONNELL: Irin, Lily`s point I think is crucial. This is -- we
frame these things in these kinds of shows as women`s issue, but fair pay
for women in the work place is, as she says, is a family issue. When you
have two-earner couples, male and female, the man is as interested in the
female`s earning power as the female is. He would love to see her come
home with a stronger paycheck.

IRIN CARMON: I think the same goes for reproductive rights as well.

O`DONNELL: Exactly.

CARMON: We`re talking about families. We`re talking women and men
having the autonomy to make decisions about their lives. You`re talking
about children being raised in single parent households, many of them
headed by women.

These aren`t just women`s issues. These are issues of personal
autonomy and freedom, which supposedly something that Paul Ryan is really
interested in, until it comes to a woman`s uterus.

O`DONNELL: Irin, I haven`t heard anything from Romney about how they
feel Ryan helps them with the gender gap.

CARMON: I think that they probably just hang up and they`re gone. I
mean, they`re just going home on that one. I really, I think -- maybe they
think women will find him cute.

At this point -- all it`s really done is energized women -- single
women in particular who are going to be a really crucial swing vote, he`s
turned into a meme. He has a hashtag. All of these people who might have
sat this out are now making fun of Paul Ryan for the fact that -- you know,
we`ve been hearing about Ayn Rand all week. We should also be hearing
about the handmade stuff (ph), which is basically if you look at Paul
Ryan`s voting record, a vision that he has for women.

O`DONNELL: Lilly Ledbetter and Irin Carmon, thank you both very much
for joining me tonight.

LEDBETTER: Thank you. Thank you so much.

O`DONNELL: Coming up, a video review of the worst week so far in the
Romney-Ryan campaign. Yes, I know. They`ve only had the one week. But it
was a very bad week.

And in the "Rewrite," how Rush Limbaugh is trying to tamper with the
presidential debates and how you can actually make sure that he fails.

(COMMERCIAL BREAK)

O`DONNELL: With Paul Ryan well on his way to becoming the next losing
vice president who will never become president, I am ready to announce my
pick for the front-runner for the next presidential nomination in 2016.
That`s coming up.

And it`s hard to imagine the second week can be as bad as the first
week for the Romney-Ryan ticket. We will have a video review of the Romney
Ryan fumbling first week, next.

(COMMERCIAL BREAK)

O`DONNELL: In the Spotlight tonight, the week that wasn`t for Paul
Ryan. This was supposed to be the happy days are here again week for the
Republican presidential ticket. They were banking on a surge of youthful
energy from Paul Ryan and a Republican right wing so thrilled that that
thrill would somehow miraculously become contagious, and that independent
voters would suddenly start dreaming of how great this country could be
again if we could have a simple minded right wing fanatic in the vice
presidency.

But as Paul Ryan approaches the finish line of his first week of
campaigning for the vice presidency, Republicans are not singing happy days
are here again. In fact, they`re publicly worrying that Ryan might sink
their chances of winning not just the White House, but also lose them seats
in the Senate and in the House of Representatives.

Ryan week one has left the Romney/Ryan running mates on the offensive
every day, trying to convince voters that they will not destroy the most
popular social program in America.

(BEGIN VIDEO CLIP)

ROMNEY: The next vice president of the United States, Paul Ryan.

RYAN: This was a man who when he was governor of Virginia lowered the
unemployment rate.

ROMNEY: He has a plan, for instance, for Medicare.

UNIDENTIFIED MALE: A referendum on Paul Ryan`s budget plan.

ROMNEY: Well, I have my budget plan, as you know, that I`ve put out.

UNIDENTIFIED MALE: If the Ryan budget had come to his desk as
president, he would have signed it, of course.

(CROSS TALK)

UNIDENTIFIED MALE: Any principles in the Ryan budget or significant
provisions with which you disagree.

ROMNEY: I`m sure there are places that my budget is different than
his, but we`re on the same page, as I said before.

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

ROMNEY: Well, we`re very much on the same page.

(CROSS TALK)

RYAN: Our job is to strengthen and protect Medicare.

ROMNEY: Seven hundred and sixteen billion dollars out of the Medicare
trust fund to pay for Obamacare.

Seven hundred and sixteen billion dollars.

BRIT HUME, FOX NEWS ANCHOR: Doesn`t your budget also contemplate very
major savings from medicare on something like the same amount?

ROMNEY: My plan for Medicare is very similar to his plan for
Medicare.

HUME: You make savings. How much?

RYAN: The -- I -- the -- I joined the Romney ticket.

WOLF BLITZER, CNN ANCHOR: How many years would it take for the Romney
budget to result in a balanced budget?

UNIDENTIFIED MALE: Wolf, I`m not sure of that myself, actually.

RYAN: Well, I don`t know exactly when it balances.

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

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

UNIDENTIFIED MALE: Governor, was Paul Ryan a risky pick? Did you
roll the dice a little bit with Paul Ryan?

(END VIDEO CLIP)

SCHULTZ: Joining me now, Krystal Ball, cohost of MSNBC`s "THE CYCLE,"
and Howard Fineman, "Huffington Post" editorial director and MSNBC
political analyst.

Howard, we need your memory here. We need your campaign memory. I
cannot think of a first week of a vice presidential part of the ticket
rollout where the talk has been how much damage might this candidate do not
just to the presidential ticket but also to House seats and to Senate
seats. I know people worried about what Dan Quayle might do to the first
President Bush`s ability to get elected, or what Sarah Palin might do.

But what they weren`t saying was this candidate has a record -- a
record that could hurt us in to the Congressional elections.

HOWARD FINEMAN, "HUFFINGTON POST": Well, Dan Quayle comes closest. I
was there at the Dan Quayle convention. And Roger Ailes, who now runs Fox,
and who was advising George H.W. Bush, later said it was like throwing a
hot dog in a shark tank. That was the first week of the Dan Quayle
experience.

But you`re right. It was that Dan Quayle didn`t have a record. Paul
Ryan very much has one. And that`s both his appeal and his great drawback.
And yes, Republicans are worried about Congressional seats as well.

It mystifies me, Lawrence, because they had to have known. That is,
Romney and Ryan had to have known that the Ryan budget plan, especially the
Medicare part of it, would be at the center of Democratic response to the
pick. And yet when they announced down in Norfolk, Virginia, there were
only couple of lines about it. Ryan didn`t even mention it.

What Romney said was demonstrably hypocritical at best, because the
Ryan budget itself makes the same amount of cuts, assumes the same amount
of cuts in waste and fraud and efficiency that the Obama plan does. And
just because Obamacare, quote unquote, is not universally unpopular doesn`t
mean that Americans want to dismantle Medicare. Most Americans don`t.

And it seems like while they prepared in great secrecy to unveil Paul
Ryan down there off the USS Wisconsin, they were kind of unprepared for the
natural questions that were going to follow and that you summarized the
results of there.

O`DONNELL: Well, let`s listen -- you just mentioned it, Howard.
Let`s listen to Paul Ryan speaking today about President Obama`s cuts in
Medicare and what they think they`re trying to do.

(BEGIN VIDEO CLIP)

(CROSS TALK)

RYAN: First of all, those are in the baseline. He put those cuts in.
Second of all, we voted to repeal Obamacare repeatedly, including those
cuts. We didn`t propose those as a new baseline. And when we voted to
repeal Obamacare, we voted to repeal all of it.

(END VIDEO CLIP)

O`DONNELL: So Krystal, he`s asked about, well, why are you
criticizing the Obama Medicare cuts if you have the Obama Medicare cuts in
your plan? And he uses the word you must not use, which everybody on the
Budget Committee understand and most of the people in Congress understand,
baseline.

FINEMAN: Baseline.

O`DONNELL: He starts -- Howard is laughing about it now. It`s like
you`ve got to find the American language way of answering this question,
not the Congressional language way.

KRYSTAL BALL, MSNBC ANCHOR: That`s exactly right. And I think that
is the thing that`s so shocking about this rollout, is how fundamentally
unprepared they were about the absolutely obvious questions. I mean, like
Howard said, obviously if you pick Paul Ryan, Medicare is going to be the
central question. And they seem to not only not have good answers, but not
have any kind of a strategy.

And in fact, their entire campaign, one thing I`ve been surprised by
is how much of a fly by the seat of the pants kind of campaign it seems to
have been. From the very beginning, they`ve had a hard time even defining
what Mitt Romney`s narrative of his biography will be. When first
questions started coming out about his tax return, they still haven`t
figured out what a good answer is for that.

And now they`ve essentially crumpled up their whole strategy of just
being the inoffensive alternative, and picking Paul Ryan, and had no idea
past the initial introduction, which even got flubbed, what they were going
to do and how they were going to answer these questions.

So that`s the thing surprising to me. I actually thought Mitt Romney
would be somewhat of a poor candidate but with an effective campaign at
least. And that hasn`t even been the case.

O`DONNELL: Howard, we haven`t heard someone on the presidential
ticket talking in Congressional language that way since poor Bob Dole in
1996, who didn`t come close to the victory line there.

FINEMAN: No. And I -- I think that again, my sense from talking to
Republicans, including Ed Gillespie, who you showed there a number of times
and who is generally regarded as a pretty shrewd guy on their side -- my
sense from talking to Ed was they threw that 716 billion thing out there.
Yes, that had some effect, by the way, in the 2010 elections. Some
Republicans were able to neutralize or even advance their cause based on
accusing the president by using such numbers.

But overall, you can`t -- the Republicans can`t win this argument this
way because just because you have some doubts about Obamacare, if you`re a
swing voter, doesn`t mean you want to dismantle Medicare. That`s the key
thing here. And I think if the Democrats are lucky enough to have the
whole rest of the campaign argued on the question of who`s going to
preserve Medicare --

BALL: Right.

FINEMAN: -- the Republicans are going to lose. They`ve got to be
crazy. There`s 8.3 percent unemployment. The economy is muddling along
and so forth. If -- every day everything that Mitt Romney and Paul Ryan
are not on that message and not on that message exclusively is a day
they`ve lost the chance to advance in this campaign.

O`DONNELL: Howard, all they have to do is buy half an hour of
national television time for Paul Ryan to come on and explain to the
country baseline assumptions in legislative packages.

BALL: Winning message.

O`DONNELL: Nothing to it. Howard Fineman and Krystal Ball, thank you
both for joining me tonight.

BALL: Thanks, Lawrence.

O`DONNELL: Coming up, Rush Limbaugh is lying about the presidential
debate moderators before they`ve asked a single question. Why you need to
fight Rush`s lies this time, and not let him influence the presidential
debates. That`s coming up .

(COMMERCIAL BREAK)

O`DONNELL: In the Rewrite tonight, it`s Mr. Big Stuff versus the left
wing liberal Democrats. Not all of them, just four of them. And they`re
not just left wing liberal Democrats. Rush is targeting two of them -- two
of the ones he`s targeting are far left wing liberal Democrats. And the
other two are far, far left wing liberal Democrats.

By now you`ve probably guessed who I`m taking about. Far left wing
liberal Democrat Jim Lehrer, far left wing liberal Democrat Martha Raddatz,
and far far left wing liberal Democrat Candy Crowley, along with far, far
left wing liberal democrat Bob Schieffer.

(BEGIN VIDEO CLIP)

O`DONNELL: First presidential debate, October 3rd in Denver,
nominated -- moderated by Jim Leher of PBS, far, far liberal Democrat.
Town hall October 16th, Hempstead, New York, moderated by Candy Crowley of
CNN, far, far left wing Democrat momma.

Third presidential debate, October 2nd, not far from here, down in
Boca Raton, moderated by Bob Schieffer, far, far, left wing liberal
Democrat, and dinosaur. Correct, and dinosaur.

And the vice presidential debate will be October 11th in Danville,
Kentucky, and it will be hosted by Martha Raddatz of ABC, far, far left
wing liberal Democrat.

It`s the same old media hacks handling the debates.

(END VIDEO CLIP)

O`DONNELL: Of course, none of them are far, far left wing liberal
Democrats. And none of them are far left wing liberal Democrats. And none
of them, as far as I know, and I know three of them personally, are left
wing liberal Democrats. I don`t know what any of them are politically.
They are accomplished professional journalists who never turn over their
political cards.

Rush is accusing them of being far left wing liberal Democrats because
he is trying to intimidate them now, right now. He wants the debate
moderators waking up every morning thinking about how they can prove in
these debates that they are not far left wing liberal Democrats. How can
they prove they are fair?

Well, the way Rush way, the way Rush wants them to prove that they are
fair is for really tough with the Democratic candidate on the stage and go
easy on the Republican candidate. He`s trying to get inside their heads.
He knows when the moderators first heard him say this, as they all must
have by now, they thought what he was saying was just ridiculous, and of
course it wouldn`t affect the way they moderate the debates.

But Rush is going to keep saying this. And other Republicans are
going to echo it. It`s called working the refs in sports. The coach
argues every call the refs make, even the obvious fair ones, to try to
psych the refs into thinking twice about calling a foul or a penalty on
their team.

Now, if the Democrats had an irresponsible liar with a big microphone
like Rush Limbaugh on their side, they could try to work the refs this way,
too. They could say Jim Leher, who has moderated more presidential debates
than anyone in history, is a far right wing conservative Republican. They
could say Bob Schieffer is a far, far right wing conservative Republican.

They could say that about Candy Crowley. They could say that about
Martha Raddatz. But it would, of course, be a lie, a Limbaugh style lie.

We can let the debate moderators know what we want them to ask.
Governor Romney, you gave the McCain campaign 23 years of your tax returns
four years ago when they were considering you for the vice presidential
nomination. You demanded to see several years of Paul Ryan`s tax returns
to evaluate his fitness to serve as vice president. Why shouldn`t voters
be able to see your tax returns to make the same judgement about your
fitness to serve?

Congressman Ryan, you gave the Romney campaign several years of your
tax reruns. Why won`t you let the American voters know what`s in all of
those tax returns, instead of just the two years you say that you will
release?

And Congressman Ryan, you voted yes for a 90 percent income tax on
bonuses paid by banks that were bailed out with TARP money. That tax was
unconstitutional and opposed by Vice President Biden and President Obama.
Why, Congressman Ryan, did you vote for a confiscatory, unconstitutional 90
percent income tax in 2009, and are now opposed to a four percent increase
in the top tax bracket?

We`ll come up with a lot more questions for the debate moderators in
the next two months. And we hope you will too. You can suggest questions
to me on Twitter or on Facebook. And thanks to Twitter, you can politely
suggest questions directly to the moderators.

Rush Limbaugh is going to keep lying about these debate moderators.
And you should keep helping the debate moderators understand what the
American people want to know.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It`s got to hurt a little bit, huh?

TIM PAWLENTY (R), FORMER PRESIDENTIAL CANDIDATE: I didn`t support
Governor Romney because I expected to be vice president. So I`m not
disappointed. I didn`t get something I didn`t expect.

(END VIDEO CLIP)

O`DONNELL: Well, I bet big and I bet wrong on the Republican
presidential primary, thinking that Tim Pawlenty had the best shot at the
nomination, simply because he had fewer political problems in his resume
than anyone else in the field, and he was the least crazy of the Republican
candidates.

When Tim Pawlenty ran into trouble in Iowa, he knew who to blame for
his failure in the presidential campaign.

(BEGIN VIDEO CLIP)

PAWLENTY: I think it was actually the Lawrence O`Donnell endorsement
that sank my vote. I mean, the weight of your endorsement, I could feel it
by the day, by the hour, by the minute, just dragging me down as if it was
a political quick sand.

But I do appreciate you`re rhetoric. But I think the weight of it
just took us out.

(END VIDEO CLIP)

O`DONNELL: I didn`t endorse him. I just said I thought he was the
front runner for the Republican nomination. Then I, of course, thought Tim
Pawlenty`s timing of his surrender to Mitt Romney early was the right route
to the vice presidential nomination.

(BEGIN VIDEO CLIP)

O`DONNELL: In the official view of this show, Tim Pawlenty remains at
the top of the vice presidential list for the obvious nominee to be Mitt
Romney.

PAWLENTY: You`re killing me. You`re killing me here. You`re -- you
should just take out a dagger and put it right through my political heart
now.

(END VIDEO CLIP)

O`DONNELL: But tonight, having been passed over for the have the vice
presidential nomination, Pawlenty`s political future could not be brighter.
Paul Ryan is well on his way to becoming the next losing vice presidential
candidate who will never be vice president. He will take his place beside
Sarah Palin on the list of vice presidential losers whose political careers
never recover from having lost in the vice presidential slot.

And since Republican primary voters like to run candidates who have
run for the presidential nomination before and lost, like Ronald Reagan,
John McCain and Mitt Romney, Tim Pawlenty has that Republican primary loser
advantage over Chris Christie and Marco Rubio, who didn`t have the courage
to go out there this year like Tim Pawlenty and lose their way to the next
Republican presidential nomination.

And so tonight, I am declaring the front runner for the next
presidential nomination is Tim Pawlenty.

Ari Melber, there you have it. How crazy does that sound? On a scale
of one to 10, 10 being just insane.

ARI MELBER, "THE NATION": I give you seven.

O`DONNELL: I`ll accept a seven on this one.

MELBER: Lawrence, it`s as crazy as the base is crazy, which is to say
in a normal year --

O`DONNELL: I got to remember the base is crazy. This is not John
McCain`s old party in 20088, Bob Dole`s in `96, where it was, hey it`s his
turn. It`s not that party, is it?

MELBER: No, it`s not that party. So Tim Pawlenty, if you were
running a computer model, if this was Lawrence O`Donnell sort of merged
with Nate Silver, and all your inputs were other cycles, then the
prediction is really sound.

But this cycle, we have seen a level of extremism in the base demanded
of the candidates that excelled in the primary, and then demanded of Mitt
Romney as someone they`re not happy with, that`s had a huge outsized impact
on his decision making.

O`DONNELL: But now when they lose this year, will there be a lesson
to the Republican party and Republican primary voters of don`t be tricked
into going right? I guess there won`t be because Romney was sort of the
least right wing of those nuts running this time who survived.

MELBER: That`s the question. If you lose bad enough, I do think
there`s a medicine there. And the classic example in realignment is
Goldwater, where you basically said boy, we went really far in this
libertarian thing, and we need to reassess.

O`DONNELL: So let`s go to someone reasonable next time like Richard
Nixon.

MELBER: Well, Richard Nixon, though, as we all know, created the
Environmental Protection Agency and does look like a liberal guy compared
to where the party went later. So I do think though Nixon did do something
different than Goldwater, and was definitely less of that southwestern
angry conservatism, that angry libertarianism.

O`DONNELL: There`s a worry now that Paul Ryan, who really is a right
winger. Forget Romney. Ryan is really what this ticket is riding on now.
He is an extreme right winger. There`s a fear he can bring down Senate
candidates, Republican Senate candidates with him. He can bring down
Republican House candidates with them.

If they get a -- some form of what have they think is a wipeout
because of the Ryan effect, doesn`t that wake them up in any way towards
being more reasonable?

MELBER: Yeah. Look, there`s 435 House races. There aren`t enough
white boards in the country to explain the Romney/Ryan or Ryan/Romney plan.
You can`t just circle the world solvent over and over and over.

So there`s going to be that fissure between what`s on the top of the
ticket and what a lot of other Republicans have to sell.

O`DONNELL: OK, the other advantage Pawlenty has is he`s been tested.
Not for long, he dropped out pretty early. But he got out there and he did
all those things that you go through, that the Marco Rubios haven`t gone
through, that Christie hasn`t gone through. And they haven`t tested their
appeal outside of their own states, those guys.

MELBER: Yeah. And the other thing about Pawlenty is he does have a
record, if you want to run towards the median vote and not the voter on the
right. He has a record where he was a fiscal conservative in certain ways,
but he also did propose additional educational funding for the first two
years of tuition for, for example, math and science students in his state.

And he can go out to other states and talk about that as a model.
There was a time when people used to like governors because they would
point to what they did and explain it, as you said, when campaigning around
the country.

Paul Ryan -- let`s not forget, what has Paul Ryan done in office?
Right? He has increased the deficit by voting for wars and Medicare Part
D. His name is on every Bush spending bill. OK?

That`s what he`s done. The only thing that the media likes to focus
on in D.C. is the fact that he`s got these future plans. That`s a big
contrast with someone like Pawlenty, who did, actually, I will say,
although not in every way that I like, but he did shrink the deficit in
office.

O`DONNELL: OK, now I understand not giving Pawlenty keynote speaker,
because he`s not dynamic. But to completely shut him out of the
convention, did they have to do that to my boy Tim?

Ari Melber gets tonight`s LAST WORD. "THE ED SHOW" is up next.

END

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